Tag Archives: economics

Deciancio, Melisa, Pablo Nemina, and Diana Tussie (eds.), Handbook on the Politics of International Development (Cheltenham: Edward Elgar, 2022)

Book review (editorial review), ,

This is a book that makes a significant contribution to the extant professional literature, particularly the academic literature in political science, although there continue to be far too few serious attempts to link their research issues directly with those of economics, i.e., neoclassical economics or contemporary political economy. Sociology is also not directly a major source of the insights presented in this book. In particular, there is no world-systems theory emphasis, although many themes do overlap with the traditional topics found in many world-systems analyses of the global capitalist system.

The three editors are all from Argentina. All are affiliated with FLASCO, Argentina.[1] The contributors come from Columbia, Australia, India, Spain, Brazil, Chile, Argentina, Italy, the Netherlands, Belgium, Switzerland, Sweden, Dubai, South Africa, México. Ecuador, Malaysia,  Kyrgyzstan, China, Greece,  Hence, they supply a perspective that is truly global. While there are also some chapters by authors in the UK, Canada, the US, and Germany, the book as a whole is quite different in some ways from the predominant North American, British and European viewpoints.[2]

The book is rich with useful information. It is difficult to review it, because there are thirty chapters. Some of the chapters are arguably better than others, but none can be said not to belong in a book on such an important topic.

The book is divided into four parts:

Part I: The Concept and Politics of Development: Paradigmatic Debates. (Five Chapters.)

Part II: Development and Contested Globalization. (Eight Chapters.)

Part III: The Politics of Development Agendas. (Nine Chapters.)

Part IV: Global Actors in the Politics of Development. (Eight Chapters.)

In a short book review I cannot do justice to all of the thirty chapters. So, I have selected the Introduction and will emphasize two chapters from each of the four Parts. The choice of those eight chapters is arbitrary and subjective. But it does provide a kind of sample of the book as a whole.

Let me start with the “Introduction” by the three editors. It is not listed as a separate chapter, but is in a sense a 31st chapter. (Also, there is no “Conclusion” by the editors.) The Introduction is comprehensive. There is mention of the “broader intellectual landscape of the political economy” (p. 2) and IPE (International Political Economy), which is discussed on Pp. 46, 173-176, and 218-228. There is no sustained discussion of Classical Political Economy. The brief mention of Karl Marx (1867) on Pp. 244-245 is a very basic mention of the difference between slavery and “free labor.”[3]  (Axel Marx is also mentioned.) Thomas Piketty’s Capital is cited on p. 465 to indicate that capital has grown but has not been widely distributed. Then the discussion goes to philantropy and a sudden rise in the contribution of “private wealth” to “social causes.” Hence, some slight mention of Political Economy, but no real exploration of the “broader landscape.” The emphasis is more closely associated with the “field” of political science and with stimulating and detailed discussions of all kinds of organizations. Acronyms of UN agencies abound, not just UNESCO and UNICEF. The authors are clearly well versed on the day-to-day activities of all kinds of agencies and know a great deal about many international agreements. The World Bank (WB) and the World Trade Organization (WTO) are also discussed in several keen ways.

The book has many strengths. But it has taken me a long time to finish this book review in part because I wanted to not let my immediate impression dominate what I write. As a Handbook with a specific slant, it is valuable and would make a useful contribution to any university library. Also, now that is can be dowloaded online, there may be individuals who wish to purchase it as well. But I found myself comparing it to Brian Frederking and Paul F. Diel’s (2015) fifth edition of The Politics of Global Governance: International Organizations in an Interdependent World. A useful dialogue would happen if that book were critiqued by the editors and authors of the Handbook being reviewed here. Important issues such as poverty, disease, regional conflict and climate change are dealt with quite differently in the Frederking and Diel book.

Similarly, I tried to compare the Handbook to Sylvia Walby (2009) Globalization & Inequalities. That book tends to look at “modernity” as a more complex issue and has a somewhat more critical approach, although not Critical Theory of Marxist/Marxian theory per se. The issues dealt with when we consider international development, modernization, rural integrated development, the role of international and national organizations such as NGOs, and so forth, are so complex that no one Handbook can cover all the necessary ground. Moreover, the intellectual problems hinted at in this Handbook could have involved more dialogue and debate. On the other hand, that would have made it a different book. It is always unfair for any reviewer to start to question a book project. The reader will gain a great deal from the separate chapters and from the overall organizational structure. The framework, however, should not necessarily be taken as the final word.

 

Notes

[1] The Latin American Faculty of Social Sciences (FLACSO) was founded in 1957 by UNESCO. FLACSO is an international, intergovernmental, regional and autonomous organization with representations in different Latin American countries, including Argentina, Brazil, Costa Rica, Chile, Ecuador, Guatemala and Mexico.

[2] Bruce Currie-Adler is identified as “Program Leader,” IDRC, the  International Development Research Centre, Ottawa-Gatineau, Canada. [I myself have benefited from IDRC grants and an IDRC sponsored seminar for selected students in Indonesia.]. Daniel Kefeli is a Doctoral Researcher, Institute of Political Science, University of Münster, Germany. Karen M. Siegel is Research Group Leader: “Transformation and Sustainability Governance in South American Bioeconomies,” Instutute of Political Science, University of Münster, Germany.

Amrita Narlikar is President, German Institute for Global and Area Studies (GIGA), Germany as well as a Non-resident Senior Fellow, Observer Research Foundation, India, and Honorary Fellow, Darwin College, University of Cambridge, UK. Thomas H. Stubbs is Senior Lecturer in International Relations at Royal Holloway, University of London, and Research Associate in Political Economy at the Centre for Business Research, University of Cambridge, UK.

José Antonio Ocampo is Professor of Professional Practice in International and Public Affairs, University of Columbia, USA.

[3] I was surprised to read there are “only” 2.6 million people in North America, Europe and Oceania who are malnourished. The statement is from Lima and Baca in Chapter 16: The Polltics of Food. They are the only authors who cite Karl Marx’s 1867 work on the Critique of Classical Political Economy. (They cite a Spanish edition I do not have at hand.) It is true the percentage of severely malnourished people is higher in other parts of the world, but the authors do not seem to be familiar with the extensive literature on food insecurity in the US.

Equity and the Pareto Principle: Does the Pareto Principle Have Moral Force?

Article (double blind peer review), ,

Preface

This heretofore unpublished paper is now nearly 23 years old.[1] It was written at a time when what is here called “Pareto thinking” was often expressed in public debate—particularly political debate—in order to justify recommendations of policy or particular political decisions; and it was also used more widely to defend the propriety of certain commercial transactions. Vilfredo Pareto, or something called “the Pareto Principle”, might or might not have been mentioned in these connections.

I daresay that many of those who enunciated “Pareto thinking” had never even heard of Pareto himself. But what they had in common was that they thought of what is herein called “the Pareto Principle” (whether or not they thought or spoke of it under that name) as a carrying with it a kind of moral or equitable mandate that favored, or even demanded, the implementation of one or another policy decision or justified one or another commercial transaction—a mandate somehow grounded in the science of economics.

Strictly speaking, at the focus of my discussion in the paper was and is what might be more properly called the “Pareto Efficiency Principle”, which is different from Pareto’s so-called “Principle of Factor Sparsity” or “80-20 Rule”. The latter is less familiar among ordinary folk, but is also referred to as the “Pareto Principle” by political economists.

As a principle of what economists call “efficiency”,[2] Pareto’s principle may be applied either to efficiency in production, which is not discussed in the paper, or to efficiency in allocation. As indicated to my reference to policy decisions and commercial transactions—vehicles for the distributive allocation of benefits (goods and services) and burdens (costs and privations)—it is the latter that is discussed in the paper. Since it is easier to give examples based upon commercial transactions, the paper refers more often to them than general policies; but all of the examples are tied to the question of the “Pareto efficiency” of some allocative action.

Now, an astute peer-reviewer of this submission has doubted that any actual economist would view the Pareto Principle as carrying with it any normative mandate or approval for any policy or transaction—any claim that a policy or transaction that is Pareto is something that ought to be implemented or carried out. It is a principle of efficiency, this reviewer emphasizes, not a principle of equitable allocation or of normative merit, and this is something, the reviewer insists, that an economist would know. I am not sure to what extent ostensibly “Pareto” thinking is still commonly employed as a tool in economic rhetoric as it certainly was so when this paper was written, but there are indications that it has not disappeared.

Sean Ingham[3] has remarked, in an encyclopedia entry on “Pareto-optimality”[4] (often equated in economics text books with “Pareto-efficiency”), that:

Economists typically find Pareto-optimality to be extremely plausible—indeed, indisputable—as a condition that good laws, policies, and allocations must satisfy, although few would claim that it suffices to make a law, policy, allocation of commodities, and so on, good.

I find this statement fuzzy in some respects, but it is at least a claim that economists “typically” view Pareto-optimality as an “indisputably” necessary condition for the “goodness”—or let us say the propriety—of various allocative instruments, even if it is not sufficient. Ingham certainly finds that, with respect to Pareto-optimality, it is not unusual for economists to “lapse into their normative mode”, as the celebrated economist, Uwe E. Reinhardt (1937-2017), worded it when he issued this warning to his students in a Princeton University economics course in 2016:

When economists or other policy analysts lapse into their normative mode – that is, when they pretend to be using scientific methods to suggest what ought to be done and what is or is not “efficient” or “welfare enhancing” –  a red warning light should go on in your mind. There is always the chance that you are being addressed by someone knowingly and cleverly playing politics in the guise of science, or by someone commissioned by an interest group to structure information felicitously, toward a desired end – that is, by someone insufficiently respectful of the limits of economics as a science. Finally, there is always the chance you are face-to-face with an economist who has never been properly taught or, in any event, has never fully grasped the meaning of the word “efficiency” within economic analysis.[5]

Taking Reinhardt at his word, we can grant to my reviewer that by an economist who is knowledgeable, clear-minded, and honest, Pareto efficiency per se will not be thought or said to carry a justification or claim of propriety for allocative measures that support or tend toward it.[6] Given these background remarks, I now turn to the body of my paper.

I.

Despite the fact that the Italian economist, sociologist and philosopher Vilfredo Pareto (1848-1923) is frequently named in passing as an important thinker—in particular, as a foundational thinker in microeconomics—a surprising number of contemporary economists—not to mention policy makers—are apparently unfamiliar with some of his signature ideas. Among the vulgar, Pareto’s only real legacy is the so-called “Pareto Principle”,[7] which was originally advanced as a principle of “efficiency” pertaining to—among other things—commercial transactions within a free market. Roughly speaking, the idea is that in an unrestricted market, “rational agents”, pursuing their own interests, or policy makers, supposedly pursuing the public good, would engage in transactions, or policy decisions, which yield Pareto improvements.[8] A Pareto improvement is a change which makes at least one person better off and makes no one worse off. And since rational agents in an unrestricted market prefer to make transactions in that way, a free market[9] will tend toward Pareto optimality, or so contemporary Pareto fans believe. A situation is said to be Pareto optimal if there is no way to change it that would represent a Pareto improvement.[10]

II.

In the recent climate of “free-market liberalism”, Pareto thinking has been widely applied by politicians and legislators in decision- and policy-making on a larger scale; it has, for many, become their credo, or at least their cover story. For it is vaguely implied that Pareto improvement, and convergence upon Pareto optimality, must be a good thing. It certainly sounds as if making at least one person better off while making no one worse off must be a good thing—the thing to do, whenever possible.

In their moralistic moments, certain economists and policy-makers would like us to understand that the pursuit of Pareto optimality is what really is best for everyone;[11] although when gripped by the scientific mood, these same people may be heard to assert that sound scientific and practical thinking should keep clear of moral concepts like “good”, “right” and “just”—these simply express subjective emotions—and should rely upon more tangible and measurable (and supposedly objective) notions like “preference” and “choice”. Then, Pareto allocative optimality is defended as the convergence point of what rational actors would pursue, individually and communally, in an unrestricted marketplace, free of coercion. Anyone who opposes a Pareto-driven approach is thus thought to have declared himself the enemy of individual autonomy and free choice, and the friend of coercion—although of course no “value judgement” is implied in asserting this!

III.

I believe that there are many reasons why one should not be drawn into this sort of Pareto euphoria, but most of those reasons will be left out of my present discussion. In this brief piece, I will not examine Pareto optimality, which has been the focus of much critical work, but will be primarily interested in the idea of Pareto improvement, which is in any case the more fundamental of the two notions. What I am going to ask is whether there is an imperative of morality or normative merit supporting Pareto improvements. As the term “imperative” indicates, I am asking a deontological question: a question about obligation or duty.

I will examine the strong deontological statement, which says, of a prospective action A:

(P) A ought to be done if and only if doing A would make someone better off and make no one worse off.

 

This deontological version of the Pareto Principle can thus be broken down into two claims:

(P1) If doing A would make someone better off and make no one worse off, then A ought to be done.

(P2) A ought to be done only if doing A would make someone better off and would make no one worse off.

(P1) says that an action producing a Pareto Improvement is a sufficient condition for its being normatively mandated, while (P2) says that an action leading to a Pareto Improvement is a necessary condition for its being so.

Now the question whether P could even possibly hold as a mandate of morality or normative merit is dependent upon how we understand the notion “better off”. One way to understand it is in terms of the satisfaction of wants or desires, so that it could be formulated as follows:

(Pw) A ought to be done if and only if doing A would result in at least one person’s wants being more fully satisfied and would not result in anyone else’s wants being less fully satisfied.

But this again requires further specification as to which wants are being considered. The wants in which economists have been interested are immediate or present wants at the time of a possible exchange, and this is sometimes called, technically, a person’s interest. Certain economists, at any rate, evidently subscribe to the technical definition: [12]

Y is in S’s interest =def. S wants Y

This technical sense of one’s “interest” is highly misleading; it is, in my opinion, an unfortunate terminology. That is because the more normal and natural idea of something’s being in one’s interest is not at all the same thing as its being wanted. Thus, a small child may want to play in a busy street, but that is not at all in the child’s interest. Someone may, at a given moment, want to smoke a cigarette but may not even think himself that doing so is what is in his interest.

I will not use “being in one’s interest”, therefore, in its artificial, technical and very misleading sense, but will stick to speaking of wants, when that is what I mean. Returning, then, to (Pw): suppose we think only of the wants that a person may have at a given moment. Then, I think, (Pw) loses any plausibility as a moral imperative. This is related to the fact that I am unconvinced that the satisfaction of anyone’s immediate want is per se (i.e., just because it is someone’s want) of any value.

I note here, parenthetically, that if we do not restrict the wants referred to by Pw to those that a person may have at a given moment, then Pw provides no clear instruction; even misguided instruction. Since we can want a thing at one time and not at another, and wants are fickle and often transitory, then Pw is not only subject-relative (goods are only goods-to-someone), but time-relative: to be a good to someone at t is to be desired by that person at t. It is often very difficult to discern what people might want at the moment of an allocative decision or transaction, but what they might want, or not want, later on, or “in the long run” is even more opaque, not least to the people themselves. And so it will be highly uncertain, even positively indiscernible, what the supposed normative mandate requires.[13]

At any rate, the question whether the satisfaction of anyone’s immediate want is per se of any value is a fundamental one and I think one over which there is deep disagreement. It is related to a wider disagreement about human nature and the character of human life. The tradition associated with Hume (and perhaps Hobbes) maintains (or simply assumes) that goods are created by wants or desires.[14] That is, something is a good, to someone, if and only if that person desires it. To be a good, to someone, is to be desired by that person.

IV.

There is, however, another tradition, which denies that something is a good, to someone, if and only if that person desires it. In modern philosophy, its most powerful exponent is Kant. Kant thought—among other things—that there were goods, or values, whose worth was entirely independent of anyone’s wants or desires. And he thought, moreover, that we could recognize and commit ourselves to these values, that we could be moved to pursue them, whether or not we had any desire for them. This last part is a motivational theory.

The Humean motivational theory is different. According to it, one is moved to pursue only what one wants or desires. In Hume’s language, all motives are passions.[15] This Humean motivational theory benefits from the great elasticity of the idea of a desire or a passion. Thomas Reid complained about Hume that he used these terms—desire and passion—simply to refer to any motivational state. If this is done, then of course Hume’s motivational theory will be bound to be true. But it will be true just by definition; the notions of desire and passion (or want) will lose any independent substantive content. We will not have made any interesting discovery to the effect that desires, or wants, or passions, as independently characterizable states of mind, have a causal influence on our actions—are motives—and indeed the only motives according to Hume.

The Humean point of view would be interesting if we had an independent characterization of wants, desires and passions, and could argue plausibly for the non-definitional thesis that these things, and only these things, motivate.

Now, as regards the question of self-interest and benevolent action, we can consider alternatives to the Humean motivational theory (in its substantive, non-definitional form). If I act benevolently, i.e. in the sense of promoting the interests of others, must it be because that is what I want or desire? Or because this is in any interesting sense in my interest? Perhaps so, but it is not clear. What is clear is that the motive upon which I act will always be my motive. This isn’t enough, I think, to bring my action under my interest. In any other sense (i.e. other than that I always act on my motive), it seems easy to name examples of actions that I might perform which are not in my interest, actions which it is clear to me are not in my interest. It also seems easy to name examples of actions I perform without wanting or desiring to do them. One may wish to deny or explain away these examples, and that may be possible; but one will have to be very careful not to be simply stretching the meaning of “desire” or “interest” to fit the case. What’s wanted is a carefully worked out characterization of these terms.

V.

Returning to our main theme, it seems to me that people’s interests are a more plausible basis for a Pareto-based normative imperative than are their immediate wants. I think that the mere fact that something is wanted or desired gives no basis for normative obligation, not even presumptively. The reason is that desires can be for things which are utterly trivial, or which are contrary to people’s interests (not least, the wanter’s), or which are simply malign. So, I don’t think that the fact that someone has a yen to drink a can of paint (to take an example from Donald Davidson), or to crack their knuckles, or to have sex with a certain other person creates any obligation upon anyone to bring about the fulfillment of these desires. It is where wants are attached to genuine interests or needs—or at any rate to something of a different character than mere wants—that obligations may possibly be created.

Now I said that I thought that interests would be a more plausible basis for a Pareto imperative than wants. When I say this, it should be clear that I am not using “interest” in the technical way explained above. Something is in a person’s interest if it improves her life, is good for her, makes her genuinely “better off”, whether she happens to want it or not.

If this be granted, it may nevertheless be thought that a person’s interests come down to what he wants or desires all things considered, and in the long run: “all things considered”, because a person may have various conflicting wants, so fulfilling some at the expense of others may not be in his interest (e.g. if the ones fulfilled are valued less than the ones that aren’t); “in the long run”, because what one wants now may lead to unforeseen, and undesired consequences: consequences not desired by that person himself later on, when they come to light. So the idea is that interest is determined by desire, but not—or not merely—by immediate, individual desire.

Many (among them Thomas Reid and John Stuart Mill) have found this persuasive, but I do not. For if a person has a distorted or limited perspective, he may conceivably fail to build a genuinely fulfilling life for himself even though in his life, his actual desires are fulfilled all things considered and in the long run. A person may have a set of desires which is not the best set that he could have had, or even a very good set. And it makes perfect sense to say that his interest would have been better served—he would have been better off—had he had a different set of desires. So a couch potato, or a Gamma in Huxley’s Brave New World, would have been better off with a different set of ideas than those they actually have. And even if many of those different desires had been unfulfilled, a person’s life might have been better than in his actual life where all of his desires are fulfilled.

J.S. Mill warned that we should not confound the two very different ideas of happiness (as he called it) and contentment. Contentment is the state where one has no, or few, unfulfilled desires. It is a kind of desiderative Pareto point. Happiness—by which Mill meant not a state of mind, but well-being—living a good life—is a different thing.

My argument so far may be questioned, or objected to, at many points. But if we accept at least temporarily, for the sake of further discussion, that if (P) holds as a moral imperative, we must understand “better off” to mean genuinely better off (all things considered and in the long run, whatever that comes to). What it does not come to is merely having one’s desires fulfilled.

That said, I want to stick in a word in favor of wants and desires—or perhaps, better, preferences in the sense that economists like to use this term—as metrics for being better off. A person may not have a good idea about what would make her better off; and her preferences may not be in accord with her real interests. This metric of preferences is therefore imperfect and incomplete. But in general (although rebuttably), individual people are, or should be taken to be, the best judges of their best interest or what would make them better off. Preferences are the most important general metric we have for this; and in practice, in a society with an enlightened citizenry, it is the metric upon which it is best to rely as a general rule. But it is not the only metric and it does not carry absolute privilege. And when the limitations and imperfections of this metric (not least the way in which it is bound to function in a morally dysfunctional society) are overlooked or denied the standard of preferences may become malicious.

VI.

Now, how does (P) come out as an imperative of normative merit in allocation-making, given what I will call the strong reading of “better off”? Let us consider (P1) and (P2) separately. Together, we recall, they add up to (P).

(P2) is, at least, unconvincing as an imperative of that kind. For (P2) says that an action A ought to be done from the point of view of normative merit only if doing A would make somebody better off and would make no one worse off. But it seems quite clear that we often have obligations which, if carried out, will make at least some people worse off, for instance, the moral obligation to hire the best qualified candidate for an academic job, which will (or might) make less qualified candidates worse off.[16] More dramatic cases involve the morally necessary sacrifice of some people in cases of war or shipwreck, but it is the relatively banal examples which are the most telling. There is practically no choice that we make which does not make someone worse off to some extent: certainly no large-scale or political policy decision will be of that kind. But many such choices and decisions are morally defensible and indeed even obligatory.

Here we should pause for a moment to notice the general inapplicability of the Pareto approach to large-scale decision-making, not only from the deontological, but even from the more strictly and narrowly economic and political points of view. The approach makes a fair amount of sense in its primary application, which is to the isolated commercial transaction: Fred and Roger decide in a free and uncoerced manner to exchange x for y; since they both agree freely to the exchange, both of them must think that they will be better off for making it, and neither will think himself worse off. But here our attention is restricted only to those who make the transaction, Fred and Roger, leaving out of account any others who may be affected by it (for instance, Shalimar the slave-girl might be the y which Roger exchanges for Fred’s sum of money x; and she might be made much worse off by the exchange). Economists commonly refer to such considerations as “externalities”. When a theory is such that, in application, “externalities” are bound to matter much more than the parameters posited by the theory, then it is the validity of the theory that is thrown into doubt, rather than the factors categorized as externalities.

As soon as we move from the narrow consideration of the preferences of the transaction-makers taken in isolation, to include the preferences (not to mention the genuine interests) of third parties affected by a transaction, we quickly get an idea of just how few transactions there are which actually make no one worse off. Taking all affected parties into account, the number of real Pareto improvements is vanishingly small, even for individual transactions; for large-scale policy-making decisions, I cannot think of a single real case. The realization of what even a small transaction may mean for third parties also raises serious questions about the Pareto approach as a panacea for those who value individual autonomy and free choice.

VII.

At any rate, having disposed of (P2) as a plausible moral imperative, we are left with (P1). This says that if an action A would make someone better off and no one worse off, then A ought to be done. This, too, has evident problems.

For instance, two alternative actions, A and A’, might be actions of the kind described, but of benefit to different persons. Say that by doing A, some person S would be made a bit better off and no one worse off; but by doing A’, S’ would be made much better off and no one worse off. Then, evidently, there would be no moral imperative supporting A. And if a perceptible alternative A’ would make everyone much better off and no one worse off, then, certainly, if there is anything that ought to be done, it would evidently be not be A. Suppose now that A’ would make most people much better off, but would make a few people a bit worse off. Then if there is any normative mandate, it would seem, once again, not to attach to doing A—insofar, that is, as the foundation of this imperative is supposed to be that of making people better off.

However, in favor of (P1), it might be maintained that it is, nevertheless, what is sometimes called a prima facie moral imperative. In other words, if an action represents a Pareto improvement on the strong reading of “better off”, it is something that arguably ought to be done, although one which may be overweighed by other moral obligations: for example, the obligation to make the existing allocative landscape tolerably just.[17]

With the caveats included, I have no particular objection to offer to this, and I cannot see that even Kant would need to have one, given a suitable understanding of “better off”. But it will then be one principle among many, and one of meager significance since (1) so few of the possible actions that we might take lead to Pareto improvements of the kind imagined by the devotees of this principle and since (2) its normative input will be so heavily qualified and so easily overweighed by conflicting considerations of propriety.

VIII.

Before closing, I would like to add some remarks about the Pareto Efficiency Principle as a normative principle. Part of the cover story of contemporary economics, in its several “mainstreams”, is that any such principle is non-normative. My peer-reviewer sought to disagree with me by saying that no proper economist would think of Pareto’s principle as carrying a normative mandate applicable to allocative decisions. I suppose that Pareto himself would resist thinking of it as such. “It is a principle of efficiency,” my reviewer insisted, “not a normative principle or moral imperative.”[18] Actually, my reviewer, in saying this, was more in agreement with me than in disagreement. (But the disagreement is important.)

To begin with the agreement, what I was critiquing was interpreting the Pareto Efficiency Principle” as carrying a mandate for implementing certain allocative decisions or policies, or at least as carrying a recommendation favoring their implementation. Now my reviewer maintained, in agreement with me, that this should not be done, and opined that no proper economist would do so. I maintained, however, and still maintain, that this was done by a variety of policy makers and economists to support the pretense that these recommendations were issued by science, and therefore respectful of Weberian Wertfreiheit. “Efficiency” is widely claimed by those economists who reflect upon their modus operendi, to be a non-normative matter; but their commitment to this claim is belied by their at the same time using Pareto-efficiency as a reason justifying certain allocative decisions as the “right” ones—and even as the normatively mandated ones—to make, without any arguments that back up the drawing of such inferences from the “fact” of efficiency.

Reihardt, in the lecture text cited earlier (see footnote 5) cites Kenneth Arrow’s observation that

A definition is just a definition, but when the definiendum is a word [like “efficient”] already in common use with a highly favorable connotation, it is clear that we [economists] are really trying to be persuasive; we are implicitly recommending the achievements of optimal states [such as Pareto-optimality][19]

In other words, despite their dutiful protestations, economists who appeal to “efficiency” as a justifying reason for implementing certain allocative decisions without any further supporting argument, have turned “efficient” into a normative term and left Wertfreiheit in the dust. That way, they avoid revealing their supporting reasons, which might appear odious if exposed to the cold light of day. Reihardt himself says, in that same lecture text, that:

Honorable economists will always be quick to apprise their audiences and clients of the distributional impact of proposed policy changes. Alas, the real world is full of “seasoned economists” who do not, either because they wish to push their own ideology, or because they are paid to abstract conveniently from the distributional consequences of proposed policies  –  e.g., proposed health reforms or trade policies. “This policy is efficient,” they may loudly proclaim, adding inaudibly under their breath “abstracting from distributional effects, of course.” Sadly, some policy makers buy this stuff, either because they innocently believe the economist, or because they find it profitable or ideologically soothing to do so.

I suspect that Pareto himself was rather in the forthright camp, which is why he is anathema to a large number of political economists who admire his scientific work but dislike the way in which he wanted to see it applied.

Whether or not we turn out to agree with it, we should take seriously Reinhardt’s view that (quoted earlier in footnote 5), that:

Modern applied welfare economics may look like objective science, because it typically is cloaked in mathematical symbols or graphs. At its core, however, economic welfare analysis is but one particular distributive ethic. It is just one of many different moral doctrines.[20]

And Reinhardt says, rather open-mindedly to his Princeton University students:

You may or may not buy that particular distribute ethic. Whether or not you do may possibly depend on—you guessed it—your wealth and ability to offer high bid prices for things.

IX.

What will by this time be apparent to moral theorists or, indeed, to anyone who has thought carefully and systematically about such matters, is that the Pareto Principle, as a Consequentialist moral norm for decision-making, invites comparison with more familiar Utilitarian principles. A good Utilitarian is, I think, bound to conclude, that the Pareto Principle, which is in an obvious way Utilitarian in spirit, has no independent authority but can be given weight as a moral norm to the extent, and only to the extent, that it is sanctioned by more fundamental (and overarching) Utilitarian principles. The arguments given above against the weight of (P1) and (P2) are, at bottom, Utilitarian arguments. It is, however, questioned by more deontological thinkers, whether any kind of Utilitarian theory is capable of giving a satisfactory account of normative obligation or, in words I have used here (echoing Kant), of “normative imperatives”. No position is taken on that issue in this paper. Rather, an argument concerning the limitations of the Pareto Principle as a moral norm is framed within the general theoretical context of Utilitarian, or at least Consequentialist, reasoning to which the Pareto Principle itself belongs. In other words, the Principle is critiqued on its home ground, so to speak. The exploration of the deeper questions concerning allocative imperatives would obviously require a great deal more time and space than I have at my disposal here. And for extraneous reasons, I wanted to keep Vilfredo Pareto in focus throughout. In short, my objective in this paper is relatively modest, but not, I think, trivial. Deeper discussion of the issues raised here must await another occasion.

 

Endnotes & references

[1] Originally composed as a lecture text under the title, “Equity and the Pareto Principle—Does the Pareto Principle Have Moral Force?”, presented to students and teachers at the SOCRATES Intensive Program, “Equity versus Efficiency in Political and Economic Decision-making”, University of Rennes I, 16-26 July 2000 and, within the same period presented as an invited paper to the Department of Philosophy of the University of Rennes 1, 24 July 2000. Revised for presentation under the title, “Does the Pareto Principle Have Moral Force?”, to the Department of Philosophy of the University of Genoa, 10 April 2001 and much later lightly revised for presentation to the Seminar of the Faculty of Economics, University of Iceland, 25 February 2011. Subsequently submitted to Nordicum-Mediterraneum in response to a call for papers on Vilfredo Pareto to be published in commemoration of the centenary of Pareto’s death on 19 August 1923 and revised in response to critiques made in blind peer review.

[2] A principle rather than the principle, since economic “efficiency” may be characterized in other ways than Pareto’s, although few alternatives are discussed.

[3] Sean Ingham is (or was when he contributed the entry) an Assistant Professor of Political Science at the University of Georgia and evidently a regular contributor to various respectable encyclopediae.

[4] The Encyclopedia Britannica on line; see https://www.britannica.com/topic/Pareto-optimality

[5] The source for this is a lecture text, or handout, entitled “The Concept of ‘Efficiency’ in Economics” that has very recently come into my hands. The main lesson is 18 pages, followed by three appendices, two pages on “The Efficiency of Production”, six pages on “How Economists Bastardized Benthamite Utilitarianism and Became Shills for the Well-to-Do”, and one page on “The First and Second Theorem of Optimality in Welfare Economics”, where he references Kenneth J. Arrow, “Uncertainty and the Welfare Economics of Medical Care”, American Economic Review, December, 1963, pp. 942-943. The conclusion of the second appendix reads as follows: “Modern applied welfare economics may look like objective science, because it typically is cloaked in mathematical symbols or graphs. At its core, however, economic welfare analysis is but one particular distributive ethic. It is just one of many different moral doctrines.” This is not worded as a claim about contemporary economics generally, nor is it a claim about the Pareto Efficiency Principle as such. But it reflects an orientation that is very close to my own, and Reinhardt’s discussion of the uses of Pareto’s Efficiency Principle make a number of the critical points made in this paper and more. Unfortunately, Reinhardt seems never to have published his lecture text, leaving room for Nordicum-Mediterraneum to publish mine. It does make me wish that I had been fortunate enough to be a student in his classes.

[6] And note that this does not rule out all arguments that the correctly demonstrated Pareto efficiency of an allocative measure could support normative claims of that sort, even if I am skeptical concerning that possibility; but that is a separate matter.

[7] As noted in the Preface, I have in mind what might be more properly called the “Pareto Efficiency Principle”.

[8] It should be noted that Pareto did not believe that those making allocative decisions acted as rational agents; indeed, he was profoundly skeptical concerning the rationality of economic actors. Thus, Pareto‘s Efficiency Principle was not understood as a descriptive principle, giving a description of the behavior of economic actors, but as a rational standard, and thus a normative principle although not thereby a principle of equity or moral propriety.

[9] A “free market” is nowadays widely understood to mean one in which exchanges and transactions are unrestricted or unregulated. As the economist and economic historian,  Michael Hudson, likes to point out, this is not what Adam Smith meant by the term, although Smith is often cited as its originator. By a “free market”, Smith meant a market free of control by rentiers. Without worrying about Smith, even brief reflection suggests that no market can really be unregulated. What a market is is precisely a venue for the sale and exchange of goods and services, activities that proceed according to certain rules. It is a theatre of contractual exchange, and contracting is defined, and bound by, rules. Moreover, the ideologues of what they call the “free market” insist that free market exchanges must be voluntary, by which they mean uncoerced, but they appear to be blind to the fact that that in itself is a regulatory requirement.

[10] Paul Samuelson (1915-2009), “likely the most influential economist of the latter half of the 20th century“ according to The Economist, described allocative efficiency, in a glossary, as “A situation in which no reorganization or trade could raise the utility or satisfaction of one individual without lowering the utility or satisfaction of another individual. Under certain limited conditions, perfect competition leads to allocative efficiency. Also called Pareto efficiency.”

[11]Even if it comes out much better for some than for others.

[12]The attraction of this definition is partly the antecedent, (supposedly) “Humean”, persuasion of many people that all goods and values are the creatures of wants or desires—as discussed below—and partly the attempt by economists to be “scientific”. Although at first blush a “want” or “desire” might seem to be the kind of internal, subjective, emotional state of mind that many economists think of as unworthy of the attention of proper science, the use of “wants” as a metric may be thought acceptable to the extent that “wanting” can be defined operationally, by reference to what people select in the marketplace: to put it crudely, if you bought it, you wanted it.

[13] The matter of “long run” interests is touched upon in a later section of this paper.

[14] As far as Hume is concerned, I have maintained that this is not actually Hume’s view, however often it may be attributed to him. See my “Reason, Passion and the Influencing Motives of the Will” in Saul Traiger, ed. The Blackwell Guide to Hume’s Treatise (Oxford: Blackwell Publishing, 2006), 235-55. In an earlier version of this paper, I claimed that Adam Smith belonged to this same tradition, but, upon reflection stimulated by a peer reviewer, I find that it is unclear whether or not Smith followed this supposedly-Humean doctrine.

