Tuesday, 5 May 2020

The 'Close' of Economic Science

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-neutral 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?

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