What Are Economic Assumptions?

The economic man is the subject who conducts economic activities with the goal of fully pursuing material interests. Everyone wants to get the maximum gain with as little effort as possible, and he can do whatever he can. "Economic man" means a rational economic man, and it can also be called a "real person." This is the view of classical management theory on people, that is to treat people as "economic animals", that all human behavior is to maximize the satisfaction of their own private interests, the purpose of work is only to obtain financial reward.

Economic man hypothesis

The economic man is to pursue the full pursuit of material benefits

1.The economic person hypothesis means that everyone aims to maximize their own interests

2.The economic man hypothesis refers to the pursuit of maximizing self-interest or utility, which is the basic motivation of individual behavior.

The "economic man" was put forward by western economists as a basic hypothesis, hence the name "economic man". There have always been different views on the scientific nature of this hypothesis. As our country turns

The "economic man" hypothesis originated from the philosophy of enjoyment and the British economist

The "economic man" hypothesis and its corresponding X theory were popular in the European and American business management circles from the early 20th century to the 1930s. This theory changed the state of laissez-faire management at that time; strengthened the society's concern for eliminating waste and improving efficiency, and promoted the establishment of a scientific management system. This has certain reference effect on China's current management practice. But the "economic man" hypothesis and the X theory also have great limitations.

1. The "economic man" hypothesis is based on the hedonistic philosophy, which regards people as irrational, natural "lazy people" who do not like work. This is a reflection of the doctrine of individualistic values at the beginning of the 20th century. Taylor sought the roots of efficiency from the profitability of entrepreneurs and workers, and regarded people as machines. This is in opposition to the Marxist view that human beings are human beings and that human nature is the sum of social relations.

2. The management of the "economic man" is based on the management model of money-based machinery, which denies the owner's spirit of the owner and the human consciousness, initiative, creativity and responsibility. They believe that because people are inherently lazy, they must use coercion, control, reward, and punishment in order to achieve their organizational goals.

3. The "economic man" assumes that most people lack ambition and that only a few people play a dominant role. Therefore, the manager is absolutely opposed to the man being managed, opposes workers' participation in management, and denies the status and role of workers in production. The view of human nature is completely wrong.

Regarding the origin and concept of the "economic man", the relevant encyclopedia is explained as follows: The economic man is also called the "economic man hypothesis", that is, it is assumed that people's thinking and behavior are objective and rational. The benefit is maximizing material compensation. This is often used as a basic assumption in economics and some psychological analysis. The "economic man hypothesis" comes from

Summary

Regarding the meaning of "economic man" and "economic man hypothesis", the Chinese and foreign economic literature has not given an authoritative and standard explanation, nor has it been universally accepted and widely used. At present, what most economists call the "economic man's hypothesis" roughly consists of four

Effective assumptions are a prerequisite for scientific research.

Overview of the Economic Man Hypothesis

Self-interested and rational "economic man" is the theoretical foundation of western economics. The "economic man" hypothetical conditions have continuously evolved in the course of economic development, and have roughly gone through the classical "economic man", the neoclassical "economic man", and the "economic man" in a broad sense. At present, China still has the "economic man" of the socialist market economy. It is assumed that the conditions assumed by each of the above "economic people" are different. Earliest

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Self-interest evolved into a combination of self-interest and other benefits; the earliest rationality evolved into bounded rationality; from the pursuit of maximizing individual interests to the pursuit of the unity of personal and public interests; the conditions of the "economic man" assumption were The initial complete idealization evolved closer to reality. This is the need of socio-economic development and the inevitable result of socio-economic development. The evolution of the "economic man" assumptions directly affects people's theoretical research and also directly affects changes in management models. With the change of the "economic man" hypothetical boundary, the management concept has become more humane, and more emphasis has been placed on the coordination of personal and public interests. This provides useful inspiration for China's further improvement of the socialist market economy: people-oriented, respect for the legitimate rights and interests of the socio-economic subject; advancing with the times, constructing the "economic man" hypothesis needed for a socialist market economy; The interests are combined to achieve a win-win or win-win situation.

boundary

In the discussion of "The Wealth of Nations", Smith's "economic man" is assumed to be a subject that pursues the maximization of personal interests and is actively engaged in economic activities. Smith believes that the "economic man" has a self-interested nature. In economic activities, people will completely pursue their personal interests without taking into account the interests of others, but because everyone's profit-making activities are restricted by the profit-making activities of others. Affected by the "invisible hand" of the market economy, this self-interested behavior of everyone will eventually promote the interests of society.

