The End of Homo Economicus
Source Dave Anderson
Date 09/08/25/22:50

from Logos
The Revolution is Upon Us: The Age of Crisis and the End of Homo Economicus
by Mike Lynn

THE PRESENT ECONOMIC collapse is likely only the opening salvo of a
much longer and broader age of crises. This period will produce
changes at least as profound as those that marked the transition from
feudal society to capitalism. It will change virtually everything
about the way we live our lives. It will, in short, constitute a

This revolution, while recognizable in form, will be entirely new in
origins. It will not be a revolution that operates according to our
own timetables or agendas. It’s a revolution that will be dictated to
us by the dynamic relationship between humans and the planet upon
which we live.

The present economic downturn is taking place in the context of an
extraordinary and extraordinarily convergent series of crises. Some of
these, such as climate change, have recently begun to receive
widespread media attention and enter into mainstream consciousness.
Others, such as impending food and water crises, continue to percolate
under the surface. Any one of these crises alone would be daunting.
Collectively, they pose the greatest challenge humanity has ever
faced. The reality and severity of these crises will form the backdrop
that informs and limits our future social and economic development.

The economic crisis is not necessarily a result of any one or even all
of these crises. But it offers the prospect of clearing the
intellectual and ideological terrain in a manner that allows us to
begin the difficult work necessary to honestly and effectively
confront the much greater challenges now at our doorstep. To
understand the immediacy of that challenge, a brief digression into
recent scientific developments is necessary.

The year 2007 was a watershed in the science of climate change. That
was the year in which a dramatic increase in the rate of Arctic ice
melting blew up existing models of climate change. Arctic ice always
melts and recedes during the summer, but 2007 was extraordinary. An
area the size of Britain disappeared in less than a week. The speed
and extent of the melt shocked climate scientists, exceeding what even
the most pessimistic of the models predicted. Said Mark Serreze, an
Arctic ice specialist with the U.S. National Snow and Ice Data Center,
“It’s amazing. If you asked me a couple years ago when the Arctic
would lose all of its ice, then I would have said 2100, or 2070 maybe.
But now I think that 2030 is a reasonable estimate.”

Clearly, something was wrong with the models. Early models of climate
change assumed fairly constant rates of change commensurate with
atmospheric concentrations of greenhouse gases, but scientists
discovered other mechanisms had not been factored in. For example,
arctic ice, being white, reflects 80% of the sunlight striking it back
into space. Open blue water, on the other hand, absorbs 80% of the
solar energy reaching it. As the ice melts, more open water leads to
more energy absorption and more heat, which in turn causes more and
faster melting in a positive feedback loop.

The incorporation of feedback loops has significantly increased the
power of the models to more accurately predict climate charge. Other
such loops include those related to glacial calving and methane
release. Studies of glaciers and ice packs reveal that, as ice melts
on the surface, water begins to flow in streams through glacial
crevasses and down to bedrock, acting as a lubricant. This causes
increased “calving” as more and larger icebergs break off at the
glacier’s mouth. Flowing water also accelerates the disintegration of
ices sheets, such as those in Antarctica and Greenland. Melting of the
Greenland ice pack would raise global sea levels by about 23 feet, and
of the West Antarctic Ice Sheet, another 16 or so feet. This would
inundate coastal cities and produce hundreds of millions of climate

An even more ominous development looms. Studies show that increasing
sea temperatures spur the release of methane, a greenhouse gas more
than 20 times as potent as carbon dioxide, from deposits trapped below
the ocean’s surface. As the water gets warmer, the rate of methane
release increases. This is especially true at the poles, where
temperatures are rising fastest and methane deposits are heavily
concentrated in seabeds and permafrost.

The sobering results of studies incorporating new climate change
models have produced a change in thinking among climate scientists and
invoked a new sense of urgency. James Hansen, the chief NASA climate
scientist, recently warned that we must limit the concentration of
carbon dioxide in the atmosphere to 350 parts per million (ppm), “ . .
.if humanity wishes to preserve a planet similar to that on which
civilization developed and to which life on earth is adapted.” We’re
currently at a level of 387 ppm and that level is increasing at
roughly 2 ppm per year. Hansen now says we must end the burning of
coal by 2030.

