Four decades ago I set out to conceive the social reality of the economy, so as to shed light on the fate of freedom in society and state. My task was to critique and build upon the pioneering, but inadequate efforts of Hegel and Marx to uncover the social dynamic of market relations. Both had recognized that the economy did not consist in a natural metabolism between human beings and their biosphere, in a playing field of psychologically determined wants, or in a sphere of technique, where an agent acts unilaterally upon things. Instead, each saw that the economy was a historically emergent independent social institution. It formed the basic association of a civil society, intermediate between household and state, in which individuals interacted in terms of conventional needs that could only be satisfied by providing others with what they had independently chosen to obtain from others in turn.
Hegel had established that normative validity could only consist in self-determination. Any attempt to conceive what was justified as determined by something other than itself could not be sustained. So long as what was justified was held to owe its justification to some other privileged factor, that foundation of justification could claim validity on its own terms only by being the source of its own justification. The foundation of validity is then compelled to ground itself, eliminating its own defining difference from what it justifies. The distinction between what has and what confers validity ends up being undermined by the very foundation of justification once that privileged factor is made to be consistent with itself. Validity turns out to reside in what is self-determined, which means that truth and right consist in the autonomy of reason and conduct. 1
Hegel further understood that self-determined conduct could not be wielded by an agent in isolation from others. Alone, one can only exercise the given faculty of choice, whose form of willing is not the product, but the enabling condition of all one’s voluntary actions. Since that faculty is operative in each and every choice, it is formal in character, leaving the content of the options among which it decides something externally given. In these respects, the single choosing will exercises a volition that does not determine the form of its own willing, nor what choices it can make. To be self-determined, Hegel recognized, individuals must will in relation to one another, since only in conventions of interaction can individuals have an agency that is determined in and through their own conduct. This is the case in every exercise of rights, insofar as individuals therein wield an agency whose universal prerogative can be engaged in only by participating in the reciprocal interaction where individuals will so as to facilitate the same sort of willing by their counterparts. So, Hegel saw, individuals determine themselves as owners by embodying their wills in different external factors that they mutually recognize to be the respective exclusive domains of their right as owners. Similarly, individuals determine themselves as self-ruling citizens by jointly participating in institutions of self-government that consist in nothing but the political self-determinations of their members. The economy, Hegel realized, was another institution of right, in which market agents exercise the universal entitlement to satisfy self-selected particular interests in reciprocity with others. Participants in the economy thereby engage in the basic freedom of civil society, whose distinctively social self-determination revolves around its members pursuing self-determined particular ends that can only be achieved by enabling others to do the same.
Although Hegel had attempted to conceive how the economy could consist in an institution of social freedom, his account was undeveloped at best. In particular, Hegel failed to determine the role of capital in the market and the implications of the relation of capital and labor. Moreover, he allowed pre-modern feudal estate relations to intrude into his economic conception. Instead of delineating class divisions based upon forms of earning specific to market freedom, Hegel inserted the bonds of a peasantry and landed gentry, whose groupings were based on birthright that simultaneously defined its members’ kinship, occupation, and relation to power. When Hegel proceeded to consider the social interest groups that arise from market activity, he conceived them as corporations, advancing the privileges of feudal guilds rather than economic interests specific to civil society. These oppressive conventions spilled over into Hegel’s account of the family and the state. Instead of developing the family as a codetermined joint private domain, Hegel subjected the household to traditional hierarchies based on natural difference, limiting marriage to a heterosexual union where the husband was the master of the home, representing it in society and state. Similarly, instead of consistently determining free political association as an institution of self-government, Hegel made the head of state a hereditary monarch and turned the legislature into an estate assembly, retaining feudal privilege and subverting the demarcation between civil society and state.
Marx, by contrast, attempted to conceive the economy as the basis of civil society by focusing upon the dynamic of capital accumulation and the capital-labor relation, excluding all remnants of feudal, pre-modern formations. In so doing, Marx aimed to carry through a critique of political economy that would eliminate the imposition of natural relations upon market activity such as Smith and Ricardo committed. Instead, Marx aimed to determine economic relations in strictly social terms. Although Marx sought to free his economic conception of Smith’s appeals to natural proclivities to truck and barter 2 and Ricardo’s appeal to the natural fertility of the soil as a basis of wealth accumulation, 3 Marx’s conception of capital remained hobbled by three abiding confusions.
First, Marx’s critique of political economy remained incomplete owing above all to his retention of a labor theory of value. Although Marx seeks to conceive how economic relations are determined by the interactions of commodity owners and, more specifically, of individual capitals with one another and their other consumers and employees, his labor theory of value orders the market according to the technical relations that operate within the immediate labor process, irrespective of the realization of profit through the sale of what is produced and the dynamics of competition. This reduction of social to technical determination extends to Marx’s treatment of the circulation process of capital, where he privileges the stage of production capital over the stages of money and commodity capital. It finally undermines Marx’s conception of the system of individual capitals. Marx’s so-called price-value transformation and appeal to an average rate of profit end up rendering the determination of price and profit through competition an epiphenomenon, adding nothing essential to the underlying sway of the labor theory of value.
