One of the great things about Austrian economics is that one of its main practitioners, Hayek, also wrote a book on the brain, meaning every once in a while I can indulge myself in a little neuroaesthetics.
In Hayek in Mind: Hayek's Philosophical Psychology, (Adv. in Austrian Economics, vol. 15), Chiara Chelini has an article, "Hayek's Self-Organizing Mental Order and Folk-Psychological Theories of the Mind," that I highly recommend for the simple observation Chelini makes that our theory of mind (regardless of which theory of theory of mind you choose to subscribe to) is what allows us to coordinate our actions -- coordination which gives rise to the economic spontaneous order. Because we understand others have minds and because we empathize with them, we are able to more or less figure out what others are thinking, meaning we can coordinate our actions with them. When we are more or less right, we get coordination; when we are wrong, we get discoordination. Our large number of mirror neurons aid in this, because they allow us to copy people's actions exactly (they practically compel us to, in fact), which in effect coordinates our actions with all those around us.
What does all of this have to do with literature?
How could we even understand a story if we could not identify with the characters? This is even more true when viewing a play, film, or T.V. show, since we can watch the characters' actions and faces, which allow us to understand those actions. We do so because we place ourselves into those characters' minds. More, the actors similarly place their minds into the characters' minds in order to bring them to life for the audience. Our having a theory of mind and a very large number of mirror neurons is what allows us to create stories, understand stories, and act.
In other words, the same thing that allows for economic coordination is what allows us to create stories.
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