THE RISE AND DECLINE OF ECONOMIC MAN

Author(s): Talcott Parsons

Source: The Journal of General Education, Vol. 4, No. 1 (October 1949), pp. 47-53
Published by: Penn State University Press
Stable URL: http://www.jstor.org/stable/27795290
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 THE RISE AND DECLINE OF ECONOMIC MAN
Talcott Parsons
T
JL have not interpreted the title of this
thinking about man in society as not real
paper, "The Rise and Decline of Econom ly something that was the product of a
ic Man," to concern a very con
specific highly sophisticatedphilosophical analy
cept but, rather, to concern a frame of sis of human action in
any direct sense
reference or a system of
thinking, and not but rather as a kind of
crystallization of
only about man's economic behavior as certain patterns of
thinking which got
such, but about man in his social relation established, like any pattern of thinking
ships generally, including, but not con widespread in human
society, as a result
fined to, his economic behavior. It seems of a very
to me that what are sometimes referred complex interplay of forces.
Among the forces accounting for its rela
to as the
"postulates" of economic theory tively wide spread is the fact that, within
have
historically been associated with certain limits and for certain
purposes, it
this system of I say
thinking. "historically worked, and it worked relatively well.
been associated" because I do not think It was a
that are simple?in some respects, as we
they logically dependent upon see it now, of
this system of quite na?ve?way thinking
thinking. But it has had about human
beings, and many of the
considerably broader application than to contemporaries realized that itwas na?ve.
either the science of economics alone or But itwas
simple and in certain respects
to what we
ordinarily call "economic be clear and could
give a certain coherence
havior" alone. I have found it convenient and unity and
integration to analyses of
to refer to this as the "utilitarian social phenomena.
system
of thinking." I do not think any such term There are two
is ever free of major aspects, on one
objection. By no means all level, of any basic conceptual scheme for
people who were called "utili the analysis of action. One
historically aspect is the
tarians" fit exactly into that context; and,
way it handles what you may call the
on the other hand, many features of the "action units," and the other is the
way
system of thought are to be found in the inwhich it handles their in
works of people who are not relationships
ordinarily systems. This is a very simple schema, but
called "utilitarians." But it does seem to itwill serve for our
me that the scheme which concerns us purposes.
The assumptions or if
formed the principal core of what is ordi preconceptions,
you want to call them that, of the utili
as the "utilitarian
narily referred to phi tarian system with
respect to the first as
was most
losophy," which prominent in pect, the nature of the units, were very
cen
England during the early nineteenth simple. It
was what
you might call the
tury. idea of the
I should like to interpret this system of "unproblematical" rationality
of action. I stress the term
"unproblem
atical" because, as I
Mr. Parsons is Professor of Sociology and say, I do not think
Chairman this was the result of a
of the Department of Social Relations really sophisti
in Harvard University. He is the author of Struc cated analysis. It was rather a
ture of Social Action
way of
looking at things that worked relatively
(1937) and Essays in So
(1949), other works.
ciological Theory among
The present paper was a lecture in a symposium well, and itwas not so much that itwas
believed to have been
on "Landmarks in Scientific
Integration' held at proved that action
theUniversityofChicago in theautumn of 1948. was rational as that itwas a convenient

