Kuandyk Ainabek
The Philosophy of Life and Business
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CHAPTER 4. MODELS OF HOMO ECONOMICUS
If the essence of the man is determined, his meaning as a business entity can also be understood and discovered. Therefore some attention was devoted to determining the essence of the man, based on non-traditional approaches, as the abundance of materialistic and traditional provisions have not contributed to full exposure of the problem.
The man, for fulfillment of his essence, should support his life, which implies self-cognition and cognition of the environment, finding means of living, carrying out purposeful activities.
The man’s essence in the material world is fulfilled through labour. In the economic literature, there are different definitions of labour: “labour as a conscious purposeful activity” [1, p.16]; “labour as a certain type of costs ” [1, p.17]; labour is “any mental and physical effort made partially or wholly with the purpose of achieving a result, apart from satisfaction gained directly from the work performed” [10, p.124]; “labour is a process characterized by consumption of the man’s time and energy, aimed at transformation of natural resources into material, social, intellectual, aesthetic and spiritual benefits” [11, p.131].
Without going into particulars of the difference between the above-mentioned definitions, it can be noted that in the generalized form labour is a means of fulfillment of the man’s essence, as physical, intellectual and spiritual activity of the man are exercised through it. This combination of the man’s activity is aimed at creation of items, subjects of labour, production of goods, and improvement of life environment. This activity of the man belongs to its business or economic form.
It is commonly supposed that labour made the man. However, without denying the meaning of labour in formation of the man, we should emphasize the influence of the primary role of the Information universal field on the man’s activity program. It would be appropriate to quote some considerations on the matter by M.N. Chepurin writing that “it has been put as an axiom for a long time that labour as a conscious purposeful activity extracted the man from the animal world, dowered him with consciousness and determined the public nature of his life. However, it may be just a theorem requiring proof” [1, p.16].
To fulfill himself, the man should work [7, p.126]. And he appears as an agent performing activity in the form of business. Therefore the man is considered as a business entity, as he is the master of determination and choice of the purposeful activity, the type of labour in supporting his life in the material world and, indirectly, and maybe directly, implementing the program of the Information universal field.
The man as a spiritual thinking creature, performing his business activity, should seek to adequately perceive the life environment surrounding him. With the extension of the public production scope, business relations are getting complicated, certain economic laws are appearing, being the basis for manifestation of elemental forces which predetermine the tendencies of positive and negative development of the economy.
At the initial stage of community development the man was to a lesser extent and very obscurely aware of himself as of a spiritual individual. His self-consciousness was at the level of the communal-egoistic thinking within the established primitive relations.
At the early stage the development of human thinking corresponded to the relations of communal business, to the level of the instruments of labour used, limited framework of primitive production. People owned primitive instruments of labour freely, and their life activity was governed by the traditions of the community, which were conditioned by the life environment. This characteristic refers to the first model of the homo economicus in the conditions of communal development at the dawn of the mankind becoming.
The model of the homo economicus should be treated as a combination of characteristics of conceptual (quality) meaning, predetermined by the conditions of labour, business relations, traditions of a particular stage of the community development. The first model characterizes the man as an integral component of the community, where individuality is reduced to physiological needs, and thinking and self-consciousness – to indivisibleness from integrity in the environment of low level of labour instruments development, corresponding to the scope of communal production.
The communal way of survival conditioned the limitation of the man’s egoism, bringing him under traditions, rules of joint business activity, observance of hierarchical relations within the community. It was predetermined by the dominance of initial and basic relations of the communal property.
Appearance of private property changed the relations between people based on the level of labour intstruments development and extending public production scope. People with more advanced instruments of labour could support their own living and use others as instruments of labour. This change in the conditions of the people’s life predetermined absolute dominion of some people over others, which formed polar ways of thinking: that of a master and that of a slave. Private property generated the vehicle of universal violence by the minority over the majority in the form of the state and division of the community into classes: possessing and non-possessing. Labour instruments development conditioned the change in the contents of relations between opposing parties in the community. More developed economic relations facilitated reduction of transactional costs, increase of labour productivity, growth of wealth of possessors and the state.
Development of production means and appearance of private property conditioned the existence of the second type of the homo economicus model, which had a qualitative difference in the contents from the previous one. Only possessors can be referred to the second type of the homo economicus in the epoch of the slave-owning system, as slaves were labour instruments for masters. Certainly, some disputes with opponents may arise here – with regards to the definition of the model of the homo economicus – as they can say that the conditions for this emerge since the point of economic freedom of the man of labour. And these conditions are characteristic of the capitalism epoch. However, our argument lies in the fact that business is typical of the slave-owning system as well, and free activity is performed by the master of the situation, possessor, and the slave, being a labour instrument, does not appear to be an economically free person. Therefore in the second model of the homo economicus the possessor is characterized as the subject in question. It is the possessor in the conditions of the slave-owning system who is an economically free man, and his major business activity predetermines implementation of economic processes through using a specific instrument or means of labour – a slave.
