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Student Essays on Post-Autistic Economics
from post-autistic economics review : issue
no. 19, April 2, 2003
4 New Assumptions for a
New Economics
James Bondio (undergraduate
at University of Queensland, Australia)
I hope to add to the kindling that has been laid to ignite a new
economics. The ideas in this paper are
not original but their combination as an economic theory came to me while I
was waiting in various airports recently.
I have reached this point of view through combining studies in philosophy
and history of economic thought, behaviourism, social psychology, sociology,
theology, and the beautiful people around me.
I am not an expert at economics and know less of writing theories, but it is
my opinion that economics has a noble greater purpose, making people happy,
and an economic theory should explain ways to achieve this. At present the theory I am taught teaches
profit maximisation, utility maximisation and (individually summed
utilities) social welfare, which are achieved through self-love and
greed. Then the fear created by
competition forces us to do the best we can for each other to fulfil our
selfish motives. My common sense tells
me that a society dominated by fear and greed will not be happy and my
experiences provide me with enough evidence to believe that selfish and
scared people are never happy. The
ideas for a new theory that I present here are assembled in an effort to
create a more realistic theory, to better understand people’s behaviours and
decisions, how prices are set and to explain ways people can be happy.
My theory goes something like this: the economy is not made up of individual
rational utility and profit maximisers; it is made
up of people. Traditionally, what
makes human beings as a species different from other animals is two things:
the power to reason and the power to communicate through language. We are creatures eternally looking for
reason, meaning, and value in everything around us (economics itself is
evidence of this) and most importantly in our own existence. If we find meaning and worth in ourselves,
then our own existence is valuable and can be appreciated. It is when our existence is meaningful that
we are happy. Of course, the greatest
human expression of value and appreciation is love. So my first assumption of economic
behaviour is:
People search for meaning and value in their own existence and everything
around them.
Our ability to communicate value and meaning between each other enables
values to be agreed and disagreed upon, reinforced and rejected by those
around us, and learnt and taught to those we have contact with. People who communicate to each other
(verbally, through body-language, clothing, or anything else that can
communicate meaning) create a social group and a social context. Groups can be formal and established or
informal, but groups have common and recognisable values and reason. These common values and reasons within a
group are referred to as, habits, culture, stereotypes and social norms. They communicate meaning and value. They exist within friendships, families,
firms, political parties, university faculties, religions, age groups, and
football teams. My second assumption
is:
We are all subject to
social norms.
It is the values and meanings we learn from groups and individuals important
to us that define what is meaningful.
Our values are dependent on the groups we are members of. Group membership is maintained and
established with groups that provide and communicate meaning or value. To be members of a group people then adopt
what is important and representative of that group, and can be recognised as
group members. Being recognisable
means an identity has been established, which communicates meaning to
others. My third assumption is:
People will adopt the norms of the groups most important to them at any point
in time.
What is important to people will
depend on what context they are in.
Different contexts will demand needs that need to be satisfied. Individuals will behave within norms that will
satisfy their needs according to a hierarchy.
Importantly, people will satisfy their needs within the boundaries of
the norms (values & beliefs) of the groups vital to their
identities. For example, a strictly
Jewish man dying of starvation would not eat pork. The hierarchy operates such that lowest order
needs of physical survival must be satisfied, then pleasure needs,
self-fulfilment, social fulfilment and spiritual/universal fulfilment, each a
higher order of needs. The orders
represent levels of personal development.
The level that people have reached will determine what they value and
consider meaningful. The more
developed person experiences a deeper meaningfulness and reason. This fuels our desire to develop. Therefore, my fourth assumption:
The importance of groups (and their norms, which are followed) will
depend on two, sometimes opposing, forces – personal development and context.
Those are the basic assumptions I need, thus far, to explain behaviour within
economies. I feel that the current
assumptions in economic theory should be replaced by a set of assumptions
similar to these. I want to direct
this paper from here towards explaining how people can behave according to
the assumptions, how behaviour could be modelled, and the implications of a
theory based on these assumptions. Perhaps,
to follow in the footsteps of our ancestors, an example of how the butcher’s
love provides us with meat is appropriate.
According to these assumptions the butcher can provide us with meat for a
number of reasons. The butcher can
provide us with meat for his survival, purely out of self-love. His job provides him with income that lets
him buy food, shelter and clothing.