Smith also illustrates the moral conduct of the "economic man." He believes that altruism is the purpose, and altruism is the means. The altruistic means must be used first to achieve the self-interested purpose. At the same time, he also proposed that God has given everyone a "selfishness". If the "selfishness" is too strong, it will infringe other people's selfish activities. Therefore, everyone must take into account the selfishness of others while making full use of selfishness Profit-making activities are inviolable. "Economic people" are required not to cross the border and damage the legitimate rights and interests of others when realizing their goals and exercising their legitimate rights and interests. Not to deny "selfishness", but to give full play to the conditions of selfishness. "The Wealth of Nations" talks that everyone's profit-making activities based on "self-interest" can only be carried out within the limit of not infringing the "rules of justice." They are consistent, and they all emphasize the degree of "self-interest" behavior, which is an important guarantee for maintaining the order of social life.

The boundary of Smith's "economic man" hypothesis refers to the "degree" of Smith's "economic man" assumption. Smith's "economic man" hypothesis can be summarized into the following four points: First, the "economic man" must be self-interested and not isolated. The motivation (self-interest) for chasing personal interests is the driving force of the "economic man" behavior. The "economic man" cannot survive in isolation, but only communicates with others in economic life and seeks private interests. Second, the "economic man" always judges his own interests based on the market environment he is in, and strives to use various methods to maximize his own interests. Third, the sole purpose of the "economic man" is to pursue private interests, but ultimately promote social and public interests. However, this process requires good legal system and rules as a guarantee. Fourth, the means and content of "economic man" chasing private interests will change with the development of society, but its self-interest nature will not change. To sum up, the boundary assumed by Smith's "economic man" should be: The "self-interest" boundary of "economic man" should be limited to not harming the interests of others; The boundary should be limited to the extent that it does not harm the public interest: the self-interest and the maximization of interests of the "economic man" should be under the constraints of the legal system and rules, and be ethical and obey the law.

Displacement

Displacement is a physics term used to describe a physical quantity that changes the position of a moving object. The "economic man" hypothetical boundary displacement refers to the process and phenomenon that the "economic man" hypothetical condition evolves during the development of economic history. In economic history, Western economists such as Mendeville, Smith, Bentham, Jo Mueller, Sinier, Liszt, Simon, Marshall, Bombarvic, Koss, Becker, Friedman, Economists such as Lucas have "economic people" assumptions, which are roughly divided into classical "economic people", neoclassical "economic people", and "economic people" in a broad sense. Exactly the same. With the development and improvement of the socialist market economy, there is also the "economic man" assumption of the socialist market economy. Therefore, it can be said that since the first day of the "economic man" assumption, the boundary of the "economic man" assumption has been Shifted.

(A) Mendelville's enlightenment of the "economic man" hypothesis

In Mendelville's book "Fables of the Bee, or personal malpractice is the public interest", public interest refers to the socio-economic development and the increase of social wealth, and personal malpractice refers to the individual's pursuit of their own happiness and interests. If everyone is free to engage in self-interest activities, it can naturally increase the prosperity of the whole society and be more effective than purposeful activities. Mendelville's idea that personal interests are the driving force for economic development has a great impact on Smith's "economic man" assumption.

2. The boundary of the classical "economic man" assumption

Smith established the boundary of the "economic man" hypothesis, and systematically used "economic man" for economic analysis, and became the founder of modern economics. After Smith, through the further supplement of the "economic man" thought by Bentham, Cynair, Joel Muller and others, the classical "economic man" model was basically formed, creating scientific hypotheses for the analysis and research of economics and premise.

