Commentary on Political Economy

Monday, 14 November 2022

RATIONALITY AND RATIONALISIERUNG in the Society of Capital – Max Weber’s Vorbemerkungen

Hegel’s Absolute Idealism purports to show that “whatever is rational is real and whatever is real is rational”. This claim is the culmination of the mediaeval Scholastic search for the Ordo et ratio rerum et ideorum – that is to say, the complete collimation and congruence of intellect and thing, the famous adaequatio rei et intellectus. The ultimate goal of Western philosophy – its Holy Grail, if you like – its com-pletion or Voll-endung (full ending) is precisely this identification of the idea and the thing. Not simply the adaequatio rei ad intellectus or of the intellectus ad rem, but rather their total interpenetration. But this is precisely the possibility that Kant’s Critique of Pure Reason had expressly denied: no idea or con-cept (from the Latin, cepere, to seize) can indeed seize reality because reality is the domain of the Ding an sich, of “the thing in itself” which is impenetrable to human com-prehension or understanding. All that the human intellect can seize or grasp are only appearances or representations (Vor-stellungen) that will never be able to contain the totality of reality, of the world. Reality is therefore in-comprehensible in its totality; it is refractory to rationality; it

will always elude all human attempts to find a perfect correspondence or order and reason of ideas and things. Hence, there exists, in the words of Fichte, a hiatus irrationalis between the two orders of reality – thought and thing – that can never be filled; a gap, a chasm that can only be bridged by a rational schema or by schemata produced by the intellect (Verstand) as a pro-ject, as a projectio per hiatus irrationalem.

If we reflect upon the opposing factions in the Methodenstreit, we can see that the German Historical School led by Roscher understands political economy as an idiographic study akin to history whose aim and scope is to describe the manifold ways in which a society produces and reproduces itself as the outcome of an organic process made up of social relations that include both narrow utilitarian gains and broader moral, ethical and cultural standards, values and goals. By contrast, the Austrian School led by Menger sees political economy as a science capable of establishing a formal mathematical relation between the exchange of goods and services amongst separate individual units, be they individuals or firms, with a view to maximising their subjectively-defined wealth. Indeed, for Roscher, political economy has scientific legitimacy to the extent that it is not turned into an “idealistic method” of mathematically relatable and quantifiable entities, whereas for Menger it is precisely the ability of mathematics seemingly to be able to encapsulate subjective individual exchanges that enables political economy to be a science. Whereas Roscher’s understanding of society and of political economy is Epimethean, retrospective and organic and therefore idiographic, extending to the totality of social relations between both individuals and groups and classes and institutions, for Menger political economy is Promethean, pro-jected toward the future, a corrective to mistaken beliefs and actions; it is purely nomothetic in that it observes the overwhelmingly prevalent behaviour of individuals in society where the exchange of goods and services is concerned and then seeks to formulate it mathematically in order to prove its scientific status. For Menger, social behaviour is scientific to the extent that it can be encapsulated by mathematical formulae. For Roscher, no such scientific formulation is possible because social development is historical – spontaneous and organic. Roscher looks to the present institutions of exchange and production as the outcome of physiological and organic and moral historical social developments; Menger instead seeks to tease out the invariant and mathematically quantifiable aspects of the behaviours of productive agents so as to prescribe and project their scientific optimisation into the future. Roscher’s political economy can be said to be historical-organicist or emanationist, as Weber labelled it, whereas Menger’s is mathematical-idealist. The former theory describes historically the actual process of social reproduction whereas the latter prescribes mathematically the scientifically appropriate conduct of exchange and production of goods and services. Put differently in negative fashion perhaps, it may be said that for Roscher there is no correct or mistaken way to produce and exchange goods and services because political economy is simply an aspect of social life, whereas for Menger the optimisation of economic behaviour is central to the status of political economy as a science.

Hence, Roscher’s political economy can never be a rational mathematical science because economic behaviour necessarily involves irrational behaviours not amenable to mathematical calculation. For Menger, instead, it is the calculability of economic conduct made possible by its reduction to interactions between individual self-interested agents that enables political economy to become a rational mathematical science – rational because amenable to mathematical calculability! Clearly, Roscher’s position is akin to that of Hegelian idealism: rationality is physio-logical, it pertains to nature, it is the essence – the interpenetration of nature (physis) and logic – of reality. Rationality is intrinsic to nature; it is the extrinsication of the Idea, its unfolding in space and in time. By contrast, the Mengerian view is eminently neo-Kantian: rationality is not intrinsic to nature and the world, because the hiatus irrationalis separates the Idea from the Object, but is rather the ability of the human understanding to render reality measurable and therefore predictable – predictable because measurable. It is not that reality is measurable or predictable; it is rather that we reduce the real to the measurable so as to make it predictable! The rational does not belong to reality; there is no rationality intrinsic to the world. Rather, the purpose of rationality is – here is the essential concept – the rationalization, the Rationalisierung, of reality! 

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