Economics for Humans by Julie A. Nelson

Economics for Humans was published in 2006 and written by Julie A. Nelson, a prominent feminist economist and Professor of Economics at the University of Massachusetts Boston. In Economics for Humans, Nelson seeks to answer how we could create and structure an economy not for imaginary “rational men” but for actual human beings. Nelson criticizes both neoclassical economists for their models that hold little or no relevance for how people actually behave in an economy and Left leaning economists that tend to overestimate the inherent goodness of governments and non-profit organizations and the greediness of private companies. Nelson writes, “in an era of suspicious elections, campaign finance fiascos, and powerful lobbyists, one has to be naïve in the extreme to believe that governments can be trusted to automatically or naturally work for the common good.” (39)

Under the influence of neoclassical economics, we have grown accustomed to the idea of separating economics and ethics but Nelson argues that treating the market-driven economy as a machine dictated solely by “the laws of nature” is not only a false notion but is also to the detriment of human welfare needs.


Nowadays, the core curriculum for economics at most American and European (and many other) universities is based on this neoclassical model. Undergraduates study neoclassical theory, usually not realizing that what they see presented as economic knowledge is not based on economists’ years of intensive study of actual businesses and households. Rather, the base is actually a set of mathematically convenient assumptions and Smith’s image of mechanically driven economy. page 21

Most people would probably assume that the criteria for social welfare should include such things as meeting people’s basic survival needs and not destroying the life-supporting ecological processes of the planet. Not so in the world of neoclassical economics. Because of the desire to keep economics as “objective” and “value-free” as possible, economists have adopted a rather bizarre notion of social well-being or welfare. They have gone out of their way to avoid any criteria that could possibly be thought of as “subjective,” fearing that their “science” would be tainted if they made “value judgments”. “Needs,” this school has claimed, for example, cannot be scientifically distinguished from “wants.” Who is to say, for example, that dental care is a “need,” if so many people around the world get along without it? With no clear, scientific way to draw the line between needs and wants, neoclassical economics has dispensed with the concept of “need” entirely. page 23

Perhaps the most dramatic episode in recent history concerns what happened in Russia after the fall of Communism. Many economists expected that free markets would simply blossom once the “encumbrances” of state control were lifted from Russian society. They thought that the “natural forces” and “economic laws” of capitalism, now unleashed, would more or less automatically create the grand system first describes by Adam Smith. What developed instead, as we know, was chaos, corruption, fraud, murder, and an economy that has had more in common with organized crime than with organized markets. Rates of poverty and alcoholism climbed, while Russian male life expectancy dropped to 58 years. page 25

The idea that the world of morals and care is distinct from the world of business has also had an interesting gender dimension in both popular life and scholarly thought. During the Victorian era, middle-class women were thought to be the guardians of moral and care, which were assumed to rule in the home. Meanwhile, men were thought to be morally less pure by nature and hence appropriately assigned to the rough-and-tumble world of competitive business. page 36

Producing goods without thinking about moral implications can easily lead to the marketing of harmful products. Creating jobs without respecting the humanity of the employees can easily lead to the creation of inhumane working conditions. A belief that everyone should be responsible for themselves without acknowledging the realities of human childhood, illness, and old age leads to an attitude of hard-heartedness. Producing or consuming products without paying attention to ecological impacts puts the earth’s future in hock to the short-sighted impulses of the current generation. It isn’t bad to want to create goods and jobs. But if you do so assuming that the ethical implications will “take care of themselves,” you can do real harm. page 56

While the policies created by the old Progressives are no longer entirely adequate for today’s society and economy, I think we can a great deal from their methods. “What are the greatest causes of harm in today’s society?” and “How can we work together to correct them?” are the right questions to ask. page 126


☞ Julie A. Nelson, Economics for Humans, University of Chicago Press (2006)


The Sane Society by Erich Fromm

The Sane Society was published in 1955 and written by the German social psychologist Erich Fromm. Among theorists such as Marcuse and Adorno, Fromm was a part of the first generation of the Frankfurt School of Critical Theory. He was interested in the psychological effects that large social systems have on individuals and the increasing sense of alienation that in part seems to characterize modern men. He discussed these subjects in Escape from Freedom (1941) where he analyses our ambiguous relationship to freedom. Fromm argues that we harbour a fear of freedom and, in extension, choices and responsibility, which leads us to try and escape by subordinating ourselves to authorities or by simply conforming ourselves to  society and suppressing critical thinking. Fromm connects these psychological tendencies to what enabled the rise of Nazism.

In The Sane Society, Fromm questions how sane our modern capitalist society really is by tracing its alienating effects on our lives and mental health. Fromm criticizes both  capitalism and communism as dehumanizing ideologies and instead explores the possibilities of structuring a society based on individual freedom.

Our problem is that our motive for production is not social usefulness, not satisfaction in the work process, but the profit derived from the investment. The usefulness of his product to the consumer need not interest the individual capitalist at all. page 89

“We are not in danger of becoming slaves any more, but of becoming robots,” as Adlai Stevenson said so succinctly. There is no overt authority which intimidates us, but we are governed by the fear of the anonymous authority of conformity. We do not submit to anyone personally; we do not go through conflicts with authority, but we have also no convictions of our own, almost no individuality, almost no sense of self. page 102

If the market and the contract regulate relationships, there is no need to know what is right and what is wrong and good and evil. All that is necessary is to know that things are fair – that the exchange is fair, and that things “work” – that they function. page 109

The dimensions with which we deal are figures and abstractions; they are far beyond the boundaries which would permit of any kind of concrete experience. There is no frame of reference left which is manageable, observable, which is adapted to human dimensions. While our eyes and ears receive impressions only in humanly manageable proportions, our concepts of the world has lost just that quality; it does not any longer correspond to our human dimensions. This is especially significant in connection with the development of modern means of destruction. In modern war, one individual can cause the destruction of hundreds of thousands of men, women and children. He could do so by pushing a button; he may not feel the emotional impact of what he is doing, since he does not see, does not know the people whom he kills; it is almost as if his act of pushing the button and their death had no real connection. The same man would probably be incapable of even slapping, not to speak of killing, a helpless person. In the latter case, the concrete situation arouses in him a conscience reaction common to all normal men; in the former, there is not such reaction, because the act and his object are alienated from the doer, his act is not his any more, but has, so to speak, a life and a responsibility of its own. page 120

The mechanism through which the anonymous authority operates is conformity. I ought to do what everybody does, hence, I must conform, not be different, not “stick out”; I must be ready and willing to change, according to the changes in the pattern; I must not ask whether I am right or wrong, but whether I am adjusted, whether I am not “peculiar,” not different. page 153

Modern man does not know what to do with himself, how to spend his lifetime meaningfully, and he is driven to work in order to avoid an unbearable boredom. page 179

☞  Erich Fromm, The Sane Society, Rinehart, New York (1955)