Abstract
Modern economics evolves from (neo)classical political economy, which stresses the role of the individual and rationality. Using Kantian foundations, it is argued that economic is what concerns the individual urge to pursue personal wealth. Nature and the social sphere are both ignored. An alternative view can be based on the ideas of human nature that Samuel Pufendorf formed. According to him, man is sociable. His self-interest is often applied toward this end and not an end in itself. Also, nature plays a role as man can decide what to do with it. Last but not least, Pufendorf recognizes that individuals grow up in society, where they are formed through the use of language and the internalization of conventions. Man, without society, is not perfect and cannot hope to strive for happiness. He needs support from society to protect himself from his fellow man and to increase the chances of realizing this drive toward sociability. Economics could be rebuilt on stronger foundations as neuroscience seems to confirm Pufendorf’s view of human nature in general.
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1 Introduction
It is not natural to have something like political economy. The current version of political economy is called economics. It is, compared to earlier versions, a rather unpolitical political economy – which is itself highly political. The current doctrine works through constitutions and treaties that make the State more and more impotent when it comes to political economy (Herrmann 2007). For instance, central banks move more and more toward an inflation-targeting approach, leaving little space for other considerations (Constâncio 2017). In the Eurozone, governments depend on the Euro, a currency that is created by the European Central Bank (ECB). The ECB is supranational and, as it stands, is not allowed take orders from national governments. On top of this, national governments in the European Union (EU) have agreed to follow the Stability and Growth Pact, effectively introducing the possibility of government default. Before that, the government was supported by its own national central bank, which ensured that the question of default would never arise. Today, Eurozone governments have to turn to the banking system in order to finance their spending (Ehnts 2016). If financial markets decide not to finance their spending, the Troika, an unelected and improvised body, will heavily influence the political economy of crisis countries (Blyth 2013).
Our thesis is that the way modern economics is practiced is fundamentally flawed. The resulting problems are by now obvious: the intrusion of the market into spheres where people don’t want it, catastrophic climate change and the lack to address it, the overreliance on private enterprise and entrepreneurship to solve social problems, the misguided belief in the efficiency of financial markets in allocating resources, the naïve view that free trade can even exist when the role of government clearly implies that it can’t, the unwanted rise in inequality, and a range of other issues. In this context, we believe that Samuel Pufendorf (1632–1694) can help us understand reality. All these problems have one thing in common: the policies that created them rely on a view of the world that builds on the individual and some notion of rationality, as embodied in the homo oeconomicus. Our goal is not to criticize the homo oeconomicus (Helmedag 2018, pp. 54–102; Kirchgässner 2008), but rather to rebuild some philosophical foundations upon which an alternative to modern economics can be created.Footnote 1 In this endeavor, we find the works of Samuel Pufendorf to be an important contribution. This is why Pufendorf matters.
2 The Anthropocene
The Anthropocene is the age in which the domestication of nature started and – today – found a surprising limit. The agricultural revolution could be seen as the starting date, but a later date like the end of World War II is also possible.Footnote 2 What matters is that humans are changing the environment to an extent that it rather adjusts to us than forcing us to live within the limits that are good-natured.Footnote 3 The role of the environment has been mostly neglected in modern economics.Footnote 4 Principles of economics textbooks teach students that the supply curve is sloping upwards: more supply will be forthcoming at rising prices, but it will be forthcoming. There is no limit to supply. This way of looking at the world is based on Say’s Law, named after Jean-Baptiste Say. Say (1852, 66) in his Cours complet d’économie politique pratique writes:
The natural riches are inexhaustible, because otherwise we would not get them for free. Being unable to be multiplied or exhausted, they are not the object of economics.
So, there is no reason to examine nature more closely. Scarcity, the topic of economics, has to be solved through choice, since we cannot produce everything. However, in modern economics it is not the limits of nature that force us to choose, but rather the budget constraint. Money, in the form of income, is limited and forces us to choose. This view of man and nature is not undisputed. Many of the ancients, among them Pufendorf, understand obedience to the limitations of Nature as the very source of culture.Footnote 5 In Of the Law of Nature and Nations, Pufendorf (1672) writes about man and natureFootnote 6:
It is true that God allowed men to turn the earth, its products, and its creatures, to his own use and convenience, that is, He gave men indefinite right to them, yet the manner, intensity, and extent of this power were left to the judgment and disposition of men; whether, in other words, they would confine it within certain limits, or within none at all, and whether they wanted every man to have a right to everything, or only to a certain and fixed part of things, or to be assigned his definite portion with which he should rest content and claim no right to anything else.
