09 Oct

How relationships impact economic outcomes

Hands

CAMBRIDGE – Lorna Zischka, a PhD Student in Economics at Reading University, has written a paper called ‘The Hidden Asset: How relationships impact economic outcomes’, where she argues that “Consideration for others as well as oneself also represents a more desirable basis than individualistic self-interest on which to found the development of society.”

In Relational Thinking, this is familiar territory.  See Dr Michael Schluter (together with Jonathan Rushworth and Paul Mills): After Capitalism: Rethinking Economic Partnerships and Transforming Capitalism from within: A relational approach to the purpose, performance and assessment of companies.

In her paper Zischka explains the need for consideration for others and how this provides a stronger basis for economic theory than individualistic self-interest. She writes:

“Greed is commonly perceived to be a factor precipitating the 2008 financial crisis. On the other hand, every textbook on neo-classical economics teaches that individuals pursuing their own private interests in a free-functioning market gives us the best possible allocation of resources and is a driving force for efficiency, implying that the pursuit of private gain will result in social good… This essay examines whether ‘self’ interest is an over-simplistic foundation for economic theory, and why paying more attention to the ‘other-centred’ interests that individuals might have is helpful. It suggests that relational drivers have a significant additional impact on human behaviour. Consideration for others as well as oneself also represents a more desirable basis than individualistic self-interest on which to found the development of society.”

The full version of Lorna Zischka’s paper can be found here: