Homo Economicus Eternal Self-Interest

The number of people doing volunteer work in Germany is growing constantly and the willingness to make donations is increasing. Yet many scientists and scholars still see human beings as coolly calculating creatures guided by selfish motives. Why do we attribute such great importance to self-interest? A conference of the Einstein Forum got to the nub of matter.

 Conference poster; © Einstein Forum Conference poster | © Einstein Forum “It is not from the benevolence of the butcher, the brewer or the baker that we may expect dinner”, Scottish economist and philosopher Adam Smith wrote in the 18th century, “but from their regard for their own interest”. Since the beginnings of modern economics, the social sciences’ picture of man has been shaped by the idea that, at the heart of all human endeavour, stands a rational calculus set on maximizing one’s own advantage. But is the self-interested homo oeconomicus really an accurate description of man? Or is he rather a self-fulfilling prophecy?

Self-interest, empathy and cooperation

In June 2013 a conference of the Einstein Forum on the topic zum Thema „Why Do We Believe in Self-Interest?“ posed the question of why, despite all the criticism, the theory of self-interest is still so widely accepted. Drawing on impressive studies in behavioural biology, the Dutch anthropologist Frans de Waal was able to show that many animal species have not only the capacity for but also the corresponding disposition to cooperative behaviour. Thus elephants are able to coordinate their behaviour with others of their species in complex ways – for instance, to save a cub or to secure food. Studies have demonstrated that even mice show a surprising capacity for empathy as soon as visible pain is inflicted on one of their kind.

Lorraine Daston, Director of the Berlin Max Planck Institute for the History of Science, emphasized in her lecture the progress signified by the reflection on individual interests at the time of the Enlightenment. People learned then to become aware of their own interests and to take them into account in their actions. The French philosophe Condorcet even wanted to inculcate the capacity for calcul by means of systematic adult education. It should, he believed, become possible for everyone to weigh choices rationally, to distinguish between his own interests and those of others and between clear and unclear ideas. Daston stressed the extent to which this enlightened calculus differs from economic means-end rationality.

The conference also emphasized the strength of the self-interest-based model in plausibly describing phenomena such as the arms race during the Cold War: since both super powers, the United States and the Soviet Union, each correctly assumed that the other would refuse to take a decision that would inevitably lead to its own demise, the horror of a nuclear war could be avoided.

But the self-interest paradigm is not only an explanatory model. Often enough economic policy recommendations are inferred from it. Thus Adam Smith already believed that “By pursuing his own interest [the individual] frequently promotes that of the society more effectually than when he really intends to promote it”. Smith was convinced that self-interested behaviour in free markets led to efficient results and a high degree of prosperity. But is this really so? Does a company, for instance, manage itself more efficiently when managers and employees seek merely their own advantage? The financial crisis of recent years provides a wealth of examples that suggest the opposite.

“Darwiportunism”

In order to describe current developments in the working world, the Saarbrücken economist Christian Scholz has coined the term “Darwiportunism” – a neologism that combines the concepts of the Darwinian selection mechanism and opportunism. Scholz thus describes the increasingly ruthless behaviour of companies that is masked by terms like “process chain optimization”. In this development Scholz includes employee behaviour in institutions. For example, a corporate culture has formed in many places that puts individual advantage at the centre of things. Employers are often seen by employees as merely sources of money, a forum for the gratification of ego needs and the basis for potentially more lucrative jobs. Darwiopportunistic behaviour can, according the Scholz, be of mutual benefit to the parties involved. But that there are also negative consequences has become apparent to everyone in the past few years. The excesses of the financial economy since 2008 at the latest make Scholz optimistic that values like fairness will again play a larger role in the business world in future.