A couple of weeks ago, we tried posting a couple of videos on YouTube on what we described as neoclassical myths. They were put out in the afternoon, but to be honest, they did not set the world alight, and we are now wondering whether there is a real benefit from publishing material of this sort in this way, and whether we should publish it instead as blog posts, with the deliberate intention of the post in question being transferred straight into our glossary, which some people have asked that we do.
Quite deliberately, the post that follows, which will also be posted to the glossary, repeats the theme of one of those previous videos, referring to the myth within neoliberal economics of the existence of the wholly rational human being, commonly called homo economicus.
This post is, we think, about the length that this subject requires, and the format is one that we could use for about thirty subjects that we have identified as being suitable for this treatment. However, before putting the effort into doing that, I would be interested to know what people think. Is this worthwhile? Then, once the series is complete, would people be interested in having it made available as a PDF download? There is a poll below, and on this occasion, you can answer as many questions as you like, as I am looking for opinions on a range of issues. And if you have other suggestions to make, please leave a comment.
Rational Economic Agents (Homo Economicus)
Neoclassical economics begins with a myth that sounds scientific but isn't, which is that people behave as perfectly rational decision-makers.
According to this story, each of us calculates costs and benefits like a computer, acts only in our own self-interest, and never lets emotion, the influence of others, or habit intervene. Economists even gave this imaginary species a name. This person is called Homo Economicus. He or she has become the invisible protagonist of most economic models, despite never having been observed in nature.
Assumption
The theory assumes people maximise their “utility”, which is a technical word for satisfaction or well-being, while firms always maximise their profits and have no other objectives.
Everyone is assumed to have perfect information so that they understand all options available to them, and that they then act solely on the basis of the logical calculation of the best possible outcomes for them alone.
Emotion, uncertainty and power are excluded. Economic life is reduced to a series of tidy equations describing how idealised agents interact in markets that always balance.
Reality
Real humans are not calculating machines. Behavioural economics and psychology have shown again and again that we act through shortcuts, hunches and habit, or heuristics as they are called. We are influenced by peers, advertising, culture and fear. Far from possessing perfect information, we are often misled or overwhelmed by too much of it. Biases, such as overconfidence, herd instinct, and loss aversion, all shape decisions far more than rational analysis ever could. Financial markets, which are supposedly driven by reason, repeatedly fall prey to collective euphoria and panic. The 2008 crisis, crypto bubbles since then, and housing manias are all examples of herd behaviour dressed up as rational choice.
Why It Matters
Building economic policy on this false psychology has serious consequences. It leads governments and central banks to believe, or at least pretend, that markets will always allocate resources efficiently because everyone acts logically. This then blinds policymakers to instability, exploitation and crisis. Meanwhile, social security systems are designed as if people respond only to incentives without consideration for need or dignity, whilst tax systems assume compliance depends purely on self-interest, in the process ignoring morality and social trust. It is only when we accept that humans are social, emotional and cooperative that a different economics becomes possible; one that values care, community and fairness as much as calculation.
Summary
Economics must start from the realisation that human beings are fallible, relational, and creative, and not from the assumption that we are the robots that economists wish us to be.
Poll
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Comments
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I have found the myths and also the questions (like the Schumpeter Question) excellent
Thanks
Me too.
Two typos: perfect information … SO that they understand & … NOT from the assumption …
I would consider a regular / annual subscription as I read your posts every day and occasionally donate a lump sum. Paying for each download would be off-putting. ( I don’t buy music tracks …)
Thanks
And noted
It would be interesting to wonder what irrational man would look like. Are his decisions predictable, can marketers, policy makers make reasonable assumptions about their future behaviour.
We have recent examples on this blog where there have been posts saying that markets are irrational. Then days later posts saying Tesla share price has hit 280 and is going down or that we’re in a bubble. If these things are irrational then predicting which way they go from here is impossible, but predictions were made. Why? Because reason is on a spectrum, there’s some degree of rationality and some degree of not. If you’re modelling you have to start at one end and then refine from there.
Politely, most of this is twaddle.
To suggest modelling requires that we start at an extreme is absurd: that’s just the route to madness, and where economics is.
Insread we can use heuristics because that is what people actually do. I feel like yor are wasting my time. Next time you do so you will be deleted.
Just personally, I am better at reading than listening, and follow you here rather than on YouTube. However, I voted for video and transcripts, because I think a majority of other people do find the spoken word more accessible than the written word, so videos are going to be the most effective medium for your project to better educate the general public on matters relating to political economy.
Noted
We discussed this again, in the light of comments
We may do blogs first and videos second.
I liked this blog, succinct, understandable, informative and above all not very long. Personally I like listening /watching videos and reading your stuff equally, but I’m probably weird, it depends what I am doing. . My concern is that in general our attention spans are lessening so the length was perfect. For more formal educational purposes then pdf as well but perhaps a more in depth version ?
