Saturday, January 22, 2011

the bourgeois economists and the equilibrium

The figure of the homo economicus is first used in economics as a model for building a truly mathematized ‘social physics’ in the 1890s, which is also the decade in which Freud laid the foundation of psychoanalysis. These may seem like coincident moments in the intellectual history of two disciplines, but I wonder…

The marginalist ‘advance’ towards an economics that imitated the models of physics – that is, the breakthrough to the kind of ‘social physics’dreamt of by Bagehot - divorced value from production in order to grasp what, from the marginalist point of view, was the outstanding feature of the modern economy – the price system. It is a well known story: in economics, it is the age in which the insights of the classical economists were finally systematized as a science by leaving aside the labour theory of value. The theory, not being able to provide a direct explanation of prices, was, according to Jevons, Walras and Menger, incoherent. In its place, the marginalists advanced the idea of demand as the great mover of the system. Demand, however, or tastes, a subjective quality, could be appropriated by the mathematician in terms of units of utility – which would no longer be tied to the old 18th century psychology of pleasure and pain, laid out discretely like Newton’s corpuscles. Instead, one would use Newtonian calculus, the mathematics of limits, to produce a description of demand as a curve tending towards indifference.

At the same time, Freud was producing an image of the consciousness led by the demands of the libido – in a code that did not possess an endogenous no.

Let me leave the coincidence there to fester a bit. What we also see, in this era – the era of the great depression for the workers, and the gilded age for the rich, from the 1880s-1890s – is a further advance in the remove from production – that is, the creation of ever more links populated by circulation agents – and, at the same time, the technological spread of the aesthetic domain through gramophones, photographs, and the beginning of moving pictures.

These are the circumstances into which homo economicus was formally born.

These are also the circumstances in which the idea of the equilibrium is seized as the entry point for understanding the economy, what Schumpeter called the “Magna Carta of economic theory as an autonomous science.” To find the conditions, or equations, of equilibrium is to find the ideal moment in which the economy reveals itself as a totality. In Schumpeter’s words, it is the moment in which the static and the dynamic dimensions of the economy interlock – which is to economics what the synchronic and diachronic are to Saussurian linguistics.

Equilibrium gets us over a fundamental antinomy in bourgeois economics: the antinomy between the individual, who is theoretically the foundation to which all social practices reduce, and the aggregate, which is what, in actuality, economics always studies. Though the economic agent’s tastes are subjective, the formal elements in which those tastes are expressed are objective – they have a systematic form. That form comes out using Walras’s method, which pares away blocking contingencies to get to the structure of the ideal equilibrium between those tastes and the supply of goods and services – an equilibrium that is continually displaced. As Pareto puts it in the Course on Political Economics: “The principle object of our study is economic equilibrium. We will soon see that this equilibrium results from the opposition which exists between the tastes of men and the obstacles to their satisfaction. Our study thus comprehends thee distinct parts: the study of tastes; the study of the obstacle; and the study of the way in which these two elements combine in order to arrive at an equilibrium.”

Wednesday, January 19, 2011

the enlightenment of strategy vs. the enlightenment of the Absolute

In 1822, Stendhal’s master, Destutt de Tracy, published Condorcet’s notes on the 29th book of Montesquieu’s Spirit of the Laws. Condorcet’s objections to Montesquieu voice the protest emitted by the revolutionaries at the end of the Enlightenment period against the first Enlightenment generation. Within intellectual history, the French revolution was mounted not simply against what the revolutionaries called ‘feudalism’, but also against the first Enlightenment generation, those who were celebrated, later, in Michelet’s history of the Regency. The revolutionary generation was already thinking in terms of the universalism for which the codex was The Phenomenology of the Spirit. The force of Condorcet’s objections are summed up in the comment on Chapter IV, The laws which shock the views of the legislator: “How is it that in The Spirit of the Laws Montesquieu never speaks of the justice or injustice of the laws that he cites, but only of the motives that he attributes to these laws? Whiy doesn’t he establish any principle for distinguishing, among the laws emitted by a legitimate power, those which are unjust and those which are in conformity to justice? Why, in the spirit of the laws, is there never any question of the nature of the right to property, of its consequences, its extension, its limits?” (281 – my translation)

What Condorcet is complaining about is what I would call the Enlightenment of strategy – for the relativism of the Enlightenment thinkers (Condorcet goes on to blast the conclusions Montesquieu draws from the history of a ‘few Greek villages”) is a strategist’s relativism. In one sense, one can draw a line (unexpectedly enough) from Montesquieu to Foucault, and gather the same type of criticism of the latter as the former – where are the absolutes? Where are the universals?

Where does this strategic thought come from? In Montesquieu’s case, one wants to say, obviously Machiavelli. But I have an idea that, more broadly, the analysis of law as strategy is connected to the Leibnizian idea of the best of all possible worlds.

The image in the Theodicee is striking. In a letter to Sophie Volland in which Diderot describes an evening he spent with Grimm and the Abbe Galiani (the repartee of which he describes in the letter – “dear friend, I think that our babbling besides the fireplace is something that always amuses you, and so I followed it”), the three began to speak of original sin and whether man merits the pain he suffers in the world.

“On these occasions, what is the party of good sense? This, my friend, which we took. Whatever the optimists say, if the world could not exist without sensible beings, nor the sensible beings without pain, it had only to remain at rest. It could have gone on an eternity without committing that stupidity.

