Commentary on Political Economy

Saturday 15 November 2014


THE ROLE OF THE STATE IN ECONOMIC THEORY has rarely been examined owing to the mistaken notion that the State is a political structure or institution that is wholly “adventitious” or epiphenomenal or superstructural and so entirely extraneous to the reproduction of society, albeit not to its “foundation”. This seems incongruous if not contradictory because, if indeed the State is essential to the establishment of a society – indeed, of the “re-public” -, then it seems odd that it should not play also an essential defining role in the constitution of the most basic “economic” categories and relations of that “society” or “republic”.  This peculiar theoretical flaw and lacuna is due in part to the approach of classical political theory to the State which sees it as simply being the collective noun for its constituent building blocks such as the individual or the family household or the tribe or the city and finally “the people”.


Because economic theory is exclusively concerned with the production and exchange of goods and services between “individuals” or individual “units” and not with the “reproduction” of society as a whole – that is, not with the metabolism of a society with its “environment” which would entail the analysis of “economic” relations in the broader context of the “choices” selected by a society and its members from virtually limitless options and possibilities -, for this very reason economic theory has universally neglected the role of the State in the economy.  Yet, whereas economic theory sees Politics as an intrusion in Economics, in reality it is economic theory that wrongfully extrudes Politics from what it claims to be its “scientific” ambit. By contrast, the notion of metabolism serves to restore the ineluctable element of “choice” and “project”, and therefore of the Political, in the selection of alternative social relations of production.


Owing to these twin misconceptions, aided and abetted by the political interests and outright violence of the bourgeoisie, economic theory has always emarginated the role of the State in “the market economy” to that of mere “Police” – to that of a purely “administrative” body that preserves or conserves and regulates the autonomous “natural rights” obtaining between individuals historically and analytically in a societas naturalis that existed prior to the establishment of the societas civilis and the State, as in the Lockean jusnaturalist version, - or else, as in the Hobbesian version, to one where the State is instituted wholly contractually for individuals to exit the anarchy, lawlessness and civil war of a hypothetical state of nature. In the former case, the Lockean, the State acts merely as an arbiter – as an independent judge – to adjudge and enforce the respective natural rights of individuals, which are thought to be historically prior to and analytically independent of the State. In the latter, Hobbesian case, the State is the actual founder of human society; it undertakes a restauratio ab imis of human society or erects a “total constitutional order” - so much so that State and civil society are indistinguishable as status civilis as against the lawless state of nature or status naturae that preceded its contractual foundation (v. Hobbes, De Cive, X, I; or Rousseau, Le Contrat Social, or consider Pufendorf’s “extra rem publicam nulla salus”).


Yet even in the Hobbesian version of jusnaturalism, where the State is actually the fons et origo of these “rights” (the status civilis of legal positivism), it is still not considered to determine the substantive content, the “essence”, of economic categories. Thus, in both versions, the State enforces these “rights” without actually determining their content, which supposedly arises from an autonomous “economic” sphere consisting of the utilitarian needs and wants of individuals. In both cases therefore - and this is the decisive point –, the economic sphere exists independently of the State in a fundamental historical and analytical sense. Indeed, even the mechanistic Hobbesian state by institution that could never be said to have existed historically on account of its extreme suppositions threatens to become a state by acquisition in the Lockean sense because once a civil society descends into civil war of the kind hypothesised by Hobbes, then it will be impossible for humanity to escape or exit from that State.


Whereas in classical political theory the State was identical with society itself, either as the ethical dimension of being human (as with Aristotle’s zoon politikon, for which Politics is the continuation of Ethics) or as the worldly embodiment of a divine or transcendental Reason (as in Thomas Aquinas’s notions of animal sociale or animal rationale), in modern theory the State is quite distinct from society either historically as postdating a primordial pre-statal society or analytically by virtue of the assumption that such a society devoid of all “statality” – either a state of complete “anarchy” (Hobbes’s bellum civium) or a societas naturalis  (Bodin, Locke, Rousseau) – is indeed possible.


The “science” of economics became imaginable only once the triumphant capitalist bourgeoisie seriously set up its central political aim to confine the role of the State precisely to the perpetuation of this false separation of the Political from the Economic. This in turn required the identification and isolation of a sphere of social life that is not contaminated by “values” other than the Value of economic theory – “exchange value”. The cardinal point to consider is that this “technical neutrality” of the State had to proceed hand in hand with the destitution of “individuals” of all Ethico-Political values and their reduction from “citizens” to economic atoms whose activities could be calculated and measured in isolation from one another so as to lend “scientific” economic Value to the utilisation and production of social resources. But in fact and in reality, this reification of human living activity – its reduction to “measurable” labour-power - is a specific form of social violence perpetrated by the capitalist bourgeoisie.


Even Marx, in his critique of political economy, sought to establish that in the process of commodity production and therefore of economic value the capitalist derives a profit by extracting surplus value from the labour-time “socially necessary” to produce those commodities. But one source of surplus value that Marx specifies arises from the fact that the capitalist does not pay workers for the sociality of their “individual labours” – for the fact that what are supposedly “individual labours” are in reality indivisible aspects of social labour. Thus, in his effort to present his theory in a scientific guise, Marx neatly obscures what he clearly recognizes, that is to say, that it is impossible to specify and calculate economic Value independently of the “sociality” of human living activity – which therefore leads us inevitably to ethico-political values as the real matrix of economic value.