[15] Unlike the view of goods commonly attributed to him (see discussion above), this view is pretty certainly Hume’s actual view.

[16] Here, my peer-reviewer objects that I do not use the notion of “worse off” in the way that an economist—or perhaps Pareto himself—would understand it. In the context of Pareto-guided allocation, a person’s being made “better off” or “worse off” by an allocative decision must be understood in terms of his ex ante “endowment”—that is, what he has or lacks prior to the allocative decision’s being made. Prior to the hiring decision, none of the candidates for the job had the job; thus, possession of the job was not a part of any of their “endowments”. The successful candidate is made “better off” by the hiring decision, since having the job was added to her endowment; but, since nothing was subtracted from the unsuccessful candidate’s endowment, he is not made “worse off” by the hiring decision, the reviewer explains. In response to this point, I could withdraw the example, for there are plenty of others available to illustrate my point; indeed, some are given in the sentence that follows. But I think that it is important to say something about the reviewer’s critique of the example, because it is important to the strategy of defending Pareto efficiency as the touchstone to “good” or “proper” allocative decision-making. From Pareto’s perspective—and I believe that this can actually be attributed to him as well as to the community of economists—an allocative decision is an “improvement” in the landscape of allocations if it adds to the endowment of at least one person while not subtracting anything from anyone else’s endowment. The endowments in question are those existing at the time that the allocative decision is implemented. This entirely—and deliberately—ignores the question of how the existing landscape of allocations, that is to say, of “endowments” was reached or whether it is defensible per se in terms of, say, the general welfare. An overall situation that is Pareto-optimal (maximally Pareto-efficient) can be outrageous from the standpoint of social or economic justice and inefficient in terms of the functioning of society (with “efficiency” understood in an ordinary, common-sensical, way. This is masked by the predication of allocative “improvement” or “optimality” upon “endowments” whose credentials are left deliberately unscrutinized. A further point to make with respect to my reviewer’s critique of my mundane (and indeed, familiar) example, is that there is no principled way of describing what is, or is not, in a person’s “endowment”. For instance, prior to the hiring decision, might have considered his endowment to include an opportunity for gaining employment, which was then lost when someone else got the job. Would we not all understand what was meant were he to complain that, “She got the job at my expense”? My reviewer defines the endowments in the example in a way that is at odds with the “satisfied preferences” view of being made “better or worse off”: the successful job candidate had one of her preferences fulfilled and none thwarted by the decision. The unsuccessful candidate had none of his preferences fulfilled, but one thwarted. This points to a certain indeterminacy, and even perhaps to a certain disingenuousness, in the use of the “existing endowment platform” for the assessment of allocative decisions.

[17]I imagine, in fact, that we would have what Kant described as imperfect duties, which are even weaker than indicated here; but I aim here to keep the discussion as simple as possible. Whether there are actually such “Pareto duties”, whether they would be what some theorists call pro tanto, as opposed to prima facie duties, perfect or imperfect, and so on, are issues which it would take a much larger space to address.

[18] This is a paraphrase, but I believe that I do not distort the meaning.

[19] Citation to Kenneth Arrow, “Uncertainty and the welfare economics of medical care,” American Economic Review, 1963; p. 942. Bracketed material added by Reinhardt and by myself.

[20] This ethic is clearly not restricted to applied welfare economics; but it is there that any such ethic is most directly relevant to the allocation of benefits—goods, services, and wealth—i in its real social, political and technocratic context.

Walter Baier, Cornelia Hildebrandt, Franz Kronreif, Luisa Sello (eds.), Europe as a Common: Exploring Transversal Social Ethics, Volume I (Zürich: LIT Verlag, 2020)

Book review (editorial review), , ,

The ongoing dialogue between Christianity and socialism, albeit soft and sometimes rather marginal is still going on and bears a genuine significance in the face of the newer problems of our changing world – the refugees ripples, the climate issues and the Corona virus crisis that menaces even more within a context of “globalization of profit and indifference” triggered by a multi-factor equation of recent developments and challenges. Two very different ethical and meaningful visions of the world and of the value of people come together again to address an imperative concern described by the negative consequences of globalization and environmental crisis. The book is an image of the works of the Christian-Marxist symposia summer school. It is a call for dialogue – for transversal dialogue – involving all concerned with the better future of the planet all men and women of good will and, especially, all who take the current environmental crisis seriously. Transversality avoid hierarchies of actors and themes in the actions engaged by this dialogue for recovery and development. Nowadays the labour movement seeks the fulfilment of goals within the capitalist society rather than against it. The seizure of power by revolutionary means is neither an acceptable or a fruitful path to follow. Christianity and socialism maintain newer revised antagonism, but address their specific aims via respectful cooperation and devotion to the rejection of oppression and exploitation.

The four chapters of the volume structure this multi-faced, complex approach reuniting mainly young people’s contributions from Austria, Belgium, France, Vatican, Hungary, Italy, Portugal, Tunisia and Greece meant to form a basis for university curriculum in Portugal (Coimbra), Spain (UNED), Austria (Innsbruck) and Italy (Sophia/Florence). The first chapter, “Backgrounds and Starting Points” gathers three topics: Towards a ‘Differentiated Consensus’ (Franz Kronreif); Socialism and Community (Walter Baier) and Europe’s Common Destiny (Angelo Vincenzo Zani). The concept of “differentiated consensus” is based on transversal social ethics and the complementarity of truth and reality. Humanity, society and world are equivalent interlocutors in this dialogical attempt to describe what is man and which are the undeniably common valuable aims and themes apt to sustain consensus and, eventually common hope and common actions for European and (ultimately) world transformation and development. “This transversal social ethic approach is meant to produce a radical transformation that goes to the root of the problems” (p. 30) in order to find solutions, not scapegoats, “envisioning economics, politics, growth and progress” (ibid.). Walter Baier interpreted the renewed connection between socialism and community via the renewed nexus of welfare and democracy despite the attacks of neoliberalism. Both socialism and Marxism share preoccupation for society, for the emancipation of the disempowered ones, for deeply meaningful personal relationships, for empathic standpoints and interests against collective and individual egoism (p. 36). This vein of Enlighted Marxism places the accent on the importance of the social and ethical dimension of human community and not only on the fulfilment of the necessary material conditions. Bearing duty and responsibility is crucial to the interpretations of Marxism by Antonio Gramsci, Theodor W. Adorno, Max Horkheimer and Erich Fromm as well as to the interpretation of socialist freedom as a difficult but necessary leap from the realm of necessity to the realm of freedom, in Karl Polanyi. In the Economic Philosophical Manuscripts communism was oblivious of human imperfection and described by the “positive transcendence of private property and human self-estrangement” provided by the manifestation of human essence, thus ending the conflict “between man and nature and between man and man”, which is not very far from the Christian view, but was neither verified by history, practice or socialism to this day.

There is a common European destiny. In the Vatican’s perspective, Angelo Vincenzo Zani underlines that this is not only a purpose or a metaphor, but the very framework to deal with the misadventures of globalisation, with the degradation of biosphere, with climatic disasters, with the massive migration ripples, or, with the threats of the developing nuclear, chemical or cyber weapons. (p. 44) The European method is dialogue for cooperation and responsibility, unconfined to a temporal horizon”, but expressing also the transcendent vocation of human reality. (p. 47) All in all, Europe’s destiny remains to “pursue ideals” and “contemplate heavens” in a way that maintains Europe as a referential for “the common good and of a world of fraternity and peace” (p. 49). The next part describes the performative and transformative twin dimensions of dialogue. Piero Coda proposes a new paradigm found in a “culture of encounter”. The ideal community is the “social treasure” of the community of Jesus – love of God and love for each other. Such a society sets the standard of “maximum ethical achievement”. This is way religion can be both a factor of stability conservative of the status quo and a potential transformative factor, in the spirit of love and emancipation from Mammon, the “idol of power and money”. (p. 55) There is a special understanding of the dialectic identity-alterity in the Christian thought which is powerful and subversive for adversity, very different from the understanding of philosophers such as Hegel, Marx or Feuerbach: there is always a fluid aspect reuniting identity and alterity in paradoxical ways, understandable only in the generous Christian perspective where oneself is to be found most authentically in the understanding and communion with another, in this perplexing dialectics of “per-dono”, which makes forgiving and the actions of giving the most genuine gain.

Bernhard Callebaut goes to the roots of transversal dialogue against the “violence” of individualist thinking, described by the fact that “thoughts become the absolute property of an individual, the other has nothing to say or add”. (p. 70) In Christian tradition of social thinking the thoughts of an individual cannot be absolute: “I cannot think if I do not listen to the other, if I am not able to be changed, modified by him or her. I experienced this so many times on occasions of sincere, open, authentic dialogue. I exposed strong convictions, but striving to offer them as a contribution, not as an imposition, and then I experienced inside, even as I spoke, that the quality of listening of my dialogue partners opened me up to new insights, moderating my convictions, deepening but also correcting and enriching them.” (p.70) Unity should not mean uniformity, for respectful open dialogic interaction reenforces transversal thinking. The importance of the acceptance of the fundamental reality of co-existence orients as well the chapter signed by Thomas Stuke, in “Experiencing «Otherness». On Dialogue between Christians and Marxists”. The author exploits the difficulties and possibilities of experiencing the other integrating differences of opinion into a shared view. In this endeavour, most interesting is the capitalisation upon the Lacanian approach of the ‘O/other’ opening to the identification of four kinds of communicative interactions and to the interpretation of the paramount role of silence in dialogue. There is a communication circle in (fruitful, genuine) communicative interactions, emphasizing the co-orientation of people and the co-ordination of mutual understanding in dialogical relations. This kind of genuine communication is transferred into real co-operation. (p. 76) From a Lacanian perspective, there are four ways of experiencing the other in a dialogue – superior, inferior, good or bad – these four aspects forming an interpretative matrix. Communicative interaction takes the shapes of dialogue discussion, debate or decision with the respective outcomes of co-existence, co-orientation, co-ordination and co-operation. The Other may be a Rival, a Venerable, or a feared and hatred Evil-Other, or a more manageable other (a rival, similar other, a feared other or a hatred enemy). The main outcome of communicative interaction are however empathic relationships, understanding and co-operation. These outcomes cannot be reached when someone is passively silent or actively silenced. However, the dynamics of communicative interaction should be reconsidered including contemplation and active self-assumed silence for qualitative listening, understanding and awareness (p. 85).

Definitely, the world has to be named in order to change it. Cornelia Hilderbrandt and Pál Tóth set Marxist-Christian dialogue at the foundation of a nonviolent strategy for interaction, necessary in a pluralistic world. This dialogue aims to bring closer another world a better one, which should be possible. Both Marxists and Christians welcome changes imagined “from the bottoms and margins of society”. The weakest, the “damned of this earth”, “the leftovers” are the first called into the project of emancipation. (p. 105) Both Marxists and Christians reject the idea that human beings could be treated as “consumer goods to be used and then discarded”, as the premise of Communist Manifesto underlines, “the free development of everyone is the condition for the free development of all” and dialogic interactions are to build the necessary “culture of sharing and economy of communion” (p. 106).

At stake to the future of the European Project is a process of re-thinking, L. Bekemans shows, as the process of European integration is so complex and varied in forms of intergovernmental and supranational cooperation. Pessimism vs. optimism, globalization vs. Europeanisation, such realities describe a challenging European context, best captured by the term crisis, within a generally, rapidly changing world. (p. 123) Europe is navigating a sea of hopes and fears. “The EU needs a renewed political project embedded in a long-term vision in the current era of globalisation. The increasing influence of national interests in European policy-making can only be blocked in this way, in favour of the ‘European commons’. Otherwise, faced with citizens’ growing frustration, criticism and even indifference, the danger is that the EU will become a mere union of economic interests or disintegrate into national and sub-regional entities.” (p. 135) The author highlights the importance of a mobilizing vision to inspire citizens and renew the rhetoric of the European narrative of ideals of peace, freedom and solidarity. The origin of Europe seems to function as well as purpose in Spyros Syropoulos’ view. The knowledgeable discussion of the great leaders Alexander and Philip II provide the pretext for a discussion of a historical greatness and the inherited “vision of an empire where the conquerors would not feel like conquerors and the conquered would not feel like conquered”. (p. 138) Here is a historical lesson of togetherness that overpasses antagonisms and differences. There is the legacy of a “secure central government”, of “satrapy as a basis for effective local administration”, of common currency and propagandistic power of coinage and, eventually, of a successful imagined community, formed and maintained, well before the interesting book of Benedict Anderson. (pp. 140-143) Common language and common traditions followed and the lessons of historical cultural policies meant to create solid cultural points of common reference should be revisited for a deeper understanding of the already drawn historical avenues for European unity.

Michael Löwy dedicates his chapter to the democratic destination of Europe and to the European future. Noticing a current decline of democracy, the author warns about several dangerous aspects that tend to pass undiscussed, such as the tricky non-majoritarian institutions which are not responsible to electors or elected officials, about the use of crisis as a Carl Schmittian “state of exception” (p. 151) that should excuse violations of democratic procedures and a very low level of democracy in Europe as exceptional accidents due to exceptional circumstances. Dangerous is also the fact that the governments in Europe tend to be oblivious to public protest, mass demonstrations and strikes and very attentive to the pulse of financial markets and to the opinions of such exponents, experts and representatives. The struggle for democracy should be taken more seriously, although it is increasingly a struggle against neoliberalism. The democratic, ecological and social Europe matters and this is the Europe worth fighting for, one that does not submit to onerous financial imperatives and to the fascist temptation to blame the crisis, the immigrants or the austerity policies. A Different Europe? Is it possible? Luciana Castellina indicates as well the deficit of democracy in Europe, for “intermediary bodies” (trade unions, parties, media, civil associations) ensuring greater degrees of democracy and the need for a Europe of nations, for a European citizenship with national roots, empowering Europeans as citizens entitled to “the common good called Europe” (p. 159).

“The Secular State as a Religious Necessity. An Islamic Perspective”, by Adnane Mokrani, approaches the civil and political maturity of the state from the perspective of emancipation from religious interference in democratic development. Ideology should not replace religion and religion should not replace ideology. Nowadays religion may contribute educate the good citizen and the state should be neutral to be legitimate in treating all citizens equally (p. 171). Fundamentalist governments adopted the worst of the state models – the totalitarian one. Alberto Lo Presti relates democracy, Christianity and pluralism. Democracy and political Catholicism are seen rather oppositional although many Catholic scholars have contributed to the literature on democracy. Certain theoretical views looked for the contribution of elites in democracy while others denounced the disguise of elites in democracy. Catholicism and democracy have in common lately (since Rerum Novarum) the preoccupation for the realization of the human person and the common good, concern for the limits of sovereign power and for ethical-religious pluralism: “the task of democracy is to encourage every single person (…) to represent their legitimate interests in the political community.” (p. 181)

The last part of the volume announces a future of common values. These common values are clearer in the twilight of neoliberalism, as Walter Baier shows. The ecological welfare state represents an ideal and a practical plan to exit the trap of the obsession with the maximization of profit. Profit, borders and weapons have never really saved anyone. The common grounds between Socialists and Christians are to be found in transversal dialogue on political, economic and ecological challenges. The dialogue between the Catholic social ethicist Petra Steinmair-Pösel and the Socialist philosopher Michael Brie emphasizes the jeopardized commons and the common solutions, the common Socialist and Catholic future strategies emerging from an understanding of the spiritual dimension (p. 225) and of mutual belonging in our shared home (p. 226).

The Manifesto of Hermoupolis emphasizes the importance of an economy that serves social equality, justice and ecological sustainability. Problems are to be transformed into solutions with the identification of new forms of participation, through creativity and a commitment to a universal culture of peace (p. 230). Governance in times of Covid-19 has to become a collaborative governance, shows Javier Andrés Baquero Maldonado (p. 239). People and their relationships determine the outcome of the governments and every public servant has to learn to see things through the eyes of the citizen to give more hope to people in dare times and to create a more trustworthy feeling of a human family in society. José Manuel Pureza approaches the topic of social rights and social exclusion, in the chapter titled “Three challenges to Deepen the Dialogue” (between Christians and Marxists). Alienation, individualism and poor spirituality are the challenges that, well-addressed, lead to critical thinking, solidarity and liberating spirituality that bring people together in improved dialogue and action despite their differences.

The volume concludes with “The Preferential Option for the Poor. A Key Criterion of Christian Authenticity”, a text where Pope Francis approaches the pandemic as a revealing agent for the stringent inequality ruling the world. The lessons of faith show that every Christian is meant to be an instrument of God in our common home, for care of creation, with the two main points of attention: the poor and the environment. To exit the pandemic in better shape we should place the peripheries at the centre. This is the most actual, clearest and simplest message that both Christians and Marxists could and should embrace.

Sakari Hänninen, Kirsi-Marja Lehtelä and Paula Saikkonen (eds.), The Relational Nordic Welfare State: Between Utopia and Ideology (Cheltenham/Northampton: E. Elgar, 2019)

Book review (editorial review), ,

Neoliberalism is a peculiar phenomenon: Nobody, to my knowledge, identifies as being a neoliberal, yet several publications have recently demonstrated how four decades of neoliberal reforms have transformed Western democracies in surprisingly uniform ways. In this sense, neoliberalism is an ideology without proponents, or, to use vocabulary from The Relational Welfare State: Between Utopia and Ideology, a utopia that has successfully manifested itself by replacing or transforming other socio-historical regimes.

Neoliberalism is clearly the antagonist in this rich, and often thought-provoking volume on social policy research, with perspectives from legal studies, management, political science and history. The centre of attention is how neoliberal reforms serve to restructure the state apparatus modelled on the business enterprise, while transforming public services in fields like health services, care and education. Driven by a discourse of scarcity, permanent reforms are launched to increase ‘efficiency’ and ‘productivity’. The question is how well the Nordic welfare states can survive this type of pressure.

The Nordic welfare states, as described over 12 chapters, were developed via political struggles where conflicting interests were historically settled in the form of mediating, institutional arrangements such as collective bargaining. The relative equality, trust in authorities, and aspirations to full employment in these states were founded on the open recognition that a society consists of conflicting interests, notably between labour and capital – a recognition that is currently being eroded by neoliberalism’s harmonising policies and governance. This historical background could also explain why Anglo-American political theory, rooted in different historical experiences, fails to grasp the relationship between individual and state in the Nordic context (and possibly therefore can serve as a spearhead for neoliberal reforms). In one of the most informative chapters, political historian Pauli Kettunen sets forth a notion of “social citizenship” where individuals are engaged as parties to social relationships based on their interests, in contrast to the (Anglo-American or neoliberal) notion of the isolated individual’s social rights. Work is a central category here, as the development of the Nordic welfare state can be seen as an effort to “make it everybody’s right to fulfil everybody’s duty to work” (p. 102). Paradoxically, perhaps, the focus on individual rights is a source of new, social conflicts nurtured by distrust between groups.

The Nordic nations, with their history of valuing solidarity, equity and inclusion, have not resisted international trends of increasing inequality in wealth and income (indeed, the increase is among the largest in the OECD area). This development is buttressed by neoliberal orthodoxy whereby individual subjects are posited as responsible via their choices. Replacing collective interests with individual rights, a structure of metrics and incentives (often operating in the reverse, as punishment), render collective arrangements seemingly irrelevant. An illustrating example (chapter 9) is how the discipline of social work is being transformed by the discourse of responsibilization where individuals are targeted with measures to make them “employable”. This process increases the administrative load of social workers and reduces the ability to exercise professional judgment, much to the dismay of the social workers and local administrators who nonetheless comply.

A central thesis seems to be that the Nordic welfare state is not only a set of political and economic arrangements and institutions, but more importantly a type of regime where relations are central, described in terms like “relational rationalities” and “social sustainability”. The foregrounding of the relational is only partially coherent: In some chapters, the term relational is used as a synonym to corporatism, while in others it is refers to the education of social workers, as a new professional paradigm. Considering that the chapters frequently analyse notions like values, political imaginaries, norms and “symbotypes” and make reference to specific, historical Nordic imaginaries such as equity/parity, trust (in authorities and institutions), and solidarity, the foregrounding of relations is hardly justified. It thus seems exaggerated when the editors state (in the epilogue) that individual subjects are “made by” their relations. Moreover, is there not a danger that the “soft” term relationality can be consumed by the neoliberal jargon of soft governance? Other aspects of the title are also somewhat misleading. Notably, the term Nordic in this volume means Finland and Scandinavia, with emphasis on the former. Iceland is not mentioned in places where it would have been natural, for example when nations are compared on various variables, and only figures in one sentence plus a footnote. Another disappointment is that the notions of utopia and ideology, so central in the title, are not explained or used for anything significant.

When read from the beginning to end, it becomes clear that several of the chapters are unique studies. Several chapters are well-written and -portioned, but some of the more specialised chapters use too complicated terminology to be of general interest. However, after a bumpy first section, where each new chapter sets out with a new introduction and conceptual framework, the flow of the volume improves considerably. To avoid consecutive setbacks, a good choice would be to start with chapter 5, ”The rise and fall of the Nordic utopia of an egalitarian wage work society” by Pauli Kettunen, which is cross-referenced by several other chapters, even preceding ones. Other highlights for this reader are chapters 6, 9 and 10, whose respective topics are the introduction of rights-based childcare (Finland), transformations in the discipline of social work (also Finland), and notions of social sustainability in Nordic firms (Denmark, Norway and Finland) – all of which added insight to the book’s central theme. Taken together, the collection elucidates why the notion of individuals being responsible for their own lives is faulty, politically dangerous and socially erosive.

One question that begs itself is this: Could there not be something in the rationality of the Nordic welfare state, a form of biopolitics – for example in the fact that relationships of care are impersonal, set inside institutional arrangements where individuals are replaceable – that could help to explain how neoliberalist reforms have penetrated the ideological fabric of the Nordic model? In the present volume, neoliberalism is treated as an outside force, a threat or opponent to the Nordic relational welfare regime, but I would have liked to see a discussion that cast a sceptical eye on this narrative as well. Also curiously lacking is a discussion of how immigration – and mobility in general – puts pressure on the legitimacy of universal services and social benefits. As the narrative goes, the Nordic welfare arrangements were developed during a time of cultural homogeneity which is now challenged by immigration. But this is not true: the homogeneity was only on the surface. Unfortunately, the volume makes no mention of national and indigenous minorities, and no references to Greenland, Sápmi or Lappland.

That said, the volume is a timely contribution, and through concrete examples also very helpful to understand how forty years of reform have fared in this corner of the world. Through their choice of perspectives, the authors demonstrate that there is still a particularly Nordic outlook whose arrangements are the result of concrete, interest-based struggles and thus not as continuous or robust as some might like to believe – along with the dawning realisation that not only our states, but also the ecological systems are not necessarily sustainable.

Mikkel Mailand, Corporatism Since the Great Recession (Cheltenham/Northampton: E. Elgar, 2020)

Book review (editorial review), , , ,

I should begin by acknowledging that I am reviewing this book, not as an expert in this field but rather as someone with casual interest in the book‘s subject matter and a passing familiarity with the relevant literature.

This ambitious book reports the findings of a research project on how corporatism fared in the wake of the Great Recession. What is at stake is testing the proposition that corporatism has been weakened as states are on the same track, moving towards a neoliberal approach to policy making. To test the proposition the author focuses to three countries, i.e. Denmark, Austria and the Netherlands which the author claims are critical cases as the literature on corporatism indicates that these three countries have not gone down the neoliberal path to any significant extent. Thus, if the data show a weakening of corporatist arrangements in any of these three countries then we can be fairly certain that the same thing is happening elsewhere.

The author proposes three research questions to determine if this is the case (p.4):

    1. To what extent are tripartite arrangements still used in work- and welfare related policy areas?

    2. Are the social partners still able to influence the regulation of societal challenges through tripartite arrangements following the Great Recession?

    3. Which factors best explain the development in the quantity and quality of corporatist arrangements?

As the author intents to examine the issue in depth he must necessarily limit the scope of inquiry and does so by focusing on three policy areas that cover large areas of work and welfare policy which are also traditional areas of social partner involvement, namely 1) active labour market policies, 2) unemployment insurance, and 3) continuing vocational training. The study is also focuses on agenda setting and to a lesser extent on policy formulation.

The data used to answer these question is composed of 42 semi-structured interviews with key decision makers from government, social partners and researchers in the three countries under scrutiny.

This book has a lot to recommend it. It is clearly written and well structured. The author‘s review of relevant literatures is both concise and comprehensive and makes a good introduction for the lay reader whether they are new to the subject or need a brief refresher. The chapters on each country contain a lot of interesting information. The author is also admirably honest about the limitation of his study.

Does the author accomplish his task? The findings suggest that while corporatism seems to be holding its ground in Denmark it has fared slightly less well in Austria and the Netherlands. As these are critical cases, we can then assume that corporatism is on the defensive in most countries. The author, however, correctly points out that his findings does not show in what direction corporatism is retreating, whether it is moving uniformly towards neoliberalism, some other direction or even if all countries are moving in the same direction.

In fact Mailand‘s findings do suggest that changes to corporatist arrangement depend heavily on context. Nothing much happening in Denmark, whereas challenges to corporatism in Austria stem from political challenges and to a lesser extent worker ‘s organisational loss of power whereas the latter is the primary driver of changes in the Netherlands.

Strangely much of the praise for Corporatism Since the Great Recession claims that it demonstrates that corporatism is alive and well. To demonstrate that the critical cases would have had to be countries where we would expect corporatism to be particularly vulnerable and the findings should have shown that that corporatism was still going strong in those countries. Even then there would be ample room for doubt.

The literature on corporatism is riddled with conceptual and empirical problems and much of it is concerned with trying to determine which conditions give rise to corporatist arrangements. While there is nothing wrong with this preoccupation it is hard to resist the conclusion that it is nevertheless misguided. As Mailand observes, the wide range of ideas about what gives rise to tripartite corporatist arrangement, many of which have some empirical support, is a source of confusion rather than clarity. Could it be any different?

It is here where I feel that Corporatism Since the Great Recession falls short. What is truly interesting about Mailand’s findings is not that they lend support to the case that corporatist arrangements are under pressure. A casual glance at the literature reveals that we knew as much. By making that the point of departure for his study the important contribution of his study is relegated to the role of slightly bothersome facts that limit the book’s contribution to the field.

In my view what is truly interesting about this study is the fact that drivers and directions of change would be so different in such a small sample of countries all of which can be seen as bastions of tripartite corporatism. This may indicate that rather than trying to come up with a general theory of corporatist arrangements the way towards understanding what is going on with corporatism today is rather to focus on governments and the social partners as strategic actors with specific objective acting in diverse and changing contexts. While neoliberal ideas may well be a part of many contexts it is likely only one influence among many, with history, culture, power resources, economic conditions and key actors probably playing substantial roles and pulling in different directions. But then, that wouldn’t be the study of corporatism as a thing but rather the study of strategic interactions around policy making.

 

 

Asger Sørensen, Capitalism, Alienation and Critique: Studies in Economy and Dialectics (Leiden: Brill, 2019)

Book review (editorial review), , , , , , , , , , , , , , , , , , , , , , , ,

The compilation of texts under the title Capitalism, Alienation and Critique: Studies in Economy and Dialectics is Volume one of a trilogy named Dialectics, Deontology and Democracy by Asger Sørensen. The collection is a child of its time: ambivalently modest and dashing when stating its aim, it scratches the surface of vital questions about human prospects impregnated in a global capitalist system and goes in-depth at others in the same class of issues, offering both less and more than what one might expect under certain headings.

The volume includes seven main Chapters divided in two parts (i.e. Economy and Dialectics) and throughout comes back to the initial argument that dialectics, deontology and democracy are “obligatory and necessary ways of relating to social reality” (p.11). Notwithstanding that ‘necessity’ arguments invoke primarily the necessity of immediate syllogistic precision, the exploration is generally done without being oblivious to the need to question various claims on ‘validity’ or to think of (social) science as a political practice. The included name index with bibliography and a separate subject index could well serve students stepping into the world of the Critical Theory of the Frankfurt School, getting inspired by the Hegelian dialectical nuances of Aufhebung, or discovering briefly Durkheim’s sociological conception of value as a way to situate persistent to this day realities, in which liberal politics ‘liberate’ the economic decision-making from moral reasoning.

An Interlude considers the potency of the classical Critical Theory and its current relevance, whereas the work concludes with a Postscript where the critique of political economy is continued from the first part and refreshingly deepened. This last and closing section in fact abounds with solid critique of several layers of capitalist ideology and is perhaps what one might prefer to read precisely in the first part dedicated to Economics, rather than an analysis of George Bataille’s quasi-political and neo-gnostic flow-of-energy concept on general economy in a macro- and micro- perspective.

The second part dedicated to Dialectics has a low start. Its beginning chapter dedicates only few lines to summarizing Aristotle’s contribution to the topic. The point is not that there is no mention of Topika or Analitika protera or that relevant works from Aristotle’s deeply political anthropoeia philosophia are, as if, footnoted (and briefly abstracted in other chapters), but that in the volume’s Introduction, the author summarizes this Chapter as the one where “dialectics is presented in a very classical philosophical way, i.e. taking it all the way from Plato and Aristotle to Hegel and Marx […]” (p.14). A careful reader (or simply a radical one in the sense of going back to the original ancient text in the spirit of the Hegelian Bildung tradition) can arrive to Aristotle’s dialectics either through his logic and the understanding of dialectic premises, or his Metaphysics and the theory of ousia. At least, this is what one would expect from a classical philosophical treatment.

Hence, the reader gets the impression that Aristotle somehow falls under the ‘et al.’ category, which the author uses throughout the entire volume. No matter how playfully or only practically intended, the ‘et al.’ practice is at points inadmissible for arguments’ sake, opening up with no need a dismissive context which inadvertently goes against the author’s own hailing of credible normative frameworks and emancipatory politics. At times the usage is outright obdurate as in “[…] and the discovery of Auschwitz et al. […]” (p.49). In any case, even if the promised classical treatment is missing as a simple consequence of preference or choice of focus, we should be mindful that these themselves might be due to a long tradition of ‘readings’ of Aristotle which sometimes impoverish dizzyingly (Kant), adapt fecundly (Hegel) or appropriate catachrestically (Heidegger) Aristotle’s potent theoretical system and dialectic approach.

In this sense, by being too eager to ‘move on’ in his argumentation at points too quickly, Sørensen risks being not radical enough in the most necessary sense, the political one. Leaving unmined treasures of insights and knots that could have been brought to light is evidenced also when the dynamic of lotteries, gambling halls, internet scams and casinos is put under the umbrella of ‘ideology of hope’ (p.290), without mining one’s own or contextual anthropological assumptions as crucial for giving a consistently critical perspective. The work itself, for instance, is seen as seeking to contribute to the establishment “of credible normative frameworks enabling us to comprehend conceptually, and hopefully also to cope with, the current human predicament, while remaining painfully aware that such an ambition may in fact be overly presumptuous” (p.20). Perhaps claiming an aim only to give it up rhetorically in the same assertion might be attractive to a certain readership, but some might see the claimed scope as complacent and missing any substantial ethico-political challenge. Moreover, even though Sørensen is afraid that Honneth’s critique might be politically impotent “due to its very radicality” (p.12), the reader might wonder what in particular is radical in reducing Critical Theory to social philosophy, given also the well-presented argument on Honneth’s approach in light of the classical critical project (p.67-82).

Imprecision, inaccuracies, and possible contradictions are thus somewhat burdensome, even though the volume is not lacking in solid demonstrations; among else, into how the ever-growing mathematization of political economy is covering up its deeply ideological violence, which leaves out the problem of social (and political) justice. Nonetheless, the claim that an apolitical relation to social reality fails to recognize the value of all intermediary institutions, since it subscribes to the idea of a single individual facing the absolute (p.122), is potentially ideological itself if left unpacked, despite one’s otherwise evident dedication to the critical project. The fact that Durkheim’s or our current intermediary institutions would condition an answer to relevant questions, or aim to eliminate the challenging ethico-political questions altogether, does not cancel or salvage us from the human condition and facing ‘the absolute’ whose historical trajectory, from God to State to Market, is only a potent soil to plough into critically.

The collection is therefore a good reminder of a struggle. A struggle of weakened States embedded in the new practices of imperialism and fragmented by the cynical ideology of global capitalism, which relies on the displaced likelihood that once something happens, it can be quickly renormalized as already having been possible. Examples abound, but think of a recent one: the imposition of a European State onto a non-European one to change its name even in its relation to all other states, against the clear will of the only sovereign (i.e., the people) and through an openly illegal and anti-constitutional process, but such that the first (politically) demarcates the (ethnic) identity of the ‘Other’ by claiming exclusivity over cultural history and even symbols. It is such political violence par excellence that defines our current world, alongside the direct one and the one that counts several millions of people as nothing, for they are neither consumers nor employees. But, if we do not see that all three orders of violence sit in the lap of greed, force and ‘this is mine’ ideology so typical of capitalism, we have understood nothing of its nature.

Hence, if our aim is effective change of the conditions currently guiding people’s lives, the grand problem might not even be how do we system-wise sustain such change and reach those that are most in need of justice and equality. Badiou has already addressed this question elsewhere. Rather, are we aware that an ‘all-inclusive’ proletarization is already underway? Such that we are all (beyond the classical image of proletarians) potentially stripped of our substance? We could, at least potentially, imagine a rich rather than a meagre symbolic life offered to newborns brought to a world of biogenetic manipulation (geared, likely, out of any democratic oversight) and threatening ecological breakdown, coupled exponentially with freedom reconfigured as being able to follow one’s whims: yet lo and behold, our political problem is deeply ethical. It reconfigures for each of us the quintessential question of what do you believe in and hope for, and how do you live in the name of it.

There was a reason why Marx was concerned with raising the awareness of the working class and the need for unity in making a change that will indeed not be in the interest of the few only, and why education is such a potent ‘game-changer’, or why for that matter Hegel was obsessed with Bildung in line with the tradition of the classical Athenian polis, and his view that critique presupposes alienation. Potentially excluded from our very substance, each-of-us a Homo Sacer might be the only proper conceptual start.

