The Myth of the Rational Individual

Capitalists: everyone is rational.

Everyone: *in thousands of pounds worth of debt*

By rational, liberal theorists mean that people are naturally corporate-minded and seek to maximize profit and accumulate capital. They are motivated by self-interest and are concerned with increasing their wealth however they can. This assumption is what allows the rich to absolve their guilt and blame the victims of the inequitable and iniquitous system they maintain for their own misfortune. The claim is inaccurate. I’ll stop myself before I talk too much about the “human nature” fallacy which I’ll save discussion on for another time.

This is not to say that human individuals are irrational; the point is that individuals are not rational in the sense purported by liberals, and that rationality by liberals’ definition is not key here.

Human beings are indeed, to some degree, self-interested but not in this way. This is the consequence of human instinct since, as animals, we are biologically programmed to ensure survival, by whatever means available to us. Under capitalism this would mean acquiring capital in order to obtain the goods and services needed for survival. The problem with this is that the manufactured scarcity and the poverty for laborers under capitalism is precisely what makes them need to pursue capital to survive. Where we have abolished capital and markets, people will no longer be struggling to survive. This supposed self-interest thus becomes irrelevant. Furthermore, as emotional beings who experience pain and pleasure, it is expected that we will indulge and protect ourselves in order to avoid the former and increase the latter. However this is very different to the liberal assumption of rationality.

It is not about rationality, it is about desire. Humans want things. We all do. And there’s nothing wrong with that, especially considering corporations pump millions into psychological research so that they can find ways to manipulate us into thinking we want things which we don’t necessarily need or would not have thought about purchasing had we not seen their advertisements. That is how advertising works. That is its purpose. A significant portion of capitalists’ profits are invested in advertising. So we try to attain those things which we want. Often there are a lot of these things or they are rather expensive, maybe even unaffordable realistically. In a world where we place value on money, we have to exchange capital in order to obtain these things, these material possessions or services. When we do not have the necessary capital to buy these things, we may take out credit. Then we end up paying more than the market value for these products or services. Then we amass a debt. This puts us under increasing pressure, making us more conscious of how much we spend and therefore less likely to get the things we want and live comfortably, as well as causing mental stress. Sometimes we take out loans to help us pay off this debt, and that puts us in more debt. We might then take out another loan to pay off the old debt. And then we fall into a vicious cycle. We spirall further into debt, exacerbating the problems that debt brings. A system which forces people to diminish their financial security or stability, and severely restricts their ability just to attain a fraction of the things they want does not work for the consumer. Many of us find ourselves in this situation. We might even spend more than we can afford knowing deep down that this is where it will get us. But we do it anyway. Is this rational? I would argue it’s not.

Capitalists say we can rely on the market to govern, yet people often have to pay by credit at interest. Only a small number of people can afford to pay for goods without amassing a debt. The free market only works for the few. As we saw in 2008 most recently, and many times before, a debt-based system is unsustainable.

Maintaining the myth that the individual is rational serves to legitimize and justify the suffering of the proletariat on two counts. First, a capitalist can feel satisfied in paying a poor wage to its workers by presenting this work as voluntary, a contract entered freely by the workers out of their own choice. In reality, under capitalism, proles have little choice but to sell their labour; they will otherwise not be able to sustain themselves by acquiring basic possessions such as a home and food to eat to survive. In the absence of realistic alternatives, no choice can ever be free. Second, it can be used to claim that individuals who spend too much or fall into debt do so strategically as a way of making money or owning more of what they want in the long term, that this is merely an investment. If they struggle to then come out of debt or if they do not increase their wealth, this can just be dismissed as an error of judgement on the part of the individual. This denies that market forces have placed too high a value on certain items and services, making them unaffordable for those who demand them and need them most, and ignores that it is highly difficult to both live a comfortable life and maintain financial security for those who did not inheret. It places the blame on those who fall into poverty or debt, as something caused by the individual to some degree out of choice.

That individuals are rational, in the sense attested by capitalists, is a lie, and one which maintains their system of domination. We need to think not in terms of self-interested pursuit of wealth for every individual, and find ways to facilitate this, but in terms of everybody’s wants and needs, and how best to satisfy these without incurring harm on workers and consumers. This abstract thinking of individuals, existing in a vacuum, unaffected by the mode of production, makes us miss the reality of the circumstances actual people live in. We need to think instead of workers and consumers, at mercy to property owners and the market. This illuminates how capitalism immiserates both. It shows how capitalism denies them any real autonomy and makes acquiring their wants and needs either a dream or something attainable only at great cost which will only make it impossible to satisfy these in future. There is no certainty, there is no security. There is no rationality, there is no investment. There is no freedom and happiness under capitalism.