Nietzsche and the Economists


Nietzsche made many criticisms of philosophy as taught in Europe. One of his main criticisms was that it was written in ignorance of its real subject matter, that is man. Free will is one of the main tenets of moral philosophy yet Nietzsche cast doubt on its existence. How free he asked was tge criminal when he conducted his crimes? He argued that psychology taught that many actions of the individual are pre determined by their biological drives. Is the criminal freely committing his criminal acts or is he not acting in a predetermined manner. If this true how can the criminal be responsible for his actions? 

While Nietzsche’s  reasoning was founded on a rather crude biological determinism his argument is still valid. Moral philosophy was wrong when it assumed that an individual was responsible for his actions. Therefore all philosophers such as Kant were wrong when he based his moral philosophy on the categorical imperative. Kant’s categorical imperative states  that one’s actions should be capable of serving as the basis of a universal law,a philosopher’s updating of Christ’s injunction, to do onto as others as you would have done onto yourself. Nietzsche would argue that the individual man was incapable of acting rationally as Kant believed, as his actions were driven by a series of biological drives which could be quite irrational. To put it simply the rational man of the philosophers did not exist, so all philosophy was flawed, because of this fundamental error.

Nietzsche’s scepticism applied to economics

As a student of economics I do believe that although many of the insights that economics has developed are invaluable in understanding the economy, too much of the subject matter of economics is based on assumptions about the nature of human behaviour and the workings of the economy which are flawed and therefore much of economics is just plain wrong. What economists never practise is self reflection, they never question the assumptions on which their predictions about economic behaviour are based.

One of these fundamental assumptions of economics is that the economy runs most effectively when consumers are free to choose without constraint between a variety of options. Economists believe that they know best what they want. They don’t want some remote body such as the government making choices for them. If it does it because of its remoteness from the individual citizen will make the wrong decision. This philosophy underpins much of the reform of public services in the UK, which is about giving the user choice. Now when you go to your doctor you are given a variety of options to choose from. Last week when I saw my doctor I was given a choice of health care providers at which to have my chest X-Ray. Politicians and health care economists see this as an unalloyed good. They believe it is preferable that Individual such as myself have a choice about which health care provider to use. Rather than being directed to be health care provider by the government, to a help care provider that I would not have chosen. However there is evidence that this apparently self evident good is not always a good.

What evidence there is suggests that whatever we want as consumers it is not always choice. Two American economists conducted an experiment into choice. They ran two market stalls selling jam, on one stall they had an almost infinitely large selection of jams and on the other a very limited selection of jam types.  The second stall sold the most jam, as it appeared that when  people faced a large range of products from which to choose an almost they found it difficult to decide which one to buy. When choice was limited they found it easy to make a decision. Tesco Britain’s largest supermarket discovered this truth through its falling sales . In its stores there could be up 30 different varieties of one product on display, whereas it’s more successful rival Lidl would have one or occasionally two examples of one product. Customers did not want a large product range, they preferred the Lidl approach. Lidl also by limiting its product range was able to buy in bulk and could negotiate large discount through being a bulk buyer. This fed through to lower store prices which made Lidl a formidable competitor for Tesco. 

Economists by recommending the break up of public sector monopolies its several competing private suppliers to offer the service user more choice may be mistaking the public mood.  Until 1993 railway services were provided by the state owned British Rail. Then the state monopoly was broken up and rail services and divided up among various competing rail companies, so to give the rail traveller a choice of service provider.  After 22 years of privatisation the majority of the people want railways to be renationalised. Rail fares are now some of the highest in the world and the conditions travellers are subjected to are distinctly second class. The term ‘cattle truck’ as a description of how people are transported at peak times is a frequently used term. Also the costs to the government of a privatised rail service are much higher than the costs of running the former nationalised rail service. Private firms require from the state a huge subsidy to run what they claim is an unprofitable public service. They claim that they need subsidies to break even or to make a modest profit. Yet all the companies make a significant profit,a profit that up is massaged downwards for reasons of public relations and tax avoidance. Only a free market economist would find something of value in a rail service which charges some of the highest fares in the world for what are some of the worst of travelling conditions.

Economists lack the skills of self reflection, they never question the core principles or truths on which the subject is founded.  These founding principles of economics are little more than assumptions about human behaviour which are frequently wrong, which be proved on reflection. Until economists can apply a little Nietzschean scepticism there subject will continually provide the wrong answers to the questions asked of it.


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