As we saw in our analyses on the relation of
economic equilibrium to social reality, antinomies arise from the use of
aporetic concepts that seek to crystallize human reality, to freeze or reify
it, to reduce it to the state of a “thing” that is perpetual and immutable – to
something that is not subject to history.
And as we saw in our last section, ultimately the aim of every scientistic
reification is to remove thought from
history itself, to present history as ineluctable fate. The antinomy implicit
in this conception is the reason why the word “historicism” has come to acquire
diametrically opposed meanings in terms of “soul” and “form”: - on one side,
historicism stands for the idealist position that the human spirit is entirely
free to operate in its history (Dilthey); on the other side, history is seen as
a teleology of the human spirit (Hegel) or of human needs (Marx) or of race or
indeed of “matter”. (See the classic miscomprehension of this antinomic
opposition in K. Popper, The Poverty of
Historicism where the interdependence of the two poles is jejunely resolved
in favour of “individualism”. Much more refined is the discussion in RH Carr, What Is History?)
Indeed, as the theorization of past practice or
human actions, as the human appraisal of these actions, of humani generis res gestae, the sense of history may well be the
epitome of praxis, of the exercise of judgement. Here once again is Arendt:
Here we shall have to concern ourselves, not for the
first time,3 with the concept of history, but we may be able to reflect on the
oldest meaning of this word, which, like so many other terms in our political
and philosophical language, is Greek in origin, derived from historein, "to inquire in order to
tell how it was"— legein ta eonta
in Herodotus. But the origin of this verb is in turn Homer (Iliad XVIII), where the noun histör ("historian," as it
were) occurs, and that Homeric historian is the judge. If judgment is our faculty for dealing with the past, the
historian is the inquiring man who by relating it sits in judgment over it. If
that is so, we may reclaim our human dignity, win it back, as it were, from the
pseudo-divinity named History of the modern age, without denying history's
importance but denying its right to be the ultimate judge, (op.cit., p.5)
Thought is imprescindible.
Thought is ec-sistence itself because
thought is intrinsically reflective – whence comes the illusion that behind
thinking there must be a “thinker”, an Ego that thinks. Thought is action (cogitare from co-agitare). Impossible to go “beyond” it; impossible to en-compass
it. But it is equally impossible to oppose thought to matter – because “matter”
itself is a concept, and thought itself cannot but be “material”. (On all this,
please refer to my “The Philosophy of the Flesh”.)
Thought must not be confused with Ego-ity: as
Nietzsche validly proclaimed, it is vivo
ergo cogito, not cogito ergo sum!
Experience comes before knowledge. For Western thought, however, thought is the
Logos - real because rational and
rational because real. It is this identification of reality and rationality
(the rational is real and the real is rational), the ordo et connexio rerum et idearum that Nietzsche combats. Not only
is the world not rational, but the rational is not even real because “the real
world is a fable” (Nietzsche, Twilight).
Nietzsche’s condemnation of Historicism – which he understands as a form of
Platonism - and particularly the Historical School of Roscher and Knies is
precisely not aimed at its inaccuracy, but at its power-lessness (Ohn-macht)
with regard to what it pretends to defend history against - nihilism. (Cf. Twilight of the Idols, pp.225 ff.) To
understand is to com-prehend, to control. By seeking to understand
hermeneutically (Verstehen)
historical action, by seeking to describe it, Historicism ends up circum-scribing it, and therefore making
it vulnerable to scientisation. The Geistes-wissenschaften
have this in common with the Natur-wissenschaften
– that both make the ideo-graphic
already nomo-thetic. But how can the
ideo-graphic trans-cresce into the nomo-thetic? Only if the nomothetic and the
ideographic are defined and understood as antinomic poles! Thus, Historicist hermeneusis turns into historicist
teleology and scientistic determinism (cf. Popper, who did not even begin to
understand the untenability of his “open society” as a bulwark against its
“enemies”).
