Religion & Liberty Online

The person at the center of the economy

When we think about economics we can tend to immediately focus on mathematics, data, and graphs, but at its core economics is the study of human action in a marketplace. Economics is a human science.

Which means we need to have a clear vision of who the human person is and how he acts. Much of modern economic theory operates with the assumption of human beings as “rational maximizers.” This is called homo-economicus—economic man. Now the reduction of man to economic man can at times be useful in thinking through a problem, but when it becomes the underlying assumption of who man is and how he acts, it can lead to a lot of errors. A central part of the revolution in behavioral economics was to show that the person does not always act as a rational maximizer. Behavioral economics can also fall prey to a reductionist concept of man and a limited vision of reason, but, for its faults, it has acted as an important corrective, and much can be learned from it.

The human person is not simply an economic being. The human person is a complex being that cannot be reduced to one single element economic or otherwise. Many of the problems of modern economics and other social sciences are they begin with a reductionist, often materialist vision of the human person that does not take into account the complex individual and social nature of the person.

What Does Economics Have to do with the Human Person?

John Paul II wrote that that the “fundamental error of socialism was anthropological in nature.” At first glance this seems strange. After all isn’t socialism an economic theory? Is not the fundamental problem an erroneous economic theory? But a closer look at socialism, whether it be that of Karl Marx, Antonio Gramsci, the Frankfurt School or the Fabians, reveals that socialism is first an anthropological and philosophical vision of the person and society. Economics are important, but they are not as central as we often think.

At the core is an erroneous and materialist vision of the human person. If we are going to get economics right, we have to begin with proper understanding, a richer, more complex vision of the human person. The person is not simply a material thing comprised of neurons, chemical, and hormones. We are embodied, so we are of course impacted by all these things, but we are not determined by them. We have reason, and freedom, moral agency and moral responsibility. We are both individuals, subjects willed for our own sake, and social beings called to be in relationship with others.

If you think that human beings are simply matter, then it is a short step for them to become cogs in the machine of an industrial factory or the socialist state. How we think about the human person changes the way we think about the politics, marriage, family, life and death–and how we think about economics. There are many things that the science of economics can tell us. It teaches us about the importance of prices, supply and demand, and the role of incentives. But if we are going to understand what economics teaches us and apply the lessons well, we need to begin with a rich, beautiful vision of the human person.

Here is a short video from The Good Society series that addresses the connection between the person and economics–that puts the person at the center of the economy.

Michael Matheson Miller

Michael Matheson Miller is a Senior Research Fellow at the Acton Institute