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Changing the economic discussion

| Tuesday, January 14, 2014

Not many people see the study of economics as having very dire moral implications. It likes to market itself as a science, like any other science, which merely describes reality, whereas if it had moral implications it would have to make judgements upon the value of different kinds of possible realities. However, this type of economics ignores its origin, an origin very much laden with value judgements, and as a result of this selective memory it has created a system of morality that is now causing the oppression of people across the world.

The term “economics” comes from the Greek word, “oikonomia,” which according to Wikipedia translates to, “management of a household, administration.” This initial definition has since expanded to revolve around wealth, how to make it, how to keep it and how to use it. Newer definitions also try to construe economics as a hard science, creating theories and rules to predict how a market would behave, an endeavor much like Newtonian physics. However, despite efforts to morph economics into an “objective” science, it has always been plagued by this initial definition as “management of a household”. Growing up as a kid, my household was run in a different way than your household because it was run by a different set of parents with a different set of ethics. These ethics are ostensibly subjective, making it hard to create universal laws for the money management of all households. Since this subjectivity has a direct influence on the viability of economic predictions, economics assumes people are “rational actors” in order to obviate this problem.

This idea of “rational actors” states people act according to their own self-interest. The logic is that a rational person will want to be happy, and therefore will evaluate options insofar as they relate to their own happiness, i.e., be self-centered. Temporarily putting aside the assumption that rational people act selfishly — a rather cynical innuendo with a much more complicated reality — this idea has become less a safe guess made about human nature in order to create predictive models and more a categorical imperative. This means selfishness has become not only acceptable, but good and just. This has created a system of idolatry where the pursuit of wealth is one’s moral duty.

Since wealth has been linked with personal happiness, happiness has become understood as a utilitarian calculation of material goods. A while back Bloomberg published a good example of this, an opinion piece entitled, “Who Needs a Raise When You Have TV?” The gist of the article is the increased availability of cheap and quality entertainment should be taken into account when asking the question, “Are you better off than you were 10 years ago?” The assumption made in this argument is that quality of life is a function of material goods. Furthermore, this viewpoint leads to the commodification of everything, people included: either something is valuable to exchange for something else, or something is valuable for consumption. It shouldn’t be hard to see how this paradigm effects business approaches to labor markets, creating a dynamic of a race to the bottom rather than an elevation of general living standards.

The imperative of self-interest has also created a new system of Social Darwinism. Whereas old Darwinism equated the value of a person with race, this new Darwinism equates the value of a person with their production. Thus people are valued by their wealth and have fully earned the wealth they have, nevermind the fact that people face an inequality of opportunity and the commodification of people incentivizes the labor abuse of disadvantaged people.

Thus we are left with an unjust system, endorsed by science and sanctioned by culture. However, the assumption that “rational actors” inherently act out of self-interest is completely wrong. It’s a false dichotomy. Granted, it is true if you equate happiness with utilitarian materialism. However, if you think happiness is more than stuff, one cannot assume one’s self-interest is one’s self-interest. The reality is rather a unity between self-interest and other-interest, not of the breed where two people’s immediate material interests happen to align, but rather of the type where the other is our happiness and we are theirs. This is a relational understanding of happiness and one that is blatantly ignored by our economy and culture.

What would economics look like if it no longer assumed people as materialistically self-interested? I have no idea. I don’t think it is impossible, though, to have societies that are fundamentally relationally-centered. There are societies and businesses that behave in this way now; we can all play a role no matter our future professions. All that is necessary is for us to have the will to reject the fabricated “reality” of “rational actors” and instead choose to live in a different way. Today might be a good time to start.

Robert Alvarez is a senior studying in the Program of Liberal Studies. He is living in Zahm House. He welcomes all dialogue on the viewpoints he expresses. He can be reached at [email protected]

The views expressed in this column are those of the author and not
necessarily those of The Observer.

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