THE THREE ‘ELEMENTS’ – Euclid, Hobbes, Walras and
the Framing of the Society of Capital.
We are trying to answer the
question, asked in Kantian vein, “How is capitalist society possible?”
We know that capitalism is a specific historical form of social relations of
production. But what is this form, and how can it be compatible with the reproduction
of a society? After all, as we are amply demonstrating here, the bourgeois
self-understanding of capitalist industry is incompatible with the survival of
any form of society, first, because the theory behind it, although quite
purposeful strategically, is tautological and therefore meaningless, and second
because where a meaningful practical implementation of this theory is allowed –
as in the theory and practice of a “self-regulating market” – it leads
inevitably to the destruction of any society. And this despite the fact that
the bourgeoisie maintains that its theory of capitalism is indeed an “economic
science” applicable to all human interactions and societies! Clearly, there
cannot be any Automatik in the process of reproduction of capitalist
society: not only does a “market” not exist as a “self-regulating mechanism”,
but it may be said also that a market can exist only as a regulated
institution.
The cardinal
quasi-Euclidean axiom of the absolute atomicity or in-dividuality and
self-seeking self-interest of human beings as the basis of any exchange of
goods between them is the most indispensable postulate of all bourgeois
economic theories. Thomas Hobbes translated Euclid’s Elements of
Geometry and then went on to write his own Elements of Law and Politics.
So it stands to reason that in order to erect his political theory, Hobbes should
start from the Euclidean axioms that each human being represents a “point” or
“body” or “unit” entirely unconnected to other human “points” or “bodies” or
“units” and is entirely self-interested or, mechanically put, has its own utility
or “appetitus” or “conatus” – which Hobbes calls “Power”. From these utilitarian
individualist axioms he deduces that the original, most “natural” state of
human beings, the “state of nature” or status
naturae, is a state of civil war (bellum
civium) or “the war of all against all” (bellum omnium contra omnes). This “clash of wills” or appetites,
this “war of all against all”, can lead logically only to a deterministic mechanical equilibrium in which there is
no “room for manoeuvre for the individual
freedom of the will” (Schumpeter in Ch.7 of the Theorie) because
each individual will is bound by the wills and boundless appetites of other
wills, or else to the assured self-destruction of human beings. This is
Hobbes’s scientific hypothesis interpolated
between the mechanical physics of Galileo and Newton and theorized in Euclidean
terms soon to be imitated in Spinoza’s more geometrico:
Hobbes enjoyed a
belated but influential encounter (in about 1628 if Aubrey is correct) with the
geometry of Euclid; an encounter which not only led him to a sometimes disastrously
misguided practice of the skill, but much more importantly drew his attention
to the use of definitions in rigorous argument. In Leviathan he was to call
geometry 'the only science that it hath pleased God hitherto to bestow on
mankind' (IV. 12; see also V. 7). Be that as it may, geometry was, and remained
until the middle of the nineteenth century, the paradigm for deductive probity.
(JCA Gaskin, Introduction to Leviathan, p.xv.)
In its turn, following Hobbes’s, Newton’s
terminology in physics is unmistakably political: body, action, reaction,
momentum, force, work, energy. This is how Hobbes managed for the rising
capitalist bourgeoisie an epistemological feat that has not been equaled since
he wrote: - he managed, that is, to combine the positivist scientific hypothesis of Galileo-Newtonian mechanics with the
jusnaturalist political convention of
innate rational human rights, and thereby to erect bourgeois political practice
on effectual scientific grounds. Hobbes begins with the positivist scientific hypothesis of the “universal conflict”
between human beings taken as wholly egoistic atomic individuals, and from
there he develops “rationally” - with the “rationality” of the “laws” of
mechanics - the jusnaturalist
political convention (common-wealth) that will make social life possible based
on the “natural rights” of these conflicting individuals. ((Cf. This
insuperable twining of political convention and scientific hypothesis in Hobbes
is superbly enucleated in A. Pacchi, Convenzione e Ipotesi. The parallel
Hobbesian combination of positivist authoritarianism and jusnaturalist
contractualism is masterfully unjumbled by N. Bobbio in Da Hobbes a Marx.)
