A Review: The End of Economic Man

The End of Economic Man
George P. Brockway

Reading this title was particularly appealing from a non-economist's perspective. Namely because the subject can be such a scrutinous, nebulous, heartless topic which endlessly appears to concern itself with the balancing of paretas, game theoreticals, vector units, graphs of continuous varieties and complex looking formulas for break even, profit and loss, lag and or productivity cycles, et al. Brockway entices interesting discussions on his pet topics, he is fairly obstinately opposed to FRB interest rate increases and has a left of centre perspective on squeamish topics such as true measures of productivity, and the disproportions inherent in the bottom 20% of labour consumption and production. They call him humanist, but I am not sure the skeleton he examines is completely human. There is something of a chimera in the shadow of economic man's ends. Certainly he writes more about man's purpose than his denouement.

But firstly, economic man is defined as a hypothetical being, free from altruistic sentiments or motives and selfishly pursuing wealth and its enjoyment. That such a man exists in hypothesis form is logically correct. That many outrageously wealthy men (and women, man appears as an assumption, something which economic measures are always satisfying with composite hypotheticals) certainly appear by all accounts to enjoy and pursue wealth with great singularity is fairly obvious. But on the basis of actual life, real situations, even those possessed of an understanding or interest in Euclidean space dimensions, it is highly improbable, and perhaps almost impossible, that any sentient being actually is completely bereft of any or all altruistic elements. Yes, Gates has his philanthropic interests, as did Carnegie. Soros, while reviled in countries like Malaysia seems to redistribute large portions of his wealth through educational training in Eastern Europe. Even Ted Turner has made significant divestments of his wealth. Brockway seeks to burst an illusion on the topic of economic man. Such an economic man only exists in the perceptions of principles, be they economic or not, associated with consequences and judgements made by individuals or communities of individuals in the realm of purchase and sale of commodities and or services (which are a more highly categorized variety of commodities).

The psychology of the study of such economics is Brockway's first target. He digs around in Adam Smith and Maynard Keynes, as each appears to do, he latches on to dead hands and nuggets of perceived wisdom. Whereas many disciplines have managed to move on philosophically from the Age of Mercantilism, it is an easy assessment to make that many in the field of economics guard more closely the tombs and graves of outdated theories in a quest for purity of reason that in many contemporary fields, from a humanistic perspective, economics as a science might appear outrageously attached to a bygone era and blissful aridity of bean-counting and its associated derivatives. But the consequences and judgements remain based in corporate dynamism, which appears to favour only recently issues such as Sarbanes-Oxley, accountability principles that attempt even to qualify or quantify intellectual properties inherent in staff allotments and intangibilities, Black-Scholes options pricing, and levels of financial transparency probably never imagined in Smith's often misattributed, entirely dead, invisible hand of economy.

Economic man is further defined as possessing inherent aspects of greed, a human condition, related to productive or consumptive capacities, and even Maslow would assume in the hierarchy of needs that greed plays a role in establishing the psychological priorities of man. Greed cannot be excised from an enlightened self interest, but it can be rationalized, often to a greater extent and net benefit to the individual or corporation than any degree of enlightened self interest might hope to reasonably attain. In all his discussion on the topic, Brockway hinges on three fairly solid antimonies of greed, and its relation to the work of economists. He beats the horse with these:

1. Maximizing profit and utility cannot be enacted simultaneously. Where one rises, the other falls.

2. In partial analysis, universality of greed and its converse, philanthropy, are undeniably equal in scope. However, some argue greed possesses greater limitations of net benefit.

3. Foolish greed is unpredictable, rational greed absurd.

Only perhaps in the last ten years of its conception has the world of economics been called to provide such new formulaic assumptions-based modeling. A new age skeletal anatomy of that clay-like claw is in the workings, mostly out of the demands of stock holders and dividend-desirous financiers who rightly credit the French for coming up with ideas like laissez faire anyway. Brockway jibes Smith for never providing any economic evidence of human interest in the moral behaviours of economic man. A fair complaint, but an impossible task to fulfill. Individual priorities, whether humanist or the result of base greed, in broadly defined pedestrian versus corporate societies can neither be ordered communitarily nor even deduced in a complete ranking of all their possible variations. Such idealisms may be enlightened, as Brockway's perspective, but offer little to the computational economist working exclusively within macro, micro, welfare, or market economics within base mathematicals, metrics, measures, and graphing out of real, real positive or even real negative lemmas. Such demands would be akin to asking the banana to devour the chimpanzee. However, it does appear to at least be wiggling around in contemporary perspectives on the topic of a revisionary perspective on economics.

So as Brockway leads into the topic of mathematics, economists seem to revel in the impartiality of measuring statistical sets of data according to formulas and equations to map out potentials at time specified event horizons and factorials. A self-enclosed, or open, dynamic, or static arrangement of events, inputs, outputs, and possible permutations based on statistical manipulations. Economic man quotes a defense of his retreat into the safety of the mathematical forest with, " our science must be mathematical, simply because it deals with quantities. Wherever the things treated are capable of being greater or less, there the laws and relations must be mathematical in nature." (William Stanley Jevons, 1871) Brockway indicates with ample historical evidence that the ways and means of economists and economic theory have followed the path of Newton and Max Plank because its adherents wish to stumble upon grand universalist type theories, whereas the topics of their study, namely money, goods, and services exist in the realm of human values rather than pure logic, physics, or mathematical esoteria. The relationship is subversive according to Brockway. Mathematical universes do not impact upon human values as do the results of econometrical formulas and decisions based upon their results. His best example is the inverse and reciprocal relationships in formulaic equations versus the unilinears of economy. Calendar or historic time dominate economics and are irreversible in reality of consequences and judgements in ways which pure mathematics or physics has never intended. He hints a linear destination in economics of illogical obtusiveness which is lacking a crucial element: the human factor.

