The Madness of Capitalist Reason
The demand that Reason take rational social form.
Marx, Capital and the Madness of Economic Reason review – a devastating indictment of how we live today.
Renowned critic of capitalism David Harvey explores a growing awareness that the free market can’t give people want they really want and need.
‘One third of children in the United States, still the richest country in the world according to David Harvey, live in poverty. They often, he writes, inhabit “toxic environments, suffer from hunger and lead poisoning even as they are denied access to elementary social services and educational opportunities”. This is the “madness of economic reason”.
‘Harvey has long been a critic of capitalism’s inhumanity. In his 2014 book Seventeen Contradictions and the End of Capitalism, he yearningly imagined that the system is under threat as never before … Global warming, habitat and species destruction, water scarcity and environmental despoliation suggested to him that it was in danger. So too did the fact that it was proving harder to find profitable investment opportunities.
Most important, though, in heralding capitalism’s demise is a contradiction he elaborates on in this book: the phenomenon of new alienation. Marx set out in his account of alienation (the labourer who creates value is separated or alienated from both what she makes and the surplus value created by her, which is appropriated by the capitalist). These days, it’s not just the have-nots who are revolting, but the haves, at least in countries such as Brazil and Turkey where the urban, educated middle classes reject the regimes from which they have materially benefited. What they yearn for, Harvey suggests, is not being bought off with material goods, not the compensatory consumerism that “limits and imprisons rather than liberates the horizons of personal fulfilment” but dignity.’
David Harvey: Marx, Capital and the Madness of Economic Reason
‘In Marx’s time, political economy was a far more open terrain of debate than it is now. Since then, a supposedly scientific, highly mathematised and data driven field of study called economics has achieved the status of an orthodoxy, a closed body of supposedly rational knowledge – a true science – to which no one else is admitted except on state and corporate business. It is now supplemented by a growing belief in the powers of computer capacity (doubling every two years) to construct, dissect, and analyse enormous data sets on almost everything. For some influential analysts, sponsored by the big corporations, this supposedly opens the way to a techno-utopia of rational management (e.g. of smart cities) where artificial intelligence rules. This fantasy rests on the assumption that if something cannot be measured and condensed into data points then it is either irrelevant or does not exist. Make no mistake, large data sets can be extremely useful but they do not exhaust the terrain of what needs to be known. They do not help solve problems of alienation or of deteriorating social relations. Marx’s prescient commentaries on capital’s laws of motions and their internal contradictions, its fundamental and underlying irrationalities, turn out to be far more incisive and penetrating than the one-dimensional macroeconomic theories of contemporary economics that were found so wanting when confronted with the crash of 2007-8 and its long drawn out aftermath. Marx’s analysis along with his distinctive method of enquiry and his mode of theorising are invaluable for our intellectual struggles to understand the capitalism of our times. His insights deserve to be taken up and studied critically with all due seriousness. So what, then, are we to make of Marx’s concept of capital and of its purported laws of motion? How might this help us understand our current predicaments? These are the questions I shall explore here.’ xiii-xiv
Ch 1 The Visualisation of Capital as Value in Motion Ch 2 Capital the Book Ch 3 Money as the Representation of Value Ch 4 Anti-Value, The Theory of Devaluation Ch 5 Prices without Values Ch 6 The Question of Technology Ch 7 The Space and Time of Value Ch 8 The Production of Value Regimes Ch 9 The Madness of Economic Reason
https://profilebooks.com/marx-capital-and-the-madness-of-economic-reason.html
The labour theory of value and internal critique and contradiction as against standard economic reason based on price and marginalism. Money can not only represents value, it can betray value, with representation coming to falsify that which it is supposed to represent. How the monetary system comes to betray that which it is supposed to represent. In abolishing the labour theory of value, the neo-classicals lost the possibility of internal critique of the contradictory dynamics of the capital system.
We've been long warned about the 'spirit' of capitalism as a denial of natural qualities.
Marx points to the mean, life denying morality of capitalism:
'Its true ideal is the ascetic but usurious miser and the ascetic but productive slave. Its moral ideal is the worker who takes part of his wages to the savings bank... Its principal thesis is the renunciation of life and of human needs. The less you eat, drink, buy books, go to the theatre or to balls, or to the public house, and the less you think, love, theorize, sing, paint, fence, etc. the more you will be able to save and the greater will become your treasure which neither moth nor rust will corrupt - your capital. The less you are, the less you express your life, the greater is your alienated life and the greater is the saving of your alienated being. Everything which the capitalist takes from you in the way of life and humanity, he restores to you in the form of money and wealth.'