Schmoller goes
further here than most of the theorists would have been prepared to do. In his
works on method in the Handwörterbuch der
Staatswissenschaften he emphasises the causal and theoretical task of
social science even more forcefully. This approach is quite compatible with his
view that the theory of social science needs to a large extent an historical
'substructure'. All these statements do not at all reveal an opposition to
theory on principle, although of course they do not exclude an opposition to
the existing theory. This latter kind of opposition, however, could only be an
opposition 'within the theory', because as soon as the historian sets out to
obtain general perceptions on the basis of his detailed historical research he
would be forced to isolate facts and to arrive at abstractions, that is, he
would in fact change into a theorist. It does not matter what these general
perceptions are called. As v. Schmoller strikingly remarks, it makes no
difference whether we talk of laws or whether we employ a different term for a
complex of facts which remains essentially the same whatever name we might give
to it. It is true that 'empirical laws', that is the identification of regularities
in facts which remain unanalysed, would be possible even without abstractions,
but they would, firstly, not be numerous and would, secondly, not tell us very
much, they would be 'incomprehensible'. It is interesting to observe how closely
representatives of schools, which are usually considered as essentially
hostile, approached each other when they came to debate the principles of the
matter. Even some of Schmoller's followers, as, e.g. Hasbach1, assumed
the attitude which is characterized by the recognition of generally valid
172 ECONOMIC
DOCTRINE AND METHOD
laws. Gradually
this attitude began to prevail until finally in recent times any argumentative
hostility to theory died out, and the distinction which had already been
stressed by Menger between the perception of the general and the individual was
recognized. This distinction was given philosophical support. (Wïndelband:
'nomothetical' and 'ideographic' point of view, Rickert: 'scientific' and
'historical' approach.) This, however, had only very little effect on
the contrast which continued to exist between the two methods of work, and it
was rather because people became tired of the controversy than because they
composed their differences that the quarrel gradually became less bitter.
The individual
is already the general and vice versa because, antinomically, the
one implies (begs the question of) the other. (Interesting, in this context, to
note Alfred Marshall’s most idiotic notion of market prices being determined by
the “scissors” of supply and demand – something that Marx derided repeatedly.
It should be obvious to all but the most warped minds that “supply” requires
“demand” and vice versa, just as competition requires monopoly, and that
therefore one crutch cannot support the other! The epitome of stupidity was of
course Say’s Law according to which “supply creates its own demand”! For a
recent re-statement, cf. M. Rothbard, Present
State of Austrian Economics.) Indeed, no theory of the general can long fail to de-fine the individual, and vice versa.
7. There are no 'social wholes' or 'social organisms'. Austrian
Aristotelians hereby embrace a doctrine of ontological individualism,
which implies also a concomitant methodological
individualism, according to which all talk of nations, classes, firms, and so
on is to be treated by the social theorist as an, in principle, eliminable
shorthand for talk of individuals. That it is not entirely inappropriate to conceive
individualism in either sense as 'Aristotelian' is seen for example in
Aristotle's own treatment of knowledge and science in terms of the mental acts,
states and powers of individual human subjects. (B. Smith, “Austrian School and Aristotelianism”.)
The historicism that starts with the idiosyncratic ends up under-standing it,
com-prehending it through the general,
through the principles of “science”. Thus, it loses sight of the only way in
which theory and science are possible: - as strategy.
By glorifying the in-dividual, the particular,
it neglects its antinomic dependence on the general.
Science is possible only as reification, not as rationality but as its
stultification, that is, as Rationalisierung,
only as rigid violent imposition or at the very least as convention (cf.
Nietzsche’s brief exposition in Uber
Wahrheit und Luge). The contractum
unionis implicit in all conventions always has the potential to become a contractum subjectionis - for Hobbes politically and for
Nietzsche semiotically. For Nietzsche, historicism ends up as its opposite, as
“science”, because it denies the tragicity
of ec-sistence, and therefore of thought:
Thucydides, and perhaps Machiavelli’s Principe, are most closely related to me
in terms of their unconditional will not to be fooled and to see reason in reality – not in ‘reason’, and even less in ‘morality’… (ToI, p.225)
This is what Nietzsche decried in Roscher who had
dared wrongfully to enlist Thucydides – the ultimate muse of tragicity for Nietzsche - in the
historicist camp and thereby opened himself up to the stinging critique of a Menger.
Reality does not contain or elicit “reason”: for there is no reason outside of
reality. There is and there can be no Scholastic ordo et connexio rerum idearumque. But this is far from saying that
Nietzsche did not believe that “reason” or “theory” can be applied to
“reality”. On the contrary, for Nietzsche “reason” can be imposed on “reality” – but only as a strategy, as a straitjacket, as Eskamotage,
as the ante litteram Weberian Rationalisierung! There is no “reality”
to which reason can apply or from which it can be deduced: reason is the
ultimate “rationalization” of human motives. For Nietzsche, real courage
consists in staring down this horrifying ability that human beings possess: to
impose a “rational” or rather “methodical” scheme on their violent or at least
coercive practices. This is the tragedy
of Weberian Verstehen and of all
hermeneutics: the tragedy of all historicism: - that it does not understand its
own quest and thus it cannot long remain ideo-graphic because its ratio sooner or later will turn
nomo-thetic (Windelband, Dilthey). Marx’s own lampooning of “Thukydides-Roscher”
in Book 9 of Das Kapital was meant to
highlight the inability of this historicism to draw the violent conclusions of
capitalist reality – without, for that reason, necessarily enlisting Thucydides
amongst the historicists.
