Rationality as a justification of social inequality

Rational choice theory is a branch of thinking ever omnipresent in the social sciences. It is especially dominant in economics and many of the adherents in other disciplines have spilled over from economics (e.g Gary Becker, and Freakonomics co-author Steven Levitt). As could be noted by the use of the term “choice” it a theory of human action. The theorists are not attempting to explain the thoughts, feelings and emotions of People. They purport to explain why they do what they do (at least in the “economic” realm). In addition, their conception of rationality is more specific and different then average person’s definition Duncan Foley explains it like this in his piece Rationality and ideology:

Economists, however, have come to define rationality in a much narrower sense. The economist’s rational decision maker optimizes, that is, pursues not just any action that promotes a goal, but the action that best promotes the goal. The economist’s rational decision maker processes information according to the procedures of Bayesian statistics. Furthermore, the goals the economist’s rational decision maker pursues have to be reducible to the direct consumption of material goods and services. This is a “rationality of the belly” (which some people might reasonably regard as being rather irrational).

This may seem absurd on it's face; on a moment's reflection it is easy to recognize that people don't behave like this. The defense however, is easy (but strangely brilliant) and was made over half a century ago by Milton Friedman:

Let the apparent immediate determinant of business behaviour be anything at all—habitual reaction, random chance, or whatnot. Whenever this determinant happens to lead to behaviour consistent with rational and informed maximization of returns, the business will prosper and acquire resources with which to expand; whenever it does not, the business will tend to lose resources and can be kept in existence only by the addition of resources from outside.

What he is essentially saying is that people have no agency. Actors may have differing motivations but as soon as they start to deal with the problems of “scarcity” and the “economy” they will encounter competition and behave “as if” they are rational “utility maximizing” people. The “natural” processes of economies (Duncan Foley suggests that in Neoclassical economics these processes are determined in a Hobbesian/Lockean/Rawlsian “veil of ignorance”). Even when leaving work and production and entering the world of “leisure”, agents have no agency since their preferences are predetermined. Note that since rational, utility maximizing individuals require perfect information, complete markets and definite measurements of all elements of life that provide “utility”, any move away from Capitalism is rejected as almost perverse. Further, redistribution downwards is considered “inefficient” and “supoptimal” because it may result in less total utility being available (this is called pareto optimality). In this view, it is less efficient for a poor person to have 1 dollar then for Donald Trump to have 3. All that matters is that the better off **could** compensate the worse off, even if they never do. In it's purest form, Rational Choice theory is a full throated defense of capitalism that argues against even the mildest forms of redistribution.

Foley, Duncan. "Rationality and Ideology in Economics." World Political Economy Graduate Class. New School For Social Research, New York City. 27 Mar. 2012. Lecture.

Friedman, Milton. "The Methodology of Positive Economics." Essays in Positive Economics. Chicago, IL: University of Chicago, 1953. Print.