“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Saturday, November 06, 2010

the exchange matrix

The other day, my friend M. sent me a copy of a letter that was written by an editor of a press to another person, in which the editor solicited a small essay for a line of books that would contain small, one hundred page essays on a variety of topics. M. suggested that this was definitely up my alley – and I have to agree.
So I have been thinking of carving out a small bit from my human limit project for a book to be tentatively entitled, Homo Oeconomicus: the biography of a myth. Much of what I’ve been writing lately (about the origin of the equilibrium idea in economics) would flow very easily into a book about the rise of the idea of the homo oeconomicus – the rational actor whose ectoplasmic calculations are at the center of mainstream economics. To paraphrase Paul Veyne’s book, “Did the Greeks believe their myths”, I think an essay about whether the economists believe theirs – and more importantly, how their belief has helped form the political and economic order of modernity – is worth a nice one hundred pages.

This essay would have to begin in Rouen. I’d like to start with Pascal, Boisguilbert and Fontenelle and go forward until, in the 20th and 21st century, I bump into Robert Lucas, the Ownership society and the Browne report. The essay would really be the development of a phrase of Fontenelle, who, in his Eloge de Montmort, wrote that the scientific spirit will in the end bring about the belief “that the political world as well as physics is ruled by weight, number and measurement.” The great transformation of the economic and political arrangements under capitalism, outlined by Marx and Engels in the Communist Manifesto and Karl Polanyi in the Great Transformation, took place not only in the vast recombination and recreation of everyday routines, but also in the thoughts entertained by the clerks, the policymaking intellectuals, the poets, the dissenters, the political arithmeticians, the pamphleteers and scientists, and in general the entire crowd of Burke’s “theorists”. Such is the ‘spirit’ of capitalism.

Historians have long been convinced that Adam Smith’s conjectural history is basically right Smith puts “commercial society”, or a society based on the cash nexus, at the endpoint of history. Myself, I want to dispute one of the premises of this idea, which is that we have gone from a society in which the dominant form in which the matrix of exchange occurs is barter to one in which the dominant form is money. I think this claim is made, to an extent, by engaging in a definitional tour de passe-passe, in which a system of exchanges is mysteriously expelled from economics, and is then, as mysteriously, crunched into a system of rational choice, a method by which mountains regularly give birth to mice, and all is dissolved in the triviality of a decisional form without, of course, explaining decisions at all. I take the term “exchange matrix” from Robert Cowen, who was very concerned with the fact that, in the Walrasian and neo-Walrasian schemas which are at the heart of neo-classical economics, the stripping away of the “veil of money”, which is meant to help us understand the self-regulating nature of money, is the equivalent of the claim that, in essence, money simply is a refined form of barter. D. Dillard, in The Barter Illusion, helps us to see what Cowen tries to show formally in matrix form – namely, that the idea that money is barter undergirds a completely fictitious view of firms, which premise that they exist solely for the sake of consumption. As Dillard – echoing Marx – points out, a firm’s output is ‘reconstituted as money capital” for the very good reason that firms do not exist – except on the most abstract level – to increase consumption. “What is real from the point of view of the objective of the firm is money.” As Dillard points out, “A corollary of the barter illusion is that money is neutral with regard to output and unemployment.”

All of which is one part of the illusion of the pure exchange system – that is, that barter and money are essentially the same. So the first part of understanding the myth of homo oeconomicus is to remove the illusion of the equivalence of money and barter, and the corollary illusion that, on the one hand, there is a pure barter system, and, on the other hand, that there is an equilibrium towards which markets tend.

Homo Oeconomicus, that eternal calculator of profit, operates within these larger mythical frameworks. My proposal is, firstly, to go from the mixed matrixes of the late medieval European economies up through the genesis of political arithmetic in the early modern period by looking at some plays – I’m thinking of Everyman, King Lear, the Alchemist, L’avare; secondly, to look at some analogies of the wheel – the wheel of Fortune or Nemesis, the circulation of the blood, and the circulation of money; thirdly, to examine Pascal’s meditations on the difference between reasoning and authority, against the background of Pascal’s development of a theory of probabilities based on the example of the game; fourthly, to examine the Enlightenment development of man the machine as man the calculating machine; fifthly, to go from Smith’s pin-factory to Marx’s theory of alienation, with its deep reach into how he conceives the economic sphere; sixthly, to discuss Polanyi’s double movement – that fold in the development of Capitalist culture in which the state intervenes as a guarantor (of social welfare, of banks, of farming culture, etc.); and finally, to discuss the social coordinates of individualism.

This may be too ambitious. Hey, commentors, tell me what you think!