Marx’s discovery of the Doppelcharakter of production in capitalism, contrasting the “use value” of human production with its “exchange value” under capitalism echoes the ancient Aristotelian distinction between the oikonomia (the laws of the household) and the chrematistike (the speculation of finance). It was meant to highlight the fact that “use values” point well beyond the uni-verse of “economics” with its “exchange value” toward the multi-verse of human values. That is why Marx thought Proudhon’s famous motto - “property is theft” (more than just an aphorism encapsulating Rousseau’s thesis in De l’Inegalite’) - was so worthy of approbation. Yet even though the notion of property is so obviously “legal” and requires of necessity the existence of a State apparatus to enforce it, even Marx could conceive in his own “critique of political economy” that it was possible to isolate the role of the State from that of “property” or “the market” or “the economy” as an object of “scientific” inquiry. There are two senses of the social category Value which reflect the Doppelcharakter of social resources identified by Marx. On one side, we have Ethico-Political Value, and on the other we have Economic Value. Our thesis in this review of the role of the State in economic theory is that these two meanings of Value are indeed inseparable – and that their separation is only the product of the modern distortion of social and political theory that comes with the rise of the capitalist bourgeoisie and of its “science” par excellence – “economic science”.



The isolation of Ethico-Political Value from Economic Value requires the specification of a scientific sphere for the latter such that its precise quantitative determination can allow the State to become technically neutral and to extrude all other “values” from the sphere of economic value. This is the contrary of what Habermas contends in Theory and Practice where he equates the advent of the bourgeois State to the scientization of politics tout court. Yet, as is quite evident, the claim of liberalism is precisely the opposite – that is, to be able to “free” the Political , not by scientizing it, but by isolating it scientifically from the Economic. Liberalism does not pretend that Politics can be turned into a science; its main claim and injunction on which the dictatorial rule of the capitalist bourgeoisie is based is rather that Politics must not interfere with the “science” of Economics. That is the entire rationale behind the homologation of Politics and Economics behind both Classical and Neoclassical Political Economy – a free society and a dictatorial workplace!


Here it is not just Habermas’s thesis about the scientization of politics but even Constant’s distinction between the “freedom” of Antiquity and the “liberties or guarantees” of Modernity that is neatly surpassed and sidelined. Indeed, far from accepting that politics can be turned into a science, Constant himself – the greatest theoretician of liberalism after Locke - went so far as to claim that it is the “science” of Economics that is the ultimate and perhaps most desirable or efficient “guarantor” of the Political and of its bourgeois liberties against the interventionist State: specifically, for the French theoretician, it is the mobility of capital between nation-states that is the most effective discipline and corrective against “interventionist” States and governments: in other words, it is “the economic law of competition” that disciplines governments!


The retreat of the citizen from active participation in the political life of the State to the passive spectatorship of the bourgeois is entirely justified by the scientization of the Economy that allows the ambit of the Political to be confined to the sphere of public opinion. Habermas’s entire enterprise is thus set on the wrong path in that it focuses on the antinomies already evident in Hobbes regarding how the contractum unionis turns into the contractum subjectionis, - in other words, how the freely-entered rational contract is possible given the inability of individuals freely and rationally to control their desires. Liberalism does not rest on these antinomies because, with Locke and then Constant, it already posits the possibility of a societas naturalis based precisely on rational-scientific economic relations, on the scientisation not of Politics (!) - as in Machiavelli, on whom Habermas relies to advance his thesis -  but rather on strictly rational economic behaviour, not of the ethico-political and ideological superstructure, but rather of the reproductive and productive necessity of society (scarce resources), not of the sphere of choice, but of the sphere of necessity – bourgeois economics is the “science of choice”!


To be sure, following Aristotle, we must avoid the identification of all social relations with those of “statality” – that is, those relations that require the existence of a State. But our thesis here is that there is no possibility of a separation of the Economic from the Political or of a choice or trade-off between state and market! The notion of “market” is a fiction because the question is not one of whether human beings exchange individual labours but it is rather one of how human beings organise social labour! (In this sense, Durkheim is the perfect antidote to Adam Smith’s spurious derivation of the division of “labour” – by which he meant “individual labours” – from exchange. Had Smith started instead from the notion of social labour, he would have understood that indeed it is exchange that is made possible only by the fictitious and coercive parcelisation of social labour into individual labours!)


Bourgeois economic science since Adam Smith is founded on the spurious conundrum of economic co-ordination: it asks, how is it possible for self-interested atomic individuals to co-ordinate their activities so that exchange is possible between them? And the obvious answer – which condemns all neoclassical theory to irrelevance – is that it is utterly impossible for self-interested atomic individuals ever to exchange or to co-ordinate anything at all with one another! As Robert Clower has properly pointed out, there can be no “market” as theorised in all neoclassical equilibrium theory – because there is no meaningful “market process” between human atoms: even Walras’s tatonnement does not amount to market process because prices are not final until all “markets” clear and general equilibrium prices are reached. The question from which we must start instead is the exact opposite: how is it possible for human beings who are species-conscious beings ever to create a society that enforces individualism on them? This is what Rousseau did when he inverted the question of the existence of “property”: instead of assuming that property rights are “natural”, he asked: how and when did “property” become a social reality? Similarly with “statality”, we ask not how the State arises from civil society, as if the two spheres were insuperable antinomic metaphysical entities such as “body” and “soul”, because there is no solution to a problem set in these terms. Rather, we must ask how a society of private individuals can arise from human species-conscious being.


