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Schumpeter and Marx

There is however one thing of fundamental importance for the methodology of economics which he [Marx] actually achieved.
Economists always have either themselves done work in economic history or else used the historical work of others. But the facts
of economic history were assigned to a separate compartment. They entered theory, if at all, merely in the role of illustrations, or
possibly of verifications of results. They mixed with it only mechanically. Now Marx’s mixture is a chemical one; that is to say,
he introduced them into the very argument that produces the results. He was the first economist of top rank to see and to teach
systematically how economic theory may be turned into historical analysis and how the historical narrative may be turned into
histoire raisonnee. (J. Schumpeter, CS&D, p.44)

The reason why Marx is able “to introduce the facts of economic history into the very argument that produces the
results” cannot be due to any “methodology of economics” because there is no such thing as a “methodology
of economics” just as there is no “methodology of science”. What characterizes scientific studies is not an
identifiable “methodology” but rather a human praxis that first identifies a desirable outcome and then
sets out to apply existing knowledge to achieve it and, in the practical process of doing so, may or may
not come out with that desirable outcome or other serendipitous outcomes. Each particular scientific
experiment is sui generis – it is an “experience” - and there is no way of abstracting from individual
experiments to a broader “methodology” for the simple reason that no “method” will ever be capable of
being scientifically or logically connected to the predictable (rather than “causal”) relation that is
ultimately found between events.

If we define “theory” as a series of abstract rules that connect facts in a predictive or apodictic relation by
means of experiments, then it is obvious that no “theory” will ever be able to achieve such a relation by
means of a “method” because each experiment is, by definition, a unique “experience” whose outcome
cannot be “formalised” in isolation from the actual experience. Furthermore, for what concerns the
connection of theory with facts, whether in the physical or in the social sciences, first, the selection of
“facts” is itself arbitrary from a “theoretical” viewpoint in that it is the “theory” that selects the “facts”,
which means that the theory itself must be “arbitrary” from an “objective theoretical” or “scientific”
viewpoint”! (Cf. Windelband, “Thus, in the scientific sense, ‘fact’ is already a teleological concept,” [History
and Natural Science, p.181]. We do not share, of course, the artificial dichotomy of the Marburg School of
neo-Kantian philosophers between “natural sciences” [Natur-wissenschaften] and “social sciences” [Geistes-
wissenschaften]). And second, no amount of theorizing will ever be able to establish any “causal links”
between “facts” independently of the human interest involved in isolating a particular “chain of causality”
among an infinity of other “causal chains” (the point was first established by Nietzsche from as early as
Uber Wahrheit und Luge, and then elaborated by Weber [cf. his Objektivitat]). After Nietzsche, we ought to
know that there is no ordo et connexio rerum et idearum; after Heidegger, we know that there is no
adaequatio rei et intellectus.

So, it is certainly not because of a superior “methodology of economics” that Marxian social theory presents
this “chemical” fusion of fact and theory (or hypothesis) against the “mechanical” incongruence of
bourgeois economic theory. But why, then, does Schumpeter believe that when it comes to the analysis of
capitalist industry and society “Marx’s mixture [of facts and theory] is a chemical one” whereas that of
orthodox bourgeois economics is only “mechanical”? To find out the answer, let us look at it in reverse,
that is to say, let us see why it is that bourgeois economic theory has no need for “facts” to support it, and
then we will be able to deduce at least negatively what we must not do if we do not wish social theory to
be entirely detached from reality.
If we take human beings as isolated individuals and we then ascribe to them “self-interests” that are
insatiable and also absolutely incommunicable and incommensurable with one another, and if we then
assume that they initially “possess” given “endowments” which they are only able “to exchange” with
one another – then it is entirely obvious that we will be able to come up with a “science of exchange”
(Walras’s equilibrium or Hayek’s catallactics or Mises’s praxeology) that will be the exact replica of
Newtonian mechanics in which there is either a unique solution (Walrasian equilibrium) or else an ex post
facto rationalization (Hayek, Mises) for all the possible “exchange ratios” between all such individuals
and for the optimal distribution of their original endowments to maximize their individual self-interests.

In order to protect its claimed “scientific status”, bourgeois economic theory must separate itself from the
social and physical environment in which it operates – all the more so because it needs to present its
findings as immutable laws of human nature. The peculiarity of this “economic theory” or “economic
science” is that it contains no history! No historical or sociological facts are needed for this “science” because
“history” is the record of metabolic interaction of human beings not merely inter se, between themselves
as individuals or groups, but also and above all with their physical environment, which is how they pro-
duce their needs and in so doing create and develop new ones, while all the time they transform also their
interpersonal relations in the process.

