Beyond Western Economics

Remembering Other Economic Cultures

Trent Schroyer

• Publisher: Routledge
• Year: 2009
• ISBN:
  9781135970420
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This book combines intellectual history with contemporary events to offer a critique of mainstream economic thought and its neoliberal policy incarnation in global capitalism. The critique operates both theoretically, at the level of metaphysics and the philosophy of science, and concretely, in case studies of globalization and world events.

Trent Schroyer provides a moral and cultural interpretation of modernity and scientism, highlighting their political and economic consequences – but the book's main purpose is not to criticize. The author moves beyond this to offer alternative "economic cultures, " again combining abstract theoretical analysis with concrete case studies of alternative economic formations from local self-sufficiency movements to cooperatives and other anti-capitalist institutional experiments.

These case studies exhibit an impressive range of variation, from first world to third world, from reformist to utopian transformative. Finally, Schroyer links the project to the global justice movement that opposes corporate globalization and eventually links participatory economics and democratic politics to a new image of science as "participatory social learning."

Part I
Critical histories of western economics

1 Origins of idealization of the self-regulating market

The emergence of the economic culture of commercial market society

How did the idea of market self-regulation as the source of societal wealth, which creates a new economic culture, emerge in English history? Up to the end of the eighteenth century the civic culture of classical republicanism had been the dominant political philosophy in England. This changed in the first three decades of the nineteenth century when the victory of the economic liberals ushered in the classical liberal economic world view which has returned as neo-liberalism of the 1980s. We will pick up that story in Chapter 2.

Historian J. G. A. Pocock argues that the ideology of the market system emerged within a debate between the civic humanists’ defense of ‘virtue’ and the moneyed interests’ justification of the civilizing mission of empire.¹ Pocock claims that the debate between virtue and empire has continued since the seventeenth century; while the constellations change, the central issue of dialogue continues. It is clear that American empire building has been surging despite denials from Donald Rumsfeld that the U. S. never acts as an imperial power.

But many strong dissenters charge the loss of American integrity and virtue. For example, Andrew Bacevich’s The Limits of Power: The End of American Exceptionalism² is a sharp indictment of the corruption of virtue in America. U. S. leadership has refused to face the problem of oil dependency which has led to an imperial presidency who conducts wars to secure the ‘American way of life’. The American people are deeply enmeshed in this corruption, as is the Congress which has given up defining the common good. Empire versus virtue goes on.

Pocock’s researches into the history of classical republicanism from Aristotle to seventeenth-century England provide access to civic humanism that remains an important source for political discourse, especially in the United States.³ Critical constitutional theory seeks to restore the civic humanist dimension of U. S. political history and re-image the socio-cultural conditions under which constitutional self-government is possible. This classical republican renewal restores a vocabulary that has always been central to western normative discourse – such as ‘virtue’, ‘the public’ and ‘common good’, and finally ‘corruption’. For example Richard Fallow’s commentary in the Harvard Law Review asserts, behind republican revivals, “lies a set of assumptions about human nature, the nature of the good for individuals and society and the means by which the good can be identified”.⁴ These classical norms of political civic culture have been consistently denied, or coopted, in order to justify expansions of free market capitalism. Nonetheless, civic culture remains relevant for the critique of the corruption of today’s neo-liberal empire.

‘Corruption’ means the destruction of the preconditions that make political participation possible. In civic humanism it indicated an undermining of civic virtue resulting from the loss of freehold land, the victory of moveable property (capital), and the moral-ethical consequences of commercial specialization and division of labor. This critique of commercial capitalism was developed as a civic humanist critique of corruption as early as 1698. Republican civic humanism could reconcile ‘liberty’ with equality only insofar as equals had nothing to fear from political action or opinion. In the English context, this meant independent freehold of land and the right to defend this with arms. The republican paradigm of civic virtue resisted the growth of trade and credit as the emergence of a momentous corruption that would spread fear for security from one level of society to all. They also believed that the ‘moneyed interest’, whose increasing power rested on the new ‘moveable’ forms of property, also corrupted government to act in its exclusive interest. As a reaction to the dynamic of commercial capitalism, the country Whig party, opposed to the Tories, or the ‘Court Party’, ironically and defensively radicalized a political culture that normatively established a notion of the common good.