As Tidemans (2010, 12) points out, for Pufendorf property should arise from human agreement. The extraction of natural resources could then be confined to “certain limits” or “none at all.” This, compared to the position of Say above, is a very different approach to Nature. Pufendorf recognizes that the use of “the earth, its products and its creatures” has to be decided upon by the society and cannot be taken for granted. He thinks that law – property law – is the appropriate way for the Anthropos to deal with Nature.
In contrast, Modernity subjects Nature to the desires of men. We make use of the resources as we wish, mostly in the pursuit of profit. As a result, Nature – for the best and for the worst – has become the subject of man. With a global climate crisis under way, Nature, so far domesticated by man, now more and more domesticates man. Antoine de Saint-Exupéry (1943, ch. 21) writes in The Little Prince about this complicated relationship between man and nature:
“Men have forgotten this truth,” said the fox. “But you must not forget it. You become responsible, forever, for what you have tamed.”
2.1 The Anthropos – Who Are We?
The Anthropos (Greek for human: ἄνθρωπος), according to Pufendorf, is deficient. Having lived through the Thirty Years’ War, it is easy to understand how Pufendorf came to this conclusion. Hobbes (1642, 1651), who also lived in this period, assumed that the natural state would be war of all against all. The State would be needed to help tame the Anthropos. Pufendorf disagrees with this view. Man has always lived in groups, communities, and states. Therefore, community (the State) and the individual are not antagonisms – they constitute a necessary whole. In The Whole Duty of Man According to the Law of Nature, Pufendorf (1673) writes about the existence of communitiesFootnote 7:
The next inquiry we are to make, is upon what Bottom Civil Societies have been erected, and wherein their Internal Constitution does consist. Where, in the first place, this is manifest, That neither any Place, nor any Sort of Weapons, nor any kind of brute Creatures can be capable of affording any sufficient and safe Guard or Defence against the Injuries to which all Men are liable, by reason of the Pravity of Mankind: From such Dangers, Men alone can afford an agreeable Remedy by joining their Forces together, by interweaving their Interests and Safety, and by forming a general Confederacy for their mutual Succour; that therefore this End might be obtain’d effectually, it was necessary that those who fought to bring it about, should be firmly joined together and associated into Communities.
For Pufendorf, the State is more than an institution to stop us from killing each other. The State creates the possibility of furthering individuals’ cooperation. We can rise above the sum of the parts for the benefit of the whole. Individuals do not grow up without society and later chose to sign something that resembles a social contract, as envisioned by Rousseau (1762). As Flint and Powell (2013, p. 270) point out, “society has never been constituted on a social contract.” Individuals grow up in societies that predate the individuals. This view of the world is informed by Pufendorf’s ideas about human behavior. The two driving forces that decide human action are self-interest and sociability.Footnote 8
2.2 Self-Interest
According to Pufendorf, the Anthropos has a free will that allows him to follow his self-interest (Saether 2017, 68). In volume two of De Jure Naturae Et Gentium Libri Octo, Pufendorf (1934) [1688] writes:
In the first place man has this in common with all beings which are conscious of their own existence, that he has the greatest love for himself, tries to protect himself by every possible means, and tries to secure what he thinks will benefit him, and to avoid what may in his opinion injure him. (II.iii.14: 205)
The pursuit of self-interest is the strongest force driving the Anthropos. That is “because man is so framed that he thinks of his own advantage before the welfare of others for the reason that it is his nature to think of his own life before the life of others. Another reason is that it is no one’s business so much as my own to look out for myself” (ibid.: 207).Footnote 9
2.3 Sociability
The second driving force of the Anthropos that Pufendorf identifies is that of sociability.Footnote 10 This is due to “the greatest weakness and native helplessness” (ibid.: 207). The Anthropos would feel punished if left alone by his fellows. According to Pufendorf, the Anthropos is “malicious, petulant, and easily irritated, as well as quick and powerful to do injury.” This is why it is necessary for man to be sociable: “Every man, as so far as in him lies, should cultivate and preserve towards others a sociable attitude, which is peaceful and agreeable at all times to the nature and end of the human race” (II.iii.15: 207). Saether (2017, 69) points out that it is important to note that the Anthropos, according to Pufendorf, must be sociable. It would be wrong to conclude from Pufendorf’s writings that the Anthropos is naturally sociable. We are imperfect beings, needing to cultivate a social attitude. If we do, with the help of (natural) law, the outcome can be quite acceptable:
A man shall not harm one who is not injuring him; he shall allow everyone to enjoy his own possessions; he shall faithfully perform whatever has been agreed upon; and he shall willingly advance the interest of other, so far as he is not bound by more pressing obligations. (II.ii.9: 172)
The rule of law, according to Pufendorf, should be based on an understanding of the Anthropos as having an inclination for society. Ordo amoris, “rightly ordered loves” in Latin, is an order of ethical values that individuals base their actions on in the years around 1700 (Vollhardt 2001, 67–94).
