A thought-provoking piece from FT’s John Kay posits
the following proposition:
As noted in the FT piece, Nobel Laureate Gary Becker
probably provided the best formulation of the so-called economic approach nearly forty years ago:
“... “the combined assumptions of maximising
behaviour, market equilibrium and stable preferences, used relentlessly and
unflinchingly, form the heart of the economic approach”. He went on to claim:
“The economic approach is a comprehensive one that is applicable to all human
behaviour.”
But, John Kay offers a useful critique:
“... remains in
vogue, not because its answers are right but because they are unequivocal, and
supporters attach more importance to universality than to relevance. If you
criticise its applications, you will be asked what theory you would use
instead. But there is no obligation to answer. The alternative is not some
other all-encompassing theory of human behaviour but a pragmatic view
recognising that explanations are appropriately context-specific.”