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The Rise of the Homo Economicus. A short history till now.

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Since everything in our global economy is valued and expressed in numbers and currency it has to have serious impact on existential questions. Like for example, how do I perceive my presence at spaceship earth? Or how do I define myself as a human being. What kind of a Homo Sapiens am I? I use observations from normal life to help to develop my own personal leadership skills. Personal leadership is an important subject to me and a skill to grow over time to use for the life I want to live. Jesper –  a good friend of mine – always asks me to write another The Perfect Strugglers-piece about how I reflect on life. In this blog I will write about the rise of the Homo Economicus and how it influenced us all. 

Anybody who knows me just a tiny bit knows that I like to grasp difficult abstract theoretical topics. Ask my girlfriend when I start talking – about how political structures influence our consciousness – over our beloved overnight oats. You should see the look on her face at 0830 AM. 

This time I try to cover the Homo Economicus. Of course the words and relations I chose to focus on are just a tiny piece of the immense Homo Economicus pie. I try to be as objective as possible. Which is hard because I am biased as well in many ways, but I try. That is the best I can do.

The beginning: Sedentary Agricultural Lifestyle

If we want to understand the path that homo sapiens traversed to becoming homo economicus we need to go back a while. To the point back in time where our nomadic lifestyle as hunter gatherers gradually changed into a sedentary agricultural lifestyle. If you are familiar with for example Harari’s work you ‘know’ that this change didn’t happen overnight – approximately 10.000 years bc. it took some years to build this kind of new routines. But it happened. Agriculture created sedentary societies. Which means the practice of living in one place for a long time and grow as a civilization. To make this more personal. We are so used to this way of living that new people we meet always ask: “don’t you miss a home?”

What does that mean?

I understand the question. In a way we do live a hunter/gatherer lifestyle. Which seems an odd choice if you follow a western ‘approved’ lifestyle. To be honest we live a very luxurious nomadic lifestyle. We don’t have to forage for nuts and fruit because we go to the Lidl instead. And we don’t have to pitch our tent because we take care of animals when house owners are on a deserved holiday break and we get to live in their homes. So no difficult physical labour for us. And I am almost 40 which is pretty old if you compare this to the average age of a nomadic hunter/gatherer.

The common definition for home is to have your own place. With your own stuff. Surrounded by familiarities you are attached to. For me this definition of home is an effect of how the relationship between individuals and home is formed by our political structures. Because of our transformation into a Homo Economicus. Liberalism is also the freedom to possess as much as you want right?

And of course feeling at home is where the people live you love.

What is home to me?

For me this is an interesting question. Because home is where I am. There is no home outside myself. I am the only one who creates home as it is. What the f@#$%? Yes, you sense some buddhism in my explanation. This means as long as I am okay with my presence in the moment I am home everywhere. And I don’t need tangible stuff to build a home outside myself. But also for myself home means to be with people who I love. So I am very grateful Marleen is at my side. And we have our home and thoughts about this concept together. 

Home is a concept. Just like basic income, emancipation, liberalism and money in general. And there are thousands more, some of them yet to be developed. This ability to create a new concept is one of the most important abilities that interconnected Homo Sapiens throughout their evolution. To fight with complete strangers for a common cause to other complete strangers. How would you manage that to organise? You need people to believe in something bigger than themselves. I am talking about imagined orders here. If you want to read more about this take a look at the blog about imagined orders I wrote, inspired by Yuval Noah Harari.

What is an imagined order? For example a nation is an imagined order. It doesn’t exist on itself. It is a construct we are taught to believe in. And we created some rules to support it (boundaries, language etc). And it is impossible to not-participate in this believe.

Homo Economicus

Did you know that Homo Sapiens transitioned from living in trees into bipedal hairy creatures probably because of climate change? And did you know this happened because the temperatures on earth were rising and because of this change living in trees wasn’t sufficient anymore for the daily need of nutrition and protection? Considering our 2020 lives in our global warming context. What will be our next step in evolution? For me this is interesting stuff to think about.

Let’s go back 10.000 years ago. Where one of the biggest transitions homo sapiens ever made gradually took place. Humans started to live sedentary. This is the start of the agricultural revolution. This was a system change happening. Let me explain this system change in a nutshell. 

