A lot of times when I’m debating anticapitalists, I come across this assertion that my free market theories “assume that people are economically rational, when they’re not.” When I probe them on what they mean by this statement, I can never seem to make heads nor tails of what they’re getting at.
Is anyone familiar with this argument?
Surely, they can’t be talking about rationality in the Misesian sense… it’s logically incoherent to say that people don’t employ scarce means to achieve desired ends, that they don’t aim to achieve the most valued attainable end with each unit of a good, etc.
I’ve always kind of assumed that they meant that economic actors aren’t very good entrepreneurs–i.e. when I say that if there is a profit opportunity then people will seek it out, the anticapitalist’s retort that people aren’t economically rational implies that people aren’t smart enough entrepreneurs to find those profit opportunities. Thus, on the assumption that that is what the anticapitalist means when he says “people are not economically rational,” my response has typically been that it doesn’t matter how “rational” economic actors are in that sense, because the functioning of market forces work just the same. Those who satisfy consumer demand best will, of a course, be the ones who make the profits and hence have the most ability to bid away the means of production, and hence more and more become the movers and shapers of the market, whereas the exact opposite holds true for those who are worst at satisfying consumer demand. Yet, the anticapitalist always responds that that has nothing to do with what they’re arguing.
So, I suppose I’m at wit’s end here.
Has anyone here ever pinned down an anticapitalist who’s used the “Your argument assumes people are economically rational, when they’re not” assertion, and gotten them to explain just what, exactly, they mean by this?
