Universiteit van Amsterdam
The Rational Utility-Maximiser:
Ideological aspects of neoclassical economics
Master thesis Political Science
Specialisation Political Economy
22 June 2018
Abstract
This thesis will show the ideological aspects of neoclassical economics. Thereby I will argue for the theory to be an ideological construct. I will approach this argument by focussing on neoclassical economics’s view of the individual and human behaviour as this clarifies the assumptions and generalisations that are the foundation of the theory and are part of its ideology. The concept of ideology used in this thesis consists of on the one hand the assertion that ideology obscures part of lived reality and is thus descriptively false. On the other the concept includes the legitimisation of hierarchies by naturalising and objectifying social phenomena. By applying a critical and social constructivist analysis with a feminist perspective I will reveal how views and ideas came about and on what background meanings and social structures they rested. These were rooted in the Enlightenment and capitalist modes of thought. The separative self construct that arose out of this legacy regards the individual as distinct from society and allowed economic analysis to detach itself from its subject matter to focus instead on theoretical issues. In extension it made the individual an axiom in the formal mathematical models by assuming human behaviour to be constantly selfish and utility-maximising. Apart from providing an incomplete picture of economic and social relations, the neoclassical rational choice premiss keeps in place dominating power structures by claiming choice-making is unaffected by people’s different experiences and socio-economic circumstances. This thesis will show how neoclassical socio-economic assumptions reaffirm patriarchy and other asymmetrical social structures when choice-making as the main tenet of the theory bases freedom of choice on unequal grounds.
Table of content
Abstract
3
Table of content
5
Introduction
7
Objective and research question 7
Disposition 9
1 Ideology and theory
10
1.1 Different senses of ideology and critical theory 10
1.1.1 Descriptive sense of ideology 11
1.1.2 Pejorative sense of ideology 12
1.2 Revealing the truth? 14
1.3 The construction of social reality 16
1.4 Summary 18
2 Neoclassical economic theory and human behaviour
20
2.1 Neoclassical economic theory 21
2.1.1 The concept of the individual in neoclassical economics 22
2.2 Early neoclassical economics 24
2.3 The development of neoclassical economic theory 27
2.4 Development of economics’ concept of the individual 29
2.4.1 The economic approach to human behaviour 30
2.4.2 The constitution of economic policy 30
2.5 Summary 32
3 The ideology of neoclassical economics
33
3.1 Economics and political ideologies 34
3.2 The descriptive falsehood of the separative self 37 3.2.1 The impossibility of making interpersonal utility comparisons 39
3.2.2 Exogenous and unchanging tastes 40
3.2.3 The “disappearance” of the individual 42
3.3 Theory and ideology 44
3.4 Summary 49
Conclusion
51
Limitations, implications and further research 53
Introduction
Economics and whether “the economy” is doing well or in crisis has a big influence on how we live our lives. Whether there is work, money to consume the goods and services we need, how much taxes we pay and what kind of products there are available are amongst others related to the functioning of the economy. What is deemed to be good economics will instruct what political and societal policies will be implemented conversely political opinions influence how to run the
economy. Today’s economics is predominantly run by the neoclassical school which is also termed mainstream economics. Therefore the theory has significant consequence within the economic discipline and the economy as a whole. The neoclassical school defines economics as “the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses” (Lionel Robbins in Chang,2014:20). The definition points towards economic inquiry revolving around the different choices we need to make. This thesis is about understanding who this person is, which makes these choices, and what consequences such a view has.
Neoclassical economics is a specific method, a way of looking at and dealing with (economic) issues. What is regarded as the theory’s assumptions and generalisations instructs the direction of its inquiry and the answers it comes up with. This in turn influences society as a whole considering the significance of economic policy recommendations. Therefore it is important to know what the theory's assumptions are and in what measure, if at all, they are influenced by ideological convictions. Since neoclassical economics fundamentally revolves around the individual and the choices this individual makes are the assumed characteristics of this economic agent also informing the whole of the theory. Acknowledging that theories and their assumptions have a prescriptive power of influencing how we perceive the world to be, it is important to be conscious of the interests and power relations that have played a part in establishing a particular theory.
Awareness of how economic rationales came about will help to open up a normative discussion in order to assess and to reevaluate whether they still meet our standards.
Objective and research question
In this thesis I will argue for a distinct ideological aspect regarding neoclassical economics’ concept of the individual. I will argue that the theoretical facts people in the economic discipline adhere to are based on dominating social structures and asymmetrical power relations. The concept of ideology I will be using in this thesis consists of on the one hand the assertion that ideology
Therefore when I use the term ideology I regard it as a set of beliefs that influences narratives and the common sense perception of people with oppressive and perpetuating effects. How these come to expression within neoclassical economics is the objective of this thesis. My research question is: What are the ideological aspects of neoclassical economics?
In order to answer this question I will examine on what foundations neoclassical economics bases its view of the individual. This will reveal that the theory’s claimed value-neutrality disregards contextual values and bases its assumptions on biased background meanings. I will show how neoclassical economic assumptions reaffirm patriarchy and other unequal social structures when choice-making as the main tenet of the theory bases freedom of choice on unequal grounds. This is done by abstracting and homogenising individual behaviour to such an extend that it
misrepresents the social world (Anderson,1995:53). The one-sided and pervasive assumptions of rationality and value-maximising have allowed for the disappearance of the individual in economic theory as human behaviour has become devoid of behavioural influences as well as human experiences formed by dependence, tradition and power (Ferber & Nelson,1993:6,
Heilbroner,1998:143). This has had the result of making the individual along with its social and psychological circumstances disappear by transforming it into an axiom that fits abstract mathematics and formal economic models. As such is economics a theoretical construct that is indifferent to the power structures it surrounds and turns economic problems into mathematical ones (Davis,2010:4-5, Schabas,2009: 7-8). Not only represents this a descriptively false conception of social relations as it leaves out much of the human experience it also legitimises hierarchies by taking inequality as a given and as sufficient grounds on which to base economic equations (England,1993:43,44).