Brendan Myers, Reclaiming Civilization: A case for optimism for the future of humanity. A Study of the Sacred, Part Three (Gatineau: Northwest Passage Books, 2016)

Book review (editorial review), , ,

After addressing the phenomenon of the sacred from an individual (Loneliness and Revelation, 2010) and interpersonal perspective (Circles of Meaning, Labyrinths of Fear, 2012), Canadian philosopher, novelist, poet, gamer, trade unionist and neo-pagan acolyte Brendan Myers tackles it now from a socio-political perspective.

Continue reading Brendan Myers, Reclaiming Civilization: A case for optimism for the future of humanity. A Study of the Sacred, Part Three (Gatineau: Northwest Passage Books, 2016) →

John McMurtry, La fase cancerígena del capitalismo, de la crisis a la cura (Valencia: Tirant Humanidades, 2016)

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Las reticencias y críticas contra la globalización neoliberal nacieron prácticamente con la emergencia del fenómeno mismo, sin embargo, en los últimos años de crisis se ha venido fortaleciendo una nueva tendencia, creciente y heterogénea, de posturas críticas y acciones contestatarias contra este modelo de producción y comunicación mundial. La desconfianza y rechazo hacia una  integración global de las comunidades humanas dentro de los márgenes del neoliberalismo se dejan ver en movimientos sociales, partidos políticos y propuestas teóricas que, desde orientaciones políticas y morales distintas, cuando no opuestas, exhiben sus deficiencias y consecuencias negativas , así como el extravío e inviabilidad de su presunto horizonte emancipador.

La obra del filósofo John McMurtry, La fase cancerígena del capitalismo, se integra dentro de esta tendencia crítica, con la destacable ventaja de que su primera edición fue lanzada en 1999. En aquellos años, en los que aún predominaba un aire de triunfalismo liberal sobre las experiencias históricas que pretendieron acabar con el capitalismo, McMurtry lanzó su diagnóstico sin complejos: el sistema capitalista es un trastorno cancerígeno que puede acabar con la vida humana y con la base natural que la soporta. Es posible que hace quince años, cuando diversas regiones del planeta vivían un auge económico, esta valoración haya podido generar ciertas dudas en algunos sectores, pero con la crisis económica, política, ecológica y cultural que se ha cristalizado desde el 2008  a nivel mundial, su pertinencia es innegable. Debido a esto, el autor lanzó una segunda edición aumentada en el 2013, en la cual añade y analiza los datos y acontecimientos más determinantes de los últimos años retomando el marco analítico de la primera publicación. La edición que a continuación referiremos es la primera traducción al castellano que acaba de publicar la editorial Tirant Humanidades (McMurtry, 2016).

La investigación que nos presenta McMurtry parte de la idea de que todas las sociedades tienen una estructura de reglas subyacente, un tipo de gramática nos dice, que rige las acciones, el discurso y el pensamiento de sus miembros. Estas metareglas son la codificación del sistema de valores prevalente. Es en el metanivel  de los sistemas sociales donde el autor cree que la filosofía debe excavar para poder evaluar “su verdad y su valor en la búsqueda de su forma más completa” (p.19). Por consiguiente, en esta obra se abordan los valores que regulan, en última instancia, el mecanismo del sistema capitalista, partiendo del supremo principio que lo define: la maximización del beneficio privado monetario en detrimento de las bases naturales y civilizatorias de la vida humana.

A lo largo del texto se despliega una ontología social que postula como primer  y necesaria instancia de la existencia humana y sus sociedades el ámbito natural-material y socio-cultural, los cuales integran el life capital[1]. Éste comprendería “(…)las riquezas naturales y las creadas por el hombre que más producen en el tiempo sin pérdidas”(p.420) y estaría constituido por el capital de la tierra, el capital del conocimiento, el capital social y el capital ecológico. En esta propuesta el concepto de Capital desdobla su significado y trasciende al de la economía política clásica y neoclásica, ya que es concebido como la riqueza total –material, cognitiva y simbólica- que sostiene y garantiza la vida y, por ende, deja de limitarse al de una magnitud de valor social  tendiente a la infinita valorización del valor monetario y a la totalidad de los bienes mercantiles de los sujetos individuales y colectivos. Es así que, el life capital constituye la corporeidad y las condiciones de posibilidad reales de los sistemas sociales.

Para abordar la condición actual del sistema global y del life capital que en última instancia lo sostiene, el autor trasladara desde la medicina el marco conceptual clínico del cáncer. Pero, antes, nos aclarará que esta traslación no busca la postulación de una metáfora sino la construcción de un “modelo explicativo” (p.p.64-5) que dé cuenta de un trastorno  que invade literalmente los cuerpos orgánicos y los cuerpos sociales por igual. El principal y determinante agente cancerígeno que opera en nuestras sociedades sería las Secuencias de Dinero Privado Transancional (SDPT), aquello que la prensa mundial llama, con sospechosa neutralidad, los mercados o los flujos de capital. Estas secuencias son reproducciones monetarias anómalas de las dinámicas de intercambio y producción social que tienden a la automultiplicación sin ninguna función vital, operando igual que las células cancerígenas que invaden los organismos biológicos: “(…)Ambas se multiplican fuera de control. Tampoco tienen ninguna función  en compromiso con la vida. Ambas invaden y se extienden  al depredar y despojar al anfitrión de sus recursos. Y la clave para sucumbir en cada nivel, es la insuficiencia del sistema inmunológico en reconocerles” (p.91).

Precisamente en el no reconocimiento del trastorno radica parte de su fuerza. Al respecto, McMurtry percibe una pasividad en los economistas y los filósofos por no cuestionar estructuralmente las bases axiomáticas del sistema cancerígeno: “(…) Ningún economista hace esto porque cada paso es bloqueado a priori  por la estructura profunda de la doctrina y su modelo cientificista. Ningún filósofo moral lo hace tampoco, en la medida en que está por fuera de los límites el reconocerlo dados los tabúes metodológicos y sociales” (p.31). El cáncer capitalista se ha convertido en un tabú social, toda vez que los medios de comunicación y las instancias del conocimiento presentan profundas lagunas respecto a su análisis.  Ante esta situación nos recuerda que en la era del oscurantismo medieval :

(…)La reflexión social registrada está mas o menos confinada  a la teología moral especulativa  decretada por Roma. Las cuestiones de fondo se hacen a un lado en el plano normativo. Las relaciones sociales preestablecidas, bien se mantienen por fuera de la discusión en su conjunto, como un tabú innombrable de los medios del momento, o se les concede una mera disculpa y justificación. A esto le llamamos <<Era del oscurantismo>> por una buena razón. Pero una Era de Oscurantismo puede volver a ocurrir.(…) ¿No nos enfrentamos a una nueva teología absolutista, de las leyes eternas del mercado, en lugar de las de Dios, como los mandamientos del mundo?. (McMurtry, 2016, p. 205)

El período cancerígeno que se analiza en la obra tendría sus orígenes en la derrota estadounidense en Vietnam, el golpe de estado chileno del 73, el cambio del patrón oro por el patrón dólar en 1974 que permite la reproducción de moneda fiduciaria sin arraigo directo en la materialidad y la llegada al poder de Donald Reagan y Margaret Thatcher y la consecuente liberalización de los mercados. En los años que van de 1973 a 1999 nuestro autor observa la consolidación de una nueva “soberanía supranacional” , un tipo de “poder colectivo de secuencias monetarias” (p. 32), que circula por todo el planeta destrozando por igual las soberanías de los estados nacionales, los ecosistemas, los ámbitos culturales locales y la salud misma de los organismos humanos. A partir del 9/11  se despliega una estrategia que busca consolidar el poder global de las Secuencias de Dinero Privado Transnacional después del reacomodo que supuso la caída de la URSS y de la emergencia de varios fenómenos contestatarios que empezaban a  tomar consciencia de los impactos dañinos del sistema. Esta estrategia estaría basada en la reconstrucción de un enemigo , habida cuenta de la caída del monstruo soviético, para justificar la ampliación de la metástasis capitalista.

Pero, a pesar de el sombrío diagnóstico que nos presenta, McMurtry también se encarga de proponer unos principios mínimos, una “ontoaxiología”, que en la práctica funcionaría como “la cura” contra el cáncer capitalista. Esta “cura” estaría basada en una de las facultades naturales de los cuerpos sociales: el “(…)sistema inmune social de capacidades y competencias sobre el que todo el funcionamiento de la sociedad y cada vez más personas y especies dependen para su supervivencia y prosperidad”(p.320) . Este sistema inmune social expulsa o elimina los agentes extraños y dañinos que amenazan con desequilibrar, atacar o destruir al organismo social que supone una comunidad y estaría constituido por un conjunto de prácticas, regulaciones, prescripciones, instituciones y procesos que están orientados a proteger la vida general. Los agentes encargados de desplegar y operar la potencialidad del sistema inmunológico de la sociedad  serían los “comunes civiles” : “(…)cualquiera y todas las construcciones sociales que permiten el acceso universal a los bienes vitales” (p.497). De esta forma, “(…) el movimiento progresista, la izquierda, la comunidad, los sindicatos y las cooperativas”(p.497), explícitamente avocados a la defensa y garantía de la vida, serían los elementos operativos del sistema inmunológico social.

Mcmurtry no se limita a sostener su propuesta curativa sobre una ideal moral, sino que también lo argumenta con algunos ejemplos socio-políticos actuales que  considera saludables. Estos ejemplos serían las actuales políticas en defensa y protección de los ámbitos públicos, los recursos naturales y la vida humana que han implementado países como Venezuela, Brasil, Ecuador, Argentina y Bolivia por medio de nacionalizaciones, renegociaciones de la deuda pública, recuperación y protección de zonas naturales estratégicas, así como la revitalización del cuerpo social por medio de programas sociales orientados al fortalecimiento de la salud, la educación y el conocimiento de la población. Por ello, nos dice que “En toda iniciativa política y legislativa en América Latina existe una lógica unificadora de recuperación: la reivindicación pública de la economía al servicio de las necesidades conocidas de su gente y sus condiciones de vida.” (p.80).

En lo referente al aspecto teórico-critico de esta obra, nos parece relevante destacar que su análisis no se integra en la línea del pensamiento marxista o posmarxista. El propio autor  marca distancia con algunos aspectos de esta corriente porque que considera  que el life capital no es captado en sus postulados. Y es que Marx, nos dice, centró su atención en las células básicas del capitalismo, la mercancía-dinero p. e., sin mirar las auténticas fuentes de la riqueza , las cuales no pueden ser reducidas a la fuerza de trabajo, ya que  ésta se encuentra también sustentada sobre las mismas, es decir, sobre el life capital. A pesar de ello,   McMurtry no duda en reconocer la importancia de la obra marxiana:

(…)Lo que abre el espacio de reflexión para el análisis crítico  de los presupuestos sociales de una vez por todas, es el profundo trabajo estructural sin precedentes de Karl Marx(…) su obra rompe de forma decisiva la larga aquiescencia de la teoría con el statu quo y los privilegios de clase dominante (…) Yendo mucho más allá de Sócrates o Rousseau, él expone a la crítica sistemática la estructura de poder material de todo lo hasta hoy hay de existente en la sociedad civil(…) Ningún filósofo de la historia antes de esto se había atrevido a ir tan lejos. Desde entonces, la obra de Marx ha sido un punto de referencia fundamental en el panorama filosófico: un punto de referencia para los pensadores cuya preocupación por las estructuras subyacentes se extiende a las formas sociales dominantes, y no meramente a los ordenamientos naturales y conceptuales. (McMurtry, 2016, p.212)

Para finalizar, diremos que, al margen de las diferencias onto-epistémicas que hay  entre McMurtry y Marx, las propuestas de ambos se emparentan en el hecho de que están enfocadas en el análisis de las condiciones materiales, sociales y culturales de la existencia humana. En consecuencia, ambos toman como primer principio de referencia los hechos históricos y la estructura constitutiva y causal de los sistemas sociales que los genera. Por ello, es de agradecer que en La fase cancerígena del capitalismo las críticas y argumentos se sustentan en diversos escenarios y acontecimientos históricos actuales, con lo cual, McMurtry, como Marx en su tiempo, rompe con la endogamia metafísica de algunas corrientes de la filosofía que han decidido hacerse a un lado ante la acuciante realidad de nuestros días. Creemos que esta obra nos recuerda que, en los tiempos vertiginosos que corren, es un imperativo ético para los filósofxs  exponer  el potencial crítico de la filosofía ante un sistema desconocedor de la vida que está dominado por “egoísmos atómicos automaximizadores”.

[1] No hay traducción posible en castellano que haga justicia al concepto de Life capital, ya que capital vital y capital de vida tienen una connotación distinta en castellano

Asger Sørensen, Capitalism, Alienation and Critique (Aarhus: Nordic Summer University Press, 2016)

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As concerns the main contents of the new book by prolific Danish philosopher and social scientist Asger Sørensen, they are certainly relevant and urgent, for they constitute an articulate critical reflection upon the grim reality of avoidable human degradation and suffering within the capitalist order, as well as upon their callous and hopeless acceptance therein, all of which are important features of contemporary social life worth thinking about and, possibly, acting against.

Building upon a variety of essays written independently of one another and published individually elsewhere on previous occasions (e.g. the prestigious scholalrly journal Philosophy & Social Criticism), the book is internally diverse, but it is neither contradictory nor overwhelmingly heterogeneous. Rather, the book’s structure is sensibly and comprehensibly open, for it comprises:

(A) An introduction, a presentation and an interlude that, somewhat redundantly but very usefully, lead the reader into the rich intellectual panorama to follow, highlighting above all: (1) the common conceptual threads linking together the two subsequent, admittedly uneven parts; (2) their being the result of a single process of intellectual growth and maturation lasted many years; and (3) their more or less direct impinging upon the Continental school of thought known as Critical Theory, to which the book’s author claims to belong himself.

(B) A first part, entitled “Economy” and focussing on the classic social thinkers Émile Durkheim and Bataille, whose reflections provide a profound and complex theoretical backdrop for the correct understanding of the axiological significance of the emancipatory movements emerged in capitalist countries in our young new century (e.g. the Occupy Wall Street movement in the US, the Indignados of Spain, etc.). Although admired and mined for important insights in existing realities and problems, neither classic social thinker is idealised and extensive criticism of their views, especially Bataille’s, is offered too;

(C) A second part, called “Dialectics”, covering a much wider spectrum of intellectual sources in all senses, i.e. disciplinary, geographical, historical and linguistic. It is also a more complex section, which requires closer attention to detail and serious efforts of synthesis in order to appreciate how the different notions of dialectics explored and explained in its five chapters (i.e. Aristotle’s, Hegel’s, Marx’s, Bataille’s, Tong Shijun’s, Mao’s, and the Frankfurt School’s) can be combined together so as to shed light on contemporary capitalism, its many woes and their possible solutions;

(D) A postscript that expands upon and integrates (A), developing a critique of key-aspects of liberal and neoliberal political economy, especially Ricardo’s doctrine of comparative advantage and the macroeconomic practical manifestations of the Austrian school of economics in pre-2008 developing countries and in post-2008 Europe, under the banner of austerity. Somewhat disconnected from both (A) and (B), it is per se a very interesting piece of intellectual reflection, and one that should appeal to open-minded economists as much as to social scientists at large and philosophers.

Noteworthy and original is the book’s attempt to give a better-contoured and more positive shape to the notion of cultural Marxism, which has been used very loosely in contemporary social discourse and, typically, with an almost taken-for-granted negative connotation. In this manner, the book can be useful both to the friends and to the foes of the broadly humanitarian, democratic and socialist (i.e. not liberal, as the book’s author vehemently states in his postscript) cultural tradition that goes under this name and that the book’s author identifies, investigates, interrogates and invigorates. Whether trying to promote it or to demote it, both sides can benefit from having a conceptually more refined version of it to dissect, debate and disagree upon.

From a scholarly perspective, the book is verily informed and informative. If anything, it is scholarly thorough and thoroughly scholarly. Its main arguments are sensible and sensibly constructed, but a reader unfamiliar with the classics of philosophy and of social thought that are so frequently referred to therein is unlikely to be able to grasp such arguments with ease, if at all. The spectrum of ideas and ideologies presented and toyed with in the book is immense, even if inevitably partial, and what is presented and toyed with is done so in a competent, intelligent and perceptive manner, as well as in an articulate, meticulous and subtle one. The overall style of the book is plainly academic. Positively clear and professionally tailored, no reader will find thrilling passages, stimulating wit or spiritually inspiring prose to ponder upon. Yet, it is unlikely that any reader but an academic one will purchase the book and read it.

Peter Koslowski’s Ethics and Economics or Ethical Economy: A Framework for a research agenda in business ethics

Conference proceedings (triple non-blind peer review), , , , ,

This paper presents the concept of ethical economy (Wirtschaftsethik) and the relation between ethics and economics on the basis of the work of the German ethical economist Peter Koslowski. The concept of ethical economy includes three levels: micro, meso and macro levels; and it also deals with the philosophical analysis of the ethical foundations of the economy. After the discussion of these elements of the ethical economy, the paper presents some possible research topics for a research agenda about economic ethics or ethical economy.

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Can Macroeconomics and Ideology Be Separated? Some Experiences from Europe and the Nordic Countries

Conference proceedings (triple non-blind peer review), , , , ,

Mainstream economists claim that economics is an objective and empirically tested science – contrary to the humanities and soft social sciences. According to this view, economics is beyond the influence of ideology. It represents the rational way of analysing economic welfare – not influenced by political consideration. Therefore, it is explicitly stated within the Treaty of Lisbon that the board of directors of the European Central Bank must not take any direct instructions from the European Council to secure objectivity in the European monetary policy. Unfortunately, economic theory is not neutral. It cannot be separated from the vision and the fundamental assumptions which lay behind the economic model employed when policies are decided upon. The so-called general equilibrium model is firmly relying on market theory and ordo-/neoliberal ideology.

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Mathias L. Pedersen & Jakob Christoffersen (eds.), Nordic Countries. Economic, Political and Social Issues (New York: Nova Science, 2012)

Book review (editorial review), , , ,

 

The book is somewhat tilted towards the presentation and analysis of economic issues within specific countries, rather than across the Nordic region. The reader is presented with a number of stimulating and topical country case studies that contributes useful background, insights and analysis on different aspects of Nordic economies and the Nordic welfare model. The chapters range from the very descriptive and general to papers with a high level of analytical and empirical sophistication.  Some of the chapters require good knowledge of specific disciplines and their methodological approaches to be of real value, whereas others could be read and easily understood by any reader; e.g. a subset of chapters on Sweden and its international trade sector would likely appeal primarily to a targeted audience familiar with the tools of econometric analysis. Still, the book takes the reader through an interesting and stimulating journey through a variety of topical landscapes.  For some readers the diversity in style and methodological approaches may be an unwanted distraction, whereas for others it does quite the contrary.

 

A connecting denominator across the chapters is the region: the Nordic region and the broad array of current issues, ranging from quality of childcare, occupational safety to highly theoretical issues surrounding the J-curve effect in commodity trade between Sweden and Germany, and the S-curve dynamics of commodity trade between Sweden and the United States, to mention a few.

 

The book is stimulating because of the variety of themes, and perhaps somewhat unique set of issues, and certainly from any standpoint an unlikely combination of topics. On the one hand, the book provides a good dose of stimulation, precisely because it is a somewhat unlikely combination of papers; yet at the same time is provides a certain degree of frustration – the theoretical and econometric papers take up a lot of space – and they are written by some of the same authors on similar topics, with a heavy focus on Sweden. There are three highly theoretical papers on Sweden´s international trade, with some similarity among author teams; although impressive pieces of analytical works, this makes the structure and discussion unavoidably somewhat predictable, and some readers might feel tempted to skip ahead to the discussion and conclusion in those cases.

 

Chapter 1, on “Denmark: Lessons from the Global Leader in Straw-to-Energy”, presents a discussion of the straw-to-energy technology in Denmark, and sets out to identify and analyze factors of Danish success in this field. The chapter and its case studies are highly descriptive and would probably have been more interesting and useful with more emphasis dedicated to analysis. The chapter is based on reports and publications on straw-to-energy, and a set of interviews. The chapter is unfortunately flooded with countless small details that tend to provide more confusion than clarification.  This may be interesting for some readers who are specifically interested in this industry and in information on straw heating, while for others it makes it a challenge to get a sense of the main ideas the author wants to present or convey. A concise and not so surprising list of the major factors of Danish success in straw-to-energy is presented as part of the conclusion, including: political and financial support, nationally supported energy research, developed straw-to-energy technology.  It might have been useful with a discussion of case studies structured more around highlighting these points. It clearly represents a powerful example of a Danish success story, but lacks concrete detail on how it can be duplicated in other places and across the Nordic region.

 

Chapter 2, on “Exchange-Rate Volatility and Sweden´s Trade with Germany: Evidence from Industry Data”, provides an impressive, well-focused and highly theoretical and empirical analysis of trade between Sweden and Germany using a large data set from 1997-2010. While interesting, on the down side, a large part of the chapter is dedicated purely to the presentation of econometric results. This structure may fail to capture the full attention of a broader audience.  Also, the results are not that surprising, namely that small industries are more likely to be affected by exchange rate volatility, and that larger exporters in Germany are able to insulate themselves and hence experience less volatility – this through imperfect competition and various methods of hedging.  The chapter might have benefited from a detailed elaboration of this not so surprising finding – e.g. a description of what types of imperfect competition are referred to. This would probably have made it a more interesting read. 

 

Chapter 3, on “The Norwegian Quota Reform and the Fear of Incompetent Women”, is an interesting, well-researched and important piece of research on the gender representation on company boards in Norway. It employs a solid method and makes use of a sizeable sample size for the interviews, but the empirical work could have been elaborated on. The conclusion is not all that surprising: the results show that new women board members appear to be and are perceived to be as competent as other directors, and hence, the research rejects the human capital theory as an explanation for the low number of women directors prior to the reform of 2003 in Norway – when legislation was passed to specify gender representation on company boards. But one cannot help but want more detail and to ask: How does this compare to other places? Is this a general trend, or to what extent is it specific to the case of Norway and its changed legislation?

 

Chapter 4, entitled “Development of Quality in the Child Care in Denmark – Legislation, Culture and Daily Practices”, discusses the factors that constitute quality in childcare in Denmark.  The study presents a longer list of results rather than focusing on a smaller handful of results that could have been discussed in more detail.  One of the many findings is the increased focus on centralized political goals, specific learning objectives, testing of children etc. since the new 2007 law in Denmark – and how this has negatively affected care in a number of areas. The findings are as important as the debate itself and they certainly raise a number of critical issues. Yet, it would have been more useful with some reference made to the rest of the Nordic region.

 

Chapter 5, on “The Ambivalent Mentality of a Lilliput Nation: Ethnic Relations and Intercultural Learning Among Danish International Workers”, sets out to analyse what the authors refer to as a “paradox” of the difficulties of maintaining a small-scale welfare society despite the overwhelming forces of globalization. They go on to analyse how this “paradox” affects Danish international workers´ abilities to manage internationally and learn from their foreign surroundings.  One might question this “paradox”.  Is there really such a “paradox”? Also, the chapter makes a series of strong statements that seem poorly formulated, appear weakly substantiated and that need further support to be more convincing.

 

Chapter 6, entitled “Is There a J-Curve Effect in Commodity Trade between Sweden and Germany?”, investigates the bilateral trade between Sweden and Germany by looking at 124 industries – a time series analysis for the period 1963-2009.  The analysis finds little support for the J-curve effect, i.e. that a slow adjustment process after a currency depreciation leads to a deterioration of the trade balance.  However, the study does find some evidence of a J-curve effect for a larger number of heavily traded commodities, which the authors suggest may be explained by larger industries being more sensitive to fluctuations in the Swedish krona. The chapter comes across as very methodologically sound, and the econometric approach and tests are appropriate.  Since this is not a chapter in the journal Econometrica, what may be missing to make this of interest to a broader audience would be a more poignant explanation of the results in simple and plain words.  What does this mean? What is the significance? What are the implications for the future of Swedish international trade? Without these more grounded considerations this chapter risks being of interest to a more narrow and specialized audience.

 

Chapter 7, on “Occupational Safety in Finland”, provides a useful and important review of research carried out in Finland related to occupational safety. One of the critical findings of the review is that bullying is a common phenomenon in Finnish workplaces, and that women and healthcare workers in particular are subjected to workplace violence.  As an outsider one is likely to want to know more, i.e. how does this compare to other Nordic countries?  Since the book is about Nordic countries, it would have been useful if some comparison had been drawn to other Nordic countries or cases.  The lack of comparison makes the review slightly less interesting.  Also, why has violence been increasing at the workplace? And how does this trend compare to other Nordic countries?  If it is only a trend in Finland, what explains it?  The literature list is comprehensive and useful for anyone who wishes to conduct research on issues of workplace safety and bullying.

 

Chapter 8, on “Co-operation between Finnish Authorities in the event of Animal Disease: A Rhetorical Comparison of Three Laws from Finnish Legislation”, analyses the hierarchy of authorities in animal health.  Unfortunately, the chapter is not an easy read and the examples presented are not all that well explained. It is also somewhat unclear what the exact objective of the paper is and what the main conclusions are.  Still, the issues raised are important, and the research seems to contribute to filling certain gaps in knowledge, and from this perspective it qualifies as a unique and welcome addition, albeit incomplete. 

 

Chapter 9, on “The S-Curve Dynamics of Commodity Trade between Sweden and the United States”, discusses the S-curve effect. One cannot help but get a bit overwhelmed by the sheer volume of results, with up toward 12 pages of lists of trade figures and graphics.  One cannot but wonder how useful those are to the average reader. They may be more confusing and only serve to distract from the real message of the research.  This is the third chapter on Sweden and its trade sector. First there is a general analysis on exchange rate volatility, and then two chapters on the J-curve and the S-curve respectively.  Could these chapters have been linked somehow, which might have made more sense – with a general introduction on Sweden and its international trade sector?  The topic is interesting and stimulating, and as in the case of the two other chapters by this first author, it also appears very methodologically sound.  Based on a large sample size and employing and using econometric techniques, the paper finds that there is evidence of an S-curve effect in half of the 92 industries surveyed.  An interesting result is that for the largest industries in the empirical test (accounting for 50 percent of the trade between Sweden and the U.S.), evidence suggests that a real depreciation of the Swedish krona will increase international competitiveness in trade with the U.S.. Some discussion on what exactly this means might have been useful.

 

Chapter 10, on “Assessing Evidence of Swedish Cartel´s Longevity: 1956-1993”, presents an empirically sophisticated paper on the legal formal cartel contracts in Sweden with an examination of the structure and factors that determine their longevity. A historical and econometric analysis is presented using data for the period 1956 to 1993. It is empirically solid work and also highly theoretical. The regression results are perhaps not that surprising, but nevertheless interesting to study: for example, the results suggest that cartels are longer lived under horizontal and vertical restrictions than those that are organized under horizontal restrictions only. Results also suggest that the presence of effective regulation does not increase the longevity of cartels relative to those cartels where regulation is absent.  It is found that cartels tend to break during downswings in foreign and domestic markets. The strength of this paper – as with the other papers in this book on foreign trade – is the empirical presentation. Unfortunately, common for all of them is that the discussion is limited.  Given the nature of the book (and it is not an econometric journal article), one would have expected more in terms of a basic explanation of the empirical and regression results in view of the presumably relatively broad audience – and perhaps more on what these results mean for the Nordic countries in general, now and in the future.

 

I think it would have greatly enriched the book if there had been an attempt to synthesize and find or explore overarching themes or trends, and also, if efforts had been made within individual chapters to connect the conclusions to literature on other Nordic countries, and possibly to compare across national borders where appropriate. Some readers might be left wondering whether the results of the case studies are unique to the specific country investigated, or to what extent they are “Nordic”, and if so, how and why.

 

I would recommend this book to those readers who are interested in a broad range of issues and in particular those who are looking for a snapshot of a range of different and important topics in the Nordic countries.  It is a stimulating and interesting book, and one comes away having learned something useful. Still, given the diversity of approaches and the thematic areas introduced, the book would have benefited from a concluding chapter highlighting some connecting points between the different thematic areas of the ten chapters, and maybe with a discussion of some overarching conclusions that can be drawn about Nordic society and welfare and its place in society.  What lessons can non-Nordic countries learn from these case studies? To what extent are they success stories? 

Donald W. Jones, Economic Theory and the Ancient Mediterranean (Oxford: Wiley Blackwell, 2014)

Book review (editorial review), ,

 

 

Even if it is not as mathematical as a standard advanced textbook, it maintains the same rigor and complexity. The volume has a few introductory chapters, covering basic economic tools (production, costs and supply, consumption, industry structure and types of competition, and general equilibrium), and then it goes on developing all the traditional micro and macro theories (public economics, information and risk, capital, money and banking, labor, land and location, cities, natural resources, and growth).

 

It is not a book about ancient economies, meaning that if one hopes to learn about the economies of ancient civilizations, this is not the place to look. The abundant references though may be of help. The book is about economics. The theories are all modern theories explained in detail, even if those details are alien to ancient times. The justification for this is to see the difference between ancient and modern economies, but the focus of the theories is on the modern ones. I fear that this is a weakness in an otherwise impressive book. Using talents rather than dollars to explain the working of banks is fine, but one is left wishing for more direct and explicit use of the theories in ancient times, when, say, central banks’ policies are explained, as central banks, fiat money, and monetary policies are not institutions that resemble some past sort of equivalents. 

 

Despite its only sporadic information about ancient economies, the book is a powerful, even if advanced tool, to develop an understanding of economic theories.  A brand new novice to economics may find it daunting. But a non-economist with a solid background of economics may find the prose rigorous and informative. Not a book for everybody, but potentially a great manual for some. 

Crisis and Crisis Scenarios: Normativity, Possibilities and Dilemmas

Introductory note, , , , , ,

 

‘Crisis’ can mean a confrontation between old and new. ‘Crisis’ can mean a rupture with the old ways of thinking and a chance of dislodging rigid ways of thinking, including those in the academy. There is a crisis of a notion of any stable ‘subject-hood’ in which new critical theories and philosophical ideas might also have a place. We could propose ways of looking at ‘crisis’ in gender relations, the arts and the humanities, and the continuing debates on the crisis of the current capitalist practices. Why is it that the latter has so far not produced any real change? A discussion of ‘crisis’ and the ways in which the notion is impacting culture and society might be of interest.

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Erik S. Reinert & Francesca Lidia Viano (eds.), Thorstein Veblen. Economics for an Age of Crises (London: Anthem, 2012)

Book review (editorial review), , ,

Frequent yet allegedly unexpected crises, the sudden meltdowns of recently praised free-market ‘tigers’, and large-scale social unrest keep surfacing in the post-Thatcherite world of ‘free-trade agreements’, ‘globalisation’, ‘deregulation’, ‘privatisation’, monetary ‘great moderation’ and similar catchwords for the so-called age of ‘neo-liberalism’. Given such circumstances, a few mainstream economists have been willing to reconsider at least some of the premises upon which their discipline has operated and to rediscover the long-forgotten wisdom of a famous but largely uninfluential mind, whose contribution to the discipline’s textbooks has been reduced to a class of odd goods that moneyed people want all the more the costlier they get (i.e. so-called ‘Veblen goods’).

In this perspective, part four (of four) in Reinert’s and Viano’s book contains six exemplary chapters, penned by five seasoned academics and two outstanding young students, that focus upon the usefulness of Veblen’s diverse and different categories of thought for today’s economists, legislators and policy-makers.

Geoffrey M. Hodgson’s “Thorstein Veblen: The Father of Evolutionary and Institutional Economics” compares mainstream economics’ current usage of notions that were crucial for Veblen—such as “institutions” and “evolution” (283)—with Veblen’s original understanding of them. His conclusion is that the former, corrupted by rational choice theory and a simplistic interpretation of Darwinism, has reduced these notions to “apologetic” descriptors within a grossly distorted picture of “market competition” that pleases the adherents of “laissez faire” economics (292). On the contrary, Veblen’s understanding of them is much more nuanced, empirically perceptive, open to revision, and disciplinarily ecumenical. He therefore concludes: “We can still learn a great deal from his writings and build on them for the future.” (292)

Paul Burkander’s “Veblen’s Words Weighed” dissects the full complexity of meaning in a famously convoluted passage in Veblen’s essay “Why is Economics is Not an Evolutionary Science”, showing its author’s commitment to replace “neoclassical economics” (297) with a novel approach that may truly “scrutinise the economic actions of man” (300).

L. Randall Wray’s “The Great Crash of 2007 Viewed through the Perspective of Veblen’s Theory of Business Enterprise, Keynes’s Monetary Theory of Production and Minsky’s Financial Instability Hypothesis” brings three heterodox classics into dialogue, highlighting mutual similarities and differences, so as to provide insights in the structural economic conditions that do actually cause financial crashes like the 2007 one.

James K. Galbraith’s “Predation from Veblen until Now: Remarks to the Veblen Sesquicentennial Conference” makes use of a largely neglected concept in Veblen’s understanding of socio-economic phenomena, i.e. predation, in order to explain the historical origins and the well-tested beneficial functions of regulation within market economies. As he writes: “A functioning structure of regulation is the instrument… of that part of the business community that wishes, and chooses, to play by a common set of rules” that keep market economies from “predatory self-destruction.” (327)

Sophus A. Reinart’s and Francesca Lidia Viano’s “Capitalising Expectations: Veblen on Consumption, Crises and the Utility of Waste” addresses another economic notion, i.e. “expectations” and how Veblen was capable of explaining its centrality in “systemic financial collapses” as well as “patterns of individual consumption.” (329)

Robert H. Frank’s “Thorstein Veblen: Still Misunderstood, but More Important than Ever” takes its moves from Veblen’s enduring textbook relevance in the very specific field of positional goods. Then it proceeds to emphasising his relevance vis-à-vis the much more general claim that “evaluations of all types depend heavily on social context”, hence on the necessity for “economic models” to stop assuming “that consumption decisions take place in social isolation” and start differentiating amongst the ways in which social factors affect economic evaluations and actual choices. (358)

Elements of the fourth part of the book colour the third one, in which three more social scientists explore in as many chapters Veblen’s importance for the field of politics.

Sidney Plotkin’s “Thorstein Veblen and the Politics of Predatory Power” focuses upon Veblen’s understanding of predation in human affairs and its applicability to phenomena such as social coercion, alienation, instrumental rationality, warfare and institutional development.