The central feature of capitalism is that the
bourgeoisie has tried as far as is humanly possible without tearing asunder the
very fabric of human society to reduce this society to the state of absolute possessive utilitarian individualism. That is why all accounts
of bourgeois economic theory must start with the axiomatic postulate of this
possessive utilitarian individualism. Hobbes did not neglect to include in the
“possessive” part the ability of individuals to buy or sell their own “power”,
meaning both their physical possessions and their labour-power, in exchange for
physical possessions. In the Leviathan,
he describes “the value or worth or price of a man” as “so much as would be given for the use of his power”. Clearly, Hobbes had already an embryonic notion of
what Marx would theorize later as “labour-power”, the commodified form of
living labour in capitalist industry.
Like Euclid and Hobbes, Leon Walras wrote his own “Elements”
– the Elements of Theoretical Economics. What subtends and denominates,
what homogenizes the political theory of Hobbes and the economic
analysis of Walras is the intention to reduce human history to a mechanistic
science based on empirical observations or “facts” of (a) interactions between
atomized egoistic individuals from which (b) physical logico-mathematical rules
or “laws” – political and economic - can be scientifically induced and mathematically
deduced. What Walras added to Hobbesian political theory to erect his own
economic theory was the further condition that these interactions or exchanges be
confined to rare goods whereby demand equals limited supply.
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)
Samuel Bowles sees only the second part of this
Hobbesian-Walrasian project, the reification of social relations to physical
“laws”, but regrettably leaves out the first part, the reduction of human
beings to atomic egoistic individuals:
Leon Walras (in Elements,
1954), in laying out the precepts of the then-young neoclassical paradigm,
sharply distinguished his contributions from the social economics of the
classical founders of the discipline and from his contemporaries in the German
historical school and Marxian political economy. He sought a ‘pure science’ of
economics as ‘a relationship among things,’ not ‘people.’ The flourishing of
theoretical work during the century following him did much to realize this
objective. Significantly, political economy dropped the adjective, becoming
simply economics. Thus, the neoclassical paradigm at its zenith borrowed its
metaphors from the physical sciences, particularly physics: the exchange of
goods is more like a heat exchange than an exchange of greetings. (S. Bowles et al., The Politics and Economics Power,
p.2)
The central thesis of equilibrium analysis is that
it is possible for individuals to exchange their initial endowments in a
manner that maximizes their welfare. But just as for Euclid’s infinitesimally
small points it was impossible to form a geometric line, and for Hobbes
atomically egoistic individuals could never agree to a social contract, so for
Walras the irreconcilability of (a) the atomicity, and (b) the intransigent
self-interest of his economic agents, makes the co-ordination of the exchanges between
them conceptually intractable. If equilibrium prices are the rates of exchange
of individual supply and demand of their endowments that maximize the welfare
of each individual, the question then goes entirely unanswered of how such
individuals can co-ordinate their exchanges to achieve this optimal equilibrium
– optimal in terms of commutative justice. Furthermore, given that these
individuals exchange “endowments” whose social origin is not known, it is
impossible to address the question of distributive justice either!
For such co-ordination to obtain, then, we need to
set out the pre-conditions for this equilibrium to occur. We need to
specify what is meant by “welfare” or “wealth”, and therefore what human needs
correspond to the demand and supply of the exchanged endowments or goods. By
confining the scope of economic analysis to the theoretical existence of
equilibrium and therefore to the possibility of the co-ordination of economic exchange
and the maximization of individual welfare, orthodox bourgeois economic
analysis entirely evades the most vital questions of its presumed analysis. The
subtitle to Walras’s Elements reads, “or The Theory of Social Wealth”.
But unlike Adam Smith’s magnum opus, Walras’s work addresses neither the
“nature” nor the “causes” of “wealth”, let alone of “social wealth”! It
assumes by postulating axiomatically what it needs to explain, to theorize: – the
nature or social objectivity of “wealth”, hence the existence of money as a store
of value and means of payment rather than just a means of exchange; the
possibility of a self-regulating market to exchange endowments by atomistic
egoistic agents; the acquisition of initial “endowments” by these agents; and
the production of further “social wealth” by these agents. In fact, the only “social
wealth” outcome of equilibrium theory axioms is the exact opposite of it - that
is, the annihilation if not the impossibility of any kind of economic
co-ordination or indeed of any kind of market or wealth, let alone of any
society!
