Marxist Theory

Logical Systems Utilized in Economics

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There are two essential types of logical system utilized in terms of economics: induction[1] and deduction[2]. In terms of building a Marxist ontology, we need to strongly reject induction as the basis for any epistemological claims; this can be done on the following grounds:

§  Inference is inappropriate as it makes unjustified universal claims about reality.

§  Induction is unjustified as it assumes that reality has a homogenous nature.

§  Induction assumes that the Intrinsic Condition of Closure holds, i.e. that an object remains constant or changes at a constant rate.

 In general, we will need to utilize a deductive-nomological model to guide our ontological constructions. However, we need to be careful about what kind of deductive-nomological structure we establish: in particular, the concept of ceteris paribus holds numerous problems as it requires us to treat our deductive model as an isolated system, which is of course, counter-intuitive to the way in which economic reality actually functions[3]. This concept allows for the application of the Intrinsic Condition of Closure (which is essentially a feature of induction), in which the mechanisms in question do not change and secondly, it excludes other mechanisms and renders the boundary around the chosen syllogism solid and impermeable[4]. The problem here is that this fails to address the ontological background of realism, which requires an assessment of whether the assumption made is reasonable, e.g. it is not uncontroversial to claim that Demand curves do not really exist; a similar argument is made in terms of Homo Economicus: no explanation is offered in terms of the physiology of the individual; its psychology is reduced to ‘rationality’ of a very narrow form – however, Homo Economicus may well not exist: its existence, however, is a precondition for orthodox and heterodox economics.

The development of our deductive-nomological system thus needs to move away from both the Intrinsic Condition of Closure and the Extrinsic Condition of Closure[5], i.e. we must accept that the boundaries of a syllogistic systems are permeable, and that other mechanisms might enter from outside. This is perhaps achieved by acknowledging that deduction can be rendered invalid, for example:

 §  Two mechanisms in a system might be internally related, i.e. are mutually constitutive.

§  Most deductions (and economic and econometric models) assume the independence of explanatory/causal mechanisms. However, if they are interconnected and – perhaps – internally related, the nature of the relationship will affect the outcome of their combination.

§  Deduction poses problems in terms of strata: if strata have emergent properties, this changes the outcome of the deduction, e.g. philosophy and economics are mechanisms in the creation of ideology. However, because philosophy shapes economics, they can be conceptualized as different strata. The problem here is that of emergence: the higher strata (economics) is rooted in but not irreducible to the lower stratum (philosophy); the higher stratum has developed characteristics of its own not native to the lower stratum. Therefore, we cannot deduce the higher stratum from a lower one[6].

§  It is difficult to understand the manner in which unknown or hidden assumptions beneath known or stated assumptions might disrupt the deductive-nomological system[7].

 Therefore, because of the relations between mechanisms (assumptions) in a system (syllogism); because of the effects of other, interceding causes (assumptions, facts, ideas) on the system; because of (the possibility of) the existence of emergent properties and of unknown lower mechanisms; then, the effect on the outcome (the conclusion) of the initial mechanisms cannot be simply deduced from these mechanisms. Furthermore, for a deduction to be undertaken requires an assumption that none of those other effects can occur, or that they are trivial. However, for a Realist, these are dubious assumptions.

 It should be noted that orthodox economic systems, and especially neoliberalism, use a deductive-nomological system which fails to acknowledge the shortcomings listed above[8]. Furthermore, most heterodox economists use deductive systems[9].

 Marxism adopts the ontological position that reality is historically bound and constantly changing depending on social, political, culture and power-based factors[10]. Reality is constructed based on spatial and temporal positions and modalities, and that different versions of reality become privileged over others[11]. Reality consists of strata, which can be peeled back through theoretical and historical orientation.

[1] Induction is characterized a movement form the specific to the general, e.g. if one hundred swans are observed, the inductive inference is that all swans are white.

[2] Deduction is often expressed in the form of syllogisms, incorporating a number of assumptions which generate a conclusion, e.g. if Peter is a fish, and all fish are cats, it follows that Peter is cats. The assumption “all fish are cats” indicates a move from the general to the specific: this is the case with the deductive-nomological model; however, this is not necessarily the case as assumptions can be specific and not general. Deductive models are common in economics, e.g. if we assume a price has fallen, and that demand curves are downward slopping, it follows that the quantity demanded will increase (this is, of course, the orthodox formulation of demand). An essential feature of feature of deduction is that we move from assumptions to conclusions.

[3] . It is possible to replace the systematic features of deduction: we replace assumptions with mechanisms, and conclusions and events. The movement from assumptions to the conclusions is assumed to be linear, and underwriting the argument is the (unstated) assumption of ceteris paribus. Thus the mechanism in question (e.g. the mechanism of demand, which in orthodox economics, tends to mean that people demand more of a good in response to a price change) is treated as being isolated from other mechanisms – this however, is problematic, e.g. other prices that the consumer faces might have risen, thus triggering countervailing mechanisms, which potentially affect the outcome.

[4] As Hahn (1973, on equilibrium) notes, standard orthodox economists are aware of this, e.g. the demand curve is constructed on the basis of ceteris paribus: of course, ceteris is never really paribus, but is considered a reasonable assumption to make, and it is often stated that it is necessary if the analysis is to be moved forward.

[5] The ECC, in terms of syllogistic thinking, argues that the deduction that the mechanism in question is enclosed by a solid, impermeable boundary and thus isolated from other effects. While the ICC argues that the syllogistic system cannot affect other systems, and assumes that other systems do not effect it, the ECC argues directly that external systems do not affect the syllogistic system, i.e. while the ICC regards exogenous events/mechanisms as non-effective as an assumption, the ECC states it as a conditional.

[6] Note that the statement: economic theory A’ is based on philosophy A. Therefore, if philosophy A has characteristic ‘x’, then it seems reasonable to deduced the economic theory A’ must also express philosophical characteristic ‘x’ fails to acknowledge the nature of emergence; rather, we should be stating that economics A’ might not express ‘x’, but instead express ‘x’ in a modified form, x’ or even express a different proposition y.

