Chapter V


SINCE ECONOMIC activity is a part of the whole of human behavior, the analysis of that activity must comport with the analysis of behavior generally. The classical economists were quite right in deriving their economic principles from the theory of human nature; the fault, as we have seen, lay in the conception of human nature which prevailed in the eighteenth century. A quarter­century ago, when "institutionalism" first began to attract general attention as the chief contestant with the classical way of thinking, at least on the stage of American academic economics, commentators remarked apparently with some surprise that this new way of thinking in economics seemed to derive from the psychological doctrine known as "behaviorism." Doubtless the surprise was due not so much to the coincidence of economics with psychology as to the peculiarities of that particular school of psychologists. The original "behaviorists" have been singularly truculent and have embroiled themselves in argument with all other shades of psychological opinion insisting all the while that theirs is the only true behaviorism. But there is a larger sense in which virtually all psychologists, in American, at least, are now behaviorists; and it was in this sense that the "institutional" economists who after all stood outside the family disputes of the psychologists, were resolute behaviorists. As it was presented to them, the issue was between the modern point of view in psychology and the traditions of the past.

A valid way of thinking in economics must derive from a valid conception of human nature. But what is a valid conception of human nature? As it is presented to the student of economics, this problem is complicated not only by parochial disputes among contemporary psychologists but by issues which go beyond psychology proper and involve the whole roster of biological sciences on one hand and on the other the whole roster of social sciences, all of which are in some sense or other sciences of "man." Is psychology a physical science or a social science? Is human behavior to be explained in terms of minute currents of electricity conducted by nerve fibers, or its it to be explained in terms of the configuration of social situations? Or are these absolute alternatives ?

To the economist it would seem that they are not. Indeed, to anyone who stands outside the special controversies by which modern scientists are divided, their agreements seem to be much more important than their differences. On two related points which are of supreme significance for economics all modern students of human nature are agreed. Throughout the past the phenomena of human nature were conceived to be of a different order of reality from those of physics and even anatomy. This distinction is perpetuated in the etymology of the word "psychology," which was originally the study of the "mind" or "soul" as distinguished from the body and the physical universe which it inhabits. These two realms of being were conceived to be related in some fashion, to parallel or even touch each other in some mysterious way, but nevertheless to be quite separate and distinct: a phenomenal realm of the physical universe including the physical organism; and a noumenal realm of mind. "Mind," it was thought, could be known only by "direct" inward contemplation, since "knowing" was assumed to be an act of the knower's "mind" which thereby "knew itself" in a metaphysical self­embrace. And this meant that each mind was in a very important sense unique, since the only mind which is metaphysically accessible to any knower is his own. All this is what is conjured up the economic assumption that wants are "primary data."

With respect to this tradition there is general agreement among contemporary students all the way form anatomy to sociology. It is the issue which the "behaviorists" seemed originally to raise. When they first declared "introspection" out of bounds it was the metaphysics of self­contemplation which they attacking. In their enthusiasm they extended the attack to include laboratory techniques which seemed to others scientifically useful, so that the issue of introspection soon lost its edge. But whatever they may call their laboratory techniques, there are today no psychologists, at least in America, who are engaged in exploring the recesses of the soul. The metaphysical dualism of body and mind has been completely abandoned throughout science, and with it the metaphysical uniqueness of the individual soul. Anatomist are no less insistent than sociologist on the continuity of the phenomena with which they are concerned, and could declare with no less emphasis that "a separate individual is a phenomenon unknown to experience." This principle of continuity is a basic postulate of modern science (for reasons which will be examined later ) , and extends even to the issue between the physical and the social pattern of behavior. No modern scientists on either side of the perennial controversy over "nature and nurture" would state this issue in terms of the metaphysical dualism of physical and spiritual realms of being. Geneticists do sometimes declare (outside the laboratory) that issues of tax policy over which they find economists contending "are just a matter of breeding"; but they know that even the super-race of which they dream could scarcely settle their tax problems in the maternity ward. These outbursts are only acts of self­assertion on the part of specialists who are always fearful lest the importance of their researches be forgotten, and they have perceptibly slackened as it becomes more and more certain that modern civilization is not going to favor sociology at the expense of genetics, or vice versa, since each is plainly indispensable to the sum of knowledge.