Because mainstream economics had a clear political use both after WWII promoting government intervention and during the Cold War promoting laissez-faire one could be led to conclude that economic theory itself is a-political and neutral because of its variety of application. I however, want to argue for this not being the case. Although neoclassical economic recommendations can be adjusted to allow for more social equality the use of the theory was socially constructed by powerful actors to achieve hegemony in their favour. The way in which obscuring of for instance the class system, disciplinary effects of the market and supposed normalcy of utility-maximisation happens is by ascribing certain qualities and traits to human beings and behaviour that apply to all people in all situations. This disregards complex and multiple causal factors such as the different lives people lead as well as other behavioural impulses affecting decision-making and will result in incomplete economic inquiry. However, these qualities and traits are not the only real and possible way human conduct is. By applying a critical and social constructivist analysis with a feminist
social structures they rested. These were rooted in Enlightenment and capitalist modes of thought. The separative self construct that arose out of this legacy regards the individual as distinct from society and stands at neoclassical economics’ basis. It allowed economic analysis to detach itself from its subject matter and to focus instead on theoretical issues. This presents an opportunity for economists to avoid controversial value judgments that can be related to socio-economic
circumstances (Rhoads,1990:90). The asymmetric power relations on which some terms of exchange are based are not discussed as all individuals are supposedly free and unconstrained, not making interpersonal comparisons, and thereby fully accepting the status quo. Taken out of any social context this individual represents an inaccurate description of the social world. To insist on a one-sided and incomplete view of the individual while obscuring the power relations it rests on is, as I use the term, an ideological construct. Because not only does this view distort part of the social context it also legitimises hierarchies that are unjust.
Disposition
The first half of this thesis, chapters 1 and 2, will set up the analytical tools and the subject matter I will use to argue for the ideological aspects of neoclassical economics in chapter 3. Chapter 1 will clarify the concept of ideology I use in this thesis and how I arrived at it. I will examine some of the different senses of ideology which highlight the issues that come up when formulating a definition of ideology. In particular relating to concepts of delusion, the connection between the creation of knowledge and power as well as the social construction of the narratives we use to create a common understanding. In chapter 2 I will analyse the content of neoclassical economic theory and on what background meanings and foundations it rested. It will show the social structures and power relations inherent of neoclassical economics. Here I will also present economists that are representational of the field and what these regard as neoclassical economic assumptions and practices, especially focussing on the theory’s assumptions about the individual and human behaviour. A historical trajectory of the theory’s development will show the political and social settings that accompanied economics in the 20th century. Lastly, in chapter 3 the analyses of the first two chapters will come together by arguing for the ideological aspects of neoclassical
1 Ideology and theory
The concept of ideology I will be using in this thesis consists of on the one hand the assertion that ideology obscures part of lived reality and is therefore descriptively false. On the other hand I also include in the concept the legitimisation of hierarchies by naturalising and objectifying social phenomena. When I use the term ideology I regard it as a set of beliefs that influences narratives and the common sense perception of people with oppressive and perpetuating effects. This
conception is based on critical and social constructivist theory and their research on ideologies and ideology critique which aims to enhance the lives of a subordinated group of people in society. Critically examining ideologies by asserting that a current condition is unjust has the goal of
alerting on power asymmetries or unfairness, as well as questions the legitimacy and accuracy of a social practice or institution. An example of a critical theory is feminist social critique
(Haslanger,2012: 22-23).
Below I will look at some of the different ways to define the concept of ideology because arriving at one concept of ideology involves making decisions about what one perceives the function of ideology is in our society. This function can be providing narratives for people to construct a
common ground. But this function also can include the mystification of dominating social practices. I will then examine the relationship between ideology and theory with a special focus on the
methods and premisses related to the Frankfurt School and its ideology analysis. This will show the kind of issues that come up when determining whether a statement or theory is ideological and how to judge whether the situation it refers to is part of a delusion. The last section of this chapter will look at how the social world is constructed which not only makes it susceptible to power struggles but also allows for analysing and changing dominating social structures. The chapter will conclude with a summary that will clarify the concept of ideology used in this thesis and how I will analyse neoclassical economics’ view of the individual that will aim for revealing ideological aspects.
1.1 Different senses of ideology and critical theory
Raymond Geuss (1981) explicates in his book The idea of a critical theory: Habermas & the
Frankfurt School three different senses of ideology and provides a systematic account of several
ways of ordering the broad concept of ideology. In short, provides the first sense a descriptive account of the social world and the ideas prevalent in it. The second sense assumes ideology to be pejorative and concealing oppressive realities by deluding a group of people in society. The third
notion of ideology can be labeled as positive, focussing on the creation of meaning, the productive aspect of an ideology and creating an ideology (Geuss, 1981:4-5,12,22). I will go over some of the distinctions of ideology made by Geuss I find relevant in order to show the contentious meanings of the concept and to clarify how I arrived at the meaning of ideology used in this thesis. I wondered especially if one can be critical about social reality and the ideas prevalent in it without assuming that ideology is pejorative per definition. As well as whether ideology analysis can uncover asymmetries or legitimation of forms of oppression when not specifically looking for them.
1.1.1 Descriptive sense of ideology
Some forms of ideological analysis aim to be critical without assuming oppression-legitimating systems and allow for a more open-minded analysis of concepts and principles that have informed political behaviour in the form of ideologies. Here ideology encompasses all the ideas that fit into a distinctive system representational of a particular group of people in society that guides their behaviour (Leader Maynard,2017a:6-7). This form of ideology analysis applies a descriptive sense onto the concept of ideology as any set of beliefs or frameworks of understanding about how people think the world works. A framework of understanding functions to allow people to make sense of their social world. That something makes sense in a particular way instructs and gives direction to their behaviour, which has the capacity of producing and reproducing society
(Haslanger,2012:411-412). An example could be that people as a way to distinguish themselves think it is important to have new clothes regularly (as was stated by neoclassical economist Alfred Marshall (1961[1920]:87)). This would make people go to work in order to afford new clothes. The need to earn money will structure people’s activity around work and will instruct how to organise the production of clothes as well.
In order to study ideology in the descriptive sense it is possible to make subdivisions into narrower ideologies according to what the sets of ideas are about and what kind of action they lead to in a society. Each of these subsets have their separate logics and instructions to guide behaviour and actions within its particular field but can also instruct social practices and institutions of other fields. In the above-mentioned example ideas about identity have instructed ideas about work and the economic process. One could argue also that economic ideologies have informed an ideology about identity. Ideology in the narrow sense allows for a division of sets of ideas into separate domains. Analysis can then look for the points of overlap between the different ideologies as well as how different domains instruct others (Geuss,1981:8-9). In relation to economic theory it is revealing to look at a theory's ontological meanings that inform its content and instruct what is
presupposed, unquestioned and unchallenged belief system to which all in the field adhere and structures research (Mäki,2001:5).
On this descriptive level ideology can as any system of beliefs almost become an analogy for culture. However, what the concept of unchallenged and presupposed beliefs already points towards is the intersection of social practices with political power. Because what is unquestionably regarded as the right way of doing things will have been able to push out and rendered invisible other potentially more just meanings and practices. A descriptive account of an ideology could thus undervalue the importance of analysing the different power struggles present in society that do not reveal themselves on the surface. This can overlook hidden or taken for granted forms of
domination. The concept of ideology should also include which group of people proposes ideas and with what kind of intentions (Eagleton, 1994:11).
