Elias L. Khalil

I attempt a reconstruction of Adam Smith's view of human nature as explicated in The Theory of Moral Sentiments. Smith's view of human conduct is neither functionalist nor reductionist, but interactionist. The moral autonomy of the individual, conscience, is neither made a function of public approval nor reduced to self-contained impulses of altruism and egoism. Smith does not see human conduct as a blend of independently defined impulses. Rather, conduct is unified, by the underpinning sentiment of sympathy.

The paper distinguishes between two kinds of products, `symbolic' and `substantive'. While substantive products confer welfare utility in the sense of pecuniary benefits, symbolic products accord self-regarding utility. Symbolic products enter the utility function in a way which differs from substantive ones. The paper distinguishes among three kinds of symbolic products and proposes that each has a distorted form. If symbolic products result from forward-looking evaluation, they act as `prestige goods' which please admiration or, when distorted, as `vanity goods' which satiate pretentiousness. When symbolic products originate from forward-looking action, they act as `pride goods' which satisfy respect or, when distorted, as `deference goods' which indulge pomposity. When symbolic products arise from backward-looking evaluation, they act as `identity goods' which enhance dignity or, when distorted, as `reification goods' which gratify reverence

Organisms change their shape and behavior during ontogenesis in response to incentives—what biologists call “phenotypic plasticity” or what is called here more specifically “behavioral plasticity.” Such plasticity is usually in the direction of enhancing welfare or fitness. In light of basic concepts in economics, such behavioral plasticity is nothing but rationality. Such rationality is not limited to organisms with neural systems. It also characterizes brainless organisms such as plants, fungi, and unicellular organisms. The gist of the article is the distinction between rationality and intelligence. Whereas rationality is ubiquitous in all organisms, intelligence varies in degrees depending on division of labor that may involve the evolution of a neural system. This article aims to defend the universality of rationality—the Organismus oeconomicus hypothesis. It argues that neither the notion of bounded rationality of behavioral economics nor Herbert Simon’s “procedural rationality” can ultimately undermine the Organismus oeconomicus hypothesis

Abstract There are two kinds of beliefs. If the ultimate objective is wellbeing (util- ity), the generated beliefs are “practical.” If the ultimate objective is truth, the generated beliefs are “scientific.” This article defends the practical/scientific belief distinction. The proposed distinction has been ignored by standard rational choice theory—as well as by its two major critics, viz., the Tversky/Kahneman program and the Simon/ Gigerenzer program. One ramification of the proposed distinction is clear: agents who make errors with regard to scientific beliefs (e.g., the conjunction fallacy) should not be taken as committing irrationality—because they are most probably engaging the other kind of maximization, the pursuit of wellbeing.

There has been no systematic study in the literature of how self-deception differs from other kinds of self-distortion. For example, the term ‘cognitive dissonance’ has been used in some cases as a rag-bag term for all kinds of self-distortion. To address this, a narrow definition is given: self-deception involves injecting a given set of facts with an erroneous fact to make anex antesuboptimal decision seem as if it wereex anteoptimal. Given this narrow definition, this paper delineates self-deception from deception as well as from other kinds of self-distortions such as delusion, moral licensing, cognitive dissonance, manipulation, and introspective illusion.

The paper examines the ramifications of naturalism with regard to the question of individuality in economics and biology. Economic theory has to deal with whether households, firms, and states are individuals or are mere entities such as clubs, networks, and coalitions. Biological theory has to deal with the same question with regard to cells, organisms, family packs, and colonies. To wit, the question of individuality in both disciplines involves three separate problems: the metaphysical, phenomenist, and ontological. The metaphysical problem is concerned with purposeful action: Is the firm or organism exclusively the product of efficient causality (optimization) or is it motivated by final causality (purposefulness)? The phenomenist problem is interested in the substantiality of essences: Is the firm''s or organism''s scheme of institutions/traits deep or is it extraneous to identity? The ontological problem is related to the issue of reductionism: Is the behavior of lower-level organization governed by a pre-constituted entities or is it context-sensitive? The paper finds that theoretical differences run along the naturalist/anti-naturalist divide rather than along disciplinary specialization. Also, the paper finds that it is not inconsistent for the same theorist to be naturalist with regard to one problem and anti-naturalist with respect to the other two problems.