(3) The boundary of the neoclassical "economic man" hypothesis

Smith's "economic man" hypothesis was generally inherited by western economics. At the same time, this hypothesis itself is constantly being improved, and it is most prominently reflected in the neo-classical theory system. The neo-classical school believes that the "economic man" is the actor of economic activity. One is utilitarian in nature, that is, to obtain its own great economic benefits at the minimum cost. The second is to have complete rationality, that is, to possess all knowledge and information. Choose to maximize benefits; the third is that "economic people" generally include producers and consumers, seeking to maximize profits and utility; the fourth is that "economic people" usually adopt labor, capital, land, entrepreneurs and other four factor suppliers status. Neoclassical economics conducts qualitative and quantitative analysis on the behavior of the "economic man". By introducing a quantitative analysis method, it answers the questions that Smith did not answer, and the original "economic man" of Smith is a big step forward. Neoclassical economics examines the conditions under which the "economic man" maximizes profits and utility in different market forms, emphasizing that "economic man" can reach equilibrium and achieve maximum satisfaction and efficiency only in a fully competitive market environment. It can be seen that neoclassical economics further abstracted Smith's "economic man" into a fully rational, simple, and quantifiable "robot". Transform economics from a discipline with morality and sociality into a discipline with only technical tools. Therefore, the hypothetical boundaries of the classical "economic man" are: pure "self-interest" without "altruism", pure "pursuit of maximizing personal interest" without "public interest", and without the constraints of social rules.

(4) The boundary of the general "economic man" assumption

In the new institutional economics, the "economic man" hypothesis (also called "economic man" in a broad sense) is closer to the real society than the traditional "economic man" hypothesis. Its "economic man" hypothesis contains the following contents: one is that people have dual motivation. Pursue the maximization of economic and non-economic benefits. Non-economic benefits include altruism, ideology, and voluntary burden constraints. They usually have collectivist behavior preferences. The second is limited rationality. The new institutional economics inherits Simon's "limited rationality" theory and believes that people's access to information is incomplete, so that human rationality is a limited rationality between complete rationality and incomplete rationality. The "economic man" in the new institutional economics has limited rationality. It not only pursues the maximization of its own interests, but also pursues non-economic benefits such as altruism and voluntary burden constraints, and also has an opportunistic tendency. It can be said that the traditional rational "economic man" is in an ideal state, and the rational "economic man" of the new institutional economics has returned to reality. It can be seen that the generalized "economic man" hypothetical boundary should be the return of Smith's "economic man" hypothetical boundary, and it is a higher level of return: "self-interest" and "altruism" coexist, and the pursuit of "personal interests" "Maximization" and "maximization of the public interest" coexist, and the behavior of the "economic man" is social.

(5) The assumed boundary of the "economic man" in the socialist market economy

Since China's economic system reform, the Chinese economics community has also raised the "economic man" hypothesis of a socialist market economy. Some scholars believe that in the analysis of socialist economic theory, the western "economic man" hypothesis belongs to the individualism of Western culture, which is far from the mainstream consciousness of China's traditional collectivism. It should not be used as a prerequisite for economic theory analysis. Economic Man "position. With the further deepening and development of China's market economy, most scholars believe that in order to establish a socialist market economy in China, only the prerequisites of the "economic man" hypothesis can be recognized, and by establishing an appropriate mechanism, people can maximize their own interests. At the same time objectively contribute to the realization of the overall goals of society. The "economic man" hypothesis is the starting point of a transaction and the starting point of a market economy. The "economic man" realizes self-interest through altruism. Altruism is a means of self-interest, and self-interest is the purpose of altruism. Although the socialist market economy has different characteristics compared to the capitalist market economy, it is the market that uses the "invisible hand" to play a fundamental role in resource allocation and still conforms to the general laws of the market economy. Therefore, the "economic man" hypothesis is also an implicit prerequisite for the establishment and development of a socialist market economy. The "economic man" of a socialist market economy pursuing their own interests in the market should exhibit the following four basic characteristics: First, autonomy. As the "economic man" of the socialist market economy, laborers, consumers, investors, enterprises, or business associations, seek greater benefits for themselves through free, conscious, and autonomous production, exchange, and consumption activities. The second is profit-seeking. The legitimacy and importance of socialist economic activity subjects in pursuing their own interests are clarified. The third is competition. Socialist "economic people" compete in the fields of production, exchange, and consumption, improve the labor productivity of enterprises, and cultivate and improve the economic mechanism of the survival of the fittest. The fourth is anticipation. It can be seen that the boundary of the "economic man" hypothesis of the socialist market economy can be summarized as: organic coordination between "self-interest" and "altruism". Pursue the organic combination of "maximization of personal interests" and "maximization of public interests", the unification of "economic people" and "social people", and compliance with laws and regulations.

