Why Economics Should Return to its Roots

Economics explains how people interact within markets to accomplish certain goals. People; not robots. And people are creatures with desires, animalistic urges that guide them into making conscious, but often unconscious, decisions. That sets them apart from robots, which act solely upon formal rules (If A, then B, etc.). But this difference between humans and robots shouldn’t have to be a problem, right? Not if economics takes into account the fact that humans are biological creatures, who (might) have got a free will; an observation which makes their actions undetermined and therefore unable to be captured in terms of laws.

It seems fair to say that we all want to increase our utility – in the broadest sense of the word. But do we always know why we want to increase our utility? Don’t we never ‘just want’ to go out, ‘just want’ to buy a new television, ‘just want’ to go on holiday? Yes we do: it seems that, sometimes, we just happen to want things: we don’t know why, we don’t have explicit motives for our desires. And if we – the people having the desires – don’t even know why we do things, how on earth could economists know, let alone capture these actions in laws? That’s only possible if you make assumptions: very limiting assumptions.

Rational choice theory is a framework used within economics to better understand social and economic behavior by means of formal modeling. But if this sense of understanding – that is possible only through formalizing humans’ behavior – is only possible by treating humans like robots, what then, on a conceptual level, is the difference between economics and artificial intelligence? Besides that the latter really works with robots and the former seems to assume to work with robots? Robots whose actions are fully predictable and explainable by a set of parameters: speed, vision, greediness etc. Or its formal economic counterpart: humans whose actions are manipulable by changing interest rates, government expenditures, taxes and other parameters that are part of the large economic machine we are all a part of. Assuming a mindless creature, following formal rules, makes it possible to capture his intentions in a formal corset. Everything should be dealt with in a formal manner: even uncertainty should be put in mathematical terms. Anything to make sure that we don’t miss out on any of the creature’s shenanigans. Even the ones that are grounded in the deep domains of irrationality.

But maybe it’s time to wake up and ask ourselves the question: have we come to forget what that we’re dealing with humans here? That the economy is not a steam engine, robot or any other mindless entity whose actions are fully explainable – let alone predictable. Have we forgotten that economics is a ‘social’ science, a science dealing with products of the human mind, related more to psychology than to mathematics?

It’s understandable that economics wants to position itself as being a ‘genuine’ science, a science that is able to objectively describe the way the world works. A science that wants to show that it is capable of capturing its findings in laws. But why should economics be dependent upon these kind of formalities in order for it to be a science? Isn’t it time for economics to stop being insecure? To realize that it’s beautiful the way it is. Why does it behave like an 18-year old girl, whining and crying about the girls who she thinks are prettier than her? Stop it economics! You’re pretty: be happy with what you are.

But this leads us to the real question: what is economics? Economics is – much like politics – a system created by the interaction between us human beings. A system that – although less explicitly than politics – is founded on the notion of morality: our ideas about what’s right and wrong. It’s no surprise that figures such as Adam Smith and Friedrich Hayek have been so influential in economics. They understood what economics was really about: economics is in the basis a philosophy of what it means to be a human being, and the fundamental rights that each one of us should have. This ethics is the starting point of their economic systems. And that’s a tradition current economists should try to continue: interweaving morality and money. Keeping an eye on the moral fundamentals underlying markets and coming up with original ideas about how to improve these markets on a moral level. So there’s plenty of work left to do for the genuine economist.

But what do you think?

Why do People Enjoy Talking about Themselves So Much?

Do you know those people who always seem to interrupt you when you are talking? Those people who always seem to find a way to make the conversation go about themselves? Or maybe you consider yourself to be just that kind of person? And if so, how does that make you feel? Personally, I get very uncomfortable around people using the word ‘I’ more than five times per minute. It makes me feel like I am attending a lecture instead of having a conversation. But do you know what bothers me even more? I am that kind of person.

Too much using of the word ‘I’ can be an indication of either of two things: (1) a lack of empathy or (2) a disproportionately large longing for validation. Let’s start with empathy. Any human being living in this world of ours has a need to socialize with its fellow species-members, whereby socializing consists of keeping an adequate balance between the giving and taking of thoughts. It is an endeavor that allows us to live together in the dense populations we have. However, whenever the balance between giving and taking gets distorted too much, we don’t consider ourselves to be engaged in a conversation anymore. By talking about ‘I’ too much, the conversation has stopped and the plea has begun. By talking about what ‘I’ believe too frequently, you implicitly take away the right of your conversation partner – or even his duty – to contribute to the conversation. And that is what we usually consider to be anti-social behavior.

The other reason for using the word ‘I’ too frequently is that you might have a disproportionately large need for receiving validation from your social environment. This need consists of a sense of ‘wanting to be listened to’ that is significantly larger than what people generally consider to be pleasant. The question is: why would someone do that? Why would someone keep talking about his own ideas while knowing that his interlocutor might not find this pleasant? Well, maybe it is because the person doesn’t understand yet or doesn’t understand why his behavior is considered to be anti-social. Maybe it is because he just started interacting with his species members and still needs to experience the nature of giving and taking which is present in a pleasant conversation. Or maybe the person knows all of the above but still doesn’t consider himself to be anti-social; maybe the person believes that we he says is right and that what the others say is wrong, and that this observation justifies him in talking about his ideas disproportionately much.

However, it often is very difficult to draw the line between what is a healthy contribution to a conversation and what is a narcissistic urge to express one’s ideas. The former is praiseworthy and can function therapeutically, constructively and even emphatically. Speaking is after all the best medium we have at our disposal for us human beings to make others aware of our beliefs. You could of course say that works of art and other human creations also have the capability to pass on their creator’s message. And although that might be true, social interaction in terms of the spoken word still seems to dominate each other medium in making your intentions clear to another human being. Face-to-face communication allows people to absorb the often subtle gestures, facial expressions and tonality that are required in order to truly understand the creator’s beliefs. And, as you might have experienced, passing on a well-intended written ironic statement is much more likely to be misinterpreted than the same message being spoken out loud. The subtleties present in human speech can make all the difference for interpreting a message in either the intended or unintended way.

But although it might be annoying, sometimes we just have to let the ‘I-talkers’ rush out and talk about themselves. Sometimes we just have to let them release the tension that is underlying the painfully unidirectional ‘conversation’ you appear to be engaged in. We might even learn something from it; that is at least what I hope your response will be after reading this self-centric plea of mine.

Therefore the right question to put all the above into perspective would be: what do you think?