It is true that human beings are both rational and aware in all their undertakings; an assumption in economic policy. This means that, they will weigh all the options available at their disposal, and after gaining all the required information, they will make the right decision to suit their interests. This is very evident from the neo-classical economic theory, where economists argue that, the rationality of people emerges as a result of their needs, which are always limited by scarcity.
Economists also assume that, humans act in their own interest in designing policies. This is to mean that, no matter how people may be concerned about offering the best to others, in the long run their own interests must be fulfilled. This is very much evident in the business world, where a business person will try to ensure that their business operations are in line with the interests of consumers. The business person does all this with an inner motive to be fulfilled, that is excellence in business.
Keynes, a great economist argues in support of the two assumptions above. He says that, everyone is always free to say yes or no, to any transaction, after a great consideration of their needs. He says that, the expectations of many have to be fulfilled in the long run. He also says that, it would be foolish, if we formed our expectations, by attach high weight on matters that we are not certain of.
Even if we do not know the exact impact, we at least know the possible results of any business activity we undertake. This is to mean that, generally, human beings have some information regarding the outcome of business activities, and will always choose reliable and benefitting actions, thus fulfilling their personal interests (Mankiw and Romer 25).
Kindleburger suggests that for the economy of a particular nation to improve and remain improved, the social, political and economic interests of the nation have to be realized. This calls for all the business activities of the nation to be in line with the set political requirements. It also requires the social interests of customers as well as business people to be met.
The economy encompasses a wide range of market in order to make sure that, the required information is passed across, people can weigh different options, and that the interests of every individual in the business world are met. This works well for the general improvement of the economy of a nation. Thus the major purpose of business operations is for the fulfillment of different interests of different people (Kindleberger 97).
The two assumptions have an advantage in that; they help many business people in designing a proper environment in their businesses to serve their customers well. In doing this, the needs of customers are met, and since the main aim of any business organization is to make a profit, the very interest of the business person will be met in the long run. This shows that, the personal interests of both the consumers and the business people will finally be met.
This helps improve the economy of any particular nation. Thus, as a nation, we can still continue relying on the two economic assumptions. Although the two assumptions seems to fail in the short run, which is a disadvantage to many who rush in to any business transaction, their efficiency in the long run is a great advantage and calls for us to continue following them.
Works Cited
Kindleberger, Charles P. Economic Laws and Economic History, Cambridge, England: Cambridge University Press, 1997. Print.
Mankiw, Gregory Romer, David. New Keynesian Economic, Cambridge, Mass: MIT Press, 1991. Print.