Alchian-Demsetz, to give yet another example of the rampant stupidity of Nobel Prize laureates in economics, quite incorrectly select a negative definition of capitalism – the absence of government in the economic process - and completely leave out the “individual”:


The mark of a capitalistic society is that resources are owned and allocated by such non-governmental organizations as firms, households, and markets. [First sentence of “Production, Information Costs and Economic Organization”.]


This is quite clearly nonsense because, in practice and in reality, governments have historically played a crucial role in “the ownership and allocation of [social] resources”; and in bourgeois economic theory, it is individuals, not “firms and households”, that must axiomatically take precedence over “firms and households and markets”! It is possible, of course, that by “markets” Alchian-Demsetz mean the economic exchange of atomistic individuals. Demsetz in any case will later take a fresh look at competition as “perfect decentralization”, which requires the postulate of possessive individualism (cf. above all his “Freedom and Coercion” and “Fallacies in the Economic Doctrine of Externalities”). The locus classicus of “possessive individualism” is, of course, CB Macpherson’s towering study by that name.



What makes the inversion of this age-old nexus between State and economy ever more peremptory and pressing is the fact that now more than ever we are witnessing how it is not the economy that is the foundation of the State but much rather it is the “statality” of being human that is culpably obfuscated by “economic science”. The great part of Aristotle’s study on the State, the Politics, is devoted to what he deems to be its foundation – the oikos or household whose “regulation” or “laws” (nomia) lend the name to present-day economics (oiko-nomia). Since Aristotle, and then thanks to his influence through Antiquity and the Christian Middle Ages, it is the laws of the household that found the reproduction of human society intended as societas civilis and not vice versa – that is, it is not the “statality” of human being that founds economics. With Aristotle, “the freedom of the ancients” answers to the physis of human beings – the zoon politikon. This is the active side of the animal sociale in that human beings seek ful-filment in Politics, in the State. Hence, the State is the ethico-political perfection of its citizens in the sense that the State’s ethico-political dimension, quite distinct from its police and military functions, is an emanation from the citizens as animalia rationalia (rational animals) distinct from other animals by the faculty of language and therefore of reason.


In Aristotelian metaphysics, the “nature” (physis) of an entity is to pro-duce or generate its “purpose” (telos). The nature of an entity is that without which that entity could not exist: the progeny of an entity is the telos of its physis. Hence, it is in the nature of the household to give rise to the State. The State exists because it is the ec-sistence of the household: the State is the telos of the household. The State is the telos (purpose) of the family household as the “natural” reproductive unit whose “nature” or physis it is to bring forth the State. But the nature of the household itself is constituted by that without which human beings could not exist – the union of man and woman. That is why for Aristotle it is not the individual but the household that takes precedence – because no individual could exist without a household. In turn, Aristotle contends, the household could not exist, would not be self-sufficient, without its more developed progeny – the State.


Yet, it is not the State that sanctions the rationality and ethico-political perfection of its citizens but it is the citizens who ful-fil and per-fect themselves by establishing the State. In Aristotle’s theory, the citizens play an active role in the formation and life of the State understood as a polity founded on the household as its natural reproductive unit. But they achieve this perfection only in the ethico-political sphere, not in the reproductive and economic one of the household! Because the State is perceived as an agglomerate of households, so far as the reproductive and economic spheres are concerned, the State serves merely as an adventitious mechanical instrument of protection against internal disruption (police) and external enemies (army). There is no “statality” in the sphere of social reproduction which is left entirely to “the household” - except where the household threatens social peace by exceeding, by going beyond, the bounds of its reproduction and thereby defeats the pursuit of the ethical ideal of the good life.


However much Aristotle may insist on its “self-sufficiency”, the State does not play a reproductive role in the society he describes given that its scope is limited to internal and external order. Here the ambit of the State, its role in society, is merely confined to the ethical one of “temperance and liberality” on the active side, and of policing and defence on the negative side. But in the first case the State turns out to be a wholly ideal, moral and ethical entity, and in the second case a purely mechanical and militarist one. There simply is no organic nexus between the existence of the State and the needs of households – there is no “statality” in the households which are presented instead as self-contained and “self-sufficient units”! Despite his contention to the contrary, the household Aristotle describes exists only ontogenetically, that is to say, it is capable of subsisting independently of the State! In reality, it is painfully evident from Aristotle’s exposition of his political theory that the interests of the household in expanding its genetic and territorial reach – its telos of “populating the earth” - will inevitably threaten the integrity of the State as a regulator of households and as a defender of them against external threats – because the expansion of households will make the State liable to internal dissolution if it is uneven and also necessarily to external attack if it is excessive – except for the entirely “idealistic and moralistic” Aristotelian prescription of “temperance” and “liberality”.


What makes Aristotle’s theory of the State idealistic and voluntarist is the fact that the interests of households and State do not coincide – which is why Aristotle has to appeal passionately to the extrinsic philosophical ideal of “living well”. Of the two aspects of the good life as prescribed by Aristotle, one, temperance (phronesis or prudence), shrivels into a pious renunciation of profiteering by privileging use values over exchange values, whilst the other, liberality or the pursuit of excellence in the arts, degenerates into the cynicism of “knowledge is power”.