Stephen Edgell’s “Veblen, War and Peace” tries to fill a gap in the scholarly literature about Veblen, since the economists interested in his work are said to have largely neglected Veblen’s studies on World War I and the ensuing peace agreements. By doing so, Edgell does not only offer an account of this lesser known component of Veblen’s legacy, but also an application of Veblen’s insights to the contemporary conflicts in the Middle East.

Eyüp Özveren’s “Veblen’s ‘Higher Learning’: The Scientist as Sisyphus in the Iron Cage of a University” approaches Veblen’s research from the perspective of Veblen’s assessment of the history of modern sciences, the development of academic institutions, and the failure of the latter to be truly beneficial to society at large. According to Özveren’s “account, Veblen was highly sceptical of the universities’ ability to produce skilled and constructive minds, because of enduring archaic habits of thought, ritual functions in costly displays of wealth and status, enslavement to short-term business goals, and the prevalence of institutional competition over institutional cooperation. Additionally, Özveren’s account offers a depiction of academics as Sisyphus-like figures, who engage in the production of knowledge and fame that are bound to be overcome by the future academics that they nurture and instruct.

Parts one and two of the book belong primarily to ‘Veblenite’ historiography, as they deal with Veblen’s personal biography, his family and cultural background, his education in the US, and his own controversial teaching experiences. Of the six chapters comprised in these two parts, the readers of Nordicum-Mediterraneum are going to find the first four (i.e. part one of the book) of particular interest, for they focus upon Veblen’s Norwegian and Scandinavian background, especially in the context of late-19th-century Nordic immigrant communities in North America. These four chapters being: Kåre Lunden’s “Explaining Veblen by his Norwegian Background: A Sketch”; Terje Mikael Hasle Joranger’s “Valdres of the Upper Midwest: The Norwegian Background of the Veblen Family and their Migration to the United States”; Knut Odner’s “New Perspectives on Thorstein Veblen, the Norwegian”; and Russell H. Bartley and Sylvia Erickson Bartley’s “The Physical World of Thorstein Veblen: Washington Island and Other Intimate Spaces”.

The book hereby reviewed is the result of the conference held in Valdres, Norway, upon the 150th anniversary of Veblen’s birth. It contains essays that differ considerably in length, topic, methodology, and reader-friendliness. Most of them presuppose a modicum of familiarity with Veblen’s work. Therefore, this volume cannot be recommended as an introduction to it. Rather, taken together, the book’s essays offer a very interesting token of Veblen scholarship and an eloquent exemplification of the cross-disciplinary appeal of Veblen’s genius. Furthermore, the essays comprised in the first part of the book reflect extensively upon the Nordic elements in Veblen’s life experience and intellectual interests, and should appeal to our journal’s Scandinavian readership, particularly in Norway.

Winning the War of the World

Interviews, memoirs and other contributions (editorial review), , , , , , , , , ,

Not even prophets like Chris Hedges decode it. Journalists are trained not to. Not even moral philosophers question the system worship masked as ‘the free market”. Freedom means no accountability to human and world life, while competition means competing to externalize all costs onto the lives of citizens and environments. The value driver behind it all is no more questioned than the Almighty. It can do no wrong. But one underlying lock-step of false equations propels this unnamed war on the world through its mutations and metastases:

Rationality = Self-Maximizing Choice

= Always More Money-Value for the Self is Good

= Self-Multiplying Sequences of Ever More Money to the Top as the Ruling Growth System

= All Else is Disposable Means to this Multiplying Pathogenic Growth

 

My 15-year study, The Cancer Stage of Capitalism: From Crisis to Cure diagnoses this ruling value mechanism as cancerous. It is, in short, a deregulated self-multiplication of transnational money sequences accountable to nothing but their own multiplication with no committed life functions. With the Hayek-Reagan-Thatcher crusade to reverse the history of the world into a moronic ‘free market’ and ‘conservative values’, the march was on. Marxists would not engage this Great Reversal on moral grounds because morality was believed to be only ruling class ideology. This left no value ground to stand on. From the transnational victory of corporate world rule from 1991 on, reversals of social states were portrayed as ‘market miracles’ whatever the results for people’s lives. ‘The magic of the market’ was the new world religion, ‘the end of history’. The mass media were  consolidated into one collective corporate organ across cities and borders. Death squads erased community opposition in the South. The academy was and is still defunded to serve the global corporate market and commodity development.

The nations of the world are all ‘restructured’  to be subordinate functions to the supreme moral goal of transforming humanity and the world into ever more private commodities and profits. Society itself s does not exist to this ruling value mechanism. Its logic of growth is totalitarian and malignant to the marrow. More precisely, deregulated global corporate money sequences abolish by treaties and wars all barriers whatever to their free multiplying growth through all that exists whatever the destruction of natural and social life support systems. My work has been to decode this globally life-invading value system. Predictably the diagnosis is taboo to mention in the press, however confirmed by the facts and predictions. No social disorder allows its ruling program to be publicly unmasked. Thus the malignant value code marches on. Alarm bells at the degenerate symptoms increase, but policies of solution only extend the system further and deeper. Life-value economics is as unspeakable as the fatal disorder itself.

 

The Essential First Step in Winning the War of the World is Comprehension of It

The essential first step in winning the war of the world is comprehension of it. Only system analysis can lay bare the underlying value program, but it is avoided. The sciences do not study values and specialize in domains of self-referential meaning. Journalists report facts, spectacles and impressions, but not the underlying values governing them. Philosophers seldom analyse the ruling value system of the societies within they live from social habit and fear. In the age of instant culture, value-system comprehension does not sell. Together these blocks of normalized avoidance make the value code selecting for all the degenerate trends invisible to us. As in immune system failure, the life host fails to recognise the disorder devouring it.

Lacking any unifying framework of comprehension, people are lost. Thus when millions rise in the Occupy Wall Street movement, there is no diagnosis or policy demand. Although Wall Street had indisputably defrauded masses and had failed to its knees broke, no policy shift arose – not even public control of the public money infusing the system cancer, $16 trillion dollars by Senate  count in the U.S. alone – thanks to the heroic Bernie Sanders. Nor was there movement for a needed public mortgage system – even after the private system had perpetrated the biggest fraud in history, indebted tens of millions into ruin and collapsed the economies of the West in irreversible debt. The lost alternative of public banking on which the U.S. revolution was founded, Lincoln won the war of Union, North Dakota has had 100 years of debt-free prosperity, the West itself managed the 1939-45 war and post-war years to unprecedented full employment, and first Japan and now China wins in productive investment – all is  amnesiac in the West.

Fast forward to today, and the underlying system cancer advances on. The financial giants causing the 2008 Crash are bigger and richer in criminal impunity. They speculate with publicly supplied trillions on food and water futures. They control even Rio + 20 as the life-ground catastrophe they finance explodes on one front after another. Transfused with endlessly with more public money to bleed and indebt the world dry, the money-printing system metastasizes further – now occupying the once prosperous social democracies of the European Union with public money bled out of peoples’ lives and life bases to private banks with no limit . Refusing any regulatory limits, converting pensions into more stockmarket feeding troughs, investing nothing as youth unemployment and debt spike ever higher – where does it all end? It ends when public money and human rights stop being fed to the failed system. It ends when commodity cycles of destructive waste are stopped. It ends at the base of the disorder when the 97%-counterfeiting of debt and credit by private financial institutions is publicly controlled.

 

Economic Doctrine Allows Money-Cancer System Free Reign

Neo-economic theory is a pseudo-science. Its defining postulates are unfalsifiable by facts. All organic, social and ecological life requirements are absurdly assumed away. Infinite demand on finite resources is presupposed as sustainable. Mechanical reversibility of everything is taken for granted. Whatever does not fit the doctrine is rejected. Endlessly self-maximizing atomic selves are believed to necessitate the best of all possible worlds by the market’s invisible hand.  

Is this not a fanatic religion? Supra-human laws dictate commands across peoples. No deadly consequences lower certitude in the miracles of the market God. Even when the ruling value mechanism visibly depredates the very life bases of the world, the only reforms are to globalize it further. Corporate-lawyer treaties coined in secret rule as the new laws of nations, while hostile zones are subjected to covert forces sponsoring civil wars, as promised in 2001 – Afghanistan, Iran, Iraq, Lebanon, Libya, Somalia, Sudan and Syria Iraq, and now the Ukraine as I write.  All is believed in and pursued as a world crusade, even if fascists lead it. One supreme goal governs underneath bizarre beliefs –  multiplying growth of transnational money-sequences at ever higher velocities and volumes with no life limits tolerated. This is the moral DNA of the ruling value mechanism. In theory, it is expressed well by University of Chicago professor and godfather of the U.S. National Security Council, Leo Strauss, who wrote in his canonical Natural Right and History (p. 60): “limitless capital accumulation” is “a moral duty and perhaps the highest moral duty”.  On the ground, Strauss’s patron, David Rockefeller, expressed the moral-political program more concretely at the turning point in 1991, “A supranational sovereignty of an intellectual elite and bankers is surely preferable to the national auto-determination practiced in past centuries”.  The promises are kept. There is no binding regulation to protect any life carrying capacity on earth from the loot-and-pollute bank money system in the years since.

Many blame capitalism, but unlike classical capitalism this mechanism is not driven by productive force development. It is driven by transnational money-sequence multiplication with no productive standard which despoils more means of life than it produces. It eliminates the working class itself. The ruling idea that the system is peerlessly productive is increasingly contradicted by far more life goods disappearing than are created. Something much more sinister is afoot.  The social and natural life bases by which the human species evolves are reversed and overrun. Yet not even the opposition defines what ultimately counts – humanity’s universal life necessities themselves. The meaning of ‘the economy’ itself – to produce and distribute life goods otherwise in short supply through generational time – is lost. While the very air humanity breathes is going more toxic and acidic, the contradiction to ‘productive growth’ is unseen. As the waters of the world are simultaneously destroyed, the dots are not joined. Even as there are mass extinctions of species, youth without futures, and irreversible debt servitude of the world, all is well if ‘more growth is returning to the system’ which causes all of them. That at the same time the earth’s very soil cover taking tens of millions of years to evolve is simultaneously mined, acidified, salinated, degraded and exhausted as forest and mineral covers are stripped from one continent to the other are not connected into common meaning. The ruling value mechanism devours the life substance of humanity and the earth, but remains assumed as ever ‘more productive’ even by angry unions. 

Well at least, someone might reply, climate warming has been recognized by a blue-ribbon economic panel, Britain’s Stern Review, as “the greatest and widest-ranging market failure ever seen”. This is a step towards rational observation. But even with a UN panel of over-1600 scientists on the case, there is no connection to the other basic life carrying capacities driven towards collapse by the same organizing value mechanism. No secret is more unspoken. So more rights to pollute and profit are instituted, and the climates and hydrological cycles spiral to more deadly extremes. “The world’s poor suffer first and most”, Lord Stern also rightly observes, but this fits the reigning value mechanism. Those without money do not exist.

 

Unmasking the Ruling Code of Value Driving the War on Life  

Let us summarize. Behind every step of the Great Reversal lie failures of knowledge and value understanding: (1) failure to diagnose the regulating value mechanism at work; (2) failure to connect across the domains of life despoliation as predictable from the system’s blind money-sequence multiplication; (3) failure to define or demand any public policies against its feeding on life support systems with public treasure; (4) failure to recognise any life-value principle or the life ground of the economy itself.

This knowledge black-out is understandable once one recognises that the vaunted “knowledge economy” has no criterion from the start. All it means is what can be controlled, sold or manipulated to grow the ruling value mechanism. Pause on that general fact. This is why true knowledge is now so often denied or attacked as “uncompetitive’.  Look for exceptions to this spread of the ruling money-value mechanism into the very capacities of human understanding.  Diagnosis of this disorder is the knowledge most needed, but unspeakable. Who even now recognises that ‘new efficiencies’, ‘reforms’ and ‘cost cutting’ are always attacks on people’s lives, means of life and life functions?  Who connects across the one-way falls of life standards and regulations, public science and testing, agrarian communities and lands, workers’ rights and unions, social infrastructures and protections, and social life security while money demand multiplies out of control at the top? Who names the innermost ruling code driving all – whatever protects or enable human and ecological life is eliminated as a barrier to private money-sequence multiplication. This is the source code of the cancer system. It explains why transnational corporate, equity and bank profits grow to ever new records as the world’s majorities are dispossessed. It explains why social and natural life-carrying capacities are despoiled across continents.  The war on life is built in.

The ideals of “freedom”, “democracy”, and “economic growth” are thus reversed in the name of them. The big lies become so automatic that few notice them– for example as I write, food-stamp slashes reducing 47 million hungry U.S. people below $1.40 a meal and $90 less a month for life necessities “protects the most vulnerable Americans” (President Obama, Jan. 29, 2014). There is a recourse against lies which is as old as the species. Humanity’s deciding evolutionary advantage is that knowledge wins in the end. Above all knowledge evolves through recognition of how life is enabled or disabled by material conditions and social rules. For example, the binding abolition of the most profitable commodity of world trade ever, human slaves, won. Knowledge won again from the 1929 Crash and subsequent World War when the collective life security of peoples evolved by known facts and social policies more in 30 years than in the prior twenty-five centuries.  

The missing link for this long life-and-death struggle is the life value code. We do not know it because we are without a reference body in a vast ocean of self-maximizing money-sequences for which the goods are only what sell for private profit. A life-ground and compass almost emerged after 1945 when peoples recognised how ruling delusions of self-maximizing fanaticism almost destroyed civilisation. Learning from the greatest war and depression in history, societies forged binding international covenants for collective life security and free human development. Universal education, health, and income security infrastructures were publicly formed across societies. But no unifying life-value code underlying them was found. In absence of any sound life base of understanding to re-ground in, the Great Reversal from 1980 on has gone from one extreme of life-blindness to the next with endless lies of better days to come – even as there is ever more joblessness, meaningless employment, deprivation of more majorities, commodity diseases across the globe, debt servitude chaining the futures of peoples, and deepening ecodidal trends advancing one way with the system’s growth. Locked into the ruling frame of thinking, people blame humanity for the catastrophe unfolding even as the demands of the ruling value mechanism have been imposed every step by a secretly negotiated and adjudicated transnational corporate system backed by global armed force, financial sabotage and embargo, and limitless lies. From secret codification by corporate lawyers of treaties overriding constitutions to free looting of human and natural life-carrying capacities across borders, ever more money-sequence ‘investor’ rights are prescribed and multiplied across nations. Those who resist are ‘against competition’ or ‘terrorists’. Reverse projection rules.

An absurd metaphysic is assumed throughout. The economy’s provision of goods through time mutates to ‘laws of supply and demand’ that are fatuous caricatures of both. Demand is never people’s needs or necessity. It is private money demand minted by private banks without the legal tender to back it to indebt people and gamble on their future means of life. ‘Supply’ is not the life means people require to survive and flourish. It is ever more priced commodities for profit promoting more human and ecological ill-being across continents. The supreme moral value of the system is then equated to its opposite as well. Freedom = freedom for private money demand only = in proportion to the amount controlled = ever less freedom for those with less of it = no right to life for those without it.  

When mass uprooting, joblessness and misery follow, more reverse meaning is proclaimed. “Uplifted out of poverty” headlines proliferate over a money-gain equal to the cost of a coffee for subsistence farmers who have been forced into city slums without any means of natural and communal life support left. Peoples are too distracted by competitions for vast prizes to notice. The global struggle for life is displaced by ever more contest spectacles as global mass-marketing sites – the meaning now of ‘sport’.  But behind the perpetually revolving mirrors, the meaning is taboo. People may see “greed of the rich”, but not that greed is the global system’s r driver at every level. “More productivity”   is liked across classes, but who sees that it only means less cost per unit of profitable commodities bringing more life waste and destruction. Workers and left thinkers may no more want to see this than the corporate press.

The meaning of ‘the free market’ itself is reversed. Over centuries it has meant the opposite of the global corporate system – public places of local life goods, all exchanged for legal tender, featuring real foods and crafts, no mass conditioning ads, no debt servitude, no dominance of transnational money-sequences, no throwaway packages and waste, no lobbies controlling government, no invisible head offices pulling puppet strings, and no bribery controlling supply and demand. Yet the free market like the real economy is overwhelmed. There are only more absentee money sequences with no required life functions or accountability to the communities and life conditions they competitively bleed. The enemy is undefined. The common life capital it attacks is unknown. But the life and death choice cannot be made without knowing both.  

 

The Life-Value Turn as the Next Stage of Civilisation

Reality hides in the language of the past. So ‘capitalism’ is blamed by critics when real capital is, in fact, destroyed every step. Journals report ‘global wealth has soared 68% in 10 years’. But life wealth is devoured as fast as the money-sequence system can grow.  Always the underlying life ground  is lost beneath the competitive self-multiplication of money demand invading all that exists. With no life value anchor and compass, the degenerate trends only deepen beneath reference body to recognise them. I have spent most of my life as a professional philosopher on the problem of life value and social value systems. Although the sane may agree life value is what ultimately matters, nothing has been less understood.  People called ‘pro-life’ usurp the woman’s body in the name of fundamentalist religions. Nations absurdly assume that ‘standard of living’ is measured by the private money spent. Animal rights theory has no criterion to tell the life value of a snail from a person. ‘Life sciences’ sacrifice billions of animal lives a year for private money-value gain. ‘New and better technology’ has no life-value standard to decide better from worse.  

Life value is the missing base. But there are as many proxies for life value as there are values. Specialist domains like physiotherapy and medicine recognise life-value in organic functions, but without principled meaning to apply to wider life systems. In general, life value ignorance defines the age. This is how the greatest of all fatal confusions has mutated: that money-sequence growth = life value growth. Just as the multiplying grotesque cells eating the life-host alive are not recognised on the micro level, so too on the social level. Thus tidal bank notes of bets, credit and debt without legal tender drive ‘financialization’ across the planet. They must loot life and life bases to keep growing without inflation as trillions of new dollars are printed without life function. Endless slashing of life goods in wages, benefits, social security, pensions and environmental protections result, as money-demand powers multiply at the top. This is why endless bonuses for financial failure, stripping of the middle classes and the poor, squandering of public wealth on rich corporations – the list can go on – are demanded as U.S.-led wars for resources, lands and corporate markets never stop and taxes on the rich are reversed. All is predictable once the cancer system is diagnosed.  

 

An ultimate question arises. What is the ground of response to this ruling value mechanism which cumulatively plunders human and other life to feed itself?  We know the ultimate ground is life value. But what is life value? To roll thirty years of research now in three UNESCO volumes – the objective standard and measure can be defined in three steps:   

 

(1)           all value whatever is life value,

(2)           good versus bad  equals the extent to which  life is more coherently enabled versus disabled,

(3)           by greater/lesser ranges or capacities of thought, felt being and action through time.

 

Visions of world peace, the classless flourishing of peoples, a planetary ecology in which humanity is its conscious understanding – all such ideals express this underlying life code of value.  But “who decides?” skeptics ask. No-one decides because gains and losses in life capacity are as objective as the laws of biology and medicine. Anything is better or worse by the greater or lesser range of life capacities it enables. This value code is built into evolution itself. It is no more a matter of opinion than people’s life necessities are: that without which life capacities are always reduced. The ruling value mechanism is the polar opposite. It attacks life and life conditions everywhere as ‘externalities’ to its self-multiplying growth. Because this growth is assumed to be life value, however, the greatest value reversal in history goes unseen.

 

The three-step life code of value provides the generic value compass and base which has been missing. It is objective because it is true independent of anyone’s perception of it. It has unlimited validity because there is no exception to it (which is testable by searching for one). It is presupposed in value judgements – as you can observe when these judgements are defended. Life value is also universalizable because all values derive their worth from it. Finally life value is sovereign because it trumps any other value in cases of conflict. All are testable generalizations.

 

But what of measure of more or less life value? Life value is measurable in degrees by greater/lesser capacities of thought, felt being and action shown through time – for example, how much life capacities gain or lose by nourishing versus junk foods. Today the macro trends are in one-way loss of life capacities. Knowledge is the exception. It forms the way stations of life understanding passed onto others and subsequent generations across epochs, the distinguishing life capacity of our species. But even knowledge is threatened by corporate rights against its dissemination at the same time as there is mass propagation of public lies. New electronic communication capacities without corporate control still win the war by the greatest civil community development in history. But the life-and-death fields of invasion by the ruling money-value mechanism are not decoded – the money tides of hit-and-run buying and selling of lands and currencies across the world, free and growing use of ecocidal extraction methods, life-starving hours, wages and no benefits in global dispossession of workers’ century-long gains, one way global growths of disease commodities and lethal arms trading, oil-guzzling and air-polluting noise vehicles of multiplying kinds, big oil and big pharma looting of public lands and health dollars growing business on ill effects, a world-wide pension raid for corporate-stock gains at the life cost of hundreds of millions of people, and most invisibly, full-spectrum assault on humanity’s thinking and feeling sides of living itself – the zombie effect.  

 

Where we might ask do the transnational money-sequences not destructively invade the evolved fields of life of humanity and fellow species? The movement is by exponentially multiplying money-sequences eating away at the margins of every private transaction, public funding, life exchange and substance within and across borders. Consider all the bites every moment across business and exchange sites – before and beyond the ‘carrying trade’ in exploiting lower interest in one country to flood another with the cheaper money advantage, beyond the trillions in derivatives betting every day, beyond the raids on sovereign currencies and bonds without tax or regulation. On the local level, hardly a shop, a buyer, a builder, a home-dweller, anybody who lives today is not invaded by the same financial mechanism with ever more rights to demand at every exchange site with no function while enforcement is paid by the public being stripped by it. The apparently free credit-card system, for example, imposes a 2% charge to the seller for sales at a hidden 33% annual debt-charge rate, before the debt predation of poorer consumers begins. There is no end to the invisible lines of life devouring demands now deeply into higher learning and public health themselves while destroying workforces and companies overnight by hostile takeovers, bid-up mergers, asset strippings, capital flights, and straight-on funding of civil wars and destabilizations from which fire prices and dominant positions are extracted. Ruining societies is the medium of metastases. How else would a cancer system behave? 

 

The world-choosing choice begins with what you buy. Clearly for example eating, selling or supplying junk foods is objectively bad to the measure that it disables human life and produces global epidemics of obesity, heart failure, cancer and diabetes. Yet even economic ‘science’ calls them all ‘goods’ whatever the rising disease effects. Simultaneously violence entertainments flood public airwaves and play-spaces before the same consumers – most avidly the young – with images of humanity being killed, tortured, injured and humiliated. As the sugar-salt-lard concoctions are ladled into bloodstreams and throwaways clog the earth`s circulatory channels at the same time, we begin to see the multiplying destructive occupation of the fields of life and life substance as built into these runaways growths and their ‘goods’. Life capacities at every level are attacked as ‘market freedom’. Only life-value ground and measure can penetrate the disease mechanism none define – to addictively disable human life capacities for more transnational money-sequences through ever more lives from infancy onwards.  Where is there exception to the pattern?  Life-activity-replacing motors and commercial games in multiplying life occupation, endless unneeded and non-recycled conveniences locking into habits of life, political-junkie election images and spectacles where the truth is what sells corporate lines and candidates, and commercial internet and television hooks everywhere in front of which children spend 11 waking hours. Which of any of these is not geared to addict consumers to compulsive consumption against life capacity development? Which does not input toxic wastes into the circulatory flows of ecosystems at the same time? But all is optimal for the ruling economic model for which life and society are reduced to atomic desiring machines propelling more money demand to money controllers as the nature of the growth the official world calls for..  

 

The moving line of the true war of liberation begins with what we are able to control, our own lives. Consider your own life, what you know best.  Every value you enjoy, lose or gain has a bottom line – its life capital, what enables life to reproduce and grow rather than degrade and stagnate through time. We defend it and our health by buying life goods and nothing else. The turning point is as old as physical and cultural evolution. Every human advance is by knowing what enables life from what does not. Collective life advance is transmitting this life-and-death knowledge across selves, space-time and generations. The life value code holds across cultures. But the universal life goods and necessities are not even known. Their meaning is obscured everywhere, but are exactly definable. Life goods are always that without which life capacities decline and die. All real needs are known by this criterion. Every human life suffers and degenerates towards disease and death without breathable and unpolluted air, clean water and waste cycles, nourishing food and drink, protective living space, supportive love, healthcare when needed, a life-coherent environment, symbolic interaction, and meaningful work to perform. All are measurable in sufficiency across cases. (author note: a systematic explanation is available by google of “Universal Human Life Necessities”). Yet all universal human life needs and capacities are attacked, polluted or perverted by the ruling value mechanism in product, process and lobby demand across the world. Yet where are the universal life needs named and  connected against the malignant growth system spreading through ever more nodes?

 

Not zero growth, but zero bad growth is the way. A real economy by definition regulates for these universal life necessities and against toxic junk, and individuals would not buy 99% of corporate commodities if they did. Victory or loss in the war of the world lies in how we live.. So why does anyone buy such commodities? System addiction is how it grows, and knowledge of life goods versus bads is the through-line of the good life and human evolution itself. What deeper motivation could there be? I like others have long lived without corporate-ad television, regular private auto or gas-vehicle use, any junk food or beverage, any throwaway  item, any new fashion or commodity not more life enabling than the old, or business with big private banks –  selecting solely for life goods at the local level. The organizing principle is the spirit of the Tao-te Ching and the free autonomy of the wise. It is as old as the good life. The life-code formula is clear: minimal market demand to enable life capacities to flourish. This value imperative defines transformation to true economy and liberates life wherever it moves.

 

Collective Life Capital as the Common Value Ground and Measure Across Divisions

We know the war of the world can be won. The plague addiction to corporate cigarettes has been conquered by 30-50% of the developed world’s population. This shows how the life code can select against habituated system harms of the most compulsive kind, and everyone live better the more it is done.  At the personal level, it begins with zero-base accounting with money demand only justified by life-enabling gain. Yet for collective life goods, we do not have a principled ground and measure. Collective life capital does not exist in public or expert meaning. Any common life interest or agency at all is excluded unless it promotes profits. The implications are fatal but unseen. Collective provision of the universal human life necessities that have evolved by long social organization and human evolution are blinkered out of the ruling value mechanism. It sees only mechanical ‘growth’ by commodity sales and profits. Everything that makes a society civilised or liveable is blinkered out – common water and sewage systems for all, free movement pathways and life spaces without cost to use, public libraries with unpriced books and films, non-profit healthcare and disease-prevention by public institution, public income security from disemployment, old age and disability, life-protective laws including sufficient minimum wages and environmental regulations, primary to higher education without multiplying debts, and family housing, food and means of life assistance for children without parental money. Yet all these are defunded or eliminated to pay debt-services to private banks and grow business, with the IMF to the Tea Party leading the charge as ‘new efficiencies’ and ‘savings’.

 

From this built-in erasure of common life ground, the hollowing out of collective life goods  proceeds without any feedback correction. Public wealth is privatized at every level to feed corporate money sequences. Thus fed with endless giant tax and subsidy hand-outs and deregulations to invade further, the demands of the ruling value mechanism multiply further. The collective life base to steer by and regulate does not exist. For example, when Amartya Sen titles his Nobel Laureate monograph “Social Choice”, even he can get no further than atomic aggregates of individual preferences. No collective life goods in themselves are conceivable within the market paradigm. When another progressive economist, Elinor Ostrom, wins the Nobel Prize for Economics years later for her book, Governing the Commons: The Evolution and Institution of Collective Action, she is trapped within the same paradigm. No principle of common life interest or agency beyond mutual self advantage can be conceived. “The commons” and “collective action” are posted on the cover, but no civil commons or agency is seen from universal health care to a public bicycle path. Common life bases can no more compute through the ruling prism than the collective actions required to provide them.  

In fact, the underlying problem is ancient. We have lacked a common life-ground since the genocides of first peoples began. It is a very ancient blind spot which has become increasingly fatal with all-powerful technologies of destruction and the deranged money-value code driving them. The eco-genocidal streak goes deep – from the old-testament tribal god command to exterminate all other peoples in Palestine to, millennia later, the first peoples in the New World saying to their modern invaders: “When all the trees have been cut down, when all the animals have been hunted, when all the waters are polluted, when all the air is unsafe to breathe, only then will you discover you cannot eat money.” Even “life, liberty and freedom” in the US Constitution reduces to the commerce clause and corporate rights by Supreme Court interpretation. Abdication of life responsibility is built into the-system. The Global Market God rules, and the common life interest and its agency do not exist to it.  

How are we to ground beneath this life-blind paradigm whose global mutations threaten evolved life on earth? In the end, the organizing principle crosses the lines of death itself – the life code of value at the collective level. But this common life interest is usurped in its very name. That is why, for example, the young can be killed in masses and arms budgets bankrupt U.S. public sectors  to enrich Big Oil, or people’s homes can be expropriated for private developers as ‘the public interest’ and ‘eminent domain’.  This is the dark side of history, one oppressor rule after another. But the collective life interest is the true bottom line of legitimate governance. The proof is in the conditions of its definition. It must be consistent with the life carrying capacities of all through time. It must be open to life-enabling change. It must go deeper than family, gender, and culture differences. It must include past as well as future generations. It must supersede the ruinous man/nature, economy/environment splits and individual/society duality of interests. It must realize the Three R’s of ecological literacy to be life coherent. It must bridge the past to the present to the future as one process to steer development beyond the holocausts of history. It must embody the economic principles of efficiency, productivity and innovation in life-serving form. It must make all freedom responsible to its life conditions of possibility. It must embed the life bases of all as supreme so it cannot in principle go wrong. 

 

Such a moral code seems impossible. Every demand of the ruling value mechanism is structured against it. Opposing ideologies do not find its common life base. Postmodernism and relativism deny any universal principle of value except the actually ruling one. Political policies are confined to what serves the corporate market system. Issue politics rule fixated on sexual preferences. There is no common life ground recognized or life-value compass to steer by. Collective life capital re-grounds us. It is the life base of the common interest – that without which humanity’s life capacities degrade and die. It is the bridging concept across the ‘the economy-environment’ division as well as cross present and future generations. It is the true meaning of economic necessity and the sole substance of growth and development. In all, collective life capital transcends all divisions by impartial principles that cannot go wrong: (1) a unifying life value regulator enabling all, (2) a generic life-value measure to tell greater from lesser by margins of capacity loss or gain in any case, (3) production of more life value capacity through generational time, (4) cumulative life gain as the organizing goal of the process throughout, (5) the more coherently inclusive in enabling life the better. In this way, the common interest is provided an exact progressive meaning, and collective agency is built into its inner logic of life progression.       

 

Conversely, whatever person, group or system destroys common life capital is objectively evil to the extent of life capacity destruction through time – for example, corporate U.S. oil wars or leisure vehicles destroying natural life. Advancing collective life capital, in contrast, is what “make the world a better place” means. It could be by cures to diseases, more ecological methods, life infrastructure building, advancing knowledge, new ways of seeing, or life-protective laws. All more inclusively enable life without loss and cumulative gain. No real progress is ever made without satisfying this logic of value.  Feeling with across species and tribes, for example, may bind many of us in this room. So too even more so advancing life-coherent knowledge and visual comprehension, as Peter’s films do. The understanding and feeling sides of life keep extending despite death and moral numbing by the ruling value mechanism. Public knowledge via the Internet commons wins against corporate media silencing and propaganda. We see here the underlying struggle across the fields of life. The rising and falling of life capital base and compass can in fact be found in every social policy, decision or movement that goes right or goes wrong. There is no exception. The war of the world is everywhere, and so is our task of life commons awareness and building.

 

This is not hope without substance. The common life interest is already built into our lives over millennia without our knowing it – the ‘civil commons’ of language, collective water sources and sewage, common safety regimes, shared pathways everywhere, community health rules and healing sites, and everyday life-enabling knowledge institutions at every level – all collective life capital formations that keep advancing beneath notice despite and through diseases and wars. Unseen too is that all are more threatened now by the ruling value mechanism than ever before.   The defining general meaning is all social constructs which enable universal access to life goods. This too is no utopian ideal. It is the measure of true development across all cultures before and after our lives – from environmental economy to universal libraries and education to public water and waste cycles to life-serving laws before which all are equal. These are all forms of collective capital in continuous development without loss and cumulative gain but all are attacked bite by bite by the multiplying money-sequence system now out of control.

The collective life capital developments that are needed now are many, but can be crystallized into three system shifts in general:

(1) public banking for credit and investment in individual and collective life capital growth,

(2) ecological quotas for all consumption of non-renewable energies and materials,

(3) citizen income security guaranteed in return for life-enabling hours of public service.

 

Movements of masses to demand them completes knowledge in public action.

 

Under the ruling value mechanism today, in contrast, evolved life on earth is under totalizing attack. 95% of all gains go to 1% with no required life function, while 95% of the world’s life support capacities are pillaged by life-blind money-sequences.. Yet life-value steering is easier than not. Norway for example has led the world in holding onto and advancing its common life capital bases through the system sickness, and emergent Latin America is implicitly building collective life capital deciders from decades of death-squad and foreign money-sequence ruin. Before the Great Reversal, societies everywhere were becoming governed by public policy patterns of similar kinds  – national recovery of control over public owned resources, progressive taxation, public banking and investment, and policy-led elimination of structural depredation of the poor and the environment.  All are methods of collective life capital formation inclusively enabling the lives of individuals across time. “Inclusiveness” is a concept much invoked today, but not with the life capital bases and compass required in the real world.

 

Let us overview the condition we face. Once upon a time in the distant past, capitalist organization under public control mass-produced healthy food, clothing and utensil commodities despite brutally exploitative methods.  There was a long painful taming of it over 200 years, and then the Great Reversal from 1980 on usurped progressive social development at every level possible. Since then, the private transnational money-sequence system has been increasingly deregulated to competitively multiply and override all life carrying capacities as its supreme goal – propelling endless wars, public and public sector debt slavery, mass disemployment and majority dispossession for obscene riches. This is the global cancer system which occupied states subsidize, enforce and grow as fast as they can – stripping the soils and forests, poisoning the waters, disemploying peoples and producing disease-causing junks in ever greater volumes. Re-grounding in common life capital, however, exposes every disorder and directs solution to it – the long missing base and measure of ‘the moral science’. It re-sets evolutionary theory itself in which only selfish gene multiplication counts – the biological correlative of the self-multiplying money mechanism. Self-maximizing game theory dominates both and military doctrine, justice and moral analysis besides. Yet common life capital bases are excluded from all of them as the lost life-ground and reference body of our capsizing planetary condition.  

