Economics and Its Discontents

ATROPOS PRESS
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2015 by Jdrzej Malko

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E conomics and Its Dis contents

-GU]HM0DONR
Acknowledgements:
I am grateful to many for their invaluable discussions, insights, and
VXSSRUW , ZRXOG OLNH WR WKDQN 0LNRDM Borucki, Prof. Vivienne Brown,
Prof. David Hawkes, Prof. Jerzy Jedlicki, Jakub Krzeski, Dr Bartosz
.XQLDU] Prof. Germano Maifreda, Krzysztof Pacewicz, Tadeusz
7HOH\VNL and to Aleksandra Piejka, my love, for taking their time to
read the early manuscript of this book and help me refine the argument. I
am also very grateful to Elena Rozbicka for proof-reading the manuscript
DQGWR$GDP%RURZVNLIRUWKHFRYHUDUWZRUNDQGWR3DZH0DONRIRUWKH
cover idea.
I would like to express my gratitude to the internet communities of
anonymous pirates and intellectual property thiefs who break copyright
laws and let academic books and articles into circulation. Without you I
would never have been able to do my research.
Finally, I would like to thank my family and my dear friends for the
support they gave me while I was working on these pages. Also,
apologies are in place for all those times I lost myself in the library and
didnt show up when I should have. I owe you one!
Contents :
Chapter 1....11
In which the purpose of this study is outlined.
Chapter 2....13
In which the analytical approach of discoursive materialism is explained.
Chapter 3....19
In which the myth of barter is debunked.
Chapter 4....23
In which the concept of debt regime is introduced.
Chapter 5....29
In which the violent beginnings of the institution of money are recalled.
Chapter 6....35
In which it is shown how Greek economic discourse was shaped by opposing political
factions.
Chapter 7....41
In which it is argued that the existence of a longing for the good old days doesnt mean
that they have ever existed.
Chapter 8....45
In which we point out that economic growth is relatively new phenomenon.
Chapter 9....51
In which the interplay between religious and economic discourses is introduced.
Chapter 10..55
In we recognize the institutional character of private property and visit time when it was
of secondary importance to constellations of power.
Chapter 11..61
In which it is argued that the issue of usury was so dire because it violated the logic of
arithmetical justice and endangered interests that hinged upon it.
Chapter 12..67
In which, by acknowledging the significance of Arabic economics, we pretend that this
study is not so Eurocentric.
Chapter 13..71
Which puts Friedmanite monetarism in an appropriate, medieval, context.
Chapter 14..77
In which a transition from feudal to capitalist Europe is sketched.
Chapter 15.....83
Which shows how the market became a space of spontaneous order and how exchange
ceased to be arithmetical.
C hapter 16 ..87
In which it is shown how money became capital.
C hapter 17 ..91
In which we s ee that the Italian R enais s ance didnt give rebirth to humanity;
nevertheles s it left offs pring in the form of modern bookkeeping.
C hapter 18 ....99
In which historical, static patterns of consumption are explained, and then their
breakdown, as well as legal attempts to defend them are presented.
C hapter 19 ....107
In which we study an economic school that has never existed.
C hapter 20 ....115
In which the emergence of population as an economic subject is considered.
C hapter 21 ....119
In which the synthesizing effects of bodily and organic metaphors are explained.
C hapter 22 ....125
In which the relationship between P rotestantism and the rise of capitalism is discussed.
C hapter 23 ....129
In which it is explained that supposedly secular liberal political economics are more
sacral than the economics of Aquinas ever were.
C hapter 24 ....133
In which two main outlooks on international commerce are outlined.
C hapter 25 ....145
Which shows how perilous passions were turned into legitimate interests.
C hapter 26 ....149
In which iconoclasm as a mode of critique is critiqued.
C hapter 27 ....153
In which an example of iconoclastic argument from seventeenth-century E ngland is
presented.
C hapter 28 ....157
In which we see that economic freedom was instrumental for the market equalizing
machine.
C hapter 29 ....165
In which we see the roots and fruits of the scarcity figure.
Chapter 30 ....173
In which it is shown how liberal political economy was used to legitimize nineteenthcentury economic genocide.
C hapter 31 ....179
In which a time is shown when everyone understood that economic and political
freedoms arent the same.
C hapter 32 ....183
In which we see that classic liberals were rebellious pro-statists.
C hapter 33 ....191
In which impact of banking on the regime of debt is inspected.
C hapter 34 ....199
A short but important chapter which shows how economics is blind to the political nature
of money and its disciplining effects. Also, a chapter in which the worthlessness of the
radical notion of value is outlined.
C hapter 35 ....205
In which it shown how intellectual property was established by business fighting business
in British courts.
C hapter 36 ....211
Which argues that Adam S mith was not the father of economics.
C hapter 37 ....215
Which shows that socialist and liberal economics are not that different.
C hapter 38 ....221
Which inspects a few important tropes of labor struggles.
C hapter 39 ....229
In which essential shortcomings of Marxs economics are outlined.
C hapter 40 ....239
Which explains why the working class can never win the class struggle.
C hapter 41 ....245
In which we take look at the so-called marginalist revolution.
C hapter 42 ....249
In which psychological premises and logical tautologies behind the figure of homo
economicus are inspected.
C hapter 43 ....257
In which the historical role of historical schools of economics is outlined.
C hapter 44 ....265
In which mathematicization of economics and its use of abstract theorizing is criticized.
Chapter 45....273
Which shows why Keynes was no K eynesian.
C hapter 46 ....279
In which it is explained why in the twentieth century the enthusiasm for central planning
was shared on the both sides of the Iron C urtain.
C hapter 47 ....283
Which shows that economic game theory is a war game.
C hapter 48 291
In which modern consumption is studied as a field of power and domination.
C hapter 49 ....299
In which the sad frutilessness of the postmodern left is explained.
C hapter 50 ....307
Notes 311
B ibliography.353
Chapter 1:
In which the purpos e of this s tudy is outlined.
Already too many spectres have haunted the people, and for too long
the people have unreflectively worshipped various spectres. Countless
manifestos have fruitlessly promised to lead the people on the road from
serfdom, out of the dark tunnel of necessity, and into the daylight of
abundance. And yet, few people have asked: what is this spectre? And
how is it possible that the more unwaveringly it promises to unchain the
people, the heavier are the shackles which ultimately bind them?
There is an urgent need for a narrative on economics that will allow
us to grasp the role it has been playing in the constellations of power
throughout the ages. An attempt at such an analysis is the main purpose
of this study. It should be noted that at no point is it postulated that all
historical power struggles could or should be reduced to the realm of
economy. The cognitive value of bringing all dimensions of social reality
under one common denominator is negative. The search for any one
prime mover, the true and hidden structure, or some general logic of
history is always harmful. The attraction of simple answers lies not in
what they reveal about the world, but in how much they hide from us,
making life less complicated than it should be. That said, one doesnt
have to fall into traps of crude economic reductionism to acknowledge the
role economics plays in modern systems of power. On the contrary, it is
hardly possible to analyse the economics of power without appreciation
for the power of economics.
Economics and Its Discontents
12
Political struggles that shape worldwide economic infrastructures are

largely informed by economic discourses, and the legitimacy of the
decisions that affect the lives and livelihoods of billions of people and,
ultimately, the natural environment of this planet are often derived from
this or that economic doctrine. Whats more, in the course of this study it
will be shown that today economistic narratives, figures, and modes of
thinking have contaminated areas of life whose economic nature until
recently had not been considered self-evident. Economics has burst its
banks and spilled over a terrain so vast that today we dont even speak
about society, culture, and people, but rather about social capital, cultural
capital, and human capital. Resources to be invested with hope for a nice
rate of return.
To challenge the status quo one has to first understand it. Without
untangling the relationship between economics and other discourses,
cultural formations, and institutions, there can be no meaningful response
to problems arising at the multiple tangent points between politics,
economy, and economics. Hopefully, this study will productively
contribute to a debate on such a response, providing some insight into the
basic dynamics of mainstream economics and its pivotal motifs. This
historical perspective is meant to provide a much needed context for the
most present issues. Only if we really grasp the fact that there has never
been a critical difference between the main schools of economics, if we
appreciate how much they are alike and recognize the synthesizing logic
with which they operate, will we be able to cut through the threadbare
and barren debates between left and right and work out a truly fruitful
understanding of political economy.
Chapter 2:
In which the analytical approach
of discoursive materialism in explained.
In the past two or three decades, it has been often claimed that the
discussion on economics is changing. The rigorous modernist claim that
economics is a positive, norm-free science has been challenged numerous
times. Klamer argued in 1990 that seeing economy as a discourse and
exploring its rhetorical dimensions, to which their works inspire, seems to
bring new life to the conversation about economics. 1And indeed, some
discoursive analysis of the economic genre has been applied. Economists
are not completely unaware of what poststructuralist theory has to offer,
and they occasionally employ the devices of (a kind of) literary
deconstruction or (a rudimentary) genealogical analysis. To name a few
examples, there were attempts to apply poststructuralist critique to
Marxist thought, 2 to treat neoliberalism with Gramsci, 3 to show
foundationalism of liberal doctrines 4 and to apply rhetorical analysis to
Friedman 5 or Keynes. 6 Henderson pointed to the potential benefits of
conceptualising economics in literary terms, 7 while Klamer made a case
for appreciating the discursive and rhetorical dimensions of economics. 8
McCloskey published several interesting books on the latter subject. All
in all, economics is supposed to enter a tempestuous season. 9
Yet, this tempest seems to be ultimately a sort of dry thunderstorm,
both in economic discourse and discourse on economics. Possibly it
shouldnt be surprising that mainstream economists couldnt care less for
some philosophical, epistemological quibbles. But not only the
interpretive turn hasnt reached mainstream economics, 10 but the
challenges formulated on the margins of the discourse usually utilize
poststructuralist arguments only as a way to establish themselves as the
14
new orthodoxy. It seems that the trench warfare between different

economic schools continues, while all sides slowly learn to use new
stylistic armaments. And as will be shown later, it is hardly a new thing in
the history of economics.
No comprehensive critique of economic genre has been formed yet. I
would argue, that without providing a more general framework for
thinking about economics, the cognitive value of discoursive analysis will
be lost and will deteriorate into the very blind instruments of power it
seeks to dismantle. Whilst deconstructing economic knowledge is
certainly indispensible to understanding it, it needs to be a part of a much
bigger project. Otherwise it may be that studying rhetorical devices used
to established legitimacy for this or that theorem will end up just another
way to publish an academic paper. The sole claim that economists have
become to some extent prisoners of their tools 11 is as much true as it is
analytically barren.
Such comprehensive critique of economics must be based on a study
of its history. Without proper historical context, it is simply impossible to
grasp the dynamic of power struggles on a systemic level. Debord warns
that:
The precious advantage that the spectacle has drawn from the outlawing of
history, from having condemned the recent past to clandestinity, and from
having made everyone forget the spirit of history within society, is above
all the ability to cover its own history of the movement of its recent world
conquest. Its power already seems familiar, as if it had always been there.
All usurpers have wanted to make us forget that they have only just
arrived. 12
The analytical value of the idea of the spectacle will be discussed later
(Chapter 27), but for now let us concur that oblivion of the past ensures
that the present remains unchallenged. Even if one tries to do so, without
the knowledge of the past he or she is stuck in the vicious circle of
15
repeating the same age-old arguments in the same age-old debates and
making the same groundbreaking discoveries as had been made
countless times before.
Therefore, to a significant extent this is a historical study.
However, it is neither a history of ideas nor is it purely a materialistic
history of economic practices. As hopefully will be illustrated by this
thesis, a proper examination of social phenomena needs to abandon the
timeworn methodological dichotomy between spirit and body (which has
typically expressed itself in the Christian preference for the former or the
materialist for the latter). As Schmitt argues, constructing a contrast
between these two spheres only to dissolve it by reducing one into the
other must result in a caricature. 13 Thus, I will be looking for
interdependencies between economic discourses, institutions, and
practices, trying not to privilege any one of them. Study of discourse that
disregards study of practice is rootless and toothless. Study of practice
that doesnt see its discoursive underpinnings is no study at all.
Vries rightly complains that historians are prone to labour under the
misapprehension that one can answer fundamental questions about a
phenomenon by seeking its origins. There one hopes to observe naked,
innocent acts that reveal the true character of what is later shrouded in
mystery. 14 The search for such original sin is futile. Thus, instead of
giving way to such archaic methodology and looking for points of rupture
that put in motion successive historical periods, I propose to analyze
history as a story about a multitude of discourses, institutions, and
practices that dynamically change their configuration, forming various
power structures. Perhaps it could be described not by a genealogical
metaphor, which suggests themes of evolution, generational succession
and family resemblances, but, if you forgive me this high-flown
metaphor, as a history of constellations. Hardly ever does a really new
16
star appear on the night sky or an old one vanish from it, but each of the
myriad stars pulsates with varying brightness, and time after time we
decide to look at a chosen few of them as if they were somehow
meaningfully connected. And, after all, on some level they really are
interconnected, influencing each other constantly by their gravitational
and electromagnetic forces.
For some decades now, social theory has been growing in the climate
of,
to
use
metanarratives.
Lyotards
15
clichd
expression,
incredulity
toward
It is accepted to study localized politics of resistance,
explore the lonely struggle of the prisoner in his cell, 16 to give voice to
groups previously silenced and expelled to the margins. Narratives that
are scaled to a more general level of analysis stink of sorcery, of crude
Marxism, of Enlightenment hubris. But while distrust towards totalizing,
or homogenizing narratives is understandable, it too often becomes an
excuse not to think on a more global and general level. The justified
hostility towards the way of thinking associated with grand narratives is
too easily extended to the object of such analysis. Rejection of
structuralist approaches too often leads to refusal to analyze global
structures. I would argue that this is the equivalent of throwing the baby
out with the bathwater.
Today, to find our feet in the world, we desperately need narratives
that are big, even grand, along with those that are small and localized. As
long as we remember that they all have their blind spots and limitations,
as long as we resist the temptations of reductionism, they can serve us
well. Whats indispensable in this endeavor is a sort of intellectual
humility that allows for no more than just pointing to some impermanent
tendencies, shaky patterns, and a few cautious generalizations. As little as
this. A much as this.
17
This discussion is not to be enclosed within one subdivision of

academic field. It will bring in diverse issues, ranging from the military
conquests of Alexander the Great to Elizabethan theater, from the
scholastic stance on probability to the birth of modern consumer credit.
However, it would be imprecise to say that the approach will be
multidisciplinary. Rather, one can expect from this work an attempt at an
unidisciplinary approach. It is not about bringing together various
perspectives on one subject but proposing an analytical framework that
could be used to further our understanding of various subjects.
The book is structured around 50 short chapters, each of them
tackling a specific topic and presenting yet another side of the problems
at issue. The chapters are organized more or less chronologically,
although that rule is sometimes bent. I recommend that they are read
consecutively, however, the narrative is not strictly linear and at times a
topic touched on in one chapter is picked up in another one. Such links
are usually indicated by the number of the chapter put in brackets. The
argument will proceed in a somewhat discontinuous way precisely
because the broadness of the subject at issue renders linear narratives
useless. Perhaps it cannot be cut open with a one-dimensional, however
sharp, argument, but must be entwined by a net-like one. Hopefully, the
insights we are fishing for will not slip through.
Finally, I must acknowledge that the decision to operate on a level of
general analysis in search of systemic interdependencies comes at a cost.
Tackling a wide range of issues means that none of them is fathomed
completely, and many are certainly treated with less attention than they
deserve. This is also partly due to an attempt to make this work as
succinct and to the point as possible. Writing lengthy papers is a threefold
sin: of smugness, style, and lack of consideration for the reader.
18
Although I stand by my research and have put a lot of effort into

ensuring that no factual mistakes were made, I accept that in many fields
I remain an amateur. I therefore welcome all possible corrections and
criticisms.
My only hope is that these criticisms will not bring the discussion
back to the level of particulars. Succumbing to the terror of details bars us
from any chance of understanding the world we live in. To say that things
are more complicated is always true, but only at times does it contribute
to our understanding of the issues at stake.
Thus, demolish my arguments all you want, but please, do it in order
to go beyond them and not to step back.
Chapter 3:
In which the myth of barter is debunked.
Barter (verb)
mid-15c., apparently from Old French barater, to cheat, deceive, haggle
Online Etymology Dictionary
Few concepts are more central to modern economics than that of

barter. After Adam Smith proclaimed that the propensity to truck, barter,
and exchange one thing for another 17 is inherent in human nature, this
claim has been repeated countless times, becoming the great founding
myth of the discipline of economics. 18 The existence of barter has been
often presented as a historical fact, usually in narratives telling stories of
the gradual progress of humanity: once upon a time there was barter,
which was natural, but very inconvenient, so people came up with money
to supplant it. It needed conscious reasoning power of Man to make the
step from simple barter to money-accounting tells Crowther, who was
editor of The Economist from 1938 to 1956, in his Outline of Money. 19
This story has become a sort of common sense understanding.
One can notice that in modern economic textbooks, barter is no
longer presented as a stage in economic history, but rather as a imaginary
figure. Graber collected several instances of this: To see that benefits
from a medium of exchange imagine a barter economy, write Begg,
Fisher and Dornbuch. Imagine the difficulty you would have today, if
you had to exchange your labor directly for the fruits of someone elses
labor, propose Maunder, Myers, Wall and Miller. Imagine, suggest
Parkin and King, you have roosters, but you want roses. 20
This move from grounding argument in historical narrative to
abstract theorizing surely is linked with the general concession to abstract
reasoning (see chapter 44), but it has another quality as well. Being solely
an abstract figure in a thought experiment, it cannot be falsified with
20
historical evidence. This is priceless, because the fact is that there is no

historical evidence that an economy sustained by barter has ever existed.
Anthropologists have discovered an almost endless variety of economic
systems. But to this day, no one has been able to locate a part of the world
where the ordinary mode of economic transaction between neighbors
takes the form of Ill give you twenty chickens for that cow. 21 In the
words of one Cambridge anthropologist: No example of barter economy,
pure and simple, has ever been described. [] all available ethnography
suggests that there never has been such thing. 22
Of course, there are specific cases in which barter exchange occurs,
and does so on a significant scale. It is a legitimate form of settling
accounts in all capitalist markets. In the 1980s around 40 percent of EastWest trade involved some degree of barter. 23 Inmates in many prisons use
various barter systems to exchange items on a black market. However, it
has never been employed as a regular way of handling economic
interactions between fellow villagers. Abundant data on various exchange
systems that could be labeled as barter shows that it only takes place
between strangers, even enemies, 24 and all such cases of trade through
barter have in common that they are meetings with strangers who will,
likely as not, never meet again, and with whom one certainly will not
enter into any ongoing relations [] each side makes their trade and
walks away. 25
Confusion about the pervasiveness of barter amongst humans may
have arisen from the fact that many regimes of exchange may appear to
the unaided eye like barter systems, although in fact they are nothing of
the sort. The prevailing system of settling accounts within European
societies, a system that predated capitalist and even feudal modes of
exchange and for a long time co-existed with them, was the system of
21
account money, which was an ideal unit of measure that allows the
evaluation of goods that are exchanged. 26
It existed only in the mind and in writing. It was a measure of value used
for accounting purposes, and the value of other commodities, including
actual coinage, would be measured against this standard. The system of
money of account most common in medieval Europe was that of pounds,
shillings, and pence, which was based on multiples of twelve (the
duodecimal system), as opposed to ten (the decimal system). It was
introduced possibly as early as the seventh century, but given prominence
by the financial reforms of the Emperor Charlemagne in the late eighth
century. 27
- writes Wood, but account money and object money (see chapter 5) have
been used long before the seventh century. It was used in ancient Egypt,
where the unit was grain, whose value was subjected to careful regulation
by administrative authorities. 28 One can also see in the Homeric epics that
we all know from school that people measured the value of ships and
armor in oxen, but of course they never actually paid for anything in
oxen. 29 Davies argues that because the taming of animals preceded
agriculture, cattle preceded the use of grain as the unit of account
money 30 and have occupied a role so central in its evolution that
etymologically the term capital is a derivative from cattle. 31
In early Germanic law codes, a monetary value was assigned not
only to property but to people as well (wergild), detailing
compensations due for various degrees of bodily harm, murder, and
manslaughter, somewhat prefiguring modern insurance calculations that
evaluate peoples health in terms of percentages of bodily damage.
Everything and everybody quite literally had a price. For example, from
the earliest known Anglo-Saxon laws, the dooms of Aethelberht of Kent
(6023) we read that If anyone lies with a maiden belonging to the king,
he is to pay 50 shillings compensation. But of course 50 shillings would
not have been paid, not just because the economy was largely nonmonetary at that stage, but because neither the shilling, nor even the
penny, was then in circulation. 32
22
This imaginary money was used to settle accounts even in seventeenth

century Europe, providing a matrix for economic exchange that had
nothing to do with the direct exchange of goods for other goods and
everything to do with communal debt regimes, which are the subject of
the next chapter.
Chapter 4:
In which the concept of debt regime is introduced.
The debt shall be paid, said Crito;
is there anything else?
Plato
Many readers may remember that in the Homeric epics, which

are set in a pre-monetary context, the exchange of gifts plays an important
role in establishing relationships between the protagonists. 33 Another
well-known, or perhaps even the best known, instance of gift exchange is
the one between the Queen of Sheba and Solomon. 34 Although the figure
of barter is so well-rooted in economic discourse that sometimes gift
exchanges are presented as a yet another form of barter, 35 ever since
Malinowskis studies of the Kula ring in the Trobriand Islands and
Mausss conceptualization of gift economies, there has been enough
research on the structures of reciprocity that it is generally recognized as
a separate institution, with its own specificities. Modern mainstream
economists may still struggle with the very concept of giving gifts and
consider it a wasteful ritual, hence any transfer of resources which was
not chosen by the recipient through the market will generally be
inefficient. 36 However, few would argue that gift economies didnt exist,
or that elaborate gift exchange systems didnt play important social
functions both within communities and in diplomatic encounters between
them.
For that reason, some radical thinkers look to gift economies
as a potential site of resistance to capitalist ordering of the economy.
However, gift systems have never constituted the primary regime of
economic life. They are interesting institutions, certainly worth exploring,
but all things considered, they should be rather treated as phenomena that
24
were historically of secondary importance to the distribution of power.

Leaving aside the instances of Mesopotamian kingdoms and ancient
Egypt where circulation of wealth was centrally managed with only an
embryonic market system functioning on the sidelines of a highly
regulated temple economy, 37 for a very long time, the majority of day-today dealings were not subject to administrative decrees or to the monetary
market economy, but were part of a social debt regime.
Debt regime can be understood as a system of recognizing mutual
obligations within a given group that ensuries stability and the continuity
of economic exchange by disciplining the parties engaged in it to abide
by their agreements. And the fact is, that long before the establishment of
monetary economy, through the Middle Ages and even far into the
eighteenth century, a majority of everyday transactions operated on the
basis of personal credit, through the use of imaginary account money as
well as with the aid of various tallies, tokens, and ledgers. 38 The
commonly repeated narrative of the credit system being a late
development in the history of economic exchange, which supposedly
moved from the most concrete forms (barter) to the most fictitious ones
(financial derivatives), a story about the victory of abstract over
concrete, 39 is simply not true. Credit was central to everyday communal
life constituting a complex and intricate network of personal ties, []
based on personal agreements, many of which were struck verbally in
face-to-face interactions. 40 And it was central to wholesale trade and
manufacturing as well; wholesale trade in wool, cloth, wine, tin and so
on [] all stages in the woolen clothing industry [] sales of land and of
rents [] were commonly conducted through extending credit. 41
English merchants, shopkeepers, farmers, manufacturers, and consumers
had developed an elaborate credit network based on personal agreements.
One historian estimates that by the first half of the seventeenth century, the
25
ratio of personal credit to coin transactions was 11:1. This statistic is

further substantiated by Craig Muldrews study of how people in
sixteenth-century Kings Lynn, a then-vibrant coastal town north of
Cambridge, used a wide array of credit contracts, such as sales credit, bills,
bonds, and pledges, to mediate their commercial interactions. The
successful employment of such instruments generated an extensive web of
credit that connected people throughout the community, sometimes as
creditors and sometimes as debtors. 42
Discipline was ensured mainly by means of informal social control, and

for a long time operated without appealing to the mechanisms of state
violence such as police or bailiffs. That was especially the case in the
Middle East, where after converting to Islam commercial classes largely
dispensed with the state structures. 43
The livelihood of the masses depended in the first instance on
such informal credit regimes and on the commons. The commons can be
understood as an inseparable combination of a social practice and a
resource that was both its condition of possibility and the object of this
practice. It was an institution that forwent the regime of property rights,
in which, for instance, a village cooperative communally used land on
which (individually owned) cattle was herded. Collective management of
the commons ensured that no tragedy of the commons (i.e., no
depletion of the common resources caused by unrestrained individual
usage) would occur, deciding on the rules and fines for breaking them,
e.g. when the increasing number of cattle raised the risk of overgrazing
the pasture, the cooperative issued an ordinance for the pasture []. It
limited the number of cattle, impounding them if necessary and levied
fines and enforced their collection. 44
The regime of debt was enforced from within but was also influenced
from above. The most important regulations were ones designed to
counter the tendency to accumulate wealth in the hands of a small elite
26
and to protect debtors. Sumerian and Babylonian kings typically on

assuming power and sometimes later over the course of their reigns
issued declarations of clean slates, voiding all outstanding consumer
credit, returning land to its original owners and freeing the debt-peons. 45
As Graeber notes, the Sumerian word amargi, the first recorded word for
freedom in any known human language, literally means return to
mother since this is what freed debt-peons were finally allowed to
do. 46 The Old Testament rule on the jubilee years served a similar role:
every 7 years debt-induced slavery was to be annulled, and every 49 years
all debts were forgone and land returned to its owners. 47 The deeply
political dimension of debt regime was also appreciated by Solon, whose
famous reforms laid foundations placing the political sphere above the
most immediate financial interests of the lenders. 48 As Reddy writes:
[Solon] set that society on the road to democracy by decreeing that debts
could no longer be secured against the persons of Athenian citizens.
Defaulting debtors who had been sold into slavery were immediately
freed; others liable to the same fate were declared free of their debts. From
this reform arose that stark distinction between citizen and slave in Athens
upon which civil equality and popular sovereignty were later built. 49
Both in the case of communal debt regimes and the practice of

the commons, there was some room for motives, practices and discourses
that were not strictly economic.
[C]ivic organization in the ancient world gave first place to non-economic
relations, even in the case of commercial enterprises connected to the
political-administrative sphere. This gave rise to a sort of personal
relationship between authorities and citizens, due to a civic sense in the
Greek polis, to ambition and patronage in the Roman Republic, and
finally, in the Roman Empire, to the benevolence/beneficence of the
emperors, who, whatever they did, were called benefactors 50
In Attic tradition the city, although being a community, is treated as

a friend, or, the benefited partner of the euergetic [characterized by
generosity JM] relationship between two individuals. 51 These themes
of friendship and solidarity were an important part of this discourse of
27
benevolence. However, perhaps to the disappointment of those leftist

theoreticians who like to point to the commons as a new utopian project
of social organization that could replace the discredited project of
communism, we have to remember that the commons, as all institutions,
were open to power struggles and practices of violent domination.
Vesting power over ones access to economic resources in the hands of
the local community made for a very efficient disciplining tool that
ensured ones compliance with local social, cultural, and religious
hierarchies. Neither social debt regimes nor the commons should be cast
in the role of a horn of plenty that automatically brings about some
version of an utopian future.
Also, some neo-Keynesians utilize this history to claim that debt is a
primordial mode of social being, its essence even, and that granting
government the power to create money means simply reconciling the
political sphere with the underlying economic structure. 52 This is perhaps
an interesting, but ultimately a marginal approach. For our discussion, a
more important stance on debt is that taken by mainstream liberal
economists. And it is an approach marked by a hard-line hostility towards
debt and a utopian vision of a society of individuals free from any
obligations to each other and at liberty to settle all their accounts in cash
(see chapter 34). It is, perhaps, precisely due to this hostility that the
history of social debt regimes has been generally consigned to oblivion,
since if it was remembered, it would certainly give the lie to liberal
economic mythology.
Chapter 5:
In which the violent beginnings
of the institution of money are recalled.
Money, its a crime.
Pink Floyd
Although there is nothing universal about money out of six

grand civilizations in human history, the Sumerian, Egyptian, Minoan,
Chinese, Mayan, and Andean, the last two developed highly sophisticated
social structures without any use of coinage 53 today money is
instrumental to the modern debt regime and thus to all economic power
struggles, so it is worth exploring its history.
The first Lydian coins were struck out of electrum a gold-silver
alloy during the 7th century, BCE. In Greece, as in India and China,
coinage was probably invented and first manufactured by jewellers, but
soon thereafter it was monopolized by the state. It is often argued that the
biggest force behind the spread of coinage was warfare. 54 The invention
of money correlates in time with changes in the techniques of warfare and
the replacement of old armies made up of aristocratic warriors and their
servants with trained professionals. This new class of mercenaries was
paid salaries, not only the plunder and spoils of war. But plunder and
pillage contributed to the development of coinage as well, as during wars,
large amounts of precious metals, previously stockpiled in temples, were
dethesaurized, as the economic historians like to say; [they were] removed
from the temples and houses of the rich and placed in the hands of
ordinary people, [] broken into tinier pieces, and began to be used in
everyday transactions. [] How? Israeli Classicist David Schaps provides
the most plausible suggestion: most of it was stolen. This was a period of
generalized warfare, and it is in the nature of war that precious things are
plundered. 55
It is telling that the Phoenicians, the greatest merchants and bankers

of antiquity, didnt strike coins until they were forced to do so to pay
30
Sicilian mercenaries. 56 Business could be and had been conducted using

ingots and promissory notes. But warfare demanded coinage.
Probably the single most influential event for the popularization
of the institution of coinage was the military campaign of Alexander the
Great, whose conquests led to the most rapid extension of any single
monetary system in world history until the advent of euro in 2002. 57
Not only had Alexander destroyed the ancient Mesopotamian debt
regimes and dethesaurized gold held in their temples, but he also ensured
that his coins were the only legal tender in his empire meaning that all
taxes had to be paid in Macedonian drachmae. 58 This meant that civilians
in the conquered lands found themselves in a position in which they had
to accept payments in the currency of the conquerors. When Alexanders
army was fully engaged in Asia Minor, the total cost of his campaign
reached daily payments of some half a ton of silver. 59 This meant around
120,000 drachmae transferred every day into a multitude of private, often
armed, hands. Unsurprisingly, the coinage soon became accepted both as
a concrete instrument of exchange and its abstract structure. As Davies
writes:
Coins followed indeed accompanied the sword; payment for troops and
for their large armies of camp-followers was generally the initial cause of
minting. Only the best was good enough for an all-conquering army, and
what was good enough for the army, even if at first accepted through
compulsion, was soon universally accepted by everyone with alacrity.
Although armies could always take, or requisition, whatever they
wanted, payment in good coinage was a better way of getting eager cooperation. 60
From that time, control over coinage became one of the first priorities to
be assumed by any conquering army, even until this day, with the British
Authority money in the Second World War or dinars issued by the
Coalition Provisional Authority after the Second Gulf War.
Issuing money always performed not only an economic role, but a
political one as well. Austin and Vidal-Naquet show that in the history
31
of Greek cities coinage was always first and foremost a civic emblem. To
strike coins with the badge of the city was to proclaim ones political
independence. 61 Emblems and symbols struck on coins were arguably
by far the best propaganda weapon available for advertising Greek,
Roman or any other civilization in the days before mechanical printing
was invented. 62 And today, quite a bit of political energy is still
mobilized around issues of currency sovereignty, for instance in
European countries in which adoption of euro is debated, or in Central
and Southern American countries which adopted the US dollar as their
official currency.
Wherever state coinage was imposed, it had to prevail over
previously existing systems of exchange consisting of the abstract
account money, social debt regimes, and finally, object money
(sometimes described as primitive money). Davies gives us a whole
alphabet of items used as object money:
amber, beads, cowries, drums, eggs, feathers, gongs, hoes, ivory, jade,
kettles, leather, mats, nails, oxen, pigs, quartz, rice, salt, thimbles, umiaks,
vodka, wampum, yarns and zappozats, which are decorated axes to name
but a minute proportion of the enormous variety of primitive moneys 63
Setting aside the issue of gold being also a kind of object money used
successfully (and without calling it primitive) by leading capitalist
countries up until the twentieth century, it should be noted that the most
successful object monies such as manillas which were metal bracelets
used as currency in West Africa were in circulation even after the
Second World War, and it took a long and painful struggle to displace
them with British pounds. 64 In fact, an indispensable part of the European
colonial enterprise was always a long and painful struggle to enforce new
forms of discipline by drawing people into the cash-nexus and
supplanting local exchange systems with state-money. It usually involved
some sort of poll tax that had to be paid in cash, 65 and penalization of the
32
traditional rituals of gift exchange and conspicuous consumption. For

instance, the 1927 Revised Statuses of Canada stipulated a penalty of no
less than two months in prison for engaging in any Indian festival, dance
or other ceremony of which the giving away or paying or giving back of
money, goods or articles of any sort forms a part. 66
However, it always takes power to establish a monetary regime, and
sometimes invaders found it impossible to achieve. At times shortages of
coinage and other problems with establishing a generally accepted
monetary system led colonists to officially recognize as currency object
money of the conquered peoples. For an instance, in the seventeenth
century, wampum was made legal tender in several American colonies,
making strings of beads both a currency in dealings with indigenous
communities and among the colonists themselves. 67
As monetary regimes are so closely interconnected with the political
powers upholding these regimes, an essential part of a great number of
modern revolutionary movements was the creation of revolutionary
money. Two great revolutions of the late eighteenth century, the French
and the American, were financed by experiments in creating inconvertible
paper money:
The first action of the second Continental Congress [a convention of
delegates from the Thirteen Colonies that started in 1775, soon after
breakout of the American Revolutionary War JM] was to create an army.
Armies have to be paid for and the Congress had no taxing powers. It
therefore arranged for the issue of $2 million of Bills of Credit in June, and
another $1 million in July. []. Needless to say the Bills of Credit were
not as good as gold but moral persuasion was used to induce people to
accept them:
Any person who shall hereafter be so lost to all virtue and regard for his
country as to refuse the Bills or obstruct and discourage their currency or
circulation shall be deemed published and treated as an enemy of the
country and precluded from all trade and intercourse with its inhabitants.
(Resolution of 11 January 1776) 68
Eventually, there was a complete default [of the revolutionary money].
Thomas Jefferson said that the public feared that this would shake the
Confederacy to its very centre, but instead:
33
Their annihilation was not only unattended by tumult but was everywhere
a matter of rejoicing and congratulation. Their great services as a support
of the War were known and felt by all and all knew and felt their
destruction was a certain public good. In Rhode Islandan
obstreperous little commonwealthsome Continental bills were buried
with the honours of war. They were enclosed in a special repository, and
over this a eulogy was pronounced as over the remains of a departed
friend and benefactor. 69
The close relationships between war, debt, and money will be studied
later on (chapter 33), but for now, let us note that exposing the bloody
origins of coinage shouldnt be taken as a proof that it is an essentially
violent, oppressive institution. It seems to me that this is the mistake
David Graeber makes in his otherwise captivating account of the social
history of debt. The narrative on money that dominates economic
discourse today is one that sees money as a sort of atemporal, natural, and
neutral thing. Liberalism sees it often as primary to political institutions,
while mainstream economics doesnt see it at all (chapter 34). 70
Therefore, the challenge lies not so much in condemning money for its
gory genesis, but rather in putting it in a historical context, seeing it as an
institution and exploring the functions it played in the power struggles
through the centuries. Economic reflection shouldnt be concerned simply
with the politics of distribution of money in a given society, but muat
rather recognise the political dimension of the institution of money as
such and study the various effects different exchange systems have.
Chapter 6:
In which it is shown how Greek economic discourse
was shaped by opposing political factions.
economy (noun)
from Greek ,
literally; management of the house, law of the house
Etymology Online Dictionary
The first Greek text on economy is Hesiods poem Works and

Days, in which he argued against the admiration for war and martial
virtues and praised the new ideal of peaceful husbandry. 71 The most
important principle of Hesiods household economic teaching is the
traditional, timeless order which:
shows itself in the careful division of work according to the season. [e.g.]
Wood must be brought from the mountains in winter, and even the age of
people and animals is taken into account in the division of laborthe 40
year-old is the youngest able to dig a straight trench and not just look
around. 72
Other themes of his teaching were care, which should be applied at

all times, and neighborly reciprocity. He warned that profit can confuse
the senses and bring out aggressive behavior in people. Nonetheless, he
recommended that one should seek to increase household profit and
engage in sea trade on a limited scale. 73 Hesiod also advised that since sea
trade is hazardous, a mans entire property should never be risked on a
single ships excursion, 74 thus voicing around 700 BCE the intuition for
whose mathematical formulation Harry Markowitz earned a Nobel prize
in 1990.
After Hesiod, bits and pieces of economic reflection can be
found in philosophers such as Heraclitus and Democritus, but certainly
the fullest and also most successful Greek economist was Xenophon. His
Oikonomikos became a best-seller for generations, not only in Ancient
Greece, but also in the Roman empire and long afterwards.
36
In the 15th century, it was streamlined into a separate Italian economic

discourse, 75 but was influential on its own as late as 1652 (date of
publication of Bliths Dedication to the Nobility and Gentry) 76 or even
1727 (Bradleys translation of Oikonomikos under the title of The Science
of Good Husbandry). 77 Xenophon emphasized the same principles as
Hesiod, praising order (nothing is useful or fine for human beings as
order 78) and diligence. 79
In both Works and Days and Oikonomikos the household was
conceived as a private sphere that was understood without reference to
the local or national economy. However, this doesnt mean that the
Greeks were not capable of a more macroeconomic analysis. For
instance, Isocrates Trapeziticus treats the specific situation of the
Athenian economy, with its fiscal and monetary problems. 80 And
Xenophons less known work, Ways and Means, also shows a general
orientation to the economy of the whole polis and proposes a series of
policies to promote trade, strengthen manufacturing, and attract capital
from abroad. 81 In a proposal that could be called proto-Keynesian, if we
were interested in such retrospective readings of history, he argues for a
proactive stance of the polis in promoting industrial entrepreneurship and
tries to calm objections that public initiative will have adverse effects on
private business. 82 In his other work, Cyropaedia, he describes the
division of labor, linking it (as Adam Smith would do later) to the size of
the market. 83 And Aristotles abstract conceptualization of the geometric
exchange matrix proved essential for scholastic economic theories
(Chapter 15).
There is a general tendency in economic historiography to exclude
analyses critical of a given economic order from its body and focus solely
on theories that accept it either openly or implicitly, by assuming that it is
37
morally neutral. Thus, the bulk of Greek economic theorizing is

disregarded as moral philosophy and not strictly economic theory. 84 But,
of course, all economic theories are, explicitly or not, moral and political
philosophies as well. And the fact that the elite of Greek philosophy
shared a distrust of economic motives and were wary of commerce does
not mean that they didnt theorize about them.
Probably the most hostile attitude towards commercial society was
Platos. He conceived economic activities as morally degrading and the
profit motive as unacceptable. He especially held retail trade, which in his
eyes was an unproductive speculation on goods, in contempt. He argued
that politics must be purified from the polluting effects of the commercial
mentality or otherwise, when the desire for more growth has reached its
technical limits, the feverish mentality of the opulent city sets loose the
spirit of war with other city-states. 85 Therefore, in The Republic he
envisioned a society whose economic activities are regulated in great
detail by a cast of ascetic philosopher-kings. If trade is left to be
determined by hedonistic demand it will lead to a new ordering of the
world, based on a calculation, that could be handled mathematically and
that [would] replace the traditional ordering of life forms according to
various dimensions, with a one-dimensional measurement, 86 alienating
people from moral ideals and destroying the natural environment in the
process. 87
Similarly, Aristotle goes into great lengths to describe misdevelopment of the polis into a commercial society animated by the
chrematistic spirit:
For him [Aristotle], the development of a monied market economy that
prospers on commercial exchange between socially unrelated individuals
and that is moved by a chrematistic mentality, would adversely affect the
traditional values of the community and gradually undermine the public
spirit of the polis and of its citizenry. 88
38
However, Aristotle was slightly less hostile to commerce than Plato.

