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Exordium

“A specifically bourgeois economic ethic” – Max Weber, the Protestant Ethic and
Neoclassical Economic Theory

What the great religious epoch of the seventeenth century bequeathed to its utilitarian successor
was, however, above all an amazingly good, we may even say a pharisaically good, conscience in
the acqusition of money, so long as it took place legally. Every trace of the deplacere vix potest
has disappeared.

A specifically bourgeois economic ethic had grown up. With the consciousness of standing in
the fullness

176

of God's grace and being visibly blessed by Him, the bourgeois business man, as long as he
remained within the bounds of formal correctness, as long as his moral conduct was spotless and
the use to which he put his wealth was not objectionable, could follow his pecuniary interests as
he would and feel that he was fulfilling his duty in doing so. The power of religious asceticism
provided him in addition with sober, conscientious, and unusually industrious workmen, who
clung to their work as to a life purpose willed by God.

In this telling passage from the last chapter of Weber’s Protestant Ethic dedicated to
“Asceticism”, the great German scholar draws a clear and unmistakable link between the
world-changing emphasis of the Protestant faith on “work” (Arbeit) as the road to
salvation and its manifestation or reward in the “outward signs” of material wealth and
success – the light cloak that nefariously turns into an “iron cage”. Yet in tracing this link
between “the Protestant Ethic” and “the Spirit of Capitalism” and then designating the
former as “a specifically bourgeois economic ethic” Weber unwittingly inverts or, more
accurately as we are about to see “reverses”, the real content of what truly constitutes the
“specificity” of this “bourgeois ethic”. The aim of this piece – as intrepid, I believe, as it
is original – is to show that the Protestant Work Ethic, though it certainly played a
historical role in the rise of the Spirit of Capitalism, most certainly could not provide a
logical coherent foundation for “a specifically bourgeois economic ethic”, and was in fact
in complete opposition to and even in contradiction with such ethic. By so doing, we
hope to provide a revealing original interpretation and critique of the worldview
introduced by the negatives Denken – a worldview that, whilst in strident opposition to
the universalistic claims of Western metaphysics and theology, has come to dominate
implicitly, though not explicitly, the science and ideology of global capitalism.

Our thesis here is that the Protestant Work Ethic retains the Christian and Scholastic
genes of mediaeval theology and jusnaturalism (Latin, jus naturale, Natural Law) that
will ultimately form the foundations of Classical Political Economy and of the Labour
Theory of Value – both of which are emphatically antithetical to any version of “a
specifically bourgeois (and capitalist) economic ethic”. The real, true and canonic
“bourgeois economic ethic” – indeed, an entire imponent metaphysics, as we shall show –
is and could only be constituted by what has come to be known as “neoclassical
economic theory”, a theory that from its early beginnings in the middle of the nineteenth
century on the back of Hobbesian and Lockean possessive individualism and then
through its direct predecessor, the negatives Denken initiated by Schopenhauer, has come
to dominate and permeate the entire one-dimensional uni-verse of bourgeois orthodox
“economic science”. We characterize this philosophical and socio-theoretical current,
immensely influential to this day - though this is far from obvious to even the most
perceptive scholars in economics especially - as “negatives Denken” or “negative
thought”. The meaning of this description will become apparent in the course of our
exposition as we trace the salient aspects of the negatives Denken with special reference
to the field of economic theory as expounded and articulated by Neoclassical Theory.

For although in the worldview of the negatives Denken “labour” can consume existing
wealth or “nature” to provide for individual wants when it comes into contact with this
“nature”, it can by no means “create” or produce greater wealth to satisfy or provide for
human wants unless this “labour” can be made more “productive” by “capital”.
Aphoristically put, one might say that for the Protestant Ethic production leads to greater
wealth and possessions by means of labour understood as penitence (toil and abstinence
or parsimony) whereas for the negatives Denken it is the renunciation of present
consumption that leads to future accumulation through the diversion of labour to the
production of capital. The essential feature that both the Protestant Ethic and the
negatives Denken have in common is that for both “labour” is “sacrifice and
penance” or “toil and effort”: yet the all-important difference is that for the first
labour pro-duces greater wealth, regardless of whether this wealth is then saved or
consumed, whereas for the second this is impossible given the essence of labour as
“want” or “provision for want”, and only the renunciation of consumption, the
conquering or sublimation of “want”, can lead to the accumulation of wealth
provided that this renunciation is devoted to the production of labor-saving tools
and ultimately exchange values.

We wish to demonstrate here that whilst Neoclassical economic theory and a fortiori the
negatives Denken give absolute pre-eminence to sacrifice and “renunciation” as the real
foundation, source and origin of “greater wealth” or “production”, just as the Protestant
Ethic did, they deny most vehemently that “labour” can be the real source and origin of
greater wealth and assert rather that that source and origin is to be found in “capital”
understood as “the saving of labour” or better still as the “diversion of labour from
immediate consumption to production goods or labour-saving tools” – or, in other words,
“means of production” or “capital”. Indeed, for the negatives Denken and for
Neoclassical Theory it is quite simply metaphysically impossible for “labour” to be the
source and origin of “wealth” of any description; if anything, labour is seen as
consumption of wealth, as “want” or as “provision for want” (Bedarf) to ensure survival.
For Neoclassical Theory thus labour has no “utility” and is rather “dis-utility”; labour is
effort, toil and pain - thence it cannot be the substance of or be embodied in any kind of
“wealth” or “goods”. Not labour, but renunciation of consumption, which includes
labour-as-consumption (!), in favour of the production of labour-saving tools can lead to
the accumulation of wealth. Not only, then, is labour not the source of wealth-creation for
the negatives Denken, but labour is even considered as a form of consumption of wealth
to secure its own subsistence! Furthermore, as we will show presently, for the negatives
Denken the accumulation of wealth must be devoted not to consumption but to the
production of “Objective Value” or goods for exchange: the necessary corollary of this
condition is that if the increased production is not to be consumed, that part of it that is
constituted by consumption goods can then be used only toward the purchase of the
“labours” of other individuals who do not or cannot afford to save.

The protestantische Ethik as enucleated by Weber still expressly glorifies “labour” as the
direct and positive source and motor of wealth-creation, that is to say, as the substance of
all except “natural” wealth, by tracing “the spirit of capitalism” back to the Christian
notions of human expiation of the original sin through the ascetic dedication to work and
prayer as in the Benedictine motto – “ora et labora” (work and pray). The devotion to
work and prayer represents a “withdrawal from the world” by subtracting time from the
pursuit of “worldly and mundane” pursuits that sinfully privilege this world and this life
against “the other world” and the afterlife, above all by exalting the toil and sacrifice to
which man was condemned when expelled from the Garden of Eden. Work and prayer
represent therefore the rightful pious means of expiating for the original sin of mankind
and its expulsion from heaven. This is an “ex-piation” (Lt. pius, pious) that is equally a
“red-emption” (Lt. red-emptio, buying back) of man’s salvation, of man’s original state of
heavenly bliss or “grace”: - expiation and redemption that represent a “renunciation” of
the evanescent terrestrial world (the Augustinian civitas terrena) and an “a-scent” back to
paradise (Lt. ascensio, climbing up [to paradise or civitas Dei]). The task and substance
of this A-skesis is therefore the withdrawal from and denigration of the world and
mundane pleasures by the ascetic through the sheer renunciation of these pleasures and of
“consumption”. This Christian deontology and ethic of ascetic renunciation was
articulated early in the Middle Ages by the monastic sects (Benedictine and Franciscan)
and was then sharpened and exasperated in the determinist eschatology of the Puritan
Protestant Work Ethic.

For the Protestant Work Ethic, there are two aspects to the Askesis: one is the “toil”
represented by labour as penance and atonement for the original sin, and the other is the
“parsimony” that devotion to labour entails as a result of being a material diversion from
“consumption”. Yet, as we shall demonstrate here, this “renunciation”, in its German
version as Entsagung, a term coined by Goethe, will undergo a profound and radical
reformulation through Schopenhauer’s metaphysics and ethics as a direct and profoundly
influential negation of Classical German Idealism, most virulently in opposition to the
universal rationalism of Hegel’s dialectics. So radical was the reformulation of the
Christian and ascetic worldview at the hands of Schopenhauer and the theoreticians that
followed in his wake - from Nietzsche to Weber and Heidegger in philosophy, Mach in
science, and the Austrian School in economics – that we can indeed speak of a “reversal”
(Um-kehrung) of that worldview whereby first its metaphysics and then its ethics were
thoroughy “turned inside out” until they found practical expression in Neoclassical
Theory from the early marginalists to the Austrian School, to General Equilibrium.
Weber perceived the central difficulty, the apory in his thesis, as these passages
demonstrate:

Rationalism is a historical concept which covers a whole world of different things. It will be our task
to find out whose intellectual child the particular concrete form of rational thought was, from which
the idea of a calling and the devotion to labour in the calling has grown, which is, as we have seen, so
irrational from the standpoint of purely eudaemonistic self-interest, but which has been and still is one
of the most characteristic elements of our capitalistic culture. We are here particularly interested in the
origin of precisely the irrational element which lies in this, as in every conception of a calling.

(Vorbermerkung, pp.75-8).