The incompatibility of the interests of the household in expanding its family and possessions and that of the State in regulating this impulse by means of the philo-sophic “ideal” of phronesis is made painfully evident by Aristotle’s invocation of it as a cure for the intrinsic ills of the household economy and its inevitable descent into the blind pursuit of wealth on which the Greek city-state was founded to its unavoidable detriment and undoing. Thus, the State in Antiquity was bound to remain a superstructural entity that was understood only in its ethico-political but not in its metabolic reproductive dimension. The State legislates only over the policing of autonomous households in their relations inter se and over the defense of the polity because the households have no organic relation to one another: their interests inter se and therefore vis-à-vis the State are neither co-extensive nor harmonious – in fact, they are antagonistic. As a result, even the apparent dis-interestedness of leisurely philosophical pursuits which are the deliberative active foundation of the Greek city-state is ultimately dependent on the material  “economic” ability of the household to support its master, the citizen who forms the State. But given the obvious antagonism between the material interests of individual households, this “economic” side of the State will never suffice to secure its survival as a free deliberative assembly of citizens! Aristotle fails to apply to his own political theory the critique that he deploys to dismiss Plato’s attempts in the Republic and the Laws to prescribe the forms of external intervention of the State on the autonomy of the household: given that the household remains the fundamental unit of the State and households have conflicting interests, it is impossible for the State to reconcile the divergent interests of households except in an idealistic and moralistic sense prescribed by phronesis.


Indeed, as Marx’s and other historical analyses of the ancient economy have shown (Karl Polanyi, Moses Finley, Perry Anderson), Aristotle’s impassioned defence of the household and virulent condemnation of “wealth-seeking” is disarmingly moralistic or velleitary in that the “speculation” of chrematistics (commerce for the sake of profit) which so obviously endangers the survival of the Greek economy based on the household, can only be “tempered” by the pursuit of “the good life” or “excellence” epitomised by the love of wisdom or philo-sophy. But given that the speculative dis-interestedness of philo-sophy is supported materially by the “speculative” pursuit of wealth by the household (chrematistics or finance), it is quite simply impossible for philo-sophy, the real source of phronesis, to restrain its material speculative counterpart in the chrematistics blindly pursued by the household!


In Aristotle’s political theory, economics (the law of the household) is distinguished from chrematistics (the pursuit of abstract wealth for its own sake). Just how inconsistent and specious Aristotle’s plea for temperance and just how deficient his theory of the State are can be inferred from how the philosophical “speculation” that supposedly leads to temperance and liberality – to phronesis – rapidly and inexorably degenerates into the financial speculation that he so vehemently decries, in the example of Thales, the philosopher who, when reproached by his peers for wasting his time on pointless philosophical “speculation”, determined to show how knowledge can turn into power by “speculating” on the market for the production of olive oil by monopolising olive trees and oil-making equipment at a time when prices were low only to make a fortune by selling when prices rose. The fact that knowledge (sophia) can demonstrate its power only by turning from philosophical speculation to financial speculation (chrematistike) shows just how contradictory and pathetic Aristotle’s pleas for temperance and liberality – for “living well” – are, because they are founded on his incomprehension of the inevitable inconsistent dynamics of the Greek city-state founded on private households. Here, the “speculation” of philosophy insidiously turns into the “speculation” of chrematistics just as swiftly and inevitably as the law of the household, economia, was bound to turn by its internal contradictions into that of “finance”, chrematistics, and thereby come to threaten the very existence of the Greek city-State! (In similar vein, Ernst Mach in Erkenntnis und Irrtum champions pure scientific research against its application for gain.)


In his review of Classical political theory in Theorie und Praxis, Habermas is too pre-occupied with decrying the abandonment of the ethico-political understanding of politics in Antiquity – which he, following Arendt [in The Human Condition], is very eager to praise - in the social theory of Thomism and the mechanistic scientism of Machiavelli and Hobbes, and so fails to stress the purely “idealistic/moralistic” or “voluntarist” nature of Aristotelian politics. This is the limit also of Herman E. Daly’s “ecological economics” directed precisely at this distinction between the household and chrematistics. Daly condemns modern economics for promoting chrematistics by neglecting “economics” in the Aristotelian sense (see hisThe Common Good). He fails to see that economic science [chrematistics] can return to the use values of the household only once “the household” itself has disappeared with the abolition of the individual labours of the wage relation. Daly sees “the irrational pursuit of wealth or exchange value for its own sake” – as did also Aristotle and Weber and the entire Scholastic opposition to usury – but cannot explain why the “use values” pursued by the economics of “households” have led inevitably to the exchange values of chrematistics and therefore to capitalism and its “science”, economics! Thus, his call for a return to the economics of the household, just like Habermas’s nostalgia for Aristotelian politics, remains voluntaristic because it fails to see that it is not “economic science”, or Habermas’s “scientized political science” since Machiavelli and Hobbes, that is the problem but rather the interests that lie behind the imposition of the wage relation by the capitalist State and its “private enterprise”.


Neither for Aristotle nor for Marsilius or Bodin – the first theoreticians after Aristotle to inquire on the nature of the State (Machiavelli clearly did not) until Hobbes - can the State change either the “natural” or the divinely-decreed way in which a community reproduces itself. But whereas for Antiquity the centrality of the household conditions the ethical role of the State and thus allows the active participation of its citizens in government, already with the political thought of the Middle Ages the focus shifts to the preservation of social peace in a historical context in which the household has been replaced by the feud. Marsilius and Bodin reflect on a society in which the partition of land by large aristocratic landowners is likely to degenerate into civil war without the State’s correction of corruptible human nature, not as in Antiquity as the forum or ecclesia for the per-fection of the ethical life of its citizens but rather as the bridge or com-pletion of the gap in social reproduction left by the antagonistic interests of households that preserves or conserves social peace by means of absolutist government – and the only question becomes one of governance.


