Contemporary Theories of Political Economy - Essay Example

Contemporary Theories for Political Economy Question In the era posterior to Marxist and the liberals, the debate has moved on to the new territory concerns the appropriate institutional framework, within the parameters of which a market may operate. Essences and markets Aristotle uses both the general essence/accident distinction and the more particular teleological account of essences to describe the market as a social institution (Marx & Fowkes, 347-574). To characterise those properties of the market which it possesses in virtue of the kind of economic institution it is, as against accidental features of this or that market, Aristotle starts by considering the features of the market that distinguish it from non-market economic institutions, specifically the household. He proceeds thus in virtue of his taxonomic approach to the characterisation of an essence which he inherits from his biology: a sentence characterising an essence of an entity of a particular kind standard has the form of a noun phrase indicating a genus modified by an adjectival phrase that expresses the differentiae, the properties that are peculiar to that kind. (Fukuyama, 82-113) The chrematistic art of acquisition, because it involves acquisition of objects not for their "proper and peculiar" properties, is, for Aristotle, "unnatural" for humans, and hence to be held in check. It needs to be held in check, however, because it is the normal developmental outcome of exchange. The essential nature of market exchange is revealed for Aristotle in its developed "unnatural" form (Frank, 213-268). In this final state the dispositional properties of markets are exhibited. The most significant of these for Aristotle is the particular moral character it tends to produce: Aristotle's political theory is by and large concerned with the tendency of different social and political institutions to issue in different virtues and vices. The market, where its development is unchecked, tends to issue not in the virtues constitutive of a flourishing human life, but in the vice of pleonexia, the disposition to want more than is proper. (Marx & Fowkes, 347-574) Distinctions and influences Aristotle's essentialism is a complex of claims that are logically independent of one another. One might accept his basic distinction between the essential and accidental properties of an object without accepting the further teleological specification of essences in terms of normal patterns of development. Indeed it is worth noting that the example of essentialist descriptions of copper I used in section A does not conform to the Aristotelian teleological model. Likewise one might accept essentialism in its basic form without accepting his particular taxonomic approach to the specification of essences. Again, it is possible to adopt an essentialist position in either its basic form or its teleological elaboration for entities in the natural world, but to reject it for the social world. (Fukuyama, 82-113) One might accept essentialism about social institutions generally and markets in particular, but reject the teleological elaboration of essentialism that Aristotle offers. The options open to the "essentialist" are much more varied and complex than recent anti-essentialist caricatures of the position allow (Frank, 213-268). The picture of Aristotle's influence on subsequent essentialist thought about social institutions in general and the market in particular is similarly complex. Both Aristotle's essentialism and his discussion of the market have had a large influence on philosophical and economic thought. Aristotelian essentialism, as far as description of the natural world is concerned, has had a long-standing influence and indeed has recently undergone something of a revival. (Fukuyama, 82-113) In the social realm it is possible to find theorists, most notably Hegel and Marx, who self-consciously defend Aristotle's essentialism in its full teleological form. Aristotle's discussion of the market has also exercised a large influence on subsequent economic thought. In some theorists both philosophical and economic influences converge. The most notable example of such a thinker is Marx, whose work exhibits the influence of Aristotle's basic distinction between essence and accident, his teleological specification of essences and his more particular discussion of the market and its specific mode of acquisition. However, Aristotle's influence in economics has often been independent of any explicit or self-conscious appeal to his essentialist premises. Moreover, where essentialist reconstructions of later economics are possible, they often require the rejection of Aristotle's teleological specification of essences. (Hayek, 107-114) Consider for example the work of Karl Polanyi whose work owes an explicit debt to Aristotle's discussion of the household and market. However, Polanyi employs Aristotle's account of modes of acquisition without self-conscious reference to his essentialist presuppositions. Moreover, Polanyi's arguments are clearly inconsistent with Aristotle's specific teleological account of the development of market exchange: a central thesis of The Great Transformation is that there is no natural developmental sequence in the development of the modem market economy. While, Polanyi's work is best interpreted in essentialist terms, it is in terms of Aristotle's basic essentialism without its teleological turn. Aristotelian essentialism in a non-teleological form also provides the best philosophical foundation of much in the Austrian tradition of economics. (Polanyi, 54-260) However, some of the theorists in that tradition, most notably Hayek, have a complex relation to the Aristotelian