Monday, November 15, 2010

homo oeconomicus 1

A mystery surrounds the birth of homo oeconomicus. His ‘hour of birth” is disputed. His parents are many – and they are all males. He has been traced back to Plato’s philosopher king – and more plausibly, to the all knowing fiction devised by Laplace to explain the explicability of the mechanistic universe: “An intelligence which in a given instant would know all the forces of which nature is animated and the respective situation of the beings that compose it, if it were besides of a vast enough scale to submit these givens to analysis, would embrace in the same formula the movements of the greatest bodies in the universe and those of the lightest atom: nothing would be uncertain for her, and the future, as the past, would be present to her eyes.”

Homo oeconomicus, of course, has not yet been elevated to a principle as universal as all that. But he is still a hero, and as such, a piece of the marvelous that no plebian copulation can explain. The hero’s birth, which is always a matter of cultic interest, divides us into initates and the uninitiated – and never more so than in the mysteries celebrated in the name of the rational maximizer. We understand the mysteries or we don’t. And the priests work to ensure that the mysteries become ever more mysterious and ensnaring as we enter the sacred places.

The phrase appears, all at once, in the 1890s in the works of several political economists. In an essay from 1891, Lasciate Fare, Lasciate Passare, Vilfredo Pareto writes: “now the science of economics tends to separate itself into two branches. In the first case, one departs from some postulates, in fact only one postulate, that of hedonism, and having assumed a homo oeconomicus whose actions are hedonistic in every, one establishes a workable basis of a deductive science that represents what would happen in a society composed of such men. In the other, one brings together like facts and tries to deduce laws from them, which cannot be non-empirical…” [cited by Michael McLure 2001, 41] Leon Walras in 1898 writes: “In fact, the man who has needs, who divides labor and who, in view of the maxima satisfaction of his needs sells his services and buys products in quantities such that his scarcities should be reciprocal to the virtually exchangeable quantities of goods and services, homo oeconomicus, is also he who is endowed with sympathy and an aesthetic sense, with understanding and reason, with a free and conscious ill, homo ethicus; and both are man living in society, cultivating art, making science, having manners and morals and practicing industry, in brief, homo coenonicus.” 1898 Irving Fisher, reviewing a book by the Italian economist, Matteo Pantaleone in 1898, asks: “Is it necessary, for instance, to predicate of “homo oeconomicus” perfect foresight and papal infallibility (pp. 87, 240)…”

In fact, even as homo oeconomicus steps into history, who and what he is, his properties, what he is for, the destiny that lies before him, the charge he must keep, all are subject to doubt and dispute. That he is a fiction is granted all the way around: but isn’t it true of all sciences that they operate by creating useable fictions? That is, generalizations or ideals, models or laws, that are not used to explain every physical occurrence, since occurrences happen in the friction of altering circumstance.

Walras, in 1875, corresponded with the French philosopher, Renouvier, about the justification for his conception of the economic actor - this, one should note, is before the homo oeconomicus was named, but not before the sages were dimly conceiving of him. Of his prehistory we will speak later.

Renouvier wrote that “psychological, social and other conditions are of a nature to introduce a separation between the previsions of mathematical economics and the determination of economic facts.” Walras responded, defending his Elements of Pure Political Economics: “It is exclusively a work of theory, in which I believed I was able to make an abstraction of ‘psychological, social and other conditions” of which you speak as accessory perturbations. [Cited by Donald Walker in Etudes Walrrassiennes, 2004]

This ability to put aside the perturbations of society and psychology, and to abstract the unit of pleasure – or utility – to a mathematical quantity that is, at one and the same thing, the object of some agent’s direst predilection and a mere variable for any pleasure whatsoever, is what characterizes the most heroic act of the homo oeconomicus. It is not so much that he is a calculator – it is that he is a substituter.

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