Homo Economicus and the fail of Sociology

HOMO-ECONOMICUS.jpgWhat if I said that there existed a person, that had no race, no gender, was perfectly rational, perfectly efficient, and has all necessary information to function & thrive in this world? This person also was impervious to society, family, social forces & institutions, and thus had no socioeconomic status. And what if I told you that we were all created in its image? Such a person does actually exist! It’s name (I have to use “it” because it has no gender) is Homo Economicus. It is the basis of all economic thought. All “marginalism” in economic policy is based on the perfectly rational “man” as an individual force.

We all know that people actually do have social locations: they have a race, a gender, a family, that are embedded in institutions. This is what Sociology looks at. Where things tend to fly off the rails in the inequality argument though is where Sociology has one set of “rules” while economics believes in an entirely different set. It’s not that inequality is the result of institutional arrangements in economic life, it’s that institutional arrangements are specifically set up for inequality – because in the eyes of Homo Economicus, everyone really is equal. If institutional arrangements are made based on the assumption that everyone is equal when they are (in fact) not, then inequality is embedded in the arrangement itself.

Instead of economic modeling that accounts for race, gender, and other social locations, economics, through the “spirit” of Homo Economicus simply doesn’t acknowledge the existence of such things. If there is no race, then there can be no discrimination. Since economic modeling is premised on the idea that it describes the way society works, then all people are made in the image of Homo Economicus. And if what C. Wright Mills said was true, that the political is beholden to the economic, then we can now start to see why politicians deny that police shoot black people, ghettos that are predetermined, or unemployment that isn’t the fault of the unemployed. We can understand austerity in Greece, and the re-rise of Nationalism globally. If we want to stretch this a bit further, we can even start to understand why so many politicians (and economists) deny climate change. Homo Economicus would never do something so inefficient as destroy the planet.

Homo Economicus was born after Marx, and from “abstraction”: the desire to generalize, and make things simple for a math equation to describe human behavior. It may have its roots in Adam Smith, but Homo Economicus became a “force of nature” after Marx. This started during the “Marginal Revolution” of the 19th Century, mainly in France – where Homo Economicus was born. It can be (and to some degree, has been) argued that the Marginal Revolution, and the birth of Homo Economicus was a direct response to the Socialist movements spreading across Europe at the time. Homo Economicus manifests itself in such economic discourses as “market forces”, “contagion”, and “natural rate of unemployment.”

There’s no question that western society (especially under neoliberalism) is organized by economic rule. In fact, that’s the point of Sociology – to study how societies are organized. However, it’s stunning how Sociology insists on using the same set of rules to study something that playing by a completely different set. In fact, when this type of Sociology is practiced elsewhere, it’s typically called “ethnocentric.” Studying one culture and asking: “why don’t you do things our way?” without ever asking what is “your way” is the epitome of ethnocentrism.

There is next to nothing in the Sociology (and scant in Political Science) literature about how Homo Economicus came to be: next to nothing on the Marginal Revolution, nothing on the culture (or lack thereof) of Homo Economicus, of the ideology of “free markets” under the rule of Homo Economicus, or on the ideology of Homo Economicus. There is nothing in the literature on the very real organization of society based on a fictional character.

Sociology has spent decades using Marx to try and convince economists that Homo Economicus doesn’t exist while at the same time, leaving Homo Economicus to the economists. The result has been a mystification of the economic by Sociology when most of the founders of Sociology were in fact, studying the economy. The result is that today, when Sociologists study the economic realm, they show signs of trouble understanding things like marginal utility, or the indifference curve. Such ideas end up in the garbage bin of Sociology, with Sociology (rightly) saying: “but this isn’t how the world works.” Sociology is studying the economic reflexively – with its own set of rules, when Homo Economicus doesn’t play by those rules. And while Sociologists may believe that the idea of “marginalism” may belong in the garbage bin, the fact is that most political and economic policy is based on it. In other words, a lot of babies get thrown out with the bath water.

If our society, through its political and economic institutions is going to be organized on the premise that all of society emulates Homo Economicus; that people are acting in their “rational self interest” devoid of race, gender, culture, family or society, then it would seem like a necessary first step for Sociology to actually look at Homo Economicus from outside of its own viewpoint. It’s not that intersectionality doesn’t exist; it’s not that social locations don’t exist; it’s that in order to understand how neoliberalism, economics, and political structures exist in western society, then social locations and social intersections need to be set aside long enough to effectively study Homo Economicus on its own terms. Sociologists need to know the culture and rules that Homo Economicus lives by, largely by learning and understanding economic subject matter. Durkheim did this by “embedding” himself with the Marginal thinkers during the Marginal Revolution before writing his magnum opus (The Division of Labour in Society). Otherwise, Keynes predicted, our capitalist society may fall apart piece by piece, with Sociology never understanding why.

This entry was posted in Economic Theory, Economics, Political Economy, Sociological Theory, Sociology. Bookmark the permalink.

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