In fact, the summum bonum of [this] ethic, the earning of more and more money, combined with the strict
avoidance of all spontaneous enjoyment of life, is above all completely devoid of any eudaemonistic, not to
say hedonistic, admixture. It is thought of so purely as an end in itself, that from the point of view of the
happiness of, or utility to, the single individual, it appears entirely transcendental and absolutely irrational.
Man is dominated by the making of money, by acquisition as the ultimate purpose of his life. Economic
acquisition is no longer subordinated to man as the means for the satisfaction of his material needs. This
reversal of what we should call the natural relationship, so irrational from a naive point of view, is
evidently as definitely a leading principle of capitalism as it is foreign to all peoples not under capitalistic
influence. At the same time it expresses a type of feeling which is closely connected with certain religious
ideas. (PE, beginning of Ch.2, “The Spirit of Capitalism”.)

For Weber, capitalist industry is supremely “rational’ in that it relies on the arithmetical
surplus of profit over costs in the process of production and market exchange of goods.
Its rationality is purely “instrumental” (or purposive, Zweck-rationalitat) and not
substantive (Wert-rationalitat) because it is made tangible by the ability of the capitalist
to calculate precisely the profitability of his enterprise through the medium of money. It
is this Kalkulation that makes capitalism a supremely rational human endeavor for Weber.
On the other hand, apart from the fact that all “callings” or vocations are “irrational” in
the sense that they do not have a material origin, and apart from the fact that the
Protestant calling leads to the “indefinite” accumulation of wealth, the capitalist calling
appears irrational to Weber also because, on one side, the capitalist seeks to accumulate
wealth through the exertion of “labour”, and yet at the same time “the devotion to labour
in the [capitalist] calling… [is]…irrational from the standpoint of eudaemonistic self-
interest”. In other words, Weber correctly points out, the entire capitalist enterprise seems
wholly irrational and counter-productive from the very self-interested standpoint of the
capitalist! If indeed the aim of the capitalist is the “eudaemonistic self-interested” one of
accumulating wealth, it is then irrational to think that this can be done through “the
devotion to labour” or money when it is blatantly obvious that such “devotion” represents
an “indefinite renunciation” of the very “wealth” or “self-interest” that the devotion to
labour or to “money” is meant to help accumulate!

And the converse is even more true and irrational: for it is irrational in the extreme to
suppose that a “devotion to labour” that is meant as expiation for the original sin can be
pursued so ascetically when one knows that it will actually result in the accumulation of
wealth! Weber is saying, quite validly, that a calling that at one and the same time pursues
wealth through labour when labour is ipso facto the diversion of time for consumption to
time for production and therefore to total “abnegation” of the self or “renunciation” of
wealth – that such a calling can only be classed as “irrational”, in complete contradiction
with the “calculating” rationality that money makes mathematically possible for the
capitalist! Worse still, the indefinite accumulation of wealth that is a by-product of the
devotion to labour is irrationally inconsistent with its original goal of expiation of the
original sin.

This interesting “contradiction” between “devotion to labour” and “accumulation of


wealth” should have prompted Weber to reassess the legitimacy of the link between the
Protestant Work Ethic and the Spirit of Capitalism not so much in historical terms, where
it may well be accurate and even legitimate – but above all in terms of the internal
consistency of such a link, and therefore of its ability to be adopted effectively by the
capitalist bourgeoisie as a lasting ideology capable of being presented not just as “a
specifically bourgeois economic ethic” but indeed eventually (in the late nineteenth
century) as an “economic science”. ((Interestingly, it was another Neoclassical
economist, the Italian Vilfredo Pareto, who first distinguished between ideologies and
their “derivations” that may be functional to the interests underlying them and those that
may be dys-functional or detract from those interests. Weber’s own notion of Zweck-
rationalitat is aimed at assessing the “purposive rationality” of given means at achieving
stated aims.)

Another important inconsistency with the Protestant ethic is that the accumulation of
wealth in capitalist industry is impossible as the result of purely individual exertion or toil
or sacrifice, but rather through the command over the “labours” of other individuals –
something that is clearly inconsistent with the status of the “devotion to labour” as
expiation or sacrifice. For it is preposterous to suggest that one may expiate and atone for
one’s sins vicariously by accumulating the labour of others! If indeed labour is the real
motor of the accumulation of wealth, then it becomes impossible for the capitalist to
explain the legitimacy of his profits. As every capitalist knows, any accumulation of
capital on any suitable scale is possible only through the use of the labours of many
workers, not just the work of the individual capitalist! (As Marx established, capital is the
concentration of workers in one place, what he called “the concentration of capital”
distinct from “the concentration of capitals” which refers to the need for capitalists to
equalize the rate of profit across different markets.) Weber himself in the first quotation
above specified how the capitalist, apart from feeling justified in his profits through the
Protestant Work Ethic, acquired also through this Ethic a workforce of “unusually
industrious workmen”. The contradiction here between “private” capitalist accumulation
and the utilization of a large workforce that makes such “private” accumulation possible
is entirely palpable!

Yet another apory in the Protestant Ethic is that of the conflict between greater labour
productivity and the depreciation of the price of labour or wages. What for Smith and the
Puritans – and for Weber - was wealth-creating division of labour, Hegel perceived in
Smith’s “pin production” as the paradox of greater productivity of labour that does not
enrich the worker! The problem, of course, as Marx will correctly explain, is that the “use
value” of the higher productivity of living labor (its “wealth”) is obviously greater with
specialization, but the “value-in-exchange” of the “labor-power” of the worker is lower as
a result because the employer can employ fewer workers for the same output and thus
lower the wages he pays to the fewer workers he can employ! With good reason,
Mandeville could chastise Smith with the harsh reality that “the Publick” that benefitted
from “Private Vices” (conspicuous consumption) was not the working class whilst taking
delight both in the ferity of humans as well as in exposing the hypocrisy of Smith’s
“invisible hand” (a Deus absconditus or hidden God) that justified bourgeois enrichment
and working-class immiseration as a hidden divine purpose. Mandeville could still share
the condemnation of “laziness” and of the charity halls, not for ‘Deistic’ reasons related
to “the Protestant work ethic” (for discouraging “labor” as an avenue to “wealth”), but for
the quite cynical realization that they invited work-shirking on the part of proletarians to
the detriment of profits and production of goods to satisfy those “private vices” that he
mercilessly lampooned! What may appear as contradictory was in fact only sheer
cynicism that Mandeville preferred to hypocrisy – for him, “hypocrisy is the tribute that
vice pays to virtue”.

This conceptual inability of the Protestant Ethic to reconcile labour as the source of new
wealth and the legitimacy of capitalist profits as a separate claim to wealth also based on
labour is a major source of theoretical paradoxes, one that afflicted equally Classical
Political Economy, and one that Marx exposed vehemently and ruthlessly. In reality, with
the “protestant ethic” Weber is still unwittingly reprising the Labour Theory of Value in
its pre-Marxian form, although in his academic lectures he had adopted already the
marginalism of the Austrian School. (In the Vorbermekung, however, he embraces
Cantillon’s notion of “entrepreneurial profit” whereby profits are the simple outcome of
exchange. It is a well-known fact that Weber’s understanding and grasp of economic
theory was rather limited.) Specifically, Weber was embracing Smith’s theory of
specialization as the source of new and greater wealth: - division of labour, specialization,
as wealth-creation, as more efficient pro-duction or “labour productivity”, and therefore
labour as pro-duction. Wealth is created through growing labour productivity enabled by
exchange and therefore “specialization”, that is, through the pro-duction of more goods
for exchange and the use of fewer goods for consumption: “growth of productivity
through exchange” is the source of wealth. In this perspective, wealth is the “squeezing
out” of greater output from existing means of production or resources or from their re-
combination by means of higher labour “intensity”. By consuming less himself or by
“working harder” the worker can exchange more – and by exchanging more he can
“specialize” more so as to produce even more! The worker can be more productive by
specializing, producing more and consuming less in the exchange. Smith assumes fixed
and exogenous technology. Smith’s theory does not allow for “innovation” or the role of
wealth as “delayed consumption”. Thus, “consuming less oneself” becomes “producing
wealth for exchange by consuming less”. Both Smith and Weber single out this
“parsimony” as a means of accumulating wealth and as an aspect of “Asceticism” in
(‘PE’, p161).

It can be seen how this “protestant work ethic” rationale still preserves entirely the link
between labour and wealth-creation because the aim of parsimony is not “the saving of
labour time through its diversion from consumption to production”, but rather increasing
the productivity of labour through its “intensification” by means of specialisation.
In the Smithian worldview, faithfully adopted by Weber to describe his conception of the
Protestant Work Ethic, it is still Labour (Arbeit), it is the higher productivity of labour
that is the immediate source and cause (fons et origo) of the increase of wealth. This
rationale and aetiology is in all and for all the rationale of Natural Law, of Classical
Political Economy and of the Labour Theory of Value (from the mediaeval Schoolmen
such as Aquinas to Smith and to Marx through Ricardo and JS Mill). It is the ancient
biblical prejudice that wealth comes only “in the sweat of thy brow”. (Smith refers in
“Astronomy” to the distinction between “tranquility and composure” and “labour and
discomfort”.) Labour as toil is “the price to be paid for the acquisition of wealth” – a
“real cost” hypothesis. As we are about to see, this worldview of wealth as a direct
product of labor requires three fundamental tenets: the first is that human needs are fairly
homogeneous, with minor exceptions; the second is that human labour, although it may
be as heterogeneous as there are human activities, is quantitatively homogeneous in terms
of the labour-time or labour-power required to satisfy these homogeneous human needs;
and third, as a corollary of this, that labour therefore represents the most fundamental and
pervasive source of human social co-operation and co-ordination to ensure the
reproduction of society, the basis of the social synthesis.

