Commentary on Political Economy

Tuesday 21 January 2020

PROLEGOMENA to a theory of capitalist society - Smith and Hobbes

The hypothesis upon which Thomas Hobbes bases his theory of bourgeois civil society is entirely analogous with that upon which Adam Smith founded his theory of the capitalist market economy: this grim hypothesis is that ultimately both bourgeois society and capitalist market economy can be theorised only on the basis of the war of all against all. Only through this universal Eris - universal conflict - can the dire necessity of a political convention and an economic equilibrium be given. What this means for us, what brings us closer to the discovery of the Ultima Ratio - the ultimate rationality and Truth - of bourgeois political economy, is that the society of capital requires an Extrinsic Rule - an external Iron Law or Principle -  a "hypothesis", upon which all of its political and economic institutions, its "conventions", can be founded. In this the second part of our Prolegomena, we take a step further toward the discovery of this capitalist-bourgeois  Ultima Ratio or "Border Concept" in the fateful formulation advanced by Carl Schmitt (in The Concept of the Political).

The very notion of “justice”, reasons Hobbes, entails the notion of “distribution” between members of a human society. And a fortiori it implies that what “justly” belongs to one member does not belong to another. The notions of justice and right, therefore, whether they be of divine or of natural origin, must mean that members of a society or community have moral or legal claims over some social resources “to the exclusion” of other members. But the actual “right”, even if natural or divine, would amount to a mere pious wish or velleity in the absence of a “social power” that can enforce it, that can transform this “right” from a moral aspiration to a positive social reality. And this “social power” must be overwhelming and unopposed in the society: this social power must have a monopoly of “force” over the members of society. It is sheer fantasy, then, it is mere utopia, empty moralising to insist on the “natural or divine rights” of human beings outside of a community or society ruled by an entity, an institution with sufficient power, political or otherwise, to enforce such rights. It makes no sense at all to speak of “rights” as applying to human beings outside of a “society” organised in such a manner that these “rights” can be enforced. Outside of such a society armed with such an “institution” able to uphold such “rights”, it is not possible to identify, to name even, any “rights” or “laws” on which human beings may claim to be entitled to anything at all. In a “pre-social” state, in a state of human existence that precedes that of civil society living in peaceful co-existence under a legal system, all resources must be “in common” and there cannot be any question of “individual claims or rights” to any of them. However much human beings may form the belief, in foro interno, that they ought to be entitled to certain resources, no actual positive “right” can materialise in foro externo in the absence of laws and institutions capable of enforcing them and thus give them social validity (Lev., c. p135). Not only is the concept of “property” meaningless, not only are “rights” vacuous and velleitary except in the feeblest moralistic sense, but also the concept of “individual labour” may well be difficult to define given that even “individual labour” can only be applied to other natural “resources” that must be “in common” and that therefore cannot entitle those who utilise them to claim the pro-ducts of their work as their own.
The source and origin and cause of “rights”, then, must arise from two opposing forces in human nature, given that nothing outside human nature can influence the conduct and association of human beings. On one side, there is the reality of “concupiscence” whereby human beings are prone to have competing claims to the same resources and that, as a result, there is bound to be conflict between them as to how to utilise and distribute these resources. On the other side, the very fact that unrestrained conflict in human society will lead to a widespread feeling of insecurity and fear whereby each individual will act in self-defence and seek self-preservation will mean that the members of the human group will be desirous of forming a “league or contract” to ensure their own safety and survival. Two forces, again, both attributable to human nature but tending in opposite directions: one is the human tendency to appropriate social resources – a “community of goods” – unreasonably and insatiably to the detriment of others; the other is the need to ensure personal survival by avoiding the destructive “contention and calamity” that will befall each individual at random. The “resultant” of these forces will be a “league or contract” whereby the “concupiscence” of each member will be kept in check by an overriding social power that will preserve social peace and protect the lives of each and everyone.
It must be noted that here Hobbes’s social theory quickly rejoins that of Adam Ferguson in a devastating reproach to Adam Smith’s Panglossian optimism of the capitalist market’s Invisible Hand. Both Hobbes and Ferguson realize that human beings are equally prone to conflict and to co-operation. But in that case it is undeniable that the possibility of all-out conflict obliterates the sustainability of a “liberal State”, let alone its unproblematic emergence as a “state of natural rights” theorized by Locke. Once we allow that it is “possible” for human society to degenerate into all-out civil war, then the liberal State theorized by Locke becomes theoretically unsustainable because there can be no historical and theoretical recuperation for human society from universal conflict! Put differently, whereas it is possible to conceive of a civil society degenerating into civil war, it is theoretically impossible to see how a state of civil war could ever progress to a civil state! It follows that Hobbes’s devastating critique of liberalism is founded on both the theoretical impossibility and the historical unviability of a liberal State of Right. For Hobbes, a liberal state as that theorized by Locke is theoretically unstable and historically doomed. Indeed, (as Cacciari notes in Dialettica) it is arguable that Hobbes’s Sovereign state is one by acquisition and not by institution, given that his state of nature of “war of all against all” could never have existed historically! For there is simply no return from civil war. Civil war is the Euclidean axiomatic hypothesis on which the bourgeoisie builds its conventional parliamentary representative politics. Thus, the avoidance of all-out civil war must set out the conditions for a coercive hypothesis for a capitalist state of exception on which and from which all consensual conventions – the free market, parliamentary democracy – must later be founded and originate.