Rising sea levels are not the only hazards of ice melt. Lester Brown,
president of the Earth Policy Institute, reports that glaciers in the
Himalayas and the Tibet–Qinghai plateau are melting at alarming and
increasing rates. These rivers feed all the major river systems of
Asia, including the Ganges, Indus, Mekong, Yangtze and Yellow. Wheat
and rice production in the region depends upon these rivers.

The picture emerging is that of a delicately balanced climate and
hydrological system that maintains the conditions under which human
civilization has evolved. Further, scientists are beginning to realize
how small changes in input conditions lead to large systemic change.
The fear is growing that there are “tipping points” beyond which the
system will spiral out of control. We may be crossing thresholds we
can’t see, with consequences we can’t predict.

Vital functions of our civilization depend upon the burning of fossil
fuels, which, as we have now confirmed, is proven to have disastrous
effects. Yet, even if it were safe to continue to rely on fossil
fuels, future supplies are seriously in question. Since late 2004-
early 2005, oil production has been essentially flat. Since this was a
period of rapidly rising demand and prices, traditional market forces
don’t seem to offer an explanation. While this alone doesn’t offer
conclusive proof that we’ve reached peak oil—that moment when world
oil production begins its inexorable decline—it is suggestive. The
president of the French oil company Total recently stated his belief
that his industry would likely never produce more than the current
global total of roughly 89 million barrels per day.

Control of global oil and gas reserves has been a major driver of
national competition and conflict for at least the previous decade.
While it’s reasonable to debate the role such control played in the
American invasion of Iraq, few doubt that it was a significant factor.
The emergence of crises around water and food—exacerbated by the
demand for grain as a feedstock for fuel—threaten even more intense
conflict in the coming decades. The summer of 2008 is instructive on
this score. Rising food prices led to shortages that produced food
riots in Cameroon, Egypt, Ethiopia, Haiti, India, Indonesia and
Senegal, among others. The age of crises promises to be a very
volatile and dangerous time.

While the depression we face may not be a direct result of the
emergent ecological and social crises just discussed, there is a
direct link between neo-classical economic theory and those crises.
Neo-classical economics assumes that markets always get prices right.
But in failing to account for the value of natural resources and
biosystems as well as financial capital and physical goods, the system
has produced badly distorted pricing and disastrous real world
outcomes. A more fundamental flaw lies within capitalist theory
itself: capitalism is based on the unlimited growth of a system that
exists within a larger, quite limited ecosystem.

Our present economic collapse comes on the heels of a solid three
decades in the grip of the extreme free market fundamentalism of the
neoliberals. Like all fundamentalist faiths, neoliberalism reduces a
complex world to a simple schematic. All of society is viewed through
the prism of an economic lens. Economic growth, measured by increases
in GDP, is the ultimate goal. Indeed, it’s the ultimate good. The
market is the perfect mechanism to achieve this goal. And the market
functions best with minimal or no interference from government or
civil society. Armies of bright young economists armed with complex
equations attested that this was so.

The genius of neoliberalism was in its ability to cloak market
leadership of society in an aura of scientific and historical
inevitability. The collapse of the Soviet Union seemed to validate
Margaret Thatcher’s claim that there was no alternative.

The great economic historian Karl Polanyi observed, “The idea of a
self-adjusting market implied a stark utopia.” And neoliberalism was a
stunning utopia of economic determinism, one even more ambitious than
that of Marx.

With all the big questions thus settled, history appeared to be at an
end. There was one and only one route to prosperity and peace. All
that was required was to make sure the model was correctly applied and
all would be well. We all settled into our assigned roles. Capitalists
retreated to the role of technocrats, eschewing risk themselves while
shifting and spreading it throughout society. The rest of us were
relegated to the roles not of citizens, but of consumers. Using our
homes as ATMs, we filled our lives with Chinese-made goods, oblivious
to the looming environmental and social costs of a runaway,
unregulated consumer-driven society. Only a marginalized few
questioned the basic economic structure. It was the era of homo
economicus, humans in service to the economy.

