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September 29, 2009
In his When Freud Came to America in The Chronicle Review Russell Jacoby says that:
Yet the clamorous effort to rid the world of Freud is misguided. Psychology departments may relegate psychoanalysis to phrenology and other quackeries as they seek testable results, but Freud's thought lives on in the humanities—or wherever scholars and students contemplate the vagaries of desire, morality, and religion. In the name of reason, Freud challenged the veneer of reason. He dug to uncover the forces that make us not only loving but also odd, hateful, and violent. Even when he was wrong, a boldness infused his thinking. He remains a tonic for a cautious age. The epigram that Freud chose for The Interpretation of Dreams—a line from Virgil—has not lost its appeal: "If I cannot bend the higher powers, I shall stir up hell."
Though Freud uncovered the unconscious dimension of individual reason, this hasn't really been accepted in the social sciences, especially in economics despite the rationality principle being a fundamental principle of economics in that it is premised on individual agents choosing rationally. What does that mean?
It is the principle according to which people act rationally in the sense that they tend to adopt means which, according to them, are oriented towards the satisfaction of their goals which are understood in terms of utility, profit or wealth maximization. The equation of human rational behavior with instrumentalist, especially economic, rationality represents the hallmark of the economic or rational choice approach. Here the optimizing substantively rational actor faces the problem of maximizing utility subject to a budget constraint.
Duncan K. Foley states that:
The concept of rationality connects economics firmly to the Hobbesian-Lockean tradition of political philosophy, which purports to explain the political and economic organization of modern society as the necessary outcome of the interaction of naturally constituted rational individuals confronting each other as competitors for scarce resources. To avoid the terrible consequences of anarchic struggle, these rational individual actors are supposed, according to this "just so" story, to agree to the institutions of property and political authority that constitute the framework of modern society.
The theme of rational-actor theory is that "naturally" constituted individuals facing existential conflicts over scarce resources would rationally impose on themselves the institutional structures of modern capitalist society, or something approximating them.The world as it presents itself to us is to a better or worse approximation, the world we would have constructed freely if we had the chance. This way of looking at matters systematically neglects the ways in which modern capitalist society and its social relations constitute the "rational," calculating individual.
The strong versions of substantive rationality are at odds with observable individual behavior. People are routinely inconsistent in making choices and processing information. They act from multiple motives without having resolved the conflicts inherent in them, and these motives often include aspirations, identity issues, and unconscious values that are impossible to reduce to material consumption.
What has happened is that economics functions as if psychoanalysis, a logic of the unconscious, never happened; that it no longer has a place in the history of reason; and that we can return to the Enlightenment, to Hobbes and Locke, and to the philosophy of the ego without paradox. Economics represents a restoration that places the unconscious outside reason.
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