[7] This has particular relevance in terms of strata. If the stratum of assumption is rooted in lower strata, but if nothing is known about those lower strata and their effects, it is no longer possible to ‘simply’ deduce from assumptions to conclusions, e.g. an orthodox economist might consider Christian values as holding true: however, this would be difficult to reconcile with economic beliefs – consider the Laffer curve (an economic belief) with the belief that people should give up their riches (a Christian value); the problematic assumption here is that orthodox economics is erected on positivism, which as a philosophical project precludes a belief in bods.

[8] Of interest to the reader may be Marshall’s warnings about this (1890: 773).

[9] For example, one can cite the work of Paul Davidson (a Post-Keynesian). Davidson highlights major axioms, which according to him, are thrown out by Keynes: the axioms of gross-substitutability, ergodicity and the neutrality of money. Therefore, Davidson indicates, a general (Post-Keynesian) theory contains fewer axioms than an orthodox theory. However, this argument is very problematic: there is no reason to assume that any such system is closed from other influences.

[10] Neuman, 2010.

[11] Mertens 2009.


More thoughts on Capitalism, Ideology and Ontology

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The central issue of our Marxist ontology should not be that of reality, but rather that of appearance. This distinction is critical as it allows us to understand the logic involved in the development of neoliberal ideology in later modernity. This distinction goes back to Hegel, who distinguished between[1]:

§  The inquiry of how it is possible to sift through the plethora of appearances to arrive at an underlying reality.

§  The inquiry of how appearances are able to emergence.

 This distinction in the nature of inquiry allowed Hegel to disregard the attempt to search for a single unknown event to which all other events are measured relative to. The distinction renders the task of speculation on the nature of primitive replicators in order to relatively measure the state of a contemporary good as inappropriate. In terms of neoliberalism, this distinction will allow us to understand the inappropriateness of the task of speculating on the nature of how Capital should be directed to obtain an understanding of the Real. For Hegel, “[u]niversality is not merely the universal core that animates a series of its particular forms of appearance; it persists in this irreducible tension, noncoincidence, between these different levels”[2].

 The conception of Universality as positing a universal abstraction to which all other ideas are measured relative to, is the ideological construction which maintains the neoliberal order. The universal core acts as an exception which constitutes the universal as transcendent and to which all to which all other particulars are forced; thus under neoliberalism, then all that is, is that which can be known in relationship to the neoliberal expression of capitalism.

Our approach to this is to refuse a logic which – in the manner illustrated above – advocates the notion of a closed system. All that is, on is insofar as it is revealed to individual’s through the symbolic/semiotic order, and because it is not everything that is, it is pas-tout. In establishing a pas-tout, a non-whole, there is understood to be an absence of a static exception or universal core. The pas-tout operates within the what-is and reflects the logic of the what-is, but society can never fully correspond to or overtake the what-is, yet the what-is is operative everywhere in society undermining and distorting it[3].

[1] See Žižek, The Fragile Absolute. 14-15.

[2] Žižek, S. (2006) The Parallax View. (Cambridge, MA: MIT Press): 31.

[3] See Kotsko, A. (2008) Žižek and Theology. (New York: T&T Clark): 48-49.

The Ontology of Differences

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Our ontology must be rooted in the dialectical nature of things, in the non-identical nature of things with themselves. In Das Kapital, Marx fundamentally alters traditional ontological theory; although there has been little attention to this – and certainly Marx himself would not have seen his enterprise as an exercise in ontology – it is possible to see how this ontological position has been developed by others. This is notably the case with Lev Semenovich Vygotsky (ontology as the dialectical relation linking speech, gesture and thinking), Mikhail Mikhailovich Bakhtin[1] and Alexei Nikolaevich Leont’ev (ontology as the dual nature of the object of activity).

In Das Kapital, Marx shows how – one-sidedly – the value of a commodity simultaneously is use-value and exchange-value[2]. Whereas classically trained political economists have regarded the double nature of each commodity of each commodity as ‘nothing more than’, Marx insisted that this difference is not the result of different perspectives, but one of an inherent nature: The difference is in the thing itself. The appearance of difference due to different points of view is a ‘one-sided expression’ of a much deeper difference, the result of an inner contradiction within the commodity value, which is non-identical with itself. This means that a commodity is not self-identical: It differs from itself. The question, then, is how a thing A is not identical with itself[3]?

This leads us to an ‘Ontology of Difference’ in which the statement A≠A is true:

§  Each instance of A is a singularity, and as such, inherently different from other singularities.

§  Each singularity is itself homogeneous, because it is what it is only through the plurality of singularities[4].

§  Even in repetition we are able to locate difference[5].

 The advantage of ontology of difference is of particular assistance in understanding some of the structural edifices within economics: for example, in the ontology of the same, distinctions between ‘expert users’ versus ‘non-expert users’ are made[6]; in an ontology of difference, ‘non-expert users’ are seen as constitutive of the structural framework underpinning ‘expertise’ or ‘expert praxis/knowledge’.

We are also able to make an ethical argument for an ontology of difference, based on rational understanding of the orientation of one’s thought and the manner in which difference becomes operational. Critical here is the notion that human beings are calculating machines, focused on utility as required under the paradigm of Homo Economicus. This requires one to make a commitment to Emmanuel Levinas, to an approach to thinking “which has thrown off its ‘logical’ chains (the principle of identity) in favour of its prophetic submission to the Law of founding alterity”[7], i.e. a commitment to the Greek notion that “adequate action presumes an initial theoretical mastery of experience, which ensures that the action is in conformity with the rationality of being”[8] as replacing the Judeo-Christian notion that “everything is grounded in the immediacy of an opening to the Other which disarms the reflexive subject”[9]. In this ontological structure, presence/experience takes precedence over reflexivity/’rational reflection’.

 However, we should be careful not to presume that an ontology of difference can be, or is rooted, in the ideological apparatus of tolerance. The problem here is that tolerance inherently demands a competition between two opposites: “between ‘tolerance’ and ‘fanaticism’, between ‘the ethics of difference’ and ‘racism’, between ‘recognition of the other’ and ‘identitarian’ [or ‘ontological’] fixity”[10]; furthermore:

“[t]he problem is that the ‘respect for differences’ and the ethics of human rights do seem to define an identity! And that as a result, the respect for differences applies only to those differences that are reasonably consistent with this identity.”[11]

 In order to construct an ontology of difference it is necessary to challenge what is part of the Western philosophical canon, and adopt the argument that far from being a self-contained and self-sustained whole brought into relationship with the other through the tolerance of difference, reality is inherently incomplete, and consequently that truth is given, from nothing, in the form of an event. Thus,

“genuine thought should affirm the following principle: since differences are what there is, and since every truth is the coming-to-be of that which is not yet, so differences are then precisely what truths depose, or render insignificant. No light is shed on any concrete situation by the notion of the ‘recognition of the other’. Every modern collective configuration involves people from everywhere, who have their different ways of eating and speaking, who wear different sorts of headgear, follow different religions, have complex and varied relations to sexuality, prefer authority or disorder, and such is the way of the world.”[12]

 If we understand the difference is simply what there is, then the undertaking of identifying with difference is completely useless. In this sense the ontological position is not to understand ‘the other’ but to ‘recognize the same’.

 One should also be careful here not to fall into the trap of constructing an ontology of difference around negativity, i.e. with the difference ‘to be’ and ‘to exist’.

[1] a.k.a. V.N. Voloshinov.

[2] For example, in early barter exchanges a farmer may have exchanged a bag of grain for a coat from a tailor. For the farmer, the coat has use-value, whereas for the tailor, the same coat has exchange-value; for the farmer, the grain has exchange-value, whereas for the tailor, the grain has use-value.

[3] An identify often expressed in equations such as A=A.

[4] This is why Jean-Luc Nancy states that ‘Being’ is ‘being singular plural’.

[5] Thus if we state A=A, then work has been done that drops the inherent differences between two instances – e.g. different ink, different paper pieces – as their background, or different spatial locations, so that what matters are the structural properties of each sign, which are held to be the same. In the classical approach to identity, a person’s Self is held to be identical with itself – the self-identical ‘I’ (ego) becomes the core of being and thought; thus Descartes’s ‘cogito ergo sum’. The ‘I’ implied in ‘cogito’ (‘I think’) and the ‘I’ embodied in ‘sum’ (‘I am’) are held to be the same, similar to the statement A=A. The problem here is that this approach leads to insurmountable philosophical aporia. Edmund Husserl, who attempted to build an egology (science of the ‘I’) that would be able to show how the Self and its knowledge are the results of a pre-existing pure and self-identical ego – realized that ego cannot be the foundation of knowing and our Selves. Rather, at its heart, the Self has to be the Other as well because, for example, it is impossible to identify the behavior of someone else as angry without first adopting an exterior viewpoint – that of the Other – on one’s own affects. This leads us to the formula Self ≠ Self, or Self = Other, an inner contradiction.

[6] This can be phrased in different ways; e.g. the same linear distinction as the newcomer and old-timer in some community of practice, which is also taken as a self-identical entity.

[7] Badiou. ‘Ethics: An Essay on the Understanding of Evil”: 20.

[8] Badiou. Ethics. 19.

[9] Badiou. Ethics. 19.

[10] Badiou. Ethics. 20.

[11] Badiou. Ethics. 24.

[12] Badiou. Ethics. 27.

Considerations on Building a Marxist Ontology

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In dealing with an analysis of contemporary political economy, or more generally, in economic discussion there is a clear lack of productive dialogue with contemporary Marxism. Such a dialogue requires an acknowledgement of the core tenants of Marxism, notably the persistence of class struggle[1]. Part of the weakness in contemporary Marxist analyses of neoliberalism is the failure to move beyond critique couched in terms of ideology and class struggle.

The central issue of our Marxist ontology should not be that of reality, but rather that of appearance.

Orthodox Marxism relies on using class antagonism to explain the rationality of neoliberal hegemony. A notable example of this is the of David Harvey, who argues that neoliberalism was based in, and represents, a successful attempt to restore the power and wealth of so-called ‘upper classes’ through the class dynamic[2][3][4]. In this analysis, Reagan and Thatcher represent the class movement driving the neoliberal agenda, through capturing the ideals of individual freedom[5], and subverting these against the ‘interventionist’ and ‘regulatory’ state, so allowing ‘capitalist class interests’ to restore, protect and advance their position. The IMF and World Bank function as the international poles for the propagation and enforcement of ‘free market fundamentalism’ and ‘neoliberal orthodoxy’. The Orthodox Marxist solution to the problem is rejuvenate class politics, and to acknowledge that class is the central conceptual weapon by which neoliberal hegemony can be defeated.

Orthodox Marxism also offers a specific understanding of social ontology[6]:

“The Marxian ontology implies that the world is full of contingently realized natural necessities. This world is triply complex: it is divided into different domains, each having its own casual powers and liabilities, these domains are involved in tangled hierarchies, with some domains emergent from others but reacting back on them, and each domain is itself stratified, comprising not only a level of real causal mechanisms and liabilities but also the level on which such powers are actualized and/or can be empirically examined.”

Such an ontology operates on two levels: that of ‘ontology as actuality’ and ‘ontology as empirical’[7] [8], where the empirical and actual are to related through theoretical discursive practices[9]. The world is thus a “unity of diverse determinations”[10] in which any object, subject or event contains within it a ‘diversity’ of aspects. Each of these aspects, more properly called ‘determinations’ corresponds to a distinct domain within reality[11], and the basis of each domain is a set of internal/necessary relations[12]. The application of this ontological framework has important consequences: firstly, it indicates the manner in which social structures are functional only through the application of agency[13] and secondly, social structures are maintained only through the actionality of agency[14]. Hence we are able to establish a set of two reciprocal dualities: the duality of structure (society is both the condition and continually reproduced/transformed outcome of intentional agency) and the duality of praxis (the actionality of agency should be considered as normally conscious production and the normally unconscious reproduction/transformation of the conditions of production, i.e. of society)[15].

Neoliberalism, however, does not place any stake in class antagonism[16]; rather – and very importantly – neoliberalism is premised on a completely different ontological structure: that society (and ‘social reality’) is an economic construction, which is fundamentally undemocratic as all members of society are ‘subscribers’ to the economic reality generated by neoliberalism (and to which there is no effective escape). Radically – and this must be borne in mind when dealing with criticisms of reducing/increasing state intervention – the state is all-important in neoliberalism as it ensure that no member of society is excluded from the economy[17].