Bourgeois economic analysis postulates that economic
activity is motivated by the search on the part of isolated individuals for the
maximization of personal utility. Economic activity is restricted to the simple
exchange of existing endowments possessed by these individuals. And the
exchange itself is confined to endowments or goods that are rare (Walras’s rarete’)
or scarce, given that abundant goods cannot be said to be “in demand”, and
therefore hold no exchange value. Prices are thus for bourgeois economic
analysis simple ratios of exchange of endowments between individuals: they are
only semaphoric signals of intentions to exchange and logically exclude time. For Neoclassical economic analysis,
prices are therefore relative prices that do not require the demand for money
as a separate store of value and means of payment mediating these exchanges.
For this analysis, value, attributed to utility, is purely subjective
and has no socially objective political reality, and therefore value
cannot exist as – be socially objectified by – a separate social institution
such as money.
The only Objective Value allowed by Neoclassical
economic analysis is the social objectivity of the clash of wills, the conflict
between completely atomistic and selfish market agents – individuals -
which leads to the objective “market” determination of “relative prices” as the
resultants of individual utilitarian preferences . The Subjective Values of
atomic selfish individuals are made objective only through the medium of
relative prices, only in and through the act of exchanging individual
goods, their pre-existing endowments. (Cf. C. Menger, Principles of
Economics. Menger’s On the Origins of Money is devoted entirely to
money as a simple “means of exchange”.) For Neoclassical analysis there is no
Objective Value in the sense of a socially objective shared reality – an
interest as an inter-subjective political reality, an inter homines esse.
By contrast, because for Classical Political Economy value can exist only as
socially objective value (quantified living labour) and not as subjective
utilitarian estimation (Neoclassical utility theory of value), this objective
value – the labor embodied in produced goods – is a result of the social
relations of production and power that obtain between both individuals and
classes of individuals (workers, capitalists, entrepreneurs, landlords) who
determine both the nature of supply and demand and the prices of goods as a
distribution of labor value among economic agents. Consequently, this Objective
Value can assume an independent social institutional existence in the
form of money because it is not limited to the direct exchange of goods
between atomic individuals.
The axiomatic assumptions that turn all prices into relative
prices, into exchange ratios between goods, make the notion of Value wholly metaphysical.
If the prices of goods can be determined only after all possible exchanges are
settled, then the question of what determines these final equilibrium prices –
be it utility, labor or marginal utility – is wholly immaterial because prices
are calculated ex post facto, after the event! Walras’s mathematical intellect
was clearly not conceptually refined enough to penetrate what ought to have
been an evident truth: he glibly re-iterates the importance of utility and the
further refinement of marginal utility (which he attributes to his father) –
and fails to notice that prices as marginal utility do not remove the
metaphysical objection (vedi, Elements, pars. 155 to 160). His
objection to Smith’s Labor Theory of Value that goods are exchanged that do not
involve labor does not overcome the fact that the aggregate value of all goods
could be any “substance” at all, including utility! Both Hobbes and Walras view
utility as an absolute essential notion – as a substance. Hobbes and Walras
operate still in an essentialist Newtonian world like Classical
Political Economy. Yet, Walras’s mathematical techniques, which merely connect
prices in a purely “relative” manner, in terms of the final equilibrium ratios
of marginal utilities, ensure that these ratios or prices denote only formal
numerical or algebraic relations with no reference whatsoever to the real
objective social content of the “wealth” that they were presumed to
theorize or explain! Walras’s attempt at a “Theory of Social Wealth” would be
laughable if it had not been so glorified by the collective idiocy or madness
of orthodox bourgeois “economic science”!
Both Hobbes and Walras, from vastly different
historical and political positions – Hobbes was a monarchist and Walras a
self-defined socialist –, still operate within the universalist ambit of the
humanistic renaissance world view of a mechanistic mathesis
whereby human reason progressively reveals the Divine Plan contained in the
“Great Book” of Creation - which is at the very origin of Western natural
philosophy or science at the inception of capitalist industry in north-western
Europe. This is a Newtonian “closed world” that seeks to discover a clavis
universalis, a universal key or code that can unlock all the mysteries of
the universe in a manner akin to the Divinity. (See, A. Koyre, From the
Closed World to the Open Universe and P. Rossi’s studies, among them I
Filosofi e le Macchine. I have covered this ground in my “Descartes’s
World”.) Indeed, despite his diatribes with Descartes, it was Hobbes’s Cartesian
universalist mechanicism that opened him in his late years to the ridicule of
the new breed of English scientific empiricists whose naked and brazen, value-free
(wertfrei) experimentalism could no longer be restrained by the
doctrinal strictures of the humanist era to which Hobbes squarely belonged. The
onset of capitalist industry required the primacy of “doing” over “knowing” in
the sense that the subjection of pre-industrial society to the all-conquering
Promethean powers of capitalist enterprise could no longer suffer the inhibitions
and shibboleths of existing absolutist monarchic feudal and ecclesiastical
rule.