Marx, Economic and Philosophical Manuscripts in Early Writings 1975:361/2
Here is Max Weber:
"In fact, the summum bonum of this ethic, the earning of more and more money, combined with the strict avoidance of all spontaneous enjoyment of life, is above all completely devoid of any eudaemonistic, not to say hedonistic, admixture. It is thought of so purely as an end in itself, that from the point of view of the happiness of, or utility to, the single individual, it appears entirely transcendental and entirely irrational. Man is dominated by the making of money, by acquisition as the ultimate purpose of his life. Economic acquisition is no longer subordinated to man as the means for the satisfaction of his material needs. This reversal of what we should call the natural relationship, so irrational from a naive point of view, is evidently as definitely a leading principle of capitalism as it is foreign to all peoples not under capitalistic influence."
Weber proceeds to draw an analogy with religion:
"At the same time it expresses a type of feeling which is closely connected with certain religious ideas. If we thus ask, why should "money be made out of men", Benjamin Franklin himself, although he was a colourless deist, answers in his autobiography with a quotation from the Bible, which his strict Calvinistic father drummed into him again and again in his youth: "Seest thou a man diligent in his business? He shall stand before kings" (Prov. xxii. 29). The earning of money within the modern economic order is, so long as it is done legally, the result and the expression of virtue and proficiency in a calling; and this virtue and proficiency are, as it is now not difficult to see, the real Alpha and Omega of Franklin's ethic, as expressed in the passages we have quoted, as well as in all his works without exception."
Max Weber, The Protestant Ethic and the Spirit of Capitalism 1985: 53
Christian Socialist R.H. Tawney is no less scathing of capitalism, this time drawing on religious inspiration for his searing indictment:
"Circumstances alter from age to age, and the practical interpretation of moral principles must alter with them. Few who consider dispassionately the facts of social history will be disposed to deny that the exploitation of the weak by the powerful, organized for purposes of economic gain, buttressed by imposing systems of law, and screened by decorous draperies of virtuous sentiment and resounding rhetoric, has been a permanent feature in the life of most communities that the world has yet seen. But the quality in modern societies, which is most sharply opposed to the teaching ascribed to the Founder of the Christian Faith, lies deeper than the exceptional failures and abnormal follies against which criticism is most commonly directed. It consists in the assumption, accepted by most reformers with hardly less naivete than by the defenders of the established order, that the attainment of material riches is the supreme object of human endeavour and the final criterion of human success. Such a philosophy, plausible, militant, and not indisposed, when hard pressed, to silence criticism by persecution, may triumph or may decline. What is certain is that it is the negation of any system of thought or morals which can, except by a metaphor, be described as Christian. Compromise is as impossible between the Church of Christ and the idolatry of wealth, which is the practical religion of capitalist societies, as it was between the Church and the State idolatry of the Roman Empire.
'Modern capitalism', writes Mr Keynes, 'is absolutely irreligious, without internal union, without much public spirit, often, though not always, a mere congeries of possessors and pursuers.' It is that whole system of appetites and values, with its deification of the life of snatching to hoard, and hoarding to snatch, which now, in the hour of its triumph, while the plaudits of the crowd still ring in the ears of the gladiators and the laurels are still unfaded on their brows, seems sometimes to leave a taste as of ashes on the lips of a civilization which has brought to the conquest of its material environment resources unknown in earlier ages, but which has not yet learned to master itself. It was against that system, while still in its supple and insinuating youth, before success had caused it to throw aside the mask of innocence, and while its true nature was unknown even to itself, that the saints and sages of earlier ages launched their warnings and their denunciations. The language in which theologians and preachers expressed their horror of the sin of covetousness may appear to the modern reader too murkily sulphurous; their precepts on the contracts of business and the disposition of property may seem an impracticable pedantry. But rashness is a more agreeable failing than cowardice, and, when to speak is unpopular, it is less pardonable to be silent than to say too much. Posterity has, perhaps, as much to learn from the whirlwind eloquence with which Latimer scourged injustice and oppression, as from the sober respectability of the judicious Paley - who himself, since there are depths below depths, was regarded as a dangerous revolutionary by George III."
R.H. Tawney ‘Religion and the Rise of Capitalism’ 1926 ch 5
The truth about capitalism is out by Giles Fraser
"But when, with Marx, we begin to understand that money is a way of capturing a social relationship between those who own the means of production – whether factories or apps – and those who work in them or for them, we begin to recognise that capitalism is not magic but exploitative to its core. The magical quality of our faith in money and in economic growth is a deliberate mystification of the social exploitation that the capitalist – understandably – wants to cover up. And “we draw the magic cap down over eyes and ears as a make-believe that there are no monsters,” as Marx put it in the preface to Das Kapital."
https://www.theguardian.com/commentisfree/belief/2017/oct/05/the-truth-about-capitalism-is-out-as-marxs-magic-cap-starts-to-slip
It's a 'deliberate mystification' indeed, but also one that is inherent in the capital system. That is, the problem is not merely one of ideological distortion, but of an immanent systemic distortion. The inversion expressed by capitalist political economy is not an intellectual mistake, to be corrected by a better economic science or philosophy, but is inherent in an economic system in which objects have come to acquire existential significance and their human creators have become appendages of the machine. The result is an economic system driving the world to planetary catastrophe.