Indeed, he married Pythias, a daughter of Hermias, the powerful banker
who ruled the polis of Atarneus and a close friend of Aristotle. 89
Philosophically, as always, he recommended the golden mean as the
answer to economic problems. In his eyes both poverty and excessive
wealth can be equally corrupting, and the possession of wealth as such is
not something negative. However, as the gain motive theoretically can be
infinite (and in practice often is), it cannot be treated with the golden
mean solution, and thus is inherently harmful. 90
Also, Isocrates and Gorgias, Sophists who are usually treated as
technocratic pragmatics, considered the commercial spirit it to be the
source of injustice and corruption. 91
There has been a long-lasting dispute on whether the Greeks
employed the notion of linear time at all (or perhaps it was a Judaic
invention, and the Greeks followed a more natural, cyclical vision of
time?), and if so, whether it told a story of advancement or maybe of
progressive decadence. There are numerous examples in support of all
three options, 92 and arguably this debate can be only resolved by
discarding the idea of the homogenous Greeks to whom one or another
world-view could be ascribed and acknowledging that there were
numerous tensions in Greek culture, one of which concerned the issue of
progress.
The aforementioned authors (apart from Hesiod) all wrote in a
rapidly changing social environment in which two political prospects
contended for primacy: a commercially growing society based on trade
against a traditional and static society based on agriculture merchant
classes supported by democratic structures against an aristocratic culture
supported by the elites the nouveau riches against the traditional
39
establishment. 93 The lines of demarcation, as always, were not clear, but

one can see these two tendencies in the political discourse of Classical
Athens.
In Ancient Greece, this tension between perfect gentlemanship and
the commercial spirit, between love of honor and love of gain, was
perhaps overcome only in Sparta, where citizens were forbidden to have
anything to do with money-making, leaving economy in the hands of
enslaved helots. 94 In The Human Condition, Hannah Arendt liked to
romanticize Ancient Greece as a place where public life was free from
lowly economic concerns, which rightly belonged to the private realm. I
would argue that she misreads some of the philopohical writings that
constituted a conservative defense of the power held by the elites for the
general climate of the era. For all Arendts originality, this mistake is
surely of the most trite in the historiography of ideas, it almost falls in the
realm of clich.
Chapter 7:
In which it is argued that the existence of a longing for the good old
days doesnt mean that they have ever existed.
I remember the time when a man who was a
tolerable workman in the fields had generally,
beside the apartment in which he carried on his
vocation, a small summer house and a narrow
slip of a garden, at the outskirts of the town,
where he spent his Monday, either in flying his
pidgeons, or raising his tulips. But those
gardens are now fallen into decay. The little
summer-house and the Monday's recreation are
no more.
John Thelwall, year 1795
Two of the tropes that appeared in the Greek debates described in the
previous chapter made a terrific career in economic discourse. Namely,
themes of nostalgia and moralistic anti-consumerism.
One of the most widespread myths of the pre-modern cultures, the
myth of the lost Golden Age, was also an important part of Greek culture.
Originally, goods were abundant and people could obtain them without
much effort, but eventually human pride and desire for knowledge led
them to disobedience and a conflict with the gods. The consequent godly
punishment sentenced humanity to life of suffering and poverty, made
possible only by painful labor. In this respect, the biblical story of the fall
from Eden closely resembles Greek mythology. Interestingly, these myths
may have reflected actual historical developments, telling the story of the
Neolithic Evolution, which by introducing new agricultural technologies
enabled the birth of civilization as we know it, but at the same time most
likely drastically degraded quality of life. 95
42
In any case, in many ancient texts:

there is considerable nostalgia for the solidarity of the frugal agricultural
society, content with its poverty. This mythical model is contrasted with
the society of the time, in which trade had introduced a love of easy riches
and, along with it, selfishness and a disdain for moral values. Roll reminds
us that the biblical prophets expressed this nostalgia because they were
witnessing the decline of the tribal economy and the rise of private
property, which also brings trade, the division of labour, class distinctions,
and poverty. A similar process took place in ancient Greece. 96
In Dicaearchus of Messana (c. 350 c. 285 BCE) we find the first

formulation of the theory of economic stages. History moves through a
series of phases, each characterized by one main type of production.
However, in his eyes, this was a theory of the decline of man and not of
his progress. 97
Also, in Book I of Aristotles Politics, we can find a discussion on
the dynamic of the decay from an economy based on natural art of
household management towards an acquisitive system stimulated by the
profit motive. 98 He makes a distinction between a natural and legitimate
procurement of goods in order to live well and an unnatural management
of goods oriented towards profit and the limitless increase of ones estate.
Regress from the Golden Age is said to be fuelled exactly by yielding to
such low and artificial motives. One can see that this argument works
only when a divide between natural and artificial needs is introduced.
Natural is legitimate, limited, and simply good. Unnatural is artificial,
threatening, and luxurious. Of course, these criticisms are necessarily
divorced from any historical sense, as they fail to see that all traditional
and natural goods were once considered unnatural novelties. 99
Nevertheless, they have found a place in the economic and political
discourse for good.
43
As Perrota notes:
The opposition between natural and artificial needs (and consumption)
has had an enormous success. It was repeated in the Middle Ages, by St
Thomas among others. In the modern and contemporary age it has
become, and still is today, the main argument of all the critics of increased
consumption, of all those who are nostalgic for the simplicity real or
presumed of the past. With this function it was adopted by the moralists
of the seventeenth and eighteenth century; by Rousseau; by all kinds of
Utopians in the nineteenth century; by the Marxists Baran and Sweezy in
the 1960s; and, lastly, by many advocates of a conservationist reduction in
con-sumption. Today this distinction is still part of the common culture of
so-called anti-consumerism. 100
At times the division between acceptable and unacceptable

consumption was voiced in explicitly political terms; for instance, Plato
argues in Republic against unregulated economic development by
warning that it leads to rising social inequalities and discord, whose effect
is that eventually the State falls sick, at war with herself. 101 (For more
on political regulation of consumption patterns see chapter 18.) But
generally, the natural/artificial division was part of a moralistic discourse
that sought to influence individuals for the sake of their own moral
standing. If the original affluence was lost due to the sins of pride and
greed, then perhaps it could be regained by turning away from worldly
pleasures. Thus, affluence can be achieved only through individual
restraint and asceticism.
This idea has been repeated countless times over the course of
history. Xenophons Socrates proclaimed that being controlled by the
harsh masters of gluttony, lust, and foolish ambitions is no better than
slavery. 102 Plato, of course, voices the same argument for moderation and
restraint. The Stoics warned that one should never rely on more than is
absolutely necessary (which, in their view, included possession of
slaves). 103 Also, early Christians drew on the Stoic tradition, and the more
radical passages of the gospel, to campaign for indifference towards
44
earthly goods. In the Middle Ages, the Aristotelian division between

natural and unnatural wants was picked up by Thomas Aquinas, who
explicitly repeated his calls for moderation. 104 Aristotle was used as a
major point of reference long into the sixteenth century, 105 and later, the
same tropes can be found in Montesquieu 106 and Adam Smith, 107 and in
the twentieth century, in Keynes. 108 Marxist critics, even though they rise
above the level of crude moralism, in their treatment of consumerism as a
sort of false consciousness brought about by the media complex to
manipulate consumers into buying things they dont really need or truly
want, also often presume this dichotomy between natural and artificial
needs. 109
It will be seen in this work that the themes of nostalgia for the lost
serenity of life and the moral discourse of individual restraint, often
working in pair, are recurring elements of economic discourses through
the centuries (Chapters 10, 18, 48). And in any case, this longing for the
good old days seems of little analytical value. Nostalgia appears to be a
constant trope in European culture, working rather as a mode of
experiencing the present than as an approach to understanding the past. It
can and often is mobilized by political (especially, but not exclusively,
nationalistic) movements, but it is doubtful whether it can become a
valueable feature of any analytical framework that would improve our
understanding of power struggles.
Chapter 8:
In which we point out that economic growth
is a relatively new phenomenon.
It's a zero sum game,
somebody wins, somebody loses.
Gordon Gekko in Wall Street
The conservatism of the Greek elites and their ascetic ethics should
be put in the context of pre-modern economy, the most important
characteristic of which was, perhaps, that it didnt know economic
growth. Product per capita was generally static. Until the eighteenth
century, all societies were caught in a Malthusian Trap, in which
increases in output translated into larger populations but no significant
increases of wages or quality of life for the masses. Clark notes that
the average person in the world of 1800 was no better off than the average
person of 100,000 BC. Indeed in 1800 the bulk of the worlds population
was poorer than their remote ancestors. The lucky denizens of wealthy
societies such as eighteenth-century England or the Netherlands managed
a material lifestyle equivalent to that of the Stone Age. But the vast swath
of humanity in East and South Asia, particularly in China and Japan, eked
out a living under conditions probably significantly poorer than those of
cavemen. The quality of life also failed to improve on any other
observable dimension. Life expectancy was no higher in 1800 than for
hunter-gatherers: thirty to thirty-five years. Stature, a measure both of the
quality of diet and of childrens exposure to disease, was higher in the
Stone Age than in 1800. And while foragers satisfy their material wants
with small amounts of work, the modest comforts of the English in 1800
were purchased only through a life of unrelenting drudgery. 110
The perception of steady progress through the ages comes from a

cultural overrepresentation of the lifestyles of small elites, which indeed
have been progressing, but constituted only a margin of the population.
Jane Austen may have written about refined conversations over tea served
in china cups. [] While even long before the Industrial Revolution small
elites had an opulent lifestyle, the average person in 1800 was no better off
than his or her ancestors of the Paleolithic or Neolithic. 111
46
As Malthus himself noted, the histories of mankind that we possess are

histories only of the higher classes. 112
Economic activities in this pre-growth era were largely governed by
tradition and custom. It isn't the knowledge or the ignorance of the
farmers that causes some to be well off and others to be poor, 113 says
Xenophon. This knowledge didnt need to be written down or codified, as
the rules of economic conduct were considered to be obvious. 114 For
centuries the rhythm of economic life was set by weather cycles. Periods
of famine were interlaced with periods of relative abundance, and the best
one could hope for was a stable comfort of living.
In such an environment, consumption patterns were very different
from the ones we know today. The greater hazard to a communitys
interests lay not in scarcity, but in surplus, as its unequal appropriation
endangered the social cohesion of the group. Hence, in pre-growth
economies, one can see so many rituals of collective feasting, destruction
of goods in potlatches or religious sacrifices, and finally, burying goods
in the ground as treasures. 115 Some of these rituals have survived to this
day, e.g., the Christian customs of Easter feasting can be tracked directly
to old Slavic rituals of gluttony. On the other hand, traits such as
entrepreneurship or willingness to take risks were often considered to be
unsavory or outwardly threatening in pre-growth economies.
The Catholic condemnation of usury certainly was instrumental in
securing the Churchs economic and political interests (Chapter 16), but
one can also argue that in a pre-growth economy it contributed towards
securing social (albeit feudal) cohesion. Following Pikettys r>g
argument, 116 that whenever rate of return on capital is greater than the
rate of growth, inequalities must rise, it is easy to see that when g is 0,
47
any return on capital must result in a concentration of resources and an

increase in economic inequality.
The static economy accommodated static economics (Chapter
11). When economic growth was unthinkable, exchange was understood
as a zero-sum game in which the profit of one party must cause the loss of
another party. This is why Aristotle states that trade is justly discredited
(for it is not in accordance with nature, but involves men's taking things
from one another). 117 By definition, the accumulation of wealth led to
the impoverishment of others and therefore was immoral. This was the
meaning of Augustines warnings that the superfluities of the rich are the
necessities of the poor or that you possess what belongs to others when
you possess more than you need. 118 Mass enrichment was not possible.
As Aristophanes observes in Plutus, a society can have general affluence
only if it is built on the enslavement of some other group. 119 The
moralizing discourses described in the previous chapter are best
understood this context, perhaps put in the most concise terms by Seneca:
The objects of your desire [] cannot be transferred to one person
without being snatched from another. 120
In Malthusian economies, wages always tended to be low, no matter
how much people worked or how productive they were. Good times
could last only for short periods of time triggered by a new technique of
production, intensification of labour or, most famously, as a consequence
of famines, plagues and wars, which by decreasing the numbers of
mouths to feed could temporarily bring higher real wages to those who
survived the purge. But as the population grew, individual incomes fell
back to subsistence levels. In this situation, the only possible welfare
policy that could be implemented was one of work prohibition. In the
48
long run, it didnt affect the production per capita and wages, but
improved life quality by increasing leisure time. This was precisely the
economic impact and social importance of the Catholic prohibition of
work on Sundays or the Judaic Sabbath. 121
Finally, we should note that recently the very notions of economic
growth and gross domestic product (GDP) as its measure have come
under harsh criticism. Simplifying it a bit, GDP is an estimation of the
total sum of money spent in a given economy within a given time. The
conventional approach to it is that the higher GDP per capita, the more
developed the economy and the happier the people. This alleged identity
is so far-fetched that even some mainstream economists, such as Nobel
prize laureates Joseph Stiglitz and Amartya Sen, argue that GDP may be
a poor measure of well-being, or even of market activity, 122 as it fails to
capture some of the factors that make a difference in peoples lives and
contribute to their happiness, such as security, leisure, income distribution
and a clean environment including the kinds of factors which growth
itself needs to be sustainable. 123 Thus, in recent years a number of other
approaches to measuring economic and social progress have been
developed, such as the United Nations Human Development Index or the
OECD Better Life Index, that take into account factors such as life
expectancy, education levels, or quality of the natural environment.
However, none of these attempts have gained significant standing in
mainstream economic discourse.
Another
criticism
of
relying
on
gross
domestic
product
measurements can be the gross part of the formula. GDP is the ultimate
economic aggregate, which amasses all economic activity in a given
country and unifies it in one figure. This can have a dangerous effect,
creating a perception of economy as a unitary entity in which all internal
49
tensions are synthesised out of existence. This is not inconsistent with the
historical purpose of national accounting. From its very beginnings, it
was devised with the aim of providing knowledge not about quality of life
issues but about the total military potential of a given country. William
Pettys 1665 estimates of Britains production were to provide an
assessment of British resources available for the Second Anglo-Dutch
War, while Davenants 1695 measurements were explicitly called An
Essay upon the Ways and Means of Supplying the War. 124 And the GDP
itself was chosen over indexes that would be more focused on wellbeing
than simply total output in 1942, when the US Government needed a
basis for planning their military expenses during the Second World
War. 125 This was done despite the fact that the economists who devised
the GDP formula explicitly stressed the need for relying on other
measures:
It would be of great value to have national income estimates that would
remove from the total the elements which, from the standpoint of a more
enlightened social philosophy than that of an acquisitive society represent
disservice rather than service. Such estimates would subtract from the
present national income totals all expenses on armament, most of the
outlays on advertising, a great many of the expenses involved in financial
and speculative activities. 126
Chapter 9:
In which the interplay between religious
and economic discourses is introduced.
Remember the Lord your God,
for it is he who gives you the ability to produce wealth.
Deuteronomy 8:18
To claim like Foucault 127 that economics is an atheistic discipline, a

discipline without God, is an easily made mistake. Nevertheless, it is
undoubtedly a mistake. It is a godly discipline in many respects. Some
scholars argue that economics should be simply understood as a branch of
religion. 128 Such arguments are probably meant to shake our faith in the
scientific legitimacy of economics, and may be valuable as such, but it is
doubtful that they really further our understanding of economic
discourses and practices. One can always describe one discipline in terms
of another, but such pleasures of redescription are vulgar. When
Encyclopedia of the Worlds Religions included dialectical materialism in
its directory, 129 it was undoubtedly a way of discrediting Marxism, but
the cognitive value of such a move was, at best, vague.
Therefore, it is our job to study economics not as religion, but to
explore the interplay between the two. One can see three main (though
often overlapping) dimensions of this interplay: first, there is explicitly
religious discourse on economy; second, there are ways in which
economic discourse shaped religious dogmas; and third, there is
economic discourse that is not strictly religious, but uses religious figures
and formulas as a way of establishing its legitimacy.
Many examples of religious discourse on economy can be found in
the holy texts of all three Abrahamic religions. The ancient Persian
discourse on economic justice and equity filtered by the rabbinical
tradition appears as one of the main topics in prophetic books, with
Amos, Micah, and Isaiah articulating radical critiques of economic
52
development that creates social inequality and fails to provide for the
poor and the weak. 130 One can find in the scriptures several precepts
designed to ensure a welfare safety net for the poorest strata of society.
Consider, for example, Leviticus 23:22: when you reap the harvest of
your land, you shall not wholly reap the corners of your field when you
reap, nor shall you gather any gleaning from your harvest. You shall
leave them for the poor and for the stranger. 131 Deuteronomy 24: 19-21:
When you reap your harvest in your field, and forget a sheaf in the field,
you shall not go back to get it; it shall be for the stranger, the fatherless,
and the widow, that the LORD your God may bless you in all the work of
your hands.20 When you beat your olive trees, you shall not go over the
boughs again; it shall be for the stranger, the fatherless, and the
widow. 21 When you gather the grapes of your vineyard, you shall not
glean it afterward; it shall be for the stranger, the fatherless, and the
widow.
Or Deuteronomy 23: 24-25:

When you come into your neighbors vineyard, you may eat your fill of
grapes at your pleasure, but you shall not put any in your container.
25 When you come into your neighbors standing grain, you may pluck
the heads with your hand, but you shall not use a sickle on your neighbors
standing grain.
In Chapter 4, we have already discussed the Old Testament rules on

the jubilee years and their influence on the debt regime. In the New
Testament one can find much more than simply a welfare safety net for
the poor. In the parable about the rich man and Lazarus, Epistle of St
James, and, above all, in the Sermon on the Mount, one can find an
outward praise of the poor and an attack on the rich. A sharp contrast is
outlined between material wealth and spiritual riches, and there can be no
doubt which are favored in the eyes of God. As we noted in Chapter 7, a
good Christian should have an indifferent attitude towards worldly
prosperity. The good man neither turns his head to wealth when he has
it, nor seeks after it if he has not, says Basil of Caesarea (330-379). The
treatment of economic issues in the Quran was quite detailed and nuanced
53
as well (we will come back to the economic doctrines of the Levant in
Chapter 12).
Another aspect of the interplay between economics and religion
is the impact of the former on the latter. Agamben argues interestingly, if
not entirely convincingly, that in the first centuries of the Catholic
Church, economic notions played a decisive role in shaping Catholic
doctrine. 132 Trinitarian dogma is not a theogony, a story about gods, but
an oikonomia: a form of articulation and administration of divine life. 133
Christian theology is economic-managerial and not politico-statist,
because its god is not a sovereign governor of the world, but a deity who
manages it through providential revelations. 134 Gods providence
(pronoia) appears in a form of oikonomia, in which the world is not so
much governed as it is managed. In this paradigm, suffering and evil can
be explained in various theodicies as collateral damage, a part of the
bigger picture of a world that is the best of all possible worlds. Agamben
argues that modern democratic sovereignty is derived precisely from this
sort of theological-economic-providential paradigm. 135
Although it is an ambitious argument that may seem a bit far-fetched,
it is worth noting that Maifreda makes a similar case by pointing to the
role of economic discourse in seventeenth-century Protestant disputes and
showing how they influenced Hobbes theory of social contract. 136
The third dimension of the interplay between economics and
religion is of great importance. Economic discourses that establish their
legitimacy by explicit or implicit appeals to religious discourses, and the
various effects these appeals have, will be discussed numerous times in
this thesis, in Chapters 10, 11, 12, 14, 23 and 26, to list some of the more
significant instances.
Chapter 10:
In we recognize the institutional character of private property and
visit a time when it was of secondary importance
to constellations of power.
when you give to the poor, do not let your left
hand know what your right hand is doing
Matthew 6: 4
In feudal economy, private property as we know it today rarely

existed. Land was allocated by a superior lord under certain conditions
and in return for services, especially military ones. This was the very
basis of feudal economy: no one actually owned land. Feudal tenure was
the antithesis of private ownership:
A tenant could not sell his holding without the consent of his lord, he
could not leave it by will, nor did his family have any legal right to
succeed to it. All that he had was seisin, or possession. The lord had
lordship, or dominion, but unless he was the king, he was himself a
tenant. 137
In England, it was only during the twelfth or thirteenth century that a

sort of private ownership of land emerged, if not in theory, then in
practice and in common law. 138
The most lush Medieval discourse on property was produced by the
Catholic Church. This shouldnt be surprising. This biggest land holder in
Europe 139 had to reconcile its earthly economic interests with the radical
calling of Jesus. In other words, Mammon and Jehovah had to become
friends.
The Christian discourse on property generally considered it to be a
necessary evil, an unfortunate consequence of the shortcomings of men
and of the original sin. By no means was it to be considered a value in
itself, and as we have seen in the previous chapter, several reservations
were made for the sake of the poor. Since land and riches were
considered a gift of God to humanity as a whole [] possessions return
56
to common ownership in case of need, when the survival of the pauper is

at stake. 140
The rationale for the Churchs dominion over so vast lands was the
stewardship thesis: the idea that mans resources were a trust of which he
was a steward rather than the owner. 141 In Jeromes (347-420) words:
your possessions are no longer your own, but a stewardship is entrusted
to you. 142 Wealth is given to the wealthy by God, along with the moral
responsibility of administrating it, on Gods behalf, to promote godly
goals. 143 In this way, the efficient administration of wealth was turned
into a legitimization for possessing it. Already in the second century,
Clement the Consoler of the Rich of Alexandria wrote a treatise on The
Rich Mans Salvation in which he sought to free the rich of the
unfounded despair they might have acquired from reading 144 more
radical passages of the New Testament, by explaining that goods are
called goods because they do good. 145 As Aquinas later put it,
possessions are not merely private property for personal enjoyment, 146
but their holder has a continual duty to administrate their wealth for God
and for the common good of the Christendom. The logic of accumulation
of power in hands of the Church was thus morally and religiously
justified, while at the same time a disciplinary moralistic discourse that
condemned particular excesses of this logic was brought to the table,
decrying the capital vices of greed, gluttony, and envy. The system was
legitimate, however, individuals were sometimes corrupt.
The surest way to present oneself as a steward of God was to practice
almsgiving, a holy work which increases present merits, forgives sins,
prolongs life, separates us from the devil, joins us to God, and calls his
angels to our help, 147 as Augustine described it. Wood succinctly
portrays the situation:
57
Pauper had both logic and tradition on his side when he declared that
Withholding of alms from the poor needy folk is theft in the sight of God,
for the covetous rich withdraw from the poor folk what belongs to them
and misappropriate the poor mens goods, with which they should be
succoured. The rich were worse than thieves; they were murderers.
Ambrose had stated bluntly that those who do not feed the starving kill
them. This was taken up by Pauper, who dealt with it under the Fifth
Commandment: Thou shalt not kill. 148
The fifteenth-century theological treatise Dives and Pauper reads: if

any man or woman dies for lack of help, then all those who should have
helped, or might have helped, or who knew of the persons plight, but
who would not help are guilty of manslaughter. 149 At the same time,
giving alms was presented as a good deal for the patrons. John
Chrysostom (347-407), Archbishop of Constantinople, put it graphically:
You give bread and get back eternal life. 150
The practice of almsgiving was crucial to the oft-repeated idea of
Medieval Christendom namely, that the rich and poor are indispensable
to each other. The patrons and the paupers were said to be the opposite
poles of the same ideal, harmonious order. 151 This paternalistic view was
voiced already in the beginning of the second century in The Shepherd of
Hermas, an anonymous text that many Church Fathers considered
canonical. 152 Interestingly, from the fourth century the Church
institutionalized the practice of almsgiving and started providing for the
poor out of its own coffers, 153 thus making it no longer simply an issue of
individual morality, but also a legitimization for collecting the tithe. Also,
already in 435 another justification of economic inequalities is formulated
that without the consumption of the rich there would be no work for the
poor, 154 an argument that would enjoy a great career in the next
millennium and is still used to the present day.
Such paternalist ideas were in no case a novelty. In the very first
Sumerian legal code, issued around 2050 BCE, the king presented
himself as the protector of the weak, the widows and the orphans, from
58
the oppression of the mighty. 155 Similar themes can be found in the
ancient Egyptian tale of the Oasis Man, in which the Pharaoh is praised as
the mediator between the greedy administrators and the humble peasants
and as the protector of the latter. 156 It seems that paternalism has always
been an easy answer of the elites to the social demands of the
subordinated classes. Similar to the husband who loves his wife so much
that he just cant help but to beat her, for millennia the privileged loved to
take care of the poor so much that they just could not stand the thought
that they may cease to be poor, and were even eager to express that care
as long as it ensured that their privilege seemed morally warranted.
When in the late Middle Ages the changing economy (Chapter
14) started to produce greater social inequalities and more poverty, the
discourse on almsgiving was adapted accordingly. The poor, rising in
numbers, were still considered essential to Gods plan of salvation, but
were also seen as a potentially threatening force. Thus:
Donors of charity became more discriminating [] the needy came to be
divided into the deserving those like the friars who were deliberately
poor, and those who had fallen into poverty blamelessly and the
undeserving, vagrants, lepers, the unemployed, and beggars, who were
considered idle and degenerate. 157
Along with this new moral qualification of the pauper, in

commercially more developed areas, public aid was also condemned, as it
was said to discourage people from working. 158 It was also at around this
time that a new discourse on the dignity of labor began to emerge.
The mendicant orders took an entirely different and quite

influential, if short-lived, stance on property. A rule of the Franciscan
Order set in 1221 forbade the friars from receiving money in exchange
for their work or to carry money on them: If ever we find money
59
somewhere, we should think no more of it than the dust we trample under

our feet, for it is vanity of vanities, and all vanity, and if any of the
friars collects or keeps money, except for the needs of the sick, the others
must regard him as a fraud and as a thief and a robber and a traitor. 159 In
practice, Friars Minor did control property, but since Innocents 1245 bull
Ordinem vestrum, the formal ownership of all Franciscan property was
vested in the papacy, allowing the Little Brothers to use it without
officially owning it. 160
From the very beginning, mendicant orders were often perceived as a
radical and politically dangerous movement. At the beginning of the
fourteenth century, after a century-long struggle, John XXII relinquished
papal ownership of Franciscan property and declared it a heresy to claim
that Christ had owned nothing. Many Little Brothers were persecuted and
the Holy Inquisition burned some of them at a stake. Nevertheless, it is
today argued that the earlier solution of vesting Franciscan ownership in
the hands of the Pope served later as a model for the English monarchy,
in which the king became the steward of God on earth and ultimately had
dominion over all English land. Any property that priests, or indeed
laymen, held was the result of a royal grant, and was held from the king,
on condition that it would be used for the good of the realm, and on the
understanding that the grant was revocable. 161
In any case, it should be remembered that private property has

always had an institutional character. Hence, its specific form and role in
social order varied historically and geographically. It would be
worthwhile to look beyond the current debate on the innate nature and
inevitable effects of private property in which liberals claim that it is
60
essential to any just political order, while radicals respond that it is

inherently corrupting. Particular institutional arrangements of property
have different power potentials for different social actors in different
institutional environments. Private property had qualitatively different
meanings for the Cathars in feudal Europe, for the English poor during
the enclosures, for the French bourgouise in the wake of the Revolution,
or for a modern New Yorker influenced by consumerist culture. Thus, the
effects of specific property arrangements have to be studied close to their
historical contexts, without yielding to the temptation of easy
generalizations.
Chapter 11:
In which it is argued that the issue of usury was so dire because it
violated the logic of arithmetical justice and
endangered interests that hinged upon it.
How about murder?
Cato the Elder,
asked for his opinion on professional money lending
The when and how of the invention of interest-bearing loans is

unknown. There is some speculation that it was conceived as a way to
finance long-distance caravan trade, 162 but we will never know for sure,
as interest taking appears to predate writing. In fact, a common opinion
on the invention of writing is that it was invented as a method of
bookkeeping. 163 While its origins may be unclear, it has been one of the
most controversial problems in Western culture. As Moser says, in
history of ideas, there are only a few questions that have occupied human
minds longer than the question of the justification of interest taking. 164
Most classical religious, moral and philosophical discourses on usury
displayed a clear condemnation of lending with interest. One can find
objections to the practice in Judaism, Christianity, and Islam, in Greek
philosophy and Roman political tradition. Cicero quotes Cato the Elder,
who, queried about professional money-lending, simply replied: How
about murder? 165 In the Ancient world, perhaps only in the
Mesopotamian societies was there no moral disapproval of the practice
(although, as we have seen in Chapter 4, there were periodic legal actions
aimed at curtailing debt-induced inequalities). 166
In the medieval Christian discourse, usury was seen as an especially
disgraceful offense against the ethos of charity. Canon law, codified in
the twelfth century, entailed a restrictive regulation of economic dealings
and a strict economic ethic. Monks were barred from engaging in
62
commercial business as well as in banking activities, and stiff sanctions

were introduced to enforce the regulation. 167 It was said that a loan should
always be free and treated as an act of charity. To demand more in return
than the original amount was a sin of avarice, covetousness, and cupidity
and an attack on the natural order. The iconography of many medieval
sculptures, surely more accessible and understandable to all than the
scholastic treatises, portrayed the spectacular ways in which usurers
would be tortured by Satan after their death. 168
A similar attitude was held towards trade (Chapter 8). To resell a
good for more than it was bought for was to violate natural equality. 169
Unless the good was improved through labor, the merchant was always
cheating if he demanded more than he paid for it. Augustine argued that
Christians should not be involved in trade altogether, as it is impossible to
avoid sinning when buying and selling. 170 In 1078, the papacy proclaimed
that merchants are necessarily sinners and denied them the prospect of
salvation unless they find another line of work. 171 Mercantile activity was
thus at best seen as a necessary evil, perhaps indispensable for social life,
but nevertheless a sinful and in no case legitimate practice. 172
The prejudice against interest-taking and trade can be surely better
understood when it is put in the context of a pre-growth economy (see
chapter 8) in which there was no concept of a productive use of wealth. In
static economy, the need to borrow usually arose after some temporary
hardship, such as sickness, a natural disaster, or a bad harvest. The lender,
if he demanded interest, seemed to be seeking a benefit from the suffering
of his fellow compatriots. 173
63
Usury was often defined simply as where more is asked than is

given:
The requirement for a perfect arithmetical equality in the loan contract was
clear and without exception. Equity and justice demanded that one who
lent five pounds could receive only five in return. Such an arithmetical
equality, so satisfying in its simplicity and balance, remained an ideal. 174
Today it is established that a lender can expect compensation for his

loan, because he forgoes other use of the capital which may be
productive. Aquinas explicitly denied lenders rights to compensation for
possibly lost profit, since he would then sell what had only a probable and
not definite existence, and one should not sell something which one has
not yet got. 175 The spheres of the real and the probable were strictly
divided and shouldnt be confused. 176 And one couldnt legitimately seek
reimbursement for the time one had to go without the lent amount,
because as time belongs to God, it cannot be sold. 177
It can be argued that this early scholastic thinking operated in binary
terms: either something does exist or it does not; either it brings salvation
or it is sinful; it is to be praised or forbidden. Exchange is either natural,
harmonious, and equal or it is usurious and wicked. Kaye, in his terrific
book on Medieval economic episteme, argues that overturning usury
theory would entail overthrowing the theological edifice of sin,
restitution, and penance that had been built upon it, as well as the ideal of
natural equality and justice at its core. 178 He calls it an arithmetical
model which grew out of
a sense of natural balance and divine order based on knowable points and
perfections, and it was understood to be regulated by a conscious process
of addition and subtraction toward the end of finding a knowable point of
natural equality. It was represented by the ancient model of adding and
subtracting weights to a scale in order to reach the perfect balancing point
between gain and loss. 179
64
One of the most influential and oft-repeated arguments of Aristotle

was that of the sterility of money: as a measuring medium, money is
barren and cannot breed money. It should serve as a medium of exchange
and could never be legitimately rented or sold in itself this would
violate its intrinsic nature and purpose. As we shall see, the importance of
this concept cannot be overstated.
For Aristotle, society is held together by the exchange of goods and
services. And this exchange is governed by the constant process of
equalization in the marketplace:
Money, then, acting as a measure, makes goods commensurate and equates
them; for neither would there have been association if there were not
exchange, nor exchange if there were not equality, nor equality if there
were not commensurability. 180
For it is not two doctors that associate for exchange, but a doctor and a
farmer, or in general people who are different and unequal; but these must
be equated. This is why all things that are exchanged must be somehow
comparable. 181
Kaye comments that in both Aristotelian and early scholastic

economic worldviews, this desire to establish such equality was the only
proper motive for exchange and its legitimate end. The search of equality,
for the accurate proportionality, is the search for justice. If money is the
medium through which this search takes place, it needs to be neutral.
Otherwise,
the
process
of
measurement,
commensuration,
equalization through exchange would be corrupted.
and
65
Aristotle arrives at this figure of proportionality as the

conceptualization of such exchange:
182
All things are measured by money. Let A be a house, B ten minae,

C a bed. A is half of B, if the house is worth five minae or equal to them;
the bed, C, is a tenth of B; it is plain then, how many beds are equal to a
house, viz. five. 183 This figura proportionalis was later adopted by
scholastic thinkers and often was the only figure illustrating medieval
Aristotelian manuscripts. To quote Kaye once again: Since scholastic
thinkers were every bit as concerned with the question of equality as
Aristotle, the search for underlying principles of equality became one of
the great shared themes of medieval economic and proto-scientific
thought. 184
This idea sits well with another Aristotelian/Thomistic premise
which perceives all motion in terms of a fundamental deficiency and
inadequacy of the moving object. Movement is said to be a manifestation
of a need, symptom of a deficiency, and nature realizes itself through
fulfillment of this lack. As war must be for the sake of peace, movement
is for the sake of rest and tranquility. The purpose of motion lies in its
completion, its termination. This theme seems to me one of the most
prevalent motifs of the Western culture, surfacing time after time,
infecting countless theories and practices. We will come back to this, to
show how such ideas mystify the processes of exchange, cloud the
practices of economic domination, and entice false hopes for
emancipation (Chapter 34).
Chapter 12:
In which, by acknowledging the significance of Arabic economics,
we pretend that this study is not so Eurocentric.
If thou profit by doing what is permitted,
thy deed is a jihad.
Prophet Mohammed
Today no serious historian disputes that Islamic contributions to the

culture of Medieval Europe were some of the defining elements of the
era. Certainly economic discourses were not free of such influences, and
so, to understand the developments in Western economics one has to
acknowledge and understand the impact Islamic economic theorizing had
on scholastic thinking. It may be also worth taking a step back from the
unfortunate eurocentrism of this thesis to recognize that from the
perspective of any other religion or intellectual tradition in the world, the
differences between Semitic religions are few and barely perceptible. And
from the eighth-century Umayyad conquest of Hispania to the 1492 fall
of the Emirate of Granada, large parts of the Iberian Penisula were part of
Al-Andalus. Muslim Spain in Middle-Age Western Europe was Islamic
Europe.
Recently, it has become a commonplace element of Western
chauvinist discourse on Islam to claim that it is inherently hostile to
commerce and economic progress. The issue of linking economic
prosperity to various religious ethics will be dealt with in Chapter 22, and
an alternative explanation of the differences in economic performances
across the world will be sketched in Chapter 24. For now, let us note that
the premise of the aforementioned argument is simply not true:
There has been simply no tendency for Islamic societies to grow less
quickly than others over the past half-century. This result was established
by Marcus Noland of the Peterson Institute for International Economics,
one of Washington's most respected think tanks, in a study published in
68
2003. His paper provoked a cacophony of yelps of surprise among fellow

economists but no convincing refutation. Indonesia and Malaysia, for
example, have been relatively successful. And when Noland looked at
countries with both Islamic and other religious communities, such as
Ghana a good way of isolating the specific influence of religion on
growth he found no evidence that Muslims were doing badly. If
anything, Islam appears to be good for growth. 185
Quranic verses regulating economic life, apart from sumptuary laws

proscribing consumption of wine and pork, read more like a guidebook
on business ethics than a rule of a mendicant order. 186 Certainly, there is a
strong preference for social equity. For instance, riba (usury), is defined
in Aristotelian terms as an unnatural offspring and is prohibited. Zakat, a
tax on income and property for the poor, is recommended, and rules on
inheritance
generation.
ensure
187
that
property
is
broadly
redistributed
each
Market transactions are to be monitored in order to curtail
speculation and to ensure the quality of the standards of weight and

length measures. 188 However, all things considered, when one compares
the stance on trade and commerce of the Golden Age Islam and early
feudal Christian Europe, there is little doubt that the former was more
welcoming to money making both in practice and theory. 189
And Islamic economic theory was highly sophisticated. 190 Zaid Ibn
Ali (699-738) differentiated between business credit and riba, opening
doors to the concept of productive capital. Al-Ghazali (1055-1111)
accepted the motive of self-interest and profit, and viewed the latter as a
reward for taking risks as we have seen in Chapter 8, a problematic idea
in a pre-growth economy. Al-Dimashqi (1232-1310) offered a coherent
and complete formulation of the market mechanism 191 and a price
theory, in which he distinguishes between ordinary periods in which price
is a derivative of the cost of production, and periods of scarcity or oversupply, when it is set by speculative forces. Ibn Taymiyyah (1263-1328)
carried out an analysis of market mechanism which includes an
69
investigation of regulation and deregulation, a description of the law of

supply and demand, and a discussion on price elasticities of various
goods and services. Ibn Rushdi (1126-1198), in his extensive
commentaries on Nicomachean Ethics and the Republic, analysed politics
in terms of a conflict between social classes.
When Aristotles economic theorizing was introduced to scholastic
thought, it was Arabic Aristotle, re-worked and furnished with comments
(and significant omissions) 192 by this Andalusian scholar. 193 Interestingly,
in Ibn Rushdis comments on Metaphysics, he stipulated that an objects
measuring rod has to be the smallest of its own kind, theoretically
opening doors for a marginalist attitude towards value. 194 Later this idea
played some role in scholastic debates, but its real career was six
centuries later, when a non-labor theory of value was needed that
overcome Marxist critiques of capitalism (see chapter 41).
Studying Islamic Golden Age economic thought is important for at
least two reasons. First, as we have already mentioned, it had an influence
on the evolution of Medieval economic discourse. Second, one can find
ideas and theories in Islamic economic discourse that seem very close to
modern economics, but which were rejected and appeared again only
after many centuries. Thus, studying it helps to understand that the history
of economics is not a story of a linear progress of science, nor should it
be seen as a cyclical story about a scientific truth that is time after time
discovered, established, rejected and forgotten, only to be rediscovered
again. Rather, one can see how similar economic conditions
accommodate analogous economic discourses, and how similar
discourses legitimize analogous economic systems. If one looks for truth
in economics, hostility towards usurious loans in a static economy is as
much true as is a celebration of productive capital in a growing economy.
70
Truth about economy is not something outside of economic discourse, an

objective reality it unveils. It is rather a condition produced by a
successful combination of economic discourse and economic practice.
Chapter 13:
Which puts Friedmanite monetarism in
an appropriate, medieval, context.
The ancient coins are excellent [] yet we
make no use of them and prefer those bad
copper pieces quite recently issued and so
wretchedly struck.
Aristophanes, The Frogs
One of the most heavily debated topics in economic history was the
(il)legitimacy of debasement. From the twelfth century onward, the
practice became commonplace both in Islamic and Christian Europe. The
prince or a king periodically called in all coins, proclaiming the date after
which they would lose all value as legal tender and an exchange ratio at
which they could be exchanged for the coins newly minted by
government-licensed moneychangers. 195 In France, in the period between
1337 to 1360 there were eighty-five such debasements, on average more
than three a year.
Taxation on income wasnt very effective in feudal reality, thus
rulers resorted to alternatives such as confiscation, selling state offices, or
debasing the coinage. 196 Debasement, although not without its
disadvantages, proved to be the most effective way of ensuring financial
liquidity, often providing over half of the income for the authorities. In
critiques of debasement, negative macro-economic and social effects
were frequently attributed to the monetary variable, for example
Copernicus wrote that:
It cannot be contested that the countries which use good coinage excel
[their] manufactures, have the best laborers and have everything in
abundance.
On the contrary, in States that use debased coinage, cowardice, sloth and
indolence reign; manufactures and the cultivation of the spirit are
abandoned, and the rankest poverty prevails. 197
72
And although today this argument is generally presumed to be

correct, it should be noted that historical evidence does not support such
unequivocal disapproval of debasement. 198 It is more accurate to argue
that this policy had a wide range of short and long-term effects, some of
which harmed the interests of the moneyed classes. Thus, one can find
various attempts to delegitimize the practice both in Islamic and Christian
monetary discourse. In Islamic doctrines, debasement was seen as both an
individual sin and a social fraud. Individually, it was a transgression
against a value system that was based on the intrinsic (i.e., imposed by
God) value of gold and silver. 199 Socially, it was an abuse of the
authorities who were supposed to foster monetary stability to ensure a
predictable business environment. Debasing coinage was counterfeiting
money, a misuse of political power, comparable to bribery and
corruption.
On the other hand, the political classes argued in Aristotelian fashion
that money, as a medium of exchange, is only a conventional standard
and has no intrinsic value. Along these lines a concept of valor impositus
was developed, which put the right to change the convention and impose
value on money in the hands of the prince or the king. 200
In Medieval monetary discourse, the interests of the moneyed classes
were defended most notably by John Buridan (1295-1358), Nicholas
Oresme (1300-1383), and Gabriel Biel (1415-1495). Their work was
largely derivative from earlier Arabic doctrines 201 but certainly played a
significant role in Christian Europe. Oresme, bishop of Lisieux and
advisor to king Charles V of France, in his treatise On the Origin, Nature,
Law and Alterations of Money denounced debasement as worse than
usury, an unlawful hidden tax inflicted by a sovereign upon his
subjects. 202 Tractatus de origine monetarum, translated into French (at
73
that time an exceptional measure that was taken explicitly to popularize

its thesis), became the most influential work on the subject until the
sixteenth century. 203
At a time when around 70 per cent of the fiscs income came from
debasement, 204 Oresme argued that the amount of the princes profit is
necessarily that of the communitys loss. 205 Money is an instrument of
mediation between man and the divine order 206 and belongs to the
community and to individuals 207 and not the king. The sovereign can
alter the value of money, and debase it in special cases, for instance,
when a war is to be financed, but it is for the community to decide what
constitutes an emergency, and the sovereign should act only as its
representative. 208
In the historiography of economic ideas, there is a tendency to
disregard such discussions as non-economic. As the issue of debasement
seems to many to have been settled long ago, medieval arguments for and
against it, with their references to divine order and Aristotle, are
discounted as nave and unscientific. This is clearly wrong. It makes no
more sense than arguing that medieval wars were not wars at all because
no one used jet fighters and machine guns back then. Of course, the
acceptable frames of reference change over time, and ways of
establishing legitimacy change accordingly. However, the need for this
legitimization of economic practices remains the same. If we rise above
superficial differences between debates on medieval debasement and
modern monetary policy, it may happen that we will see them as not so
different. Davies makes a good point, when he talks about the
quality/quantity pendulum:
74