The world, a stupidity? Oh, my friend, a beautiful stupidity nonetheless! It is, according to the inhabitants of Malabar, one of the seventy four comedies that the Eternal amuses itself with.

Leibniz, the founder of optimism, also as great as a poet as he was deep as a philosopher, recounts somewhere that there was in a temple in Memphis a high pyramid made of globes stacked one on the other; and that a preacher, questioned by a traveler about this pyramid and the globes, responded that this was all the worlds possible, and that the most perfect was at the summit. And that the traveler, curious to see up close the most perfect of worlds, mounted to the height of the pyramid, and that the first thing that struck his eyes, glued to the top globe, was Tarquin raping Lucretia.” (my translation, 271)

In the perfect world of the strategic Enlightenment, there was, cosmically, no Pareto optimum outcome. Perfection was entirely a principle of construction. The wedding of optimism and horror – repulsive to the romantics – was, for the Enlightenment strategists, the principle that Condorcet failed to see in Montesquieu – with the latter’s penchant for anthropological anecdotes.

Monday, January 17, 2011

on the image of revolution

In the introduction to the history of the Regent’s reign that forms the 14th volume of his History of France, Michelet writes:

“The regency is a whole century in eight years. It lead to three things at once: a revelation, a revolution, a creation.
I. It is the sudden revelation of a world arranged and masked for fifty years. The death of the King [Louis XIV] is a coup de théâtre. What was underneath becomes what is on top. The roofs are lifted up, and one sees everything. There never was a society so open to the light of day. A rare good fortune for the curious observer of human nature.
II. And it is not only the light that returns; it is movement. The regency is an economic and social revolution, the greatest that we had before 1789.
III. It seems to have aborted, and not less did it remain enormously fecund. The regency is the creation of a thousand things (the great roads, the circulation from province to province, free education, the bank account, etc.). The charming arts were born, all those which make for the easiness and agreement of private life. But, this was even more great, a new spirit began, against the barbarous spirit, the bigoted inquisition of the preceeding reign, a large spirit, soft and humane.”

The trope of the ‘roofs being lifted up’ is used in another, individualistic sense by Emerson in his essay, Experience:

“Every roof is agreeable to the eye, until it is lifted; then we find tragedy and moaning women, and hard-eyed husbands, and deluges of lethe, and the men ask, `What's the news?' as if the old were so bad. How many individuals can we count in society? how many actions? how many opinions? So much of our time is preparation, so much is routine, and so much retrospect, that the pith of each man's genius contracts itself to a very few hours.”

There is something sensational – revolutionary, apocalyptic – that is crystallized in the image of the roof being lifted off the house. It is a disaster, a blind strike by nature that crushes all human intentionality - and yet it has the exhilarating scope of an escape, of the dissolution of the congealed, dead labor of intention that bears down on the living like a nightmare. Louis XIV’s masked world of bigotry and Emerson’s reference to the world of narrowed experience that results from the routine irresistibly enforced by respectability and endless labor, under the system of moneymaking – both are eminently roofed worlds. The mask complements the roof to the extent that both disguise the naked human, face or body. Both conceal secrets. But the roof, unlike the mask, thrusts us back to the forest floor from whence we came, the treetop canopies that sheltered our monkeyness, and in this it seems the most useful of things. The mask is made to be removable – the roof, not.

When both are removed, we see the misery of the world. The deluges of lethe, the slow, grinding torture of the court.

Still, for all the exhilaration when the roof is lifted off, when man becomes earthquake to man, we realize that we can’t live in that moment. We must have roofs. The revolution cannot be permanent. The problem for the revolutionary imagination is that if the revolution finds a stop – if an equilibrium is established around which a new order assembles – if the roofs are generally nailed on again – we necessarily re-establish the conditions that lead, at the very least, to deluge of lethe, to the class system of claustrophobia.

But something changes.

In Michelet’s preface, the change that is brought about by the temporary rooflessness is that France, for the first time, consciously joins the global system. Michelet, like many French historians, conflates France and Europe, ignoring, for instance, the Spanish and Portugese experience. Yet he does point to a social fact – the new sense of the global order that we see in the first wave of the enlightenment. This social fact is, as well, a new sense of the domestic order. The economic experiments of the Regency also penetrate the household of the peasant, Michelet claims.

In a wonderful passage about the ruin of Law’s system, he writes:

“In this misfortune, yet note one thing: the old bankruptcies, the violent reduction of Mazarin or Colbert or Desmarets’ rents was without any consolation, a dead and sterile series of facts. But Law’s catastrophe was of a wholly other type of import. It had the singular effects of a sudden illumination. France knew itself.
Massew who had been immobile and ignorant up to this point, like the bottom of the Ocean, having never known tempests, the class that was not moved by either the Fronde or the Revocation, lifted up their heads this time, inquiring about the public treasure – and thus of the state and the kingdom, of war, of peace, of neighboring kingdoms, of Europe.
The distant enterprises of Law, his colonializations, the razzias that were made for the Mississippi, obliged the coldest among them to dream of the other hemisphere, of unknown lands, as one said, of the isles. In the cafes which opened by the thousands, the talk was only of the Two Indies. The seventeenth century saw Versaille. The eighteenth saw the Earth.”

Michelet is writing after Marx and Engels Communist Manifesto, and he might even have known that paen to the world economy.

This is, of course, the other side of the melancholy of the clerks. Do not think that the ichor in the veins of homo economicus is absolutely cursed – he, too, is a dialectical figure.


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