15 comments:

N. Pepperell said...

This is very nice:

All of which is one part of the illusion of the pure exchange system – that is, that barter and money are essentially the same. So the first part of understanding the myth of homo oeconomicus is to remove the illusion of the equivalence of money and barter, and the corollary illusion that, on the one hand, there is a pure barter system, and, on the other hand, that there is an equilibrium towards which markets tend.

Marx makes this pivot in chapter 2 of Capital, where at the very beginning of the chapter it can look as though he's discussing a system of barter. Not too many paragraphs in, however, he shatters this possibility, bringing in money (through the "devil's dialectic" passage I've discussed on the blog) - and, in the process, indicating that the previous discussion of "barter" isn't really even a discussion of barter, but a discussion of the exchange of material goods as it could only take place after the mediation of money had been established as a ubiquitous aspect of the process...

roger said...

Nicole, interesting comment. So, are you looking around to publish your Marx work? I hope so - I want to see Pepperlianism unleashed upon the world!

It is interesting that Cowen, although he does get the exchange matrix, still doesn't get that exchange has anthropological dimensions that economics must deal with - rather than retreating to the rational agent. Calling this extra-economic is not only a cop out, but it fundamentally distorts the study of the political economy.

Which is one of the reasons I hold on to Marx's notion of alienation - and believe he did. Since it points to an essential anthropological moment in the capitalist economy.

N. Pepperell said...

Hey roger - I agree absolutely on the notion that Marx is offering an anthropological take on capitalism, and that omitting this fundamentally distorts what economists are trying to explain. Marx ruthlessly goes after the political economists' tendency to treat contingent aspects of our experience as "data", by showing that it's neither necessary nor desirable to treat these things as black-boxed "givens" - that it's possible to analyse the contingent practical processes by which this sort of "data" is produced.

In terms of whether this is best inflected in terms of the notion of alienation, it sort of depends, from my point of view, on the associations your likely audience has to the term. A lot of approaches to Marx that emphasise the term "alienation" have in mind a sort of philosophical anthropology - as though what is being "alienated" is a kind of human essence that is more transhistorical than capitalism itself, and which capitalism violates - so the standpoint of critique is lodged in this transhistorical substratum, which is then understood to be "alienated" by the contingent phenomenon of capitalism.

I think Marx attempts to be more consistent in, as he phrases it, rendering his categories "fluid". If we keep the vocabulary of alienation, then the term needs to be redefined such that what is experienced as alienated is not a transhistorical human essence, but instead practically-generated potentials (including potentials for the full development of particular kinds of human potential) that are just as contingently produced as capitalism itself - but that, for all their contingency, still point toward the possibility for the future development of a form of social life that is more emancipatory than what we're reproducing now.

Inflected this way - such that what is alienated is just as "fluid" a category as what is alienating - I think it's possible to articulate what Marx is doing in terms of a theory of alienation. The issue is only how much the actual term is weighed down, for specific audiences, by its historical associations is some very non-fluid forms of Marxist theory...

I tend not to use the term "alienation" for this reason, although, to be honest, I'm learning from examiner and reviewer reactions that a term that I do use - "anthropological" - seems basically to have the same associations for some readers... :-P So maybe there's no way to avoid this problem - people just want to read Marx as providing a kind of objective, scientific anchor for politics, and it may not be something that I can break through by sufficiently selective choice of terminology... ;-)

N. Pepperell said...

By the way, I meant to say earlier, on the question you actually asked in this post :-), that the book concept you're proposing sounds fantastic. The question of our myths - our fetishes - and how we do and don't believe them - how they form us, even as, with part of ourselves, we have the capacity move beyond them - is a really nice frame.

roger said...

I must admit that I have largely ignored the humanitarian - anti-humanitarian fight about alienation because I don't think either side reads Marx right on the issue. Which is not about the human essence, but about a historically situated shift in everyday routines and expectations that comes about with the "great transformation" to capitalism.

Obviously, one can find family resemblences with other forms of alienation generated in other economic systems. But I don't read Marx as being nostalgic for those other systems - no romantic about the Middle Ages he! - but, as you say, understanding the potential for liberty opened up by the dynamite of revolution, which is liberty in our everyday life.

So - I take alienation not to have a double sense - on the one hand, it has a normative aspect as a term from which one can mount a moral criticism of capitalism; and, on the other hand, an anthropological aspect, from which one can see how capitalism generates both compliance and discontent, for like any economic system, norms alone, or laws and norms, don't really suffice to create compliance and manageable dissent. Alienation, in its essence, is the expression of the substitution function encoded in capitalism. And that is what the human essence stuff amounts to - for one of the great guardians of the capitalist order is the thought that what one does, who one is, can be substituted for by the system, which is, in fact, set up to do just that.

N. Pepperell said...

Hey roger - yeah, for years this would have been the case for me as well - not worrying too much about a number of the long-established debates, because it's often very difficult to get from either side to the sort of reading I was trying to develop. The main problem - and, I guess, for me, this problem first manifested when I started blogging - is that the vocabulary I was using when I was just trying to develop a reading for myself, ended up sometimes being systematically confusing for other people trying to follow along.

