Philip Aldrick (Times, Feb 28) is the latest person to draw attention to an, as yet inchoate, new trend in economic thinking emphasising feelings and sentiment in economic behaviour – including financial markets – rather than rational calculation. From one point of view, this might seem like a case of better late than never. One curiosity in intellectual history is that recognising and studying the irrational has been current in politics and sociology at least since the 19th century, but that never really broke into economic theory except for the national self-sufficiency stuff between the world wars. Economic theory of all colours; Keynesianism and welfare economics as well as neoliberalism and monetarism, still assumed the rational utility maximiser as the model human, if only to make prediction easier (more accurate might be another question). So the nasty ‘economic man’ of Victorian times continued to haunt the subject.
Make no mistake, I should be only too pleased to see the back of neoliberalism in particular. But being the suspicious old curmudgeon that I am, I remember that the herd-following, emotional, symbol driven, group minded human of other social (and natural) science can be even nastier than Economic Man. Downright barbarism is all too often the name of the game here. Indeed, I might invoke the national self-sufficiency case itself to illustrate the point that the new wave of economists and policy advisers need to be careful about replacing neoliberalism, and Economic Man, with something better rather than with Barbaric Man.