Comments on BN's 'Toward a New Cosmology of Capitalism'

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Comments on BN's 'Toward a New Cosmology of Capitalism'

Postby Jonathan Nitzan » Sat Mar 09, 2019 4:47 pm

The comments below were posted by an anonymous 'Ikonoclast' on John Quiggin's website (February 13-14, 2019).

Quiggin' site: https://johnquiggin.com/2019/02/12/the-culture-of-financialised-capitalism/
BNArchives page: http://bnarchives.yorku.ca/586/

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“Capital as power: Toward a new cosmology of capitalism” – Shimshon Bichler and Jonathan Nitzan http://www.paecon.net/PAEReview/issue61/BichlerNitzan61.pdf

Perhaps people should read that paper, of only 20 pages or so, before reading on below.

Here is a key quote from the paper:

“Political economy, liberal as well as Marxist, stands on three key foundations: (I) a separation between economics and politics; (II) a Gal-ilean/Cartesian/Newtonian mechanical understanding of the economy; and (III) a value theory that breaks the economy into two spheres – real and nominal – and that uses the quantities of the real sphere to ex-plain the appearances of the nominal one.”

I think Bichler and Nitzan are on the right track in a number of ways but I still do have some key disagreements with them. To illustrate these disagreements I will re-write the statement above in what I regard as the more correct form.

“Conventional economics stands on three key foundations: (I) a separation between economics and politics; (II) a Cartesian/Newtonian mechanical understanding of the economy; and (III) a value theory that breaks the economy into two spheres – real and nominal – that uses the quantities of the real sphere to explain the appearances of the nominal one (ideological justification) and that then uses the quantities of the nominal sphere to manage those of the real sphere (as an instrumental, formalised reason system for the purpose of deriving, in a sense, quantised values for the real).”

To explain these changes;

(I) By definition, political economy does not separate economics and politics. Even using the original definition of political economy which meant national economy, the operations of government and politics are implicit in the definition. It is conventional economics which artificially separates the complexly conjoined, but far from identical, “twin” spheres of politics and economics. Political economy in general and Marxism in particular attempt to deal with the entire twinned system. This is not to say that any existing form of political economy, including Marxism, has fully investigated and properly explicated the “cosmology” of this twinned system. Indeed, they have not.

(II) This point is clearer if only Cartesian-ism and Newtonian mechanics (classical physics) are mentioned. The issue with Cartesian-ism is (sub-stance) dualism which is very arguably a fallacious metaphysics and ontology. The argument is a long one of which more later, at another time. Suffice it to say here that modern physics and complex system science lend weight to the stance of a form of Priority Monism which we might term Complex System Monism where the whole known system (the cosmos) is prior to its parts. Its “parts” in turn are sub-systems which can include, or rather exhibit, emergent and evolutionary complexity. The problem with taking the viewpoint of Newtonian mechanistic physics (and the mathematics which goes with it) is in the very application of mechanistic science (and maths) to complex emergent and evolutionary systems. Conventional economics remains, for the most part, mired in mechanistic and deterministic models. These are wholly inadequate for complex emergent and evolutionary systems.

(III) It is true that conventional (classical) value theory, even Marxist value theory, breaks the economy into two spheres – real and nominal. However, classical theory is not quite so bereft of analytical and pragmatic use in this arena as is suggested by Bichler and Nitzan. The market, however constituted and however imperfect, is the social and economic instrument of measurement of real value in nominally comparable value terms. How good, representative, true or useful the nominally comparable value terms are is another question. Individual humans, as agents, are the agent-actuators of the collective instrument that is the market. The market is a collective and cooperative instrument that is used for the competitive game or rather the pseudo-competitive quasi-rigged game of market economics. This fits within the theory of cooperative-competitive games. Of course, it is still possible, at least in theory, that we could find a better instrument than the market. It is also possible that we might not.

Breaking the world into real and nominal spheres (or sometimes real and virtual spheres) is something we humans do all the time. It is not unique to classical economics. Every ideational system, every mathematical system is a model or map (in nominal or formal form) of the real world. Every interaction of a human agent (a human being) with the real world (the physical or material external world in substance philosophy terms) is mediated and managed by our mental models. Even our sensory data is modeled in the brain into a virtual representation (in the brain) of all that which we sense. This virtual representation is a model or a set of models. Modelling is the way, the entire way, in which the human agent (the human person) interacts with the world in any purposive, endogenously directed fashion: modeling and modeling only.

In the above sense, the broad agent model of modern economics is not wrong, not misconceived. We model values and we build cooperative-competitive instruments (markets) to collectively model economic values as a community. There are of course other ways to model values from religion to moral philosophy to science (oftentimes these are widely differing kinds of values of course).

