Greed, need, and solidarity: The socialization of Homo economicus

Introduction

Instead of passively accepting the neoclassical assertion that markets are merely amoral tools employed by autonomous individuals, a more cogent approach recognizes that markets are an inherently normative laden form of social interaction through which individuals collectively assign relative worth to objects, activities, and other individuals. Following this alternative approach also calls into question the neoclassical premise that markets provide the metric for evaluating the efficacy of all other seemingly subordinate forms of“social” interaction (Pareto 1906/1971; Hicks 1939; Pigou 1951; Cooter and Rappoport 1984). Homines economia, defined by the market process, only require the protection of private property rights and their freedom to be able to acquire the goods and services that best satisfy their unique and infinite desires. The nexus of the problem is failure of this abstract, purely transactional neoclassical model to recognize both the concept of basic human needs and interdependencies and the requisite value systems that enable actual human societies to function and prosper. By expanding the neoclassical model to explicitly recognize the existence of both human needs and public property rights—i.e., the right not to be excluded—we can provide a basis for understanding the essential role that nonmarket social processes play in evolving rules of distributive justice and constrained market efficiency that would be lost if we depended solely upon markets.

It is somewhat ironic that some of the most salient normative issues that plague the discipline of economics can be traced back to the way in which neoclassical economists have perpetuated a distorted view of their ostensible patron saint, Adam Smith. Their persistent failure to connect his earlier Theory of Moral Sentiments (Smith 1759/1982) with the Wealth of Nations (Smith 1776/1981]) has prevented them from understanding two of his fundamental propositions:

• 1 Complex, market-based societies will experience ever-increasing levels of economic and social interdependencies.
• 2 Economic progress requires that societies need to constantly derive public and private property rights that accommodate these interdependencies and offset the delusions of autonomy fostered by markets.

Though markets are a necessary component of an advanced and prosperous society, Smith also recognized that they can work to undermine social solidarity; i.e., the moral sentiments and level of empathy needed to sustain such a society (Johnson 1990). The simplest and most direct means of modeling the type of economic interdependency that characterizes such advanced market societies is to recognize the unique features of need-based behavior.