I agree with Tim Kent above , that for me the biggest revelation ever was the simple fact that the Government is Not Like a Household. To me the most important anti Neoliberal lesson. All the other myths then follows. (And your Zack Polanski pod was fab. I’ve just rejoined the Greens)
Thanks all round, and noted
This sort of thing is valuable content that will last; indeed, I think it is more valuable that some of your other material. But it is a slow burn not a quick endorphin hit. More in the nature of educational material than political commentary or reaction to the news. It is exactly the sort of thing I would hope to see a serious social-political-economic commentator and educator putting out. But you should not expect to draw the same number of clicks and views as other more polemical material.
It is your time to spend as you wish, of course, but is it only worth the buck if it goes with an immediate bang?
To put it another way, is anyone else doing it in the way you are, with the reach and cut-through that you have? Might that be enough reason to continue?
It might justify both approaches
Deep economic conversations may be too much for video and maybe better as a post for a like-minded audience to read. The videos need to be more accessible and tackle general topics to gather viewers. Your wealth series was superb. I find it empowering to debunk societal, governmental, and educational myths—like the idea that household theory for how governments are run. I’m also intrigued by Yanis Varoufakis’s concept of techno-feudalism and would like to see it explored from an economic viewpoint.
Thanks
Varoufakis seems not to understand money. It makes most of his economics hard to understand, like many on the further left. If they tried to understand that money does not need a theory of class attached to it – because that is elsewhere – they would make a lot more sense.
Varoufakis was limited by Greece being in the Euro currency and being restrained by European Central Bank. I am sure he can be persuaded to see your point of view with a sovereign currency.
I voted for ‘posts’, but I’m biased because I almost never watch any videos – I’m generally in a busy and very social household, unsuited to either loudspeakers or headphones (family are in the room now – the television is on) but I’ve long been able to concentrate on reading and writing whatever’s going on around me (it comes, I believe, from childhood, having to do homework in the family living room – the only heated, comfortable room in my childhood home).
But I would guess that a more political. less economic presentation would boost video viewing numbers – eg. ‘conservative myths’ rather than ‘economic myths’.
Noted
Thanks
You need to phone James O’brian this morning. He’s talking about taxation and wealth distribution.
I am filming
Regarding homo economicus: simply stepping into the real world shows this to be utter and complete nonsense, thus real world examples – e.g. demand for 4x4s driven totally by marketing – , used to destory theories that should never have seen the light of day. “people maximise their “utility”” – utter nonesense in lots of areas.
The economics profession and its neoclassical adherents remind me of “Being There” & Chancy Gardener – seemingly sensible statements grounded on nothing (I regard the film as a masterpiece and a timeless commentary on the imbecility within politics – & a predictor on the election of another village idiot – Ronnie Raygun).
Noted
I have a simple view which is basically that as the whole subject area is being dragged down into the mire (and all of us with it) by all the myths that surround and bolster the topic, it is surely important to have a readily available collection of the topics that are “wrong”. That way, anyone can determine whether a topic is valid or not. Thus, it will become an invaluable resource available to all.
It should become the go-to place for all in the media to check stories they are producing.
Thanks for being willing to produce the Fallacy Files.
Thanks
I like the title
The word NOT seems to be missing in your summary:
” ….. and NOT from the assumption that we are the robots economists wish us to be.”
Thanks
Added
I looked through your list of neoliberal myths. A good list. I agree with all. You asked for opinions and these are mine.
I was surprised that “Government is like a household” was half way down the list. To me this is THE key myth. Ever since it was introduced, or at least emphasised, by Mrs Thatcher, it has been a key, but false part of the political dialogue. I hear it multiple times every day in the media.
This first myth leads to the second pernicious myth. The argument goes: “Well, it may be technically true that the government can create money, but in practice that is the same thing as treating the government as a household. That’s because, if you actually do create money you inevitably cause inflation, then hyperinflation, and the economy collapses”. So, it seems to me, that the second myth is that money creation causes inflation (and secondarily, that if we borrow or tax there is no inflation risk, which is also untrue).
Further myths flow from these two. The deficit myth is one corrollory, but it is a derivative myth.
Whilst I agree with your analysis of rational economic agents, that these false assumptions are the basis for current neoliberal economics, I wouldn’t start from there. The idea of all knowing rational economic agents is an academic argument. It leads, falsely, to the primacy of markets, which is tosh. It doesn’t lead to the government is a household myth, which is simply, factually, proveably, false. I think people are hard to convince with academic arguments. If we want to change the change the system, to change the narrative, we need to target the falsity of the household analogy head on. To me academic analysis, whilst interesting and desirable, won’t change the economic narrative and won’t move the Overton window.
I think the primary focus should be on the household analogy and its derivatives. Hope that opinion is helpful.
Thanks
But we will do them all
I prefer the written format because I am a speed reader and I find video slow and takes up too much time. By the way, writing is like wading through thick mud.
One option would be to share the same material across different channels.