'Welcome to the cruel, topsy-turvy economic logic of a civilization facing the risk of collapse. As millions of people increasingly suffer the devastation of climate breakdown, we can expect the economy—as measured by conventional benchmarks—to maintain and even strengthen itself right up to its breaking point.The reason for this apparent disconnect between economics and society’s well-being arises from the use of GDP as the benchmark of economic success. GDP merely measures the rate at which our society is transforming nature and human activities into the monetary economy, regardless of the ensuing quality of life. Anything that causes economic activity of any kind, whether good or bad, adds to GDP.'
In which case, civilizational collapse will not be the one big, dramatic event but a long, slow, drawn out process in which disaster comes to be normalized, further debilitating the will to act, a gradual disintegration of regions that lack the wherewithal to recover from climatic disasters, while the more developed and affluent nations enjoy economic booms and soaring stock market valuations. 'As long as our political and financial leaders are evaluated by the distorted measure of GDP, our civilization may well disintegrate from climate breakdown even while they get credit for a cruel, topsy-turvy economic boom.'
Getting out of this inverted world, and the mad economic rationality that driving us to destruction, means a social transformation of that reason could, at last, take rational social form ...
"At this point, our society can still choose to invest in a future that builds genuine welfare rather than shoring up collapsing infrastructure. In an urgent but still hopeful report, 2020: The Climate Turning Point, members of the highly-respected Potsdam Institute show there is still time to turn things around. Just. And the profound irony is that we can do this by investing in the very things that create welfare for society."
Too much inequality and too few natural resources could leave the West vulnerable to a Roman Empire-style fall.
"Two important features seem to appear across societies that have collapsed," reads the study. "The stretching of resources due to the strain placed on the ecological carrying capacity and the economic stratification of society into Elites and Masses."
In unequal societies, researchers said, "collapse is difficult to avoid.... Elites grow and consume too much, resulting in a famine among Commoners that eventually causes the collapse of society." As limited resources plague the working class, the wealthy, insulated from the problem, "continue consuming unequally" and exacerbate the issue, the study said.
If we're to avoid their fate, we'll need policies to reduce economic inequality and preserve natural resources, according to a NASA-funded study that looked at the collapses of previous societies. "Collapse can be avoided, and population can reach a steady state at the maximum carrying capacity, if the rate of depletion of nature is reduced to a sustainable level, and if resources are distributed equitably," reads the report.
Which brings me back to Marx and the insights that his critique of political economy brings to all of this. Emphasize that word critique: Marx does not give us a new economic or political theory, still less a blueprint or a programme. Stuart Jeffries writes of Harvey's book as "when necessary, a creative betrayal of Marx," which is entirely in keeping with Marx's critical spirit. Dogmatism is the death of Marx and the real dialectic. Marx should be treated as a pioneer motivated by a concern for self-knowledge, not a prophet. My old Director of Studies Jules Townshend put it this way:
"Is it not better to follow the example, rather than the letter, of Marx? As a child of the Enlightenment he had an intense passion for freedom and knowledge in equal measure. He pursued knowledge in the name of freedom. This involved the destruction of any form of mystifying consciousness that sustained humanity's self-oppression, and the development of ideas that would be of practical use to the struggles of the oppressed and exploited. He would not have enjoyed the prospect of future generations looking to him not for inspiration, but for legitimation. Marx and the movement he created offer all those struggling for freedom and equality a treasure house of practical and theoretical wisdom - negative as well as positive. This movement is a constant reminder that the theory and practice of human freedom are always unfinished business. As long as capitalism remains in business, Marxism as a movement and doctrine, in whatever form, is likely to remain obstinately relevant."
Jules Townshend, The Politics of Marxism, 1996 ch 15
If we want to resolve the problems we face, then we need to understand and unravel the contradictory dynamics of the capital system. And that means we need to be dialectical rather than dogmatic.
Marx, as Giles Fraser points out, was an awkward child of the enlightenment, mind:
"Of course, I am not the first person to argue that capitalism is based on a superstitious belief in the efficacy of magic. Marx’s Kapital, one of the great works of 19th-century atheism, is a genius attempt to disabuse us of this dangerous mystification. Of course, the god in Marx’s sights is not the one of the Bible but one celebrated by the philosophers of Enlightenment rationalism: the god of capital."