Every theory, whether in the physical or in the
social sciences, is a strategy: we
owe this great realization above all to Nietzsche, though earlier hints of it
were already in Cusanus (cf. E. Cassirer’s masterly Individual and Cosmos), in Machiavelli, and then in Vico (La Scienza Nuova). Theory and practice are
indissolubly linked and failure to take conscience of this is the dangerous
fallacy of all positivism. (To be fair, despite our disagreement with his
entire neo-Kantian approach, this is the point of Habermas’s best work from Erkenntnis und Interesse to Theorie und Praxis.) The immediate
question for us now is: how does the bourgeoisie use economic theory in
practice to preserve and advance its interests? Ultimately, the crucial
question must be: what specific “tools” or institutions does the bourgeoisie
put in place to preserve its interests, accumulate capital and advance its
social hegemony?
Joseph Schumpeter provides a rare insight into this
process in his discussion of how Neoclassical economics replaced Classical
economics in bourgeois business, academic and political circles as the
“scientific paradigm” for theorizing and analysing capitalist society. Distinguishing
between the Historical School and the nascent Neoclassical School, Schumpeter
at once draws attention to the insistence of the former on including and
canvassing “non-economic elements in
the field of economics”. Now, if one considers “the social process as a whole”
– something Schumpeter urges us to do later in the very opening sentence of the
famous “Chapter 7” of the Theorie
that was significantly omitted from the English translation -; if one considers
this, it is obvious that whether or not a specific historical fact or “element”
is “economic” or “non-economic” is a matter for democratic agreement and not
for “scientific” determination. For if indeed economic theory is to be used to
guide social policy at all, then it is a matter for democratic consensus to
agree as to the likely effect of inclusion or not of specific facts to the
formulation of economic theory to
guide economic policy.
Schumpeter himself makes clear that economic science
must be founded on historical facts and that indeed economic science is a “methodologically distinct” form of
historical knowledge:
That
specifically historical spirit which alone turns the collection of facts, which
after all is necessary for any school, into something methodologically
distinct, did not develop. (Econ. Doctrines, p.166)
The crux of the
methodological question now becomes vividly clear. The problem with the methodology
assumed by the Old Historical School of Roscher and Knies was not so much that
it failed to take account of historical
detail – in fact it took too much
account of such detail, to the point that it cluttered its research with
“non-economic elements”. Here is Schumpeter:
With Knies the
matter is somewhat different. His resistance to the splitting up
of the
personality into individual 'urges' and to their treatment in
isolation—although
we must stress the fact that this does not constitute
the essence
of classical economic thought, as Knies thought
—and the
emphasis which he places on the vital part played by
non-economic elements even in the
field of economics (Heteronomy
of
Economics) places him more closely to the genuine historical
school.
(p.157)
Now it is clear that
once a society becomes detached from “traditional” social forms such as those
associated with feudalism and becomes instead focused exclusively on the
production of Value, that is the potential control over labour-power, over
living labour, which is what happens with the rise of capitalism, most rapidly
in the Germany of the Old Historical School, it is then evident that as the
reproduction of a society becomes less autochthonous and localised and is
instead more centrally controlled through the development of a strong statal
administration and government, what we call “the State” – it is then clear that
all those “non-economic elements” associated with “traditional” societies must
be eliminated with the object purpose to maximize capitalist production.
This is at bottom what
Schumpeter and the Austrian School from Menger onwards were driving at. And
obviously the various Historical Schools in Germany and Austria stood in the
way of such a development – at least from a “methodological” or “scientific”
stance, because nothing is more ideologically correct than the imposition of an
ideology as “science”.
The question then
becomes one of determining how such a “methodology” can be developed out of
“that specifically historical spirit”, - how, that is, “the collection of
facts” can give rise to a theory that is specifically “economic”. (Schumpeter
refers to Weber’s methodological studies in this context close to
neo-Kantians.) More specifically, the problem becomes one of how historical
facts may be divided not just into “economic” and “non-economic”, but also into
what may be called “regularities” and “laws”. In other words, even admitting positivistically that it is possible to
isolate “regularities” of an “economic” nature in social life (cf. M.