1.1.2 Pejorative sense of ideology
Apart from the above-mentioned descriptive sense, ideology can also have a negative connotation and can it be used in a pejorative way to refer to people having a false consciousness making them deluded in some way. Here ideology is solely understood as a negative aspect of social life and applies a critical perspective on beliefs people in a society hold. For instance some beliefs or forms of consciousness are ideological in the pejorative sense when oppressive social phenomena are seen as natural or objective ones, therefore unquestioned. Ideologically pejorative are also the beliefs that the dominant group of a society holds as beneficial for the whole of society
(Geuss,1981:12-13). To reveal a false consciousness and show peoples’ real interests is the project of critical theory as developed by the theorists belonging to the Frankfurt School and other Marxist theories ( Freeden,2016:1,3, Geuss,1981:12, Leader Maynard,2017a:7). Ideologiekritik is one of the Frankfurt Schools’ main methods to enlighten and emancipate people or specific groups of people in society. The task of members of the Frankfurt School is revealing certain norms and values that are sometimes unacknowledged and have the power to legitimise domination that can make people willing participants in upholding social institutions that are coercive
(Geuss,1981:45,31). Patriarchy for example is the practice that makes men the dominant social group and has the ability to conceal its existence by making this masculine perspective the
universal one. As will be made clear in chapter 2 and 3 is for instance the idea of a male measure of success such as money and prestige less attainable for women because their “natural” maternal function making them do house and care work for free (Chambers, 2013:1,9). However, the
question can come up whether people dominated by patriarchy are willingly upholding this
concerning ideology and “willingly” upholding domination which relate to the construction of social structures. I will go deeper into analysing issues of institutionalisation in the last section of this chapter.
Relevant for studying the case of neoclassical economic theory is the distinction made by Frankfurt School theorist Max Horkheimer (2002 [1968]) between scientific and critical theories. He saw scientific theory as objectifying and neutralising the thing it describes. In such a process facts and values are separated and values about these facts concealed. According to Horkheimer rationalist approaches of describing the natural world have been used in the social sciences to strengthen the status quo in favour of a dominant group (Horkheimer,2002:196). Other critical researchers such as feminist theorist Joey Sprague (2005) argues that quantitative research, while making a claim for objectivity, “tends to be based on the experiences of men and/or express the assumptions of dominant discourses” (Sprague, 2005:192). For instance have quantitative researchers tend to focus analysis on an individual level rather than viewing social contexts as influencing behaviour and outcomes (ibid:192-3). In these cases what kind of categories and classifications are made can be understood as part of an ideology that serves to legitimise the ruling power by rationalising that the way things are is right. Thereby naturalising and universalising views that are actually partisan and have historically and socially specific values (Anderson,1995: 30,40,
Eagleton,1994:8-9).
Horkheimer’s concept of ideology includes obscuring a truth. The use of ideas and knowledge presents a preferred way of seeing reality, which makes ideology in this sense pejorative. Horkheimer wrote how he saw that knowledge and science, in particular mathematical physics, was being used by bourgeois hegemony to universalise not only the natural sciences but the social or human sciences as well. An application of these knowledges onto “facts” and the distinguishing of separate fields has had the consequence of disconnecting research from its social processes and implications. The ideological aspect is how this disconnect has managed to frame science as value-free and unconcerned with what is done with scientific results (Horkheimer,2002:194-196). For a contemporary example, it is important to think about the philosophical, social and political implication of artificial intelligence before the research is executed and applied rather than allowing research to continue in shielded laboratories not taking into full consideration its potential societal impact. This means viewing science both natural and social not as moved forward by its internal puzzle-solving only (Anderson,1995:53). The point of this ideology is then, according to
Horkheimer, to accomplish a division of labour of sciences so to obscure the role they have in the societal whole. Objectifying social phenomena and constructing them as natural will function to
working for them as normal and natural socio-economic circumstance rather than a social construction. This has as its result the making and the continuation of the existing order (Horkheimer,2002:194-196).
Instead, the development of society needs to be seen as unified and as related to its past and specific contexts. In line with Marx’s historical criticism theoretical concepts can only in relation to the overall structure and historical trajectory make sense. This will reveal them as specific to their time and as social constructs. Therefore social institutions, such as scientific communities and their theories are not unchangeable objects but part of relationships between people and power
structures (Eagleton,1994:33, Horkheimer,2002:230,237,239). Specifically looking for asymmetries of knowledge creation and application will reveal what these can oppress, as well as show in what kind of social relations they have arisen. This can help to uncover more of what a theory does than what it claims to do. Horkheimer’s critique of mathematical application onto human nature is of particular interest for my aim to unravel the relation between neoclassical economic theory and its view of the individual. This has led to the assertion, as I will show, of economics being a exact science not affected by society while at the same time claiming to be able to explain the whole of society and human behaviour according to its basic assumptions. Especially relevant is
Horkheimer’s observation of the economic rationale regarding the individual subject as
autonomous from the world while critical theory regards the individual in relation to others, the social totality and nature, and so constructing the social present (Horkheimer, 2002:211).
1.2 Revealing the truth?
The difficulty begins with establishing what is real and what is false. As mentioned above Horkheimer regards ideology as obscuring the truth by using ideas and knowledge to present a preferred way of seeing reality. His critical theory tries to investigate the legitimacy of a theory and when needed emancipate people towards bettering their situation. This implies that in order to provide a critique of society one needs to go beyond empiricism and positivism that reject
statements or propositions that are not falsifiable, are not knowable by observation and therefore cannot in a positivist view be rationally evaluated. A positivist analysis of society could thus not evaluate beliefs and attitudes, as these are not observable, that have generated a society or parts of it having a false consciousness, making ideologiekritik a fundamentally normative endeavour (Devetak, George & Weber,2012:68-69, Freeden,2015:3, Geuss,1981:26-8, Horkheimer,2002: 218). Apart from distinguishing the different possible senses of ideology Geuss most of all
analyses and critiques in his book some of the premisses on which the Frankfurt School’s theorists determine false consciousness or true knowledge and interests. Geuss writes that according to
Jürgen Habermas people are only free when all agents in a society have consciously agreed to their situation. When people are made aware that a situation has arisen under a form of coercion and that they have had a false consciousness they will want to fight their oppression which would lead to change.
