Tuesday 23 September 2014
Schumpeter and Classical Political Theory
To be sure, the analytical
framework of Walrasian equilibrium is also beset with “unscientific” ethico-political
and indeed metaphysical problems. It is hard to imagine, for instance, a more metaphysical notion than that of
“utility”, which is essential to neoclassical economic theory. Or indeed even
the notions of “individual” and “self-interest” that form the mechanical
elements of equilibrium theory. Yet equilibrium theory, exactly like Hobbes’s
notion of the state of nature or state of civil war, begins with the formal equality of individual market
participants who are unequal or different only in the “endowments” with which they conduct their perfectly competitive
market exchange.
Indeed, it could be argued that
the differences in “initial endowments” do not constitute “inequality” given
that no two individual human beings are alike! The central ethico-political
assumption of equilibrium theory is that individual market participants have a legal right to their initial endowments. Once this initial legal
right is accepted, then the entire “settlement” of equilibrium exchange
transactions in accordance with utility schedules is mathematically determined.
The absence of “profit” or “surplus value” in neoclassical equilibrium theory
means that the problem of the Dynamik,
that is, the problem of the mutation or trans-formation of the economic system,
of its “evolution”, is not even posed.
Just as in Hobbes’s theory it is
the necessary (to preserve one’s
life) yet free and rational (free because rational) decision of
individuals to alienate their “free-dom” in exchange for the totalitarian rule of the State, which
establishes civil society and proclaims positive laws, so in equilibrium theory
self-interested individuals are governed “from outside” by the quasi-Euclidean totalitarian axioms of the theory which,
as we saw earlier, transform “economic agents” into the “inert bodies” of
mechanical physics. Just as in Hobbes’s state of nature individuals transfer mechanically their de facto possessions or power to the civil state so that they may
be socially recognized as “legal possessions”, so in equilibrium theory the
“endowments” of individuals are sanctioned axiomatically without any question
being posed about how and with what right they came to acquire
these “initial endowments”.
Neoclassical equilibrium theory is entirely analogous to Hobbesian political
theory in that its “government” is entirely external
to its governed individuals who therefore acquire their possessions and formal equality
before the law from the State. The conflicting “free-doms” of individuals lead
them to agree, on pain of mutually assured destruction, to alienate their
individual “free-doms” to the State. Because the “government” is mechanically
imposed on its “subjects” – because the contractum
unionis becomes instantly or mechanically a contractum subjectionis – we call this equilibrium state or
political state a “state by institution”.
By contrast, in the case of
Schumpeter’s Dynamik, given the “indeterminateness of prices” caused by
the fact that the economic system is changing endogenously (“from within”
and not “from outside” as in equilibrium) through the innovative actions of “economic agents” (Withschafts-subjekte) and changing “incessantly”, the question that comes up immediately is not just
how initial entitlements or
endowments are to be settled between economic agents, but also how present and future endowments or
entitlements are justified! In other words, the ethico-political questions
raised by the Dynamik relate not just
to the initial acquisition of
property rights, to their transfer from the state of nature to the civil state,
but also and especially to the present
and future legal claim over the pricing of all goods and services for
exchange on “the market”. In this case we have a Lockean “state by
acquisition”.
The contrast between John Locke’s
political theory and the Hobbesian theory lies centrally in the fact that the
first relies on the existence of “natural rights” possessed by individuals in
the state of nature which are then transferred to the civil state by agreement
or social contract so that they may be protected by the State. In other words,
for Locke, unlike Hobbes, “natural rights” exist already in the state of nature, and it is only for protection that
individuals contractually acquire a State to preserve these natural rights from
violent acts that would lead to a civil war. Unlike Hobbes, then, Locke does
not believe that the state of nature is a state of war of all against all in
which no “natural rights” can be said to exist, except for the right to
preserve one’s life! As a result, the
Just as in Hobbes, who is the archetype of bourgeois social and economic
“science” (cf. the lyrical rendition of a masterly intuition on the part of
Hannah Arendt in Volume 2 of The Origins
of Totalitarianism quoted above), we find, on one side, the positive
“scientific hypothesis” or rationale
provided by the framework of equilibrium whereby the capitalist system can be
ana-lysed as a “balance of competitive and conflicting forces” whose ultima ratio is that metus mortis (fear of death) that pushes
atomic self-interested individuals out of the status naturae (state of nature), out of its stasis (civil war), and out of its “gravitational centre” or
equilibrium, into the metabolic orbit
of the political convention or status
civilis (civil society). The conflict of the state of nature is transformed
into entrepreneurial activity under the protection of the State. But under this
commercial “continuation of civil war by other means” (Constant), an ethical or
political or rational-efficient productive-scientific rationale must be found
for the determination of prices (for the theory of distribution) – considering
the “separation” between “worker/product” and employer/worker/product. Thus, on
the other side we find the jusnaturalist “political convention” or rationalization of the status civilis (civil society) that
takes into account the political and bureaucratic “frictions and fictions” and
compromises, the conventions and atavisms, all guaranteed by the
“Common-wealth”, that is to say, the State, that drive the political system back into the paralysis, stagnation or
sclerosis and finally the stasis
(civil war) of the status naturae.
Thus, jusnaturalism and positivism become Janus-faced or enigmatic concepts,
the one entering the other as it exits itself. The profit-seeking of pure
competition (jusnaturalism) drives out of equilibrium, but the profit-making of
imperfect competition (positivism) pulls back into equilibrium. The tendency here is toward “entropy” or
paralysis – due to the proliferation of protective measures and to the easier
reliance on conservatism – leading to civil war (stasis or bellum civium).
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