ALGORITHMIC MATRIX: ECONOMIC THEORY AS KAFKAESQUE SCHEMA

 

The problem with the late-romantic critique of capitalism is that it confuses its social relations of production with the positivism of “science and technology”; and the problem with the late-romantic critique of positivism is that it confuses it with capitalism. The strategic political need of the bourgeoisie to identify social relations with relations between things, or in other words to reify social reality, is what is behind this pervasive and deleterious critical deficiency because the rule of the bourgeoisie, like every rule, to the extent that it is political, is also dependent on the violent control over material production, and to the extent that it controls material production must also depend on political legitimacy. The Marxian notion of “social relations of production” is all here: it is meant to emphasize the political continuity between the “social relations” (the political, social, cultural and religious aspects) of the society of capital and the fact that capitalism is a specific mode of political domination that relies almost exclusively on the exchange of political freedom for material production, or in other words on the absurd “exchange” of living activity with its “pro-ducts”, that is, with “dead labour”. The difference between “the freedom of the ancients” and “the liberties of the moderns” (Frederic Constant and John Locke, the founders of liberalism) is that the former was based on the democratic participation of all citizens to political decision-making in the State whereas the latter is based on the protection on the part of a state apparatus (a civil and military bureaucracy) of the “private rights” of citizens to their possessions: under capitalism, “freedom” has been reduced to the legal claim over possessions – to “liberty”, or to what we call “free-dom” or “greed-dom”. Bourgeois late-romantics – whom Weber called disparagingly “literati” - pine for the “freedom” that their own political violence has reduced to “greed-dom” by shifting the blame for this reduction to an “impersonal” or “neutral” perpetrator, the positivism of “science and technology” – absurdly transforming thereby a political reality into the very “techno-scientific” reification that they seek to denounce!

 

Our aim in this piece is to illustrate through an exposition of Schumpeter’s “methodological individualism”, the real capitalist political strategy that constitutes its ultimate foundation. The “science” intended by Schumpeter is that of the negatives Denken from Hobbes through Schopenhauer  and beyond. It is a neo-Kantian, Berkeleyan-Machian or “idealist-empiricist” notion of science that differs significantly from the Galilean-Newtonian science that preceded the Industrial Revolution when the bourgeoisie was still consolidating its social power and needed to justify its hegemony as the fruit of “labour”. The universe of Galileo is a divine creation whose secret hidden laws are amenable to human discovery by virtue of the fact that humans have been gifted with the divine powers of Reason. The task of Science is therefore to discover in Nature the divine “rational laws” or “order” by which Nature is bound through the faculty of Reason that the Divinity has bestowed upon humans. Human beings do not “make” these laws, they exist independently of humanity because they are of divine origin and yet they are accessible to humans by virtue of the faculty that they share with the Divinity – Reason. Science is therefore the application of human reason to the discovery of the divine laws that govern it and Nature: consequently, science must be subordinate to Reason, values must prevail over facts. This is an essentialist or objectivist science in the sense that the universe is governed by laws independent of the human ability to discover them: in the Galileo-Newtonian worldview, Nature and Reason, Object and Subject, are separate yet interdependent entities.

 

Although human reason is able to discover the laws by which Nature is governed, due to the faculty of free will – liberum arbitrium – and its “arbitrariness”, its “voluntariness”, and therefore the human ability to prefer Evil over Good, human affairs could never be classified in accordance with the same Ratio-Ordo, the same rational order, with which the Divinity had crafted the universe. The “rationality” of the laws governing nature – the rationality of science and the corresponding “rational order” of Nature – could be established and proven only upon condition that the rules of Reason themselves could be proven unconditionally or ab-solutely, that is to say, according to a principle that was itself so certain as to be devoid or independent of any rational proof. Yet such an intuitus originarius (Leibniz, Kant) is by definition not accessible to human reason and must therefore exist without rational proof. Already Adam Smith (in The History of Astronomy) had attacked the Newtonian worldview on the grounds that Humean scepticism showed how “metaphorical” – and therefore “conventional” - its supposedly “universal laws of physics” were in reality: human reason, let alone science, could not survive the application of its own principles to itself! Both the Cartesian cogito – a fallimentary attempt at syllogism – and the Kantian formalism of the Categorical Imperative so cruelly derided by Nietzsche hinted at the coming ex-haustion (or com-pletion, Heidegger’s Voll-endung) of the summum bonum of Western metaphysics – the identity of value and fact, of the rational and the real. First Machiavelli, then Hobbes and Vico established long before Nietzsche that the “truth” of human reason was not “ab-solute” in any divine sense external to human beings but was ab-solute and certain precisely to the degree that it could be imposed “conventionally” or symbolically – that is to say, “by definition” – by human beings themselves by virtue of their actions. Human reason was “true” not in the sense that its truth was “universal” or “ab-solute” (a legibus soluta), but rather on the inverse principle that it was entirely “arbitrary”: it is the very arbitrariness or conventionality of human principles that assures us of their absolute certainty! Scientific truth becomes thereby the ability of some human beings to assert their interests over other human beings by force if necessary.  (The devastating finality of what we have called “Nietzsche’s Invariance” is all here – cf. our Nietzschebuch at scribd.com.)

