Human Nature in Modern Economics

Structure, Change and Perspectives

Anna Horodecka

• Publisher: Routledge
• Year: 2022
• Print ISBN: 9781032073453
• eBook ISBN: 9781000605464
• Edition: 1
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

Human Nature in Modern Economics offers a precise definition of the concept of human nature in economics, something that is so far lacking in the theoretical and methodological literature.

This book develops tools for the analysis of human nature through the construction of the author's meta-model – based on anthropological and psychological foundations – allowing for comparisons of anthropological assumptions made in economic theories. The model demonstrates that the normative functions of human nature may affect the economic reality. The chapters argue that the concept of human nature determines our thinking about the economy and economics, including fundamental methodologies, methods and theories. Thus, the differences between various economic schools may result from the different assumptions of these schools about human nature. Those evolving views of human nature proceed to explain the development of both orthodox (mainstream) and heterodox economics.

The book marks a significant addition to the literature on the history of economic thought, heterodox economics, economic theory and economic methodology. For students, it is a supplement to standard textbooks as it explains the current state of economics, especially in its heterodox branches. It will allow scholars to discover the importance of what they assume about human nature and how it may influence their research process.

1Human nature and how to study it

DOI: 10.4324/9781003206484-2

Introduction

Since the research goal, the cognitive perspective and the understanding of terms of key importance to the study shed light on the approach to the issue of human nature, the discussion begins with their presentation (Section ‘Introduction’), followed by deliberation on the concept of human nature (Section ‘The understanding of human nature’) and crowned with the objective of this chapter – building a tool for analysing various views of human nature, referred to as the meta-concept or meta-model, allowing comparisons of concepts further in the study (Section ‘Components of human nature’).

Human nature

The cognitive perspective of the study is determined by the understanding of human nature – as a set of adopted (usually philosophical) prejudgements or (in psychological terms) as cognitive heuristics applied to human characteristics, respected by various economic schools and their theories. Those concepts of human nature may be treated as the substantive basis of studies of economic phenomena; therefore, they determine the understanding and practising of economics.

It is assumed that concepts of human nature develop through culture and in social settings. They are depicted with the use of a language, terms, symbols of the period and the social environment; they are also ascribed specific values which – in a given period, place and context – are regarded by scholars as the most important to humankind. That ‘humankind’ may either be reduced to part of the population or cover society as a whole. Changes in the view of human nature can be driven by developments in society, technology, culture, the environment as well as by their reception. Some of those concern the economic domain, thus cultural, social and technological transformations in the organisation of the production and distribution of goods and services. Changes in the understanding of the aforementioned phenomena lead to a new view of economic reality and of the economic agent. Another driving force of changes is the knowledge that society has on the determinants of human action, not only in social, cultural and technological settings but also in the economic context; for example, the knowledge about motives of actions, values, the degree of consideration for others and the environment in individual choices. Such determinants of changes in views of human nature are reflected upon in Chapter 5.

The concept of human nature functioning in an economic approach forms a ‘map’ used by an economist in tackling the meanders of the economy, with characteristics allowing a better or worse explanation of certain issues. That map tends to determine research capabilities and the perception of reality.

Thus, an economist using the homo oeconomicus model can, for example, correctly describe the law of demand and supply, the benefits of labour specialisation or international trade. But micro- or meso-economic phenomena such as knowledge transfer, market cooperation, home working, voluntary service or the existence of non-profit organisations are very difficult to explain if the homo oeconomicus model has been adopted. On the basis of the model concerned, it is similarly challenging to interpret and predict long-term imbalances. Neither is it easy to provide the economic justification of macroeconomic objectives, such as social justice and the environmental protection, because those involve, as indicated by some economists, economic costs (whereas others highlight economic benefits and the dispute remains unresolved). Justifying the existence of such goals would require a different concept of human nature: one in which the aforementioned objectives or consequences of their implementation would matter to an individual.

In general, the more schematic the map used by an economist (e.g. only allowing a single motive – utility maximisation), the easier the application of formal research methods. In contrast, the more complex it becomes, the greater the need for different methods of explaining and understanding economic reality. In that sense, certain concepts of human nature can be regarded as more complex; however, it is not an evaluative view, but solely a statement with no prejudgement as to the reality of that theoretical construct. It is only possible to say that a map is better or worse suited for serving its purpose – explaining and understanding economic reality. The adoption of varying concepts of human nature is very likely to result in explaining different sections of reality. The eyes of an economist may be on aggregates (with more schematic concepts – low-definition maps, for example homo oeconomicus) or on issues brought to their attention by a less schematic view of human nature (a higher-definition map or, for example, the concept of human nature in Sen’s theory) – happiness, social inequality, capability. It would mean that the view of human nature determines the research scope of economics.

