The remainder of this chapter will study
the process whereby Hayek’s and Robbins’s conception of “the science of choice’
proceeds from certain assumptions (individualism, historical institutions seen
as rigid ossified structures, scarcity or ‘rarete’’, competition) which allow
it to be distinguished from pure engineering and yet permit the selection of a
“box of tools” that turn it into a “technique” that purports ‘to describe’
social reality but in fact prescribes
social action and shapes it decisively.
It is the combination of “in-dividualism”
(recall Hobbes – in von Clausewitz’s perspective, if war is the continuation of
politics by other means this is only because politics is incipient war) and “scarcity”,
as the expression of the antagonism of self-interested in-dividuals, that make
the theory particularly powerful strategically for capital. By adopting these
assumptions, Robbins’s formal categorization of “praxeology” – which
(Napoleoni) is the encapsulation of the fundamental assumptions of neoclassical
theory – completely overlooks the fact that these notions of “individualist
competition” and of “scarcity” are not “scientific” categories but in fact are
themselves determined by “political” conditions that go from the ‘Trennung’ to
the selection of production technologies, consumption schedules and income
distribution (Napoleoni points this last element out in reference to Pareto
optimality, which cannot encompass this parameter, at p. 46) which are not
“given data” (Hayek pointed this out by reference to general equilibrium and
“competition” – also covered by Sraffa and Robinson later) because they are not
“exogenously/independently” determined but are endogenous variables to “the
science of choice”, thereby destroying their “scientificity”.
As Napoleoni notes, Robbins’s aim was to
turn “economics” into a “technique” in a fashion similar to engineering, but
this is not possible because of the fallacy of misplaced concreteness (invoked
by Hayek against “scientism”) because “individuals” and “scarcity” are themselves social constructs. Above all,
Robbins’s definition of an “economic” problem leaves out the act of “exchange”,
that is, the institution of private property and the artificial calculation of “individual
labours” against the division of “social labour”, which are fundamental to a
“market” economy and without which it would be entirely consistent with a
“planned” economy. It is the “choice” implied by “the science of choice” that,
once it is seen as “conflict”, destroys the “scientific” pretensions of the
Robbinsian epistemological definition of economics. It follows that the
“goal-neutrality” and “means-neutrality” of “the science of choice” is anything
but neutral but in fact disguises clear ideological-political choices that
reveal its strategic-political
character largely dependent on “prices” determined through equilibrium
analysis.
We can now see (what remains a mystery to
Cacciari, p44) why Schumpeter as well as Hayek had to cling “desperately” to
equilibrium analysis even though they were aware of these “apories”
(simultaneity and perfect competition in Hayek, endogeneity of technology and
organization as well as “finance-capitalist” nature of ‘Statik’ analysis in
Schumpeter where ‘Dynamik/Krisis’ become the differentia specifica of capitalism). Without equilibrium analysis,
both Hayek and Schumpeter were aware that their attempts “to distil” the core
of (scientific) “economic analysis” in isolation from the “Marxian” factors
(relegated by Schumpeter to “economic sociology”) would come to naught. The
theory was evidently un-historical (cf. Napoleoni – who also neglects to
emphasise its internal inconsistency) and Schumpeter sought to improve on this
score without relinquishing the Machian presuppositions and yet introducing
Nietzschean notions that give it far greater political realism and
“honesty”/bluntness.
Thus, “praxeology” becomes a
Wittgensteinian “language-game” that limits the scope of human action forcing
it into a straitjacket. We seek to outline the epistemological foundations of
this construct (also discussing Nietzsche’s Frammenti
Postumi) and to highlight its Kafkaesque “violence” (recall Arendt and
Cacciari’s references). Interestingly, Cacciari uses the word “inexorable” to
describe the functional instrumentality
of the kind of “language game” erected by Hayek-Robbins.
As we noted, Wittgenstein had already
reached the epistemological limits of the project of establishing the logical
foundations of mathematics and then also the development of a non-metaphysical
“language-game” aspiring to scientific status. This was the failure of Machism
as well (recall also Lenin’s intervention discussed by Cacciari). Relativity
and quantum theory will put paid to these velleities, whilst Husserl and
Heidegger will perform similar tasks in philosophy/phenomenology (cf. Logische Untersuchungen and “The
Problems of Phenomenology”, respectively).