However, the butcher could do a number of jobs that will satisfy his
survival needs. He may choose to be a
butcher, over other trades, simply because he finds pleasure in cutting and
preparing meats. If the butcher’s
father was also a respected butcher then the son may have followed his
fathers valued footsteps to gain the same self-respect. Further he can provide us with meat because
of the pride it gives himself when others recognise him as a skilled
tradesman and a hard worker. He may
work to support his family. The
butcher may love the fact that he can provide fresh food as a source of life
and enjoyment for his customers and community, which means he may take extra
care in ensuring quality, not just for his own profits, but for the people
around him. The butcher can choose to
provide us with different meat. He can
choose to supply ‘free range’ chicken, beef grazed in pastures that have not
caused deforestation, and non-genetically modified meat because of the values
he places on animal life, the environment or god’s creation. The butcher can provide us with meat for
any number of reasons and loves. Why
he does will depend on what is meaningful to him.
How then is this behaviour modelled? I
haven’t given this a huge amount of thought; however, I think the supply and
demand model can remain, with a few modifications. What follows is a list of ideas instead of
a structured argument. The simple supply and demand model can no longer be
viewed as the relationship between utility and profit according to the axioms
of price and quantity. Equilibriums
will no longer represent optimal outcomes and equilibriums will only be context
specific. Equilibriums could be viewed
more as contextual agreements and instead of equilibrium points they could be
modelled as intervals. Agreements can
be made within the intervals depending on the salience (contextual relevance)
of group norms. This is where
advertising and salespeople come into play, they attempt to increase the
salience of norms that will most benefit sales and prices.
This then gives power to the people who influence norms (group leaders,
respected institutions, publications, advertising and media figures). Therefore, there does not have to be
perfect competition. Nor does the
assumption of perfect information need to be kept, indeed it is because there
is not perfect information that we adopt group norms, relying on the perceptions
and judgements of each other to guide our decisions (i.e. “if everybody else
whom we see as important thinks it is good there must be something good about
it.”). Hence outcomes are not always
optimal and people do not have to be modelled according to subjective
expected utility theory as rational economic agents. Nor do firms have to be modelled as profit maximising
juggernauts. Instead people (on both
the supply and demand curves) are behaving in order to achieve something
meaningful to find reason so that we have value and can be appreciated by
others.
To find what is meaningful we then look to those people we respect and regard
as important, and they are determined by our context and development. Therefore if we are to understand the behaviour
of different markets, identifiable groups with observable group norms, we can
benefit from understanding these processes.
Importantly, what order of needs, according to the hierarchy, are
being satisfied need to be identified explicitly. I think this is already done implicitly in
analysis but is left largely outside of analysis that I have been
taught. This would require empirical
research out in the wide-open ‘playing fields,’ finding out why people do
what they do. Present theory restricts
motivations for behaviour purely to the lower order needs of survival,
pleasure and self. If this were true,
then everybody would live according to fear and greed – not a happy
situation! Progressing the theory in
the way I have suggested here means analysis can also include the value and
benefit of things greater than our individual existence. This is what my common sense tells me will
make the world a happier place, and this paper is the draft of a theory that
says the same.
The implications of a theory based on these foundations are many and I am
sure to think of others after I have written this paper. But primarily these foundations:
- bring
both consumer and producer analysis together through the analysis of
people;
- require
less emphasis on mathematical logic and more on observing reality;
- shift
methodology towards group analysis away from individualism (this is
important in explaining group hostility and cooperation, gender, class,
societal and cultural characteristics) and;
- require
explicit historical perspectives when analysing the development and
emergence of groups and their norms.
Importantly, economics will need
to move to analysing actual contexts that groups
exist in. We will need to broaden our
analysis from contextual factors (e.g. income, welfare, savings, standard of
living) to include personal development factors (e.g. education, the family
unit, group membership, judgements and
perceptions). Economists will need to
ensure that the economy creates a context, by including normative analysis
and policy, where people are not solely concerned with survival and self, a
context where people value each other, our environment, the miracle of life
on this planet, the power of love, and the existence of things greater than
ourselves. It’s time to make economic
teachings relevant again.
______________________________
SUGGESTED
CITATION:
James Bondio, “4 New Assumptions for a New Economics“, post-autistic
economics review, issue no. 2 April 2003, article 4, http://www.btinternet.com/~pae_news/review/issue19.htm
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