Regional President Speech

J ECONOMIC MAN VS. SOCIAL MAN . \ by DAVID P. EASTBURN Senior Vice President \ Federal Reserve Bank of' Philadelphia. Member of Panel discussing ,·, Values--Their Consequences in Social Welfare Planning - 0 ·} NATIONAL CONFERENCE ON SOCIAL ~ffiLFARE . New York Hilton, New York City May 28, 1969 Federa·l Reserve 8 k . an. _:.of Philade·lphia ,. LIBRARY Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis ECONOMIC MAN VS. SOCIAL MAN David P. Eastburn· My contribution to this panel is as a citizen-layman who has been involved in activities of agencies concerned social w~th welfare planning. .Inasmuch as my training and work are as an . . economist, pexhaps I can also contribute this dimension to some observations on changing values. From this viewpoint, one aspect of changing values strikes me particularly forcibly. This is a conflict between a whole group of values which might fall in the broad category of economic and those which might be desc~ibed as social. I see this conflict not only Nithin society but also within individuals.- Economic-Man is ()" at war with Social Man. This conflict also explains ·part of the generation gap. The other day a Gallup poll. of college students quoted a Yale under- graduate as saying "We are disenchanted with the id2<>logies of the adult population today, with their belief that a large Buick says something important about one's self. 'The l!-rge of people fo_r self- aggrandizement repels us. Furthermore, we don't go along with the j 'hard work mystique'--the notion that if'one works hard he is there- fore a good person." . l Let me try to draw •i/n a few broad· strokes the dist·inctions I have in mind between economic values and social values. I am aware that in doing this.I will be drawing a caricature. I will be guilty o~ e~aggeration and over-simplification. But imagine, if you will, that we are conducting a poll of a repr_esentative group Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis of citizens, asking them what characteristics they _associate with economic values and what characteristics they. associate with social values. When you list these characteristics in two columns, you might get something like this: . 1- L Economic Man Social Man Production Distribution Quantity Quality Goods and services People Money values Human values Work and discipline Self-realization Cooperation Co~pet~tion Laissez fair~ Involvement Economic Man tends to be concerned p~ rimarily with pro- ducing goods and services, with quantitative problems. Social Man is more concerned with how goods and services are distributed among people, and with qualitative problems. Economic Man ex ' presses values in money terms. Social Man tends to measure more readily in human terms. The driving force behind Economic Man is work and discipline in the tradition of the Puritan Ethic and in the environment of competition. The driving force behind Social Man is self-realization in an environment of cooperation. Economic Man wants to be free to pursu~ his self-interest in the la~ssez- faire sense. Social Man wants'to be free 'to involve himself in problems.of his fellow men. No moral connotations attach to any of these character- istics. are not necessarily in conflict, of course, but in The~ fact often are. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Over the l0ng run Social Man has been winning out over . . Economic Man. The sharp edges of economic values have been greatly dulled. Let me read something by Herbert Spencer, for example, to .show you what I mean • ••• The poverty of the incapable; the distresses come upon the imprudent, the starvation qf th~t ··the idle, and those shoulderings aside of the weak by the strong, leave so many "in ~hich shallows and in miseries," are the decrees of a large, far-seeing benevolence. Herbert Spencer in POVERTY IN AFFLUENCE, p. 58 Except for Ayn Rand and her disciples, virtually no one now really_believes in letting the 4arsh disciplines of the economic run rampant. even with·our minds mellowed by syste~ Neverthel~ss, the "!;lumanitarian accomplishments of the past "thirty years, many of (\ us have been shocked into a new awareness of ·conflict. Organiza- tions concerned with planning social welfare are in the middle of it. How can·social planners help resolve the conflict? I believe in two ways: (1) by helping. Economic Man and Social Man understand each other, and (2) by recognizing that each has a con- tribution to make. Let me try to fill out these two points briefly. Social.Man needs most of all to understand what to Economic Man is a central concept of life--opportunity costs. This is the concept that everything has a cost in terms of opportunities foregone. Resources are once a decision is made to use scare~~ them for one purpose, they are no longer available for another. One opportunity cost of your presence here, for example, is· not being able to attend one of the. eighteen other sessions which the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis program tells me are now being held at this same hour. Economic Man,.by and large, has learned to live with this principle. He makes his cost calculations carefully; he sets priori ties. But ·I ·.have the impression that Social Han has yet to get the message •.. If social planners can--without dull~ng the edge of the drive for social betterment--convince Social Man that everything cannot b'e achieved at once, they will have gone a long way toward a con- structive resolution of today's conflict. Rising expectations are healthy, but only if we are aware of the 'limitations of resources. Planners can also help Social Man appreciate the predica- ment in which he often puts Economic Man. Economic Man is trying to "make it" in a competitive world. In doing so he carefully cal- culates his own opportunity costs--how to use his time and energy (\ to best effect. He devotes most of his resources to his economic pursuits, but he also is increasingly aware of his social responsi- bilities and hence becomes, as we say, "involved." How is he often ··received? If he gives money, he is criticized; it is just money. If he gives some of his time, he is just playing at doing good. I recall another panel on which a of a large representat~ve corpora~ tion was explaining what his company was·doing 'to meet the problems of the urban ghetto. When he was finished, the first question asked him was this: "Mr. X, where do you live?" I submit that the integrity of Economic Man sho~ld not be questioned because.he fails to move his family from to Harlem; Scarsd~le . At the same time, social planners can help Economic Man to understand Social Man better. You can help him to see how his economic motivations can be reconciled with social goals. Corpora- tions· .are struggling nmv with this problem, and 1 believe with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis considerable success. They are doing a great deal of soul-searching about the profit motive. Increasingly they recognize that if they take a sufficiently broad and long-run view, the search for profit .can encompass many. social activities. So corporations are now spending billions of dollars in the ghetto because they realize this is in own economic self-interest. ~heir Planners may have a harder time dealing with motivations of individuals. The Puritan Ethic is deeply embedded in our society. There is a strong belief that rewards should go only to those who discipline themselves, work hard, and produce. As a result, it is often hard for Economic Man, good Christian though he may be, to ·understand the' plight of the· disadvantaged. If only the poor would apply themselves, he feels, they could solve their own probl~ms. And if Government tries to deal with povertyroy some device for .. income maintenance, i1: only encourages shiftlessness. I believe these attitudes are weakening but only very slowly •. I ; In short, social planners can help resolve conflicts between Economic Man and Social Man by helping each to understand the other. But they also can help in way--py showing that anoth~r both have a vital role to play. We cannot solve our social problems unless we have a strong and growing economy, and we cannot prosper economically if we continue to have large ?arts of the ,population not sharing in the fruits of production. err: ... I, /./'>' Digitized fo5r F/R2A6S/E6R9 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

David P. Eastburn (1969, May 27). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19690528_david_p_eastburn

@misc{wtfs_regional_speeche_19690528_david_p_eastburn,
  author = {David P. Eastburn},
  title = {Regional President Speech},
  year = {1969},
  month = {May},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19690528_david_p_eastburn},
  note = {Retrieved via When the Fed Speaks corpus}
}