Schumpeter and Heidegger (Part One)
Schumpeter and Heidegger (Part One)
The commonsense of this tool of analysis may be formulated as
follows: first, if we deal with, say, the organism of a dog, the
interpretation of what we observe divides readily into two
branches. We may be interested in the processes of life going on in
the dog, such as the circulation of the blood, its relation to the
digestive mechanism, and so on. But however completely we master
all their details, and however satisfactorily we succeed in linking
them up with each other, this will not help us to describe or
understand how such things as dogsJoseph Schumpeter, Business
Cycles. (1939) 29 have come to exist at all. Obviously, we have
here a different process before us, involving different facts and
concepts such as selection or mutation or, generally, evolution. In
the case of biological organisms nobody takes offense at the
distinction. There is nothing artificial or unreal about it and it
comes naturally to us; the facts indeed impose it on us. It is
incessant change in the data of the situations, rather than the
inadequacy of the data of any given situation, which creates what
looks like indeterminateness of pricing. We conclude, on the one
hand, that we must take account of this pattern when dealing with
the process of change which it is our task to analyze in this book
and which must be expected to create precisely such situations,
and, on the other hand, that it does not paralyze the tendency
toward equilibrium [Gleichgewichtstendenz](Business Cycles,
p.43)There comes a time when even the bourgeoisie must contemplate
its own surcease. In this revealing passage, Schumpeter canvasses
with Heideggerian Entschlossenheit (or, as the Freiburg philosopher
would put it, with resoluteness in confronting being-toward-death)
the eventual demise of capitalism. The very reality of social
change and of economic evolution contains the certainty of
capitalist extinction: The facts indeed impose it on us. This is a
reality that equilibrium analysis by its very formal character
quite simply cannot countenance. There is no being-toward-death in
equilibrium, no Da-sein and no extinction. But the important
realization in Schumpeters reflection above is not so much this
existential dread, the fact that formal theory can never encompass
existence (cf. Kierkegaards vehement critique of Hegels dialectic);
it is rather the fact that equilibrium theory completely neglects
the most essential aspect of economics the pro-duction of goods and
services and therefore the metabolism of the economic system with
the physical environment of which human beings are part (this is
indeed the very first concern of Schumpeters intellectual mentor,
Eugen Bohm-Bawerk, at the beginning of The Positive Theory of
Capital).The certainty that equilibrium theory affords lies in the
axiomatic determination of prices. Yet, once we allow the market
participants of equilibrium, which as we have shown are merely
mechanical inert bodies, to become political economic agents, then
the prices of the economic system become wholly indeterminate,
precisely because the system undergoes incessant transformation or
mutation. For Schumpeter, the problem with both Classical and
Neoclassical economic theories is that their formalization of the
relations between the component parts or functions of the economy
(supply, demand, investment, consumption, interest, monetary mass),
is entirely static or closed or self-referential, and is therefore
entirely incapable of accounting for the equally observable fact of
the dynamic movement of the capitalist economy, for its mutation
from one equilibrium to another, - equilibria that are quite
different not only in quantitative but also in qualitative terms!
Capitalist development is not just horizontal quantitative growth
or development (Wachstum); it is above all vertical qualitative
mutation or evolution (Entwicklung). Schumpeters initial objection
to the translation of Entwicklung with development rather than
evolution is all here: development refers to incremental change;
evolution points starkly at the possibility of extinction. Of
course, the term evolution has its own problems in the sense,
first, that capitalism is not a dog (however much we Marxists woud
like to think of it as such), in other words it is not an animal
species with genes so that the analogy is very imperfect; and
second that evolution, as Schumpeter himself pointed out, has a
tone of complacency about it. Indeed, it is even possible to
challenge the status of equilibrium economics as science given
that, to reprise Schumpeters metaphor of the circular flow or
Kreislauf, equilibrium analysis is just that mere ana-lysis! It is,
as it were, a descriptive or ana-tomical schema that can only
photograph or sketch an economic system and classify its individual
organs. It relies exclusively on pure exchange and on the
maximization of welfare or utility from the redistribution of given
endowments. Above all else, because equilibrium is quite simply a
formal descriptive schema, it exists only logically, but it does
not ec-sist in the sense that it does not face the certainty of
death, in the case of its individuals, or the certainty of
extinction, in the case of the capitalist economic system. Once the
certainty of ontogenetic death and phylogenetic extinction are
taken into account, then we understand that the individuals that
make up the economic system must deal with their physical
environment, with their physis: this is the metabolism that is
entirely and conceptually absent from the equilibrium schema and
that is instead essential to the notion of market process, that is,
to the unfolding or extrinsication of an economic system in the
physical world.What equilibrium analysis cannot do is understand
and explain how the economic system metabolises, how it interacts
with its social, political, and physical environment, how it grows,
mutates, and dies or, phylogenetically, how it evolves and becomes
extinct. Seen from the point of view of market process which, as we
explained earlier, is the quasi-logical or dialectical conceptual
extrinsication or unfolding of the concept of equilibrium, its
Heideggerian ec-sistence seen from this perspective, equilibrium is
a purely descriptive or classificatory exercise: it merely
describes the logical and functional relation of each component of
an economic system to other components, and then determines the
price matrix that will maximize the individual utility schedules of
its self-interested individuals. But two essential points must be
made and understood: first, the prices or exchange rates of goods
at equilibrium are mathematical identities that do not tell us what
is being exchanged except for the purely metaphysical notion of
utility. The equi-valence of the exchange in a static framework
merely destroys or dissolves in the identity of the objects
exchanged, in their formal equi-valence, their difference (cf.