This rationale and aetiology could no longer serve the bourgeoisie after the initial phase
of accumulation in the First Industrial Revolution. Hannah Arendt perceived this
inconsistency in Smith’s economic theory as an apology for capitalism:

Theoretically speaking, the stage was set when first Locke-probably under the influence of the prosperous conditions
of the colonies in the New World - and then Adam Smith held that labour and toil, far from being the appanage of
poverty, the activity to which poverty condemned those who were without property, were, on the contrary, the
source of all wealth. Under these conditions, the rebellion of the poor, of 'the slavish part of mankind', could indeed
aim at more than liberation of themselves and enslavement of the other part of mankind. (On Revolution, p.23.)

The central achievement of Neoclassical Theory, derived fundamentally from the


philosophical “reversal” of Western Hellenic and Judaeo-Christian metaphysics
performed by the negatives Denken, will be the outlining of a complex and
comprehensive economic “science” that will relegate “labour” and the working class to
their subordinate place in the market economy. Above all, by severing the social-
teleological osmotic link between labour and wealth, Neoclassical Theory was able to
replace the Judaeo-Christian “Beruf”, so burdened with “metaphysical” notions, religious
tenets and “moral theology” (this was Schopenhauer’s, and Nietzsche’s, critique of Kant
and Hegel), with the positivistic Hobbesian “amoral, effective Entsagung” that leads to
the entrepreneurial spirit (Unternehmergeist) of the “captain of industry” glorified by
Schumpeter. This is the “specifically bourgeois economic ethic” that Weber was seeking
at the end of Die protestantische Ethik but understood and traced incorrectly. The new
link that needs to be theorized is that between “labour as consumption of nature”, “saving
as renunciation of consumption”, and thence as “deliverance from the world”
(Schopenhauer), on one side, and then “capital as diversion of labour from consumption
of wealth to production of labour-saving tools or tools that increase labour productivity”,
“utility as partial satisfaction of insatiable human appetite” or as “gap between want and
provision for want”, and therefore “capital as store of utility or value meant for future
exchange”, “value for exchange as objective [market validated] value” and finally
“capital as interest-yielding labour-saving tools” due to the discount of future goods.

Only by severing the nexus between labour and wealth and replacing it with the link
between wealth and “utility”, and only by reversing (um-kehren) the metaphysical
content of “wealth” and “labour” by re-defining fundamentally the understanding of this
human reality will it be possible for the bourgeoisie to establish that wealth is not an
objective or intersubjective entity that can “grow” or be “accumulated” but rather a
subjective estimation by atomistic individuals of the “utilities in exchange” or “marginal
utilities” to be derived from the exchange of production and consumption goods in a
temporal dimension, that is, through the subjective discounting of present wealth as
against its use in the future. Neoclassical theory draws its conclusions thus from the
application of abstract general principles from physics and psychology.

This is the side that Weber neglects but that is present in Schopenhauer and is insightfully
and coherently, though not always explicitly, applied in the sphere of economic theory by
Bohm-Bawerk and the Austrian School of Economics, first, and then more broadly by
Neoclassical Theory. Let us look more intently then at the Neoclassical notions of labour
and capital.

CAPITALIST METAPHYSICS - 2

The propositions of the Protestant Ethic and of the Labour Theory of Value are
fundamentally antithetical to the metaphysical positions of the negatives Denken and also
of Neoclassical Theory. For Weber’s Calvinists and Puritans, wealth is a sign of “Beruf”,
of divine grace and active “divine calling”. But the Beruf, even in its religious
specification of Entsagung, of “renunciation” and Askesis, does not yet sever decisively
the theoretical link between labour and the accumulation of wealth by interposing the role
of “capital” in the trans-formation of existing natural resources or wealth into greater
wealth for individuals. The “wealth” of the Protestant Work Ethic is still a constructive
universal human value that can be socially aggregated and accumulated by means of
labour as “effort” first, and then as sacrifice and “renunciation” of consumption, even
though labour is not seen as social fulfilment but rather as expiation and sacrifice by the
individual soul in its univocal relation with the Divinity.

Two are the essential foundations of the Protestant Work Ethic and of the Labour Theory
of Value that bourgeois economic theory needs to demolish: the first is that all
economically significant “wealth” – that is to say, all use values pro-duced by human
beings and not occurring naturally – derive their “utility”, and therefore also their
exchange or market value, from labour itself. And the second is that “labour” is a
homogeneous entity that can be measured in terms of the amount of it that is “embodied”
in exchange values and upon which market prices are agreed upon by market agents. In
order to do so, however, the negatives Denken had to develop an entire metaphysics upon
whose foundations it could erect “a specifically bourgeois economic ethic”. The aim of
this section is to dis-cover the essential content of this "capitalist metaphysics” and so to
un-cover and expose a ritroso, as it were, “going backwards”, the theoretical vestiges that
connect bourgeois metaphysics with bourgeois ethics and economics.

Classical Political Economy intended both “wealth” and “Value” as objective or inter-
subjective realities – that is, as an entities whose content and quantity can be agreed upon
scientifically by all human beings and be the subject of social and economic co-
ordination either through planning (socialism) or through the market (liberalism). It is
this universality, this concordance and possible “harmony” – this inter esse, this
“common being” - that the negatives Denken attacks most virulently. For the negatives
Denken, human wants are entirely subjective and cannot in any way shape or form be
regarded as homogeneous or commensurable between human beings. Hence, “wealth”
can be considered only from the point of view of “Subjective Value” pertaining to each
“individual” in isolation from other “individuals”. And “labour”, although it is the
immediate factor in the production of wealth, can exist, it can manifest itself, only as
“individual labours” - precisely because neither wealth nor labour can be homogeneous
use values that apply to human beings as a species – that is, phylogenetically – and whose
quantity and value may be calculated scientifically independently of the conflicting and
competing claims put forward by each individual with regard to all available “wealth”
whether naturally-occurring or humanly produced. For the negativesDenken, labour
can and must be regarded only ontogenetically, as mere mechanical operari, only as the
physical bodily exertion on the part of the individual worker separate from the exertions
of other workers and separate from any “tools” that the worker may “utilize”. Indeed, the
“utility” of the tools is considered to be entirely distinct and separate from the actual
body and bodily exertions of the worker. Consequently, labour always and ineluctably
consumes its object, whether it be the tools it utilizes or the materials it “works upon”,
to provide for the present material wants of the labourer.

In no circumstances can labour be considered to be homogeneous or to satisfy


homogeneous human needs and therefore to constitute the most basic form of the human
social synthesis, of human inter-est, of social co-ordination and fulfilment. A fortiori,
there can be no notion of “social labour” for Neoclassical Theory, nor can there be any
“separation” (Trennung) in the Marxian sense between “labor” and the “means of
production” - because there was never any union between them! The human operari is
entirely “instrumental” to its goal – the provision for want. There is and there can be no
Gattungswesen, no species-conscious being, no “original union” of workers with tools or
with one another in the labour process or indeed with the product of the labor process -
simply because labour is not seen as a social, phylogenetic activity. Quite to the contrary,
the insatiable nature of human wants and the “scarcity” of their provision ensure that
there is “conflict” between and among workers, and between workers and nature, let
alone between workers and capitalists! Human beings are irreducibly and ontologically
“things-in-themselves”; they are Schopenhauerian “Wills” or, as Nietzsche describes
them, “instincts of freedom” that can “co-operate” or “col-laborate” to the extent that
their “needs”, their “iron necessities” and their “wants” are provided for and satisfied.
Wants expand to absorb the available output by labor and indeed all the wealth and
resources available to the individual Will: that is why economic “science” deals always
with scarce resources (recall the description of economics as “the dismal science”). All
wealth and resources, natural or produced, are inevitably “scarce” because human wants
are insatiable and because wealth cannot be created but can only be conserved or
transformed or consumed. All natural and produced resources have “utility” only for the
individual Will. The negatives Denken relies on the notion of utility, yet this is not based
on the Benthamite conception of utility as an intersubjective and phylogenetic quality that
made it consistent with the Labour Theory of Value espoused by Classical Political
Economy from Smith to Ricardo and Mill. For the negatives Denken, instead, utility is an
entirely subjective and inscrutable entity that can be “measured” as “Value”, that can be
given “social significance” or a “social Form” – that can be “reified” – only through the
inevitable “clash of Wills”, the irremediable and irresoluble conflict between the wants of
individuals. Any “social osmosis” is possible only through the market pricing mechanism
where individual Wills “clash” or “com-pete” and come into conflict for the same wealth
rendered “scarce” by insatiable individual human appetites. Of course, the evident
inconsistency lies in the fact that it is impossible to specify “market rules” that apply to
individual Wills that are in irreconcilable conflict with one another: the “com-petition”
(shared claim) of market agents is a contradictio in adjecto!

Wealth and nature are seen by the negatives Denken as being antithetical to human
being (in Schopenhauer’s phrase, “the Will to Life”), as ob-jects (Gegen-stande)
literally “standing against” human beings, first, because human wants are
bottomless; and second, as a corollary, because each individual’s wants and
“labour” must be antithetical to and in competition and conflict with the wants and
“labours” of other individuals. Wealth and nature do not and cannot represent a
source of uniform homogeneous commensurable and compatible objectification of
human potential, of social labour, but are seen rather as the source of satisfaction of
strictly individual wants that are absolutely incommensurable between individuals
and indeed are a source of universal conflict between one another and between them
and Nature, individually and collectively.