 

Kant described his idealism as “critical” because it traced the limits of human knowledge set by the impenetrability of the thing-in-itself; and he called it also “trans-scendental” because the validity of human reason can be deduced only as a requisite of its formal consistency and not by its identification with its Object (the famous Scholastic adaequatio rei et intellectus). But the very fact that the thing-in-itself is unknowable decrees the absolute “futility” of both pure and practical reason and of metaphysics altogether. Kant believed to have traced the limits of human knowledge, but the effect of his philosophy was to establish conclusively that no Object could delimit any longer the use of knowledge as the application of the power of the Subject. This is the real reason why his idealism is “transcendental”. But if the Subject no longer knows or admits of a non-Subject or Object, a natural order, that can sub-ordinate the Subject by the power of its over-arching rationality (Kant designated this with the architectural term “contignatio”) – the ab-solute primacy of the Ratio-Ordo -, the question then arises of how this power of human action is to be governed and restrained inter homines, between Subjects. Herein lies the mortal danger of solipsism: If “man is the measure of all things”, what then is the measure to be applied by some men to other men? As Nietzsche poignantly observes in the Genealogie der Moral, man’s experiments on nature are like nothing compared with those conducted by some men on other men – for the simple reason that if “science” is the rationalization of human domination over nature, then the ultimate abuse of nature is that perpetrated by some men against other men who are also an indivisible part of nature. Our central point here is that there is nothing at all “rational” about this Rationalisierung because it consists solely in the subordination of human living activity to an abstract rule – logical and political – that can be given a quantifiable form.

 

The problem with the Vichian verum ipsum factum is that if truth is to be found in human actions themselves, then the end not only justifies and sanctions but also actually ascertains and verifies the means and the means ascertain and verify the end: if truth is certainty, then even the most diabolical violence can be true so long as its outcomes are certain! Both Galileo and  in the physical sciences, as well as Machiavelli in political theory, had taken care to distinguish the laws of nature from the laws governing human affairs. After Hobbes, Vico and Kant, and finally with Mach, the two realms become indistinguishable because certainty, not truth, is the object and limit – the objective - of science: hence, we have a politics of science and a science of politics. The problem with positivism as the bourgeois philosophy par excellence is not so much that it substitutes values with facts (cf. Koyre, From Closed World to Infinite Universe, and Husserl’s Crisis lecture) or that it con-fuses the two (Kirchhoff): the real problem is that Positivism as a philosophy of science means that the truth of human action is no longer “science” but certainty, that is, the effectuality of domination and violence.

 

The capitalist bourgeoisie was the first historical agency to put this principle into political practice by giving the name “science and technology” to its politically-enforceable and politically certain objectives. The Italian philosophic critic and historian Paolo Rossi is perhaps one of the few to have remarked upon the crucial difference between the essentialism of the Classical and the subjectivism of the Neo-Classical worldview:

"[For Vico i]the criterion of truth is not (as the Cartesians wanted) neither in the immediate evidence nor in the clarity and distinction of ideas but instead in the conversion of the true with the fact....the criterion of truth of a thing lies in doing it....[23] Mathematics and geometry are not, as Galileo had understood, revealing the divine language present in nature, they do not say anything about the world: they are a product of that singular ability that man had to reap useful fruits from the constitutional limit of his mind....Vico now extends the criterion of  verum-factum  to historical reality, enlarges it to understand that world that is the work and construction of man," (Paul Rossi, Introduction to GB Vico, New Science, pp.22-3).