Heidegger, Identity and Difference) - in such a way that the
exchange is not pro-ductive, it is not meta-bolic there is no
change in this ex-change! Even then, this exchange of utilities is
quite simply impossible when we consider the atomicity of the
self-interested individuals of equilibrium theory. For it is quite
absurd to imagine that such absolutely self-interested and
in-dividual entities Aristotelian entelechies! could ever be able
to exchange anything at all! For any exchange to be possible or
meaningful, there must be a sub-stance that makes the objects of
exchange equi-valent of the same value. But it is precisely this
Objective Value that is utterly absent in equilibrium analysis
because of the bottomless in-dividuality and irreconcilable
self-interest of its market entities, of its individuals! The only
value present in equilibrium is Subjective Value which, as an
inevitable result of its subjectivity, is quite simply
incommensurable. But every self-interest must share some common
element with other self-interests to give meaning to the conflict
of interests (the difference) that makes exchange possible. Every
com-petition must have an object over which competitors com-pete
(seek together)! This object, this sub-stance or quidditas, this
subject-matter that forms the communion of the exchange (the
contractual meeting of the minds over an object) is entirely
missing in the theory of equilibrium!Second, as a corollary of the
first point, equilibrium theory allows only for the exchange of
goods and services: it tells us nothing about how they are
pro-duced, that is, it tells us about the subjective estimations by
market participants of their goods for exchange with respect to one
another, but tells us nothing about the relation of market
participants to their natural environment. Third, market
participants are mere inert bodies that obey the axiomatic
conditions imposed by equilibrium theory: they are certainly not
economic agents making their own spontaneous decisions. And finally
these economic agents are not allowed to interact with one another
or with their physical environment an exclusion that automatically
removes the object, the subject-matter of economics and eschews
politics from the field of economic inquiry because (a) there is no
object over which to haggle (there is no disputandum, no com- of
com-petition and no con- of con-flict), and (b) atomic in-dividuals
cannot form friends with whom to fight foes (cf. Carl Schmitts
definition of the Political in The Concept of the Political). In
other words, seen from the perspective of the market process,
equilibrium (a) is internally inconsistent because it contains
aporetic and antinomic concepts, (b) does not allow for the
ontological and phylogenetic ec-sistence of its individuals in the
sense that their existence is purely logico-mathematical , (c) does
not allow for pro-duction, that is, for the metabolic interaction
of human beings (alone or together) with their physical
environment, and (d) is entirely devoid of Politics because of its
individualistic existential or ontogenetic axioms which exclude
phylogenetic reality. As we have seen, without this metabolic or
frictional interaction with themselves (the Political) and with the
world (phylogenesis) without the physis -, capitalist competition
or enterprise is unthinkable because innovation and profit-making
are unimaginable, and so too therefore is economic change. The
self-interested individuals that make up the market mechanism of
equilibrium analysis are inert bodies that obey mechanically the
axiomatic pure laws of competition imposed externally and
logico-mathematically on them. There are two essential aspects to
metabolism here that are entirely different from and make it
incompatible with equilibrium analysis. The first is that the
economic system is trans-formed from within by the spontaneous
actions of its economic agents. And the other aspect is that these
economic agents transform the economic system not merely relatively
to one another as atomistic individuals, that is, considered
ontogenetically as they must do axiomatically in equilibrium theory
which involves only relative prices or exchange rates and therefore
only pure exchange indeed an exchange so pure that it lacks an
object -; but they also transform the economic system by
interacting (a) with one another as aspects of being human, that is
to say, phylogenetically, and (b) with their physical environment,
which includes not just surrounding nature, but also their own
physical being, their physis. We have therefore two questions: the
first is the transcendental question of existence, and the second