Though Bodin can conceive of a societas naturalis existing independently of the State, the possibility of civil war and its descent into a state of nature makes the existence of the State part of the divine natural order (as in the family governed by the paterfamilias – cf. Filmer’s Patriarcha) so that obedience to the sovereign must be absolute. Here it is the Ratio, the animal rationale, that dictates absolute rule, and the Ratio is first derived from and ascribed to the Divinity and then manifested in Nature. The absolutist State is justified by Reason and, in turn, its actions become “reasonable” and incontestable – a legibus solutae (“ab-solute”, exempt from human law). For Bodin as for Marsilius and Filmer, the State is a defensor pacis founded on the natural or divine reproductive order of the monogamous family and on the Biblical mutual distrust among human beings, the human propensity to perpetrate evil following the Biblical account of the Fall.


The difference between Aristotle’s per-fection and Bodin’s correction (cf. Constant’s “freedom” and “liberties”) will later become Hegel’s correct formulation of the question of the State – that it must answer to the ful-filment of human beings and not simply ensure their protection as defensor pacis (where societas naturalis is possible) or creator pacis (a restauratio ab imis, where the state of nature, either original [Hobbes] or degenerate [Rousseau], is corrected by the status civilis to found the societas civilis ). In modern political theory the sphere of social life to which belong all social relations independent of the State is known as “civil society” (cf. A. Ferguson, An Essay on Civil Society on which Adam Smith relied for his “civilised society”), and the State is theorised as the institution that complements civil society by “com-pleting” or by “preserving” or “conserving” it – by supplying the “order” or “law” or “administration” without which civil society would not be able to govern itself not in an “economic” sense but rather in a “political” sense given that the Political, in marked contrast to the Economy, is the sphere of public opinion and therefore of unquantifiable and often irrational beliefs. For those political theories that see civil society as a self-sustaining sphere for which the State provides merely a “guarantee” of social peace (Locke, Constant), the State is seen as a “defensor pacis” in that it merely “defends” a social peace that is inherited either from divine sources (Marsilius, Bodin), or from “natural rights” (Pufendorf, Grotius and Locke). For those theories instead for which the State provides the very legal and political foundation indispensable for the establishment of civil society (Hobbes, Spinoza, Rousseau), the State is seen as a “creator pacis” – a veritable “deus mortalis”, (cf. C. Schmitt, The Leviathan); it is the mechanical resultant of the natural physical conflict between atomistic individuals in the state of nature (status naturae) that precedes the civil state (status civilis, cf. Hobbes and the negatives Denken from Schopenhauer to Nietzsche and the Austrian School).


The basic building blocks of the State for classical political theory from Aristotle onwards are almost exclusively ontogenetic, in the sense that the State is seen as the political pro-duct or construct of more basic elements such as the individual, the family household, the group or tribe or village (oikos, vicus), the city (polis, civitas), and finally “the people” or nation – hence, the nation-State. Even in those political theories that identify the State immediately with society or civilisation as societas civilis as against a pre-statal societas naturalis, the “statality” of human being is never considered. There is never a suggestion that the State may actually be a necessary precondition of human being, of being human in a phylogenetic sense, in the Marxian sense of “species-conscious being” (Gattungs-wesen) or that the State is an essential element in the metabolic productive capacity of a society. The State is thought to be fundamental to the establishment of the societas civilis not because of the phylogenetic attributes of human being but rather merely to prevent the degeneration and descent of natural society into civil war (Locke) or else to exit a hypothetical or primordial state of civil war (Hobbes).


[Nor does classical political theory even envisage the contrasting possibility that the State may “contain” - in the sense of limiting, hampering or even stifling - the productive forces of civil society except as an aberration and degeneration of the “true” political role and goal of the State. Even in the negatives Denken (Schopenhauer, Nietzsche, Kierkegaard, Weber and the Austrian School), where the role of the State is the “negative” one of creating or maintaining the salus publica (social peace), and even in its liberal counterpart (Locke, Constant, Maine, Bastiat), the State is not seen as the source of social conflict but merely as the necessary guarantor of social peace. Only when the State deviates from its scientifically required neutrality from civil society does it interfere with its productive, and specifically its economic, potential. An even more negative view of the State is adopted by Marx and Schumpeter for whom the State actively stifles the creative productive potential of civil society.]


To the extent that the reproduction of social units is identical with the broadly “political” aspects of social life, as societas civilis or civitas or polis, then it is indistinguishable from the status civilis that follows the exit of humanity from the state of nature into the State itself. But to the extent that this status civilis begins to be differentiated from the reproduction of independent social units that may or may not coalesce into a State, then the State is distinct from this preceding civil society. This tendency to draw a clear distinction between social interaction or social relations, on one side, and social reproduction or social relations of production, on the other side, only becomes prominent once the notion of “labour” intended as “individual labour” as a separate source of social wealth is isolated from other forms of social interaction, from Hobbes and Locke until the definitive culmination of this social theory in Hegel and Marx. With Locke, for the first time in human history the notion of a societas naturalis is separated from that of a societas civilis or the State in that the possibility is canvassed of a status naturae in which relations between individuals are possible although unstable either in a state of civil war or in one that can degenerate into one. By contrast, in all political theory prior to Hobbes and Locke only the possibility of stasis or civil war, the bellum omnium contra omnes, could be countenanced, but never that of a state of nature historically prior to or analytically distinct from the status civilis or the societas civilis. Hobbes allows only of a status civilis that is founded by the State by institution and not by acquisition because his status naturae allows of no possible societas naturalis independent of the State. This exposes Hobbes to the objection that his State, a deus mortalis that creates social peace, is incapable of explaining how this status civilis came about – for if human beings are capable of a contractum unionis it is not clear why this should become mechanically a contractum subjectionis. Hobbes’s State is homologous to the Walrasian state of equilibrium in that it is entirely mechanical and static and allows for no historical metabole or development.


