On Human Rationality and Government Control


  • Emile Phaneuf Export Manager for an American manufacturer in the mining industry. MA in Political Science from University of Arkansas, Fayetteville.
  • Carmelo Ferlito Senior Fellow, Institute for Democracy and Economic Affairs, Kuala Lumpur, and Visiting Professor, INTI International College Subang, Subang Jaya, Malaysia




In this paper we first address a long-standing criticism of human rationality and what that means for the role of government. We review and compare much of the literature on rationality and demonstrate that various authors within various fields often mean very different things by the word «rational.» While we make no claims as to whether or not humans always behave rationally, we point out the flawed logic for what is suggested for the role of government as a way of addressing the human irrationality problem. Building on the Mises-Rothbard-Huerta de Soto tradition, we argue that what is more important than perfect rationality is purposeful action. We explain the dynamic nature of the market in which time plays an important role, and humans act with expectations to accomplish goals, learn from past mistakes, discover new information and modify their plans accordingly. Using Hayek’s approach, we discuss the knowledge problem in which data is dispersed among millions of individuals (unknown in its entirety to any central authority) as well as the problems with applying the scientific method exactly as it is used in the natural sciences to the human behavioral sciences. These problems combined, we argue, make for a much more disastrous system than would be a system in which often-irrational individuals would be free to make mistakes for themselves, discover new information and take actions for their own betterment.

Key words: Rationality, Government Intervention, Equilibrium, Human Action, Purposeful Behaviour.

JEL Classification: B53, D80, D84, H10, H30.

Resumen: En este artículo abordamos en primer lugar una vieja crítica de la racionalidad humana y lo que ello implica para el papel que desempeña el gobierno. Revisamos y comparamos gran parte de la literatura sobre ra-cionalidad, y demostramos que distintos autores dentro de diversos campos atribuyen cosas muy diferentes a la palabra «racional». Si bien no hacemos ningún tipo de reivindicación respecto a si o no los seres humanos se com-portan siempre racionalmente, subrayamos la defectuosa lógica por la que se sugiere el papel del gobierno como una forma de abordar el problema de la irracionalidad humana. Siguiendo la tradición Mises-Rothbard-Huerta de Soto, sostenemos que más importante que la racionalidad perfecta es la acción intencionada. Explicamos la naturaleza dinámica del mercado en la que el tiempo juega un papel importante, y los seres humanos actúan con ex-pectativas para lograr sus metas, aprenden de los errores del pasado, des-cubren nueva información y modifican sus planes en consecuencia. Utilizando el enfoque de Hayek, se discute el problema del conocimiento en el que los datos están dispersos entre millones de individuos (desconocidos en su to-talidad para cualquier autoridad central), así como los problemas con la aplicación del método científico tal y como se utiliza en las ciencias de la naturaleza a las ciencias del comportamiento humano. Estos problemas combinados, sostenemos, generan un sistema mucho más desastroso de lo que sería un sistema en el que los individuos con frecuencia irracionales fuesen libres para cometer errores por sí mismos, descubrir nueva información y tomar acciones para su propia mejora.

Palabras clave: Racionalidad, Intervención del Gobierno, Equilibrio, Acción Humana, Comportamiento Intencionado.

Clasificación JEL: B53, D80, D84, H10, H30.


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How to Cite

Phaneuf, E. ., & Ferlito, C. . (2014). On Human Rationality and Government Control. REVISTA PROCESOS DE MERCADO, 11(2), 137–181. https://doi.org/10.52195/pm.v11i2.166