3 Neurosciences on Self-Interest and Sociability
The two driving forces of the Anthropos identified by Pufendorf have been investigated by neurosciences over the last years. Motivational system and aggression apparatus were identified as major components of our internal working. In a nutshell, our motivational system drives us toward sociable behavior while our aggression apparatus regulates violence as a means of protest against unacceptable social situations. According to Bauer (2011), “human behavior occurs in a neurobiological framework staked out by two fundamental systems. The first is the central drive … or motivation system. It aims – in addition to the satisfaction of basic needs (…) – on the attainment of attachment and social acceptance (…).” This connects to Pufendorf’s idea of the Anthropos being sociable. It is probably not a wild guess that basic needs are satisfied through self-interest, and once that is achieved “social acceptance” is what is targeted next. A combination of scarce time and resources and/or money is the obvious ingredient to this.
Bauer continues: “The second system, the aggression apparatus, serves to ward off pain and social exclusion (…). The aggression apparatus is at the service of the motivation system: it becomes active when drive targets targeted by the propulsion system seem to be at risk (…).”Footnote 11 Note the stress on “social exclusion” as something to be avoided; unhappiness starts here, and not with underachieving the consumption targets of individuals as one might expect (Haller and Hadler 2006).
3.1 Motivational System
What is it that gives us satisfaction? Neoclassical economics assumes that it is the consumption of goods and services that increases our satisfaction. However, recent developments in the research of neuroscience point in a difference direction. Tabibnia and Lieberman (2007, 94) find “that people derive satisfaction from implementing justice and maintaining fairness by punishing unfair partners.” So, there is much more to make us happy than consumption. Lyubomirsky and Ross (1997) find that happiness is affected by the presence and performance of peers. Unhappy people are much more effected by social comparison than happy people. So, not only is there more than consumption to make us happy or unhappy, but we are heavily influenced by our social surroundings when it comes to the happiness that we draw from our own performance. Surely, these results must be puzzling for everyone basing her or his thought on the homo oeconomicus. On the other side, those using the homo sociooeconomicus as a foundation will find their ideas confirmed. We are sociable and struggle for social position (Veblen 1899).
3.2 Aggression Apparatus
It is often assumed that the Anthropos is aggressive. However, “Man the Hunter” (De Vore and Lee 1968) or “The Selfish Gene” (Dawkins 1976) are myths that have been rejected (Lewontin et al. 1984; Sober and Wilson 1999). Our forefathers, instead, were vegetarians engaging in social cooperation (Robinson et al. 2017; Boyd and Richerson 2009). Even when they started hunting, there was no change. The Milgram (1963) experiments, often quoted to support the idea that humans can act aggressively toward other human beings, rather shows that humans are not willing to hurt others when unprovoked and not under pressure. The Neo-Darwinist ideas of “Man is evil” and “Man is a sinner” are also not correct, as there is ample evidence to the contrary.Footnote 12 Adding to this is the fact that Darwin himself was rather less Neo-Darwinist than many would think:
A man who has no assured & ever present belief in the existence of a personal God or a future existence with retribution & reward, can have for his rule of life, as far as I can see, only to follow those impulses & instincts which are the strongest or which seem to him the best ones. A dog acts in this manner, but he does so blindly. A man, on the other hand, looks forwards & backwards, & compares his various feelings, desires & recollections. He then finds, in accordance with the verdict of the wisest men, that the highest satisfaction is derived from certain impulses, namely the social instincts. If he acts for the good of others, he will receive the approbation of his fellow-men & gain the love of those with whom he lives; & this latter gain undoubtedly is the highest pleasure on this earth.
Confirming this view, Eisenberger et al. (2003) find that rejection by others creates social pain that is comparable to physical pain.