The issue, it is becoming more and more apparent, is between universes of discourse, or levels of generalization as the logicians and semanticists prefer to say, not realms of being. To insist that tax problems are a matter of public finance is not to deny the validity or importance of Mendel's laws, any more than to insist that heredity is a matter of genes is to deny the validity and importance of Einstein's general theory of relativity. Problems of taxation do not appear in the bottles in which geneticists breed dropsophila melanogaster, any more than genes appear in the cyclotrons in which physicists decompose the atom. Different levels of generalization are of course not unrelated. The relationship between the physical and the social levels of generalization with regard to human behavior are especially intimate and subtle. Furthermore our knowledge is very far from complete. Future discoveries in physics or chemistry may bring unexpected developments in the physiology of the nervous system; these may substantially alter our conception of the learning process; and this may effect substantial changes in our analysis of the social patterns of behavior. Nevertheless our scientific maturity is already sufficient for general agreement not only on the principle of continuity and the distinction of levels of generalization but even with regard to the relation of different levels to each other in the analysis of behavior as a whole.

This relationship is one of complete alternation. It is the same for human behavior as for any other phenomenon. Any given substance such, for example, as table salt may be said to be composed entirely of electrons, protons, neutrons, etc.; or it may be said to be composed entirely of atoms; or it may be said to be composed entirely of molecules; or it may be said to be composed entirely of crystals. None of these propositions invalidates any other. None can be substituted for any other, and especially not in part. Thus it would be a complete misrepresentation of both the physics and the chemistry of sodium chloride to say that this substance consists in part of electrons and in part of molecules. Insofar as molecular structure is concerned at all, it is co­extensive with the salt. A given quantity of salt my be partly crystalline and partly in solution in water, but it may not be partly crystalline and partly atomic.

It exactly the same sense human behavior is wholly organic and wholly social. There is no movement, position, function, or condition of the human body which is not that of a physical organism and which therefore is not what it is because that organism is of the biological species homo­sapiens; and similarly there is no organized activity of any human being which is not socially organized. All human behavior is organically conditioned in the same sense in which all other human behavior is organically conditioned; and all human behavior is socially organized in the same sense in which all other human behavior is socially organized. To say that part of the actions of human beings are to be accounted for in social terms, while part are to be accounted for in physical terms, would be as complete a misrepresentation of the case as to say that part of handful of table salt is molecular while part of it is atomic. The articulation of the joints of the legs by virtue of which the legs can be folded so as to rest the weight of the trunk directly on the ground (or any small object) is a wholly physical phenomenon, determined by physical heredity, the biological characteristics of the species, and all the rest. The practice of sitting down to eat, to hold court, to listen to music, and the like, are social practices and as such are neither determined nor explained by the structure of the body. To say that we sit down to eat because politeness dictates this behavior, but that we sit down to listen to music because of the way the bones articulate, would be an outrageous confusion of the physical and the social aspects of behavior­­ both of which are of course present in both instances.

These two aspects of behavior are related, just as the physical and chemical aspects of all substances are related. We are told that the reason sodium chloride is a stable compound although both elemental sodium and elemental chlorine are violently unstable is because sodium and chlorine atoms swap electrons. Thus the electronic character of these elements defines the character of their combination. In similar fashion, it is of course true that the articulation of the bones, muscles, and nerves of the human hand, the structure of the throat, the whole organization of the central nervous system, all constitute the physical equipment of a species which, because of this physical equipment, is capable of the organized activities of tool­using, language­speaking, and so on. Yet no one may be said to "speak a language" because of the structure of his throat or the function of his brain. No one speaks a language except by virtue of having learned that language, and the same is true of all organized behavior.

