Orthodox
Economics does not just obfuscate, it truly obliterates the
social reality of Value in the theoretical explanation of the social relations
of production by providing a logico-mathematical Schema of simultaneous
equations to determine the relative prices of endowment goods exchanged by
atomistic self-interested individuals to maximize their individual utilities.
This Walrasian Schema is founded on Euclidean axiomatic principles that
lead inexorably (with the inexorability of tauto-logical thinking) to
the political project (framework or Entwurf) of the capitalist
bourgeoisie to transform human society into the society of capital
(note the objective genitive – society has been captured by capital).
This is the scientific paradigm of the bourgeoisie as a social
class: to frame social relations of production in such a way that they may be measured
and predicted so as to perpetuate the existing order of
capitalist class society through the accumulation of capital or value. By
leaving out value as a social reality of political coercion allowing “the exact
calculation” (Max Weber) of value, this bourgeois paradigm must necessarily
leave out the effectual reality of value in the form of money, and therefore of
capital in the form of money (money-capital).
As we
demonstrated earlier, like all Schemata, Walrasian equilibrium analysis
is tautological, and therefore meaningless. But that does not at
all mean that it is without political purpose, because the practical
implications of measuring human living activity and social relations of
production can be given institutional force, can become co-action –
compelled and compulsive politico-economic reality. Gunnar Myrdal missed this
all-important distinction – ironically in his masterly opus on “The Political
Significance of Economic Theory” – by insisting on the meaninglessness of
equilibrium analysis and failing to detect its obvious political
significance!
An illustrious
illustration – one truly with little lustre – of this incomprehension of the strategic
uses of logico-mathematical schemata in social life is afforded by the work
of Tony Lawson – a philosopher of economics. I got to know Tony Lawson very
well at Cambridge and I can asseverate that he is the most lovable fellow in
this and many other galaxies. But that does not mean that he does not tangle
himself in colossal bloopers when the intellectual game gets a little complex.
Let us quote first a passage from one of his critiques of equilibrium analysis
in its entirety:
If
all parties agree that Adam Smith set (and contributed to answering)
one of the fundamental
questions of economics—namely, how social order
emerges in the absence of central
or any intentional design, and,
indeed, with individuals
pursuing largely independent goals—it is clear
that the inheritors of
Smith’s project are not economic equilibrium theorists
concerned with formalistic
modeling. Rather, it is those working in
THE STATE OF EQUILIBRIUM
ANALYSIS IN MODERN ECONOMICS 443
the traditions of Marx,
Keynes, Hayek, and others who make the explaining
of the actually existing
social order the priority.
The project of formalistic
modeling can be misinterpreted as one concerned
with explaining the actual
social order only if the atomistic presuppositions
of the former go
unrecognized, or their irrelevance remains
unappreciated. Once we
turn to social ontology, to theorizing
the nature
of social reality, the impotence of the equilibrium
notion becomes apparent.
The real question, Smith’s question in
modern terms, is how
social reproduction of
complex, internally related, dynamic, social structures
occurs in an open world of
individuals seeking their own ends. (T.
Lawson, The (Confused) State of
Equilibrium Analysis in Modern Economics, pp.442- 443)
Now, let us examine the
first part of Lawson’s contention:
If
all parties agree that Adam Smith set (and contributed to answering)
one of the fundamental questions
of economics—namely, how social order
emerges in the absence of
central or any intentional design, and,
indeed, with individuals
pursuing largely independent goals—it is clear
that the inheritors of
Smith’s project are not economic equilibrium theorists
concerned with formalistic
modeling. Rather, it is those working in
THE STATE OF EQUILIBRIUM
ANALYSIS IN MODERN ECONOMICS 443
the traditions of Marx,
Keynes, Hayek, and others who make the explaining
of the actually existing
social order the priority….
The real question, Smith’s question in
modern terms, is how
social reproduction of
complex, internally related, dynamic, social structures
occurs in an open world of
individuals seeking their own ends.
Lawson’s inability to deal
with these matters is almost alarming. The fact of the matter – the inalterably
evident truth – is that it is quite absolutely utterly inconfutably
incontrovertibly obvious that there is no possible way in this world – because logic
itself excludes it! – that “social order [can] emerge in the absence of central
or any intentional design”! There is no way known in this or the next or the
other world “how social reproduction of complex, internally related, dynamic,
social structures
occurs in an open world of
individuals seeking their own ends”! And
that is not because I say so, but because logic dictates it! Not only! Adam Smith
himself – the great man himself – did not believe it! And that is why he had to
invoke… “the Invisible Hand”! Lawson is infinitely wrong - to the nth degree!
And here is Hannah Arendt – someone who professionally knew little about economic
theory – stating what should have been the bleeding obvious to Lawson just from
his very summation of the issue at hand! Here is Arendt:
Classical economics assumed
that man, in so
far as he is an active
being, acts exclusively from self-interest and is driven by
only one desire, the desire
for acquisition. Adam Smith's introduction of an
"invisible hand to
promote an end which was no part of [anybody's] intention"
proves that even this
minimum of action with its uniform motivation still contains
too much unpredictable
initiative for the establishment of a science.