[in the history of money] there is an unceasing conflict between the
interests of debtors, who seek to enlarge the quantity of money and who
seek busily to find acceptable substitutes, and the interests of creditors,
who seek to maintain or increase the value of money by limiting its supply,
by refusing substitutes or accepting them with great reluctance, and
generally trying in all sorts of ways to safeguard the quality of money. []
For long periods of history the most important net debtor has been the
single monarch or the composite state, each possessed with a varying
degree of sovereign power to determine the supply of money, though never
with complete control over the acceptability of money substitutes. Not
surprisingly when the state becomes a net debtor the pendulum tends to
widen its oscillations. An indebted monarch or government is usually able
not only to reduce the real burden of its own debt, but can as a bonus
consciously or unconsciously court popularity with the indebted masses by
allowing the net pressures of indebtedness to increase the supply of money
or the acceptance of substitutes and so lift some of the heavy burden of
debt from the shoulders of the poor masses and from many up-andcoming entrepreneurs. There is therefore a secular tendency for money to
depreciate in value, a tendency halted or partially reversed whenever net
creditors, such as large landowners, rich moneylenders and wellestablished bankers, are in the ascendancy or can bring their usually
powerful influence to bear upon governments.[] [This is why] theories
of money, despite being so confidently held at one time, tend to change so
drastically and diametrically (and therefore so puzzlingly to the
uninitiated) to an equally accepted but opposite theory. 209
Thus, for instance, modern debates between Keynesians or, more

accurately, various supporters of quantitative easing as a way of dealing
with the crises of 2008 and monetarists, who still claim that increase in
money supply is tantamount to inflation and silent theft, can be seen as
another instance of Daviess quality/quantity pendulum. However, what
should be remembered is the fact that it is not a matter of a tug-of-war
between creditors and debtors. This conflict is always mediated through
concrete institutional arrangements of the particular debt regime, and at
times the pendulums swing in the quantity direction may actually
serve the interests of the creditors. It is too soon to say anything definite
yet, but this seems to be precisely the case with recent quantitative easing
policies which may have supported economic activity 210 and
contributed
conditions,
towards
211
broad-based
improvement
75
in
financial
but evidence suggests that due to chronic structural
weaknesses and perverse regulatory incentives prevailing in the banking

system, this economic activity concentrated mainly in the financial
sector, increasing speculative pressures and destabilizing peripheral
markets. Thus, fresh money translated into a new house price,
commodities or stock market boom rather than output, investment and
employment. 212
In any case, the theological/metaphysical frame of reference to which
medieval scholars often appealed in these debates on debasement
shouldnt confuse us. Whatever the language in which these issues were
expressed, the stake has always been the same earthly economic power.
And the conflicts over debasement can be seen as exemplification of the
thesis that money is an institution (Chapter 5), and that the most
fundamental economic struggle is not over who gets how many banknotes
or coins, but over the characteristics of the structure that makes these bits
of paper and metal meaningful.
Chapter 14:
In which a transition from feudal
to capitalist Europe is sketched.
Ora et labora
Benedictine motto.
The year one thousand, the twelfth century, the Black Death, the
years 1500, 1650, 1800. These are only a handful of the answers to the
question of the birth of capitalism in Europe. The exact date of the
rupture between feudal and capitalist economy is a subject of many
heated debates. What was decisive? The improvement of farming
techniques (ca. 1000)? The creation of lay legal framework for economy
(12th century)? The demographical revolution that ended serfdom in
Western Europe (the Black Death)? The emergence of the capitalist
world-system (ca. 1500)? The first capitalist nation-states (ca. 1650)? Or
maybe the Industrial Revolution (ca. 1800)?
Arguably, such discussions are futile. It can be said that such
reasoning can be divided into two categories: one that seeks to divide
reality into categories, and one that does not. The first tries to label
historical periods, phenomena, and ideas, to delineate between them and
organize them into alphabetical or chronological order. Like Borges
Celestial Emporium of Benevolent Knowledge, it divides animals into
stray dogs, suckling pigs, embalmed ones, those that belong to the
emperor, those that are trained, fabulous ones, those that, at a distance,
resemble flies, et cetera. The second style of thinking is perhaps a less
ambitious one. It doesnt promise an encyclopedic, spotless inventory of
reality. It humbly accepts that history develops along multiple
contradictory vectors in a heterogeneous and often chaotic way. It sees
that at any given time a number of autonomous power structures exist,
some of them at odds with each other, others indifferent or in symbiotic
78
relationships. Its aim is not chopping social reality into pieces and
mummifying them in catalogues, but exploring the dynamic interplays
between various social actors, practices, institutions, and discourses.
When one puts this second mode of thinking to use, the search for
points of rupture rarely looks like anything other than a farce. The
proclamation of a radical break is usually nothing other than a discursive
device employed to promote some political agenda. I feel no need to take
part in such a hunt, but in Chapter 36 we will see how this mechanism
worked in the process of crowning Adam Smith as the father of
economics.
For centuries, feudal structures coexisted with capitalist institutions,
and the distribution of power in Medieval and modern Europe was
influenced by both. And obviously, the situation varied geographically.
For instance, in England serfdom started to radically decline already in
the fourteenth century, while in Poland serfdom was formally abolished
half a thousand years later, and latifundian structures were only truly
closed down after the Second World War, when they were turned into
socialist state agricultural farms.
In the High and Late Medieval period, one can see several significant
shifts in economic structures. A number of agricultural improvements had
been spreading, such as three-field rotation, using legumes as a nitrogen
source, or the horse-collar and a deep plough, all of them increasing
productivity and allowing for a revival of towns, which in turn enabled
the flourishing of new crafts, trade, and intellectual life. 213 Many
inventions, both industrial and cultural, were imported from the Arab
countries via the Iberian peninsula and the Italian maritime city-states.
From the eleventh to the thirteenth century, scholars at Bologna
University worked on a new lay legal framework that envisioned market
processes as an objective, morally neutral, medium through which
79
autonomous parties are free to strike whatever deals they like. 214 The
monetary economy was advancing, accompanying and at times
supplanting trade in kind. 215 Black Death, the most deadly biological
weapon used to date (it entered Europe during the Mongol siege of Caffa,
when infected bodies were catapulted into the city), caused acute
shortages of labor by killing around half of the European population. This
strengthened the bargaining position of laborers vis--vis the landcontrolling class, adding new pressures to dispense with serfdom and turn
from extensive, labor-consuming agriculture to intensive, capitalconsuming agriculture.
It was still generally a feudal economy, and due to all these
developments a prosperous one, but it was also a rapidly changing
economy. And no one accepted these changes passively. Federici shows
that:
Contrary to the schoolbook portrait of feudal society as a static world, in
which each estate accepted its designated place in the social order, the
picture that emerges from a study of the feudal manor is rather that of
relentless class struggle. As the records of the English manorial courts
indicate, the medieval village was the theater of daily warfare. At times,
this reached moments of great tension, when the villagers killed the bailiff
or attacked their lord's castle. Most frequently, however, it consisted of an
endless litigation, by which the serfs tried to limit the abuses of the lords,
fix their burdens, and reduce the many tributes which they owed them in
exchange for the use of the land [] Thus, in 13th century England, both on
the lay and ecclesiastical estates, male peasants were frequently fined for
claiming that they were not serfs but free men, a challenge that could result
in a bitter litigation. 216
Although in scholastic economic deliberations the issue of just prices

overshadowed the just wage theory (perhaps also because scholastics
were not usually wage-earners 217), in the aftermath of the Black Death
the landowning classes repeatedly tried to set the wage levels by passing
legal regulations that appealed to the right reason. 218
80
In France and in Aragon, ordinances condemned the outrageous wages

being demanded by laborers. The English Ordinance of Labourers and the
Statute of Labourers of 1349 and 1351, respectively, tried to impose a
wage freeze and to restrict geographical mobility. 219 Also new sumptuary
laws (see Chapter 18) were passed to ensure that social hierarchies remain
evident.
Monetary exchanges were still held under suspicion, and money
itself was often seen as a disturbing and distorting element, an
overturner of the social order, an instrument of chaos. 220 Markets were
quite rigorously regulated: Both princes and city councils continued to
regulate (often in minute detail) the quality, quantity, and, at times, the
prices of goods in exchange. 221 Especially in times of emergencies such
as a famine, prices were to be controlled, for example, by Philip the Fair
in 1304, Edward II in 1315, or Edward III in 1349. These regulations
were rarely successful, especially when passed by central authorities and
not civic councils, but the paternalist discourse (Chapter 10) demanded
that they were laid down. Kaye argues that the failure of these laws was
one of the bases for the recognition of the marketplace as a autonomous
system, not easily bent to external control and direction. 222
The Catholic Church, the biggest benefactor of the feudal system, at
first responded to these developments by stiffening its stance on
commerce and money making. Throughout the twelfth and thirteenth
century, the dogma became more dogmatic, 223 and the Church began to
use the charge of heresy to attack all forms of political insubordination, as
in 1234 when the Bishop of Bremen called for a crusade against his
peasant tenants who refused to pay the tithes. 224 Moralists warned about
the great variety of new ways by which usury cloaked itself, 225 and in
1179 usury was made a mortal sin, and usurers were excommunicated
and denied Christian burial. 226
81
The papacy tried to stop the wave of change, while a number a

number of new religious movements thrived on it. Probably the most
notable were the Cathars, a popular movement that flourished from the
twelfth to the thirteenth century in northern Italy and southern France.
Influenced by Persian Gnosticism and Islamic commerce-friendly
doctrines, rooted in the most economically developed regions of Europe
at the time, Catharism explicitly challenged the papacy and the feudal
order in general:
Against the strict dogma of the ecclesiastical authorities, prohibiting usury
and financial dealings in general, the Cathars espoused a doctrine more in
line with the growing commercialization of economic life. In their view
the social novelty of the emerging commercial and democratic society was
morally better than the exploitation inherent in the feudal structure. []
With a logic and propaganda understandable by the landless peasants and
the rural artisans, they railed against the feudal lords who profited from the
extraction of economic surplus under the form of seigneurial rent. In their
eyes the feudal lords were the most shameless and rapacious usurers of
all. 227
Unsurprisingly, Catharism was proclaimed the Church of Satan

and a crusade was organized to crush the movement. During this very
crusade, the infamous Massacre at Bziers occurred during which, in the
words of the papal legate in command of the crusading army, it spared
no one, irrespective of rank, sex or age, and put to the sword almost
20,000 people. After this great slaughter the whole city was despoiled and
burnt. 228 Some years after the massacre, it was reported that the
captives slaughter was commenced by an order: kill them all, God will
know His own! Although there are serious doubts whether the papal
abbot really said that, the phrase took root and has been repeatedly used
as a proverb in recent wars in Vietnam and during the so-called War on
Terror.
Chapter 15:
Which shows how the market became a space of
spontaneous order and how exchange
ceased to be arithmetical.
Grates Domine
Historians who romanticize the past often imagine the medieval

world to be innocent of economic calculations, a place occupied by
religious commandments and traditional customs. An oft-repeated
example of this alleged ignorance is the scholastic concept of iustum
pretium the just price. It is thus usually presented as a sister to usury
theory, another manifestation of the medieval desire to control economic
activity in the name of religious ideals and social equilibrium. 229 This
may have been to some extent true in the Early Middle Ages, when
market simply didnt play a big role in the distribution of wealth, but in
the High and Late Middle Ages, this image of a nave, adolescent
medieval people turns out to be very nave itself when confronted with
historical sources. As Kaye observes, in the majority of texts on this
question from the thirteenth to fourteenth centuries the just price was
simply the current market price. 230 Medieval scholars were involved on
a daily basis in the administrative tasks of their universities and parishes,
so when the new marketplace reality began to emerge, they were the first
to notice. 231 And when the new moneyed classes evolved into a
considerable political power, several scholars lent a sympathetic ear to
their concerns. 232
As we have noticed, at that time the major intellectual frame of
reference was Aristotle. For this Athenian philosopher, economic
exchange was a self-ordering process, a quasi-mathematical product of a
geometrical equalization (see Chapter 11) in which individuals could
84
compare usefulness of exchanged goods. This trope was picked up by

Thomas Aquinas tutor, Albertus Magnus, who then slightly modified the
argument and said that it was not utility for the individual, but common
utility that determines a goods value. Thus, marketplace was presented
as a sphere where the whole community can evaluate the quality or
usefulness of any good or service. 233
Market price came to be seen as an aggregate product the concrete (if
ever-changing) numerical representation of a complex, supra-personal
system. As the geometric figura of exchange was de-subjectified, it came
to represent the marketplace as a kind of mechanism of equalization, in
which the cross-conjunction of common estimation and common need
automatically determined market prices. 234
Augustine already remarked that in the marketplace what is

measured is not an objects essential value but its value according to
human use. This is why bread costs more than a mouse, although the
latter is certainly more perfect in the eyes of God. 235 Or, as Aquinas said:
In exchange, things are not valued according to the dignity of their natures.
If that were so, a mouse, which possesses sensitive life, would be priced
higher than a pearl, which is inanimate. But the price of things is
determined according to how much men need them because of their
usefulness. 236
Following this line of reasoning, the Languedocian Franciscan Pierre

Olivi (1248 1298) offered a theory of supply and demand, in which he
explained that value is weighted up when individuals evaluate goods
and services on the basis of needs, scarcity, and taste. 237 Baeck noted that
to explain the differences between prices across markets and time Olivi
even introduced an embryo of subjective marginal calculus. 238
Earlier thirteenth century theologians stated that it is a shared
responsibility of both buyer and seller to achieve a knowable just price.
But later on, not only lay lawyers claimed that things are worth as much
as they sell for, 239 but also some canon lawyers came to similar
85
conclusions. They started to treat just price as a price which is naturally

produced by a supra-personal process of common estimation. It became a
result of a dynamic and impersonal market mechanism in which needs
and interests of both buyers and sellers balanced themselves out. 240 As
Olivi argued:
The judgment of the value of a thing in exchange seldom or never can be
made except through conjecture or probable opinion, and so not precisely,
or as if understood and measured by one indivisible point, but rather, as a
fitting latitude [] within which the diverse judgments of men will differ
in estimation. And such a latitude will therefore contain various degrees
and little certainty, and much ambiguity attached to the estimates, with
some greater and some less. 241
The same point was made by Aquinas when he wrote that: The just
price of things sometimes is not precisely determined but rather consists
in a certain estimate. 242 These were truly extraordinary ideas: estimation
replaced knowing; probability took the place of certainty. Even qualities
and this was a serious departure from Aristotle could be quantified and
turned into continua with ranges and latitudes. 243 Oresme characterized
this new worldview as a geometrical one and mocked the opposing
arithmetical (Chapter 11) vision for her short-sighted concern that God
conform to her vision of perfection 244 manifest, for instance, in a belief
that God would dislike geometry for the reason that it posits irrational
numbers.
For Olivi and Buridan, exchange is caused by individual desire to get
as much from the other as possible. It is no longer motivated by the
parties wish to achieve balance and equity (see Chapter 11). Equality
emerges as a by-product of the market mechanism and ceases to be its
guiding principle. 245 Money, previously seen as a dangerous subversive
force, was now appreciated as instrumental in this process of
equalization. 246 Scholastics thus started to calculate the monetary value of
86
everything and anything. Now, even the value of a simple grates

Domine (thank you, sir) could be estimated in monetary terms (it was
said to be worth ten pounds). 247
Seen through this lens, market was autonomous and worked freely
from any need for external ordering or intervention. The justice it
produced was no longer a fairness of a judge who balances scales but a
justice of an impersonal mechanism. 248 This was probably the first
acceptance of the existence of an order which didnt need to be ordered.
Let us remember that for Aquinas the equation of order with ordering
intelligence was so undeniable that it provided basis for one of his proofs
of Gods existence. 249 Yet, the marketplace became a completely selfordering system. The movement of celestial spheres still required active
intelligence, but letting people bargain freely was now seen to
automatically produce fair results. Conflicting interests, mediated through
the market, were necessarily reconciled. Intelligent order became
harmonious discord.
Chapter 16:
In which it is shown how money became capital.
Compound interest is the eighth wonder of
the world. He who understands it, earns it.
He who doesn't, pays it.
Albert Einstein
The new geometrical vision of the world allowed for a break in the
conceptualization of money. In the thirteenth century, the arithmetic
theory of usury crumbled. Enrico de Susa (1195-1271), Raymond of
Peafort (1175-1275), and above all, Pierre Olivi proposed that charging
interest is not usurious when the loan is commercial, i.e., when the money
is used productively. Advancing the money to finance trade or other
commercial enterprises involves an element of risk that should be
appreciated and reimbursed. Moreover, the lender forgoes other
potentially productive uses of money, so he is entitled to lucrum cessans,
compensation for the lost profit. 250 These were revolutionary claims.
They dispensed with the concept of economy as a zero sum game. They
valued time as an economic resource and they accepted that money can
be used productively. Money ceased to be a barren medium of exchange,
as the exchange itself ceased to be perceived as barren. This new
productive form of money was introduced by Olivi under a new term,
namely capitale. 251 At first, the legitimacy (or even the existence) of
this capitale seemed by no means to be self-evident or natural. It took a
long and painful struggle to establish it as the new social paradigm.
The older moral imperative to share occasional surplus with ones
community through festivities and almsgiving wasnt nave or idealistic
as we have seen, in pre-growth environment it made sense and served
important social functions (Chapter 8). In the incipient commercial hubs
88
of the Late Middle Ages, surplus came to be employed to generate more

surplus. The payment of interest could be legitimate, in Olivis words,
because capital, in itself, i.e. insofar as it is profitable and destined to
trading operations, contains a certain profitable nature in addition to its
nature as the same amount of mere money not destined to trading
operations. 252 Olivi argued that the probability of profit has real
existence and value in itself merchants measure this value on a daily
basis and there is no reason to call this practice sinful or illicit. 253 This
constituted a major shift from earlier Thomistic discourse on time, profit,
and the division between the real and the merely probable (see Chapter
11).
These theological developments went hand in hand with new lay
legal framework which made room for charging interest. Basically, three
tactics can be outlined. First, the Italian jurists admitted that divine law
forbids interest but declared that natural law allows it because it
recognizes mens weakness. 254 Second, a harm reduction approach was
proposed without going into theological or moral disputes, it simply
stated that from a pragmatic point of view, the sovereign should not waste
his efforts on an endless struggle to eliminate usury, but rather limit
himself to keeping the levels of interest within reasonable bounds. 255 The
third way was to present no theoretical discussion whatsoever, but to
simply devise various legal instruments and financial derivatives aimed at
disguising commercial loans as legitimate deals. Interestingly, the
legitimacy of the first tactic was in part accepted by Aquinas, who made a
limited allowance for charging interest on the grounds that if all sins
were forbidden many useful things would be prevented. 256 (More on the
place of theodicy in political economy in chapter 23.)
89
However, these new practices and ideas were dangerous for the
feudal order and the Churchs position in it. They were disturbing on a
philosophical level and agitating in terms of power struggles. Although
Olivi overtly opposed the Cathars as a heretic sect, his own branch of the
Franciscan order, the Spirituals, held a quite similar stance on economy: it
was keen on commercial classes and critical of the Churchs
accumulation of wealth. Thus, in 1296 the Spirituals were declared to be
a heretical movement and persecuted. Two years later, on Olivis death,
his books were burnt and the friars were forbidden to keep them. His
tomb was destroyed and his remains were scattered. 257 His ideas were
forgotten, and influenced only a few Italian Franciscans [] Duns Scotus
soon restated the traditional definition of usury. 258 The arguments in
favor of the right to lend at interest were declared heretic by Clement V in
1311. The concept of capitale re-emerged in the fifteenth century, when
other Franciscans, Bernardino of Siena and Antonino, the bishop of
Florence, copied Olivis arguments without acknowledging the source. 259
The Vaticans persecution of Olivi was so successful that it was only
recently that he was recognized as the silent partner of these two scholars.
And to this day, many of his works remain unpublished and still wait to
be studied. 260
Only more than two centuries after Olivis death, in 1515, pope Leo
X issued the Inter multiplices bull, in which he sanctioned the Monti di
pieta, a sort of ecclesiastical pawn shop, which loaned at interest. The
practice gained universal sanction, insomuch as it was necessary to cover
the expenses of montes pietatis and to indemnify them against loss. Usury
was now redefined, to use Leos phrasing, as a profit that is acquired
without labour, cost or risk. 261 Thirty years later, in 1545, Henry VIII
legalized payment of interest on all loans as long as the interest didnt
90
exceed 10 percent per annum. 262 But the issue of usury by no means
disappeared from the intellectual horizon. Even today there are still
heated debates on the subject, and in many countries regulations are put
in place to define usurious and thus illegitimate interest rates. But from
the sixteenth century, the focal point moved from questioning the
legitimacy of any interest at all to merely defining its acceptable rate.
While the legitimation of the willingness to take risks as a source of
income (in contrast to perceiving it as dangerous vice [Chapter 8])
provided advantages to the moneyed classes, the most significant change
came with loosening the doctrine on the sterility of money. Once the
medium of exchange didnt have to be neutral, its owners could start to
derive profits from all flows in the economy. This was, if not a
fundament, then certainly an indispensible counterpart of capitalism: the
legitimization of a systemic arrangement for smooth bolstering of
economic power by means of economic power.
Chapter 17:
In which we see that the Italian Renaissance didnt give rebirth to
humanity; nevertheless it left offspring
in the form of modern bookkeeping.
And dont tell me that one must put the
common good before ones own interests!
Poggio Bracciolini
In his nineteenth century essay on The Civilization of the

Renaissance in Italy, the Swiss historian Jacob Burckhardt envisioned the
Italian Reinassance as the great pivotal point in the history of humanity.
He portrayed it as a long awaited spring that came after the long and
harsh winter of the middle ages. Mankind suddenly woke up and begun to
liberate itself from the chains of custom, superstition, and religious
dogma. The potential of the individual was finally appreciated and set
free to flourish. Contemporary cultural genres such as the portrait, the
diary, and autobiography testify to this new perception of individuality as
the ego gloryfing its own being. 263 Although this story is still
commonplace in popular culture and schoolbooks, few serious historians
would today back it up. Porter notes that the tale has the ring of myth,
even an air of soap-box rhetoric, especially when recounted as an epic in
which the heroic self is portrayed as surmounting ridge after ridge until it
reaches its peak of perfection in our own times. 264 Burke states the
sociological problem: whose self? Burckhardts examples came from a
tiny minority of Italians, generally upper-class males. 265 Martin points to
the conservative and nostalgic message of this thesis:
[The individual] often meant someone accomplished and well-rounded: an
Alberti or a Leonardo. Burckhardts approach to the development of
individualism located it in the stratosphere of elite culture. He deplored
what he viewed as the blinder and potentially demagogic forces of mass
democratization and industrialization. Individual freedom for the masses,
he argued, would ultimately be no freedom at all. 266
92
So a narrative about a radical break signified, as usual, more a

political intervention than an attempt to really analyze the Italian
renaissance society. Unsurprisingly, it has been shown that Burckhardt
overstated the contrast between the Renaissance and the Middle Ages. 267
While we must abandon the idea that Renaissance humanism really meant
a renaissance of humanism, several tropes of the era are undoubtedly still
worth exploring.
We have already noted that the marketplace had been previously seen
either as a place where independent individuals engage in series of
exchanges or a sphere where the communal equalization of goods and
services takes place. In Renaissance discourses on economy, the latter
approach certainly dominated. The individual exchanger would be seen
less and less as involved in a personal relationship but as confronting a
system, a set of economic laws. 268 Economy came to be perceived as an
extensive structure which, in order to be apprehended, needed to be
studied from, to use Bernardo Davanzatis (1529-1606) words, a very
high peak. 269 Interestingly, at the turn of the sixteenth century, a new
kind of landscape also gains in popularity. In the major commercial hubs
(e.g., Florence, 1470; Venice, 1500; Anwerp 1515), detailed birds-eye
landscapes of whole cities were drawn. Compare this 1500 chorography
of Venice with a typical medieval, much more schematic, representation
of Constantinople:
93
94
This is, of course, not meant to prove that new economic concepts
influenced these artistic representations of cities. Rather, both could be
seen as two expressions of the same experience of living in an
increasingly complex and interconnected urban reality.
To the extent that Renaissance culture promoted individualism, it
promoted self-interest. In 1428-9 Poggio Bracciolini wrote On Avarice, in
which he vigorously defended the titular trait. Who in fact would do
anything unless he hoped to profit from it? 270 If it wasnt for avarice, all
the magnificence of cities would be removed, all culture and ornament
would be destroyed, no temples would be built, no colonnades, no
palaces, all arts would cease, and then confusion of our lives and of the
republic would follow. 271 For indeed we undertake everything for
money, and we are all moved by the desire for gain, 272 and dont tell
me that one must put the common good before ones own interests [...]
[for] I have met no-one who could afford to do so. 273 It has been argued
95
that it was the first real pamphlet in favour of monetary economy, 274 or
at least the first since limited defenses of earning were put forward by the
Epicureans and the Sophists. 275
Already in the fourteenth century, Dantes friend Bartolus praised the
merchant classes and presented trade and commerce as the foundation of
secular political power. As Wood argues, a prosperous merchant class
came to be understood as the force of political progress, the two became
linked, underpinning Italian humanism. 276 The fullest expression of this
sentiment can be found in Albertis Libri della famiglia Books of the
Family. Written between 1433 and 1441, they presented profit and trade
not only as a legitimate, but also an indispensible part of civic life,
deserving of recognition and respect. 277 Thus, in 1458 Cotrugli writes
about the dignity of merchants and argues that the advancement, the
comfort, the health of republics to a large extent proceed from
merchants. 278 Neither kings nor princes nor any [other] rank of men
enjoy as much reputation or credit as a good merchant. 279 This is light
years from the feudal disapproval of trade and profit (see Chapter 11).
When Lorenzo Valla (1407-1457) declared that it is natural to desire
more than is needed, 280 or when Giordano Bruno went against the
nostalgic Golden Age myth by arguing that in the past man was no noble
savage but rather a brute beast, 281 they proposed a fundamentally new
vision of the world.
Around this time, several novelties in the perception of time appear.
If for Xenophon its almost impossible for a human being to exercise
forethought 282 and for medieval scholastics time remained the domain of
God, now prophecies of the inevitable were replaced by prognoses of the
possible. The future now appeared unstable, open to every possibility,
subject to human manipulation [] There was a shift from a passive
acceptance of change, for better or worse, to a will to make changes, from
96
determinism to voluntarism. 283 Of course this new, secular mode didnt

supplant the old, millenarian one, but from now on they both coexisted,
forming various constellations. 284 But the feelings of contingency and the
need to plan for the future were qualitatively new. So was the concept
that that the moneyed classes live in a different time dimension, in which
time could be evaluated in monetary terms and sold with licit gain. 285
One can see that I sometimes use terms such as arithmetic and
geometry in this book as broad categories depicting opposing ways of
thinking. These categories are not my invention. In the Late Middle Ages
and Renaissance, they were used in debates on topics from metaphysics
to celestial motion and to justice. We have already noted Oresmes use of
them. Another instance was a fierce thirteenth-century debate between
Henry of Ghent and Godfrey of Fontaines. 286 In Maifreda we can find
another interesting example:
A horse is really worth 100 scudi; one person values it at 1000
scudi, another at 10 scudi: the question is, which of them made the best
evaluation and which was the least extravagant? This mathematical
point was posed as late as 1627, and yet answers varied. To many, the
obvious answer was that 10 scudi was closer to the real price because,
after all, it is only 90 scudi from it. The problem interested Galileo, who
argued that the exaggeration cannot be measured by its absolute distance
from the just price [] [which would be] founded on a certain political
decree that wants commutative justice to proceed in adjusting
inequalities, with arithmetical proportions, but must be measured using
geometric proportions. Only then, he argued, can one arrive at a proper
conclusion that both estimates are equally of the point, one inflated the
price ten times, while the other understated it by the same proportion. 287
97
A significant factor in the development of new commercial

mentalities was the proliferation of a new approach to numbers. In 1202,
Leonardo Fibonacci introduced to the Latin West the numeration and
calculation methods he had learnt from his teachers in Algier, where his
merchant father took Leonardo precisely in order to acquaint him with
superior Arabic mathematics. 288 The Indo-Arabic numeration coexisted
for a long time with Roman numerals. It can be argued that it was only
with the invention and spread of double-entry bookkeeping that it
supplanted the Latin numeric system. The first Italian book on the new
accounting methods was published in Venice in 1494, but it was probably
in use for over a century prior to that. 289 Not much is known about the
origins of double-entry bookkeeping, but its subsequent great career is
unquestioned:
The double-entry system was a great deal more than a simple collection of
information concerning income and expenses, details of transactions and
debt, which might have been easily gathered into a single-entry volume as
well. It represented a successful attempt to offer a complete and systematic
analysis of transactions in a single document, making it possible to
produce simultaneous, synchronized calculations of profit and loss, capital
investment and the details of the business's financial situation. For these
reasons, economic historians, from Weber, Sombart and Schumpeter, have
seen the basis and stimulus for the birth of the capitalistic rationale in
scientific accounting. 290
Accounting was slowly becoming a lingua franca of the emerging

capitalist world economy. And if it may be an exaggeration to say, like
Sombart did, that capitalism without double-entry bookkeeping is simply
unconceivable, and it is certainly incorrect to claim that with this way
of thinking the concept of capital is first created, 291 accounting
undoubtedly very soon started to symbolize, for better or worse, a new
calculating rationality. Already Petrarch longed to abandon the cities to
merchants, the lawyers, the money-lenders [] let them be: they are not
our race. Let the rich count their coins, helping themselves with
98
arithmetic: we shall count our riches without the need for study or
science. 292 On the other hand, Bacon and Newton modelled their
notebooks after merchants waste books, attracted by their elegance and
specificity. 293
The distinctness of capitalist bookkeeping came to light quite
recently. After 1989, when socialist enterprises were being privatized by
foreign investors, even though they all had books of account, the
investors soon noticed that they were unauditable. In socialist countries,
accounting served another purpose it was not a language in which
changes in actual resources were recorded, but a language through which
state planners and local directors negotiated their plan. 294
Chapter 18:
In which historical, static patterns of consumption are explained,
and then their breakdown, as well as legal attempts to defend them
are presented.
Increase of appetite had grown
By what it fed on
Shakespeare, Hamlet
No one ever yet possessed so much silver as to want no more,

wrote Xenophon. 295 The avarice of mankind is insatiable, men always
want more and more without end, added Aristotle. 296 Avidity alone, of
acquiring goods and possessions for ourselves and our nearest friends, is
insatiable, perpetual, universal, confirmed Hume. 297 Kant added that it
is not in mans nature to be contented with what he already possesses and
uses and settle for it. 298 This clich has been repeated over and over
again, and if it is relatively easy to find arguments that say that man
should limit their wants, few will say that they are naturally limited.
Rather, the common sense is that in the human nature lies, that the more
it has, the more it wants. 299
I find this discussion entirely irrelevant. The philosophical debates
over human nature have a long tradition, and I dont think it is
worthwhile to add to it another voice. Let us thus leave aside human
nature and look at the real historical consumption patterns. Interestingly,
when we do that, the historical data provides us with an entirely different
picture of human appetites than the one derived from philosophical and
economic treaties.
Even if we dont fully accept Campbells bold argument that the

idea that human beings somehow have a natural tendency to display
100
insatiable wanting does not derive any support from history or

anthropology, 300 there seems to be vast historical evidence suggesting
that in societies that werent WEIRD (Western, Educated, Industrialized,
Rich, and Democratic), consumption patterns maintained a customary,
finite and static rather than endless or dynamic notion of wants. 301
European consumers didnt automatically use surplus income to satisfy
new wants and change consumption patterns. Hoyt and Nair have shown
that when the introduction of cash crops provided peasants with extra
wealth, at first they were most likely to pay others to do their own work,
translating the new wealth into leisure and not increased consumption of
goods or services. 302
Several times in the course of history the same consumption patterns
and the same tastes have been perpetuated unchanged. When one inspects
the history of fashion the symbol of the instability of modern
consumption, one can find that in ancient Egypt, the same type of tunicdress was maintained for nearly fifteen centuries with almost absolute
consistency. Greek peplos, a womens garment, hadnt really evolved
from the origins of Greek society to the sixth century B.C.E. A similar
stability can be found in Rome as well as in China, India, and other premodern Asian civilizations, where alterations in clothing were rather an
exception than the rule. 303
It seems that it was only in the mid-fourteenth century that
throughout Western Europe a new attitude towards fashion appeared. Its
protean character was quickly noticed by a number of authors. Its most
notable critic was Montaigne, who denounced it as artificial and
theatrical, warned that we change so suddenly and promptly that the
inventiveness of all the tailors in the world could never furnish us with
enough novelties, 304 and called upon his readers to return to their own
natures. 305 In this way, the fickleness of fashion came to be presented in
101
opposition to internal true identities. Stavrakakis argues that to this day,

this is the dominant type of critique of consumerism: to see the culture of
consumption in terms of a false consciousness that is produced by
advertising to stimulate false and artificial needs. 306
On the other hand, there was also praise of the new consumerism.
Particularly, the Italian humanists extolled fashion and in general the
needs of the mind, that is, the desire for things beyond the necessary.
These needs were infinite and so had a civilizing influence on man. 307
An English pamphlet from this time portrays the streets of London in this
way:
And now from the Tower to Westminster along, every street is full of
[luxuries], and their shops glisten and shine of glasses, painted cruses, gay
daggers, etc., that is able to make any temperate man to gaze on them and
to buy some-what, though it serve no purpose necessary. 308
The necessary somehow had to be recognized from the purposeless,

so a new notion of taste appeared and in the first decades of the
sixteenth century, new books on the issues of manners and etiquette were
published. 309 Man are not born, but fashioned, wrote Erasmus in one of
them.
The temporal and geographical correlation between these new
patterns of consumption and new types of social structures is of course
not accidental. An important part of the transformation from medieval to
early modern society was a change of the nature of social stratification.
Slowly, step by step, social differentiation was gaining a dynamic
character, ceasing to be ruled by the principle of hereditary nobility.
Consumption filled this void, becoming a new factor in the process of
class structuring, a factor that many would argue 310 is today an
integral, if not fundamental, part of this process. Modern consumption
became both a matrix for class cohesion and a vehicle for individual
102
differentiation. 311 On the one hand, displaying certain consumption

patterns became a part of establishing ones class affiliation, while on the
other, vague and transient lines of demarcation between social classes
encouraged emulative consumption. 312 In this way consumption became
the means through which social status and reputability can be achieved.
The frivolity of fashion scorned by moralists is absolutely essential to
its functioning. If its purpose is to evaluate not the past, but the present
position in the society, prevailing tastes have to change as often as
possible. As Debord writes:
The fashions of the upper stratum of society are never identical with those
of the lower; in fact they are abandoned by the former as soon as the latter
prepares to appropriate them [] There must be novelty, but it must be
novelty that is recognized as a mark of fashion and that is at least
potentially capable of being imitated and purchased. 313
The feudal elites didnt passively yield to this new paradigm of social
stratification. On the contrary, they tried to make use of their legislative
powers to limit the social significance of consumption. Hence, the
existence of sumptuary laws. Sumptuary law was regulation of
consumption, either in the form of legal limits on expenditures or
reserving particular types of cloth for designated social classes.
Historians, although aware of the existence of these regulations, for many
decades regarded them usually as an immature or unsophisticated stage
of legal development. 314 This disrespect can be arguably pinpointed to
the fact that the sumptuary laws were simply misunderstood. It is easy to
belittle social institutions as immature or delusional 315 when one does
not understand their function.
The history of sumptuary legislation is long. The regulation of
acceptable style of dress can be found in Locrian code, the first written
Greek law code, and in Solons laws. Romans had their own sumptuary
legislation as well. The Roman laws included both regulation of clothing
103
(which were understandably the first type of goods to be regulated,

because ones clothes are always on display, they are the most palpable
intermediate between private resources and social recognition) and
detailed rules on acceptable alimentary expenditures. 316 The regulations
were often gendered, and an association was constructed between female
desire, desire for luxuries, and effeminacy and the triad functioned as
a feature of many narratives of political and moral decline. 317 For
instance, the 1433 preamble to Florentine statute reads:
The barbarous and irrepressible bestiality of women, who, not considering
the fragility of their nature, but rather with that reprobate and diabolical
nature, they force their men, with their honeyed poison, to submit to them.
But it is not in accordance with nature for women to be burdened by so
many expensive ornaments. 318
Sometimes this stereotype of womens desire for extravagance,

although stripped from its bestial features, was cast in the positive role
of a civilizing factor which incited [in men] a general passion to work,
invention and industry. 319 At other times, womens dress was left
entirely out of the scope of sumptuary laws, which focused solely on
men. 320
In Medieval Europe from the early ninth century, dress was at times
linked with rank; from the eleventh century often only certain colors were
permitted to the peasantry, and by the end of the twelfth century quite
detailed sumptuary regulations appear in more commercially developed
cities: 1157 Genoa, 1234 Aragon, 1249 Siena, 1250 Florence, 1256
Castille, 1267 Bologna, 1277 Padua, 1297 Venice, 1304 Zurich. The laws
were coming both from church and secular authorities. By the end of the
fourteenth century, they were present in a large number of Western
European cities and in England. By the middle of the fifteenth century,
they spread to Scotland and Germany. 321 Hunt thus argues that:
104

It is only with the decline of feudalism that the emergence of the bastard
feudalism that succeeds the monetization of land rents, and the long rise
of merchant capitalism, gives rise to what may be regarded as the high
period of sumptuary law. 322
Sumptuary laws were not part of the nave medieval attempt to

regulate social reality by decrees, but a reasonable attempt to protect the
social standing of the traditional elites in a rapidly changing environment:
An obvious and striking feature of the great bulk of sumptuary law was
that it was directed at conceptions and images of the social order. It was
concerned with attempts to protect hierarchical conceptions of social
relations, to resist some of the most directly visible manifestations of rising
social groups challenging the incumbents of advantaged social positions. 323
Hunts argument can be backed with Woods description of 1363

sumptuary legislation in England:
The legislation regulated the food and above all the dress appropriate to
each order, so that someones social status was instantly recognizable. It
drew attention to the outrageous and excessive apparel of divers people
against their estate and degree, to the great destruction and
impoverishment of all the land. 324
Therefore, imposition of sumptuary laws can be understood as a

conscious tactic designed at preserving immobile social order. On the
other hand, regulation of consumption patterns was sometimes a part of
radical egalitarian projects, for example in the case of the Florentine
humanist Anton Donis 1552 project of the ideal city, in which everybody
would dress in the same way and use the same things. 325
After the sixteenth-century peak in sumptuary legislation, the
eighteenth century has seen its decline, and today, if sumptuary laws
havent disappeared completely, than certainly they have changed in
character and lost much of their importance. 326 Although struggles over
dress and consumption patterns continue, at least in the Global North,
legislative regulations play in them only a supplementary role.
105
The point here is to appreciate the sphere of consumption as a

legitimate field of power that needs to be studied in its own terms. It is
not innocent of practices of domination (like some sociologists who study
consumptionism claim), nor are these practices epiphenomenal to
supposedly more concrete economic realms, such as production (like
Marxist economists argue). Structures of consumption must be studied at
once in relation to other economic institutions but without forgoing their
autonomy, and certainly as a field that is not innocent of relations of
power (Chapter 48).
Chapter 19:
In which we study an economic school
that has never existed.
Their argument frequently supposes that all
wealth consists in gold and silver, and that
to multiply those metals is the great object
of national industry and commerce.
Adam Smith, The Wealth of Nations
Reinert argues that the common understanding of political economy

is skewed by precursorist bias, i.e., a tendency towards charting the
genealogy of current ideas and ideologies rather than studying ideas in
their own contexts. 327 Probably the most unequivocal example of such a
retrospective and precursorist approach to economics is the case of socalled mercantilism. The term mercantile system was invented by
Adam Smith as a polemical term. 328 Nearly two centuries after the fact,
Smith managed to create this phantom economic school, which then
served as a sort of whipping boy, an allegedly unscientific background for
his supposedly scientific political economy. Although as Harris shows,
the greatest mercantilist authors such as Malynes, Milles, Misselden,
and Mun never belonged to any coherent, let alone nameable, school of
thought, 329 and rather perceived each other as ideological adversaries
than as supporters of the same paradigm or policy, Smith made them one.
The quarrels between the mercantilists were simply erased from
history. Mercantilism was said to be based on the [self-]interested
sophistry of merchants and manufacturers, 330 who confused wealth with
money, fetishized balance of trade, and neglected the advantages that
laissez-faire policies could bring. 331
As the concept of mercantilism from its very beginning was
politically loaded, to this day discussions on mercantilism are often
spoiled by ideological quarrels on the merits and weaknesses of state
108
intervention in economy. 332 Nevertheless, it is worthwhile to go beyond

polemical appropriations of mercantilist ideas and to try to understand
them in their own terms and in their own historical contexts.
So, first we have to abandon the ridiculous, if enormously popular,
idea that economists of the sixteenth and seventeenth centuries mistook
wealth for gold. Even Foucault ascribed to them the opinion that gold
presents a natural economic value as it is a perfect product of a cosmic
system. 333 This seems to be a terrible case of mythologization of the past.
It may have been seen as perfect in abstract alchemical terms, but was
useful only insofar as the people agreed to use it. Economists of the era
didnt fetishize gold or money. They were merely occupied with coming
up with ways to strengthen domestic production and they closely linked
surplus in balance of trade with increase of production. The anonymous
authors of Advice and authors such as Cary, Child, Davenant, Evelyn,
Huet, Mandeville, Mun, and others were explicit about the fact that
money should not be confused with wealth. 334 As Perrotta writes:
A spectre haunted Europe in the mercantilist period: the fear of ending up
like Spain, rich in gold, poor in production and with a frighteningly
unfavourable balance of trade. These three factors constituted in all Europe
the negative example of Spain, which the mercantilists unanimously
indicated as a model not to follow. According to Eisenhart, it was in fact
the example set by Spain that made the seventeenth century economists
shift their gaze from the earning of money to the strengthening of
manufacturing. This statement is an exaggeration, since the English
mercantile policies had been designed and introduced before the Spanish
crisis became evident. However, the affirmation of mercantilism in Europe
can be said to have been favoured by the negative example of Spain. 335
For mercantilists, wealth clearly didnt come from hoarding money

or gold but from employing it productively. 336 Expansion of
manufacturing was usually seen as the best way to make a country rich,
and trade enabled this expansion. The two were inseparable. In 1767,
James Steuart still argued that to ask whether trade owes its beginning to
109
industry, or industry to trade is like asking whether the motion of heart is

owing the blood, or the motion of the blood to the heart. 337 Money itself
was likened to the blood in the body, and its quantity had to stay in
proportion to the amount of commodities in the country to nourish its
trade. 338 Money was the soule that did infuse life to Traffique
(Malynes), or the vital spirit of trade (Misselden). 339 It was not the end
in itself. Mercantilists werent obsessed with bullion itself, but merely
concerned with its flows (see Chapter 21).
And if the writers of the era sometimes stressed the need to have a
steady supply of precious materials, it was not because of some nave
adoration of gold and silver, but because it was crucial to the supply of
sound coinage. 340 And as that supply time after time was found to be
inadequate, European economy suffered chronic coin shortage. 341 As we
have seen in Chapters 4 and 5, most people did without coins at all in
day-to-day life. People used tallies and promissory notes instead, and in
smaller communities they simply kept track of who owes what to whom
and more generally disciplined every and each member of community to
contribute to the wellbeing of his or her peers within customary
boundaries. 342 In the fifteenth century, there was the famous Great
Bullion Famine, caused in part by unfavorable balance of trade with the
Levant. 343 In the sixteenth century, the expansion of European economy
caused the demand for money to grow by approximately 500 percent,
while the supply grew by only 63 percent. 344 In the eighteenth century,
even the British government was often a year behind in paying to wages
to its own employees. 345 In the United States, the account books from the
mid-nineteenth century show that only one-fourth to one-third of business
was carried out in cash (and that included barter transactions). 346 Thus, as
late as 1940, sociologists spoke about various effects of the recent
plunge into the cash-economy system. 347 We can see that as a sort of
110
liquidity crisis was almost permanent, the preoccupation with bullion was
entirely rational. The first bullionist legislation forbidding export of
silver from England in 1278 was no more a crude money fetishism than
the 50 travel limit for British tourists going overseas, which was
abolished only in 1979.
There has never been a mercantilist era. As always, a number of
different
economic
discourses
flourished
in
different
economic
environments. Early Modern Spain is of special interest. As the sixteenth

and seventeenth centuries were turbulent for the Spanish economy, they
provided a fascinating ground for economic debates. The fact that they
remained barely mentioned in accounts of economic thought until very
recently can be perhaps understood only because they couldnt be easily
reconciled with Whig historiography that disregards economics prior to
Smith as nave gibberish.
Although the so-called price revolution, caused by the expansion of
world economy, the rise of international financial markets, and the inflow
of American gold and silver, meant in reality inflation of only 1-1,5%
yearly 348 a very modest rate for modern capitalist economies, its
significance was big. After hundreds of years of relatively stable prices, it
was not the rate of inflation that was surprising, but its constancy. In other
words, what was revolutionary was not the actual changes in price, but
the change in the perception of price. Observing this development of
early capitalist forms of economy, the scholars of Salamanca proposed
that debasement cannot be treated as the main cause of inflation. Instead,
they singled out the market forces of supply and demand and the quantity
of money as the determinants of prices. 349 Francisco de Vitoria (14831546) developed the subjective theory of value, 350 and with de Soto
(1494-1560) and Saravia de la Calle (fl. 1544) proposed that the volume
111
of money is the prime determinant of its value. 351 Toms de Mercado