is the immanent question of metabolism. The former involves for the
study of economics the ontological question of why is there an
economic system at all and not nothing (cf. Heideggers question why
is there something and not nothing at all? in Einfuhrung in die
Metaphysik); and the latter involves the question of why the
economic system is what it actually is now what is its material
history. These are the crucial questions that Schumpeter attempts
to consider and fails because he limits himself to the
transcendental question but never even remotely tackles the most
important question the historico-materialist one of metabolism. It
is simply irrelevant and incorrect to accuse Schumpeter of failing
to integrate theory and history. Given that Schumpeter never even
considers the question of immanent metabolism, given that he
considers only the question of transcendental existence that is to
say, the application of an abstract formal schema to empirical
facts -, there was simply no way in which these antithetical
concepts could ever be integrated! Such a criticism of Schumpeter
is a lucus a non lucendo a fire that will not light because of the
antithetical terms in which the question is posed by Schumpeter.
And Schumpeter poses the question in these terms precisely because
he is attempting to make whole the literal meaning of to integrate!
the social reality of capitalism that is broken and fragmented! As
a result, Schumpeters theory must forever oscillate, like a
pendulum, between logico-mathematical formalism constituted by the
functional-analytical, descriptive-anatomical schema of equilibrium
theory, on one side, and the subjective-voluntarist,
ethico-political hypostasis of the Innovationsprozess on the other.
To deplore the absence of reality in equilibrium theory (vedi
Lawson, Economics and Reality) or Schumpeters failure to integrate
theory and history (vedi Mouras homonymous essay) is to make the
biggest error of all! And that is that no economic theory, however
sociologically or historically informed, will be able to reflect
the antagonistic reality of capitalism scientifically! No theory -
as theory! - will be able to integrate what is the broken,
fragmented antagonistic reality of capitalist society! Lawson and
Moura have completely misconstrued the ineluctable ethico-political
instrumental purpose of bourgeois economic theory behind its
scientific mask and indeed the instrumental purpose of any economic
theory, that is, of any theory that attempts to present as
scientific what is necessarily a partisan (Schmitt), non-neutral
account of social reality! (Cf. Webers Objektivitat for what is
decidedly the greatest attempt from a bourgeois social theoretician
to com-prehend these paramount issues.)Lawson and Moura make
precisely this mistake of confusing political antagonism with
existential human choice, which is a purely individual category
that conceptually obscures the sphere of politics because the
Political cannot be reduced to the humanistic abstractions of
individual existence and free will (not to mention the theological
one of the soul cf. Jaegers The Theology of the Early Greeks). Like
Schumpeter, in their attempt to outline and prescribe a
historically-conscious or reflective economics - they confine
themselves to transcendence and therefore fail to consider what is
the real problem with Schumpeters pure economic theory of economic
change - namely, the complete neglect of metabolism, that is, of
the sphere of pro-duction and of the social and political
antagonism that is the very essence of the capitalist mode of
production. To be sure, Schumpeters theory does rest on the
ineluctability of conflict, the universal Eris, not just in
capitalism but in the entirety of existence that is the entire
point of his Dynamik and, as we are about to see, of his entire
rationalisation of the scientific need for a Statik! Like
Nietzsche, Weber and finally Heidegger, Schumpeter presents and
understands social and political and economic conflict as an
absolutely ineliminable reality not only of human, but indeed of
all existence. As we remarked above, there is no dialectical spiral
in Schumpeter and in the entirety of the negatives Denken from
Schopenhauer to Hayek: there is only the eristic pendulum of stark
opposition (Gegensatz, Gegen-stand) between human self-interests
that are transcendental and ontogenetic (cf. Heideggers notion of
Da-sein and Nietzsches notion of exploitation) and therefore admit
of no immanentistic phylogenetic and dialectical reconciliation
(cf. Hegels notion of Versohnung). That is the whole point to the
methodological individualism of the Austrian School.