All students of man, from anatomist to sociologists, agree on these principles without any reservation of principle. Nevertheless it is important, especially for students of economics, to review them, for two reasons. Science has arrived at this resolution of the different levels of generalization in the analysis of human behavior only within the recent decades and many special cases still remain as holdovers from older ways of thinking in which these principles are violated. The disposition of economists to abstract "motives" from other patterns of behavior is one of these. Whereas the organization of an industrial assembly line is patently a social pattern, there is still a common disposition among economists to think of "motives" as being somehow aboriginal, a sort of well­spring of economic conduct from which all the rest of economic activity flows, and so to think of the "psychological basis" of economic activity as being limited to "motives." This way thinking is of course derived not form modern scientific studies but from old ways of thinking in economics. In the view of modern science there is nothing unique about "motives." Indeed that very term is itself a holdover. If the scientific analysis of behavior is trustworthy at all, we must accept the principle of alternate levels of generalization and its inevitable economic corollary. All economic behavior is equally social in character. No economic act or function is uniquely physical (let alone spiritual) or uniquely determinative of all the rest­­ not motives, or consumption, or anything else.

A second reason why it is important to hold general principles of analysis in clear view is that this means that the phenomena with which all the social sciences, including economics, are concerned are those of culture. This is what various modern economists have had in mind when they have urged their students and their colleagues to study anthropology. Culture, the organized corpus of behavior of which economic activity is but a part, is a phenomenon sui generis. It is not an epiphenomenon, a result of something else, explicable in other and non­cultural terms. It is the stuff of social behavior, the universe of discourse of the social sciences, the aspect which the data of observation assume at that level of generalization.

As such it is self­explaining and self­perpetuating. Some years ago Professor Robert Lowie adapted an axiom of biology to the social level of generalization. Following the final explosion of the ancient myth of spontaneous generation, the biologists laid down the principle, omne vivum ex vivo, meaning that living organisms come only from pre­existing organisms, and that the form, structure, functions, and all the rest, of living organisms are to be explained only in terms of the forms, structures, functions, and the rest, of other living organisms. In similar fashion Lowie laid down the principle, omnis cultura ex cultura, meaning that every cultural phenomenon is derived from some other cultural phenomenon and can be explained only in terms of other cultural phenomena. This is not to deny that human beings have skeletons, or that the lining of the stomach secretes hydrochloric acid. But it is to deny that any social pattern whatsoever derives from the bones or the secretions of the stomach or can be explained in such terms. Cultural phenomena (including the economic) derive exclusively from other cultural phenomena and can be explained only in terms of other cultural phenomena.

Most particularly this is to deny that social patterns derive from, or can be explained in terms of the behavior of "individuals." The dilemma of the individual and society has been a particularly troublesome one from which science has begun to extricate itself only within the past generation; and yet the difficulty is not intellectual. The relationship of the individual cell to the organism offers and exact analogy. Every function of the body is in fact performed by a multitude of individual cells without the action of which it could not occur. No one denies this. Nevertheless in the analysis of organic functions the individual cell is irrelevant. The functions of the organism constitute another level of generalization to the analysis of which the actions of the individual cell do not pertain. This does not mean, as some nineteenth­century sociologists were tempted to say, that society is an organism, any more than it means that men are cells. The analogy is between the distinction of two levels of generalization in each case. All human activities are the sum of the acts of individual men. This is the level of generalization on which ordinary human affairs are conducted and for which the question is all­important, "Who has acted how, and why?" The functions, factors, and forces into which culture is resolved by analysis do not "act" as men act; but they do constitute a causal nexus the analysis of which is the problem of the social sciences, and in this analysis of social causes and effects the acts of individual men are not at issue. All this is obvious today and would have been obvious long ago but for the persistent belief in the metaphysical ultimacy of human individuality which has prevented our viewing men as we view cells and molecules. A compulsion neurosis, inspired by immemorial tradition, has perpetuated a fixation on the human individual to the confusion of cultural analysis.

For the student of economics, then, what is at issue on the level of generalization of cultural analysis? Anthropologists study kinship systems; taboos, ceremonials, and esoteric rites; the lore of myth and legend; collections of artifacts representing material culture traits. Sociologists study primary and secondary groups, family, neighborhood, region, and the like. Political scientists study governments. But what do economists study? The textbooks have an answer ready: the activities in which men engage in getting a living. But these glib phrases with their plausible citation of the common tongue commit the error for which economists have so often had occasion to reproach themselves, that of defining the problem on the individual level and the raising it to the cultural level by a sort of algebraic multiplication the way a variable is raised to the nth power. The question still remains. What social functions and activities are included in "getting a living ?"