While ‘free market fundamentalism’ and ‘neoliberal orthodoxy’ are ideological structures with questionable scientific bases[18], the Orthodox Marxist view of these twin elements as constituting the ‘ontological’ problem of neoliberal capitalism, fails to account for the complexity and diversity of neoliberal praxis. In particular, the ontological categories generated by neoliberalism find their basis in the epistemological practices of neoliberalism[19]. The fundamental questions that should be treated are firstly, what is the nature of neoliberal ontological category generation (i.e. what are their politico-historical roots) and secondly, what are the ontological mechanisms and institutions generating conditions under which ‘true statements’ (i.e. ontological categories) about economy can be stated.

The second enquiry is the simplest to address: the ontological apparatus of neoliberalism forms the environment under which reasonable economic judgments are made today; for example, when we discuss exchange rate regimes, our discussion is in terms of fixed, pegged, floating policy rules (for example) – all elements of which the instrumentality of neoliberal theoretical practice limits our discussion and options; in this sense, we must ‘choose’ an appropriate ‘pegging’ rule to be adopted, without being able to reasonably question the basis of ‘pegging’ itself; as this example demonstrates, the very ability to conceptualize outside of the neoliberal ontological apparatus has become almost impossible. To use another example, it is often cited that a depreciation of the Rand is desirable in certain circumstances – against this is the notion of appreciation of the Rand; however, the poverty of our discourse rarely allows us to step outside this binary opposition and question the very structural foundations underlying appreciation/depreciation of the currency – in this sense, the currency (and similar to the notion of ‘pegging’) are ahistorical phenomenon, which are ‘pure’ theoretical instruments contained within ‘monetary’ policy. We are almost completely excluded from a historical, contextual and structural analysis, not of which policy is appropriate, but of the very concepts themselves. The effectiveness of neoliberal ontological construction is that we are unable – or with great difficulty – able to construct instrumentality independent of these ideas; a classical example demonstrating that this is an historical phenomenon only requires an examination of Marx himself, where the exchange rate can rightly be understood not as an instrument of ‘monetary policy’ but as a mechanism for the transmission of surplus value generated through labour and given form as a commodity modality, thus hiding the labour-related origins of exchange rate mechanisms. In practical terms, this means that the selection of an exchange rate regime first requires an analysis of the conditions under which exchange rate regimes emerge[20].

What this establishes is the foundation under which new regimes of ontological reorganization and re-categorization prevailed under the neoliberal paradigm; one in which – fundamentally, one in which utility and empirical verifiability of governmental economic praxis becomes most important[21]. Under this neoliberal praxis, scientific truths can be expressed about economics; this is one of the underlying ontological tenets of economic neoliberalism: namely that doctrines of economics are politically neutral and that political decisions about economics must be based on ‘economic truths’[22] [23]. For exchange-rate policy rules this involves the discussion of avoiding market distortions to allow for the correct formation and alignment of the exchange-rate; only an undistorted regime would allow efficiency, equity and stability through effective resource allocation.

At this juncture it is possible to expose one of the flaws adopted in contemporary Orthodox Marxism: the resort to political economy as a methodological apparatus[24]. Political economy functions, ontologically, as a mechanism for limiting governmental rationality in that it comes to delimit the bounds of how the state is ontologically defined: no longer is the state to be limited because it violates liberty or the rights of men; rather its bounds are now defined by how successful it is. Until the eighteenth century economic practice was seen as the exercise of sovereign and/or feudal rights, techniques for preventing revolt or the maintenance of the commons. Political economy fundamentally changes the nature of these, requiring them to become based on coherent and rationalized principles. Economic practice becomes divorced from ethics or as a principle of morality or legality; rather it becomes formed as a ‘truth proposition’[25]. The separation of economic rationality from legality and morality was felt in two distinctive spheres; firstly, political economy removed the market as a site of jurisdiction[26], and secondly, it reduced the distributive rationality of the market by the state[27]. Rather, the market is now a naturalistic, ahistorical and amoral[28] entity, defined by spontaneous ‘laws’, the manipulation or modification of which would impair and distort the entity and prevent its proper functioning[29] [30]. By extension the ontological nature of state practice changed, from a focus on ‘justice’ to ‘utility’[31], and underpins the neoliberal idea that the state is limited in that “governmental power is [now] limited by evidence, not by the freedom of the individual”[32] [33] [34].

The form of economic rationality supported by the neoliberal project has significantly shifted the premise upon which an ontological framework can be constructed; in particular, neoliberal ontology moves away from economics understood as the study and analysis of economic processes and their historical or mechanical logic towards an analysis of the strategic programming of subjective activity and praxis[35]. For Marx (and Adam Smith) economics was underpinned by a fundamental logic, one which the worker is conceived of as both subject and object – in Marx, the object of supply and demand in the form of labor power. The neoliberal concept moves away from the possibility of labour as objective, and the individual is purely an economic subject, a modality of exchange – the ‘entrepreneur of the self’. For Marx, labor has always been the objective sphere of exploitation.

Reverting to an earlier discussion within the paper, the question arises as to how a Marxist ontology can address the problems of positivism. Two possible alternatives to positivism are constructionism[36] and interpretivism[37]; for our purposes constructionism is more applicable.

There are various ways in which a solid Marxist ontology may be derived. One such method lies in viewing reality either as a set of strata, embedded within which we find causal mechanisms; alternatively we can view reality as a ‘system’[38].

In the case of a strata-orientated approach, different strata of reality exhibit emergent properties rooted in but irreducible to the strata below[39]. Such a model is characterized by the following:

§  Strata can act in non-predetermined mechanisms, e.g. biological desires within human beings can combine with emotion and rational factors to generate human action.

§  Economic and social structures (e.g. organizations, rules etc.) interact with individual agents within them.

§  Mechanisms, when activated, however, display certain tendencies of actions.

§  Mechanisms interact with other mechanisms, e.g. when one mechanism is triggered, its effects are combined with other mechanisms; e.g. if one event occurs and an event is triggered, it is likely that the effects of the mechanism will be affected by other mechanisms.

The characteristics of a system-based approach are as follows[40][41][42][43][44]:

§  Systems have boundaries, which are fuzzy, changing and malleable, and subject to change and redefinition.

§  Sub-systems exhibit and operate within larger systems, and may exhibit some or all of the same properties as the larger system.

