WHAT IS IT THAT MAKES the human act distinctive? For the economist, it is our capacity to deliberate. "A spider," Marx writes, "conducts operations that resemble those of a weaver, and a bee puts to shame many an architect in the construction of her cells. But what distinguishes the worst architect from the best of bees is this, that the architect raises his structure in imagination before he erects it in reality" (Marx  1974: 174). It is this that makes his or her act "exclusively human" (Marx  1974: 174). Though we suspect that neither author would be flattered by the comparison, it is striking how closely Marx's characterization of the human act here anticipates the basis of Ludwig von Mises's painstaking attempt at recreating a viable economic theory from first principles (see, in particular, Mises 1996: chapter 1, section 2, paras. 1-3 incl.). Actually, we should say first principle, he begins his treatise: "Human action is purposeful behavior" (1996: 174). (1)
Economics does not claim purposive rationality to be the only characteristic of the human act. It also recognizes the human being as a moral creature--a creature who distinguishes right from wrong. Indeed, another way of understanding the idea of purposeful behavior is to say that we act on that distinction. For the economist, though, the point is that our morality has no economic significance. Economics studies the process whereby we try to realize our values, not those values as such. Moral positions (understood broadly) may motivate our behavior but do not capacitate or enable it. And since economics studies how we are capacitated as purposeful actors--how we establish means that (we hope) will further our (admittedly moral) ends--a consideration of the moral aspect of human behavior has no place in a distinctively economic inquiry.
On this view, then, Homo economicus--economic man--is a misnomer. For the Homo economicus that the modern neoclassical theorist has in mind is not a form or type of human being but rather an abstraction from it: it is human being considered in regard to its economic aspect or capacity. Those who criticize economics for assuming an actor with unduly base motives are therefore wide of the mark. The motives of Homo economicus cannot be either base or noble for the simple reason that, while motives may bring capacities into play, capacities as such do not have motives. The actions of Homo economicus can no more be judged immoral than can a Stradivarius be blamed for making a bad tune. But two wrongs do not make a right. The conventional economic view--that the moral aspect of human behavior has no place in economic analysis--does not follow from the fact that it claims to attend to capacity rather than motive. If, as we will want to argue below, our capacity for somehow co-coordinating our diverse ends is itself an essentially moral-ethical capacity, then conventional economic theory is mistaken: for in that case, our status as moral beings, notwithstanding the means-ends dichotomy, should be a matter of concern to the economist.
The nature of the relation between economic activity and moral-ethical behavior remains a live issue, both within economics itself (see, for example, Akerlof and Kranton 2000) and in related disciplines. Sociology, especially, has taken an interest in the possibility that the discipline of economics itself has played a formative role in the behavior that it purports to study (see Mackenzie and Millo 2003). In general, though, much of the discussion lacks clarity because of a failure to agree on the characteristics of the actor at the center of economic analysis. In the literature, Homo economicus ranges from the pure economic agency of high neoclassical theory to the crude formulations of the undergraduate textbook, in which the economic actor is represented as a fully fledged moral subject with (typically base) motives of its own. As we argue below, criticisms of orthodox economic theory that rest on the latter characterization badly miss the point: the neoclassicist makes no assumptions about the motives of the economic agent, other than that it is somehow motivated. …