The meta-concept

The assumption adopted is that it is possible to compare concepts of human nature; therefore, it is also possible to design a research tool for comparing – based on specified criteria – concepts of human nature: created by various economic schools, under the influence of cultural, social and political factors and in different historical circumstances. Such a tool is the meta-concept presented in this study: built with components (the dimensions and levels described in Section ‘Components of human nature’) which form a set of criteria for portraying human nature and, specifically, the economic agent. Differences between the various views of human nature boil down to dissimilarities in their respective approaches to the components in question.

Metaphorically, the meta-concept can be understood by analogy with Leonardo da Vinci’s sketch representing the ideal human body proportions which – although difficult to find in most people – play an essential role in understanding the build of the human body. An artist painting a person may use or depart from those proportions, depending on the specific purpose. However, it does not mean that the proportions must be necessarily followed. Those depend on cultural ideas or current trends.

To enable comparisons between diverse concepts and models of human nature, the meta-concept was built with reference to the present-day stock of knowledge, mostly in anthropology – the bridge bringing together knowledge on human beings developed by particular disciplines, with a philosophical perspective. It will allow not only the analysis and comparison of strictly economic concepts of human nature but also the observation of parallel views created by other social sciences and philosophical theories. Therefore, the meta-concept will serve to fulfil the research task and to compare concepts of human nature functioning in modern economics – not only orthodox but primarily heterodox economics – thus allowing to determine how they are reflected in the understanding of the discipline of science concerned. In particular, heterodox economics, having formed as criticism of the neoclassical model of human nature (specifically, of its textbook treatment), despite the many differences between its various branches, is characterised by a more complex human model, including aspects disregarded in the neoclassical approach (e.g. dependence on the social setting and the natural environment).

Orthodoxy and heterodoxy

Studying non-neoclassical concepts of human nature in modern economics requires travelling the economic ‘landscape’ with the main river bed – orthodoxy – and a number of its tributaries – heterodoxy. When entering the territories of the history of economic thought, the researcher cannot but face the necessity, even if as a matter of convention, to classify the diverse scenery. The sole purpose of the distinction adopted is to facilitate the understanding of further argumentation, to capture certain trends, ideas; it is not, in itself, the subject matter of the monograph as this division, considering the vast body of the literature, controversies and numerous concepts thereof, would deserve a book of its own. The task is made no easier by the fact that even economic thought experts tend to be reluctant to declare how they divide the existing economic schools and economists. Arguably, one reason is that any attempt at classification should be accompanied by clarifying comments: ‘but’, ‘excluding that and that period’ or ‘that and that work of the economist in question’. It reveals an important truth about the nature of the division – it is purely a matter of convention as the dividing line between orthodoxy and heterodoxy is along the economist’s ‘heart and pen’, with a great many examples.

One metaphor capturing the present situation in economics is the breakdown into orthodoxy and heterodoxy in another, much older, discipline – theology – and in religion. In the 16th century, when Luther, Calvin and Zwingli began to preach new ideas for understanding the truths of faith – primarily the so-called theory of justification or the doctrine of purgatory – those were regarded by theologians of the (Roman) Catholic Church as heresies, or theories inconsistent with the teachings of the Church, erroneous. Heresies or, precisely, heterodoxy. But one fundamental process, dating back to the Diet of Augsburg in 1530 and the public reading of the so-called Augsburg Confession – the principles of the Reformation, the foundation for subsequent churches – radically changed Luther’s situation. Before that date, Luther was a mere heretic; afterwards, although he remained a heretic in the eyes of the Church for centuries, he already enjoyed institutional and social support in the fast-growing and ever-stronger Protestant Church.

Analogically, the negation of heterodox approaches by neoclassical economics, particularly after World War II, during the development of the post-war consensus referred to by Keizer [2017] (despite the agony of neoclassical economics, using Colander’s metaphor of the ‘death’ of neoclassical economics [2000]), inspired representatives of heterodox economics to seek institutional support. Such an ‘Augsburg Confession’ for heterodox economists, struggling against the tide in their endeavours to obtain legitimisation, access to grants, the publication of research results and to overcome restrictions on introducing that economic approach to the curriculum [Heise, Thieme, 2016].

The breakthrough for heterodoxy as a whole could be the creation of the Association for Heterodox Economics (founded by Lee), the establishment and development of its own base: funds, journals, associations.

Before the beginning of the institutionalisation process, heterodoxy might be likened to...

Table of contents

• Cover
• Half Title
• Series
• Title
• Copyright
• Contents
• List of figures
• List of tables
• Introduction: Human nature and economics
• 1 Human nature and how to study it
• 2 Human nature in understanding and practising economics
• 3 Homo oeconomicus as the starting point for alternative concepts of human nature in heterodox economics
• 4 Alternative concepts of human nature in heterodox economics
• 5 Determinants of changes in the concept of human nature in economics
• 6 Perspectives of economics in the light of changing concepts of human nature
• Conclusion: Human nature in modern economics
• Index