rival views of the market
Brad DeLong wonders aloud if having economics graduate students “read short biographies of William Gates and William Marshall as a way of getting at the idea that there are non-market societies that work very differently from our own today–would that be a teaching idea of extraordinary brilliance or of total insane lunacy?”
Sociology graduate students, I fear, sometimes suffer from the opposite problem. Many of us enter our graduate education dissatisfied with the status quo and assume that other economic systems must be better. Thus, an introspective book that provides multiple views of the capitalist/market system might help sociology graduate students to better prepare their minds for achievable possible alternatives (or perhaps to believe in the adequacies of the market alternative). I recommend Albert Hirschman’s Rival Views of Market Society, which unfortunately appears to be out of print. Most university libraries probably have it on hand. Besides providing a nice overview of the market system, the essay also puts both the critics and proponents of the market system in context.
Reviewing the notes that I took for this book when preparing for the economic sociology comprehensive exam, I’m reminded of Hirshman’s genius. He has the ability to see through the muck of theory and offer crystallized syntheses that sum up a vast literature. What follows are my mostly unedited notes on the book.
The idea that social order could be improved to increase the happiness of humans is unique to modernity. It coincided with the emergence of another modern idea, that human actions could have unintended consequences. This essay tracks rival views of capitalism… a view that claimed that social order might be improved by taking it out of the hands of well-meaning individuals….
Commerce was believed to civilize humans, making them more congenial and cooperative. Conflict and lack of social skills inhibited exchange and the acquisition of wealth, as it is established in market society.
Commerce was also believed to deplete the moral order of society, by appealing to individual’s self-interest over collective interests. Traditional values are eroded over time as self-interest becomes the primary motivation for any action. Religiosity is replaced by faith in material goals.
Capitalism had an inner force capable of throttling all other institutions. Its source of success was its ability to commodify everything, turn all goods and services into objects of self-interest. However, capitalism could only advance so far before it turned into itself and began dismantling its own structure.
The Polanyi and Schumpeter theses both move along these lines (although Polanyi ends with the idea that capitalism can preserve itself through state intervention and market constraint). Capitalism destroys the norms and values that were so important at its founding.
Eclipse of the doux-commerce thesis
Doux-commerce was questioned and set aside during the latter part of the eighteenth century as industrialism wreaked conflict where once theorists supposed cooperation. Further, human actions began to unravel and reveal their unintended consequences.
Durkheim appears to generate a neo-doux commerce thesis, but H notes that Durkheim was fully aware that any sense of harmony generated by the division of labor was an unintended consequence. In fact Durkheim clearly states that the web of relations created through market behavior is superficial at best. Simmel also discusses the integrative effects of commercial exchange. Like Durkheim he sees markets as organic wholes that produce collective goods for the individuals involved.
Economists did not rush to the rescue… Indeed, because neoclassical theory portrays perfect competition as the ideal, although perhaps not realistic, and competition requires distanced and impersonal relations, social cohesion would be thought of as an unnecessary product of capitalism. In fact, many economists viewed sociability and market exchange with suspicion, as it may have inhibited market competition.
In recent years, economists have begun to look more carefully at social organization. Transaction cost economics, for example, sees social relations as a way to lower transaction costs associated with imperfect information and asset specificity. H suggests that the economics discipline might be ripe for a rebirth of doux-commerce thesis.
The feudal-shackles thesis
Another camp contends that the capitalist revolution was never finished, left hanging as bourgeoisie market-bearers bowed to the demands of aristocrats and traditional authority figures. Certain societies were never fully capitalized; instead, traditional lines of moral and formal authority formed the social and economic foundations of society.
Capitalism, in some parts, is too weak to fully modernize society. This leads to a less-than-fully-mature capitalist system, impeded by imperfect competition and irrational constraints on exchange. The typical example of a feudal-shackle economy are peripheral nations from world-systems theory. For many theorists in this camp, their objective is to explain why capitalism never matured in these countries.
America, or the perils of not having a feudal past
“American exceptionalism” is the idea that America came into being without the confines of a feudal past. The institutions and class struggles peculiar to Europe and other feudal nations were never present in America, making it uniquely capable of promoting capitalist enterprise.
Hartz has come forward to offer this exceptionalism as a curse. Because the United States never had a history of traditional authority or class structure, there was necessarily less ideological diversity, which he believed to be the foundation of liberty. The U.S. for this reason never developed class conflict or progressive movements to the extent of other Western nations.
Toward a tableau ideologique
H notes that each view follows the other. Each perspective refutes the previous perspective, until at the end we are left with the “feudal blessings thesis” – that countries originating from feudal backgrounds are the most ideologically diverse, and therefore, free from collective constraint.
H in the end concludes that there is some truth to each perspective and that comparing them in pairs helps us to see how capitalism operates. Comparing, for instance, the self-destruction thesis with the doux-commerce thesis leads us to the conclusion that capitalism may be simultaneously replenishing itself and depleting its moral order. This accounts for the strange contradictions observed in capitalist society. We can observe both processes of destruction and disorder at the same time we observe reproductive and ordering processes.
I’m not sure I understand all of my notes, but I’m intrigued. I need to read this essay again.