By: Jeremy Kingston
Much of political philosophy concerns itself with devising a priori systems (derived purely from theory) for organizing society. However, in doing so it tends to overlook many extant structures – particularly those of the economic sphere. In this piece I examine what it is that these a priori systems overlook, as well as the ways that the existing structures alter the institutions haphazardly placed on top of them. I devote the bulk of my attention to the frequent attempts made to overlay liberal values into our market society.
THE SELF REGULATING MARKET EMERGES
Classical economics regards its object of study as a subset of the social, subject to its rules and dictates. In fact, for most of human history the economic has been considered to be part of the social sphere. Although it would not be fully grasped for some time after the deed, the advent of capitalism momentously extricates the market from that grip. The economy begins to organize itself with an aim towards production, rather than taking its directives from some social institution (e.g.; the command of some governing authority or tradition).
Crucially, the emergence of the self-regulating market necessitates the commodification of three things previously not thought of as such: land, labor and capital. Only when these three come to be regarded as economic rather than social goods, can the self-regulating perpetual motion machine begin humming. So, as Hegel is sometimes said to have ‘discovered society’ economists after Smith, such as Malthus and Ricardo, began to ‘discover the laws’ of economics.
Most societies have possessed both land and labor but not all have treated them as commodities. Because land and labor are the very substance of society – of the social realm – when we subject them to the market, we take the fabric of the social and morph it into the economic. We take aspects of life that were formerly social (public) and privatize them. But the shift from peripheral markets towards a market society also requires the proliferation of private values and self-reinforcing individualist moral psychologies. Our new values and theories coevolve with the emerging economic system and serve to ex post facto rationalize the degradation of social values. As Karl Polanyi explains:
[T]he development of the factory system had been organized as part of a process of buying and selling, therefore labor, land, and money had to be transformed into commodities in order to keep production going. They could, of course, not be really transformed into commodities, as actually they were not produced for sale on the market.
But the fiction of their being so produced became the organizing principle of society.
All social systems are hyper-complex, and as such it is effectively impossible to draw certain lines of causal reasoning. However, it is helpful to quickly note some of the major factors that allowed for land, labor, and capital to become these vital factors of production. The first amongst these is the emergence of Calvinism and the Protestant Ethic, encouraging saving and reinvestment of capital for the dual purposes of “piety as well as profit”. Next, the enclosure movement, which led feudal lords to regard their property as an instrument for extracting wealth. This helped to catalyze the emerging notion of land as a commodity. Finally, a class of urban proletariats begins to emerge as guilds slowly grow into more formal businesses, and the sheer amount of available labor greatly increases.
Arguably the most important innovation of the capitalist mode of production is the commodification of labor. This brings the notion that the worker owns himself, and so the essence of his being becomes the object of his being – a factor of production. And this is to be celebrated, for the worker is freed from the shackles of serfdom – he inherits the ability to choose to whom he will sell his labor, to whom he will sell himself. But all this freedom comes with a price: the worker, unlike the serf, is to be self-sufficient. No social safety net exists to provide for his well-being; should his labor fail to pay for his needs then his needs must go unmet.
Joseph Schumpeter, explaining the dynamo like nature of the modern system writes: “Capitalism…not only never is but never can be stationary.” It is a social system never contented by its immediacy but always trapped within it; it seeks to conquer and do away with all competing social systems. The system instinctually drives towards new goods, new methods of production, new markets and new forms of industrial organization. In contrast to pre-capitalist formations which are static and tradition-oriented, capitalism is dynamic and future oriented. The system will implode if alternative social systems remain in use (consider the US – Soviet relationship).
Before we ascertain why this is the case first let us consider what economic growth implies. Growth is not simply an abstract notion, it is measurable and its effects are tangible. Because, economic growth increases our standard of living, we suffer when business slows down. When business slows, economic growth slows, and our standard of living increases more slowly. A small change in growth might result in a large increase in the amount of time it takes to double our current standard of living. For example, during much of the 20th century the American economy grew at around 1.5% per year, meaning every 47 years we doubled our standard of living. A small change in that percentage translates to a significant increase or decrease in number of years. To the individual this matters a lot; if I am only going to live for 60-70 years, it would be nice if I get to enjoy some of the fruits of my labor. Clearly, capitalism increases our standard of living at a tremendously fast pace – the faster it goes, the better it seems for the individual. As a result, it appears to be in my own interest for more of my life to become commodified. The difference here is especially striking when we consider the relative stagnate size of feudal societies. In pre-modern times, one’s children, great-grandchildren, and so on could expect only a marginal increase in their standard of living (at best). Now, it is the status-quo for children to lead a better life than their parents. (Though this quite clearly does not hold true across all racial groups.)
