Several comments ago (link below), I said that rational choice theory, as stated in the Investopedia article seems falsifiable, because that article included the more familiar sense of rationality, the normativity, and the egoism:
“Rational choice theory states that individuals use rational calculations to make rational choices and achieve outcomes that are aligned with their own personal objectives. These results are also associated with maximizing an individual's self-interest. Using rational choice theory is expected to result in outcomes that provide people with the greatest benefit and satisfaction, given the limited option they have available.”
But my point was that this falsifiability can’t be trusted because the economic discourse is equivocal. Thus, I said, “When put in ordinary language like that, rational choice theory seems perfectly empirical and falsifiable. It's just that the key terms in those assumptions [e.g. ‘rational,’ ‘self-interest’] are defined to make them trivial and unfalsifiable.”
So there’s no inconsistency on my part.
Next, regarding scientism, my point was that it’s scientistic to pretend that your interpretation of rational choice theory amounts to a theory. The scientism is the attempt to lend scientific credibility to economics by borrowing the technical term “theory,” due to the presumption that scientific knowledge is the only legitimate kind. No, it’s not about “calling rational choice theory rational.” The confusion’s yours.
Next, I’m talking about the current role of rational choice theory. Words change their meaning over time, and I’m confident that however Adam Smith, Bertrand Russell, and the others were talking about rationality, they weren’t positing merely the triviality that desires exist or that some actions are caused by desires. They’d have presupposed all kinds of other claims about how the mind works and what we’re supposed to be doing (including egoism or even patriarchal theories of rationality in the more generic, honourific sense). The more you distinguish between the core of this “theory” and the “auxiliary” hypotheses, the more you confirm my point that economic anthropology is full of equivocations.
Yes, there’s such a thing as instrumental rationality. No, that kind of rationality doesn’t suffice for a defense of capitalism since we can be instrumentally rational (i.e. objective and divorced from questions of value) about destroying our species via, say, capitalist consumerism. This kind of rationality is consistent with rank, self-destructive sociopathy. Thus, if that’s the weak rationality we exercise when we’re approximating the cogitations of Homo economicus, that economic model doesn’t entail that capitalism takes care of itself for the best.
You’ve said you don’t subscribe to that kind of libertarianism. That’s fine. I’m criticizing economics in so far as that discipline supports a rosy view of capitalism. The difference is where we draw the line between neutral, “scientific” economics, and the propaganda.
Next, how do you distinguish between capitalism and redistributive policies, to get the measure of inequality that applies strictly to American-style capitalism? Capitalism has been mixed with egalitarian ideals of modernity for centuries. Capitalism was about elevating the merchant class at the expense of the aristocrats, and was thus about fostering a middle class, due to an awareness of the equal, inherent rights of all people. Some governments have been more consistent than others in applying that modern secular framework.
As I argued recently (second link below), though, capitalism nevertheless clashes with the welfare state or with other elements of modernity (medicine, law, war, democracy). Of course, these distinctions depend on how we define our terms. The American-style, so-called libertarian capitalism I have in mind is premised on the sovereignty of greed for money. And that’s what clashes with the other modern institutions that posit the equal dignity of all people.
Of course, as you say, “No economist will evaluate rational vs irrational in a moral sense.” That’s because mathematical economists are scientistic. But my point is that a science of economics won’t support capitalism. Thus, this science has no value as propaganda in the plutocracies that capitalism is liable to generate. Consequently, economists must equivocate if they’re to improve their social station. They must pretend they’re discovering facts of how capitalism operates, while insinuating that those facts are good, that capitalism is inherently self-correcting, and that the government should get off the backs of rich people.
One such equivocation is in the economist’s talk of rationality. When I said, “being rational is good, as in it’s better than being irrational,” I was talking explicitly about what I called “the ordinary sense of rationality,” as opposed to any technical, economic one. The problem is that if you eliminate all traces of normativity from rationality, as in the economist’s conception of instrumental rationality, you’re left with some triviality that won’t sustain a Smithian celebration of capitalism.
Scientific objectification calls for some such stripped-down abstraction. But the defense of capitalism requires egoism or a sense of a higher good that’s supposed to direct our behaviour so that a viable social order can emerge. Economists equivocate on what they mean by “rationality,” depending on the context.
That’s my hypothesis. And no, I don’t have to prove it by doing a Ph.D. on the details.
https://benjamincain8.medium.com/so-rational-choice-theory-is-a-misleading-misnomer-acaf840ec99