However, Geuss points out that when forms of coercion have been very successful they are legitimised and agreed upon, and as such not false. In other words, when an ideology is so
pervasive and accepted the social reality it has created actually becomes the truth or at least lived reality. It would then not be correct to say to aim for uncovering a false consciousness because it is not false, it is real. More correct would be to say to offer other possible truths or realities that
enhance the lives of a subordinated group (Geuss,1981:60-64, Haslanger,2012:473). Geuss also questions the reach of critical theory as he seriously doubts that an uncovered consciousness will be sufficient to take down the asymmetric power structures in which it would have arisen in the first place. Powerful groups in society with an interest in keeping the existing structures in place will have the capability to keep enforcing them. Making the people, now aware of their coercion, possibly only more frustrated (Geuss,1981:74-75). The Frankfurt School’s critical theory and its ideologiekritik is supposed to induce self-reflection in people which hopefully enlightens and leads to positive change. But as stated by Geuss it also supposes ideologies to be a form of false consciousness or that people who are marginalised by a specific theory or ideology are deluded (ibid:60-1).
According to Horkheimer’s description of critical theory makes ideology people see the separation of the individual and society of which he wrote as real and have regarded that state as natural. But there is nothing irrational about what people think or see as natural as they make up their social world from the available knowledge. It is this knowledge production which is in his view distorted by bourgeois economic power. Horkheimer emphasised that the “naturalness” of objects instead relate to the social world and it is the social world that determines this naturalness not an intrinsic nature (Horkheimer,2002:199-200,202). Similarly as Marx and Engels’s concept of ideology, the material conditions people live in are shaping their ideas and are making them have a particular mind set about the social world. In addition ideas and power are linked, ideology serves the practical purpose of mystifying social life in such a way that benefits the ones in power by legitimating hierarchies. Ideology analysis will therefore reveal how people are distracted into accepting oppressive material conditions. This concept of ideology might include both true or false ideas and thus not necessarily delusion as long as it keeps the status quo (Eagleton, 1994:6-7).
As shown above, ideology has a huge creative potential for making meaning. It has the ability to make a certain situation seem like the only one possible, which makes it the reality in a particular time and place. However, things could be different. Demystification or the revealing of a false consciousness means the aspiration to uncover the acceptance of lived reality as the only one possible and questions the naturalness of it, not that people have been incapable of seeing the “real” reality (Haslanger, 2012:467,473). Looking at ideology and ideas as a field of struggle to become the dominant one implies that in order to change the social world changing people’s perception can be a starting point. In extension changed ideas that reveal domination can lead to making material conditions conform to these new notions. If so, there appears to be an overlap between the different senses of ideology of descriptive, pejorative and positive as described by Geuss (Geuss,1981:4-5,12,22). It is productive, as in the positive sense, it has the ability to create meanings and when dominant an ideology can reproduce itself. The concept of ideology and its analysis, in the sense I want to use, can be regarded as descriptive while at the same time demystifying by analysing what kind of ideas and understandings are prevalent in society or in a particular part of it. However, not in the sense of revealing that a consciousness or perception of how society functions is false as in being unable to judge what reality is, but false by revealing that reality does not have to be this way.
1.3 The construction of social reality
Ascribing ideology or a hegemonic set of ideas the ability to influence the constitution of lived reality we experience, accept and participate in, implies malleability of the social world. An ideology has shaped how we are to navigate in the world and is also helping us to make sense of our reality in a particular way. Ideologies are not forced upon us but we enact them by what we choose to do. The reality that has come out of a particular ideology can consist of dominating social structures and it is of political importance to know that our reality is not natural but is guided by the beliefs and habits an ideology can instil. Social relations and institutions do not just materialise but are socially constructed by us. Part of social critique, which can be through the analysis or critique of ideology, is revealing how we construct our social world and can break the automatic perpetuation of certain social practices (Haslanger, 2012:4-6,473). By rethinking how we go about our daily lives, become aware about what we take for granted and as common sense the aim is to achieve more clarity of potentially dominating structures. Whether this clarity is enough to challenge existing hegemonies and emancipate oppressed groups in society as a critical theory strives for, remains to be seen. Some hegemonies or ideologies can be so dogmatic and ingrained that people affected by them do not recognise it applying to them (ibid:27).
Sally Haslanger (2012) writes how social constructionists analyse systems of social relations and how this reveals the assumptions that are involved in making us understand something. In extension can these assumptions play a part in creating social structures or institutionalisation. These assumptions of what things mean are based on background knowledge widely accepted and used when we speak that provides information implied in the word, concept or thing we talk about (Haslanger:449). But often, that information is not the nature of something. Haslanger gives in her book Resisting Reality as one of her examples “cows are food”, which is a statement widely accepted as many people eat cows or at least beef. That cows are food is however not a natural property of a cow but an outcome of social practices. Yet, because cows are eaten and we have build a whole industry around farming them is the statement “cows are food” true and has become reality. Our practices have made food out of cows and have come to serve as a common ground in our understanding about cows. It is easy to see that many concepts we use come with some meaning that does not necessarily need to be in that particular way, they are not natural but have become the common ground on which we structure our social world even if these meanings are morally dubious (ibid:460-461). That the connection cow with food is not natural but constructed, we can also recognise in the way these connections are absent in another historical time or culture. For the predominantly Hindu population in India cows are not food but holy, free to roam the streets and not to be eaten.
Meanings and our ideas about these meanings have the power to become social structures when they are intersubjective (the common ground) and transposable to new practices and
circumstances that inform our conversations, practices, social roles, hierarchies etc. (ibid:461). These meanings or schemas are “sets of dispositions to perceive and respond in a certain way” (ibid:464) that encode knowledge but in order for them to become social structures there also has to be an enactment of them in world. The schema and common ground surrounding “cow” has materialised into the bio-industry for instance, it has manifested itself in reality even though the fact that a cow is food is not natural or not the only reality it can have. For this to happen the common ground has become more than merely discourse and has instructed how to organise material resources. Moreover, there is an interdependence between these schemas and resources as they inform and constitute each other, that also imbue the power relations prevalent in society.
Schemas or common grounds described in this way are a different name for ideologies and are constitutive of the social world (ibid:463). When an ideology has become hegemonic it makes the world around us the reality. We have accepted the background meaning of the concepts we talk about which also informs our behaviour. How, can we then say that it is not how things have to be?
Haslanger writes that although these conventions are hard to disrupt and dislodge needs an ideology critique to make visible how the words we use with their background meanings are
instructing what choices we make and construct social structures, but that any of these do not have to be the way they are now (ibid:468). Making explicit the workings of these schemas and
structures will be the beginning of challenging what is now regarded as reality as well as opening a space for imagining other possibilities, narratives. However, showing that things do not have to be “real” does not mean that people will recognise this situation applying to the them, sometimes people have internalised what is “natural” and have invested a lot into having a certain identity or position even when these can be of a disadvantage to them. Moreover, affects internalisation and socialisation to what is normal the processes in our bodies and minds that guide intentional and unintentional behaviour, as well as feelings and emotions. Changing these is very complex. Dominant power relations also have the ability to adapt to new situations. When patterns and structures, meanings and ideologies have a long history of being hegemonic will simply laying them bare not be enough to really change something, as is Geuss’ observation. But in unraveling reality there is the opportunity to present new narratives that could, with struggle, become
hegemonic (ibid: 473-475). A successful critical theory means perhaps the achievement of emancipation and showing what other realities are possible. However, to open up a normative discussion and debate about the current state of affairs of some concept, how it came about and how to develop it further, already is a political accomplishment (ibid:475). Questioning how and why the concepts we use and the structures we live in have arisen and reevaluating them consciously if they still meet our standards will be at least conducive to change.