Friedman’s essay), there is still the greatest difficulty in determining
whether such “regularities” can be described as “laws”. For, though they may
represent and describe the present
reality of social life, it may well be that such regularities do not amount to
immutable “laws” of social life but are attributable instead to the particular
culture and political form of government that prevails in a given society! The
greatest difficulty is of course that not only are these regularities not laws,
but that they are always subject to change – and above all else therefore the
regularities cannot possibly form the foundation of a positive science of economics or of any social science at all!
This is something that
even the acutest bourgeois minds in economic theory simply cannot see. Here is
the Nobel prize-winner Milton Friedman:
Positive economics is
in principle independent of any particular ethical position or normative
judgments.
As [Neville] Keynes says, it deals with "what is," not with
"what ought to be." Its task is to provide a system of
generalizations that can be used to make correct predictions about the
consequences of any change in circumstances. Its performance is to be judged by
the precision, scope, and conformity with experience of the predictions it
yields. In short, positive economics is, or can be, an "objective"
science, in precisely the same sense as any of the physical sciences. Of course,
the fact that economics deals with the interrelations of human beings, and that
the investigator is himself part of the subject matter being investigated in a
more intimate sense than in the physical sciences, raises special difficulties
in achieving objectivity at the same time that it provides the social scientist
with a class of data not available to the physical [5] scientist. But neither
the one nor the other is, in my view, a fundamental distinction between the two
groups of sciences.3 Normative economics and the art of economics, on the other
hand, cannot be independent of positive economics. Any policy conclusion
necessarily rests on a prediction about the consequences of doing one thing
rather than another, a prediction that must be based - implicitly or explicitly
- on positive economics. (M. Friedman, “The Methodology of Positive Economics”
in Essays in Positive Economics,
pp.4-5)
Note
Menger’s analogous position:
38 ] BOOK
ONE The above contrast is not infrequently characterized, even if in a somewhat
different sense, by the separation of the sciences into historical and theoretical.
History and the statistics of economy are historical sciences in the above
sense; economics is a theoretical science.5 Besides the two above large groups
of sciences we must bear in mind here still a third one, the nature of which is
essentially different from that of the two previously named: we mean the
so-called practical sciences or
technologies. The sciences of this type do not make us aware of phenomena,
either from the historical point of view or from the theoretical; they do not
teach us at all what is. Their
problem is rather to determine the basic principles by which, according to the
diversity of conditions, efforts of a definite kind can be most suitably pursued.
They teach us what the conditions are supposed to be for definite human aims to
be achieved. Technologies of this kind in the field of economy are economic
policy and the science of finance.
At
p.99:
The common
element in the above two methodological problems is to
be found in
the circumstance that both practical and theoretical economics
are concerned
with the question of whether economic laws which correspond
to a definite
developmental stage of economy are also adequate
for
developmental phases of it differing from this stage. What is not infrequently
overlooked
here is the decisive circumstance that in the one case
it is a
matter of normative laws (of rules for human action established by
the state or
through custom). In the other, however, it is a matter of laws
of phenomena (of
regularities in the coexistence and the succession of the
phenomena of
economy). That is, it is a matter of two completely different
things and
concepts which are just by chance designated by the same
expression (law!).
Only the
most extreme scientific one-sidedness could assert that the
CHAPTER TWO
[ 119 parallelisms in national and state life in general and in the development
of economy in particular are absolute regularities, or, in other words, that
the development of the phenomena under discussion here exhibits a strict
conformity to law.42 But even if rationally laws of nature in the development
of ethical phenomena in general and of economy in particular are out of the
question, there still exists no doubt in the mind of anyone at home in history
that regularities are actually to be observed in the development of those
phenomena, even if not with the presumed strictness. Their
determination-whether they are called laws of development or mere parallelisms,
mere regularities of development-is a by no means unjustified task of
theoretical research in the realm of human phenomena and in that of economy in
particular.
Both
Menger and Friedman seek to divorce positive
economic reality or necessity from normative
policy choices or freedom, yet at the
same time they attempt to maintain a continuum
between reality and policy, with the latter being merely an optional application of knowledge about
reality. This nuanced distinction between normative
and positive economics ends up being
extremely naïve because it begs the question of how a “positive” economics can
presume “to be independent of normative economics”! For either we argue that
policy is always a matter of applying positive knowledge correctly or incorrectly,
or else, like Friedman and Menger, we introduce a normative sphere of action –
but then this sphere must be precluded to us by the presumed existence of a
positive reality!