The creation of the Homo Economicus in a nutshell

A sedentary lifestyle means you are living at one spot for a longer time. This lifestyle nudged sedentary agriculture as well. Farming at one place. Sedentary farming means food and staying put at one location. Farming at one place also created food surplus and food stability and that means you can feed more people. So a side effect of a sedentary agricultural lifestyle was a growing population. This means more children. A bigger family means men, in those days, work outside on the farmlands and the women take care of the children (= the beginning of the patriarchal societies). 

More people means bigger populations living sedentary. Forming villages and cities. Forming villages and cities means creating political structures (clans, kingdoms, states etc) to protect the people and to keep control and peace (= the start of an elite versus the common man). Social and political structures means bureaucracy (= the start of tax). And before you know it – in a very simplistic accumulation of events – it is 2020 – and we created the Homo Economicus. 

If you want to know more about this gradual process from sedentary agricultural lifestyle to Home Economicus read Guns, Germs, and Steel: The Fates of Human Societies written by Jared Diamond – one of the best books I read.

Homo economicus attempts to maximize utility as a consumer and economic profit as a producer.

source: Wikipedia

Perhaps you have or perhaps you have not seen it, but  another way of describing the Homo Economicus, in the hilarious spirit of Jerry Maguire can be seen in the video below.

Money, Political Structures and Shakespeare

First of all the shift of living as hunter/gatherers to becoming sedentary farmers meant a lot of good things for human beings. People as well claim it is the worst thing happened to mankind considering the industrial revolution and the post industrial negative consequences to our environment and fellow earthlings. Personally I think it is a combination of both. 

History teaches us that prosperity, growth and dominant civilisations will be answered by adversity and system crashes. The Maya’s collapsed. The Romans fell. The kingdom of the commonwealth (UK) crumbled into tiny bits and pieces. And what will Covid-19 do to how industrial global power is divided? Many more civilisations thrived till an accumulation of different events crushed their prosperity into oblivion.  

But at that same thin line of growth and collapse we invented writing, equality, freedom, art, built moral constructions – constitutional states. We invented money and many more things.

The history of money

The history of money concerns the development of social systems that provide at least one of the functions of money. Such systems can be understood as means of trading wealth indirectly; not directly as with barter. Money is a mechanism that facilitates this process. Money may take a physical form as in coins and notes, or may exist as a written or electronic account. It may have intrinsic value (commodity money), be legally exchangeable for something with intrinsic value (representative money), or only have nominal value.” 

Money made things easier and safer. Also it made up for a nice way to collect taxes by the elite to maintain and obtain power. But commoners got something in exchange for this. The elite provided the commoners with safety. With the collected tax money they built huge armies to defend their surface of sedentary living (agriculture). And used their forces to gain land and power by crusading for higher grounds, gold and other supplies.

Politics and money shape your behaviour

Since human beings started to live more and more sedentary the need for political structures grew as well. People can organise themselves without rules – like laws – till a population size of more or less 150 people – like a clan. The social structure, pressure and connections within that group take care of social stability and moral control. It is very hard for groups bigger than 150 people to be organized without any kind of political structure. 

The most common political structures are socialism, communism and liberalism There are many split structures but I won’t mention those because it gets too complicated. We can divide those three structures in two groups. Socialism and communism share the belief that what is best for the group is as well the best for the individual. And liberalism turns it around; what is best for the individual is accumulated the best for the group.

Socialism and communism battled for a long time to be the dominant system to control people living in it. After WWII liberalism was the third dog who won the bone and left communism and socialism astonished behind. Well this obviously is not 100% waterproof – China, North Korea, Russia and more countries are organized a bit different – but the world we grow up in is more or less built on a liberalism belief system. Especially true if you are an inhabitant of one of the rich western countries.

Capitalism the almighty god

Liberalism is as well the political structure that released capitalism as the almighty god who solves every problem mankind would face. This god is commonly accepted to believe in because it is ‘science’. And science is the soil we use for building our economic infrastructure. 

Amongst others because of the climate change example we now ‘know’ that liberalism and capitalism aren’t the best systems to work with considering the damage it has done. The individual is not capable of choosing what is in the best interest for the group (for example carbon footprint). That person is only occupied with choosing what is in its own best interest and of their children. You could consider this as one of the flaws of our political structure. But perhaps with a little restructuring liberalism can fix the side effects it has created. 

