The Making of Neoclassical Economics (Routledge Revivals)

John F. Henry

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136810534
• Edition: 1
• Topic: Commerce
• Subtopic: Commerce Général

First published in 1990, this unique explanation of the rise of neoclassical economics views social change as an engine promoting change in theory. It attempts to develop a theory of the origins, consolidation and rise to dominance of the neoclassical school of thought. In so doing, it addresses the contest between the labour and utility theories of value; both are placed in historical context, and reasons are offered for the relative success of each in particular historical periods. It is argued that the eventual dominance of neoclassicism, a theory based on the social changes then taking place, resulted not from its scientific superiority but from its non-social perspective which ignores the social order upon which it depends.

CHAPTER ONE

On the origin and dissemination of ideas

In any study that attempts to examine the ideological structure of a science, it is most important to specify the locus of ideas and the mechanism through which ideas become dominant. One position on such matters is to place the individual ideologist at the center of the process. Thus, histories of ideas focus on ‘great thinkers’ who are separate from society and social forces, whose ideas result solely from a superior intelligence or, in the religious version, divine inspiration. The argument contained herein takes exactly the opposite point of view: that ideas are social products, and that individual thinkers themselves are products of society.

Moreover – and this should be an important element in the history of any science – if an idea is to be successful, it must have a social mechanism of dissemination. Any idea, no matter how potentially significant, cannot become operable unless it has an impact on that which it is about. And to have an impact, the idea must be transmitted throughout society, or at least throughout a significant part thereof. An idea that does not go beyond the brain of the ideologist is stillborn; it either dies with its creator or must wait rebirth by another at a more propitious time.

Since the social origins and the dissemination of ideas are the central focus of this work, the conflicting approaches will be examined succinctly at this point, and a general schemata will be generated within which the substance of this work will then be argued.

On the social origin of ideas

Ideas are obviously the product of human activity. Since significant ideas can be traced to individual thinkers (though not without antecedents), it seems natural to credit such individuals with advancing knowledge independent of any social forces that surround them. In other words, there are ‘great thinkers’ who arise spontaneously and independently and produce the ideas that are then transformed into social action. Such an explanation may be termed the ‘Great Man’ version of the origins of ideas.

If this argument is correct, if ideas are independent of time, place and social forces, then ideological formations are social accidents, awaiting the birth and development of specific individuals who carry within them, in some sense, significant ideas. It follows, then, that change in society (or nature) is caused by the advent of ideas: ideas are primary; social forces are of secondary importance.

This idealist position is comforting to those seeking an explanation of historical movement that is independent of social laws. If ideas and ideologists are independently created, if history is a compendium of accidents, then there is no sense to human past and, further, no predictability to human future. Theories based on the possibility of the discovery of any historical regularity or necessity can then be identified as invalid, and the conclusions drawn from them can be dismissed as political rhetoric or wishful thinking.

In contradistinction to this idealist view is posed the materialist argument: that ideas (and, therefore, ideologists) are the product of social forces, and that they mirror or reflect social reality, attempting either an explanation or an obfuscation of that reality.

People are necessarily the product of society and, thus, of social organization. Society produces the environment in which individuals are born, educated and acculturized. There is no record of an individual raised apart from society who managed to develop into a thinker (Malson, 1972).

The ability to form ideas, to acquire knowledge from others through oral and written communication, to expand upon that knowledge, and to develop new knowledge are all socially determined. People apart from society are not human except in the purely biological sense. They have no power of human communication or cognition. They thus have no ability to develop ideas that would advance an understanding of society or nature. Such people would be equivalent to a lower order of primate and would be responsible for as much thought or invention as the ape.

The above is a trivial, though necessary, point. It is trivial because it is patently true. It is necessary because it is so easily ignored by the accidentalists, who tend to see ideological formation as the work of unexplained geniuses somehow separated from society. Hence we are treated to the myth of the isolated, ivory-towered thinker. However, as noted by one of the most astute nineteenth-century thinkers, Lewis Henry Morgan,

It fortunately so happens that the events of human progress embody themselves, independently of particular men, in a material record, which is crystallized in institutions, usages and customs, and preserved in inventions and discoveries. Historians, from a sort of necessity, give to individuals great prominence in the production of events; thus placing persons, who are transient, in the place of principles, which are enduring. The work of society in its totality, by means of which all progress occurs, is ascribed far too much to individual men, and far too little to the public intelligence. It will be recognized generally that the substance of human history is bound up in the growth of ideas, which are wrought out by the people and expressed in their institutions, usages, inventions and discoveries. (Morgan, 1877, p. 302)

But society provides more than the nurturing ground for individuals. It also establishes reasonably well-defined constraints on people’s mental constructions (their ideas). Ideas supporting the notion of slavery (or attacking that notion) develop and find reception only in the context of the establishment of a slave society. Primitive societies could not envision international security markets. Authorities investigating the actual formation of ideas (rather than merely assuming their existence and creation) have demonstrated a distinct relationship between the form of social organization, its level of economic development, and the ideas produced within the context of the society (Bernal, 1971; Childe, 1964; Farrington, 1953; Lilley, 1965; Thomson, 1965, 1974).