1.4 Summary
For the purpose of this thesis I will use the foundations critical theory and social constructionism have conceptualised for examining ideologies in order to research neoclassical economic theory and its assumptions about the individual and human behaviour. The concept of ideology I will be using in this thesis consists of the assertion that ideology obscures part of lived reality and is therefore descriptively false. The concept also includes the legitimisation of hierarchies by naturalising and objectifying social phenomena. While I am not going to make a critical theory in the sense that I will prescribe or recommend a certain practice in order to accomplish greater social equality, I am going to adopt some of the practices and concepts that have arisen out of the legacy of critical theory for ideology analysis and critique. The way I will use the concept and meaning of ideology in this thesis will include the assumption that there is a power struggle in promoting a certain conception of reality. Apart from regarding ideology as any set of ideas about neoclassical economic theory’s conception of the individual as in a descriptive sense I will
challenge assumptions by revealing their background meaning. In particular I will be looking for the aspects that legitimate domination within the ideology of neoclassical economics and how these express themselves. This concept of ideology refers to that distinct part of knowledge or set of meanings that distort and/or obscure parts of the social context in which they have arisen. When a knowledge system such as a theory which makes a claim towards expressing the truth neglects part of it, such as power relations, they can be regarded as ideological (Sprague,2005: 56).
As proposed by the tools critical theories and social constructionism have provided I will start for my project from analysing the premisses of neoclassical economic theory relating to its
conceptions of the individual. After examining the theory according to its historical subjectivity or reality it will become more clear what ideological principles the theory has constructed which opens up for a normative evaluation. Moreover, I will not assume a false consciousness as in a state of delusion or not being able to see the “real” reality when I use the term ideology. Instead I regard ideology as a set of beliefs that influences narratives and the common sense perception of people with oppressive and perpetuating effects. Before an ideology is unpacked and reevaluated it has the tendency to be the general rule and can continue unquestioned. By revealing the historical processes and background meanings that come inherent with concepts and social practices we can understand more clearly and reevaluate our social world. I find especially the theoretical concepts of Sally Haslanger useful for staying openminded without assuming an ideological delusion by looking at the “naturalness” of words and concepts. On top of giving a descriptive account of the social world this method also questions it and aims for highlighting power imbalances and exposing how these are kept in place. This perspective of critical theory or
ideology critique is an empirical evaluation of certain social practices, structures or institutions after which it provides new ways of assessment. Therefore it does not make a normative statement only.
2 Neoclassical
economic theory and human behaviour
This chapter will outline the development of neoclassical economic theory as originating from the classical school at the end of the 19th century, focussing on the theory’s conception of the individual. The aim is bringing to the fore the background meanings and common grounds on which the theory is established. As well as clarifying the historical specificity of social structures rooted in Enlightenment and capitalist modes of thought analysed in section 2.1. Neoclassical economics based economic action on the individual choices made by rational utility-maximising agents. But over the course of the theory’s existence to today’s mainstream economic theory the conceptual content of who this individual is with its relation to society has evolved. Applying a critical and social constructivist analysis on the theory’s view of the individual will not only reveal on what ground economic views and ideas rest but show the adaptability of these ideas to changing political times as well. However, basic premisses and the underlying structures have remained. In particular I will look at what these views omitted from analysis, such as the asymmetric power relations inherent in neoclassical economics. A focus will be put on the way women and their role in society was viewed which highlights these hidden hierarchies.
I will present a selection of theorists I regard as representational for neoclassical economic theory that will point out the biased and political implications of these theorists’ reasoning through
exemplifying some of their writings on economic practices. This will bring out the common ground these theorists have. The early neoclassical theorists analysed in section 2.2 acknowledged that their theory rested on capitalist views and its need for a hierarchical, stratified society. This relates in particular to the legitimisation of hierarchies by presenting a unquestioned need for them so to benefit the economy. Second, by asserting that social relations and human activities only have an economical reasoning made the theories of William Jevons (1905) and Alfred Marshall (1920) a start in establishing a view of human decision-making as being separated from physical and social influences as well as possible coercion.
I will then go through the development of neoclassical economics and its adaptation to fit the changing political climate of the 20th century in section 2.3. Mainstream economic theory into which neoclassical economics evolved, adhered to the utility-maximising motivation but abstracted individuals so to fit theory rather than treating individuals and economic relations within society as its subject matter (Chang,2014:125-6). This made economics cease to explain the phenomena that led to humans making choices that satisfies their preferences. Rather, tastes were represented as formal specifications disconnected from individuals and the circumstances in which people live and make choices which took the obscuring of dominating social practices even further. Section 2.4 will
development, or more precise, the “disappearance” of the individual subject in economic reasoning. Economic behaviour became separated from any sort of psychological or social
explanation for preferences. In all, this chapter will by creating an understanding of the view of the individual used by neoclassical economics set up for analysing the theory’s ideological aspects explored in the next chapter.
2.1 Neoclassical economic theory
Neoclassical economics arose from the classical economic school at around 1870 with the
invention of marginalist economics and the work of William Jevons (1835-82), Leon Walras (1834-1910) and Alfred Marshall’s publication of Principles of Economics in 1890. The marginalist revolution based the theory of value on the subjective feelings of a consumer for a product rather than on production costs as the classical school did with the labour theory of value. The value or price of a good was now set according to how much a consumer is willing to pay for it, based on an individual’s expected satisfaction or utility derived from the good. Rather than the classical school’s focus on classes, the neoclassical school has at its analytical base the individual. This individual is assumed to be rational and selfish in the sense he or she (more likely he, as will be discussed later) can order preferences and would choose the option available with maximum utility. Selfishness expresses itself in the assumption that utility-maximisation is individual and
independent from others with perhaps the exception of one’s family (Caporaso & Levine,1992: 79-80, Chang,2014:120-22, England,1993:47). Exchange happens only in the case there are
expected gains of utility. An individual will exchange that which is less worth to him/her for something that has more worth, or in Jevons’ (1905) words, that which is comparatively superfluous for the comparatively necessary (Jevons,1905:5). Another change from around Marshall’s time was naming the discipline no longer political economy but economics, which can be regarded as a sign to establish economical analysis as a science devoid of political elements. An individual’s subjective value judgments became the focus of economics (Chang,2014:120).