In sharp contrast, there is no metabolic interaction between the “atomistic individuals” of orthodox
bourgeois economic theory because there is no pro-duction of needs on the part of these atomistic
individuals but only the simple pure “exchange” of “given” endowments – an “exchange” that “exists”
only as a logico-mathematical equation and deduction and never involves any historical interaction
between these individuals. There is no historical change in neoclassical economic exchange: there is no
history in such pure exchange. As Lucio Colletti put it, in this type of social and economic theory,

[t]he relation between the theory and its object contracts, due to the ideal character of the latter, into a mere relation
of idea to idea, an internal monologue within thought itself. The object of analysis thus slips through our fingers; it is,
as Lenin pointed out [in What are ‘Friends of the People’], impossible for us to undertake any study of the facts, of
social processes, precisely because we are no longer confronting a society, a real object, but only the idea of society,
society in general…. in the place of concrete historical phenomena it has interpolated the idea; in the place of a
concrete, determinate society it has substituted society ‘in general’? (Ideology and Society, pp3-4).

But Colletti here mixes up two separate matters: the first, which is the more relevant, is that bourgeois
social theory reduces human society to abstract ideas and ceases to treat it as a “living” organism, that is
to say, one that mutates and evolves physio-logically, with the emphasis on the physicality of human
needs: it is this immanent materialism – this stress on the metabolic production of human needs that are
ever-changing - which leads to the requirement of the “concreteness” of historical analysis. But then
Colletti jumps immediately to the bourgeois dichotomy of concreteness versus generality without
specifying in what way the Marxian approach is more “concrete” except to state that it studies this
particular “society” – capitalism - when in fact the relevant issue is that it is the abstraction from how
human needs are satisfied and pro-duced that makes the “generality” of bourgeois social theory and
“science” problematic because it invariably seeks to justify the status quo and its social exploitation by
hypostatising it into “human nature”. Not the “generality” of bourgeois science is the real problem: the real
problem is that it turns the established order of exploitation into an eternal truth!

“History” is not merely the historia rerum gestarum (the record of personal or institutional actions) but
rather it is the record of how human beings interact with one another and with their physical
environment: history is the record of human metabolic pro-duction. History is the record of how human
beings interact to fulfil and satisfy their changing needs by meta-bolically interacting with their physical
environment. It is this “metabolic interaction” that forms the content of “history”. History is not just the
record of human relations; it is the record of social relations “of pro-duction” because not just the
distribution of the product but above what is pro-duced and how it is pro-duced are essential to
understanding human “history”! It is this immanentism that we are seeking to expound here by way of a
critique of Schumpeter’s work so as to overcome the old antinomic dualism of materialism and idealism.

But in this pro-duction of their needs, as a discrete albeit dependent aspect of it, the question arises of
how human beings may organize in such a manner that some exploit others in the sense that the living
activity of a section or class of human society is subordinated by another section or class. In capitalism the
specific form of subordination relates to the “exchange” of dead labour with living labour, and specifically
to the reality that such “exchange” can occur only through political violence because no “exchange” of
living with dead labour could take place without such violence. As we shall demonstrate later in our
discussion of the labour theory of value outlined by Marx in Zur Kritik, the problem with capitalism is not
that the concrete living activity of human beings is reduced to or reified into abstract labour through the
forced separation of workers from the means of production – because no such “reduction” or
“reification” is possible given that all human activity, however violently enforced or alienated, remains
living activity. The problem is instead that living activity is violently made exchangeable and therefore
commensurate with dead labour, with the product of living labour, by means of that violent separation. In
other words, the “exchange” has no “objective” or “market” basis except the violent institutional
organization of human living activity on the part of capitalists.

It is over this discrete, distinct reality of conflict and antagonism in the process of human metabolic
production of their needs that the dialectical method can be applied to assess the validity of socio-
theoretical accounts of this antagonism. The peculiarity of the dialectical method, even and especially in
its pre-Socratic origins, is that it is a “negative” procedure that does not seek to establish “the truth” – as
if “the truth”, as an absolute reality, ec-sisted! For if it did, there would be no need for the very concept of
“truth”, as Nietzsche established as early as “Lies and Truth”. Rather, dialectics seeks to establish a
“dialogue” (whence “dialectics”) between opposing sides onto a common ground (the polemos, or
dispute) from which the dispute may be “resolved” or better “super-seded” (cf. Giorgio Colli, La Nascita
della Filosofia). Dialectics is not a “positive” method but is rather one that applies in a negative and critical
manner to aporetic concepts that hypostatise or reify human reality as well as to their underlying reality -
as is evinced by Hegel’s emphasis on “the negation of the negation” instead of, as is commonly and
erroneously believed, the “triadic” sequence thesis-antithesis-synthesis. (Cf. on this Norberto Bobbio’s
instructive Studi Hegeliani and Theodore Adorno’s Introduction to Negative Dialectics, which is
characteristically opaque but highlights this “critical” role of the Hegelian method.)

Both formal logic and dialectics rely on the notion of contradiction – but the application of this notion is
what distinguishes the two methods. Both formal logic and dialectics can be applied negatively to assess
the validity of statements about physical events and entities - which are either true or false at a particular
point in time - but not to the individual physical events or quantifiable entities themselves – which are
neither true nor false at any point in time. But unlike formal logic, although it cannot be applied to
scientific findings, dialectics can be applied to statements about all human activity as well as to the
activity itself, including scientific inquiry, if this activity can be shown to contain antagonistic motives
and interests. The “findings” of scientific activity may be disputed on the evidence but not on the “logic”
of the events that are the object of scientific inquiry: events are never “contradictory”, but statements and
conclusions or “findings” about them can be. To repeat, both dialectics and logic can be applied to
statements about human activity and events; but dialectics applies also to human and scientific activity
that may be said to be antagonistic (for example, research into a harmful product or research that is itself
harmful).

