Academic journal article Review of Social Economy

Cardinal Issues in the Future of Social Economics: A Humanistic View

Academic journal article Review of Social Economy

Cardinal Issues in the Future of Social Economics: A Humanistic View

Article excerpt

Social economics must be seeking its unity in the forces of human nature. That is no easy task. Elsewhere (Lutz, 1990, 407-42), I have indicated that our Association can be characterized as a rather heterogeneous group with several divergent orientations, but with a common core: a strong conviction that economic thinking and discourse cannot be carried out in an ethical vacuum, and that it is this explicit ethical foundation which is so distinctive for social economics as an alternative to ordinary economics. The challenge before us, therefore, is essentially twofold: first, to develop and articulate this core further, and second, to indicate how such a foundation can generate meaningful guidance for policy makers. In what follows, I will attempt to indicate how thi double challenge might apply to the humanistic tradition in social economics, a tradition that dates back 180 years to J. C. L. Simonde de Sismondi.

As its name implies, the humanistic perspective centers upon the human person and human welfare. It does so explicitly and candidly and without apologies.(1) As does conventional economics, we stress human agency and autonomy and like to make generalizations supposedly valid for all humanity.(2) Yet, unlike mainstream economics, we are not shackled by positive scientism and a nominalis epistemology, and we do operate with a greatly enriched view of human nature that takes morality seriously and that is consistent with human dignity. Therefore, we see it as our mission to expose error in the mainstream and to offer a general framework with which to rebuild economics, including the theory of economic policy, on sounder ground.

In pursuing the humanistic research program we confront several key issues, fou of which will be briefly discussed here. They pertain to (1) economic rationality, (2) ecological sustainability, (3) the doctrine of international free trade, and (4) the problem of absentee ownership. All of the four issues selected for discussion are to some extent interrelated, and two of them (i.e., trade, ecology) are likely to be hot topics on the political agenda of the twenty-first century. These four topics have been chosen because much interesting work has already been done in each one of them, work that will hopefully inspire newer generations of social economists to carry on.

The Issue of Human Nature and Rationality

The issue of human nature is and has been absolutely central to social economics. Everybody agrees that the nineteenth century atomistic abstraction labeled homo economicus was a rather poor foundation for a meaningful economics A social economic critique became more tricky after Robbins, Hicks, Allen and Samuelson managed to move the mainstream towards a new abstraction: modern Rational Economic Man (REM) in his axiomatic garb. Now it needs to be demonstrated that the birth of REM does not significantly remedy the basic inadequacies of the earlier homunculus. This, in a nutshell, constitutes the first cardinal challenge before us.

Yet, our task is rendered especially difficult because so many economists knowingly or unknowingly overestimate the human potential of REM. Virtually all texts in microeconomics start out by claiming that, contrary to popular criticism, modern economics need not and does not assume self-interested behavior only. We now know that such claims are mere rhetoric. The very same books, when it comes to the chapters of public choice, will inform the student that it is rational to free-ride. Similarly, all of general equilibrium economics, game theory, and all of the "new" welfare economics, assumes--and ha to assume--self-interested behavior (see Sen, 1982).

Here is the basic question: To the extent that we believe that altruism and morality do matter and that they cannot be simply reduced to self-interested maximization within a framework of more complex utility functions, how can we express this? How can we show that REM fails as a model of the person, that it somehow ends up ruling the distinctively human elements "out of bounds" of economic thinking and discourse, and thereby also ends up as the driving force in the further dehumanizing of our socio-economic institutions? …

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