However the representative agent model is wrong or inadequate in two specific ways. Individual agents (humans) are dissimilar enough, because of their internal complexity and complexities of their individu-al histories of socialisation, that they cannot be validly aggregated in many ways. Also, the representative agent model takes no proper cognizance of emergent behaviors.

Where all this ontological investigation and theorising gets us is not clear at this stage. The investigation, theory and testable theories (hopefully) would have to be carried on and developed. But certainly it is necessary to return to ontology (what is real, how it is real and how do these real things or real processes interact?) before we solve (partially but more than so far solved) the “wicked” problem of economics, or rather of political economy.

My main criticism of conventional economics and even of Marxism and Capital as Power theorising is that they are all too incomplete and none of them has yet developed a consistent and supportable ontolo-gy. They can never be completed of course but surely they can be ex-tended further than their current development. The way to do this is to return to ontology as I say. If we don’t get the basic ontology right we will get nothing else right.

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[. . .] I think Bichler and Nitzan’s approach is very interesting and useful. I am however a little puzzled by their rigid insistence that “Capital-ism is not a mode of production. It’s a mode of power.”

To me, it is clear that capitalism is both a mode of production and a mode of power. The extensive fact is that both activities are intrinsic to its overall operations. Imagine we asked a question about bees. Are bees producers of honey or pollinators of flowers? The answer is that they are both. Both functions are intrinsic to their overall activities. One activity is an intermediate goal (the final goal being feeding young for reproduction purposes) and the other activity produces a byproduct service from the point of view of wider ecology. A person may focus on the study of one activity or the other but a study focus should not mean that one overlooks the wider system embedded nature of the activity or process being studied.

I suspect the issue is really a definitional one. If one defines, or at least closely identifies, capitalism with the operations of financial capital then capital itself will appear as a mode of power. But it is only the proximal source of power. Ownership, symbolically signified and proved at law by possession of nominal quantities (shares and dollars), is the legitimation for manipulating real quantities. Ownership in turn is backed by state laws and the state’s monopoly on violence. Violence, real, implicit or threatened, is always the final underwriter of (political and biological) power.

In one important way, Bichler and Nitzan follow Veblen in dividing economic activity into industry (actual production) and business (buying, selling, manipulating and even sabotaging industry). This too is a useful way of looking at things. These different methods of looking at capitalism are prisms to view it through. They split capitalism up in different ways into different apparent constituent components. But after all reductionist analysis, the key is to put a model of the whole system back together conceptually. This is the most difficult task and perhaps even impossible for a truly complex system.

One component of capitalism which must not be forgotten is the state. The state too is a component of capitalism and (paradoxically perhaps) statist activity heavily underwrites oligarchic capitalism. The rule of (capitalist-favouring) law, backed by the state’s monopoly on violence, is a key component of capitalism. State subsidies also underwrite capitalism, or a least our current form of capitalism. Most successful, established, capital intensive industries, even when in private hands, are heavily underwritten by state subsidies. We only have to look at fossil fuels (massive subsidies), industrial agriculture (massive subsidies), banks (massive subsidies), armaments production (massive subsidies). This conformation of state activity to the interests of large capitalist holdings (big government to big business) probably explains why China finally made the transition to “statist capitalism” so easily. It’s a natural fit under the current system.
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Re: Comments on BN's 'Toward a New Cosmology of Capitalism'

Postby Jonathan Nitzan » Sat Mar 16, 2019 8:21 pm

Due to a problem with Forum registration, ikonoclast has been unable to post here. I take the liberty of uploading his March 10, 2019 follow-up comment from John Quiggin's site here:

https://johnquiggin.com/2019/02/12/the- ... ent-206210

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ikonoclast's follow-up comment

On the slight chance Jonathan Nitzan checks back here, I haven’t been able to register on his site’s forum yet. It seems reCAPTCHYA V1 is shut down.

I feel I have to apologize to Jonathan Nitzan and his readers for a very poorly written blog piece. My ideas are not made at all clear. My apparent claim in that post that I bring new insights to the table looks rather threadbare upon review, at least in that screed. I used a lot of words to say very little.

I’m taking a metaphysical approach, from first principles as it were, in an effort to find a shared ontology for the Hard and Social Sciences. This is clearly a different approach, or at least an approach from a different direction, compared to the methods of CasP. However, what struck me was our shared judgement that orthodox economics commences with Cartesian Dualist and Classical Physics reductionist and mechanistic a priori assumptions. Whenever the Social Sciences commence with these a prioris, they have already taken a wrong turn, in my opinion.