§  These sub-systems interact with each other: thus the mechanisms operating within each system also interact, which is facilitated by the permeability of the system boundary.

§  Systems are also spatially and temporally-aligned, thus mechanisms – both within and outside of the system – operate intermittently.

[1] Nealon. Foucault Beyond Foucault. 81-82.

[2] Since the rise of neoliberalism from the 1970s onward, the income gap between rich/poor and/or the ruling class/working class has considerably widened. Harvey demonstrates that income gaps narrowed considerably after World War II, but retained relative stability until the late 1970s; from the 1970s onward there has been an enormous – almost exponential – increase in the levels of wealth in the top income categories.

[3] In the United States, for example, the share of national income taken by the top one percent of income earners has fallen from a pre-war high of 16 to less than eight percent by the end of World War II, and stayed at that level for the three decades after the war. Since the 1970s, wealth has now become concentrated at a level not seen since the 1920s and a reversal of a post-War gains by the middle class has largely been reversed.

[4] See Harvey. A Brief History of Neoliberalism. 15.

[5] Orthodox Marxism often coaches this by stating that neoliberal theory was able to provide a ‘benevolent’ ‘mask’ utilizing practices such as freedom, liberty, choice and rights; all of these were used to hide the realities of the shift towards naked class advancement.

[6] Jessop, 1990a: 162-3.

[7][7] The empirical level refers to direct empirical observation; the actual includes the empirical level and – additionally – ongoing flux or actual events which may or may not be observed.

[8] See Jessop (1982: 215-16; 1990: 207, f10). Jessop refers extensively to Bhaskar and Sayer (see 1992) and sees agency as being at the level of the actual, as sui generis real entities.

[9] See Laclau and Mouffe, 1985.

[10] See Marx, Grundrisse. (Marx, 1973: 100)

[11] The term ‘domain’ here references Jessop’s usage of the term. Other Marxist theory also refers to this us ‘stratum’ or ‘strata’. What is crucial here is that Jessop’s formulation refers to the ontological levels of ‘real’, ‘actual’, and ‘empirical’.

[12] An internal relation is said to exist whenever a relationship confers new properties onto its elements (natural objects or social ‘positioned-practices’), so altering their nature; for example, an internal relationship would include the marriage relation, where the social position-practice ‘husband’ necessarily entails the position-practice ‘wife’; a landlord/tenant relation, similarly entails that the landlord exists as such only when given a tenant, and vice versa. These can be contrasted with external/contingent relations where the nature of the elements is unaltered by their relationship, e.g. the relationship of passers-by on the street. A relation is symmetrically internal if the essential nature of both elements depends on the relation; it is asymmetrically internal if the nature of only one of the elements depends on the relation. Internal relations often come in sets – such a set is termed a ‘structure’.

See Sayer, 1992.

[13] Bhaskar, PON: 35:

“[P]eople do not marry to reproduce nuclear family or work to reproduce the capitalist economy. Yet it is nevertheless the unintended consequence (and inexorable result) of, as it is also a necessary condition for, their activity.”

[14] Sayer, 1992: 96-7:

“Actors are not mere ‘dupes,’ ‘automata’ or ‘bearers of roles,’ unalterably programmed to reproduce. The very fact that social structures are historically specific … ought to remind us of the contingent status of social structures.”

[15] Bhaskar (PON) also terms this relationship as the transformational model of social activity.

[16] i.e. worker’s rights and demands versus those of the capitalist class.

[17] See Foucault. Birth of Biopolitics. 202.

[18] Harvey. A Brief History of Neoliberalism. 21.

[19] We should be careful here not to abandon ideology as an apparatus for critique and understanding (this is dealt with in more detail later). A key criticism of Foucault in this respect lies in the complete unwillingness to engage in ideology, and the perception that ideology is merely a matter of drawing lines between what can be categorized as ‘scientific’ or ‘truthful’ and what falls under the label of ‘ideology’). See:

Foucault, M. (ed. Colin Gordon, trans. Colin Gordon, Leo Marshall, John Mepham & Kate Soper) (1980) “Truth and Power” in Power/Knowledge: Selected Interviews and Other Writings 1972-1977 by Michel Foucault. (Brighton: The Harvester Press). 118.

[20] This is the focus of much of the later part of this paper.

[21] Foucault. Birth of Biopolitics. 18-19.:

“At one time these amounted to the question: Am I governing in proper conformity to moral, natural, or divine laws? Then, in the sixteenth and seventeenth centuries, with raison d’Etat, it was: Am I governing with sufficient intensity, depth, and attention to detail so as to bring the state … to its maximum strength? And now the question will be [is]: Am I governing at the border between … the maximum and minimum fixed for me by the nature of things … ?”

[22] Teivo Teivainen (2002) has characterized attempts to carry out state policies exclusively on the basis of politically ‘neutral’ economic analysis as “economism”. He argues (2002: 17), furthermore, that politically relevant decisions are made in institutions and contexts defined as economic and therefore outside of the scope of democratic decision-making. Democracy is thus restricted through governance institutions and issues labelled as ‘economic’; as well as a strong emphasis on the doctrine of ‘economic neutrality’ to produce a political/economic dichotomy. Teivainen cites the following as examples of this: Central Bank independence; balanced budget amendments; exchange-rate rules as well as commitments to specific policy rules associated with trade and investment through international or regional institutions such as the International Monetary Fund (IMF).


Teivainen, T. (2002) Enter Economism, Exit Politics: Experts, Economic Policy and the Damage to Democracy. (London: Zed Books).

[23] Economic truths are also seen as requiring the pursuit of private interest as a mechanism for the spontaneous emergence of the ‘common good’ and as such any interference would interfere with this process, and hence becomes deemed as ‘irrational’. For example, state intervention creates market distortions; this in turns leads to an incorrect formation in the modality of prices. By creating ‘economic truths’, economic questions (such as the income gap between the working/ruling class) is no longer ‘political’ and instead governed by scientific rationality.

[24] Foucault has indicated the meaning of “political economy” (économie pollitique) itself is not a stable term, and from the period between 1750 to 1810/20 the meaning varied from a strict and limited analysis of the production and circulation of wealth; but in a broader sense referred to any method of government that could produce the nation’s prosperity (See Foucault. Birth of Biopolitics. 13). Most interpretations of Marx use political economy in the former sense – this is clearly not what Marx had intended, and explored in depth elsewhere in this paper.

