November 25, 2009
Groundhog Days (Inside The Iron Cage)
I’ve recently observed that debates on political economy from the 18th Century appear not-at-all dissimilar to those of today in some ways, that “progress” in politics is a suspect notion, that the contemporary left is broadly economically illiterate and overly fond of meaningless platitude and grand-sounding rhetoric.
So it’s interesting to see Max Weber writing the following in 1917:
“Today, some people even expect that the economic organisations of the future, which will be mainly governed by considerations of finance and currency policy, will slay the dragon of ‘capitalism‘, the father of everything evil and the source of all unrest. Some people are childish enough to imagine that the ‘communal economy’, and such-like slogans, which emerged during the war and from the compulsory organisations to which it gave rise, will be the forerunners of a fundamental change of ‘economic principle’ in the future that will resurrect the lost ‘economic morality’ of the past at some higher, ‘organic’ state of development. What makes anyone who is familiar with the reality of these matters so impatient with these literateurs is, above all, their profound ignorance of the nature of capitalism. The least offensive example of this is their failure, in their blissful ignorance, to see any difference between the war profits of the Krupp concern and those of some little black-marketeer in malt, since both, as they say, are products of ‘capitalism’ after all. Much more significant is the fact that they have not the faintest idea of the gulf of difference separating the kind of capitalism which lives from some momentary, purely political conjuncture – from government contracts, financing wars, black-market profiteering, from all the opportunities for profit and robbery, the gains and risks involved in adventurism, all of which increased enormously during the war – and the calculation of profitability that is characteristic of the bourgeois rational conduct of business in peacetime. As far as the litterateurs are concerned, what actually happens in the accounts of office of this type of business is a book with seven seals. They do not know that the underlying ‘principles’ – or ‘ethics’, if this term is preferred – of these two different types of capitalism are as mutually opposed as it is possible for two mental and moral forces to be. They have not the slightest inkling that one of them, the ‘robber capitalism’ tied completely to politics, is as ancient as all the military states known to us, and the other is a specific product of modern European man.”
We must allow for the contextual location of this passage. Weber is responding to a very specific situation of a powerful nation ravaged (and about to be defeated) in war, whilst also taking aim at the theories and followers of Durkheim in particular. But even so, there’s a diagnosis and complaint here that should have resonance for the contemporary left and those observing it. Times change – but how much does politics?
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The passage is taken from “Suffrage and Democracy in Germany”, page 89 of the Cambridge Edition of “Weber – Political Writings“
Dan said,
November 25, 2009 at 4:29 pm
That is really a very interesting passage; it’s particularly interesting to me because it reads like it could have been written by a libertarian today. For example, the main distinction he argues the critics of capitalism have ignored – the distinction between “the kind of capitalism which lives from some momentary, purely political conjuncture” and “the bourgeois rational conduct of business in peacetime” is almost exactly the same distinction which sensible libertarians (e.g. http://www.cato-unbound.org/2008/11/10/roderick-long/corporations-versus-the-market-or-whip-conflation-now/) use between crony/corporate capitalism – which is a bad thing – and free markets – which are not. That could indeed be why the left seem to be unable to take this diagnosis to heart – because those on the left who do take it seriously do not stay on the left for long.
David said,
November 25, 2009 at 8:49 pm
“…that the contemporary left is broadly economically illiterate and overly fond of meaningless platitude and grand-sounding rhetoric.”
Couldn’t this also apply to the contemporary, Cameroon conservative? Or, in fact, to any politician who wishes to appear in favour of economic change without actually having much understanding of what he wants to do?
Paul Sagar said,
November 26, 2009 at 8:19 am
because those on the left who do take it seriously do not stay on the left for long.
What, like Weber? Who moved ever further to the left in his mature years?
A somewhat oversimplified picture, methinks.
David,
Yes, it could. But Cameroons don’t interest me unless I’m poking fun at them or pointing out the threat of Torygeddon. Intellectually, there’s nothing about them that interests me.
Dan said,
November 26, 2009 at 11:20 am
What, like Weber? Who moved ever further to the left in his mature years?
A somewhat oversimplified picture, methinks.
Whether or not he moved further ‘to the left,’ I think you’ll have a hard job arguing that Weber was anything but a strident critic of socialism even in his mature years.