(1525-1575), who besides being a moral theologian worked in the
Exchange House of Seville, offered a clear formulation of quantity theory
of money and an analysis of international purchasing power parity that
preceded works on the same subject of Fisher and Cassel by three
centuries. 352 The Salamantitos perceived economy in the same terms as
the moneyed classes. They praised the social value of instrumentum
persistens lucre, or productive capital, and they praised the merchants
themselves, these hombres universals, cosmopolitan citizens of the
world. 353 Sometimes they are credited with founding the monetarist
tradition of thought that has resurfaced so many times up to this day.
Certainly, if we were to describe the history of economic constellations in
terms of a linear development of a number of traditions, one could make
this claim. But as we are not interested in such narratives, we should
simply note that this is yet another (not the first, if we recall Levant
economic theories [Chapter 12], and certainly not the last) instance in
which a commercially developing society becomes a breeding ground for
a set of ideas that is aligned with the short-term interests of the moneyed
classes.
This is not to say that this was the only economic discourse in the
Iberian Penisula of the time. Besides the scholars of Salamanca, another
group, the Arbitristas, proposed a different economic discourse. If the
Salamantitos are today called monetarists, the Projectors can be
compared to structuralist or development economists. 354 They pressed for
the development of industry and national productivity. Luis Ortiz (fl.
1558) proposed detailed policy of state-led industrialization consisting of,
among other things, new investments in infrastructure, a fiscal reform that
would provide impulse for private investments, and promotion of new
machinery organized by the local authorities. 355 Another proponent of
112
industrial development was Sancho de Moncada (fl. 1619), who argued

that industrialization cannot succeed without simultaneous reform of
administration and higher education, as well as the introduction of
vocational training. Moncada was perhaps the first advocate of the
increased interaction between the business community and higher
education, proposing reforming the latter to satisfy the needs of the
former. 356 Francisco Martines de Mata (fl. 1626) added a theoretical
formulation of the consumption multiplier, somewhat prefiguring
Keynesian ideas on the subject. 357 However, all these ideas had little
impact on Spanish policy:
During the second half of the seventeenth century the Spanish Empire
went down-hill. The writings of the arbitristas and their associates failed to
make any headway against the established interests of the Sevillian
banking world, or against those sectors profiteering from the inflation and
deindustrialization, or against the Spanish kings and nobles. Seldom in
history has such loudly proclaimed advice been disregarded by the
responsible policy executives with such damaging consequences. 358
In England, the immediate political implications of economic debates

were as clear as in Spain. Misselden and Malynes were merchants; the
latter was also an English commissioner in the Spanish Netherlands; Mun
was a member of the East India Company; Child was its governor. Their
disputes may have been expressed in a theoretical idiom, but they were
not abstract from political realities of the time. On the contrary, they often
explicitly intended to influence the policies of the Parliament. Theories of
international trade arouse around the very practical issues of
administrating the East India Company. The last bullionist theses of the
era (i.e., theses favoring qualities of metallic currencies over bank money)
were formulated in the eve of the currency reform of 1696 in an attempt
to fence off the emerging alliance of the government and Bank of
England (more on the birth of modern banking in Chapter 33). Two
113
hundred years after the discovery of America and encountering peoples

who lacking in iron would happily buy it for its weight in gold, the purely
social character of money was already acknowledged. 359 But of course
anthropological knowledge, however accessible in the era, mattered little
in establishing dominant economic narratives. I would argue that the new
trope of using the language of romance to describe commercial ventures
was more influential for the British economic imagination. At the
beginning of seventeenth century, Milles characterized Englands foreign
trade as our sweet Mistresse who, distempered and distrest, waits for
remedy from her male saviors. As Harris writes, adventure came to
signify both romantic quests and commercial enterprises by the end of the
sixteenth century. 360 If the appearances of economic debates have
changed over the centuries, their most basic premises have not. The topics
of the debate are still mostly set by the clashes of the most immediate
political interests, all sides of the argument pay little attention to actual
anthropological, sociological, psychological, or historical findings and
instead rely on whatever can attract some eristical value. But lets not get
ahead of ourselves.
Chapter 20:
In which the emergence of population as
an economic subject is considered.
The only wealth is men.
Jean Bodin
In 1615, the French dramatist Antoine de Monchrtien published

what is by many considered the founding text of political economy,
namely, A Treatise on Political Economy. His analysis almost completely
dispensed with quantitative methods, relying on metaphorical and
philosophical arguments instead. The alleged novelty lay in his focus on a
new object of governance the population, and his perception of national
economy as subject to a series of natural, cyclical processes. Monchrtien
argued that it is not the gentry and clergy that should be identified with
the state, but the lowly people who could be the most negligible in
appearance, but in fact constituted the essence of the nation. 361 This was
by no means a radical project of emancipation of the third order, but
rather a call for redefinition of politics as a procedure of governing the
population.
To that great and most honourable design your pacific majesties can apply
yourselves; in what may the persons whom you chose to admit to the
administration of your affairs be more worthily and usefully employed, if
not to vigil over and work for order, employment and reconciliation of
your people? 362
Of course, this wasnt Monchrtiens original idea. At least since

Jean Bodin (15301596) the enrichment and well-being of the population
were commonly seen as the proper object of sovereigns policy. 363 And
even before that, a large population was traditionally considered to be a
signifier of a sovereigns power, both as a supply of his troops and as
proof that he is capable of enforcing his rule. 364 The novelty of
Monchrtiens approach was that he analyzed it mainly in economic
116
terms: the more hands, the higher the production and the stronger the
State. 365
Fifty years later, in 1680, William Petyt (16411707) described
population in terms of human capital in quite explicit terms:
The most precious resource, from which everything derives; it is a form of
capital, which is in itself a raw material and which needs governing to be
improved. If there were a policy and if labour were under public control,
instead of being at the mercy of greedy antisocial interests, England would
grow great. 366
In Petyts argument, it was therefore not simply a numerous

population but a numerous and skilled population. Later on, Botero and
Petty complicated the picture by adding that there is a possibility of
overpopulation, which can be caused by an unbalanced growth of the
people in relation to the resources that are at hand. 367 Cantillon similarly
wondered if a small but well-fed population isnt better than a large but
destitute one, and inverted the causation between population and
production, arguing that the rise of the former depends on the growth of
the latter. The economic relationship between the two was for centuries
one of the main issues for political economy. The argument that the
world is already full and the population is too large for the soil was not
new, 368 but now it was taken up as an economic question.
We will be coming back to questions surrounding the population
(Chapter 29), but before we proceed, let us note the three tangent points
between population, biopolitics, techniques of statistical quantification,
and discourse of medical care.
First, as we have already mentioned, not only did Monchrtien point
to the population as the proper subject-object of political economy, but he
also argued that economy is to be understood in terms of an inalterable
natural process. His political economy saw men as part of the natural
117
world, and proposed that its population is subject to the same laws as that
of any other mammal. The concept of biopolitics made a career so
brilliant that it is today reasonable to be somewhat suspicious of its value.
But however it ended, it began here: at the turn of the sixteenth and
seventeenth centuries, in debates over population and productivity. Only
later mankind would turn into the human species (as in the French
Encyclopaedia), 369 and schemes for control of peoples fertility would be
presented as solutions to the problem of economic development (e.g., by
Benjamin Franklin, James Steuart, Arthur Young). 370
Second, this new approach to population went hand in hand with the
development of new techniques and knowledge, namely, statistics,
political arithmetic, and demography. Of course, the instrument of
census was used before, at times for purely economic reasons, as in the
case of Diocletians census in the third century CE or the British 10851086 Doomsday census. But after John Graunts 1662 Natural and
Political Observations Made upon the Bills of Mortality and with the
establishment of political arithmetic, the biological life of the
population begins to be quantified on a daily basis. Political arithmetic is
defined by Davenant in 1698 as the art of reasoning by figures, upon
things relating to the government. 371 After all, (this is still Davenant)
the wealth of all nations arises from the labour and industry of the
people; a right knowledge therefore of their numbers, is necessary to
those who will judge of a countrys power and strength. 372 In 1751,
Arithmtique politique will be put into Diderots Encyclopaedia as art
essential to modern administration of the state. 373 And, in fact, from the
eighteenth century, the practice of governing will be closely intertwined
with the that of accounting, at times shifting entirely from governance,
through administration, to pure management.
118
Third, the emergence of the concept of population should be

analyzed along with changing attitudes towards the poor. We have
already noted in the Chapter 10 that new economic inequalities provoked
a transformation of the discourse and practice of almsgiving. Polanyi
argues that the new political and social phenomenon of the poor masses
was one of the main causes of the development of modern political
economy, both liberal and Marxist, and of expansion of the state
administrative machine. 374 This is an argument that should not to be
dismissed lightly. The relationship between the enclosures of the
commons, the establishment poor relief system, and the discourse of
taking care of the population certainly should be studied in detail.
Already today it is a well-documented claim that first creating the poor by
enclosing the commons and then turning them into a productive resource
by forcing them into workhouses was indispensible for British economic
development. 375 And all this was done not simply in the name of
economic development, but was also legitimized as providing immediate
well-fare for the population:
The promotion of compulsory work within the ateliers nationaux in France
and the workhouses in England from the beginning of the seventeenth
century was an answer to a dual goal of national enrichment and
improvement of the populations health. Mercantilist thought supported by
physicians managed to transform the danger of having a population of idle
and starving people into a cheap and disciplined source of labour, which,
through the policy of imprisonment, contributed to national wealth. 376
Chapter 21:
In which the synthesizing effects of
bodily and organic metaphors are explained.
Primum non nocere.
First, do no harm.
As the influence of explicitly religious frames of reference declined,

the need for new metaphors and a new symbolic framework for
legitimizing economic arguments arose. At first, in the seventeenth
century, the most successful model for economic knowledge was
medicine or, to be precise, anatomy and physiology. A number of
economists, including Locke, Petty, Barbon, Mandeville, and most
notably, Quesnay, studied anatomy and practiced medicine. 377 Quesnay
actually spent most of his life working as a surgeon and physician and
writing works on medicine and physiology, and in 1749 he was even
appointed an ordinary surgeon to the king. 378 Christensen seems to be
spot on, when he argues that:
Physiology played a crucially important role in shaping the early
development of the classical model. From Hobbes to Quesnay, the
dominant set of metaphors shaping the conceptual structure of the
economic theory of production and exchange were drawn from physiology
and the comparison of the economy to the living body. 379
In the seventeenth and eighteenth century arguments, the primary

rhetorical devices were analogies, metaphors, and identities, and one of
the main anologies established by political and economic writers was that
between animal/human body and the political body of the State. 380
Clment has collected a number of telling examples. For example,
Monchrtien wrote in 1615 about a strong relation between the wellmanaged State and the animal body:
Animals have three faculties, the vegetative that nourishes the body as
labourers work and nourish the state, the sensitive that is a source of heat,
120

under which one may class skilled workers, and finally the mental, which
makes the body move and to which merchants correspond in our society. 381
Mun spoke in 1644 about the sovereign who is like the stomach in
the body. Davenant substituted the sovereign for the population (see the
previous chapter) and in 1698 made the people the stomach of the
States Body. Boisguilbert argued in 1707 that the body of the State is
like the human body, all parts of which and all limbs must also contribute
to the common sustenance. The notion of the complementarity of body
parts was extended to the economy, in which different sectors and actors
were seen as integral parts of a single organic entity. 382
Another bodily category used by seventeenth century economists was
a physiological-circulatory flow. Maifreda notes that when Mun
proposed his concept of the balance of trade, he didnt portray it as a
system weights balancing the scales of international exchange but rather
as a persistent flow of fluid streams of goods and money. 383 Harveys
discovery of the circulation of blood (1628) was quickly followed by
Pettys (who began his career as Harveys personal assistant) concept of
the velocity of circulation of money, and afterwards the circulation of
blood in a body became a go-to analogy for the circulation of money in
the economy. We have already noted prevalence of this figure in
mercantilist discourses (see Chapter 19). It was also absolutely
instrumental to Hobbes who had witnessed autopsies conducted by
Harvey and was a great admirer of his work, which he thought to be
equaled only by that of Galileo and Copernicus. 384
What is important to understand here is that the penetration of
medical metaphors into economic discourse had nothing to do with
recently popular interdisciplinary inquiries. Economists didnt draw from
physiological knowledge to enrich their understanding of the biological
aspects of economical processes. While medicine provided new imagery
121
for economic discourse, it would be hard to argue that it yielded new

economic knowledge. 385 Economists were more interested in the
inspirational value and objective aura of medical framework than in the
actual findings of contemporary medicine.
When Montchrtien spoke of the faculty of the brain that enabled
movement, he was not borrowing from medical knowledge of the time
Vesalius (the leader in this field) had been unable to elucidate the problem
of the brain but was referring to common and everyday assumptions
about the human body. 386
However, the fact that medical metaphors didnt provide any positive
knowledge for the economic genre doesnt mean that they didnt leave
any imprint on it. As the disorders of national economy were described in
medical metaphors, and the sovereign was cast in the role of a physician,
the general legitimization of economic liberalization became Hippocratic:
first, do no harm. 387 A good physician will rather abstain from any
action than risk doing more harm than good. In this narrative, national
economy was envisioned as a series of natural processes that could not be
easily controlled but could be understood as an organic whole. It didnt
have to be controlled because as a living organism it naturally took care
of itself.
Digestive metaphors and the theory of humors were used to justify
eighteenth-century French reform of grain trade: to rid the economy of
its excess grain, Boisguilbert suggested setting up a free trade policy. The
opening of borders was the remedy for economic decline, just as bloodletting was the remedy for humoral congestion. 388
Bodily metaphors eventually gave way to the mechanical model, but

this medical episode in the history of economics can be noticed even on
122
the superficial level of modern economic language. For an instance,

inflation was first a medical term for swelling, and consumption signified
tuberculosis. 389
This
identity
between
consumer
spending
and
consumptive disease was part of the Victorian ethic of thrift and

prudence. Reinventing consumptive credit as consumer credit and
shedding its pathological sense occurred only in the late 1920s, 390 and
was part of the reconfiguring of the modern debt regime (see Chapter 48).
And even today, economic crises are often portrayed in medical
terms, e.g.. the Asian Flu of 1997, or the Russian Flu of 1998, or the
Mexican Flu of 2008. Harris puts forward a good argument that:
By troping economic illness as a communicable condition that
transmigrates across oceans, the metaphor attributes the cause of plunging
stocks and evaporating capital around the world to specific foreign bodies
rather than to global commerce itself, which is figured simply as the
disease's indifferent medium. [...] the "Asian flu" is not simply a metaphor;
it is a character. 391
In short, organic economic metaphors erase conflicts and instabilities

from economy by externalizing them: the capitalist world economy is
naturally prosperous and growing, unless it is attacked by some foreign
bodies. One can see, that this was also basically the dominant economic
discoursive tactic in Nazi Germany, which heavily relied on organic
imagery of economic relations (see Chapter 43).
Interestingly, the body seems to have become fragmented and
dispersed in the most recent mainstream economic discourse. For
Classical economists like Adam Smith, political economy was to a large
extent an anthropological science, both in a sense that it described the
whole human, with all their natural sentiments, desires, and
capabilities, and in a sense that it was a proposal for a certain logic of
administration of individual bodies. In neo-classical theory of the
123
twentieth century, human bodies exist only as supposition, perhaps a

logical correlate of the existence of bodily functions such as consumption
or production. 392 Amariglio and Ruccio argue that after Debreus Theory
of Value (1958) and Arrow and Hahns 1971 General Competitive
Analysis, as economic discourse becomes formalized,
[h]uman bodies are no longer recognizable as the site at which the various
economic capacities and functions do their work. The full discussion
of sensation and sentiment, passions and interests which informed so much
of the theoretical legacy handed down to todays economists is not so
much reduced in importance with the onset of axiomatization as it is
completely ignored or even renounced as extraneous to the methods and
procedures of contemporary economics. 393
Chapter 22:
In which the relationship between Protestantism
and the rise of capitalism is discussed.
Their distance from God could only be
precariously bridged, by unstinting,
purposeful labor.
Max Weber
In his famous Protestant Ethic, Max Weber argued that Protestantism

(and especially Calvinism) was a key force behind the development of
modern capitalism. By encouraging interest in earthly business and
influencing new work ethics, it not only accidentally led to the success of
capitalism in Northern Europe, but also contributed greatly to
establishment of a new rational world-view. This argument has been
debated for many decades now and has been both attacked and defended
in numerous ways. It is not the purpose of this chapter to fully engage in
this debate, let alone to resolve it. A study of the history of economic
reason that would omit one of the most commonplace reasonings on the
birth of modern economy, however, would be at fault. Hence, let us note
a number of objections that were raised to Webers thesis.
First, there is the methodological problem. A wider reading of
Protestant writers of the sixteenth and seventeenth century (including
even those whom Weber himself cites) shows that their attitude towards
worldly prosperity was far more nuanced, and at times unreceptive, than
Weber has argued. 394 Moreover, he mistakenly attributed the seventeenth
century additions to Protestant treaties to the sixteenth century, thus
inverting the alleged time sequence between radical Protestant ethics and
the birth of Modern Capitalism. 395
126
Second, there is the problem of Webers dualist and periodical view

of history. It has been argued that he was interested in feudalism only
insomuch as he treated it as the reverse of capitalism. 396 He saw the two
as distinct space-time continua that could be linked only through
intervention of an external, spiritual, factor. 397 Therefore, he ignored the
fact that the Renaissance capitalism of northern Italy and Flanders
flourished long before the Reformation, 398 he overlooked the significance
of (Christian) Cisterians in economic development that marked the
transition from the High to Late Middle Ages, 399 and all in all he simply
failed to see that, in Schumpeters words:
The society of the feudal ages contained all the germs of the society of the
capitalist age. These germs developed by slow degrees, each step by step
teaching its lessons and producing another increment of capitalist methods
and of capitalist spirit. 400
Third, Webers account of the development of capitalism has been

attacked from materialistic positions, mainly, but not exclusively, by
Marxist scholars. The arguments stating that Protestantism couldnt have
had an impact on the rise of capitalism because superstructure is
derivative of structure, and not the other way around, can be put aside as
tautological. But departing from the point that the simplest answer is
usually the correct one, one may present, as for instance Wallerstein does,
a down-to-earth account of the rise of capitalism that dispenses with the
need for a discussion of the role of Protestantism altogether. Hence, the
identification of Protestantism with the forces favoring the expansion of
capitalism would be seen as largely accidental. 401
Protestantism and the Protestant ethic seem to explain less of economic
phenomena than they seemed at one time to do, [because] it also appears
there is, in the Reformation era, less to be explained [] Leadership in
economic matters passed slowly from the Mediterranean to the north, and
as the Italian cities declined, those of the Netherlands rose; but there was
little in the way of business or industrial technique in use in northern
economies that would have been unfamiliar to a Venetian merchant or a
Florentine clothier of the fifteenth century. 402
127
All these three objections are serious, but not lethal. First, there are
very few methodologically spotless arguments in social sciences, and
although Webers mistakes are rightly criticized, these criticisms should
not be treated as an excuse not to engage with his theorizing. Second,
when one makes an argument, generalizations are bound to happen, and
although Webers treatment of feudalism and capitalism is scandalous,
maybe it can be forgiven as a regrettable manner of speaking that can be
separated from the main line of argument. Third, Weber explicitly
distanced himself from mono-causal explanations and ended his essay by
saying that he does not seek to to substitute for a one-sided materialistic
an equally one-sided spiritualistic causal interpretation of culture and
history [] each, if it does not serve as the preparation, but as the
conclusion of an investigation, accomplish equally little in the interest of
historical truth. 403
Perhaps a promising way out of this conundrum is proposed by
economic historians with an institutionalist outlook. Theology and faith
dont influence economic performance on their own, but they certainly
can have an impact insomuch as they are intertwined with churches,
bureaucratic apparatuses, and legal systems. Thus, the Reformations
impact would be analyzed not so much in terms of individual, spiritual, or
psychological imperatives, but more as a social phenomenon that
disrupted existing power structures. 404
As is the case with the topics of all the other chapters, this issue
deserves to be studied in far greater detail than has been done here.
However, as we have already noted in the preliminary methodological
remarks, the point of this thesis lies precisely in forgoing a thorough but
limited in scope dissection of details for the sake of a more systemic and
general analysis.
128
So for now, let us just note that perhaps the immense popularity of
Webers thesis (and the fact that in commonplace reception it often does
signify a mono-causal, spiritual, explanation of the birth of capitalism)
may come from the fact that it sits well with the discourse on homo
economicus (Chapter 42) and its inclination for locating the origins of
economic performance within individuals and not in their objective (for
instance, geographical or class) contingents. The proposition that the key
to economic success lies in individual work ethics is profoundly political
in nature and today is often employed in liberal narratives.
Chapter 23:
In which it is explained that the supposedly secular
liberal political economy is more sacral than
the economics of Aquinas ever were.
And there are those questions that deserve
punishment, as to ask proofs of the
existence of Providence.
Clement of Alexandria
Distancing ourselves from Webers argument doesnt mean that we

should abandon altogether the notion that religious discourses influenced
economic reasoning. Perhaps the most important was the economic
appropriation of the figure of providence. Already in the second century
oikonomia becomes closely linked with pronoia, and economy was
perceived as a manifestation of divine providence. 405 Of course, not all
economists called upon an explicitly providential frame of reference, and
it is often claimed that those who did, did it for purely ornamental
purposes. 406 However, while the overt and superficial use of religious
metaphors is one thing, using divine providence as a model and premise
for the structure of economic arguments is completely another, and it is
the latter that is the subject of this chapter.
The classical Thomistic justification of the existence of evil in the
world is that:
It is not the function of divine providence totally to exclude evil from
things. [] The good of the whole takes precedence over the good of a
part. It is proper for a governor with foresight to neglect some lack of
goodness in a part, so that there may be an increase of goodness in the
whole. [] If evil were removed from some parts of the universe, much
perfection would perish from the universe [] For this reason, it is said: I
make peace and create evil (Is. 45:7); and again: There is no evil in a
city which God will not do (Amos 3:6). 407
One way to look at the liberal political economy is to see it on the

whole as a variation on this theme of theodicy, an exercise in secular
130
theodicy. Some of the medieval scholars already recognized that

individual sins may be at times socially advantageous or necessary (recall
chapters 11 and 16), but generally it was a concept marginal to the
punitive moralistic discourse that secured the Churchs economic
interests. But from the seventeenth century, the question how can
individual vices be translated into public virtues? became central to the
political and economic discourses of emerging capitalist Europe.
Dudley North, in his 1691 Discourses upon Trade, explicitly linked
sinfulness and material prosperity:
The main spur to Trade, or rather to Industry and Ingenuity, is the
exorbitant Appetites of Men. [] The Glutton works hard to purchase
Delicacies, wherewith to gorge himself; the Gamester, for Money to
venture at Play; the Miser, to hoard; and so others. Now in their pursuit of
those Appetites, other Men less exorbitant are benefitted 408
A bad man can be a good citizen. In the seventeenth century this

argument is made repeatedly by Bayle, Barbon, and Harris, among others.
In 1714, Mandeville wrote his famous The Fable of The Bees: or, Private
Vices, Public Benefits, in which he argued simply that without private
vices, public prosperity cannot exist. Although Mandevilles poem was
seen as scandalous and was even prosecuted a number of times, 409 its
general thesis, if not its bold style, became accepted by many liberal
political thinkers over the course of the eighteenth century. The key to
legitimatizing the transformation of private vices into public benefits was
mediating it through the figure of providence.
Consider Vico (1668 1744), who wrote:
Out of ferocity, avarice, and ambition, the three vices which lead all
mankind astray, [society] makes national defense, commerce, and politics,
and thereby causes the strength, the wealth, and the wisdom of the
republics; out of these three great vices which would certainly destroy man
on earth, society thus causes the civil happiness to emerge. This principle
proves the existence of divine providence: through its intelligent laws the
passions of men who are entirely occupied by the pursuit of their private
utility are transformed into a civil order which permits men to live in
human society. 410
131
The mainstream historiography sees early modernity as the era of the

emancipation of economic thought from the religious discourses of the
Middle Ages. However, it can be argued that what is perceived as the
laicization of economics was in fact its radical sacralization. In scholarly
discourses, the realm of economy was portrayed as a distinctive order that
was essentially illegitimate and hostile to Gods plan of creation. Hence,
various ways were devised to restrain profit motives and limit social
effects of the cash nexus.
New economics reconciled Jehovah with Mammon, proposing that
economy is not an impious sphere that needs to be laboriously brought
with the sacral universe, but a sort of sacral universe on its own and from
the start. The universal law that governed trafficke and commerce was
an invention and gift of God, argued Malynes, 411 and Adam Smith
added that as all the events in this world were conducted by the
providence of a wise, powerful, and good God, we might be assured that
whatever happened tended to the prosperity and perfection of the
whole. 412 As the ultimate ground of economic reality is the design of
God, 413 we can rely on some sort of invisible hand or a set of
divine/natural laws that ensures that individual efforts, uncoordinated and
often conflicting, are somehow translated into a higher purpose. Adam
Smith was in this respect not at all an original thinker: besides the authors
already mentioned in this chapter, figures as diverse as Locke, Hegel, or
Montesquieu proposed a very similar world-view.
132
A novel element in this new conceptualization of market economy

was a futility thesis, which stated that the economic process is structured
in such a way that anything one might wish to accomplish will be offset
usually in some unexpected or unanticipated manner returning you to
the original situation. 414 According to this view, economy is ruled by
overpowering natural laws that can be studied and understood, but cannot
be changed.
Francis Bacon theorized the productive processes in his history of
trades project in this very way, 415 but in the eighteenth century it became
an orthodoxy that from then on may have been challenged a number of
times, but has never been overturned. In this regard, Marx didnt differ
from Locke, Smith, or Malthus at all. What iek says is true that today
the rise of global capitalism is presented to us as such a Fate, against
which one cannot fight one either adapts oneself to it, or one falls out of
step with history and is crushed. 416 But the Marxist rhetoric on the
inevitability of the communist revolution was nothing other than a variant
of the same argument.
Interestingly, in a pre-growth economy, this futility thesis may have
had some validity. As long as the economy was caught in the Malthusian
Trap (recall Chapter 8), the economic prosperity of the majority of the
working poor tended to go time after time to low subsistence levels. It
may seem ironic that at the moment the European economy was entering
the Industrial Revolution which finally rendered the Malthusian
pessimism obsolete, the futility thesis put down its roots in economic
thought.
Chapter 24:
In which two main outlooks
on international commerce are outlined.
The division of labor among nations is that
some specialize in winning and others in
losing.
Eduardo Galeano.
The providential ordering of economy was recognized not only in

analyses of national economies, but also in international trade. Although
trade in the eighteenth century was still perceived in purely economic
terms as a zero-sum game, with the gain of one country being an
equivalent loss suffered by another, trade was believed to have a great
range of political, social, and moral benefits. 417
The idea that international trade is a part of the divine plan was
voiced already in the fourth century by John Chrysostom, who argued
that God decided that certain countries should produce different goods
from others, so that they need to exchange them, thus creating a bond of
mutual support between them. 418 In the seventeenth and eighteenth
centuries, this view became commonplace. Consider this fragment of Le
parfait ngotiant, the seventeenth-century textbook for businessman:
[Divine Providence] has not willed for everything that is needed for life to
be found in the same spot. It has dispersed its gifts so that men would trade
together and so that the mutual need which they have to help one another
would establish ties of friendship among them. This continuous exchange
of all the comforts of life constitutes commerce and this commerce makes
for all the gentleness of life. 419
This was the doux commerce thesis, an idea that the pursuit of
commerce reconciles nations, calms wars, strengthens peace, and
commutes the private goods of individuals into the common benefit of
all. 420 International commerce was praised for its stabilizing and
civilizing effects, and financial globalization was seen as a positive force
134
that limited a sovereigns ability to debase coinage. Montesquieu was

explicit on the disciplinary effects of international finance on national
monetary policy:
These violent operations could not take place in our time; a prince would
fool himself, and would not fool anybody. Foreign exchange operations
have taught bankers to compare coins from all over the world and to assess
them at their correct value. [] These operations have done away with the
great and sudden arbitrary actions of the sovereign or at least with their
success. 421
Commerce was supposed to bring out what is best in people, to make

them smooth and gentle. This theme was repeatedly reproduced by
Italian, French, and British elites over the course of seventeenth and
eighteenth centuries. Often it was presented through dialogic figures, for
instance, when Turogt said that commerce is a debate between every
buyer and every seller, 422 or when Smith explained that the offering of
a shilling, which to us appears to have so plain and simple a meaning, is
in reality offering an argument to persuade one to do so and so as it is for
his interest. 423 Economic exchange was like small talk a gentlemens
pastime. However, if we go beyond this elitist horizon, doux commerce
immediately starts to look suspicious.
First, as Reddy argues, although in the comfort of a European salon,
it was easy to evoke the image of two wealthy London merchants, one
Puritan, the other Quaker, dickering over the price of their wares, and to
treat this image as a paradigm of what commerce did to social
relationships, 424 it cannot be seen as a general model for dealings in the
European, let alone the colonial, economic regimes of the time. Thus, the
thesis that commerce was gentle should be put in the perspective of
slavery in the Caribbean or serfdom in Eastern Europe, which although
135
geographically peripheral to the emerging world-market, were absolutely

instrumental to its development.
Second, doux commerce was only one way of conceptualizing
international trade, and by no means the dominant one, if we take into
consideration a wider selection of sources than a handful of liberals from
economically dominant nation-states. Its more popular counterpart was
the jealousy of trade thesis, which perceived the competition over
resources, goods, and markets in terms of perpetual combat (Colbert)
and a kind of warfare (Josiah Child). 425 Arguments were made that the
jealousy of trade is nothing but jealousy of power, 426 and that
commerce had come to decide the superiority of one Nation over
another. 427 And many saw this new war of industry and bloodless
war as always on the verge of being resolved by violent military
means. 428
The period we are talking about was that of the emergence of a
relatively integrated European capitalist market. Between 1500 and 1800,
previously distinct economic zones became to a large extent co-dependent
parts of the same economy. 429 As international commerce intensified, its
political role rose as well. In the feudal pre-growth economy, the longdistance trade in exotic luxuries was of marginal importance to
economics of power. Access to it was a prize for the feudal elites, but
their standing was secured by other means. Now, the international trade
became the very vehicle through which power was distributed across
states and societies. As Reinert argued:
A state could no longer safeguard its liberty by closing itself off from
international trade, for no closed commercial state at least in Europe
could long resist the aggressive power of the great trading nations. As even
Davenant admitted in 1699, amid fears of virtues decline in the modern
world, though trade was in its nature a pernicious thing, it was a
necessary evil given the posture and condition of other countries.
136

Commerce might have been a negative influence on human existence, but
it was also a necessity for the survival of an independent polis in the face
of hostile foreign powers. 430
Pietro Verri, an Italian philosopher and economist, wrote in 1765

that:
In the last century, the enlightenment spread across Europe has given birth
to a new science of finance. The nations have shaken off their lethargy; the
nations feel that the tacit war of commerce always progresses and always
acts, even in peacetime, and that the balance of commerce in Europe
becomes that of power. 431
This tacit war was no different from a military conflict in at least one
respect: the winning side saw it in terms of bringing peace and concord,
while the losing one decried it as a violent subjugation. The former spoke
about doux commerce, the latter about the jealousy of trade. For instance,
in the Kingdom of Naples, which time after time found itself subdued to
foreign powers, a sophisticated economic theory was formulated that
focused on asymmetries in trade patterns and underlined the political
effects of an economy that exports raw materials and imports
manufactured goods from abroad. Genovesi (1712-1769) warned about
the meaninglessness of titular independence in a situation when a nation
hasnt got enough military and industrial power to guard its position in
the regime of international trade. 432 De Jorio (1769-1851) echoed these
concerns when he wrote about English dominion and Universal
Monarchy established through industry and free trade. 433 De Jorio
argued that this is a new kind of Empire, but nevertheless an Empire
capable of giving laws to subjugated states. Filangieri (1752-1788) added
that:
Commerce [had become] essential to the organization and to the existence
of political bodies [] In the midst of opulence your name will be feared,
your alliance will be desired, your rights respected, your pretensions
supported well, [and] you will give the law to your neighbors, but they will
give it to you if you are poorer than they are. 434
137
Agamben writes about an implicit assimilation between war and

economics. 435 In the eighteenth century this assimilation was very
explicit. One could hear that finance is the sinew of war, 436 but
commerce was militarized not only discoursively but also in practice. In
the words of Jan Coen (1587-1629), an officer of the Dutch East India
Company and the governor general of the East Indies, one cannot do
commerce without war, nor war without commerce. 437 McCloskey
criticizes contemporary popular economic discourse for using the
metaphor of leadership in a race of industrial might as it assumes
silently that first place among the many nations is vastly to be preferred to
second, or twelfth. 438 It is easy to sympathize with such critiques,
however, one can see that as soon as there emerged something that can be
called world economy, it started to operate as if it was a race. An
economic race, in which war becomes a mere continuation of economy
by military means, while economy becomes a continuation of war by
monetary means. As List (Chapter 43) observed in 1841, anyone [who]
strives only to retain without acquiring must come to grief, for every
nation which makes no forward progress sinks lower and lower, and must
ultimately fall. 439 At the same time, various arrangements for
international balance of power between core countries were devised to
ensure that no single state could get too far ahead of others for too
long. 440
138
It must be remembered that up to the eighteenth century, Europe was

neither the most developed nor the richest nor the best-supplied region of
the world. See these tables:
441
From the standpoint of the world market, events such as the Thirty
Years War or the French Revolution were little more than peripheral
turmoils. Even in 1850, India and China still generated 65 percent of the
global GNP. The institutional framework of private property regime was
in place, the rates of growth in literacy and productivity were similar to
European ones, and even poor, working class families in China were
better nourished than those in the United Kingdom. 442 Hence, many
historians argue that the Industrial Revolution was around the corner for
China and India. 443 Although the debate on this subject is heated and its
speculative character makes any definite conclusions impossible to
achieve, the general consensus is that if Asian countries had any chance at
139
industrializing themselves, it was destroyed by European engagement in

the region. 444 As Davis argues:
The looms of India and China were defeated not so much by market
competition as they were forcibly dismantled by war, invasion, opium and
a Lancashire-imposed system of one-way tariffs. [] Whatever the
internal brakes on rapid economic growth in Asia, Latin America or
Africa, it is indisputable that from about 1780 or 1800 onward, every
serious attempt by a non-Western society to move over into a fast lane of
development or to regulate its terms of trade was met by a military as well
as an economic response from London or a competing imperial capital. 445
Dozens of unequal treaties were enforced by gunboat diplomacy,

of which the most notable examples were the Opium Wars, the Yangtze
Patrol, or a number of interventions in Japan. Wallerstein shows that
European powers deliberately pursued the policy of the forceful
deindustrialization of its competitors. 446
In 1830 an ex-employee of the East India Company and a Member of
Parliament, Charles Marjoribanks, testified before House of Commons:
We have excluded the manufactures of India from England by high
prohibitive duties and given every encouragement to the introduction of
our own manufactures into India. By our selfish (I use the word
invidiously) policy we have beat down the native manufactures of Dacca
and other places and inundated their country with our goods. 447
When the power struggle between nation-states wasnt decided with

gunships, it depended on a perpetual and peaceful war of mind and
industry among all nations 448 (Colbert), in which the main vehicle was
emulation. As Marqus de Pombal of Portugal (1699-1782) said, all
European nations have improved themselves through reciprocal imitation;
each one carefully keeps watch over the actions taken by the others. 449
Knowledge about good economic practices was perceived as a mystery
jealously protected by some countries and desperately sought by others.
First, the Dutch were hiding it, then the English managed to divine it,
and then other European countries had to steal it from the Brits. 450
140
Progress was thus to be achieved by emulation, and emulation was to be

achieved through translation.
Translations of economic texts were very rare in the sixteenth and
seventeenth centuries, but they increased moderately towards the end of
the seventeenth century and boomed in the mid-eighteenth century. See
the figure below:
451
And the decisive majority of these translations were from English. In

the entire period 1550-1849, 615 texts were exported from England,
while only 144 were imported. 452
It is worth pointing out that the economists on which modern
economic historiography focuses were almost completely uninfluential in
terms of translations and international emulation. While in retrospective
reading, special importance is attributed to the British free trade
proponents such as Barbon or North, their contemporaries hardly ever
referred to them, being far more interested in texts that proposed much
more protectionist policies. 453 A good example of such a work is largely
141
ignored today: Essay on the State of Englands Trade, written in 1695

by John Cary, a Bristol merchant. Cary proposed that real wealth is based
on accumulated labor and technological developments, to which
international trade can be instrumental if it is the right kind of trade
which should be the object of a states policy. 454 Not the trade itself but
what was traded was important, and when Englands position was
endangered by cheaper manufacturing in Ireland, the latter should be
simply reduced to the state of a colony if there are no other ways to
discourage the working up this Wooll there. 455
Carys essay enjoyed a big career throughout Europe, and after being
translated to French, Italian, and German, it became a textbook of modern
realpolitik. And in each country, the translation meant a transformation of
Carys essay. Genovesi translated it and used it as textbook of political
economy at the University of Naples, but first he edited Carys work to
align it more closely with the Italian perspective. In the 1755 French
translation, the same happened. 456 Translation of an economic text meant
its adaptation for the needs of the new addressee. In this regard, these
eighteenth
century
translations
were
no
different
from earlier
appropriations of Aristotle by Ibn Rushdi, or Moerbecke, or Aquinas,

who always lost in translation some uncomfortable lines and interpreted
others in a way that suited their arguments. 457
Another aspect of emulation by translation was economic
propaganda produced by the leading countries aimed at misleading the
developing ones:
At the height of the French Revolution, Gaetano Sotira, a Neapolitan
scholar in Parisian exile, explicitly warned against the errors, the
propaganda and the disinformation, promulgated by certain political
writers with regard to the causes of Englands greatness. Rather than
locating it in centuries of imperial policies and interventions to encourage
manufactures, said writers explained it simply by recourse to the form of
142

its Government, English national character, or even it being an
island. The English themselves, he argued, have accredited such
errors, which serve greatly to render their emulation by other Peoples more
difficult. 458
Whether or not this is a conscious tactic on the part of the hegemonic

states, it is still practiced today. Time after time, promoting laissez faire
trade by the Global North is condemned by politicians and economists of
the developing countries as kicking away the ladder with which they had
climbed to the top and a dont do what we did, do what we say
approach (Chapter 43).
In many peripheral countries, especially in Eastern Europe, these
processes of emulation coexisted with conservative movements that
pushed in the opposite direction. They idealized the past, praised locality,
and equated capitalist progress with moral decay. Thus, it has been said
that Narodniks in Russia or messianic movements in Poland sought
refuge from the economic machine in romantic nationalism, agrarian
ideologies, and moralistic discourses. However, it is important to see that
these movements were neither a really external force, hostile to
modernity, nor that they can be properly understood as its effect. Both
approaches are guilty of presenting modernity in idealistic terms as a sort
of abstract yet homogenous force of nature that progresses through
history, helped by some and restrained by others.
Hence, the triad of modernity-modernizers-anti-modernizers should
be abandoned. It is invested with ideological presumptions and it is
analytically barren. Conversely, these issues could be understood in terms
of main sets of discourses and practices, all equally modern (which by
now becomes really an empty, analytically useless, category), that voiced
interests of different groups and proposed alternative structures of power
143
distribution. And in eighteenth-century Europe, as the world market

became increasingly integrated, it became evident to more and more
groups that no power strategy can ignore the emerging global economy.
Liberal trade doctrines, protectionist policies, or isolationist proposals
were simply different ways of establishing ones position in the slowly
bolstering and stiffening system of international division of labor.
Chapter 25:
Which shows how perilous passions
were turned into legitimate interests.
To set affection against affection,
and to master one by another.
Francis Bacon
We have noticed in Chapter 10 that although the medieval Christian

discourse found a way to legitimize earthly possessions, it simultaneously
established a punitive discourse on the seven deadly sins. It praised
temperance and treated passions as dangerous forces that need to be
controlled at all times. Hirschman argues that during the age of
Enlightenment a new approach to affections was established, one that
proposed that they should not be repressed, but balanced by playing them
off one against the other. 459 If for Dante pride, envy, and greed fed off
each other and could be kept in check only by the rule of reason, 460 for
Spinoza, Hume, or dHolbach they could balance each other in such a
way that not only was no harm done, but rather they became a driving
force for social and individual progress.
Consider dHolbach:
The passions are the true counterweights of the passions; we must not at
all attempt to destroy them, but rather try to direct them: let us offset those
that are harmful by those that are useful to society. Reason [...] is nothing
but the act of choosing those passions which we must follow for the sake
of our happiness. 461
And such successful balancing of the passions could be recognized

when someone acted in accordance with their interest. This concept of
interest was relatively new, and can be summarized in the shortest form
as a legitimized profit motive. Hume compared avarice with other
passions and found that the desire of gain, is a universal passion which
operates at all times, in all places, and upon all persons and is preferable
to other passions which operate only by intervals, and are directed
146
against particular persons. 462 Montesquieu equalled the love of gain with
interest and argued that it is fortunate for men to be in a situation where,
though their passions may prompt them to be wicked, they have
nevertheless an interest in not being so. 463 Francis Hutcheson, Adam
Smiths tutor, praised the calm desire of wealth as the civilizing force
that encourages rational calculation and calms other passions. 464 If
thinking had progressed in a linear fashion, we could mark a path from
Bacons idea that passions can be set against each other, through the
Enlightenment concept of pitting ones interest against other passions, to
Adam Smiths final solution: collapsing all passions into the drive for the
augmentation of fortune. 465 Of course this would be a clumsy
generalization, as a dissolution of passions into self-interest was proposed
by Hobbes in England or La Rochefoucauld in France long before
Smith. 466 Nevertheless, it seems undeniable that a gradual shift in
attitudes, or a reconfiguration of acceptable attitudes toward passions
occurred over the course of the seventeenth and eighteenth centuries.
Interest differed from avarice mainly in appearances. As Hirschman
writes, in the pursuit of their interests men were expected or assumed to
be steadfast, single-minded, and methodical, in total contrast to the
stereotyped behavior of men who are buffeted and blinded by their
passions. 467 This novel concept of predictable rationality will later
become a basis for the figure of homo economicus (see Chapter 42) and
abstract economic theorizing (Chapter 44), somewhat prefigured by 1758
Helvtius claims that just as the physical world is ruled by the laws of
movement, no less is the moral universe ruled by laws of interest. 468
The notion of individual interest can be apposed with the postMachiavellian concept of interesse, reason of state, which in the second
147
half of the sixteenth century came into use in Italian, French, and English
political thought. On the one hand [it was] obviously a declaration of
independence from the moralising precepts and rules that had been the
mainstay of pre-Machiavellian political philosophy; but, at the same time,
[it] aimed at identifying a sophisticated, rational will, untroubled by
passions and momentary impulses, that would give clear and sound
guidance to the prince. 469 The Duke of Rohan opened his 1638 essay On
the Interest of Princes and States of Christendom with a statement that
princes order their people around and interest orders princes around. 470
Also, earlier Italian writers called interest the tyrant of tyrants and the
prince of the princes. 471
Interestingly, both state and individual interest, much like the
neoclassical notion of utility (see Chapter 42), remained largely
undefined. Although for centuries the dichotomy between passions and
reason was absolutely fundamental to European moral discourses, the
new paradigm that united both in one notion of interest was now seen as a
self-evident frame of reference for both moral and amoral judgements. 472
If the literature on interest in statecraft explicitly cleared itself from moral
pretences, in terms of individual morality it has been immediately valued
as a virtue. There are few ways in which a man can be more innocently
employed than in getting money, claimed Hume. 473 And Montesquieu
argued that it is almost a general rule that wherever the ways of man are
gentle there is commerce; and wherever there is commerce, there the
ways of men are gentle. [] [It] polishes and softens barbarian ways as
we can see every day. 474 But by now we have arrived at the doux
commerce thesis, which has already been discussed in the previous
chapter.
Chapter 26:
In which iconoclasm as a mode of critique is critiqued.
Ye shall not make with me gods of silver
Neither shall ye make unto you gods of gold.
Exodus 20:23
The shift from feudal dues in kind to rents paid in cash and the
growing importance of cash transactions in general didnt go unnoticed
for contemporaries. As we noted in Chapter 18, many commented on the
social changes brought about by the new commercial economy.
Wallerstein dates these developments in England between 1540 and
1640. 475 And in fact, an the turn of century even merchants voiced
concerns about excessive commercialization of life, as can be seen in this
fragment of A Treatise on Commerce, written in 1601 by a British
merchant John Wheeler:
All the world choppeth and changeth, runneth and raveth after Marts,
Markets and Merchandising, so that all things come into Commerce, and
pass into traffic [...] this man maketh merchandise of the works of his own
hands, this man of another mans labor, one selleth words, another maketh
traffic of the skins and blood of other men, yea there are some found so
subtle and cunning merchants, that they persuade and induce men to suffer
themselves to be bought and sold, and we have seene in our time enowe,
and too manie, which have made merchandise of mens soules. 476
The most heavily exploited theme in critiques of the emerging

