Socializing Homo Economicus

We have a spectrum of spirits. Why do economists fixate on only one?

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Note: this is adapted from my Econ Life 101 series. Paying subscribers can access the audio edition here

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There’s a long history of people arguing about ‘human nature’. Are we selfish or altruistic? Are we good or evil? Are we individual or communal? Are we X or Y?

One common feature of these debates is that the disagreeing parties agree that we are one thing, but fight over what that one thing is. In fact, entire ideologies get built upon the imagined one thing.

For example, we feel love towards others sometimes, and presenting this fraction of us as the whole of us is a hallmark of ‘hippie’ culture. The story told within that culture might be like this: the universe is founded on love, but humans have lost their way and become separated from their true selves, torn apart by illusory differences, fragmented from oneness. To repair this situation, that culture might present an alternative vision of life that involves building eco-villages, communes, small permaculture cooperatives, or futuristic ‘solarpunk’ eco-utopias.

On the other hand, we can be angry and violent towards each other, and if you foreground that you get to far-right culture, with its ‘dominate or be dominated’ mentality. The story here might be: the world is a Darwinian struggle between races and civilisations, and you must protect your family while crushing threats. Somebody with this world-view might gravitate towards nationalism and protectionism in an economy - admiring a ‘strong man’ leader like Putin, Trump or Viktor Orbán - but could simultaneously lean towards ‘every man for himself’ libertarian visions of the economy.

We also have a communal streak, and presenting this as the whole of us is the centrepiece of 20th century Communist regimes. Within this ideology, humans are fundamentally cooperative and competition is just an aberration that can be solved by getting us together to collectively own everything, while being centrally coordinated. The old Soviet poster below represents this by showing each person with a specific role in society - agriculture, manufacturing, military etc. - working shoulder-to-shoulder for the common good. Notice the map in the background showing the collective output of the country, rather than revering individual gain.

These political-economic visions share a common feature: they present one part of us as the whole, and then try to lock it in through a political program. A very similar phenomenon can be observed with mainstream economics, and its political corollary: free-market neoliberalism.

The Political Project of Homo Economicus

There’s a strong historic tendency for big philosophers to seek universal descriptions of reality, in which one thing applies everywhere without having to co-exist simultaneously with other things that may contradict it.

In the realm of economics, this either-or thinking has often centred on whether or not we are ‘Homo Economicus’. Homo Economicus is a term given to a particular view of human nature that was popularized by economists from the 18th century onwards. They noticed that we have an accumulative and competitive streak, and turned this into a world-view in which all humans are solo ‘agents’ out for themselves. We are presented as ‘rational’ and narrowly self-interested, always wanting to maximize - to accumulate more - as well as to optimize and seek efficiency to reduce loss. In the Homo Economicus model, we are calculating machines weighing up costs and benefits, pros and cons, to our individual selves.

The figure of Homo Economicus really irritates a range of critical thinkers. Not only do they see it as inaccurate, but also, when economists describe people as being narrowly self-interested, it can actually encourage people to be that way, and can be used as a justification for exploitative behaviour. Put differently, there’s a slippage between the descriptive act of making a claim about ‘how we are’ with the prescriptive act of saying ‘how we should be’.

For example, one of the most dominant political-economic programs since the 1980s has been the promotion of neoliberalism, forged out of an alliance of politicians and mainstream ‘neoclassical’ economists (along with a sprinkling of other variants of free market economics). It’s synonymous with the rise of Margaret Thatcher, Ronald Reagan, corporations, stock-market trading and 80s ‘yuppie’ culture, as exemplified in the Wolf of Wall Street image below.

At its most cartoonish, this culture promotes the idea that ‘greed is good’, which is an amplified version of ideas found in mainstream economics. This segueing from economic description to prescription was very apparent to me when I worked in the financial sector. For example, when I was training to be a broker in 2008, the classic finance film Wall Street (1987) was held up as a kind of heroic tale, rather than a cautionary one. I literally watched traders, who a few years earlier had been mild-mannered science students, acting out a kind of cliche of Gordon Gekko, trying to mimic the stereotype of the swaggering financier.

