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Sunday, 6 March 2011

The purely economic man is indeed close to being a social moron

Brilliant though the title is, it is not, alas, original, as most will realize. No, this gem is from A.K. Sen, the famous Indian thinker. And most people would agree with the sentiment - no-one makes their decisions based on a quick cost-benefit analysis. So you dont go for breakfast to the diner that's the best economic decision for you, you go to the one you prefer, sometimes justifying afterwards that "They have a great deal on pancakes here". If you were economically rational, you would probably never do anything voluntarily, not engage in sports or activities (that could actually damage your economic potential).

Even the big decisions of your life - buying a car, a house, what sort of job you wish to do - none of these are economically rational decisions. I would argue that some people are a bit more rational than others, but we decide on what house to buy, what car to buy and what job to do on various, and varying parameters of desire, prejudice, fun, belief and status. Its an old discussion, but most academics I know would be three to four times better off if they had pursued a career in private business. To try to answer why they do not do so, the mistake that is made most frequently is to try and generalise the answer: "They dont because......"

What does worry me however, is that although economic theorists of the Chicago School are utterly wrong, they have simultaneously shaped our society, an this may, ironically, lead to them being right. Despite that there is no such thing as "human nature" the influence of culture is massive, and these guys believe in human nature. Most of our Western culture for the last thirty years, has had at its core the bizarre philosophies of these economic rationalists. So a view of Darwinism that it somehow also applies to human societies (a version of Whig history) and view of individuals as "competitive" and primarily economic, and a preposterous positioning of economics as a science with theories to explain all of this, has shaped our culture. People now talk about the 'value' of an education, almost purely economically. RHB aksed me tentatively last week, how I thought it would be received if she gave a talk to prospective University students and mentioned that the advantages of University were not just that you could get a better job at the end.

People talk about social capital. I know that this notion is not as simple as common usage has made it seem, but at the heart of social capital is an attempt to discover the "value" inherent in relationahips. Ironically, it was a Marxist sociologist who popularised social capital, trying to understand the strengths that exist in communities apart from economic ties or relationships of blood or obligation, trying to define the value of unseen things like friendship, community mindedness, philanthropy, altruism. There are two problems with this - first of all Marxism, and secondly sociology: Marxism because of the predominance of economic determinism in its ranks, and sociology because as a discipline it does'nt think about what its doing sometimes.

In the case of social capital, sociology "gave the ball away" (to use a footballing term), and has provided neo-liberal Governments with a concept that they have decided is measurable in order to inform and enforce their policies. So in the UK, annual surveys ask people about their perceptions of racism, crime, neighbourly behaviours, altruism and friendliness. This all gets poured into a big computing machine and the results tell us how much "social capital" there is in a neighbourhood. The results are interesting, if only that they tell us more about statistics than about people.


JoeyMac said...

ok. finally. I get to disagree with one of your posts. :) First, the economists just borrowed the idea from mathmaticians, (Game theory for the most part). Second, these models are just that, models. Reductionist attempts to understand something complex by making it simpler. Psychologists, anthropologists, meteorologists all do it. Governments and media (and yes some bad scientists) may have hyped these up to be Representative of 'truth', but most recognize that they are just a tool in understanding the complexities of a much crazier system.
I also really enjoy Anna's talks about social capitol since it gets at a complaint that a lot of people throw at these game theory models - that they don't deal with the 'intangibles' of a decision like you mentioned. Very clever, these anthropologists, even if we subvert their intentions. Well, they do sort of deserve it for trying to use relativity and string theory to describe Brazilian tribes.
So, don't blame the methodology, for all of its idiotic uses. The government of course understands neither game theory nor social capitol. But if social capitol exists, they certainly want to find a way to tax it.

MJN said...

JUst wrote a brilliant comment replying. Then watched Dirk Kuyt spank the third goal home against Man U. Am therefore drunk with happiness.

I will return to this later...........:)

JoeyMac said...

I saw that. I've always liked Kuyt. :)

MJN said...

I will get back to this discussion - fundamentally, I think we agree - my position is, very briefly, that there's limits to reductionism and this is recognised by 'good' anthropologists and social scientists, although there is disagreement within and between disciplines where those limits are, they are based, for the most part, on decent theoretical understanding of the arguments. Politicians, however, dont understand the arguments at all, but often latch on to 'pop science' interpretations that support their prejudices. THis is an area I want to explore further, and was about to. However, a number of assignment deadlines and crises have emerged (a bit like grounded theory) so I cant go into this further right now due to time. I will the meantime, my life is reduced to watching the odd match and writing, writing, writing.........