Homo economicus
"Capitalism is what humans do when they are left alone": In other words, when they are alienated from a meaningful context, of customs and traditions.
The statecraft which constructed the free market in England turned to its purposes the effects of a centuries-long development. In the course of this historical movement, market forces had come to be a dominant force in social life.
Market exchange there had always been, and in England a market economy had existed for several hundred years; but it was at this juncture in history that the truly free market came into being, thereby creating a market society.
Karl Polanyi notes that, ‘Ultimately … the control of the economic system by the market is of overwhelming consequence to the whole organisation of society; it means no less than the running of society as an adjunct to the market. Instead of economy being embedded in social relations, social relations are embedded in the economic system.’
[John Gray]
False Dawn, p.11-12
As some economists have recognised, the pursuit of economic efficiency without regard to social costs is itself unreasonable and in effect ranks the demands of the economy over the needs of society.
That is precisely what drives competition in a global free market. The neglect of social costs which is a professional deformation of economists, has become an imperative of the entire system.
[…] the economic argument for unregulated global free trade involves a wild abstraction from social realities. It is true that restraints on global free trade will not enhance productivity; but maximal productivity achieved at the cost of social desolation and human misery is an anomalous and dangerous social ideal.
[John Gray]
False Dawn, p.83
The spread of new technologies throughout the world is not working to advance human freedom. Instead it has resulted in the emancipation of market forces from social and political control.
By allowing that freedom to world markets we ensure that the age of globalisation will be remembered as another turn in the history of servitude.
Jospeh Schumpeter understood capitalism better than any other twentieth century economist. He saw that it did not work to preserve the cohesion of society. Left to itself it could well destroy liberal civilisation.
That is why he accepted that capitalism must be tamed. Government intervention was needed to reconcile the dynamism of capitalism with social stability.
[John Gray]
False Dawn, p.208, 210
The laissez-faire policies which produced the Great Transformation in nineteenth-century England were based on the theory that market freedoms are natural and political restraints on markets are artificial.
The truth is that free markets are creatures of state power, and persist only so long as the state is able to prevent human needs for security and the control of economic risk from finding political expression.
[…] The parliamentarians who passed Factory Acts in the 1860s and 1870s were not reconstructing society or the economy according to a plan. They were responding to problems of working life - danger, squalor, inefficiencies - as they become aware of them. Laissez-faire withered away as the unintended consequence of a multitude of such uncoordinated responses.
[…] The market is not, as New Right thinkers have imagined or claimed, a gift of social evolution. It is an end-product of social engineering and unyielding political will. It was feasible in nineteenth-century England only because, and for so long as, functioning democratic institutions were lacking.
[John Gray]
False Dawn, p17
In a capitalist world, violent debates about truth—whether they concern questions of religion and virtue or questions about the nature of humanity— interfere with the productive conduct of commerce. It is therefore best for such questions to be eliminated or obscured.
“Capitalism,” concludes Nobel laureate Milton Friedman, “is simply what humans do when they are left alone.”
[Peter Thiel]
‘The Straussian Moment’
Paine's writings were in no special sense aimed at the working people, as distinct from farmers, tradesmen and professional men. His was a doctrine suited to agitation among "members unlimited"; but he did not challenge the property rights of the rich nor the doctrines of laissez faire.
[…] they were aimed at the great landed aristocracy, where the hereditary principle involved in the custom of primogeniture gave him offence. In terms of political democracy he wished to level all inherited distinctions and privileges; but he gave no countenance to economic levelling.
In political society every man must have equal rights as a citizen: in economic society he must naturally remain employer or employed, and the State should not interfere with the capital of the one or the wages of the other.
The aristocracy were the main target; their property might be threatened - even as far as Land Nationalisation or Henry George's Single Tax - and their rents regarded as a feudal exaction dating from "a French bastard" and his "armed banditti"; but - however hard trade unionists might fight against their employers - industrial capital was assumed to be the fruit of enterprise and beyond reach of political intrusion.
[E.P. Thompson]
The Making of the English Working Class, p.104-5
[…] the final years of the 18th century saw a last desperate effort by the people to reimpose the older moral economy as against the economy of the free market.
