On Broadening the Concept of economic Rationality

How does it come about that problem-solving conceived in terms of scientific strategies for maximization of economic rationality leaves out commitment or disappointment of people (for example in the case of negotiations as to labourconditions) and political and religious convictions (as in the case of a company making products for South-Africa) as relevant factors for goal attainment by the firm? What makes sense to ordinary people does not seem to affect the scientific analyses of economic theorists. They consider such factors to be external or exogenous to the economic process itself. These factors cannot contribute to the maximization of the rationality of economic processes, although their influence under circumstances can frustrate the workings of the economic process.

With regard to this and similar questions the thesis is defended, that dimensions of reasonability which are taken into account in everyday practices are left out (although tacitly assumed) in economic theorizing on rationality. Suggestions will be made as to conceptual means to integrate them in economic theory formation.

In everyday life ‘reasonability’ is one of the criteria we use in evaluating our personal behaviour and that of others. In a number of situations we do also claim that our actions did live up to the measure of reasonability, or we do recognize other people’s claims to the same effect.

The word ‘rationality’ is mainly used as a technical term to qualify actions within a framework of scientific research. In the field of the social sciences economists, socio logists, political scientists (and so on) … all speak of ‘rational behaviour’. It becomes then an interesting question to know if there is any interconnection between what social scientists call rationality and the reasonability we call upon in everyday interactions. It is amazing to find that among social scientists there is little or no attention given to this question. On the basis of the way in which social scientists talk about their subject-matter and the way they deal with ‘social’ problems it is however possible to discover three underlying positions with regard to the question posed:

(a) the meaning of the concept of rationality forms an extension of the meaning of the everyday concept of reasonability and the former draws upon the meaning of the latter;

(b) the meaning of the two concepts is at this stage still quite different, but the more the importance of the scientific enterprise will be recognized by the public at large the better the chances will be to finally replace the ambiguous concept ‘reasonability’ by the precise concept ‘rationality’;

(c) the meaning of the two concepts is different due to the difference of contexts in which they are used. These two contexts cannot be reduced to one another, although they are systematically interdependent.

Only position (c) does seem to be fruitful and promising in view of the articulation of the interconnectedness of reasonability and rationality.

A second important question concerning reasonability and rationality is the following. Let us assume that with regard to everyday social interactions several action dimensions have to be distinguished (by all means the dimensions of representation, expression and valuation) and that it is meaningful to use the concept of reasonability for all three dimensions. The question then arises whether the same holds for the concept of rationality:

does for example the coccept of economic rationality refer to a multidimensional context of action, and does it allow for rationality in each of the dimensions?

The concept of rationality as it is used in mainstream neoclassical economics applies only to the goalrationality of action in terms of the most efficient use of means for a given end. When we combine this conception of rationality with the above sketched position (b), we are able to identify in economics two strategies for circumventing the question concerning mono- or multidimensionality of scientific rationality:

– the one strategy leads to a theoretical compartmentalization of social reality along the established disciplinary lines: you have economic rationality as well as political, sociological, juridical rationality. It is however quite serious that this strategy does not give any clue at all as to the interrelatedness of these different forms of scientific rationality. Thus a number of unrelated monodimensional disciplines creates a major problem as soon as one is willing to take advantage of progress in scientific knowledge for the purpose of problemsolving in matters of society1).

– the other strategy does not have to face this problem. Gary Becker2) (of the so called Chicago school) and other proponents of this strategy do maintain, that everything worth to be called rational can be calculated according to the criterium of economic rationality. Research assumedly has shown that the concept of rationality as it has been developed in economic science can be successfully applied to all phenomena be they social or not. Thus a multitude of monodimensional disciplines can be reduced to the monodimensional discipline of economics, which by the same token becomes an omnidiscipline.

It is in view of these already old trends that Parsons has developed a research-program with the aim to counteract the disintegrating forces in the field of the social sciences. His efforts to develop an integrative, differentiated theory of society still merit our attention. He attempted to overcome the onedimensionality of the scientific rationality concept as well as the unrelatedness of the basic concepts of the different social disciplines by elaborating his general theory. A well known part of it is his conceptual frame of reference for the explanation of societal actions and processes, the so called ‘interchangeparadigm’3).