This isn't really preventable in any absolute sense, although some terminological shifts have helped some kinds of misunderstanding, so I keep trying... I get constantly struck by how much the presentation of an argument requires a high level of goodwill from potential readers - a willingness to meet you halfway with at least the potential that you might be making sense... An author can't really create this sort of goodwill - at least, I'm not sure if I personally know how... So I end up trying to avoid the most common triggers for unsympathetic reactions - alongside asking myself which terminology I really need, which terminology I might as well use, because people triggered by it will probably dislike the argument anyway, etc.

But over the course of getting everything into some sort of organised presentation, my vocabulary has changed quite a lot - to the point that I now express certain types of claims using frames that could easily seem diametrically opposed to where I started out, even though the "sense" of what I'm trying to communicate hasn't changed, from my point of view. I've just become more aware of the sorts of "sense" other people are trying to make of the same texts...

(post cut off for lenth - more below...)

N. Pepperell said...

But on the substantive point: I see Marx deploying something like a Derridean concept of selective inheritance, and tend to play with this vocabulary in place of the vocabulary of alienation, in the perhaps false hope that people will be less tempted to read the argument in essentialist terms...

So: capitalism is a complex system. It requires lots of practices to reproduce it - and these practices are, on the ground, quite different from one another. Lots of different dispositions are enacted, lots of different goals are sought, lots of different sorts of practical activities are undertaken - and what we call "capitalism" is the aggregate downstream effect of all of these divergent micrological practices.

Most forms of theory, from Marx's point of view, focus on only a thin slice of this complex array of everyday practices. Often, that thin slice involves the practices associated with market exchange. But the reproduction of capital requires more than just market exchange - so the sensibilities, dispositions, habits of perception and thought, and practices associated with the market are only part of what gets generated in the course of reproducing capital.

Theories that focus on some thin slice of that overall process of social reproduction constrain our sense of the possibilities being generated in everyday practice - they narrow our vision, they make only a small part of our history "citable" to us. In the process, they make it more difficult for us to appropriate the practical possibilities we are already generating - they make it more difficult for us to inherit our current history differently, to create a new sort of future from those unchosen and accidental elements lying ready to hand, if only we would render more of our present history "citable".

I see Capital as a vast catalogue of citable historical potentials. This catalogue includes some aspects of everyday experience that are frequently cited (and, sadly, these are often the very elements that have been emphasised in common forms of Marxist theory). But the catalogue also includes many aspects of experience that are not often cited - or that, when they are cited, are treated as somehow "outside" capitalism.

Marx is trying to bring many more of our historical potential into the ambit of citable historical experience. He is trying to make it possible for us to appropriate our history - actively - selectively - with a different appropriation to the one that endlessly reproduces capital in ever-shifting forms.

In this sense I think it's possible to talk about our "alienated" historical potential - in the form of possibilities that we collectively enact, but that we do not inherit in a way that would enable their creative development into new forms of collective life. So yes, as you say: it's not at all a nostalgic conception - we aren't "alienated" from something we used to have. We are "alienated" from our own capacity to creatively and actively inherit the possibilities we nevertheless continue to reproduce in stunted and thwarted forms, in the course of reproducing capital.

roger said...

Nicole, this is beautiful.
I've noticed that you are a very careful writer. Often, reading your sentences, I'm reminded of a bomb squad working on a tricky explosive. And I think that it is partly because the history of the interpretation of Marx is so fraught with partisan bickering that some of the tools he developed - like alienation - are almost unuseable, since they have been, over time, the subject of claimjumpers and debunkers.

And I, too, was at one time properly disdainful of the humanistic Marx, and the humanistic in general. I've slowly lost my disdain, which has to do with the wear of the current trend in Anglophone culture - the trend towards ignorance, inequality, permanent war, and the collapse of Polanyi's double movement that made the state the modifier of capitalism's excesses. It is an inhumane (not to speak of an anti-ecology) moment, and I want the tools to hit it as hard as I can.

michael- said...

Great discussion both!!!

I would agree with most everything you both have said, so one quick note I will make is that in looking at Marx's more anthropological statements we need also look at what he says specifically about "species-being". I think Marx is most insightful when he talks about human potential ('needs', capacities, etc) and what certain production systems actually do to embodied humans and social relations. "Alienation" is just a door-way in to Marx's theory of human nature, which, in broad strokes, is compelling and deeply ethical.

michael-

PS: Would either of you mind if i post your exchange on my blog?

Sarah said...

I admit to being way out of my depth with you two (I haven't even read Marx, much less Pascal, Boisguilbert, Fontenelle and the others you mention) but I would like to add my enthusiastic endorsement to your writing this essay. I'd love to read it.