[25] Foucault. Birth of Biopolitics. 18.

[26] In the Middle Ages and through the sixteenth and seventeenth century the market was invested with strict regulations ensuring that prices were fair, with no fraud, theft or crime.

[27] Where the rules of the market ensured that poorest could also buy things.

[28] In the neutral sense.

[29] Foucault. Birth of Biopolitics. 30-31.

[30] Foucault – for example – argues that France had adopted full employment rather than price stability, and the provision of social services rather than the balance-of-payments as its primary and absolute economic objectives after World War II. The reasons for the liquidation of these forms of economic priority towards the end of the 1970s was connected to serious global economic crises, and attributed by economic experts to insufficiently rationalized economic decisions.

See Foucault. Birth of Biopolitics. 195.

[31] Limiting state power moves here from traditional problems of law or revolutionary questions concerning rights towards the usefulness and purpose of government.

[32] Foucault. Birth of Biopolitics. 62.

[33] Foucault characterizes this as identifying the market as a site of truth, and characterizing the limitation of governmentality by the calculus of utility.

[34] Foucault makes reference to a third characteristic of neoliberal governmentality (not relevant at present): the globalization of the market as an objective. Until the eighteenth century economic activity was understood as competition over limited resources; e.g. any resource, such as iron, was limited; as such, one state could only become enriched if wealth was deducted from other states. With Adam Smith the concept of competition under freedom as a means of ensuring universal profit was advanced. Competition in a free market was conceived by Smith (amongst others) as leading to maximum profit for the seller and minimum expense for the buyer.

See Foucault. Birth of Biopolitics. 56-57.

[35] Foucault. Birth of Biopolitics. 223.

[36] Constructivism, or social constructivism, holds that reality is constructed by the observer, but – as opposed to radical constructivist theories – holds that reality is a collective construction. The role of interaction and communication in the process of constructing reality is emphasized (see Gergen, 1999). Constructivism is historically derived from idealism (see Burrell & Morgan, 1979). Constructivist typically extend their ontological assumptions beyond social reality, and come to regard most ontological manifestations as derived from social reality, e.g. technology.

[37] Interpretivism can be regarded as a weaker form of constructivism in which the ontology utilized is limited to social reality.

[38] See Mearman, 2002a, 2003a.

[39] Bhaskar (1979) uses the example of water: the properties of water cannot be explained in terms of the properties of hydrogen and oxygen.

[40] See Dow, 1996.

[41] See Eberle and Hayden, 1991.

[42] See Hodgson, 2000.

[43] See Boulding, 1971.

[44] See Georgescu-Roegen, 1971.

Resistance to Prevailing Regime Rates

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A critique of neoliberal governmentality is extremely problematic at the present juncture, as – argued elsewhere – current debates from the Left focus on utilizing the underlying ontological and epistemological paradigm enforced by neoliberalism. A key example is the construction of an ‘aesthetic of existence’ which is used a basis for resistance against neoliberalism, and forms the basis for much of the current debate on issues such as ‘service delivery’ and ‘participatory democracy’; this construction, however, basis itself on the entrepreneurial image of the self as understood through neoliberalism: in this respect the solution to the lack of access to public goods (e.g. fresh water, sanitation and so forth) is constructed as requiring individuals to become ‘entrepreneurs’ in their own communities; and forms much of the underlying problem with the IPAP2 and the NGP[1][2].

Another area where this occurs is the focus on diversification and individualization that characterizes contemporary societies, or alla Deleuze[3], the transcendence of the individual as substance-like and inflexible, towards a regime in which the discipline is regarded as a molding in which there is modulation and control exercised in an open landscape. Our current macroeconomy is not geared towards the creation of a standardized and normalized ‘mass society’ but rather is dominated by neoliberal practices of individual self-creation[4]. What is critical in understanding neoliberalism is that it represents here a fundamentally distinctive mode of production of subjectivity: the subject is produced as an economic entity, which is then structured by different tendencies, preferences and motivations[5] [6] [7] [8] [9]. Caution should be exercised at this juncture, however: the neoliberal construction of the production of subjectivity as fundamentally an economic construction is not a direct (or indirect) consequence of implicit or hidden ontological presuppositions concerning human beings; the question of whether human beings, are, for example, self-interested, is irrelevant to the discussion. Rather, and what is really so radical, about neoliberal conceptions of the subject/individual is that neoliberalism creates the conditions in which  any discussion of economic mechanisms must be framed – or reference – subjects/individuals as though they were self-interested and competitive[10]. What must be understood is that this mode of production results from neoliberalism’s ontological foundations; namely, that economic rationality must be the rationality for society. The rationality of society extends in this conception to become a collection of atomic actors competing for maximal economic returns; the purpose of governmentality in this scheme is to create the social conditions that produce such actors.

There is a fatal flaw in the neoliberal conceptualization of individual/society (which itself can be argued as a false dichotomy) in that the ontological premise at work here confuses political subjectiviation with the process of individual and collective individuation[11].

If we consider the ontological foundations of neoliberalism, it becomes clear that resistance is not about ‘revelation’ concerning ‘hidden truths’ within neoliberal economic theory and policy. This is the case with almost all dialogue on macroeconomic policy issues as well as debates concerning exchange-rate policy design within both mainstream economic institutions such as Treasury and South African Reserve Bank, but also within the formations and organizations of the Left itself. Resistance to neoliberalism, rather, should be seen as understanding the politico-historical genealogical roots of the neoliberal project and how this project has come to dominant what can be regarded as scientifically true claims about economic issues. Neoliberalism is not just a political belief system or theoretical construction, but is an extreme articulation by which the current conditions for formulating policy and political decisions and beliefs are evocated. However, this is not to say that – as Margaret Thatcher famously did – that “There is no alternative’; or to accept – as Badiou, Negri and Hardt and David Harvey seem to – that neoliberal capitalism forms the background for political struggle; rather the question is what are the political conditions and political theoretical constructs necessary to resist the idea of ‘economic truth’. Certainly this is an area where the Left in South Africa (and perhaps internationally) has completely failed in its responses: to bring it back to point, the answer is not what economic truth is applicable for exchange-rate regime and policy rule making; but rather – and more importantly – to establish what conditions have established the economic truths themselves (e.g. the notion of ‘pegging’ as a construct) and how these must be – not dismantled – but understood as historical, legal and ethical sites of resistance and struggle. Rules for exchange-rate policy making should not consist – as at present – of discussions concerning what is an appropriate regime, but rather should be focusing on how the ethical and political dimensions contained within the domain have been stripped away, and how they can be meaningfully introduced into domain contestation and formulation.