4 The Individual and the State
Pufendorf recognized that community (the State) is an anthropological constant. Individuals would constitute the community, which would at the same time define them. One cannot exist without the other. This is one of the major insights of discussions in natural law (Dumont 1991, p. 85 ff.). Language is spoken by a community, and the individuals adjust to the language spoken in the community. Individuals do not invent their own language. With language come certain ideas regarding ontology and epistemology that heavily influence the social reality of the individual (see Lawson 1997). The rise and development of individualism naturally depend very much on the use of language in the respective community. Heteronomy is a requirement for autonomy, as parents can easily verify when looking at their children.
In the modern West an opposite view of the world dominates. Society is assumed to be a contractual union of autonomous individuals, who signed this contract themselves. The relationship between individual and state is one of voluntary submission. The Hobbesian state has the monopoly of violence and has no further rule to play. Since the Enlightenment stresses autonomous rationality, individuals deal with their (self) interests without involving further parties. The state is the guarantor of these private contracts – its own role as a competent ruler with a view toward the public purpose is not seen as constructive. Values are relative. What leads to convergence of views between two individuals has legal power. Law is replaced by contract.
The society built on these arrangements will revive a feudal form of society. In the absence of public purpose as a concept of constructing reality, everyone seeks to maximize self-interest by subduing her or his own self-interest to that of another (self) interest or interests.
The success of neoliberalism has rested to some extent on being perceived as the embodiment of the Enlightenment. As this, it can be understood as an extension of the sad tradition of utopias in the twentieth century. With its focus on the so-called autonomous individual, neoliberalism supports the individual dreams of consumption of urban hipsters. In a world where individuals are only committed to self-interest, it is unproblematic to just follow one’s ideas of consumption. A state that interferes with this can only be totalitarian. There is no better way to capture the Anthropos: consumption as the insignia of freedom.
4.1 The Enlightenment Versus Pufendorf
As we have seen above, Pufendorf understood community to be the institution that is needed to make individuals thrive. Protecting one from another against physical harm was only the beginning, as the community would play a role in supporting the Anthropos to be sociable and help to deliver common goods. This idea of the interconnectedness of the deficient Anthropos and the supporting community came under pressure during The Enlightenment – now the rational individual was all that we needed to get the best of all worlds – and it has been (almost) forgotten now that modern economics rules.
Saether (2017, ch. 5) sees Pufendorf as a “Champion of the Enlightenment,” a characterization with which we disagree. Pufendorf saw the Anthropos as deficient, a view that was not shared by thinkers like Kant. The Enlightenment was based on the idea of rationality, a concept that was also used in Pufendorf’s writings.Footnote 13 That rationality was the rationality of an individual, divorced from community. Sapere aude was addressed to this individual, not to a community. Hence, Pufendorf’s deficient Anthropos did not fit into the new worldview. Thinkers now believed in the possibility of individual autonomy and perfection, in overcoming the self-inflicted immaturity through the effort of the intellect.
The rise of the natural sciences with their laws that were discoverable by the Anthropos led to a similar rise in self-confidence which stood in contradiction to the idea of a deficient Anthropos. The myth of the unstoppable progress of (Western) humanity started, continuing to this day. Pufendorf’s imperfect individuals needed the help of society and the State, which is incompatible with the autonomous rational individuals that many thinkers of The Enlightenment envisioned.
4.2 Modern Economics and the Homo Oeconomicus
Political economy developed in the nineteenth century toward a discipline that would mimic natural sciences, with a strong focus on Newtonian physics. The concept of homo oeconomicus, the rational autist that contracts with others and consumes without any public purpose, was developed. The “economic man” acted in pursuit of self-interest, which was narrowly defined as the pursuit of wealth. Individual wishes (preferences), when satisfied, led to an increase in satisfaction (utility). Peace or the absence of aggression was taken for granted, justice and fairness ignored. Political economy became a narrow field of what used to be the state sciences (Staatswissenschaften), severing all ties that bound it with disciplines like the Law, sociology, psychology, philosophy, geography, and others. The distribution of incomes was justified by productivity alone.