But do you seriously not see that the passage you quoted contains what is fundamentally a classical liberal insight? I mean, Weber is literally saying that everything that is wrong with ‘capitalism’ is down to political interference (“government contracts, financing wars, black-market profiteering”) and that the enemies of capitalism are simply ignorant of the difference between this “robber capitalism tied completely to politics” and the rational operation of businesses in peacetime (by which I think he reasonably means: relatively free markets). Of course I wish that the contemporary left took these complaints seriously, but I find it hard to see how they could realize the deleterious impact of political interference with markets and still remain on the contemporary left – which is, above all, a statist movement.
Paul Sagar said,
November 26, 2009 at 12:57 pm
Dan,
It’s just not that simple.
For a start, it’s not a “fundamentally a classical liberal insight”. You guys don’t have a monopoly on noticing that capitalism is complex, and that mega-corporation gangster capitalism is a very bad thing. (although I notice a libertarian tendency to try and appropriate everyone’s good insights, and claim that everyone is ultimately either wrong or a libertarian/classical liberal).
Yes, Weber was a strident critic of state-centred socialism. And with good reason. But this doesn’t turn him into a libertarian, by a long shot. For a start, the notion of moving to a minimal-state scenario is for Weber not only a complete fantasy. The bureaucracy is now an entrenched fact, not least because corporate entities of all sizes are predicated upon the presence of ever-more-sophisticated bureacuracy. You can’t do away with bureaucracy; it’s a fixture of the modern political and social. Importantly, it’s bureaucracy that brings the concept and possibility of (equal) citizens as rights-bearers in the modern sense about. So he would just straight-forwardly disallow the libertarian/classical liberal premise of rights independent of states, as somehow existing as natural facts about human beings flowing from their self-ownership.
And whilst he was extremely concerned about how the state would meddle in the economy – fearing that it would lead to, effectively, what we now call “state capture” – this is not the same as saying the state should be minimal and allow market forces to simply govern pretty much everything. At all. For a start, this kind of (utopian) notion of the benevolence of market forces is pretty obviously incompatible with Weber’s preoccupation with the complex nature of power structures, the irreducibility of conflict in the political, and the was men attempt to dominate and exploit each other (albeit, in modernity, from within the framework of the stifling “iron cage” of the bureaucracy, which is as much a necessity of private as public institutionalisation). The utopian classical liberal view that everyone will just float along fine under the benevolence of supply-and-demand interraction, with no need or attempt to control each other and in turn need to be controlled, is fairly anthithetical to the Weber picture, upon which the state emerges as a functional necessity of mass-populated modern territories and is something that has to be lived with and conceptualised as such, not some inconvenience that we could possibly exist without, joyfully and harmoniously amidst the flows of economic exchange.
“I mean, Weber is literally saying that everything that is wrong with ‘capitalism’ is down to political interference ”
Well he just isn’t, i’m afraid. He’s pointing to the fact that capitalism is an increidbly complex phenomenon, and that it’s pretty silly to fail to draw distinction between the kind of black-market gangster capitalism that goes on in a war-time economy, and the sort of careful, productive entrepreunerial rationalism of the industrious producer in peactime. But this isn’t the same as saying something banal and oversimplified as “everything that is wrong with ‘capitalism’ is down to political itnerference”. I mean, he’s pretty concerned about the impacts of class (on a much more sophisticated interpretation than Marx) which is rooted not just in economic distinctions but in related socio-situational self-perceptions. And market forces and ‘capitalism’ are at the heart of that, and they interact with the (necessary) bureacuracy of the state. So there’s just no simple story to tell here.
The essay I quoted from in the OP is discussing what kind of parliamentary system of government Germany is going to need to institute post-1917(/18) to avoid falling apart in civil war. Weber is targetting especially the naive, idiot, dogmatic communistic elements who don’t understand economics and think the state can just step in and set-up “co-ownership” structures in industry (etc) as a way of regulating the bosses, and Weber says “no, that’s just going to entrench the power of the capitalists at the expense of ordinary people, and what that will lead to is social upheavel, revolution, violence and horror [to paraphrase]“. Accordingly he wants a system of universal suffrage as the best way of ordering politics, whilst keeping the state and industry/corporations as broadly separated as possible to avoid both state capture and the fusing of the two realms of bureaucracy in a monolithic tyranny. But this is all to do with how to managed power-conflicts born of interests divided fiercly by class (the poor, especially, who went to fight, and the wealthier who stayed at home and will continue to be wealthy after the war is over) especially. The state has a vital role to play in avoiding ressentiement and hatred that could boil over into anarchy and civil war. To say that creating a minimal state and just leaving everything to market forces in this situation would solve all those fierce economic tensions and resentments is simply a position you can’t attribute to Weber (not least because it looks idiotically naive). And note that there is also a very big difference between the state not naively attempting to “co-own” big corproate enterprises, and the state having no role to play whatsoever in economic management (not to mention all the other non-economic, or non-directly economic spheres of life). That Weber is against statism in terms of mutual co-ownership of the biggest productive industries, because this will lead to a form of state-capture nightmare, is not to say that he thinks the state’s only economic role to play is to enforce contracts and provide national defence and not a lot else (a-la-’classical liberal’ notion).
