Human sociality and resource distribution
from Blair Fix and RWER issue #90
Is it obvious to you that humans are evolved social animals? Is it also obvious that our sociality is central to how we distribute resources? If you think so, you’re probably not an economist.
Through years of schooling, mainstream economists are trained to ignore the obvious facts about human nature. The theories that economists learn make it impossible for them to understand human sociality. Economists are trained that humans are asocial “globules of desire”. This is Thorstein Veblen’s satirical term for “homo economicus”, the economic model of man. Here’s Veblen describing homo economicus:
“The hedonistic conception of man is that of a lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact. He has neither antecedent nor consequent. He is an isolated, definitive human datum, in stable equilibrium except for the buffets of the impinging forces that displace him in one direction or another. Self-poised in elemental space, he spins symmetrically about his own spiritual axis until the parallelogram of forces bears down upon him, whereupon he follows the line of the resultant. When the force of the impact is spent, he comes to rest, a self-contained globule of desire as before” (Veblen, 1898).
As Veblen makes clear, economists’ model of human behavior is bizarre. Indeed, the assumptions are so far-fetched that one wonders how this “theory” ever gained acceptance. I have spent years trying to make sense of homo economicus as a scientific theory. I have concluded that this is a waste of time. Economists’ selfish model of humanity is best treated not as science, but as ideology.
Unlike scientific theories, ideologies are not about the search for “truth”. Instead, they are about rationalizing a certain worldview – usually the worldview of the powerful. Economists’ selfish model of humanity is a textbook example.
The discipline of economics emerged during the transition from feudalism to capitalism. During this period of social upheaval, business owners battled to wrench power from the landed aristocracy. To supplant the aristocracy, business owners needed to frame their power as legitimate (and the power of aristocrats as illegitimate). Their solution was devilishly clever. The new business class appealed to autonomy – the mirror opposite of the ideals of feudalism.
Feudalism was based on ideals of servitude and obligation. Serfs were obligated to perform free work for feudal lords. And these lords, in return, were obligated to protect serfs from outside attackers. This web of obligation was rationalized by religion – it was a natural order ordained by God.
To upend this order, business owners championed the ideals of autonomy and freedom. Business owners claimed to want nothing but to be left alone – to pursue profit unfettered by government or aristocratic power. From this world view, the autonomous model of man was born. It had nothing to do with how humans actually behaved. It was about rationalizing the goals of business owners. They wanted power, but they framed it as the pursuit of freedom and autonomy. “Power in the name of freedom” is how Jonathan Nitzan puts it (in conversation with me).
The ideals of autonomy, championed by business owners, became enshrined in the new discipline of economics.[1] Every individual was modeled as a selfish globule of desire – an aspiring capitalist.
[1] Were economists aware that they were serving the interests of business owners? Some definitely were. Others were probably not. My guess is that progenitors of ideologies are often unaware of what they are doing. Church clergy, for instance, were probably not aware that their faith justified the power of feudal lords. For the clergy, their faith was simply the way the world worked. And so it is with many economists. The world “is” how their theory imagines it. That their ideas justify the power of business owners is not on (most) economists’ radar.
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Real-World Economics Review Blog 
Thank you, Mr. Fix. Very succinct explanation of economics’ role as rationalization for the evils of capitalism. Why don’t we take the next step by giving up the pleasures of criticizing the so-called “theories” of contemporary economics in favor of building a new way of thinking about this subject? I suggest we start with a couple of commonsense premises: First, there is enough to go around; and second, every person is born with an inalienable right to everything necessary for a secure, healthy, and productive life.
Agreed, John, and I have done, capturing the ordering of events in circuit diagrams. Your premises are however not unchanging facts but axioms which need to be accepted. As we say in the Marriage Encounter movement, “Love is a decision”.
Blair, I am very much with you in your “read more”, but where you say “Church clergy, for instance, were probably not aware that their faith justified the power of feudal lords”, perhaps you are not aware that feudalism was “all men are brothers” catholicism’s pragmatic response to enslavement by conquerors: ensuring serfs had rights even as de facto slaves.
Finance capitalism and Marxism are both way passe’. Direct and Reciprocal Monetary Distributism intelligently and strategically implemented is the thirdness greater oneness of that obsessively contentious duality.
I’ve not heard of Veblen’s weird ideas before, but the dangers to society of trusting ‘businessmen’ were spelled out most emphatically in Adam Smith’s warning to his countrymen, never to trust the advice of ‘those who live by stock’. Of course, these are the *only* people ‘economics’ now serves!
Smith closed the opening book of his first volume of ‘Wealth of Nations’ with this astonishingly accurate prophetic warning:
“It is the stock that is employed for the sake of profit, which puts into motion the greater part of the useful labour of every society. The plans and projects of the employers of stock regulate and direct all the most important operation of labour, and profit is the end proposed by all those plans and projects.
But the rate of profit does not, like rent and wages, rise with the prosperity, and fall with the declension of the society. On the contrary, it is naturally low in rich, and high in poor countries, and it is always highest in the countries which are going fastest to ruin.
The interest of this third order, therefore, has not the same connexion with the general interest of the society, as that of the other two. Merchants and master manufacturers are, in this order, the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the public consideration.
As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen.