For example, Nate Hagens shared “The 10 Core Myths Still Taught in Business Schools” as a video on Youtube, as audio only on podcast platforms and as a PDF transcript.
https://www.youtube.com/watch?v=GkIedVEkQZU
https://www.thegreatsimplification.com/frankly-original/the-10-core-myths-still-taught-in-business-schools
https://www.thegreatsimplification.com/wp-content/uploads/2025/06/Frankly-99-Transcript-10-Core-Myths-of-Business-Schools.pdf
I don’t think the same material can be used in each case.
The same ideas can be.
Keep up the great work Richard. I voted for numbers two and three in the poll but what ever works best for you to get the message across effectively is fine by me.
As an aside, I noted in your post of October 2 “Not Bad” that most of your audience is made up of the over 55’s which includes myself pushing nearly 70. I believe that you cross-post links to the blog on some of the social media channels (which I don’t use myself), but have you thought about including posting on TikTok where I believe most of the younger people spend some of their time? Maybe something for your sons to explore to garner interest from this demographic?
We are discussing your second para
We might need to get the guys making the videos…
Young people don’t watch grey hair
The classical economic man is a man who follows social clues and morals of those around him. This is the human instinct. Rationality is when an individual behaves different to those around him. Whereas in our modern thinking we are told that wisdom is in the crowd (the market) and doing the opposite is irrational. It is a completely different picture of the world.
Lots of good suggestions above but I would add “Don’t listen to your regulars (like me) we will come in any case”. The aim is to get new folk in – listen to them. Having said that…..
Subscription is way better than pay-per-article. Is it worth having a Patreon account?
I think everything is best when first delivered as written material. It allows thoughts to be gathered and honed… and indeed, improved and modified in the light of BTL comments here. Only then make the video – it will be better for it. Video transcripts are never as good as a purpose-built written article.
I think you do two sorts of article – a quick response to the daily news which will not be of much interest in a month/year and other “think pieces” that will always have relevance (although there will be overlap).
For example, I love the “XXXX” question series (Marx, Galbraith, Schumpeter). I think they should be under a separate menu for easy access. Similarly, your quantum series (although I am not such a fan).
Other sub headings might include Money, Electoral reform etc.
In short, you put out a lot of stuff and you should make sure that the important stuff gets read and re-read – rather than you having to keep re-writing it.
In short
Clive
Thanks
I wish I knew how to index 24,000 posts
It needs a wiki – but it is a massive amount of work
That series, however, is all available here https://www.taxresearch.org.uk/Blog/category/economic-questions/
Richard
And thanks for suggestions on bonds
I’m a little surprised (and disappointed) that so few, so far, (at least of those that have voted) would be reluctant to make a donation for a pdf.
I was thinking( with Tiktok in mind and its younger followers) of something akin to Horrible Histories, maybe Horrible Economics and Horrible Politics. It may well be copyrighted, I don’t know, but it seems to be universally acclaimed as a good way to reach young people with facts. It’s probably not a cheap option, but could be sponsored or subscribed to.
As said above, maybe something for your sons to chew on.
We will play with those.
Evil Economics?
🙂
Briefly, I’m very pleased to see you
“,Will do them all”
Point 1
We need your viewpoint to be spread throughout a wide audience.
Point 2
I would never have heard of you if YouTube had not brought up one of your videos on my screen
Point 3
YouTube brought up your video because you mentioned Garry Stevenson and I’d been watching several of his podcasts.
(I subsequently bought one of your books)
Point 4
I like to share your viewpoint with my partner. She’s partially sighted and would have great difficulty in reading your blog.
She is also likely to share your insights with others.
Point 5
Most of my acquaintances would take the time to watch a video on YouTube if I send them a link. They would not think of reading a blog.
These are people who have offspring and grandchildren who need to hear about your viewpoint.
Thank you. All noted, and appreciated.
The system would not allow me to post my comment because it appeared I was repeating myself. I wasn’t.
My main point is I am not a trained economist, I’m just an ordinary Joe who wants to understand why we appear to be governed by self serving nincompoops. I would never have read your book, “The Courageous State” or seen any of your videos or subscribed to your blog, and passed on as much of what you say, as I can, to as many people as I can, if YouTube had not brought up one of your videos because I was watching other videos of a similar nature. I am pleased you said you will continue with both videos and your blog. PS. I would be willing to pay for a subscription for full access.
Thank you
Being a ‘student of life’ (I, being 80 years young, choose that rather than ‘OAP’) I prefer the written word, but my eyesight is OK – with the written word, I can go back and re-read until I have understood and/or the possibility to look subjects up whilst perusing your blog/subject online – I find that with the spoken word and/or video, my attention is not as focused as there are always distractions however hard one concentrates – but many younger than I may argue against this, and it would be excellent to attract younger people, especially now that Tom & James are involved. I had no economic or political education at school, and indeed history ended in the 1890s. I like (and understood!) your ‘Homo Economicus’ post above and believe that all, young and old, should be educated in this.
It’s odd. People have different styles. I probably prefer writing. Jacqueline much prefers video (and she’s 62). Both the guys typify their generation in liking video, but are also avid readers. There is no one answer here. James, in particualr, is reminding me of that, often.