capitalist society was that of idolatry. The prohibition of idolatry had its
roots in the Old Testament commandment against worshipping idols the
products of human labor which one invests with supernatural powers. 477
It is Yahwehs first concern in the Decalogue and the single most often
regulated issue in the Old Testament (the second being usury). In second
century, Tertullian picked up the Aristotelian notion of a final cause and
argued that all things can be used accordingly to their proper, natural
purpose, or they can be abused, which would be idolatrous. 478 Hence,
150
idolatry meant worshiping gold and silver, worshipping the products of

labor and confusing the natural with Satanic uses of things. It is perhaps
not surprising that the figure of idolatry served easily as a mode of
critique of the embryonic commercial society.
Hawkes argues, that the Protestant Reformation could be understood
precisely as an iconoclastic movement:
Luther was shocked and outraged to discover that the indulgence system
was no temporary aberration of papal policy, but merely an especially
egregious abuse of an ecclesiastical system that was, as he saw it, openly
run on market principles. This commodification of religion is the crux of
Luthers case against Rome. In his Appeal to the Ruling Class of the
German Nationality (1520) he informs his audience of: a state of affairs in
Rome that beggars description. You can find there a buying and selling, a
bartering and a bargaining, a lying and trickery, robbery and stealing,
pomp, procuration, knavery, and all sorts of stratagems bringing God into
contempt, till it would be impossible for the Antichrist to govern more
wickedly. There is nothing in Venice, Antwerp, or Cairo to compare with
the fair which traffics in Rome. [] the pope has built a market-house for
the convenience of all this refined traffic, viz.: the house of the datarius in
Rome. This is where all those resort who deal in this way in benefices and
livings [] if you bring money to this ecclesiastical market, you can buy
any of the goods. [] Indeed, here the devil becomes a saint and a god:
what can-not be done anywhere else in heaven or earth, can be done. 479
As the geometrical (see Chapter 15) ordering of economic life

progressed, the once certain axioms crumbled. In their place arose new
concerns about confusion of means and ends and about the dangerous
supremacy of representation over essence. Let us not forget that this was
the very definition of magic: the manipulation of symbols, appearances,
and representations for the sake of altering reality. And although this is
not a place for a detailed study of this issue, we can note that there
historically has been at least a recurring correlation between the periods
of commercialization of life and social concerns with witchcraft. This was
the case in Early Modern Europe and it is still the case in places that have
been integrated with the world market more recently, for instance, in
certain areas of contemporary South America 480 or Africa. 481
151
Although iconoclasm as an explicitly religious mode of critique of

commercialization declined towards the end of the seventeenth century,
we can see that its secularized form has remained one of the main modes
of critique of capitalism. After all, doesnt the Marxist critique of
commodity fetishism repeat the basic formula of arguments raised against
idolatry? An identification of appearance as false reality, an attribution of
social ills to confusion of appearances with reality, and a call to restoring
natural order and proper relationship between means and ends? This
figure is so handy that even the latest poststructuralist thinkers often fall
into its traps, and the fact that they turned it upside down to denounce the
substance in the name of surface changes little.
It is not that there are no instances in which such critique can be
legitimate. But iconoclastic arguments are very much like dialectic ones.
There are particular situations in which they can provide valuable
insights, but to believe that an argument is valid simply because it is
presented in this or that style is ludicrous. Not all iconoclastic arguments
are valid as iconoclasm as a mode of critique is not sufficient to make
them valid. It is just like with dialectics. There are some matters which
can be enlightened by three-lined dialectic stanzas, but generally poems
are not necessarily true just because they rhyme.
Historically there may have been moments when these iconoclastic
surges could be successful in terms of political mobilization, but if we are
to understand anything about historical and contemporary constellations
of power we must abandon this Old Testament hunt for false idols.
Chapter 27:
In which an example of iconoclastic argument from
seventeenth-century England is presented.
In all its specific manifestations the
spectacle epitomizes the prevailing model
of social life.
Guy Debord
Another stage on which concerns about the social effects of the

development of monetary economy was voiced was the stage of
Elizabethan theater. It is common knowledge that sixteenth and
seventeenth-century England saw an antitheatrical controversy in which
theater was attacked by numerous groups as it was considered in many
ways demoralizing and generally was held in contempt. The argument
usually stated that all spectacles are immoral because the theater relies
on a visual, sensual, medium of signification, which is intrinsically
corrupting [] This results in a fetishized or idolatrous sensibility, and
the adoration of human figures upon the stage leads to a correspondingly
objectified view of human beings in general. 482 In Agnews words, the
theater provided an intelligible, formal analogue of the increasingly
fugitive and abstract social relations of a burgeoning market economy. 483
However, when this issue is explored in more detail, one can see that
the antitheatricalists were often opposed not to the theater as such, but to
its abuse. As antitheatrical clergyman John Northbrook (fl. 1567-89)
wrote:
As farre as good excercises and honest pastimes & plays doe benefit the
health of manne, and recreate his wittes, so farre I speake not against it,
but the excessive and unmeasurable use thereof, taketh away the right
institution thereof, and bringeth abuse and misuse [] and therefore they
are rather chaunged into faults and transgressions, than honest exercises
for mans recreation. 484
154
It seems that the demarcation between the use and abuse of

theater was drawn along the lines of the taboo against commercialism.
Northbrook supported plays which were not performed publicly for
profit and gain of money. Munday criticized he who writeth for reward,
neither regardeth virtue, nor truth; but runs unto falsehood, because he
flattereth for commoditie. And the 1574 London City Council exempted
from its ban plays that were performed without collection of money of
the Auditorie. 485 Hawkes sums it up:
The main objection, it seems, is not to the theater per se but to the
startlingly new form taken by the theater in Elizabethan London. The most
conspicuous novelty to scandalize puritan opinion was the fact that the
playing companies had become commercial enterprises, selling a product
for a fee. Again and again, the tracts deplore the fact that the public
playhouses charge admission, and they decry the aesthetic effect of the
consequent need to pander to popular taste. The abuse of the theater, in
short, involved its commodification, and to abuse poetry was to
transform it into a commodity to be traded on the market. 486
These antitheatrical and more generally, anti-commercialist,

arguments were regularly expressed in the theater itself. Ben Jonsons
Bathelomew Fair denounced this wicked Fair [] the abuses of it []
this idolatrous grove of images, this flasket of idols. 487 In Milton,
Middleton, Shakespeare, Bunyan, or Adams we can find sharp critiques
of the novel commercial realities. Idolatry, usury, and their social and
cultural effects were common themes in the English Renaissance theater.
Arthur Stonex counted 71 plays that included the role of a usurer in the
period, and in 45 of them the usurer played a dramatically central role. 488
Often the sphere of monetary exchange was linked or related with the
erotic sphere. Prostitution, pimping, and homosexuality were linked with
usurious practices, they were essentially the same and differed only in
form. 489 Commodified sexuality and all non-reproductive sex acts were
regarded as violations of sexualitys natural telos and thus, an appropriate
155
metaphor for usury. 490 Meres explained it clearly in 1598: As

Paederestie is unlawful, because it is against kinde: so usury and encrease
by gold and silver is unlawful, because against nature; nature hath made
them sterill and barren, and usurie makes them procreative. 491 And
Howards argues that the sudden obsession with whores reflects a new
anxiety that due to the commodification of labor, everybody was
becoming a prostitute. 492
Probably the most overtly political play in this controversy over the
commercialization of theater and social relations was John Marstons
Histrio-Mastix, in which he supports arguments of the antitheatricalists
and treats the theater as a metonym for the market society: 493
The mercantile classes rise, the lower classes become wage-laborers
instead of feudal retainers, the nobility feels threatened. It is noble
Mavortius who first initiates the conflict into which Histrio-Mastixs
society degenerates, when he refuses to pay the players the price they
demand, preferring to get drunk and pass out. On waking, he begins to
decry the decline of the aristocracy, deploring the new state of affairs
[][Finally] civil war breaks out between the nobles and the merchants.
Chaos soon ensues, and the stage is held by a crowd of name-less
Russetings and Mechanicalls, who vow to kill all the nobles and middle
classes alike:
Slid, we are men as well as they are.
And we came all of our Father Adam.
Goe to then, why should we be their slaves?
Liberty, liberty, liberty 494.
All this is usually ignored in the analysis of economic history and

declared null and void for any contemporary political reflection. I would
argue that this is a big mistake. When we forget about these past debates,
we end up wasting time by repeating them time after time. And by
overlooking this particular controversy, we may end up even worse. We
may end up getting excited about Debords Society of Spectacle another
analytically useless offshoot of iconoclastic exorcism.
Chapter 28:
In which we see that economic freedom was
instrumental for the market equalizing machine.
Laissez faire, morbleu! Laissez faire!
Marquis d'Argenson
For many mainstream historians of economics, the French

physiocrats were the first real economists. The conomistes praised
private property, individual self-interest, and the agricultural sector. They
considered the latter as the only productive sector of economy, hence the
only possible source of surplus was cultivated land or, in other words,
nature and human labor. Therefore, they are often considered inventors
(wrongly) or proponents (rightly) of a sort of labor theory of value. While
they are also known for their influence on Smith or Ricardo, they are
probably best known as enthusiastic supporters of laissez-faire economic
policies in general and liberalization of trade in particular.
The liberalization of commerce was presented above all as a way of
dealing with periodical scarcities of grain (for more on scarcity see
Chapter 29) and high prices. They argued that market regulations do not
prevent scarcities or limit prices in times of dearth but are their very
causes. Dearth, that is to say the actual insufficiency of the quantity of
grain necessary for a nation's subsistence, is obviously a chimera. The
harvest would have had to be nil, in the strict sense of that term, 495
argued Abeille in 1763, and added, As soon as people know that
commerce is free free within the country and free also between one
country and another they know full well that at the end of six months
imports will relieve the country's lack. 496 Freedom is the only possible
preservative against scarcity, wrote Turgot in his Lettres sur le
commerce des grains. 497 Condorcet argued likewise, when defending
158
unlimited freedom for the grain commerce at all times, withstanding

extreme situations such as military blockade. 498
When the Scottish physician Arbuthnot urged in 1773, Let the corn
flow like water, and it will find its level, 499 he encapsulated both the
ends and means of the physiocratic argument. Freedom of trade must lead
to the best possible results because market is both the providential and
natural place of equalization. First, Divine Providence (Chapter 23)
guarantees the proper functioning of the markets, and therefore all
imbalance must be caused by human wrongdoings. 500 Second, the market
mechanism is conceived in biological and hydraulic terms. Already
Boisguilbert (Chapter 21) theorized market equilibrium in these terms, 501
arguing that:
by immediately removing an unnatural element like a fallen boulder, the
deviation of the natural course of a river ceases, with the ensuing
reestablishment of the good conditions of nature. Consequently the
remedy of an ill is nothing more than the cessation of its cause. No
disorder has ever been found in nature without its remedy, as there
cannot be a mountain without a valley. 502
And the physiocrats picked up these themes. As Christensen argues,

Quesnays language resonates with the meanings it takes from his own
physiological
writings
and
from
the
biological
work
of
his
contemporaries. This meaning is not confined to physiology but involves

the larger economy of nature: the circulation and regeneration of vital
materials within the womb of nature. Nature reproduces itself. 503
Quesnay, a physician who took an interest in economy only at the
age of 60, based his economic models on the cardiovascular system of
blood circulation. 504 As blood must flow freely through the body to
irrigate all the parts, money has to flow through economy. The body
provides the map of the structure and operation of the socioeconomic
system. 505 The scientific objectivity of this approach seemed for
159
Quesnay undeniable. After all, he tested it empirically, when he

experimented with homemade machines made of water pumps and tubes
of tin. 506
Another important influence for the physiocrats was China, which is
not surprising given that at that time it was the richest and in many
respects the most developed state on the planet. Fascination with China
was thus not uncommon in Europe, and figures such as Leibniz, Voltaire,
or Diderot are often described as sinophiles. 507 In Despotisme de la Chine
(1767), Quesnay presents a systematic digest of the Chinese doctrine,
worthy to be used as a model for all states. 508 China was idealized and
reshaped to fit the needs of French liberals. The meritocratic mandarinate
was praised as a truly rational and enlightened system of government, 509
hard-working and entrepreneurial Chinese were contrasted with idle and
poor European vagrants, 510 and the legitimacy of various policy proposals
was established through claims that they had already been implemented
in the Middle Kingdom. On the other hand, Chinese policies that didnt
sit well with physiocratic doctrine, such as government aid for the poor in
times of scarcity, were harshly criticized or simply omitted and
ignored. 511
Chinese culture provided European writers also with more intangible
sources of inspiration. For instance, it was noted already in the 1760s that
Quesnays Tableau economique (one of the first European graphic
macroeconomic models ever, see figure) was modelled after the ancient
Chinese Book of Changes, the Yijing (yes, the very same Yijing that plays
the central role in Philip K. Dicks The Man in the High Castle). 512 It
would certainly constitute an intellectual abuse to say that the whole
edifice of European economics was built on one ancient divination text
because the Tableau didnt have that much of an influence on the
160
economic genre. But one can see that this enthusiasm for neat, albeit
abstract, models is a shared trait of economics and religion alike up to this
day (Chapter 44).
161
Using the figure of China as a way of establishing legitimacy was

criticized by many contemporaries of the physiocrats, including
Montesquieu. This is not the place for a prolonged discussion on this
issue, but it can be seen as an interesting case of an economic emulation
(Chapter 24) at a moment in history, when the country most worthy of
emulation seemed to be not in the West, but in the Far East.
But physiocracy was criticized for much more than its nave
sinophilia. Tocqueville criticized the conomistes for the fact that they
construced abstract models of essential order and then wanted to
reconstruct the individuals to fit this imaginary society. It does not
simply reform men, it transforms them, [the role of the State for
physiocrats] is not only to command the nation, but to shape it in certain
way. 513 This sort of government leads to a form of despotism that is
dazzling men instead of enlightening them. 514 The physiocrats, in fact,
did propose a seemingly paradoxical, although well-known for anyone
who has ever met a neoconservative, mix of anti-statist ideology and
advocacy of strong government. On the one hand, economic activity was
to be freed from governmental interference, on the other, this freedom
was to be guaranteed by an all-powerful ruler. Representative of this
approach was Lemercier de La Rivires 1767 proposal for establishing a
regime of co-property, in which the sovereign would own a set proportion
of all productive resources in the country. This would remove the
potential conflict of interest between the government and private industry
and ensured that as long as the sovereign acts in his best self-interest, he
acts also in best interest of his subjects.
This was an interesting usage of the recently established paradigm of
self-interest (Chapter 25), but whats perhaps more important is that this
was one of the first comprehensive attempts to construct the identity of
162
economic interests within a nation-state. The attempt to establish a

synthesis of many contradictory elements. To erase conflicts, to reconcile
different forces, to smooth out surfaces. This will for synthesis will
corrupt the character of economic reasoning from then on.
The market is a synthesizing machine as such (Chapter 15), and
social and economic ills are result of imperfect functioning of this
machine. Recently, it has been argued that this is the neoliberal
paradigm, 515 but in fact this is the basic logic of all main economic
doctrines, all economistic doctrines, Marxism notwithstanding (Chapter
39). Economy is seen as a natural sphere of equalization. It may be (and
in practice, always is) distorted by cultural backwardness, governmental
interference, or capitalist exploitation (delete as appropriate), but is
potentially capable of becoming a matrix for a just society. Provided a
couple of more or less radical changes in economic policy, the goal will
be achieved, the perfect equilibrium will be established, and peace will
finally be achieved (Chapter 11). To take part in the process of
equalization, one simply has to produce. Hence, so common in classical
economics, liberal and radical alike, the contempt for nonproductive
work, such as the domestic labor of women 516 or for landlords profits,
achieved without any labor at all. 517 Without expounding on this issue,
and certainly without resolving it, let us only note the ambiguity of
arguments for introducing pay for domestic work. On the one hand, they
express the understandable need for recognition of domestic works worth
and the domestic laborers dignity. On the other, their successful
introduction would lead to subsumption of yet another aspect of life under
the cash nexus. Maybe today, it really is the only attainable way to
improve the domestic laborers position in the current constellation of
power, but if so, it is very telling of this constellation.
163
But for now let us go back to the physiocratic treatment of freedom.

What is of outstanding importance here is to understand that when we
talk about freedom we do not speak of some abstract idea or value and
not about the political ideal of libert, but about a very concrete way of
arranging economic life. Analyses of economic freedom as a discourse,
practice, and institution must not succumb to its praise as an ideal. By
doing that, it becomes nothing more than a blind apology of liberalism,
without bringing us any closer to understanding how it works. Foucault
proposes a quite good approach to freedom:
Ideology of freedom really was one of the conditions of development of
modern or, if you like, capitalist forms of the economy. This is undeniable.
[] More precisely and particularly, freedom is nothing else but the
correlative of the deployment of apparatuses [of power which ][] cannot
operate well except on condition that it is given freedom [...] the
possibility of movement, change of place, and processes of circulation of
both people and things. 518
And then he describes the physiocratic discourse as a pure affirmation of

these new techniques of liberal governance, which were:
Connected to what the physiocrats called physical processes, which could
be called natural processes, and which we could also call elements of
reality. These mechanisms do not tend to a nullification of phenomena in
the form of the prohibition, you will not do this, nor even, this will not
happen, but in the form of a progressive self-cancellation of phenomena
by the phenomena themselves. In a way, they involve the delimitation of
phenomena within acceptable limits, rather than the imposition of a law
that says no to them. 519
It seems that the capitalist economy as we know it cannot function (at

least in its core countries) without some degree of economic laxity, for
instance, without license to sell and buy labor. Although today it is a
liberal clich to portray economic freedom as a foundation and a
necessary prerequisite for universal political freedom, for the early
liberals that was clearly not the case. The two were quite distinct, and
while legitimacy of the former was based on scientific policy and
rational government, the latter was rather seen as a threat to the edifice
164
of Enlightened policy that needed to be muted and kept in check. We will

come back to this confusion of two freedoms in Chapter 31.
Foucault argues that with the physiocrats, the conceptualization of
the marketplace changed so it became a site that reveals something like a
truth:
This does not mean that prices are, in the strict sense, true, and that there
are true prices and false prices. But what is discovered at this moment, at
once in governmental practice and in reflection on this governmental
practice, is that inasmuch as prices are determined in accordance with the
natural mechanisms of the market they constitute a standard of truth which
enables us to discern which governmental practices are correct and which
are erroneous. In other words, it is the natural mechanism of the market
and the formation of a natural price that enables us to falsify and verify
governmental practice when, on the basis of these elements, we examine
what government does, the measures it takes, and the rules it imposes In
this sense; in as much as it enables production, need, supply, demand,
value, and price, etcetera, to be linked together through exchange, the
market constitutes a site of verification, I mean a site of verificationfalsification for governmental practice. 520
Thus, government becomes economic government. As Terranova

writes: the natural laws of the market constitute the primary referent for
a government that, from now on, will present itself always as an
economic government. 521
It can be said that when Foucault presents these developments as
qualitatively new, when he contrasts historical periods when market was a
site of jurisdiction and a site of verification (or, in fact, almost always
when he uses the past as a contrasting background for the phenomenon at
issue), he seems to be indulging in completely unnecessary and
analytically harmful periodization. Nevertheless, to some extent these
intuitions reflect the developments in eighteenth-century political and
economic discourse. When Quesnay spoke about a good government
being economic government, 522 it seems that this was what he had in
mind that the economic realm maps out the field of state politics
(Chapter 32).
Chapter 29:
In which we see the roots and fruits of the scarcity figure.
Lack is created, planned, and
organised, it is never primary.
Gilles Deleuze and Felix Guatarri
The key to understanding modern economics is the notion of scarcity.

Assumption of the main fact of scarcity 523 constituted the basis for the
most part of twentieth-century economics and in 1935 economic sciences
were simply defined by Robbins as the science which studies human
behavior as a relationship between ends and scarce means which have
alternative uses. 524 Today the general understanding of this issue is one
exemplified by Sartres claim that the whole of human development has
been a bitter struggle against scarcity. 525 Even such an acute mind as
Foucault seemed to reaffirm this ahistoricity of scarcity, arguing in 1966
that the situation of scarcity is perpetual and fundamental 526 to mens
life. This approach fits well with the tendency to consider lack as the true
fundament of all reality (Chapter 11), but however scarce is the research
on scarcity, I would argue that it is sufficient to constitute a base for an
argument against this threadbare view on lack. Scarcity, in the current
sense of the term, is a quite recent invention.
The etymology of the English scarcity reveals to some extent the
historical development of the notion. Of medieval origin, derived from
the Old French escarcet, it was at first used to denote an insufficiency of
supply and in the fifteenth century acquired a more specific sense of a
dearth. 527 It wasnt until the nineteenth century that the word took on its
modern meaning of a general condition. As late as in 1763, Abeille wrote
that scarcity means a present insufficiency of the amount of grain
necessary for a nations subsistence. 528 At that time it was always a
scarcity of or a time of scarcity, never simply scarcity. 529 Hence, a
166
juridical system of price controls, regulations of the right to store and the
prohibition of hoarding was put in place to prevent events of scarcity
altogether or limit the social impact when the dearth did occur.
In the eighteenth century, a different take on scarcity was taking roots
in European economics. The physiocratic school (Chapter 28) argued that
instead of maintaining a legal apparatus preventing scarcity from
occurring, an economic system should find a point of support in the very
processes of scarcity. The quantitative fluctuations of production resulting
sometimes in abundance and sometimes in scarcity were to be studied, so
the other elements of reality could be fine-tuned in relation to them in
such a way that scarcity is cancelled out. 530 Parendo vincere: in order to
conquer nature, man has to obey its laws. That is the literal as well as real
meaning of the physiocratic movement: physio cratos, the government of
nature.
Curbing scarcity by a sort of laisser-faire, [] a sort of [laisser]-aller,
in the sense of letting things take their course. It means allowing prices
to rise where their tendency is to rise. We allow the phenomenon of
dearness-scarcity to be produced and developed on such and such a
market, on a whole series of markets, and this phenomenon, this reality
which we have allowed to develop, will itself entail precisely its own selfcurbing and self-regulation. So there will no longer be any scarcity in
general, on condition that for a whole series of people, in a whole series of
markets, there was some scarcity, some dearness, some difficulty in
buying wheat, and consequently some hunger, and it may well be that
some people die of hunger after all. But by letting these people die of
hunger one will be able to make scarcity a chimera. 531
In other words, the physiocrats naturalized the phenomena of

abundance/scarcity, and tried to arrive at a mechanism that would work
within this new reality of scarcity and not against it. 532 It was argued that
due to such developments, scarcity must in the long run become a
chimera, 533 as the phenomenon will be gradually compensated for,
checked, finally limited, and, in the final degree, cancelled out, without it
being prevented or losing any of its reality. 534 Exactly this was the
167
moment the long-run perspective started to play a significant role in

economics.
The change in the treatment of scarcity was, as it must have been,
accompanied by a shift in the discourse on economic subject. Around the
middle of the eighteenth century, the concept of the individual
husbandman being charged with God-given tasks died out, and farming
started to be conceived in terms of a series of natural processes. 535 Profit
ceased to be perceived as a result of the individual diligence of the
husbandman, but rather as the outcome of managerial procedures applied
to nature. 536 This divorce from an individualistic perspective on
agricultural production meant also the end of the idea that economic
production can be understood in terms of particularized and isolated
actions of husbandmen. This new global perspective was the perspective
of the population (Chapter 20).
Thus, in the second half of the eighteenth century, population
becomes the collective subject-object 537 of economic and political
management. As Quesnay wrote in 1756, the condition of the population
and the employment of men are [] the main objects of economic
government of states; for the fertility of the land, the monetary value of
products, and the good use of financial wealth are the results of the work
and industry of men. 538 Thats why Davenant notes in 1771 that people
are the real strength and riches of country. 539
As we have noted (Chapter 20), the notion of population is associated
with a changing attitudes towards the poor. The pauper was no longer an
issue of morality but rather of productivity. Thus, in the eighteenth
century, many ceased to see temporary scarcity or even permanent poverty
as undesirable. Ontes wrote in 1774 that misery [of the nation]
168
corresponds with its wealth, 540 MFarlane claimed in 1782 that the
greatest number of poor is not to be found in barren countries or amidst
barbarous, but in those which are the most fertile and the most
civilized, 541 and Burke argued that once the masses were fated by the
laws of political economy to toil in misery, what else was the idea of
[material] equality but a cruel bait to goad mankind into selfdestruction? 542 Humes economic theory explicitly justified the existence
of scarcity, inscribing it into the theory of the dynamic of social needs and
integrating it into a broader theory of progress (Chapter 23). 543
A conventional warning should be issued here this change in the
treatment of scarcity, its generalization and internalization into economic
processes, didnt happen at any single point in history. Late eighteenthcentury France wasnt the place where this change occurred, it is merely
the point where it can be seen.
And in any case, it was still a long way from Robbins main fact of
scarcity. For instance, for Adam Smith scarcity was still specific and
local, contrasted with the usual abundance of low-priced goods after a
good harvest, 544 and Brown persuasively argues that attribution of the
neoclassical notion of generalized scarcity to Smith is a bad case of
retrospective reading. 545 But it can also be argued that without the
inclusion of scarcity as an integral element of economics, the later
neoclassical generalization of it would not be possible.
169
For the purposes of a crude generalization, the attitudes to scarcity

can be arranged in order:
x
from moral-religious discourses aimed at providing alms to the poor;
through paternalist systems of legal regulations of markets that tried

to prevent occasional scarcities, treating them as external to market
mechanism;
through laissez-faire markets which tried to limit the harm done by

occasional scarcities by treating them as internal to market
mechanism;
to the neoclassical generalization of scarcity, which treated it as an

essential condition of every action and simply a natural economic
environment.
This gradual shift to the acceptance of scarcity was accompanied by
the emergence of a post-scarcity utopia. The idea of a final stage of

economic development is built into the great majority of economic
doctrines. Marx envisioned a society which was able to provide the
common satisfaction of needs. 546 As Arendt writes, this hope for an
eventual liberation from labor and necessity was the Utopian element
of Marxism and at the same time the actual motor of all Marx-inspired
revolutionary labor movements. It is the opium of the people which
Marx had believed religion to be. 547 On the other end of the political
spectrum, classical liberal economists founded their post-scarcity utopias
on Ricardos hypothesis of a falling rate of profit and the stationary state.
J.S. Mill argued that economic development must eventually lead to when
the rate of profits falls to zero, it will bring about a state of social
equilibrium in which people will be free from impulses towards
competitive accumulation. 548 Then, human concerns would shift from
170
problems of quantity to a matter of quality, 549 focusing on all kinds of

mental culture, and moral and social progress [on] the Art of Living. 550
More recently, the idea of post-scarcity utopia was employed by Keynes.
In Economic Possibilities for our Grandchildren, he envisaged that
economic progress would eventually lead us out of the tunnel of
economic necessity into daylight 551 of abundance, when the moral codes
will be transformed 552 and man will concentrate on his real, his
permanent problem how to use his freedom from pressing economic
cares, how to use his leisure, which science and compound interest have
won for him, to live wisely and well: 553
We shall once more value ends above means and prefer the good to the
useful. We shall honour those who can teach us how to pluck the hour and
the day virtuously and well, the delightful people who are capable of
taking direct enjoyment in things, the lilies of the field who toil not,
neither do they spin. But beware! The time for all this is not yet. For at
least another hundred years we must pretend to ourselves and to everyone
that fair is foul and foul is fair; for foul is useful and fair is not. Avarice
and usury and precaution must be our gods for a little longer still. 554
All these post-scarcity visions were obviously built on the

essentialist,
ahistorical,
understanding
of
scarcity,
needs,
and
consumption and therefore, on the old dichotomy between natural and

artificial needs. While the conservative Greeks told a story about a lost
Golden Age when people were content with their natural needs (Chapter
7), economists told a story about a coming Golden Age when economic
progress will allow for their satisfaction. But as Xenos argues:
The promise is in each case based on the presumption that the distasteful
present is a necessary precursor to the attractive future. And in each case,
the present and past are explained in terms of a necessary struggle with
scarcity that will yield a future of abundance. In a curious way, then, this
tradition, which sets out to criticise the status quo winds up offering a
legitimisation for it. 555
171
That was certainly the case with Hume, Smith, Mill, Marx, and
Keynes. They all integrated economic dynamics into a larger theodicean
narrative of progress, whether under the name of refinement or dialectical
history. 556
Chapter 30:
In which it is shown how liberal political economy was used to
legitimize nineteenth-century economic genocide.
A brilliant way of organizing famine.
Bertold Brecht
As we have seen, the new subject-object of modern political

economy was population, and its new mode of management, biopolitics
politics concerned with the biological life of a population. But since the
population is nothing more than what the state takes care for its own sake
[] the state is entitled to slaughter it, if necessary. So the reverse of
biopolitcs is thanatopolitics. 557 Thus, events such as the infamous Great
Irish Potato Famine, with a death toll of one million, 558 should not be
perceived as a fatal mistakes of the new system of the management of
population and scarcity, but the very vehicles through which this system
operates.
Let us consider the less-known, but recently flawlessly portrayed by
Davis, 559 Great Famine of 1876-1878 in India, which killed around 5.5
million people, caused ten times more distress, and brought terrible
horrors upon the people. It is estimated that during the week-long
celebration of Queen Victorias Diamond Jubilee, around 100,000 of her
subjects starved to death. 560 British village officers reported to their
supervisors cases of cannibalism; one madman dug up and devoured part
of a cholera victim, while another killed his son and ate part of the
boy. 561 The only well-fed part of the village population were the pariah
dogs that feasted on the bodies. 562
This is how one British journalist described the situation in the country:
174

The dying and the dead were strewn along the cross-country roads. Scores
of corpses were tumbled into old wells, because the deaths were too
numerous for the miserable relatives to perform the usual funeral rites.
Mothers sold their children for a single scanty meal. Husbands flung their
wives into ponds, to escape the torment of seeing them perish by the
lingering agonies of hunger. Amid these scenes of death the Government
of India kept its serenity and cheerfulness unimpaired. 563
Victims of Madras Famine, 1876
In the same article another important statement catches attention:

One civilian, a Mr. MacMinn, unable to endure the misery around him,
opened a relief work at his own expense. He was severely reprimanded,
threatened with degradation, and ordered to close the work immediately. 564
This was because the main principle of colonial famine policy was the
sufficiency of private trade and the necessity of non-interference with
private trade. 565 Humanitarian hysterics were denounced and strict
orders that there is to be no interference of any kind on the part of the
Government with the object of reducing the price of food were issued. 566
An amalgam of Smithian and Malthusian ideas was brought up to justify
175
this. After all, The Wealth of Nations, a textbook in the East India
Company college at Haileybury, asserted that famine has never arisen
from any cause but the violence of government attempting by improper
means, to remedy the inconvenience of dearth. 567 And Malthusian
demographics allowed the authorities to claim that [e]very benevolent
attempt made to mitigate the effects of famine and defective sanitation
serves but to enhance the evils resulting from overpopulation. 568 (See,
how the providential futility thesis [Chapter 23] is at work here). A
good example of this attitude was Queen Victorias economist Nassau
Seniors expression of fear that the the famine of 1848 in Ireland would
not kill more than a million people and that would scarcely be enough to
do much good. 569
All in all, the main preoccupation of colonial officials was that the
scarcity might disturb the intricate system of the multilateral settlement
of [Britains] balance of payments. 570 According to Temple, the Famine
Commissioner for the Government of India, elevating public health above
public finance was irresponsible. Although a couple of years earlier he
had managed to deal very efficiently with a drought that severely
damaged the harvests in Bengal, and thanks to measures such as food
imports and providing relief works, the official death toll was only
twenty-three starvation deaths, after he came under harsh criticism from
London, he changed his policies completely. 571 The relief proposals were
denounced
as
Communism.
573
Fourierism
572
and
species
of
International
When a welfare safety net was provided, it was in the
form of forced labor camps in which the daily diet provided less calories
than were provided in the Nazi Buchenwald labor camp. One district
official suggested that it would be better to shoot down the wretches
than to prolong their misery in the way proposed. 574
176
In a fashion resembling todays liberal attacks on the unemployed

and the poor, the high mortality was blamed on the victims as well. After
all, nor will many be inclined to grieve much for the fate which they
brought upon themselves, and which terminated lives of idleness and too
often of crime. 575 The economics of famine, its structural underpinnings,
were completely ignored. Meanwhile, three such features can be pointed
out: first, change in the local debt regime; second, new local market
infrastructure; and third, integration with the world market.
As elsewhere in the world, pre-capitalist economy in India depended
largely on the commons. Dry grass for fodder, shrub grass for rope,
wood and dung for fuel, dung, leaves and forest debris for fertilizer, clay
for plastering houses, and, above all, clean water. All classes utilized
these common property resources. 576 With the imposition of colonial
rule, all that had changed. Enclosing lands and forest, and above all,
privatizing the water sources demolished the traditional modes of
subsistence. Moreover, after the Mutiny of 1857, the traditional system of
communal grain reserves regulated by the social debt regime (Chapter 4)
was replaced by the money economy and its cash nexus. 577
In practice this meant pauperization of the masses and establishment
of a debt peonage as the main mode of production nothing is cultivated
in India without advances, sugar, indigo, and everything which is
cultivated to be exported from that country, testified Prideaux before the
House of Commons in 1848. 578 The creditor debtor relationship was
easily transformed into one in which the debtor delivered whatever
surplus produce he had to the creditor. The creditor became his landlord,
and de facto the master of the whole family, as described by Bagchi, 579
while Wallerstein adds some details: once a weaver accepted advances
from the East India Company, he was required to deliver cloth to the
Company, and it became illegal to sell this cloth to anyone else. The
177
Company was given the right to impose guards over the weavers to see
that they fulfilled their contracts, and in the case of indigo cultivation he
goes on to argue that it would not be wrong to describe [it] as indigo
slavery. 580 Perhaps the 1848 testimony of J. A. Turner of the Manchester
Commercial Association that India, with its cheap labor, will at all times
be able to compete with the slave labour of America, 581 is the most
telling.
Second, there were the railroads. Lauded as safeguards against the
famine (after all, they did facilitate easy circulation of goods), they were
in fact used to ship grain out of drought-stricken districts. 582 Tens of
thousands of miles of new tracks were supposed to make famine
impossible, 583 but in fact the population decreased more in the regions
with railways than in regions without them, 584 and as Washbrook has
shown, the death-toll was heaviest in the most commercially advanced
districts. 585 Commercial development and the most basic security of life
didnt go hand in hand. Between the years 1875 and 1900, from 10 to 20
million people died from successive famines (according to different
estimates), annual grain exports increased from three million to 10
million tons, and by the turn of the century India was supplying nearly a
fifth of Britain's wheat consumption. 586
This is the third feature of famine economics integration of the
Indian economy with the world-market. The great European demand for
wheat and a rapidly developing futures market on which standing crops
were bought in advance elevated prices of wheat, making it unattainable
to the local population. The profits from exports were pocketed by the
small Indian moneyed elite, moneylenders, and grain merchants, while
the incomes of direct producers were halved 587 and their life expectancy
in the years from 1872 to 1921 dropped by 20 percent. 588
178
Of course India wasnt alone. This was happening all over world,
wherever the colonial enterprise put its roots. As Davis says:
We not are dealing, in other words, with lands of famine becalmed in
stagnant backwaters of world history, but with the fate of tropical
humanity at the precise moment (1870-1914) when its labor and products
were being dynamically conscripted into a London-centered world
economy. Millions died, not outside the modern world system, but in the
very process of being forcibly incorporated into its economic and political
structures. They died in the golden age of Liberal Capitalism; 589
Europes la belle poque was the Global Souths colonial war, debt
peonage, genocide, labor camps, and famine. All done for the sake of the
White Mans Burden and under the aegis of Adam Smith. When the
Soviet famines of 1928-1934 which took the lives of around 5.5-6.5
million people are discussed as a case of economic terror, they are rightly
so. But so, too, should be discussed the famines orchestrated by the
capitalist countries. In both cases, it is wrong to say that the economic
discourse was secondary to a pure struggle for power, because economics
is a struggle for power. Economic discourses and practices are (one of)
the very vehicles through which domination and discipline is ensured.
The differences between Queen Victoria thanking the Irish for their
patience in resignation in the face of the Potato Famine and Stalin
executing by a firing squad demographers who found out that the due to
famine the USSR lacks millions of citizens are pretty obvious. But at the
same time, there are more similarities between the two than it may at first
seem (Chapter 46).
Chapter 31:
In which a time is shown when everyone understood that economic
and political freedoms arent the same.
No injury is done to the willing.
a common law doctrine
Today political and economic freedoms function usually as one,

being presented either as fundamental to each other or simply two
expressions of the same abstract Freedom. It is worth noting that not
always has this been the case. At the turn of the eighteenth century, it was
often suggested that the spheres of commerce and politics were
essentially distinct, and although they may have some tangent points, they
should be generally conceived separately. Economic freedom was about
freeing economic flows, as in freedom of trade and industry, free
circulation of labour and of stock, and free competition all vital
instruments of national wealth, 590 while political freedom was, well, to
put it simply, just dangerous.
Coleridge tells the story of a shipowner in 1798: An acquaintance of mine
(least of all men a political zealot) had christened a vessel which he had
just built the Liberty; and was seriously admonished by his aristocratic
friends to change it for some other name. What? replied the owner very
innocently should I call it the Freedom? That (it was replied) would be
far better, as people might then think only of Freedom of Trade; whereas
liberty has a jacobinical sound with it! 591
Historically, the development of liberal economic institutions was

usually carried out by not so liberal governments. The physiocratic
argument that to break old economic structures and ensure certain levels
of laissez-faire an (enlightened) despot needs to be in power (Chapter 28)
proved to be one of their few correct observations. This was because
scrapping of the old institution didnt mean setting free the natural free
spirit of capitalist entrepreneurship. Such a spirit has never existed. The
new capitalist institutions had to be built and upheld. As Reddy argues:
180
Extensive recourse to coercion was necessary to impose liberal social

orders in Europe not just because old habits held the multitude in thrall,
nor just because the machinations of benighted reactionaries threatened to
undo the victories of virtue. Coercion was necessary because liberal
reform did not produce dramatically new and free social relationships.
Liberal reform did not liberate most people; it provided some with
momentary windfalls (as in the abolition of the tithe or of seigneurial
dues); it gave to all new opportunities to fight their way out of (and new
chances to fall back into) the subjection of propertylessness. 592
Anyone who has studied history of economy and economic

institutions and not just history of economics and economic ideas can
confirm that laissez-faire consisted not so much in leaving things alone
but was developed through very proactive governmental policies. The
regime of economic freedom was planned, organized, and executed with
full force. 593 As Foucault notes, liberalism has developed extremely
coercive techniques that in a certain sense have become a counterbalance
to a determinate economic and social freedom. Individuals certainly
could not be liberated without educating them in a certain way. 594 And
they had to be liberated, that is, their social relations had to be mediated
by the labor market and the money nexus (Chapter 34) if capitalist
economy was to function. One could say that the freedom gained in the
process was the freedom of poultry released from battery cages into the
free range.
The fact that it could be called free at all comes in part from a longstanding tradition in European legal philosophy which asserted that
compulsion by any means other than open violence isnt really a
coercion. Therefore all choice is by definition free. As Aristotle put it,
none is voluntarily treated unjustly or in other words, one who was
ever willing cannot be seen to suffer an injury. 595 Physical force
eliminates will, but compulsion does not. This is why Hobbes wrote that
181
Covenants entered into by fear, in the condition of mere nature, are

obligatory. [] if I be forced to redeem myself from a thief by promising
him money, I am bound to pay it, till the civil law discharge me. 596 In
this light, all economic exchange is free as long as parties do not steal
from each other or use physical force (but not a threat thereof). A galley
slave shackled to his seat wasnt free, but if it was a monetary debt that
kept him in place, he was as free as the galley captain. This was also
made possible by the concept that money can act as a neutral universal
equivalent, a subject upon which we have already touched (Chapter 15)
and to which we will return in more detail later (Chapter 34). (Perhaps we
can also note here that the central figure of liberal political mythology,
namely the [historically ludicrous] myth of the social contract is an
interesting vehicle for establishing the legitimacy of politics by means of
economic metaphors.) 597
This sort of thinking is still evident in more recent economic
doctrines, perhaps most vividly in the writings of Hayek and Mises who
claimed in unison that economic coercion simply cannot and does not
exist. 598 Economic coercion is defined out of existence. As Langholm
says, Where the old institutionalists speak of coercion [], authors in
the Austrian branch of the new institutionalism therefore call for freedom
or liberty in order for the invisible hand thus to guide economic
evolution. 599
This is truly a long way from Roman Emperor Julian the Unfaithfuls
idea to punish slave converts to Christianity by freeing them and throwing
them into the world of paid work. 600 From economic freedom as a
punishment for heretic slaves to economic freedom as the foundation of
all political liberties this is the distance we have travelled.
Chapter 32:
In which we see that classic liberals
were rebellious pro-statists.
The coldest of all cold monsters.
Friedrich Nietzsche
The European transition from feudal to capitalist economy was

accompanied by the emergence of a new kind of state regime: an
international system of balance between absolute monarchies. Wallerstein
argues that the history of modern statehood can be seen as one long
quest to create structures sufficiently strong to defend the interests of one
set of owner-producers in the world-economy against other sets of ownerproducers as well as, of course, against workers. 601 The state, if it is able
to organize an effective bureaucratic machine, can perform the following
functions for them:
x directly help compete in the world market (mercantilism);
x affect the ability of other states to compete (military power);
x mobilize their resources to perform these competitive and military
tasks (public finance) 602
Such a modern state becomes less the central economic enterprise
than the means of assuring certain terms of trade in other economic
transactions. 603 In other words, interstate system and the state itself
become an environment for economic struggles, and not so much the
main agent in them.
On the other hand:
Incorporation into the world-economy means necessarily the insertion of
the political structures into the interstate system. This means that the
states which already exist in these areas must either transform
themselves into states within the interstate system or be replaced by new
political structures which take this form or be absorbed by other states
already within the interstate system. The smooth operation of an integrated
division of labor cannot operate without certain guarantees about the
possibility of regular flows of commodities, money, and persons across
184
frontiers. It is not that these flows must be free. Indeed, they are hardly
ever free. But it is that the states which put limitations on these flows act
within the constraint of certain rules which are enforced in some sense by
the collectivity of member states in the interstate system (but in practice by
just a few stronger states). 604
It can be said that this was the rationale behind the post-Westphalian
regime of the interstate balance of power that Foucault describes in the
Birth of Biopolitics, and which is still in place today.
The economic debates on the role of the state from the seventeenth to
the eighteenth century seem to reflect that gradual change very well. First,
with mercantilism they introduced the national economy as a unit of
analysis 605 and then they meticulously redefined the role of the state. The
retrospective reading of these old debates that treats them as voices in a
modern dispute between state-advocates and market-proponents misses
the point. They were written in an environment in which these two
institutions were not at all opposed to each other, but on the contrary,
competed as a pair with the older arrangement of feudal economies, guild
systems, social debt regimes, and the paternalist relationship between the
sovereign and his subjects. Within the mainstream economic discourse, a
strictly anti-statist position simply didnt exist at the time. The
physiocrats favored active engagement of the state in economy. So did
mercantilist writers earlier, and so did English classic liberals
afterwards. The debate was over not the engagement itself, but about its
specific character.
The novelty of Turgot or Smith lay in their faith that markets can
work as universal equalization machines, provided that the state creates
the proper legal environment. If for Steuart (1712-1780) the modern
economy was a delicate watch that is continually going wrong; [] and
185
the workmans hand becomes necessary to set it right, 606 for liberal
economists the watch generally showed the right time.
Smiths The Wealth of Nations envisions a system of natural
liberty, a sort of providential ordering of economy that synthesizes
individual interests into common opulence:
All systems either of preference or of restraint, therefore, being thus
completely taken away, the obvious and simple system of natural liberty
establishes itself of its own accord. Every man, as long as he does not
violate the laws of justice, is left perfectly free to pursue his own interest
his own way, and to bring both his industry and capital into competition
with those of any other man, or order of men. The sovereign is completely
discharged from a duty, in the attempting to perform which he must always
be exposed to innumerable delusions, and for the proper performance of
which no human wisdom or knowledge could ever be sufficient; the duty
of superintending the industry of private people, and of directing it towards
the employments most suitable to the interest of the society. According to
the system of natural liberty, the sovereign has only three duties to attend
to; three duties of great importance, indeed, but plain and intelligible to
common understandings: first, the duty of protecting the society from
violence and invasion of other independent societies; secondly, the duty of
protecting, as far as possible, every member of the society from the
injustice or oppression of every other member of it, or the duty of
establishing an exact administration of justice; and, thirdly, the duty of
erecting and maintaining certain public works and certain public
institutions which it can never be for the interest of any individual, or
small number of individuals, to erect and maintain. 607
As one can see, the system of liberty is natural because it was said to
establish itself whenever artificial impediments are taken away, but in
practice it establishes itself through deliberate state policy. In Lectures on
Jurisprudence, he argues that whatever regulations are made with
respect to the trade, commerce, agriculture, manufactures of the country
are considered as belonging to the police, whose proper object should
be promoting opulence. 608 Smith challenged not the state as such, but
the outdated concept that the state should engage as an actor in the day to
day commercial dealings. This is the praise of Foucaults moderate
governance, which puts limits on the arbitrariness of a sovereigns
186
decisions and makes the economic environment more reliable, more

predictable. 609 As Goethe described it, it meant introducing a regular and
efficient system of political economy, of dispensing with all the arbitrary
power, and of ruling alone by law and justice. 610
If The Wealth of Nations depicted an enemy of the system of natural
liberty, it certainly wasnt the state but big business. As Brown notes:
Hardly a reference to these groups passes without a barrage of negative
terms: the clamour and sophistry of merchants and manufacturers
(Wealth of Nations I.x.c.25); the sophistry of merchants and
manufacturers (WN IV.ii.38); the impertinent jealousy of merchants and
manufacturersthe mean rapacity, the monopolizing spirit of merchants
and manufacturers (IV.iii.c.9); the interested sophistry of merchants and
manufacturers (IV.iii.c.10); with all the passionate confidence of
interested falsehood (WN IV.iii.c.13).
Smiths vision of economy, like that of the physiocrats, was sectoral,

meaning that he analyzed it not in terms of a series of co-dependent
markets, but of distinct sectors of economy: agriculture, manufacturing,
home trade, and foreign trade were seen as qualitatively different from
each other. 611
The economic relation between the individual and society was, thus, not a
simple one of aggregation or disaggregation, but was mediated through a
sectoral view of the composition of revenues. Within the system of natural
liberty, therefore, competition secures the greatest annual revenue, not by
promoting market equilibrium, but by means of facilitating the proper
course of sectoral development which underlies the natural progress of
opulence. 612
And Smith claimed that the actual historical development of