As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business, than about that of the society, their judgment, even when given with the greatest candour (which it has not been upon every occasion), is much more to be depended upon with regard to the former of those two objects, than with regard to the latter.
Their superiority over the country gentleman is, not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his. It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction, that their interest, and not his, was the interest of the public.
The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market, and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can only serve to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.
The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”
That bit about ‘profit being highest in countries that are going fastest to ruin’ could never have been more perfectly illustrated than our modern situation, where the whole of society is being sacrificed under the pretence of a need for ‘austerity’, in order to maintain profits for the rich by transferring wealth upwards from the poor in countries where progress should have levelled out the imbalances were this not seen as a failure purely because the enrichment of the rich naturally slows down when everyone has what they need! In our time, the rush into ruination has created an ever growing bonfire of resources, that is threatening Humanity’s very existence, but still we go on in our mad dash for ‘growth’.
Smith must be boiling in his grave!
Thank you so much for this, Spamletblog! Adam Smith’s so “to-the-point” warning comes across much enhanced now you have taken it from its context and displayed it on a back-lit screen.
This, of course, is why catholic Christians and the Muslims after them banned usury, until the folly of Britain’s Henry VIII allowed it in again. By Smith’s time – with its usurers being encouraged to become anti-religious, never mind anti-catholic – that was of course two hundred year old history: the long-forgotten cause of present troubles.
Thanks davetaylor1.
All too often I find that, when I go back to early writers, they have already thought things through amazingly well without the need of any of our incredible technology of communication. More modern writers cherry pick the buzzwords like ‘free trade’, while leaving out all the caveats and conditions that the originators put on their concepts.
A parallel warning was George Washington’s warning, on retirement from the USA Presidency, that it would be a disastrous thing if political parties were to gain control of their new Republic. He predicted exactly that human nature would lead to the breakdown of accountability of political leaders and result in a tyrant coming to power with the aid of a hostile foreign power. All he left out were their names! Naturally, ‘human nature’ meant he was completely ignored and the parties began monopolising Congress straight away. So here we are!
“…In offering to you, my countrymen, these counsels of an old and affectionate friend, I dare not hope they will make the strong and lasting impression I could wish; that they will control the usual current of the passions, or prevent our nation from running the course which has hitherto marked the destiny of nations. But, if I may even flatter myself that they may be productive of some partial benefit, some occasional good; that they may now and then recur to moderate the fury of party spirit, to warn against the mischiefs of foreign intrigue, to guard against the impostures of pretended patriotism; this hope will be a full recompense for the solicitude for your welfare, by which they have been dictated. …”
George Washington
Extracts from his Farewell Address 1796
Oh well: At least he tried!
http://avalon.law.yale.edu/18th_century/washing.asp
It is not unreasonable that people who are not “economists” might think that economics as a discipline should help them answer questions that seem related to economic development. I did this as a post-French Revolution historian specializing on the 19th century. It was a period of great power rivalry, dominated in 1800 by the French, in 1900 by a newly formed German empire. My question, did this reversal of great power fortunes have anything to do with economic development? The people living in the 19th century thought it did and wrote a lot about it. When I turned to the new economic history (in the 1960s/70s) developing under the influence of neoclassical economics and ecometrics, I discovered that they attacked traditonal enterpretations of economic development, with their new methodologies, to call into question the work of people like David Landes, e.g., The Unbound Prometheus, Based on my investigation of the specificities of time and place, I could not verify the renterpretatiions of neoclassical and econometric based views of 19th century history. I found the views of people living and observing what they were experencing, much more creditable than the enterpretation of what people trained methodoligically in the new history, who did not live in the 19th century, said about what happened to people living then. I have written about it ever since. .
People who write this sort of “history” don’t lknow much history. The rise of bourgeois freedoms is only tangentially connected with 19th century industrialization. I SAY SO IN MY, French legitimiwts and the politids of moral order in the early 3rd republic, whch is based on years long archival source work, not just a few ideas picked out of the air. I followed the work of Alfred Cobban, on France.
Cobban’s views and works in the macrocosm were to be the inspiration and birthplace of the historical school now known as “Revisionism” or “Liberalism”. Along with George V. Taylor, Cobban vehemently attacked the traditional Marxist conception of the past within Marx’s dialectic, particularly in his work The Social Interpretation of the French Revolution. His resultant argument was that the Revolution could not be seen as a social revolution exacerbated by economic changes (specifically the development of capitalism and by corollary, class conflict between the bourgeoisie and the nobility).[5] Rather, argued Cobban, the French Revolution should be seen as a political revolution with social consequences.
Over the last several decades one of the major debates in anthropology is about the origins of human language. One group has postulated that language originated from random mutations in one or several genes. But that postulate is losing ground to the postulate that language was created gradually by humans over several thousand years. That is, language is part of human culture. I believe the same is the case with sociality. There is little biological (genetic, anatomical, etc.) evidence that language’s origin is there. Similarly, I postulate that sociality is not inherent in or primarily derived from human genetics or other biological factors. Sociality is, likewise cultural. Sapiens or even earlier Homo species created sociality, living in groups to improve their welfare and help ensure their survival. It has performed those tasks well. Apart from this disagreement, I find your assessment interesting and relevant.