In this perspective, centuries later, the Walrasian
equilibrium schema reveals a novel aspect to the application to society of logico-mathematical
and scientific schemata. While still clinging to the catholic observance
of universal values, the Walrasian method formalizes the Neoclassical
development of a microeconomic project or “frame” (the German word Entwurf
captures the unity of the two concepts – project and frame) that reifies
existing social relations of production and social power and that will enable
the “exact calculation” of profit and accumulation of capital that the new
bourgeois order had imposed on European society. Hannah Arendt captured most
perceptively this essential historical truth:
It is the same conformism, the assumption
that men behave and {p42} do not act with respect to each
other, that lies at the root of the modern science of
economics, whose birth coincided with the rise of
society and which, together with its chief technical tool, statistics, became
the social science par excellence. Economics—until the modern age a not too important part of ethics and politics and
based on the assumption that men act with respect to their
economic activities as they act in every other respect—could achieve a scientific character only when men had become social beings and
unanimously followed certain patterns of behavior, so that
those who did not keep the rules could be considered to
be asocial or abnormal.
(H. Arendt, The Human Condition, pp. 41-2)
Arendt neglects to observe that, rather than
“men…unanimously following certain patterns of behaviour”, it was the
capitalist bourgeoisie that imposed these “patterns of behaviour” on the rest
of late feudal society. Bourgeois economic science congealed and crystallized
analytically at a microeconomic level these “patterns of behaviour” into strict
logico-mathematical schemata – a project or Entwurf – that
appropriately “framed” human social action so that it could be strictly
commanded, directed, predicted and calculated. Hence, the sole purpose of
bourgeois economic analysis – Classical and Neoclassical, through “the Law of
Value” - since the onset of the capitalist agrarian and industrial revolutions is
not to theorize the social political reality of economic production and
exchange, but instead to establish a microeconomic formal
mathematical relation – a schema, a “model”, an Entwurf - between all social exchanges so that this
formal system of exchanges has a unique solution for all transactions (what in
mathematics is called the “existence” of a function connecting numerically
dependent and independent variables).
“The most
important thing is, first, to find the existence of functional relations
and, second, to know as many properties of these functions as possible.
One can, then,
establish algebraic expressions even if their numerical magnitudes
cannot be found."
"Uber die mathematische Methode/' p. 37. Quite apart from any
numerical magnitudes,
the mathematical method, according to Schumpeter, is "just the appropriate
instrument" of exposition because the use of "systems of
simultaneous equations for
the representation of economic interrelationships affords a comprehension
[Überblick]
of them that cannot otherwise be attained with the same clarity." (J.
Schumpeter, Epochen,
p. 110, quoted in “Schumpeter’s Econ. Meth.” in F. Machlup, The Methodology of Economics.)
By steadfastly refusing and failing to confront the
question of value as a shared objective social interest, of what
determines prices not as relative ratios of exchange between individual
goods and individual agents but as social relations objectified by those
goods, orthodox economic analysis fails to theorize how individuals came
to possess their initial endowments and how this initial wealth can be accumulated,
how capital can “grow”, by means of the production of goods for sale –
in other words, (a) how and why present capitalist society originated and
became what it is today, and (b) what dynamic internal to capitalist industry
can lead to the accumulation of capital or indeed, less accurately described,
to economic growth and development. Finally, as a direct corollary, Neoclassical
analysis quite simply cannot account for the existence of money as a store
of value and as a means of payment rather than as a simple means
of exchange!
