The Paradox of Rational Contradiction: On the Relevance of Existentialism and the Concept of Bad Faith to Economics

Rationality occupies a singular position in economics, to the point that, for some, it is virtually synonymous with the discipline itself. It raises the fundamental problem of the logic of individual action and, ultimately, that of the allocation of resources and its possible organisation. Yet rationality is above all an analytical matrix—much like social properties in sociology—used to understand why individuals do what they do in given situations. However, a closely related and equally crucial problem has received far less attention: that of coherence, understood as the symmetry between thought and action, or, put differently, moral rationality. For being coherent—doing what one says or saying what one does—is relatively rare and, in this sense, paradoxical: why is it so difficult to be rational without contradiction? This is precisely what Sartre's concept of bad faith allows us to grasp. Although it has never been used in economics, we argue that it possesses strong heuristic power for accounting for the metalogics of rationality itself. Grounded in the phenomenological method, which describes things as they appear, the concept of bad faith refuses to think action in terms of a before and an after. Instead, through the existentialist notion of praxis, it conceives action as a continuum. It thus invites us to think economic rationality in direct relation to what we call economic responsibility, that is, the political responsibility of one's choices within a universe of scarcity. From this perspective, rationality becomes economically—and morally—very costly. In microeconomic terms, irrationality, understood here as incoherence, maximises utility. Without necessarily positioning ourselves in direct opposition to standard economics, we show that part of the resolution lies in the fact that incoherence is itself rational, insofar as the world actively valorises incoherence through prereflective experience. Drawing on the phenomenological sociology of Alfred Schütz, we show that in everyday life it is rational to bracket the contradictions of experience—and thus to embrace them—since recognising them, questioning them, and orienting one's action accordingly entails costs that are simultaneously economic (in terms of price and variety), social (in terms of integration), and moral (in terms of the gaze one directs at oneself). This paper therefore aims to show that ethics and morality can be economically—and very concretely—heuristic through the contributions of existentialism, and more broadly that philosophy can play a decisive role in economic problematisation, particularly when it comes to raising—and resolving—paradoxes.