Just briefly, what is it which separates the hard and social sciences? Traditionally, it is considered to be the divide between objectivity and subjectivity. Despite at times sharing some scientific methods and statistical techniques with hard science, albeit with less scope to abstract objective quantitative data, the social sciences tend still to offer explanations predicated on the assumption of a substance difference between conscious or mind systems and physical systems.

This clearly introduces the connection problem, or as I call it, the transmission problem. I refer here to the transmitting of matter, energy and information between real systems, including minds and formal systems instantiated in real systems, which is the only place formal systems are instantiated according to my development of monist ontology. Formal systems are there instantiated (in some real systems) as patterns which can influence other patterns. Clearly, this then leads on to aspects of information theory. Humans (human agents) perform the role of encoders, decoders, translators and transformers of the information in these patterns.

Assuming a substance difference between conscious or mind systems and physical systems leads on to assuming the “wrong kind of difference” between rational formal systems and real systems. The difference assumed essentially entails assuming that consciousness, rationality and formal systems “come from somewhere else” other than from processes emergent from the monistic complex system of existence itself. An a priori epistemological rift or schism is placed between matter and consciousness or its rational ideations, which then presupposes that explanations, connections and causes cannot “chain up” or “link up” in the emergent and evolutionary sense from the phenomena of the hard sciences (physics, chemistry, biology). Emergence and searches for emergence-conditioned explanations perforce are excluded where Social Science adopts dualist, reductionist and mechanistic assumptions. Orthodox economics seems to be particularly beset by this limitation and it probably suits a number of justificatory ideologies to keep it that way.

I am not claiming this approach or set of insights are unique. I’m not in a position to assess this as I work alone on this project in an autodidact fashion and am quite unconnected with academia. Also, it is not clear that this approach will lead anywhere pragmatically useful. It is all rather theoretical and metaphysical. Plus, it is probably extensively covered already in the academic world in manners quite unlike my idiosyncratic approach. If it is, then the news has not reached orthodox economics, or at least not the dominant, bowdlerized and ideology-ridden form known as neoclassical economics.
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Re: Comments on BN's 'Toward a New Cosmology of Capitalism'

Postby Jonathan Nitzan » Wed Mar 20, 2019 8:05 am

The following comments pertain to Ikonoclast’s text from March 9, 2019.

Ikonoclast:
By definition, political economy does not separate economics and politics.

Bichler & Nitzan:

As we see it, political economy, both neoclassical and classical (including Marx’s), examines the interaction between politics and economics. In Marxism, politics is generally seen as supportive of the capitalist economy, whereas in neoclassical political economy, politics is said to undermine the economy. The very existence of these interactions presupposes that economics and politics, although interrelated, are fundamentally distinct.

This presupposition is perhaps the most important ‘proprietary innovation’ of classical-liberal political economy. Speaking for the rising bourgeoisie, classicists from Locke and Smith onward insisted that the voluntary-utilitarian relationships of the market (or ‘civil society’ as they called it) be freed from the hierarchical-coercive relationship of politics and state.

In the late nineteenth century, neoclassical writers turned this emancipatory demand into a rigid theoretical prerequisite. The primordial ‘market’, they insisted, is theoretically autonomous from any outside intervention, and this autonomy means that politics and power, although occasionally present, are merely external distortions of an otherwise pristine ‘economic’ phenomenon.

Marx’s analysis, although very different in substance, was similarly bifurcated into economics and politics. The underlying process of capital accumulation, Marx argued, occurred at the material economic ‘base’ of labour, production, technical change and class, while the justification, legitimation and enforcement of this process was affected through the political, legal, ideological and cultural ‘superstructure’ dominated by the state.

Although political economists rarely emphasize it (and many vehemently deny it), the economic-politics duality continues to inform – and in our view remains essential to – the building blocks and foundational categories of both neoclassical and Marxist analyses.

Take capital. As far as we can tell, all political economists conceive, theorize and (pretend to) measure its accumulation as an ‘economic’ process denominated either in socially necessary abstract labour time, or SNALT (the elementary particle of the Marxists), or in ‘utils’ (the basic atom of the neoclassicists). And as far as we know, all political economists view politics, politicians and policymakers as ‘intervening’, positively or negatively, in this process. (Out of respect for our intelligent reader, we ignore here the fashionable nonsense of conjuring up new forms of capital – from the ‘natural’, to the ‘social’, to the ‘cultural’, ‘intellectual’, ‘experiential’ and ‘spiritual’, among others.)

Or take the state. The early twentieth-century rise of ‘big government’ and ‘economic policy’ made it difficult to view this institution as a mere ‘political entity’. With direct spending by post-war capitalist governments typically accounting for 20-50 per cent of all ‘economic’ activity, and with so-called ‘policy interventions’ affecting pretty much everything else, it is hard to see where politics begins and economics ends. And given that the modern state ‘infects’ and ‘distorts’ every dollar in the economy, it is now a real challenge to identify a single economic realm where the assumptions of neoclassical theory have any purchase.

