3. The Nature of the Individual—Values and Actions

3. THE NATURE OF THE INDIVIDUAL—VALUES AND ACTIONS

SUGGESTED ACTIVITIES

1. To help students realize that economics is about how-we-try-to-get-what-we-want-with-what-we-have, ask each student to list a dozen or so things he or she wants to do or to have in the short-run or immediate future, the medium-run, i.e., next week, next month, next year, or the still longer-run of several years hence, etc. Then discuss what each goal will call for in the way of (a) money, (b) equipment, (c) effort and (d) time.

2. Ask each student to list the various steps necessary to accomplish at least one of his or her short-, medium- or long-run goals. Explain that everything we try to do requires (a) planning, (b) time, (c) resources or “tools” of some kind. For instance, if a student must turn in a term paper within the next 24 hours, he may have to complete family chores first, visit the local library, do some research, assemble notes, paper, typewriter, and then stay home, in lieu of going out with friends, to complete the assignment on time. Another student’s medium-run goal might be to improve his or her skill at shooting baskets, which calls for “tools” (a basketball and a basket), planning to forego other activities and to arrange transportation to the gym, energy and time for daily practice. Students seeking longer-run goals—college, a car, or some special career—should recognize easily that such goals take (a) planning, (b) time, and (c) resources or “tools.”

3. Ask each student to write down how he would use a hypothetical (a) $100 gift and (b) $1,000 reward for information leading to the arrest of a jewel thief. How much would he spend and/or save? What would he buy for himself and others?

4. Discuss how the goals and would-be purchases of different students vary. Take advantage of this opportunity to point out that there is infinite variety among the wants of individuals, reflecting the infinite variety that exists among individual interests, ideas, goals, values, likes, dislikes, gripes, aptitudes, health, wealth, age, family situation, personality, character, temperament, and so on. No two persons will ever be aiming at the same time, at precisely the same wants, in precisely the same order of urgency. Nor will the same person, at two different times in his life, value precisely the same items in the same order of importance.

5. Most novel plots describe actions on the part of hero or heroine undertaken in the attempt to relieve some “felt uneasiness,” attain some desired goal and/or avoid certain situations the actors consider undesirable. It might be helpful to have each student analyze—from the point of view of the ideas discussed in this Unit (see especially paragraphs 3, 9 and 10)—some novel read outside school or for another class. Robinson Crusoe would be a good book for this purpose. Ask each student to review the plot and make a list of the values and/or goals of a hero or heroine, arranged according to their relative urgency in the eyes of the actor insofar as this may be revealed in the book. Then take at least one specific action of hero or heroine and show how the author recognized

a. the conditions necessary for a person to act

(1) dissatisfaction with the existing situation

(2) an idea about how to improve things

(3) hope of success.

Discuss also

b. what else is needed to accomplish a goal

(1) planning

(2) time

(3) means or resources of various kinds.

Then point out how the actor’s action was influenced by

c. outside factors such as

(1) accidents

(2) changes resulting from natural causes

(3) the actions of others

(4) changes due to the passage of time

(5) mistakes on the part of the actor.

EXPLANATORY TEXT

This Unit deals primarily with the concept of action and the values of individuals as motivating factors.

1. Summarize briefly the material covered in Unit 2. Stress the fact that economics is the study of the peaceful means each of us uses in the attempt to attain as many of our various goals in life as possible. Refer to the glossary definition of “Economics.” Point out also that we do not always aim at positive goals. Considerable effort is often spent on accomplishing what might appear to be negative goals, i.e., trying to avoid undesirable situations. Thus some of our wants in life are only relatively desirable, that is they are “lesser evils” in that they are less undesirable than some other situations we want to avoid.

Refer again to the six categories of a priori knowledge described in Unit 2. Each of us is able to act and, in fact, we do act, only because the world in which we live is an “ordered world” in which these aprioristic, self-evident axioms are true. The “natural order” in the universe—with respect to physical phenomena and interpersonal relations—rests on these six a priori postulates. We are able to live, breathe, think, reason, choose, make decisions, plan and act in the attempt to improve our respective situations and to accomplish our respective goals only because these a priori concepts are true and we have confidence they will continue to be true indefinitely. In a world in which these conditions did not prevail it would be impossible for human beings like us to survive, or to act. In re-examining these a priori concepts, ask what it would mean to us and life as we know it if they were not true:

a. Regularity: Suppose no one could count on any regularity in the world. Suppose physical matter did not follow certain “laws,” that no one could ever know the likely consequences of anything, and that it was impossible to rely on the results of our actions or those of other persons? Would we be able to act if we could not count on the fact that the same combination of causes, under the same conditions, would always have the same results?