Neo-Darwinism is based on the same principles as the Walrasian analysis of equilibrium. This may be surprising for evolutionary economists who resort to neo-Darwinism as a result of their dissatisfaction with Walrasian economics. As it is well-known, the principle of rationality does not play a role in neo-Darwinism. In fact, the whole (neo-)Darwinian agenda became popular exactly because it expunged the idea of rationality from nature, and hence, from equilibrium. It is less known, however, that the rationality principle is also not central in Walrasian equilibrium analysis. Therefore, if we find that the rationality principle must be central to the analysis of decision making of human and nonhuman organisms, we must advance organomics . Organomics is bioeconomics understood as the use of rational choice to the study of the behavior of human and nonhuman organisms. Organomics offers a different starting point than the one offered by neo-Darwinism.

Civil society consists of members obligated to respect each other’s rights and, hence, trade with each other as equals. What determines the boundary, rather than the nature, of civil society? For Adam Smith, the boundary consists of humanity itself because it is determined by identification: humans identify with other humans because of common humanness. While Smith’s theory can explain the emotions associated with justice (jubilance) and injustice (resentment), it provides a mushy ground for the boundary question: Why not extend the common identity to nonhuman animals? Or why not restrict the boundary to one’s own dialect, ethnicity or race? For David Hume, the boundary need not consist of humanity itself because it is determined by self-interest: a European need not respect the property of outsiders such as Native Americans, if the European benefits more by exploiting them than including them in the European society. While Hume’s theory can provide a solid ground for the boundary question, it cannot explain the emotions associated with justice. This paper suggests a framework that combines the strengths, and avoids the shortcomings, of Smith’s and Hume’s theories.

Rosen accuses conventional biology of abandoning its main challenge: the understanding of the nature of life. Biologists generally act subservient to physicists, handicapped by the Cartesian metaphor of the organism as machine. This allows biologists to eschew the issue of intentionality and finalism. The machine metaphor assures biologists that they do not need to appeal to laws other than the ones used by physicists. Rosen argues that the machine metaphor affords the reduction of the organism to its constituent parts.

Hume and Smith advance different answers to the question of whether sympathy can ever be the foundation of the moral order. They hold contradictory views of sympathy, called here ‘the Fellow-Feeling Paradox’. For Hume, fellow-feeling tends to reverberate in society, leading to the socialization of the individual and even mob (collective) psychology. Hence, sympathy cannot be the foundation of the moral order. In contrast, for Smith, fellow-feeling develops into critical judgment of the emotions/actions, leading to individual moral autonomy even self-command. Hence, sympathy can be the foundation of the moral order. This paper provides a resolution of the two answers.

Textual exegesis is used to show that Marx's concept of social labor is transhistorical, referring to a collective activity of humans as a species. The collective nature of labor is suspended in capitalist production because of the anarchic character of market relations. But the suspension is skin deep: The sociality of labor asserts itself in a mediated manner through the alienated empowerment of goods with value. This is commodity fetishism, which vanishes when relations of production become actually collective?matching the transhistorical essence of labor. Marx's concept of social labor is adjudged inadequate. It amounts to asserting that the actions of agents could be ex ante calculated according to a global rationality. In this respect, Marx's concept of social labor is reminiscent of the equally deficient notion of perfect competition in mainstream neoclassical economics.

The brain is involved in theory-laden cognitive processes. But there are two different theory-laden processes. In cases where the theory is based on facts, more facts can either falsify or confirm a theory. In cases where the theory is about the choice of a benchmark or a standard, more facts can only make a theory either more or less warranted. Clark offers a review of a view of the brain where the brain pro- cesses input information in a way that confirms its priors or its pre- dictions. This does not mean that the brain creates its own reality. The brain, rather, processes input data, but it does so in light of its own priors. The brain is a bidirectional hierarchical structure. While the top layers generate priors, the lower layers process input data. The brain amounts to the dynamics of image- making, where the top-down process generates unified images, while the bottom-up process, which takes data, corrects the images.

This article advances what it calls the ‘Impossibility Result’: it is impossible to claim that the reduction of exploitation leads to the improvement of efficiency. The Impossibility Result is the inevitable result of the proposed conceptual difference between ‘injustice’ and ‘exploitation’. Injustice occurs when one member of a society deviates from the norms and the legal rules concerning how one should treat other members of that society. Exploitation occurs when one member of a society takes advantage of entities such wild animals, cattle, a field of vegetables, or other people that lie outside the boundary of that society. In many cases of exploitation, the exploited may derive some benefit, as in the case when enslavement is better than death. In other cases of exploitation, the exploited may derive zero benefit, called here ‘harm’, as in the case when a deer is hunted.

The category “other-regarding preferences” is a catch-all phrase based on a self/other dichotomy. While the self/other might be useful when the motive is self-interest or altruism, it fails when the motive involves bonding. This article identifies three motives that involve bonding: i) the preferences regarding friendship and community; ii) the preferences that amalgamate communal bonding with self-interest; and iii) the preferences for distinction and status. These three types of preferences unify the self and other—usually aided by ceremonies of gift exchange and celebratory prizes. This article offers a more complete taxonomy of preferences and, corollary, structures of exchange.

