Major Themes in Industrialised Societies: Markets II
- Don Slater & Fran Tonkiss and Albert Hirschman
While the liberal tradition of social thought promoted both a model of individual self-interest and a model of social order, most social theorists regard the market society as brutal, crisis-ridden and irrational. We shall discuss rival interpretations of the market order through the works of Marx, Weber, Simmel and Durkheim.
Marx
a) Karl Marx sees systematic and ineradicable contradictions between the social interests. These systematic contradictions not only make capitalism technically crisis-prone, but also mark it as a fundamentally immoral and exploitative social order. In both respects, it can be regarded as profoundly irrational. Capitalism is distinguished from other modes of production for the market: people do not produce specific goods for their immediate consumption, but rather produce goods solely for profitable sale in the marketplace in order to realise the surplus value through market exchange. Fundamentally, the value of a product is determined by the amount of labour required to produce it, so that capitalists extracted much as possible from labour in their production without paying for it (i.e., exploitation).
b) Marx regards the market as ‘epiphenomenal’: it is not itself the basic social reality or the principle that accounts for the modern social order, but is rather the effect of deeper causes in the sphere of industrial production (i.e., market prices are reflections of different values of labour time in producing goods). Marx treats the market as a sphere of mystification and irrationality, since the real source of value occurs in the production sphere. Economists who are exclusively focused on the market are engaging in a kind of fetishism, worshipping it as if it were a real source of power.
c) The value in the market is determined through labour in production. Value created in production is distributed according to capitalist social relations of production in which the determining feature is whether one is an owner of means of production. The employers’ profits and competitive success depend upon the intensity with which wages can be reduced, and surplus value increased: the rate of exploitation. This division between profits and wages is a structural contradiction that results in fundamentally opposed and irreconcilable interests, and cannot be overcome by cooperation nor through market exchange.
d) Moreover, markets are driven by forces outside themselves. The values and goods that appear in the market are entirely to be explained by the capitalist’s drive to expand exchange value rather than to meet human basic needs, produce the material basis of a good society, or promote culture. Furthermore, capitalists are required to exploit their workers, because a decline in their rate of profit makes their business unattractive as investments, or requires them to sell their goods at uncompetitive prices.
Hence, markets are determined by structures outside themselves – above all, the social relations of production. In this respect, Marx extends the central concerns of political economy to social classes as opposed to individual choices. Marx was also therefore concerned with social structures as objective and determining realities, and not as reducible to individual acts or subjective preferences or ‘tastes’. This also means that Marx is concerned with how these objective determinants operate regardless of the consciousness of either workers or capitalists, and therefore a gap may arise between the appearance and the reality of market society. Indeed, Marx argues that markets generate a systematically false view of the social.
e) Marx’s analysis of the market in terms of essence and appearance is complemented by a concern with the formal as opposed to ‘real’ values of market society. For Marx, the central values of liberalism, such as individuality, rationality and freedom, are connected to the formal appearance of market relations, but are belied by its real underlying compulsions and unequal relations.
Contrary to Adam Smith’s account of the natural harmony of interests, Marx conceives the market as a place of contradictions, where the pursuit of self-interest results in collective irrationality. The market is crisis-ridden, mystifying, and based on exploitation. In addition, under capitalist relations of production, humans are alienated from themselves, their fellows and their work through the reduction of creative labour to labour as an abstract quantity of labour power, sold in the market as a commodity – having little control or discretion over the nature of work.
a) For Max Weber, the market is one example of the dominance of one narrow of rationality over all others within the modern world. Market rationality is part of a process of social rationalisation, which leaves the modern individual with less and less meaning and freedom.
b) In Weber’s work, goal-rational action – instrumental rationality – is seen as one ideal type of action in a schema that also includes habitual-, traditional- and value-rational action. Yet, instrumental rationality has increasingly come to dominate modern society. In the market exchange, the pursuit of interests is conducted without hindrance from tradition, taboo, status and other substantive obligation. That is, the market exchange is impersonal and unsentimental, applying a logic of calculation regardless of who and what is involved in any particular transaction.
c) In contrast to Marx’s account, Weber’s rationalised modernity works; indeed, it works efficiently, exercising ever more detailed bureaucratic and commercial power over individuals. However, Weber discussed two problems that relate to the distinction between formal and substantive rationality. Formal rationality refers to the extent of quantitative calculation, and substantive rationality denotes the extent to which particular needs are met. An individual can behave in a calculative manner without achieving its needs and desires.
i) First, Weber claims that at sociological and historical level, the rationalisation or intellectualisation (or disenchantment) of the modern world has reached such a state that there are no longer any unquestioned substantive values left that command our belief. The empirical fact that calculation has become the basis of modern social order produces profound ethical dilemmas for its citizens. First, efficient calculation and maximising choice are no longer simply ways of doing things, but rather become the proper goal of society in themselves; e.g., the economic growth of the country. Second, the formal/substantive split is linked to a technocratic mentality within the division of labour whereby individuals allow themselves to be efficiently integrated within processes whose ends or consequences (e.g., pollution and exploitation) they never question.
ii) The second problem is that the formal/substantive split can be applied at the level of the individual. The formal rationalisation of modern life undermines modern individuals in at least three ways. First, the disenchantment of the world empties the world of intrinsic meanings, making it ever more difficult to define the meaning of life. Second, rationalisation reduces freedom by subordinating them to rational production processes beyond the individual’s control, as well as extending the bureaucratic control over all aspects of social life. Third, the dominance of instrumental rationality threatens to subvert individual autonomy: unbound to tradition or values, the individual becomes driven by given wants or impulses.