Modern textbooks are still based on these old conceptions, and ideas coming from other fields or those that are not compatible with the framing of political economy are only introduced in an ad hoc manner at later times. In this way, one can talk about ecological economics with both feet in the neoclassical or neoliberal paradigm, arguing that taxation should change the incentives of the individuals so that markets can work best. No larger role for the state can be imagined within the neoliberal paradigm because of the deep foundations resting on the homo oeconomicus. In the last decades, the discipline has successfully reduced macroeconomics to a case of applied microeconomics, thus closing down the only part of economics where a larger role for the state could be imagined (Ehnts and Helmedag 2018). This surely has not been a coincidence.
There exist now many intents to “rethink economics,” to reconstruct it, or to move toward a new economic paradigm. The project is perhaps larger than those that are working on the issue understand. In order to have progress in economics we need to go from a world based on the homo oeconomicus and the ideas of Enlightenment toward a new view of the Anthropos that could be called the homo sociooeconomicus. Since this change occurs at the foundation of modern economics, paradigm change is indeed called for. It would be worthwile to ponder how exactly this is brought about, but probably it will just happen as scientific change always happened. The older paradigm dies out, while young scientists intrigued by the new paradigm and by choosing to work within generate the conditions that will make it successful.
5 Conclusion
Since the Great Financial Crisis and the recent awakening to climate change, people have found economics to be deficient. Economics did not see it coming, did not use balance sheets as a methodology when it comes to financial crises (Bezemer 2009), did not discuss financialization or globalization with a critical attitude.Footnote 14 Economics did not even change the way that finance and macroeconomics is taught.Footnote 15 Instead, economics was widely perceived to be a force that argued in favor of more globalization and more financialization (Appelbaum 2019). Meanwhile, the two important topics of our time were almost completely ignored by textbooks and journals: Climate change and the fight to stop it and the rise in inequality.
While it is more or less understood why economics has not changed (yet), the question what it is that should replace it is still an open one.Footnote 16 In this chapter, we tried to lay down the argument that we should rebuild economics by abandoning the neoclassical superstructure – with the homo oeconomicus at the center – in favor of something that we’d like to call the homo sociooeconomicus. The homo sociooeconomicus is understood as a social being first, with economic motives playing a secondary role. Self-interest is used not only for economic, but also and perhaps more importantly for social gain.Footnote 17 Amassing wealth might be seen as a way to improve social status and position. Last but not least, the idea that the individual can exist without society has to be discarded. Learning language from his surrounding society, the individual can only think what is possible in that language and will internalize some if not most of the conventions.
Notes
- 1.
Our approach should be compatible with those arguing that uncertainty matters (Müller-Kademann 2019).
- 2.
No official date has yet been set by any relevant institution.
- 3.
Humans have been influencing nature for millennia. For instance, the Amazon rainforest is a product of human intervention. See Mann (2005, Ch. 9).
- 4.
There are some alternative views at the fringes, like Georgescu-Roegen (1971).
- 5.
See Greenwood and Stini (1977, 393–408) for a modern interpretation of this view.
- 6.
Book IV, Ch. 4, Sect. 4.
- 7.
Chapter 6.
- 8.
According to Saether (2017, 47), Pufendorf took the idea of self-interest from Hobbes and the idea of sociability from Grotius.
- 9.
Saether (2017, 68) claims that Pufendorf rejects the possibility that people can act altruistically.
- 10.
To support this view Pufendorf quotes the Roman philosopher Seneca the Younger: “Man was born for mutual assistance” and the Roman Emperor Marcus Aurelius (121–180): “For we have come into being for cooperation” (ibid.).
- 11.
Own translation.
- 12.
In neoclassical economics, usually nothing is said about morality during classes in microeconomics or Principles of Economics. Following self-interest and maximizing profits is thought to be without any moral implications. Interpreting the silence as taboo, one might easily get the idea that homo oeconomicus could be evil or a sinner, especially in connection with popular books like The Great Gatsby or their respective movie adaption (usually starring Leonardo di Caprio as the young and rich “evil sinner”).
- 13.
See Saether (2017, 53).
- 14.
Giegold et al. (2016) provide a blueprint for financial reform from a policymaker’s perspective.
- 15.
The most convincing alternative seems to be Modern Monetary Theory (Wray 2015).
- 16.
- 17.
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Ehnts, D., Jochem, E. (2021). Why Pufendorf Matters. In: Backhaus, J.G., Chaloupek, G., Frambach, H.A. (eds) Samuel Pufendorf and the Emergence of Economics as a Social Science. The European Heritage in Economics and the Social Sciences, vol 23. Springer, Cham. https://doi.org/10.1007/978-3-030-49791-0_10
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