HomoEconomicus – #OMN (Open Media Network)

One of the meany problems with modern capitalism is not simply that some corporations are greedy. It is that we have built institutions around the assumption that people are greedy, and then wondered why they behave that way.

Since the 1970s, #neoclassical economics became dominant in business schools and corporate thinking. An older social democratic idea of the manager as a professional with responsibilities to workers, customers, communities and society was displaced by a #geekproblem model of management built around financial incentives, shareholder value and measurable returns.

This became part of what is commonly called #neoliberalism. At the #OMN we polemically and, we argue, factually call the resulting social system the #deathcult: a system that places financial accumulation, competition and individual economic interest above the social relationships and ecological systems that actually make society, and life possible.

The darkness at the centre of this system is the idea of #Homoeconomicus – the simplified economic human who is assumed to rationally pursue personal advantage and maximise material rewards. Applied to the corporation, the logic becomes straightforward, managers cannot be trusted to act in the interests of shareholders because they have interests of their own, so we need incentives.

Give managers shares and stock options. Tie their bonuses to share prices. Measure everything. Monitor everything. Make individual financial reward correspond with corporate financial performance. This became part of the intellectual foundation for shareholder value.

The corporation increasingly stopped being understood as a social institution with multiple responsibilities and became something closer to a machine for maximising financial returns. Workers become costs, communities externalities, nature becomes a resource, customers markets. Managers become agents, shareholders become the priority. And success becomes a number.

The problem is that people aren’t actually like this – the fascinating thing is that the economic model is a very dangerous description of how humans actually behave. Research from behavioural economics and even game theory has repeatedly demonstrated that people are motivated by much more than financial self-interest.

People care about: honesty, fairness, trust, reciprocity, reputation, pride in their work, belonging and professional responsibility. People will often sacrifice financial rewards in order to behave in ways they consider right, cooperate when they trust each other, reward cooperation and punish behaviour they believe is unfair – sometimes even when doing so costs them something.

This matters enormously for how we organise institutions – if people are capable of cooperation, trust and reciprocity, then building institutions on the assumption that everybody is fundamentally selfish can actually make society more selfish, a institutional feedback loop

This is the real problem, a narrow and blinded theory about human behaviour becomes institutional reality. We start by saying: People are selfish, so we design institutions around that assumption. We create bonuses, stock options, surveillance, competition.

Then people learn that these are the behaviours that matter, cooperation becomes secondary, professional pride becomes secondary, community responsibility becomes secondary. Trust becomes something that needs to be managed rather than something that can be built.

People adapt to the system, and then we look at the resulting behaviour and say: “See? People really are selfish.” it is the trap we have all walked into. Assume people are selfish → build institutions around selfishness → reward selfish behaviour → weaken trust and professional norms → observe selfish behaviour → conclude that the original assumption was correct.

The institution has created the behaviour it claims merely to measure, is the #mainstreaming problem. Once a particular model becomes normal, it stops looking like ideology, it becomes common sense. Eventually, people forget that things could have been organised differently.

This is one of the most powerful things institutions do: they turn particular assumptions about human beings into apparently neutral systems. The system then reinforces those assumptions is how ideology becomes infrastructure.

This argument is more subtle, and more important. A narrow economic model has had enormous influence over how corporations understand management, incentives and organisational success. It helped legitimise corporate culture with its head bowed down worshipping a #deathcult.

And once that becomes the default, even people who personally reject the model have to bow there heads or be banished. To let the light into this mess, the path itself has to change, from extraction to participation. This connects directly to the #OMN projects.

We need to stop designing social systems around the assumption that people are isolated individuals competing for maximum personal advantage. Humans are social, we build relationships, we cooperate, create communities, develop shared norms. We care about reputation, we care about doing a good job, care about whether other people treat us fairly.

This is also why the #OMN puts so much emphasis on trust, participation, commons and the #4opens. As the alternative to the #deathcult isn’t simply a nicer version of the same system, it is a different understanding of what people are. Instead of designing systems to control selfish individuals, we need to #KISS design systems that enable cooperation between social beings.

Instead of endless surveillance, build trust, of individual competition, build participation.
Instead of extracting value from communities, build commons, recognise them as contributors.
Instead of measuring everything through financial value, recognise social and ecological value.

The path isn’t simply “How do we make selfish people behave better?” the bigger question is “Why are we building institutions that require people to behave selfishly in the first place?” That is the question we need to ask of corporations, business schools, governments, NGOs and our own activist institutions. Because when a system repeatedly produces the behaviour it claims is simply human nature, perhaps the problem isn’t human nature, perhaps the problem is the system.

Our institutions are not neutral observers; they actively shape human nature. The path away from this mess is simple and native to the #openweb, compost the #deathcult, build the commons.