The Hayek-Robbins pro-ject does not seek to
go beyond Machism because its “self-understanding” is in reality/effectively to
develop “tools” that can serve as the foundations of a “Science of Choice”.
What Wittgenstein (and Nietzsche before him) show is that this is im-possible.
Thus Hayek remains a prisoner of the Wiener-Kreis position, seeking if not a
Neo-Kantian correspondence of logic with reality, at least a Machian
phenomenological correspondence with truth, an “explorative” procedure a’ la
Tarski or Carnap, allowing a growing approximation or refinement of logical
analysis to reach scientific truth. Popper’s definition of “scientificity” of
course is “empirically” antithetical to this, preferring the experimental road
to science (contra Hayek).
But Mises remained the “fundamentalist”.
The misguidedness here as in Hayek to a lesser extent is in failing to
understand that the “rules” to be “distilled” from the reality of capitalist
social relations of production do not and cannot correspond to reality because
the reality is in a different dimension, a multi-verse
that is worlds removed from the one encompassed by the “rules”. This is so not
only in an epistemological sense, as Godel (but also Russell and Cantor with
their ‘paradoxes’) showed, because the “rules” cannot “explain” their “truth”,
the “causality” of the events they “measure” and “relate”; but also because, as
Wittgenstein showed, there is no (Kantian) truth.
And this is why it is possible to attribute
Kantian foundations to Mises (“Kant is metaphysics!” we can hear Neurath cry
out) in the “introspective/individual” rationality of “human action”
representing the Ratio of the transcendental subject. Misesian appraisement stands for the “freedom” of
the Kantian Subject which remains “exogenous” to the economic system: it
simultaneously “re-equilibrates” the system of exchange described by marginal
utility, pushing it toward an “equilibrium” thanks to the “logic” of its
rationality; but then it makes the attainment of this “equilibrium” impossible
because the “choice” of the transcendental subject cannot be subordinated to
the “phenomenal” link of causality, of empiricism.
Here the Planlosigkeit of “choice”, the Kantian “freedom” of the Subject, is
what rescues “homo agens” from the “non-action” of the “end-state”, of
equilibrium. The market mechanism, therefore, whilst it is analyzable
“scientifically” through “logic”, must retain for Mises the freedom of “choice”
that restitutes the Subject to the centre of the system of exchange: the
exchange cannot be one of “equivalents”; exchange must involve conflict, “competition”.
The “socialist” attempts to transform “the
logic of choice” into a “Plan” would remove this subjective element, this “appraisement”,
this conflict, as would the Hayekian emphasis on “co-ordination”. These are
Neo-Kantian moralistic elements that Hayek-Robbins seek to supplant with Machian
observational/empiricist ones evocative of the logical positivism of the Wiener
Kreis, (tending toward equilibrium but generating the “utilization of
knowledge” or “learning” that would evolve the system) – notions Mises despised
because they would lead to a “scientistic determinism” incompatible with
“action” and “choice”. Schumpeter will retain the Kantian moment with the
notion of “Innovation”, exogenous to the system, and supplement it with Marxist
antagonistic “evolutionary” notions.
Mises instead always turns “calculation”
into “appraisement” by supplementing the “exchange” with “competition”. (For
Kant’s influence on Mises, see Long’s, and also Boettke’s recent piece, “Witt.,
Austrian School and Logic of Action”. But Long
ably re-establishes the Mises-Hayek link with Wittgenstein. See also Festre’;
and the “Husserl vs. Schlick” article. Note also Kaufer’s article on Heidegger
and Logic, re Frege-Husserl-Carnap.)
Cf. and discuss “The False Prison” which
rightly teases out the “Schopenhauerian” origins of the Tractatus (ch 1 –
“Wide-Angle View”.) whilst justly circumscribing the Kantian rapport.