To reduce Weber to a “classical liberal” who just blames all the failures and problems of capitalism upon state interference is to travesty the complexity of his work. And frankly, it’s a bit annoying. Not everybody was on your side whenever they had something good to say, you know?
Paul Sagar said,
November 26, 2009 at 1:12 pm
p.s. why was Weber talking about state “co-ownership” of productive means? Because it was 1917 and the Russian Revolution had only just happened, and so modern state-communism hadn’t yet been seen. No doubt Weber would have been horrified by the Lenin-Stalin project – but he was focusing very much upon the widely-proposed fussion of state and industry in Germany.
Dan said,
November 26, 2009 at 3:02 pm
It seems there are two areas of disagreement: what, exactly, Weber believed, and the import of the passage by him you quoted.
I have to say that I find the first less interesting, and I am perfectly willing to grant that you are more of an expert on the life and writings of Max Weber than I am. Although I’m uncertain where I claimed that Weber was a classical liberal, I do suspect he may well have had such leanings (I think anyone who endorses the monetary policies of Mises must be at the least sympathetic to it; not to mention that no less of an authority as the SEP implies leanings in these directions quite strongly.) You are probably right that I over-simplified the matter. But having said this, there are quite a few non-sequiturs in your argument. Even if Weber did believe that any move to a minimal state was a complete fantasy and that bureaucracies are entrenched to a large extent, that hardly disproves he was a classical liberal (unless you are in possession of an argument showing that there cannot be such a thing as a pessimistic classical liberal for conceptual reasons.)
“So he would just straight-forwardly disallow the libertarian/classical liberal premise of rights independent of states, as somehow existing as natural facts about human beings flowing from their self-ownership.”
Well, where to start. This immediately equivocates between moral rights and positive (i.e. actually enforced) rights. Classical liberals and libertarians (at least those who emphasise rights, which is by no means all of them) do think that moral rights are independent of states and flow from natural facts about human beings. But equally obviously they don’t think that such rights come into the world automatically enforced – this might well explain why so many classical liberals were historically preoccupied with ways of actually getting states to enforce, or at least, not violating them (like, say, constitutional limitations on government, checks and balances, separation of powers, etc.) So if you are saying that classical liberals think that positive rights just flow forth from facts about human nature, you’re simply wrong; if you’re talking about moral rights, you’ve given no reason to think Weber rejects them.
the state’s only economic role to play is to enforce contracts and provide national defence and not a lot else (a-la-’classical liberal’ notion).
But this just isn’t what a lot of classical liberals (unlike libertarians) believe – I get the impression Hayek would really surprise you if you read some of his stuff.
At any rate, I think that far more interesting than Weber exegesis is the question of who exactly has the best claim to have understood and incorporated the actual insight that the passage shows – and I’m pretty sure that the answer is not the contemporary left. The problem diagnosed above is capitalism “tied completely to politics”, and all it takes is a quick browse at Liberal Conspiracy to see that the contemporary left’s answer to, well, pretty much everything is more political involvement in the economy. Financial crisis? Let’s nationalize the banks and have more regulation. People earning more than we feel comfortable with? Let’s have a state high pay commission. We don’t like newspaper coverage? Let’s have a more powerful PCC. Does it ever occur to the contemporary left that the net result of all this regulation, intervention, oversight, forced compliance and interference with the market is a change in the nature of the thing, from an institution in which success comes from competition to one in which success comes from having friends in high governmental places? And that the effect of this corporate plutocracy we are being regulated into a part of is not, to put it mildly, going to be in the interests of the least well off? I don’t think the contemporary left does, and I think Weber did when he realized that “these two different types of capitalism are as mutually opposed as it is possible for two mental and moral forces to be.”
David said,
November 26, 2009 at 5:27 pm
“Yes, it could. But Cameroons don’t interest me unless I’m poking fun at them or pointing out the threat of Torygeddon. Intellectually, there’s nothing about them that interests me.”
Fair enough, but tbh, they interest me more at present, because they stand more of a chance of getting into power. Far more. This is crucial, because I don’t think it actually *matters* so much what the fringe intellectual left conferences are saying for the time being, because they stand about as much chance of influencing the government as I do.