The principles of political economy set out by Adam Smith in The Wealth of Nations, which have since become the unassailable foundation of all “economic science”, are based on strictly Hobbesian pessimistic assumptions. This may seem strange in the author of The Theory of Moral Sentiment. For in this later work, Smith finally welcomes the theses presented by his noble predecessor in the Scottish Enlightenment, Adam Ferguson, who, in his path-breaking An Essay on Civil Society, adroitly and perspicaciously demolishes the notion of an elemental and invariant “human nature” – and most pointedly the presumption that human beings are indivisible atoms, in-dividuals, whose only purpose is to protect and enhance their self-interest. In a devastating tirade against philosophical pessimism – and with Thomas Hobbes clearly in mind – Ferguson shows irrefutably that human “moral sentiments” are just as likely to be altruistic as they are to be selfish. And that not only have human beings established historically their ability to live in civilised society, but also indeed such communion or common-wealth is an ineluctable aspect of being human!
Yet, in laying out the principles of political economy, Smith chose to ignore completely the irrefutable arguments advanced by his illustrious predecessor. Surely enough, Smith elaborates his scientific principles in such a manner that ultimately individual self-interest turns out to be “enlightened”, to lead to economic “equilibrium” and even to increase “national wealth”. But this Panglossian optimism is reached through the stultifyingly unjustified intervention of an “Invisible Hand” that – like the Deus absconditus of mediaeval theology – providentially leads humanity to the best of all possible worlds. Given the axiomatic assumptions laid out by Smith in Wealth of Nations, this optimal end-result can only be the redistribution of existing wealth between freely-exchanging, self-interested individuals. It stands to reason, of course, that if self-interested individuals are allowed to exchange “freely”, then the “self-interest” hypothesised by Smith can only be “enlightened” in that it will lead to an economic equilibrium that maximises individual welfare! These assumptions are (a) that human beings are entitled to their possessions, (b) that they agree on exchanging them “freely”, and (c) that these “exchanges” do not include their living labour.
Smith’s political economy – the foundation of all future bourgeois economic theory – is based then on the Hobbesian hypothesis of the unlimited selfishness of humans, on one side, and on their simultaneous ability to agree to conventions including rules of exchange and of ownership. It is this combination of pessimistic hypothesis and optimistic convention in the founders of bourgeois capitalist theories of economics (Smith) and politics (Hobbes) that is our central focus here.
Because he chooses to begin with the atomised self-interested in-dividual, Smith wrongly assumes that it is through the “exchange” of produced goods that human beings maximise their individual welfare by choosing to engage in time-saving specialised production. Thus, for Smith, it is exchange that leads to the division of labour. Two erroneous conclusions follow from Smith’s assumptions: the first is that exchange between individuals precede and engender the division of social labour, when in reality the contrary is true. The second is that “labour” is seen as a homogeneous quantity that can be dissected and divided, and not as “social labour”, that is to say, as a totality of human living productive activities that are ineluctably social and heterogeneous in nature. Had he followed Ferguson instead, Smith would have seen and understood that it is the human division of social labour that makes exchange possible – and not the other way around! And that because, in John Donne’s fatidic words, “no man is an island unto himself”.
Smith then believes that this occurs through a natural division of labour as “separation/appropriation” - when in fact it occurs through a particular political form of social co-ordination – a “division of social labour” that emanates from a “civil society” that already contains a ‘State-form’, a status politicus, in which social labour has been forcibly homogenised into an abstract quantity called “labour” and in which the “possessions” of individuals have been set as the ‘preservation’ of “natural rights” presumably “acquired” in or “transferred” from the “state of nature”!
This leads us neatly to the third false assumption made by Smith – that of possessive individualism which Smith adopted from John Locke. Locke, the founder of liberalism, relies on the social contract merely “preserving” pre-existing “natural rights” that first arose in the status naturae. In Locke there is “the pre-supposition” of the political State, the status politicus, in the status naturae. This is perhaps one of the most important and delicate passages in the whole of political theory. It is here that Hobbes’s political theory poses a fundamental challenge to the “ideology” of liberalism. That ideology, as we have seen, was founded on two premises: first, the existence of “natural rights” in the status naturae accruing to “self-interested individuals” which form the basis of “civil society” in which these “natural rights” are guaranteed by the State pursuant to “positive laws” under which the State is “constituted”. And second, the reconciliation of these “self-interests” in the “self-regulated market” through “the price mechanism” – the identity of supply and demand.

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