Fundamental to neoclassical economic theory is the concept of constrained choice or as a much used definition of economics by Lionel Robbins (1932) as "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses" (Chang, 2014:20, Backhouse,2010:101). In assuming the individual as a “choosing agent” who
systematically calculates as to what ends are optimal and ordering these options along most preferred to least preferred makes neoclassical economics a study of rational choice. By making decisions along a consistent ordering towards maximum utility, rational choice becomes
their subjective utility, by alternative and scarce means (Caporaso & Levine,1992:80-81, Chang,2014:20).
Neoclassical economics however does have conceptualisations about society and the outcomes of all these individual decisions, albeit founded on the individual agent. The welfare of a group came to be seen as consisting of the welfare of its individual members. As group welfare is considered separate and independent from individual welfare, maximisation of societies’ welfare exists of the maximisation of all its individuals’ welfare taken in isolation (Caporaso & Levine,1992:81). The neoclassical economic concept of a Pareto optimum is a condition in which all individual
transactions are all mutually beneficial and where any additional exchange cannot happen without making anyone else worse off. No changes or transactions should be individual sacrifices, not even for the “greater good” as this does not exist (Chang,2014:122). In order to reach this social equilibrium a free market is a precondition, individuals should be able to exchange freely and voluntarily to the prices they deem to satisfy their utility to the maximum. Another important
implication of the Pareto optimum is the acceptance of the given endowments of each individual as a satisfactory basis for entering the market place, making social improvement and assessing welfare judgements (Caporaso &Levine,1992:83, Chang,2014:122). Pareto optimality would for instance not be met when governments apply redistributive policies as it would make a relatively wealthy person worse off even if it makes a person in need better off (England,1993:43).
2.1.1 The concept of the individual in neoclassical economics
Neoclassical economics’ conception of the individual has at its foundation the modernist dualism of human subjectivity versus objective nature originating from the Enlightenment. This dualism
existed in, on the one hand the Newtonian view of understanding nature as a mechanism. The other side of the dualism is associated with Descartes’ disengaged individual. Both laid the foundations for contemporary history of science as explained by John B. Davis in The Theory of
the Individual in Economics: identity and value (Davis:2003:2). Disengaging ourselves from our
senses was for Descartes paramount so to avoid distortions created by our perception and
sensations, writes Davis. Only then could we form reliable observations of nature and interpret the world with its properties translated in numbers, figures, positions, and size suitable for
mathematical abstraction. Descartes famous cognito ergo sum argument expresses itself in the view of the individual as “one that withdrew from the world to understand and control the world’s mechanical laws” (ibid:4). The divide between subject and object allowed modern scientists to see themselves as being disengaged subjects and nature as “spiritless”. Where Descartes still believed in a God, giving man the ability to disengage from the senses and observe “objectively”, Lock
opinion, custom and desires that influenced man so he could pursue his own happiness.
Detachment was thus a necessary condition to constitute a self that promotes one’s own interests. The senses were for Locke the only reliable way for the individual to form autonomous opinions free from tradition and desire. While the role the senses played differed between Descartes and Locke the outcome was however similar. Locke also stressed the need for individuals to disengage and objectify the world which resulted in a subject distinct and separate from society. Moreover, Locke saw the individual as unchanged through time as it will always possess the same
consciousness, even unaltered by experiences or actions (ibid:2,4-5).
Other outcomes of the Enlightenment legacy of a separatist view of the individual from the outside world are the gendered distinctions that relate to man versus nature. Feminist economists and theorists have highlighted the gendered aspect of the Cartesian ideal where objectivity and the primacy of mathematics is related to “rational man” as the detached individual. Detachment led to the notion of nature as being passively undergoing man’s objective observation and control, eventually nature and the body became viewed as being mechanical. Traits connected to
masculinity have also become related to a particular view of doing science. The abstract, general, detached, emotionless stand in opposition to the concrete, particular, embodied, passionate “feminine” which is associated with nature and inferior (Nelson,1993:24-5). The mechanical body was perceived only in relation to what it can do, its functions, and in true economic fashion became subjugated so to serve maximum social utility (Federici,2004: 138). For working class men the mechanisation of the body meant redefining it as an object for saleable labour power. For women it meant to be viewed as a machine for the reproduction of new workers (ibid:12). Silvia Federici (2004) writes about the change of the social position of women and their bodies during the period of replacing the socio-economic system from feudalism to capitalism. Under the cover of biological reasons, women’s bodies became appropriated by men so to fit the gender roles in capitalist society. But the subjugation of women was also necessary in the power struggle to expel the European peasantry from the land held in common so to fit the capitalist system of private
property. Disciplining the female body was accompanied with violence by state and church which brought about the “witch” hunt of the 16-17th centuries (ibid14,63). With the change to the capitalist economy based on money the production of market goods became the only source of value. The reproduction of the workforce on the other hand, hidden in the home, was seen as valueless which further weakened the power of women (ibid:75). Overall, the body became regarded as a machine or a tool to be instructed so to obey, needed for the capitalist rationalisation of work. This
“machine” could be instilled with a work discipline and predictable behaviour as well as produce the required labour force (ibid:138-40).
The assumptions about the disengaged individual and expected behaviour informed how the economic discipline developed based on methodological individualism. The concept of methodological individualism coined by Joseph Schumpeter (1954) as an analysis based on “behavior of individuals without going into the factors that formed this behavior” (cited in Davis, 2010:35) added an atomistic quality onto the individual. The contemporary and most commonly used definition of methodological individualism in economics has an even stronger and prescriptive meaning. Explanations of supra-individual entities such as society, government, firms, are always referred back to the decisions and actions of individuals. Thus, social phenomena are only to be explained by individual behaviour (ibid:36). Any organisational questions and its analysis are reduced to looking at the choices individuals make regarding these questions without considering to what choices lead or how they come about (Buchanan & Tullock,1962:14). Analysis in this manner emphasises a view that sees the individual as separate from society, only one’s own value-maximisation are grounds for making choices. This leads to overlooking the asymmetric power relations that play a role in people’s decision-making, as individuals are regarded as autonomous. Next I will exemplify the above-mentioned views of the individual that accompanied neoclassical economics and the development of capitalism that legitimised gender and economic related hierarchies.
2.2 Early neoclassical economics
The conception of the individual seen as separated form the world and society happened progressively in economics. The early neoclassical economists still had something to say about society and had clear values attached to their economic analyses. Especially central stood the bourgeois business man and his dealings in maximising utility. Economic behaviour was very much connected to a person of flesh and blood although the full affects of his behaviour and the
underlaying social structures that allowed for this behaviour were already viewed abstractly and distinct from himself. Disconnected and presupposed to be autonomous, individual identity is not defined by who one is in relation to others (Davis, 2003:34) which resulted in separation and in extension in disregard of personal responsibility towards others.