This position does not mean that the individual thinker is of no account. It does, however, place the individual in a secondary positon. In this context, great thinkers are those who are most attuned to social developments, who have a level of training sufficient to analyze such developments, and who have enough prescience to place such developments into an ideological structure that itself aids in molding those developments.

It follows, then that individuals can influence the fate of society by virtue of definite traits of their nature. Their influence is sometimes very considerable but the possibility of its being exercised and its extent are determined by society’s organization and the alignment of its forces. An individual’s character is a ‘factor’ in social development only where, when, and to the extent that social relations permit it to be.

It has long been noted that great talents appear always and everywhere, whenever and wherever there exist social conditions favourable for their development. That means that any talent that actually manifests itself i.e., any talent that becomes a social force, is a product of social relations. But if that is so, one can understand why people of talent can . . . alter only the individual features of events, not their overall trend; they themselves exist only thanks to that trend; but for the latter, they would have never crossed the threshold between the potential and the actual. (Plekhanov, [1898] 1976b, pp. 304, 310)

The social dissemination of ideas

For ideas to be viable, to have significance, they obviously must be transmitted as well as developed. And it is the social process of dissemination that creates the greatest force in the power of ideas.

It is conceivable that the same general idea or system of ideas will occur to different individuals at about the same time or in different periods. However, only at certain times does the idea bear with it a concomitant ability to realize itself in some sort of social acceptance. Consider the development of the ideas surrounding the Copernican system.

On the Revolution of the Celestial Orbs was published in 1543 (the year of Copernicus’ death) and was judiciously dedicated to the Pope. But acceptance of the argument had to wait several centuries. Part of the reason for this delay was the normal process of science; a theory is propounded, then tested, evaluated and modified, and then accepted or rejected by those with sufficient expertise to judge it. Thus, the work of Tycho, Kepler, Galileo and others formed a compelling body of evidence that validated, in the main, the Copernican idea.

But scientific validation was not the only reason why acceptance of the theory was delayed. A more important issue was that the Copernican theory ran counter to prevailing ideas surrounding the nature of the universe and, thus, of man. The officials of the Roman Church had taught that the earth was the center of the universe and the Church was the center of the earth. The Pope, as the head of the Church, was directly responsible to and received authority from God. Hence the political power and economic welfare of the Church rested upon Divine authority. By removing the earth as the center of the universe, Copernicus also caused the rest of the argument – resting not on scientific truth but on mere assertion – to collapse.

Once the implications of the theory were understood by church officials, a great struggle ensued, the Church attempting to prevent the idea from being disseminated, and the Copernicans attempting to gain ideological dominance. For the Copernicans, however, the main instruments of communication were closed because the Church was the principle ideological force of the period and controlled the main organs of communication. In reserve, should all else fail, the Church had a powerful persuader – the Inquisition.

The contest was not directly over truth, for representatives of both sides recognized where truth lay.¹ Rather, one side was attempting to suppress truth, the other to allow truth to ‘will out.’ The former, behaving in characteristic fashion, cajoled, bribed, lied, threatened, tortured and murdered; the latter persisted. Obviously, the Copernicans eventually won, but not entirely by dint of their own efforts. To win, they had to have the ability to communicate their ideas and find a vehicle to allow those ideas to become socially acceptable. The vehicle that permitted both communication and acceptability was social revolution.

The basic, and so most often ignored, aspect of the Church is that it was and is a propertied institution. Given the origins and history of Christianity, the Church was a feudal institution that was dependent, therefore, on the maintenance of feudalism for its economic well-being (Dunham, 1964; Robertson, 1962). During the period in question, feudal Europe was wracked by peasant revolt and by social revolution led by the class eventually called capitalist. The attempt to maintain the feudal structure fell largely to the chief feudal ideologists – shurch officials. Hence the authority of the Church was most significant: to the extent that people accepted the position of the church fathers on corporeal matters, they would turn aside from their attacks on the feudal order; to the extent that church authority was undermined by seditious ideas, the population would carry on its struggle.²

The Copernican theory, because it undermined the authority of prevailing (pro-feudal) ideas, undermined the authority of the dominant feudal ideological institution. And, to the extent that it undermined that authority, it subverted the whole feudal system.³

