[OPE] Behavioural economics: a revolution in science?

Thanks for your comment Michael. I've experimented a little with this type of thing in a naive sort of way. Perhaps I shouldn't, but Marx interestingly said the vice he excused most is human gullibility, and I think it is important to know about this, how you can have your own feelings about what is good and fair exploited, whether you are weak, or whether you are strong. But surely the substantive point is that markets provide no morality of their own, except for the obligations necessary to settle transactions, and therefore, what is thought to be "reasonable" in a transaction can vary a lot?

One paradox of ethics is that if the pursuit of self-interest would always obtain an ethical result, no ethics would be necessary (or even useful). It is precisely because self-interest and a morally correct course of action can diverge, that ethical notions (which are often encoded in law, and sedimented in human character - psychologists sometimes refer to the "moral emotions") are necessary (assuming that we can unambigiously define a self-interest, which may be problematic in itself). The presumption of the concept of the rational self-interested actor is that this actor always acts in self-interest, but this is a tautology which therefore has little explanatory value, at best it is an idealisation. It just says that if actor X did Y, that must be because he thought it in his self-interest.

The problem I have with the Financial Times defence of free markets is not at all that I reject the whole idea lock, stock & barrel that there can be anything good or progressive about free markets (through of course in reality markets are rarely truly "free" - what they really mean is the ability to make transactions freely without external constraints). It is rather that this defence abstracts from morality, desire, beliefs, needs and power, and just blithely assumes that markets will always deliver the Good. But not even the most gullible businessman believes that, so why promulgate such an ideology in this day and age?

The spectacle of the McCain/Obama debate is not simply that it is infantile, but that is it almost purely about moral conduct, without however going into any specifics, or referring to any principles. One could of course complain that it is unprincipled, but the real insight seems to be that it is impossible for them to be truly principled, since they must reconcile the irreconcilable. They must convey integrity without any rational evidence. But more importantly, they must persuade people to follow them with the "suggestion" that it is in their self-interest to do so, even if it isn't, or they don't understand why this is so. Surely this type of thing makes a mockery of the rational actor model? Presumably what Marx would say is that modern politics is mainly about the exploitation of human gullibility.

Jurriaan

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Received on Sun Sep 28 10:46:25 2008