Impact of boundary displacement on theory and practice

The displacement of the "economic man" hypothetical boundary directly leads to changes in theoretical research, extending economics to an unprecedentedly broad field; the displacement of the "economic man" hypothetical boundary also directly promotes the development and progress of management theory and practice.

(I) Theoretical evolution of the "economic man" hypothesis

The classical "economic man" was used by the Smith system. After some classical economists supplemented and perfected it, the cornerstone of economic maturity was finally laid, but there were still some shortcomings. Through the criticism and improvement of the historical school and the institutional school, neoclassical economists based on the classical "economic man" model and absorbed the results of the development of natural science in the contemporary era, thus forming the neoclassical "economic man" of western economics. idea. The neoclassical "economic man" model overcomes the superficial interpretation of the economic world by economists in the past, so that it can analyze market activities in detail. Eventually, economics is transformed from a discipline with moral and political attributes to a rich instrumental analytical science. The "economic man" has become naked rational selfish. In the new political economy movement. The "new economists" represented by Becker, Buchanan, Koss, North, etc. have abstracted the "economic man" hypothesis for the third time. The characteristics of the generalized "economic man" model: the "economic man" hypothesis is applied to many social fields outside the economic field, and "self-interest" and rational choice exist not only in the economic field, but also in all human activities outside the market ( Politics, marriage, maternity, illegal activities, etc.). New academic achievements such as transaction costs and information costs were applied to the neoclassical "economic man" model, and the assumptions of "complete rationality" and "complete information" were modified, so that the "economic man" assumption went beyond the scope of pure economics. General meaning. The "new economist" reintegrated the historical and ethical factors and social moral factors abstracted from neoclassical economics into the category of "economic man", and carried out a higher-level revival of Smith's "economic man" thought.

The preliminary formation and application of the classical "economic man" thought has become the cornerstone of economics. The neoclassical "economic man" assumption has promoted the scientificization of economic theory. The "new economist" developed the "economic man" in a broad sense and made the economy Science has expanded to an unprecedentedly broad field. It can be seen that in order to more effectively analyze the actual economic behavior of human beings and various economic phenomena, economists of all ages have continuously abstracted and revised the hypothesis of "economic man" in order to establish a support point for a logical and rigorous economic theoretical system.

(II) Impact of "Economic Man" Hypothesis on Economic Management Practices

Looking at the emergence and development of western management theories, different management theories are almost always based on different understandings and theoretical assumptions about human nature and motivation. First, the embryonic stage of western classical management theory was based on Adam Smith's "economic man" ("rational economic man") assumption. American management scientist McGregor proposed the "X" theory. In this kind of management, managers treat people as objects, ignore people's own characteristics and spiritual needs, and only focus on meeting the physiological and safety needs of people. The well-known management concept of Hulubu Dabang was proposed, and the founder of scientific management theory, Tyro, is a typical representative of this view. Second, behavioral science theory believes that people are not only "economic people", but also "social people", thus establishing a new set of management theories that meet people's various social needs as the basic starting point. According to Hawthorne's experiment, Mayo et al. Proposed that the satisfaction of social needs is often more motivating and motivating than economic remuneration. Good interpersonal relationships are the decisive factor in motivating people, and material stimulation is only secondary. To work. Moreover, people have found in long-term social life that personal interests can only be protected when the interests of the entire group are taken into account. The emergence of behavioral science meets the requirements of the continuous development of society, the continuous improvement of people's material and cultural life, and the ever-changing requirements of corporate labor and labor composition, and makes up for the deficiencies of classical management theory. Third, at the stage of modern management theory, people are further regarded as "self-fulfilling people", "decision-makers" and "complex people", and strongly advocate the implementation of participatory, flexible and changeable management to adapt to the increasingly democratic and complex Management environment. Maslow's hypothesis of "self-fulfilling people" proposes a management method that can continuously stimulate people's potential by satisfying people's multi-level needs. Simon's "decision maker" assumed that starting from limited rationality, the quality of management was greatly improved, and the operability of management was enhanced. Schein's "complex person" hypothesis put forward a "flexible and flexible" management method, which means that it depends on people, events, and circumstances.