 

New ‘natural’ and ‘social capital’ categories may seem to assist us here. But they now only repeat the vicious circle. ‘Natural capital’ is what can be exploited for more money. ‘Human capital’ is more future private money-demand for its owner. ‘Social capital’ is lower transaction costs for profit. ‘Physical capital’ follows suit. Life capital remains without a name. Collective life capital does not exist. All must be steered back into conserving and producing life goods rather than destroying them, the ultimate policy imperative of the world. The public authority, policies, subsidies and right to issue sovereign money now lavished upon the life-destructive mutations of private money capital thus end without a shot fired. They are now so dependent on counterfeit money-sequences, treaty edicts, public hand-outs and resources that they cannot go a day without them. The public needs only to reclaim them, not to take a thing. .

 

“Let the Market decide!” all money interests cry. This ruling superstition is more barbaric than any before – essentially, ever more for those with more money to suck the lifeblood of humanity and the earth dry.  Its  ruling delusion is that the best of all possible worlds must follow by the invisible hand. In fact, a deregulated global chaos of private transnational money-sequences exponentially multiply while the world of life capital and goods is cumulatively destroyed. The life capital alternative is self-evident once seen. It grounds in common life capital – life wealth that produces more without loss and new gains for successive generations. Its moral logic is, in fact, the through-line of all human development since language and the cooperative provision of means of life. Unlike the global market of atomically self-maximizing corporations devouring the world for more private profit extraction without end in the delusion that an unseen hand directs all to the best of all possible worlds, collective life capital steers across divisions by an objective and universal life-value base and measure in exact progression which cannot  as life-coherent go wrong. Ecological capital and knowledge capital are its baselines of value compass and coordination across life capital domains, and the unifying principle of all is already implicit in the architecture of modern human thought.

 

All that is lacking is life value, ground and measure. They connect life, the ultimate onto-ethical concept, to capital, the ultimate concept of political economy: and so by transitivity, to law, human rights, sustainability and intergenerational equity. The meaning is clear. Valid law is a collective life capital formation providing the rules to live by that coherently protect and enable life.  Human rights are instituted claims of all to what enables their life capacities to be realised as human. Sustainability is of collective life capital, or it is a fraud. Intergenerational equity is access to collective life capital across generational time without loss, or it is a lie. Throughout we see a missing life base presupposed but not yet conscious or defined. Throughout we see that the ruling money-sequence value mechanism is incompetent to comprehend it. Building without loss and for better life across generations is what is ultimately worthwhile. No-one might deny it, but ignorant usurpation of its meaning is what rules. All universally life-enabling progressions of human evolution and history to now are the result of its implicit understanding. You cannot take a clean breath, meet a child safely, enjoy a drink of water, without their support from the past. The warped streak of epics and histories of power is opposite, but even state mass murderers and Wall Street bankers think that they are improving the world – the primary delusion which received theory rationalizes so that few understand.  

 

The lost life-ground is already implicit in healthy lives. Our organic fitness and powers, our depth and breadth of knowledge acquisition, our abilities to perform productive tasks of needed kinds, and most of all our sustained intent to create more life wealth without loss and cumulative gain are the generic parameters of a life code already built into us as human. More than ever we know the plague is ruling, and “the 1% and the 99%” expresses it. But a real economic law holds beneath opinions and times. Public investment in common life capital capacities is the only allocation that works over time.  We know this from America and Canada before their falls, Germany, Japan, Korea after 1950, and the post-1945 age of social life standards across the world. It has been proven again despite sabotages, coups and financial strangulations in Latin America after 1999. The unseen enemy is borderless money sequences with ever more rights. The missing map is diagnosis of the ruling value cancer. The missing link is the life-capital economy all breathe and move by. The war of the world today is won by knowledge action.   

 

It is the age of forgetting everything,

It is the age of remembering all.

It is the age of competing to death,

It is the age of our coming together.

It is the age of ignorance and falling apart,

It is the age of more knowing more than ever.

It is the age of losing all that lives,

It is the age of finding common life ground.

It is the age of ever more commodity diseases,

It is the age of choosing world life.

It is the age of sleepwalk

to catastrophe,

It is the age of awakening

to shared life meaning.

It is the age when capital destroys the world.

It is the age when life capital wins.

 

 

 

Responsibility and Capitalism. A Phenomenological Way to Approach the Economic Crisis

Reflection on the economic crisis (editorial review), , , , , , ,

1. Capitalism as the economic expression of onto-theology

 

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages[2].

 

The words of Adam Smith, originally used to justify liberalist economy, presently sound like an act of accusation. Classic capitalism encourages pure egotism, relying on an ‘invisible hand’[3], which should promote the public interest together with the individual one. However, the hand of the market is not invisible, is pitiless. Capitalism in nothing but a pursuit of money, of more and more money. Then, as time goes by, wealth accrues in the hands of fewer and fewer people[4]. Marx already predicted the concentration of capital as a necessary consequence of free competition. However, he could not predict the birth of financial capitalism. Neo-liberalism spread over Western countries, leading to financialization, that is ‘the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies’[5].

 

 

While classic capitalism links money to production, financial capitalism is based on uncertainty[6]. Money increases or decreases according to the Stock Exchange prices. Since they are unpredictable, people could gain or lose fortunes in a day: a risky investment is nothing but gambling. In this way, the concentration of capital in a few hands comes faster. Those who are not successful go broke and damage other people: bankers and brokers lose the money of whole companies and families, shopkeepers and businessmen close their activities and dismiss people who work for them. There are not only employers and workers who pay the price, but also small capitalists. Unemployment increases and consumes decrease. In this way, even production decreases and the system itself collapses.

 

This is a devastating situation, depending not so much on the structure of the system, as on its moving principle. Capitalism, in its classic definition, should stimulate production and consuming, appealing to individual interest. But the course of egotism is one-way: it aims to individual affluence, regardless of its impact on the others.

 

Capitalist economic systems are characterized by the private ownership of property and the consensual exchange of goods and services in a free market.[7]

 

According to this recent definition, common both to classic and financial capitalism, egotism reveals to be their driving force. The expression ‘private ownership’ refers to individual possession and power, while ‘free market’ indicates liberty of action.

 

Philosophically speaking, capitalism is nothing but the economic expression of onto-theology. Exactly like the Ego of Western philosophy[8], it is regardless of the Other. The theoretical I subjects everything to its structures and the practical I cares only about its freedom. In the economic case, the Ego subdues the Other to the main category of capitalism, that is profit. The practical consequence of this philosophical statement is that an indiscriminate pursuit of money causes the exploitation of environment, animals and people. The Ego prevails on the Other, but would be powerless without Him. Profit has to be made at the expense of somebody, who cannot be too weak, otherwise he will die or become a slave. The free market disappears without a certain balance: money can circulate only among people who produce, work, and consume. This is why, if the Ego takes too much power, then will lose everything.

 

The current economic crisis could be seen as a critical moment when, philosophically speaking, the I is capable of annihilating the Other. The next step would be the following: a few people with a high concentration of money, laying down the law to the majority and spoiling the environment of its resources.

 

There are two solutions to avoid this disaster: the first is destroying capitalism and adopting another economic model, communism for instance; the second is putting limits to capitalism itself. The former corresponds, in philosophy, to the annihilation of both the I and the Other, and to the birth of an anonymous subject; the latter would be the introduction of a different relation between identity and alterity, that is responsibility. If neglecting ethics is destroying capitalism, adopting ethics will save it.

 

 

2. A general lack of ethics

 

The present economic crisis is the symptom of a disease. Capitalism could be seen as a living organism, whose childhood, adolescence and youth were quite healthy. Some temporary illnesses, as the crisis of 1929 and the post-war situation, did not destroy it. Capitalism is, at the moment, in its maturity. After a fast and flourishing growth, it took a definite shape: at the top there are the investors (individuals, private and public institutions), who finance with their money the whole system; they fund producers and providers of services, who distribute their products and services through mediators and sellers; in order to produce, sell and put in operation, a great amount of manpower (workers and employees) is necessary; at the end, there are the consumers, who buy products and services. Every element of capitalism has to work correctly, like the organs in a living system. If one of them has problems, it affects the other elements and the system collapses.

 

Capitalism is presently affected by a disease and is in great danger. The most acute stage passed away, but the organism is not regaining its health. First of all, it is necessary to identify the illness and the affected parts of the organism. Fortunately, the diagnosis is not difficult: the crisis started from financial institutions and companies (Lehman Brothers and Bernard Madoff Investment Securities, for instance). Their collapse created a sudden lack of money and damaged producers, providers and money savers in general. In this way, there were indirectly affected also mediators, sellers, workers and employees, who saw their revenues decreasing or vanishing. And, since every member of the system is a consumer, products and services were bought to a lesser extent. The crisis of consumption caused, on the other hand, a new crisis of production and service-providing[9]. It is a vicious circle generating a gap between the majority of people, who progressively lose their wealth, and a few people, who hold money and power. This gap already exists, but is becoming greater and greater.

 

The crisis is due, primarily, to the heads of financial capitalism, but it would be a mistake to blame only them. There are also other people who are responsible in a similar way, people who hold a great amount of money and power: executives and owners of national and multinational companies, big traders and mediators. In Italy it happened, for instance, that Calisto Tanzi, President of the food company Parmalat, was guilty of bankruptcy fraud and criminal association. His immoral policy, nourished by the connivance of some politicians and bankers, led to the ruin of a great number of investors. The bankruptcy happened in 2003, four years before the collapse of the subprime mortgage market in the United States. Then the current crisis came, as a product of a diffused malpractice. When powerful people do not behave in a responsible way, they create a great damage to society. The crisis is not the disease of capitalism, but a serious symptom of it: the disease is what produced the crisis itself, that is a general lack of ethics.

 

Before giving a definition of what ‘lack of ethics’ means, it is necessary to define ethics itself. Capitalism is seen, in this paper, as the economic expression of the Ego of onto-theology. According to Levinas, the guiding principles of the Western I are intentionality and freedom: the former is a grasp of what is external to the subject; the latter is the ability to act through free will. Levinas takes position against Husserl, the father of phenomenology and of conscience as intentionality[10]. Even if his criticism could be considered exaggerated (Husserl had no intention to theorize a ‘tyrannical subject’[11]), the author of ‘Totality and Infinity’ is extraordinary in delineating ethics.

 

Morality is not added to the preoccupations of the I, so as to order them or to have them judged; it calls in question, and puts at a distance from itself, the I itself […]. The “vision” of the face as face is a certain mode of sojourning in a home, or […] a certain form of economic life. No human or interhuman relationship can be enacted outside of economy; no face can be approached with empty hands and closed home. Recollection in a home open to the Other –hospitality – is the concrete and initial fact of human recollection and separation[12].

 

Levinas points out the ‘separation’ between the Ego and the Other: the latter is not an alter-ego, another subject, but someone radically different. The other person is irreducible to the Ego. Notwithstanding this separation, there is an original relation between them: the subject approaches the other person in a particular ‘economic’ way. Since ‘economy’ means ‘management of a household’ (from the Greek words oikos, ‘house’, and nomos, ‘law’ or ‘rule’), every relation with something or somebody has to do with interiority. While the objects are included in the domestic dimension of the subject (as nourishment, tools or furniture), the other person cannot be grasped. The interhuman relationship is hospitality, is opening one own’s doors to the other.

 

According to Levinas, ethics is not only reception, but also responsibility. The identity of the subject is orientated to the alterity of the other, ‘without a prior commitment’[13]. Responsibility precedes freedom, it is independent from every choice. One is responsible of the other ‘despite oneself’[14], thus nobody can avoid responsibility.

 

From the economic point of view, it is a very important principle: it is not based on what one ‘chooses’ to do, but on what one ‘is’. Applying Levinas’ statements to capitalism, one could say the following: if one ‘is’ richer and more powerful, then one ‘will be’ more responsible, despite one’s choices. It does not mean that freedom is not important, but that responsibility founds freedom. Responsibility is the moving principle of ethics, while freedom is what makes it concrete. Behaviour depends on free will, which acts ‘according to’ or ‘against’ responsibility. This is the reason why a single action or a whole behaviour is responsible or irresponsible. Shortly, if ethics is based on responsibility, then moral activity will be responsible and immoral activity irresponsible.

 

Adapting Levinas’ phenomenology to economic analysis, one could state the following: intentionality and freedom exactly correspond to the ‘private ownership’ and ‘free market’ of capitalism. They are based on egotism and on an instrumental relation to the other. If egotism coincides, in capitalism, with obtaining profit, the other will be seen as a mean to make money. This relation to the other is absolutely unethical. Ethics, instead, is moved by responsibility and sees the other as the main addressee of action.

 

However, Levinas’ thought is too radical to be concretely applied: according to him, the subject should give itself unconditionally, because it is guilty from time immemorial[15]. Levinas’ ethics is oriented to non-reciprocity and, economically speaking, it is inapplicable. In order to move the market, a balance between one’s needs and the others’ needs is necessary. It would be better, in this case, to follow Ricoeur’s reciprocal ethics: one should see ‘oneself as another’, that is an intimate implication of otherness in identity[16]. Ethics requires both an original relation to the other (Levinas) and a practical bi-directional attitude (Ricoeur).  

 

The Golden Rule and the imperative of the respect owed to persons do not simply have the same field of exercise, they also have the same aim: to establish reciprocity wherever there is a lack of reciprocity[17].

 

The keyword is ‘respect’: respect of every person as the aim of morality, respect of oneself and the other in the same amount (it recalls the Christian principle ‘love your neighbour as yourself’[18]). ‘Reciprocal’ does not mean ‘claiming something in exchange’, since the logic of ‘exchange’ is based on egotism. Reciprocity is seen as a bi-directional respect, towards oneself and towards the other.

 

At this point, if ethical behaviour is respectful, unethical behaviour will be disrespectful. Unethical behaviour could be defined as a certain number of actions, fulfilling one’s aims and directly damaging (or putting in danger) the other. ‘Directly’ means that there could also be indirect consequences of one’s own action, not imputable to the agent. Unethical behaviour means betraying one’s responsibility towards the other. Phenomenology usually considers the other as ‘the other person’, but human actions do not effect only people. The other could be a human being, as well as an animal or the environment. They cannot do anything ‘in exchange’, but it does not matter, since reciprocity, in this case, does not involve exchange.

 

A concrete example of what unethical behaviour means is given by various bankers in the United States and United Kingdom. During the economic crisis, they violated ethics in this way: through ‘deception’ and ‘half truths given to authorities’ (lying), ‘violation of securities legislation’ and ‘allegations of fraud’, ‘misleading balance sheets’, promoting an ‘excessive bonus culture’, ‘ignoring internal corporate risk controls’, ‘conflict of interest’, ‘undue short-terminism’, ‘excessive risk-taking’, ‘callousness towards impoverished home owners’, ‘over-concentration of economic power by large banks’[19].

 

These actions are directly imputable to bankers, who violated both ethics and law. In this way, they caused a great damage to society, especially when financial institutions collapsed. Having an over-concentration of economic power gave an enormous amount of responsibility to the bankers, who used it, paradoxically, to escape responsibility itself.

 

Marx thought that the crisis of capitalism depended on over-production and concentration of money in a few hands[20]. The evolution of capitalism through financialization, together with globalization, changed the economic situation. The current crisis is not due to over-production, but to an indiscriminate pursuit of money. Capitalism is in danger not for its dialectical movement, but for a lack of ethics. The moving principle of ethics is responsibility, so ‘lack of ethics’ means ‘violation of responsibility’. Moreover, everyone is responsible of oneself and other people, and more power means more responsibility. For this reason, a lack of ethics is worst in powerful people than in common ones, because the consequences are more serious. An ethical revolution is then necessary and has to involve, primarily, the higher levels of the economic system.

 

 

3. A Phenomenological perspective on ethical revolution

 

An ethical revolution could be considered from several points of view. In this paper, a phenomenological perspective is adopted. ‘Phenomenology’ is here considered as an equivalent of ‘egology’: everything is considered, perceived, and felt ‘in first person’, from the point of view of the subject. On the ethical side, it has some interesting consequences. First of all, phenomenology claims an original responsibility towards the other.

 

The knot tied in subjectivity, which when subjectivity becomes a consciousness of being is still attested to in questioning, signifies an allegiance of the same to the other, imposed before any exhibition of the other, preliminary to all consciousness […]. This allegiance will be described as responsibility of the same for the other, as a response to his proximity before any question[21].

 

Ethics does not ‘proceed’ from consciousness, but ‘precedes’ it. The human subject has a moral character, so that he cannot avoid responsibility. The latter is part of his ontological (Levinas writes ‘pre-ontological’[22]) constitution. The subject is introduced, from its birth, in a relational world. When it lives distant from people, it is related with animals and nature. Loneliness is nothing but an abstraction. Using Sartre’s words, ‘the fact of the other is incontestable and touches me to the heart’[23]. Human beings are then relational (not only social) beings. The way in which they interact is based on responsibility. From the economic point of view, it is very important, because it implies the following: no one can avoid responsibility towards the other. An economic subject is responsible of the strategy chosen, of its application, and of its consequences. Violating responsibility implies paying for one’s own mistakes.

 

A second consequence of a phenomenological perspective is the singularity of both the ego and the other. Every subject has a common core[24], typical of human knowledge, perception, and feeling, but a concrete ego is absolutely unique. Moreover, it relates to an other who is absolutely unique as well.

 

Reason presupposes these singularities or particularities, not as individuals open to conceptualization, or divesting themselves of their particularity so as to find themselves to be identical, but precisely as interlocutors, irreplaceable beings, unique in their genus, faces[25].

 

Ethics refers to singular beings, either subjects and addressees. Every ego is different and relates to a different other. From the ethical point of view, no one can be replaced in assuming responsibility. Every person, here and now, is called to an original relation to the other. This relation does not consist in universal principles, belonging to universal subjects, and applied to universal addressees. Phenomenology does not theorize either norms, or rules. It does not matter ‘what’ the subject does (‘this act’, ‘that act’), but ‘how’ it does it (‘respecting’ or ‘not respecting’ the other). An ethical behaviour is that which follows one’s original responsibility towards one’s concrete neighbour.

 

In capitalism, it means that every single member of the system (executive, trader, worker, employee, customer) is not responsible for what the others do, but for what he or she does. The amount of responsibility is greater according to the amount of money and power one has. If, for instance, an employee behaves in a bad way towards a customer, he or she will have to pay for his or her single action. If an executive adopts an irresponsible strategy, he or she will have to pay not only for the action, but also for all that follows. In the case of people with great power, a single mistake has many consequences and involves many people.

 

Thirdly, phenomenology avoids two kinds of danger: anonymity and alienation. The uniqueness of both the ego and the other preserves them from the tyranny of universality. From the philosophical point of view, the singular avoids a subordination to the Same (or Being, or Spirit)[26]. In economy, it gets away from Hegel’s ethical State and Marx’s socialism. The difference between the former and the latter is that Idealism maintains private property, while communism abolishes it. In both cases, the ‘good’ of individuals is established by State institutions, which manipulate everything, from the economy to private life[27]. Equality is guaranteed, but at the price of making individuals anonymous beings.

 

Phenomenology also helps against alienation. In this case, it is better to adopt Ricoeur’s version: the thought of Husserl is inclined to alienate the other (‘all that which holds for myself holds, as I know, for all other human beings’[28]), while Levinas risks to alienate the subject (‘the-one-for-the-other goes to the extent of the-one-being-hostage-for-the-other’[29]). According to Ricoeur, oneself is seen as another, implying respect on both sides.

 

This ethical principle is necessary to heal the plague of capitalism, that is the alienation of a part of the system. Marx thinks that there are only two classes, oppressors and oppressed. The former are capitalists, the latter proletarians. Workers are alienated by owners of companies, who make profit with the exploitation of proletarian labour[30]. However, financial capitalism is characterized by a more complex structure. Alienation usually concerns the parts of the system who own less money: workers, employees and small businessmen, for instance. Phenomenology leads, in its ethical and reciprocal form, to a balance between stronger and weaker members of the system.

 

Ethical capitalism, that is capitalism passing through ethical revolution, is a third way between communism and classic/financial capitalism. The former reduces all subjects to anonymity, the latter is a source of alienation. Phenomenology theorizes uniqueness (Levinas) and reciprocity (Ricoeur) between the ego and the other.

 

Fourthly, a phenomenological perspective warns against a pseudo-ethical behaviour. ‘Being ethical’ does not mean ‘having an ethical coat’. There are companies who put ‘something ethical’ in their product or in their policy, in order to attract investor, partners or customers. For example, an enterprise produces part of its eggs, breeding hens in open air. In this way, it attracts people who are sensitive to the living condition of animals. These customers will pay a higher price to buy this kind of eggs. However, there are also people who are content if hens are not in cages, even if they are bred indoor. And there are customers who do not care about animal conditions, but only about price. The latter will buy eggs produced by hens bred in batteries. This is exactly the case of the Italian company AIA:[31] its executives understood that better conditions for animals attract more customers. But the company is not moved by ethical reasons, otherwise it would limit the whole production to free-range eggs. Companies like AIA purely act for profit.

 

If the purpose of a behaviour is other than ethical, such a behaviour will be not really ethical. However, a moral appearance is useful to make money: being good pays. An ethical film enhances profit, even if the substance is unethical. First of all, not all the people are sensitive to moral behaviour, because most of them rather prefer to avoid an immoral behaviour. Secondly, they pay willingly an higher price up to a certain threshold (30%, 50% of sustainable production, for instance). This threshold is not clearly determinable and is different case by case.[32] This is why companies do something ethical, as much as it does not hinder profit.

 

Phenomenology rejects such a kind of behaviour. ‘Being ethical’ means ‘acting responsibly’. When a company follows a moral conduct, it does not limit itself to some good actions. Ethics is neither charitable, nor instrumental. An ethical producer of eggs, for instance, breeds chicken in open air, provides them with healthy food, leaves them space enough to live comfortably, heals them when they are sick, avoids to raise too many hens if good conditions cannot be guaranteed. This kind of behaviour is ethical because it respects both customers and animals: it provides buyers with eggs of the best quality and, at the same time, allows chicken to have a good life. This kind of behaviour is, philosophically speaking, oriented towards the other.

 

If moral behaviour is, on the contrary, money-oriented, it will not be moral at all. Since current capitalism aims to profit, it meets ethics only by accident. Ethics is usually a limitation to profit: the “obsessive materialism which capitalist economy promote is one of the weaknesses of capitalism when it is considered from an ethical point of view”[33]. An ethical behaviour is not necessarily ascetical and includes material goods and pleasures: in order to avoid alienation, the ego has to preserve itself. Capitalism does not purely promote self-preservation, but an indiscriminate pursuit of materialism. As the economic expression of onto-theology, capitalism is ruled by egotism.

 

Phenomenology goes beyond the tyranny of the Same, of the universal subject, of indiscriminate property and freedom. Stating the importance of ethics, of original responsibility, of uniqueness, phenomenology does not destroy the subject, but makes it ‘singular’. Definitely, it has to renounce to its tyrannical power, but not to itself. What is here suggested is not to alienate the ego in behalf of the other. Building one’s own identity is necessary to self-preservation and, moreover, to have ‘something to give’. If the subject is alienated, it cannot offer anything to the other. Ethics should not imply a fission of one’s identity[34], but an equilibrated inclination to giving.

 

The economic consequence of such a perspective is not the end of capitalism. If capitalism is based on egotism and egotism is ‘partially’ preserved by phenomenology, then capitalism will be ‘partially’ preserved by phenomenology. Phenomenology does not accept capitalism in its current form, because it is ‘wholly’ based on egotism, that is indiscriminate freedom and property. However, it accepts a different form of capitalism, which is only ‘partially’ ruled by egotism. This new kind of system is called ‘ethical capitalism’ and is based on respectful freedom and property.

 

Defining what is and what is not ‘respectful’ is the most difficult task to accomplish, due to the open character of phenomenology. Phenomenology is not a normative system, but a perspective. For this reason, it does not suggest a precise behaviour, but a different way to approach the world. Classic and financial capitalism are based on individual interest; ethical capitalism is based on responsibility. One’s freedom and property are not destroyed or ‘limited’ by the other’s freedom and property. One’s freedom and property is directed both to self-preservation and preservation of the other, that is the environment and its inhabitants. Ethical capitalism is not self-oriented, but other-oriented: it is directed both to the other and to the self as another. Responsibility is opposed to alienation, because it is bi-directional. This is why a responsible behaviour, on large scale, could save capitalism from its gaps and from its ruin.

 

[1] Cf. Hein, E., The Macroeconomics of Finance-dominated Capitalism and its Crisis, Cheltenham: Edward Elgar Publishing, 2012, p. 1.

[2] Smith, A., The Glasgow edition of the Works and Correspondence of Adam Smith, vol. 2a, edited by R.H. Cambell and A.S. Skinner, Oxford: Claredon Press, 1976, pp. 26–7.

[3] Cf. ibid.,  p. 456.

[4] ‘It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals’ (Marx, K., Capital [Cap.], Volume 1, London: Lawrence and Wishart, 1954, p. 586).

[5] Epstein, G. A., ‘Introduction: Financialization and the World Economy’, in Epstein, G. A. (ed.), Financialization and the World Economy, Cheltenham: Edward Elgar Publishing, 2005, p. 3.

[6] In 1938, George Edwards already individuated finance as an element of instability: the current form of capitalism converts real equity in financial one. Edwards was even afraid of a conspiracy by financial institutions. See Edwards, G. W., The Evolution of Finance Capitalism, London: Longmans Green, 1938.

[7] Bishop, J. D., ‘Ethics and Capitalism. A Guide to the Issues’, in Bishop, J. D. (ed.), Ethics and Capitalism, University of Toronto Press Incorporated: Toronto-Buffalo-London, 2000, p. 4.

[8] ‘Ontology as first philosophy is a philosophy of power’ (Levinas E., Totality and Infinity: an Essay on Exteriority [TI], Duquesne: Pittsburgh, 1969, p. 9).

[9] For a specific description of this mechanisms, see Hein 2012.

[10] Levinas criticizes the thought of Husserl in several writings. Cf., for example, TI, pp. 109-110, 121-126; Id., Otherwise Than Being or Beyond Essence [OB], Dordrecht: Kluwer, 1981, pp. 8, 33, 63-66; Id., Discovering Essence With Husserl, Evanston: Northwestern University Press, 1998, pp. 74-75, 124-126, 176-177.

[11] Husserl considers the Other as an Ego-subject, but neither identical, nor subject to the Ego. ‘Each has its place from which he sees the physical things present; and, accordingly, each has different physical-things appearances. Also, for each of the fields of actual perception, actual memory, etc., are different, leaving aside the fact that intersubjectively common objects of consciousness in those field are intended to as to having different modes, different manners of apprehension, different degrees of clarity, and so forth’ (Husserl, E., Ideas Pertaining to a Pure Phenomenology and to a Phenomenological Philosophy, First Book  [Ideas I], The Hague: Martinus Nijhoff, 1982, pp. 55-56).

[12] TI, p. 172.

[13] OB, p. 153.

[14] Ibid., pp. 51, 54-56, 74.

[15] Ibid., pp. 26, 51, 87.

[16] Cf. Ricoeur, P., Oneself as Another, University of Chicago Press: Chicago, 1992, p. 3.

[17] Ibid., p. 225.

[18] Matthew 22:39; Mark 12:31; Luke 10:27.

[19] Thomas, R., ‘Ethics – or the Lack of Ethis – in the Global Financial Crisis 2007-2010’, in Rosamund M. Thomas (ed.), Business Ethics, Cambridge: Ethics International Press, 2011, p. 75.

[20] Cf. Cap., p. 587.

[21] OB, pp. 25-26.

[22] Ibid., pp. 43-44, 78.

[23] Sartre, J.-P-, Being and Nothingness. An Essay on Phenomenological Ontology, New York: Philosophical Library, 1956, p. 367. Even if Sartre is better known as an existentialist, Being and Nothingness can be considered as a phenomenological masterwork. Anyway, the constitutive inter-subjectivity of human beings was first stated by Heidegger, according to which ‘being-in-the-world’ (in-der-Welt-sein) is also ‘being-with’ (Mit-sein). Cf. Heidegger, M., Being and Time, State University of New York Press: Albany, 1996, p. 112.

[24] The phenomenological epoché, theorized by Husserl, searches for a pure consciousness, abstracting from the concrete Ego-subjects. ‘It therefore remains as the “phenomenological residuum,” as a region of being which is of essential necessity quite unique and which can indeed become the field of a science of a novel kind: phenomenology’ (Ideas I, pp. 65-66).

[25] TI, p. 252.

[26] Cf. TI, pp. 46-47, 143, 269-271.

[27] Cf. Hegel, G. W. F., Elements of the Philosophy of Right, Cambridge: Cambridge University Press, 1991, §§ 257-258; Marx, K.- Engels, F., The Communist Manifesto [Manifesto], New York: Russell and Russell, 1963, Chap. 2. According to Hegel, the State is the reality of reason and will, which coincides with individual freedom. According to Marx, communism implies centralization of credit, means of communication, production and education in the hands of the State. Both authors theorize, in order to guarantee equality, a strong Statism.

[28] Ideas I, p. 55.

[29] OB, p. 141.

[30] Cf. Manifesto, pp. 25-26; Marx, K., Economic and Philosophic Manuscripts of 1844, New York: International Publishers, 1964, pp. 108-111.

[31] Products numbered B5110, for instance, come from hens farming to barn, while B5114 are free-range eggs. The other products come from hens bred in batteries. This is why, in 2001, AIA was condemned by the Italian Antitrust. The company showed on its egg-packages images of hens eating on lawns and the proposition ‘uova fresche allevate a terra’ (‘fresh eggs bred ashore’). It could led customers to think that they were free-range eggs, while hens were crowded into big barns (intensive livestock farming).

[32] Cf. Trudel, R.- Cotte, J., ‘Does It Pay To Be Good?’, MIT Sloan Management Review, vol. 50, 2, 2009, pp. 66-68.

[33] Groarke, L., ‘Can Capitalism Save Itself? Some Ruminations on the Fate of Capitalism’, in Bishop 2000, p. 204.

[34] Cf. OB, pp. 49, 104, 141, 180, 185. 

 

Joseph V. Femia and Alasdair J. Marshall (eds.), Vilfredo Pareto: Beyond Disciplinary Boundaries (Surrey, England and Burligton, USA: Ashgate, 2012)

Book review (editorial review), , , , ,

The volume opens with a jewel introduction. It contextualizes Pareto historically and it offers the big pictures in which to fit all the pieces of Pareto’s intellectual production. Pareto was an engineer involved with the running the newly nationalized Italian railroad system, but his claim to fame is for his sociological work. He wrote hundreds of pamphlets calling for change, free trade, small government, and pacifism, all of which fell flat. And “his youthful idealism soon gave way to skepticism, even cynicism, about human potential” (p. 2) so that today he is best known for his theory of human rigidity and inflexibility which make the world fundamentally unchangeable. His mathematical training and skills made him a professor of economics at Lausanne University (1893-1900), but his discontent with the model of a rational homo economicus led to his interest in and research on human irrationalities. During a time in which disciplines fought to establish their boundaries, Pareto broke them and refused to be confined in any one. For him comprehension of the complexity of human behavior came from the complexity of a boundless knowledge.

 

The rest of the book reflects the introductory claims. The first chapter, “Pareto and the Elite”, by John Scott, describes the not always successful balance of an open definition of elite that Pareto offers us. This analysis smoothly continues in Chapter 2, “Talents and Obstacles: Pareto’s Morphological Schema and Contemporary Social Stratification” (Francois Nielsen). Pareto’s empiricism allows him to analyze data from across the world and across time and see patterns in the wealth elites. Wealth is not distributed normally, but more “like an arrow”. Regardless of time and place, income inequality seems to be a natural and inevitable pattern: 80 percent of income is distributed among 20 percent of the population. This 80-20 distribution seems to be a constant pattern in many natural phenomena, from elites to genes, not just income distribution. This raises a question, not raised by the author, but that any post-2011 reader may ask: does ‘Occupy Wall Street” know about Pareto? And assuming that by some miracle, Occupy Wall Street is successful in changing the distribution of wealth in rich societies, will it be a sustainable change? Or will we move back, inevitably, to the arrow-shaped income distribution that Pareto kept finding in his data? The inability of society to change, to be stuck with certain patterns or with certain equilibria becomes a major theme in Pareto’s thought. While some of his contemporary sociologists and political scientists would theorize beneficial changes in society, Pareto focuses on dysfunctional evolutions and sticky points where societies may be unable to get out of detrimental conditions. So Chapter 3 is the chapter where Charles Powers describes “The Role of Sticky Points in Pareto’s Theory of Social Systems”.

 

The empirical and pessimistic eye of Pareto is also present in his visions of political theory, as Joseph V. Femia describes in Chapter 4—“Pareto, Machiavelli, and the Critique of Ideal Political Theory”. A scientific understanding of human behavior requires that we look at human beings as real and not ideal creatures. This is why Pareto leans on the realism of Machiavelli, rather than the idealism of Kant, in his theories. And this realism, when combined with modern risk analysis, allows us to link Pareto to a variety of cultural and psychological patterns widely recognized and accepted today, as Alasdair Marshall and Marco Guidi demonstrate in Chapter 5—“The Idea of a Sociology of Risk and Uncertainty: Insight from Pareto”.

