Provocation #97. Economists are very concerned about the state of the economy and politics,
But how many have noticed that Donald Trump is a near perfect representation of the kind of human being at the center of conventional economic thinking: economic man, a person with no relationships with others except buying and selling, hiring and firing. Rational man, who knows what he wants (money wealth) and uses his intellect to get it.
Here is Mill
“[Political economy] does not treat the whole of man’s nature as modified by the social state, nor of the whole conduct of man in society. It is concerned with him solely as a being who desires to possess wealth, and who is capable of judging the comparative efficacy of means for obtaining that end.”
Here is wikipedia
“In economics, homo economicus, or economic man, is the concept in many economic theories portraying humans as consistently rational and narrowly self-interested agents who usually pursue their subjectively-defined ends optimally. Generally, homo economicus attempts to maximize utility as a consumer and profit as a producer.”
Trump represents the competitive man, for example, following Friedman in that the only purpose of a corporation is to benefit the stockholders, in this case Trump himself. Since there is no other goal, corruption, monopolizing, paying off politicians, is all not only ok but to be admired. Pedestrians get out of the way. Losers.
Trump seems unsocialized. I would love to see his grade school reports. He seems not to have absorbed the American Ethos most of us got, in a confused way, in grade school and high school. It is hard to imagine him – or economic man – using the word “democracy.”
Certainly most people in business are not as blatant, but the decline in social awareness in exchange for competition and winning is obvious to anyone hanging around business communities.
In the pursuit of which there are no ethical considerations except to not get arrested.
The president sets the style for the nation, even the world. This self centeredness is ugly. But the embrace of economic man as a working assumption in much of economics is legitimizing anti-social attitudes and increasing the sense people have that the society is economics and economics a fierce game of winning at all costs.
The idea from Aristotle – economics as )holistic) estate management, and Adam Smith’s economics as the wealth of nations, has been trending towards cynicism and despair about social values. Market economics was a choice on how society should be organized for its good. But it has lost any sense that the outcome of economic activity should be social well being. Society should win for all is replaced by winners and losers, makers and takers, capital and labor. Trump reflects the assumptions of economic man and is helping lead society to bankruptcy, war and despair. Joseph Tainter in Collapse of Complex Societies makes it clear that elites, in a time of emerging crisis, instead of investing in society, pull out all resources from essential infrastructures, and cut costs to do so, so they can have he cash to protect themselves.
Cn we imagine a more attractive narrative about society? What is economics in such a narrative?
Economic man wa picked because of its convenience. science and especially the imitative sciences try to extract the machine from the organism. (see Mirowski’s Machine Dreams. This move “for efficiency” is really to make calculation possible, but in a field like economics where all is change and new, math has limited relevance. Yet economics continues (see the many critiques of econ 101 in the last dozen years) to push this model and its “elegance” on vulnerable students and continuing through the press and public policy.
One result is Trump and his hideous inability to see the norms of Presidential from the perspective of a fully realized homoeconomicus.
Some thoughts on Edinburgh
I like to look at the narrative line from Smith the humanist to Keyes the humanist to the present tight grip on ignorance of history. An expanded narrative is
Smith the polymath to the marginalists using math to replace narrative to Keynes whom like Smith, knew a lot about a lot` of things and after him a decline into marginalist neoclassicism. Economic man, rationalist expectations, equilibrium.
Keyes and Smith were responsive to the complexities of their times, a tradition that was lost after Keynes (Frank Knight a kind of taciturn exception. There wren many others on the sidelines.) Another way to see it is that Smith and Keyes brought a humanist perspective to a field dominated by technocrats and were unique in trying to maintain a fuller relevance to economic thinking. That effort we can say mostly failed
From Steele’s Keynes snd Hayek. The following about Keynes:
(However, there is a growing consensus that Hicks’s formulation is at variance with the essence of Keynes’s General Theory; and that a heavy price has been paid for allowing the easy tractability of Hicks’s ISLM geometric(or algebraic SENIE formulation) to gain the ascendancy.2 How did this happen? Robert Skidelsky suggests simply that ‘Keynes, who, above all, sought to influence policy, did not resist this reconciling way of selling his ideas if it made them accessible and acceptable to the younger economists’(Skidelsky 1997: 322). In short, people could make of his theory whatever they liked, so long as policy remained on the right lines!
As Hicks was formulating the neoclassical synthesis, Keynes was drafting a statement of the essence of his ideas for The Quarterly Journal of Economics(1937). The contrast with Hicks could hardly be greater: in Keynes’ s elucidation ‘there is no consumption function, no investment multiplier, only vague and uncertain knowledge, fluctuating states of confidence, and courage, fears and hopes, coped with, as best they can be, by strategies and conventions’ (Skidelsky 1997: 323). Out of that re-presentation, an alternative to Keynesian (SENIE) macroeconomics was developed.
About the complexities of Smith and Edinburgh, From Buchan, Crowded with Genius: the Scottish Enlightenment: Edinburgh’s Moment of the Mind
Having failed through lack of matter to launch a literary revival in 1755, two years later Wedderburn felt engulfed. ‘The most agreeable prospect in this Country arises from the Men of Letters,’ he wrote. ‘Robertson has almost finished a History, which will do any honor to any age & bids fair to dispute the prize with Davd Hume – John Hume has finished the first act of Agis & applies in earnest – Ferguson is writing a very ingenious System of Eloquence or Composition in general – Wilkie’s Epick poem you have certainly seen. Smith has a vast work upon the anvil, it dis-closes the deepest principles of philosophy.’
Of those works, the last and greatest was Adam Smith’s Theory of Moral Sentiments. When it appeared in the spring of 1759, a year of triumphant British military victories over the French in Europe and North America, it caused a sensation. Less abstruse than Hume’s Treatise, less precious than Hutcheson’s Inquiry, it was the work that established Scottish philosophy in the first rank.
When Smith died, after a life of intellectual adventure and social prudence, the Caledonian Mercury complained in its obit-uary of 4 August 1790 that he had converted his chair of Moral Philosophy at Glasgow University into one of trade and finance, a judgement that has lasted to the present day. His name stands as shorthand for an ideology of unrestricted commerce and blithe social optimism. Business people who know nothing of Edinburgh or the eighteenth century yet feel they possess in Smith a venerable sanction to go on doing what they are doing already (which is what other people are also doing). Some have heard of the Invisible Hand, an invention of his which pardons errors and makes good transgressions: wields, as it were, an invisible moral brush and dust-pan.
The picture of Adam Smith as the apostle of amoral modern capitalism has been under attack in Scotland for some years, and is indeed unhistorical in both its terms. Smith’s interests ranged over wide horizons, from cosmology through language to morals and the increase in wealth. He wrote well on Italian verse and on garden topiary. He believed that all philosophy, including medicine and what are today called the natural and social sciences, was imaginary, hypothetical, provisional and impermanent. Like that other great intellectual David Hume, Smith had little time for the intellect: both philosophers held that humanity followed its instincts far more than its reason.