b. Logic: Suppose it were not possible to reason or think things out logically, step-by-step, to reach conclusions? Or suppose other persons at different times and places reasoned with a different logic, so no two persons could ever agree? How could anyone then conceive of an idea or a plan for cooperating with others that might improve conditions? Or carry it out, if he did?

c. Causality: Suppose events did not have consequences, actions did not lead to results? How could a person take steps to accomplish a purpose?

d. Time: Suppose there were no such thing as the passage of time, that everything took place instantaneously? Suppose there were no interval of time between the beginning and end of an event, between start and finish? How could anyone then think, reason, plan, act in the attempt to attain various ends?

e. Change: Suppose nothing ever changed in this world, suppose there were no movement, no erosion, no birth, no life, no death, no action, no opportunity to bring about changes? If nothing could ever be any different, why try to do anything?

f. Value: Suppose people were completely indifferent to their surroundings? Suppose they were like stones or other inert objects, simply uninterested as to whether or not they were buffeted around at the mercy of inanimate forces—fire, currents of air, water? Suppose no one had any preferences and thus no reason to try to bring about changes?

2.What is the unit of economics, the building block, so to speak, on which the science of economics is based? Economics, as we have seen, is the study of purposive peaceful human actions. Thus the units we deal with are the individual actions of individual actors. We must start, therefore, by considering what action is, the prerequisites for action and the factors that permit, induce and influence individuals to act.

In studying economics, we have an advantage over physical scientists—chemists, geologists or astronomers, for instance, who are studying chemicals, rocks or the stars and planets. Physical scientists can know nothing about their subject matter by insight or introspection; they must learn everything through experience, observation, controlled experiments and research. On the other hand, economists have an insight into their subject —human action—even before they start studying. Because they are individuals themselves, they act. Consciously or unconsciously, therefore, they understand why individuals act. Every human being realizes that he is acting at any instant purposively, consciously, intentionally, to attain the particular end, goal or value he considers most urgent under the specific circumstances prevailing at the time. Thus, we have a “head start” of a sort in economics for we are studying something we already know something about.

3. What conditions are necessary for an individual to act? Each of us knows that he acts because he hopes to accomplish something. But let’s break that statement down a bit. In the first place, when a person acts, he is dissatisfied in some way with his situation. Secondly, he must have an idea about some condition he would prefer. And thirdly, he must have hope that action on his part can help to make things somewhat better. Thus, every action necessarily involves three essentials—(a) dissatisfaction or “felt uneasiness,” (b) an idea and (c) hope.

Let the students discuss these three prerequisites. Can they conceive of anyone’s taking a purposive action if these three conditions did not prevail? (a) Suppose, for instance, a person had no unsatisfied want, no “felt uneasiness,” no irritation he wanted to remove, no “evil” he wanted to avoid or condition he wanted to change? (b) Suppose, in spite of being dissatisfied with something in his present circumstances he could think of no better situation, no way to relieve the condition that made him unhappy? (c) Suppose, in spite of having an unsatisfied want and an idea as to what he would prefer, he had no hope that anything he could do would be effective?

Everyone “naturally” tries to improve his situation as he sees it and he will always make an effort to do so unless he considers his situation completely hopeless. To help the students realize how strong is this drive to act in the attempt to relieve a present “felt uneasiness,” ask them to name what kind of obstacles it would take to prevent them from acting. Given a dissatisfaction and an idea as to something they would prefer, what would it take to keep them from trying to do something about it? For instance, physical restraint by another person, imprisonment, weakness, inability, lack of skills, absence of tools, funds, or means of getting them, the conviction that any decision or action on their part would be thwarted or its effects counteracted before any good could come of it. Many examples might be cited from books depicting life in prison or concentration camps to illustrate how determined individuals may be to improve their situations as best they can—in spite of serious obstacles —and how ingenious they often are in conceiving of ways to do so.

4. Granted individuals act, how does this simple fact contribute to economic understanding? The recognition that men act is one step in the logical explanation of economic phenomena. In the first place, an action necessarily means that the individual acting is not indifferent to his surroundings. He has some dissatisfactions, some felt uneasinesses, some preferences. He has values, ideas, likes, dislikes. He has hopes or expectations that his decisions and actions will help to improve matters. The very fact that an individual acts indicates that, at the time he acts, he prefers the specific object (material or immaterial) that he is seeking, values it more, despises or fears it less, than any other conceivable alternatives. He wants one thing more urgently and promptly than anything else. He is aiming first at the particular goal he considers most important.

