Synopsis : We now know that humans are predominantly social beings and that their sociality does not lend itself to the purely functional society in which modern economics seems to reside. The question that arises is whether economics’ claim for universality and ethical neutrality can survive such acknowledgements. In other words, can the main building block of modern economics—the conception of the individual—accommodate the sociality we uncovered in the previous two chapters while maintaining the same organisational principle of competitive decentralisation as the universal recipe for economic organisation.
Evidence seems to suggest that individuals are intrinsically (if not innately) social, so how does this affect the way we conceive human behaviour? We examine here whether the way in which modern economics conceptualises human behaviour is consistent with an idea of intrinsic sociality. We begin by claiming that there is more than one way of characterising human behaviour and, which is more important, that there is more than one way to understand rationality. Using a Weberian distinction between instrumental and expressive rationality, we find that while instrumental rationality may, in principle, be consistent with the level of sociality we expect to find in human behaviour, cognitive and technological developments, which we associated with an increase in social distance, strengthen the belief in the relevance of expressive rationality as the more appropriate method to conceptualise human behaviour.
Nevertheless, we ask whether the conception of human behaviour in modern economics—the instrumentally rational utility maximiser—could still be in line with the kind of instrumental rationality we expect at the level of sociality we attribute to human beings. To answer this question, we conduct a logical exercise to examine the sensitivity of economics’ rational utility maximiser to social settings. We find that the way standard economics understands human behaviour is oblivious of the social dimensions which are the result of the interdependence which lies at the core of economic organisation. We also find that it is more likely that such considerations will appear in a form of expressive rationality which will undermine the promise embedded in economics’ paradigmatic core that competitive decentralised decision-making will lead both to a solution of the economic problem and to a socially desirable outcome.
In the light of more recent developments in economics, we then ask whether it is possible to adjust the instrumentally rational utility maximiser so that it will capture the sociality embedded in human nature. We argue that this will not be the case for two main reasons. Firstly, as instrumental rationality is a consequentialist approach, there is a need for agents to engage in extensive calculations of the consequences of their actions. As the world of economic interdependence becomes increasingly more complex, this is most likely to become an impossible task. The second reason is that in the instrumentally rational utility maximiser lurks the idea of opportunism. This is manifested in two ways: one, through the idea of substitutability of outcomes and, the other, through the neutrality of means. As such, it is not conducive to any notion of sociality, where processes and not only outcomes, are important components in the judgement of human interaction when individuals are social minded.
This led to the final attempt at rescuing the instrumentally rational utility maximiser and this time through the idea of Homo economicus and the presumption of a functional separation of social spheres. We have already argued in the previous chapter that human sociality does not lend itself to the separation of the spheres but the question that arises is whether such a separation may be permitted for purely analytical reasons. If this were the case, as is implied by modern economics, the domain of economic interactions is clearly separable from the social domain and, therefore, it seems perfectly consistent for individuals to act differently in different domains. This, it is assumed, will legitimise the use of the instrumentally rational model within the economic domain while recognising social behaviour in other domains. However, while the idea of Homo economicus, coming from J. S. Mill, was indeed an attempt to allow the functional separation of spheres for analytical purposes, this did not mean that the different domains no longer influenced one another. The way in which an individual interacts in the economic domain is not independent from the social dimensions of his or her character. This means that if we allowed sociality—in a more expressive form—to influence the way the instrumentally rational agent would behave, the outcomes of competitive decentralisation may not be the same as those predicted by the purely self-interested instrumentally rational utility maximiser. This will raise the spectrum not only of whether such outcomes are universally socially desirable but also of whether the distribution of the levels of sociality in society will not produce numerous interactions between different types of individuals where one type always takes advantage of the other.
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We have established in the previous chapters that there is good reason to suppose that human beings are inherently social in the sense that they view the other from a different prism than their mere usefulness to them. Naturally, this is an attitude which is not independent of the social distance between individuals and the latter may depend on technology as well as on the cognitive abilities of humans. But, no matter how the world of social affiliations is changing, there are always enough individuals who are at the same time members of the economic, the civic and the social reference groups. This means that it is very difficult to argue for complete separation of spheres and, hence, attitudes. Moreover, we have also argued that given that human sociality is cognitive rather than instinctive—which means that the association among individuals is more a result of common abstract ideas than immediately shared experiences—the sense of relatedness may not be based on the physical familiarity of the others as it would on their implicit association with the same abstract ideas. This means that while the domain of economic interactions may involve individuals who are not within the immediate circle of personal familiarity, the social distance between those agents may not be so great as they may still be members—or associates—of the same abstract ideas which form individuals’ social affiliation. In simple words, while the seller and the buyer—or the employer and the employee—in the market may not know each other personally, the fact that they deem each other as either members or not of the same social or civic group will have some effect on the way they treat and interact with them.
The question which arises is whether the conception of the individual in modern economics can be deemed to be consistent with these conclusions; with the fact that individuals are inherently social beings. The importance of this question cannot be overstated as the entire edifice of economics’ paradigmatic core—based on methodological individualism—rests on its conception and modelling of the individual. In particular, the idea that decentralised decision-making through competitive interaction leads to a resolution of the economic problem, which individuals as well as society face, relies heavily on a particular conception of the individual. And it is the very same conception of the individual upon which the universality and ethical neutrality of these conclusions rests.
Indeed, as was described in Chap. 2, the individual in modern economic theory has a universal and neutral appearance. He or she is simply rational utility maximiser and what this means is that they are people who always choose the best means to achieve an end regardless of the nature of that end. Therefore, the neutrality emanates from the fact that economics does not seem to be committed to any particular objective (or end), and the universality too, is embedded in this as whatever it is individuals may wish to attain, they would always seek to achieve it through the choice of the best means.
We have already indicated in the previous chapters that the idea of the rational utility maximiser sits more naturally with the view according to which social actions are entirely self-serving and society, by implication, is entirely functional.1 But there are two questions which immediately follow: firstly, there is the question of whether the self-serving behaviour is the only possible interpretation of the analytical framework embedded in the rational utility maximiser. Namely, we are not questioning the fact that the rational utility maximiser captures well the self-interested behaviour, but could the behaviour of an individual who is socially minded nevertheless be captured by the same analytical framework? In other words, all selfish behaviour can be depicted by the rational utility maximiser, but are all rational utility maximisers selfish?
Secondly, there is the question of whether rationality can be captured by other means than the analytical framework of the rational utility maximiser. Does rationality of agents necessarily mean that in each individual action they choose the best means to an end, or could it be that once an end is being selected an agent may act in accordance with that end without ensuring that each individual act is the best means to this end? To put it in terms of our previous discussion, is an act promoting an entity (like organism in evolutionary biology) and not consistent with its individual manifestation (the life of the agent) be considered as a rational act (the idea of inclusive fitness)? If this were indeed the case, would it also follow that such behaviour will lead decentralisation of decision-making through competitive interaction to a universal resolution of either the economic or the social problem?
In recent years, with the developments of game theory and experimental economics...