People like Jordan Belfort - who wrote the Wolf of Wall Street - literally make it their career to sell that image. The literary genre of pop finance was built upon the mystique that surrounds the ‘bad boy’ finance bro, who supposedly uses their intellectual brilliance or roguish ingenuity to fuck over their opponents in ‘the markets’. This mythology is still heavily used by brokerage firms to try lure hapless retail day-traders into speculating in a market dominated by mega banks and investment funds, as exemplified by this marketing video from a firm that tries to sell trader training courses:

In the financial sector, the Homo Economicus vision is often fused with those slightly fashy visions of domination - that idea that we live in a ‘dog eats dog’ world where you’re in an endless struggle with others - but it’s also very typical for economists to explain cooperation in terms of self-interest (‘we cooperate for our personal gain’). In this sense, Homo Economicus is a surprisingly adaptable figure, and economists have historically tried to use it to explain every human trait from love to war.

For example, I’ve met economists who’ve tried to convince me that young children ‘trade’ with each other on the playground, and that mothers are actually expecting a future ‘investment return’ by breastfeeding their child now. I remember meeting an economist who insisted that the decision to cull large numbers of African elephants can only be based on a calculation of the profit derived from leaving them either dead or alive.

Not all economists are like this, but there’s a distinct tendency in the discipline to seek out evidence of calculated exchange in every act (or, in the case of the elephants, to promote the idea that it should be like that). You can certainly find examples of people doing calculated exchange in the most ancient and modern of human societies alike, but economists are notorious for cherry-picking these examples to ‘prove’ that exchange is the most ‘natural’ of our tendencies. It’s like the discipline puts goggles onto its students, which amplify awareness of anything that might resemble Homo Economicus, while screening out anything that doesn’t.

This bias towards believing that our every act is - at some subconscious level - a cold ‘economic’ calculation, means the Economics vision can start to colonize other disciplines. Certainly, the idea that ‘everything is exchange’ seeped into many other fields during the 20th century, from political theory to sociology, law and management studies. Politically, this becomes the foundation of ‘free market’ world-views, in which our imagined natural drive to personally gain from exchange not only needs to be protected from interference, but also needs to be encouraged, because letting it run free supposedly leads to spontaneous and optimal order, as well as a consumer utopia.

‘Neoliberalism’ was, and is, the political project that attempts to hard-code this vision into political institutions, so that they work to promote this idea. For example, many members of the recently ousted Tory government in the UK were ideologically committed to this worldview, viewing the state as nothing more than a vehicle to empower capitalists. I’ve hung out with a lot of Tory aristocrats in the finance sector, and this outlook is considered ‘common sense’ within these peer groups.

Needless to say, critics of the Homo Economicus model (including those from schools of ‘heterodox economics’ that disagree with mainstream economics) sometimes try to disprove Homo Economicus by showing that we are often ‘irrational’, communal, altruistic, or non-maximizing. This has gradually prodded some parts of the economics discipline towards adding various bolt-on disclaimers and modifications to their model (e.g. Daniel Kahneman’s work in behavioural economics makes the agents a bit less ‘rational’), but the ghost of Homo Economicus still lurks in the background as the default against which the modifications get added.

Deep down, many economists want to believe that we are one thing, and the act of tinkering with the model is an attempt to hone in on exactly what that one thing is. What they seem scared of is the obvious point that we could have more than one nature. In fact, we can simply bypass tired debates about fundamental human nature by accepting that we are multifaceted.

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Homo Economicus, meet the rest of your being

Just like a beam of light contains multiple spectral wavelengths that can be seen by passing it through a prism, so Homo Sapiens contains multiple ‘human natures’, of which Homo Economicus is but one.

There’s no perfect way to split out the different parts of ourselves that might simultaneously reside in us, but the world becomes a lot more alive when you open yourself to the possibility that you are not one thing. Let’s go through some possible ‘natures’ within us. This is an imperfect and subjective list, and is by no means exhaustive or definitive. Think of it as a creative spur to help us think about what we might miss when we opt to use singular and constrained views of ‘human nature’.

