The Myth of the Rational Economist

This year marks the fiftieth anniversary of E. P. Thompson’s classic book, The Making of the English Working Class. The book chronicles the state sanctioned proletarianization of English craftworkers and artisans in the late eighteenth and early nineteenth centuries. Thompson’s primary goal in writing the book was to rescue working people from the ‘enormous condescension of posterity.’ Thompson’s target was the elitist anti-working class bias in academia – particularly history and sociology – that portrayed lower class agency as fundamentally irrational and dangerous. This bias against the actions of workers, peasants, slaves, serfs and women is as old as the canon of Western political thought, when Plato depicted the women, children, slaves and so-called ‘free men’ of the Athenian democracy as irrational slaves to their appetites in the pages of Republic. In Thompson’s time, this excessively normative characterization of lower class agency was given a dispassionate, pseudo-scientific gloss dating back to the literature on crowd behaviour pioneered by the likes of Gustave Le Bon at the end of the nineteenth century. 

Yet, it seems that old battles need to be constantly re-fought as the pseudo-science of yesteryear penetrates the last bastion of academic rationalism:  economics.  A relatively recent case in point is Bryan Caplan’s astonishingly condescending book, The Myth of the Rational Voter, a book that vindicates Thomas Carlyle’s characterization of the discipline as the ‘dismal science’ on its opening page. Caplan’s contribution to economics is the claim that people are fundamentally irrational. This claim is, of course, old hat to anyone living outside of the bubble of rational choice theory. Do not, however, expect some prosaic Burkean argument about the significance of habituation and prejudice, or the propensity of man to be awed by the sublime and incomprensible. Rather, Caplan dresses his economic revelations in vulgar Epicurean clothes:  people vote irrationally because it makes them feel good
Again, much of this is not new. Both Epicurus and Hobbes made the claim that men acted on the basis of pain and pleasure: they desired what brought them pleasure and tried to avoid what caused them pain. Indeed, Jeremy Bentham’s entire liberal doctrine of utilitarianism was founded on such an idea and acted as an important inspiration to the later development of rational choice theory. But in their various ways, each of these thinkers argued that man’s reason served his passions or appetites. Reason still played an important role, it was merely a vehicle or an instrument to serve the passions.
Caplan’s ‘innovation’ is to enable economists to have their cake and eat it to, for it is not so much that people are irrational, rather, they are rationally irrational. But what is important is the criteria that determines irrational behaviour. One need look no further than page one:  irrational behaviour is support for protectionism, full stop. Here Caplan makes sweeping and unsubstantiated claims such as:  economists on both sides of the spectrum argued about the evils of protectionism for centuries (except those that didn’t); and protectionism harms most people (except those that it doesn’t hurt, like the countries that implemented tariff walls to facilitate industrialization, such as the US, Canada, Germany, France … you get the picture). This historical revisionism that implies that laissez-faire led to the path of economic development has been revealed to be myth by Sandra Halperin in her book, The Mirror of the Third World.
Given that support for protectionism is decreed as a form of rational irrationalism (decreed because Caplan doesn’t even bother to argue the point), the fact that voters may vote in favour of protectionist policies is considered by Caplan to be a ‘paradox of democracy’ that produces ‘bad policies’. Of course, it is only a paradox if you believe that support for protectionism is irrational and harmful to most people; if you don’t subscribe to that position, then it is merely a result of democracy. What this amounts to saying is that the auto-worker in Detroit who votes in favour of a bailout of General Motors is rational to the degree that this act serves his immediate interest of retaining his job (not to mention the spill over effects that affect the entire community; everything from parts suppliers supplying the industiry to diners and pubs servicing the autoworkers’ needs); however it is irrational because it displays anti-market bias. For Caplan, this means that it is irrational because according to his theory of economics, at some point in the future, dire economic consequences will ensue. It stands to reason then, that it would be more rational for the autoworker to vote his employer – and himself – out of business so as not to distort the market (the irony here is the economics comes from the Greek word oikos, meaning household; but clearly there are no households in Caplan’s world, just free floating rationally irrational economic actors).

Take this example of scholarly argument: ‘Voter ignorance is a product of natural human selfishness, not a transient cultural aberration.’ Case closed. No bother arguing the case; no need to engage in the voluminous political science literature regarding declining voter turnout, the transformation of political parties, the decline in party membership, the weakening of legislative power, etc. None of that is necessary. All that Caplan needs to do is mouth the words rational ignorance and all is sorted:  people are ignorant because they know it is rational to be ignorant; and it is rational to be ignorant because they are fundamentally selfish – a truism of economics and theology that in the social sciences at least has to be argued.  
At the end of the day, Caplan’s book is merely another elitist screed denouncing the multitude for not buying his brand of pseudo-scientific market fundamentalism. As I have been highlighting on this blog, liberalism has long displayed a contempt for the alleged ‘ignorance’ of the working classes. Caplan is no different. If the masses disagree with you, obviously they must be irrational. Unfortunately for the likes of Caplan, people seem to support democracy, so we can’t strip them of the right to vote (although that hasn’t stopped the right-wing from trying to stop them from acting on their right to vote). This is the contemporary conundrum of neoliberal technocracy. But there is a solution of course, because democracy for liberals is merely a method of choosing government; it has nothing to do with the scope of political power.  In other words, democracy has nothing to do with the spheres of social life that can be brought under collective control. What Caplan would like to do is to diminish the capacity of democratically elected politicians to have any influence over economic policy, thereby removing economic policy from the sphere of democratic decision making. Those decisions would be vested with the ‘experts’, a class of ‘Economist Kings’ immune to such petty concerns like unemployment or working conditions.  We have now reached the point where the neoliberals have become that which they always claimed to oppose:  a new Platonic elite that claims access to a higher truth that grants them the wisdom to dictate to the rest of us where our true interests lie.       

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