It is thus that “civil society” as the repository of all economic as against merely socio-political or ethico-legal relations is neatly isolated from the State as the political pro-duct and mere legal guarantor, not the creator or founder of civil society either in its ethical (family, tribe, social values and goals) or strictly economical aspects (market exchange, production). Because for the negatives Denken, as the true theoretical matrix of liberal bourgeois politico-economic theory, the proper function of the State is to ensure the untrammeled operation of the “self-regulating market” and the “laws” of competition (“the level playing field”), any interference by the State with these “laws” through the imposition of extraneous “political” or “ethical” goals is denounced as improper in that it transgresses against individual rights, or even as unscientific in the sense that it distorts the quasi-mechanical “economic” choices on the part of individuals.


Even for socialist economic theory, in which it plays obviously a central role, the State intervenes only to plan and to co-ordinate individual economic choices in the interests of society as a whole so as to spare it from the deleterious effects of capitalist “anarchy” in which short-term self-interests are placed before long-run economic and social welfare. In other words, for socialism, and even for Marx, “the economy” and “social reproduction” are still realities separate from the State on which the State can intervene only in an ethico-political or “super-structural” capacity (liberalism) or in a scientific capacity (socialism and Marx’s dictatorship of the proletariat) correcting the anarchy of individual actions so as to maximise the public good or social welfare (cf. Pigou, Lerner, Dobb), but not in a fundamental manner as an essential part of those “social relations of production”.


The schism, the Great Divide, in economic theory is always between the methodological individualism of the negatives Denken – society and the economy are products of spontaneous individual choices for which economic theory can only provide rational alternatives (a mathematical “proof of existence” [Walras and equilibrium theory] or a “science of choice” [von Mises, Hayek and Robbins]) – and the methodological objectivism of the Sozialismus for which social choices must be imposed scientifically and collectively on individual members. But crucially in both instances – whether for individualism or for collectivism – the State does not figure as a fundamental, indispensable, constituent ingredient of the scientific and practical spheres of economic action. For both liberalism and socialism (and even for most “Marxisms”), the economy is an Object (a neo-Kantian “thing-in-itself”) of scientific inquiry whose operation can be determined “objectively”, scientifically, for the benefit of its individual members – taken ontogenetically as “in-dividuals” – in accordance with the Law of Value, that is, by acknowledging and positing the supreme “truth” that economic relations are rationally (logico-mathematically) quantifiable either in a relative sense (Value is the mechanical resultant of the “haggling” or conflict of atomic individuals with subjective self-interested utility schedules, as in Neo-classical equilibrium theory) or in an absolute sense (socialist-Marxist notion of Value as “socially necessary labour time”).


Up until Adam Smith set out to formalize the operation or functioning of “the market”, economics had not existed as a “science” separate from theories of society or indeed of “the body politic”. Yet in this very separation of “economic science” from other aspects of social life and from its history lies the fatal flaw of this “science”, because once its methodology leads it to exclude non-economic social forces as “exogenous factors” or as “externalities”, then it becomes a “closed system” of pure logico-mathematical relations in which “economic facts” are completely deprived of all sociological and environmental content (of what Schumpeter called “extra-economic effects”). Consequently, “economic science” is incapable of (a) specifying the content of its subject-matter and (b) explaining historical change, including the transformation of economic reality itself, totally extruding thus from its scope both the “value” (in both senses of the word, the economic and the ethico-political) of its inquiry and the very “positive empirical experience” on which it is supposedly founded.


In his review of Comte and Mach, in Knowledge and Human Interests, Jurgen Habermas emphasises one aspect of positivism as his crucial objection to it - namely, that positivism as a philosophy of science is incapable of understanding and explaining the “historical evolution” of “science” itself. We partly agree with Habermas; but this can only serve as an “internal” critique of positivism in terms of its internal consistency, whereas as we will discuss more fully below this type of criticism of positivist methods entirely misses the point about their “external” real practical political effectuality! In short, Habermas criticizes positivism in the name of “science”, when in fact bourgeois “science” is a real political practice that cannot be “contradicted” in purely “scientific” terms! “Science” simply  does not have the politically-independent epistemological status that Habermas’s neo-Kantism assigns to it – as Max Weber showed conclusively, although only obliquely (cf. “Objektivitat” and “Science as Vocation”).


Put in simpler terms, science as praxis must be able to justify its intrinsic human interest and it must combine theory and facts: science without human interest is abulic or harmful; theory without facts is empty, and facts without theory are blind. But the “facts” that “economic science” pretends to theorise are the very violent reality that the capitalist bourgeoisie has already imposed on human society! Bourgeois economic science therefore pretends merely “to observe empirically” its misdeeds or “facts”, and then to dress them up as “human nature” that gives rise to “natural human rights”. This miserable combination of scientific positivism and ethical jusnaturalism is the very essence of bourgeois economic science! At the hands of positivism and empiricism, the Statik of equilibrium theory contradicts the Dynamik of capitalist reality: hence, equilibrium expels history, stasis stymies metabole, necessity chains freedom. How then to reconcile these irreconcilable opposites? How to evade and escape these antinomies and apories?