• Homo Economicus: the calculating part of ourselves that seeks maximization, accumulation, efficiency, and optimization

• Homo Adventurous: the questing part of ourselves that seeks adventure and exhilaration, regardless of how efficient or optimized it is

• Homo Communis: That part of ourselves that seeks connection with others, that empathizes and wants to be empathized with, that wants to love and be loved

• Homo Cogitans: That thinking part of ourselves that wants to reflect on the world, and to contain the chaos within it into theories and philosophies that can make it seem less bewildering

• Homo Absurdum: that part of ourselves that enjoys being silly, playing jokes and doing weird stuff that makes little ‘rational’ sense, like making pig faces. It’s that part of us that senses our existence is an unlikely cosmic joke

• Homo Reverens: that serious part of ourselves that senses everything is deeply meaningful and must be approached with reverence, rather than being laughed at

• Homo Meditari: the part of ourselves that wants to think of nothing, and to be free from unnecessary stuff. It’s that part of us that wants to fill itself with emptiness

• Homo Ecologicus: the part of ourselves that feels intuitively connected to the earth, trees and rivers, and that loves the smell of fire, or rain on soil. It feels awe when looking at the night sky, and fascination at other creatures

• Homo Expressio: That part of us that starts wanting to dance when we hear a bass drum, and that feels a desire to sing, and creatively express

• Homo Shamanicus: the mystical part of us that desires to connect to unnamed things and feelings beyond the rational or verbal realm. It may sense that not everything can be explained, and that some things must simply be felt

• Homo Eroticus: the part of us that lives in the tantalizing intersection between you and others. It plays with the push and pull of losing yourself in another and separating again

• Homo Fusione: the part of us that desires to lose ourselves in a group, to lose individuality and identity. It’s that feeling when you want to cheer when everyone else cheers, and that elation at being part of a big movement

• Homo Dominandi: that part of ourselves that seeks to project an aura of control, and which is scared of anything or anyone that threatens that illusion of control, and so seeks to subdue them. It’s that part of us that wants power over others

• Homo Protectoris: the part of us that seeks to protect others from dominators and other dangers

• Homo Activismus: the part of us that senses injustice, and wants to rectify it

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What ‘human nature’ would you add to the list above? Leave a comment!

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If you set out to only see one thing, you are far more likely to find one thing, but when you open yourself to the possibility of multiple simultaneous things, you are more likely to find evidence of this in the world, and in yourself. Look at each of the people in the picture below. Each has multiple natures woven into the thread of their being. Each can also be taught, or pushed through circumstance, to identify more with one strand than another, and to attach their identity to it.

Much of the historical critique of Homo Economicus emerges from the angst experienced by people when the Economics discipline tries to say ‘you are narrowly self-interested and calculating’, rather than saying ‘one part of you is narrowly self-interested and calculating’. Once we drop the either-or thinking, and take on the ‘both-and’ thinking, we can become more accepting of our inner Homo Economicus.

In fact, much like we teach kids to socialize with others, we can teach our inner Homo Economicus to play with the other parts of us. This also becomes a useful frame for picturing human behaviour more generally, because we can imagine the different parts of ourselves routing through each other, enlisting each other, or forming alliances and fusions. For example, Homo Economicus has a historical tendency to be connected into Homo Dominandi (ever heard of the association between money and power?), but can also dock into other archetypes. You can take any two of the natures from the list above, and see how they play together.

In the final analysis this is a thought experiment, because there isn’t literally a way to ‘split’ the different parts of ourselves. To return to our image of the prism, a white light beam is the whole spectrum of colours at once. Similarly, we are our whole spectrum of natures at once. This, though, opens up a powerful question. Does our current economic system amplify, or favour, particular parts of the ‘spectrum’ in you? Which parts of yourself are pushed into the background when you approach a modern economy, and which are brought to the fore? Does our economy ‘filter’ out certain parts of the spectrum of our natures? Does it ‘colour’ us?

My intuition is to answer yes. The vast-scale, accelerating, expanding vortex of corporate capitalism pushes us towards heavily emphasizing certain narrow parts of our being, while choking and suppressing others. This narrow amplification is presented as progress. It’s presented as the essence of humanity. In reality, though, it is but a fraction of what we could be.