"Economics presupposes that one is rational," the student learns in the first lesson of economics. Few, including teachers, can imagine the fundamental influence of understanding rationality on the further development of a student's thinking.
There are basically two ways of understanding human rationality. Unfortunately, contemporary mainstream economics, whether "pro-rational" or "anti-rational" (behavioral) theorists, usually understands rationality in a way I can't agree with. If we bring their understanding of rationality into effect, we will find that “the mainstream economy denies itself"And criticism of behavioral economists is justified.
Mainstream economics quite often understands rationality objectively. What does it mean?
Although in the introductory lessons of many textbooks we read something about subjective perception and preferences, this "subjectively" is still ignored. The only thing that is taken into account is that rationality is said to be "effective goal achievement."
It can therefore be assessed from the perspective of a third party: if the goal was achieved at low (lowest) cost, the negotiations were effective. If the goal was achieved at high cost or was not achieved, the negotiations were not effective. The first was correct, that is, rational. The second was wrong, irrational.
On all such an understanding of rationality is built almost all criticism of economic rational and de facto the whole of behavioral economics. However, this understanding of rationality has many major flaws.
I know that I know nothing
According to the objective understanding of rationality, rationality is verified retrospectively - has the goal been achieved? The action was rational. Has the goal not been achieved? The action was irrational.
So if rationality can be assessed objectively, we come to a simple question: what action is absolutely rational?
The answer is: it is the most effective action. What action is most effective? It is a negotiation with zero costs and XNUMX% profit. Mobile perpetuum.
If rationality is only verified retrospectively, was Gutenberg rational when he invented letterpress and not even a laser printer? However, a laser printer is a much more efficient machine, isn't it?
What about us? Why do we use laser printers today when they are certainly less efficient than similar machines that will be used in a hundred years? We are irrational? And what about those people in a hundred years - won't they have the knowledge of those who will live in another hundred years? And so on.
The simple thing is here: after the battle, every general is. Rationality cannot be verified retrospectively, in other words, the "correctness" or "incorrectness" of a certain action tells us nothing about rationality. We never know 100% in advance what is right and what is wrong.
The problem with all "objective rationality" is that one acts as expected. He acts and expects something from his actions. He expects benefit - to some extent in some way of meeting needs.
Human needs are different. They also arise from previous events, from the past, but at the same time from knowledge, from information and from the way of evaluating this information. All this - as we will certainly agree - is individual.
One certainly does not know one's future. The fact that we set a goal certainly does not guarantee us that we will achieve that goal. One never has all the knowledge he needs to achieve his goal - he does not have the knowledge to reduce the cost of acting because they do knowledge may not yet exist (example of Gutenberg) or does not have knowledge that he did not acquire through the knowledge of others (wiki: opportunity cost).
In other words, An art historian has a great deal of knowledge about art history also due to the fact that he is not a military historian and does not have such detailed information about the history of the military or because he is not a mathematician. At one time he could be in one place - and knowledge is fragmented, individual, dependent on the individual, place and time.
If the current mainstream economy assumes that "man is rational" by effectively achieving his goals, where costs are as low as possible and returns as high as possible, he says that rational man is one with 100% information that evaluates 100%. "Rationally" (ie equally "objectively effective) and thus achieves its goals 100%.
Simply put, today's mainstream economy describes the actions of non-existent creatures achieving impossible goals under any impossible conditions. The current mainstream economy describes the actions of gods, not humans.
As has already been said, human needs are subjective, as is the desire to fulfill them, as well as the knowledge one has to fulfill them, as well as the way in which that knowledge and information is evaluated, as well as the "effort" to obtain that information. Everything is individual - it's just a question of costs and benefits. Costs and revenues that must be understood subjectively!
One and the same thing can be a burden for one person, but not for another. One person perceives the same fact, the other does not. One thing is a farm for some, but not for others.
The economy can't say much about these subjective things - maybe it can't say anything at all. A thing, thought, or process is a good or service to some people because it benefits them. We can't say more, respectively, this field is a place for psychology. The economy is value neutral - to condition rationality by any values is a value judgment and has nothing to do with economics and neutral (any) science.
Therefore, if all of the above is subjective, a mere matter of individual values, we cannot take some specific features of the given subjective areas as a condition of rationality - it would again be a subjective value judgment.
The magic of goals
What, then, is that rationality? The answer to this question is simpler than it may seem at first glance: it is an effort to achieve goals. Rationality is expectation and decision making. And that's all!
"Goals" are understood transcendently here - any "goal" is a goal. I must admit that in this part I feel limited by the language 🙂
If an individual decides that he does not want to achieve anything and wants to be dragged by the flow of events, it is also a goal. At first glance, this may seem like a tautology: "Not setting goals is also setting goals" - however, it is only a misinterpretation, not a tautology. It would be correct: "not setting subjective goals is also objectively setting a goal." The goal we want to achieve. What rational action!
If everyone is trying to achieve some goals, we will come to the conclusion that everyone is really rational. This concept of rationality respects human reality, it is not about describing deities, but of people. People who make mistakes and do not achieve their goals.
The whole "subjective concept of rationality" is de facto a different interpretation or part of the concept human behavior. Rationality is a state, a property. Human action is an ongoing process. Economics describes human action, rationality is not a condition for the validity of economic theories - it is part of action as such. It is not a "condition of action," it is a "property of action." Talking about irrational behavior is like talking about a "red Ferrari in blue."
Thus, there is no "irrational action" in economics. An economist cannot claim that his theory presupposes "rational" or "irrational" individuals. The only possible assumption of any general economic theory is presumption of human action. If an economist presupposes "rational individuals" or describes in his theory when an individual is "rational" and when he is not, it is nothing more than a special theory based on the value court. It can be an elephant on clay feet.
Ideology of rationality
The whole concept of "objective rationality" very simply leads to the tendencies of "rational management of society", social constructivism, on which statistists of all directions build - whether it is socialist central management or monarchists.
It is enough to choose the wise, the smart, the scientists and the elites to rule and dictate to us. After all, they are knowledgeable, they are experts who know better than we do what is good. An objective understanding of rationality clearly leads to these ideas.
After all, the most famous constructivist, the ideologue of "objective rationality", is Plato.