(c) Copyright 1998: Graham L. Strachan
Economic rationalism is an economic policy, an approach to economic decision making. It is not itself an economic theory. The theory it purports to implement is free market theory, although as will be seen, it is at best a distorted version of free market theory that is involved.
But first the meaning of the word ‘rational’. Many people assume it means what it ordinarily means, ‘sane, sensible, not foolish, absurd or extreme’. Not so.
In his book “The Death of Economics”(1994), Paul Ormerod describes the appropriation of the word ‘rational’ to economic rationalism as ‘a propaganda coup of the highest order’. It carries the implication that any criticisms of it, or any alternatives put forward, are by definition ‘irrational’, and hence not worthy of serious consideration [p.111-2].
The ‘rational’ in economic rationalism comes from philosophy where it means ‘guided by reason as opposed to emotions’. Now the term ‘emotions’ covers a wide field, and includes things like ‘consideration for people’, or ‘sympathy for the plight of human beings’, ethical considerations. These things have to be excluded from the economic equation as a matter of policy.
From philosophy the term was applied to the rising ‘scientific management’ in the late nineteenth century. Scientific management (sometimes called Taylorism after its originator, Frederick Winslow Taylor)(1)involved the breaking down of jobs into a series of steps which could be performed by a number of different operatives doing repetitive tasks. This de-skilled and dehumanised the work, and it was known as the ‘rationalisation’ of work: the organisation of work without regard for the people who did it. People became ‘human resources’, just another aspect of the production process like raw materials and packaging. To the economic rationalist, people have no other function on earth than as adjuncts to the economic system.
In short ‘rational’ means without regard for humans, and economic rationalism is the policy that in the making of economic decisions, their effect on people, or the community at large, is not a ‘rational’ consideration. Now if you think this is an exaggeration, consider this: the Hilmer Report, an influential document in the implementation of economic rationalism in Australia states, at p.99: ‘....in determining questions of public benefit, primary emphasis should be placed on economic efficiency considerations’. So if you’ve been wondering why governments no longer seem to care about the hardship caused by present economic policies on the people of the world, that’s why. If you've been wondering why the word 'rationalise' invariable means 'downsizing' a company and the shedding of labour, that's why.
Some of you might also be wondering what’s ‘rational’ (in the sense of ‘sane, sensible, not foolish, absurd, or extreme’), about an economic policy for human beings which specifically excludes its effect on human beings from the economic equation. The answer is, there is nothing rational about it at all. Economic rationalism is about as ‘irrational’ as it gets. Put bluntly, it involves the insatiable pursuit of profit, and to hell with the human race and its environment.
References:
(1) Paul Ormerod, "The Death of Economics" (1994) p.111-2.
(2)Harry Braverman, "Labor and Monopoly Capital"(1974), Chapter 4, esp. p.91.