If
indeed it were possible to isolate “positive” economics from the “normative”,
then there would be no reason for “normative” economics to exist at all, for
the simple reason that once we can isolate what
is from what ought to be, then
the what is, the real, would be the only option left, “the only thing there is”,
because reality understood as “what is”, as “physis”, could never change and it
would already point the way to whatever “changes” we intended to apply as
future policy! Present reality, if it is to be “real” at all, cannot allow of
any “normative change” or any change at all – because any “reality” that can be
“changed” cannot ever be “really real”! Any attempt to change reality, “what
is”, along normative lines would be bound to fail according to Friedman and Menger
if it did not conform with that positive reality!
For
a normative economics to exist beyond the positive we must allow for a sphere
of practical action that is instructed scientifically by “positive economics”
and yet cannot be determined by this positive economics for the simple reason
that the latter is still an “imperfect” science.
But
the existence of such a sphere of the unknown, the acknowledgement of
“imperfect science” and the realm of practical action, of decision-making, that
it opens up should alert us to the fact that all science – natural and social –
is “imperfect”. Thus, the attempt by social science to imitate physical or
natural science merely exposes the degree to which the nature of “science” is
misunderstood. The fact that there is no “normative physics” as against
“positive physics” does not show that physics is a “more perfect science” than
economics: instead, it shows that neither physics nor economics can ever be
“sciences” in a positive sense that eliminates human action from their sphere
of knowledge. In fact, even the
“laws” of natural science have a questionable “legality” in terms of how
scientific knowledge or “truth” is indeed a “will to truth”, Nietzsche’s Wille zum Leben. If scientific “laws”
described the “real”, if reality could never be changed or trans-formed, then there would be no room left
for science at all – because science, no matter how “immutable” its “laws”,
remains a human practice, a praxis, an inter-vention on “reality”, a mani-pulation of
“reality” – which therefore is not “real” at all in the sense of “immutable”!
Ultimately, what is important is not the immutability of scientific laws –
because these in fact do change: all
science has a history! What is important is what human beings do with such “laws”, and even what they
do to discover them!
"In
contrast to the absolutism of theory," says Knies,39 "the historical
conception of
political economy is based on the following principle. The
theory of
political economy is also a result of historical development just
as economic
conditions of life are. It grows, in living connection with the
total
organism of a human and ethno-historical period, with and out of
the
conditions of time, of space, of nationality. It exists together with
them and
continues preparing for progressive development. It has its
line of
argument in the historical life of the nations, and must attribute to
its results
the character of historical solutions. Too, it can present general
laws in the
general part of economics in no other way than as historical
explication and progressive
manifestation of the truth. It can at every
stage present
itself only as the generalization of the truths recognized up
39 Knies, Politische Oekonomie nach geschichtlicher
Methode (1853), p. 19 and
(1882), p. 24.
116 ] BOOK TWO
to this
definite point of development, and cannot be declared absolutely
self-contained
according to sum or formulation. Furthermore, the absolutism
of the
theory, where it has obtained validity at one stage of historical
development
presents itself only as a child of this time and designates
a definite
stage in the historical development of political economy."
The error
which is the basis of the above conception of the nature of
the
historical orientation of research in the field of theoretical economics
is clear. The
individual phases of development of our science can be
understood historically,
to be sure, only in connection with the spatial
and temporal
conditions from which they have emerged. Or in other
words: a literary
history of our science with a correct comprehension of
its
(historical!) task must not overlook the connection between the individual
phases of its
development and spatial and temporal conditions.
This is,
however, a postulate of every literary history, even one of the
exact natural
sciences, of chemistry and physics, indeed, of any writing
of history in general.
However, it has no immediate relationship at all to
those
postulates of research which we have called the historical point of
view in theoretical economics
(Le., retaining the fact of the development
of economic
phenomena in the investigation of the general nature and the
general connection of the laws of economy).
Not only are “changes”
to social reality subject to normative considerations: what is most important
of all, the paramount consideration here is that it is impossible to define
“what is”, social reality itself, without introducing normative values, “what
ought to be”, into that de-finition and into the “scientific” tools to be used
in analyzing, assessing and defining social and indeed even physical reality! The
mere “observation” of any reality requires an inter-vention on that reality
that transforms and changes it. Heisenberg’s Indeterminacy Principle is not an
objective notion for the simple reason that it abolishes objectivity – and in
doing so it unmasks science as scientificity, which is a practical notion.
Science is not “the discovery of truth”; science is a particular way of acting
in the world – this is why Nietzsche referred to scientific activity as “the
will to Truth”.
