Interests and ideas
from David Ruccio
Self-interest is central to neoclassical economics.
My students certainly know that. According to the neoclassical economics they’ve learned, all choices made by economic agents can be reduced to and explained in terms of self-interest.
Interests are not fixed or predetermined. They are themselves shaped by ideas – beliefs about who we are, what we are trying to achieve, and how the world works. Our perceptions of self-interest are always filtered through the lens of ideas.
And, according to Rodrik, neoclassical economics has played a key role in shaping interests:
In the aftermath of the financial crisis, it became fashionable for economists to decry the power of big banks. It is because politicians are in the pockets of financial interests, they said, that the regulatory environment allowed those interests to reap huge rewards at great social expense. But this argument conveniently overlooks the legitimizing role played by economists themselves. It was economists and their ideas that made it respectable for policymakers and regulators to believe that what is good for Wall Street is good for Main Street.
Additional evidence for the effect of economic ideas on self-interest comes from game theory—beginning with the famous ultimatum game study by John Carter and Michael Irons (“Are Economists Different, and If So, Why?” Journal of Economic Perspectives, Spring 1991) and continuing through the work of Robert H. Frank, Thomas Gilovich, and Dennis T. Regan. What they find is that, across a variety of games, economists and students who have taken courses in neoclassical economics are less likely to engage in cooperative behavior than noneconomists and students who have not been exposed to those ideas.*
So, here we have two key ideas: First, interests are not predetermined, and depend at least in part on ideas that are “in the air.” Second, neoclassical economics plays an important role in shaping interests, and therefore has performative effects in making the world in which it exists.
*Of course, within bourgeois culture, it’s impossible for anyone not to be exposed, at least to some degree, to the idea of self-interest.