European economy is an inversion of its proper and natural, development:
Instead of agriculture being developed first, followed by the manufactures
of the towns, and finally by foreign trade, the actual order of development
in Europe had been based on the prior development of the towns and
foreign trade with agricultural development lagging behind. Again here,
the terms used by WN in describing this development are entirely
negative. Such development is characterised as an unnatural and
retrograde order (WN III.i.9) and contrary to the order of nature and of
reason (WN I.x.c.26). In obstructing the free circulation of labour, the
187
corporation laws have produced disorder, the greatest perhaps of any in

the police of England (WN I.x.c.45). 613
Thus, for Smith, the state was the enemy, insomuch as it was
hijacked by the interests of merchants. In his own words, The Wealth of
Nations was a very violent attack [] upon the whole commercial
system of Great Britain. 614 As Rothschild argues, his attacks on
corporations and guilds the silk weavers of London, the cutlers of
Shieffield, the master smiths, the bakers have attracted little attention in
the modern debates because they couldnt be mechanically transposed to
current political debates. 615 Nevertheless, when Smiths argument is
studied in his own contemporary context, it is clear that the guild system
was one of his primary targets. This is why Smith was denounced as a
friend of the poor 616 who is out of touch with the needs of a commercial
society. 617 In fact he attacked the contemporary laws and government
[which] may be considered [] in every case as a combination of the rich
to oppress the poor. 618 His argument for high wages was used in 1795 to
justify a parliamentary proposal to fix a minimum wages:
No society can surely be flourishing and happy, of which the far greater
part of the members are poor and miserable. It is but equity, besides, that
they who feed, clothe and lodge the whole body of the people, should have
such a share of the produce of their own labour as to be themselves
tolerably well fed, clothed and lodged. When the regulation [] is in
favour of the workmen, it is always just and equitable 619
No wonder a few weeks before The Wealth of Nations was published

in March 1776, the manuscript was seized by the London police and
almost destroyed. 620 Smith had been seen as seditious and rebellious. In
1793, Lord Lansdowne, the former prime minister, even argued in the
House of Lords that it was Smiths ideas that inspired the French
Revolution. 621 This is the foreign effect of Adam Smith French
Revolution and Socialism, repeated Lord Acton in 1881. 622 Austrian
188
economist Carl Menger, in turn, added: Smith placed himself in all cases
of conflict of interest between the poor and the rich, between the strong
and the weak, without exception on the side of the latter. 623
A French economist and Louiss XVI minister of finance, Anne
Robert Turgot, should be of special interest. Perhaps his practical policies
point to the character of the new liberal discourse even better than
Smiths theoretical writings. A good hallmark of Turgots economics is
his treatment of the 1770-1771 crisis in Limoges, when a famine tested
his devotion to the freedom of grain trade. On the face of it, he remained
committed to liberal doctrine. No! No! I will never be a cowardly
deserter! 624 he exclaimed when pressured to bring back market
regulations, and insisted that the freedom to transport and store corn
should be untouched. On the other hand, he criticized the physiocrats as a
sect of the most arrogant men that now exist who, unlike him,
preferred the laws of order over the rights of humanity. 625 He then
implemented a number of welfare policies to limit famines social effects.
Most importantly, he started a program of public employment, supported
food imports, and readjusted taxation. He opposed charity and
almsgiving, advocating in their place public works that would spread
money among the people. 626 It can be argued that, not for the first and
not the last time in history, a crisis was thus used to augment the social
importance of the cash nexus, but Turgots policies were, by modern
standards, rather ones of a moderate social democrat than a laissez-faire
champion. Nevertheless, the policies were considered a triumph in
Condorcets summary, this successful experiment had confirmed M.
Turgot in the truth of his principles. 627
If Turgot had opposition, it was not really from the paupers
demanding more paternalist protection nor was it from liberal economists
189
demanding more laissez faire. The strongest enemy was still the
establishment that owed its position to the medieval guild system. The
craft guilds, thanks to their semi-monopolistic position, were able to
affect both the market prices and wages. Also, they controlled standards
of work, working hours and conditions, entry to the craft, the number of
apprentices each master might have 628 to protect the standard of living of
their members. For physiocrats and other liberals, this sort of regulation
was no smaller a distortion of market mechanism than paternalist control
of the grain trade. The conservatives, on the other hand, mounted a
defense of the guild system, warning against abandoning the certainty of
the present for an uncertain future and envisioned a dark prospect of
universal alienation in which every manufacturer, every artisan, every
worker will regard himself as an isolated being, dependent on himself
alone, and free to wander in all the discrepancies of an often disordered
imagination; all subordination will be destroyed. 629 Turgot, in his 1776
edict for the suppression of the guilds, described them as bizarre,
tyrannical, and contrary to humanity and morality, 630 but just few weeks
after registering the reforms he was removed from the office. As
Rothschild says, the reforms proved too radical for Paris. 631
All in all, Smith and Turgot can certainly be seen as an advocates of
liberalization of trade, but this should be put in the appropriate historical
context. They promoted liberalization of commerce at a time when it was
still regulated by feudal institutions, laws, and customs. Their praise of
free trade was an attack on the state involvement in the charity-like
welfare provisions and on the power of the guilds. And not on, let us say,
socialist control over economy or etatist involvement in it, which would
have been at that time simply incomprehensible. One can see that both of
the main modern reactions to these proto-liberal discourses are therefore
190
at fault. Lefties, who see in them the first symptoms of the deadly disease
of neoliberalism, and righties, who see in them the first state-bashers
and apostles of laissez-faire, are equally guilty of crude appropriation of
the past for their immediate political use in the present (Chapter 36).
Chapter 33:
In which impact of banking on
the regime of debt is inspected.
The trouble with being educated is that it
takes a long time; it uses up the better part
of your life and when you are finished what
you know is that you would have benefited
more by going into banking.
P.K. Dick
For a very long time a strict definition of banking didnt exist. In the
UK, until the 1979 Banking Act, it was common practice to define it
simply as a business carried out by a banker, and a banker was defined as
someone carrying on the business of banking. 632 Such problems with
definitions are common when it comes to old institutions and practices,
and banking is certainly one of the oldest.
Already in the Code of Hammurabi one can find regulations of
banking procedures of temples and great landowners. 633 The oldest
Babylonian private bank known by its name was the seventh-century
BCE Grandsons of Egbi which gave loans, accepted deposits, issued
checks, and had its own merchant fleet. 634 The first giro system of
payment was developed in fourth-century BCE Ptolemaic Egypt, in
which a system of government granaries were turned into a network of
banks under the control of the central bank in Alexandria and its head,
called the Oeconomus. 635 In the second century BCE, the Bank of Delos
rose to significance, becoming a financial center for Hellenistic and
Roman merchants for at least four centuries. 636
In medieval Europe, the first prominent bankers were probably the
Knights Templar. Certainly, Le Goffs claim that the only fruit of the
Crusades kept by the Christians was the apricot was an exaggeration. 637
They brought about a rare concentration of capital and opportunity to
carry out international trade on an unprecedented scale:
192
Ships which carried armies to the eastern Mediterranean could and did
offer cheap facilities for return cargoes, and thus increased two-way trade
across the Mediterranean. [] [The Knights Templar] had their own ships,
kept their own private armies, depots and storehouses, and occupied
strong-points and castles at a number of strategically placed ports and
inland towns, from Spain to Syria and from England to Egypt. They could
therefore easily arrange the safe custody and delivery of valuable goods,
specie and coins, and often save the necessity of moving such specie and
coins by bilateral and sometimes trilateral offsetting transfers. They also
themselves owned considerable financial resources which they increased
as a result of accepting vast deposits from kings and merchants, which
they were then able to lend out to creditworthy borrowers, the interest
element in such dealings normally being hidden by the nature of the
transactions either in foreign exchange or as bills of exchange or,
frequently, as both. [] They were even granted powers to mint their own
coins [] They therefore were able to carry out the whole range of
merchant banking activities relevant to the increasing demands of
commerce and politics in the thirteenth and fourteenth centuries. 638
Only when in 1307 King Phillip IV of France, who was heavily

indebted to the order, turned on the Templars and accused them of
numerous crimes (among others, spitting on the cross, homosexual acts,
and of course, idolatry) was their power crushed and wealth
expropriated, 639 leaving only legends about hidden treasures and sacred
artefacts.
Although bills of exchange had already been in circulation in the
Levant in the eight century, and proper paper money was in use in
seventh-century China, the development of modern banking and paper
money as we know them probably should be traced to twelfth-century
Venice. Needing money for military purposes, compulsory loans were
collected from its citizens, promising a five percent annual interest and
allowing the bonds to be transferable. 640 The practice slowly spread to
other more commercially developed states and was accompanied by the
establishment of a number of private and public banks. The Bank of
Barcelona was founded in 1401; the public Bank of Genoa in 1585, the
Banco di Rialto in Venice in 1587, the bank of Amsterdam in 1609,
193
Hamburg in 1619, Rotterdam in 1635. Sometimes banks were founded by

agricultural cooperatives to insure against bad harvests, the Monte dei
Paschi di Siena, which is today one of the biggest banks in Italy, was
established in 1473 precisely to serve as an intermediary for such
arrangements. 641
However, the question of the birth of modern banking is not really a
question of the first modern banks per se, but rather of the establishment
of a new relationship between the state and the banking community. The
Bank of England, the first successful central bank, was founded in 1694
when a group of English bankers made a loan of 1,200,000 to the king in
return for the right to issue paper banknotes in that value which could be
loaned to the general public. The loan was perpetual, which meant that
the government wasnt obliged to pay it back, but only to pay 8 percent
annual interest. 642 In the following decades, the Bank of England gained
more and more privileges and governmental protection, and a century
later it had a guaranteed monopoly over the issue of banknotes, which
were now recognized as the legal tender and whose forging was
punishable by death. 643 Interestingly, the crucial connection between the
introduction of metallic money and war (Chapter 5) was repeated in the
case of paper money as well. The money provided by the Bank of
England was needed for no other purpose than the English war with
France. It was born out of a marriage of convenience between the
business community of the City, ambitiously confident that it could run
such a bank profitably, and the government of the day, desperately short
of the very large amount of cash urgently needed to carry on the long war
against Louis XIV. 644
The new monetary arrangement changed the nature of state debt. It
was no longer a private affair between the sovereign and a number of
194
moneylenders, but a public credit. The state debt, first in the form of
transferable government bonds, and then in the form of regular
banknotes, was increasingly impersonal. Lending money to the monarch
no longer locked creditors in a long-term relationship with the state, as
the debt could be easily unloaded at all times. As Wennerlind observes:
Public credit thus came to depend on how public opinion perceived the
states current capacity to service the interest payments and its imaginary
ability to repay the debt in some distant, theoretical future. In this new
culture of credit, public opinion became the arbiter of public credit,
dictating everything from Englands imperial campaigns, fiscal
administration, and legislative decisions to the choice of ministers. 645
This was the context of Napoleons famous remark that When a

government is dependent upon bankers for money, they and not the
leaders of the government control the situation, since the hand that gives
is above the hand that takes. Money has no motherland; financiers are
without patriotism and without decency; their sole object is gain. If the
states military strength, its ability to use force, started to depend on the
international financial markets, can one legitimately speak about the state
monopoly on force? 646
Public credit was no longer an exclusive affair between the Crown and a
small number of wealthy financiers. It was now subject to the fickle
judgment of the public. Since public debt instruments were now actively
traded, the status of the national debt was dictated by an amorphous
publics decentralized judgment of the prospects of a disembodied and
depersonalized state administration. The recognition that an intractable
public opinion now dictated public credit was deeply unsettling to
traditional elites. 647
Creditworthiness, or credit rating, became the underlying

background of all politics from this point on. The issues pertaining to
public credit were deeply intertwined with other major issues of the day
party politics, foreign policy, the succession, and religious controversy
the opinion of the investing public was formed within a much broader
public sphere. 648 This new reality was quickly realized by the British
195
Lord Treasurer who assembled a propaganda team that included Daniel

Defoe, Jonathan Swift, and Simon Clement, dedicated to securing public
trust in the government through press articles and pamphlets. 649
At the same time, an argument should be made that the rate of
interest that governments have to pay for their debt is not necessarily an
innocent product of international foreign exchange markets dominated by
rumors and mob mentality. At times, interest rates are set arbitrarily and
unilaterally, through political decisions and used to put disciplining
pressures on governments that try to break away from economic
submission by pursuing heterodox economic policies. This political
significance of the global regime of debt can be seen time after time, most
recently in the 2015 conflict between the Greek government and the
Troika.
As state credit became increasingly public, individual debt became
more and more privatized. Social regimes of debt were gradually
becoming monetized, and the monies themselves changed from various
tokens produced independently by local goldsmiths to state produced
coins. 650 Already in the sixteenth century, cases of civil litigation
concerning indebtedness (i.e., conflicts over debt that were resolved
within the state-legal framework and not the customary one) increased
manyfold. 651 When the law allowed debt to be transferred in the
beginning of the eighteenth century, 652 the traditional network of personal
debt truly gained a full-scale alternative of impersonal debt regime. This
shift from personal to system trust was ensured by an energetic
campaign on the part of the states apparatuses of violence.
After the passing of the 1695-1697 Acts to prevent counterfeiting,
which considered all kinds of monetary frauds a high treason punishable
by death, 653 an important role in the imposition of the new order was
196
played by Isaac Newton. Appointed as the warden of the Royal Mint (and
afterwards Master), in 1696 he managed a network of secret agents and
informers who infiltrated the counterfeiting rings. On numerous occasions
he personally, often in full disguise, travelled to prisons and taverns to
investigate cases and interrogate witnesses. 654
As both Hobbes and Locke pointed out, it was essential that the
government was willing and capable of prosecuting those engaged in
activities that undermined trust, such as corruption, overissuance, forgery,
counterfeiting, or other fraudulent practices. The idea of using the death
penalty to deter people from manipulating credit was an integral part of
nearly all of the periods credit money proposals. Hence, as much as
seventeenth-century political economists believed that it was possible to
generate trust in credit money by designing a transparent mechanism with
impeccable security, managed by men of the highest reputation, the
gallows nevertheless constituted an important ingredient in the formation
of trust. 655
Perhaps this is the right moment to note a significant shift in the

constellation of powers. Not because the change of monetary and debt
regime was decisive in it, but because with it we have enough elements to
outline a basic sketch of the situation. So, a gradual change was taking
effect.
In the place of customary debt regimes; of a pre-growth, local,
feudal, and largely non-monetary economy; of a static, arithmetic
worldview, and of moralistic condemnation of interest-charging; of
hereditary social classes and of sumptuary regulations; of the state
machinery as a private affair of a monarch whose power differed from his
vassals quantitatively rather than qualitatively; a new arrangement was
taking shape, one of a monetary debt regime, of a slowly integrating
capitalist world economy, of a geometric, dynamic worldview, of
capitale, of the modern nation-state machinery defended by new warfare
technologies and financed by bankers and international financial markets.
The change was not absolute, nor was it unconditional. Nevertheless,
197
there had been a change in the technologies of power. Their center of

gravity has moved; their multiple centers of gravity have shifted.
Chapter 34:
A short but important chapter which shows how economics is blind
to the political nature of money and its disciplining effects.
Also, a chapter in which the worthlessness of the radical notion of
value is outlined.
This planet has a problem: most of the
people living on it are unhappy for pretty
much of the time. Many solutions were
suggested for this problem, but most of
these were largely concerned with the
movement of small green pieces of paper,
which was odd because on the whole it
wasn't the small green pieces of paper that
were unhappy.
Douglas Adams
The progressing monetization of societies was accompanied by a

strengthening of the conviction that money can serve as a universal
equivalent, oiling the wheels of the equalizing market processes.
Suspicion towards exchange value and monetary transactions in general
was slowly giving way to a confidence that money is a natural and neutral
medium of exchange. Moreover, often it was not even seen as value-free,
but an essentially emancipatory thing. This trope can be found already in
Aristotle, and in the medieval praise for geometrical systems (Chapter
15): in economic transactions no account was to be taken of the social
positions of the participants. 656 Market not only was said to ignore them,
but even actively encroached upon the petrified social relations. All
fixed, fast-frozen relations, with their train of ancient and venerable
prejudices and opinions, are swept away, all new-formed ones become
antiquated before they can ossify. All that is solid melts into air, all that is
holy is profaned. 657
It is questionable whether the market really challenges practices and
discourses of domination, or whether it merely challenges traditional
forms of domination only to re-implement them in a slightly changed
200
form (Chapter 49). And arguably, even this is achieved at the cost of
exporting the heaviest economic burdens to the peripheries of the world
market (Chapters 24, 30). In any case, it seems to be out of discussion
that the new monetary exchange relations brought their own forms of
discipline and subordination. And it is one to which the economic
discourse is entirely blind. We have already touched upon this issue in
Chapter 31. The basic premise of the new money ideology was simple:
Only if the poor are subjected to nonmonetary, juridicial forms of direct
or personal domination is there any disadvantage. If, however, power
over the poor arises solely out of the lesser stake that the rich have in any
transaction, it is liberty. 658
On the one hand, individual monetary exchanges start to be perceived
as politically and morally neutral or even positive (Chapters 24, 25). On
the other, the systemic, political significance of money becomes
legitimized (Chapter 16) and institutionalized (Chapter 33). Reddy, in his
terrific Money and liberty in modern Europe calls it the liberal illusion:
Its ingredients were (1) the unlimited and easy substitutability of money
for any other object of desire, and therefore (2) the universality of the
underlying desire for advantage or gain; (3) the political neutrality of
money exchanges, and therefore (4) the compatibility of free trade with
personal liberty.
Each of these ideas so neatly entailed the others, all so plausibly turned on
the apparent truth of the first principle, that the theory seemed to sum up
what the essence of money is, especially in the experience of well-to-do
landlords and merchants who had little contact with either production or
deprivation. 659
The Smithian system of natural liberty was coherent and workable

insofar as within it money answered all things. Through a series of
geometrical equalizations, the market was presented as capable of
synthesizing all conflicting interests, provided that money was left to
201
perform its natural function as a medium of exchange. In Smiths words,

as long as people are allowed to pursue their interests:
The whole of the advantages and disadvantages of the different
employments of labour and stock must, in the same neighbourhood, be
either perfectly equal or continually tending to equality. If, in the same
neighbourhood, there was any employment evidently either more or less
advantageous than the rest, so many people would crowd into it in the one
case, and so many would desert it in the other, that its advantages would
soon return to the level of the other employments. This at least would be
the case in a society where things were left to follow their natural course,
where there was perfect liberty, and where every man was perfectly free
both to choose what occupation he thought proper, and to change it as
often as he thought proper. Every man's interest would prompt him to seek
the advantageous, and to shun the disadvantageous employment. 660
Thus, the purpose of the economist is to identify and remove the

artificial obstacles to natural liberty. The scourge of economy is a guild, a
monopoly, or a protectionist policy that doesnt allow free circulation of
goods and labor. In more general terms, it is a use of political power to
disrupt and corrupt the natural economic process of equalization that
would result in perfect competition. It is amusing that so many
economists who praise this fantasy of perfect competition and who
propose policies based on it fail to see that in a perfectly competitive
market no action could ever be performed at a profit.
The obvious blind spot of this approach is that it fails to grasp that
economic wealth is already a form of political power. They are not two
distinct realms that can be opposed to each other. Property laws are
nothing other than regulations of access to the apparatus of state
violence. 661 Debt, property, money, they are all institutions, thus wealth is
a form of power this is true by definition, its a tautology. There can be
no natural economic exchange free from power asymmetry because
economic exchange is the very articulation of power asymmetry. Reddy
calls upon the history of ending serfdom in Prussia to illustrate this point:
202

The outcome in Prussia was utterly different from what the reformers had
envisioned. [] [It had been] promised in 1811 that the state would thus
acquire a new, estimable class of motivated property owners and that
through the desire to enter this class, the cultivation of the soil would
profit from more hands, and through their greater effort, because freely
given, more work as well. Up to 1848, in fact, roughly 350,000 peasants
did gain ownership of some land in Prussia, although compensation
payments and indebtedness made their position precarious and many now
had to depend on wage labor to supplement the yield of their own meager
acres. Even worse, the number of rural landless laborers in Prussia in the
meantime tripled, reaching well over a million. Hope of gaining access to
land ownership was for this group nil; their insecurity was extreme in the
best of times. [] Prussian reformers thought they were liberating serfs; in
fact they were merely altering the disciplinary potentials within which
serfs could be made to continue obeying their betters. 662
What is fascinating and of utmost importance is that Marxs

economics followed a very similar route. In his Capital, money radical
leveller that it is, does away with all distinctions 663 and works as a
neutral medium of exchange. 664 The Marxist critique attacks the specific
crimes of the capitalist mode of production but treats the market
mechanism as such as an equalization machine that is almost never
mistaken. 665 The whole edifice of Marxist economics can be treated as a
quest for an identification of the mechanism that corrupts this objective
process of equalization. Capitalist exploitation is said to be precisely this:
an unequal exchange, theft of workers labor, of a definite quantity of
human muscle, nerve, brain etc. that is unlawfuly taken from laborers. 666
This critique is made possible by the labor theory of value a
concept that economic value is produced by labor. Historically, in preChristian European societies where economy wasnt sustained either by
slavery or serfdom, the connection between labor and the right to its
produce was often seen as self-evident. 667 In feudal Europe it came to be
considered a radical and subversive idea, at odds with the feudal regime
of property (Chapter 10), 668 and when it was voiced again in the
203
seventeenth century by Locke, it still had that character. Only then, it didnt
just challenge the feudal social structure but it simultaneously legitimized a
new commercial economy. 669 For a whole generation of classical
economists the labor theory of value was a cornerstone of their theory,
providing a legitimization for a transition from manorial to market
economy. Marx followed this tradition and embarked on a journey in the
search of lost value. In Capital he showed how value that is produced by
laborers is then appropriated by the capitalists. The laborers have a bigger
share in the production than they are remunerated for, and the objective rate
of this disproportion, the rate of exploitation, can be expressed by a
mathematical formula. 670 This approach treats value is an objective, innate
quality of the produced good. Individual labor is, of course, put in the
context of the whole economy and the social organization of production,
but ultimately, it can be said to produce a certain measurable value, and
whenever his employer appropriates a share of this value, the individual
laborer is exploited. This is the physiological truth. 671 Robinson wrote:
Voltaire remarked that it is possible to kill a flock of sheep by witchcraft if
you give them plenty of arsenic at the same time. The sheep, in this figure
may well stand for the complacent apologists of capitalism; Marx's
penetrating insight and bitter hatred of oppression supply the arsenic,
while the labour theory of value provides the incantations. 672
Perhaps an entirely different approach to value would be more frutiful.

One that would see it not as an inherent feature of traded goods and services,
but in social, relational, inter-subjective terms. Values are neither produced in
factories and equalized in the process of exchange, nor are they
independently assigned by individuals expressing their autonomous
preferences (like the marginalists believe [Chapter 41]). They are established
in a series of exchanges, as differences. And these exchanges are by no means
natural equalizations of different values. And they dont have to be peaceful.
Usually they arent. They are simply brutal (if discreet) executions of power.
Chapter 35:
In which it is shown how intellectual property was established by
business fighting business in British courts.
Art is individualism, and individualism is a
disturbing and disintegrating force. There
lies its immense value. For what it seeks is
to disturb monotony of type, slavery of
custom, tyranny of habit, and the reduction
of man to the level of a machine.
Oscar Wilde
A valuable insight into the dynamics of new economy can be

provided by a study of the eighteenth-century enclosure of cultural
production, namely, the development of the modern copyright. Although
usually discussions on intellectual property rights portray them as an
eternal idea and a natural need of the human mind, 673 even a sketchy
historical look at the sources shows that it is quite a recent institution.
Modern copyright was a child of a new technology the printing press
a child of the development of market society, of the discourse of
individual authorship, and of prolonged struggles in British courts.
For centuries, authors didnt own the texts they wrote in the abstract
form of intellectual property but rather in the concrete form of a
manuscript. Once it was sold to a patron, a bookseller, or a theatrical
company, it was no more the authors property than the cloak that he
might have sold to the actors at the same time. 674 In the Middle Ages,
each owner of a manuscript was considered to possess an alienable right
to copy it, and monasteries often charged a fee for permission to copy
their manuscripts. 675 The first English system of intellectual property was
modelled after the system developed in fifteenth century Venice where it
took form of a patent, a seven-year privilege to print granted to printer
guilds and authors alike. 676 Rose notes that at first the preoccupation of
the authorities was not so much focused on securing the economic
206
interests of authors and publishers, but on enforcing an effective system

of governmental surveillance of the press. 677 Interestingly, the printing
guild themselves put forward the argument that tying the right to print to
a royal grant makes political and religious censorship much easier, 678
hinting at the community of interest that the state and business shared in
controlling the circulation of ideas. The first English legislation that gave
some consideration to the question of literary intellectual property was
the 1710 Statute of Anne, which enabled authors to license their works
for a 14-year period, after which they entered the public domain. From
this point on, the period of copyright and its specific character became the
subject of ferocious public debates and legal struggles, resolved finally in
the House of Lords.
Interestingly, the opposing sides in these debates were neither
authors vs. business nor the general public vs. business, but business vs.
business. The bookselling trade of the eighteenth century was highly
developed and represented one of the most significant accumulations of
capital in the country, 679 and, to put it schematically, consisted of big
London publishing houses that printed copyrighted material and smaller
Scottish publishing houses that printed works whose copyright had
expired. For some decades, the two industries peacefully coexisted, but in
the 50s the English booksellers felt threatened by their Northern
competitors and started a legal campaign against them. 680 The richer
Londoners argued for imposition of a common-law right that would treat
intellectual property as no different from any other property, thus giving
the initial buyer a perpetual monopoly over it. The Edinburgh publishers,
unsurprisingly, campaigned for keeping the existing copyright as it was.
Although both sides of the struggle claimed that they were primarily
concerned with the authors interest, the contemporaries were well aware
207
that the question is of no great importance to authors, yet it is a question

in which the booksellers of London, on the one side, and [] all the other
booksellers in Britain, on the other side, are deeply concerned. 681 As
Rose argues:
At one level, the literary-property question was a legal struggle about the
nature of property and how the law might adapt itself to the changed
circumstances of an economy based on trade. At another, it was a contest
about how far the ideology of possessive individualism should be extended
into the realm of cultural production. At still another, it was a commercial
encounter, played out in the form of a national contest between England
and Scotland, in which a deeply entrenched business establishment was
challenged by outsiders. 682
Arendt writes that the notion of artistic genius has only recently
been commercialized, 683 but in fact, the realm of commercial art as such
was established thanks to the figure of genius. Although the notion of
creative genius was present in the Classical and Renaissance cultures,
only in the commercial societies did it become instrumental in cultural
production. 684 Lawyers and pamphleteers hired by London publishing
houses developed a discourse of artistic genius that was revealing in its
authenticity and originality.
London lawyers on the one hand, praised original compositions
whish rise spontaneously from the vital root of Genius 685 and on the
other, asserted that artistic production is no different from any other
commodity production. 686 Characters are but the signs of words, and
words are the vehicle of sentiments. The sentiment therefore is the thing
of value, from which profit must arise. 687
Their opponents proposed that the authors interest should be secured
by a temporary copyright, but from the moment of publication, [the
works] are thrown into a state of universal communion. 688 and one
cannot treat them as private property. Just like industrial inventions
208
become the common good after the patent protection ends, so should
literary works.
The conflict was the subject of numerous judicial actions and
incoherent court rulings until it was finally resolved in 1774, when the
House of Lords ruled that a literary work cannot be treated as a common
law property and that copyright can be limited in time. The significance
of this dispute was evident for the contemporaries:
[] the London newspapers devoted multiple columns to the proceedings,
reporting the arguments of the lawyers and judges in great detail, and they
printed dozens of letters to the editor from lawyers, booksellers, and others
commenting, often very colorfully, on the case. []
Throughout the proceedings in the House of Lords, public interest was
intense. On the first day of argument, according to a letter from London in
Donaldson's Edinburgh Advertiser, several hundred people had to be
turned away for lack of space (8 Feb. 1774), and the Morning Chronicle
reported that the House below the Bar was . . . exceedingly crowded and
that Mr. Edmund Burke, Dr. Goldsmith, David Garrick, Esq; and other
literary characters, were among the hearers (5 Feb. 1774). 689
This history can elucidate at least three points:

First, we can see how the notion of a creative individual or artistic
genius was brought to the discourse on cultural production as a way to
discount another vision of culture, one that sees it in terms of a
continuous appropriation and transformation of a common good. This
culminates in a grotesque situation where writers names become actual
trademarks under which books can be published even after their death, as
is the case with Robert Ludlum, under whose name, since the death of
Robert Ludlum in 2001, over a dozen books have been published. It is
ironic that this institution of the individual author has been built on the
archetypal
figure
of
Shakespeare,
whose
plays,
often
written
collaboratively, retold old legends and popular tales at the very time
Shakespeares Hamlet was staged at the Globe, at least one other Hamlet
was staged in London.
209
Second, we can see how the final outcome of the struggles over the
regime of intellectual property resulted from a fight between two business
groups. Although both sides developed discourses in which they
presented themselves as the protectors of authors and readers, ultimately
it wasnt a fight between the authors and publishers or the producers and
consumers, but between two business models. Analogies are tricky, but
wasnt this also the case with the 2012 protests against SOPA and ACTA,
when the popular protests began only after the new internet business,
which lives off free circulation of content, campaigned against them?
This should not be taken as evidence that commercial interests are
inherently or inevitably privileged in the modern constellations of power,
but rather that it usually takes institutional power to influence them. And
a corporation is one form of institutionalized power that is always keen to
strengthen itself.
Third, it shows very well that private property is only one of many
possible arrangements for managing the exchange of goods and services.
It was not discovered as a natural or self-evident fundament of
personal liberty, but rather it was constructed through discoursive and
legal struggles, and even then it not always succeeded. But as the
enclosure of the commons is always one of the most profitable
investments there is, attempts to enclose more and more spheres of life in
the regime of private property are constantly made, and only some of
them are fought off.
Chapter 36:
Which argues that Adam Smith was not
the father of economics.
Mothers baby, fathers maybe.
The purpose of this chapter is not the reconstruction of Adam Smiths

political economy (or worse, its interpretation), but merely cracking down
on a few of the myths surrounding this figure and the alleged Adam Smith
Problem. The said problem is an assumed incoherency between the two
Smiths: the moral philosopher and the economist, the stoic moralist and
amoral individualist, the author of the Theory of Moral Sentiments and the
author of The Wealth of Nations. Following Browns arguments, 690 I would
argue that the problem is at least overstated or simply illusory, and the
perceived inconsistency between the two Smiths comes from investing his
work with new meanings and situating it within the context of modern
capitalism. Surely, if Smith had praised the utilitarian individualism of late
capitalism in The Wealth of Nations, it would be inconsistent with his other
works. The simple resolution is that he hadnt. Hence, his critique of
Mandevilles sophistry that allows him to claim that that private vices are
public benefits 691 and his reproaches against individualism 692 are perfectly
consistent with his economic theories. It is perhaps best to quote Smith in
length to show how he understood the subject of his economic analysis:
Power and riches appear then to be, what they are, enormous and operose
machines contrived to produce a few trifling conveniencies to the body,
consisting of springs the most nice and delicate, which must be kept in order
with the most anxious attention, and which in spite of all our care are ready
every moment to burst into pieces, and to crush in their ruins their unfortunate
possessor. They are immense fabrics, which it requires the labour of a life to
raise, which threaten every moment to overwhelm the person that dwells in
them, and which while they stand, though they may save him from some
smaller inconveniencies, can protect him from none of the severer inclemencies
of the season. They keep off the summer shower, not the winter storm, but
leave him always as much, and sometimes more exposed than before, to
anxiety, to fear, and to sorrow; to diseases, to danger, and to death. 693
212
As we have outlined before, Smith was a liberal economist, a

believer in market equalization and an advocate of a modernization of the
relationship between the state and the economy (Chapter 32). But he has
never been a crude libertarian. Even though he believed that the market
mechanism can synthesize conflicting interests, he nevertheless
recognized that there will always remain some conflict between the
interest of the individual and the interest of the community that needs to
be resolved by legislation and not the market. For instance, he argues for
regulation of the banking business on the grounds that:
Such regulations may, no doubt, be considered as in some respects a
violation of natural liberty. But those exertions of the natural liberty of a
few individuals, which might endanger the security of the whole society,
are, and ought to be, restrained by the laws of all governments, of the most
free as well as of the most despotical. The obligation of building party
walls, in order to prevent the communication of fire, is a violation of
natural liberty exactly of the same kind with the regulations of the banking
trade which are here proposed. 694
Moreover, even though he saw the system of liberty as natural and

intuitive, he recognized that reforms that could bring it can only be
gradual and cautious, and must take into consideration the values and
beliefs of society. 695 And even such gradual reform would probably never
reach the ideal of perfect liberty. As the private interests of moneyed
groups would not allow it, Smith recognized the utopian nature of his
project: to expect, indeed, that the freedom of trade should ever be
entirely restored in Great Britain is as absurd as to expect that an Oceana
or Utopia should ever be established in it. 696
When modern economists and historians of economic thought are
confronted with these nuances, they usually ignore them or treat them as
foreign contaminations that should be removed in order to uncover what
Smith really intended to say and what he truly had in mind. Smith is a
213
perfect example of a two-fold canonization at the same time a

consecration and a reduction of all the complexity of the past to a single
voice for consumption of the present. 697 As I hope is already evident,
economic discourses evolve slowly and gradually. Kuhn argued that the
identification of famous scientists may make pedagogical practice
easier, 698 but it also obscures the heterogonous character of the
production of economic discourse. Making Adam Smith the founding
father of economics was a kind of paternity fraud, in which the legitimacy
of the new science of political economy was acquired by linking it with
the figure of a brilliant scientist who could be put against the background
of the misguided non-scientific economic ideas of the past. As we have
seen (Chapter 19), this was a tactic used by Smith himself, who brought
together various economic ideas under the single term of the mercantilist
system and rejected others en masse. As has been often (and still is) the
case, the final argument for scientific basis of his own theories vis vis
the groundlessness of his predecessors was the fact that the latter were
absurd, examples of sophistry, or vulgar prejudice, unnatural and
contrary to the order of reason, while the former were natural,
obvious, based on common sense, and evident to plain reason. 699
The Wealth of Nations came to be considered the foundation of modern
economics only many years after its publication and only when it was
transformed by the likes of Ricardo, Mill, and McCulloch. 700 And in any
case, the man who was canonised was not the historical Adam Smith, a
moral philosopher who put economic issues in a broader historical,
societal, and cultural perspective 701 but a simplified image of Smith
which denotes little more than the concept of some fabulous invisible
hand. 702 Well, as Nietzsche noticed, without blind disciples the
influence of a man and his work has never yet become great. 703
214
Smith can be praised for his persuasive and eclectic style and for
elegantly bringing together many different perspectives on economic
issues, such as analytic, empirical, historical, philosophical, and purely
polemic, 704 but he can hardly be considered truly an original thinker in
terms of the content of his work. By the time Wealth of Nations was
published, the gradual reform of the market-state relationship had already
been underway both in England and in France (Chapter 32), and Smith
simply took part in an ongoing debate. 705 Smith is often credited with
discovering the advantages of the division of labor and with appreciating
the importance and value of individual incentives, but in fact, the
concept of the division of labour is one of those common ideas which are
found in all economic writings, starting at least from Xenophon. 706 The
belief in a natural international division of labor was key to the doux
commerce thesis (Chapter 24), and the concept of a social division of
labor was used before Adam Smith by Boisguilbert, Cesare Beccaria,
Defoe, Ferguson, Giambattista Vasco, Harris, Kames, and many more. To
claim that Smiths appreciation for self-interest is original is even more
bizarre. Not only was the role of self-interest in economy appreciated
long before Smith (Chapter 25), but the famous passage that it is not
from the benevolence of the butcher, the brewer, or the baker, that we
expect our dinner, but from their regard to their own interest 707 is a
paraphrase of Senecas well-known, and appreciated by Smith, De
Beneficis. 708
Chapter 37:
Which shows that socialist and liberal economics
are not that different.
- What is a Socialist?
- That's when all are equal and all have
property in common, there are no
marriages, and everyone has any religion
and laws he likes best.
You are not old enough to understand that
yet.
Fyodor Dostoyevsky
Socialist discourses were from the beginning deeply indebted to the

Enlightenment ethos. They appealed to the ideals of social equality,
progress, and, above all, rationality. As Newman observes
From the utopian societies dreamt up by the early socialists like SaintSimon and Fourier, to the revolutionary projects of Marx and Lenin, and
even to the later to the sexual rebellions of Marcuse all of these
aspirations had been largely motivated by an Enlightenment way of
thinking. This included: a concept of society and social reality as
transparent, scientifically observable and determined by historical forces; a
faith in rationality to both overcome social antagonisms and to liberate the
individual from the obfuscating veils of religion and ideology; a belief in
the universal liberation of all humanity from oppressive social and political
arrangements; and a notion of the human subject with essential moral and
rational characteristics which could flourish given the right social
conditions. 709
Many early socialists claimed that there exists an ultimate and

objective social goal to which all rational men would submit if they
understood both the nature of man and society and the imperatives of
long-term social survival. 710 Thus, they argued that radical social change
could be acquired through a rational public debate. But even those for
whom such ideas were utopian and who argued that change can be
seized only through struggle shared a belief in the power of reason to
devise a social organization that would erase conflicts and bring harmony.
Perhaps only the anarchist Proudhon argued with his model of negative
dialectic that a perfect synthesis of all conflicts was unattainable. Saint-
216
Simon, Fourier, and Owen all advocated a thorough and radical reform of
social structures that would ensure rational co-operation and resolve all
conflicts. The utopia would follow from organic social development or
would be achieved by methodical control (rationalization) of social life,
but all in all was achievable. These projects of rationalization where
attractive not only for social activists, but also for the industrialists. Owen
himself was a factory-owner, and many other entrepreneurs, such as the
developer of the Suez Canal, Ferdinand Lesseps, subscribed to these early
socialist doctrines.
This may seem paradoxical now, but in the early nineteenth century
it was something completely ordinary. For many decades, liberalism and
socialism were seen as constituting one ideology.
In the period from the French Revolution to the revolutions of 1848, the
only clear cleavage for contemporaries was between those who accepted
progress as inevitable and desirable, and thus were globally favorable to
the French Revolution, and those who favored the Counter-Revolution,
which took its stand against this disruption of values, considering it as
profoundly wrong. Thus the political struggle was between liberals and
conservatives; those who called themselves radicals or Jacobins or
republicans or socialists were regarded as simply a more militant variety of
liberals. 711
Even the concept of class conflict, long before being appropriated by