First
of all, Friedman and Menger are arguing that “what is” has greater reason to be
than “what ought to be” (cf. Leibniz’s Principle of Sufficient Reason) – they
are thus surreptitiously presenting the status quo, the established order, as
something that is intrinsically more “scientific” than the “normative” because
“what is” is a matter for empeiria,
for inquiry and inspection or observation – a matter of scientific necessity-,
whereas “what ought to be” is a matter of choice and values – a matter of
freedom. But this is already a normative choice – “what is real is rational”
(Savigny, Jhering) – discussed by Schumpeter as “conservative”, against the
“what is rational is real” of the Neoclassics. As Weber took pains to point
out, every “is” in fact is necessarily filtered through “what ought to be”
because, first, we still choose to select one “what is” instead of another and,
second, we choose the tools to be used in the “empirical” research (again, see
his essay on “Objectivity” cited above). Friedman acknowledges this:
Of
course, the fact that economics deals with the interrelations of human beings,
and that the investigator is himself part of the subject matter being
investigated in a more intimate sense than in the physical sciences, raises
special difficulties in achieving objectivity at the same time that it provides
the social scientist with a class of data not available to the physical [5]
scientist. But neither the one nor the other is, in my view, a fundamental
distinction between the two groups of sciences.3
This
is a simplistic regurgitation of the Machiavelli-Vico-Bacon line. It is not so
much that the social scientist lacks objectivity
because of the more “intimate” role with the subject-matter: the problem is
rather that the presumed “objectivity” of scientific study is inapplicable once
we see science – all science, physical and social – as a human activity! And
this is not cured by the Windelbandian distinction between idiographic and
nomothetic – as if the size of the population made findings more “objective” or
“rational”! If “objectivity” is required, then the size of the sample is
categorically irrelevant! That is why the physical sciences never invoke sample
size when fixing their “laws”. Still, physical scientists universally refuse to
see their “science” as human activity!
But
Menger overlooks the fact that whereas it is possible to determine “wrong” and
“right”, or rather “correct” and “incorrect” or “true” and “false” outcomes in
experimental physics because of the confined and controlled nature of
“experiments” in time and in space, this is simply impossible in society
because of the irreproducibility of experimental conditions to a precise “locality”
that extend into the indefinite future! This is because where human beings are
concerned, the application of Heisenberg’s Indeterminacy Principle applies not
just at the atomic level but indeed at the epistemological level – in the sense
that any “prediction” of the effects of “scientific” social policy is itself
subject to “normative” appraisal!
Nor
can mere “predictability” of outcomes be the sufficient condition for a
science, as Menger believed.
The
investigation of types and of typical relationships of phenomena is of really
immeasurable significance for human life, of no less significance than the
cognition of concrete phenomena. Without the knowledge of empirical forms we
would not be able to comprehend the myriads of phenomena surrounding us, nor to
classify them in our minds; it is the presupposition for a more comprehensive
cognition of the real world. Without cognition of the typical relationships we would be deprived not only of a deeper
understanding of the real world, as we will show further on, but also, as may
be easily seen, of all cognition extending beyond immediate observation, Le.,
of any prediction and control of things. All human prediction
and, indirectly, all arbitrary shaping of things is conditioned by that
knowledge which we previously have called general.
The statements made here are true of all realms of the world of phe
CHAPTER ONE
[ 37
nomena, and
accordingly also of human economy in general and of its social form,
"national economy,"2 in particular.
Note the similarity between Menger’s “types”
and Weber’s “ideal types”. But note also the important distinction: Menger
intends “types” to be scientific laws of causation between phenomena in
Aristotelian fashion. For Weber instead ideal types are pure Kantian categories
where causation is impossible to establish (because phenomena are eventuated by
“things in themselves” which are inscrutable). Weber’s world is already
Machian: it links phenomena as “sensations”, not as real physical events in a
Galilean or Aristotelian manner. (On Menger’s Aristotelianism, see the
admirable work of Barry Smith. Whilst Smith’s thesis is certainly applicable to
Menger – especially through the influence of Franz Brentano whose work on
Aristotle inspired Heidegger, he is wrong about the later Austrian School from
Mises onwards, which was clearly premised on neo-Kantian and Machian lines, as
we shall see presently. In any case, Smith’s distinction between “Aristotelian
reflectionism” and “Kantian impositionism” seems superfluous because remember
that for Kant intuition does not just impose
the schemata or categories on things
in themselves, intuition also reflects
phenomena derived from things in
themselves!)