“Wealth” and “nature” therefore are not seen as resources by means of which human
beings through their “labour” - understood as social labour, that is, as being also a
resource indivisible and inseparable from “nature” - necessarily and constructively
objectify their “abilities” and fulfill their needs as a species, phylogenetically and
collectively. On the contrary, both nature and wealth are seen as “resources made scarce”
by the insatiable subjective wants of human beings understood as atomistic in-dividuals,
that is, ontogenetically, in competition and in conflict both with nature and with one
another; – infinite subjective wants for which labour can provide only immediate
provision as “hand-to-mouth” subsistence. Thus, “labour” is first broken down into
“individual labours” that can in no manner shape or form be regarded as “social labour”,
and then, as a direct corollary, these individual labours are seen as unable to do more than
provide for the immediate wants of labourers without the intervention of labour-saving
tools or “capital”.
This is the Hobbesian status naturae, the bellum omnium contra omnes, the state of
nature in which homo homini lupus obtains and that Schopenhauer postulates in Book
Four of Die Welt als Wille und Vorstellung, after his pitiless critique of Kantian ethics in
the Grundprobleme der Ethik, of the “moral theology” of the Categorical Imperative. In
the negatives Denken initiated by Schopenhauer in response to the Hegelian dialectic, the
instrumental “operari”, the Arbeit, “labor” itself, does not have “utility” because it is “the
objectification of the Will to Life” with its unfathomable Wants, with its “evanescent
World”. Only the World is “wealth”; only consumption goods have “utility” for the Will.
The individual Will alone ultimately “measures” or “values” or “prices” the marginal
utility of “the means of production” not in an “objective or substantive sense”, but merely
from its unfathomable desire (conatus) and appetite (appetitus), from its individual
“viewpoint” (Gesichtspunkt), from the “per-spective” of the “individual choice”.

Unlike Classical Political Economy and the Labour Theory of Value, which saw “nature”
as a universal “use value” for the human species, all “wealth” or “value” or utility is
“subjective” for the negatives Denken to the extreme point that it is “incommunicable”
and “incommensurable” between individuals and certainly not quantifiable either
individually or socially. Even social welfare can be assessed only relatively as in Pareto
optimality, in terms of the increase of welfare of the last individual, but cannot be
aggregated because wealth is “objective” only to the extent that its value or utility to each
individual can be exchanged between in-dividuals. Clearly then, the market economy
envisaged by the negatives Denken and Neoclassical Theory is one that is always in
“equilibrium”, as a “static” economy that can “grow” only by moving from one
equilibrium to another. (The point was made by Schumpeter in the Theorie. The
theoreticians who formalized general equilibrium – Arrow, Debreu and Hahn – later
concluded what any serious reflection on neoclassical theory could have told them from
the outset: - that equilibrium theory is incompatible with the notion of “money” as a
means of exchange and a store of value.)

It follows from this perspective that human living activity is conceptually “separated”
from its “object”, from its environment which supplies it with “the means of production”.
Human living labour is seen from the outset as pure and utter “destitution”, as “poverty”,
as “want”. Accordingly, the means of production, the tools utilized by labour, cannot
serve as means for the expression or objectification of human living labour but rather as
“labour-saving tools”! We should note the difference between Jeremy Bentham’s
Utilitarian or “hedonistic” calculus of pleasure and pain and the strict nexus established
by Schopenhauer between operari as “Arbeit” (labor) and “A-skesis” as “release from
Pain”, as “renunciation of the World” – and therefore the identification of “labor” with
“want and pain”. This nexus is entirely missing in Bentham just as it is in JS Mill who
espoused the Labor Theory of Value as the last great representative of Classical Political
Economy. But it is this Schopenhauerian nexus that is vital to the early development of
the theory of marginal utility.

What this means is that human living labour itself is already considered, for one, as a
“tool”, as an instrument whose “productivity” can be measured in terms of “units of
output per unit of time”. And for another, living labour is seen as an activity or a “labour
power” that is purely abstract, mere “potentiality”, utter “possibility”, sheer “pro-ject”
not bound by any phylogenetic and social needs of any description whatsoever. In
practice, it is the latter “view” of living labor – the assumption that living labor is only
“mere potentiality” - that serves as the premise that leads inexorably to the former
conclusion – that is, that living labor is only a “tool”, a force or power that can be
rendered homogeneous not through organic co-operation but exclusively through
mechanical conflict between human wills. Marx’s critique of political economy as
founded on “abstract labor” is all here.

In this perspective, “abstract labour” is sheer, naked, destitute poverty, barren misery –
“potential” that can only become “actual” if, and only to the extent and manner that, it is
allowed by “the laws of supply and demand” to come into contact as a tool with “the
means of production” that are the “endowment” and “possession” of the capitalist. Labor
is a fire that devours or consumes or at best transforms its object simply to keep itself
burning - and yet cannot, for all its burning, pro-duce anything. For the Neoclassics, then,
“labour” and workers are by definition the factor of production that is in “want” or
“need”, that suffers “toil” and “pain” and “dis-utility” – and that “needs” capital (the
means of production as “labour-saving tools”) in order to satisfy its “wants” that are
made “immediate”, “urgent” – in contrast with the capitalist owner who can “defer”
consumption – by the very fact that it does not now have “provisions” for its subsistence
and reproduction and survival!

“Labor” can have no “utility” because “labor” is “effort” (Kampf), it is the


“objectification of the Will”, it is the “operari”, it is “Pain” (Leid) without “Pleasure”
(Lust): “labor” is “dis-utility”! And the “marginal utility” of the consumption goods
produced “to provide for the worker’s wants” – the wage - must be equivalent to the
“marginal dis-utility of labor” if the production of consumption goods is to be optimal.
Neoclassical theory from Gossen onwards begins with Schopenhauer’s notion that human
living activity is “toil”, it is “effort”, it is “pain” and “want” (Bedarf) in search of
“provision” (Deckung), as Bohm-Bawerk styles them in the Positive Theorie.

In 1884 there appeared Böhm-Bawerk's critical work which established not only
the untenable but also the superficial character of the existing explanations of
interest and opened a new era for the theory of interest. This book and the one
entitled Positive Theorie, which followed four years later, trained numerous
theorists of interest and hardly a single one remained unaffected by them. Of all
the works on the theory of marginal utility these two volumes had the deepest
and widest effect. We find the traces of their influence in the way in which almost
all theorists of interest phrased their questions and proceeded to answer them.

There are signs of this influence even in those writers who rejected the concrete
solution of the problem of interest as offered by Böhm-Bawerk. This solution is
based on the fundamental idea that the phenomenon of interest can be
explained by a discrepancy between the values of present and future consumer
goods. This discrepancy rests on three facts: first, on the difference between the
present and the future level of supplies available for the members of the
economy, secondly, on the fact that a future satisfaction of wants stands much
less vividly before people's eyes than an equal but present satisfaction. In
consequence, economic activity reacts less strongly to the prospect of future
satisfaction than to that of present enjoyment and the individual members of the
economy are in certain circumstances willing to buy present enjoyment with one
that is greater in itself but lies in the future. The discrepancy between
present and future values is, thirdly, based on the fact that the
possession of goods ready to be enjoyed makes it unnecessary for the
economic individuals to provide for their subsistence by

HISTORICAL SCHOOL AND MARGINAL UTILITY 199

producing for the moment, e.g. by a primitive search for food.

The possession of such goods enables them to choose some

methods of production which are more profitable but are more

time-consuming: the possession of goods ready to be enjoyed in

the present guarantees, as it were, the possession of more such

goods in the future.

In this 'third reason' for the phenomenon of interest there are

contained two elements: First, the establishment of a technical fact

which so far had been unknown to the theorists, namely that the

prolongation of the period of production, the adoption of 'detours'

of production, makes it possible to obtain a greater return which

is more than proportionate to the time employed. Secondly, the

thesis that this technical fact is also an independent cause of an

increase in value of consumption goods which are in existence at

any given time.

Interest as form of income then originates in the price struggle

between the capitalists on the one side, who must be considered

as merchants who offer goods which are ready for consumption,

and landlords and workers on the other. Because the latter value

present goods more highly and because the possible use of present
stocks of consumer goods for a more profitable extension of the

period of production is practically unlimited, the price struggle is

always decided in favour of the capitalists. In consequence, landlords

and workers receive their future product only with a deduction,

as it were, with a discount for the present.

The achievement which this formulation contains was epoch-making

and a great deal of the theoretical work of the last twenty

years has been devoted to a discussion of it and to its criticism.

(Schumpeter, Economic Doctrines and Methodology.)

(To be continued.)

CAPITALIST METAPHYSICS – 3

Let us re-read carefully that lengthy quotation from Schumpeter with which we ended
Part One of this study:

In 1884 there appeared Böhm-Bawerk's critical work which established not only the untenable but
also the superficial character of the existing explanations of interest and opened a new era for the
theory of interest. This book and the one entitled Positive Theorie, which followed four years later,
trained numerous theorists of interest and hardly a single one remained unaffected by them. Of all
the works on the theory of marginal utility these two volumes had the deepest and widest effect. We
find the traces of their influence in the way in which almost all theorists of interest phrased their
questions and proceeded to answer them.

