In the film Jerry Maguire, when the hero shares a mission statement about how self-interest has replaced love as the reason to do business in the sports industry, he receives a standing ovation from his colleagues but is fired by the management later the same day. Many experience Maguire’s dilemma at the workplace where only the “converts” who can veil their innermost truths and align without flinching to the vector of capitalism are considered winners. Some of us resort to the unfortunate conclusion that cold selfish behaviour is “natural” for human beings in economic situations. This is false. The real reason for moral ennui at the workplace is buried in mainstream economic theory.

Mainstream economists are the high priests of the modern economic superstructure. They receive an extraordinary moral education in which they are taught to believe that self-interested behaviour is virtuous. This idea is often called the doctrine of the “invisible hand” and incorrectly attributed to the Enlightenment philosopher Adam Smith. The doctrine has a modernist interpretation that is a hostile takeover of Smith’s original idea. The modern version states firstly that human beings are exclusively motivated by self-interest in market economies and secondly that they should be because the invisible hand of the market guides self-interested agents towards the common good of society. The first part is a positivist assertion about human behaviour and the second is a normative endorsement of selfishness. The first gives the theory its falsity and the second its perfidy.

Mainstream economic theory has conjured up a behavioural specie of humans known as homo-economicus – economic man, who is assumed to behave with the sole motive of profit maximization in strategic and even social microcosms. Evidence, however, points to the non-existence of homo-economicus both in laboratory and realistic settings.

The ultimatum game for example, an experimental instrument to understand economic behaviour, strikes at the heart of microeconomic theory by showing that people are often concerned about fairness and dignity over profit. In this two player game, a 10 dollar bill is placed on the table and the “proposer” makes a take-it-or-leave-it (ultimatum) split to the “responder.” The responder can either accept in which case he gets his proposed share or refuse and get nothing. The prediction of economic theory is that the proposer offers the split ($9, $1) . The idea being that the proposer should offer the least amount of money that the responder will accept and the responder, if he is homo-economicus, should accept any offer greater than zero. This prediction of economic rationality bears no resemblance to actual outcomes. A substantial number of proposers (though still a minority) offer a 50-50 split ($5, $5) based on considerations of equity and fair play, even though this is not their best economic move. Low offers are frequently rejected by responders who act against their own best interests and refuse the money to chastise the proposer for making an ‘unjust’ offer.

These results, while perfectly sensible to ordinary people, were so offensive to economists that no major journal would publish them for a long time. Their main criticism was that the stakes were not high enough for homo-economicus behaviour to kick in. Prof. Lisa Cameron tested this with subjects in Indonesia where the participants could receive the equivalent of 3 month’s salary in the game. She still found no evidence of participant behaviour approaching the selfish outcomes.

How did this happen? What makes economists insist that everyone is selfish and that
selfishness is good, when this is obviously and demonstrably false. We have to turn to the
history of Western Europe for the answer. The term laissez-faire meaning “let go,” was coined during the French Revolution to call for the freedom from tyrannical control of markets. The initial idea was a principle of non-interference by the state in the private affairs of citizens but today it is the moral license for indiscriminate free market capitalism. Like Smith’s “invisible hand,” this term also became decontextualized from the historical occasion and engendered the corporate control of government, a reality that is the converse of the original vision! The cry of liberty for all became a free pass for the rich.

Laissez-faire sounds appealing because nobody is obligated to “serve the public interest” and can focus exclusively on themselves in their enterprise. The problem is that it takes away the critical responsibility of the rich to meet the needs of the poor. Today, the poor man is only “free” to sell his labor and his dignity, while the rich man is free in the desirable sense, that is to do whatever he pleases. Friedman’s Free to Choose is a perfect example of rhetoric which makes what is good for the rich appealing to the poor so that the poor vote for their own exploitation.