The reason for this abject failure is that bourgeois
economic theory again steadfastly refuses to enquire and inquire, first,
into the social and political antagonism intrinsic to the process of capitalist
production or valorization where living labour is reduced to labour
power through its “exchange” with dead labour by means of money-wages,
as well as, second, into the process of consumption or realization
of value where the needs of “consumers” – otherwise known as demand
- to be satisfied by capitalist supply are conditioned by the capitalist need
to limit that supply to needs or demand that bind and tie workers to the
process of production, to the necessity to sell their living activity as
labour power quantified in terms of money-wages exchangeable for dead labour. Far
from being an immutable aspect of “human nature”, then, the capitalist economy
is the historical product of social conflict and antagonism where the social
relations of production also condition and interpenetrate the relations of
consumption.
Capitalism involves essentially
the accumulation of capital by means of profit, which is the monetary
form of the excess value realized from the sale of goods. As we shall
see, value is the ability of dead labour or produced goods to command living
labour. There are two stages to the social validation of this command: the
first is the process of valorization which is the process of production
of goods; the second is the moment of realization where produced goods
must be sold to eventual purchasers. The necessary time and ownership gaps
between production (valorization) and sale (realization) mean that money in its
form as capital (money-capital) must intervene to mediate these processes as
(i) a store of value, and (ii) a means of exchange, for the precise reason that
both capitalists and workers act as formally (legally) free agents whose mutual
competition is socially regulated by broad legal and institutional rules.
Because equilibrium analysis
entirely leaves out objective value from the semaphoric transactions that it
describes, its “prices” can only be relative prices, that is, simple
exchange ratios between goods exchanged. Because the entire scope of
equilibrium analysis is to maximize the utility of its agents, there is
absolutely no logical or real room in it for the accumulation of value as
command over living labour, which is the essential purpose of capital. And
because exchange and prices are purely semaphoric, and therefore there is no
ownership transition from production to sale of goods, there is no room either
for money as a store of value and as a means of payment. In capitalist
industry, the realization of value is separate in time from its valorization, so
the exchange of goods between these two temporally separate phases of the
circulation of capital requires the demand for money, for a separate store of
value for the accumulation of value, and means of payment for the transactional
change of ownership between sellers and purchasers.
Both Adam Smith’s providential Invisible Hand and
Walras’s totalitarian “auctioneer” were required to resolve the conceptual
antinomy between the impossibility of market co-ordination due to the atomistic
self-seeking nature of market agents, on one hand, and the necessity of markets
to clear (of demand and supply to coincide) for the market economy to maximize
individual self-interest. It is the unity of opposites: equilibrium analysis
requires that economic agents are in perfect competition (hence, complete
decentralization of decisions) and at the same time have access to the same
information (hence, total centralization of decision) so that all markets clear
with equilibrium prices. Thus, the axiomatic requirements are perfect
competition (decentralized decision-making) and perfect co-ordination
(centralized information)! For markets to clear, agents must have access to the
same information (total centralization of utility schedules), whilst complete
decentralization is required to ensure perfect competitive pricing leading to
maximized welfare. But complete decentralization of decision-making is
inconsistent with total centralization of information. The participants of
equilibrium are decision-making agents in the Smithian case (hence the need for
a providential divine hand) and totally passive recipients of information in
the Walrasian case (whence the need for an independent sovereign and
totalitarian auctioneer). Similarly, perfect competition must lead to absolute
monopoly to be true to its name - because perfect competition must eliminate
itself if it is to be “perfectly” competitive, whilst total monopoly must
result in its own elimination for it to be worthy of the name “monopoly”, because
the very concept of “monopoly” implies the presence of its opposite -
competition.
Thus, equilibrium theories from Smith to Walras
become akin to “a snake eating its tail” in Nietzsche’s phrase: we have complete decentralization of economic
activity in Smith, which requires the providential spontaneity of the Invisible
Hand, similar to Hayek’s “spontaneous order”, and equally total centralization
in Walras’s auctioneer, which involves the mathematical automatism of
simultaneous equations. As Loasby has very perceptively pointed out (in Equilibrium and Evolution), the
“complete decentralization” of economic decisions that is implicit in Hobbesian
political theory and then in Walrasian equilibrium economic analysis makes the
co-ordination of economic decisions “a matter of life and death”. Fittingly, it
was the English translator of Euclid’s Elements,
Thomas Hobbes, who first devised this worldview. In this worldview, there is no
space for common human interests (inter
esse, common being): the syllogistic conclusion is that “freedom” can be
defined and exist not as a common human goal but only as “free-dom”, that is to
say, as an equilibrium of opposing, conflicting and irreconcilable
individual wills. This equilibrium, the equilibrium of Greek stasis or civil war (bellum civium), can be settled by political convention (autocratic,
democratic or elitarian) only because the atomized human individuals postulated
in Hobbes’s theory know that the only outcome of such static equilibrium, of
this stasis, will be the war of all
against all (bellum omnium contra omnes)
that will lead fatally (fate here turns into death) to the extinction of
society and humanity.