There are signs of this influence even in those writers who rejected the concrete solution of the
problem of interest as offered by Böhm-Bawerk. This solution is based on the fundamental idea that
the phenomenon of interest can be explained by a discrepancy between the values of present and
future consumer goods. This discrepancy rests on three facts: first, on the difference between the
present and the future level of supplies available for the members of the economy, secondly, on the
fact that a future satisfaction of wants stands much less vividly before people's eyes than an equal
but present satisfaction. In consequence, economic activity reacts less strongly to the prospect of
future satisfaction than to that of present enjoyment and the individual members of the economy are
in certain circumstances willing to buy present enjoyment with one that is greater in itself but lies in
the future. The discrepancy between present and future values is, thirdly, based on the fact that
the possession of goods ready to be enjoyed makes it unnecessary for the economic individuals to
provide for their subsistence by
HISTORICAL SCHOOL AND MARGINAL UTILITY 199

producing for the moment, e.g. by a primitive search for food.

The possession of such goods enables them to choose some

methods of production which are more profitable but are more

time-consuming: the possession of goods ready to be enjoyed in

the present guarantees, as it were, the possession of more such

goods in the future.

In this 'third reason' for the phenomenon of interest there are

contained two elements: First, the establishment of a technical fact

which so far had been unknown to the theorists, namely that the

prolongation of the period of production, the adoption of 'detours'

of production, makes it possible to obtain a greater return which

is more than proportionate to the time employed. Secondly, the

thesis that this technical fact is also an independent cause of an

increase in value of consumption goods which are in existence at

any given time.

Interest as form of income then originates in the price struggle

between the capitalists on the one side, who must be considered

as merchants who offer goods which are ready for consumption,

and landlords and workers on the other. Because the latter value

present goods more highly and because the possible use of present

stocks of consumer goods for a more profitable extension of the

period of production is practically unlimited, the price struggle is

always decided in favour of the capitalists. In consequence, landlords


and workers receive their future product only with a deduction,

as it were, with a discount for the present.

The achievement which this formulation contains was epoch-making

and a great deal of the theoretical work of the last twenty

years has been devoted to a discussion of it and to its criticism.

(Schumpeter, Economic Doctrines and Methodology.)

Bohm-Bawerk’s theory of the greater “productivity” of “more roundabout” methods of


production is yet another version of the Schopenhauerian “renunciation” (Entsagung), the
“refusal” of the “pain” (Leid) that the Will to Life imposes on the human body (which is
the objectification of the Will) in its abulic, incessant and insatiable search for “pleasure”
(Lust) that can never be satis-fied, least of all at the moment of its ful-filment because,
paradoxically as Schopenhauer took pains (!) to point out, a desire is extinguished in the
very moment of its fulfilment! In Schumpeter’s masterly exegesis of his mentor’s
economic theory, Bohm-Bawerk is clearly intimating that the capitalist is “rewarded”
with higher productivity of the “tools” (capital) he possesses by virtue of his “ascetic
renunciation” or “deferral” of “immediate consumption” in order to devote his labor and
existing capital to the construction of more “roundabout” methods of production that will
yield higher productivity and therefore “profit” when they are utilized:

“The prolongation of the period of production [necessitated by the need to renounce immediate
consumption in favour of producing “tools”], the adoption of 'detours' of production, makes it
possible to obtain a greater return [gains in productivity obtained thanks to the “labour-saving”
nature of tools] which

is more than proportionate to the time employed.”

Labour therefore is mere want, mere operari; it is poverty by definition or at least it is the
simplest form of subsistence living. Consequently, labour can have only “dis-utility”
because it is mere “effort” or “toil”, mere “labour-power” or “abstract labour”. (Marx will
later object that the unique use value of “the commodity labour-power”, of abstract
labour – or rather, of labour made abstract by capitalist command -, is precisely to
produce “surplus value” for capitalists under their violent command. This vital Marxian
distinction of the Doppelcharakter of the commodity labour-power - that is, its being a
mere exchange value for capitalists but in fact being “the source of all exchange value” -
is what re-connects the appearance of “market capitalism” as a scientistic eternal human
condition to its actual reality as a historically specific exploitative social system.)

Here, as Schumpeter reminds us with characteristic acuity, every “detour” undertaken by


an individual allows him to exchange the new products obtained by the use of “tools”
either for the consumption goods obtained by other workers or else for the purchase of
their own “labour-power”. We can see now how the entire concept of “interest or profit”
in Neoclassical Theory is evidently founded on the idea of a “price struggle between
capitalists and workers” that, given the premises of this theory, “is always decided in
favour of the capitalists”. And this “price struggle” is absolutely – metaphysically, we
could say – inevitable because of the innate drive (Trieb) of the human Will to Life
toward the conquest of greater pleasure or “utility”. But in order to produce “labour-
saving tools”, the individual must first “renounce” the consumption (and production) of
goods for immediate consumption that are coveted by other individuals.

Clearly therefore, only individuals with the greater ability to renounce the Will to
Life are able to produce “labour-saving tools” that enable them to produce more
efficiently fresh consumption goods that are intended for exchange with the labour-
power of other individuals who are less capable of renouncing the Will to Life. It is
therefore those individuals with greater self-mastery who turn themselves into
capitalists (producers of labour-saving tools or “capital”) at the expense of those
individuals who are less capable to renounce the Will to Life, and are therefore
condemned to a life as “workers”. We must note that, in renouncing goods for
immediate consumption in favour of “labour-saving tools”, the capitalist must aim at the
production of values in exchange or “Objective Value” - because otherwise the goods
produced by the renouncing individual would still be used either in direct consumption or
else in exchange for other goods for consumption, not in pursuing renunciation as a
means of dominating more labour-power, which is what turns him into a “capitalist”! The
production of values in exchange through the adoption of labour-saving tools (capital)
allows the owner of these tools, the capitalist, to exchange these values for the individual
labours of other individuals whose “wants” are too pressing for them to delay
consumption, in such a way that their “provision for want” (Bedarf) becomes dependent
on their being employed by the owner of capital, who now becomes a capitalist employer
(a “giver of labour”, Arbeit -geber) to the dependent employee ( a “taker of labour”,
Arbeit-nehmer).

Thus, it is Capital, not Labor, that allows human labor to be “productive”; it is “labour-
saving tools” that allow some workers to produce more wealth and value than other
workers and thereby turn themselves into “capitalists”. It follows that capitalists produce
more consumption goods not in the positive substantive and objective sense of universal
human endowments, but only in the negative subjective sense of providing for the wants
of individuals by saving “labor” for them individually, reducing their subjective “pain”
(Leid) of and “effort” of work, of the operari, its “strife” (Kampf) in a “world” in which
“pleasure” (Lust) is only the “Provision [Bedarf] for Want”, the “satis-faction” of
“unlimited wants”, their “partial extinction” – their ful-filment and com-pletion only in a
negative sense of the appeasement or extinguishment of a want or desire, never in the
positive sense of its full gratification, for that is impossible!

Indeed, we can finally state that the aim of the capitalist is the extinguishment of labour
as desire intended as “appetite”, as “want” or “need” or “poverty”. We can see that for the
negatives Denken and Neoclassical Theory it is not “labour” as such that occasions
wealth for the capitalist but rather it is the delay in the consumption of consumption
goods through the diversion of labour to the production of production goods. Labour here
remains at all times a mere operari, a mere mechanical consumption of wealth.
Furthermore, human wants are seen as insatiable and inextinguishable. Therefore, the
decision to divert labour to production goods and to delay the consumption of
consumption goods represents for the negatives Denken a Schopenhauerian ascetic
“renunciation” and sublimation not just of “ephemeral worldly pleasures” but also a
transcendental refusal of the Arbeit, of Labour, and of the Will to Life that motivates
it – in short, a renunciation of labour as consumption of the world in favour of
labour-saving tools or capital as rational domination over and extinguishment of the
Arbeit, of labour and of “the world” – of Nature - through the rational sublimation
of the Will to Life. In the words of Lionel Robbins, “Nirvana is the satisfaction of every
desire”. As we will see, this renunciation turns the Schopenhauerian Will to Life into a
Nietzschean Will to Power or, in Schumpeter’s version, a capitalist entrepreneurial “will
to conquer” – the Unternehmersgeist.

Without the intervention of capital, individual labours can only either consume or
transform existing wealth (“nature”) to ensure “provision for their insatiable wants”, but
they cannot, as labour (!), produce greater wealth. (Similarly, Adam Smith completely
ignores the possibility of social labour in his analysis of exchange as the basis of
specialization and higher productivity – something that Rousseau did instead – see L.
Colletti in Ideologia e Societa’.) Labour by itself is a “negative” factor of production in
the sense that it can only satisfy the most immediate wants in terms of the duration of the
goods it can obtain for the satisfaction of individual wants if unaided by tools. Only
through the use of capital can labour produce wealth in a form that can be accumulated.
But the use of capital does not change the essential quality of labour which is that of
being sheer operari, mere mechanical exertion. Capital becomes therefore the only
“positive” factor of production – hence “the positive theory of capital”.
For the negatives Denken, labour has no “utility” in and of itself because in and of itself,
by itself, without the intervention of capital, labour is mere immediate consumption of
“nature” and cannot be the cause for the accumulation of wealth or goods with utility –
remembering that “nature” alone is a source of “utility” or “Subjective Value”. All
values-in-exchange are also part of “nature” except that they have been trans-formed by
labour with the aid of capital. Labour therefore is “want”, or rather, it is the only means
of “providing for want” through the consumption of “nature”. But this consumption
cannot produce greater wealth or utility unless it is mediated by capital, because capital
alone – as labour-saving tools, as means of production – can yield to labour the
“productivity” that can free it from its status as provision for want (hand-to-mouth
existence or mere subsistence).