 

The relevance of Pareto in today’s debates and research agenda is pushed further by John Higley and Jan Pakulski in their chapter on “Pareto’s Theory of Elite Cycles: A Reconsideration and Application” (Chap. 6). They apply what may seem a vague theory of elite to the UK and the US governing elites of the twentieth century. It is unclear whether Pareto works or not when applied today. This question mark comes at a perfect time in the volume. So far one is exposed to the marvel of Pareto’s thinking, its correctness and applicability. One may be starting to question whether Pareto was this infallible intellect, underappreciated in his time and also in ours, who deserved a much larger role because of his continuous correctness. Higley and Pakulski remedy that sensation and bring back the fallibility, or at least imperfections, in a genius’ work. I see their chapter as sort of refreshing watershed, as it is followed by two other chapters more prone to see some of the deficiencies of Pareto. Alban Bouvier shows how Pareto may be more indebted to J.S. Mill than he is willing to admit—or than his readers are willing to admit (Chap. 7: “Pareto, Mill and the Cognitive Explanation of Collective Beliefs: Unnoticed ‘Middle-range Theories’ in the Trattato”). Similarly, Giorgio Baruchello shows how Pareto may be more indebted to Aristotle than to Plato in his understanding of the role of rhetoric.  Interestingly enough, in these two chapters, as well as in some preceding ones, there is subtle emphasis on the importance of language in communicating effectively and how Pareto may not have been gifted with it: a possible reason for the fact that his popularity does not necessarily reflects his contributions.

 

The breadth of Pareto’s understanding, or his willingness to accept the complexity of human behavior, is returned to in the last chapter of the volume (“Pareto’s manuscript on Money and the real Economy”) where Micheal McLure describes how Pareto rejects the quantity theory of money and is willing to integrate money in the general equilibrium model of Leon Walras, despite the unwillingness of the discipline to bridge the monetary and the real analysis.

 

The volume is an impressive and yet balanced testament of the breadth and stature of Pareto. Pareto does come out as a rounded Renaissance man, who for all that is pessimistic about the possibility of human improvement. He does come out as a scholar willing to break all disciplinary barriers and one who, as a consequence, stands alone. And probably today and more so in the future, when we also realize that many of the existing disciplinary boundaries are artificial constraints that limit our creativity and intellectual development, we will come to appreciate Pareto more. This volume is a step in that direction. 

 

Jonathan Schlefer, The Assumptions Economists Make (Cambridge, Mass., and London: Belknap Press of Harvard University Press, 2012)

Book review (editorial review), , , , , , ,

 

Indeed, a culture of superficial self-examination is laid bare in Jonathan Schlefer’s monograph The Assumptions Economists Make. Moreover, he provides evidenced accounts of confirmation bias, forgetfulness, denial, indifference and outright ignorance permeating mainstream economic theory and practice. So extensive and consistent is this across both centuries and organisations that it suggests some form of institutionalised mass delusion. Neither a critic of, nor an apologist for capitalism, Schlefer is really an old fashioned seeker of truth and knowledge. He is more interested in how economists think, than in the ‘causes’ of the crisis. In this sense, he is taking a step back to look at how theoretical arguments are made in economics, and how the discipline functions as a crucible for truth. Schlefer is a political scientist who ‘took several graduate-level courses in economics at MIT and Harvard, multivariate calculus and all’. In this way, the Harvard Business School research associate offers us the penetration of an outsider, who is nonetheless both informed and connected.

 

Economists, he says, form simplified assumptions which they use as the foundations for imaginary worlds. These ‘models’ are used to draw practical lessons: the bedrock of policy. Schlefer intends to explain to us their various structures such that we can more fully understand key disputes in economic theory. Since he does this without mathematics, he is surely translating for a non-economist audience. Instead of equations and graphs, Schlefer describes each model using simplistic metaphors and analogies. It is nonetheless complex material that requires work, so this is unlikely to appeal to the majority of the general public.

 

Schlefer focuses on each model through the lens of its assumptions, so he renders its structure objectively, in its advocates’ own terms. Set in their historic social, political, economic and theoretical contexts, their assumptions also indicate how theorists interpret their world. Schlefer uncovers the mode in which they build from this in order to draw conclusions and make policy. He thus critiques the plausibility of their assumptions, their methods of reasoning and the validity of their conclusions. A largely chronological succession of economic models is scrutinised in this way throughout chapters three to fourteen. However, they do not form a comprehensive history of economic theory. Rather Schlefer deconstructs only a selection. Through these he traces the ancestral line of economic thought leading to those current models most pertinent to the crisis. Schlefer thus shines a light not only on individual theorists’ thinking, but also on distinctive styles of reasoning across time. He peppers this chronology with copious references to economic policy and education.

 

Before commencing his central work, he frames it thematically with two quite explosive opening chapters. An almost always unstated assumption he says, indispensable for dominant mainstream theory and free market policies, is that Adam Smith’s ‘invisible hand’ is an authentic mechanism which, if left alone to function, inevitably leads markets to an optimal equilibrium. For some three decades now, Dynamic Stochastic General Equilibrium (DSGE) models have dominated academic, commercial and government circles throughout the West; notably among central banks, which still use them. This is despite the fact that their ‘invisible hand’ foundation has been proven to be not a mechanism, but a mere metaphor. It was generally concluded in the 1970s, Schlefer says, that ‘no mechanism can be shown to lead decentralized markets to equilibrium’. His opening chapter takes us through a century of failed attempts to model the ‘invisible hand’, examining in depth the canonical 1954 Arrow-Debreu model and its dozen preposterous assumptions, on its own terms. How is it possible, Schlefer asks, that a ‘supposedly scientific theory’ can be ‘founded on pure faith’ in a discredited metaphor?

 

His second chapter turns to education, arguing that while the history of economic thought has ‘all but vanished from graduate programs’, the most successful economics textbooks seem little more than ideological propaganda. He shows them consistently excluding facts, contradictions and complications. Those textbooks which do discuss such inconveniences are ignored or, in one shameful episode, withdrawn by university departments following financial pressure from ideologically motivated external donors. Schlefer also shows how textbooks and courses blur the distinction between two-dimensional abstract models and reality. Some students, he says, ‘feel cheated, as if they were watching a magician put on a stage show, the workings for which are hidden out of sight. Others like the stage show better than the messy everyday world’.

 

As Schlefer works through the models, reality’s ‘messiness’ seems to provoke two styles of theorising. It is acknowledged by classical theorists through Keynes to the structuralists and ecologists: economy is bound up with society and technology. This seems to connect with the emerging interest in complexity theory, briefly covered in the final chapter. Conversely, for the early economist-politicians, neo-classical theorists and monetarists, messiness is avoided: economy is an isolated object. Their exclusion of fuzzy interdependencies underpins today’s DSGE models. These assume that economies are autonomous objects, thwarted from reaching their mythological equilibrium by ‘external’ shocks.

 

Schlefer’s fastidious dismantling of each model’s nuts and bolts locates errors in reasoning across the board. However, most of many implausible assumptions, tautologies and examples of circular logic are shown to be among neo-classical models and their descendants. Despite their claims to scientific veracity, Schlefer exposes an unbroken history of convenient invention. Repeatedly, he shows exemplifies how DSGE models are constructed on an historical pedigree of unexplained workings, misrepresentation, obscurantism, bogus or bizarre claims, arbitrary labels, unexplained magical forces, misleading arguments, false conclusions and illegitimate revisions. Proofs against their invented mechanisms are routinely forgotten or ignored, which Schlefer often finds ‘strange’, ‘weird’ or ‘mind-boggling’. Such practices culminate with the ‘shoehorning’ of Keynesianism into neo-classical models to form a basis for DSGE modelling. This assimilation is largely prompted by rational expectations thinking and constructed on the idea that ‘aggregated’ macroeconomic models can truly represent their microeconomic siblings. Schlefer tears it apart.

 

Teeming with jargon and frequently contested, misappropriated or distorted meanings, a non-economist can soon become lost. This demands exceptionally clear writing and here Schlefer could do better. His historical accounts and anecdotal examples are breezy, but his technical material requires intense concentration. This is not helped when model evaluations are interwoven with complex discussions on policy. Separating them would aid clarity. The exclusion of mathematics does make this wonderfully accessible, but Schlefer’s excellent metaphorical descriptions of models might be easier to absorb with just a few simple, non-mathematical illustrations. In-text cross-referencing would help us to link together the dense tangle of concepts. This also needs clear signposting: chapter headings and sub-headings could avoid poetic summation and simply state the subject matter. There is an excellent 670 entry index, but a glossary or even additional index of differently used meanings would be practically useful. In short, this deserves to be a textbook. We are listening, but please slow down and spell this out more carefully.

 

Because what Schlefer says is surely important: the DSGE models, which require ‘incredible’ assumptions and still determine our economic fate, did not predict the crisis precisely because they cannot admit the possibility of a crisis. Moreover, models which did predict it were ignored (and remain so), the ‘Great Moderation’ was and is a myth (it ignores several crashes), and the past thirty years of mainstream academic research was useless when the crisis struck. All this exposes an academic field which is not fit for purpose. Schlefer’s economics is a rogue discipline of mythology and pure faith; a crucible not for truth, but for ideology masquerading as science. He calls for a tighter scientific approach and recommends four simple criteria for making good assumptions including, astonishingly, stating them. As if to confirm Schlefer’s point, mainstream media reviews of this book omit any mention of these issues, as though he never wrote about them. Perhaps Schlefer’s thinking can only be developed outside of economics.

 

References

 

Colander, D., Föllmer, H., Haas, A., Goldberg, M., Juselius, K., Kirman, A., . . . Sloth, B. (2009, February). The Financial Crisis and the Systemic Failure of Academic Economics. Retrieved February 22, 2013, from Kiel Institute for the World Economy: http://www.ifw-members.ifw-kiel.de/publications/the-financial-crisis-and-the-systemic-failure-of-academic-economics/KWP_1489_ColanderetalFinancial%20Crisis.pdf

ECB. (2012, December). Eurosystem Staff Macroeconomic Projections For The Euro Area. Retrieved February 26, 2013, from European Central Bank: http://www.ecb.int/pub/pdf/other/eurosystemstaffprojections201212en.pdf

Rogoff, K. (2013, February 11). Don’t blame the Federal Reserve for not predicting the financial crisis. Retrieved February 22, 2013, from The Guardian: http://www.guardian.co.uk/business/2013/feb/11/federal-reserve-blame-financial-crisis

University of Pennsylvania. (2009, May 13). Why Economists Failed to Predict the Financial Crisis. Retrieved February 22, 2013, from Knowledge@Wharton>: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2234

 

[1] See for example: Colander, et al., (2009); Rogoff, (2013); and University of Pennsylvania, (2009). Schlefer points out that in fact it was forecast, just not by the mainstream; see main text further down.

[2] For example, the European Central Bank and its national Central Bank affiliates continue to produce macroeconomic projections for the Euro Area using procedures and techniques that were set out in 2001. An ECB report of December 2012 states that: “The Eurosystem staff macroeconomic projections are produced jointly by experts from the ECB and the euro area NCBs. …More information on the procedures and techniques used is given in ‘A guide to Eurosystem staff macroeconomic projection exercises’, ECB, June 2001, which is available on the ECB’s website” (ECB, 2012).

 

Joseph Femia (ed.), Vilfredo Pareto (London: Ashgate, 2009)

Book review (editorial review), , , , , , , , , , , , ,

However, apart from Pareto’s posthumous peak of fame in the 1930s and 1940s, when his work inspired a generation of scholars on both sides of the Atlantic Ocean, genuine engagement with his studies has been actually quite rare over recent decades. To most contemporary researchers, Pareto is primarily little else but a name in the “rosary” of great dead white men encountered during one’s undergraduate studies, and then a label for two mathematical notions that young academics must familiarise themselves with. Even Pareto’s crucial contribution to political science, namely his theory about the circulation of the elites, seems to be poorly known these days.

Perhaps, as Joseph Femia—editor of the volume hereby reviewed—suggests in his concise yet comprehensive introduction to the life and work of “the hermit of Céligny”, it is true that Pareto’s cynical notion of social equilibrium, his lack of faith in human progress and collective enlightenment, his elusion of the comfortable categories of normal science, and the overwhelming theoretical as well as historical analyses in which he indulged for the sake of scientific completeness, scholarly precision, intellectual integrity, and academic pedantry make of Pareto one of the least inspiring authors that ever reached the status of “classic” in any discipline.

Yet, several scholars of the 20th century did read his work, no matter how uninspiring, depressing, tedious and taxing it could be. And they did not only read it, but also recognised its remarkable character and its profound insightfulness. In particular, many seemed to find Pareto’s work extremely appealing in connection with the general decline in individual liberty, social wellbeing and collective hope informing the aftermath of the First World War and of the ensuing boom-bust financial cycle of the 1920s, which unleashed the Great Depression and the affirmation of fascist regimes all over Continental Europe.

Some scholars, albeit fewer than in the inter-war grim interlude, have kept finding Pareto congenial after that time. Amongst them, Femia has proved himself to be one of today’s main experts on Pareto within Anglophone academia. In addition to the volume reviewed hereby, to him we owe two further recent books on Pareto: Pareto and Political Theory (New York: Routledge, 2006) and Beyond Disciplinary Boundaries (London: Ashgate, 2012). Whereas the former, as the title indicates, focuses upon the work of Pareto as a political thinker, the latter, co-edited with Alasdair Marshall, explores the ramifications of Pareto’s contribution for contemporary areas of inquiry, whether sociological (e.g. stratification research), economic (e.g. monetary issues) or humanistic (e.g. rhetorical reasoning).

The 2009 volume that Femia edits comprises three parts, each containing essays on Pareto by variously influential scholars of the 20th century. Specifically, Part I focuses upon methodological aspects of Pareto’s contribution to the social sciences, most notably sociology rather than economics, written in the 1930s and 1960s. Part II explores broader aspects of his social theory and includes studies written between the 1960s and 1990s. Two of them deserve a special mention, i.e. “Vilfredo Pareto’s Sociology in his Letters to Maffeo Pantaleoni” and “Introduction to Pareto’s Sociology” (pp. 67—87 and 89—112), for they were authored by Italy’s leading liberal thinker Norberto Bobbio and constitute a sort of “classics” in Italian Pareto studies. Noteworthy is also “Pareto, Vilfredo: Contributions to Sociology” (pp. 171—80), written by US action theorist Talcott Parsons, who is probably the most famous heir of Pareto’s in the Anglophone world. Part III discusses Pareto’s politics, especially with regard to English-speaking countries, and offers reflections over the last three decades of the 20th century by, inter alia, Nobel-prize economist Amartya Sen (“The Impossibility of a Paretan Liberal”, pp. 267—72) as well as Joseph Femia himself (“Pareto and the Critique of Justice”, pp. 317—29). All together, these essays represent the most articulate introduction to Pareto’s social and political thought, as well as its reception over the past 70 years, currently available in the English language.

What is more, given the high quality of the scholarly work selected by the editor, such an introduction avoids the unfortunate yet widespread oversimplifications and blatantly erroneous depictions of Pareto’s thought, which is often “pigeon-holed” into science-worshipping positivism, psychological reductionism and proto-fascist authoritarianism.

Certainly, Pareto did attempt to apply the induction- and experiment-based scientific methods of physics and chemistry to the study of social phenomena. He did so in order to stress and charter the uniformities of human behaviour due to fundamental instincts and mental dispositions characteristic of our species, as well as to criticise much-venerated democratic regimes qua demagogic plutocracies. Nevertheless, he never denied the limitations intrinsic to the observation-constrained, abstraction-prone, descriptive, probabilistic hypotheses of the natural sciences. Indeed, even the field of economics, which he himself had contributed to formalise by adopting elements of the mathematics used in physics, had been abandoned by Pareto because of its inability to grasp the non-rational elements of the human psyche, which caused rationality-based economic models to fail regularly and inevitably in their predictions about the future. As Pareto had come to realise, the actual social man was not much of an homo economicus. C.B. Macpherson’s 1937 essay “Pareto’s ‘General Sociology'” (pp. 3—16) in Part I of Femia’s book is most relevant in this respect, as it accuses Pareto of adhering too much to the allegedly value-free methods of empirical science, yet revealing as well Pareto’s awaraness of the profound differences existing between the study of inanimate or animal phenomena and the study of value-driven human beings.

Analogously, Pareto researched and categorised the fundamental instincts or sentiments (“residues”) determining human action within societies and commonly rationalised post-factum into fallacious arguments (“derivations”) and doctrines (“derivatives”) in order to please yet another sentiment of ours, that is, our desire for explanations that sound logical to us. However, he never denied the ever-changing creative power of the human being as a semiotic animal, who is capable of activating and intensifying certain instincts and dispositions by engaging in symbolic activities. The tension between the fundamentally non-rational universal constant of “residues” and the possibility for self-reflective, cunning minds to manipulate them intelligently is discussed in Bobbio’s work as well as in the 1972 essay by Vincent Tarascio chosen for this collection (“Marx and Pareto on Science and History: A Comparative Analysis”, pp. 145—58), which also belongs to Part II.

Even less did Pareto deny the dangers to social order and public wellbeing stemming from political doctrines fostering despotism, censorship, nationalism and racism. Indeed, Pareto was very much an old-fashioned 19th-century liberal, who certainly disapproved of universal suffrage and other socially “dangerous” socialist aims, but commended the peaceful, direct male democracy of small Swiss cantons as the best example of political life in his age and regarded the liberty of the individual as paramount. In nuce, Mussolini’s deification of the State and his charismatic leadership of the masses did not belong to Pareto and their common association is, as S.E. Finer called it, “a misfortune” (“Pareto and Pluto-Democracy: The Retreat to Galapagos”, pp. 305—15; 305).

A scientist but not a devotee of scientism, a pessimist about human reason but not an irrationalist, and a conservative liberal but not a fascist: Pareto was a complex man and a complex thinker. He tried to mirror in his work the complexities of human phenomena themselves, thus avoiding explanatory shortcuts and ideological simplifications that would have probably granted him a much wider audience and a much broader appreciation. Femia’s book, which contains selected essays by some of the most eminent intellectuals who have written about Pareto over the last seven decades, bears witness to such complexities. It is therefore no easy book to read; yet no more candid depiction of Pareto’s approach and investigations would be possible.

Ingerid S Straume and J F Humphrey (eds.), Depoliticization: The Political Imaginary of Global Capitalism (Malmö: NSU Press, 2011)

Book review (editorial review), , , , , , , , , , , ,

This split, so the thesis goes, aims to stifle any truly creative political critique of our institutions, thereby avoiding genuine structural changes that might hurt private capital’s interests. In this view, ‘depoliticization’ is the diminishing of any public capacity to imagine, create or deploy new forms, such that the depoliticizing political-economy split is an inherently anti-democratic defence of capitalism.

For example, discussion on who should bear the cost of the economic crisis is depoliticised. In business, transnational corporations wriggle out of any democratic scrutiny exercised in national interests. In law, institutions and rights become fixed in a way that can tend to immobilise political thought and action. In the symbolic field, undermining everything, the capacity to think or posit new institutional forms is deadened by fear and indifference.

In this way, runs the thesis, global capitalism feeds on depoliticization, so capitalists promulgate it until the freedom and autonomy of a political life is no longer possible. This authoritarian state is, the book suggests, the inevitable and imminent outcome. However, this is not so much a warning about fascism’s resurgence. Rather it is an intricate, provocative and mostly quite convincing theoretical elucidation of the subtle, sub-conscious architecture on which the current drift towards authoritarianism is constructed. The benefit of this work lies in the way it points out opportunities for a redesign: reconnecting politics with economy – politicising the debate, imagining and implementing new forms – becomes a key objective with a new and significant value.

Depoliticization assembles its tally of authors from five countries, representing over a dozen disciplines spanning economics, history and philosophy as well as political and social theory. There is a preponderance of Scandinavian contributors, but nevertheless the stated intention is to urge more transnational debate on our (perhaps Western) political fate and legacy.

In accordance with its central theme, the essays are organised in two parts: Economy and Politics. Opening with Straume’s more in-depth look at how the depoliticizing political-economy split leads to personal suffering (principally, it detaches us from reality and creativity), part one goes on to dissect capitalism’s ‘economic logic’. Arnason cites Baechler, Wallerstein, Boltanski and Chiapello to expose not only the irrational ‘spirit’ that underpins its multiple manifestations, but also and critically, the social-historical context that spawns it all. D T Cochrane’s ‘power theory’ harmonises Thorstein Veblen and Castoriadis in order to critique Marx’s Labour Theory of Value and pin down capitalism as ‘the valuation of control’. According to Lundkvist, this control commodity is used unaccountably by an oligarchy of transnational corporations to choke off market competition. Their strategically managed alliances and mergers give the lie to any notion of a ‘global free market’. Instead they spiral inexorably towards a ‘capitalist planned economy’. J F Humphrey rounds off part one by connecting the discussion to the current economic crisis. He draws out from Marx how money transforms from a means of exchange to become the ultimate commodity: production determines distribution, exchange and consumption, such that what is produced has no (social) value other than to satisfy the need for accumulation; or as Cochrane might say, control.

Blinkenberg builds on this in part two, working from Jacques Rancière’s argument that money as power requires the exclusion of ‘virtue’ (or perhaps ‘social value’). Rather, an ‘authoritative allocation of values’ ascribes virtue in order to legitimise acceptable political actors. Here depoliticization is a method of ‘value-neutral’ policing that safeguards the hierarchical distribution of power against democratic egalitarianism. Changing the hierarchy’s regimes for ‘truth-production’ by disclosing the function of truth, is what Foucault sees as the purpose of intellectual and political action, according to Jacobsen. Yet relativism, Foucault’s ‘tyranny of perspectives’, means that any claim to objective truth always proceeds from an infinite regression of fundamental hegemonic discourses, dissolving objectivity. Such impotence is perhaps made manifest in Europe’s Kafkaesque language shift from ‘pedagogy’ and ‘education’ to ‘learning’, as argued by Straume. Commodified and assessed by endlessly uncertain tribunals, ‘learning’ comes packed with a capitalist payload of quantitative, computable subtexts: competition, employment, product and again control are deemed virtuous for the ‘entrepreneurial citizen’. The lost ethos of autonomous critique, inspired by love in Castoriadis’ pedagogic scheme, is de-valued, de-personalised and effectively de-commissioned. Finally, Nilsen’s analysis of Stanley Kubrick’s Eyes Wide Shut illustrates the outcome of extreme wealth inequality and a switch from ‘productive capitalism’ (growth) to ‘finance capitalism’ (no growth). This is demonstrably a grand repetition of deteriorating trust, consciousness and intelligence that sets up the apparently imminent, unavoidable descent into despotism and dictatorship.

But democracy’s shallow grave may not be dug yet. If you’re prepared to bury your head in the text and not the ground, you can find some genuinely useful arguments here.  For example, Cochrane’s frankly excellent reading of capitalism as ‘the valuation of control’ provides a strong theoretical case for competing to command assets socially. Similarly Straume’s first essay shows that depoliticization rests on the inability to provide ‘sufficiently robust meaning’, such that teaching critical thinking to every citizen becomes a political as well as an educational mission.

‘Depoliticization’ is not directly addressed in every essay; for some it remains at the side. However, the papers overlap each other well enough to be stitched together with a good narrative, and so the eight authors cover the theme well. Collectively, they delve deep into capitalism’s depoliticizing traits, often working at the level of language and meaning. There are some quite fascinating technical constructions offered in explanation of unconscious or unobvious shifts, such as: controlled ‘free markets’; consumption determined by production; or money, power and control commodified for accumulation. There are also references to more popular economics (Stiglitz and Soros for example) and the odd graph (not listed in the contents) to explain relevant numeric data.

Given their intensity and density, some of the essays are wonderfully clear although in at least two, the author’s purpose or line of thought becomes obscured; whether by poor writing or poor translation is unclear. More of a practical problem was the lack of an index; while the use of footnotes rather than endnotes means locating a cited source requires endless flicking.

But the only real issue was in terms of a personal take on ideas. For me the capitalist paradigm of ‘growth’ appears to be accepted without question, despite its physical impossibility. Moreover, there was a tendency to dismiss ‘logic’ or ‘evidence’ too readily, while quantity always seemed subordinate to quality. I would have liked to have seen these points more clearly and fully discussed, not lost in the background as ‘value-neutral’ givens. But then, this is not so much a criticism of the work as a rejoinder to the discussion; which the authors would surely welcome.

Emergence of a new paradigm: Towards a post-crisis cosmopolitanism

Conference proceedings (quadruple non-blind peer review), , , , , , , , , , ,

1. Introduction

The current, tense “post-crisis” situation is considered by many intellectuals, politicians and citizens to be a simultaneous aggravation of much older financial, political and environmental crises that have been challenging the international community. At the same time, it has also been described as a perhaps unexpected hope for the emergence of a real cosmopolitanism based on a genuine possibility of emancipation and dialogue about world problems in the international community.

We will begin by discussing briefly the causalities of the recent financial crisis, which can be seen as a crisis of neo-liberal capitalism following the original mortgage crisis in the USA and the following economic depression in many countries. In this context we can also mention political elements of the crisis and further explore its threatening relation to the environment. Finally, the same crisis can be considered as a crisis for cosmopolitanism. Some pundits have interpreted the crisis as a crisis of cosmopolitanism of human rights, where it has not been possible to create a new world order of strong international governance.

On the basis of these causalities the paper will discuss whether we can see a potential “new beginning” or qualitative shift towards a new regime of a social ethics including: (1) the emergence of a community economy, e.g. state intervention and civil society responsibility in connection with corporate citizenship and business ethics; (2) the emergence of a new ethical cosmopolitanism including a paradigm shift towards a renewed conception of justice as concerns the common good in the world community.

2. Crisis causalities

What happened? Why did this world crisis come around and how should we explain the crisis causalities? There have been many arguments or diagnoses trying to explain the worldwide financial crisis. I can mention the following, very different, but mutually dependent explanations:

1. The crisis is due to neo-liberal capitalism.

This explanation focuses on the financial breakdown based on the American mortgage crisis and the following depression in many countries. It was the neo-liberal processes of globalization (e.g. privatizations, liberalizations, financializations) that led to the development of risky financial products and the resulting credit crunch, for they were based upon the dogma of the neo-liberal economic system, whereby the paramount goal is quite simply to increase economic gains in the business at all costs. This model for risky business did not only concern banking and economic investments. The most important factor that played a pivotal part in the economic crisis was the emergence of the use of houses for sales and risky mortgages of houses, so that houses became primary objects of investment. The dominant narrative in this explanation is neo-liberal “greed”, as exemplified by Madoff’s pyramid Ponzi scheme, which resulted in his imprisonment and so well symbolizes the basis for this kind of explanation of the crisis. The narrative of “greed” involves that the crisis is due to a brutish conception of human nature as a kind of profit-maximizing individual, who lives only or mostly according to his or her own narrowest self-interest. This explanation is based upon taking into account the fact that neo-liberalism was the dominant economic ideology after the end of the cold war. With this explanation of the crisis we have an explanation that is conceived exclusively in economic terms, and primarily as a breakdown of the international financial system.

2. The crisis is due to changed relations between major powers in the world.

This explanation focuses on the relation between the US and other countries, notably China. In this context the crisis may be considered as a shift in world powerhouses. We may argue that such a shift is the real reason of the credit crunch and the ensuing economic depression. It can be argued that the Chinese, after the massive economic crises in the east of Asia in the 1990s, realized that they would have to build up a strong financial system. After longer than a decade, the savings of China were so large that the country was able to resist the 2008 financial crisis, which showed instead the real vulnerability of the US and Europe. In addition, the crisis can be explained as a result of the economic problems of the US after the Asian wars in Iraq and Afghanistan since the early 2000s. It can be argued that the result of the wars was the weakening of the US as a superpower and that the credit crunch was just a symptom of this changed situation of the West in relation to the East in economic terms, where China is emerging as the main power in the world. With this explanation of the crisis we move from a purely economic explanation towards an explanation in terms of international politics too.

3. The crisis arises from a clash of civilizations.

Here we can focus on the confrontation between world cultures, in particular the tensions between radical Islam and the West, leading to the wars of Iraq and Afghanistan. How can we interpret the crisis in terms of the “clash of civilizations” described by Samuel Huntington? Since 2001 and 9/11 in particular, the confrontation between civilizations has been very present in international politics. The concept of the clash of civilization was developed as a response to Francis Fukuyama’s idea of the end of history, i.e. the end of the struggle of recognition, when the liberal world order has been victorious. We may say that the clash of civilizations is a response to this situation, where the end of the struggle for recognition is not ending in dialogue, but exactly in a clash between civilizations. In fact we may say that a challenge for a post-crisis situation would be to develop a kind of intercultural philosophy building upon a dialogue between civilizations, as opposed to the clash of civilizations. The clash of civilizations is in particular a challenge to the belief in the universality of the Western values of democracy and human rights. We can argue then that the recent crisis is a crisis of these values, following the events of 9/11 and of the wars in Iraq and Afghanistan.

4. The crisis is a crisis in the policies to respond to an environmental crisis.

We can argue that the recent crisis was a crisis of the realization itself of the climate problem. The question is: have recent agreements led to hope for environmental justice or do we only experience new inequalities between developed and developing countries? In the neo-liberal paradigm before 2008 the climate issue was dealt with as a matter of utility and sustainable use of resources. It can be argued that the recent crisis is a crisis for the utility-based conception of the environment, for it appears that CO2 reduction is more than utility, but something that is fundamental with regard to the possibility of life in the world. We can argue that the crisis is a crisis for a civilization that has no understanding of the climate issue as fundamental for human survival. The Danish environmental sceptic Bjørn Lomborg may be considered as a representative of this view. In fact it can be argued that the opposite view of Al Gore, who stresses that the climate issue is about the continuation of the human species, represents an alternative to the view of Bjørn Lomborg, which emerges out of the crisis of the neo-liberal conception of the environment as utility: rather than admitting defeat in front of overwhelming evidence, blind denial is preferred.

5. The crisis is a crisis for cosmopolitanism.

Some have interpreted the recent crisis as a crisis of cosmopolitanism of human rights, where it has not been possible to create a new world order of strong international governance. In fact, it can be argued that the dream of the neo-liberal position was a world order with universal governance. As described by Michael Walzer, we can say that we need a new world order where we have to find the right balance between world government and total anarchy. It may be argued that the concept of the world order as a universal order with a world government is in crisis with the global crisis. What is needed is a new conception of the global order that is both beyond state sovereignty, but also beyond the idea of a world government. We may argue that we have to look for models of cosmopolitanism that deal with world politics without referring to a concept of a global world government as the basis for international politics.

3. The cultural and social background of the crisis

On the basis of the five causalities described above, the issue may be addressed as follows: how really should we define the recent crisis? What does the crisis imply and what does it relate to?

From a phenomenological point of view, we meet the crisis in our own lives when our family, ourselves or our friends lose their job or have to go from their houses because the mortgage rent is too high. In fact, the pre-crisis atmosphere in the Western world was marked by a strong narrative of greed and of spending, in particular a raise of luxury spending. We can then use the concept of hyper-modernity in experience economy, as proposed by the French sociologist and philosopher Gilles Lipovetsky, to take into account this pre-crisis, but indeed also the crisis atmosphere.

Hyper-modernity or hyper-modern society is conceived as an escalation of modernity, i.e. a kind of creative construction of experience where the creativity of human beings as makers of metaphors and symbols moves in the forefront of capitalist production. We are searching for more than maximization of pleasure preferences in the cultural industry. We want to become new human beings when we eat at restaurants, travel, go to the theatre, read magazines or books, or even when we buy ordinary products in the grocery store or in the supermarket. We want to experience happiness and authenticity in all aspects of our lives as consumers. Consumption shall help us to construct our identities. I shop therefore I am. It is the creativity of the producers and designers of experiences that is needed to fulfil this search for meaning in the experience economy. The conditions of possibility of the experience economy are based on the historic changes of the meaning of creativitiy in human societies. Today, with a hyper-modern society of creativity, creativity means something else than it was the case earlier in history. What is essential is that creativity no longer is based on a higher divine reality, but instead it refers to the entrepreneurial genius of the human creative spirit. With no divine meaning left, it is therefore the job of the creative class to fill the empty space of the loss of meaning in post-modernity or hypermodernity, and because there is no pre-given meaning dependent on a metaphysical reality, also the consumer must be creative and create meaning through experiences. Human beings are now primarily defined as hyper-consumers and their appearance as citizens is derived from this condition of consumption.

Hyper-modernity expresses a metamorphosis of liberal culture. We live in a consumer society that has become global and international. In the hyper-modern society we can talk about a new system of consumption that has become universalized. What characterizes hyper-modern society is the development of a world culture of consumption. We can talk about universalization of the brand market economy: the West, Asia and China, South America and Africa. The global market culture is a culture of global media and of global commercial culture. Hyper-modern society is made possible with the neo-liberal ideology of the free market and private happiness through consumption, and it was accelerated with the global revolution of information technologies.

In his 2006 work on hyper-modernity Le Bonheur paradoxal (Paris: Gallimard), Lipovetsky describes the three phases of the development of hyper-modern consumer society:

1. the period from 1880 to the second world war

2. the period from the 1950s to the 1970s

3. The time starting with the 1970s-80s (where we really see that consumer society fully developed).

We have been facing hyper-modern society since at least the 1980s. This is a society where consumption is democratized and made available to nearly everyone. Whereas the first phase of industrial society is signaled by the the emergence of industrial society for an elite, the second phase is marked by the increased generalization of consumer society as well as by increased individualization of consumption, for example by the generalization of luxury products like perfumes, media appliances, etc. However, it is only with the emergence of hyper-modern society that we really face the individualization of products.

In this individualist society we see how individuals are able to organize their space and time on the basis of their individuality. Accordingly, we can argue that with the individualization of consumption, combined with the focus on individual experience, makes immaterial experience and pleasure the focus of product promotion and product content. This new society of hyper-consumption is marked by a break with the conformities of class society. Although the class differences still exist, there is no specific class culture. In this sense, the consuming individual is utterly liberated from the traditional institutions and from the cultural bonds of society. We can say that the consumer of the experience economy is a “turbo-consumer”, a capitalist consumer who is no longer regulated by strong ethics and who is free to consume as much as he or she wants.

A very good example of this “Turbo-consumer” in hyper-modernity is the consumer of great international brands. The brands are expressing the global logic of hyper-consumption. Through global marketing brands appeal to the dreams of having authentic experiences. Consumers of hyper-society are not particularly loyal to one particular brand, but they are loyal to the promise of happiness in the brand economy that activates their dreams and emotions. The global brand economy expresses the logic of experience as emotional rather than bound to the materiality of the products. Hyper-consumption is a continuing renewal of the sensations. It is travel in experience. The turbo-consumer wants the most intense experience and in order to get this experience the turbo-consumer overcomes traditional limits of time and space that are taken over by the commercial logic. There is a close link between the brand economy and the search for happiness as the ultimate imperative of hyper-consumption society.