The classic exploitative relationship of the Industrial Revolution is depersonalised, in the sense that no lingering obligation of mutuality - of paternalism or deference, or of the interests of ‘the Trade’ - are admitted.
There is no whisper of the ‘just’ price, or of a wage justified in relation to social or moral sanctions, as opposed to the operation of free market forces.
Antagonism is accepted as intrinsic to the relations of production. Managerial or supervisory functions demand the repression of all attributes except those which further the expropriation of the maximum surplus value from labour. This is the political economy which Marx anatomised in Das Kapital. The worker has become an "instrument", or an entry among other items of cost.
[…] in the overstocked outwork industries, where there was always a sufficiency of unorganised "hands" competing for employment, these considerations did not operate. Here, as old customs were eroded, and old paternalism was set aside, the exploitive relationship emerged supreme.
[E.P. Thompson]
The Making of the English Working Class, p.73, 222-3
[…] what was ‘perfectly proper’ in terms of capitalist property-relations involved, none the less, a rupture of the traditional integument of village custom and of right: and the social violence of enclosure consisted precisely in the drastic, total imposition upon the village of capitalist property definitions.
Copyhold and even vaguer customary family tenancies (which carried common rights) might prove to be invalid at law although they were endorsed by the collective memory of the community.
Enclosure, indeed, was the culmination of a long secular process by which men’s customary relations to the agrarian means of production were undermined. It was of profound social consequence because it illuminates, both backwards and forwards, the destruction of the traditional elements in English peasant society.
[…] one finds a dense cluster of claims and usages, which stretch from the common to the market-place and which, taken together, made up the economic and cultural universe of the rural poor.
[…] But whereas it fitted the conditions of the Industrial Revolution like a glove, in agriculture it contested (at best) with older paternalist traditions (the squire's duty to his labourers) and with the tradition of earnings based on need (the older customs of differentials according to age, marital status, children, etc., which were perpetuated under the Speenhamland system of poor relief) […]
The doctrine that labour discovers its own "natural" price, according to the laws of supply and demand, had long been ousting the notion of the "just" wage.
[…] the perpetuation of Speenhamland and "rounds man" systems, in all their variety, was ensured by the demand of the larger farmers - in an industry which has exceptional requirements for occasional or casual labour - for a permanent cheap labour reserve.
[E.P. Thompson]
The Making of the English Working Class, p.238-9, 244
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American Modernity
Americans believe their ideas are universal - the supremacy of the individual and free, unfettered expression. But they are not - never were.
[Lee Kuan Yew]
Any attempt to impose one’s own will or values upon others or to unify the world under a certain model of ‘civilisation’ will definitely fail … No one economic system is good for all countries. Each must follow its own path, as China has.
[Qiao She (Chinese Politician)]
The Enlightenment idea of a universal civilisation is nowhere stranger than in the United States, where it is identified with the universal acceptance of western - that is to say, American - values and institutions.
The idea that the United States is a universal model has long been a feature of American civilisation. During the eighties, the Right was able to co-opt this idea of a national mission in the service of free market ideology. Today the worldwide reach of American corporate power and the ideal of a universal civilisation have become indistinguishable in American public discourse.
Market utopianism has succeeded in appropriating the American faith that it is a unique country, the model for a universal civilisation which all societies are fated to emulate.
According to the ‘Washington consensus’ [the] manifold economic cultures and systems that the world has always contained will be redundant. They will be merged into a single universal free market […] The ultimate explanation of the power of the free market cannot be found in any economic theory. It is in the recurring utopianism of western civilisation […] A global free market is the Enlightenment project of a universal civilisation, sponsored by the world’s last great Enlightenment regime […] That is what explains its popularity - especially in the United States.
Most European countries have been partly shaped by Enlightenment thinking, but all are now post-Enlightenment cultures […] Only in the United States is the Enlightenment project of a global civilisation still a living political faith.
[John Gray]
False Dawn, p.2,100-1, 104, 216, 234
All of the world’s empires - such as the Roman, Chinese, Ottoman, Romanov, British and Hapsburg empires - encompassed a copious diversity of cultures.
Each had a dominant culture, and at times some had universalist goals; but none of them ever consistently attempted to convert their subjects to a single way of life or set of beliefs.