Can rational choice theory justify hope and patience in dealing with calamities such as financial collapse or terminal illness? The Book of Job is a good entry-point. Three friends of Job counsel him to avoid hopelessness and bitterness arising from frustration regarding calamities. They do so on non-rational grounds. They argue that Job should ignore the evidence and instead blindly uphold the belief ‘God is just.’ However, such blindness permits magic, superstitions, and cultish beliefs. The specter of such beliefs is probably what prompted the fourth friend, Elihu, to dismiss the arguments of the three friends. Elihu reasons that one should be rational, i.e., acknowledge the evidence. This need not entail the conclusion ‘God is unjust’ – as God cannot perform miracles on a daily basis. That is, given the evidence, one cannot sustain hopeful beliefs that God will interfere and reverse the course of natural catastrophes and shocks from which humans, as well as other living beings, suffer. One at best can be patient, accept suffering considering worse counterfactuals. Based on Elihu’s critique of the arguments of the three friends, and building on Maimonides’s interpretation, this paper concludes that standard rational choice theory can explain patience, but not hope.

This review identifies at least six different kinds of fellow-feeling in Adam Smith’s Theory of Moral Sentiments. The six kinds are (i) the mirroring of emotions; (ii) altruism; (iii) judgment of pitch of emotions/actions; (iv) judgment of merit of emotions/actions; (v) friendship-and-love; and (vi) aspiration that leads to admiration. Smith does not list them side-by-side. This side-by-side listing promises to help thinkers to see how to assemble them to construct a coherent and systematic framework on how to amalgamate three moments of behavior: the emotional, the rational, and the moral.

Why would decision makers adopt heuristics, priors, or in short “habits” that prevent them from optimally using pertinent information—even when such information is freely-available? One answer, Herbert Simon’s “procedural rationality” regards the question invalid: DMs do not, and in fact cannot, process information in an optimal fashion. For Simon, habits are the primitives, where humans are ready to replace them only when they no longer sustain a pregiven “satisficing” goal. An alternative answer, Daniel Kahneman’s “mental economy” regards the question valid: DMs make decisions based on optimization. Kahneman understands optimization not differently from the standard economist’s “bounded rationality.” This might surprise some researchers given that the early Kahneman, along with Tversky, have uncovered biases that appear to suggest that choices depart greatly from rational choices. However, once we consider cognitive cost as part of the constraints, such biases turn out to be occasional failures of habits that are otherwise optimal on average. They are optimal as they save us the cognitive cost of case-by-case deliberation. While Kahneman’s bounded rationality situates him in the neoclassical economics camp, Simon’s procedural rationality echoes Bourdieu’s “habitus” camp. To abridge the fault line of the two camps, this paper proposes a “two problem areas hypothesis.” Along the neoclassical camp, habits satisfy wellbeing, what this paper calls “substantive satisfaction.” Along the Bourdieu camp, habits satisfy belonging, love, and bonding with one’s environment, what this paper calls “transcendental satisfaction.”

Smith asks whether patriotism and cosmopolitanism spring from the same source. If they do, we face two anomalies. First, we should expect a British subject to love France more than Great Britain because France has a larger population than Great Britain. Second, we should expect a British subject to love France more than a far-away country such as China given that the British subject is more familiar with the French than with the Chinese people. Both expectations are factually untrue. This led Smith to reject the patriotism-cosmopolitanism continuum thesis. The love of country must spring from a source that is unrelated to the love of humankind. Nonetheless, neither kind of love can be reduced to substantive utility that informs the economist’s utility function and the social welfare function. Substantive utility appears as self-interest and other-interest (altruism). The altruist preference varies in intensity, depending on familiarity: people are ready to help more familiar people than less familiar ones. What complicates the discussion is that Smith uses the same term “familiarity” to discuss varying degrees of love: people tend to love more familiar people than less familiar ones. This paper sheds light on Smith’s confusing concept “universal benevolence”—which is best understood as the love of humankind.

This paper proffers a dialogical theory of decision-making: decision-makers are engaged in two modes of rational decisions, instrumental and existential. Instrumental rational decisions take place when the DM views the self externally to the objects, whether goods or animate beings. Existential rational decisions take place when the DM views the self in union with such objects. While the dialogical theory differs from Max Weber’s distinction between two kinds of rationality, it follows Martin Buber’s philosophical anthropology. The paper expounds the ramifications of the dialogical theory in understanding structures of exchange considering assessments of diverse thinkers.