Together with Jean Serroy in La culture-monde. Réponse à une société désorienté (Paris: Gallimard, 2008), Lipovetsky discusses globalization of culture in the perspective of hyper-modernity. We can mention fashion, advertisements, tourism, art, the star-system from Hollywood as aspects of a world culture that has become dominating in hyper-modernity and manifests itself as a cultural hyper-modernity aiming at satisfying the search for satisfaction of experiences by consumers in hyper-modern society. But at the same time this globalization of culture in the framework of an experience economy is marked by the paradoxes of increased complexity and increased collective and individual disorientation.

The capitalist market experience economy is supposed to respond to the dark sides of increased individualization and narcissism. Because of individualist mass society with less common references to give a sense of meaning and community, the world culture of brand consumption is supposed to be the compensatory device that can give individuals meaning and fullness in their individual lives, which are increasingly devoid of meaning. World culture promoted through experience economy is the only tool left to give meaning and sense to individual lives, yet it is far from certain that it is succeeding in its task.

4. Towards a new beginning: Emergence of a new cosmopolitanism

With an economic crisis in the middle of hyper-modern consumer society, we can see how the whole foundation of this society is shaken. Therefore it is also interesting to ask the question about what happens after the crisis. Can we see a “new beginning” or qualitative shift towards a new regime of social ethics of responsibility as a kind of new event emerging out of the crisis, or should we just say that the crisis is nothing more than a confirmation of the logic of hyper-modernity, or alternatively is it possible to argue that the crisis opens for new meanings that help us to move beyond hyper-modern society? What does it mean to speak about paradoxes of a post-crisis situation that challenge the pre-crisis relations? We can observe the following aspects of a post-crisis situation that helps to mark qualitative breaks with the pre-crisis situation.

1. The emergence of a community economy

State intervention and civil society responsibility in connection with corporate citizenship and business ethics signal the emergence of a community economy. We can argue that the business ethics movement based on corporate responsibility and corporate social responsibility replaces within this context the confrontation from the cold war between communism and capitalism. Moreover, the end of neo-liberalism shows that we need a better relation to the economy and a better conception of the content of the economy. Business ethics and corporate social responsibility represent a response to the situation of crisis of business organizations in the sense that it is a new way to deal with the capitalist system.

Business ethics deals not only with ethical responsibilities of corporations but also with a responsible way to deal with economic and legal activities. Therefore we can talk about the economic, legal and ethical responsibilities of a corporation. The different responsibilities must be integrated into the strategy of the corporation, according to the new paradigm of corporate social responsibility and in close coherence with the strategy of the corporation. Business ethics can be considered in close interaction with the idea of hyper-modern society because in hyper-modern society ethics and corporate social responsibility are integrated into the experience economy. This means that ethics is considered as a virtue that is closely related to the self-construction of the individual. Accordingly, the individuals in the business corporation want to have a meaningful work and they want to be accountable and trustworthy as a part of their personal identity. Therefore business ethics is not in contrast to hyper-modernity, but rather a consequence of the culture of this kind of society. So the post-crisis scenario of intensified business ethics and corporate social responsibility is not necessarily in contrast to the culture of globalized hyper-modernity.

In this context we can argue for a movement towards an ethical cosmopolitanism within the field of business, as I have argued in my book Responsibility, Ethics and Legitimacy of Corporations (Copenhagen Business School Press, 2009), which the reader can find reviewed in the present issue of Nordicum-Mediterraneum. An important aspect of this movement is the idea of republican business ethics, defined as involvement of corporations in and for the common good, the res publica, which are expressed in the concept of corporate citizenship with integrity and responsibility. Integrity matters as the self-imposed norms of international corporations can ensure accountability and trust. Integrity is analyzed as a function of the business ethics of corporations, especially in the normative guidelines for international business.

With this cosmopolitan approach I have argued that the corporation can contribute qua world citizen to solve the important problems of hyper-modernity. This can be viewed as the application of the important concepts of the virtues of responsibility and cosmopolitanism. As actors at the global level in a time of interstate interdependence with regard to world ecological, economical and political problems, it is a challenge of the corporation to contribute to building up an international community of virtue and protection of basic rights.  We can define this vision of universal corporate citizenship as the World ethos of business ethics. The corporations shall not only protect universal human rights, but they shall also give those rights meaning in relation to the particular cultures in the countries where they operate.

2. Cooperation replaces conflict.

We may ask the question whether the post-crisis scenario is opening for a new era of cooperation that is in contrast with the idea of conflict that was dominating in the cold war times and in the times immediately after the cold war. An argument from globalization is that the financial crisis has been a reminder of how we now really live in “one world” in economic, cultural, social and political terms. In this sense it can be argued that we need scenarios of cooperation with new interactions between major powers in the international community, which is establishing a regime of problem solving rather than confrontation.

With Hannah Arendt, we can argue that we are searching for a political conception of international relations that move beyond the legalistic conception of the international community. Hannah Arendt’s work after the second world war presents a critical discussion of Kantian cosmopolitanism. She offers novel views on human rights and the rights of citizens and she discusses the possibility of an international tribunal to deal with crimes against humanity. Also, her philosophy implies a critical reply to a naive “juridification” of international relations as marked by legal structures alone. Arendt proposes a solution for the reintegration in the political community after the fight with the wrongdoers. The international political community needs a dimension of civil society, as proposed by Arendt, to find a possible mediation of the double edge of cosmopolitanism. We can argue that Hannah Arendt understood the importance of a political foundation of the respect for the naked human being beyond the political relations of the nation state. This is what Arendt argued for when she coined her famous term of the foundation of human rights as the “right to have rights”.

In her 2006 book Another Cosmopolitanism (Oxford: Oxford University Press), Seyla Benhabib seems to propose a new version of Arendt’s older position. According to Benhabib, modern cosmopolitanism is not only about hospitality but also about the political and legal institutions to govern our world in order to deal with circulation of persons, capital, commerce, pollution, information, labor, goods, viruses, etc. Cosmopolitanism is about building political relations at the international level, so that people can enjoy the right to have rights in the international community. In particular, Benhabib defines human rights as universal ethical obligations that go beyond national sovereignty and are formulated within a form of law.

Benhabib argues that the challenge we face today is the construction of a jurisprudential theory that is able to reconcile the universality of human rights with the partiality of positive law. She deals with the problem, as Hannah Arendt also did, by focusing upon the rights of persons who reside within a state but who are excluded from its polity, i.e. legal and illegal aliens. Thus, Benhabib takes up the challenge of the double edge of cosmopolitanism by arguing for the search of a legal foundation of cosmopolitan citizenship beyond positive law alone.

When Benhabib deals with the double edge of cosmopolitanism she answers this question by drawing on Kant’s doctrine of cosmopolitan rights, which she attributes to Kant’s thesis that ”The law of world citizenship shall be limited to conditions of universal hospitality” – hospitality covering the relationship between states and strangers. With Benhabib we can argue that the double edge of cosmopolitanism lies within the confrontation between republican national law and international relations, because the law of hospitality intersects with the positive law of the state. Specifically, Benhabib focuses upon the point of intersection between these two dimensions. On the one hand we have the Republican opening towards the international community in the republican public sphere; on the other hand we have the mediation between the cosmopolitan norms and the republican community.

Benhabib argues that we can propose a solution to the tension of the double edge of cosmopolitanism by means of a cosmopolitan law that emerges from increasingly conscious public debates in democracies, where the norms of cosmopolitanism are accepted as basic human rights into the positive constitutions of republic societies. In this sense universal norms are mediated into the will formation of democratic societies, so that cosmopolitan norms are becoming integrated into the republican framework of democracy.

An illustration of this kind of democratic development of the cosmopolitan norms and of the “democratic iteration” is for example the European Union, where citizenship is expanded in a cosmopolitan direction. However, the contradiction between the universality of ethics and the particularity of law can never fully be overcome and there is always room for national sovereignty where laws are made.

When we talk about a civil justification for the emergence of cosmopolitan norms, we can argue that this justification of cosmopolitan hospitality emerges within the framework of democratic community because people are becoming more and more acquainted with others beyond their national borders and cultures with norms of reciprocity and respect. In this perspective there is a genuine hope that cosmopolitan norms are internalized in local cultures, democracies and populations. However, this is not enough according to legal theorist Seyla Benhabib. Cosmopolitan norms must also be based on a legal framework. In Another Cosmopolitanism, for example, Benhabib discusses the case of European citizenship as a token of the increased movement towards the development of such cosmopolitan norms.

Still, there remains the danger of a cosmopolitan stateless future. Benhabib argues that we should imagine a future where ”civil, social and some political rights” are not related to national belonging. In this context, universal cosmopolitanism is situated between law and ethics, universality and particularism, nation and international community. When we search for a philosophical foundation of these cosmopolitan norms, we can look back at the philosophy of Hannah Arendt who argued, as we have already said, that the most important thing is the right ” to have rights”.

We can say that Hannah Arendt’s book about the Eichmann trial — Eichmann in Jerusalem. Essay on the Banality of Evil (London: Penguin Books 1964/1981) — was fundamentally a book about cosmopolitanism and international law. This is true in particular when Arendt deals with crimes against humanity, where genocide is conceptualized as the crime against humanity, or rather the crime against humanness or the right to be human. The issue of the cosmopolitan double edge, i.e. how to mediate between national legal structures and moral universalism, can be answered by reference to the Eichmann trial. This trial marks the beginning of cosmopolitan norms. It is a trial for crimes against humanity that goes beyond the traditional boundaries of legal positivism.

If we look more closely at Arendt’s book about Eichmann and follow Seyla Benhabib at the same time, we can argue that cosmopolitanism is not only the Kantian horizon that as we may infer from Arendt’s letters to Karl Jaspers — Jaspers being himself a Kantian cosmopolitan — but an ideal of civic republicanism combined with a vision of political self-determination as the foundation of true hospitality in cosmopolitanism. So the emergence of global civil society as the movement from international to cosmopolitan norms of justice can only be accomplished as long as it draws with it principles of civic republicanism.

Concepts such as ”the right to universal hospitality” and ”the right to have rights” are certainly Arendt’s legacy of Kantian cosmopolitanism. Yet she adds a normative force that can emerge only within a republican, democratic framework of legal norms. These concepts, in other words, should have a binding power. The idea is that the ”right to have rights” indicates rights of universal hospitality that triumphs over positive law, but can also be within positive law, because it is founded on republican self-governance and autonomy.

We need more than the formal political construction of the cosmopolitan norms of human rights. The international human rights regime, crimes against humanity, humanitarian interventions and transnational migration norms should all be based on civic republican recognition of the right to have rights. So cosmopolitan justice must be based on a kind of nationally sanctioned international law of peoples, where the tension between sovereignty and hospitality is overcome through the act of self-legislation as an act of self-constitution under a cosmopolitan perspective.

Benhabib says that ”Liberal democracies must learn to negotiate these paradoxes between the spread of cosmopolitan norms and the boundedness of democratic communities”: according to her, the development of cosmopolitan norms is characterized by democratic Iterations between the local, the national and the global.

5. Conclusion

Following Hannah Arendt and Benhabib, we can argue that cosmopolitanism emerges as the power of democratic forces within a global civil society and this helps to a construction of international norms that goes beyond the tension between cosmopolitanism and national sovereignty. What is characteristic of the new cosmopolitanism, at least according to this view, is that citizenship and political membership are no longer based on culture and collective identity. As exemplified by the case of the European Union, the conflict between sovereignty and hospitality is no longer so important. Accordingly, a new discussion of politics implies the search for new forms of political agency in cosmopolitan times, where we recognize what Benhabib calls the “democratic iterations” of the concept of democracy and citizenship. And this recognition will help to develop new foundations of democracy in international politics.

Moreover, by protecting universal rights that are dependent on the charter and declarations of the United Nations, corporations can act for good international relations that go beyond the interests of particular communities of republics and nations. By doing this, corporations, when they really want to appear as good citizens, can help to build a world community that implies the universalization of the procedural virtues of liberal society. Corporations can at the same time be cosmopolitan and situated in particular societies, in the sense that they foster universal principles while making those principles work in concrete practice. In this sense, the post-crisis scenarios can be a development of a new cosmopolitanism in both international politics and in the activities by corporations and other organizations and institutions helping to build up an international civil society.

After the Financial Crisis: The Ethics and Economics Debate Revisited

Reflection on the economic crisis (editorial review), , , , , , , ,

 

 

Introduction

In this sense the problem of the relation between ethics and economics in business concerns the concept of economic action and the role of ethical responsibility in economics.[i] The debate about economic rationality and political philosophy depends on the problem whether there can be something like a common good or social justice for all members of society. From the standpoint of mainstream economics we can say that this problem is a problem about how to deal efficiently with limited resources. In this sense we may argue that neoclassical economic theory is a system of thought that seeks to deal  rationally with the problem of sacrifice, that is the problem of who, how or what society should sacrifice in order to seek optimal and efficient use of resources.[ii] With the separation of economics from political philosophy, economics has become the rational use of resources based on the principle of the rational profit maximization of homo œconomics.

Accordingly, the idea of economic rationality depends on the concept of economic action.[iii] This concept is marked by interplay between individualism and altruism and personal responsibility for economic actions. The idea of an ethical correction of economic action implies a critical attitude to the concept of self-interest as the basis for economic action. It is argued that economic calculation should exclusively be based on individual utility maximization but include an altruistic concern for the common good and for other human individuals. In the perspective of such an ethical correction of economics we think of the economic actor as an individual, who makes an economic calculation which is extended to include the responsibility for other human beings and society integrating economic calculation in well-founded moral norms and ethical customs of society. In the following, I want to address this issue in five parts 1) Ethics in economic history 2) The neoliberal concept of economics 3) Welfare economics and the criticism of neo-classical concepts of rationality 4) Ethics within economics 5) Economic anthropology and the foundations of rationality. 

1. Ethics in economic history

Looking at the relation between business and ethics in the perspective of economic history, we can see that the idea of the rational profit-maximizing individual based on self-interest is a newcomer for understanding economics.[iv] Although we find preliminaries of the concept in the classical materialist philosophy of Epicurus, it is only with the modern economic thinkers of the 16th and 17th century, in combination with the emergence of an autonomous capitalist economy based on efficiency and utility, that this view of economic actors becomes predominant. The concept of the political and social neutrality of the market has emerged in this context of independent economic markets. In classical political economy market action was conceived in the perspective of political community. Aristotle argued, for example, that wealth and money are not goods that man seeks for their own value but rather as a means to obtain the good life in community.[v] And Thomas Aquinas developed the doctrine of the “just price” in which economic exchange relations were based on respect for the natural law and political justice in society.[vi]

Even though he was the founder of the modern economic doctrines of self-interests and the invisible hand, a similar conception of economy as science of the good for community can be found in the works of Adam Smith.[vii] In the Theory of Moral Sentiments (1759) Smith seems to argue that the relation between persons and other mutual moral sentiments are the basis for economic action. Self-interest is only one among the human virtues and of the natural inclinations of human nature. Therefore, even Smith argued that utility maximization has to be seen in the perspective of other virtues like generosity and justice.[viii] And therefore rational economic calculation is founded on a broader view of human nature than the idea of “economic man”, which has become predominant in neoclassical economics.

At the same time, with Adam Smith we can perceive the beginning of the emancipation of economics from moral philosophy. With the emergence of the modern individual it has been possible to find a concept of rational action with is totally based on individual self-love and egoism.[ix] Smith was inspired by the provocative work of the Bernard Mandeville who, with his book the Fable of the bees, announced the new foundations of the modern concept of economic rationality, based on the idea of “private vices, public benefits”.[x] Smith integrated this view as the foundation of his concept of economic action in the Wealth of Nations from 1776. With this point of view, we can argue that Smith was very important for the degradation of economic action to personal preferences and self-interests of homo œconomicus. Economics is a private affair and the state has only the very limited function to protect the liberty and rights to exercise personal choices of the individuals in society. Therefore, it is very enigmatic how Smith could combine the belief in self-interest with the analysis of morality and the possible sympathy of human beings with one another in the Theory of our Moral Sentiments.[xi] Smith seems to argue that the broader social relation between persons and other mutual moral sentiments can be the basis for economic action. However, we should remember that sympathy in the perspective of Smith is analyzed as a part of the sensibility of the individual.[xii] Sympathy does, however, not come from egoism or selfishness, for the subject feels an inclination towards another. Accordingly, self-interest seems to be only one among the human virtues and of the natural inclinations of human nature.

Therefore, as already stated, even Smith argued that utility maximization has to be seen in the perspective of other virtues like generosity and justice.[xiii] And therefore rational economic calculation is founded on a broader view of human nature than of the idea of “economic man”, which has become predominant in neoclassical economics. However, it may be argued that Smith did not solve the tensions between egoism and altruism implicit with his view of the economic subject. Because of his emphasis on self-interest Smith cannot really integrate the sympathy for the other in his theory and therein remains a tragic tension between homo œconomicus and sympathy for the other. Moral judgment is captured between egoistic economic rationality and the passions and emotions for the other.[xiv] In fact, the idea of the invisible hand shows the heart of the tension because the concern for community is removed from the individual to the mysterious divine force of the invisible hand.[xv] It is only through the sympathy of the others that the individual requires sympathy for his or her self as based on self-interest.

In the perspective of the history of political economy we can argue that economics originally was viewed as a moral science, not as a mechanical natural science, but as a part of the art of “good government”. According to Amartya Sen, among others, this view of economics has been forgotten in modern economics, which is more interested in the engineering problems of economic efficiency than in ethical and political problems of rights and social achievement.[xvi] This tradition includes classical authors like Ricardo and Malthus and is continued by the neoclassical tradition of Leon Walras and Jevons and developed by authors like Alfred Marshall in his Principles of Economics[xvii], which focuses exclusively on individual utility and seems to forget the importance of concerns for the common good in economic theory. Due to this concentration on self-interest, economic theory, the idea of economic rationality is exposed to a strong tension with deontological constraints on economic markets based on protection of rights, interest and freedoms of other human beings.[xviii] According to this view, the concepts of well-being and rationality in neoclassical economic thought must be considered in accordance with ethical principles. We should look more closely on the ethical aspect of human motivation and integrate questions of the good life in economics. Therefore, without disregarding all the important insights of descriptive positive economy, we may argue for a normative view of economic theory in saying that business ethics is providing us with the “missing link” between traditional “political economy” and micro-economic rationality.

In order to provide such a link between ethics and economic rationality, we have to look closer on the foundations of the neoclassical tradition in political economy, its view of economic rationality and its ethical implications. The neoclassical concept of rationality implies an unlimited conception of rationality according to which economic agents have unlimited competencies of decision making in order to maximize personal self-interest within an exogenous space of possibilities.[xix]

2. The neoliberal concept of economics

The conception of political economy within neoliberal thought can be conceived as a generalization of the economic concept of self-interest and economic rationality to be the basis for organizing society and social justice. According to a liberal like Hayek, free competition among individuals in the market within ethical custom is the best argument for human happiness and luck.[xx] It may be argued that economic equality cannot be viewed as important at competitive markets based on economic freedom. Neoclassical economic thought privileges the pursuit of self-interest and implies the view of human beings as competitive natures. Property rights liberalism does not imply any principles of equality as the basis for economic markets because economic freedom is essential to property rights. It is argued to be paternalistic to limit human freedom by rules of justice on economic markets. Radical libertarians and some liberals are indeed somewhat critical to the deontological perspective, because it implies moral restrictions on personal liberty.

Hayek links this argument for the unlimited economic rationality of the market with a criticism of the proposal to use the state actively to establish social justice in modern society. Such justice would be somewhat the same as socialism and Hayek thinks that there is no meaning in the idea of planned social justice.[xxi] Human beings do not have the perspective of the invisible hand but they are always situated in a culture and history where they live by the human capacity of learning by trail error and imitation. Hayek criticizes the idea of a planned social justice from an epistemological point of view. We cannot rationally construct social rules, we can only use our faculty of imitation. We can only follow specific patterns by tacit recognition of meaning and of imitation of others. Freedom is what the individual does with what society has done with him or her.[xxii] It is the freedom of the situated individual to act in a given social condition. Hayek approaches economic and ethics from the point of view of methodological individualism. Human beings are responsible for their society, but they cannot fully know what the result of their actions is and they have no control over the collective level of society, which is much more complex than the level of individual action.

The level of society can in this context be conceived as a complex cybernetic system that human beings cannot control. Society that is created by individuals is more complex than the individuals and we cannot conceive the system in its complexity. Human beings act in society but society goes beyond their reason and they cannot conceive society. Society is more complex and even contradictory. The social order is a spontaneous order that no-one really wanted to be like that. The spontaneous order can be conceived as a kind of reinterpretation of the idea of the invisible hand. Social order is established between a natural order and an artificial order. The abstract order is a result of the increasing complexity of cultural evolution. The social world is a result of a large evolutionary process like the process of evolution of the natural world described by Darwin. There are no general laws of evolution. We are in an open society, the society of individual freedom as proposed by Adam Smith. There is selection of the most efficient rules in evolution. They depend on information and efficiency. Utility and calculation of lives is the instrument of evolution. The market is the essence of the evolution of this spontaneous order. The market is the foundation of social organization, auto-development, division of work and efficiency in evolution. Hayek develops an information theory of price. They are signals not instruments of distribution of wealth. It is not possible to calculate price from the collective point of view. The market is becoming meta-tradition of all economic traditions. It is competition that makes progress in the economic market. Information is the essence of the economic development in the market. Competition makes people act rationally according to efficiency in the market.

We can observe such a utilitarian justification of liberty and justice in Hayek’s economic theory.[xxiii] Externalization and self-transcendence are a liberating alienation of the individual. You have to leave yourself to the forces of the market and to forget social justice, because you cannot control society anyway. The individual is requested to act in conformity with the rules of the spontaneous social order of which it is a part. Justice cannot be planned but it is a concept that is generated by the spontaneous social order. Property rights are the rights of personal freedom. And imitation is the basis for the personal development of individuals and for their social and economic self-regulation. Selection out of path-dependence plays an enormous role in social evolution. The markets results are without ethics. They are blind. Social politics breaks with the connection between individual and the market.[xxiv]

We also find this idea of the ethical consequences of self-interested individual action in Hayek’s philosophy of the “spontaneous order” of economic and social development. During evolution based on interaction among self-interested individuals those practices which are based on individual freedom and rational choice of the most efficient alternative will, in the long run, contribute to social betterment. And indeed better legal and moral systems will be a result of this spontaneous order. Fair competition and healthy economic institutions will, in an economic system based on fair competition, contribute to a better society. In this perspective the idea of competition includes an ethical dimension of fairness and transparency contributing to the spontaneous order of society. Social orders are spontaneous. No-one can control them. Hayek seems to want to establish the good and just society on the contingency of social spontaneity and social affairs.[xxv] But this is really an argument against any attempt to formulate a rational foundation of the political constraints of actions of individuals and corporations. According to the invisible hand and to the idea of the spontaneous order, the market should have the right to exist as a free human institution, because this is the guarantee of development of society. Thus, economic action should be based on the supremacy of free individual decision making and on open economic markets with as little government intervention as possible. It is the result of the liberal concept of economics that economic rationality should be liberated on its own and ethics should only be introduced as an external limitation of economics when it goes beyond the acceptable requirements of economic rationality, by, for example, not respecting the rules of fair competition on free and open markets. 

The ideal of perfect competition in Hayek’s thought and neoclassical economics presupposes the rights of individuals to make their own rational choices in economic markets. This view of economics can be argued to be based on the presuppositions of perfect competition, rational independent decision-making, a perfect market, a homogenous product, many competing sellers and free possibilities of entry/exit into economic markets. It is presupposed that the firm consists of one rational individual rather than a group or coalition of individuals. The firm is a category of the individual and a production unit in order to provide goods to be exchanged on economic markets.[xxvi]

In the view of neoclassical economy ethics is regarded as external limitations of the market. Ethics is not integrated in economic decision-making but useful to ensure free economic action in the markets. Economics refuses to integrate external values in economic rationality. Therefore I would argue that the only ethics present in this doctrine is the ethics of competition, which is to maximize self-interest and personal preference maximization. A promise of total opportunistic and selfish action is a handshake, as some has characterized this ethics of competition. In this way ethics seems to be an exogenous element of social action at the limits of economic rationality. However, a presupposition is that the conditions of fair competition and perfect markets should be accepted by all participants in economic competition, which is restricted by the rules of the game, for example property rights and contract law. A generous interpretation of the thought of Smith and Hayek may be that the ideas of the invisible hand and spontaneous order are attempts to integrate a concept of the common good in liberalism. From this optimistic perspective, liberalism always goes beyond pure egoism because self-interest is supposed to somehow serve the general interest. Although such an interpretation may be closer to the original moral intent of liberal philosophy, it is a point of view, which seems to have been more or less forgotten in the economic self-understanding of neoclassical economics that isolates the concern for the good from the concept of economic analysis.

Moreover, even though they heavily disagree with neoclassical economic theory, some other paradigms of economics – for example game-theory and agency theory – seem to share the same view of the separation between ethics and economics and the idea of egoistic rational utility-maximizing individuals as the ideal protagonist of economic action. They prioritize the individualistic approach as the basis for economic action rather than considering economics from the point of view of society as a totality in search for a common good.

Game theory contributes to solving an important problem in neoclassical economic theory – the problem about harmonious equilibrium leading to monopoly, which is contradictory to the ideal of perfect competition.[xxvii] In order to avoid static harmony, game theory operates with “non-cooperative games” as the ideal of economic interaction. According to the economic mathematician John Forbes Nash a situation of equilibrium is the case where every participant in the game chooses a strategy, which is the best response to compete with the strategies of the other. Perfect equilibrium in non-cooperative game theory is a combination of strategies, where no player has reasons to choose another strategy to improve pay-off.[xxviii] Indeed, this theory of competition presupposes external limitations on markets and firm behavior. The players have to play within certain rules and they have to share the same concept of rationality considering economic actors as self-interested utility maximizers.

A similar view of the economic man may be said to be present in agency-theory building on rational individual agents acting in firms in order to maximize their own interests. In agency theory corporations are primarily viewed as instruments and devices to maximize profits.[xxix] And we may even mention some views of the economic man in transaction cost economics, arguing that if we look at men “as they really are” we are likely to meet not only self-interested utility maximizers, but potentially opportunistic individuals, who, even though they are not rational in any ideal sense, in their daily actions, with limited knowledge, are likely to follow a non-ideal strategy of personal utility maximization.[xxx] Even though transaction cost theories argue for the importance of governance structures and agree that cooperation, personal honor and integrity matter,[xxxi] this institutional economics regards self-interest as the primary motive for action.

We can say that we are confronted with an instrumental concept of economic rationality, which is presupposed in the systems of neoliberal and neoclassical economics rather than explicitly argued for. But why consider self-interest as the only motive for economic action when we know that real people also are motivated by a plurality of values and ethical choices?[xxxii] A plausible answer could be that economics is viewed not as a science applied to a specific realm of being, but rather as a general set of assumptions and tools that can be applied as a fundamental method in all aspects of human life, including ethics, which is only justified insofar as it allows such an economic methodology to work as freely as possible. The foundation of this concept of economics is the anthropology of the individual as maximizing self-interest and individual preferences – even under conditions of bounded rationality and finitude of voluntary reflectivity. The concept of the common good does not play any important role in this concept of economic action where the drivers of economic activities are not social institutions with common values but the interests of individual utility maximers.

3. Welfare economics and the criticism of neo-classical concepts of rationality

In fact, looking closely on the concept of welfare economics we can criticize the focus on a pure economic concept of rationality as foundation of political economy, as it is the case in neoclassical and neoliberal thought. In contrast to the neoclassical liberal model focusing on individual maximization, welfare economics works with macro-economic choices in relation to society as a whole. Welfare economics works with the concept of personal preferences as foundation of economic theories and economic models. This concept of rationality emerged out of the separation of ethics and economics that developed with the emergence of modern economic sciences. Welfare economics constitutes a normative theory of maximizing of personal preferences.[xxxiii] Specifically, the rational theory of welfare economics in macro- and micro-economics is a normative theory of maximization of preferences in conditions of risk and uncertainty rather than a descriptive theory of factual economic conditions. In welfare economics this theory is used as the basis for economic action in order to determine results with the most efficient economic outcome. This economic theory of rationality does not operate with a substantial theory of rationality. We cannot determine the content of each individual preference and their may even be irrational preferences. Therefore economic theory is based on a formal theory of individual actions as basis for determining the outcome of economic action.

Within this context, Daniel M. Hausman and Michael S. MacPherson argue that there is not necessarily an absolute separation between economics and ethics. In fact rational decisions according to preferences are in the end tested according to moral concepts of minimal goodness. When economic actors like the World Bank develops economic plans or proposals like dumping waste from the Western world onto developing countries, such a proposal is in the end not only evaluated according to economic rationality, but also all other things being equal considered from the point of view of minimal goodness or ethical value. We may argue that it is a presupposition of economic theory that it should be a good thing to satisfy personal preferences of an individual. This concept of goodness behind the economic rationality of welfare economics can be illustrated by the concept of Pareto-optimality, which means that an economic situation has achieved Pareto-optimality when it is impossible to improve a condition of one individual without making others worse off. Dumping garbage in the developing countries may improve the situation in the Western world, but it is does not lead to any improvement of the living conditions in the developing world and it therefore does not fulfill the conditions of minimal goodness of ethical actions.

However, welfare economics shares the presuppositions of liberal economics by emphasizing that free competition is an important condition of free economic choices of individual actors. The ideal of free competition as the basis of efficient economic action is shared by most welfare economists. Moreover, welfare economics also shares with liberal economics the idea that satisfaction of rational preferences is the foundation of economic decision-making. Indeed, this is also based on the idea of minimal goodness or ethical evaluation of the economic choices as the basis for decisions in macro economics. This concept of preferences in national economics may be said to imply that individuals are supposed to be rational and well-informed and their preferences are also supposed not to be odd and totally un-ethical.[xxxiv] In this sense the idea of minimal goodness or ethical acceptability may be conceived to be a condition and a minimal presupposition in the welfare economic conception of individual preferences.[xxxv]

We may say that welfare economics must presuppose the ethical awareness of economists in order to be acceptable as an economic theory. The counterargument from neo-liberal or neoclassical points of view is sometimes that economists cannot be ethical because ethical constraints would destroy the requirements of free competition. It is falsely supposed that there is a close relation between free competition and immorality. But this may not be the case and it may even be better for a company or public authorities to be moral than immoral in order to ensure long term sustainability and cost limitation of the institution.[xxxvi] From this point of view the critical skeptics have not really demonstrated that there is a close connection between free competition and immorality. Still welfare economists cannot have their theory of rationality without looking at the possible moral limits and consequences of their actions. In this sense we can argue that ethical evaluation has to be an internal aspect of economic theory in welfare economics.

However, this does not mean that there is a clear relation between economic rationality and ethics. Rational action may in some cases be moral, but in other cases it cannot be said to be acceptable from the point of view of ethics. But, from another point of view, rational preferences in welfare economics may not always be individual preferences. The concept of rationality in welfare economics can be based on altruistic concerns and it is not necessary to exclude altruism a priori from economic models in welfare economics. Indeed, welfare economists have argued that moral norms and virtues have had positive impacts on economic development, for example a code of ethics in business makes economic action more reliable and it contributes to increase economic welfare.[xxxvii] However, there may also be moral norms that are inefficient from an economic point of view and in cases where they are not even justified from an ethical point of view, for example when we perceive discrimination or suppression of employees, it may be justified not to accept these norms within economic theory. So from the point of view of welfare economics moral norms of economic actors may have an impact on economics even though there may be no direct link between conceptions of moral deontology or moral duty and economic efficiency or rationality. This means that although individuals may have meta-preferences which outlaw actual supposed preferences, there is no direct link between economic rationality and ethics.[xxxviii]

 

4. Ethics within economics

Common to the ideas of neo-classical theory and welfare economics is the idea of a close connection between ethical rationality and economic rationality. Some even argue that there is an internal ethical dimension of economics and even that it is possible to define what can be considered as valid ethical behavior out of economic reason.[xxxix] The issue is what economics can help to say about the good life and how economics as a moral science may contribute to a better society. According to the Austrian economists like Karl Menger, Ludwig Von Mises and to some degree Hayek, economics may be considered as a kind of “praxeology”, a normative science of practical reason, based on universal categories of human action and helping to realize the human good.[xl] They proposed a rationalistic and interpretative paradigm of economics in which it was argued that economics could be based on synthetic a priori principles. Also there is much convergence between utilitarian ethics and traditional views of normative economics. Economics is viewed as the science of calculation of efficiency, profit and maximization of personal and common human preferences.

In so far as institutional organization theory is founded on ideas of self-interest and efficiency in maximization of profits it seems to presuppose some kind of utilitarian ethics. But this is utilitarianism with strong emphasis on personal and egoistic interests. Indeed this is the case with neoclassical economics and we have seen how the concept of human beings as self-interested and potentially opportunistic actors has been taken over by theories of economic organization like transaction costs economics and agency theory. Transaction cost economics considers firms as contractual relationships among individuals who seek to maximize self-interest and the fight against opportunism on the basis of lawful behavior within contracts can be considered as a defense of an ethics of good governance and high performance in efficient economizing market institutions.[xli] Agency theory focuses on economic property rights as the basis for economic behavior.[xlii] When we propose an ethics of welfare economics we are not only looking at the firm in the light of micro-economics but we also consider the organization as integrated in larger social and political systems.[xliii] We want to state that individual instrumental economic reason has significance only within the framework of ethics subordinating individual goals to the common interest of a community.

In opposition to this view we have to admit that there may be many important aspects of economic principles of self-interest and rational action that can help to shape ethics. Orthodox economists argue that efficient allocation of scarce resources is based on minimal governmental and legal intervention and that free actors are the best to know how to respect the norms of the market and ethical custom of society.[xliv] As mentioned, major economists like Adam Smith and Milton Friedman, but also John Stuart Mill believed that the economic rationality of seeking self-interest and profit maximization in economic markets contained on its own an important form of rationality whereby everyone who  seeks to fulfill his own interest will contribute to the common good. Business ethics cannot ignore this ethics of the market, which can contribute to an original form of ethics, given within the rules of market economy, yet sensitive to the common good of society.