Indeed, Wittgenstein moved further away
from Machism and well toward Nietzsche after the failure of the Tractatus in that “later” he came to see
the hopelessness of “founding” logic and mathematics “outside” (even
phenomenologically – see Husserl’s concepts of “apodictic transcendence”) of
their “self-referential” consistency, effectiveness or instrumentality which is
the “inexorability” of the rules of language games. As Cacciari brilliantly
expounds, the “rules” are “effective” because once they apply to a “reality”
they encapsulate it or “circumscribe” it – they possess or permeate it ineluctably and totally: “the law always catches (raggiunge sempre) the guilty” …. because the law
has no meaning without the guilty or guilt (Kafka) and without co-action or the
State to enforce it (v. Bobbio on Kelsen). And this “always” is not just a
statement of infallibility: it is a statement of im-possibility (non c’e’
possibilita’ di grazia – Cacciari). (Wittgenstein
– if you think outside of the rules of chess, you are not playing the game.
Therefore, pace Humpty Dumpty, I
cannot choose to make a word mean whatever I choose. There is no choice in a language-game
where words are governed by rules. To
think outside the rules is im-possible.)
What Mises and Hayek (Schumpeter as well
with his insistence on the Machian/Walrasian schema) do not understand is that
the “efficacy” of “the logic of action” lies entirely in its first having
“appropriated” reality. Logic does not describe or contain or refer to
“reality”; logic has no “truth”, no “meaning”, it tells us nothing new but it renders visible: it is only ineluctable, it is only “inexorable” because it is
tautological (Wittgenstein). Once we define money or rent and “utility” in a
certain way – once we define “supply” and “demand” - once the “rules” of the
game are set – the conclusions are inescapable and the consequences inexorable.
But this is not because “reality” conforms to the “theory”: there is no theory – there is a language game! The hypothesis is not
“falsifiable” – hence Hayek had to disagree with Popper about this as a
condition of “scientificity”, although he also disagreed with Mises on the
aprioricity of economic theory. There is only a “game” whose inexorability is
hidden only by the fact that it does not “initially” encompass all reality as
“given data” (Hayek)…. but it does so sequentially by approximation or
“perfection” (Tarski).
Indeed, Hayek was the first to perceive
(no, actually Walras and Pareto did too) that general equilibrium was flawed in
the sense that it encompassed “simultaneously” the “totality” of events: it
was, in Loasby’s words, a “closed system” that was completely and utterly
“totalitarian” – Kafkaesque. But Hayek failed to see that this was the
“destiny” of his “Pure Logic of Action”. Once the “reality” of its field of
operation was “given” metaphysically (by positing scarcity-dependent ‘utility’,
for instance, or ‘rarete’’), then the conclusions would follow “inexorably”.
Hayek does not perceive this “inexorability” (his cousin Wittgenstein did)
except perhaps in the case of “the impossibility of a socialist economy”, where
Hayek could intuit the “extremity” of Mises’s arguments. Yet he believed that
it was possible to proceed “by approximations” (like Tarski, but without the
latter’s awareness of the impossibility of establishing the truth of logical propositions, but only
the effectiveness of the rules in a
given game).
Similarly with the concept of
“competition”: Hayek showed how hopelessly aporetic this was. Loasby
(‘Econ&Ev’, pp21-2) approves of Demsetz’s recasting of the concept as
“perfect decentralization” and relates how Hahn regards general equilibrium as
leading to intellectual death, as does Debreu – no improvements in knowledge
are possible. He then proceeds unperturbed with “evolutionary/institutional”
approaches that, as we will soon see (‘Demsetz’ below), are doomed by their limits! And Metcalfe refers to Hayek’s
critique of “competition” in “equilibrium” theory as “devastating” (‘Ev Econ
and Cr Destr’, p.15). But he still examines the implications of Hicksian
growing returns to scale – as if these did not provide a perfect illustration
of the “closed system” approach, though one that at least “formally”
contradicts the assumptions of equilibrium analysis in favour of an
“open-ended” Schumpeterian approach in the sense of Langlois (‘Analytical
Review’)!
(My argument here is, see next section,
that the “open-endedness” is only “formalistic” or “contemplative” [cf Lukacs]
and therefore either aporetic or re-enclosable in the “closed system” model, at
its “theoretical” best, or lapsing into a vulgar “practical empiricism” at
worst. Indeed, it is this last “strategic use” [or ideological, but we prefer
the other term to stress the “political usefulness” of ideology as against the
“idealistic/impractical” connotations of the latter] that gives these
“theories” any “relevance” at all! Pareto and Schump [CS&D] have something
to say about these notions of “ideology”, too – cf Bobbio in our ‘Scientism’.)
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