Commentary on Political Economy

Tuesday 13 December 2011

Foundations of the Economics

Western thought, from metaphysics to science, must end, must "close", must "com-plete", "satis-fy", "ful-fil", "ex-haust" itself with the conceptualisation of the "Ab-solute". The Ab-solute is what is not "conditioned" by anything else, what is causa sui (its own cause), both in the sphere of logico-mathematics and science (Leibniz's intuitus originarius that does not admit of "predicates" and therefore is entirely "self-evident") and in the sphere of human praxis (Kant's "autonomous" Practical Reason guided by the Will, which is the union of the posse [I can] with the nosse [I know] in the velle [I will]). The Will is the ultimate ex-pression of "freedom" - it is "the freedom of freedom", the power of the freedom of the Subject that knows itself). Of course, whatever is "self-evident" does not allow of ex-planation in that the definiens is in the definiendum and vice versa. The Ab-solute is therefore "ab-solved" from the "need" to explain itself - just as princeps legibus solutus (the prince is "ab-solved" from the laws because he is "above" the laws). Contra Donoso Cortez, then, we say that not just "the Dictator" operates a "miracle", in that dictatorship is "the suspension of all laws and rights, human and natural), but all constituted political power does. So we must peer into this "power" (potestas), because we do not believe in miracles -  miracles have no vis, no potentia for us, us the "constituent power".

The error that the Economics commits (we call it "the Economics" rather than "economics" to emphasize that the essence of "economics" is to act as a strategy of political power) is to presume that its "subject-matter" (its sub-iectum), its "quidditas" is actually a Sub-stance, a homogeneous qualitas occulta - and it presumes as much because it starts from the phenomenology of capitalist social relations of production which are "co-ordinated and measured" by money. Every economist from Smith to Marx to Jevons started from the fact that every "thing" that is exchanged in the market has a "price" and that therefore all "things" on the market must have a homogeneous "Value" - and that this "Value" must be the "subject-matter" of a "science of Economics"!
Weber’s central failure was not that he mistook “scientificity” for “science”, for its corresponding “practical conduct” – which mostly he did not! Weber’s failure was rather that his insistence on “categorizing” his “scientific pursuit” with the introduction of the “ideal types” distracted him from the fundamental question of how the Rationalisierung is possible! This failure led him to reify, to hypostatize the historical object of his studies into the “scientific categories or forms” or "the ideal types" that he presumed to adopt for that study – ignoring thereby Nietzsche’s famous warning against “systematizers”! Essentially, Weber mis-interpreted (!) Nietzsche’s Umwertung (trans-valuation of all values) to mean that “all values are interpretations of reality”, and that therefore it is possible for the “scientific observer” of a given historical reality to select a hermeneutic code of interpretation (the ideal types) linking rationally the means available to its “actors” with the “pro-jected ends” that they may envisage. Yet, as Nietzsche would have promptly reminded Weber, this framework of analysis (Entwurf), this “phenomenalism and relativism” starts from the pre-supposition that such a “rational code” of interpretation is both possible and applicable – which Nietzsche would vehemently deny on the ground that it is the very possibility and applicability of this “rational code” itself to a given historical reality – its effectuality -  that needs to be interpreted and explained as the mathesis universalis (Leibniz), as the rationalization of the world that is based on human needs, on the “system of needs and wants”! In Nietzsche’s own words,

“It is our needs that interpret the world; our instincts and their impulses for and against,” (Aphorism 481, Wille zur Macht).

Weber’s Neo-Kantian hypostatization not only of his sociology but above all of “the scientific fields of knowledge” to which he sought to apply it – from economics, to law, to music – is induced fatefully from this inability to com-prehend Nietzsche’s Umwertung, his thoroughgoing De-struktion (Heidegger) of Western metaphysics and science and the related critique of Western Kultur and Zivilisation. It should come as no surprise, then, that it remains suspended, as we noted earlier, between the Dezisionismus of “charisma” derived from the individualist relativism and the Neo-Kantian formalism of the “ideal types” necessitated by Weber’s need to ground this hermeneutic relativism on logico-mathematical – hence, “rational and systematic”, “scientific” - bases. What Weber fails to com-prehend above all else is precisely the historical character of “the metaphysical foundations of logico-mathematical rationality” whose political origins Nietzsche had made all but evident.

A brilliant illustration of these points is provided by Norberto Bobbio who, in reviewing Kelsen’s attack on Weber’s theory of the State and sociology of law in ‘Max Weber e Hans Kelsen’ (in Sociologia del Diritto), concedes that Weber’s Neo-Kantian or Simmelian ‘formalism’ enticed him to his detriment into the Kelsenian ‘Norms’, but that at the same time Weber’s “positivism” was premised on the fact that capitalism represents a historically specific intensification of this ‘positivization’ of the juridical norm, in line with its exasperation of the Rationalisierung – which would be theoretically a far more consistent and Nietzschean position for Weber to take. Commenting on Kelsen’s requirement that ‘co-action’ be added to the definition of ‘legal norm’ (the famous Grundnorm) so as to equiparate the concepts of ‘Right’ with ‘Law’ and therefore also with that of ‘State’, Bobbio goes on to reason that Weber’s notion of ‘apparatus’ (bureaucracy) must be added to Kelsen’s ‘co-action’ for this equiparation of Right, Law and State to have any historical effectuality! Bobbio then comes uncannily close to the central thesis of this study on the meaning of Rationalisierung, which we have enucleated in our Nietzschebuch and will illustrate more incisively in Parts Two and Three (of our study on Weber). In a nutshell, Bobbio perceives without actually comprehending that the notion of Right or Law or the State requires the existence of appropriate "institutions" that "en-force" these abstract concepts. The question that needs to be answered is how political enforcement can "crystallize" or "congeal" abstract concepts and how abstract concepts "dis-solve" themselves into political institutions. This is what Nietzsche attempted and others including Marx did not.