(The Human Condition, at
fn.35)
And this is exactly why it
is quite ironic, if not pre-posterous (back to front), for Lawson to make
his major claim in the next paragraph that,
“[t]he project of
formalistic modeling can be misinterpreted as one concerned
with explaining the actual
social order only if the atomistic presuppositions of
the former go
unrecognized, or their irrelevance remains unappreciated.”
In
other words (rephrasing Lawson’s truly and absurdly awkward Daguerrotype-style
statement typical of “types” who are trying to be too clever by half), if we
recognize the atomism and the irrelevance of formalistic
modeling, then it will become clear that it does not and cannot explain “the
actual social order”. Lawson’s complete incomprehension of the bourgeois
economic paradigm here is simply colossal. “On the contrary!” we impetrate –
and imprecate. It is precisely because “the
project of formalistic modeling” is founded on “atomistic presuppositions” that
it can claim to have any “relevance to explaining the actual [capitalist!]
social order”! – It is because this
(capitalist) ‘social order’ is actually
founded precisely on “atomistic institutions”
(from which those “atomistic presuppositions” are derived) that “mainstream
economics” can hope to have any “relevance” at all – and so analyze and
incorporate those “atomistic presuppositions” in its “formalistic modeling”.
Lawson is looking for a
phantasmagoric “social reality”, independent of and ethically preferable to
capitalist reality, that quite simply does not exist! Indeed, if, like
Lawson, we frame “the real question” (“Smith’s question”), “one of the
fundamental questions of economics—namely, how social order emerges in the
absence of central or any intentional design” - in terms of “individuals pursuing largely independent
goals”, then we are accepting the very “atomistic
presuppositions” and “irrelevance” to “social reality” on the part of
“mainstream economics” that Lawson laments and deplores! If we assume the
‘Trennung’ (the forced ‘separation’ of “social labour” into “individual
labours”), then it matters not which
approach we take, the ‘theoretic’ or the ‘ontic’: they will both
mis-conceive the very origin of capitalist
“social reality” and keep going on forever with Lawson’s mystifying
profundities about “theorizing the nature
of social reality” and “illuminating
social reality”. The purpose of bourgeois orthodox economics is a thousand
times not (!) to understand “social
reality” as it ought to be: the purpose of orthodox economics is to lay
down the axiomatic rules for how social reality must be (!) for the
capitalist bourgeoisie to be able to perpetuate its domination of society! It
is not the Kantian Sein (objective reality) or Sollen (German,
Ought, the moral law) that the bourgeoisie seeks; what the bourgeoisie seeks is
instead the Nietzschean Mussen (German, Must, a commandment) – the way
social reality must be for the bourgeoisie to rule over society.
Because
the amiable Lawson – and this is one of the traits that make him so enviably
lovable – is so keen to pursue his ideal of a “relevant” economic theory based
on “ontic” (historically factual) evidence with the clear goal of improving
social life, he wholly neglects the central reality that Neoclassical theory is
functional to the social reality
– capitalist industry - that evokes it: It does not explain, but it calculates;
it does not understand, but it measures; it does not justify, but
it regulates its ‘regularities’ and
rationalizes its ‘irregularities’:– in sum, it orders the warped social reality of capitalism to enshrine it as
“scientific” and to re-present it (Vor-stellen,
[Schopenhauer, Mach]) as “social reality”, as “social order” and, like Lawson,
as “social ontology”. (See Loasby’s “Equilibrium & Evolution” for the
essential role of equilibrium analysis in providing a “paradigm” [we would say
‘language game’] of analysis – and his attempt to improve it beyond general and
Nash equilibrium.)
To borrow from
Wittgenstein, it is of no use to change spectacles (economic theories) if all
we achieve is to turn a warped reality
into an equally unreal idealistic “social ontology”, that is, an eternal or meta-physical or noumenal social
reality (a Kantian Sollen) as Lawson advocates!
This is precisely the
great achievement of Karl Marx – to demonstrate how the earthly paradise that
bourgeois political economy pretended to theorize was a hell on earth in
reality. Here is Arendt again:
[I]t was not Karl Marx but the liberal
economists themselves who had to introduce the “communistic fiction”, that is,
that there is [p44] one interest of society as a whole which with "an
invisible hand" guides the behavior of men
and produces the harmony of their conflicting interests.36 The
difference between Marx and his forerunners was only that he took the reality
of conflict, as it presented itself in the society of his time, as seriously as
the hypothetical fiction of harmony; he was right in concluding that the "socialization of man" would produce automatically a
harmony of all interests, and was only more courageous
than his liberal teachers when he proposed to establish in reality the
"communistic fiction" underlying all economic theories.…(H. Arendt, The
Human Condition, pp.43-4)
Because
the ‘theory’ encompasses the sphere of exchange, then its axioms and formal
identities become - yes, meaningless logical tautologies - but effectual
like mathematical “language games”!
The
difference between exchange and production is what eludes Lawson utterly. But
this, rather than a mythical ethical “social reality”, is the antagonistic
“ground” of economic reality.
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