If this question could be raised de novo, and on the cultural level at the outset, it would be almost self­answering. A component part of every culture is a vast system of tools and tool­using activities. Economists are certainly interested in this sort of thing, and their interest is focused not on the engineering aspect of the tools as artifacts but on the pattern of the system of activities so constituted. Furthermore the interest of economists is not limited to these activities. A further component of every culture is another system of activities in which all these tools and all the products of their use are employed to a very curious effect. They are employed ceremonially, and their manipulation in this fashion has the effect of establishing claims, exhibiting prestige, dividing the community in terms of "ceremonial adequacy" along lines more or less coincident with those which are objects of interest to anthropologists, sociologists, political scientists, and the rest. These activities also constitute a system which is part of the total system, which is the culture. Students of economics are not primarily interested in the coincidence between these and other ceremonial activities, but they are necessarily concerned with the relation between the use of tools to make things and the use of tools to make social distinctions. For these two sets of activities inevitably condition each other. Professor Melville Herskovits has remarked that there is no community of which we have any knowledge which does not engage in some sort of organized, ceremonial waste, usually on a considerable scale. What they waste­­ yams, for example­­ is the very thing they have been at greatest pains to produce and accumulate; and what we, and they, mean by "waste" is a performance in complete contrast to the meticulous grubbing care which has gone into production and accumulation. These two activities condition each other in both directions. Yams are ceremonially wasted because they are hard to produce; and they are hard to produce in sufficient quantity because they are ceremonially wasted.

The business of "getting a living" includes both these functions. That is, it includes activities of a technological character; and it also includes activities of a ceremonial character; and these two sets of activities not only coexist but condition each other at every point and between them define and constitute the total activity of "getting a living." It is the problem of economic analysis to distinguish and understand these factors, and their mutual relations, and the configurations of economic activity for which they are responsible. The great economic pioneer, Thorstein Veblen, was the first to see this clearly and to make this analytical distinction between technology and ceremony the point of departure of all further economic analysis. Probably his insight was due to the great impression which was made upon his mind in its formative period by the then infant science of anthropology, and perhaps also to the fact that he was socially and academically an "outsider," and an amateur both in anthropology and economics. Critics of his work are generally agreed­­ indeed, it is almost their only point of agreement­­ that this distinction is fundamental to all Veblen's thinking and is his most significant contribution to modern thought. It is equally fundamental to the thinking of an even greater pioneer, John Dewey, who has himself acknowledged the influence of Veblen, perhaps with more generosity than justice. As a profession, economists have not followed Veblen's lead, for reasons which have already been discussed. Consequently this approach to the study of economics is still outrageously unorthodox. Nevertheless Veblen's basic idea has become almost commonplace during the last generation or so, chiefly as the result of work in other fields. In modern studies of the social functions of language, for example, the contrast has become quite apparent between the technical, or instrumental, or denominative use of words and the ceremonial use. Indeed this distinction has become the chief preoccupation of the semanticists. Exploration of the ceremonial patterns of contemporary civilization has become the subject of a large literature. Indeed the general recognition of the ceremonial elements in present­day living is doubtless responsible for the fact that The Theory of the Leisure Class has been the most widely read and most fully understood of Veblen's books.

Researches in the field of technology have also been contributed by a wide variety of participants. The establishment of industrial museums has stimulated the investigation of the nature and history of invention. Even the history of science has been more carefully and extensively explored in recent years than ever before, as a result, perhaps, of increasing awareness of the great responsibility of science in modern civilization. Even the fine arts have quite generally emerged from the leisure­class dilettantism which has always been their curse and become material for objective social analysis.

In spite of all this, however there is still an apparent reluctance to dichotomize the technological and ceremonial aspects of civilization. Many writers who discuss tool­using and ceremonializing as though they were the obverse and reverse of social behavior still seem to refrain from saying so. Students of science and of industrial engineering frequently hazard the assertion that it is science and engineering which is responsible for the progress of civilization, but usually without raising the issue of the other aspect of culture. This hesitancy may express a common distrust of dualisms, distrust which is only too well justified. Metaphysical dualisms of body and mind, phenomena and noumena, the physical universe and the world of "spirit," have been persistent and pestilential in our thinking. Our worst confusions have had their origins in dualism.