The divergence between pre-capitalist and capitalist economic systems unsurprisingly tracks the emergence of the modern conception of individual psychology. In fact, the argument for capitalist markets begins from the premise that individuals are rational actors who seek to satisfy their ends via market goods and services. By contrast, the individual in feudal society sought the attainment of their ends first in themselves, then in certain social groups. Only if those options were insufficient would the individual be forced to resort to small tertiary markets. In a capitalist society the individual need not produce anything that he directly consumes. If we simply accumulate capital, we can use the market to realize all of our wants. In this regard the capitalist man is significantly more dependent on others than man in self-subsistence oriented modes of production. Despite our increasing material interdependence we oddly conceive of ourselves as more free and independent. The ability to lead the autonomous life that liberal thought idealizes requires an increasingly intricate division of labor, which amounts to an increasingly strong reliance of the individual on others – by way of the economic.
At first approximation it would seem that our increasing global interdependence might foster cosmopolitan values, however this does not appear to be the case; individual values remain in vogue both in philosophy and in culture. To find the culprit we must consider the impersonal character of market interactions. The agents in the consumer – seller relationship do not have matching aims for they are not actually engaged in a joint action. Each agent has independently defined ends which they must achieve, often to the impairment of the other party. Furthermore, market relations are significantly lower energy than our meaningful social relationships. They require us to engage with other humans only on the most superficial level; and this is obvious to us when we only consider even our most banal interactions. We do not meet one another as human beings – we meet in our costumes, wearing our masks, playing out our parts – we offer each other shadows. Perhaps we occasion on that sinister thought: “not even those closest to me know who I really am”. Then, those bold enough to reflect upon this condition conclude: “neither do I”.
Robert Heilbroner writes:
In the days of our Founding Fathers a hundredfold difference between one person’s income and another’s would have been regarded as a gross violation of ethical norms. By the mid-nineteenth century, the enlarged scope and growing personality of economic life steadily increased the acceptance of, even the admiration for, high rewards for economic success…During the roaring twenties the sky was the limit, no questions asked. Something like this state of mind seems to have reappeared in our time. 
The alleged misattribution of market values that liberal political and moral philosophers cite as worrisome are, for the economist, a structural feature. As a result, we might wonder if it is even possible for non-market values to safely exist within capitalist institutions. Both historically and logically it would seem otherwise.
We ought to ask ourselves: Is it possible to practice liberal-democracy within a capitalist system? If democracy consists of only formal (or procedural) participation in governance via voting, then yes. In fact, we have been carrying on this way in liberal-democracies for some time. However, if we wish to endorse a more robust conception of democracy that fosters a free community of equals, the social relations resulting from capital appear to be a massive hindrance. If we determine that democracy is in fact something we value, surely we must ask the question: can this be achieved within a capitalist mode of production?
To continue practicing both liberal-democracy and capitalism as we have will necessarily lead to things like the Citizens United decision. The case exemplifies the inherent tension between liberal-democratic values and capital as a practiced institution. The result tells us who the stronger force is. Left liberals like Ronald Dworkin might bemoan the court’s decision, arguing it is flatly contrary to liberal principles, and perhaps they are correct. But, the value of liberal-democracy plays out within the system of capital; the latter drives the show, the former just follows along struggling for a voice.
It appears that despite our most careful intentions our values will always be morphed as they become translated to practice and institutionalized. Something happens in the process of transferring the ideal to the reality. It is not as though we can simply realize new values as if our society was a tabula rasa, anything we input will have to mix and adapt to the existing conditions. To provide two very coarse examples: the value of universal public education, in light of institutional reality, outputs: a system of subsidized private education. The value of individual freedom of speech practiced upon the deeper lying institutions of capital outputs: Citizens United v FEC. But the interplay is exponentially more complicated than this simplistic analysis, and is perhaps so dynamic as to be impossible to fully capture. The values we input into our reality instantaneously begin a continual process of transfiguration as they interact with our pre-extant social reality. In fact, even in their most latent form in the imagination – far before they reach social reality, values are in themselves already transfigured by our social reality.
Consider the U.S. healthcare system. Here, liberal notions of human dignity contribute to a social attitude that longs for more egalitarian institutions. We do not think that the ill should die on the hospital steps because they cannot pay their bills. Nevertheless, an examination of the institutional reality (at least in the United States) reveals our healthcare system has been minimally effected by our values. In fact, if we scan society at large it is hard to identity any domain where a liberal value has been truly realized. The world of Locke, Nozick, Rawls, etc. exists, and perhaps can exist only on the pages of their work. Capitalism moves far too quickly to give due concern to our ideals and values; perhaps Hegel was right: “philosophy at least always comes too late.”
One of the few people to have ever seriously grappled with this question is one of our own patron saints: James Madison. To his credit, Madison was acutely aware that Locke’s liberal values were devised in a realm of ideas so far asunder from the material conditions of life, as to render them un-institutionalizable. This may seem like a heretical claim (especially to those, like myself, who have been educated to regard American Constitutionalism as Civil Religion) but, whilst exploring Madison’s work – particularly Federalist #10, one will find an explicit awareness of the capricious relationships created by mixing a system of political equality with conditions of material inequality. Rather than dismissing the issue, he sets himself to resolve the tension. How can a system be designed to prevent majority group (who Madison knows will inevitably be less affluent than the minority) from upsetting state stability?