Now that perfect machinery lies in pieces all around us and the global
economic free fall shows no signs of ending any time soon. The
fundamental reasons underlying the collapse aren’t all that difficult
to discern. Central to the whole neoliberal project was the drive to
rationalize all aspects of human society. Relentless efforts to cut
costs and increase efficiency drove down the living standards of the
vast majority, while the diminution of government and other
non-commercial institutions led to increasing concentration of wealth
at the very top of society. As high paying jobs in the industrial and
technical sectors moved from developed countries to low wage
export-based economies in the developing world, capacity soon
outstripped demand and profits in the real economy began to sag. Not
content with declining earnings, wealthy elites began to search for
investments offering higher returns. If these couldn’t be found in the
real economy, they could certainly be created in the exploding
financial sector.

Once consigned to the unglamorous world of matching those with capital
to invest with those with enterprises seeking to grow, finance became
the powerful new engine of economic growth. No longer stodgy, bankers
and brokers became sexy and glamorous. Exotic new financial
instruments, called derivatives, traded on everything from commodities
to weather.

This speculative frenzy was supported by a central bank only too happy
to keep credit extremely cheap. Debt exploded among consumers,
businesses and government alike. Creating new debt became the source
of even more exotic investment vehicles, often bearing only the most
tenuous of connections to underlying assets of real value, with
unwieldy names such as “collateralized debt obligations” and “credit
default swaps.”

All the debt and the shuffling of fictional wealth hid the underlying
rot of the real economy. It was a house of cards just waiting for the
slight breeze that would send it all crashing down. And a collapse in
housing prices in 2008 laid bare the economic contradictions.

The fundamental contradiction underlying much that confronts us in the
age of crises is an economic and social system requiring infinite
growth within the confines of a finite planet. Any vision seeking to
replace neoliberalism must take this contradiction into account and
resolve it. The overriding market failure of our time has nothing to
do with housing. It’s the failure to place any value on that which is
truly most essential to our survival: clean air and water, adequate
natural resources for the present and future generations, and a
climate suitable for human civilization.

No such new vision is currently in sight. That this leaves everyone,
neoliberals and their foes alike, in a state of uncertainty and doubt
is hardly surprising. The seeming triumph of neoliberalism was so
complete that it managed to inculcate itself in the psyches even of
those who opposed it.

We find ourselves unsure of terrain we thought we knew well, sensing
that one era has ended but unsure as to what comes next. We might do
well to embrace that doubt and understand its power to free us. Our
doubt allows us to ask meaningful questions again and questioning
implies the possibility of real choice. Removing the intellectual
straitjacket of neoliberal orthodoxy opens up the space necessary to
reconsider the purpose of an economy and its proper role in a decent
human society and to revisit the old debate over equity versus
efficiency. It calls into question the assumption most central to homo
economicus; that all humans act only to maximize their own interests.

It seems clear that the world emerging over the coming decades will
look quite different from the one we now inhabit. Of necessity it will
evolve in ways we can’t fully understand just yet. Old battle lines,
such as the ones between capitalism and socialism, will likely fade
away. Both of those models arose in a world of abundant and cheap
fossil fuels and within the confines a planet with a seemingly endless
capacity to absorb the wastes of our conspicuous consumption. New
battle lines are already beginning to take shape.

The task of reimagining the world is urgent. The limits of the
resources upon which life itself depends have become starkly apparent.
Yet, oblivious to the need to change course and to do it quickly, the
old elites, still powerful, desperately seek to shape the crisis to
their own benefit and maintain the status quo. If they succeed, our
future looks grim.

But there are signs of hope. In March, Thomas Friedman, that barometer
of all things mainstream, wrote a column wondering whether 2008 might
just go down in history as the year the markets and nature told us our
model of unlimited growth was no longer workable. While it might be
tempting to dismiss the great acolyte of corporate globalism as
getting religion a day late, surely this is a sign that the ability to
doubt and question is slowly seeping from its marginalized quarters
back into the mainstream.

The revolution is upon us. The era of homo economicus is drawing to a
close. To quote Tony Kushner, writing of a different crisis at the
outset of the era now ending, “The great work begins.”

Mike Lynn
2009: Vol.8, Issue 2
Reflections on Revolution

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