The Homo Economicus is “The Body” of the Agent

The model of the decision-making agent known as homo economicus is a trivial truth, but not a misconception. All agents are supposed to maximize the utility of their resources – that is true in every geography and in every age. But because it is a tautology, it is a mistake to give to the deductions brought about from this sole model the value of a description of a particular reality. As Wittgenstein had pointed out in his Tractatus, the tautologies do not convey any relevant information of any particular world, but of every possible world. The error consists on qualifying a common note to every possible situation as a distinctive characteristic of a particular set of events. To say that every agent acts to maximize his utility is true, but to state that this observation tells us something of a particular world that distinguishes it from every other possible world is the most extended misconception about the use of the model of the rational agent.

In another post, I mentioned the importance of having a body in order to develop a personal identity. In the same line as Hayek’s Sensory Order, the body enables us with the most elementary system of classification that makes our perceptions possible, or – to express it in a more radical empiricist strain – that brings the experience to happen. Upon this system of classification will sediment more abstract layers, or degrees, of systems of classification. Our knowledge is expressed at a level of abstraction that our mind can handle, whereas the law, the market, and the language are examples of phenomena that might achieve increasing degrees of complexity that mark blurred boundaries to our knowledge. The former are named “simple phenomena” and the latter “complex phenomena” in the Hayekian terminology. Our personal identity is continuously developing on that stratus set between the simple and the complex phenomena.

In this sense, we need the conclusions brought about by the rational agent model as the stem upon which lay further strata of increasingly complex analysis. Paradoxically, the more particular the social reality we seek to describe, the more abstract has to be our layer of analysis. Notwithstanding, it would be impossible to us to conceive any image of the social experience if we lack of the fixed point of the rational agent model.

Max Weber’s ideal types could be interpreted as instances of social arrangements based on the rational agent model, which incorporate particular – and abstract – characteristics depending on the historical circumstances under scrutiny. At the bottom of both adventurous capitalism and traditional society, beneath successive strata of different social and institutional designs, we will find an agent who maximizes utility. Perhaps that is why the term “rational capitalism” is so controversial. If rationality concerns subjective reason, then rational capitalism encloses a circular definition.

In this line of ideas, I hope this quick reflection might shed some light upon the old discussion about instrumental rationality and substantive reason. Since the instrumental rationality is common to every possible world, we might look for the substantive reason that gives order to this actual world in the increasing layers of complexity that reach degrees of abstraction that are superior to the subjective reason. Although that does not mean that we will ever be able to find it.

Another Liberty Canon: Montaigne

Michel de Montaigne (1533-1592) might be the least controversial of the list of thinkers who have inspired me on liberty, but are not part of the standard list of thinkers on liberty. He even appears in the extensive collection of the Online Library of LibertyNevertheless there is a need to develop more the nature of his thoughts on liberty, and related subjects, and not just leave his ideas in the hands of commentators who are not liberty oriented, who may be over optimistic about collectivist and state schemes to rectify various forms of dissatisfaction.

Amongst other things, Montaigne offers an ethic of individuality, which is not too tied to some very specific moral theory, and which is neither narrowly egotistical nor a demand for self-denial. He explores his own strengths and weaknesses with sometimes unsettling frankness to establish a form of individuality that is both affirmative and self-questioning.

Montaigne’s life work was his Essays, which are in large part concerned with a life lived through writing and through the reading of books, which inspire Montaigne’s own writing. This came fairly late in life though, after a career as a local judge, and a period of melancholy which may have been connected with the death of his friend Etienne de La Boétie, himself the author of a classic of liberty minded political thought, ‘Discourse on Voluntary Servitude’.

Montaigne spent much of  his time in a tower on the family estate, writing in a book lined study. He did not write a big continuous integrated book, rather he wrote a series of essays of very variable length, which became the large cumulative classic, Essays. The individual essays range in length from about a page to more than two hundred pages in the case of ‘Apology for Raymond Sebond’.

The title and themes of the essay just mentioned can be taken as an illustration of Montaigne’s way of writing. Sebond was minor Medieval philosopher, who seems to have been a follower of Thomas Aquinas, translated by Montaigne’s father, and accordingly the essay has an element of filial piety in its origin. However, the essay has little to say about Sebond’s philosophy as it ranges through the link with his father, the context of writing, numerous philosophical themes largely established in discussion of ancient thinkers, including animal nature, knowledge, doubt, and being.

Montaigne’s explorations in his essays, longer and shorter, are on his own account rambling and contradictory, though they are also written with great literary style and at a high level of reasoning with regard to the difficulties of arriving at consistent positions. Part of this is that his writing is about himself, what is going in his mind at the time of writing, and therefore what reflects his passing moods and ideas.

The result is not a mess of unconnected thoughts, but a simultaneous exploration of how the mind works and the workings of the world in which the mind exists. The emphasis on the self is a confirmation of the moral importance of the individual and Montaigne is one of the major contributors to the idea that every individual perspective and every inner world matters.

The importance of every unique consciousness is expressed in a revulsion at cruelty, in the use of state power, or in any other kind of context, which is both horror cruelty at others and despair at futile forms of self-sacrifice. Our regard for the world created by someone else exists together with our own determination to prudently preserve  our own world of experience.

There is self-criticism in Montaigne’s account since he had been a judge and was very aware that a perfectly just judgement was not always possible. The judge has duties to follow the letter of the law and the history of interpretations of that law, which do not always harmonise, so undermining the idea of perfect justice. Furthermore, both these requirements may often prevent a judge from acting according to inner conviction about the relevant facts of a case and the moral evaluation of them.

He was painfully aware that the poor tended to come off worse from such constraints. In general he took some pride in an understanding of the condition of the lower classes that his father had encouraged. Though he made no claims to great generosity towards the poor, he does provide an example of thought about how state acts, and other actions, change the lives of weakest and most marginal in unintended ways.

Montaigne does not have a clear suggestion to offer on how to avoid such problems. He does entertain some utopian scenarios in which humans live spontaneously,  according to perfect justice in small self-sufficient communities without a state, and without judges, or ‘expert professionals’  of any kind. Montaigne was sceptical about medicine as well as lawyers, and was an early critic of the idea of imposing ‘rational knowledge’ on communities.

We must also be aware that Montaigne offers a utopia here, and one in which property accumulation  and communication, commercial or otherwise, between communities does not exist. He did not think that would be desirable, so does not offer a consistent non-state vision or vision of pure custom replacing law and imposed expertise. He does offer a powerful sense of how these things can go wrong and the need to temper and contain them, in a way of thinking in which every individual counts, just as nature can create anything, and even the most ‘monstrous’ creations are to be valued as part of the abundant possibilities of nature. 

In some respects, Montaigne is an enigma, and not just because of the shifting point of view he offers. He is evasive on the difficult questions of the time: Was he a republican  or a monarchist? Was he a Christian? Was he a Catholic? He adopts the pose of a moderate monarchist and moderate Catholic Christian, but there are plenty of hints of doubts and leanings towards other perspectives.

I am inclined to think he was a religious sceptic, with strong materialist leanings, and a republican at heart, but there is no certainty about this. Though his prudence on these issues partly reflects the dangers appearing to oppose the state authority and state church of monarchist Catholic France , his capacity for such elaborate and complex prudence shows a capacity for tolerance, understanding, and inclusion, that is its own message.