[John Gray]
False Dawn, p.127
The contemporary American faith that it is a universal nation implies that all humans are born American, and become anything else by accident - or error. According to this faith American values are, or will soon be, shared by all humankind.
Of course such messianic fancies are commonplace. In the nineteenth century the claim to be a universal nation was made by France, Russia and England. Now, even more than in the past, it is a perilous conceit.
[…] Singapore rejected the universality of western values. It spurned America’s intervention and the doctrines of human rights that the United States was propagating throughout East Asia. It affirmed its own values against the liberal model of human rights and the economic culture of market individualism that the United States sought to implant throughout the world.
It pointed to its achievements as a post-liberal city-state - stable, cohesive, highly educated and fast-growing - as proof that its model of modernisation and development was superior to anything ‘the West’ had to offer.
[…] Implicitly, and in more recent times explicitly, Japan’s policy-makers rejected the view that modernisation means convergence on the same western institutions and values […] they made clear their ‘rejection of the so-called convergence hypothesis, which states that there is a universal logic to industrialism and that the social relationships found in the First Nations to industrialise (individualism, a free labour market, and so on) must inevitably develop elsewhere.’
In their dealings with their employees and the rest of society Japanese market institutions rely on networks of trust rather than upon a culture of contract.
Each version of capitalism articulates the particular culture in which it remains embedded. This is true of the free market, which expresses local American values of individualism.
The deep differences between Asia’s capitalisms and those in western countries […] reflect differences not only in the family structures but also in the religious life of the cultures in which these diverse capitalisms are rooted. The greatest sociologist of capitalism, Max Weber, was right to link the development of capitalism in north-western Europe with Protestantism.
In our time, capitalism in post-communist countries whose religious traditions are Orthodox will be unlike that in any ‘western’, Protestant or Catholic, country: neither the institutions of secular civil society, nor the limited state of such western countries, has developed in any Orthdox culture.
Both the supporters and the critics of capitalism have fastened on individualism as one of its central features. But the connections between capitalism and individualism are neither necessary not universal: they are historical accidents.
The early theorists of capitalism - Adam Smith, Adam Ferguson, Karl Marx, Max Weber and John Stuart Mill - mistook them for universal laws because the evidence on which they based their theories was for the most part limited to a few western countries.
To accept that countries can achieve modernity without revering the folkways of individualism, bowing to the cult of human rights or sharing the Enlightenment superstition of progress towards a world civilisation, is to admit that America’s civil religion has been falsified.
For most Americans such a perception is intolerable. Instead, evidence of the superior economic growth, savings rates, educational standards and family stability of countries that have repudiated the American model will be repressed, denied and resisted indefatigably. To admit this evidence would be to confront the social costs of the American free market.
The discovery that America’s path is a singularity that in no sense plots the course of universal history in the modern world will be a catalyst for large cultural changes. Its effect must be to strip the United States of its self-image as the paradigm of modernity.
The United States has built the illusions and superstitions of the Enlightenment into its view of itself. In other times this might matter less. Today it threatens to render intractable the most difficult task of the age - that of contriving terms of peaceful and productive coexistence among peoples and regimes that will always be different.
By seeking to impose a single economic civilisation on all of humankind America’s support for the Washington consensus risks turning manageable differences between states into intractable conflicts.
[John Gray]
False Dawn, p.131-2, 127, 167, 169-70, 191-2, 205
[…] like many other late modern social movements [feminism and multiculturalism] are - in their most radical and sectarian manifestations - peculiarly American phenomena. If such radical social movements do not belong to ‘American civilisation,’ nothing does.
[John Gray]
False Dawn, p.127
The American intervention in Bosnia was prompted by the belief that intractable political and military conflict can be resolved by the imposition of a cleverly contrived constitution.
It expressed the Dayton illusion: that a short-lived American intervention can extend to other regimes and cultures American values and procedures - a legalist culture of rights and a model of negotiation between states and communities that derives from the practice of corporate law - whose authority is strictly local.
[John Gray]
False Dawn, p.128
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Mobility
Fixed - Mobile
Regulated - Free
Professional associations, local authorities, mutual societies and stable families were impediments to the mobility and individualism that are required by unfettered markets.