In this model the possessor is determined as a complete egoist, thinking of his own person, absolute power, strengthening his positions mainly due to enrichment by economic exploitation of slaves and rescue of property from weaker competitors.
The characteristic as an egoist implies irrationality of behaviour of this model of the man in the situation at hand. The irrationality expresses increase of wealth by any ways and means, and costs become secondary. This approach results from the possibility to compensate for expenses due to unrequited exploitation of slaves, expropriation, robbery and seizure of other men’s property. At the same time increase of income due to exchange of goods is not denied either.
In the study materials it is common to consider the models of the homo economicus from the period of the capitalism appearance, where free competition and market balance reign [1, p.20]. However, it would be correct to formulate the model of the homo economicus since the epoch of emerging business activity in primitive communities. It lets us see evolutionary changes in the characteristic of the contents of the homo economicus model depending on the change of types of business, production or social-economic formations.
Appearance of the third model of the homo economicus is destinated by the conditions of the feudal system development, where new possessors of their own labour emerge: economically free craftsmen and merchants. These possessors of their own labour outcome are the subject of characterizing the contents of the third model of the homo economicus, as the feudal land-owner is almost identical to the slave-owner, with a slight difference, and the half-enslaved bond does not yet appear to be a full-value economically free person, as he is mostly bound by the non-economic dependence on the land-owner.
Whereas the definition of the contents of the slave-owner and feudal lord characterizes the second model of the homo economicus, the third model should include the combination of the basic features of the economically free man as the possessor of his own labour – the craftsman and the merchant. The third model of the homo economicus played a revolutionary role in accelerating the process of social-economic development, extending the scope of trading space, increase of the volume of commodity exchange and labour instruments. It was craftsmen and merchants who brought the mankind to the capitalism epoch due to their multiplicity and ongoing improvement of production means, activation of commodity-money relationships and extension of the market.
This model of the homo economicus is characterized by the fact that he targets at rationalization of his own costs and increase of income due to the difference between the earnings for the goods produced and sold and expenses, through market operations.
The capitalist should belong to the fourth model of the homo economical, who is different from the hired worker, representative of the fifth model. In the capitalism epoch, the private possessor of production means and the hired worker appear to be opposing entities connected by the single process of public production. The fourth model of the homo economicus is characterized by the fact that the capitalist, being the master of the situation, determines the form of labour activity organization, its direction, volume of production. He is not a complete egoist as he should not only take care of his own profit but also distribute a part of the profit to hired workers based on the reason of the objective necessity. Without hired workers, the capitalist will not be able to ensure functioning of the firm, organization, will not gain profit. Therefore objective conditions of the capitalism breed the rational man, thinking about the conditions of reproduction of the organization, gaining partial benefit and ensuring reproduction of the firm and labour force. And the hired man, being the representative of the fifth model of the homo economicus, is rational within the salary he receives, aiming at unification of forces of the hired workers in the cause of improving their material situation, creating conditions for cultural, spiritual development. Relations between capitalists and hired workers are continuously developing through contradictions conditioned by the level of public production.
In the modern civilized states the creation of conditions for cultural and spiritual development at the end of 80-s of the 20th century predetermined appearance of the sixth model of the homo economicus. This model includes people with different social statuses: hired workers, private possessors of production means, managers as hired workers and possessors, labourers and at the same time owners of a certain shareholding in the organization, etc.
The conditions in the mixed economy and especially in the socially oriented market economy as a certain stage of appearance of a new level of development destinate formation of the personality with an active living position, seeking not only to know of their profession but also to cognize the world around, the universe, penetrated with humanism, taking care of both the near ones and the community, mankind. The man is interested not only in the material but also, predominantly, spiritual world, as spirituality removes all obstacles separating people, makes them similar to the Supreme Mind [8, p.206-207].
We have considered 6 models of the homo economicus which are the results of the mankind’s evolutionary development, of public business. In the systematized world, the evolution of the homo economicus model can be seen in Chart 1.
Some editions suggest a model of the homo economicus formed in the environment of the so-called socialism [1, p.22]. However, this model formed in the conditions of dominance of the administrative-command system where economic stimuli were reduced to the minimum and did not have a significant role. Non-economic coercion of working people and ideological dumbing-down of the man were the levers of economy development.
Therefore this type can be referred to the characteristic of the slave at the same time the declaratively free person, having a guarantee for a “piece of bread” from the state, if he does not object and observes the rules of the game of the administrative-command system. Thus, it would be inappropriate to single him out as a full-value variety of the homo economicus. And high-ranking officials in this system could be referred to the characteristic of the feudal lord and capitalist.
