Dissertation Abstract

My dissertation addresses a contentious topic from classical political economy as it appears in the works of Hegel, Marx, and Keynes. It’s what I call the “problem of overproduction or underconsumption” (POU), which arguably gives rise to unemployment and poverty. In terms of their explanatory power, I consider Hegel’s account of what he calls the “rabble” (Pöbel), Marx’s view of “the industrial reserve army of the unemployed” (“relative surplus population”), and Keynes’s view of “the paradox of poverty in the midst of plenty” (“involuntary unemployment”). Ultimately, Marx is closer to Keynes than Hegel or Ricardo, I conclude, anticipating much of the Keynesian revolution.

First, I reconstruct Hegel’s account of the POU in his Elements of the Philosophy of Right and situate it in the context of debates of his day. The POU can give rise to unemployment and poverty for a portion of a nation’s citizens, Hegel claims, and thereby obstruct the actualization of freedom in modern society. Yet Hegel picks strange allies for this claim. He refers to the orthodox school of classical political economy (Smith, Say, and Ricardo), which denies that the POU is even possible or can cause problems at all. The orthodox school’s fundamental assumptions rule out the possibility of such problems (“general gluts”, POU) from the start: if one construes market exchange as the direct, moneyless barter of goods for goods, as they do (viz. “Say’s Law”), then supply and demand are always basically in harmony, and all is well. Detailed inspection shows, however, that Hegel’s view is much closer to the heterodox school of “underconsumptionists” (Malthus and Sismondi). Though he does not mention them by name, their view anticipates later breakthroughs in the theory of “effective demand” in ways similar to his own. Like the heterodox school, he recognizes the POU was arguably happening in cases like the post-Napoleonic recession. And this ought to motivate revision of the classical assumptions, which neither Hegel nor the heterodox school entirely succeed at doing. In their descriptions, both recognize that the POU can cause unemployment and poverty. But neither explain why or how the POU itself comes about. Indeed, they’re too steeped in classical assumptions.

Second, I consider Marx’s Capital and argue that it presents the alternative assumptions which one needs for a proper explanation of the problem Hegel recognizes, albeit obscurely. Marx’s novel concepts of value and capital differ from those of the classical school (and especially Ricardo’s labor theory of value) in ways which lend his view greater explanatory power. Like Keynes, he rejects the fundamental assumptions about markets and money which lead the orthodox school of classical economists to rule out the conceivability of the POU from the start (“Say’s Law”). For Marx, value and capital are essentially monetary, unlike the classical view, which abstracts from money. And, again like Keynes, Marx takes a fundamentally macroeconomic perspective, unlike Smith, Say, and Ricardo. With these means he can claim that, beneath the surface of unemployment and poverty, the changing composition of capital investments gives rise to the POU, which in turn gives rise to those phenomena. Over the course of so-called cycles, he argues, capitalists tend to invest relatively more money in labor-saving machinery or financial speculation and yet less in wages. This can result in a relative shortfall in those productive investments (aggregate demand) which determine the buying power of consumers (wages), ultimately impacting employment and profits negatively as well. This framework is not an option for any of the classics or Hegel, but it’s virtually identical to Keynes’s more-powerful view of stagnation and unemployment.

 

Working Papers | Abstracts

1. Hegel and Keynes: The “Rabble” or Involuntary Unemployment?

Abstract: This paper presents a reconstruction and analysis of the political-economic view that one finds in G.W.F. Hegel’s Elements of the Philosophy of Right. In his account of the so-called rabble (Pöbel), Hegel presents an incipient awareness of what economists now call a problem of “effective demand” as well as the way in which the latter arguably gives rise to involuntary unemployment and poverty. The view which Hegel’s work expresses in outline, however, is not entirely unique in the history of economic thought. Economists refer to it as “underconsumptionism”. And it has certain important deficiencies that become evident upon comparison with the stronger explanation of J.M. Keynes. The cause of those problems which Hegel has in view is a lack of effective demand by capitalist investors, as Keynes argues, and not final consumers or workers, as Hegel seems to believe. This has not been noticed in the philosophical literature because Hegel’s relation to macroeconomic theory has not been sufficiently considered. Ultimately, his view marks progress over some of his contemporaries, though one must continue beyond it to the Keynesian analysis, which might variously support or complicate his conclusions about actual freedom within a modern state—a question this paper must leave open.

Keywords: Hegel, Keynes, Effective Demand, Poverty, Unemployment, Capitalism

 

2. What is the Question to which “Capitalism as a System” is Oliver Cox’s Answer?

The purpose of this paper is to contribute to the reception of the neglected sociologist of capitalism, Oliver Cromwell Cox, and to provide some conceptual orientation for the recently renewed interest in his work. It addresses the challenge that anyone who tries to acquaint him or herself with Cox’s writings inevitably encounters. The scale and scope of Cox’s project can be overwhelming. It might seem as though one could take his statements on the topics of race or capitalism, for instance, in isolation. But the impression one gets by doing so would be misleading. How should we approach Cox’s work as a whole? In what follows I will propose to understand it as the answer to a question which Cox implicitly poses early on. “What is the cause of racial ideas and racism?” His answer is “capitalism as a system”, the title of his 1964 magnum opus. In other words, I argue, Cox’s work can be reconstructed as an attempt to explain the genesis and perpetuation of racial ideas and the reality of racism in terms of the history of capitalist society—a project still has a lot of explanatory and critical potential despite how much might have changed since he was writing.