Resistance cannot be generated through the adoption or discussion of ‘heterodox’ or ‘progressive’ economic theory; rather it must lie in programme of radical political theory and action that attempts to subvert the foundations under which current economic conditions are set – in particular we must understand how economic knowledge and praxis comes to ‘bound’ political effects.

Critical to the development of an effective modality of resistance is to understand and develop a practical policy in which good governance – and ‘solid’ or ‘effective’ state action – is not, and should not, be aimed at maximizing the material wellbeing of the population. While it is arguable that this is a component of what should be achieved by government, it is not the aim of governmentality.

Finally, resistance to neoliberalism must be understood in the context that neoliberal governmentality is bound over society and in the subjective domain: neoliberal practices ‘infuse’ personal experiences and the subjective life of the individual, and it is through these practices that neoliberal rationality is able to best function and operate.

[1] See Hayek. The Constitution of Liberty. In particular the chapter ‘Why I am not a Conservative.”.

[2] Beaulieu, A. ‘Towards a Liberal Utopia”. 812.

[3] Deleuze, G. “Postscript on Control Societies,” in Deleuze, G. (trans. Martin Joughin) (1995) Negotiations, 1972-1990. (New York: Columbia University Press).

[4] Nealon, J. (2008) Foucault Beyond Foucault: Powers and Its Intensification since 1984. (Stanford: Stanford University Press). 11.

[5] This can be contrasted with other modes of subjective production in which political or legal citizens are defined by a disciplinary society or one of sovereignty.

[6] Hamman, T. “Neoliberalism, Governmentality, and Ethics,” Foucault Studies. No. 6 (2009): 37-59.

[7] Read, J. “A Genealogy of Homo-Economicus: Neoliberalism and the Production of Subjectivity,” Foucault Studies. No. 6 (2009): 25-36.

[8] The subject is constructed here as an ‘atomic’ individual whose self-interest and tendency to compete must be fostered, maintained and enhanced. The subject is able to exercise rationality and operate decision-making based on economic knowledge and a self-utilitarian calculation of costs/benefits.

[9] Cruikshank, B. “Revolutions Within: Self-Government and Self-Esteem,” in Barry, A., Osborne, T. & R. Nikolas. (eds.) (1996) Foucault and Political Reason: Liberalism, Neoliberalism and Rationalities of Government. (Chicago: The University of Chicago Press).

[10] Similarly, if we engage in a discussion as to whether individuals/subjects are not self-interested or competitive, we are still involved in a discussion contained within this discursive structure.

[11] See Ranciére. “Biopolitique ou Politique?”: 2.

Explaining Neoliberal Hegemony

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The media should be regarded as central to the hegemony of neoliberalism in South Africa, through the establishment of a ‘popular’ unity between the social body and the anthropomorphic figure of the economy. The neoliberal right has won the struggles enacted over culture and public space: this has been achieved through the development of the new right discipline of communication studies, the development of ‘creative industries’, the doctrine of ‘prosumption’, the development of the national project into a cultural and commercial activity, and the use of new media technologies to deepen the impact of neoliberalism by seeming to oppose the state and speak to the multifaceted ability of people to make their own media – and destinies [1].

 The English-language media references ‘the economy’ as a living subject, with needs and desires. This has been facilitated by [2]:

 §  A shift from relations between consumers and producers of goods into relations between different material products of labour.

§  A change in emphasis from use-value to exchange-value.

§  The realignment towards organic terminology in the discussion of “the economy” and “the market”.

§  The textualization of “the economy” and “the market” and their subsequent fetishization as empirical truths [3][4].

 The discourse framework “the economy” has become a theoretical entity with needs and emotions; furthermore, this invention was constructed rather than merely described by economics [5]. The economy thus is seen in organic terms, as something that can thrive or suffer and has become subject to political promotion and security.

 While the media has served to anthropomorphize the economy, liberalism’s drive to economize all of forms of life has also played a central role in the establishment of its own hegemony. Perhaps the most powerful coup that neoliberalism has achieved within the space of the media is the financialization of news and current affairs [6]. If we consider South African media today, it becomes very apparent that neoclassical economic theory (under which neoliberal theory generally hides) is acceptable in media discourse in a way that other theoretical vocabularies are not. Consider the following trends:

 §  The regurgitation, by the media, of the market’s specialized vocabulary; this itself is predicated on a community of interest and commitment to fictive capital and takes affiliation with and regular participation of viewers in stock prices as watchwords.

§  The presentation of stories in terms of their monetary significance.

§  The heroization of business executives.

§  The domination of all discussion by business/financial advisors.

§  The usage by journalists of politics as a method to discredit democratic activities that might restrain capital.

§  The transmogrification of labour news into corporate news.

§  The measurement in the media of politics in terms of its reception by business.

§  The sentiment-driven journalism which interprets the gestures, facial expressions and poses of key economic players – the Minister of Finance, the Governor of the Reserve Bank etc. –  as indications of the strength or weakness of the domestic and international economy.

§  The proliferation of ‘talking heads’ in both print and TV-media.

§  The trend towards newspaper financing being generated from finance reporting.

§  Journalistic veneration of the market as a means of inducing moral panics around the conduct of whoever raises its ire.

§  The ridicule given by mainstream media to any source of leftist-generated media.


[1]    Jurgenson, 2010.

[2]    This is not – strictly – an outcome of neoliberalism, although neoliberalism has pushed this to its radical consequences. Its root comes from both the crisis of the 1930s and the diffusion of Keynesian discourse. The process bore some relationship to material reality, but come to textualize political interests and conflicts. 

[3]    Emmison, 1983

[4]    Emmison and McHoul, 1992.

[5]    See Arminen, 2010.

