In our previous few contributions, we have sought to elaborate on a new definition of economic wealth or “value” that takes its departure from Friedrich List’s notion of “National Political Economy” in contrast to what he called the “cosmopolitical economy” theorised by the Anglo-Saxon economists, from Adam Smith to the present day. Although ultimately contradictory in that List affirms the validity of the “cosmopolitical” definition of economic value, still his critique of Anglo-Saxon economic theory opens the door to a much more incisive and insightful definition of wealth and value than has been proposed thus far in the history of economic thought.
Two types of “wealth”, then. One abstract and the other concrete. The first is “objective” in the sense of non-political: individualistic and subjective for the utilitarians yet objective because determined by the conflictual tug-of-war of the market; and the other, based on the Labor Theory of Value, more essentialist because determined by socially necessary elements such as labour-time or “real cost”. These “objective” definitions of value or “wealth” are clearly non-political because, regardless of the distribution of wealth in a society, provided the market mechanism of free competition and trade is left to operate unhindered, the quantity of wealth available to a given society is a “given”, a datum that cannot be altered given the technological state of development of a society. This objective approach to value treats value as a quantity that is fixed categorically as a totality that is capable of being altered only in its distribution, not in its quantum. Both Classical and Neoclassical economic theories were theories of distribution of value, not of its production or creation. As such, any attempt to quantify value amounts to sheer metaphysics - which is the critique that neoclassical marginal-utility theoreticians moved against the “essentialist” labour theory of value” of Smith, Ricardo and Marx.
In reality, of course, the neoclassical theoreticians themselves were open to the “metaphysical” critique in that the very notion of “utility” that “the market mechanism” is supposed to distribute via “marginal exchange” is nothing other than pure metaphysics! Yet, that is not to say that neoclassical value theory is purely subjective. To put it with Weber, subjective evaluations of economic value - institutionalised in market prices - does not mean that they are arbitrary. Indeed, subjective evaluations are objective to the extent that they are made freely - and therefore, in Weber’s sharp observation, also made rationally. Weber refutes the notion that “freedom” is subjective in the sense of irrational: free human beings act rationally, and therefore the outcome of their collective free actions is rational and objective - objective in the sense of rational (cf. Bohm-Bawerk on whose neoclassical analysis Weber relied).
Even the division of labour or specialisation can result in higher productivity of a given amount of labour time or labour power — but not through scientific advances and different social relations, which are all deemed to be exogenous to the creation of value through labour (classics) or through market exchange (neoclassics). Here production techniques are exogenous to value and market mechanism - and thus non-political because objective, and objective because non-political - the objective resultant of subjective opposed forces or the objective product of the labour time employed in production - which can diverge from its real value in distributive terms, but not in terms of the quantum of wealth produced).
The “national political economy” that List proposes starts from premises that are radically different from those of Anglo-Saxon political economy - premises that are quite irreconcilable with the latter theory of economics, despite List’s insistence to the contrary. List’s national-economic theory in fact does not treat wealth as a universal value whose quantity and optimal distribution can be scientifically determined. Instead, List’s distinction between “wealth” and “ability to produce wealth” lays clear and incontrovertible emphasis on “the ability to produce wealth” as the ability for the more productive agent to overwhelm and subjugate the less productive one. The only reason why List would make such a distinction must be, and could only be, his emphasis on the ability of a nation to overtake other nations in the ability to produce offensive capabilities in the event of conflict and war. In the absence of such a premise, List’s distinction would be deprived of all sense - for the simple reason that no-one would prefer a future reward (the ability to produce) to an existing one (the actual possession and enjoyment of wealth) if not with a view to being able to control the present wealth and future productive capability of other economic agents! We have here once again the Schopenhauerian Entsagung (renunciation) that will form the basis of Bohm-Bawerk’s “positive theory of capital”. In fact this is a “negative” theory because wealth is not created but simply re-distributed according to the individual ability to defer or abnegate or delay its consumption. Here “renunciation of present consumption” becomes the basis of all claim to wealth, of its distribution from an initial position. But for List, anticipating Nietzsche and Bohm-Bawerk as well as Schopenhauer, this posticipation of consumption implies that the entire scope of wealth is not and can never be its presence (the ability to be consumed), but its potential for competitive advantage, for greater power of acquisition in future from less patient economic agents! (Note here the Ancient Greek word for “property” as analogous to “being” or “pre-sence”, the Heideggerian Da-sein, being there, ec-sisting in the Latin equivalent. Of course, Hegel’s entire phenomenology or dialectic of self-consciousness begins with the unforgettable chapter on “Lordship and Serfdom” - a dialectic that Marx will reprise masterfully with his critique of political economy based on the “Doppelcharakter” (double character) of human living activity or “labour” under capitalism - as use value, first, as the real valorisation of capital in the form of means of production, and, second, in its commodified form as labour-power that can be purchased and sold as if human living labour were a commodity equivalent and tradeable with objectified labour. The inability of the bourgeois notion of value as a mere objectified quantum to explain the phenomenon of economic “growth” not just as quantitative accumulation (Wachstum) but as political innovation and transformation, as trans-crescence, as “development” (Entwicklung), is what led Schumpeter to propose his revolutionary “theory of economic development” (wirtschaftliche Entwicklung) in which the capitalist entrepreneur has this formidable “enlivening” will to power to deflect and disrupt the sterile “Kreislauf” [stagnant circular flow] of the market economy by jolting it out of its deadening “equilibrium”. What characterises capitalism for Schumpeter is the central role that it reserves through institutional and legal protections provided by “the market” to the Entrepreneur (literally, under-taker, Unter-Nehmer) to subvert the market status quo (the stagnant, frozen “circular flow” of the economy) by means of Innovation. For Schumpeter, the differentia specifica of capitalism is to provide an institutional Innovations-prozess which is the “transformation mechanism” (Veranderungs-mechanismus) that allows the “entrepreneurial spirit” (Unternehmer-Geist) to breathe new life into the productive system and to jolt it out of its stagnant equilibrium. Of course, there is a clear dichotomy and apory here between institutional “mechanism” and entrepreneurial “spirit” that evinces the insuperable difficulties into which Schumpeter’s otherwise enthusing schema quickly runs as a theory of capitalist industry.