This analysis of the nature and purpose of an individual’s conscious actions leads logically to the realization that every individual has values. He likes, loves, respects, admires, wants, desires some things or conditions more urgently than others. Thus, consciously or unconsciously he is continually arranging and rearranging his various wants or “lesser evils” in the order of their importance or urgency to him. He has a “scale of values,” his own personal, unique, individual scale of values. His ideas, goals, wants, preferences, values change from time to time. As they change he revises his scale of values mentally, changes his plans and shifts his activities so that he is always aiming at the goal that then enjoys top billing on his own personal scale of values.

Actions truly speak louder than words. For this reason, economists analyze, and businessmen study carefully, the actions of individuals for clues to the things people really want.

5. What is the importance of value for the study of economics* The study of the purposive actions of individuals involves the concept of value directly because a person’s subjective values furnish him with his reason or purpose for acting. Every individual is different, unique and the ideas and values which influence him are infinite. Yet every human being brings some sort of order out of this “chaos” of infinite alternatives by mentally arranging his various values, wants and goals on a “scale,” in the order of their importance to him. Thus, each person has his own personal value scale on which he continually values, ranks, grades and compares in his own mind all the various alternatives open to him. When individuals have contact with one another, their values and their actions based on their values, rub up against one another. In this way a person’s own values and actions influence the values and actions of others and their values and actions in turn influence him. The outcome of this interplay of personal contacts, relationships and influences is social cooperation, exchange, the market economy. Modern economists have come to recognize that the key to understanding and explaining all economic phenomena— the division of labor, wages, prices, savings, investment, money, banking, trade, and so on—is subjective value. The complex market phenomena we observe in the world today all derive from the interconnection and interrelationship of countless individuals seeking to express their own personal, subjective values as best they can. In the following units, the connection between complicated economic phenomena and the personal, subjective values and actions of the many individual participants on the market will be developed logically, step-by-step.

6.What is the source of personal subjective value? Value is in the minds of men. The value of anything depends on the ideas an individual holds concerning its usefulness (utility) to him in some way or other. His views as to its usefulness may, or may not, be justified. Its utility may be real or imagined, but in any event it is a person’s ideas, right or wrong, as to the value of something which determine the goals he will seek and the actions he will take.

The views people hold concerning value are often based on actual physical properties of an object, characteristics which may be expressed in figures and measured. But not always and seldom exclusively. For instance, the efficiency of a fuel (oil, gas, electricity or firewood) for heating purposes affects, but does not completely determine, its value in the minds of men. The pleasure a person may derive from daydreaming before logs burning on an open hearth or from the cleanliness of electric heat may add to the subjective value to him of those fuels, irrespective of their relative efficiency or inefficiency for heating. How about the earnings of this year’s most popular musical groups? Are they related to the measurable decibels of their music or the number of songs in their repertories? Or do they rise or fall in response to the personal subjective values of teen-aged fans? Can the students think of other examples when the “value” of some good or service to people is obviously due to personal, subjective ideas that have little or no relation to physical and measurable properties? (Viz., the original painting of the Mona Lisa, a baseball autographed by Babe Ruth or any other legendary sports figure, an outfit of the latest style intended for a special occasion, a cheerful mongrel that has become a family pet, etc.) The ideas people have, rightly or wrongly, lead to their personal, subjective values. These values, real or imagined, determine an individual’s choices, decisions, preferences and thus his action, or inaction, as the case may be.

7.What is the difference between the objective characteristics of something and its subjective value? “Subjective” contrasts with “objective” as the impressions an object makes on a person’s senses and thoughts contrast with the object’s physical properties which may be measured and stated in numbers. Objective characteristics are intrinsic to the object being described. Objectively described, a crowbar is “a bar of iron or steel, usually wedge-shaped at the point or working end and more or less bent.” Subjectively described, a crowbar may be “valued” by an individual as a tool for lifting heavy loads or as an instrument for murder. Objective values are always the same under the same conditions. Subjective values always rest on interpretations, ideas and the purposes in the mind of the individual, the subject, making the analysis. Subjective values cannot be meaningfully counted, added or measured. Subjective values, like love, can only be compared by the person doing the valuing and arranged by him according to his own personal scale of values.