This is indeed another factor that makes the
Hobbesian-Walrasian schema or blueprint axiomatic for the analysis of
capitalism. But this interdependence of human economic action is still
subordinated to the axiomatic primacy of individual self-interest;
consequently, it cannot form part of equilibrium analysis except as a Hobbesian
ultima ratio or dira necessitas ob metum mortis, dire necessity in fear of death,
as we explained above. The way out of this equilibrium apory or stasis is provided by the ultima ratio, the absolutely
indispensable need for and right to self-preservation (here need becomes
right), which leads these atomic self-interested individuals to reach freely a political con-vention, an
agreement or “social contract” that can avert mutually assured destruction – by
voluntarily alienating their initial “freedom”. The absolute
self-interest of atomically decentralized individual market agents can be
preserved only if they agree – “as a matter of life and death” (Loasby above) -
to centralized co-ordination (Walras’s totalitarian auctioneer, Hobbes’s
“Sovereign”).
Here the positive
empirical evidence of a society that the bourgeoisie has reduced coercively to little more than a moral
jungle from which all notion of “natural law” has been expunged meets with and
satisfies the jusnaturalist
(natural-law) requirement that individuals must agree freely and rationally to a political regime that will protect them
from civil war. Hobbes acknowledges that what coerces individuals to accept
this bourgeois political regime based on “the laws of the marketplace” is the metus mortis, the fear of death at the
hands of any other individual. And given that each individual is axiomatically
defined as being “equal” in the ability to harm another in the state of nature,
then it follows axiomatically that each individual decides freely (by political
convention, otherwise known as “social contract”) and rationally (by scientific hypothesis,
following the definition of in-dividuals in conflict) to erect a “common
wealth” or State or status civilis
that will protect them from certain death. Here the contractus unionis (the
paradoxical community of interest of agents to preserve their self-interests) instantly
turns into a contractus subjectionis (the alienation of the
self-interest to the Sovereign or auctioneer).
Even in its “free-dom” - indeed, as Weber has shown,
especially in its “free-dom” – human
action and leadership will obey that “conditioning” constituted by the dira necessitas (the dire necessity),
the extrema ratio of
self-preservation. The ultimate foundation of mechanical rationality both for
the Hobbesian political system and for its Walrasian neoclassical progeny in
equilibrium theory is quite simply self-preservation, the “dire necessity” of
surviving in the state of nature where homo
homini lupus, man is a wolf to man. Free-dom consists not in acting
irrationally but in acting rationally: in short, that decision is “free” that
is taken rationally, by respecting
the “precise relationship” between subjectively
intended ideal goals and the objective
con-ditions, the available means, for the implementation of those goals
starting from the axiomatic postulate of the irreconcilable self-interests of
individual human beings.
Make no mistake: the Hobbesian-Walrasian
mechanical science we mean here is not an “objective science”, - for as
Nietzsche demonstrated, there is and there can be no such “thing”! The science we intend here is a political
practice based on the inflexible application of axiomatic rules to human society
by a historically specific social class – the capitalist bourgeoisie. The
bourgeoisie would be blind deaf and mute without this inflexible science, which
is why it has erected the most fabled monuments to it. This science consists
for the bourgeoisie in placing political decisions in a precise relationship to the existing relations of power in society
– its institutions - that it has imposed to its own advantage so as to
be able to reproduce them according to its own axiomatic postulates or schemata.
And then, of course, in presenting these political decisions as “that peculiar jumble of
conditioning and freedom, which economic life shows us”, which is how Schumpeter defines “economic science”.