d) Weber proposes an alternative moral conception of the individual to counter the liberal atomised individualism with moral individualism that might ground ethical subjects in the world. He describes this conception as an ‘ethic of personality’ (also called ‘ethic of responsibility’): the moral dignity of the person resides in their ability to rationalise themselves rigorously in relation to the goals and values they have embraced. This moral individualism involves people treating their value commitments as ‘vocations’, in relation to which they rationally work upon themselves. This is an ethic of both self-creation, and yet subordination of the self to something higher.
e) However, the formal/substantive distinction is slightly misleading because the formal criteria of efficiency are themselves substantive values. By focusing on the ever-increasing formal rationality of modern capitalism, Weber ignores its substantive irrationality: that it fails to deliver on any of the substantive values that lie at its core – these include real equality, freedom from exploitation and solidarity.
f) To sum up Weber’s ideas, the market is a strategic site for both the creation and destruction of the modern individual. It presumes the autonomy of subjects who calculate courses of action in relation in their private desires, and then enter into contracts to realise them. At the same time, their very ability to do so arises from social conditions that destabilise the broader value commitment that would allow for a true autonomy and sociality.
a) Georg Simmel defines forms of ‘sociation’ or interaction as the primary figure of analysis, rather than either individuals or social structures. Exchange, as a form of sociation, is one of the functions that creates an inner bond between individuals.
b) Simmel sees the permeation and objectification of monetarised exchange as a dialectically mixed blessing. First, it presupposes and yet massively intensifies the ‘intellectualisation’ of modern life and consciousness (i.e., methodicalness, calculativeness, quantification and goal rational action).
However, Simmel focuses on the impersonality of exchange that is a result of monetarisation. The impersonality is in many respects a historical achievement: a replacement of feudal obligations with monetary payments frees individuals from personal bondage. This de-personalisation is corrosive of traditional order, dissolving old bonds and their legitimating frameworks, and increasing social and legal freedom for the individual. Simmel also links it to personal autonomy in terms of the development of the individual, and the individual’s ability to make choices and to calculate the satisfaction of their needs. Similar to Marx, market societies produce both massive alienation and also the potential for the development of the individual, who is ‘rich in needs’.
c) The question, for Simmel, is one of assimilation: how can individuals reincorporate within their subjective experience the massive objective culture produced by modern capitalism? Simmel maps out modern experience in terms of an oscillation between, on the one hand, a condition of ‘neurasthenia’ (an anxious over-stimulation, overwhelmed by the sense of modernity), and, on the other hand, a defensive reaction – ‘the blasé attitude’ – in which individuals distance themselves from all this excitement by regarding these different sensations as very much the same. Here again, the intensification of individualism in the market society appears destructive of the individual as an integral, ethical subject.
d) Early defenders (Adam Smith and Scottish Enlightenment thinkers) of markets argued that they had a ‘civilising effect’, reducing the power of the sovereign, encouraging individuals and nations to be industrious and attentive to one another’s needs, and to cultivate a reputation for fair dealing so as not to damage their credit-worthiness and market position. Similarly, Simmel argues that commerce is a powerful socialising and moralising agent which brings many non-material improvements to society even though a bit of double-dealing may have to be accepted into the bargain.
Durkheim
a) Emile Durkheim argues that the very idea of orderly exchange based on contracts voluntarily entered into by individuals presupposes a moral order. There is an irreducible ‘non-contractual element in contract’, the background assumption of a moral authority that renders the contract binding. This non-contractual element normally takes the form of juridical regulation and state authority, and moral bonds and social conventions. In a complete reversal of liberal principles, this moral order is regarded by Durkheim as the logical and historical presupposition of exchange rather than as its consequence.
b) Durkheim does not argue that the division of labour and exchanges automatically produces new forms of solidarity: indeed, individualism differentiates people, and removes them from communal structures. How can society persist in holding together?
The market alone cannot provide social order, but rather requires order itself. Yet, this will have to be a form of order that is in tune with market relations and extended division of labour. Durkheim argues that society can foster certain values that are embryonic within the division of labour: above all, a high valuation of mutual interdependence, coupled with a respect for other individuals, and a concern for their freedom and equality. These values are not basic rights or properties of the self-interested individual, but rather social norms or beliefs that fill the functions vacated by the old conscience collective. From this perspective, morality and self-interest are not mutually exclusive options. For Durkheim, morality is not a denial of the self, but the tying of self to moral obligation.
c) In Durkheim’s work, moral bonds are also necessary to market exchange for the purpose of securing legitimation: we do not honour or legally enforce market contracts when they are not seen to meet certain ethical preconditions that are ultimately justified in terms of the individual (e.g., enforced/slaved work).
However, a real weakness arises when he goes beyond arguing the need for moral and political regulation of social relations, and tries to specify the content of that morality or the means by which that content is elaborated socially.
Conclusion
Much of modern social though starts from a perception of the cultural deficits of capitalism and liberal modernity, arguing that the market society has actually undermined itself, eating away at the normative and solidaristic foundations it requires for its own stability. In all these accounts, the market is a mixed blessing, one that certainly acts as a destabilising force that intensifies the pluralisation and instability of life-worlds, while at the same time providing vast new resources for producing our selves, and new modes of stabilising these selves (e.g., lifestyles).