They limit the power of markets over people. In a late modern context re-engineering the free market cannot avoid weakening or destroying such intermediary structures, and such was their fate in Britain.
It is odd that there are still those who find the association of free markets with social disorder anomalous. Even if it could itself be rendered stable the free market is bound to be destructive of other institutions through which social cohesion is preserved.
[John Gray]
False Dawn, p.36
Even for those whose incomes have risen personal economic risk has increased perceptibly.
Most Americans dread a mid-life economic dislocation from which - they suspect - they may never recover. Few think now in terms of a lifelong vocation. Many expect, not without reason, that their incomes may fall in future.
These are not circumstances which nurture a culture of contentment.
[John Gray]
False Dawn, p.111
Like social democracy, protectionism belongs to a world that cannot be revived.
Sovereign states will continue to shelter industries they regard as strategically vital; but the classical policies of trade protection, as applied across entire economies, are unworkable or counter-productive.
When companies can split up their operations and locate them practically anywhere in the world, services can be contracted out to remote countries throughout the use of information technologies, financial assets are traded in cyberspace, and protectionist policies are a dead end.
[John Gray]
False Dawn, p.204
[…] it is only in a closed economy that egalitarian principles can be enforced. In open economies they will be rendered unworkable by the freedom of capital - including ‘human capital’ - to migrate.
[…] The classic solution to the problems of financing the provision of public goods is mutually agreed coercion […] This classic solution breaks down when taxation is not enforceable on mobile capital and corporations. If sources of revenue - capital, enterprises and people - are free to migrate to low-tax regimes, mutually agreed coercion does not work as a means of paying for public goods.
[John Gray]
False Dawn, p.89
Related posts:
The Enlightenment Project
Mono - Poly
Rational - Non-rational
Both Marxism-Leninism and free-market economic rationalism adopt a Promethean attitude to nature and exhibit scant sympathy for the casualties of economic progress. Both are variants of the Enlightenment project of supplanting the historic diversity of human cultures with a single, universal civilisation.
A global free market is that Enlightenment project in its latest - perhaps last - form.
[…] Each was convinced that human progress must have a single civilisation as its goal. Each denied that a modern economy can come in many varieties. Each was ready to impose its single vision on the world. Each has run aground on vital human needs.
[John Gray]
False Dawn, p.215, 235
It’s a process of abstracting value - from complex value to abstract value - and then extracting and accumulating it. Capitalism does that, but socialism and communism have other versions of doing [- they] were really only subsets of this kind of resource concentration system.
That’s the core, that’s the ring of power that has to be broken: abstraction of value, and specifically a reductive abstraction; extraction, so you remove the content form its context; and accumulation.
[Daniel Schmachtenberger]
'46: Daniel Schmachtenberger - Phase Shifting Humanity', The Future Thinkers Podcast
Both socialism and capitalism are products of the European Enlightenment and are thus modernizing and anti-traditional forces. In contrast, distributism seeks to subordinate economic activity to human life as a whole, to our spiritual life, our intellectual life, our family life.
[Thomas Storck]
'Capitalism and Distributism: two systems at war', Beyond Capitalism & Socialism, p. 75
But it is the image of world-history as it is conceived in the Faustian style.
It begins to be true and consistent with the beginning of the Western Culture and ceases with its ceasing; and Socialism in the highest sense is logically the crown of it, the form of its conclusive state that has been implicit in it from Gothic onwards.
[Oswald Spengler]
The Decline of the West, Vol. 1, p.363
Our commitment to a radical reconstruction is directly relevant here because it insists there can be no dealings not only with every variety of Marxist and socialist ideology, but likewise with what in general can be called the hallucination, or the demonic possession by the economy.
We are dealing here with the idea that in both the individual and collective life, the economic factor is the important, real, and decisive one; that the concentration of every value and interest upon the field of economics and production is not the unprecedented aberration of modern Western man, but on the contrary something normal; not something that is, possibly, an ugly necessity, but rather something that should be desired and exalted.
Both capitalism and Marxism are trapped in this closed and dark circle. We need to break this circle wide open.
[Julius Evola]
‘Orientations’, VI
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