Chart 1.- Evolutionary models of the homo economicus
№ |
General characteristics |
Economic interests and conditions |
Types of public production or social-economic formations |
1 |
2 |
3 |
4 |
The man’s individuality is predetermined by the communal tradition. The meaning of the 1st model of the homo economicus is in joint acquisition of means of living and survival and direct submission to the communal traditions and leader. |
Satisfaction of individual physiologic needs. Primitive labour instruments, scarce food and cave conditions of life. The form of property is communal. |
Primitive communal system. |
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2
|
In the 2nd model of the homo economicus the slave is excluded. Only the slave-owner is an economically free man, master of the situation, regulating economic processes within his competence and territory. The slave-owner seeks to increase income at the expense of non-economic exploitation, rescue of other men’s lands. The feudal lord also belongs to the 2nd model of the homo economicus.
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Absolute egoism in satisfaction of “limitless” economic needs, being a consequence of absolute power. There are specific labour instruments – slaves. Private possession of production means is dominating. Competition between slave-owners for territories. Expanding trade contacts.
Absolute egoism. The bond, though differing from the slave to some extent, is basically dependant on the land owner, and in these circumstances non-economic methods of coercion of the bond to work are mainly dominating. |
Slave-owning system.
Feudal system.
|
3
3 |
The 3rd model of the homo economicus embraces free craftsmen and merchants interested at maximization of income due to increasing their own labour productivity and reducing costs on production and trade to the minimum. |
Complete freedom of craftsmen, growing number of merchants results in development of production means and extension of the market. |
Feudal system. |
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The 4th model of the homo economicus is the capitalist. He is the private possessor of production means, and his egoism is manifested within maximization of profit, mainly arranges work within bills and laws issued by the state. |
The capitalist is characterized by non-complete egoism, as revenue is divided into profit and labour compensation fund for hired workers. Relations between economic entities are forming on the base of market laws, in the environment of private property dominance. |
Capitalism – Market economy: |
5 |
The 5th model of the homo economicus includes the hired worker having a guarantee from the state of his legal freedom and right for labbour and life. He does not have production means, therefore he should apply for work and work for the capitalist. Hired workers are rational within their salary, basically aim at cooperation for reaching their goals – increase of salary and compensation of work force total value. |
The goal of the capitalist is maximization of profit, and that of the hired worker – aspiration for compensation of work force total value. |
c) Mixed economy: |
6 |
The 6th model of the homo economicus embraces businessmen, entrepreneurs, managers, creative hired workers and highly qualified labourers, art and culture freelancers, etc. People of this model are inclined to spiritual development, looking for the sense of life, cognition of the world around; they are characterized by high awareness, humanism; their rationality is developed in terms of satisfying individual needs, raising the level of development of professional skills, overall culture, and spirituality. |
Economic behaviour of the man is conditioned by the high level of development of public business on the basis of associative, private, mixed property and socially oriented market vehicle. The major motivation of this model is not economic interests but self-actualization in the community, creative activity, and humanistic direction. |
Social economy |
Further to the topic, we would like to add that there are different viewpoints on the contents of the homo economicus. Some researches oppose the homo economicus models to the social model, the man of organization [12, p.90-96]. Thus, for instance, S. Surkov reduces the contents of the homo economicus to economic stimuli [12, p.91]. Thereafter he puts forward “the homo economicus behaviour models” [12, p.93], including in the contents, but for the economic stimuli, corporate spirit, work location, social solidarity. Nevertheless, the proposed elements of the characteristic of “the man of organization” contents are components of the contents of the homo economicus, therefore the “man of organization” as a new concept proposed by S. Surkov does not have research value. S. Surkov intends to include the research of the “social man” in the economic science, as opposed to the “economic man”. He includes the following in the contents of the “social man” characteristics: “economic stimuli, social role, aspiration for self-actualization, realization of goals importance, realization of achievements value” [12, p.96]. This proposed characteristic appears to be a component of the modern model of the economic man. It can also be specified here that the modern homo economicus is, first of all, social, without which there is no personality, humanistic characteristic of the creative individual. Thus, would there be any sense in the proposal to use a special category of the “social man” in the economic science, given that there is the homo economicus model? A decisively negative answer would be suitable here.
Moreover, the proposal of the above-mentioned author to classify the individual and to define the model of the “asocial man” is not of crucial importance, as these people do not belong to the objects and subject of the research of fundamental economic science. The asocial man is not the economic man any more, so this model should mainly be the subject of research of sociology, psychology or even physiology.
Therefore the evolution of the man’s development as a business entity can be detected by the changing and enhancing economic models. This process is conditioned by the development of communal business, improvement of production means, economic relations, social-economic formations.
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