This cardinal quasi-Euclidean axiom of the absolute atomicity or in-dividuality and self-seeking self-interest of human beings is the most indispensable postulate of all bourgeois social, economic and political theories. Fittingly, it was the English translator of Euclid’s Elements, Thomas Hobbes, who first devised this worldview. In this worldview, there is no space for common human interests (inter esse, common being): the syllogistic conclusion is that “freedom” can be defined and exist not as a common human goal but only as “free-dom”, that is to say, as an equilibrium of opposing, conflicting and irreconcilable individual wills. This equilibrium, the equilibrium of Greek stasis or civil war (bellum civium), can be overcome by political convention (totalitarian, democratic or elitarian) only because the atomized human individuals postulated in Hobbes’s theory know that the only outcome of such static equilibrium, of this stasis, will be the war of all against all (bellum omnium contra omnes) that will lead fatally (fate here turns into death) to the extinction of humanity. Even in its “free-dom” - indeed, as Weber had shown, especially in its “free-dom” – human action and leadership will obey that “conditioning” constituted by the dira necessitas (the dire necessity), the extrema ratio of self-preservation. The ultimate foundation of mechanical rationality both for the Hobbesian political system and for its neoclassical progeny in equilibrium theory is quite simply self-preservation, the “dire necessity” of surviving in the state of nature where homo homini lupus, man is a wolf to man. Free-dom consists not in acting irrationally but in acting rationally: in short, that decision is “free” that is taken rationally, by respecting the “precise relationship” between subjectively intended ideal goals and the objective “con-ditions”, the available means, for the implementation of those goals starting from the axiomatic postulate of the irreconcilable self-interests of individual human beings.


This is how Hobbes managed for the rising capitalist bourgeoisie an epistemological feat that has not been equaled since he wrote: - he managed, that is, to combine the positivist scientific hypothesis of Galileo-Newtonian mechanics with the jusnaturalist political convention of innate human rights, and thereby to erect bourgeois political practice on effectual scientific grounds. Hobbes begins with the positivist scientific hypothesis of the “universal conflict” between human beings taken as wholly egoistic atomic individuals, and from there he develops “rationally” - with the “rationality” of the “laws” of mechanics - the jusnaturalist political convention (common-wealth) that will make social life possible based on the “natural rights” of these conflicting individuals. (This astute twining of positivist authoritarianism and jusnaturalist contractualism is masterfully unjumbled by N. Bobbio in Da Hobbes a Marx.)


In order to erect his political theory, Hobbes starts from the Euclidean axiom that each human being represents a “point” or “body” entirely unconnected to other human “points” or “bodies” and entirely self-interested or, mechanically put, having its own momentum or “appetitus” or “conatus” – which Hobbes calls “Power”. From this axiom he deduces that the original, most “natural” state of human beings, the “state of nature” or status naturae, is a state of civil war (bellum civium) or “the war of all against all” (bellum omnium contra omnes). This “clash of wills” or appetites, this “war of all against all”, can lead logically only to a deterministic mechanical equilibrium in which there is no “room for manoeuvre for the individual freedom of the will” (Schumpeter quoted above) because each individual will is bound by the wills and boundless appetites of other wills, or else to the assured self-destruction of human beings. This is Hobbes’s scientific hypothesis taken directly out of Galileo-Newtonian mechanics.


The way out of equilibrium or stasis is provided by the ultima ratio, the absolutely indispensable right to and need for self-preservation, which leads these atomic self-interested individuals to reach freely a political con-vention, an agreement or “social contract” that can avert mutually assured destruction. Here the positive empirical evidence of a society that the bourgeoisie has reduced coercively to little more than a moral jungle from which all notion of “natural law” has been expunged meets with and satisfies the jusnaturalist (natural-law) requirement that individuals must agree freely and rationally to a political regime that will protect them from civil war. Hobbes acknowledges that what coerces individuals to accept this bourgeois political regime based on “the laws of the marketplace” is the metus mortis, the fear of death at the hands of any other individual. And given that each individual is axiomatically defined as being “equal” in the ability to harm another in the state of nature, then it follows axiomatically that each individual decides freely (by political convention, otherwise known as “social contract”) and rationally (by scientific hypothesis, following the definition of in-dividuals in conflict) to erect a “common wealth” or State or status civilis that will protect them from certain death.


The central feature of capitalism is that the bourgeoisie has tried as far as is humanly possible without tearing asunder the very fabric of human society to reduce this society to the state of absolute possessive individualism. That is why all accounts of bourgeois economic theory must start with the axiomatic postulate of this possessive individualism. Hobbes did not neglect to include in the “possessive” part the ability of individuals to buy or sell their own “power”, meaning both their physical possessions and their labour-power, in exchange for physical possessions. In the Leviathan, he describes “the value or worth or price of a man” as “so much as would be given for the use of his power”. Clearly, Hobbes had already an embryonic notion of what Marx would theorize later as “labour-power”, the commodified form of living labour in capitalist industry.


