The Looming Death of Homo Economicus

The world seems to be on the verge of another “great transformation," which will fundamentally redefine the nature of our economic and social relationships. But mainstream economics – which assumes that people are self-interested, fully rational economic actors – fails to recognize the social half of the equation.

KIEL – The world seems to be on the verge of another “great transformation,” with changes far more profound than news-grabbing economic or geopolitical headlines about Asia’s economic rise or the fires in the Middle East. The coming changes will fundamentally redefine the nature of our economic interactions – and the social dynamics that underlie them.

This is a transformation on the scale of the shift, more than 8,000 years ago, from nomadic hunter-gatherer societies to settled agricultural ones, which eventually led to the rise of cities. A similar transformation occurred in Europe in the tenth century, with the emergence of guilds – associations of skilled workers who controlled the practice of their craft in a particular town – which paved the way for the Industrial Revolution.

The particular characteristics of the impending transformation remain unclear. It may well involve revolutions in bio-, nano-, and digital technology, together with a social-networking revolution that eliminates geographical and cultural barriers. What is already clear, however, is that, like previous transformations, this one will involve a fundamental change in all of our economic relations and the social relations that support them.

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