47

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 48 OF GENERAL EDUCATION
JOURNAL
at it. The "rational pur cal terms thatmeans the assumption that
way of looking
suit of self-interest" is one of the favorite the ends that guide action are random.
formulas in this field. Man was thought of This is an extremely simple, and in cer
as in a situation of which he had tain respects, na?ve schema. If you started
placed
accurate empirical knowledge, as pursu out to analyze how you can explain the
a or an end in such a situation, whole of social action in terms of such a
ing goal so
and as making a rational choice of means would
simple schema, you quickly
in order to attain that goal through the have run into insurmountable difficulties
of his actions. It is a very that probably its positive functions in the
consequences
fundamental It in of social thought would not
simple conception. development
volves the means-end scheme; but no have been possible. As a matter of fact,
other dimension of the whole complex from that point of view, the schema got
of action, from off to a very bad start because the first, I
system of determination
the point of view of modern think it is fair to say, really able theorist
psychology,
is taken account of at all. That is another of this scheme was Thomas Hobbes. He
reason why I like to call it the "unprob reduced it to absurdity in one sense: he
lematical" postulate of rationality. It is showed that if you made these assump
to a very high degree. tions about the action of people without
simplified
Now, with to the second aspect certain additional assumptions, then you
regard
of such a system of thinking, the way in described a situation which was empiri
which relations between these fundamen cally impossible?the "war of all against
tal units are conceived, the situation is in all." The interesting thing historically
one respect even simpler?that is, rela here is that Hobbes was never refuted on
tions of units in systems were held down his own grounds within this system. He
was the great semi
to an absolute minimum. There were simply by-passed, and
chains of means-end of nal influence of the system came not
relationships,
course, but those were not followed from Hobbes but from his younger con
as the
through very
far. Beyond that there was temporary, John Locke. Now,
no discussion of the relations of French historian, ?lie Hal?vy, has bril
explicit
ends to one another. I think itwould be Locke the
liantly shown, by-passed prob
wrong to say that most people whose lem of order in a social system, analyzed
fits predominantly into this in utilitarian terms, by a bland assump
thought
schema had a positive belief about any tion?an assumption which Hal?vy called
doctrine of the relations of ends to one that of the "natural identity of interests,"
not
another; but, if this is to form a coherent assuming that people simply would
must be a doctrine; and you come into the kinds of conflicts or indulge
system, there
find cropping up and occasionally ex in thekind of actionwhich Hobbes had
stated a very specific doctrine, in the very forefront of his picture
plicitly placed
at random. Two of the state of nature. I should say that
namely, that ends vary
of themost notable statements of that are Locke was, in describing a certain type of
to be found in the works of Thomas more correct
society, nearly empirically
Hobbes, at a very early stage of the de than Hobbes; but neither he nor his suc
and of Jeremy Bentham. cessors in the same tradition of thought
velopment,
was He did not
Bentham's famous dictum that "push-pin analyzed why he right.
is as good as poetry" means not only that answer the Hobbesian be
question, but,
it is as good but that you simply take what he created a frame
ing empirically right,
or think want as ultimate work on the basis ofwhich itwas possible
people say they
to operate. In these terms I think it is
data, and you do not inquire into the rela
to consider Locke as the
tions between the different things the probably fair
same person wants or of the things that seminal founder of modern economic
different people want. Now in techni science. Not that Locke's own economics

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 THE ECONOMIC MAN 49

was advanced to in that set of terms, as a system of balanc

technically far enough
call him an "economist" but that his con are many motiva
ing forces, and there
action in society pro tional reasons why it is very difficult to do
ception of human
vided a frame of reference within which so. I do not think that would have been
itwas for technical economics to possible but for the frame of reference of
possible
the utilitarian system of thinking, with all
develop.
Now the basic things are all, I think, its empirical inadequacies.
very simple indeed. They
are
bringing
in This system then did, as I have said,
to the forefront the activities of produc form the basis of a very important de
tion and exchange; having a frame of ref in the ac
velopment analysis of human
erence in terms of which to analyze the tion. The most prominent case was eco
relations of exchange, of trading partners; nomic science, but itwent very much be
and providing a basis for the very funda yond economic science. For instance, the
mental insight, which I remember Frank Austinian jurisprudence, the Benthamite
rest
H. Knight insistently calling attention to, type of political science, and all the
and?what for many centuries went un went together in the same general tradi
there can be tion of thought and developed pari passu
recognized?the insight that
mutual advantage in exchange, that rela with economics. It also worked fairlywell
tions of exchange are not necessarily that under two particular kinds of conditions:
of A gaining at the expense of B. first,where it was applied to a type of
These fundamentals are the back social relationship in a particular kind of

ground
in the conception of human social society, where, in fact, the actual condi
out ofwhich the elaboration tions somewhat approximated the theo
relationships
of economic analysis has been built?or, retical model which was built up on this
I should say, was built. I think the set of asumptions. We are all very much
achievements of economic science, even accustomed to think of it
working rela
in the earlier phases of its history?let us tively well
in a competitive, laissez faire
com
say down to themid-nineteenth century type of economic society with many
are not to be underestimated in their im small and a relative
peting enterprises
There were many insights of minimization of governmental control. It
portance.
very great practical utility which
were not did not work very well and was not very
a matter simply of common sense. For illuminating
in types of social situations
instance, in relation to the field of inter which were far removed from that pat
national trade: the effect of tariffs on the tern.When I put it thisway, it is apparent
balance of trade, monetary phenomena, why the utilitarian anthropology?the ap
the functions of gold in balancing price of this conceptual scheme to the
plication
levels in a free economy, and all that sort relative
study of nonliterate people?was,
of thing with which all elementary stu far less successful and ade
ly speaking,
dents of economics now are familiar. But the utilitarian economics; and
quate than
I would like to lay emphasis on a little that is one of the reasons why an im
different aspect of the importance of the impetus for theoretical
economics. Classical economics was the portant part of
has come from anthropology. Ed
first instance, tomy knowledge, inwhich change
ward Burnett Tylor is an excellent exam
a system of human activity was success
a man, usually regarded as the
as a of ple of
fully analyzed dynamic system founder of anthropology, whose thought
interrelated variable elements; and to
was fundamentaly couched in this set of
have done that successfully with all the
terms.
fuzzinesses and the empirical inadequa
cies that existed is, inmy opinion, a very A second to this scheme, work
aid
was the availability
great intellectual achievement.
Common ing relatively well,
sense does not think of human activities of a deus ex machina?to call in to account