The historical watershed for corruption was the Glorious Revolution of 1688, when transition to William and Mary also meant the foundation of a major war effort that required an explosive development of the credit and banking system of the realm. This escalation of corruption was irreversible, since land increasingly became valued as ‘moveable property’ and the extension of public credit and financing military-economic expansions through a natural debt expanded, from 1697–1715.

The actors, issues and forms of discourse of that era cannot be adequately understood in the concepts provided by Hobbes and Locke, or Marx, but have to be related to the evolution of the Whig ideology through several phases that cannot be simply represented as the ‘Whig interpretation of history’. A culturally sensitive account of the emergence of the market ideology can be gained by following the ways in which civic humanism, oriented to limiting economic empire, was discredited and ‘scientifically’ displaced by historical theories of evolution and political economy. In this way it is possible to see how the market system comes into place geared to the stabilization of authority and stated in juristic terms, because that justified cutting back expectations of political participations that could limit empire.

The watershed of the Scottish Enlightenment

Historically, the systematic evasion of civic humanism and emergence of ‘juridical humanism’ of Adam Smith occurred as the Scottish Enlightenment’s response to the union of Scotland and England, in 1707, into the United Kingdom. Scotland lost its sovereignty and, in the terms of civic humanism, its civic virtue too. But as it was re-colonized, a new view emerged in the Scottish civic public that justified it ‘scientifically’. Other development paths were discussed – such as Andrew Fletcher, who had advocated a federalism more consistent with Scottish autonomy and the independence of its militia.⁵ But oppositions to Fletcher, after the uniting of the United Kingdom, expressed the interest in joining economic progress that had been increasingly rapid since the financial revolution. These rebuttals of Fletcher had to overcome claims of the loss of civic virtue for Scotland, and at the same time advocating commercial civil society, rather than political civil society. This required a new principle for defining ‘virtue’. The principle of ‘politeness’ had been innovated as part of the latitudinarian tolerance of opinion or conduct campaign during the Restoration to replace prophetic with sociable religiosity, and political enthusiasm with a morality of manners and taste.⁶

The Scottish historical school of David Hume, Adam Smith, William Robertson, Adam Ferguson and John Millar thus provided the theory of history which explained how classical republicanism was superceded in the history of civilization through a progressive movement from barbaric to feudal to polite commercial society. But this effort followed the lead of the cultural principle of politeness which began with the seventeenth-century politics of culture diffused by Shaftsbury and Addison, who had attempted to transform the prophetic Christian into a polite and civil subject.

After the financial revolution, the ‘old and true Whiggism’ was transformed into a ‘polite Whiggism’ that used the aura of civility and enlightenment to justify the consolidation of a Whig oligarchy, circa 1714–19. Achieved through the Septennial Act of 1716, the polite Whig aristocracy effectively shrank local influence in the borough electorates and achieved ‘political stability’. Thus the United Kingdom’s turn to commercial civil society was part of the fusion of an oligarchic ideology where claims to ‘enlightenment’ culminated a century-long politics of culture oriented to suppressing the passions of the Puritan and the radical republican in the name of peace and manners.

This was the turning point in the emergence of modern economic culture; the evolution of political theory and political economics has since constituted a foundational discourse that swings from constitutionalism, to utilitarianism, to contractarianism. In all of these the legalistic emphasis has been used to justify capitalism and has always involved the strategic goal of wealth creation and the institutional arrangements that Smith calls the system of ‘natural liberty’.