According to what may be called the cost-benefit efficiency view of economic ethics, free economic action in economic markets is the best way to deal with scarce resources.[xlv] This view may have two formulations. The former stresses the role of the state in giving dynamics to economics, whereas the latter stresses that the autonomy of the private sector is the most efficient way to allocate scarce resources. Economic actors are characterized by responsible and conscious use of scarce resources. In essence, economics is about efficiency and the prudent use of resources. Moreover, organizational action should be profitable. According to economic rationality we cannot ignore the bottom-line of income and expenditures for the success of business action. Economics is about creating value and maximization of profits in terms of individual or social wealth and utility.  Economics is the science of efficiency and utility for society and economic action is about ensuring the most efficient way to deal with scarce resources.

Additionally, economics can also be regarded from the perspective of social development. Utility theory is based on Pareto-optimality (that is a situation of economic arrangements where a change of the situation cannot make the situation better for some without making it worse for others). [xlvi] Welfare-economists stress the role of the state in such situations while libertarians consider that the free market gives the best optimality.[xlvii] Thus economics is considered as the science of how to compare and weigh different goods of society and allocate scarce resources most efficiently. Economic action is about how to contribute to creating wealth on markets and thereby create wealth in society. It is advisable to contribute to economic goods within the basic rules and ethical principles of society. And it would not be just not to respect the laws and principles of economics when acting on economic markets. Economic action based on utility contributes to maximization of efficiency within limits of respect for basic rights.

An important aspect of such a concept of economic ethics is the already mentioned idea of the “invisible hand” from Adam Smith, stating that if everyone acts according to his own interest respecting the rules of fair competition on economic markets, society will flourish and individual self-interested action will be a contribution to the common good. As we have described, we also find this idea of the ethical consequences of individual self-interested action in Hayek’s philosophy of the “spontaneous order” of economic and social development. During evolution based on interaction among self-interested individuals those practices which are based on individual freedom and rational choice of the most efficient alternative, will in the long run contribute to social betterment.[xlviii] And indeed better legal and moral systems will be a result of this spontaneous order. Fair competition and healthy economic institutions will in an economic system based on fair competition contribute to a better society. In this perspective the idea of competition includes an ethical dimension of fairness and transparency contributing to the spontaneous order of society.

If we conceive economics as implying a particular ethical rationality we may therefore consider how economic institutions contribute to ethics. The ethics of economics in institutional arrangements is the promotion of rational self-interest and fair competition as an instrument for economic progress. As John Dienhart acknowledges, according to the institutional view of economics, markets are considered as “ethical engines”.[xlix] The aspect of economizing that we have discussed, may very well be considered as a part of economic institutions as ethical engines. However, the concept of economic rationality is broader and more pluralistic than the view of fair economic markets as exclusively based on the pursuit of self-interest.

Thus, we can distinguish between an internal and an external approach to ethics and economics. According to the external approach economic rationality is based on self-interest and there is complete separation between ethics and economics.[l] Economic engines can help us to attain ethical values, but economics as such is neutral. However, there seems to be an ethics implied in economic rationality. So we can argue for an internal approach according to which ethics is not only considered as external limitations to economics but rather as a part of economics. But the internal approach does not necessarily have to rely on a utilitarian and neo-classical concept of economic ethics. Rather we can have a pluralistic approach to the ethical values that have an impact on economic action. Thus, ethics is to be considered as an internal aspect of economic institutions, for there is an ethical dimension to economic concepts like property, risk-reward structures, information and competition. This implies that we should have an institutional approach to economics emphasizing that institutions determine economic action.[li] The constitutive rules and principles of economic markets based on property, risk-reward structures, information and competition include certain ethical ideas which are the conditions for development of economic systems. Douglass North has for example shown how the act of promising is a condition for good contracts that in turn conditions predictions of future economic action.[lii]

When we deal with the institutional aspects of property rights, risk-reward structures, information and competitive relationships we may say that the internal ethics of the economics of fair markets is about how to organize scarce resources in economic systems in a fair way. To respect property rights is viewed as the foundation of the economic system and a part of fair competition is not to question basic property rights. Adam Smith and after him most libertarian economists have for example always been saying that property rights should be considered as the foundation of the economic order.[liii] We may say that our use and definitions of property rights in the center of corporations are not only based on considerations about self-interest, but rather on a combination between consequentialist and teleological considerations. External intervention is necessary when basic rights are not respected in economic transactions on economic markets. This is the case when we encounter widespread corruption with regard to property rights in economic systems.

Concerning contracts we can emphasize some implicit ethical values that are required to be fulfilled in economic interactions. This is evident when some transaction cost theorists have stated that governance structures to avoid opportunism as well as confidence and promise-keeping matter for economic interaction.[liv] With regard to information we may also encounter certain ethical principles within economic interactions. Correct and reliable information is a condition for trustful relations of economic action on different economic markets. It is a requirement for good contracts that they are based on reliable information. 

The principles of fair and healthy competition may indeed also be an important aspect of the ethical principles of competitive markets.[lv] Norms about monopolistic practices constitute internal limitations of economic interactions. It is a widespread belief that monopolistic action is at the limits of economic systems and possibly of economic behavior as such in liberal economic markets.

If we analyze the ethics of transaction costs economics it may be argued that a contract view of the firm is not sufficient to conceptualize the ethical dimensions of organizations. Organizations are not only universes of micro-contracts but are based on values that function as organizational goals for corporate behavior. Transaction cost economics addresses ethical problems in organizations when it discusses problems of opportunistic behavior with regard to information, agency and liability of individuals, but it cannot explain loyal and altruistic behavior in organizations. It may be true that organizations try to control organizational behavior and ensure efficiency in competition by setting up institutional infrastructures based on contracts.[lvi] But the question is if this really is sufficient to understand cases of lack of opportunistic behavior in organizations?

With Herbert Simon we can argue that transaction cost economics cannot explain why people identify with organizations and feel much more committed that what is required from the perspective of self-interest.[lvii] Authority-employee relationships and motivation cannot be understood as incomplete contracts, but rather as based on the goals and values of the organization as implicit premises for decisions. Employee motivation is therefore not only based on economic incentives but also on loyalty to the goals of the organization. Moreover, organizations should not only be understood as micro-markets of competitive contracts, but rather as instruments for coordination of human action, which facilitate action on economic markets.[lviii] In such a goal-based view, the rationality of utility based on the “economic man” cannot be the only explanation of the function of organizations on economic markets but goal-oriented and community-based behavior is a much more important aspect of organizational action. However, within new institutional theory we can perceive an orientation towards integration of different aspects of rationality when dealing with economic institutions.[lix] Therefore it may be possible to find a sort of convergence between a goal-based and a contract-based view of organizations.

From this initiative to deduce ethics out of economics we may conclude that ethics is not always external but also sometimes implicit in economic rationality. We can say that ethical aspects of economics are based on the values of the basic concepts of economic systems. We can point to organization of market structures and the most important concepts of economic markets: “Property, risk-reward relationships, information and competition”.[lx] The system of these concepts is not neutral but cannot but implies ethical values. These values are not only based on economic efficiency but include a plurality of ethical rationality reflecting individual goals, organizational values and community values. Moreover, economic organizations are not only determined by self-interested individuals acting according to utility values but the ethical values of economic organizations are more complex and they also include personal values of individual members of organizations.[lxi] However, the plurality of values also implies great tension between traditional economic values of utility and self-interest with community values based on an ethical view of the economy.

5. Economic anthropology and the foundations of rationality 

The debate about the relation of economics to ethics and politics centers on the view of economic anthropology and on the motives for action of human individuals. With welfare economics, we already were able to propose a more complex view on concepts of preferences and economic rationality.  As mentioned common criticisms of the idea self-interest of economic actors argue that human beings are not egoistic utility maximizes but belong to human communities and social cultures where concerns for the common good cannot be excluded from understanding motives for economic action.[lxii] Moreover, neoclassical presuppositions of ideal situations of economic action are conceived to be very far from the conditions of action in concrete social contexts of economic life.

Arguments for a broader ethical foundation of economic action state that economic anthropology is characterized by a tension between egoism and altruism.[lxiii] Some authors argue that wise economic action implies reciprocity and concern for other human beings.[lxiv] Therefore, self-interest is never the only motive for economic agency. In opposition to such a social view on economic action economists like Gary Becker have defended altruism as an advanced form of individual utility maximization.[lxv] Becker advances the so called “Rotten Kid Theorem” stating that people acting altruistically do so in order to improve their self-interest – like the child who behaves nicely in order to get a great reward from his or her parents.[lxvi] In this perspective strategies of cooperation and sympathy are only forms of advanced self-interest recognizing the importance of truth-telling, promise and contract keeping for future collaboration and exchange. This argument has been fully developed by Axelrod who, in his book The Evolution of Cooperation (1984), states that cooperative behavior can be founded on individual maximization of utility because in cooperative strategies in the long run will benefit individuals more than opportunistic strategies.[lxvii]

As we saw in the discussion of welfare economics fundamental preferences are not always egoistic and maximization does not always have to be based on individual profit maximization. In fact, an important development of welfare economics in the direction of corporate citizenship, business ethics and corporate social responsibility is to show that the economic subject is not exclusively to be conceived as an atomistic preference maximizer, but can be said to have altruistic preferences at the fundamental level of economic anthropology. We may say that the “economic man” should be accomplished by a “social man” or rather that individuals are characterized by a structure of double preferences where individual preferences are also related to other persons. Christian Arnsperger gives us support for this argument by considering the French anthropological tradition coming from Marcel Mauss and the concept of responsibility in the phenomenology of Emmanuel Lévinas as possible criticisms of the liberal and neoliberal restriction of economic subjects to be “atomist monads” of individualist profit maximization.[lxviii]

With this approach we use the French tradition of anthropology to illuminate the concept of economic subjectivity. With his Essai sur le don. Forme et Raison de l’échange dans les sociétés archaiques from 1924 Mauss analyzes the anthropological foundations of the concept of exchange.[lxix] The main point is that the reduction of all exchange to economic exchange does not capture the anthropological basis of exchange which really is a condition of social integration. By doing an archeological analysis of the origins of exchange Mauss can help to understand the foundations of modern social institutions. By analyzing the concept of exchange Mauss shows that the original concept of the gift is in sharp contrast with the neoclassical concept of economic exchange. In fact by looking at the triadic structure of giving-receiving and giving back (donner-recevoir-rendre) we can see how exchange is a condition of social interaction indicating exchange as a form of social integration between human beings.[lxx] This is illustrated by the phenomenon of Potlatch that was practiced by Indians in Vancouver and Alaska.[lxxi] Potlatch was a form of aggressive gift leading to a fight of giving (prestations totales de type agonistiques) between adversaries, where the winner was the one who could contribute with the largest gift. In Polynesia, exchanges of gifts were a part of important and symbolic events in society, for example religious ceremonies. In this context the gift had a religious content and to receive something from other persons was to receive parts of a symbolic substance, for example as divine mediation between giver and receiver. Today, in contrast to economic exchange, the gift still has parts of such significance. However, in the metaphysics of the gift exchange is not reduced to an economic calculation of preferences but it is linked to spiritual relations between individuals, and even when we deal with economic transactions this spiritual dimension is a part of the exchange. A gift includes an obligation both from those who receive and give the gift and in some situations this also includes the obligation to return with expression of recognition and gratitude. In the ancient mythology of India, God is defined as divine generosity of giving the world to the human beings and in the archaic Germanic societies the gift was related to intimate social relations, a symbolic and sometimes spiritual instrument of integration between different groups of society

Mauss argues that modern society still contains elements of this original concept of the gift.[lxxii] In economics and trade the interactions are often characterized by expectations of mutual satisfaction between buyer and seller and it is presupposed that the relation of exchange is based on reciprocity and recognition. Moreover, our concepts of generosity are defined as a transgression of the ordinary concepts of exchange.. According to Mauss, the modern idea of the economic subject that has emerged with the neoclassical liberal traditions may be conceived as a sort of alienation of the original concept of the gift. Although we still live by the metaphysics of the gift in modern society, we have developed an economic system where the gift has been forgotten in favor of the concept of methodological individualism of individual profit maximizers.[lxxiii] However, there are many phenomena that show the limits of this concept of social interaction, for example social security in the welfare state, corporate philanthropy, charity movements, and also gift giving for different kinds of ceremonies. Mauss is regretting that the economic concept of exchange as personal maximization is replacing the spiritual and generosity-based aspects of the gift. In neoclassical economics the maxim of mutual exchange that is based on the idea that all give as much as they received, has been replaced by individual preference maximization.

Mauss’ anthropological concept of exchange helps us to question the liberal concept of economic maximization. This economic concept of exchange must be considered in the perspective of our social life and it is limited when we want to understand all relevant aspects of human motivation. Mauss helps us to formulate a more complex concept of economic exchange linking economics to altruistic motives as well as concepts of giving and receiving, thus linking economic markets to social life. From an ethical point of view, human subjects are not only “profit maximizers”, but in their giving and receiving they are always linked to logics of social integration, which is also an important aspect of economic interaction.

The central insight of Mauss is that economic anthropology cannot solely be based on the concept of individual preference maximizer, but that economic interaction presupposes a social concern of mutual social interdependence of economic actors. Moreover, this concept of society presupposes a broader conception of the human self than the one which is proposed by neoclassical economics.  In fact we can say that the mutual relations of giving-receiving-returning is not external to the market, but rather the real truth of the market, because the market presupposes mutual dependence and mutual relations between economic actors.[lxxiv] With Christian Arnsperger we may propose a “methodological altruism” to accomplish methodological individualism of profit maximization.[lxxv] In this context the concepts of altruism of Becker and Axelrod do not take account of what altruism really is.[lxxvi] They are begging the question of altruism because they only want to count for altruism in terms of enlightened egoism. Rather, altruism is based on the essentially social character of the market involving basic conditions for the exchange relation as described by Marcel Mauss. Instead of the foundation in the monadic subject of mathematical, axiomatic economics, we have to acknowledge the relation between economic theories to the moral sciences. Economic theory cannot abstract from the morality of exchange, because exchange after all is a social event. With the focus on anthropology we have learned that it is possible to accomplish methodological individualism with a methodological altruism that also accounts for possible altruistic preferences in the economic subject and furthermore acknowledges the importance of ethical evaluation of economic preferences and of economic motives.

Emmanuel Lévinas helps to enlarge the ethical foundation for this altruistic approach to economic anthropology. Lévinas proposes a phenomenology of the intimate encounter of the other human being as the basis for our view of human motivation.[lxxvii] The encounter of the other human being is an infinite demand of responsibility and self-sacrifice. This concern for the other is the basis for social relations. The reciprocity with the other should not be defined as a relation of “alter ego”, but rather the other is someone fundamentally different from me. In the perspective of Lévinas the fundamental respect for the other as other is the foundation of ethical relations and this concern for “the other as other” precedes the relation of economic egoistic exchange. The ethical relation is more fundamental than economic relations and this ethical ideal of respect for the other as other is the foundation and condition of possibility for economic exchange.[lxxviii] Therefore, Lévinas says that ethics precedes reciprocity as mutual recognition and altruism as enlarged self-interest.

The criticism of the atomistic economic subject that is revealed by the analysis of Mauss is supported by Lévinas’ ethical anthropology, which situates economic action as secondary to the fundamental human responsibility for “the otherness of the other” as revelation of what is the innermost purpose of human action.[lxxix] This implies that economic action is embedded in larger social structures and economic rationality cannot be separated from ethical and political rationality. Christian Arnspenger suggests that Lévinas’ phenomenological description of individual subjectivity as implying a fundamental responsibility for the other shows that the logic of the gift is a possibility of individual choice that precedes “every constitution of subjectivity as purely autonomous”.[lxxx] We may say that this ethics of otherness constitutes the fundamental openness for generosity that precedes the economic account for particular preferences. Lévinas emphasizes that responsibility is the most fundamental constitution of subjectivity and it this sense we may say that ethical subjectivity is more fundamental than the economic subject of neo-classical and neo-liberal economic theory. [lxxxi]

This view on the relation between economics and ethics helps us to understand that individual rational maximization can never be fully isolated from the idea of ethical subjectivity as fundamentally responsible for other human beings. The ontology of economics and the reach of economic method based upon sheer individual maximization cannot be conceived as all-encompassing and absolute, given that economic rationality is secondary to political and ethical reciprocity. From such a point of view economic decision-making should have external restrictions in the laws of political justice and the ethical principles based on fundamental principles of human existence. Economic reason is submitted to responsible subjectivity who, when evaluating economic preferences, cannot avoid asking questions about the ethical ideas of universal moral rules, the search for justice in the political community, and considerations of community welfare.

In the perspective of the philosophy of Lévinas we may say that responsibility for the other human being conditions the legitimacy of economic action.[lxxxii] Moreover, viewed from the ideals of political community, responsibility is not only an intimate relation with the other but should be extended in time and space to society as a whole. This is the argument of the German philosophy Hans Jonas, who thinks that responsibility does not only concern present human activities but should be extended globally in time and space and include the future of humanity.[lxxxiii]

However, such an integration of ethics and politics in economic rationality is not without a price, because basic economic considerations are considered as relative to ethical principles.[lxxxiv] Concepts of efficiency, utility, production, demand, consumption, accumulations of goods, property are not considered as intrinsic values, but as only valid insofar as they do not violate basic ethical principles or contradict our moral values. Ethical and political limitations of economic action propose an ethics of responsibility as the basis for social regulation of economic action.

Conclusion

What we can learn from this analysis of economic rationality as linked to social conditions of exchange and to the responsibilities of ethical subjectivity is not that business decisions are exclusively ethical or economic in any ideal sense, but rather that it is always possible that decision-making will be dependant on a kind of “mixed rationality” including elements from both economic and ethical rationality, as well as other fields like politics and law. But in a deeper sense, we can also conceive business ethics as the foundation of decision-making in corporations, because business ethics is not only about economic means and rationality but also about the social and political goals of economic behavior. Yet how to define this political and ethical rationality as basis for economic action?

We can emphasize the fact that it follows from subjective ethical responsibility that economic rationality can never be justified without good ethical reasons. In fact this is not only supported by economic anthropology, but also within welfare economics, which relies on the concept of individual preference maximization, i.e. the same homo œconomicus of the neoclassical tradition, but does not exclude ethical evaluation of proposals for maximization. Indeed, it is a great advantage of welfare economics, somewhat in contrast to neoclassical economics, that it does not separate ethics from economic rationality but rather recognizes that theory of economic rationality should always be justified from the point of view of ethics. It is very important that economists accept this ethical constraint on economic action even when they do not agree upon what ethical reasons should be used to justify particular economic actions.

We may say that such a kind of normativity implies that we conceive the concepts of wants, utility (pleasure), competition, freedom to consume in neoclassical economics in tension with social values like needs, self-actualization, cooperation, freedom to growth, and self-realization through work as a potential good. These ideas may be considered as what is necessary in order to promote of justice as the basic structure of society. It is, in the perspective of business ethics, the aim of business institutions to be founded on a close link between ethics and economics in the sense that economic rationality is based on good and well-founded ethical reasons and arguments.

Endnotes:

[i] François-Régis Mahieu: Éthique économique, fondements anthropologiques, Bibliotheque du développement, L’Harmattan, Paris 2001.

[ii] Jean-Pierre Dupuy: Liberalisme et justice sociale, Paris, Pluriel, 1992, p. 39-40.

[iii] Amartya Sen: On Ethics and Economics, Blackwell Publishers, Massachusetts, USA, 1987.

[iv] Henri Dennis: Historie de la pensée économique, Thémis, PUF, Paris 1966, pp. 7-91.

[v] Aristotle: Politics, book 1, chap 9.

[vi] Thomas Aquinas : Somme Théologique II. Henri Dennis: Historie de la pensée économique, Thémis, PUF, Paris 1966, pp. 74-75 and p. 83.

[vii] Adam Smith: The Theory of the Moral Sentiments, (1759), Cambridge Texts in the History of Philosophy, Cambridge University Press, Cambridge 2002. Patricia Werhane: Adam Smith and his Legacy for Modern Capitalism, Oxford University Press, Oxford 1991.

[viii] Amartya Sen: On Ethics and Economics, Blackwell Publishers, Massachusetts, USA, 1987, pp. 22-23.

[ix] Jean-Pierre Dupuy: Liberalisme et justice sociale, Paris, Pluriel, 1992, p. 77.

[x] Bernard Mandeville: The fable of the bees, Pelican classics, London 1970.

[xi] Adam Smith: The Theory of the Moral Sentiments, (1759), Cambridge Texts in the History of Philosophy, Cambridge University Press, Cambridge 2002. Patricia Werhane: Adam Smith and his Legacy for Modern Capitalism, Oxford University Press, Oxford 1991. Werhane formulates the tension between benevolence and egoism in the following way “Rather in the Theory of moral sentiments Smith critizises any moral theory that derives its basis for moral judgments merely from self-interest and equally, questions any moral theory that derives these judgments solely from benevolence. Distinguishing passions from interests, Smith argues that human beings are not motivated merely by selfish passions, but that both prudence and benevolence are virtues of the self-directed and social interests, and the basic virtue is justice” (Werhane, 1991 p. 13).

[xii] Jean-Pierre Dupuy: Liberalisme et justice sociale, Paris, Pluriel, 1992, p. 84

[xiii] Amartya Sen: On Ethics and Economics, Blackwell Publishers, Massachusetts, USA, 1987, pp. 22-23.

[xiv] Jean-Pierre Dupuy: Liberalisme et justice sociale, Paris, Pluriel, 1992, p. 84.

[xv] Ibid. p. 94.

[xvi] Ibid. p. 6.

[xvii] Alfred Marshall: Principles of Economics, 8th ed. MacMillan, 1920.

[xviii] Amartya Sen: On Ethics and Economics, Blackwell Publishers, Massachusetts, USA, 1987, p.15.

[xix] Christian Knudsen: Økonomisk metodologi II, Jurist og Økonomforbundets forlag, København 1995.

[xx] F.A. Hayek: Law, legislation and liberty. A new statement of the liberal principles of justice and political economy, including Vol 1: Rules and order, Vol 2: The mirage of social justice, Vol 3: The political order of a free people, Routledge, (1983), London 1998.

[xxi] F.A. Hayek : The Road to Serfdom (1944), Routledge Paperbacks, London 1997, p. 66-69.

[xxii] Jean-Pierre Dupuy: Liberalisme et justice sociale, Paris, Pluriel, 1992, p 247.

[xxiii] F.A. Hayek: Law, legislation and liberty. A new statement of the liberal principles of justice and political economy, including Vol 1: Rules and order, Vol 2: The mirage of social justice, Vol 3: The political order of a free people, Routledge, (1983), London 1998.

[xxiv] F.A. Hayek: Law, legislation and liberty. A new statement of the liberal principles of justice and political economy, including Vol 1: Rules and order, Vol 2: The mirage of social justice, Vol 3: The political order of a free people, Routledge, (1983), London 1998. Jean-Pierre Dupy: Liberalisme et justice sociale, Paris, Pluriel, 1992, p. 284

[xxv] F.A. Hayek: Law, legislation and liberty. A new statement of the liberal principles of justice and political economy, including Vol 1: Rules and order, Vol 2: The mirage of social justice, Vol 3: The political order of a free people, Routledge, (1983), London 1998. Jean-Pierre Dupy: Liberalisme et justice sociale, Paris, Pluriel, 1992, p. 291.

[xxvi] Christian Knudsen: Økonomisk metodologi II, Jurist og Økonomforbundets forlag, København 1995, p. 66. Knudsen refers to David Kreps: A Course in Microeconomic Theory, Harvester Wheatsheaf, London and New York 1990.

[xxvii] Christian Knudsen: Økonomisk metodologi II, Jurist og Økonomforbundets forlag, København 1995, p. 88. Knudsen refers to the article about the theories of cooperative and non-cooperative game theory by Eric van Damme & J.W.: Weibull: “Equlibrium in strategic interaction: The contribution of J.C. Harsanyi, John F. Nash, and Reinhart Selten” in Scandinavian Journal of Economics, Vol. 97, pp. 15-40.

[xxviii] Christian Knudsen: Økonomisk metodologi II, Jurist og Økonomforbundets forlag, København 1995, 96.

[xxix] Michael Jensen: “A Theory of the Firm, governance, residual claims and organizational forms”, Harvard University Press, dec 2000 and The Journal of Financial Economics 1976.

[xxx] Oliver Williamson: The Economic Institutions of Capitalism, The Free Press, New York, 1989.

[xxxi] Ibid. p. 63.

[xxxii] Amartya Sen: On Ethics and Economics, Blackwell Publishers, Massachusetts, USA, 1987, pp. 19-20.

[xxxiii] Daniel M. Hausman and Michael S. MacPherson: Economic Analysis and Moral Philosophy, Cambridge University Press Cambridge 1996, Swedish Translation, Studenttliteratur, Lund 2001.

[xxxiv] Daniel M. Hausman and Michael S. MacPherson: Economic Analysis and Moral Philosophy, Cambridge University Press Cambridge 1996. Swedish Translation, Studenttliteratur, Lund 2001, p. 64.

[xxxv]Ibid., p. 66.

[xxxvi] Ibid, p. 68.

[xxxvii] Daniel M. Hausman and Michael S. MacPherson: refers to Kenneth Arrow (1974) for this point of view.

[xxxviii] Daniel M. Hausman and Michael S. MacPherson: Economic Analysis and Moral Philosophy, Cambridge University Press Cambridge 1996. Swedish Translation, Studenttliteratur, Lund 2001, p.  87.

[xxxix] See for example John Broom: Ethics out of Economics, Cambridge University Press, Cambridge 1999. Broom even thinks that ethics and politics should learn a lot from economics. However, Broom seems to work within the utilitarian tradition of welfare economics and it is not clear whether he would speak for the neoclassical view of the necessity of a market without legal and political restrictions. Broom’s views seem to impose rather strict limitations on economic markets in comparison with the radical libertarianism of Robert Nozick and also with Milton Friedman, who both argue for an ethics implicit in economic markets.

[xl] François-Régis Mahieu: Éthique économique, fondements anthropologiques, Bibliotheque du développement, L’Harmattan, Paris 2001, p. 120.

[xli] Oliver Williamson: The Economic Institutions of Capitalism, The Free Press, New York 1989, p 129.

[xlii] Michael Jensen: “A Theory of the Firm, governance, residual claims and organizational forms”, Harvard University Press, dec 2000 and The Journal of Financial Economics 1976.

[xliii] Christian Knudsen: Økonomisk metodologi II, Jurist og Økonomforbundets forlag, København 1995., p. 262.

[xliv] Diane L. Swanson: ”Business Ethics and Economics” in A Companion to Business Ethics, Blackwell Companions to Philosophy, Blackwell Publishing, Oxford 2002. (pp. 207-217), p. 210.

[xlv] Ibid. p. 211.

[xlvi] Ibid. p. 210.

[xlvii] I.M.D Little: Ethics, economics and politics. Principles of public policy, Oxford University Press, Oxford 2002.

[xlviii] In fact, there are many arguments for corporate social responsibility and corporate citizenship that rely on economic concepts of self-interests. These arguments are based on the idea of the invisible hand and strategic action of self-interest as leading to the common good. This approach argues that it is possible to use concepts from game theory in order to justify action for corporate citizenship from a strategic perspective. Accordingly, altruistic action for the common good may be justified in terms of satisfaction of egoistic preferences.

[xlix] John W. Dienhart: Business, Institutions and Ethics. A Text with Cases and Readings, Oxford, Oxford University Press, 2000, p. 145.

[l] Ibid. p. 146.

[li] See Walter W. Powell and Paul J. DiMaggio:The New Institutionalism in Organizational Analysis, The University of Chicago Press, Chicago and London 1991., p. 293ff.

[lii] John W. Dienhart: Business, Institutions and Ethics. A Text with Cases and Readings, Oxford, Oxford University Press, 2000, p. 149.

[liii] Ibid..

[liv] Oliver Williamson: The Economic Institutions of Capitalism, The Free Press, New York, 1989, p 63.

[lv] See for example Milton Friedman’s discussions of healty markets in Capitalism and Freedom, University of Chicago Press, Chicago 1962.

[lvi] John W. Dienhart: Business, Institutions and Ethics. A Text with Cases and Readings, Oxford, Oxford University Press, 2000, p. 177.

[lvii] Herbert Simon: ”Organizations and markets”. Journal of Public Administration Research and Theory 5; 3 (1995), pp. 273-293.

[lviii] John W. Dienhart: Business, Institutions and Ethics. A Text with Cases and Readings, Oxford, Oxford University Press, 2000, p. 180.

[lix] Walter W. Powell and Paul J. DiMaggio: The New Institutionalism in Organizational Analysis, The University of Chicago Press, Chicago and London 1991.

[lx] John W. Dienhart: Business, Institutions and Ethics. A Text with Cases and Readings, Oxford, Oxford University Press, 2000, p. 182.

[lxi] Ibid. p. 182

[lxii] François-Régis Mahieu: Éthique économique, fondements anthropologiques, Bibliotheque du développement, L’Harmattan, Paris 2001, p. 299.

[lxiii] Ibid. p. 152.

[lxiv] Amartya Etizioni: The Moral Dimension. Towards a New Economics, Collier Macmillan, New York 1988.

[lxv] Gary S. Becker: Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, University of Chicago Press (1964), Chicago 1993.

[lxvi] Gary S. Becker: Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, University of Chicago Press (1964), Chicago 1993. See also François-Régis Mahieu: Éthique économique, fondements anthropologiques, Bibliotheque du développement, L’Harmattan, Paris 2001.,p. 164.

[lxvii] Robert Axelrod: The Evolution of Cooperation, Basic Books, New York 1984.

[lxviii] Christian Arnsperger: “Mauss et l´éthique du don: Les enjeux d’un altruisme méthodologique” in Revue du Mauss, Éthique et économie. L’impossible (re) marriage? No. 15. La découverte/Mauss, Paris 2000. p. 99.

[lxix] Marcel Mauss: “Essai sur le don”, In Sociologie et Anthropologie, PUF, Paris 1950.

[lxx] Marcel Hénaff: Le prix de la vérité. Le don, l’argent, la philosophie, Le Seuil Paris 2002. In this book we find a very profound development of theme of the gift. The problem is whether it is possible to unite gift and exchange. Since Socrates a particular philosophical tradition has been reluctant to allowing this, arguing that a philosopher could not sell his knowledge without reducing the gift of truth to exchange and thereby making it illegitimate. However, there is also another current accepting a link between gift and exchange, which is for example expressed in the philosophy of Montesquieu, who argued that trade implied unification of nations and Max Weber who in a certain sense can be said to reply to the theme of the gift with his idea of the Protestant ethics. However, from our point of view these discussions emphasize that the economic exchange is not something isolated, but a case of general human exchange based on reciprocity and recognition. Economic exchange, therefore, cannot be isolated from general human practices and economics must indeed be treated and conceived as a social practice. Economics cannot be separated from the social exchange processes of gift and return even though money seems to neutralize the exchange relation.

[lxxi] Marcel Mauss: “Essai sur le don”, In Sociologie et Anthropologie, PUF, Paris 1950.

[lxxii] Marcel Mauss: “Essai sur le don”, In Sociologie et Anthropologie, PUF, Paris 1950.

[lxxiii] Marcel Mauss: “Essai sur le don”, In Sociologie et Anthropologie, PUF, Paris 1950.

[lxxiv] Christian Arnsperger: “Mauss et l´éthique du don: Les enjeux d’un altruisme méthodologique” in Revue du Mauss, Éthique et économie. L’impossible (re) marriage? No. 15. La découverte/Mauss, Paris 2000.

[lxxv] Christian Arnsperger: “Mauss et l´éthique du don: Les enjeux d’un altruisme méthodologique” in Revue du Mauss, Éthique et économie. L’impossible (re) marriage? No. 15. La découverte/Mauss, Paris 2000. p. 104

[lxxvi] François-Régis Mahieu: Éthique économique, fondements anthropologiques, Bibliotheque du développement, L’Harmattan, Paris 2001.,p. 164.

[lxxvii] Emmanuel Lévinas:. Totalité et infini, Essai sur l’extéorité, M. Nijhoff, La Haye, 1961. François-Régis Mahieu: Éthique économique, fondements ’anthropologique, Bibliotheque du développement, L’Harmattan, Paris 2001.,p. 159.

[lxxviii] Emmanuel Lévinas:. Totalité et infini, Essai sur l’extéorité, M. Nijhoff, La Haye, 1961.

[lxxix] Christian Arnsperger:  “Homo Oeconomicus, Social Order and the Ethics of Otherness“ in Ethical Perspectives, Vol 9.

[lxxx] Christian Arnsperger: “Mauss et l´éthique du don: Les enjeux d’un altruisme méthodologique” in Revue du Mauss, Éthique et économie. L’impossible (re) marriage? No. 15. La découverte/Mauss, Paris 2000. p. 113.

[lxxxi] The critical reader may insist that Lévinas cannot be used in such a way as to argue for the primacy of ethics over economics. Such an approach would state that the phenomenology of the other implies a negative reaction to the instrumentalism of economic exchange and an ethics of situational ethical demand on the individual that goes beyond economic exchange. I agree with that, but this is indeed also a good argument for the primacy of ethics in the reciprocal relation of social exchange between human beings. Accordingly, ethical responsibility is a primary constitutive element of human existence. See for exemple Emmanuel Lévinas: L’humanisme de l’autre homme, Paris Gallimard 1972, p. 82-83: ”Par cette susceptibilité, le sujet est responsable de sa responsabilité, incapable de s’y soustraire sans garder la trace de sa désertion. Il est responsabilité avant d’être intentionnalité. See Christian Arnsperger: “Mauss et l´éthique du don: Les enjeux d’un altruisme méthodologique” in Revue du Mauss, Éthique et économie. L’impossible (re) marriage? No. 15. La découverte/Mauss, Paris 2000. p. 114.

[lxxxii] Ibid.

[lxxxiii] Hans Jonas: Das Prinzip Verantwortung,  Insel Verlag, Frankfurt am Main 1979.

[lxxxiv]François-Régis Mahieu: Éthique économique, fondements anthropologiques, Bibliotheque du développement, L’Harmattan, Paris 2001., p. 168.