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 50 OF GENERAL EDUCATION
JOURNAL
forthingsthatdid notfitverywell, but in A. N. Whitehead, become at all common
a set of terms that was very con in scientific circles.
closely
eco
gruent with these others, namely, the Insight into the abstractness of
deus ex machina of administrative or nomic theory, of course, helps us out of
political decision. That is, if this competi the difficulties. But that was not enough.
tive
balancing system failed to operate, Difficulties appeared at many other and
then itwas because different points: in types of social situa
somebody had made
a rational decision to have it otherwise, tions where the scheme did not fit very
and doubtless he had his good rational well; on the periphery of the places where
reasons for itdid; where attempts were made to reach
making this decision.
Now among many "utilitarians" there rather high levels of generalization; and
was real awareness that there were other sometimes in the midst of the technical
factors in the situation. I would like to matter itself. It is important in this
subject
mention one: David Ricardo, who was connection that there was a continual
certainly the greatest of the economic process of accumulation of factual knowl
theorists of this era, was bothered on and a
by the edge going growth of technical
problem of what it was that accounted methods of research. That is important
for the level of
wages. He called in because a relatively inadequate concep
Thomas Malthus' famous principle of tual scheme can go, as itwere, un-caught
population, but he pointed out specifical up as long as there are no really foolproof
ly that,while theMalthusian principle of ways of proving that it is wrong. And it
population might account for constancy became more and more technically feas
of wages on a given level, it did not ac ible to prove that this did not work at
count for the absolute level because, as important points.
noted, the English laborer lived on a The first major reaction to the accu
in this field we may
higher standard of living than the Irish mulating difficulties
laborer and got a mention is the tendency which becomes
higher level of wages.
He says thismust be in the later nineteenth cen
explained in terms of conspicuous
the "habits and customs of the tury: to attempt to assimilate the phe
people."
Well, the habits and customs of the peo nomena of human action to
biological
ple were not readily reducible to terms of models or theories. That was, of course, in
the utilitarian
conceptual scheme; and part a sheer result of the very great de
Ricardo, I think,was clearly aware of that velopment of biological science and its
fact. It was a way of
stating the limits of popularization, particularly following
the kind of economic Darwin's Origin of the Species. Social
analysis which he
was
carrying
on. science, however, would have remained
This realization that economic immune to biological influence if it had
theory been in a really satisfactory state, but it
had only relative existed even
adequacy was not. And the
before the modern of the biologists seemed to
development offer a way out of the difficulty. If you
realization of the nature and
importance take very broadly the two aspects of the
of abstraction. Most of the
analytical total system of human action that I dis
early economists felt that were lit
they
a concrete as tinguished above?the unit aspect and the
erally describing world?just
the earlier physicists felt that the New system or integration aspect?on the be
havioral unit side, biology seemed to be
tonian mechanics was the literal truth a
about the physical world and that is all adequate up to fairly advanced point,
simply because of this very simple, ob
there is to it.
Only within the last genera vious thought: Human
beings
are organ
tion or so has the kind of view about the
isms, aren't they? And biology is the sci
abstractness of scientific concepts, repre ence that tells us how
organisms function
sented by, for instance, Morris Cohen or and how they tick. And biology, of