From this radically altered perspective, it is no longer the worker who “gives wealth
or value-creating labour” to the employer to increase his wealth or capital, but
rather the other way around: – it is the employer who allows the labourer “to
consume capital” so as to earn a wage (“life-means” or “provisions”, Lebens-
mitteln). It is capital, not labour, that creates wealth or utility.

Once the possibility of “social labour” is denied, it is obvious that the only sources of
social co-ordination for individual labours are “capital” at the point of production
(supply) and “the market” at the point of distribution (demand). In any case, this
social co-ordination takes place only as the expression of the capitalist’s desire to
accumulate “wealth” not for its own sake but for the sake of accumulation – in other
words, “wealth” as “self-mastery” aimed at assuring the capitalist’s mastery over
labourers.

For the negatives Denken and then for Neoclassical Theory, wealth quite simply
cannot be “pro-duced” by labour without the intervention of capital. “Capital” here
is not seen as an inert pile of labour-saving goods but rather as the pro-duct of the
capitalist’s wilful “renunciation” of consumption represented by labour through the
production of labour-saving tools! Quite simply, capital is the capitalist’s will to
employ labor and to dominate or command labor, that is, the worker! It follows
that for the negatives Denken and for Neoclassical Theory – just as for Karl Marx! –
“capital” is not a “thing” but is rather a “will” opposed to “labour”. (One of the
major Marxist objections to Neoclassical Theory is that it treats capital as a “thing” and
not as a “social relation of production”. We can see how erroneous this objection is – and
indeed the Marxist notion of “Value” is itself tainted with the reification of “socially
necessary labour-power” where this “necessity” seeks to turn the Marxian critique of
capitalist social relations of production into a reified quantitative “science”, as we are
about to show.)

As we saw in Part One, Weber argues in the Ethik that it is the Protestant “calling”
(Beruf) of “labor as an end in itself” that makes up “the spirit of capitalism” and
constitutes “a specifically bourgeois economic ethic”. We can see already from the
discussion above that in fact it is Neoclassical Theory that provides such “a specifically
bourgeois economic ethic” because it lays emphasis on the “renunciation of immediate
consumption” as the source of Value for the capitalist through the preference of “more
roundabout” means of production (capital) rather than Weber’s “devotion” to or “calling”
for “labor as an end in itself” – which, of course, is indeed identical with the Labor
Theory of Value of Classical Political Economy. Contrary to the Protestant Ethic, the
negative view of labour and indeed of human agency expounded by the negatives Denken
contends that labour is not ascetic deliverance from the world and from wealth; it is not
“renunciation” but “resignation”, mere operari or passive acceptance of the world. The
negatives Denken contends that labour is mere consumption of existing wealth or of
“Nature” through its transformation (see the first part of Bohm-Bawerk’s PTC on this).
For the negatives Denken, labour cannot produce and create greater wealth as value-in-
exchange unless capital intervenes to aid labour in its interaction with “nature”. Indeed,
the very notion of “labour as the positive creation and accumulation of wealth” (as
“input” in productive “output”) is meaningful only within the perspective of the Labour
Theory of Value first outlined in Classical Political Economy.

In the Protestant Ethic and even in Socialist movements, labour is seen as “renunciation”
also; but this renunciation is purely the substitution of time for the consumption of goods
with more time devoted to labour and not necessarily to production of production goods
to produce Objective Value. As such, the renunciation of the Protestant Ethic may be seen
as expiation or penance or self-flagellation or even as “parsimony” and as a form of
“saving”: but it is not necessarily “saving for production intended as accumulation”! The
negatives Denken and neoclassical theory insist that only this specific type of “saving”
constitutes “capital”. Capital therefore is not just any “saving” of consumption: rather,
capital is the delay of consumption in favour of production of Objective Value.

Unlike the Protestant Ethic for which devotion to labour is a necessary and sufficient
condition for the accumulation of wealth, for neoclassical theory such “devotion to
labour” is still a form of “consumption” – if the labourer is paid more in consumption
goods (wages) to compensate for such devotion. The devotion to labour can be a
sufficient condition for the creation of wealth only if direct consumption is replaced with
direct production of production goods. Only in such a case, only when devotion to labour
is also a postponement of consumption as its renunciation in favour of production, can
such devotion to labour become the production of capital. In effect, it is diversion of
labour from consumption to production goods, and therefore the deferral of consumption
in favour of production, rather than devotion to labour as expiation or parsimony, that
constitutes the true “renunciation” for neoclassical theory.

The ultimate purpose of this diversion of labour and delay of consumption is at once the
negation of labour as consumption, the sublimation of one’s selfish wants, and the
exaltation of capital as labour-saving production. The aim of the “capitalist” here is not
devotion to labour as parsimony for its own sake or for religious reasons – and such
devotion to labour certainly does not necessarily lead to the accumulation of wealth.
The aim of the capitalist is self-mastery as delayed consumption that allows him to
exchange consumption goods (“a previous saving”) for command over the living labour
of other individuals that is used in turn for the “production” of labour-saving or labour-
cancelling tools (capital) that enable the capitalist to command even more living labour.
As Bohm-Bawerk puts it,

Adam Smith's celebrated proposition therefore—"Parsimony and not industry is

the immediate cause of the increase of capital"—is, strictly speaking, to be turned

just the other way about. The immediate cause of the origin of capital is production;

the mediate cause is a previous saving. (PTC, II.4, fn.30)

In other words, the “previous saving” is not just any saving (parsimony) but rather a
specific kind of saving that mediates production, one that is intended to increase
production by means of labor-saving tools. Here then is the inversion of Max Weber’s
proposition in the Ethik that saw the ascetic devotion to labor as the “specifically
bourgeois economic ethic”. No! It is not “devotion to labor”, it is rather the “saving of
labor devoted to present consumption” that allows its diversion to the construction of
“tools” or productive capital that will permit labor to be more productive! “Labour” is
seen here as an abstract quantity, as labour-power that is made more or less productive by
the “capital” or means of production that it uses. In the words of Bohm-Bawerk, Classical
Political Economy has been “turned just the other way about”!

It is “industry” and not “parsimony” that is “the immediate cause of the increase of capital”.
But “industry” here does not mean “Labor”! To be sure, both labor and capital are needed
for production, yet capital alone is already wealth – and wealth alone, not labor (which is
need) can produce other wealth. The capitalist alone can wait until production is
complete, whereas the labourer cannot because it is labour (as need) that requires tools to
realize itself. “Capital” therefore can be defined deontologically as “the renunciation of
consumption goods in favour of labor-saving devices”, as “self-mastery” by the capitalist that
leads to the extinguishment of labour to ensure the mastery of the capitalist over the labourer!
“Labor” is not and cannot be the source of Value – because Value is “the saving of Labor as
Want”! So here – finally! – we have what Max Weber was looking for but could not find with his
definitions and approach in the Ethik: - “A specifically bourgeois economic ethic” in which
“labour” and “capital” are antithetical and capital is mastery over the labourer by means of
labour-saving tools in the form of renunciation and sublimation of labour as want, as poverty, as
appetitus! The Neoclassical Counter-revolution against the Socialist ideology of the
industrial proletariat had finally arrived to found an “economic science”.

Hence, it is not “more labour” that produces wealth as “objective value” or “value in
exchange”. Instead it is the diversion of labour to labour-saving production as a deferral
of consumption that leads to greater value. Here the “sacrifice”, the “toil” or “effort”, the
true “parsimony” is not that of “labour” – which is in any case condemned to being
“present consumption”, the immediate provision for want – but much rather that of “the
capitalist” – the labourer who defers consumption to produce labour-saving tools.

Weber’s Askesis – ascetic ideal – is not relevant to “the spirit of capitalism” because it
understands “devotion to labor” as an ascetic end in itself! Similarly, Smith’s labour theory of
value is also not relevant because it mistakes “parsimony” and “frugality” as sufficient
conditions for “industry” (that is, capitalist production) when in fact they are only a
renunciation of consumption! On the contrary, for the Neoclassics, what creates wealth and value
(or rather, “makes it possible through the diversion of the powers of nature”) is not “labor” as
an end in itself, even for ascetic goals; nor is it “frugality” as the “renunciation of consumption”.
This “moralistic” sense of “frugality” is absent in the Neoclassical “scientific and positivist”
theories. Quite to the contrary, what occasions wealth or value is the diversion of labour from
present consumption to production of tools for production, that is, of means of production as
“labor-saving tools”! It is not “labor” that is the source of wealth or value, as Adam Smith and
Weber had it. Instead, it is the deferral of consumption that comes from the diversion of labour
to the production of “labor-saving tools” or “capital” - or the sacrifice or deferral of present
consumption in favour of production goods that can then pro-duce those consumption goods
with less labor and therefore be relatively more “valuable”! If labour were the true source of value,
then more labour would produce more value; yet in reality it is labour-saving tools or capital that
allow labour to produce more wealth as goods for immediate consumption that can “purchase” fresh
labour through labor-saving tools. From which it follows that it is these tools or capital, not labour by
itself, that produce greater wealth and potentially value-in-exchange. Here time becomes the essential
scientific element of Value. All capitalist economy is economy of time. Thus, “time is money” means
“labor-time-saving tools” or capital – not “labor”! - is “money” or “generic social wealth” or
“claim on social resources” – remembering that “labor” means “labor-power” or “productivity”
in terms of “output per unit of time” - that is, not a “quantity” but a “rate”. The saving of labour
time permitted by capital allows its owner to control more “labour as want”. The capitalist “can
wait” (B-B, Schumpeter).
The severance of labour from wealth - now defined as “subjective value”, that becomes
“objective” only as value in exchange -, the strict denial of “social labour” and the
postulation of “individual labours”, and the interposition of capital between labour and
its imprescindible “object”, that is, “nature”, as the sole means by which individual
labours can do more than satisfy individual wants – all these elements are absolutely vital
to the development of “a specifically capitalist ethic” freed from the “moral theology” of
Judaeo-Christian eschatology and of mediaeval Natural Law or jusnaturalism that
atavistically clings to the pillars of universal human values, of inter esse, and of
commutative and distributive justice much to the detriment of bourgeois self-interest.