The question now is: what is this “precise relationship…. of conditioning and
freedom”, and how can it escape its evident apories and become effectual? It simply will not do, it entirely misses the point, to
conclude that Schumpeter has failed in his attempt “to integrate theory and
history” and to reconcile freedom and necessity (this is Moura’s claim in his
homonymous essay based on Lawson’s epistemology): - because the crucial point,
the key to the enigma, is to understand this “precise relationship [of the free creative work of the individual] to
objective conditions”: that is the task
and also the limit of science. Our
aim here is to discover the conceptual requirements for the practical
implementation of the axiomatic postulates of Neoclassical equilibrium analysis
on which the very idea of a bourgeois civil society and of its economic system
are founded. This “mechanism” is capable of being embodied by an
“institutional framework” (apparatus, dispositif, Entwurf) in which decisions
are made within the limits and boundaries set by the axiomatic schema of the
bourgeois system of social power so as “to put it in motion” or “energize” (the
literal meaning of dynamis in Greek)
it. In other words, the subjective, historical “force” or “source of energy”
of the bourgeois social system must be placed in a “precise relationship” to the “objective
conditions” or boundaries or strictures that are necessary for the expanded
reproduction of human society in a capitalist form. Schumpeter’s aim is to find out the reason why capitalist society cannot stand still – why capitalism
is essentially a Dynamik “and neither is nor can be Statik”.
This reason
cannot be solely the result of experience because human experience could lead
to uncertain outcomes. Instead, whilst it cannot be contrary to empirical
experience, this reason has to be
deduced from the very conceptual framework of a capitalist economy acquiring
its own dynamic, from its axiomatic
postulates “coming into being” or ec-sisting.
Schumpeter’s economic science must be, as he styles it, a histoire raisonnee – a reunion or marriage by force of will (Ent-scheidung,
de-cision as “un-divorcing”) of the equilibrium and history that are utterly irreconcilable
in theory (herein lies their conceptual Scheidung, divorce, scission,
dis-cord, anti-nomy). Economic science is the rationalization/realization of a
specific capitalist project (Schema, Entwurf) of political
command over society – realizable only if rational, calculable, measurable,
because the im-measurable is ir-rational and therefore ir-realizable. The
axiomatic postulates - the “reasoning” schema of this “history”, the logical
basis for its “scientific hypothesis” - are formalized in Neoclassical
political economy, of which Walrasian equilibrium theory is the most “perfect”
expression.
Now, a “dynamic equilibrium” is impossible, a
contradiction in terms, if by equilibrium we intend a measurable state,
because then any position of equilibrium is inescapable. It is possible to
understand how an economy can reach
equilibrium, but it is unimaginable that it can ever move out of equilibrium without the intervention of “external or
exogenous factors”. As Schumpeter put it: “An
equilibrium can only exist at all… [as] a static one. A dynamic equilibrium is
a contradiction in terms.” Thus, the ec-sistence
of equilibrium cannot be at all a pure mathematical concept if it is to
have a practical political application. The requirements for the “pure”
mathematical “existence” of economic equilibrium are entirely different from
those of its real, practical application or ec-sistence.
And this is so not just from the standpoint of practical experience itself, but
indeed also and above all from the very conceptual requirements or implications
of the ec-sistence of a concept. On
one side, we have the formal conceptual elements of a concept; but on the other
we have also the conceptual implications of its coming-into-being, of the ec-sistence of the concept, of its extrinsication or embodiment or realization from ideal concept, from project or Schema
or Entwurf to conceptual reality!
The two sets of conceptual requirements are simply not the same. Yet, it is
absolutely evident that the practical
requirements for the ec-sistence of a
concept are just as much a part of its conceptual being as are the purely
formal logical requirements of its
internal consistency! Whereas the formal axiomatic definition of a concept can
only be self-referential and “closed”, and therefore “totalitarian” or
“tautological” (cf. Hayek, Demsetz, Loasby, Langlois), the conceptual
requirements for the ec-sistence of
the concept turn it into an “open” concept because its practical implementation
is subject to the minimal intuitive requirements of empirical experience and
observation. At that point, the concept may be said to form a “scientific
hypothesis” and it may be said to be “scientific”.
