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Wednesday, November 17, 2010

note to homo oeconomicus 1

Mill, in his influential System of Logic, devoted Book six to the logic of the sciences of human nature, which he called ethology – the science of character. His first purpose in writing this chapter is to defend the notion that social sciences are exact sciences – that is, that they express laws, in the same way that the phenomena studied by astronomers or meteorologists express laws. His second point is that ethology is a deductive science – not an experimental one: “Are the laws of the formation of character susceptible of a satisfactory investigation by the methods of experimentation? Evidently not: because even if we suppose unlimited power of varying the experiment, (which is abstractedly possible, though no one but an oriental despot either has that power, or if he had, would be disposed to exercise it,) a still more essential condition is wanting; the power of performing any of the experiments with scientific accuracy.” (517)

This breathes the air of liberal doctrine. From Mill to Hayek, the idea that some central despotic power could or would ‘experiment’ with humans evokes the moral outrage that is the correlate of the liberal philosophy of markets. Markets, on the other hand, exert no despotism; markets, being free, free men from despotism.

In fact, Mill’s observation seems, from the point of view of the exact sciences, correct. And yet, from the point of view of the governance of men, it seems to miss the point. Almost any rule – whether derived from the management of a business enterprise or from a government agency – is in the manner of an experiment. It organizes human activity in a certain way. Looked at pragmatically, humans go from experiment to experiment – that is, from norm to norm.

And this brings us back to the question of the myth of homo oeconomicus. When I asked, parodying the title of Veyne’s work, if the moderns believe their myth, I am asking about how the myth affects the moderns. My hasty answer is that slowly, inexorably, a myth that was devised to explain society has become the myth to which society is being sacrificed. This is its ‘demonic’ power. In creating an economics that features, centrally, homo oeconomicus, the economists – in spite of their protest that homo oeconomicus is an ideal type, a fiction binding together the models of a science – embarked upon an experiment. But one must be careful here: for the power to design this experiment is surely not in the hands of the economists. Rather, the myth congeals into a recognizable figure central elements of the capitalist order, and in so doing reinforces them. It is as if an experiment were proposed by an occidental despot, in which the question explored is: can we devise a society in which homo oeconomicus is the norm?

In protesting that the rational economic agent is not meant to represent the typical human, with his ‘perturbatory’ human features, Walras was doubtless being sincere. But he was ignoring the unconscious, utopian side of his invention. When physicists devise their model of the atom, it is without a thought that the atom should take counsel from the physicists. But the same can’t be said for the economists.

To leap ahead: I don’t propose to become the biographer of homo oeconomicus because I delight in his hijinks. I propose to do so because I think the experiment is turning out badly.

Looking at global capitalism at the end of the Great Moderation, I am reminded of the end of the Soviet Union. In the eighties, with actually realized socialism in place, it was time for the New Soviet Man to emerge. As he did so, in the confident words of the regime’s ideologists, a satiric portrait of him – Homo Sovieticus – was promoted in dissident circles. But even Homo Sovieticus could not quite capture the forces that were steadily undermining the Soviet imperium. As the economy became more and more unreal, an empire of soft budget constraints – factories whose products were obsolete by the time they reached the end of the assembly line, workers who diverted the chemicals needed for their machines into beverages to be fermented and drunk on the line, etc – the New Soviet Man became more and more real.

A similar, unacknowledged process is taking place in the capitalist world, which is busy ignoring the signs of imminent environmental and moral collapse. As the experiment to make homo oeconomicus real effects the life histories of billions of people, the mixed exchange matrix that actually makes capitalism livable is being eroded. In the end, when the life of the fiction negates the life of the flesh, the fiction will die – but, if history is any guide, the death throes will make the life of the flesh miserable in some vast and catastrophic way.

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