It is strongly suggested to view the Documentary "The Trap" by Ian Curtis as complementary material to this blog.
Next we will be looking at the 'role' which has been assigned to the human within the economic system.
This is because all models within economics are based upon certain assumptions about human beings and how they operate -- and thus how humans will react to particular situations, based upon this assumption. It is thus important to understand this point as this is one of the re-occurring patterns within economics on which all graphs and models are based on in terms of the various interactions and dynamics at play within the field of economics.
This will become clearer within the blogs to follow.
Within current economics, the Human is viewed from the starting point of being a rational being. This rationality is defined in terms of survival and self-interest -- where it is deemed 'rational' for a human being to act and behave in a way which will always be directed towards achieving maximum benefit for self, within the context of continued survival and self-gratification (as we've already seen that 'wants' are prioritized over 'needs' -- and thus satisfaction/personal gratification plays a role all throughout economics -- see Day 40: What is Economics for context) . Rationality is thus not defined within the context of logic or common sense -- but the ability/tendency to behave and think in an egotistical, self-centered and selfish manner. In terms of economics, this gets translated into human beings always acting and behaving in a way which they believe will maximize profit/wealth accumulation or at least minimize costs / loss. Within this context, the human is often referred to as a 'Homo Economicus'.
[Now imagine, I had been reading many texts and readings on the subject where authors kept on referring to human beings making 'rational decisions' -- where to me the decisions described by the author weren't rational at all -- and where I only later found out that with 'rational' they meant 'self-interested'. So you see, economists don't just do magic tricks with numbers -- they also do magic with words!]
The best way to introduce this point within the context of economics may be to look at the famous quote by Adam Smith (18th Century Scottish economists -- often dubbed the "father of capitalism"), from his book The Wealth of Nations:
What is also interesting to take note of, is that the particular observation of the human as being essentially self-interested and not caring about anything or anyone else in this world (which is quite accurate, this is what we've accepted and allowed ourselves to become and live out through the current economic system as a reflection/extension of our own nature) -- has never been questioned. Instead of questioning this nature and asking ourselves whether this is something we really want to live by, we took this point for granted and went ahead and built our entire society/economic system upon this point. Where we don't go: "Hmm, us Humans, we are really self-centered egotistical beings who only care about ourselves -- maybe we should do something about this" -- but instead go "Hmm, us Humans, we are really self-centered egotistical beings who only care about ourselves, let's create a society/economic system which uses / harnesses this point to get people to move and create the system in such a way that they are rewarded for self-interested behaviour!"
And so we've created an economic system which is fueled by, and appeals to self-interest to get things done -- instead of human beings re-evaluating their very nature as self-interested beings and committing themselves to changing/transforming themselves as this nature so we may act and behave in a way which is considerate as what is Best for All and be responsible living beings on this planet!
This is because all models within economics are based upon certain assumptions about human beings and how they operate -- and thus how humans will react to particular situations, based upon this assumption. It is thus important to understand this point as this is one of the re-occurring patterns within economics on which all graphs and models are based on in terms of the various interactions and dynamics at play within the field of economics.
This will become clearer within the blogs to follow.
Within current economics, the Human is viewed from the starting point of being a rational being. This rationality is defined in terms of survival and self-interest -- where it is deemed 'rational' for a human being to act and behave in a way which will always be directed towards achieving maximum benefit for self, within the context of continued survival and self-gratification (as we've already seen that 'wants' are prioritized over 'needs' -- and thus satisfaction/personal gratification plays a role all throughout economics -- see Day 40: What is Economics for context) . Rationality is thus not defined within the context of logic or common sense -- but the ability/tendency to behave and think in an egotistical, self-centered and selfish manner. In terms of economics, this gets translated into human beings always acting and behaving in a way which they believe will maximize profit/wealth accumulation or at least minimize costs / loss. Within this context, the human is often referred to as a 'Homo Economicus'.
[Now imagine, I had been reading many texts and readings on the subject where authors kept on referring to human beings making 'rational decisions' -- where to me the decisions described by the author weren't rational at all -- and where I only later found out that with 'rational' they meant 'self-interested'. So you see, economists don't just do magic tricks with numbers -- they also do magic with words!]
The best way to introduce this point within the context of economics may be to look at the famous quote by Adam Smith (18th Century Scottish economists -- often dubbed the "father of capitalism"), from his book The Wealth of Nations:
It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantagesThis quote clearly shows how humans are viewed as essentially self-interested beings -- but where this selfishiness indirectly leads to the 'greater good' of society. This 'movement' from a person being driven by self-interest only and then indirectly through only being considered with their own well-being, supporting society as a whole to be better off -- is often mentioned within the concept of the "Invisible Hand" where it is as though an 'invisible hand' moves everyone in a way that's "best for all".
By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it. - The Wealth of NationsWhat's not being considered here, is that people following their own self-interest does not in fact lead to the 'betterment' of society as a whole -- as the current status within the world clearly demonstrates, where there are more people worse off than there are people well off. This is because no-one has ever been equal or been supported to be within an equal position -- and where those with particular advantages such as skill, access to resources, location, connections etc. -- are able to move more effectively within the system and will 'trample' everyone else within their pursuit of happiness, as a game of survival of the fittest.
What is also interesting to take note of, is that the particular observation of the human as being essentially self-interested and not caring about anything or anyone else in this world (which is quite accurate, this is what we've accepted and allowed ourselves to become and live out through the current economic system as a reflection/extension of our own nature) -- has never been questioned. Instead of questioning this nature and asking ourselves whether this is something we really want to live by, we took this point for granted and went ahead and built our entire society/economic system upon this point. Where we don't go: "Hmm, us Humans, we are really self-centered egotistical beings who only care about ourselves -- maybe we should do something about this" -- but instead go "Hmm, us Humans, we are really self-centered egotistical beings who only care about ourselves, let's create a society/economic system which uses / harnesses this point to get people to move and create the system in such a way that they are rewarded for self-interested behaviour!"
And so we've created an economic system which is fueled by, and appeals to self-interest to get things done -- instead of human beings re-evaluating their very nature as self-interested beings and committing themselves to changing/transforming themselves as this nature so we may act and behave in a way which is considerate as what is Best for All and be responsible living beings on this planet!
Cool!
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