tradition. Hayek is strongly opposed to the tradition of criticism of the market represented by Aristotle and his socialist successors such as Marx and Polanyi (Marx & Fowkes, 347-574). I will bracket any critical discussion of the claims made by Aristotle and Marx that the essential nature of the market is revealed in a developmental sequence. I do so because they are not relevant to the question of whether or not the traditional debates of political philosophy about the market rest on a mistake. While the debates may assume essentialism about the market, they do not normally depend on any assumption about the normal developmental sequence of the market. There may exist constraints that 'inhibit' the exercise of those powers. (Hayek, 107-114) Consider Polanyi's use of the concept of chrematistic acquisition to specify the nature of market economies. It is only in modem conditions, in which the market is "disembodied," that the potentialities of a market economy based on the principle of the unrestrained acquisition of wealth without limit are fully exhibited. In saying that the market is disembodied in modem capitalism Polanyi is not claiming that markets here exist without any institutional context. He recognizes that it was the product of and still relies upon a particular political and legal framework When Polanyi refers to the disembodying of the market he is referring to the disappearance of legal and customary regulatory constraints on the working of the market. (Polanyi, 54-260) The relation between markets and surrounding institutional contexts was one of tension. It was this tension to which Aristotle was responding in making his distinction between household and money-making. Reference to those potentialities appears in Polanyi's explanation of the collapse of the Speenhamland Law which prevented a free market in labour (Frank, 213-268). The co-existence of non-market relations alongside market relations between agents might also entail that the market does not exhibit its essential properties. That essentialism about the market is compatible with acceptance of the existence of variation in markets in different institutional conditions also undermines a criticism of essentialism, popular in postmodern literature. It may be that markets do not share any essential characteristics, and hence that no essentialist theorist will get it right. Question# 2 The modern market models that dominated economic theory have focused on the market as a more formal model of economic order examining major perspectives within economic theory. Such models emphasise markets as an arrangement whereby buyers and sellers are able to come into contact with each other to trade commodities and resources for money. While buyers and sellers have competing self-interests, a whole series of transactions establishes an equilibrium which aligns these competing interests. In turn, this leads to a harmonisation of conflicting interests through market mechanisms, competition and information. However, the assumptions of the modern economic and social models concerning market order and individual self-interests have been subject to contest by theorists of classical tradition. Criticisms have revolved around the extent to which a stable social order might be found on market exchange and on the rational actions of private individuals alone. Without any doubt, Karl Marx and Max Weber have been two of the major social theorists of the classical sociology who challenged the modern markets by arguing against the very formalism of modern economic approaches. Both Marx's and Weber's theories have presented a well-established critique of modern markets while supporting an ethical or social notion of individualism. While Marx treats markets as a sphere of irrationality, Weber's critique of markets is based on one narrow form of rationality, the instrumental rationality which, according to Weber, dominated all aspects of modern social and economic life. (Frank, 213-268) Nevertheless, both Marx and Weber agree that the individual who emerged from the modern processes and methods of organisation is in some sense not a true individual. However, such a comparison between the particular critiques of markets is a very general one. More systematic and analytical similarities as well as differences between Marx's and Weber's critiques of markets can be explored and analysed through an extensive insight into their ideologies and their critiques of modern markets (Weber, Gerth and Mills, 28-124). Hence, while the scope of the present work is particularly to compare and contrast Marx's and Weber's critiques of markets, it is first appropriate to begin by separately reviewing the main lines of their theories. Such an examination will contribute to successfully identifying and investigating the key differences as well as similarities between Marx's and Weber's critiques of markets. (Marx & Fowkes, 680-774) Modern market models focus on the relation between 'goods' and 'needs'. According to this relation, producers produce goods that are intended to satisfy consumers' needs. By dividing the value of a commodity into 'use value' and 'exchange value', Marx explains that there is no such a relation under capitalism. This is because producers focus only on the exchange value of the products they produce by producing those goods that can be sold in the market rather than directly be used to satisfy needs. According to Marx, this is a clear intension of capitalists to maximise exchange value and their profits rather than to meet needs. Therefore, in contrast to the liberal social and economic models, Marx focuses on external forces that determine and drive markets (Marx & Fowkes, 680-774). For Marx, only the consideration of these forces can contribute