This shows that. The theoretical hypothesis about people has become the basic basis and basic starting point of western management theory research. The development and breakthroughs of western management theories are almost based on the leaps in the understanding of people; the differences in various management theories are also based on the different understandings of people.

Economic man hypothesis realistic meaning

Carefully study the "economic man" hypothesis and the evolution laws of its boundaries, and provide a reference for improving the socialist market economy and ensure that each social and economic subject realizes a harmonious benefit distribution structure.

(1) Grasp the "general rules" in Smith's "economic man" hypothetical boundary, which is conducive to strengthening the institutional and moral construction of the socialist market economic system

Smith believes that as long as the classical "economic man" has good legal and institutional guarantees, the "economic man" who is subjectively "self-interested" can also achieve socially objective results. Marshall believes that the rational characteristics of the neoclassical "economic man" self-interest behavior are reflected in the fact that profit-making behavior must be under the constraints of norms and systems. In the broad sense of the "economic man" stage, systems, laws, customs, etc. are included in the economic analysis as endogenous variables that determine people's preferences.

The system defines the space and dimensions of "economic man" activities. Under different institutional conditions, "economic man" will exhibit different behaviors. In the transition period of the market economy system, due to the lack of sound institutional constraints and the lagging of legal and institutional constructions when strengthening interest incentives, the "economic man" is motivated by strong self-interest to breed rent-seeking behaviors and infringe on the interests of society and others. The moral "economic man" behavior is enforced through moral constraints and institutions, so that compliance with morals and institutions is positively related to gains. Otherwise, imbalances in the incentives and restraints on human behavior, especially the lack of restraint mechanisms, cannot prevent self-interested "economic men" from harming others' self-interest, immorality, or even illegal acts.

Therefore, when we recognize that the "economic man" hypothesis is a general feature of the market economy, we must guide all market entities to abide by certain rules and constraints. The normal and orderly development of the market economy requires the establishment of complete legal norms and the necessary moral norms. At present, it is necessary to strengthen moral construction and advocate a moral concept that takes the service of the people as the core and collectivism as the principle, which is the development direction of China's socialist market economy and the spiritual pillar and guarantee of harmonious social development.

(2) Grasping the "Beli" boundary of the "economic man" hypothesis is conducive to building a mature socialist market economy subject

The "economic man" assumption is a general feature of the market economy because: first. The market economy is a benefit economy. The basis of its system and mechanism operation is human interest and the driving force for the continuous development of material production. The market economy must respect the economic laws and use the "invisible hand" to make use of material incentives, strengthen the concept of benefits, and promote the optimal allocation of resources by introducing competition mechanisms. Therefore, the market economy should respect the "economic man" self-interest assumption, encourage the "economic man" to compete and maximize profits, and fully respect and protect the legitimate interests of market entities, so as to ensure that each market entity can live in harmony. Second, the main bodies of the market economy are individuals, enterprises, and governments. They largely pursue and protect their own interests. The fundamental driving force for the continuous development of human social productive forces mainly comes from people's pursuit of their own interests. Due to the constraints of the level of productive forces and the social and historical process, so far, people's ideological state is far from reaching the view of working for others and social labor as their own life first. The required height, people's labor are directly or indirectly related to their own vital interests. The logical relationship between the "economic man" and the law of value and the market economy strongly proves that the pursuit of self-interest is the fundamental reason for people to participate in economic activities. However, we must prevent extreme individualistic tendencies. While respecting the social nature of the economic activities of the market economy subjects, and respecting and protecting their legitimate self-interests, each market subject can gain a lot of gains and gains in order to build a mature socialist market economy subject.

