The descent of Economic Man
by Tom Sullivan
Thomas O. Buford chaired the philosophy department during my first pass through college. Not only a fine academic, but a good, wise man. He died last year. I attended his memorial. Something Tom said in his office one afternoon decades ago never left me.
It didn’t matter how logical a system of thought was, he said, if it left you with a world you couldn’t live in.
The world we inhabit today is built on such a system. A set of assumptions about human beings. Bad ones so ubiquitous now that we accept them as just the way things are. A lot of us are struggling to live in that world now, even before climate changes renders it uninhabitable. Earlier this month, a review of books in the Times Literary Supplement examined the origins of our economic model and just where it has led us.
Economic Man conjured by economists of the 1950s is a base creature: greedy, lazy, selfish. “Only greedy, lazy and selfish,” writes Paul Collier. Economic man is a “travesty” of a human being who cannot be trusted:
He will only work if incentivized by material benefit, so his behaviour must be watched like a hawk, and his rewards linked to the observed performance of contract-specified actions. “Eat what you kill”, the phrase used in the investment banks to describe their system of monitored rewards, is implicitly normative: you get what you deserve, and you deserve what you get.
Such behavior would get one ostracized in hunter-gatherer societies. Hunters share their catch. Economic Man hordes his. “[I]n well-functioning societies,” Collier explains, “humans construct and abide by a vast web of kindness and mutual obligations of which Economic Man would be incapable.” Homo sapiens is a social animal. Economic Man fancies himself a rock and an island.
Yet, humans are today compelled by the economy we have constructed and an ecumenical faith in “The Market” to conform our existence around a theoretical model at odds with our nature. How did we come to this?
Behavior spreads through the pressure of opinion, writes Damon Centola in “How Behavior Spreads: The science of complex contagions.” Typically, the most prestigious members of a group are modest and generous. Others emulate those traits. But those norms can and sometimes do go wrong, Collier adds:
Economic and technological shocks, combined with a culture of “you deserve what you get”, have created big winners whose behaviour is disproportionately influential. As these winners turn into Economic Man, bad behaviour becomes prominent: they buy yachts; they dump their families; they brag. In consequence of being disproportionately influential, these people spread immodesty and selfishness: their repellent norms become more prevalent.
So prevalent, in fact, that Americans in 2016 elevated corruption incarnate to the White House. With the Jeffrey Epstein and college admissions scandals, with the inequality created by the drive to “maximize shareholder value” whatever the cost to communities, and with climate change threatening species including our own, only now has it become clear that Economic Man has led humanity into a societal cul-de-sac.
Citing Anand Giridharadas’s “Winners Take All: The elite charade of changing the world,” what is new, Collier adds, “is not so much the selfishness of this elite, as its brazen assertion of moral superiority, signalling its detachment by espousing values that alienate many of its fellow citizens.”
In “Licence To Be Bad,” Jonathan Aldred sees rationality used to excuse selfish and greed. In our economics, they become praiseworthy. (Michael Douglas put it more colorfully in the 1980s.) The idea that cooperative action via government is the problem spread like a contagion, at times like a game of telephone, from Friedrich von Hayek to Milton Friedman (with John von Neumann, John Nash, Gary Becker, and others contributing their own rational flourishes). Building an economy on faith in Economic Man’s pursuit of narrow self-interest led to the savings and loan crisis of the 1980s and 1990s, to the financial crisis of 2008 and, indirectly, to the unsettled political and physical climate in which growing numbers of humans struggle.
People are reduced to human resources, economic inputs. Decades of this economic logic enriches an investor class that refuses to share its catch. Our organizing model satisfies theoreticians by factoring out humanity. The needs of business come first. Humans serve the economy. It no longer serves them.
Citing Colin Mayer’s “Prosperity: Better business makes the greater good,” Collier continues, “Societies get the form of capitalism that public policy enables and encourages. We need business to be socially purposive: to find profitable solutions to society’s problems. Too often, what we have currently got is the conflation of purpose with profit.” Mayer wants to see changes to corporate governance that broaden ownership, encourage longer investment horizons, and better align the company’s purpose with the public interest.
What is hopeful in these analyses is they show speaking out against the madness is no longer taboo. The Great Recession, gaping inequality, and climate change have opened people’s eyes to how the design of this economy has mutilated our society and our democracy.
Danielle Allen, director of Harvard’s Edmond J. Safra Center for Ethics, examines the flaws in our prevailing economic theory in the Washington Post:
… there are three fundamental blind spots in our most recent paradigms of political economy. The first is a description of human beings as “rational actors,” whose decisions rest on essentially utilitarian forms of calculation. The second is a depiction of society as consisting of millions of Robinson Crusoes, all wholly independent of one another. The third is a failure to recognize the value in forms of coordination achieved other than through the price mechanism.
We are a social species, dependent on one another in ways spreadsheets cannot comprehend.* “Social cohesion is an efficiency mechanism ― transactions, institution-building and the like all move forward more easily, and in a less costly fashion, when fueled by interpersonal trust ― and the same is true of well-functioning political institutions. Neither of these can be achieved through market mechanisms alone,” Allen states bluntly.
Cooperation, interdependence, and trust are foundational and must be nurtured through the pressure of opinion again. “[E]mulation amplifies the prosocial instincts with which we are hardwired,” Collier writes. “Animals seek and respect dominance, but humans put more value on prestige – good opinion rather than fear – which tends to confer the greater reproductive advantage.” Or at least, it once did.
Several years ago, paleoanthropologist Richard Leakey observed that compassion carries evolutionary advantage:
Bipedalism carried an enormous price, where compassion was what you paid your ticket with. You simply can’t abandon somebody who’s incapacitated because the rest will abandon you next time it comes to be your turn.
The death of Economic Man “will be balm to the soul,” Collier concludes. “Only the economists will mourn him.” An economy in which “you get what you deserve, and you deserve what you get” cuts across the grain of millions of years of social evolution. We may be just now awakening from the spell cast by a mere three quarters of a century of economic theory that has led to unimaginable wealth for a few at the risk of planetary ruin for all. Whatever its seeming logic, is it a world we can live in?
* Riley Howell, 21, sacrificed his life earlier this year to stop a shooter at the University of North Carolina, Charlotte. Lucasfilm recently honored the Star Wars fan by naming a Jedi Master after him.
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