As a corollary to the first restriction or qualification – the condition that it apply negatively to statements,
just like formal logic -, the second requirement for dialectics is that it be applied negatively to assess the
validity of both human activities and statements concerning human activities that contain antagonism or
conflicts of interests. This does not extend to formal logic which can apply only negatively to statements -
to assess their validity, not their truth! - but cannot apply to human activities themselves.

Thus, what distinguishes dialectics from formal logic is the interpretation of the notion of “contra-
diction”. To the extent that human activities and statements and concepts about them contain antagonism
they may be said to be dialectically but not logically “contra-dictory”. Whereas contradiction in formal logic
can apply only to statements in the sense that they are either valid or invalid, dialectical contradiction
applies to statements and concepts concerning human activities as well as to the activities themselves to the
extent that they are antagonistic in that their purpose or aims are harmful to some humans and that
therefore this antagonism must be resolved and superseded historically because it cannot remain “eternal”
or be theo-onto-logical.

The dialectical method is founded on the practical notion that antagonism can be resolved through its
elimination by the opposition or antithesis it contains, in the triple sense that it entails the antithesis, that it
generates it materially and that it seeks to prevent the antagonism of the antithesis from destroying it
materially! Hence, whereas the contradiction of formal logic serves simply to negate a statement that is
contra-dictory but cannot resolve the contradiction historically, dialectics moves beyond contradictory
statements and activities by negating the antagonism they contain, that is, by showing how this
antagonism must be resolved historically by the negation (the negation of the negation) of both the source
of the antagonism (the thesis) and of the opposition (the antithesis) to which it gives rise and that is
contained in and by the source. Like dialectics, formal logic cannot be applied to events but only to
statements; but unlike dialectics, formal logic cannot be applied to human activities and hypotheses
thereof that contain antagonism because these cannot be “contradictory” in a formal sense but can be so
only dialectically, that is to say, historically.

Precisely on this point, Hegel’s greatest intuition was the notion of Auf-hebung, which rests on the
resolution and supersession of human antagonism and conflict rather than on their irreconcilability.
Perhaps the grandest and noblest instance of the dialectical method at work is Hegel’s chapter on
“Lordship and Servitude” (or “Master and Slave”) in his earliest theoretical work, the Phenomenology of
Mind. The fact that Hegel was wrong about interpreting supersession as the “reconciliation” (Versohnung)
of antagonism – that is to say, the “triadic” notion of the “syn-thesis” of thesis and antithesis - rather than
as “the negation of the negation” of the source of antagonism, the “thesis”, is a separate matter that we
shall discuss later in connection with Gramsci’s interpretation of the dialectic. Indeed, as Adorno has
contended, the hypostatisation of dialectical concepts – their “positivity”, “immutability” or “closedness”
- is a flaw that afflicts also Hegel’s “phenomenology” or “objective idealism”, despite its undoubtedly
revolutionary role in inspiring the later development of the dialectical method as a critical tool by Marx:

This, then, is the model of that positive negativity: the negation of the negation as a new positive that appears in
Hegelian philosophy as a new model. Incidentally, it should be pointed out that one of the very striking features of
Hegel's philosophy, one whose significance has not been sufficiently appreciated, is its dynamic nature. By this I
mean that it does not regard its categories as fixed, but instead thinks of them as having emerged historically and
therefore as capable of change. Even so, in reality its conceptual apparatus contains much more that is immutable,
incomparably more that is constant, than it lets on. And these constants come to the surface to a certain degree
against the intentions of this philosophy…. (Adorno, Lectures on Negative Dialectics, p.15)

For it is precisely this 'having something', having it as something fixed, given and unquestioned on which one can
comfortably rely - it is this that thought should actually resist. And the very thing that appears as a flaw in a
philosophy that does not have this quality is in truth the medium in which philosophical ideas that are worthy of the
name can thrive….[Adorno, Lectures, p.25]

(Adorno’s Introduction to Negative Dialectics superbly describes the need for the dialectical method to
embrace “the object” materially, as history, as physis – in other words, to include that metabolic interaction
that is our focus in this work. This is a point that Merleau-Ponty’s Phenomenology of Perception and the rest
of his work – cf. the English collection The Merleau-Ponty Reader – highlights masterfully. Heidegger
elaborates punctiliously the notion of “physis” in “The Concept and Essence of ‘Physis’ in Aristotle”,
reprinted in Pathmarks. His vice, as always, is that, unlike Nietzsche and Marx, his emphasis is on the
physio-logical rather than on the physio-logical – on transcendence rather than immanence. For a critique,
see chapter on “The Ontological Need” in Adorno’s Negative Dialectics. See also our discussion of Colletti
just below and our “The Philosophy of the Flesh” on scribd.com.)