Advances in Austrian Economics

Purpose – To show the existence of two different lines of thought in economics: the Homo oeconomicus tradition and the evolutionary tradition.

Methodology/approach – Following Hayek, the author adopts the individualistic methodology. This allows to separate the Homo oeconomicus approach, which is a hyper-rationalistic construction concerned with the intentional results of human action, from the evolutionary approach, which is concerned with the unintended consequences of human conduct.

Findings – The Homo oeconomicus tradition incurs the methodological mistake of psychologism, a theory of human nature and a human psychology as they exist prior to society. And yet the nature of individual man itself must be placed within a social context and be explained. As the evolutionary tradition and Hayek suggest, the formation of the Ego and the development of the human mind moves over a range of intersubjective relations.

Research limitations/implications – Homo oeconomicus tries to maximize the result of human conduct. However, the concept of maximization neglects the fact that the exchange occurs as soon as a positive-sum game sets in; this is very different from maximization, which does not take into account the ‘compensations’ that the subject can achieve by means of the other dimensions of human action.

Originality/value of paper – To speak of ‘classical economists’, placing evolutionary scholars and strictly utilitarian ones under the same denomination is just as misleading as using the expression ‘neoclassical economists’ in referring to the evolutionary Menger and utilitarian Jevons and Walras.