Therefore, the forces that promoted social change and progress also promoted the ideas of Copernicus, while those that desired social stability – yhat is, retrogression – nsed their influence to retard dissemination of those ideas. And, because the latter forces actually maintained their dominance in most of Europe until the nineteenth century, they succeeded in preventing full dissemination of a correct, scientific theory.⁴

This illustration raises a fundamental point. No society, regardless of the form of its organization, has ever permitted freedom of ideas. All societies have imposed limitations on the extent to which ideas could be free. True, it is impossible to impose absolute restrictions upon what any individual may think. But this is unimportant. What is significant is that any society can and does impose restrictions on the flow of ideas by exercising social control over the instruments of communication. And the flow of information necessarily influences the ideas of any individual.

Consider two representative societies. Slave society is the form of social organization with the least amount of freedom. The majority of the population’s actions are so proscribed that there can be little room for disagreement with such an assertion. In fact, the word ‘slave’ itself is used to describe a condition of unfreedom.

In slave society, ideas are controlled by the slave-holding class. Because it has an economic interest in promoting ideas conducive to the development and maintenance of slavery, and the same economic interest in prohibiting the anti-slavery impulse, it will promote and prohibit ideas at the same time. It can accomplish these ends because it controls the instruments through which ideas are disseminated. The newspapers, churches, educational institutions – sny vehicle through which ideas can be transmitted – dre controlled by the dominant class. If those instruments do not accept the control of slavers, they are closed.

The ideas of the ruling class are in every epoch the ruling ideas: i.e. the class which is the ruling material force of society is at the same time its ruling intellectual force. (Marx and Engels, [1896] 1976, p. 67)

Slave-owners do not, of course, control all instruments of communication. For example, they cannot totally control what transpires at an illicit meeting in the slaves’ quarters. They can, however, influence the outcome of the discussion by placing agents in such meetings to put forward the slave-owners’ position (in modified form, to be sure) and later to report what took place.

The other representative society used to illustrate the argument is the freest possible egalitarian society, in which every member has exactly the same general rights and responsibilities in the decision-making process. Here, one segment of society does not rule over another, but all members have equal voices in framing authority. While there are no extant societies that typify this form of social organization, primitive tribal society can be held up as an historical model (Briffault, 1927; Childe, 1964; Morgan, 1877; Thomson, 1965).

In an egalitarian society, any idea may be brought forward for discussion. But not every idea will be allowed free and equal reign. One general set of ideas will be expressly forbidden – nhat of deceit intended to advantage some at the expense of others. Any individual or group of individuals who puts forward ideas designed to advantage only some of society is necessarily putting forward ideas that are to the detriment of others. This violates the principal of equality, and, assuming that the idea is recognized as detrimental, its holders will be quashed. Thus, even the most egalitarian society does not hold all ideas in equal favor.

In sum, then, it is argued that ideas are themselves social products; that if ideas are to be popularly disseminated, they must have some appeal to those bodies controlling the mechanisms of transmission. Since the means of communication are economic units and are controlled by those who have economic interests in mind, then the ideas they advance must be favorably disposed toward those economic interests. And subversive ideas – shose not favorably disposed toward prevailing authority – yust seek other than the dominant channels of communication for their dissemination; so they will be in the minority.

Science and fraud

Ideas must necessarily be one of two general types: they must be correct, or incorrect. Correct ideas are those that accurately reflect or correspond to the world of nature or of society, thus assisting in the creation of knowledge of those worlds. These ideas can be tested in practice by subjecting them to conventional scientific tests of proof.

Correct ideas are not absolutely correct for all historical time. Such a position is theoretically absurd. Absolute correctness connotes absolute knowledge. In other words, that which is studied is known in all its characteristics and in its relationship with all other characteristics in the universe. The implication, then, is that the world has ceased changing, that motion itself has ended. For to know everything means that nothing about nature or society can change; there can be no new information. Since this cannot be the case, all correct knowledge is relative, or imperfect. It awaits further elaboration, refinement, modification and revision.

Correct knowledge may or may not be widely disseminated, depending on the relationship of that knowledge to the dominant social class. If that knowledge is conducive to the dominant class’s interests, it will b...

Table of contents

• Front Cover
• The Making of Neoclassical Economics
• Title Page
• Copyright
• Title Page
• Copyright
• Contents
• Foreword
• Preface
• 1 On the origin and dissemination of ideas
• 2 Capitalism, science and fraud
• 3 The theory of value from the heroic age to the industrial revolution
• 4 The interregnum: from Smith to Ricardo
• 5 The dissolution of the labor theory of value and the rise to dominance of utility
• 6 The consolidation of 1870-1900 and the rise of monopoly capital
• 7 Conclusion
• References
• Index