As Loasby has very perceptively pointed out (in Equilibrium and Evolution), the “complete decentralization” of economic decisions that is implicit in Hobbesian political theory and then in Walrasian equilibrium economic theory makes the co-ordination of economic decisions “a matter of life and death”. This is indeed another factor that makes the Hobbesian-Walrasian schema or blueprint absolutely axiomatic for the analysis of capitalism. But this interdependence of human economic action is still subordinated to the axiomatic primacy of individual self-interest; consequently, it cannot form part of equilibrium theory except as a Hobbesian ultima ratio or dira necessitas ob metum mortis, dire necessity in fear of death, as we explained above.


Make no mistake: the Hobbesian mechanical science we mean here is not an “objective science”, - for as Nietzsche demonstrated, there is and there can be no such “thing”! The science we intend here is a political practice based on the inflexible application of axiomatic rules to human society by a historically specific social class – the capitalist bourgeoisie. It was Max Weber who undertook the monumental project to separate the spheres of “value-rationality” whereby ends can be adjusted and connected rationally to available means and “purposive rationality” whereby means can be adjusted and approximated to chosen ends that remain irrational by definition. The bourgeoisie would be blind deaf and mute without this inflexible science, which is why it has erected the most fabled monuments to it. This science consists for the bourgeoisie in placing political decisions in a precise relationship to the existing relations of power in society that it has imposed to its own advantage so as to be able to reproduce them according to its own axiomatic postulates or schema. And then, of course, in presenting these political decisions as “that peculiar jumble of conditioning and freedom, which economic life shows us”, which is how Schumpeter defines “economic science”.


For both Hegel and Marx, the category of civil society, at least in its economic dimension as burgerliche Gesellschaft, as bourgeois society, becomes quite distinct from that of the State in that the State is pro-duced by civil society. But for Hegel this antithesis of bourgeois and citoyen can be resolved only if the State can be reconciled with the ethicity of civil society. For Marx, instead, the resolution of the antagonism of civil society will result in the “withering away of the State”, in its atrophy. Here we can see how Hegel still posits a “staticity”, an ethicity that encompasses or contains the Economic and therefore cannot be attained solely through the Economic. For Marx – again, contrarily to Hegel – the contradiction of bourgeois and citoyen can be superseded only through the economic sphere of civil society, whereby the super-structural State is rendered super-fluous, and thereby decays or withers away, once the contradictions of capitalist social relations of production that obtain in civil society are resolved.


In this sense, whereas Hegel still – quite rightly! – insists on the need for civil society to become reconciled with its “staticity”, Marx denies that this Ethico-Political “superstructural” sphere of the State can ever play a role in the extrinsication of the dialectical antagonism of civil society and of the wage relation – because it is merely the epi-phenomenic, super-structural pro-duct of the real source of social antagonism whose resolution lies in the “scientific” rectification of social relations “of production”, that is, still in the sphere of “alienated labour” understood as “materially exploited labour” through the “theft” of labour-time and labour-power, of “surplus” value! This kind of “Automatik” does not exist in Hegel, despite the “speculative” character of the dialectic denounced by Marx already in the Paris Manuscripts and in the early Critique:

“Hegel is not to be blamed for describing the State such as it is [which in any case will be “absorbed” by civil society in “communism”], but rather for presenting the existing State as the ideal State”, which, for Marx, clearly is an impossibility both because the existing State is not “ideal” and because the “ideal” State is one that will be abolished!


There are two types of “eschatology” (“prophecy” for Schumpeter) in Marx, then: the first is in the Manuscripts where the overcoming of alienation still incorrectly intended as “objectification” (!) is a necessary final stage of human history; and the second is in Zur Kritik where the supersession (Auf-hebung) of alienated labour is the final outcome of the “scientific” abolition of wage labour within civil society and, with it, of the State superstructure as well. We say that this is “eschatology” because Marx fails to see Hegel’s correct positing of the problem: - namely, that “staticity” must be reconciled with “subjectivity” and that the former necessarily re-defines the Economic as a category that must also be Ethico-Political in nature. It is impossible for Hegel to accept the Marxian separation of structure and superstructure because the two could never be “separate”. It is possible, thanks especially to the Grundrisse, to rescue Marx’s schematic schism – or simply schematicism - of base and superstructure by arguing that this “mechanical” dichotomy applies only to the “pre-history” of humanity in the sense that once alienated labour is abolished, then Ethicity and Economy will be reconciled. Still, as Arendt (Between Past and Future) and Habermas (Knowledge and Human Interests) have insisted - in too “idealist-phenomenological” and “neo-Kantian” a fashion, respectively -, Marx had always the tendency to reduce the question of alienated labour to the “materialist” one of “the theft of labour time”. What seems closer to reality instead is that the discipline of labour-time – or better, “the wage relation” – is the specific form of social violence perpetrated by the bourgeoisie – what makes it “capitalist”: but the fact that it is “violence” means that there is only a political basis to the wage relation and to “economic calculation” – and most certainly not a “scientific” one!


Indeed, to the degree that the wage relation is increasingly less able to measure accurately the level of social violence needed by the bourgeoisie to perpetuate its command over our living activity, to that degree the neat division between Economic Value and Ethico-Political Value is dissolving. The entire recent experience of central-bank monetary intervention to maintain the financial pyramid through quantitative easing certainly points in this direction – that is, the inability of capitalist State authorities to control the “market price mechanism” of various “assets” in terms of profitability, and therefore ultimately in terms of the “binding and biting discipline” of the wage relation at a societal level.

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