Introduction, Frank W. Taussig, Inventors and Money-Makers

Many economists have for generations typically pursued their analyses upon the notion of ‘economic man’. Economists thereby have assumed that individuals know what their interests are and act to achieve those interests. For the most part, economists have meant neither that people always do act as economic men nor that they always should, but that it is a useful and indeed meaningful assumption with which to conduct analysis. Many economists, however, especially the heterodox ones, have severely criticized this assumption for its patent rationalistic hedonism. They, for example, Thorstein Veblen, affirm that much ‘economic choice’ is actually a matter of custom, habit, and emulation of the behaviour of others. The assumption also has been criticized for being formalist and empty, reducing to the proposition that people demand what they demand; by taking preferences as given and by not pursuing the factors and forces which govern tastes and preferences, it can say very little about extant economic reality. In these respects, of course, the economic-man assumption forces upon the analysis the nature and limitations of a model, which is only an incomplete representation of reality. A further criticism is (like the first) substantive: it objects to the use of economic-man theorizing in the form of utility maximization in such a way that the product of labour is stipulated as pleasure and the labour itself as pain (disutility), preferring in general to believe that labour is a mode of living and of self-realization as well as of self-gratification.