About Marx... One of the reasons I haven't read him is the very visceral reaction the very mention of his name produces in my Czech dissident husband and most (not all) of his (now our) friends. But reading your discussion makes me think I should... because it sounds like he was touching on a subject I have been thinking of writing about.

This is still gelling in my mind, but my experience visiting Czechoslovakia before, and then living here after the Revolution gave me a very different view of a 'barter economy' than most people have and that I had before I came. What I discovered is that idea- promoted, in part, by economists- that economies where most transactions are carried on without money as an intermediary are in some way more crude or primitive than money-based economies is completely wrong. In fact, without the distortions of money-- and the false equations it allows-- some very sophisticated calculations indeed go on. The medium of exchange becomes the network-- and the most desirable 'commodities' are access to a particular network- or the addition of a 'valuable' person to your own network.

What this meant in practice was that people had a much wider variety of possibilities in acquiring whatever they desired than in the money-based economies I was familiar with. Not only did people with skill or knowledge have an opportunity to 'trade' this, but even people who might have the potential to develop such skills or knowledge in the future might be 'added' to someone's network 'on spec' so to speak. Of course, just as the financial manipulators are the true beneficiaries in a monetary system, the most skilled network builders and maintainers were the ones who did best in this non-monetary system.

What's interesting about this is the extent to which, despite the possibilities for accumulating money independent of any social activity in our system, the principles of the network system continue to work, generally unnoticed and without comment. If I understand you correctly, you are, in fact, noticing this here, and calling it 'anthropological'. This seems exactly right to me. Economics, and our culture, has been badly damaged by failure to recognize the fundamentally social nature of all exchanges and the attempt to treat them simply as interchangeable quantities.

Anyway, thanks very much for an interesting blog post, to be followed, I hope by an even more interesting essay.

Sarah said...

I admit to being way out of my depth with you two (I haven't even read Marx, much less Pascal, Boisguilbert, Fontenelle and the others you mention) but I would like to add my enthusiastic endorsement to your writing this essay. I'd love to read it.

About Marx... One of the reasons I haven't read him is the very visceral reaction the very mention of his name produces in my Czech dissident husband and most (not all) of his (now our) friends. But reading your discussion makes me think I should... because it sounds like he was touching on a subject I have been thinking of writing about.

This is still gelling in my mind, but my experience visiting Czechoslovakia before, and then living here after the Revolution gave me a very different view of a 'barter economy' than most people have and that I had before I came. What I discovered is that idea- promoted, in part, by economists- that economies where most transactions are carried on without money as an intermediary are in some way more crude or primitive than money-based economies is completely wrong. In fact, without the distortions of money-- and the false equations it allows-- some very sophisticated calculations indeed go on. The medium of exchange becomes the network-- and the most desirable 'commodities' are access to a particular network- or the addition of a 'valuable' person to your own network.

(continuing)

Sarah said...

...
What this meant in practice was that people had a much wider variety of possibilities in acquiring whatever they desired than in the money-based economies I was familiar with. Not only did people with skill or knowledge have an opportunity to 'trade' this, but even people who might have the potential to develop such skills or knowledge in the future might be 'added' to someone's network 'on spec' so to speak. Of course, just as the financial manipulators are the true beneficiaries in a monetary system, the most skilled network builders and maintainers were the ones who did best in this non-monetary system.

What's interesting about this is the extent to which, despite the possibilities for accumulating money independent of any social activity in our system, the principles of the network system continue to work, generally unnoticed and without comment. If I understand you correctly, you are, in fact, noticing this here, and calling it 'anthropological'. This seems exactly right to me. Economics, and our culture, has been badly damaged by failure to recognize the fundamentally social nature of all exchanges and the attempt to treat them simply as interchangeable quantities.

Anyway, thanks very much for an interesting blog post, to be followed, I hope by an even more interesting essay.

Sarah said...

(Sorry for the multiple post. I got a 'comment too long' warning after posting the complete comment.)

roger said...

Sarah, that is extremely interesting. Most anthropologists would, I think, say now that exchange systems are always mixed. There is always a money element, or a 'universal' store of value, a barter element, a gift element, etc. In American society, households commonly earmark money. This gives money qualities that economists don't like to notice - but sociologists do. Thus, to speak of 'saving' as if all saving were alike, or were the equivalent of investment, is to misunderstand how earmarking works - as, for instance, an encouragement to savings

Michael, sure, I'm fine with any copy and pasting you do. I don't know about Nicole, but if you link to Rough Theory, that should be enough.

N. Pepperell said...

Just quickly, as I'm running off to work: reproducing my part in the exchange is fine - a link back to http://www.roughtheory.org would be appreciated. Sorry not to comment substantively - will be late if I pause to think :-)