Mind the Gap! Behavioural Economics, Homo Economicus, and the Neoliberal Neurosis

Abstract

Behavioural economics (BE) has emerged as part of the zeitgeist of contemporary economic research and policy-making. It has enjoyed this burgeoning influence at least partly due to its popular representation as a 'maverick' tradition: challenging the intellectual and political hegemony of neoclassical economics and neoliberal ideology. This study contests such iconoclastic depictions. It utilises insights from critical political economy and Slavoj Zizek's Lacanian-Hegelian social theory to argue that through its efforts to reinvigorate – rather than transcend – neoclassicism BE also buttresses neoliberalism via enabling amendments to its social fantasy designed to explain away incongruities. On the one hand behaviouralism is demonstrated to remain ingrained in the neoclassical corpus: selectively utilising insights from cognitive psychology to revise it at the margins. Accordingly BE is circumscribed in its self-professed endeavour to articulate a more realistic capacious economic subjectivity to supplant the neoclassical Homo Economicus. It also preserves the latter as the normative benchmark for ‘rational’ subjectivity within its modelling - pathologising real actors’ bounded-rationality as a ‘cognitive imperfection’ which by precipitating market-failures precludes realisation of Pareto-optimal outcomes and requires correction. On the other hand the study analyses how this pathologisation has been deployed as part of an 'obsessive neurotic' endeavour by proponents to amend the neoliberal social fantasy. Such adjustments enable these neurotic neoliberals to disavow potentially traumatic symptoms of the Real of Capital (e.g. global poverty) as correctable individual psychological failures rather than confronting them as constitutive of capitalism. Subjects can thereby retain their experiential reality of the system as capable of reconciling aggregate individual self-interests toward the common good (e.g. global development) via economic incentives.