8. How does the study of the values and actions of ONE individual contribute to an understanding of the economic activities of SEVERAL or MANY individuals? Only the hermit, or an unwilling “Robinson Crusoe,” plans and acts alone. Most of us, most of the time, live in society with other people, and must take them, their ideas and their actions into consideration when making our own plans. Our personal value scales, choices and actions impinge in one way or another on the personal ideas, value scales, choices and actions of others. We cooperate. We compete. We gain many advantages from the ideas, contributions and production of others. But sometimes we are hampered by their activities also. We may be precluded from accomplishing some goal we had chosen for ourselves by the competition of others and our efforts, in turn, may impede them at times too. In any event, most of us are seriously influenced by other persons in all we think and do. By the same token, our ideas, decisions, choices, goals and actions, influence them as well. The ideas, choices and actions of countless individuals, each of whom acts to relieve his own felt uneasinesses as best he can, lead to the various economic phenomena covered in this syllabus—private property, market prices, capital accumulation, profits and losses, money, credit and banking, competition and monopoly, trade across national boundaries, and so on.

9. Once an individual makes a decision—on the basis of his subjective values—to act, what does it take to attain his goal? A felt uneasiness, an idea and hope must precede his decision to act. Thought precedes action, it is true, but mere thought along these lines is not enough. To actually accomplish a goal calls for more. Also essential are (a) planning, (b) time, (c) resources, i.e., various means, information, tools, labor, skills, knowledge about the physical world, etc. Thus if an actor expects to accomplish his purpose, these three things must be present. Moreover, they must be present in certain relationships to one another. The steps a person takes in line with his plans, the timing of his actions and the various means he selects must be suitable for, and compatible with, the purpose and not such as to shut out or preclude the success of his chosen goal.

10. Why do individuals often fail to reach their goalsP Whatever we do, everyone always aims at success—success as each of us sees it. But many factors can interfere, (a) Accidents can happen, (b) Natural phenomena may drastically alter conditions. (c) The actions of other persons can upset our plans, (d) Many other changes may come with the passage of time, (e) In addition, everyone is fallible.

We all make mistakes at times—mistakes in choosing goals, mistakes in selecting the means we adopt in the hope of attaining goals, mistakes in judging the information available to us, and so on. As time passes, changes in conditions may hamper our efforts or turn them to naught. Even if we do accomplish the most urgent goal aimed at on our scale of values, new circumstances may prevent this from giving the satisfaction expected; we may find we would have been better served to strive for something else. Some goals may be mutually exclusive, accomplishing one may prevent us from attaining another, or even preclude our seeking something else later which appears desirable in the light of new events, ideas and values. Human error and changes that come with time complicate the situation for every one of us.

To illustrate some types of interferences, the teacher might refer to football. Point up the similarities between purposive actions in real life and purposive actions on the football field. In both cases, the “players” are likely to encounter interferences compelling them to change their plans and perhaps even precluding their accomplishing their aim. For instance, a football player’s break or sprain is an (a) accident. The outcome of a play may also be affected by (b) natural conditions— weather, (c) the action of others—blocking and tackling, (d) human error—fumbles, (e) changes that come with the passage of time—team tactics vary according to the score and the number of minutes or seconds remaining in the game. Action on the football field is like life in miniature, a sort of demonstration model where the nature of the purposive actions of individual players can be easily analyzed.

SUMMARY

Individuals are not neutral or indifferent to their surrounding. They prefer some things, some situations to others; they have values. Every one of us is different, unique, with his own personal, subjective scale of values. In view of our individual preferences and personal values, we experience dissatisfactions, “felt uneasinesses” which we seek to relieve. Each of us tries to improve his situation as he thinks best. In the process he is always aiming at the goal he considers most urgent at the moment. He is able to act because he lives in a world with a certain “natural order.” At the same time, he faces uncertainties and interferences, which arise with the passage of time due to accidents, errors, natural changes and the actions of other persons. As changes take place, he tries to adjust to the new circumstances and still accomplish his various goals as best he can. In the process, the market economy develops step by step.

GLOSSARY WORDS

(For definitions, see glossary, pp. 223ff.)

Action

A priori knowledge

Economics

“Felt uneasiness”

Goal, end

Means

Objective characteristics

Scale of values

Subjective value

Usefulness, utility

Value

Free Market Economics: A Syllabus