THE ANTINOMY OF BOURGEOIS ECONOMIC THEORY AS SCIENCE
The notion
that economics is independent of politics cannot have any objective scientific
basis unless it can be shown that economic value is independent of human
institutions and wholly reliant instead on quantitative relations
between production techniques and the raw materials of production. But if that
were the case, then economics would turn into engineering! Bourgeois
economic theory tries to evade this inescapable contradiction in two related
and indeed consequential ways: the first avenue of escape is by making
the calculation of exchange value dependent entirely on subjective valuations as
a ratio of the aggregate exchanges between individual economic agents; and the
second, corollary, avenue is then to abstract from the formal mathematical
equation of these aggregate exchanges as a pure mathematical “box of tools” (Joan
Robinson, Joseph Schumpeter) that can formally describe these exchanges as
scientifically rational as a means of maximising the exchange of values for all
individual economic agents concerned. (This is done through Walrasian general
equilibrium reliant on simultaneous equations or through the further
requirement of Pareto optimality whereby any aggregate change to general
equilibrium prices must leave all economic agents in a better welfare position
than they enjoyed before the change.)
This
mathematical formulation of an equilibrium and optimal exchange of entirely
subjective values between economic agents is then presented as a “science of
choice” (as Lionel Robbins styled it) or as “the pure logic of choice” (in
Friedrich Hayek’s phrase). The complete unfoundedness of this approach, its
being a contradiction in terms (contradictio in adjecto or oxymoron) is
that a “science” or “pure logic” can never be founded on choice because
its ultimate object or subject-matter, or referent must be a material
object, not a subjective voluntary entity such as choice. Because choice is by
definition an exclusively voluntary and subjective notion, no “science” of
it is possible: choice is not a material object or matter over which a science can
be based on unless by ‘choice’ we mean the application of mathematical formulae
that maximise a subjective, and therefore inscrutable, entity such as ‘welfare’
or ‘utility’, presumably the objective or aim of individual economic
agents. But the very subjectivity and inscrutability of these entities ensures
that no objective scientific relationship of any kind – let alone the purely
formulaic one of mathematics and logic – can be found between them and the
ultimate distribution of the material products exchanged by and between the
independent economic agents!
Indeed, the
crucial vice of bourgeois neoclassical economic theory is precisely to seek to
present inscrutable individual entities (welfare, utility – which Joan Robinson
relegated to the sphere of “metaphysics”, in her Economic Philosophy) as
being amenable to objective calculation of material quantities or ratios whose “pure
logic” or rationality can be only arbitrarily attributed ex post
facto – that is, only after the event, only as the rationalisation
of a final outcome which is a postulate or axiom or assumption decreeing
that the final exchange values or prices are indeed ipso facto (by their
own finality) rational and optimal – optimal because rational.
Thus, bourgeois economic theory first assumes the existence of a “free
market” in which economic agents exchange products freely, wholly subjectively
and rationally (Max Weber proved the coincidence of free choice with rational
choice) and then concludes that the ultimate and final distribution of
the products exchanged is rational and therefore optimal.
But it is
immediately evident that the mathematical rationality of the distribution of
exchange values between economic agents can have no material or objective, and
therefore scientific, foundation because the subjective valuations of products to
which mathematical formulae and logical categories are applied can never be
founded on or evidenced by the material quantities of the products involved!
The limpid contradiction here lies between the subjective prices
or exchange values that economic agents agree on to finalise their exchanges
and, on the other side, the material quantities of the products
exchanged – which are nullified logically by the final equilibrium prices of
the aggregate exchanges! Thus, prices, on one side, and quantities,
on the other, are the two incommensurable pillars of bourgeois economic theory
that are irrevocably and logically irreconcilable because they are heterogeneous.
(Friedrich Hayek’s confusion of this simple reality was evinced in the title – Prices
and Production - to one of his major works seeking to resolve his dimly
perceived insurmountability of this conundrum – where clearly prices [exchange
values] stand in antinomic relation to production [quantities]!)
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