Idealizations of self-preservation versus dedication

William Hennis argues that the great internal conflict of ‘bourgeois society’ is between the concepts of self-preservation and ‘dedication’ as a religious identity. Although the term ‘bourgeois society’ is not entirely descriptive of the United Kingdom in the eighteenth century, the opposition Hennis identifies is central to the transitions of skeptical and scientific Whiggism in the Scottish Enlightenment. The normative ends of human society were changed from political participation to self-preservation and the meaning of virtue changed from the pursuit of internal goods of traditional practices to the appropriate ordering of our self-interested passions. Classical religious discourse on how to reconcile privatization of God’s dominion with sustaining the needs of the poor and property-less found a new resolution in the Scottish historical identification of national wealth as the means of reconciliation of individual and collective rationality.

‘Juridical Humanism’,⁷ synthesized from sixteenth-century Spanish and Dutch origins, originated in international law and the problems that derived from the administration, possession and distribution of ‘things’. This new beginning of ‘natural law’, which comes from Hugo Grotius’ juridical construction of justice, was limited to rights of appropriation.⁸ This was to be achieved by the means of respecting the rights of others; but here ‘rights’ were essentially proprietary rights of holding what is not yet owned by another.

In the ‘original state of nature’ there were ‘commons’ only in the sense that no one owned them – as yet. In this way exclusive right is the basis of property and the basis of civil society – which law and government must preserve. This denies the practice of English common law, or relies upon a proclaimed ideology of restoring it, while actually transforming it into national law.⁹ The Scottish Enlightenment forms a new vision of human civilization as constituted by individual proprietary rights and promotes a view of the social order as securing peace by arranging the institutions in a ways that secure individual rights.

A second step was the addition of a skeptical twist; namely, that human nature is not restrained by reason but actually constituted by affections and passions. In this formulation, moral philosophy replaces traditional virtues with a ‘universal’ theory of human nature which would explain the grounds of morality and justice. The new orientation is stated by Hutcheson who saw moral philosophy as “the art of regulating the whole of life” and who defined ‘moral sense’ as that inbuilt practical disposition to virtue; a universal determination to benevolence within human nature itself. This is a naturalistic formulation of the ‘moral sense’ and it provided the basis for a new universalistic account of morality.

David Hume’s subsequent analysis of humanity as creatures of instincts and passions ends by seeing moral standards as devices to meet human needs. In Hume’s ‘new science of man’ the hope of realizing the civic humanist notion of virtue as the fulfillment of an innate power of the human soul is dismissed and an abandonment of all teleological traditions as political community is accomplished. Hume’s essay ‘Of Commerce’ asserts that sovereigns must take mankind as they find them and not attempt to infuse them with ‘a passion for the public good’.

Idealization of civilizing mission of wealth creating market society

Hume’s analysis of the human passions defined the interest in gain and commerce as one which could override the love of pleasure. With gain in their eye men will acquire a passion for the increase of their fortune – hence commerce and industry must have freedom to prosper in order to facilitate the virtues of frugality and “make the love of gain prevail over the love of pleasure”. By institutionally narrowing the drives of individuals and by curing one vice by another, i.e. the self-interested love of gain, a commercial society, and indeed a world of such societies linked by free trade, could secure peace and order. In such a ‘world-society’ the major public goal would be the providing of military force for self-defense and the administration and enforcement of laws that protect private property and economic transactions. Therefore government does not exist to realize a higher form of self, or a positive community, but only for the instrumental goal of securing what Adam Smith called the ‘natural system of liberty’.

Commerce was, for Adam Smith, a substitute for virtue because it liberates man’s natural instinct of self-preservation. Such liberation is also a liberation from the reign of traditional and political virtue. For Adam Smith virtue was the practice of ‘propriety’ or the judging of what is appropriate in the empathic understanding of another’s passions in a particular situation. Smith’s own moral propriety was in judging that it would be appropriate for the inferior ranks of people to be instilled with thrift and good management through the societal operations of the law of supply and demand.

