Wicksteed on “Economic Man”

3 June 2006 at 8:50 am 4 comments

| Peter Klein |

As an economist, I'm continually frustrated by complaints from my fellow social scientists that economics falsely conceives human beings as narrow, selfish, greedy materialists — a canard refuted in even the most elementary textbooks. Economics is a theory of preference and action; it assumes nothing whatsoever about the content of people's preferences, whether they be noble or base, pure or vile, or whatever.

The proper conception of economics as a general theory of action has been around for, I don't know, about a hundred years, at least. I recently came across this nice statement from Lionel Robbins, introducing the 1933 edition of Philip Wicksteed's Common Sense of Political Economy (1910).

Before Wicksteed wrote, it was still possible for intelligent men to give countenance to the belief that the whole structure of Economics depends upon the assumption of a world of economic men, each actuated by egocentric or hedonistic motives. For anyone who has read the Common Sense, the expression of such a view is no longer consistent with intellectual honesty. Wicksteed shattered this misconception once and for all. . . .

[Modern value theory has] thrown the whole corpus of economic science into an entirely new light — a light in which Economics is seen to be a discussion not of the nature of certain kinds of behavior arbitrarily separated off from all others, but of a certain aspect of behavior viewed as a whole. . . . [W]hen [the] final history [of modern economics] comes to be written, I think it will be found that Wicksteed's exhaustive examination of the "economic relationship," and his insistence that there can be no logical dividing line between the operations of the market and other forms of rational action, are by no means among the least important or least original." (pp. xxi-xxii)

I wonder how much of the current contretemps over economic methods in organization and management is simply a re-hash of controversies already covered by Wicksteed, Clark (1, 2), Robbins, etc.

Entry filed under: - Klein -, Methods/Methodology/Theory of Science, Myths and Realities, Recommended Reading.

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4 Comments Add your own

  • 1. Nicolai Foss  |  3 June 2006 at 10:18 am

    Wicksteed would actually argue that economics does place certain constraints on people’s preferences, cf. his notion of non-tuism. Thus, according to economics (in Wicksteed’s reading), people enter exchange relations to further their own purposes, not those of their exchange partners. (Moralists may see this as a form of egoism).

    Of course, modern economics is not committed to non-tuism.

  • 2. Peter Klein  |  3 June 2006 at 10:52 am

    Well, yes and no…. My understanding is that "non-tuism" serves a purely instrumental purpose. If the buyer takes the seller's well-being into account, or vice-versa, one cannot draw supply-and-demand curves, according to Wicksteed. His point was not that "tuistic" behavior is non-economic or non-rational or whatever, only that in such cases one can't use supply-and-demand analysis to explain prices. (Kirzner has some discussion on this in The Economic Point of View.)

    (And to be extra clear, non-tuism refers to the exchange partner's well-being only, not the well-being of third parties.)

  • 3. pj  |  3 June 2006 at 10:54 am

    In order to pass from a “general theory of action” [actually, a logical framework for thinking about action] to specific empirical predictions, economics needs to give some sort of content to subjective preferences — otherwise we could have no clue how people would react to a change in objective circumstances. “Economic man” is one model of subjective preferences; behavioral economics offers others.

    I think it can’t be denied that the model of “economic man” has been frequently resorted to by economists. It’s certainly one of the simplest possible models to analyze.

    Perhaps you should reply to your fellow social scientists that they should help us discover better models for the content of preferences, rather than merely sniping at admittedly deficient (though perhaps adequate for many purposes) models.

  • 4. N. Emrah Aydinonat  |  2 March 2007 at 11:30 am

    It is interesting how Wicksteed formulates his argument with a game analogy and emphasizes the idea that the real/deep motives behind the exchange game are irrelevant because what matters at the time of an exchange is that everyone one wants to get the best trade whatever their real/deep motives for exchange are.

    Here is what Wicksteed says:

    “He is exactly in the position of a man who is playing a game of chess or cricket. He is considering nothing except his game. It would be absurd to call a man selfish for protecting his king in a game of chess, or to say that he was actuated by purely egoistic motives in so doing. It would be equally absurd to call a cricketer selfish for protecting his wicket, or to say that in making runs he was actuated by egoistic motives qualified by a secondary concern for his eleven. The fact is that he has no conscious motive whatever, and is wholly intent on the complex feat of taking the ball. If you want to know whether he is selfish or unselfish you must consider the whole organization of his life, the place which chess-playing or cricket takes in it, and the alternatives which they open or close. At the moment the categories of egoism and altruism are irrelevant.”

    “[…] Once more, then, if ego and tu are engaged in any transaction, whether egoism or altruism furnishes my inspiring motive, or whether my thoughts at the moment are wholly impersonal, the economic nature of the action on my side remains undisturbed. It is only when tuism to some degree actuates my conduct that it ceases to be wholly economic. It is idle, therefore, to consider “egoism” as a characteristic mark of the economic life.”*

    That it is to say that the rules of the game determine how people act in exchange. If you have to protect your king, you protect your king. This does not make you a selfish person. Similarly, if you have to get the best trade (this seems to be the rule of the exchange game), you behave accordingly. This does not make you a selfish person.

    Nevertheless, Wicksteed characterizes the exchange game as a game that requires/imposes selfish behavior. Thus, while it is true that it is wrong to label players of this game as ‘selfish’, we may be allowed to label the game as a selfish game and “consider “egoism” as a characteristic mark of the economic life”.

    Kirzner argues that ” Wicksteed’s rejection of egoism allowed him to include under “one’s own purposes” every conceivable interest except the interest in the person with whom one is dealing.”** Yet he also argues that “There is undoubtedly an element of artificiality, albeit ingenious artificiality, in this exception. If “one’s own purposes” are wide enough to include concern for the support of charitable institutions, they are surely able to include an interest in the welfare of the person with whom one is dealing. Despite the skillfulness and persuasive beauty of Wicksteed’s prose, it remains difficult to see the boundary line as other than the result of a quite arbitrary piece of surgery on the whole of commercial activity”**

    I also think that economics can be compatible with altruistic behavior, but I doubt that Wicksteed’s defense is the best defense of this idea.

    * http://www.econlib.org/library/Wicksteed/wkCS5.html
    **http://www.econlib.org/LIBRARY/NPDBooks/Kirzner/krzPV3.html

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