This difficulty could be resolved if it could be clearly understood that the distinction of the technological and the ceremonial aspects of organized behavior is a dichotomy but not a dualism. That is, it undertakes to distinguish two aspects of what is still a single continuous activity both aspects of which are present at all times. Indeed, they are bound and define each other as do the observe and reverse of a coin. Such a distinction need not and does not set up two separate realms of being such as have characterized the historic dualisms. On the contrary it is the essence of the case that these two behavior functions are not only functions of one continuous whole of human behavior but even that both employ and give expression to the same basic faculties of which all organized behavior is the expression.

These two behavior functions do have widely different results on which inevitably, very different judgements must be made. Such judgements are well­high universal. It is a commonplace that man as a species has proved himself capable of the most prodigious achievements and the most abysmal follies, achievements and follies both of which have no parallel in the behavior of any other species. With a very few most rudimentary exceptions, no other species uses tools at all. We admire the labors of the ants, but they are still incomparable with the works of man. The follies of mankind are likewise incomparable. Both sets of achievements, however different in outcome, are peculiarly human. Both are works of intelligence and imagination. Both are social accretions made possible by memory and habit, the capacity for organized behavior, the background of culture by which the behavior of successive human generations is socially organized.

This does not mean that there are no differences of pattern between technological and ceremonial behavior, nor that there may not be important differences of an elementary character. But these differences certainly are not total. Both are aspects of the behavior of human beings in society. In particular it must be emphasized that both employ intelligence and both employ tradition. As they are commonly used, these words have feeling tones­­ "intelligence" one of approval, "tradition" one of disapproval. There may be a sense in which such discriminations are justified, but it is a very special sense. If we mean by intelligence that which is measured by an "intelligence quotient," the behavior­organizing capacity, it is obvious that the creation of myths, the performance of sacerdotal functions, the exploitation of one's fellows, and the commission of crime, all call for intelligence no less than the use of tools, scientific instruments, and artist's materials. And on the other hand, while myths and ceremonies, invidious distinctions and exploitative privileges, are clearly traditional, so are tool uses, scientific formulas, and the techniques of painters and composers. That is, all are matters of cultural heritage, learned by apprenticeship as social accomplishments. The two traditions are different and the use each makes of intelligence is different; but they are not totally different. They are not separate realms of being; and the analytical distinction by which these differences are recognized is not a dualism, such as the metaphysical dualism of mind and body.

Once this has been established, the prevalence of dualism in the thinking of the past may perhaps be seen to be significant. Curiously enough, all the dualisms have something in common. All make unmistakable reference to the undeniable achievements and follies of the race. Can it be possible that all have been attempts, unsuccessful perhaps because of the limitations of the intellectual heritage of the past, to understand and characterize the distinction with which we are still concerned? The efforts of economists would seem to bear this interpretation. For the classical tradition in economics has given rise to a most pernicious dualism of the realms­of­being type. It was originally that of the "actual" and the "natural" or "normal," but during the last half­century these realms have been known as the "dynamic" and the "static." Contemporary economists maintain that the distinction is only an analytical device, but it is certainly more than that. Under both sets of names one of these states is existential and the other is ideal in both metaphysical and moral senses. If one be defined as the realm in which change is occurring and the other as a "stationary state," it is at once apparent that change is regarded as something of a nuisance and as an essentially transitory condition. How otherwise could the analysis of imaginary "stationary states" be regarded as a useful analytical device? It is useful only on the supposition that the static word is the real world and the dynamic world phenomenal in the metaphysical sense. The distinction is between "universals" and "particulars."

Nevertheless this distinction signalizes something more than the durability of medieval metaphysics. The modern economy is in fact both a triumph and a tragedy. The "restraints" of which it affords so many instances are by no means "unnatural." Alas, the entire history of civilization is one of grueling restraints. The attempt to identify the achievements of modern economic life with the forces of "nature," and its follies and cruelties with circumstances of a local and temporary character has been mistaken; but the efforts to distinguish between different sets of forces and their different sets of effects is a sound and necessary one. The differences are there. It remains to be seen whether the progress of knowledge has been sufficient to make possible another and more successful effort to deal with the perennial problem.

Back to TEP Home

Continue on to Chapter 6 of The Theory of Economic Progress