Money is the fuel of these by human created structures and therefor Dollars, Euro’s and Yens definitely shape our behavior in society.

Liberalism and global collaboration

Liberalism is a political and moral philosophy based on liberty, consent of the governed and equality before the law. Liberals espouse a wide array of views depending on their understanding of these principles, but they generally support free market, free trade, limited government, individual rights (including civil rights and human rights), capitalism, democracy, secularism, gender equality, racial equality, internationalism, freedom of speech, freedom of the press and freedom of religion.”

Liberalism – as with all political and moral philosophies – is an imagined order in which our believe is so rooted nowadays we would die for this ‘concept’ to protect it. Personally I think it is a great achievement for mankind as a whole to structure and create these kind of immense social and political structures. Realize these structures are not tangible. You believe in them or not. You can’t see them or touch them. Which means they are as much as real as they are not real. From this point of view it is a crazy accomplishment! 

The individual as an economic asset

Let’s go back to my question I started this blog with. How do numbers and currency influence important existential questions? How are you and I defined in a system that expresses value through numbers and currency?

It places great emphasis on two important activities, namely working and consuming. Meaningfulness is as automatically strongly related to those two. 

1 – You work – you are an economic asset. 

2 – You consume – you are a consumer. 

You repeat this cycle – you are a sheep. Together we form a herd and this adds up to a nice nation state, kingdom or other system which we live in, tangled in with a form of legislation and a law structure. Don’t be annoyed by these sentences because there is no harm in it. Nor an intention to hurt. Try to zoom out and see this is probably what we all do. Day in. Day out. 

I wrote earlier in this blog the following: 

”The common definition for home is to have your own place. With your own stuff. Surrounded by familiarities you are attached to. For me this definition of home is an effect of how the relationship between individuals and home is formed by our political structures. Liberalism is also the freedom to possess as much as you want right?

This explains in a different way the principle of ‘you work and you consume’. We simply extract meaning out of possession on spaceship earth. Look around in your own house and look how “you work and you consume” shaped your identity.

Order and stability

Liberalism created the Homo Economicus: “You work. You consume.” Those two things are easily captured in numbers and currency and those two things happen to be the best way to maintain order and stability in a country. You could probably understand me saying this is the modern equivalent of the roman colosseum and their gladiators entertaining the commoners. Imagine a world without working and consuming. Would the Romans be an empire without their gladiators?

Our relationship with money

How would you live in that world without gladiators, without working and consuming? I don’t presume this is the way our world needs to be organized. One reason I do ask this is because our liberal living standards are pushing the limits of ourselves in relation to the resources spaceship earth provides. And to nature and all the other living creatures living on that very same the planet. You only need to take a look at the global overshoot day and you find your answer in how this system we live in is not sustainable.

Our liberal belief system is primarily built on the argument that every individual must have the freedom to choose whatever that person wants in their precious short life, without harming one and another. But the outcome of individuals to choose for themselves never accumulates to the best for the group. The more wealthy the world becomes, the more countries adapt liberal standards (combined with free markets and capitalism, this means more consumerism) the less positive the future for our globe will be for you and I, our children and the more harm we will cause as a specie. 

I consume and I produce (as a Homo Economicus) and therefore I am

This could be a neoliberal shakespearean quote. Instead it is a thought that popped up in my mind while writing this blog. It is not new. It is not original. But perhaps this quote is a summary of who we are related to money and to ourselves.

The relationship Homo Sapiens developed with money dominates at present how we behave, how we choose and who we are. Because of our political values, the structures and stories told by politicians and governments we behave exactly the way ‘they’ want us to behave: “Working and consuming.” Which creates all the harm we do to the world, ourselves and others. We became creatures who find meaning in economical outcomes. We transformed from Homo Sapiens into Homo Economicus. 

Capitalism is the (numbers and currency) system which provides the Homo Economicus the playground for finding purpose and identity. This could be one of the reasons to protect capitalism as well. If we kill capitalism we kill our current identity at the same time. Although we know capitalism is not a sustainable system it provides us at least some certainty on existential matters…

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Living with Less seems like the logical thing to do. Also from an individual point of view it is life improving. We like to live with less ourselves, and love to write about it! Check out our Living with Less page for more information and perspectives that might surprise you.

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