It's easy to announce the death of God; it is much less easy to extirpate the theological assumptions that go with a belief in God - unattached, unmoored, they have this habit of tagging on to something somewhere...
Anyhow ... Marx wanted to extirpate both external and internal religiosity. There is little human gain if we are freed from external priests only to be subject to the inner priest, wrote Marx. I'm writing on Gerrard Winstanley, who anticipates Marx in so many respects, in the notion that the rich live by the labour of others, in the complicity of the poor in the wages system, in the attack on private property and hire labour. Importantly, Winstanley restored both dignity and agency to the poor, the marginalised, the dispossessed.
And Winstanley's The New Law of Righteousness makes interesting reading. This work is founded on verses 44 and 45 from the Book of Acts: "All who believed were together and had all things in common; they would sell their possessions and goods and distribute the proceeds to all, as any had need." In 1875, in the Critique of the Gotha Programme, Marx wrote these famous words:
"In a higher phase of communist society, after the enslaving subordination of the individual to the division of labour, and therewith also the antithesis between mental and physical labour, has vanished; after labor has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly -- only then then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!"
It's in Marx, it's in Winstanley, it goes back to the Bible.
So what am I saying? Winstanley exposed and demanded an end to the alienation associated with external religiosity no less than Marx did. But whereas Marx proceeded further to demand an end to internal religiosity, freeing human creators from all constraint that lies outside of their powers, Winstanley demanded the end of external religiosity as a condition of the freeing of an inner religiosity that he saw as healthy in its connection with the nourishing love and joy of a God that was located in Nature and in the body, and which, in its embodiment, fed the spiritual dimension of human life without disappearing into the tyranny and violence of abstraction, quenching the thirst for meaning. Above, I referred to the way that Max Weber connected the unnatural and inhuman domination of life by economic imperatives to a 'certain religion.' It stands to reason, as Erich Fromm argued at length, that if we see God as external, angry and distant, and if we serve that God out of fear, then we have been psychologically prepared to accept the rule of an economic machine that determines our life with what Weber calls 'irresistible force.' We are entitled to overthrow all such gods as false gods. That's not God at all, that's Moloch. Rationalization as the disenchantment of the world and the dehumanization of life is certainly not the Spirit Reason that Winstanley gives us. But Winstanley's view is not quite Marx's either. Marx sought freedom as self-determination through an appreciation of human self-creation; Winstanley located such prideful self-assertion in a neurotic need born of separation from the sources of nourishment, natural and spiritual. Winstanley, that is, gives us a Protestant Ethic that leads not to the iron cage of capitalism, nor to a revolt in the name of total human self-creation, but to the earth as a common inheritance, a common treasury to be shared with each and other and with all creatures: he gives us revolution with reverence.
"...all creatures have been turned into property, the fishes in the water, the birds in the air, the plants on the earth; the creatures, too, must become free." (that's Thomas Munzer, leader of the German Peasants’ Revolt in the early sixteenth century ... but a quote which sums up Winstanley's idea of Spirit Reason pervading all things very nicely indeed).
I shall be thrashing this one out over the next couple of months.
As for Marx ... I gave the theme a right good go myself, when way too many were turning tail, running and leading people up cul-de-sacs. I went back without any political baggage and found, well, in the main, "Marx was right," (as Terry Eagleton put it in the title of his book).
“Reason has always existed, but not always in a rational form. Hence the critic can take his cue from every existing form of theoretical and practical consciousness and from this ideal and final goal implicit in the actual forms of existing reality.” (Marx to Ruge September 1843 in EW 1975:208).
Or, as I wrote in Marx, Reason and Freedom:
‘The basic argument is that the formal rationality of capitalism is substantively irrational. For this formal rationality expresses the rationality of the fetishised social forms of capitalist social relations of production. Thus, capitalism's formal rationality cannot be separated from the substantive irrationality deriving from the fetish character of the social relations of capitalist production. Thus, Habermas' attempt to reconcile formal and substantive rationality through the demarcation of system world and life world fails to locate the contradiction in capital's alienated system of production. Consequently, he cannot but reproduce the contradictory relationship intrinsic to capitalism.
One needs to relate the question of rationality to the relations of class power. For the substantive irrationality of capitalism is accompanied not merely by its formal rationality but by its substantive class rationality. Thus, the economic compulsion to which the working class is subject, the need to sell its labour power on the market, does express a certain rationality. This is not the formal rationality of a system of production providing for human needs but the substantive class rationality of exploitative and alienative relations.’