Jevons (1905) explained that economics is the science of individual want. The purpose of this science is that it needs to establish whether a good is wanted and if so how it can be attained with the lowest cost of labour. Why a product is wanted or useful for an individual and the effects of its consumption is not the concern of economics but for the moral or social sciences to investigate (Jevons,1905:6-12). “Utilisation” becomes the objective for having wealth and also once a
individual’s want, only the price system will reveal how much a person was willing to pay for a product and for how much a producer was willing to let it go for. Economics is then, according to Jevons, the science that uses mathematical appliance on predicting the maximum utility of a good (ibid:22-3,58-9). However, Jevons did explicate the proper uses of certain commodities and promoted that a product should gain more utility. He exemplified this by a mistress handing her clothes to her maid when they where not in fashion anymore, it would be a crime against the poor to “deprive them of good and cheap clothing, and many important branches of trade would wither” (ibid:29). This example shows the ability of Jevons to on the one hand prescribe certain better uses of goods by reusing it but on the other to ignore the circumstances in which wealth is used and created. The class system of his time is taken as a given and even justified when he also states the need for a manager to earn more than his workers so to be able to live a comfortable life. The possibility for the manager to consume is the main motivation for him to work hard. Moreover, without his hard work there would be no labour for the workforce, so all benefit (ibid:35). These examples show implicitly the type of individuals society is supposed to be made up of, rational and autonomous utility-maximisers.
Individual separateness and detachment from society comes especially to the fore in the chapter about the consumption of luxury goods. Jevons justified and encouraged their consumption as otherwise we would have to “relapse into the inactivity of savage life” (ibid:45) but more importantly without the utilisation of wealth on luxuries there would be no reason to produce. In fact economic progress was made because of the production and consumption of products that are not strict necessities. Jevons' elitist view comes forward when stating that it is a normal primitive instinct for the lower class to want to distinguish themselves so to look like a higher class but that this higher class should spend their money wisely on durable luxuries that last. In this way, a good will achieve more utility as it can be enjoyed by others from the next generation and will even “increase the aggregate happiness of people in general” (ibid:48). While touching upon the different goods and also reasons for their consumption Jevons reveals the social relations on which he accepts economic progress should be based, although as mentioned supposedly not a concern for
economics. In explaining supply and demand, which is dependent on the value a person is willing to part with or acquire a good, he states that a free and competitive market is needed in order to let the price be determined by demand. For Jevons explained this the principle of competition that forms the basis of society. He stated how the cheapening of a product would allow the poorer classes to be able to buy it and as there are more of them (than rich people) the demand will go up (ibid:50,55,58). Here again Jevons does not question the reason why there are so many more poor but only focusses on the mechanisms of utility and does not acknowledge that accepting power
passing judgement on the processes and structures that constitute them. This is not the point of economic science according to Jevons, which indicates how the concept and construction of individuals who make rational calculated choices is used to conceal ideas about market exchange and the social power relations needed for this.
Marshall (1920) went further with abstracting the individual from society in order to apply
mathematical theory unto economic exchange. Like Jevons he regarded economics as a science that is detached from ethical judgments or prescription. On the other hand Marshall elevated economics to be the study of man not merely the study of wealth because people are formed by all of their economic activity, their work and attainment of material wealth for the largest part of their life (Marshall,1920:1). Marshall’s theoretical model also has rational individuals at its foundation who in order to reach a utility maximum make marginal calculations. According to Marshall individuals were not by nature virtuous and altruistic. It was the work of the economist to create economic competition so to stimulate economic activity. He called this freedom of industry and enterprise (ibid:5,9). Money with its property of making precise calculation and value measurement possible, made economics the exact science other social sciences could not be. By looking at the monetary value preference is revealed thereby the economist could quantify the desires and aspirations of human nature. It is not the motive of an individual itself but the amount of money the individual is willing to part with that allows for the study and prediction of society (ibid:14-5,26). Similarly as Jevons, Marshall considered material wealth to be the measure of progress and the production and exchange of commodities formed the basis of development (ibid:20). As Marshall writes: “The action of competition, and the survival of the struggle for existence of those who know best how to extract the greatest benefits for themselves from the environment, tend in the long run to put the building of factories and steam-engines into the hands of those who will be ready and able to incur every expense which will add more than it costs to their value as productive agents” (Marshall,1920: 561).
In this example awareness and autonomy is only ascribed to upper class men who invest and organise the modes of production and generate wealth that was quantifiable with money. To them the science of economics is dedicated, everyone else is supposed to aid in his assistance and falls under their pursuit of efficiency. Although both Jevons and Marshall still claimed that economics is not an exact science such as physics and is not fit to provide policy recommendations they clearly do make judgements about what, in their view, the proper workings of society are (Jevons,
Horkheimer’s accusation of science being used to further bourgeois social power relations. Behind the veneer of mathematics and scientific principles of the natural sciences upper class beliefs are applied to explain and produce knowledge of social phenomena. The examples of what economics is according to Jevons and Marshall also showed that for them material well-being is at the heart of economics in the earlier forms of neoclassical economic theory and mathematical abstraction already made its way into the discipline. However the emphasis still laid on some empirical observations of how production and exchange of material goods were to be governed. By analysing social relations and human activities as only having an economical reasoning the theories of Jevons and Marshall have made a start in establishing a view of human decision-making as being separated from physical and social influences and possible coercion. Taking inequality as a given means that power relations and hierarchies are legitimised. Other sources of human satisfaction are also overshadowed or even ignored by only emphasising the beneficial effects of material well-being (Nelson, 1992:32).
2.3 The development of neoclassical economic theory
A change from the time of Jevons and Marshall of around the early 1900s was the disappearance of advocacy of the free market during the 1930-60s. The Great Depression had shown in a real world scenario the effects of perfect markets (Chang,2014:77). Within that period leading economists Paul Samuelson and Kenneth Arrow were of the opinion that complete competitive markets could not provide optimal results. Mathematical theories were still used to determine real world phenomena but the work on more abstract theories that advanced the discipline
mathematically became more prevalent (Backhouse, 2010:106-7). The period after World War II is known as the mixed-economy, a mix between traits of socialism and capitalism, and Keynesian counter-cyclical macroeconomics in which the government had an active role to play. Economics and politics were thus acknowledged to be firmly intertwined. It led amongst others to the
expansion of the welfare state, more labour rights and state-owned enterprises as the outcome of the policies of many socialist parties now in power in Europe. Government intervention made sure capitalism’s adverse effects such as high inequality were kept in check. This period also saw the establishment of many of the economic institutions that are still around today such as the IMF, World Bank, GATT which later became the WTO. Along with the mixed-economy policies and mostly free trade among the members of the GATT, which were countries of roughly the same economic strength, these actions led to economic growth. That in turn along with greater possibility of social movement provided the trust for a renewed belief in capitalism (Chang,2014:76-87).