The Askesis, Weber’s ascetic “renunciation of the world” or Entsagung, is emphatically


not attained through the pursuit of “labor as an end in itself”, but rather through the
“deferral of consumption” and the application of the Arbeit to the construction of “tools”
(means of production, or “capital”) that are “more roundabout” and therefore increase the
productivity of “labor” by “saving” it, effectively by suppressing or extinguishing it. Like
fire, labour does not pro-duce wealth but rather consumes or trans-forms the means and
materials of production that it “utilizes”. And the higher Value derived from producing
with “more roundabout methods of production” can be calculated not just in an
instantaneous or timeless analytical dimension but even in a temporal one, in terms of
“time preference”, that is a “projection” toward, a mortgage over “the future”. The notion
of “fructiferous capital”, of interest-bearing capital, is all here.

Capital is therefore “stored-up labor” at a given time of exchange in the sense that capital
increases the productivity of labor by permitting the production of Objective Value that
can then be used to command more labor: not “labor” understood absolutely or positively
as “utility”, but rather negatively as “dis-utility” at a given time, given that labor too is
subject to time preference. Capital is “saved or suppressed or extinguished labour”. In
other words, capital is the very antithesis of labour: capital is command over labour.

Thus, Benjamin Franklin’s formula, “time is money”, is to be preferred to Smith’s


“parsimony is the source of wealth” because parsimony in and of itself is neither a
necessary nor a sufficient condition for the creation of wealth unless it is exercised in the
sphere of production, whereas the saving of labour-time in production (which is what
Franklin meant by “time”) is a necessary condition for the making of “money” or, more
precisely, profit. Franklin’s slogan must be read as “money is saving of labor-time for
provision of goods for immediate consumption [therefore not exchange values but only
use values] and diversion of it to production of labor-saving goods for the future
production of goods [values-in-exchange] for consumption” (cf. Keynes, “money is a
bridge between present and future”).

CAPITALIST METAPHYSICS – 4

The universe of Classical Political Economy, of the Labour Theory of Value and of the
Protestant Work Ethic is still a Newtonian ordered cosmos, a universe of absolute
objective dimensions. The world of Neoclassical Theory is instead the Machian uni-verse
of psychological inputs or “sensations” (Empfindungen) that are strictly metaphysically
private and subjective, and can be rendered social and objective only by human
convention of what remain absolutely private sensations or estimations. In this regard,
Machism and Neoclassical Theory deny all relevance to “metaphysics” as the positing of
a reality that goes beyond what is immediately perceived by each individual. From this
perspective of “methodological individualism”, given the axiomatic incommunicability
of “utility”, the principal problem of economics for Neoclassical Theory must be the
problem of economic co-ordination (Hayek, Loasby). The negatives Denken decries and
denigrates the notion that labour or anything other than the market exchange mechanism
and its “prices” can provide the social synthesis (the social “glue” or amalgam) that
allows a society to co-ordinate the activities of its members. The “objectivity” of
economic science is not constituted by the objective “necessity” of labour as a
universal human use value, but rather by the “necessity” of the competitive struggle
between absolutely egoistic self-interested in-dividuals.

For the negatives Denken, Nature is not the essential universal sphere of “objectification”
for human beings, whether individually or least of all collectively, but rather it is treated
as a “quarry” whose resources are unavoidably rendered “scarce” by the impossibility of
human subjective individual wants ever to be fulfilled or satiated as well as by the fact
that individuals are in competition with one another to provide for these insatiable
individual wants. Wealth is an entirely subjective estimation of “nature” by single
individuals, it is “Subjective Value” (B-B) and is incapable of “objective” intersubjective
use or even of agreement. What is “objective” about wealth is not its “use value” or the
labour-content of values in exchange, as it was for Classical Political Economy. Rather it
can only be its “value in exchange” between individuals as determined by the wholly
independent competitive exchange of goods in the market at rates that constitute their
“prices”.

Nature and wealth therefore do not have a universal human value, but only a subjective
individual value whose objectivity is given only by the exchange of goods for subjective
estimation as manifested by market prices. The market, not “labour”, is what makes
otherwise wholly Subjective Value become Objective Value. From the perspective of the
negatives Denken, “labour” also cannot be a uniform homogeneous commensurable
“substance” that can be “embodied in” a universal “wealth” or indeed any kind of wealth,
whether use value or exchange value. Labour simply cannot provide the social synthesis,
that is to say, the material co-ordination of human interests – the material inter esse or
comunitas, or even the spiritual summum bonum or social goal – that commonly
constitutes “the social fabric”. Rather, this social synthesis or co-ordination is provided
by the market mechanism through the exchange of “endowments” owned by entirely self-
interested atomistic individuals through the fixing of market prices that are the only
visible and material manifestation of their utilitarian preferences.

So long as labor was seen as the homogeneous direct creator of homogeneous wealth,
then clearly the aim of production had to be the equitable distribution of wealth in direct
proportion to the effort of each labourer. But once labor and wealth are seen as
individually subjective notions, then the aim of economic coordination through the
market mechanism can be only the redistribution of wealth in proportion to the initial
endowments of market agents at Equilibrium where capital too constitutes an
independent claim to such distribution! The principal difficulty of Classical Political
Economy was always that of justifying how capital could constitute an independent claim
to wealth once labor was acknowledged as the only source of wealth. Neoclassical
Theory overcomes this difficulty by reinterpreting the entire metaphysics of labor and
wealth-creation or value.

In his formidable review of Neoclassical Theory, George Stigler here dismisses and
denigrates from the point of view of Neoclassical Theory this Classical position of the old
Political Economy - exemplified by its founder and architect, Adam Smith - as its greatest
fallacy:

Drawing upon a long line of predecessors, Smith gave to his immediate successors, and they
uncritically accepted, the distinction between value in use and value in exchange:

The word VALUE, it is to be observed, has two different meanings, and sometimes expresses
the utility of some particular object, and sometimes the power of purchasing other goods
which the possession of that object conveys. The one may be called "value in use"; the other,
"value in exchange." The things which have the greatest value in use have frequently little or
no value in exchange; and on the contrary, those which have the greatest value in exchange
have frequently little or no value in use. Nothing is more useful than water: but it will purchase
scarce any thing; scarce any thing can be had in exchange for it. A diamond, on

308 GEORGE J. STIGLER

the contrary, has scarce any value in use; but a very great quantity of other goods may
frequently be had in exchange for it.2

The fame of this passage rivals its ambiguity. The paradox - that value in exchange may
exceed or fall short of value in use - was, strictly speaking, a meaningless statement, for
Smith had no basis (i.e., no concept of marginal utility of income or marginal price of utility) on
which he could compare such heterogeneous quantities. On any reasonable
interpretation, moreover, Smith's statement that value in use could be less than value in
exchange was clearly a moral judgment, not shared by the possessors of diamonds. To avoid
the incomparability of money and utility, one may interpret Smith to mean that the ratio
of values of two commodities is not equal to the ratio of their total utilities.' On such a reading,
Smith's statement deserves neither criticism nor quotation. This passage is not Smith's title to
recognition in our history of utility. His role is different: it is to show that demand functions, as
a set of empirical relationships, were already an established part of economic analysis.

Ambiguity. Meaninglessness. Moral bigotry. In this opening passage, the Nobel prize-
winning Stigler (a close collaborator of Milton Friedman at the Chicago School of
Economics), throws just about every conceivable intellectual insult at the father of
“economics”, none other than the founder of Classical Political Economy, for whom even
the most invective-prone iconoclastic critic of that theory, Karl Marx himself, could not
suppress feelings of respect and even of pious devotion. No. George Stigler – a proto-
fascist bastard if ever there was one – has an intellect so reduced, so blinded by his own
training in a repressive economics faculty, that he simply fails to see entirely the excellent
“paradox” highlighted by the great Scottish economist and philosopher, perhaps the
greatest son of the “Scottish Enlightenment” of the eighteenth century.

In the quotation that Stigler so absurdly misrepresents (in a distasteful show of colossally
culpable ignorance, of intellectual turgidity coupled with moral turpitude), the great
Adam Smith is drawing our attention to what is perhaps the most palpable paradox or
contra-diction of the capitalist mode of production (in his time) and of the society of
capital (in our time) – namely, that in this rotten society the things that are most
“valuable” for human needs, the things with the greatest “use value” (such as air, water,
health), have the least “exchange value”, and therefore are not considered “economically
valuable”, whereas inversely the things with the least use value may well acquire the
greatest exchange value and economic weight. This contradiction lies at the very heart of
the society of capital, and indeed it is assuming ever-greater apocalyptic dimensions as
capitalism poses growing “systemic risks” to human society and comes to threaten even
the very survival of our species.
On one hand, Smith is saying that even the most useful and indispensable things, if
available in great quantities, will command a lower price. It is this aspect of how supply
and demand affect prices that Stigler acknowledges as the historically valuable aspect of
Smith’s theory:

“His role is different: it is to show that demand functions, as a set of empirical relationships,
were already [in Smith’s time] an established part of economic analysis.”