Marxists, formed the basis of policy during the July Monarchy. 712 Three
decades before the Communist Manifesto declared that the history of all
hitherto existing society is the history of class struggles, 713 the rightwing liberal and French Prime Minister, Franois Guizot, proposed that
the struggle of the Orders suffuses or rather creates all this history. 714
And class analysis was also central to classical economists such as Adam
Smith or David Ricardo.
217
It is often argued that it was only after the revolutions of 1848 that
the division between liberals and socialists became evident. Moderates
delineated themselves from radicals and politically became more and
more often aligned with conservative movements. Both socialists and
liberals still voiced a belief in the inevitability of social reform and
progress, but the former demanded it now, while the latter were content
with various Parties of Moderate Progress Within the Bounds of the Law.
Still, it was rather a difference of degree than substance. Hence, the
undisputed champion of liberalism and the most influential Englishspeaking philosopher of the nineteenth century, 715 John Stuart Mill,
could consider himself a socialist. Mill argued that a decentralized
socialist (or communist, as he used these terms interchangeably)
society based on cooperative forms of property can be perfectly
consistent with ideals of individual liberty. 716 In his autobiography we
read:
Our ideal of ultimate improvement went far Beyond Democracy, and
would class us decidedly under the general designation of Socialists.
While we repudiated with the greatest energy that tyranny of society over
the individual which most Socialistic systems are supposed to involve, we
yet looked forward to a time when society will no longer be divided into
the idle and the industrious; when the rule that they who do not work shall
not eat, will be applied not to paupers only, but impartially to all; when the
division of the produce of labour, instead of depending, as in so great a
degree it now does, on the accident of birth, will be made by concert on an
acknowledged principle of justice; and when it will no longer either be, or
be thought to be, impossible for human beings to exert themselves
strenuously in procuring benefits which are not to be exclusively their
own, but to be shared with the society they belong to. 717
Much like Smith, who argued that civil government, so far as it is

instituted for the security of property, is in reality instituted for the
defence of the rich against the poor, or of those who have some property
against those who have none at all, Mill recognized the historical and
institutional character of property laws:
218
The idea of property is not some one thing identical throughout history and
incapable of alteration, but is variable like all other creations of the human
mind; at any given time it is a brief expression denoting the rights over
things conferred by the law or custom of some given society at that time;
[] society is fully entitled to abrogate or alter any particular right of
property which on sufficient consideration it judges to stand in the way of
the public good. 718
The relationship between socialist and liberal economics is not

simply that of a shared ancestry or a few accidental tangent points. They
both share a significant number of premises, goals, and methods. The
recognition of this correspondence has been historically providing a solid
base for many conservative discourses. Of course, when ultraconservative
or simply anti-Semitic discourses have personified both liberalism and
communism in the all-encompassing figure of Jewry, they abandoned
analytical reasoning for chauvinist scapegoating. Wasnt Heideggers
involvement with the Nazi regime motivated exactly by a belief that the
only force that can stand to the challenge of the nihilistic forces of
modern technology (communism, liberalism, Americanism) is a
conservative counter-revolution that will bring back the possibility of an
authentic life? 719 Obviously, the Nazi counter-revolution was nothing
more than yet another facet of modernity, and Heideggers nostalgic
dreams about the inner greatness of National Socialism 720 quickly
turned into the nightmare of the Holocaust. Nevertheless, in this spoiled
bunch one apple remains fresh: the argument that liberalism and
socialism are two faces of the same modernizing project cannot be
rejected as easily as the anti-Semitic language in which it has been
usually expressed.
219
The correspondence between socialist and liberal economic projects

was also reflected in their debates. The divide between twentieth-century
socialist economists was between those who adapted neoclassical
economic models to non-market environment and those who did it with
Keynesian (or Kaleckian, but lets not get lost in the details now)
economic models. Since Oskar Lange proved in 1938 that the Walrasian
model of equilibrium of supply and demand is perfectly consistent with
socialist economy, mainstream liberal economists accepted that, in
Schumpeters words, there is nothing wrong with the pure theory of
socialism. 721 As Hodgson notes:
It was admitted implicitly there was nothing in neoclassical core theory
that encapsulated prominent institutional features such as private
property and genuine markets that were vital to capitalism but absent
within socialism. As far as neoclassical core theory is concerned, neither
the form of ownership nor the existence of real markets, actually matters.
[] Bergson also gave Lange a clear victory in the controversy over the
possibility of socialist calculation. He remarked that there can hardly be
any room for debate; of course socialism can work. On this, Lange
certainly was convincing. A similar assessment of the outcome of the
debate was widely popularised in Paul Samuelsons seminal and bestselling neoclassical textbook. 722
Just as the classical labor theory of value could accommodate both

Smith and Marx, the neoclassical figure of equilibrium was equally
feasible for Samuelson and Lange. Arguably, it was the appropriation of
these pro-market models by socialist economists that each time provoked
the introduction of a new paradigm certainly that was the case with the
marginalist (Chapter 41) and Austrian revolutions 723 (Chapter 47) but
the fact remains that the completely abstract character (Chapter 44) of
these models allowed them to be easily turned around by any willing
theoretician.
Chapter 38:,
Which inspects a few important tropes of labor struggles.
- Did you work in a factory?
- No, we were there with our notebooks.
A conversation between Sylvre
Lotringer and Antonio Negri.
The history of all hitherto existing societies is the history of

struggles. This is tautological bacause historical events appear as events
at all only insomuch as they are expressive of some conflict. An inclusion
of an event into the body of history, pulling it out of the silent
background, means appreciating its dynamic and conflictual character as
well as its political significance. But history is also a history of struggles
in the very basic sense that the past has always been packed with clashes
between social actors. What seems to me of crucial importance is to
acknowledge the enormous variety of their origins, dynamics, goals, and
ends, without necessarily bringing them all to the common denominator
of this or that theory of struggle. Probably the classical Marxist
historiography of class struggles and class emancipation isnt as absurd as
the liberal narrative on the liberation of the individual. Nevertheless, it
too often approaches history not to learn from it but to confirm its
preliminary assumptions. Obviously, particular struggles need to be
analyzed in context, and their structural underpinnings and systemic
effects need to be studied. But attempts at producing an all-encompassing
theory of resistance must be crippling for the practices of resistance
themselves. Theorizing that tries to be avant-garde, that attempts to be
one step ahead of its times makes for a poignant sight when due to its
hubris, it ends up blocking the way for any practice that could surpass it.
Theory should rather endeavor to serve as the arier-garde, the rearguard.
222
It should occupy itself with perhaps the more modest but also more
fruitful task of rethinking a given structure or episode in such a way that
it can be closed and left behind, so space for a new praxis could be
opened. As Keynes said, the difficulty lies, not in the new ideas, but in
escaping from the old ones, which ramify, for those brought up as most of
us have been, into every corner of our minds. 724
The modern popular culture makes room for slave rebellions, so we
all know about the Roman Servile Wars and brave Spartacus who fought
for freedom in the last century before the birth of the new faith called
Christianity, which was destined to overthrow the pagan tyranny of Rome
and bring about a new society. 725 However, much less attention has been
given to a long series of popular revolts and labor struggles in the Middle
Ages. As we have already noted (Chapter 14), the prevailing picture of a
motionless and static medieval society completely ignores the actual
reality of the constant struggle between the laboring serfs and the
nobility. The list of major revolts is long. To name just a few examples
one can point to peasant revolts, such as 1323-1328 Revolt in Flanders,
1358 Jacquerie, or the Great Rising of 1381, or to first workers
democracies established by bourgeoisie revolutions in Ghent in 1335
and 1378-1382, Liege in 1378, and Florence in 1379. 726 But these were
only violent outbursts of a conflict that underpinned day-to-day life at all
times. In this everyday conflict the nobility had at its disposal manorial
courts and institutionalized violence, and the serfs made use of collective
bargaining and refusal to work. Evidence from the manorial courts of the
mid-thirteenth century shows that tenants repeatedly resorted to massive
withdrawal of labor 727 and the threat of the secession of plebs 728 was,
if not a constant, then a recurring feature of medieval economics of
power. In the more commercially advanced parts of Europe, evidence of
223
very modern-like collective action on the part of laborers can be found as

early as in the 1229 strike of tailors in Douai, when representatives of all
the chief officers of the craft, all the guardians of the goods of the trade,
all the merchant clothiers and all the tailors negotiated wages. 729
In the eighteenth century, the installation of the new economic
regime of property met not only with the resistance of old establishment
(Chapter 32), but also of the poor. The energetic development of
commercial economy in England was accompanied with numerous
risings of the poor in 1709, 1740, 1756-1757, 1766-1767, 1773, 1782,
1795, and 1800-1801. 730 These were often disregarded by the mainstream
historiography as riots of hungry and angry mobs that are selfexplanatory and dont need to be studied. But as Thompson acutely
observes:
This simple four-letter word [riot] can conceal what may be described as
a spasmodic view of popular history. According to this view the common
people can scarcely be taken as historical agents before the French
Revolution. Before this period they intrude occasionally and
spasmodically upon the historical canvas, in periods of sudden social
disturbance. These intrusions are compulsive, rather than self-conscious or
self-activating: they are simple responses to economic stimuli. []
[It is] the schizoid intellectual climate which permits this quantitative
historiography to co-exist (in the same places and sometimes in the same
minds) with a social anthropology which derives from Durkheim, Weber,
or Malinowski. We know all about the delicate tissue of social norms and
reciprocities which regulates the life of Trobriand islanders, and the
psychic energies involved in the cargo cults of Melanesia; but at some
point this infinitely complex social creature, Melanesian man, becomes (in
our histories) the eighteenth-century English collier who claps his hand
spasmodically upon his stomach, and responds to elementary economic
stimuli. 731
The eighteenth-century marketplace was often a site of openly fierce

struggles. These were not chaotic outbursts of social anger, but organized
and self-disciplined direct actions legitimized by the old paternalist moral
224
economy. If the market was the point at which working people most
often felt their exposure to exploitation, it was also the point especially
in rural or dispersed manufacturing districts at which they could most
easily become organised. 732 Direct actions often took the form of
popular taxation, in which the rioters would seize corn by force, take it
to market, sell it at the customary price, and then return the money to the
farmers. 733 In reports from these events, one can find out that these direct
actions were often initiated and carried out by women, perfect furies,
with knives stuck in their girdles. 734 A 1807 press article explained that
women are more disposed to be mutinous; they stand less in fear of law
[] because they presume upon the privilege of their sex, and therefore
in all public tumults they are foremost in violence and ferocity. 735 There
is some evidence that this was truly a consciously adopted tactic on the
part of dissenting women who assumed that [the soldiers] would do
them no hurt. 736
This perhaps banal (but often overlooked by male-centric
historiography) fact should be always remembered that just as there
would be no French Revolution without The Womens March on
Versailles, the eighteenth-century popular taxation would have never be
of the same import without the perfect furies. Labor struggles have
always been fought by all genders. And sentencing womens labor
struggles to oblivion or treating them as an appendix to the male
dominated political history plays a big role in reproducing current gender
economic inequalities.
225
737
The legal regulations of trade in grain were repealed by the

Parliament in 1772, but for many decades they were repeatedly reinstated
at the grassroots level. The dissenting gangs often styled themselves as
the Regulators, 738 and the validity of their actions had been
acknowledged by Tory paternalists for many decades. As late as 1795,
Lord Chief Justice Kenyon declared that in his view, forestalling and
engrossing remained offenses in common law. 739
One of the most famous cases of resistance to economic
transformation is the early nineteenth-century frame-braking. Although
the history of machine-breaking is much older than the history of the
Luddite movement, 740 it is in the latter that the phenomenon found its
most illustrious instance. The movement was seen as quasi-revolutionary,
and characterized by an unusual degree of organization, secrecy, and
discipline. 741 Frame-breaking was no longer the work of rioters but of
smaller, disciplined bands, who moved rapidly from village to village at
night [] Every attack revealed planning and method. 742 This is how the
Luddites attacks were described in a 1812 press article:
226
They broke only the frames of such as have reduced the price of the men's
wages; those who have not lowered the price, have their frames untouched;
in one house, last night, they broke four frames out of six; the other two
which belonged to masters who had not lowered their wages, they did not
meddle with. []
The rioters appear suddenly, in armed parties, under regular commanders;
the chief of whom, be he whomsoever he may, is styled General Ludd, and
his orders are as implicitly obeyed as if he had received his authority from
the hands of a Monarch. 743
The Luddites were crushed only after a coordinated military and

legal offensive. Frame-breaking had been made a capital offence, and in
the summer of 1812, over 12,000 soldiers were deployed in the disturbed
regions a force greater than the one sent to fight Napoleon on the
Iberian Penisula. 744
Usually these conflicts were not so much provoked by the
straightforward issues of wages and cost-of-living. E.P. Thompson points
to the fact that the issues which provoked the most intensity of feeling
were very often ones in which such values as traditional customs,
justice, independence, security, or family-economy were at stake,
rather than straightforward bread-and-butter issues. 745 The reductionist
Marxist approach often disregarded such struggles, seeing them as futile
revolts that waste political energy on issues of secondary importance,
while leaving the basic structure of exploitation intact. This is an
unnecessary harmful dichotomy. One way to say it is that purely
economic issues are always mixed with other concerns, but in fact this is
an artificial division altogether that creates a fictitious realm of purely
economic concerns. This notion may have constituted economistic
ideologies of socialism or capitalism, it may even describe the actual
approach to reality of a hedge-fund broker, but it has never been the basis
of labor struggles. I would argue that this should not be perceived as a
227
problem that needs to be fixed by improving labors class consciousness,

but in terms of a value that needs to be protected from economistic
designs upon it. The recurring embarrassment and complaints of modern
leftist politicians and publicists that people repeatedly and unexplainably
chose liberal conservatism over egalitarian progressivism, that they vote
against their class interests, 746 are based on an assumption that people
are homines oeconomici (Chapter 42) who personify little more than
the eternal drive to augment their economic interests (Chapter 25). And if
they are not, they should be educated or forced to become them. Of
course, only for their own good. Or, to be more precise, for the sake of
their own interests.
This does not mean that we should idealize the people and their
traditional practices, discourses, and institutions. They were not and are
not idyllic or harmless. On the contrary, many of them were built on
violent domination and sustained by brutal discipline. One certainly must
not succumb to the temptation of romanticizing the past. Conservative
nostalgia and soulless modernism are no more alternatives to each other
than the two sides of the same coin are. And the discussion between them
is no more illuminating than playing a game of heads or tails.
Chapter 39:
In which essential shortcomings of
Marxs economics are outlined.
A minor post-Ricardian.
Paul Samuelson
In recent decades, the mainstream left has made a habit of including a

new disclaimer in their arguments. Just as conservative arguments often
start with the waiver not that Im a racist/misogynist/homophobe but,
the post-Marxist variants habitually distance themselves from the horrors
of the Gulag and Stalinist persecutions. Two main tactics of such
dissociations can be outlined. The first treats Stalinism as a betrayal of the
inner greatness of Communism a tragic misunderstanding of Marx.
The second has been best represented by Foucault when he argued that a
critical approach to real socialism must mean questioning all these
theoretical texts, however old, from the standpoint of the Gulag. Rather
than searching in those texts for a condemnation in advance of the Gulag,
it is a matter of asking what in those texts could have made the Gulag
possible. 747 Although the second tactic is obviously much more fruitful
than the first one, it too can easily degenerate into a meaningless ritual.
The point lies not in exposing past practices and denouncing the
theoretical mistakes that allowed them. These spectacles of self-criticism
are no more productive now than they were in Moscow of the 1930s.
Conversely, Marxism has to be analyzed as an inherently synthesizing
and totalizing machine that has no inner greatness worth defending, and
whose perhaps well-minded intention can be saved precisely by a betrayal
of the doctrine and not by its purification.
The communist revolution will bring social conflicts to an end,
render politics useless, and bring about a liberal utopia of individuals set
230
free to pursue their hobbies of choice. This is how the communist future
is portrayed in the Manifesto:
When, in the course of development, class distinctions have disappeared,
and all production has been concentrated in the hands of a vast association
of the whole nation, the public power will lose its political character.
Political power, properly so called, is merely the organised power of one
class for oppressing another. If the proletariat during its contest with the
bourgeoisie is compelled, by the force of circumstances, to organise itself
as a class, if, by means of a revolution, it makes itself the ruling class, and,
as such, sweeps away by force the old conditions of production, then it
will, along with these conditions, have swept away the conditions for the
existence of class antagonisms and of classes generally, and will thereby
have abolished its own supremacy as a class.
In place of the old bourgeois society, with its classes and class
antagonisms, we shall have an association, in which the free development
of each is the condition for the free development of all. 748
The revolution will bring the final conquest of the world by the
power of reason. Chaos of natural and social realms will be brought under
the command of rational management. Class in itself will become the
class for itself, 749 mankind will finally rise above the status of human
species (Chapter 20) and become a demiurge of its environment:
The life-process of society, which is based on the process of material
production, does not strip off its mystical veil until it is treated as
production by freely associated men, and is consciously regulated by them
in accordance with a settled plan. 750
All conflicts are inherently irrational and transitional and thus

ultimately will be resolved.
A fact that Marx overlooked (or at least didnt treat as a problem)
was that, on the grounds of his own theory, a centralized economic
basis
must
superstructure,
lead
751
to
monolithic
and
all-powerful
political
and a proposal to centralise all means of production
in the hands of the state 752 could be possible only due to his
Enlightenment faith in the power of reason. 753 Hodgson argues that:
231
It would be a particularly blinkered Marxist who would read the words of

Marx and Engels on their proposed socialist future, and see no threat to a
plurality of forms of common ownership and see no antagonism to the
market nor any type of mixed economy. There is no evidence in any of
their works that they saw any value in institutional and structural diversity,
under capitalism or socialism. In their stated proposal to centralize all
instruments of production in the hands of the state they favoured a single,
all-encompassing arrangement, subject to rational principles of accounting
and control. 754
This is consistent with the Marxist premise that economy is an

equalizing machine that needs to be cleansed from all extra-economic
contaminations (Chapter 34). Had Marx seen exchange as a function of
power, instead of power as an effect of exchange, he would see that
centralisation of all instruments of production in the hands of the state
must lead to a shift in the structures of domination and discipline that are
hardly preferable to the proletariat. Reddy acutely argues that the
bargaining position of such state vis--vis the workers is incomparably
greater than that of private employers, unless there were very rigorous
and very extensive safeguards created expressly to prevent such
discipline. [But] on the shape of such future safeguards Marx and Engels
had virtually nothing to say. 755 This is by no means an original criticism
of Marxist economics. The identification of state control over economy
with political despotism was a common theme of liberal discourse of
modernization. For example, see this classic passage from Smith:
The statesman who should attempt to direct private people in what manner
they ought to employ their capitals would not only load himself with a
most unnecessary attention, but assume an authority which could safely be
trusted, not only to no single person, but to no council or senate whatever,
and which would nowhere be so dangerous as in the hands of a man who
had folly and presumption enough to fancy himself fit to exercise it. 756
And from the more radical end of the political spectrum, Bakunin
identified Marx as a state worshipper and in Statehood and Anarchy
pointed to the danger that the so-called peoples state will be nothing
232
other than the quite despotic administration of the masses of the people
by a new and very nonnumerous aristocracy of real and supposed learned
ones [] to liberate the masses of the people they first have to be
enslaved. 757 This was a critique read by Marx and answered in his best
polemic style. Bakunin was an ass and his argument was nothing other
than
schoolboy drivel,
windbaggery.
democratic
nonsense,
and
political
758
This rationalistic economism isnt an accidental mistake of Marx. It

isnt a contingent element of his project that could be rejected in order to
save it. It is the very foundation on which the edifice of Marxism is built.
As Foucualt wrote:
At the deepest level of Western knowledge, Marxism introduced no real
discontinuity; it found its place without difficulty, as a full, quiet,
comfortable and, goodness knows, satisfying form for a time (its own),
within an epistemological arrangement that welcomed it gladly (since it
was this arrangement that was in fact making room for it) and that it, in
return, had no intention of disturbing and, above all, no power to modify,
even one jot, since it rested entirely upon it. Marxism exists in nineteenthcentury thought like a fish in water. 759
When Samuelson called Marx a minor post-Ricardian, it was

primarily a political declaration, however, it does not mean the he wasnt
to a large extent right. Today no one really disputes that Marxs
economics is anything other than a variation on classical economics, built
on the same premises, categories, and logic. 760 And as C. Wright Mills
notes, both Marxism and Liberalism make the same rationalist
assumption that men, given the opportunity, will naturally come to
political consciousness of interests, of self, or of class. 761 Even Harvey,
after all a big fan of Marx, cannot help but to wonder:
233
Why does he stick with the bourgeois structure of knowledge so rigidly

[] I really do not have a good answer to this question. All I know for
sure is that this is clearly what he does (the textual evidence, as we shall
see, is overwhelming). 762
He sticks as closely as he can to the bourgeois conception of a law-like
level of generality of production and excludes the accidental and social
particularities of distribution and exchange and even more so the chaotic
singularities of consumption from his politicaleconomic enquiries. 763
These two economic discourses have been obviously mobilized by

different states in the course of different political projects, but they share
more in common than it may seem at first sight.
But even at first sight, there is one thing for which they both share
great enthusiasm: namely, capitalism. The history of mankind is a history
of linear progress and moves through subsequent stages of which
capitalism is so far the most progressive. Thus, as Marxists argue,
capitalism should be seen at once as the worst and best thing that
happened to the mankind. In A Contribution to the Critique of Political
Economy, Marx wrote:
Asiatic, ancient, feudal, and modern bourgeois modes of production can be
designated as progressive epochs in the economic formation of society.
The bourgeois relations of production are the last antagonistic form of the
social process of production antagonistic not in the sense of individual
antagonisms, but of one arising from the social conditions of life of the
individuals; at the same time the productive forces developing in the
womb of bourgeois society create the material conditions for the solution
of that antagonism. This social formation brings, therefore, the prehistory
of society to a close. 764
Hence, the ostensibly paradoxical movement of Legal Marxists,

who used Marxs analysis to legitimize capitalist development in
nineteenth-century Russia, is not by any means paradoxical. 765 All in all,
Marxist and liberal discourses shared the same enthusiasm for the
modernization of society 766 based on the Enlightenment overconfidence
that progress of scientific methodology, accounting mentality, and
234
instrumental rationality is necessarily bound to the growth of universal

freedom. 767 The final argument for Communism was simply that it beats
Capitalism at its own game. As Keynes noticed:
Communism merely claimed to be in the long run a superior technical
instrument for obtaining the same materialistic economic benefits as
capitalism offers, that in time it will cause the fields to yield more and the
forces of Nature to be more straitly harnessed. In this case there is no
religion after all, nothing but a bluff to facilitate a change to what may or
may not be a better economic technique. 768
But it can be argued that even without the perspective of a

communist future developing in the womb of bourgeois society, Marx
would still be an advocate of capitalist progress as the next best thing
mankind can get. In The British Rule in India, Marx legitimizes the
British exploitation of India (Chapter 30) by arguing that progress has its
costs: whatever may have been the crimes of England she was the
unconscious tool of history in bringing about that revolution. 769
Similarly, Engels praises the French rule in North Africa, which after all
dealt with the barbarious state of the African population. 770 This is the
progress of Hegelian philosophy of history: so mighty a figure must
trample down many an innocent flower, crush to pieces many things in its
path. 771
Certainly one cannot deny that Marxism was successful in
establishing itself as a temporarily viable political alternative to
liberalism. Interestingly, in terms of discoursive devices employed
towards this end, it differed little from the rhetoric of its rivals. It
positioned itself between the old authorities such as Aquinas 772 and
Aristotle. 773 It appealed to the age-old figures of use and abuse of money
and criticized false (idolatrous [Chapter 26]) consciousness. Sometimes
it presented itself as a purely scientific study of the laws of nature 774 or
235
the laws of history, 775 at other times it heavily utilized the imaginary of
gothic horror novels, 776 especially the vampire metaphor. 777 And in the
final instance, it simply used the power of abstraction which, simply
because Marx declared so, was not like Smiths or Ricardos
incomplete and formal abstraction but real, concrete, and
rational. 778 However, they must have been concrete and real in a
very peculiar way, because if a political opportunity arose, Marx easily
changed his views. For instance, he insisted for years that an industrial
revolution is an indispensible prerequisite for a communist one, and
portayed the Russian Empire as a hopelessly backward state. Conversely,
when the Russian translation of Capital met with a largely positive
reaction on the part of the Russian intelligentsia, he changed his mind and
suddenly declared that communism can be based on semi-feudal
communal ownership of the land. 779 Either because Marx was more a
skilful politician than a theoretician or because he believed that the
revolution is around the corner, he often made his analysis subordinate to
his partisanship. Arguably, this should be treated not as a betrayal of
Marxist principles but rather as their confirmation, which points to the
inseparable knot between politics and economics. After all, the point was
to change the world, not to interpret it. 780
For all these reasons, Marxism certainly did succeed in terms of
gaining a following. However, it is worth noting that Marxists were often,
especially in the Anglo-Saxon countries, better in spreading their good
news to various elites, to intellectuals and academics, than in attracting a
mass blue-collar following. At times, one has to wonder whether this was
not a deliberate strategy. It is striking that before the Communist
Manifesto in its final phrase calls proletarians of all countries to
unite, 781 its addressee is rather the bourgeoisie, who are addressed as
you, rather than the proletariat, who are referred to as they. 782 Hayek
236
argued that socialism has never been a workers movement, but rather an
ideology forced upon the working class by intellectuals, those
professional secondhand dealers in ideas 783 who may have been wellintentioned, but in fact, by promoting socialism did little more than secure
their own privilege. Perhaps this argument has been too easily rejected
simply because of Hayeks bad reputation for being an economic
libertarian and co-founder of the infamous Mont Pelerin Society and
should be inspected with more scrutiny.
In an 1882 letter to Bernstein, Engels reported that Marx, unhappy
with political appropriations of his ideas, declared once that If anything
is certain, it is that I myself am not a Marxist. 784 Although Marx
intended to taunt his alleged followers with this, in fact he jibed at
himself. Notwithstanding all Marxs faults, for many decades various
neo-Marxist and post-Marxist theories offered the most attractive
analytical approaches available for those who wanted to critically rethink
the status quo. Much of the most interesting and vigorous current
intellectual life has sprout from the grounds of Marxist analysis.
Nonetheless, as we have seen in this and previous chapters (Chapters
23, 26, 29, 34, 37), the Marxist project cannot be seriously treated as an
alternative to capitalism not because of historical crimes of Stalinism or
the economic breakdown of Soviet Union, but because from the very
beginning it was one flesh with liberal economics. It was a totalizing
search for a perfect synthesis, based on a faith in the equalizing character
of economic exchange and confidence that Enlightenment rationalism is a
force of universal progress. It did allow some place for conflict (albeit
dialectic and ephemeral), thus at times it may have helped to mobilize
political potential of the oppressed groups, but these had organized
themselves long before Marx (Chapter 38), and all-in-all todays
237
proletarians of all countries are still exploited just as they were in 1848.
Perhaps, the only major change is that the most brutal practices have been
exported to the periphery of the world market, so today the most ruthless
industrial production is no longer carried out in Manchester, but in China,
Pakistan, or Nigeria.
At the end of the day, one has to ask If Marx was so smart, how
come Marxism is dead? The answer is: he wasnt that smart. He is ballast
that needs to be left behind to open possibilities for new
conceptualizations of powers struggles.
Chapter 40:
Which explains why the working class
can never win the class struggle.
if there is hope, it lies in the proles
George Orwell
Let us make three observations on the notions of class and class

analysis.
Firstly, Marx argued that since capitalism is based on the theft of the
proletarians labor (Chapter 34), it is the historic mission of the proletariat
to rebel against this injustice and overthrow the exploitative regime of
production. However, the fact is that almost all revolutionary and tradeunion movements of the long nineteenth century were dominated not by
the proletarians, but by artisans who had higher incomes and workplace
autonomy than the workers and at times even owned small-scale capital
and employed labor themselves. 785 Study after study reveals [] [that]
neither leaders nor supporters of such factions were recruited exclusively
or even predominantly from the classes whose interests these factions
were said to represent. 786 For example, in the great Ruhr mining strikes
of 1889 and 1905:
Activists, it has been shown, continued to come predominantly from the
high-skill, high-pay end of the spectrum, and in particular from trades like
construction and metal working where apprenticeships still had meaning
and traditions of organization and political action stretched back at least to
the 1830s. Among such well-organized laborers moments of high
militancy resulted not from misery but from technological challenges to
the current organization of work. True proletarians were still in the
minority within the working class and, even where numerous, often
quiescent. 787
Similarly, Thompson shows that the British Friendly Societies,

probably the most important hubs of nineteenth century labor
organization in England with membership just under one million in
1815 788 (when the total population was around 10 million), were
240
dominated by artisans. 789 Wallerstein explains that the artisans were more
likely to engage in strike and direct actions, because being better
organized and possessing more resources and monetary reserves, they had
a better bargaining position. 790 It seems to be a reasonable explanation, as
it points to the fact that it takes power to fight power.
The Marxist confidence that it will be the revolt of the poor that will
usher in the communist utopia resembles, in its disregard for reality, a
somewhat religious faith in the salvation that will be found by the last
who shall be first. When empirical data contradicted Marxs propositions,
he simply ignored it. Wolfe showed that in the second (1873) and third
(1883) editions of Capital all statistics were updated except the ones on
workers wages, which were already outdated in the first edition
(1867). 791 The rise in real wages in the second part of the nineteenth
century contradicted prognoses of pauperization and polarization of the
proletarians and the prophesies about the coming time when they will
have nothing to lose but their shackles, 792 so they had to be disregarded.
Reddy calls it fetishism of the proletariat:
Failure to deal fully with the disciplinary potentials of wage and other
exchange relationships has handicapped the Marxist tradition's treatment
of class formation. The fetishism of wages has given rise to a fetishism of
the proletariat. Almost inevitably wage laborers are believed to hold a
privileged position in the hierarchy of suffering and to have a special
propensity to rebel because of low wage levels and because the surplus
value they create becomes someone else's private property. In reality quite
the reverse is true. That is, earning levels are, if anything, symptoms, not
causes, of oppression. 793
Secondly, numerous cases have been made in recent decades against

using the concept of class as a valid analytical concept. 794 Several
historical studies show that class seems to be a largely elusive thing, a
mirage that evaporates when one gets close to it.
241
Thompsons momentous Making of the English Working Class

unveils the great diversity of economic standing, social prestige,
relations to the means of production, political participation, and selfconsciousness among the labouring poor at the very time the factory
system was supposed to have been homogenizing into a single working
class. 795 Classes as real, concrete entities, as social actors that pursue a
single set of political and economic goals, cannot be identified. Even
when it comes to political antagonisms, whose class character is assumed
to be self-evident, a careful examination of the social composition of the
struggling parties shows that no clear lines can be drawn. Speaking of the
English Civil War, Tawney remarked Bourgeois revolution? Of course it
was a bourgeois revolution. The trouble is the bourgeoisie was on both
sides. 796 And Wallerstein adds that this was as true of the Glorious
Revolution of 1688-1689 as it was of the revolution of 1640; and it was
true of the Fronde as well, and even of the French Revolution in 1789. 797
Class narratives seem to overemphasize the significance of agency in
historical processes. Series of short-term tactics are seen in retrospect as
long term strategies, and accidental effects are mistaken for intentional
objectives. Roman peasants plowing and sowing their fields in a twofield rotation generation after generation did not intend to exhaust the
soil. The inventor of gunpowder did not intend to make medieval chivalry
obsolete. Columbus did not intend to find a new continent. 798
Historically, political actions rarely brought about intended systemic
effects. As Lachmann notes:
Actors almost always intended to be conservative, to merely preserve or
perhaps to augment their existing positions. Action usually had little effect.
Plans went unfulfilled. Rivals were able to blunt most challenges to their
positions. Elites and nonelites only rarely achieved the specific and shortterm gains they intended. More rarely, actors set in motion the long chains
of contingent elite and class conflict that transformed social structure and
produced new and unanticipated forms of production. 799
242
Of course some political battles are unequivocally won, and some of

these victories even produce local sets of intended effects. But to see
general systemic developments as outcomes of deliberate strategies
makes as much sense when the agent of said change is said to be
bourgeoisie or proletariat as it does when it is said to be the Illuminati, the
Elders of Zion, or Reptilians.
It can be said that the notions of class and class struggles were a
solution of an analytical problem by means of a political postulate.
Redefining the dynamic networks of overlapping hierarchies in which
social agents try to combine various means of securing their interests so
that it appears as a conflict between two relatively homogenous classes
had been instrumental to mobilizing political support for socialist
projects. It may be argued that many historical achievements of the
working poor have been won thanks to such discoursive tactics. It may be
also argued that today we need to express more issues in terms of class
conflicts, because in this way social struggles can be framed in terms of
negotiable
interests
and
not
around
nonnegotiable
identities. 800
Notwithstanding these arguments and their partial validity, it seems

doubtful that our general understanding of social processes and power
struggles should be based on propagandists categories, however wellintentioned.
Thus, thirdly, class fetishism has to be eschewed and replaced with a
study of the discoursive and institutional environments in which various
individual and collective agents pursue their goals. By no means should it
be perceived as a move against political agency as such, a fatalistic
celebration of structuralism, but rather as an attempt to appreciate the fact
that the matrix for power struggles is more complex than the class
struggle over the control of the means of production.
243
Marx deliberately ignored all other dimensions of socio-economic

conflicts and focused on the control of the means of production (and let
us note that both control and means of production are highly abstract
and ahistorical concepts). 801 Reform of the credit regime, redistribution of
wealth, progressive taxation, anti-monopoly regulations, progressive
monetary policies were all bourgeouis devations. 802 The only possible
subject for properly scientific economic analysis was the realm of
production, and the division between capital and labor inherent in it. 803
Social relations could be brought to the simple difference between those
who own the machinery and those who constitute a mere addition to it in
the form of laboring power. Hence, the central question becomes: who
owns the factories?
The alternative approach would work from the premise that not only
the social context but the deeply social character of all production has to
be emphasized, and the institutional nature of ownership has to be
appreciated. The class narratives are politically loaded constructs that
obscure the heterogeneous character of power struggles and envision a
mythical future when the working class will finally transform itself into
an agent of change, a sovereign that will shape its political and natural
environment at will. The political need of constructing discoursive
vehicles through which collective agency could be expressed is
understandable, but employing such devices towards analytical ends
cannot end well. And it can be argued that immediate political purposes
would also be better served by concepts more grounded in reality than the
notion of a class struggle with a messianist role prescribed for one of the
classes.
Chapter 41:
In which we take look at the so-called
marginalist revolution.
I say that things are useful whenever they
can be put to any use at all.
Lon Walras
It is evident that a spirit of very active criticism is spreading, which

can hardly fail to overcome in the end the prestige of the false old
doctrines, wrote William Jevons in 1879. 804 By that time classical
political economy had been appropriated by Marxists and challenged by
the historical school (Chapter 43). The former derived a radical critique
of the existing social order from the labor theory of value, while the latter
challenged the very method of abstract theorizing. Then, according to the
mainstream history of economics, in the 1870s a so-called marginalist
revolution happened. As Schumpeter wrote in his classical History of
Economic Analysis: this revolution centered in the rise of the marginal
utility theory of value that is associated with the names of three leaders:
Jevons, Menger, and Walras. We pause to salute them. 805
Milonakis and Fine argue that with marginalism, economics is
pushed away from its traditional definition as the science of wealth or
the science of the economy, towards its definition as the science of
choice. 806 As Unger describes it:
Faced with socialist attacks on political economy and escalating socialtheoretical debates about how society worked, the new marginalist market
theory simply withdraw from the contested terrain. It relocated on what it
believed to be a higher or, at least, a more general ground. 807
The marginalists proposed that economy should not be concerned

with absolute values produced by the whole economy, but only with the
relative utilities of particular goods as they appear before an individual
buyer or seller at a specific time. The value of this shift is often explained
246
by a claim that thanks to this approach, finally the ancient paradox of

value (why is water, which is indispensible for human survival, cheaper
than diamonds, which have hardly any practical use at all) could be
resolved. 808 But as we have seen (Chapter 15), medieval scholars were
already aware that prices are dependent on changing supply and demand.
Thus, the originality of the marginalists lay not so much in discovered
relativity of values, as in dissolving the politically charged tension
between relative and absolute values by excluding the latter from the
body of economic analysis.
The marginalist school was an attempt to make economics an
objective science that could discover the underlying principles of
economic conduct by deductive, abstract reasoning. Milonakis and Fine
show that Menger
Consider[ed] all phenomena as having some essential properties that
underlie their nature, and search[ed] for causal relations among the
individual elements of these phenomena through the method of abstraction
and isolation: Menger sought the simplest elements of everything real,
the essences, the nature (das Wesen) of the real. In his exact approach, he
used the process of abstraction from the individual phenomena of the
empirical world to discover their essences, to isolate them, and then to
utilise the simplest elements so obtained to deduce how more
complicated phenomena develop from the simplest, in part even
unempirical elements of the real world. 809
Walrass general equilibrium theory in which all agents are not

allowed to make binding contracts with each other until all markets reach
the state of equlibirum 810 is so unrealistic, it is hardly conceivable even as
a pure thought experiment. As Hodgson observes, it is so abstract that it
does not satisfactorily encompass money, markets or firms. 811 But the
more abstract the theory, the more universal its application 812 (Chapter
44). Hence, general equilibrium could be (and in the twentieth century
was) easily adapted as a model of a centrally planned economy. This is
247
another instance that shows the structural closeness of socialist and

capitalist economics, and would be probably welcomed by Walras
himself who before taking up professorship at Lausanne, worked in a cooperative movement.
Personally, Walras explicitly stated that no recourse to empirical
verification of economic theories is necessary. According to him,
economics as a physico-mathematical science abstracts ideal-type
concepts which [it] defines, and then on the basis of these definitions [it]
constructs a priori the whole framework of their theorems and proofs.
After that they go back to experience not to confirm, but to apply [its]
conclusions. 813 Pure economics does not expect any confirmation from
reality. 814 When in 1881 he was asked about practical recommendations
for tariffs policy, he refused to give them. I am a man of pure theory, he
explained. 815
It is perhaps a banal point, but nevertheless one worth making, that
one has to wonder about the practical applicability of economic
knowledge, when economists themselves are not that good at making
money. And with some exceptions (most notably, Keynes, who
repeatedly lost and made fortunes on the stock market), they know better
than to wager their own money on their theories. A bit symbolic in this
regard is Jevons attempt to practically use his economic reasoning. In his
forties, this revolutionary, in anticipation of a coming spike in the price
of paper that would bar him from work, bought a great stock of paper.
But the rise in prices never came, and Jevons died, surrounded by
stockpiles of unused paper so high, his children hadnt used them even
fifty years later.
248
We will come back to the issue of abstract economics (Chapter 44),

but before we proceed, it should be noted that since the 1970s the very
notion of the marginalist revolution has been brought under sceptical
scrutiny. Although it is true that the three musketeers of marginalism
spoke of their own work as revolutionary, 816 historians who look past
these self-congratulatory declarations for evidence of the marginalists
originality struggle to find any. The leading ideas of the revolutionaries
were by no means novel. 817 To mention only names already brought up in
this book, marginalist concepts and formulas could be find in works of
Ibn Rushdi, Olivi, Genovesi, Verri, Beccaria, and Turgot. Moreover,
Blaug points out that:
To try to explain the origins of the Marginal Revolution in the 1870s is
doomed to failure: it was not a marginal utility revolution; it was not an
abrupt change but only a gradual transformation of old ideas; and it did not
happen in the 1870s 818
And Amadae argues that the marginal revolution was reconstructed

in the twentieth century when the neoclassical orthodox position matured
and sought to celebrate its antecedent roots in the early marginalist
principles. 819 To borrow Alfred Marshalls favorite aphorism: fabula
non facit saltus discourse does not make jumps.
Chapter 42:
In which psychological premises and logical tautologies behind
the figure of homo economicus are inspected.
the object of economics is to maximize
happiness by purchasing pleasure
Stanley Jevons.
Yossarian was moved very deeply by the
absolute simplicity of this clause of Catch22 and let out a respectful whistle.
Joseph Heller.
Criticizing the figure of homo economicus is probably as common

as blaming neoliberalism for all the predicaments of the modern world.
It is described as an essentialist and ahistorical abstraction that has no
grounding in reality. It is criticized as a basis for real life policies that
have absolutely no grounding in reality. As Madison observes homo
economicus, a mere economizing, calculating entity [] can be thought
and has his uses, [but] he does not exist. 820 On the one hand, it is said
to be a purely theoretical concept that deliberately removes itself from
reality. On the other, mainstream economists like to claim that precisely
thanks to its abstract character, it is in a way more objective and real than
the reality itself. The concept found its first definite expression in Mills
1844 Essays on Political Economy:
What is now commonly understood by the term Political Economy is not
the science of speculative politics, but a branch of that science. It does not
treat of the whole of mans nature as modified by the social state, nor of
the whole conduct of man in society. It is concerned with him solely as a
being who desires to possess wealth, and who is capable of judging of the
comparative efficacy of means for obtaining that end. It predicts only such
of the phenomena of the social state as take place in consequence of the
pursuit of wealth. It makes entire abstraction of every other human passion
or motive. 821
But already three decades later, the drive to profit was treated by
marginalists as the inevitable tendency of human nature. 822 Thus, the
250
Enlightenment appreciation for self-interest (Chapter 25) is transformed

into a conviction that the gain motive not only should be treated as a
legitimate one, but simply is the only real one.
It should be noted that although mainstream economics disregards
modern psychological studies, it is not devoid of psychological
assumptions. 823 Arguably, they were based on theories of mechanistic
psychology developed by Richard Jennings, whom Jevons named along
with Jeremy Bentham and Nassau Senior (Chapter 30) as the most
important influence on his Theory of Political Economy. 824 Jennings, in
his Natural Elements of Political Economy (1855), presented natural
laws of economic behavior thanks to which the mystery of action is
solved. 825 The laws [] of human action are, in the same sense in
which other laws of Nature are so, fixed and invariable, 826 and could be
explained in terms of automatic reflexes, predetermined by the
materialist automatism of human neurophysiological organization. 827
Although Jennings referred in a number of places to economic actions that
were governed by the will he noted that these occurred much less
frequently than is commonly supposed. Instead, a good deal of activity
was regulated behavior, consisting of actions that were simply automatic
or instinctive, performed without the attention, or the intention, or even
the excitement of consciousness in the mind of the agent. 828
Despite Jevonss conviction that economics, if it is to be a science at

all, must be a mathematical science, 829 he spent some time doing
empirical experiments designed to throw some light upon the chemical
and physiological conditions of muscular force, 830 in which he sought to
confirm Jennings laws of the physical basis of political economy by
measuring time for which he could hold weights in the hand with an
outstretched arm. And as Alborn says: perhaps not surprisingly, a
diagram of Jevonss results looks like the labor disutility curve in the TPE
[Theory of Political Economy]. 831
251
Although such crude mechanistic psychology was heavily criticized

in the 1860s and was widely considered outdated already by the time
Jevons adapted it for his purposes, 832 it didnt hinder its success in the
economic discourse. Homo economicus fit too well with the liberal
critique of an economically over-active state (Chapters 24, 32) which was
based on the premise that the sum of local, dispersed, rationalities will
always be more efficient than the statesman who should attempt to direct
private people in what manner they ought to employ their capitals. 833
Individual preferences are always right, they cannot be wrong, because
they are the very standard against which everything else is measured, they
are the purest expressions of truth. As Foucault put it: homo conomicus
is the one island of rationality possible within an economic process. 834
Consider Smith: every individual, it is evident, can, in his local situation,
judge much better than any statesman or lawgiver can do for him, 835 or
Turgot: each individual is the only judge of the most advantageous use
of his land and his labor. He alone has the local knowledge without which
the most enlightened man reasons only blindly. 836
The only possible point of rationality was the individual, and the
logic of this rationality was utility maximization. A brief outline of
establishing utility maximization as the main principle of homo
economicus can be sketched as if it proceeded in three phases. First was
Bentham, who brought all action under the common hedonistic utilitarian
denominator:
Nature has placed mankind under the governance of two sovereign
masters, pain and pleasure. It is for them alone to point out what we ought
to do, as well as to determine what we shall do. [] They govern us in all
we do, in all we say, in all we think: every effort we can make to throw off
252