 

Not certainty itself is the problem, then; the problem is the object of certainty – its political objective - and the violence that the bourgeoisie must exert to demonstrate the certainty, and therefore the factuality or “truth”, of its political objectives. Schumpeter was entirely conscious of the “arbitrariness” of the abstract rules (again, intended in a logical and a political sense) that subtend bourgeois “economic science”:

 

Pure static economics is nothing but an abstract picture [or model] of certain

economic facts, i.e. a schema that should serve as a description about them. It

depends on certain assumptions, and in this respect, it is a creation of our

arbitrariness, just as every exact science is. … [But] this does not prevent

theories from fitting facts. (Schumpeter, 1908, 527; trans. by Shionoya, 1997,

103–4)

 

But the “theory” that fits the facts relies on a reality, social and institutional, that has been created and shaped by capitalist violence such that “the facts fit the theory” – this is the incestuous facticity of bourgeois science whereby theoria is subordinated to praxis. The schemata, the frame-work of bourgeois science, then, does not simply “describe” reality, as Schumpeter wrongly believes: rather, its axiological essence serves the essential purpose of prescribing the shape that reality must take if bourgeois rule is to prevail! The “arbitrariness” to which Schumpeter refers is not the Scholastic liberum arbitrium or the humanist and idealist “freedom of the will” or freedom “of choice”! In the Hobbesian axiological and mechanical paradigm of the negatives Denken, freedom is not contrary to “reason” intended as calculative rationality, it is not “irrational” or “unpredictable” or “indeterminate”: emphatically, it is not “freedom of choice”!  As Weber argued, a “choice” is “free” when it is “rational”, not when it is “irrational”, because an “irrational” choice must have been conditioned by factors beyond the control of the decision-maker and therefore it must be “un-free”.  It is not “choice” that determines “freedom” but “freedom” understood as “free-dom” that determines or conditions “choice”. In other words, freedom becomes a function of coercion (by other human beings) now seen as objective impersonal necessity!  For Weber and Schumpeter, as for the entirety of the negatives Denken, free-dom is the ability to make rational decisions, not the ability to choose rationally or irrationally. It follows inescapably therefore that mechanical rationality is the true foundation and origin of “freedom”: and mechanical rationality is possible only if it relates to “individuals” whose irresoluble conflict with one another, the ineluctable clash of their self-interests, “reduces” their freedom to free-dom and their conduct to that of the “inert bodies” of mechanical physics by making their living activity quantifiable through sheer political violence!

 

Political “freedom” is conceivable in this schema only as the “free-dom” of self-interested individuals. And the ultima ratio of human conduct must be the preservation of one’s life in a world in which individuals in the state of nature will destroy humanity itself because of their unbridled cupidity. The Rationalisierung as intended by the negatives Denken therefore is the exact opposite of humanistic freedom because it is instead the expression of free-dom intended as “the clash of wills” of atomistic selfish individuals - as “dis-enchantment” (Ent-zauberung), as the relinquishment of any and every illusion about the freedom of the human will, the abandonment of any sentimentality about the inviolability and invincibility of the human spirit as a universal goal! (The inability to grasp this crucial point is perhaps the biggest lapse in Karl Lowith’s interpretation of Weber’s work in Max Weber and Karl Marx. Specifically, Lowith confuses Weberian dis-enchantment and Marxian alienation in that the former concept is ineluctable whereas the latter contains its own dissolution or supersession.)

 

 

 

The market mechanism described by the axioms of neoclassical equilibrium theory and marginal utility that only apparently does away with ethico-political considerations in favour of the “productive efficiency” of its paradigm, by eliminating Objective Value, the subject-matter of economic theory, can artificially and arbitrarily limit and confine the ambit, the sphere, of economic science away from its metabolic aspects. The daft excuse opined by Joan Robinson that “a one-to-one map of reality is useless” again marginalizes the reality of production as metabolic interaction and reduces the problem of the ethico-political effectuality of theory to one of “neutral scientific usefulness”, of “universal human instrumentality”. But the very essence of an instrument or a tool rests on the human agency in whose hands it is held! Whereas in the case of market process it is the facts themselves that impose the theory of market process as the ec-sistence of equilibrium, as its extrinsication, unfolding and implementation; in the case of equilibrium, from the perspective of equilibrium analysis, it is the theory itself, its schema, that selects and frames the facts and fits them to a particular Vision or Frame-work of social reality. Schumpeter always conceded the “arbitrariness” of this process:

 

 

The whole of pure economics rests with Walras on the two

conditions that every economic unit wants to maximize utility and

that demand for every good equals supply. All his theorems follow

from· these two assumptions. Edgeworth, Barone, and others may

have supplemented his work; Pareto and others may have gone

beyond it in individual points: the significance of his work is not

thereby touched. Whoever knows the origin and the workings of

the exact natural sciences knows also that their great achievements

are, in method and essence, of the same kind as Walras'. To find

exact forms for the phenomena whose interdependence is given us

by experience, to reduce these forms to, and derive them from, each

other: this is what the physicists do, and this is what Walras did.