 

Today’s practice in the field of the social sciences has led to the isolation of the different subsystems of society as a whole, and to the disconnection of their specific functions as well. To give an example: a firm does in this view partain to the economic subsystem with its specific function of adaptation, the fulfilment of which is measured in terms of economic rationality. And of course within a firm there have to be distinguished different departments each of which has its own function, but in the traditional economic theory the functioning of all these departments is conceived of only in terms of economic rationality (i.e. the rationality of adaptation). In Parsons’ conception things look quite differently although the economic subsystem (of which a firm is a part) constitutes a domain of its own, the functioning of the processes within this particular domain cannot be explained without taking into account all other functional aspects that are constitutive for society as a whole and for any societal process as such.

In our days Habermas has taken up the task Parsons assigned himself in the thirties. Habermas is very much in agreement with Parsons as to the need for a comprehensive theory of society in order to overcome the unrelatedness of today’s social disciplines and of the onedimensional character of their rationality concepts.

He goes beyond Parsons (at least according to my interpretation of Habermas) in that he tries to avoid what has been called by Jeffrey Alexander ’the conflation’ of the analytical philosophical use of concepts and their use in social empirical theorizing4). This distinction proves in my opinion to be of crucial importance with regard to the problem of the interconnectedness of the concept of reasonability as it functions in the context of everyday interactions with the rationality concept as it functions in social scientific theory formation.

As a consequence of this distinction Habermas introduces in his Theory of Communicative Action5) on the analytical level a hypothetically constructed frame of reference for social scientific theorizing according to which all societal actions and events do have a multidimensional structure. In the constructive articulation of this frame of reference the analytical concepts of subjectivity, objectivity and normativity play a major role. I have of course to leave aside a detailed analysis of this hypothetical reconstruction; an outline of it can be found in my Kirchberg-paper of last year6).

On the empirical level this analytically constructed frame of reference has in Habermas’ conception an explanatory function with regard to the interconnectedness of reason ability and rationality within the respective contexts of everyday life and of scientific work (see fig. 1)

The analytical construction says, that there exists a structural homogeneity between scientific and everyday actions. Everyday reasonability as well as scientific rationality have to be interpreted as concretized empirical types of the multidimensional structure of societal action and interaction as such.

It is for this moment impossible to go any further into the many conceptual, methodological and empirical problems that have to be faced in view of the development of Habermas’ research-program. Already before the many problems of the research-program have been tackled, the frame of reference helps to understand better what is at stake in the questions I have mentioned in the beginning and that are left unanswered by economic theorists. This may be exemplified with Habermas’ introduction in his empirical theory of society, of what he calls rationality claims7) (see diagram).

In this scheme Habermas presents from the perspective of interacting actors the different aspects according to which actors can claim to be reasonable or rational. What does this mean for the interpretation of the rationality aspects economists usually take into consideration? On the premisses of Habermas’ theory one can argue that in current economic theory only rationality aspect 2 (actors claim to have de facto maximized the efficiency of means used for a given end) comes into the picture, and that the other five aspects are left out. And even with this interpretation one may easily disagree, because in today’s economic theory the terminology used suggests to a naive audience an action theoretical approach, and the words used seem at first sight to refer to everyday experiences and notions of economic behaviour. On reflection however it becomes evident that the meaning of the economists concepts is theory immanent and refers to the constructions the economic theorist makes from an outsider-perspective of externally observable events that do not have any longer specifically social characteristics. The interconnectedness of reasonability and rationality is completely lost out of sight within standard economic theory.

FVD.113

NDNOTES

1) See for a forceful critique of this strategy K.W. Kapp, Towards a Science of Man in Society. A Positive Approach to the Integration of Social Knowledge (The Hague 1961).

2) This strategy is exemplified by G. Becker, The Economic Approach to Human Behaviour (Chicago-London 1976).

3) T. Parsons, R. Bales and E. Shils (eds.), Working Papers in the Theory of Action (Glencoe, III. 1953).

4) J.C. Alexander, The Modern Reconstruction of Classical Thought: talcott Parsons (Theoretical Logic in Sociology, vol. 4) (London etc. 1984).

5) J. Habermas, Theorie des kommunikativen Handelns, 2 vols. (Frankfurt a M. 1981).

6) F. van Doorne, “Foundational Research as Intermediate Function between Everyday and (Socio-)Scientific Action. A Research Design”, in: W. Leinfellner and F. Wuketits (eds.), The Tasks of Contemporary Philosophy (Vienna 1986), p. 145-147.

7) My diagram is an extended (and slightly amended) version of the diagram of J. Habermas, “Was heiBt Universalpragmatik?”, in: K. O. Apel (ed.), Sprachpragmatik und Philosophie (Frankfurt a.M. 1976), p. 259.