Subjected to the price mechanism of the free market, people would control their desire to consume grain and would thus learn the propriety of prudence. In such terms Smith justified the elimination of the Corn Laws and therefore the traditional commons norm of ‘food security’.¹⁰ Although Smith admits, as Mandeville claimed, that men pursue riches in order to live better than their fellow men, i.e. for vanity, and commercial society is prone to be corrupted by such a vice, it is nonetheless better to liberate the instinct for self-preservation because this also increases the opportunity for political freedom and greater national wealth.

What is new in the emergence of juridical humanism from Grotius to Smith was an instrumental theory of law and government where the rules of justice aim primarily to secure the material interests of households and the nation. A law-governed society does not aim to enable persons to realize higher forms of civic virtue but to provide security of property, and to facilitate its pursuit. In this sense government and civil society is rooted in ‘necessity’, ‘natural inclination’, and ‘habit’, not in classical civic humanism’s idealism of the fulfillment of human autonomy through political participation and discourse.

This ‘necessity’ is intrinsic in the nature of human nature, which unlike animals who find their needs meet in nature, which is always finding that no object is sufficient and that there is ‘always need for improvement’. This restless need to improve upon the materials essential to meet human needs results in the new arts and divisions of labor. In the age of merchants it is therefore a necessity to maintain the motivation to keep what results from economic improvement, otherwise there is no reason for economic improvement after the ‘crude’ needs of agrarian life are met. It is also necessary to dismantle the apprenticeship model of public learning, because, as mentioned earlier, it was inefficient and analogous to caste structures in India, where a free labor market is necessary.¹¹ This action is a model case of the removal of a cultural institution in the interest of competitive commerce.

Internationally the logic of economic improvement also operates through these institutional arrangements to polish crude and barbarous dispositions by overcoming the resistances of the various pre-market passions through the disciplines of commerce, which cultivates the virtues of industriousness, frugality, punctuality and probity. Men are attached to each other in commercial civil society through mutual utility and are transformed into becoming supple, bending and serviceable. As a 1704 book on commerce states:

Sensing the necessity to be wise and honest in order to succeed (men) flee vice, or at least his demeanor exhibits decency and seriousness so as not to arouse any adverse judgment … he would not dare make a spectacle of himself for fear of damaging his credit standing.¹²

Formation of national and international markets was the mechanism that brought about a new social order where the unequal distribution of materials and talents fused together in one great law-like circulation of wealth. This national–international system of commerce was justified as rooted in economic necessity and assimilated both the ideas of divine providence and the notion of causal laws of physiology in an analogy of the circulation of blood and wealth – according to François Quesnay, a French Physiocratic economist and physician. Internal to this economic ‘law of nations’ the ‘particles’, i.e. economic individuals, operated optimally by fulfilling their passions for gain and luxury and were also simultaneously constrained to civility. Defining the nature of human nature as a desire for more creates a world of scarcity since both human beings and nations are constrained by the necessities of limited resources and talents as well as the causal operations of the circulation of wealth.

The original theory of the capitalist revolution emerged as the discovery of the means to transcend the necessity of scarcity; through the mechanism of work and wealth creation both scarcity and the civilizing mission of humanity is fulfilled. This meta-narrative of modernity assimilates the Christian fall into the curse of labor and the Newtonian idea of law-like order of Nature into a myth of economic scarcity and the saving mission of commercial civilization. But its actual consequences are far broader and now require rethinking. There is another way to see this grounding of modernity in the need to transcend scarcity which we will turn to in Chapter 2.¹³

Evolutionary empiricism: economic culture as spontaneous coordination

Skip to the twentieth century when theorists were trying ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Introduction: western certitudes about freedom and economics
• Part I Critical histories of western economics
• Part II Critical traditionalist cultural visions
• Part III Alternative economies
• Appendix: The medieval origins of instrumental reason
• Notes
• Bibliography
• Internet resources