As
Weber shows in his methodological studies (see the collection, The Methodology of the Social Sciences
edited by Edward Shils, and particularly the essay on “Objectivity in the
Social Sciences”), there are infinite “predictions” that can be made about the
world without this being sufficient to justify their scientific pursuit.
Furthermore, the fact that an outcome may be predictable now and for the
foreseeable future does not mean that the same outcome will occur once the
experiment is repeated indefinitely, which is what a “scientific law”
requires – immutability. This is a point astutely made by Leo Strauss in an
essay on Socrates and Western science. The presupposition of the “natural”
sciences is that their “laws” are “positive” because they are presumed to be
“immutable” and therefore “indefinitely repeatable”. There can be no
“normative” and “positive” physics – there is only “physics” and that is all!
Even when a “change” to a present state of matter is operated by physical
scientists, the “laws” that they apply remain the same. The application of
physical “laws” to the physical universe does not change the validity of those
“laws”. In essence, physical laws make the outcomes of their experiments
“deducible”. Yet, experiments are not repeatable indefinitely without transforming the
very reality that they are supposed to demonstrate. Therefore, it is
obvious that all science, natural and social, is not and cannot be “immutable”
but that its experimental outcomes will change with enough “repetitions”.
Menger’s key
distinction between the individual
and the general – from the Untersuchungen to the Irrthumer – is aimed at this power of
theory to abstract from “concrete
phenomena” to “phenomenal forms”, conkreten
Erscheinungen and Erscheinungs-formen.
Here again is the Kantian dichotomy between intuition and categories which is
the origin of the Lukacsian “antinomies of bourgeois thought”. What Menger
never explains is why the concrete phenomenon should start from the individual
intended as “a single human being” as the foundation of “the science of
political economy” rather than, say, from a community or a class – because the
very notion of “individual” contains already a discrete “choice” of category
that will determine the content of the “phenomenal forms”. Far from being a
“scientific” foundation, the “choice” of the single human being as the
epistemological foundation or “concrete phenomenon” or “individual” as the
foundation for the “general”, as the concrete basis from which abstract laws of
economics are to be derived, is indeed a wholly partial and unfounded one –
again, from a “scientific” or “objective” perspective.
Menger’s
confusion of these elementary matters is quite evident in this passage as is
also the causational or aetiological approach to “the exact theory of political
economy”:
Among human efforts those which are aimed at the
anticipation and
provision of material (economic) needs are
by far the most common and
most important. In the same way, among
human impulses that which
impels each individual to strive for his well-being is by far the most common
and most
powerful. A theory which would teach us to what crystallizations
of human
activity and what forms of human phenomena action
oriented to
the provision of material needs leads, on the assumption of
the free play
of that powerful economic impulse, uninfluenced by other
impulses and
other considerations (particularly error or ignorance); a
theory, especially, which would teach us what quantitative
effects would
be produced by a definite quantity of the
influence in question: such a
theory simply
must provide us with a certain understanding. It cannot
provide
understanding of human phenomena in their totality or of a concrete
portion
thereof, but it can provide understanding of one of the most
important
sides of human life. “The exact theory
of political economy" is
a theory of this kind, a theory which teaches us to
follow and understand
in an exact way the manifestations of human
self-interest in the efforts of
economic
humans aimed at the provision of their material needs. (Investigations, p.87.)
……….
And
Helvetius, Mandeville,
and A. Smith
knew just as well as any adherent of the historical school of
German
economics that self-interest does not exclusively influence the
phenomena of
human life. If the last of these had only written his own
theory of
public spirit! What distinguishes him and his school from our
historians is
the fact that he neither confused the history of economy with
its theory
nor even followed one-sidedly that orientation of research
which I
designated above with the expression empirical-realistic.
Nor,
finally, did
he become a victim of the misunderstanding of seeing in theoretical
investigations
conducted from the point of view of the free play of
human self-interest uninfluenced by other powers the
acknowledgement
of the
"dogma" of human self-interest as the only actual mainspring of
human actions. (p.88)
The
insuperable problem with Menger’s argument is, of course, that it is quite
impossible to identify “individual self-interest” in any way whatsoever, and
certainly not in the “quantitative” sense that he clearly intends – as a
determinant of market prices, still less as a determinant of value. The problem
is not that Adam Smith or whoever failed
to distinguish between self-interest and other human interests; the problem is that it is impossible to make such a
distinction - and therefore their attempts to put economic inquiry on solid “scientific”
and non-political or non-ethical grounds were doomed from the start! The
distinction between “positive” and “normative” proves once again to be most
elusive for bourgeois science.