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 THE ECONOMIC MAN 51

course, applies to human behavior as Behavior has become much more of a

well as to the behavior of lower organ neutral and descriptive word; it is simply
isms. In other words, in the early days of what people or organisms do.
to this day to a consid to the same fundamental
psychology?even Going back
erable extent?the line between psychol elements of the total frame of reference,
ogy and biology was very indefinite, and I would like to speak verybrieflyof the
itwas relatively easy to go ahead and say: major influences and turning points to
Well, we have all these forces other than ward a reorientation. I think that, in refer
the simple rationality schema which help ence to the units, the essential
turning
to acount for behavior. On this basis, you point is the development of modern dy
to get instinct theories namic use that term.
began things like psychology?if I may
supplementing the rationality schema, There is not any complete acceptance of
but essentially as deductions from biol a
particular term, but that seems to be the
ogy, not as results of the analysis of human best available. The essential thing here is
social behavior itself. the conception of the behavior of the in
On the social level of the system itwas dividual as a complex dynamic system.
much more difficult to get very far.We In terms of content, it does not use the
went a same fundamental model of
through about generation inwhich thinking of
there was quite a vogue of theories of the complex dynamic system that the
social evolution and of competition as ap classical economists used for the system
evo
plications of the theory of biological of the behavior of many individuals in a
lution and of natural selection. Those particular context, but it shares the same
have sometimes been summed up under a
logical pattern of complex dynamic
the heading of theories of "social Darwin of forces with
system problems of internal
ism." As attempts to provide a scientific conflict, degrees of integration, and all
frame of reference, they were strikingly that kind of thing. I personally think that
unsuccessful. There has been no heritage the most important name in this
single
to social science from the theories of so is that of
development Sigmund Freud
cial Darwinism that is in any way com and that the spread of Freud's influence
parable to classical economics in itsvalues is one of the most intellectual
important
for the future development of social sci phenomena of our times. You do not have
ence. I think the theories of social Dar to be a
specific adherent of Freud to be
winism were in
essentially indexes of the very profoundly influenced by Freud. But
tellectual embarrassment of the social Freud by no means stands alone. Gestalt
scientists of the time, who
grasped at the psychology forms
an
important chapter in
straw that the of biology the development. More
popularity empirical ap
seemed to offer. It is more.
hardly proaches in the fields of psychiatry and
The last generation or so, however, has psychopathology have also been impor
seen what we must as a tant influences.
probably regard
a new scientific
beginning transition to This basic reorientation of our ways of
level in terms of a much broader and the behavior of the indi
understanding
more vidual has, in turn, led to a very compre
sophisticated frame of reference for
this most general and analytical back hensive redefinition of the ra
problem of
is
ground of social science. I think it tionality. We can start
by saying that
to it the "theory of
probably fair call rationality is no longer unproblematical.
social action." I do not want to place any It has become very
decidedly problem
particular stress on the term "action." atical. There are some tendencies afoot to
"Behavior" is probably almost as good, believe that rationality in behavior
hardly
now that behaviorism is no ever occurs. I do not think that is any
especially
a word in very wide cir where near the truth. But where and
longer fighting
cles, as it was about twenty years ago. when it occurs itmust be understood as a

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 52 OF GENERAL EDUCATION
JOURNAL
mode of organization and a Weber s peculiar importance is his raising
integration of
motivational of some of the dynamic
complex system. That way problems of in
of at rational behavior was stitutional change, of the role of ideas and
looking totally
to the utilitarians. But,
foreign by virtue of other forces.
of it,we are now able to establish system But, while these are, inmy opinion, the
atic relationships between rational and most
important single names, I think it
nonrational patterns of behavior. I am should not be forgotten that anthropol
quite consciously side-stepping a defini ogy, as I mentioned a moment ago, has
tion of "rational." also been an important influence. One of
On the other side, on the system level, the reasons for that is that the anthro
there has been a corresponding major re a
pologist has been in position to study
orientation, which has not as yet, by any small-scale social systems as a whole, and
even he has had to face the
means, fully diffused and spread problem of what
within the relevant are the determinants of the as a
professional groups. thing
But, inmy opinion, the two most impor whole. Second, he has studied exotic phe
tant names in that field are ?mile D?rk nomena?cultures which were different
heim and Max Weber. It is interesting from our own?and therefore he could
that both of them were aware of not simply take for
acutely granted things about
the intellectual embarrassment occa that different society thatwe tend to take
sioned by the utilitarian system and its in for granted about our own and, therefore,
D?rkheims Division of do not elevate to the level of theoretical
adequacies.
Labor, his first famous book, was, in my problems.
opinion, primarily a critique of Spencer's The common keynote of this develop
version of the utilitarian scheme ment of modern
applied dynamic psychology, of
to the modern institutional
problem of
understanding the sociology, and of
modern system of contractual relations. social anthropology is that they deal with
In the phenomena of human behavior pre
doing this, D?rkheim revived Hobbes
and showed that Hobbes was as
right
in cisely complex dynamic systems. The
utilitarian terms. But you could not ac capacity to do that and to attain some
count for order on that basis; you had to order of both empirical accuracy and gen
a concep
find something else. That
something else erality of analysis in terms of
is what we may call "social institu tual scheme is, in my opinion, the most
sense
tions"?D?rkheim is one of the great be important single step from common
ginners of the modern way of looking at to science. It is the fact that this is pos
social institutions.Weber fits inmuch the sible to the degree towhich it now is that
same me the
general context, but he offered two gives principal faith in stating that
additional we are on the road to
features. He is
particularly becoming social
notable for the comparative scientists. Do not mistake me; I think the
perspective
in which he studied the classical economists were social scientists,
problems of our
own but itwas only by virtue of an analysis of
society, and he, therefore, cracked
the utilitarian scheme wide open in this human behavior which could be treated
a level
sense?that he had to attain a schema scientificially up to permitted in
which was terms ofwhat I have called here the "util
applicable both to caste India
and to modern Western industrialism. If itarian schema." Now our potentialities
the utilitarian schema worked have become immensely stronger.
relatively
well for certain phases of the a
develop Finally, I would like to say just word
ment ofWestern industrial society, as far about one other aspect of the total situ
as caste India was concerned all you ation. Science in general is not only tech
could say was that it is the "habits and nical knowledge of phenomena but also
customs of the part of our outlook on life. In technical
people." You could not get
an "ide
any further than that. The other aspect of sociological terms I should call it