Although Madison offers us an answer, it does not satisfy. He tells us that every male property owning citizen should hold political power, but not an equal share. This he thinks should lead reasonable citizens to consider a rebellion against the state a sort of self-harm. But Madison allows only formal equality not equal political power. Economic inequality remains protected by a series of political institutions that Madison designed to remain un-beholden to voter interests. It is quite apparent from his design that Madison realizes liberal values in their pure form – as they exist in the minds of the philosopher – cannot be translated into a stable political system given our present economic system. He resigns himself to tailor political institutions to insulate our economic ones, rather than doing the reverse. Although I am not certain this is the correct first move, nor am I at all convinced by the pragmatic solution he offers, we must commend him for taking on the question that not many others have.
Another very important (and more contemporary) example of scholarly inquiry into the relationship of institutional reality to our values can be found in the work of Joshua Cohen and Joel Rogers in On Democracy. In Chapter 3, aptly entitled “Structure”, the writers discuss the constraints that capital places on democracy. They argue that in a capitalist-democracy because: “the welfare of workers remains structurally secondary to the welfare of capitalists, and the well-being of workers depend directly on the decisions of capitalists,” it becomes exceedingly difficult to attempt substantial institutional re-imagining. As an explanation they suggest that democracy as practiced on capitalist foundations places a “demand constraint” on the workers that trends political conflict towards “short-term material advantage,” rather than structural reforms and revisions. In such a society it is irrational for the individual worker to seek anything other than stop-gap reforms, e.g.; minor increases in pay or improvements in working conditions.
[I]n a capitalist democracy, workers’ struggles to improve their material position are aided by the existence of political rights. Given the potential material benefit deriving from the exercise of such rights, and given the pervasive material uncertainty for workers characteristic of capitalism, it makes sense that workers’ use of political rights be directed toward the achievement of material ends. The structure of capitalist democracy thus effectively encourages the reduction of politics to striving over material gain…The reproduction of capitalist democracy reconstitutes material uncertainty and thus reconstitutes the conditions that encourage the reduction of political demand to the defense or promotion of material interests.
The obvious concern that emerges from this incisive analysis is whether it is possible to practice any robust conception of democracy within the capitalist mode of production. That is of course not to deny the existence of formal political equality, or even formal equality of opportunity; however, if a democracy requires that: “all…rule over each, and each in his turn over all,” capitalism seems problematic. How can we all rule over each other if the interests of one small group is structurally prior to the masses? Surely those masses – if they had any substantive political power – would not stand for the systematic relegation of their interests. But, as Cohen and Rogers persuasively demonstrate, the system of capital works to prevent critique of deep structure.
Contrary to their disconcerting analysis, it is generally accepted that in a liberal-democracy (no matter how fervently capitalist it might be), free citizens are able to critique anything that they please. But, is this really the case or just an ideological echo? Edward Snowden might care to weigh in. And, even in the realm of academia – much is considered taboo and as such gets extricated from the discussion. There have been times when I have found my interlocutors irked by any mention of structure – as though we are only permitted to imagine individuals qua individuals born sans context into a free and fair world. We are of course allowed to argue for formal equality of opportunity — on occasion we might even wander into the difficult territory of Rawls’ fair equality of opportunity. But heaven (or Hayek) forbid that we question the feasibility of achieving any notion of substantive equality of opportunity within the capitalist mode of production. Such a critique would undrape that ornate and maleficent gown the system uses to obscure itself.
If we want substantive equality of opportunity – as good left liberal thinkers do – then we need to account for disparate impacts of regulations that are formally equally. To do so, we need to know what those disparate impacts are — and this quite obviously this requires looking at outcomes or ends, rather than some muddled notion of opportunity. But, to look at ends is fundamentally against the ethos of capitalism. After all the market is fair – it treats all agents as equals. It seems that any attempt to create a society with substantive equality of opportunity will necessarily require a serious critique and revision of capitalism. However, this will be extraordinarily difficult because life in a market society precludes its participants from conceiving of society as an organic creation.
 Polanyi, Karl. The Great Transformation. 
 Heilbroner, Robert. The Making of Economic Society. 
 Ibid. 
 Schumpeter, Joseph. Capitalism, Socialism and Democracy. Harper Perennial Modern Thought ed. New York, NY: HarperCollins, 2008. 
 Ibid. 
 Heilbroner, Robert. Economics Explained. 
 Heilbroner, Robert. Economics Explained. [153-154]
 Ibid.  My emphasis added.
 In short, this decision allowed for unlimited corporations to donate unlimited amounts of money to political campaigns.
 Hegel, Georg Wilhelm Friedrich, and S. W. Dyde. 1896. Hegel’s Philosophy of right. London: G. Bell
 I reference here Duncan Kennedy’s wonderful paper: American Constitutionalism as Civil Religion: Notes of an Atheist.
 J.S. Mill’s Principles of Political Economy is a more interesting theoretical attempt to grapple with this question.
 Cohen, Joshua, and Joel Rogers. On Democracy. 2nd ed. New York, NY: Penguin Books, 1985. 
 Ibid. 
 Aristotle, The Politics [Book VI]
Image: Effects of a Strike Upon the Capitalist and Upon the Working Man. Originally published in Punch Magazine, 1852