Yet this is clearly the least valuable aspect of what Smith is saying – because if we define
“price” as the value at which demand and supply coincide, then it is obvious that demand
and supply have opposing effects on prices. No, the truly genial part of Smith’s economic
analysis is that he was the first theoretician to suggest that “use values” play no role in
the determination of prices in a capitalist economy. Instead, what determines prices is the
amount of labour that is socially necessary for the production of goods. Smith therefore
agrees that despite the fact that a market capitalist economy only values things that are
available for exchange, the value of these goods for exchange can still be determined
“objectively” because human needs are “social”, not “individual” or “subjective”, and
therefore their satisfaction must have a common universal value for all human beings –
and this common universal “sub-stance” of economic value is the “effort” that human
beings must make to obtain a given good or resource.

By selecting “labour time” as the “substance” or “content” of economic value and market
prices, Smith is saying, first, that human needs are “objective” or universal, which is why
“prices” can be “agreed upon” in a “market” that would be otherwise destructively
competitive. And second, Smith is saying that a market economy can achieve both
commutative and distributive justice by allocating social resources according to the
amount of human “effort” that goes into their production – “to each according to his
contribution”. Again, this Smithian position is a throwback to the jusnaturalist tradition
(Natural Law) of Judaeo-Christian religion expounded by the Schoolmen in the Middle
Ages – a tradition according to which human beings atone for their original sin by having
to work to assure their own livelihood. And of course Smith is also being truthful to the
Enlightenment movement of which he was so prominent a member by affirming the
ability of human beings to order their society according to rational scientific principles.
These principles form part of a “concordant” or “harmonious” theory in the sense that its
central tenet is that the substance of economic co-operation and exchange is constituted
by homogeneous human needs and homogeneous human labour whose “value” or “price”
can be determined “scientifically” simply by calculating the labour time that it takes to
produce a given good for exchange. The contradiction in this theory is all but evident: for
if indeed “labour” is the “source” of all value, then it becomes quite impossible to value
labour itself, because the source of value and therefore the determinant of “prices” cannot
itself have a “value” or a “price”! Yet Smith’s economic theory is based precisely on this
contradiction – that is, that “labour” has a market price just like any other “commodity”.
And we know that this is why Smith then goes on to contradict himself by stating that
ultimately market prices are determined by “supply and demand”, that is to say,
by…..”the market”! This is the contradiction on which both Ricardo and Marx pounced
to castigate Smith’s Panglossian notion of “the invisible hand” of the market ensuring
that only those goods would be produced that the market could clear, and that this
ensured the orderly reproduction or co-ordination of what would be otherwise a
hopelessly anarchical and antagonistic “marketplace society”.

In contrast to this “concordant” or “harmonious” Smithian economic theory, Stigler


objects that there is not and there cannot be a contradiction or discordance between use
values and exchange values – because the only “values” of which we can ever be aware
are manifested in the actual prices that obtain in the market. All we can ever know is what
we can “observe”. And whereas market prices are readily “observable”, labour values are
quite simply un-observable and indeterminable, and therefore they are simply
“meaningless” or “metaphysical”.

The paradox - that value in exchange may exceed or fall short of value in use - was, strictly
speaking, a meaningless statement, for Smith had no basis (i.e., no concept of marginal
utility of income or marginal price of utility) on which he could compare such
heterogeneous quantities.

Labour cannot pro-duce wealth or be the measure of exchanged wealth or “value in


exchange” because wealth is not the socially objective quantitative sum of use values
meant for exchange but rather the “value-in-exchange” of these use values is a purely
qualitative subjective estimation, a function of “utility”, whose objective manifestation
and calculation or “valuation” can be obtained only through observable market prices.

From the jusnaturalist viewpoint of Smith, value and market prices are a dependent
quantitative function of labour productivity. For him the market mechanism can only
serve to facilitate the exchange of goods, but cannot determine the intrinsic “substantial”
value-in-exchange of goods, which must therefore be measured by a universal
“homogeneous substance” such as the amount of labour-power they contain. This is a
“rationalist and humanist” worldview in which human “labour” has a creative universal
role in the world that makes all exchange values comparable and measurable, that is,
homogeneous. (Hegel’s dialectic of self-consciousness and Marx’s materialist elaboration
are perhaps the highest expression of this Judaeo-Christian onto-theology).
Yet from the empiricist and positivist perspective of Neoclassical Theory (which Smith
also paradoxically promoted and probably founded) all Value and market prices are
“subjective”: there are no “use values” – least of all “labour”! - that are universally
recognized as serving human needs and wants. It follows therefore that from this
perspective, as Stigler notes, “there is no basis on which Smith could compare such
heterogeneous quantities” as use values (utilities) and exchange values (money) because,
given that utilities are inscrutable because they are deeply subjective, it is then impossible
to measure them outside of the actual observable money prices that market agents are
willing to pay for them in the course of market exchange. Because (to quote Stigler)
“money and utilities are incomparable”. the use value or utility of a good can be
measured only by “the amount of money that agents are willing to pay for that good” and
not by some “universal homogeneous human value” such as “labour”. Use values and
wealth can be “objective” (that is, they can be socially recognized) only through the
relative estimation of their value-in-exchange by market agents in competitive conflict
with one another as displayed in and by market prices – because only these market agents
can determine subjectively the value in exchange of goods sold on the market. For
Neoclassical Theory there can be no distinction between use values and exchange values
because all Value is “Subjective Value”; and Values can become “objective” not through a
universal homogeneous human “substance” such as “labour” but only to the extent that
goods are “exchanged” by means of “prices” fixed competitively on the market.

On any reasonable interpretation, moreover, Smith's statement that value in use could be less
than value in exchange was clearly a moral judgment, not shared by the possessors of
diamonds. To avoid the incomparability of money and utility, one may interpret Smith to
mean that the ratio of values of two commodities is not equal to the ratio of their total utilities.'

Consequently, for Neoclassical Theory use values as the universally recognized qualities
of goods for human beings whose “prices” are then determined by the amount of labour
necessary to bring them to market (to pro-duce them) simply cannot form the basis of
economic analysis - only observable market prices can. If it were at all possible to
calculate scientifically the amount of labour time “socially necessary” for the production
of a given good, it would then also be possible to decide scientifically the just distribution
of the value produced according to the labour time expended. Yet this “objective value”,
this “common interest” or inter esse – this “community of interest”, this “social contract”
or “agreement”, this contractus unionis - independent of market competitive conflict or
“dis-agreement” that leads to the fixing of market prices is precisely what Neoclassical
Theory steadfastly denies is possible! For Neoclassical Theory market prices are not the
result of “agreement”, except for the setting of a “level playing field” through “market
rules”, but they are exclusively the result of “haggling”, of conflict, of individual self-
interests pulling and tugging in opposite directions in their “mechanical free-dom”!

For Classical Political Economy and the Labour Theory of Value, all wealth is
“objective” whether it be “use values” that are not produced or “exchange values” that
are produced by means of “labour” as a universal homogeneous human value, as an inter
esse (communion). Indeed, given the homogeneity of all exchange values as products of
labour and measurable by labour, Classical Political Economy identifies “Value” with
“exchange value” because only exchange values are economically significant in that their
“value” can be quantified by measuring the “labour time” that is embodied in goods on
the market. Thus, use values are not omitted from economic analysis but are simply
replaced by another universal use value, a homogeneous substance, called “labour” or
“labour power” or “labour time” or “labour content”.

In total contrast, Neoclassical Theory obliterates all universal homogeneous human


values: it omits use value from economic analysis because all use values are seen as
being strictly “subjective” and therefore the only objectivity possible for goods, their
Objective Values, are the observable prices in market exchange which are the product not
of a concordant and scientifically ascertainable homogeneous human quality (labour) but
rather of discordant competitive and antagonistic subjectivities whereby these prices are
determined through the “haggling” of the marketplace. Thus, Neoclassical Theory can
eliminate the notion of “Value” from economic analysis altogether, dismissing it as
“metaphysics”, and merely concentrate on market prices that are “positively observable”!

The “economy” intended by Neoclassical Theory is not one that furthers human interests
understood collectively as a universal goal or aim or finality shared by all human beings,
but rather it is an “economy” that is purely instrumental in character and therefore can
serve only the interests of human beings taken as in-dividuals and not collectively. Worse
still, these individuals have needs and wants that are antagonistic and in competitive
conflict with one another! The very notion of “utility” that subtends all neoclassical
economic theory is and must be based entirely and exclusively on the “in-commun-
icability” of private utilities. And because private utilities (a pleonasm) are
incommunicable, the only manner in which these utilities can be measured is objectively,
that is, by means of competitive conflict, a struggle, between individuals that finds its
observable quantitative manifestation in market prices. (Neoclassical Theory never
explains, of course, how “market rules” or “the rules of competition” can ever be agreed
by these competing individuals!) Utility therefore does not explain prices for the simple
reason that in neoclassical economic theory prices are the ultimate “facts” that allow of
no further “explanation”. Whereas classical political economy sought to discover a
“reality” behind prices that could enable the maximization of “welfare” as measured by a
universal “substance” – that is, labour or labour-time or labour-power -, neoclassical
theory does not admit of any such “universal substance” or “source of wealth”.
Neoclassical theory understands “wealth” in purely subjective terms – and that is why
prices must be the sole and ultimate manifestation (not explanation!) of (individual,
subjective) utilities.