Neo-classical paradigm

Consider first the assumption that self-interest is the primary human motivation. While there is no denying that self-interest is an important motivator, so too are people s moral beliefs. This moral dimension is entirely overlooked by the neo-classical paradigm. To use Etzioni s examples,... 

Of course it is possible to assimilate the moral dimension into the dimension of self-interest by arguing that in cases such as the above it is in an individual s interest to avoid moral condemnation. But this is far from the spirit of the neo-classical paradigm. Moreover, to argue that it is in people s interest to act morally in order to satisfy their own consciences and win the approval of others expands the concept of self-interest to the point where it has no meaning. On this expanded definition, no matter what a person does, be it moral or immoral, selfish or altruistic, it can be said to be motivated by self-interest. Most importantly, in the present context, to expand the concept in this way is to obliterate the distinction between the market and regulatory approaches to public policy which is the very question at issue in this book. In short, to be able to talk sensibly about policy in this area requires that we maintain this distinction between moral and economic motivation. 

The second part of the critique of the neo-classical paradigm questions the assumption that people and firms make their decisions on a fully rational basis. As Etzioni points out, people brush their teeth but do not fasten their seat belts. . . they purchase costly, unsuitable life insurance and pay stock brokers for useless advice and so on (1988, p. xi). 

Our critique of the neo-classical paradigm leads therefore to the realisation that the key question from a policy point of view is how to get management s attention focussed on matters of OHS. This is the theoretical rationale for this book. 

Broadly conceived, this book is intended as an extended critique of economic rationalist thought as it applies in the area of OHS. We have seen that the assumptions of the neo-classical paradigm discussed in Chapter 2 do not apply with any consistency and that the paradigm fails to provide an adequate model on which to base OHS policy. Health and safety cannot be left to the market because so often safety does not pay. Nor is it enough for governments to construct economic incentives to encourage managements to attend... 

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