We need to look at how economics, as portrayed in political discourse by way of simple narratives (i), is a fairy tale much like religion is. To be fair, the field of economics is a science (ii) – assumptions are stated and predictions are made – but once ideas become repackaged as absolutes for use as rhetoric, as the “invisible hand” (v), then we must put them in their place, right next to religion.
Admittedly there is an aesthetic to economics – in its coherence and logic – and I get why many economists are attracted to it. But after looking at how deductive and assumption-laden neoclassical economics is, especially when presented formally, it is indeed a miracle that homo economicus (iii) survives at all. Here, we will look at how its axioms create the rational man.
Types of Reasoning
It will be helpful to review the different types of reasoning we engage in before going any further. When we make observations from our natural world to form more general conclusions, then we are reasoning inductively, and when we base our conclusions on reasoning alone without observation, then we are reasoning deductively.
In other words, deductive reasoning is to a philosopher as inductive reasoning is to a scientist. In reality, we use both types of reasoning (iv) but a distinction is that deduction can work with claims that are not true but still be valid, as illustrated below.
- All people are rational. [premise]
- Jon is a person. [premise]
- Therefore Jon is rational. [conclusion]
People can be rational, but if we know Jon, who can be irrational, then this conclusion can’t be true. But it is still logically valid – that is, the conclusion follows from the premises. This is how neoclassical economics works because they start with assumptions and then deduce models from it. In fact, its appeal was because it claimed to be “completely axiomatized” akin to mathematics (see comment #2).
Axioms of Economics
Below are the three assumptions that the entire field is built upon, often referred to as axioms. The first assumption says that “we have rational preferences” which means we can assign value to specific items or services. More specifically, rational choice theory says that we pick outcomes that provide us with the greatest benefits and satisfaction given the choices available.
- we have rational preferences
- we maximize our utility
- we all have perfect information
The second assumption is that we “maximize our utility” or self-interest, which equates to rational choice theory defined above. Note that as long as we consistently rank what choices are important, then the goals, which are based on our preferences and desires, can be anything per rational choice theory.
“Perfect information” means everyone has access to the same information on pricing and that we know our utility. In conclusion, we have explained how the model for a rational actor works, known as homo economicus, as it’s just a summary of the axioms. To be succinct, it is a man that is consistently rational, self-interested, and who pursues his subjectively-defined ends optimally .
i) I am referring to the simplified version used for political discourse purposes, which are a series of myths and narratives; for example, “government intervention is always bad” and the market is “infinitely wise”.
ii) If assumptions are explicit and neoclassical economics attempts to make predictions, then it at least deserves to be in the category of science. The question should always be how well does it do its job and not framed in absolute terms.
iiI) Homo economicus is a model for how man makes decisions regarding his needs and wants. The exact definition is a human agent who is consistently rational, narrowly self-interested, and who pursues their subjectively-defined ends optimally. 
iv) Actually, we reason neither deductively nor inductively but through inference. In fact, deduction and induction are human inventions that just so happen to have utility. There is no such thing as “universal logic.”
v) I have argued that the “invisible hand” is more of a rhetorical device to promote neoliberalism policies than it is an economic insight. I don’t want to, however, give the impression that it has no value because economists have given it utility.
It can refer to the increased or created utility for both the buyer and seller after a voluntary exchange of goods or services as well as driving competition amongst firms to meet our needs for lower prices, which results in commoditization .
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 Frank, Robert H.. The Darwin Economy (p. 27). Princeton University Press.
 Kennedy, Gavin. Adam Smith and the Invisible Hand: From Metaphor to Myth. Econ Journal Watch 6(2): 239–263.
 Lakoff, George. Moral Politics . University of Chicago Press.
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