Building a Caring Economy
Today’s mainstream economic models are based on the assumption that humans act in their own self-interest, but that the “invisible hand” of the market ensures that these actions advance the common good. This assumption is patently false, and it is preventing effective action on our most critical shared problems.
DAVOS – Today’s mainstream economic models are based on two fundamental assumptions: first, humans are essentially selfish actors who act rationally to advance their own utility – so-called homo economicus; but, second, as Adam Smith’s metaphor of an “invisible hand” was intended to suggest, self-regarding behavior can inadvertently advance the common good. Both assumptions are patently false.
In order to address pressing global problems like climate change and inequality, the predominant economic models must be rethought, incorporating other motivational systems that can induce different human behaviors. Such realistic models, based on empirical research in psychology and the neurosciences, would allow societies to cultivate their sense of compassion and build a new kind of “caring economics” that reflects more fully what it is to be human.
Neuroscientific studies have shown that humans can be motivated by care and systems of affiliation just as easily as they can be by power and achievement or consumption and desire. After all, we have evolved to be able to form stable relationships, build trust, and care for children, all of which requires a capacity for compassion and empathy. Once we recognize that these caring motivational systems are common to all humans – indeed, most are shared with other animals – the world begins to look very different.