A market without prices and a mind without dreams fail in the same way. Both are predictive systems. Both rely on a small, continuous stream of error signals to keep their model of the world honest. Stop the signal and the model drifts. Reality notices.
We almost never see these two together. Prices belong in economics, dreams belong in psychology, and the people who study them do not go to the same conferences. But underneath the vocabulary they are the same mechanism. Once you see it, the failure modes of centrally planned economies and the failure modes of repressed unconscious minds start to look like two sightings of the same animal.
Prices as a distributed error signal
The coordination problem that any economy has to solve is absurd when you state it plainly. Millions of strangers, each specialised in some narrow craft, none of whom know each other, somehow end up producing a pencil, a vaccine, a loaf of bread. No one designs the supply chain for bread. No one is in charge of coordinating wheat, yeast, diesel, kraft paper, and the labour of the baker who wakes at 4 am.
Prices do that work. A price is a compressed, updated, local report about relative scarcity. When wheat gets scarce, the price rises, bakers shift to rye, farmers plant more wheat next season, speculators hold inventory. Nobody involved needs to know the cause. The signal carries enough information to make the next useful move.
This is the Misesian argument: without private property you cannot get markets for means of production, without markets you cannot get prices that reflect relative scarcity, and without prices an economic planner cannot rationally allocate scarce resources. Property, prices, and profit give you information, incentive, and innovation. Remove the first three and the last three collapse. You get pencils that do not write and shelves that do not fill.
The deeper point, which conventional economics keeps missing, is that this is not a stability story. It is a complexity story. Markets are not equilibrium systems that occasionally wobble. They are adaptive systems that live at the edge of chaos, where prices are the feedback loops that keep the whole thing from either freezing or flying apart. Adam Smith got the intuition. The textbook treatment that followed flattened it into supply curves and convinced a century of economists that the marketplace was basically stable, and instability was a nuisance to be theorised away.
It is not a nuisance. It is the whole point. The economy is a predictive system that constantly overfits to yesterday, and prices are how it updates.
The Bayesian brain
Now swap the context and keep the shape.
The brain, on the Bayesian view, is a prediction engine. It does not passively receive the world through the senses. It generates a model of what the world probably is, uses the senses to check that model against incoming data, and updates wherever the prediction error is large. What you experience as perception is the model winning, most of the time. What you experience as surprise is the error signal briefly beating the model.
Two useful consequences fall out of this.
First, hallucination is not the opposite of perception. It is uncontrolled perception: the generative model running without the sensory error correction that usually anchors it. We are, in a sense, hallucinating all the time. The hallucinations we all agree on, we call reality.
Second, the model drifts. Every day you take in new data, and every day the model overfits a little. You round off yesterday's ambiguity into today's certainty. You generalise from one difficult conversation to a whole category of people. You compress, and compression always loses something.
The brain has a mechanism for pushing back against this daily overfitting. It is called dreaming.
Dreams as model maintenance
Jung's claim, a century before anyone was writing about generative models, was that the function of dreams is to restore psychological balance. A person who is inflated, who has an unrealistic idea of themselves, dreams of flying and falling. A person who is collapsed dreams of being lifted. The dream, in his reading, is compensatory. It produces material that the waking mind has suppressed or flattened, and it does so without the waking mind's permission.
The modern framing is gentler but structurally identical. Dreams are a way of improving your generative model and tuning it up, pushing back against the daily overfitting. They may play a semi-computational role in calibrating perceptual discrimination. You run offline simulations. You recombine the day's data in ways your waking mind, protective of its current story, would never allow. You wake up with a small correction applied.
The Jungian unconscious and the Bayesian brain are not rival theories. They are the same mechanism at two levels of description. Jung was doing the phenomenology of an error-correction system without knowing that is what he was doing. The lab work came later.
What matters is that, as with prices, the system works through a small continuous stream of dissonant signal. Suppress the signal and the model drifts. The person who refuses to let their dreams trouble them, who insists on keeping the waking self tidy, is not thereby saving themselves from dissonance. They are saving themselves from the correction. The dissonance collects somewhere else, and usually louder.
The same failure, in two disciplines
Here is the move. Centrally planned economies and heavily repressed psyches fail in the same structural way.
A command economy removes prices, either directly through fixing them or indirectly by destroying the property relations that generate them. It does this in the name of order. Prices are noisy, unequal, and seem to reward the wrong people, so the planner replaces them with a model. The planner's model is, at first, not obviously worse than the market's aggregate model. It might even be better on some metrics for a while. Then it drifts. With no local error signals coming in, it cannot see what it is getting wrong. By the time the distortion is large enough to be visible to the planner, it is already baked into every factory, every queue, every shortage. The pencil does not get made.
A repressed psyche removes the inner price signal, which is the uncomfortable material surfacing at the edges of attention, in dreams, in slips, in the feeling that something is off. It does this in the name of coherence. The inner report contradicts the story the waking self is telling, so the waking self tunes it out. The story holds, at first. Then it drifts. With no local error signals coming in, the person cannot see what they are getting wrong. By the time the distortion is visible in behaviour, usually to other people first, it is already baked in. The breakdown that follows is not a departure from the model. It is the model finally catching up to reality in one expensive lump.
Both failures look, from the inside, like stability. That is the trap. The planner's economy runs for decades before it collapses. The repressed life runs for decades before it collapses. The absence of continuous small error signals is experienced as peace, when it is actually the accumulation of an unpaid debt.
What this suggests about running either system
If the argument holds, then the same discipline applies in both cases.
Do not confuse the absence of dissonance with health. A system that is never surprised is not working. It is either dead or about to be. The discomfort of a price that moves against you, or a dream that shows you something unflattering, is the system telling you its model needs an update. That update is cheap if you accept it early and ruinous if you accept it late.
Do not optimise for a clean narrative. Both markets and minds generate narratives as a side effect, and the narratives are always lagging indicators. The useful information is in the noise at the edges, not in the story at the centre. The planner who demands a tidy five-year plan and the person who demands a tidy self-concept are making the same mistake.
Keep the feedback local. Prices work because they aggregate millions of local reports into something the whole system can act on. Dreams work because they surface whatever is live for this particular nervous system, in this particular week. Neither works if you try to run them from the top down. A bureaucrat pricing bread from an office and a therapist interpreting your dream from a theory are both doing violence to the signal.
The market economy and the integrated psyche are, in the end, the same achievement. A system that keeps its model honest by listening, continuously and locally, to the ways the world is not what it expected. The people who built the case for free markets and the people who built the case for the unconscious were, without knowing it, working on the same problem. Both were arguing, against the preference of every planner and every ego, that the hard work of staying in touch with reality cannot be delegated upward.
It has to happen, cheaply and constantly, at the edges.