to explaining and defining markets and market behaviours. Having analysed the forces and relations of production and their impact upon social relations, Marx doubts the harmony of conflicting interests and treats markets motion of money, which subsumed individuality. (Frank, 213-268). While Marx focuses on a number of external forces that determine markets and emphasises the failure of modern markets to produce a rational social order, Weber focuses on the predomination of a particular form of rationality, the instrumental rationality. From the one hand, Weber emphasises the success of modern markets in achieving a greater efficiency and productivity through an impersonal and unsentimental market exchange. By spreading their logics and practises into all aspects of social and economic life, the processes of rationalisation and bureaucratisation have led to an ever increased level of economic efficiency, calculability and control. (Marx & Fowkes, 680-774) However, Weber is also concerned with the negative consequences of modern methods of the organisation of social and economic life. For Weber, the "rationalised modernity" has reduced freedom of individuals and led them to a tragic position in market societies (Weber, Gerth and Mills, 28-124). This is the basis of Weber's critiques of modern markets. In contrast to Marx, Weber is not greatly concerned with the economic consequences of modern markets. Rather, Weber is mostly based on the consequences of modern markets on the individual and how their very success tragically impacts upon individuals in society. For Weber, instrumental rationality is the best means of a given end. It is that form of rationality which provides high levels of efficiency, calculability and control. Therefore, from an economic viewpoint, Weber is strongly of the belief that rationalised modernity works. Therefore, Weber, like Marx, places a great emphasis on the subordination of labour to the production process over which it is left with little or no control. In contrast to Marxist view, Weber explains that the scope of the subordination of workers is to achieve the objectives of the rationalisation process and increase economic efficiency rather than to achieve the profit-making scopes (Weber, Gerth and Mills, 28-124). Despite the fact that Marxist theory has long been a matter of considerable dispute in terms of its morality and ethical issues involved, Marx similarly seems to stress the lack of ethical issues in modern markets which could promote and protect the fundamental rights of the working class such as safe at work, equality and justice. (Marx & Fowkes, 680-774) To continue, Weber recognises that the modern processes of rationalisation and bureaucratisation are efficient processes in that they lead to an increased level of economic efficiency. This argument apparently opposes to Marx's view that modern markets are inefficient in that they lead to irrational results and to systematic contradictions between social interests (Weber, Gerth and Mills, 28-124). It can be argued that both Marx and Weber developed a well-established critique of markets. In the present work, an attempt has been made to identify issues of their theories from which differences and similarities can be explored. While Marx's critique of markets is based on the assumption that the individual is the actual 'victim' of modern markets as a result of capitalism's failure to produce markets where social order is produced by the rational actions of private individuals, Weber's notion is that individuals becomes 'victim' in markets as a consequence of the very success of rationalised processes that dominated over all other in modern world. This argument is the most reflective to the analysis of this work. References Frank, Thomas. The Wrecking Crew: How Conservatives Ruined Government, Enriched Themselves, and Beggared the Nation. Holt Paperbacks; Reprint edition, 2009, pp: 213-268. Fukuyama, Francis. The End of History and the Last Man. Free Press, 2006, pp: 82-113. Hayek, Friedrich. 2006. Law, Legislation and Liberty, Vol. 3. London: Routledge and Kegan Paul, pp: 107-114 Marx, Karl & Ben Fowkes (trans.). Capital: Volume 1: A Critique of Political Economy. Penguin Classics, 1992, pp: 347-574; 680-774. Polanyi, Karl. The Great Transformation. Boston, MA: Beacon Press, 2003, p. 54-260. Weber, Max; Gerth, H.H. and C. Wright Mills. From Max Weber: Essays in Sociology. Oxford University Press Galaxy imprint, 1958, pp: 28-124. Bibliography Barma, Naazneen & Steven Vogel. A Political Economy Reader: Markets as Institutions. Routledge; New edition, 2007, pp: 94-142. Frank, Thomas. The Wrecking Crew: How Conservatives Ruined Government, Enriched Themselves, and Beggared the Nation. Holt Paperbacks; Reprint edition, 2009, pp: 213-268. Friedman, Milton. Capitalism and Freedom: Fortieth Anniversary Edition. University Of Chicago Press, 2002, pp: 68-177. Fukuyama, Francis. The End of History and the Last Man. Free Press, 2006, pp: 82-113. Hayek, Friedrich. 2006. Law, Legislation and Liberty, Vol. 3. London: Routledge and Kegan Paul, pp: 107-114 Lukcs, Georg & Rodney Livingstone. History and Class Consciousness: Studies in Marxist Dialectics. The MIT Press; MIT Press edition, 1972, pp: 50-110. Marx, Karl & Ben Fowkes (trans.). Capital: Volume 1: A Critique of Political Economy. Penguin Classics, 1992, pp: 347-574; 680-774. Polanyi, Karl. The Great Transformation. Boston, MA: Beacon Press, 2003, p. 54-260. Schmitt, Carl; George Schwab (Translator). The Concept of the Political: Expanded Edition. University Of Chicago Press; Expanded edition, 2007, pp: 39-80. Weber, Max; Gerth, H.H. and C. Wright Mills. From Max Weber: Essays in Sociology. Oxford University Press Galaxy imprint, 1958, pp: 28-124. Read More