To be clear, orthodox bourgeois economic theory has
developed a series of schemata, of formal mathematical models,
that in and of themselves – as mathematical schemata – are entirely meaningless
– and yet still serve a purpose in the sense that they can be used as tools
that regulate (Latin, regola, rule; whence ruler, tool to
measure and law-maker) real social relations of production that involve
real social conflict and antagonism. These schemata or analytical tools
serve the purpose of classifying conceptually the strategic role of agents, in
a project or “frame” (Entwurf) vital to the expanded reproduction of
capitalist industry and society, and of bringing these categories in anatomical
and measurable relation to one another.
We could think of no better way to conclude this discussion
– which is leading clearly to the vital link between the strategic “close” or “closure”
(Ab-schluss) of orthodox economic theory, the accumulation of capital,
and the theory and practice of a totalitarian state – than to re-cite
Hannah Arendt’s devastating summary of Hobbes’s unsurpassed theorization of the
conceptual and practical requisites for the institution of such a state. Once
more, although our treatment of Hobbes’s political theory is perhaps more systematic
than Arendt’s, we simply could not resist drawing on her disarmingly evocative
prose and quote in full what is truly one of the most moving and inspiring
passages in her entire work which stands as a lasting indictment not only of
the capitalist bourgeoisie but also of its venal intellectual apologists, among
whom we count first and foremost
professional economists:
It is
significant that modern believers in power are in complete accord
with the
philosophy of the only great thinker who ever attempted to derive
public good
from private interest and who, for the sake of private good,
conceived and
outlined a Commonwealth whose basis and ultimate end is
accumulation of
power. Hobbes, indeed, is the only great philosopher to
whom the
bourgeoisie can rightly and exclusively lay claim, even if his principles
were not
recognized by the bourgeois class for a long time. Hobbes's
Leviathan exposed the only
political theory according to which the state
is based not on
some kind of constituting law—whether divine law, the law
of nature, or
the law of social contract—which determines the rights and
wrongs of the
individual's interest with respect to public affairs, but on the
individual
interests themselves, so that "the private interest is the same with
the publique."
There is hardly
a single bourgeois moral standard which has not been anticipated
by the
unequaled magnificence of Hobbes's logic. He gives an
almost complete
picture, not of Man but of the bourgeois man, an analysis
which in three
hundred years has neither been outdated nor excelled. "Reason
... is nothing
but Reckoning"; "a free Subject, a free Will . . .
[are] words . .
. without meaning; that is to say, Absurd." A being without
reason, without
the capacity for truth, and without free will—that is,
without the
capacity for responsibility—man is essentially a function of
society and
judged therefore according to his "value or worth ... his
price; that is
to say so much as would be given for the use of his power."
This price is
constantly evaluated and re-evaluated by society, the "esteem of
others,"
depending upon the law of supply and demand.
Power, according to Hobbes, is the accumulated
control that permits the
individual to fix prices and regulate supply and
demand in such a way that
they contribute to his own advantage. The
individual will consider his advantage
in complete
isolation, from the point of view of an absolute minority,
so to speak; he
will then realize that he can pursue and achieve his
interest only
with the help of some kind of majority. Therefore, if man is
actually driven by nothing but his individual
interests, desire for power must
be the fundamental passion of man. It
regulates the relations between individual
and society,
and all other ambitions as well, for riches, knowledge,
and honor
follow from it.
140 IMPERIALISM
Hobbes
points out that in the struggle for power, as in their native capacities
for
power, all men are equal; for the equality of men is based on the
fact
that each has by nature enough power to kill another. Weakness can be
compensated
for by guile. Their
equality as potential murderers places all
men in the same insecurity, from
which arises the need for a state. The
raison d'etre of the state is the need for some security of the individual, who
feels
himself menaced by all his fellow-men.
[146….Hobbes was the true, though never fully
recognized, philosopher of the
bourgeoisie because he realized that acquisition
of wealth conceived as a
never-ending process can be guaranteed only by
the seizure of political power,
for the accumulating
process must sooner or later force open all existing
territorial
limits.
He foresaw that a society which had
entered the path of
never-ending acquisition had to engineer a
dynamic political organization
capable of a corresponding never-ending process
of power generation….
For a
Commonwealth based on the accumulated and monopolized power
of all its
individual members necessarily leaves each person powerless, deprived
of his natural
and human capacities. It leaves him degraded into a
cog in the
power-accumulating machine, free to console himself with sublime
thoughts about
the ultimate destiny of this
machine, which itself is
constructed in such a way that it can devour the
globe simply by following
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