(Schumpeter, TGE 79)

 

 

The Hobbesian roots of Schumpeter’s “scientific” framework are unmistakeable: human beings pursue their self-interest in violent conflict with one another and until the exhaustion of all available resources – in other words, to the verge of total civil war (bellum omnium contra omnes). The “measure” of utility is the ability of each individual to impose violently his will and self-interest on others. In this context, the mechanical rationality of Walrasian and Neoclassical equilibrium theory does not describe an “objective reality”, an “essence” or “goal” of the economic system as the maximization of “welfare” or “common-wealth”, but is rather a benchmark, a blueprint against which to measure the effectuality of actions based on possessive individualism. The analytical axiomatic framework of equilibrium theory sets out axiologically – that is to say, prescriptively, not descriptively as it claims to do! - the “rational limits” or “domain” of human action that need to be applied in the “space” of social con-vention outside of which only the bellum civium, the Hobbesian civil war of all against all, is possible. This framework sets out both the axiological hypothetical limits or boundaries of human action and the “tendencies” of conventional agreement based not on a common humanity, on inter esse, but on the “fear of death” held by each individual at the hands of every other individual. The ultimate equality of human beings, as Hobbes established, lies in the fact that each individual is capable of murdering another individual! Within these axiological limits or boundaries, only the “exchange” of existing individual possessions or endowments is possible because any pro-duction of new goods and services would only demonstrate the impossibility of “agreement” by market agents about their respective entitlements to the new pro-ducts!

 

Infallibly, then, “rationality” is not a neutrally or scientifically determinable quality: rationality is the sheer violence of quantifying human action. The “integration of theory and history” that we find in Marx and whose absence many critics decry in Schumpeter pre-supposes the interpretation of “choice” or human agency as the expression of the “convergence of human interests” in the preservation of this very “freedom”. At the very least, this “freedom” implies the existential unpredictability of human decisions (Heidegger’s “possibility” or, as Weber would say, their “irrationality”). Yet what is peculiar about the “pure” framework of analysis of Neoclassical Economics is precisely the absence of such universal humanistic “freedom” and certainly of its telos of Reason as inter esse (Hegel, Marx) in the sense that the “freedom” of human choice or agency as an existential and ontological reality is limited and circumscribed instead by the equal “free-dom” of each individual will, and is therefore turned into the “necessity” and “co-ercion” of human conflict (not free con-vention and agreement): the “freedom” of economic theory is not a “rationalist” Freedom epitomized by the Freiheit of Classical German Idealism as a faculty that human beings share and that reveals the identity and community of their interests as members of the human race; it is not the Augustinian initium or a common human faculty that in its uniqueness leads to communion, to comunitas, the inter esse of a common humanity, founded on the notion of the soul of Judaeo-Christian religion and the free will of Western metaphysics; and it is not even the existentialist “contingency” of Nietzsche, Heidegger and Sartre or the “uncertainty” of Knights and Keynes. It is instead a “mechanically rational” free-dom, a “room to manoeuvre” (Weber’s Ellenbongsraum) or “living space” - the ineluctable conflict of the Euclidean-Galilean mechanical scientific hypothesis of Hobbesian political theory dictated by self-preservation and self-interest.

 

 

It is the very impossibility of finding both theoretically or scientifically and practically or politically a conventum, a “social harmony” or “agreement”, or an objective measure of social equality or “development” – a social synthesis -, it is this impossibility of establishing a universal, objective, scientific theory of capitalist development, let alone a universal human goal – a summum bonum – in the interests of Power, against the Ohn-macht of late-romantic existentialisms or humanisms, that necessitates for Schumpeter the recourse to a rigid instrumental theoretical measure such as that of equilibrium theory that preserves the scientific economic status of the Dynamik by anchoring it to the axiological mechanical foundations of the Statik!  This is why for Schumpeter the Dynamik can never be reconciled with the Statik: this is why for him the two theoretical frameworks must remain logically contradictory and practically incompatible.  Consciously or not the Austrian economist himself recognized the impossibility of bridging this particular hiatus irrationale between Statik and Dynamik because, for one, he believed that social reality is irreconcilably and immutably conflictual so that no “theory” (Statik) can ever correspond to “history” (Dynamik), and, consequently, any attempt or claim to such integration would mean that the “reason” in “history” was not just “instrumental” but “teleological” or “metaphysical”, giving rise therefore to a “prophetic rationalism” that Schumpeter, like Weber, always imputed to and impugned against Marx’s own theory of capitalism and of history (cf. “Marx the Prophet” in CS&D). The “reason” in Schumpeter’s notion of “histoire raisonnee” is entirely “instrumental” and not “teleological” as in the “prophetic-dialectical” Marx (or indeed in Hegel and even in Husserl [philosophy as totality] and Heidegger [philosophy as thinking rather than thinking as technique, p.240, Pathmarks, “Letter on Humanism”]).