Separately, by discussing Kelsen’s claim that his  jurisprudence is intended to apply both to capitalist and to socialist States, Bobbio helps us highlight the link that we are about to trace in the following sections, dealing with the claim on the part of Neoclassical Theory to apply equally to both capitalist and socialist ‘economies’, between Neo-Kantism and Neoclassical Economics!

It cannot be doubted seriously that Marx was aware of the impossibility of reducing objectively, physically, heterogeneous labor to a homogeneous substance. Indeed, Marx counted this, the discovery of the Doppelcharakter of the “commodity” labor power (its being at once living labor that “valorizes” capital and “labor power” that is exchanged on the market), as perhaps his greatest achievement. It is just as certain, as Colletti has noted, that for Marx value was a “social hieroglyph” that, like God or the soul, has no material existence and yet is “objective” in that it conditions and guides human action. But, and here is the crux, this theory of value is inconsistent with the notion of market competition. One of two things: - either “market competition” is regarded by Marx as an autonomous and spontaneous sphere of activity not enforced politically by one class against another, in which case it is an aporetic concept because “competition” invariably ends up “destroying competition” (!); or else “market competition” is a sphere of activity that is “politically enforced”, in which case, eo ipso, there can be no competition as a reality a se stante (that can stand on its own). Yet Marx worked precisely on the grim assumption of the Law of Value, that capitalist society reproduces itself through the operation of the self-regulating market, especially its “pessimistic” feature – competition (the dira necessitas). Consequently, he had to persevere with his inconsistent theoretical framework  because to have done otherwise, to have accepted that value is an entirely political category  and that the capitalist economy is operated by concrete and identifiable social institutions would have meant for him to be lowered once again into “the kingdom of shadows”, into the shadowy world of the Political which he despised and spurned  because he identified it mistakenly with the public sphere of liberalism founded on the “optimistic” features of the market (commutative and distributive justice).

(Of course, Marx falls into this “scientistic trap” in Das Kapital, but generally not in the Grundrisse which are therefore much to be preferred as the exposition of Marx’s overall theory of capitalism. Incredibly, in “Natural Law and Revolution”, now in Theory and Practice, Habermas argues that it was Marx’s finding of “the theft of labor time” in the “pure exchange” categories of bourgeois law that “discredit[ed] so enduringly for Marxism both the idea of legality and the intention of Natural Law as such that ever since the link between Natural Law and revolution has been dissolved”! Habermas, who is almost entirely innocent of economic theoretical training, cannot see that indeed it is that “side” of Marx’s theory and of Socialism that believes in the fable of “the theft of labor time” that then must necessarily believe, vi rerum [by force of things!], in the “legitimacy” of legal categories that draw Habermas’s analysis back into the orbit of Arendt’s “liberalist and jusnaturalist” rendition of the historical reality of “revolutions”! Habermas manages therewith to undo the valid critique of Arendt’s On Revolution that he had expounded in his essay Die Geschichte von den zwei Revolutionen. See also Part Three discussion of these themes.)

We should note further how the German Historical School and other early opponents of Neoclassical Theory objected to it on the ground that “utility” is a “homogeneous” entity whereas in fact the “motivations” behind “economic action” are quite evidently “heterogeneous” (see Schumpeter’s account of this in the last chapter of his Economic Doctrines).One of the constant objections to capitalist enterprise is precisely this – that it “reduces” all aspects of human social interaction to the “homogeneous” pursuit of “profit”. Clearly, what these ‘critics’ fail to do is to confront the central question that we are addressing here – that is, how such a reduction of the heterogeneity of human activity to “homogeneous” and “rationally calculable enterprise” or “profit” is at all possible! Here again Weber makes the colossal Neo-Kantian mistake of assuming that there is a specific “form” of human “knowledge” or “action” that is singularly “economic” – just as he conceded to Kelsen that there is a specific dimension of human social activity that is “legal”! Weber simply mistakes what are mere and highly contingent “institutions” of human groupings – the “economy” and “value”, the “law”, “the State” and “power” – for hypostatic and ineluctable “forms” of human knowledge that a social scientist or “observer” can analyse in their epistemological specificity and “autonomy” from other “disciplines”! The fact that a great mind such as Weber’s never even posed itself the question as to how and why “utility” could be adduced as the “ectoplasm”, the “metaphysical quidditas” that could constitute the “subject-matter” of the Economics bears witness to the ability of the social production of “exchange value” and its politically-enforced transmutation into money, then money capital, and then profit, to mystify human social relations – as Marx took pains to emphasise.

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