11 Pages, Grade: A-
3 Applicability and examples
4 Consideration and general critique
I would like to stress maybe the most interesting topic that can be considered in social science: human nature. This work is about the Economic Man phenomena, which will be viewed in the light of economic relations. The picture of the Homo Economicus emerged as a product of the 19th century development, which has its implicit normative validity even now. He comes to us from the social sciences’ most disciplined discipline – economics. The current globalization process presents us with a wealth of pressing problems that require further evolution of this concept. I will try to make a case that the concept of the Economic Man (hereafter the E.M) was only a side effect of a given period in the history of industrial relations, characterized by certain technological level. But to what extent does this concept describe the present society?
It is submitted that the very notion of the Economic Man gained popularity thanks to Lowe, who viewed this picture during the height of industrial revolution. For such humanists as Humboldt, Schiller and Goethe, the E. M. was a constituent of the industrial society: rational, egoistic, a-historical and with a lack of tradition -- a rival beast of Homo Humanus. Adam Smith considered the E.M. as a subspecies of Homo Mechanicus who possessed the following characteristics: determinism, rationality, social geometry and conscious repetition. For Firth the E. M. was a reasoning person, thinking twice about the terms of exchange before allocating resources. For Barth he was a competitive man allocating resources to outwit others.
A general conception of Homo Economicus is the pursuit of rational self-interest, which is in accord with his own preferences. The E.M. will consider other people’s wishes only if there is no collision with his own self-interest. For Polanyi the Economic Man rests to a large extent upon ideology. The reason for its creation lies within a society that imposes such expectations upon individuals. For Heilbroner and Tharow the Economic Man is not a description but a generalization that people comply with when they pursue purely economic goals. For Kerber (1991), the rationality of Homo Economicus applies only to relation between effort ‘invested’ and profit received. It should be either: a maximum gain with constant mean effort or a constant expected gain with a minimum effort. The theory of rational choice in sociology has a similar concept, which falls into the class of models of purposive action, thus assuming that actors want their actions to bring optimized beneficial results.
If the concept of Homo Economicus is applied to a larger institutional framework, every company is a profit maximizer, which is responsible to the shareholders. But in reality actual companies may differ on a range from being a ‘profit squeezer’ to a company taking care of and responsible to a much larger social environment.
I submit that the assumptions of the Economic Man are consistent with an idea of free market. But why do completely free markets not exist in modern democracies? The fact is that states interfere considerably with free markets. Theoretically there are at least two reasons why they should do so:
i) the neo-liberal claims about self-sufficiency of the market and pure market economies cannot
be maintained without a certain degree of state regulation for the enforcement of regulated
standards, protection of public and private property.
ii) some safety net has to be provided against market swings and gross inequality.
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