True economics never militates against the highest ethical standard, just as all true ethics to be worth its name must at the same time be also good economics. - Gandhi
In 1930, the British economist John Maynard Keynes gave a curious lecture in Madrid titled “Economic Possibilities for our Grandchildren.” By 2030, Keynes predicted, economists would play only a minor role, “on a level with dentists.” But this dream now seems farther off than ever. Economists dominate the arenas of media and politics. And since they have the ears of the powers that be, the social world is increasingly structured along their vision of human nature. David Sloan Wilson writes in Evolution for Everyone:
It is humbling to contemplate that the concerns typically voiced about religion need to be extended to virtually all forms of human thought. If anything, non-religious belief systems are a greater cause for concern because they do a better job of masquerading as factual reality. Call them stealth religions.
The best example of a stealth religion today is the discipline of economics. The importance of the ethical approach has weakened as modern economics has evolved. Today, it is hard to find a serious discussion of the possibility that we might encourage or discourage particular behaviours by appealing not to selfishness, but instead to the force of conscience. Many modern experts would be amused at the very idea. Conscience is viewed as the concern of religious leaders and populist politicians, not lawyers, businessmen, or regulators.
Economists defined our species as the homo economicus: always intent on personal gain, like selfish, calculating robots that are separated from society and human emotions, and from ethics and interdependence. They often assume that people respond only to punishments and rewards, and can’t be trusted to do a good job. The common belief is that people can't refrain from lying, cheating and stealing unless given the right “incentives.” This mode of thinking will often have the perverse and unintended effect of promoting opportunistic, even illegal, behavior.
A leading theorist of libertarianism in the US, James Buchanan, says that an economic system should be constructed so as to conform to human nature. That makes sense. And what’s human nature? According to him, every person’s highest ideal is to be the master of a world of slaves. This means that we have to design a society so everyone is free to pursue this fundamental human nature as fully as possible. When you impose these external constraints, it does affect things. As Marcel Proust said, ‘Our social personalities are a creation of the thoughts of others.’
The belief that the pursuit of self-interest, rather than the overcoming of it, was what really worked to the benefit of all has been attributed to Adam Smith. But this supposedly 'Smithian' view of self-interested behaviour has been overstated. Although he believed self-interest was, ‘of all virtues that which is most helpful to the individual’, Smith also believed it was far from the most admirable of our traits, knocked off that top spot by our ‘humanity, justice, generosity and public spirit … the qualities most useful to others’.
He said, ‘How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.’ It is the narrowing of the broad Smithian view of human beings by modern economists that is related to the distancing of economics from ethics. If we internalise the idea that most people are mostly selfish and that selfishness must be the cause of prosperity, then we start believing that the more selfish we are, the more prosperous we all become.
For the ‘Rational Economic Man’ or ‘Homo Economicus’ dreamed up by mainstream economics, we have to blame an apple. Not any apple but the one that fell on Newton’s head. This apple led to his ground-breaking discoveries. Craving the authority of science, economists then mimicked Newton’s laws of motion in their theories and gave rise to this imaginary individual that is anything but a human. Humans are not like billiard balls acted on by simple, measurable forces that produce predictable results. William Blake summarised his critique of the Newtonian vision:
May God us keep
From single vision and Newton's sleep.
Self-interest does play quite a major part in a great many decisions. But there are motivations other than self-interest which also play a major role in many decisions. The mixture of selfish and selfless behaviour can be seen in a wide variety of group associations varying from kinship relations and communities to trade unions and economic pressure groups. Extensive empirical evidence from behavioural economics, social psychology, and evolutionary biology proves that, far from being rare and quirky, unselfish prosocial behaviour is not only common, but highly predictable.
People are far more capable of acting unselfishly than the homo economicus model admits. The evolutionary biologist David Sloan Wilson says that popular discourse on the economy is almost totally disconnected from serious academic discourse. But despite these criticisms, the assumption of purely self-interested behaviour remains the standard one in economics and is the basis of much of what is taught to students of introductory economics.
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