adaptability of neoclassical theory, it can be used by theorist on the left of the political spectrum as well as on the right. The theories’ focus on individual behaviour makes it pliable to different
opinions as to what that behaviour should lead to explain (Chang,2014:125-6). This versatility also points to the potential for an unquestioning acceptance of the status quo or bias that further certain social groups in society as did Jevons and Marshall. Marginalist individual economic analysis does however allow for logical clarity and mathematical precision which started to come more to the forefront within the economic discipline (ibid). By the 1960s the definition of economics of Robbins (1932) had, although around since the 1930s, become mainstream. “The science which studies human behaviour as a relationship between ends and scarce means which have alternative uses” (Backhouse, 2010: 101) meant that economics had taken on a more abstract meaning. This could fit the analytical precision and the expansion of any subject matter falling within the economic science. But it took the period from the 1930s to 60s for economics to establish itself as a
predominantly mathematical discipline and formalism was seen as scientifically rigorous (ibid:100-1).
The mathematical focus led to economics seeing a growth of theories in addition to its general competitive equilibrium model such as game theory which allowed for a factoring in of strategic behaviour. And theories concerning incomplete and asymmetric information when making choice decisions that caused markets to behave differently than the supply and demand models predicted. Moreover the application of economic theory with its view of the individual spread to fields not related with traditional economic subjects such as sociology and political science. Public choice became the name for economic analysis applied onto the public sector and examined for example instances of government failure when public servants act in their own interests in conjunction with neoclassical economic principles. Well known public choice theorists are Gordon Tullock and James Buchanan who researched decision making in the public sphere, and Mancur Olson with his research about collective action (Backhouse,2010:108-111, Caporaso & Levine, 1992:133). Applying market principles and methodological individualism led to promoting ideas about
sidestepping the processes of decision-making collectively. The restriction of individual freedom by government intervention was only justified in order to gain efficiency, thus utility
(Engelen,2007:173). The economic approach in the field of sociology applied neoclassical choice principles, spearheaded by Gary Becker in the 1950s, on topics such as discrimination, marriage and education. The general effect of these economic approaches was that from the period of around 1960 the right side of the political spectrum and proponents of the free market side became more prevalent (Backhouse,2010:111). Market and economic principles were now regarded as being better able to explain and predict human behaviour which led to promoting laissez-faire individual action.
2.4 Development of economics’ concept of the individual
While the earlier neoclassical theorists such as Jevons and Marshall conceptualised the individual as still having their own psychological motivation for participating in economics, albeit taken from a rather one-sided privileged view, the later mainstream economists managed to structure
interactions between individuals without saying anything specifically about them (Davis,2010:34). The earlier conceptions of the individual in neoclassical economics saw the need for distinction and some kind of material betterment as the drivers related to actual individual people. Individuals were also still related to their social environment although a complete analysis concerning why society existed the way it did was omitted. The mainstream economic theories into which neoclassical economics evolved, adhered to the utility-maximising motivation but abstracted individuals so to fit theory rather than treating individuals and their economic relations within their society as the focus of research (Chang, 2014:20, Davis, 2010:16). Through abstracting the individual subject,
economics and the economic approach of rational choice to evaluating decision-making became applicable to every kind of topic (Chang, 2014:20-21). Economic behaviour was separated from any sort of psychological or social explanation for preferences.
The abandonment of an internal explanatory motivation became possible because the aim was to understand economic behaviour through observing choices regarding different consumption options. The internal focus of an individual thus disappeared in favour of an externally related abstract economic agent defined by his or her choices. This allowed for a reconceptualisation from normative or psychological interpretations of utility to formal specification of the individual fitting abstract mathematics. The result was that economics ceased to aim to explain the natural phenomena that led to humans making choices. Rather, choices and preferences were
represented as formal specifications disconnected from individuals, as the aim was to explain what choices people would make when incomes and prices changed and not whether other factors would affect choice-making (Stigler & Becker,1977: 77, Davis,2010:28-31,165). In a sense economics became a reversed science, explaining and aiming to predict behaviour according to how people are supposed to act if rational, rather than explaining why they choose the way they choose. Analysis of the foundations on which these abstractions are based start to reveal the background meanings and their implications for keeping the status quo in favour of people on the top of hierarchies. Showing the conceptualisation of individual choice-making in economics is the aim of the next section.
2.4.1 The economic approach to human behaviour
By the time Gary Becker (1976) introduced his theories about an economic approach to human behaviour, the scarcity and choice relation of economics was sufficiently broad to fit many other objects of analysis traditionally not related to economic or market subjects (Backhouse, 2010:112). Becker applied the economic approach in order to explain and most of all predict human action. He was not satisfied with the imprecise calculations of economists that ascribed economic fluctuations to unexplained changes in tastes. Tastes were seen to be a factor concerning the fields of
psychology, history, anthropology, sociology etc, according to Becker was this not the case. To him tastes were predetermined and fixed, differences in choices was ascribed to behavioural effects related to factors such as family size, age, education, homeownership, occupation, ethnicity, socio-economic status. Factors about which there existed aggregate data showing behaviour on a systemic scale. Differences in behaviour were only related to changes in perceived utility, income, price, supply and demand, in other words the relative costs of different choices. The outcome of having a fixed taste variable was the possibility of prediction and formal calculation. Besides this, Becker held on to the neoclassical theoretical premisses of equilibrium and individual’s
maximisation of behaviour or satisfaction of utility, efficiency and information optimum (Becker, 1976:5-7,12,133-4,145). For example Becker could explain a higher fertility rate in rural areas of the country because it is cheaper to raise kids there as opposed to in urban environments
(ibid:190). Becker also equated finding a partner with a market for marriage. People decide to get married when being in a couple exceeds the utility of being single or keeping up the search. The term marriage market, Becker explained, was especially fitting because of the parallel of people trying to get the best they can get, utility-maximising. As well as the sorting of people into marriages resembling an equilibrium and Pareto optimum in which persons not married to each other could not marry and make each other better off (ibid:10, 205-7).
2.4.2 The constitution of economic policy
In the Calculus of Consent: Logical Foundations of Constitutional Democracy presented James Buchanan and Gordon Tullock (1962) an economic approach that aimed to explain the process within which individuals of a group reach decisions about the dividing line between private and public/social action. Thus, when does an individual decide to organise collectively and how are the constitutional rules of the game of government and other institutions of collective choice
established. The theory has as its starting point the individual and is called public choice in the field of political science or constitutional economics in the field of economics (Buchanan &
