Socioeconomics
Amitai Etzioni
The neoclassical paradigm assumes that people have one overarching goal: satisfying their wants. Historically, these wants were depicted as materialistic; more recently, satisfaction derived from other sources has been added, such as the pleasure gained from helping the poor, but the core concept remains self centered and hedonistic and Meistic: people are propelled by their wants, their self interest, their profits. Research in this tradition further assumes that a person’s various ‘‘tastes’’ can be neatly ordered into one unitary pattern of desire, with a common denominator to ‘‘trade off’’ various items (apples for oranges, etc.), a notion at the heart of economics. In contrast, my finding is that people have several wants, including the commitment to live up to their moral values, and that these wants cannot be neatly ordered or regulated by prices. This finding provides a starting point that is fundamentally different from that of the neoclassical paradigm.
Socioeconomics Based on the I–We Paradigm
This paradigm assumes a divided self, which does have the hedonistic urges assumed by the neoclassical paradigm (albeit those too are affected by the values of the society in which the person lives). However, far from mindlessly pursuing these desires, the person is viewed as a judging self which examines its urges and evaluates them by various criteria, the most important of which are moral/social values. A struggle ensues: under some conditions, urges win out; in others, morals triumph.
There are many ways of classifying ethical positions. Socioeconomics is moderately deontological, where a deontological position is the notion that actions are morally right when they conform to a relevant principle or duty. De ontology stresses that the moral status of an act should not be judged by its consequences, the way utilitarians do, but by the intention. Moderate deontologists take consequences into account but as a secondary consideration (see utilitarianism).
The significance of incorporating this moral dimension into the concept of human nature is that it is perhaps the most important feature that separates us from animals. Our moral commitments and our urges do not often pull us in the same direction. Much of human life is explain able as a struggle between the two forces, and a study of the conditions under which one or the other prevails. Even a modicum of introspection provides first hand evidence of this significant, perpetual inner conflict. Those who have never experienced such conflict are either born saints or utterly debased (Etzioni, 1988).
Having resolved the conflict and decided upon a goal, how does a person go about selecting a course, the means to the goal? Neo classicists say, rationally; that is, by using empirical evidence and logical inference. Much of this approach is contradicted by the observation that most choices are influenced heavily by normative/affective (N/A) factors; that is, by people’s values and emotions. These factors shape to a significant extent the information that is gathered, the ways in which it is processed, the inferences that are drawn, the options that are considered, and the options that are finally chosen.
Entire categories of means, whether ‘‘efficient’’ or not, are judged to be unacceptable and automatically ruled out of consideration. Thus, most reasonably competent daughters and sons of the American middle class consider it unthinkable not to attend college. About a third of those entitled to collect welfare refuse to apply, because it’s ‘‘not right.’’ Furthermore, emotions (e.g., impulse) cut short deliberation (when it does occur). While emotions and values have often been depicted as ‘‘distorting rationality,’’ which they can do, they also agitate against using means that may be efficient in the narrow sense but are indecent or hurtful to others or the community. Furthermore, N/A factors can often play a positive role in decision making, especially by mobilizing or inhibiting action or generating or communicating information. In short, the moral order deeply affects not merely what we seek to accomplish but also the way we proceed.
The Individual in Community
The neoclassical paradigm draws on and con tributes to the Whiggish tradition of investing all moral rights in the individual; the legitimate decision maker is assumed to be the individual. All attempts to modify a person’s tastes are viewed as inappropriate interventions (hence the term ‘‘consumer sovereignty’’). Moreover, the government is usually blamed for attempts to redirect individuals, and such redirections are treated as intrinsically coercive. In contemporary terms, the neoclassical paradigm is essentially libertarian (see libertarianism).
A recent philosophical trend, the communitarian movement, attempts to correct this radical individualism. Communitarianism builds on the observation that individuals and communities are mutually dependent, and that certain ‘‘public goods,’’ not just the individual, are fundamentally of merit – for example, defense, basic research, public education. Some extreme communitarians entirely neglect individual rights in the name of societal virtues, the motherland, or some other such cause. A much more defensible position may be found in recognizing that both individual rights and duties to the community have the same basic moral standing, hence the I–We paradigm. It follows, for example, that we need to both recognize the individual right to a trial by jury of peers, and the individual’s obligation to serve on a jury; to be defended, and to pay for defense; to benefit from the savings of past generations, and to save for future ones.
The voice of the community is typically moral, educational, and persuasive. If coercion is relied upon, this indicates that the community has been weakened, with too many members engaged in activities previously considered unthinkable. The more effective policy is not to enhance the government but to rebuild the social and moral community. This shift starts with a change of paradigms, from the neoclassical to a new approach that encompasses rather than ignores the concept of community, one that balances (not replaces) individualistic tendencies with concern for community, and one that reaches beyond the realm of material incentives and sanctions to the role of values, particularly shared values, as long as they are freely endorsed and not imposed.
Empirical work on the role of community has shown unequivocally that social collectivities are major decision making units, often providing the context within which individual decisions are made. Moreover, in many areas collectivities, if properly structured, can both render more rational decisions than their individual members (though not necessarily highly rational ones) and account for more of the variance in individual decision making than do individual attributes (see Etzioni, 1988).
Another crucial function of community is to contain the conflict and limit the scope of market competition. This social context is not merely a source of constraints on the market but also a precondition for its ability to function. Three types of elements sustain market competition in this way:
- Normative factors, such as a commitment to fairness in competition and to trust that this commitment will be shared by others.
- Social bonds, reflecting the fact that competition thrives, not in impersonal systems of independent actors unbound by social relations, as implied by the neoclassical paradigm, not in the socially tight world of communal societies, but in the middle range where social bonds are strong enough to sustain natural trust and low transaction costs, but not so strong as to suppress ex change orientations.
- Governmental mechanisms as the arbiter of conflicts, where normative factors and social bonds have proved insufficient constraints, and the enforcer of judgments. These crucial roles illustrate the need to move beyond the conceptual opposition between ‘‘free competition’’ and ‘‘governmental intervention,’’ which implies that all interventions are injurious and that unshackled competition can be sustainable.
The essential capsule of competition is thus best considered as an intertwined set of normative, social, and governmental mechanisms, which have a distinct role but also can, within limits, substitute for one another.
Bibliography
Etzioni, A. (1988). The Moral Dimension: Toward a New Economics. New York: Free Press.