Revisiting Economic Man

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Share the World's Resources (STWR)

Revisiting Economic Man

Recent empirical studies suggest that people, far from being self-interested ‘rational maximizers’, have an innate tendency to share and cooperate. Could renewed scientific interest in the essence of human nature provide the building blocks for an alternative economic order?

by
Alexia Eastwood

A wealth of literature has recently emerged emphasising humanity's biological and social propensity for sharing and cooperation, effectively challenging the model of human nature that has underpinned the dominant political and economic structures of recent decades.[1] Empirical evidence from studies of behavioural psychology has suggested that our inclination to share and cooperate is hardwired into our genetic code and may have acted as an evolutionary advantage in human societies throughout the ages.[2] These new findings confirm what anthropological research has long suggested; that basic human nature does not conform to the narrow model of economic rationality that our society often assumes to be a self-evident truth.

The debate about the essence of human nature is not a point of mere philosophical contention but in fact has far-reaching consequences for the society we live in, informing a meta-narrative for how we construct and relate to the world around us. The discipline of economics began as moral philosophy and sought to discover the ‘natural' laws of the economy. To begin to achieve this goal required an understanding of human nature to inform the inquiry. Adam Smith and David Ricardo, often regarded as the founding fathers of economics, informed their philosophy with a view of human nature based on the utilitarian principle that human beings are ‘rational maximizers' of their own interest. This model of human nature is still used today and is often referred to as Economic Man or Homo Economicus.[3] Smith's suggestion that the self-interested actions of individual agents guided by the ‘invisible hand' of the market would lead to the greater good of all society further enforced ideas of the ‘hyper-rational individual', and underlies much of our current economic framework.[4]

Modern economics uses these underlying assumptions of human behaviour as the basis for mathematical models, which are often used to develop policy and shape social outcomes. Neoliberal ideology, which incorporated ideas of neoclassical economics, rose to political dominance during the 1980s championed by Margaret Thatcher, Ronald Reagan and Helmut Kohl. They drew not only upon economic theory to support their worldview, but also on the findings of contemporary behavioural science such as rational choice theory and John Nash's game theory, both of which aimed to scientifically prove the essentially self-interested and rational nature of individuals. Economic Man thereby left the sphere of philosophy and became perceived by many policymakers as scientific fact, enabling Thatcher to make her infamous claim in 1987 that "there is no society". This marked the advent of an era of socio-economic policies based on assumptions of a highly individualistic and self-interested human being.

The global economy we see today, sustained and justified on these basic theoretical foundations, has been extraordinarily successful in presenting itself as both natural and inevitable. Criticisms of the poverty and extreme inequality that characterise and polarise our societies have long been met with cries of "there is no alternative" and mutterings of ‘rising tides' and ‘trickle downs'. If it can be proven once and for all that Economic Man is not an accurate representation of the essence of human nature, the entire economic system upon which it was based begins to seem less logical and certainly not natural or inevitable. Perhaps there is an alternative after all.

The study of anthropology can be a useful tool to examine the human condition as it illuminates the myriad different ways that cultures across the globe have chosen to organise their societies and economies. Even a cursory glance at human history and most other forms of society outside the Western world reveal how culturally specific and temporal Economic Man really is; as the economic historian Karl Polanyi stated, no other society outside of our own has ever raised the pursuit of economic gain to the guiding principle of society or understood it as definitive of the human condition.[5]

Even notions of poverty and wealth, which we tend to accept as universal and undisputable concepts, are culturally constructed and anything but universal. In other cultural contexts, wealth has been demonstrated or represented not by the accumulation of material goods but by their redistribution through practices of gift giving, as in the potlatch practice of indigenous communities in the Pacific North West or the Kula exchange of the Trobriand Islands.[6] Anthropologists have documented a wide variety of economies based on notions of reciprocity and sharing, economic values that not only ensure the material provision of goods but also provide strong social cohesion within a community. In examining different methods of social and economic provision what becomes clear is that humans are not necessarily driven to accumulate material goods, but rather act more consistently based on social motivations, prioritising their social standing within their community.[7]

New findings in behavioural science also support a more cooperative basis of human nature. Recent experiments in behavioural and evolutionary psychology have found that human beings as social animals are generally inclined to share and cooperate, and that it is these principles that have given our species an evolutionary advantage rather than the tendency toward competitive individualism.[8] Children, for example, have been found to be innately helpful and cooperative, whilst scientists using imaging technology have discovered that our brain chemistry shows the same pleasure in helping others as in helping ourselves.[9]

Another experiment that combines behavioural science and anthropology has used game theory in cross-cultural settings to test the hypothesis of Economic Man. The study found that self-interested behaviour was not a consistent response.[10]

The ongoing economic crisis has been heralded as a moment for change and reflection, and coupled with the environmental crises of man-made climate change and the loss of biodiversity, it is clear that we are at a crossroads. Perhaps it is time to sit back and take stock, re-examine the truths we have taken for granted and think about the world we want to leave to our children. An inclusive twenty-first century society needs a new vision of and for humanity, and the renewed scientific interest in the essence of human nature may provide the building blocks for an alternative economic order built upon values of sharing and cooperation.

Alexia Eastwood is a communications officer at Share The World's Resources. She can be contacted at alexia(at)stwr.org.

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References:

[1] For example, see Jeremy Rifkin, The Empathic Civilization, Cambridge: Polity Press, 2009; Michael Tomasello, Why We Cooperate, Cambridge: MIT Press, 2009; Frans De Waal, The Age of Empathy, New York: Harmony Books, 2009; Humans May Be Hardwired to Share, ABC Science, 28 August 2008.

[2] Michael Tomasello, Why We Cooperate, Cambridge: MIT Press, 2009.

[3] For an in-depth examination of the nature of Economic Man, please see Adam Curtis' Documentary: The Trap

[4] Adam Smith, The Wealth of Nations, Oxford: Oxford University Press, 1998, page 292.

[5] Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Times, Boston: Beacon Press, 2001, page 45.

[6] See Marcel Mauss, The Gift. Form and Reason for Exchange in Archaic Societies, London: Routledge, 2001.

[7] Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Times, Boston: Beacon Press, 2001, page 48.

[8] Yasmin Anwar, Do Kinder People Have an Evolutionary Advantage? Alternet, 4 March, 2010. Nicholas Wade, We May Be Born With an Urge to Help, The New York Times, 30 November 2009.

[9] The Straits Times, Humans Want to Share, 25 February 201o.

10] Joseph Henrich et al, Economic Man in Cross Cultural Perspective. Behavioral Experiments in 15 Small-scale Societies, Behavioural and Brain Sciences, 28, Cambridge University Press, 2005, page 795-855.

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