During the early twentieth century, these conceptual difficulties contributed to the rise of neo-Marxism, which unlike its classical predecessor is no longer comfortable with the traditional separation between state and capital, power and production and politics and economics. Debates over which activity belongs to which sphere remain heated. Renegade Henri Lefebvre, for example, was expelled from the Communist party for daring to reclassify the city as part of the ‘economic base’, while opportunist Louis Althusser managed to get away with claiming that ideology, although produced by the state, is nonetheless part of the economic base. These ‘territorial’ squabbles have since expanded to other academic disciplines, such as culture, gender and race, and their very continuation proves that the fundamental separation of politics from economics is alive and kicking.

For more on these issues, see:

[1] Nitzan, Jonathan, and Shimshon Bichler. 2009. Capital as Power. A Study of Order and Creorder. RIPE Series in Global Political Economy. New York and London: Routledge, Ch. 2. http://bnarchives.yorku.ca/259/

[2] Bichler, Shimshon, Jonathan Nitzan, and Piotr Dutkiewicz. 2013. Capitalism as a Mode of Power: Piotr Dutkiewicz in Conversation with Shimshon Bichler and Jonathan Nitzan. In 22 Ideas to Fix the World: Conversations with the World's Foremost Thinkers, edited by P. Dutkiewicz and R. Sakwa. New York: New York University Press and the Social Science Research Council, pp. 326-354. http://bnarchives.yorku.ca/372/

Ikonoclast:
Conventional economics remains, for the most part, mired in mechanistic and deterministic models. These are wholly inadequate for complex emergent and evolutionary systems.

Bichler & Nitzan:

It seems to us that not only conventional economics, but Marxism too is mired in mechanistic and deterministic models. Marx’s dialectics proposed to break this determinism, but in practice, his ‘laws of motion’, and particularly his model of accumulation, tended to reproduce it.

Neo-Marxists – for example, those associated with the Frankfurt School – have tried to augment this determinism with various ‘subjective’ elements, but these attempts have proven difficult to implement – if only because Marxism (and the positive social sciences more generally) originated from and remain part of the modern mechanical worldview. The real contestation of mechanical determinism is associated with existentialists and post-modern precursors like Kierkegaard and Nietzsche.

Ikonoclast:
Every ideational system, every mathematical system is a model or map (in nominal or formal form) of the real world…. The market, however constituted and however imperfect, is the social and economic instrument of measurement of real value in nominally comparable value terms.

Bichler & Nitzan:

Ulf Martin’s 2018 paper ‘The Autocatalytic Sprawl of Pseudorational Mastery’ [1] distinguishes ontological symbols that represent reality from operational symbols that construct reality. Conventional political economy tends to use the former, whereas CasP strives to develop the latter.

In conventional political economy, theory (nomos) is a map to a territory (phusis): the territory is the ‘real’ sphere of the economy; this territory is believed to have its own fundamental quantities (SNALT and utils); and these fundamental quantities (measured in ‘real’ magnitudes) are said to map onto and be represented by the quantities of the nominal sphere (money prices). In our work we referred to this correspondence as the ‘quantitative equivalence’ of political economy.

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In our view, the problem with this quantitative equivalence is that its ‘real’ (ontological?) quantities of SNALT and utils are fictitious. Unlike the so-called fundamental quantities of physics, they are logically inconsistent and empirically unidentifiable, meaning that there is really nothing to map onto nominal prices.

In CasP, nominal prices do not reflect an independent ontology of ‘real quantities’; instead, they creorder the capitalist reality through the operational symbols of the capitalization ritual.

[1] Martin, Ulf. 2018. The Autocatalytic Sprawl of Pseudorational Mastery (version 0.12). Working Papers on Capital as Power (2018/04, June): 1-20 http://bnarchives.yorku.ca/544/

Ikonoclast:
I am however a little puzzled by their rigid insistence that ‘Capitalism is not a mode of production. It’s a mode of power.’ To me, it is clear that capitalism is both a mode of production and a mode of power.

Bichler & Nitzan:

Our claim that capitalism is not a mode of production and consumption but a mode of power does not mean that production and consumption are unimportant, but rather that the significance of production and consumption should be understood through the lens of capitalized power.

Topologically, this view simply reverses the theoretical priorities of conventional political economy. In conventional political economy, power either distorts the mode of production and consumption (neoclassical) or supports it (Marxist). CasP inverts this order, arguing that we should examine production and consumptions as negative/positive dimensions of capitalized power.
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