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 THE ECONOMIC MAN 53

it is a component of an used to attach a moral stigma to a whole

ology"; or, rather,
and thus serve
ideology. I do not think very many would range of human activity
that the development of physical as a kind of a rod to catch all
dispute lightning
science is one of the most important facts our doubts and feelings of guilt and in
to channel them toward
about modern Western society that there security, etc., and
is. Not only is the extension of scientific this awful thing?profit-making. It is con
methods and high levels of scientific at venient to compare some of the attitudes
tainment to the field of human behavior toward profit-making that are current in
as a development of knowledge our society to a real religious fundamen
important if you
talist attitude toward cardplaying:
itself; it is of very great importance to the
and to the ways inwhich society take the first step, you are gone; you will
society
is organized and human action in that slide right down the drain to perdition. I
I am not thinking here am not defending capitalism at this point;
society is oriented.
of the use of social sci I am simplysayingthattheproblemof the
mainly applied
ence to solve social problems, important motive and the motivation of eco
profit
as that is, but of its relation to the inte nomic behavior in terms of a combination
our whole system of attitudes, or synthesis of modern psychology and
gration of seems For
which means a reorientation of our atti social science quite different.
tudes toward science in general. one thing,we become aware that it is not
who pursue their self
It is a terribly important fact that the only businessmen
sciences which have embarked on the interest; other people in our society pur
about human sue their self-interest; and the phenomena
path of scientific thinking
behavior have now come to occupy a stra of the pursuit of self-interest and the ex
others is by no means con
tegic place
in our social tradition; it is ploitation of
once embarked fined to systems of social relations where
terribly important that,
on that path, we should keep up and the goal is monetary profit. Profit
have the highest possible standards of as a goal is relative to the institutional
social science because pseudo-science is definition of the situation; it is not a psy
a source of social strain in such a situ motive in the general sense.
chological
Our present level of analysis makes it
ation. It causes us to see things in the
to fall more readily than for us to discriminate between
wrong light, possible
otherwise for biased and distorted defi what belongs to the definition of the situ
ation and what belongs to motivation in
nitions of the situation. It seems to me
that we have a very good example, on the psychological sense. The utilitarian
make it possible to dis
which I would like to close, in the dif system did not
ference between the utilitarian way of criminate.

at economic motivation?or shall "Economic man" in the sense inwhich

looking
we say the profit motive??and the one I have interpreted the term has played a
which now, I think, we must consider to most important role in the intellectual de
the modern Western world
be correct. From the utilitarian point of velopment of
view there were only the alternatives of in thinking about man in society; and, I
self-interest or of not pur would repeat, "economic man" has made
pursuing one's
one's It is a simple tautology. the firstmajor scientific develop
suing goals. possible
The rational pursuit of self-interest sim ment in this area. At the same time, if
action in utilitarian terms; "economic man" as the basic conceptual
ply is human it is high
that is all there is to it. And that con scheme has not yet declined,
clusion, uncritically generalized, has been time it did.

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