(3) The shift from the "rational" to the "bounded rational" hypothesis in the "economic man" hypothesis trains our revelation-perfecting the socialist market economy system must advance with the times

We know that the "economic man" assumption in economic history has changed three times, and the boundaries of the "economic man" assumption have also shifted. "Economic man" assumes that during the process of boundary displacement, "complete rationality" evolves into "limited rationality", and "complete information" evolves into "limited information". The dense "pure economic man" has become a "social man". In real social life, the "economic man" is everywhere and everywhere. The shift and change of the boundary assumed by the "economic man" is closely linked to the development of social productive forces and is a requirement of social and economic development. This has inspired us to keep pace with the times, and to build a "economic man" in a socialist market economy according to the needs of improving the socialist market economy. This is a top priority. The "economic man" of the socialist market economy should have the following characteristics: a combination of self-interest and altruism, a balance between personal and social interests, economic and moral integration, honesty and trustworthiness, and discipline and law. If we have the norms and benchmarks of the "economic man" of the socialist market economy, we can clarify many of the current confused ideas and help the socialist market economy operate in an orderly manner. Conducive to the harmonious and healthy development of society and economy.

(4) Accurately grasping the "economic man" hypothetical boundary can improve the efficiency and quality of China's public management

In the theoretical practice of China's public management, not only must the "economic person" stimulate the "self-interest" of civil servants and generate incentives, but also the formulation and implementation of effective measures to contain the negative effects of "economic person", Guarantee to produce "altruistic" behavior effects. The economic person hypothesis provides the following ideas for China's administrative management: First, we should attach great importance to the construction of the material compensation system for public servants. One of the main bodies of public management is public servants. The hypothetical boundary of the "economic man" can effectively understand the behavioral motivation of government public servants and respect the rationality of public servants' pursuit of material benefits. With the development of the economy, the material remuneration of civil servants is continuously improved, as much as possible, to satisfy the self-interest of civil servants, and to motivate their work. The second is to establish strict institutional norms to restrict the negative behavior of "economic people" of public servants, and to ensure that public servants can coexist reasonably and altruistic behaviors reasonably. Under the premise of recognizing the "economic man" hypothetical boundary, we must fully consider the negative effects of the "economic man" policy of public servants, strictly formulate sound policy specifications, administer according to law, clearly restrict the behavior of public servants, prevent negative behaviors, and promote public affairs People better achieve a high degree of integration of self-interest and altruistic behavior, and increase social and public interests. Third, public administration is gradually attracting market mechanisms, reducing the chance of negative behaviors of "economic people" by public servants, and reducing the scope of direct government control. Modern public administration includes beneficiary administration (such as social welfare, dibao, administrative assistance, social insurance and other administrative activities) and service administration (such as hydropower, communications, transportation, culture, education, health and other administrative activities). Administrative services are provided directly by relevant government departments. Service-oriented administrative services can introduce commercial management methods and market mechanisms, reduce the scope of direct government management, eliminate the breeding ground for rent-seeking of public servants, and promote the "infinite government" toward a "limited government". Achieve "effective government".

(5) Grasping Smith's "economic man" hypothetical boundary, which is conducive to the harmonious development of society

In the hypothetical boundary of Smith's "economic man", self-interest is consistent with altruism, and personal and public interests are closely linked, which is of great significance to the construction of a harmonious socialist society today.

An important connotation of a "harmonious society" is that economic entities participating in economic activities should achieve the goal of "win-win" or "multi-win", and all parties interacting with each other should obtain corresponding benefits, and the interests of all parties can be protected. In the process of improving the socialist market economy, China's original interest structure is undergoing profound adjustments and reorganizations. Some new social classes and increasingly diverse interests have emerged, which have become prominent contradictions and potential hidden dangers that affect social harmony. Therefore, we must mobilize all positive factors to enhance the creative vitality of the whole society; coordinate the interests of all parties to maintain and achieve social equity; create a good social atmosphere and form a harmonious interpersonal environment. Establish a social relationship of mutual respect and trust, and form a society in which each can do its best, have its own place, and live in harmony. We must attach great importance to the economic development of less-developed areas, care for people with more difficult lives, and vigorously promote the good customs of solidarity, mutual assistance and poverty alleviation in the whole society, and form an equal, friendly, harmonious and interpersonal environment. At present, practical measures should be taken to do a good job of reemployment, endowment insurance, unemployment insurance, medical insurance, and "minimum guarantee" for unemployed workers; do a good job in rural poverty alleviation, coordinate urban and rural development, reduce urban-rural differences, and promote rural economic development. Build a new socialist countryside; solve the problem of education equity. Establish and improve a social coordination mechanism as soon as possible, guide the masses to express interest requirements in a rational and legal form, resolve conflicts of interest, and consciously maintain stability and unity.