Second, Marx fails to conceive capital in its full universality. Due in no small part to his retention of the labor theory of value, Marx tends to identify capital with private enterprise employing wage labors, ignoring the other forms that capital can take. This limits Marx’s ability to address the full challenge to economic justice that capital presents.
Third, Marx never coherently tackles the universality of the economic relations he conceives. On the one hand, he recognizes that the disengaged economy in which capital pursues its accumulation has a universality that makes it susceptible to conceptualization. Further, his argument unfolds largely as an immanent conceptual development, first addressing what is universal to capital, then considering the particular phases of capital in its life cycle, and finally addressing the individuality of capital in the process of competition. Instead of modeling empirical observations, Marx follows out how the determinations of economic interaction develop themselves in constituting the system of capitals, starting from the most elementary, minimal interaction that all subsequent relations presuppose and incorporate. On the other hand, Marx regards capital as a particular historical economic formation, at times suggesting that his development of the concept of capital is an empirical, descriptive investigation of a purely contingent social reality. This historical particularization of the capital economy is connected to Marx’s equivocal evaluation of its normativity. Although he acknowledges that commodity relations operate in accord with juridical right, he suggests that the workings of capital impose an unequal domination subverting economic freedom. What Marx never fully considers is whether this impairment of economic right is an irremediable failing that deprives capital of normative validity, or whether it represents market dynamics that can be remedied by the interventions of social interest groups (such as trade unions and consumer organizations) and by public regulation securing the economic, as well as household and political opportunity of all. If the latter remedies are possible, then capital could retain universality and normativity as the driving principle of an economy properly subject to civil and political oversight.
In face of the respective limitations of Hegel’s and Marx’s attempts to conceive the social reality of economic relations, I sought nearly forty years ago to expose their failings and then rework and supplement their arguments so as to fulfill what was legitimate in their parallel investigations. I made my way through a rethinking of what Marx addressed in the first volume of Capital and the corresponding sections of the Grundrisse, presenting the outcome of my critical reconstruction of the concept of capital in general in a work entitled, The Social Determination of Production: The Critique of Hegel’s System of Needs and Marx’ Concept of Capital. 4 The following year I completed a sequel, redoing the concept of the circulation of capital, which Marx addresses in the second volume of Capital and associated passages in the Grundrisse. In both installments my focus was upon developing the social determination of economic relations, removing the residues of the natural and technical reductions of political economy that still plagued Marx’s mature writings.
At this juncture, however, I began working on a broader inquiry that called into question any immediate continuation of my social determination of the economy. My new task was to legitimate the entire project of overcoming the appeal to foundations as sources of justification, to show how thought could develop autonomously, and to outline the institutions of self-determination in their totality. This would involve validating the radical agendas of Hegel’s Science of Logic and Philosophy of Right, and sketching out how the self-determined family, civil society, and state should be conceived, liberated from the pre-modern trappings with which Hegel had marred his accounts of those three spheres of ethical community. This preliminary work culminated in Reason and Justice. 5
At the same time, I published The Just Economy, 6 a work that attempted to detail what economy civil society should have and what private and public interventions should be made upon that economy to uphold the economic and non-economic rights of all individuals. This work was motivated by a crucial insight that I had ignored in tackling the social determination of economic relations. What I now recognized was the basic truth that any a priori theory of conduct and institutions was prescriptive rather than descriptive in character. Conventions are inherently contingent in so far as they consist in the coordinated voluntary activities of individuals. For this reason, what conventions are or have been can only be known by empirical observation. Philosophy’s pure thinking therefore cannot provide any descriptive account of conventional practices. Insofar, however, as philosophy can develop autonomous reason, it can conceive how normativity consists in self-determination and proceed to think what conventions ought to be. This prescriptive, normative conception may have descriptive power when history has happened to generate institutions that are in accord with right. Philosophy, however, cannot provide any descriptive account of what must happen in history. Instead, philosophy can offer a prescriptive, normative history of what would have to happen in history in order for the institutions of right to come into being or fall apart. That normative history presupposes two conceptions that philosophy can provide: (1) an account of the institutions of right, which constitute the telos of the genesis of normative conventions, and (2) an account of the natural and psychological enabling conditions of free agency, which provide the starting point for the normative history of right. All the great philosophers have acknowledged the limitation of philosophy to prescriptive, rather than descriptive conceptions of conventions. Instead of conceiving the family, society, and the state in general, philosophers worthy of the name have directed their efforts at conceiving the just family, the just society, and the just state, and on that basis, they have considered how those normative conventions c...