His description of the value and purpose of money is enlightened and I have never before seen it so well explained. Money never has an actual fixed value theoretically it floats interalia between goods, commodities, and services and exists merely as a tool to interpret the values as accorded by buyers and sellers as a measuring device rather than holding its own discrete value. It is an agreed upon standard measure, and as markets prove, inter-trades, futures, and hedges place diverse values not on money itself but upon its imminent quality of liquidity, rather, the speed at which it can be converted from one measurable use to another. Its value is accorded in time vectors and future value is always of higher uncertainty, with added risk, while its immediate liquidity always makes a dollar today absolutely more valuable than any day in the future. Brockway illustrates the measurement of the purchasing power of money through the tabulation of consumer market price indicies and baskets of commodities, stocks, bonds, options, or currencies. But in measurement, only a snapshot can be taken while the continuous rise and fall of values is a consistent and interesting covergence with the physical impossibility of locating the exact positions of for example, electrons rotating around a nucleus. One may measure their speed or rate in the same manner as can be found in increases or declines in monetary values, but their exact location is never certain but hypothetically assumed as are currency variations. So many aggregate determiners influence money valuations to be nearly infinite, and quite influenced as in the allusive possibility that a butterfly's wings flapping in the Amazon could implicate the strength of a hurricane in the Carribean. But primarily consumer demands, and for example, mortgage rates on housing loans can implicate shifts in perceived purchasing powers. Supply is also an issue. For example, there are no standard or useful measures of the total amount of money in circulation, especially US dollars. Broad framework categories exist to segregate money into different flows of liquidity but they are vast numbers and amounts, often flowing continuously and almost seamlessly from one flow rate to another. Money is the sea. And everything bought and sold in the world is as flotsam and jetsam upon it.

The most familiar "law" of economics is probably supply and demand and their effects on prices. Small supply as in oil (or its refinement) then high demand raises prices and vice versa. However the dictates of market alone do not set real prices. Moral sentiments implicate fixed prices on many commodities versus what are considered natural price allocations. Economics often only fiddles with ideal pricing strategies which rarely come into effect or practice as substitution or monopolistic factors can implicate markets. It is often the same argument that US policy-makers support in their efforts to influence the trading patterns of their allies and partners, either through trade negotiations or treaties and pacts. But often in reality, the scene or stage setting for ideal pricing and free trade is never truly worked out and overwhelmingly appears to work in the interests of the US at times. The cost of maintaining free market economics may often exceed the perceived benefits. But overall Brockway insists that economic goods are human goods and price setters and takers are human beings, operating within the boundaries of responsibility and freedom.

The implications of economics on the scale and divisions of labour impact lightly in Brockway's interpretation of the economics of labour. He credits wage scales as human creations and that the highest allotments are afforded to speculators while a large proportion of mankind exist on only the most meager wages. Consumption and production are described as locked into set with one another and often reflects inequities in scale of consumption in one wage group versus another. The cost of labour alone has been the singular most important factor in the redistribution of manufacturing outputs and capital reallocations globally and continues to spiral in the increase since Brockway published this book in 1995. He realizes that enormous capital gains could be realized if the under or unemployed were considered of investment grade value to corporate organisations. The actual cost to convert such non-consumers would be lower than their expected contributions to consumption and production cycles.

In productivity Brockway bemoans the tools of measurement and the dearth of models which employ the maximization of consumption and production among the members of the bottom 20% of working populations, in some cases, only consuming 4.2% of their GNP. Few economists would contemplate tackling this issue and Brockway should be commended for even thinking of delivering such wonderful truffles. Then in the staving of inflationary pricing and loss of perceived real wages and savings, Brockway bemoans interest rate hikes courtesy of fellows like (recently former) Chairman Allan Greenspan's Federal Reserve Board hikes. In derailing inflationary control measures, Brockway would have the world's largest monetary unit, the world's largest net debtor, and largest consumer of capital goods (thanks to Leontieff's Principle) careening through international balances of payments without a brakeman. If anything, an idea? Yikes! As far as thoughful ideas, Brockway is full of them, and implicates that interest rate adjustments are unwelcome additions to what already should be free market economic profits and losses. As the last decade has taken a run on 24 hour money trading and markets which are only more and more linked technologically, such free markets could look like boom and bust gold rush towns from meridian to meridian and equator to equator. Just not sure if any of the lemmings are ready for an economic world without a guy like Greenspan. Oh well, the train may soon have to make do with a guy on the swizel stick named Bernanke. Hope he knows when to and when not to pull, how far, and how long.

Brockway delivers a wealth of knowledge and interesting questions to the occasional student of economics. But thank God he is not FRB Chairman. Economic man gets to deal a little longer? Whenever he passes, at least Brockway paints his face with humanism before the party is over.