[6]    Foucault (2008: 247) notes that cash-operated US think-tanks such as the American Enterprise Institute have become the intellectual hand-servants of this practice, serving as vocalists of a “permanent criticism of government policy”, conducting ‘research’ in order to pen op-eds in newspapers and provide talking-points in media mainstream outlets.

Roots of the Neoliberal Project

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An analysis of neoliberalism and its ontology must be rooted in understanding the structural and historical changes and roots of the neoliberal project. There are two historical roots of contemporary neoliberal theory [1]: the first is that of the proponents of the Freiburg School of Economics, specifically Walter Eucken and Wilhelm Ropke, who played a major role in the post-war reconstruction of the late 1940s and 50s. The second root of neoliberalism lies in the Chicago School who developed a more radical theory. The Chicago School developed a hegemonic economic theory which views the market as an ahistorical phenomenon, which is divorced from its development as a historical construction [2]. Under the regime of theories proposed by the Chicago School, Capital is subjective, affective and intimate [3].

Neoliberalism, underpinned by the Chicago School rationalization, becomes a critique of state activity from the standpoint of economic rationality. Furthermore, the Chicago School took the rationalization of economic society as society to its radical and extreme outcome: that market economic analyses can be used – and are the most effective mechanism to achieve – to unpack the relationships and phenomena not only of the economic sphere, but also that of the social and political sphere. For the Chicago School (and this perhaps is its greatest influence on neoliberalism) the economic domain is not one amongst others, but becomes the rationality of the entirety of human action. The economic form of the market thus becomes the ‘grid’ and methodology for understanding and acting upon social relationships and individual behavior; this allows for monetary exchange to form the foundation for conceptualizing and rationalizing non-economic processes, relations and behavior.

Genealogically, the neoliberal project begin with developments rooted in the eighteenth century, and was fully embodied within the political economy discursive structure. At the time economics had gradually developed an internal consistency (largely led by the work of Francois Quesnay) which was given full expression into the modern conception of economics as an autonomous sphere of society subject to scientific analysis.

It is tempting, when dealing with the neoliberal project to see it as an extension of liberal economic rationality; although its roots may have come from the liberal enterprise, neoliberalism is largely a practical application of pure utility. In terms of governmentality it offers a very seductive utilitarian premise, alla Jeremy Bentham and John Stuart Mill: that the aim of the state – and governance – is the maximal material wellbeing of the population [4]. Furthermore, in its utility-driven construction, neoliberalism argues that economic growth – and only economic growth defined as a continuous increase in productivity – can deliver higher universal living standards and ensure the best ‘care of life’ for the population. This has also developed with regard to the neoliberal promotion of individual rights: the right to one’s body, to health, to happiness, to the satisfaction of needs and so forth. These rights have been largely at the expense of the commons.

The neoliberal political paradigm has effectively generated an ontological landscape where the boundary between the economy and politics has shifted towards the creation of an ‘economic realm’ ‘free’ of political ‘interference’. Under the rationality of neoliberalism, economic knowledge becomes the fundamental guiding and conditioning element on the exercise of politics and ethical behavior. This creates an environment in which extensive social security, for example, is seen as too costly and forces an increase in the price of labour; this moves economic competition towards markets such as China where labour power is relatively cheap. Thus the central doctrine of neoliberalism emerges: “[t]here is only one true and fundamental social policy: economic growth” [5] and hence social justice can never be the aim or outcome of a successful economic policy. Analytically it is possible to go further than this and begun to unpack neoliberalism as a schematic framework for the construction of social ontology; a schema in which rational behavior is economic behavior and the acceptance of economic truths becomes concurrent with the acceptance of reality [6][7]. However, we should not equate the neoliberal project with a stage of economic development, or with the idea that state/social agents have withdrawn from economic activity: rather, we should understand that populations are now governed through market imperatives, invoking and training them as ratiocinative liberal actors.

Social policy in the last two decades in South Africa has largely enunciated the neoliberal paradigm [8] with its strong emphasis on ensuring that macroeconomic policy rules must have its own objectives; secondly that these must be removed from social or political interference and thirdly that there is a fundamental limitation to social mechanisms such that they cannot – inherently – interfere with economic processes [9][10].


[1]        See Foucault, M. (ed. Michel Senellart; trans. Graham Burchell) (2008) The Birth of Biopolitics: Lectures a the College de France, 1978-1979. (Basingstoke: Palgrave Macmillan).

[2]        In some respects, proponents of the Chicago School comes close to a type of naturalism, in which it is claimed that the market and enterprise are naturally developed process; without being implicitly socially Darwinistic in this respect, they do not come close to this kind of evolutionary thinking.

[3]        The entrepreneurial relations enters as the identification of the self, via the idea of ‘human capital’’, the individual’s entire behavior, the body as genetic capital, education as investment, marriage, love and child-rearing as forms of investment and revenue (see Foucault. Birth of Biopolitics. 229f; 244f).

[4]        Foucault (Birth of Biopolitics: 317) has formulated this in the following terms:

“This means ‘liberalism,’ since it was in relation to liberalism that they assumed the form of a challenge. How can the phenomena of ‘population,’ with its specific effects and problems, be taken into account in a system concerned about respect for legal subjects and individual free enterprise? In the name of what and according to what rules can it be managed?”

[5]        Foucault. Birth of Biopolitics. 144.

[6]        Foucault. Birth of Biopolitics. 29.

[7]        Becker’s work in economics can be demonstrated to illustrate how the entire spectrum of human behavior can be tested through the perspective of economic rationality and governmentality, including diverse human experiences such as altruism and addiction; human behavior is always reducible to economic interests. Thus economic rationality becomes defined such as individuals are always seen as aiming to maximize their welfare; for example, neoliberalism thus conceives of altruism as a process in which personal maximized utility is understood as achievable through the welfare of others.

See: Becker, G. (eds. Febrero, R. & Schwartz, P.S.) (1995) The Essence of Becker. (Stanford: Hoover Institution Press): 219-39, 329-42.

[8]        Curiously more in line with the Freiburg School as opposed to the Chicago School

[9]        Thus, for example, violence against women is a purely social phenomena and treated as such; the notion that there are class antagonisms and economic factors is completely ignored.

[10]      See Foucault. Birth of Biopolitics. 200.