Keywords: Capitalism, Political Economy, Geopolitics, Race, Prejudice, Racial Capitalism

 

3. Social Classes and Social Ontology: Reconsidering Classical Political Economy

In this paper I address the conception of social classes that one finds in classical political economy and argue that it can provide a convenient ontology of modern society or a useful ‘social ontology’. That is, it can help us to understand the kinds of individuals which constitute a modern society, or ‘what there is’ in society, as well as some of the latter’s peculiar dynamics and problems.

First, the paper considers important statements from the orthodox school of classical political economy (Smith, Ricardo, Mill) and its heterodox school (Malthus, Sismondi, Marx) in order to reconstruct the analytical framework which they all share. In short, which kinds of beings populate a modern society and the question of class membership is determined by the following three criteria: (a) what kind of assets one owns (viz. labor-power, capital, or land), (b) what one does with them, in exchange for (c) which form of revenue one receives (viz. wages, profits, or rents), yielding the following three classes: (1) workers, (2) capitalists, and (3) landlords. In contemporary terms, this is a “structural” or “functional” social ontology, foregrounding positions in a system which are defined by what one does to reproduce it. In two additional steps, the paper then continues to show how Marx takes the classical view a step farther by clarifying an issue that it never fully and explicitly elaborated as well as how the classical view might be updated for a more modern view of contemporary society in our own time.

The paper then considers Marx’s argument that the aggregate of value which is distributed in various forms of revenue (i.e., wages, profits, rents) is produced and increased by the employment of labor in industry (“exploitation”). Profits are possible in the aggregate, Marx shows, only if more commodities are produced and exchanged in a subsequent period than in an earlier one, because market exchange is always the exchange of equivalents, and market distributions can only yield individual or relative profits (net zero gains). Labor in production is the source of net value added in the aggregate (“surplus value”), of which the various revenues are just “forms”, deductions, or transfers that distribute that value. So, there is arguably only one source of revenue, which takes three “forms”, and the classical school succumbs to an illusion (“fetish”) when it believes classes are distinguished by three different “sources” of revenue.

Finally, the paper then considers how the classical view might be updated for a more contemporary perspective, taking hints from aspects of the works of Marx, Veblen, Keynes, and Berle and Means. To this end, it focuses on the financialization of capital and the consequent “separation of ownership and control” of it, which occurred with the formation of joint-stock companies, monopolies, and trusts (ca. 1870-1930). In this light, the classes or kinds of individuals which constitute modern society are slightly different than the classical view of capitalists, landlords, and workers. Rather, they arguably consist of owners of capital (rentiers, recipients of passive income, ROI), controllers of capital (salaried professional managers of the capital of others and labor), and wageworkers.

Some payoffs of my reconstruction of social classes as a type of social ontology include the alternative it presents to dualistic views of classes which avoids some classic clichés (i.e., bourgeoisie vs proletariat, rich vs poor, etc.), to widespread misconceptions that economic views of class are excessively reductive, and to social theories which understand matters solely in terms of mentality, intentionality, language, race, gender, sexuality, or culture—in short, anything but economic class.

 

 

5. Alternatives to Ideologism: A Critical Counterproposal

By presenting and evaluating three possible views, this paper addresses some answers to the question: what constitutes a society? They’re what I’ll call “ideologism”, “material-economism”, and “the actual-money view”. I’ll argue that the first is unsatisfactory for philosophical reasons, the second is stronger yet still unsatisfactory for empirical reasons, and I’ll propose the third as a serious and novel alternative.

First, drawing on influential statements of it, I address the commonly held and admittedly intuitive view that what binds individuals into a society is primarily just a shared set of beliefs, values, or norms (e.g., Hobbes, Pareto, Lenin, Gramsci, Burnham, Althusser). I call this “ideologism” because it’s the belief that the fundamental cohesive holding society together is just what’s customarily called an “ideology”. And it suffers from a defect related to methodological individualism (MI), which it takes for granted: it treats individuals and their beliefs as primitive constituents of the society it explains and presents no deeper explanation of them.

Second, drawing on Karl Marx’s work and Alfred Sohn-Rethel’s interpretation, I address the view that individuals constitute a society, at least in capitalism, by way of sets of market-relations in which individuals exchange labor-power and the products of human labor as commodities for money (e.g., profits, wages). I call this “material-economism” because the money-form of value provides the “social synthesis” here, in Sohn-Rethel’s words, as it’s the mediator between individuals. Intersubjective transactions rather than individual beliefs are doing the work, and the framework of society is just an “exchange matrix”. This is arguably stronger than ideologism (MI), but its central concept also contains a defect: it conceives of money on the paradigm of coinage, as though it were just like any other commodity, as a mere medium of exchange. This is the so-called commodity theory of money, which is an empirically false description. After the end of the gold standard and rise state-fiat currency in the 1970s, virtually all money is credit. So, focusing on industry and neglecting money’s other financial aspects and functions impairs the explanation.

Finally, I’ll propose an alternative to both views which keeps their virtues without their vices. Borrowing from post-Keynesian and chartalist economics, what I call the “actual-money view” substitutes a “credit theory of money” into the framework of material-economism and recuperates ideologism’s emphasis on individuals’ beliefs, which are essential in credit-debt relations (viz. credo, concerning debtors’ abilities to pay). I propose we glean the framework for our social ontology from the “set of interlocking balance sheets”, in Hyman Minsky’s words, which constitutes the financial structure of any economy today and mediates the transactions on which social existence and reproduction depends. This highlights the actual nature of individuals’ relations to one another in economies: one individual’s credit (entitlement-claim) is just another’s debt (payment-obligation), as all financial assets and liabilities net to zero in the aggregate. This empirically sound view of money, markets, and collective behavior, which does not always seem to ‘intend’ its collective outcomes (e.g., crises), provides a stronger basis for a social ontology.