Indeed, Menger is so
confused about these conceptual relations that he is forced to defend his
isolation of the single human being as the “individual” of economic theory by
presenting it as the ready-made “individual concrete phenomenon” on which the
“phenomenic forms” of economic theory” are based! This is clearly a circuitous
definition in which the “individual” as against the “singular” is what lends
itself to theorizing through the “typical” and, vice versa, the typical is what
is yielded by the theoretical analysis of the individual! The two concepts –
the individual and the typical – hold each other up like two drunken sailors
leaning against a lamp-post!
Menger is confusedly
aware of this, which is why he hastens to distinguish between “single” and
“collective” phenomena – again to stress that “individual” does not mean
“single” as distinct from “collective” – that, in other words, the scientific
foundation of political economy cannot be purely numerical. But if “individual” does not mean “single”, if it is to
mean, as Menger intends, “concrete phenomenon”, in what way can the single individual with which he starts
his “science” be or represent the “concrete phenomenon” on which the phenomenic
forms of “the exact theory of political economy” are to be erected?
Menger
fails to identify to any degree whatsoever what makes an individual a concrete phenomenon and what makes it
only a “singular phenomenon”. Similarly, he makes us none the wiser about the
distinction between individual and general, concrete phenomenon and phenomenic
forms. It is quite obvious in the passage below that Menger bases his
distinctions on vague notions of “history” and “theory”. But we cannot identify
this difference if we simply define “individual” and “general” or “typical” or
“form” with “theory”, and “singular” and “concrete phenomenon” with “history”.
Indeed, as this long passage illustrates quite conclusively, Menger seems to
think that a simple distinction between singular and collective, on one hand,
and concrete phenomenon or individual and typical on the other is sufficient to
clarify his overall methodological aim of isolating the general from the
individual.
2 See
Appendix I: "The Nature of National Economy." 3 The
"individual" is by no means to be confused with the
"singular," or, what is the same thing, individual phenomena are by
no means to be confused with singular phenomena. For the opposite of
"individual" is "generaL" whereas the opposite of a
"singular phenomenon" is the "collective phenomenon." A
definite nation, a definite state, a concrete economy, an association, a
community, etc., are examples of individual phenomena, but by no means of
singular phenomena (but of collective phenomena instead); whereas the
phenomenal forms of the commodity, of the use value, of the entrepreneur, etc.,
are indeed general, but not collective phenomena. The fact that the historical
sciences of economy represent the individual phenomena of the latter by no
means excludes their making us aware of these from the collective point of
view.
But
this is precisely the error into which Menger has fallen. For, in selecting the
single human being as the theoretical basis or “individual” from which his
“general” is to be derived, he has failed to specify what makes a single human
being “individual” rather than just “singular”! The only factor that he can
identify is “human self-interest”. But any student of human history and human
affairs should know that “human self-interest” is simply impossible to define
and to theorise for “economic” purposes! Furthermore, Menger simply assumes,
quite unjustifiably, that human “material needs” are ipso facto “economic”: but this is entirely wrong! If by “economic”
we mean “exchange of goods by different legal owners”, it is clear that this is
both practically and historically a much narrower area of “human material
needs” and of human activity.
(Refer
to Hayek’s “Carl Menger” for a clear pointer to this: – individualism
presupposes inter-subjectivity and ownership, and both presuppose a social
definition of Value, and thus “subjective value” is an oxymoron.
And
if you asked him what makes self-interest “economic”, he would say that it is
“material needs”. But material needs are not and cannot be confined to
“individuals” because it is impossible and idiotic in the extreme to parcel out
“social labour” into “individual labours”!
If
you asked Menger - and all bourgeois economists -, what determines market prices, he would say it is self-interest and
specifically “economic” self-interest. But then, if you asked him what measures self-interest, he would say it
is market prices!
The
identification and measurement of “self-interest”, at least in a causative or
aetiological and then even axiological sense (in terms of the ethical claim of
producers to products) is the “anthropological” conundrum with which Menger
struggled most of his later life: his burgeoning yet fruitless studies in
ethnography and his preoccupation with the theory of money truly expose this
“desperation” in his theoretical quest, as Hayek attests:
But his
interests and the scope of the proposed work continued to expand to wider and
wider circles. He found it necessary to go far in the study of other
disciplines. Philosophy, psychology and ethnography claimed more and more of
his time, and the publication of the work was again and again postponed. In
1903 he went so far as to resign from his chair at the comparatively early age
of 63 in order to be able to devote himself entirely to his work, Hayek, p.32)
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