Friedman sought to abolish the Food and Drug Administration because he thought the
government had no business interfering in people’s right to consume things that could be
harmful for them! Back then, this proposal was against big government but today it is clear that it would be for big business. Milton Friedman received the Nobel Prize in economics in 1976.

There is no place for government to prohibit consumers from buying products the effect of which will be to harm themselves.

Free to Choose TV Series, 1980, vol. 7 transcript, Milton Friedman

After the Global Financial Crisis of 2008 that academic economists failed to predict, the cult of greed that is the modern economic order has led mankind into an unprecedented moment in all of human history – COVID-19. Drug companies were aware of the threat of COVID-19 and had the necessary resources and information to have prepared early for a pandemic but did not do so because it was not considered profitable. This self-interested decision in flagrant disregard for the foreseeable negative social outcomes has to be accepted (and lauded!) by everyone including the government because the economic ideals enshrined in the law protect their “freedom” to act this way. Asked about what can be learned from COVID-19, Noam Chomsky pointed to the failings of the existing economic order.

One lesson is that it’s (COVID-19) another colossal failure of the neoliberal version of capitalism. Massive failure. … After the SARS epidemic in 2003, the scientists knew perfectly well that there were other pandemics coming, probably of the coronavirus variety. It would have been possible to prepare at that point … It wasn’t done. … Drug companies: they have the resources, they’re super-rich because of the gifts we lavish on them. They won’t do it. They observe market signals. Market signals tell you there’s no profit to be made in preparing for catastrophe down the road. And then comes the neoliberal hammer: that governments are not allowed to do anything, that governments are the problem, not the solution.

Noam Chomsky, interview on Efe

Before the spread of COVID-19, the theoretically optimal decision was to not do anything which eventually turned out to be the wrong decision. After its spread, while theory would have us continue running the economy, we have decided instead to sacrifice growth to protect something intangible – human life. The economic decisions around COVID-19 show that neoclassical economic theory is neither a good prediction of human behaviour nor is it necessarily good for society.

By removing the restrictions on capitalists, economic theory has allowed them to prey on every vulnerability of the human being in the name of “freedom.” David Courtwright at the University of North Florida writes about “limbic capitalism” which exploits the addictive propensity of youngsters to keep them hooked to gaming, pornography, and mobile devices despite the fact that psychologists have recognized them as being addictive in the same way as narcotic drugs. Shoshanna Zuboff talks about “surveillance capitalism” in which the goal of tech-giants is to convert human experience into monetizable behavioural data jeopardising en masse the privacy of millions and enabling the profiling of people for political gains by collusive parties. Sociologist Zygmunt Bauman has warned us that capitalism “wants us to remain single” because data shows that singles consume more than their familial counterparts. It is profitable for the populace to be single and thus it is sold as being “sexy.” Getting marriage and having children is now regarded in many metropolitan cities as a radical choice in life.  Primatologist Dr. Jane Goodall has shown that the consumption by the richest 10%,  and not overpopulation, is the driver of climate change. 

Humanity is being turned into a horde of addicted, dependent, insecure and mindless consumers most of whom would deny that market forces shape their behaviour at all. In fact, many swear by the “freedom to choose” and believe it to be the foundation of their liberty and happiness and are willing to vote for war against other ways of life to defend these ideals. This is Foucault’s power-knowledge at work where unsuspecting masses insist on their own exploitation. The co-occurence of helplessness and entitlement in people is one of the greatest ironies of modernity. 

The astonishing thing is that neoclassical economic theory with the doctrine of the invisible hand as its centerpiece continues to be taught at leading economics programs worldwide as required core curriculum. Academic economists sometimes even despair that they teach in the classrooms the ideas they are questioning in their research at the same time! The reason behind this dichotomy is that the criticism of neoclassical economic theory so far has not been driven by the search for alternatives. Curriculum remains stuck in the past because nobody has yet proposed a new set of ideas about how human beings actually behave. We have to find answers to the question: what, if not self-interest, is the ultimate desire of man?