our subjection, will serve but to demonstrate and confirm it. In words a
man may pretend to abjure their empire: but in reality he will remain
subject to it all the while. The principle of utility recognizes this
subjection, and assumes it for the foundation of that system, the object of
which is to rear the fabric of felicity by the hands of reason and of law.
Systems which attempt to question it, deal in sounds instead of sense, in
caprice instead of reason, in darkness instead of light. 837
Second, Mill redefined pain and pleasure to account for cultural and
social motives that exceed the hedonistic calculation of pain and gain.
People do calculate, but they take into account things such as
the hope of favour and the fear of displeasure from our fellow creatures or
from the Ruler of the Universe, along with whatever we may have of
sympathy or affection for them or of love and awe of Him, inclining us to
do His will independently of selfish consequences. 838
It has been noted, that the push by Mill to complement an objective

theory of value with subjective elements, in order to account for the
historically and socially situated individual, in part had the perverse effect
of paving the way for ahistorical and asocial subjectivity (marginal
utility) to prevail. 839 This is the third phase: homo economicus becomes
a subject who at once evaluates relative utilities of everything around him
and seeks to maximize its individual utility. Self-interest is the prince of
the princes (Chapter 25), and every effort we can make to throw off our
subjection, will serve but to demonstrate and confirm it. It is a
tautological argument that goes in circles. Utility is relative, and whatever
one does, one seeks to maximize it. If somebodys action seems to you to
be a disadvantageous one, it must be because you dont grasp the true
utility that one derives from it. If it wasnt the most advantageous action
possible, one wouldnt perform it. It is Catch-22.
As Reddy argues:
Such a procedure is immune from all possible disproof. For this reason, the
notion of advantage that rests at the core of classical political economy can
253
lay no more claim to validity (and no less) than Freud's notion of the
oedipal stage or Luther's notion of the futility of works for achieving
salvation. All are equally profound and instructive statements about the
underlying nature of human motivation; all are equally metaphorical,
nonscientific, essentially poetic. Money is numerical, however, whereas
salvation or making love to one's father or mother are not. One can make
calculations and projections with money. To do so looks like science. 840
In Sedlaceks words, the utlity maximalisation thesis can be summed

up in short as the discovery that human beings do what they do. 841
In the mainstream economic discourse, the figure of homo
economicus was seriously challenged three times. First, it had to fight off
the eighteenth-century conservative discourse mounted in support of the
guild system and apprenticeship, which proposed that people are not
naturally entrepreneurial and that without the guide of the guild masters,
they wont be able to pursue their own interests. 842 Interestingly, these
arguments were also voiced in the British debate on the abolition of
slavery, and decisively shaped its outcome. The Abolition Act of 1833
established a six-year transition period of The Apprenticeship, during
which the ex-slaves were expected to gradually learn how to be free while
working without pay for their former owners for four and a half days a
week. 843
Second, it was challenged by Keynes, who stressed the economic
importance of factors such as chance, psychology, mob mentality, and of
course the animal spirits:
Business men play a mixed game of skill and chance, the average results
of which to the players are not known by those who take a hand. If human
nature felt no temptation to take a chance, no satisfaction (profit apart) in
constructing a factory, a railway, a mine or a farm, there might not be
much investment merely as a result of cold calculation. []
Even apart from the instability due to speculation, there is the instability
due to the characteristic of human nature that a large proportion of our
positive activities depend on spontaneous optimism rather than on a
mathematical expectation, whether moral or hedonistic or economic. Most,
254

probably, of our decisions to do something positive, the full consequences
of which will be drawn out over many days to come, can only be taken as
a result of animal spirits of a spontaneous urge to action rather than
inaction, and not as the outcome of a weighted average of quantitative
benefits multiplied by quantitative probabilities. Enterprise only pretends
to itself to be mainly actuated by the statements in its own prospectus,
however candid and sincere. Only a little more than an expedition to the
South Pole, is it based on an exact calculation of benefits to come. 844
And finally, it was criticized by Mises, who stressed the significance

of uncertainty and argued that economics should not deal with imaginary
homo economicus, but rather with man as he really is, often weak,
stupid, inconsiderate, and badly instructed. 845
The figure of rational and calculating homines oeconomici has been
criticized by mainstream economists and it has been criticized by
countless anthropologists, sociologists, and psychologists. However, its
arguably most devastating assessment was delivered not by academics,
but by the industry, namely, the advertising industry. As early as the
1920s, Americas advertising and public relation companies explicitly
advocated public relations based not on factual argument and rational
persuasion but on emotion and sentiment. 846
Despite all these theoretical and practical shortcomings of homo
economicus, it is still the predominant paradigm of mainstream
economics. Thus, the 1992 Nobel Prize laureate Gary Becker claims that:
the economic approach is a comprehensive one that is applicable to all
human behavior, be it behavior involving money prices or imputed shadow
prices, repeated or infrequent decisions, large or minor decisions,
emotional or mechanical ends, rich or poor persons, men or women, adults
or children, brilliant or stupid persons, patients or therapists, businessmen
or politicians, teachers or students. 847
It certainly sits well with the culture of individualism, which praises

self-improvement, self-reliance, and self-blame. Possesive individualism
is a topic for another time, but let us note now that homo economicus as a
255
primary subject of economic analysis (as opposed to classes or

institutions) constitutes an important part of it, as it places the sole
responsibility for ones economic performance and social position on the
individual. The most immediate consequence of this is that both
economic successes and hardships are experienced individually. Thus,
when employees are made redundant, they are more likely to blame
themselves and feel shame than to feel anger towards institutional agents
such as companies or governments. 848 The famous 1933 diaries of the
unemployed study, which sought to analyze the every-day life of the
poor during the Great Depression, was repeated in 2001 and it shows that
the tendency to treat economic problems as individual failures has been
on the rise in recent decades. 849 The diaries, written 70 years after the first
study, described in many regards a parallel experience to the one of 1933,
used similar narratives and spoke of similar problems. The subjective
experience of unemployment, despite all the economic, social, and
cultural changes of the past century, is analogous. However, one
difference stood out. It was precisely this newly developed shame
stemming from the conviction that it is the unemployed man who bears
sole responsibility for his unemployment.
Let us make one footnote at this point. It is ironic that for the most
part, the liberal praise of capitalism fails to see that the basic institution of
capitalist economy, the unit which is indispensible (or so liberals claim)
for economic innovations and progress, namely, the capitalist company, is
an institution whose internal environment is essentially non-capitalist.
Once an individual becomes a full-time employee, he or she enters a
microcosm that is not regulated by deals struck on a market but by a
corporate culture. Employees and departments within a single company
do not trade with each other nor do they simply compete with each other.
256
The efficient functioning of a company surely depends on disciplining

employees to perform their tasks, and a companys survival depends on
its performance on a market, but the internal organizational logic of
companies is not a market one. And its efficiency depends not on
employees acting as homines oeconomici, but on them acting as social
beings who are ready to cooperate and learn from each other, and whose
motivations are at least in part affected by non-monetary incentives and
techniques of discipline.
Chapter 43:
In which the historical role of
historical schools of economics is outlined.
the register of crimes and misfortunes
Voltaire
As we have seen in the chapter on the doux-commerce and jealousy

of trade theses (Chapter 24), the standpoint on economic liberalism has
been ordinarily dependent on relative position in the regime of world
economy, that is, in the international division of labor. Ha-Joon Chang
extensively and convincingly describes the historical protectionist,
industrial, and trade policies taken by such countries as Britain, the USA,
Germany, France, Sweden, Belgium, the Netherlands, Switzerland, Japan,
Korea, and Taiwan in order to develop national economies strong enough
to compete on the free market. 850 This is well documented, so in this
chapter I will focus on only one, relatively recent, economic discourse
that legitimized such policies a discourse that before the Second World
War could be considered mainstream in many European countries 851 and
influenced American Institutionalists, 852 namely, the German Historical
School of economics.
In the eighteenth and early nineteenth century, Germany was still
primarily an exporter of raw materials, with industry in the state of
infancy. The classical dogma of laissez-faire was indisputably recognized
as inadequate to the needs of a weak economy. 853
See, for instance, this passage from Fredrich Lists 1841 The National
System of Political Economy:
258

It is a very common clever device that when anyone has attained the
summit of greatness, he kicks away the ladder by which he has climbed
up, in order to deprive others of the means of climbing up after him. In this
lies the secret of the cosmopolitical doctrine of Adam Smith, and of the
cosmopolitical tendencies of his great contemporary William Pitt, and of
all his successors in the British Government administrations.
Any nation which by means of protective duties and restrictions on
navigation has raised her manufacturing power and her navigation to such
a degree of development that no other nation can sustain free competition
with her, can do nothing wiser than to throw away these ladders of her
greatness, to preach to other nations the benefits of free trade, and to
declare in penitent tones that she has hitherto wandered in the paths of
error, and has now for the first time succeeded in discovering the truth. 854
Also, a number of nineteenth-century US presidents explicitly

expressed this position. Consider the 18th US president, Ulysses S. Grant:
For centuries England has relied on protection, has carried it to extremes
and has obtained satisfactory results from it. There is no doubt that it is to
this system that it owes its present strength. After two centuries, England
has found it convenient to adopt free trade because it thinks that protection
can no longer offer it anything. [] Within 200 years, when America has
gotten out of protection all that it can offer, it too will adopt free trade. 855
Or the 25TH US president, William McKinley: under free trade the

trader is the master and the producer the slave. Protection is but the law of
nature, the law of self-preservation, of self-development, of securing the
highest and best destiny of the race of man. 856
The difference between historical and classical economics was
grasped in 1875 by Leslie:
Two different conceptions of Political Economy now divide economists
throughout Europe, of which, looking to their origin, one may be called
English, the other German, though neither meets with universal acceptance
in either England or Germany. English writers in general have treated
Political Economy as a body of universal truths or natural laws; or at least
as a science whose fundamental principles are as fully ascertained and
indisputable, and which has nearly reached perfection.
The view, on the other hand, now almost unanimously received at the
universities, and gaining ground among practical politicians, in Germany,
is that it is a branch of philosophy which has received various forms in
different times and places from antecedent and surrounding conditions of
thought, and is at a stage of very imperfect development. Each of these
259
conceptions has its appropriate method; the first proceeding by deduction

from certain postulates or assumptions, the second by investigation of the
actual course of history, or the historical method. 857
Of course Marxists claimed to pursue the historical method as well.

Marxist political economy was supposed to be essentially a historical
science (Engels), 858 but Hodgson acutely notes that its aim is not to
analyse any specific variety of capitalism but capitalism in general.
Rather than any specific form of capitalism, capitalism per se is chosen as
an ideal type because the dynamism of that system is attributed to its
general relations and structures rather than national or cultural
specificities. 859
The Historical School has been criticized by neoclassical economists
primarily for its alleged lack of theoretical sophistication, which leads to
failure in discovering any general economic laws. Not one single law
deserving of the name, not one quantitative generalisation of permanent
validity has emerged from their efforts, 860 argued Robbins. Therefore,
they really do not belong to the body of economic knowledge. But since
many institutionalists would be reluctant to admit that many
generalisations of permanent validity exist [] they should not be
condemned outright for failing to discover them. 861 In any case, it is not
true that the Historical School was theoryless or anti-theory. They
objected to abstract and deductive theorizing that tried to establish
atemporal scientific certainty. 862 As leading historical economist
Schmoller argued, by cloaking propositions as laws, one gives them
the appearance of necessity which they do not possess [] It is more
justifiable to doubt whether today we can and ought to speak of historical
laws. 863 Economic history has to be theorized, but all generalizations
will be historically and geographically specific. Thus, for Knies, another
historical economist, to be historical meant to be context-bound.
260
Economic facts and theories must be interpreted in the context of the

place and the time period of the society or people in question, not in the
light of a larger developmental scheme or timeless causal law. 864 This is
how Schmoller, who devoted a quarter of a century to collecting
historical and statistical data on economic development, envisaged the
future of economics and a proper relationship between history and theory:
In the future there will come a new epoch for national economy. It will
come, however, only through giving full value to the whole body of
historico-descriptive and statistical material that is now being assembled,
not through further distillation of the already hundred times distilled
abstract theories of the old dogmatism [] It is by no means a neglect of
theory, but a necessary substructure for it. 865
An important element of German historical economics was its unit of

analysis. It was neither the individual nor the class, but society or the
national economy as a whole. 866 They stressed the interdependency of
people living in one country:
The common element which relates each economic individual or nation is
not only the state, but is something deeper: the common language, history,
memories, morals, and ideas [] It is a common ethos what the Greeks
called the spiritual-moral sense of community, that is crystallized in the
morality and law and that influences all human actions, as well as
economic actions. 867
The primary metaphors to which such narratives appealed were, once

again (Chapter 21), ones of anatomy, the body, and organism. As Roscher
declared explicitly in 1882: our task is to speak, the anatomy and
physiology of social or national economy! 868 Just as the very term
organism was a neologism introduced by Stahl in an overt attempt to
oppose the Cartesian paradigm of mechanism, 869 organic metaphors
were considered a viable alternative to a mechanistic understanding of
economic phenomena. 870 However, it could be argued that both frames
were pursuing the same goal of turning the plurality of economic conflicts
into a flawless synthesis. As Murphy writes: Organism and mechanism
261
are but two variations on the same theme of stipulated order: The attempt
to explain structure as if it were deliberately designed for its function. 871
Therefore, it is worthwhile to consider the argument put forward by
Hutter, namely, that such organic economics contributed to the rise of
National Socialism. 872 Conceptualizing national economy as a single
organism made it easy to consider every and each economic misfortune as
a symptom of an infection by foreign bodies (Chapter 21) and invited
questions about the purpose of this organism. 873 This argument is
undoubtedly strengthened by the fact that organic language has been
often closely intertwined with that of Romantic nationalism. However,
this does not seem sufficient to confirm the simple causal relation
between organic metaphors in economics and the emergence of an
ideology in whose spirit tens of millions of people were killed. 874
Certainly, the deadly potential of homogenizing narratives should be
remembered. But the claim that the organic paradigm must lead to the gas
chambers of Auschwitz seems to be a way of securing the legitimacy of
the rival individualist and mechanical model, rather than a sound
evaluation of historical evidence.
In 1930s and 1940s the Historical School was not so much defeated
in open debate, as it was defined out of it. Between Robbinss
aforementioned 1932 essay and the publication in 1947 of Samuelsons
bestselling textbook on economics, the mainstream simply excluded
historical considerations as unscientific. 875 Economics became, by
definition, the science which studies human behaviour as a relationship
between ends and scarce means which have alternative uses. 876 Nothing
more, nothing less. Meanwhile, historical economists found themselves
described as sociologists or simply historians. 877 Ever since, historical
approaches to economics have been treated as heterodox, sometimes
262
appreciated in leftist academia and welcomed by developing countries,

but ignored by mainstream economics.
One way to understand it is that the German Historical School
disappeared from mainstream economic European discourse when it had
served its role. It didnt lose the debate, but on the contrary, it won it so
successfully, that it helped to develop Western economies to a point when
they didnt need development economics anymore. As soon as the ladder
could be kicked away, it was.
Unfortunately, the current conditions of the production of
mainstream economic discourse do not look promising with regard to
bringing back historical or institutionalist perspectives. As Colander says,
the internal dynamics of the profession: who is allowed to become a
member, who gets promoted, who gets paid what, who gets the laurels 878
promote abstract, scholastic, theorizing for its own sake.
By developing these models, graduate students and professors
demonstrated that they could jump through hoops; the more hoops they
could jump through the higher their income, chances for promotion, and
standing in the profession. For many economists economic research has
become the art of devising clever models and in doing so demonstrating
ones technical virtuosity. Rational expectations is only one example.
There are many others. Econometric work often is done to demonstrate
mastery of new techniques, rather than to answer questions. 879
As Hewings and Helburn show, in the course of economic education

the relativeness of knowledge, and the legitimacy of different and
conflicting viewpoints are ignored, as textbooks provide a consensual
lens and an officially defined interpretation of reality [] They do not
introduce students to economics as science, into the process of inquiry
and knowledge creation [] to the diversity of opinion and ferment in
economics today. 880 If I may be excused for citing personal experience,
the characteristic statement, expressed over and over again during both
263
Neo-Keynesian and Orthodox economic courses I attended, was the

annoyed remark: Dont ask whether it is true or false! It is true by
definition, it is true by mathematical identity. If the history of economics
is present at all in economic departments, it is a sketchy Whig history of
progress and the gradual separation of biased ideology and superstition
from pure science. 881 Robbinss description of the course on the history of
economics he taught in the 1930s could describe a great majority of
courses on the subject even today:
The course will deal mainly with the economic theories of earlier
generations, but it will attempt to exhibit these theories, not as so much
antiquarian data but as the raw material out of which by a process of
refinement and elimination the economic theories of today have been
evolved. That is to say, its ultimate purpose will be to provide a negative
preparation for modern analysis. 882
The fact that economic discourse is closely coupled with political

partisanship doesnt help either. The direction in which mainstream
economics flows is obviously intertwined with prevailing political
interests. Historically, time after time, economists compromised their
analytical reasoning to maintain their political significance. Marx is one
obvious and already mentioned example (Chapter 39), but the same can
be said about Galbraith or Samuelson, who labored tirelessly to prove that
the Keynesian element in their analysis doesnt make them sleeper-agents
of the Comintern. 883 The direct transmission between the economic
discourse and political struggles makes unconstrained economic analysis
especially hard. As economic ideas became shibboleths of political
factions, any attempts to rethink them are denied without reflection.
Asking questions about the workings of the Invisible Hand is thus often
treated as an explicit expression of support for the Gulag and Khmer
Rouge, while to raise doubts about the usefulness of class analysis is
264
equalled with betrayal of the working people and surely a clear sign of
ones lack of intellectual courage. 884
Surely, part of the problem lies in the dynamics of intellectual
discourse production as such. As Jedlicki, Janowski, DQG 0LFLVND
show, 885 ever since the eighteenth century, it had strictly societal
character in the very basic sense that it was organized around informal
networks of people, often sustained more by personal relationships than
strictly professional ones. It is perhaps inevitable, although regrettable,
that in this situation solidarity with ones social circle and ones
colleagues often becomes an important motivation for engaging in public
polemics. Hence, substantive debates are frequently intertwined with
personal arguments, and the discourse on the whole has a tendency to
isolate itself from any tangible links with reality, becoming merely a
simulation of thinking. Pamphleteers refute polemicists, who claim to
have falsified theories of a philosopher who was brave enough to expose
another philosophers conceptual reliance on a misunderstanding of yet
another theoretician. Such tendencies are additionally reinforced by the
academic regime of knowledge production, within which too often the
safest way to make a career in the field of the humanities is to stick to
armchair theory.
Chapter 44:
In which mathematicization of economics
and its use of abstract theorizing is criticized.
If you wish to create a cult, mumble.
Thorstein Veblen
Judged by modern standards, Condorcets complaint about the

deluded use of the language of geometry in the economic sciences, 886
may appear unfounded. Condorcet voiced it in 1771, when Jean-Baptiste
Say was only five years old and David Ricardo wasnt yet born. At that
time, and for many more decades, pure deductive theory wasnt dominant
in political economy. As we have already mentioned, classical writers
appealed to a variety of frames of reference, such as historical,
philosophical and empirical (Chapter 36).
Among British classics, it was first Ricardo, a broker who had
made a fortune on financial speculations but had no university education
nor any training in philosophy, who developed a comprehensive
economic theory using purely deductive methodology and abstract
reasoning. As Coleman says, Ricardo hardly ever appealed to history to
make a point, to support an analytical proposition, even to illustrate an
argument. 887 Sowell confirms that, arguing that with Ricardo
economics took a major step toward abstract models, rigid and artificial
definitions, syllogistic reasoning and the direct application of the results
to policy. The historical, the institutional, and the empirical faded into the
background, and explicit social philosophy shrank into a few passing
remarks. 888
Ricardo sought to establish universal laws and general principles
of economic phenomena by means of abstract speculation. Leaving aside
a few matters of arguments, in terms of the content of his propositions, he
mainly rephrased or advanced theses already voiced by Smith and
266
Malthus. What was revolutionary was not the medium, but the message.
If the changes brought about by Ricardos work, and the influence which
it exercised, may validly be regarded as revolutionary, this must surely
be primarily, or largely, because of the novelty, and subsequent
importance for the subject, of its methodological contribution, says
Hutchison. 889
As we have already mentioned, abstract theorizing was also a prime
methodology for the minor post-Ricardian, Karl Marx. As Harvey
comments on the Capital:
This was partly due to the incompleteness of the work, but there is no hint
in the text of any intention of enriching the study with investigations of
historical forms of appearance. Indeed, if anything, the hints point towards
a desire to construct the purest possible theory of a capitalist mode of
production, uncontaminated by any attempt at grounding it anywhere. 890
Abstract economics appealed to two frames of reference: physics and

mathematics. It has been sometimes suggested that the appeal of
physicalist metaphors can be traced to Spinoza, who proposed to
consider human actions and appetites just as if [one] were considering
lines, planes, or bodies. 891 Notwithstanding the impact Spinoza may
have had on the thinking of a few European philosophers, a more
immediate influence on the economic genre was exerted by Newton.
A number of classical economists invoked Newton by name to
establish the legitimacy of their claims. The most colorful case was
Fourier, who not only claimed that his calculus of attraction unveils
the laws of motion missed by Newton, 892 but also maintained that just
as Newton was led to his discoveries by an apple falling from a tree, he
was led to his, by an apple that he ate at one Parisian restaurant. 893 Others
followed the suit, if only in a less extravagant way. Saint-Simon spoke of
forces of gravitiational morality, and Smith, in a clear analogue of
267
Newton, declared that the natural price was the central price to which the
prices of all commodities are continually gravitating. 894 The relationship
between the economic genre and physics was similar to its previous
relationship with medical language (Chapter 21).These metaphors didnt
provide any insight into economic phenomena, but simply furnished
economists with rhetorical figures that made their arguments look like
legitimate scientific proofs. As mainstream economics became more and
more abstract, the relationship between it and the physicalist frame of
reference became stronger and stronger.
Therefore, Mirowski argues that neoclassical economic theory is
bowdlerized
nineteenth-century
physics. 895
Nineteenth-century
896
in fact did their best to
economists, often themselves trained engineers,
mimic the style of physics. This meant mainly cribbing famous equations
and simply replacing physical values with economic terms. And thus, for
Walras, the price of things is in inverse ratio to quantity offered and in
direct ratio to the quantity demanded. 897 Jevons laid claims to the
scientific status of his price theory, exactly because its maths bore
resemblance to mathematical forms of physics. 898 Carey, in turn, tried to
explain urbanization by establishing a law due to which the greater the
number [of humans] collected in a given space [e.g., in populous cities],
the greater is the attractive force there exerted. 899 Edgeworth claimed
that:
Mecanique Sociale may one day take her place along with Mecanique
Celeste, throned each upon the double-sided height of one maximum
principle, the supreme pinnacle of moral and physical science. As the
movements of each particle, constrained or loose, in a material cosmos are
continually subordinated to one maximum of sub-total of accumulated
energy, so the movements of each soul whether selfishly isolated or linked
sympathetically, may continually be realising the maximum of pleasure. 900
268
The fact that hardly any economists really understood physics 901 and
that often the equations in the process of translation into economic idiom
were shattered or at least distorted 902 didnt really matter. The selfproclaimed success of economics in acquir[ing] the rigor of rational
mechanics 903 seemed to be enough to hijack the scientific authority of
physics. And when economists were confronted by genuine physicists,
who pointed to theoretical problems arising from such a treatment of
physics, they simply retreated into even more crude mechanistic
metaphors. 904
In the twentieth century, Newtonian physics finally lost ground to
Einstein and his General Theory of Relativity. But of course that didnt
change anything in the dynamics of the production of economic
discourse. Still, mainstream economics operated through an atomistic lens
and resorted to a language of frictions, the figure of equilibrium, and
other mechanistic metaphors. And when Keynes sought to revolutionize
these dogmas, he did it through an appeal to physics, albeit a new
physics, calling his work the General Theory of Unemployment, Interest
and Money suggesting that readers should see his efforts as following in
the footsteps of Albert Einstein. 905
As we mentioned, the second vehicle of abstract economics was
mathematics. The first incursion of mathematical methods into economic
discourse was Pettys project of political arithmetic (Chapter 20) in
which he attempted to quantify all aspects of social behavior and
formulate an Equation between drudging Labour, and Favour,
Acquaintance, Interest, Eloquence, Reputation, Power, Authority,
etc. 906 Customarily, economic historiography treats Cournots 1838
Recherches sur les Principes Mathematiques de la Theorie des
Richesses as the first serious work of mathematical economics. 907
269
Cournot didnt receive good press for his theories, but he did influence
Walras, who claimed to to have followed Cournots route to a point and
then superseded him, thanks to the methodological superiority of his
rigorous axioms and pure theory. 908
Walrass mathematics was deemed not good enough when he tried
to enroll in the engineering course at the Paris School of Mines. 909
Jevonss main area of speciality was metallurgy. Nevertheless, they
managed to mathematicize economics to the point that it became
subjected to Kelvins Dictum that states that when you cannot express
it in numbers, your knowledge is of meagre and unsatisfactory kind. 910
Confirmation of the primacy of mathematical methodology in
economics came with Marshalls classic Principles of Economics
(1890). Ironically, Marshall himself was very sceptical of the usefulness
of mathematics in economics. He insisted that organic metaphors are
better suited for economic subjects than physicalist ones 911 and in a 1906
letter to Bowley he wrote:
[I had] a growing feeling in the later years of my work at the subject that a
good mathematical theorem dealing with economic hypotheses was very
unlikely to be good economics: and I went more and more on the rules:
(1) Use mathematics as a shorthand language, rather than an engine of
inquiry.
(2) Keep to them till you have done.
(3) Translate into English.
(4) Then illustrate by examples that are important in real life.
(5) Burn the mathematics.
(6) If you can't succeed in (4), burn (3). This last I did often. 912
In the first edition of the Principles, he also included chapters on

economic history, believing that marginalist theory must be combined
with historical analysis and the social sciences. However, these were
dropped from later editions. For the sake of gathering support for
marginalist theory, he made a compromise and simplified his message.
270
As Milonakis and Fine say, his was one of the last attempts within
mainstream economics to keep the link between theory and history alive,
compromised though it was by the wish to establish marginalist theory.
[] The corresponding tensions within Marshall were largely and
increasingly resolved by his successors, in the token way of setting them
aside as inconveniences to be ignored. 913
Although at the beginning of the twentieth century, the (so far) final
episode in the expansion of abstract methods in economics was still to
come (Chapter 47), the paradigm had been already established.
Mathematics has become the medium through which economic discourse
was expressed, and mathematical sophistication started to be considered a
sufficient condition for its validity. Economics for centuries had been
feeding off various (sacral, medical, philosophical, mechanistic, organic,
etc.) discourses in a quest for its legitimacy. It is fascinating that in the
twentieth century it largely settled for mathematics as its main metaphor.
After all, mathematics is a purely speculative, self-referencing system that
does not relate to anything else but itself. As Porter notes, mathematics
does not describe a world, but posits one. It is a language of symbols that
refers to nothing outside itself. 914 In this context, it is not at all shocking
that in a study by Klamer and Colander, approximately ninety percent of
American graduate students of economics said that in their profession,
knowledge of mathematics and modelling are important. Only three
percent said that knowledge of the economy is very important, while
sixty-eight percent said that for an economist knowledge of the economy
is unimportant. 915
Accordingly, economics is no longer a science of economy but
merely its simulation. It becomes self-subsisting and self-legitimizing and
to a significant extent emancipates itself from previously used metaphors.
271
Arguably, it can do that because today economic genre simply does not
need to establish its authority by appeals to other kinds of knowledge (see
an exemplary case study in Chapter 47). Rather a reverse tendency of
economic imperialism is well recognized, in which discourses as
diverse as anthropology, biology, criminology, history, theology,
sociology, etc. turn to economic figures and metaphors in the search for
their legitimacy. 916
This shift certainly didnt happen because Alfred Marshall wanted to
write a bestselling textbook of economics. It didnt originate on a piece of
paper, or as an idea, but rather was caused by a very concrete and
material transformation of the structures of power and everyday social,
economic, and cultural practices. To this we will come back (Chapter 49),
but for now let us note that insofar as economic discourses do play a role
in power struggles, during the last century they started to cast a shadow
not only on economic struggles, but on all kinds of struggles, becoming
the abstract and self-sufficing standard against which everything and
everyone can be measured.
Chapter 45:
Which shows why Keynes was no Keynesian.
I can only say that I am ready to have my
head chopped off if this is false.
John Maynard Keynes
Long before Keynes developed his general theory of economy, he

wrote a primarily philosophical work, A Treatise on Probability, in which
he attacked the Enlightenment discourse on knowledge. Keynes argued
that Hume, in his attempt to delineate scientific, objective knowledge
from subjective value judgements, overstated the difference between the
two. For Hume, probabilities fall under the second category, all probable
reasoning is nothing but a species of sensation. 917 Keynes tried to break
this dichotomy by arguing that there exists a middle ground between
objective knowledge and subjective opinion, namely, rational belief. 918
Just because judgement is not based on quantitative calculation, it does
not mean that it is made on a whim. On the other hand, even in the most
cold calculations, it is not always possible to abstract from certain
subjective judgements. Thus, it has been argued that to a considerable
extent Keynes was proposing to roll back the Enlightenment. 919
Later on, Keynes often attacked other economistic dogmas. In The
End of Laissez-Faire (1926), he observed that:
The world is not so governed from above that private and social interest
always coincide. It is not so managed here below that in practice they
coincide. It is not a correct deduction from the Principles of Economics
that enlightened self-interest always operates in the public interest. Nor is
it true that self-interest generally is enlightened; more often individuals
acting separately to promote their own ends are too ignorant or too weak to
attain even these. 920
By no means can he be considered an enemy of capitalism or

liberalism. He thought that the economic regime in Soviet Russia was
based on an obsolete economic textbook that is scientifically
274
erroneous [and] without interest or application for the modern world 921
and can be at best considered a dusty survival of a plan to meet the
problems of fifty years ago, based on a misunderstanding of what
someone said a hundred years ago. 922 At the 1920 Congress Of The
Communist Internationale, Lenin found it necessary to single out Keynes
as a well-known bourgeois and implacable enemy of Bolshevism. 923
And in fact, Keynes explicitly declared that the Class war will find me
on the side of the educated bourgeoisie. 924
Keynes had a nuanced view on capitalism. He saw it as a morally
ambiguous system that could be politically legitimized by the fact that it
leads to a post-scarcity utopia (Chapter 29). But he never really criticized
capitalism on the whole. His message was nothing else but the old
revisionist Capitalism: yes! Distortions: no! His critique was both
philosophical and political in character. As Fitzgibbons argues, on the one
hand
A new Liberalism that was informed by Keyness epistemology was meant
to replace Socialism and laissez-faire. Keynes objected to these doctrines,
which he traced back to Hume, because they were materialistic and
excluded probability and intuition; they reached pseudoscientific
conclusions about what should have been matters of moral and factual
judgment. 925
But on the other hand, it can be said that in the face of the rise of
socialism and fascism, he simply sought to save capitalism from itself.
Politically, he could be perhaps lined up with Adam Smith and Thomas
Piketty: liberals who believe that capitalism is generally the best possible
system of production, who see that it has flaws but treat them as excesses
that can be curtailed without a grand revolutionary change of political
regime.
275
Keynes, who worked all his life in civil service and from 1941 sat in
the House of Lords, had many occasions to personally influence the
political processes. Most famously, he was the leader of the British
delegation to the 1944 Bretton Woods conference, at which the
foundations of the post-war economic international regime were laid.
Although the outcome of the negotiations accorded mostly the American
vision, Keyness ideas contributed to it as well, so today he is celebrated
as the intellectual founding father of the International Monetary Fund
and the World Bank 926 (perhaps another instance of a discoursive
paternity fraud [Chapter 36]). Today, Keynes is either lauded or
castigated, but few people doubt his influence on the economic discourse
and practice of the twentieth century. After all, how could there be a
Keynesian Revolution without Keynes?
However, even a quick glimpse at the economic policies made during
the 1930s in response to the Great Depression shows that discretionary
fiscal policy (i.e., using budget deficits to battle the adverse effects of
economic depression) were undertaken without any reference to Keynes.
The General Theory was published in 1936, the New Deal in the US
began in 1933. As Bateman shows, in the United States, in inter-war
Germany, in Japan, in France and in Sweden, governments undertook
budget deficits for a variety of reasons, but not because of Keynes or his
great work, The General Theory. 927 In 1938, Lloyd George, himself an
advocate of deficit spending and an author of the 1935 British New Deal
proposal, commented on Keynes that he was a much too impulsive
counsellor for a great emergency who wrote bright but shallow
dissertations on finance and political economy. 928
Moreover, Keynes personally was no proselyte of Keynesian
policies. In 1937, he warned against a simplified reading of the General
Theory that would focus solely on the issue of government spending:
276
Public loan expenditure is not, of course, the only way, and not necessarily
the best way, to increase employment. Nor is it always sufficiently
effective to overcome other adverse influences. The state of confidence
and of expectation about what will happen next, the conditions of credit,
the rate of interest, the growth of population, the state of foreign trade, and
the readiness of the public to spend are scarcely less important. 929
During the Second World War when he worked in the British

treasury, he insisted that, setting aside military expenses, the regular
budget should be always kept in balance. An exception could be made for
long-term investments that would be eventually paid off from the projects
themselves. 930
The object of our analysis, argued Keynes, is not to provide a
machine, or a method of blind manipulation, which will furnish an
infallible answer, but to provide ourselves with an organised and orderly
method of thinking out particular problems [] It is a great fault of
symbolic pseudo-mathematical methods of formalising a system of
economic
analysis. 931
mathematical methods
932
He
criticized
using
high
precise
and
in economic reasoning and warned that in
economics [contrarily to natural sciences] to concert a model into a

quantity formula is to destroy its usefulness as an instrument of
thought. 933
Despite this, it seems that Keynesian economics gained its legitimacy
only after Hicks turned it into a simple diagram, a classroom gadget, as
later Hicks himself apologetically would call it, 934 that led to the
emergence of a bastard Keynesianism, as critics dubbed it. 935 Just as
with Adam Smith (Chapter 36), Keyness theory became a Keynesian
practice only after it was reinterpreted and simplified. And in the process,
Keynes himself was flattened into a one dimensional figure, representing
not a set of ideas or a style of thinking, but merely a emblem of an
approach to fiscal policy.
277
Keynes certainly was a brilliant polemicist who wrote with an

elegant style and came up with more bons mots than many writers did.
Even his critics were impressed by him. Hayek called him the one really
great man I ever knew, 936 and Robbins said that Keynes must be one of
the most remarkable men that have ever lived. 937 But he wasnt as
original an economist as it is commonly claimed today. The appreciation
of the role of unstable expectations in economic cycles and relative
sympathy for discretionary government spending can be found
throughout the nineteenth century economic discourse. 938 It seems that
the best thing Keynes did for the establishment of Keynesianism was die.
When he died in 1946, he allowed for the immediate and safe
canonization of him as the founding father of post-war Keynesianism,
which points to the fact that from the standpoint of the dynamics of
economic discourse, a good economist is a good economist, but the best
economist is a dead economist.
Chapter 46:
In which it is explained why in the twentieth century the enthusiasm
for central planning was shared on the both sides of
the Iron Curtain.
The tricks of growth are not that difficult.
Walt Rostow
The economic effects of the Great Depression of the 1930s were

devastating in nature and world-wide in scope. Unemployment soared,
incomes fell, world trade halved. The political consequences of the Great
Depression are more nuanced, but it is hardly disputable that the
economic turbulences at least contributed to the rise of Fascist and Nazi
governments. The trauma of the Great Depression also had a deep impact
on the economic discourse. The crisis was generally received as
capitalisms great defeat. In the 1930s and 40s for the whole mainstream
political spectrum, from Left to Right, free market amounted to chaos,
poverty, and inefficiency. 939
The experiences of the Second World War, on the one hand,
suggested that the state can efficiently play a strong directive role in the
economy, exerting influence over wages, prices, and investment. The
Planning Committee in the United States controlled over two-thirds of the
American Economy and in the years 1940-1943 built more factories than
were built in the previous two decades. 940 The Germans already had
positive experiences with statist control over economic production during
the First World War. 941 In the years 1933-1939, after the nationalization
of many industries by the Nazi government, unemployment fell twentyfold without adverse effects on wages, while industrial production
exceeded pre-depression figures. Soviet economic planning, both in times
of war and peace, seemed to be successful. Between 1928 and 1937,
annual industrial production rose on average by 11 percent, whilst the rate
280
of investment went from 12 to 26 percent. 942 All in all, during the first
two five-year plans, its GDP doubled. 943 In the 1950s, Soviet leaders had
every reason to believe that if the rate of growth was maintained, the
USSR was on its way to beat the capitalist United States, both in terms of
production and consumption. 944 In fact, numerous liberal economists in
the West shared that opinion (Chapter 47). In the three decades following
the 1949 Chinese Communist Revolution, the Chinese GDP increased
sevenfold, or per capita, fourfold.
On both sides of the Iron Curtain the leading theories of economic
growth were strikingly similar. The Harrod-Domar model, 945 as well as
the so-called Feldman-Mahalanobis model, 946 posited that growth is a
simple derivative of industrial investment, and that assets for this
investment should be acquired by cutting down on consumption. The
PRGHOVZHUHVLPSOLVWLFEXWDV/HV]F]\VNLDUJXHVWKLVZDVWKHLUgreatest
value:
The political consequences of this simplicity can hardly be overestimated.
Politicians who often had little knowledge about economics were
presented with straightforward policy goals: the rate of investment had to
be raised. Like the petit-bourgeois, who in order to invest every penny,
save on food and heating costs, the Third World governments were to
reduce consumption and invest. Money spent on living today was a lost
opportunity for a better tomorrow. 947
Although the growth was legitimized both in the communist and

capitalist camps as a way of ushering in emancipation of the poor masses,
in practice it was precisely the poor masses who had to pay for it.
Curtailing the luxury consumption of the elites was often too costly
politically, so by and large the capital was raised by putting a strain on the
consumption of the masses. Everything according to the recipe: one has
to tighten his belt today to be able to loosen it tomorrow. 948
In the 1950s, the whole of mainstream development economics
subscribed to these models and expressed strong support for pro-active
281
and decisive governmental involvement in the economy. As the members

of the first World Bank mission reported:
Only through a generalized attack throughout the whole economy on
education, health, housing, food and productivity can the vicious circle of
poverty, ignorance, ill health and low productivity be decisively broken.
[] One cannot escape the conclusion that reliance on natural forces has
not produced the most happy results. Equally inescapable is the conclusion
that with knowledge of the underlying facts and economic processes, good
planning in setting objectives and allocating resources, and determination
in carrying out a program for improvement and reforms, a great deal can
be done to improve the economic environment by shaping economic
policies to meet scientifically ascertained social requirements. [] In
making such an effort, Colombia would not only accomplish its own
salvation but would at the same time furnish an inspiring example to all
other underdeveloped areas of the world. 949
Escobar rightly points out the colonial, Christian missionary

overtones of such World Bank missions that aim at bringing
salvation to the ignorant of the world. 950 /HV]F]\VNL QRWHV WKDW LW
was somewhat paradoxical that development economists, often sworn
democrats and leftists, prescribed economic policies that demanded
authoritarian governance (although it can be argued that it was no
paradox, but simply another example of economic despotism [Chapter
28]). Such large-scale social engineering based on burdening the masses
was simply unattainable in a democratic environment. 951 As Apter
showed in 1959, governments that seek rapid industrialization are
likely to develop a system of tight organisational control 952:
Where there is popular sovereignty, government actions tend necessarily to
be defined within the institutional limits of social life. This must be so, or
the government will lose its power. The pace of government can only be so
fast as the electoral groups which provide the recurring majorities will
permit. [] The big problem facing government, therefore, is how to
remain accountable to the public without letting the public dictate the pace
of change. [] The nation which can afford democracy while attempting
to produce rapid economic change is rather rare. Most governments try to
maintain their own powers and discipline the public in order to achieve
more rapid development. 953
282
Economic development was seen as dependent on the technical

knowledge of the political elites and their ability to break fractional
interests and popular resistance to change. The change itself was seen as
apolitical and based on scientific foundations. As one United Nations
report from the early 1960s stated: The ground has been cleared for a
non-doctrinaire consideration of the real problems of development,
namely saving, training and planning, and for action on them. 954 The
Friedmanite revolution in Chile and Maos in China differed little in
terms of the faith vested in economic dogmas and disregard for
democratic legitimization of economic policies. The social costs were
regarded insofar as they were literally costs. The forty-five million
victims of the Chinese Great Leap Forward were a sacrifice that had to be
made at the altar of economic progress. The end justified the means, after
all, in Maos words, it would take only 100 million tons [of steel] in ten
years, and then well be in heaven. 955
Radical economic progress has always been achieved not by the
invisible hand of market, but by the bloody hands of government
officials, assisted in varying degrees by individual entrepreneurship. The
death and suffering caused by this was either exported to the peripheries
of the world market (Chapter 30) or, when the developing country was
itself a peripheral one, it was burdened on the local poor. The economic
theorems that legitimized these purges varied from the Victorian laissezfaire, through United Nations developmentalism, to the neo-marxist
economics of Feldman and Preobrazhensky. What was constant was the
certainty that the prescribed policies are scientifically accurate and
politically neutral.
Chapter 47:
Which shows that economic game theory is a war game.
Objective analysis. Effective solutions.
RANDs tagline
In the previous chapters, the recurring connection between the

military and the economic realms has already been pointed out. In the
case of twentieth-century economics, this link is as clear is it can be. With
only a bit of oversimplification, it can be said that the modern rational
choice theory from its beginning was a military technology, developed by
the United States army. Canonical theoretical works of rational choice
theory and game theory, such as Social Choice and Individual Values, An
Economic Theory of Democracy, The Calculus of Consent, or The Logic
of Collective Action were developed by scholars employed by or
associated with the RAND Corporation, 956 a think tank founded in 1948
by General Arnold, commander of the US Army Air Forces, to furnish
better teamwork between military decision-makers and the academic
community. 957
By the end of 1950s, economists outnumbered physicists and
mathematicians, becoming the dominant professional group at RAND. 958
Kenneth Arrow, James Buchanan, Paul Samuelson, Robert Solow,
Thomas Schelling, Howard Raiffa, Duncan Luce, William Niskanen,
Henry Rowen, Alain Enthoven, Herbert Simon, Mancur Olson, in short,
almost all theoreticians of the new paradigm of rationality, were
associated with RAND and researched military applications of game
theory. 959 Contrary to marginalist theories, the new rationality was not
simply about maximizing utility for every dollar spent, but about
strategically interacting with other actors in a way that secures the actors
interests. Amadae shows that it was specifically the rationality of a
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nation-state locked in the icy and treacherous grip of the Cold War. 960
Game theory was devised at the theoretical back room for Cold War wargames, in which the American policymakers wanted to procure a situation
in which it would not be in the Soviet interest to launch a nuclear strike
on the NATO camp.
In general, this can hardly be considered a new approach to war. The
classic example is Thucydides Melian dialogue, in which during the
Peloponnesian War the Athenians threatened the neutral polis of Melos
with annihilation if they dont surrender and pay tribute. During the
negotiations, the Athenians argued in a matter-of-fact fashion that putting
aside all specious pretences, it was simply in the best interest of Athens
to demand submission and in the best interest of the Melonians to submit:
Since you know as well as we do that right, as the world goes, is only in
question between equals in power, while the strong do what they can and
the weak suffer what they must [] Of the gods we believe, and of men
we know, that by a necessary law of their nature they rule wherever they
can. [] all we do is to make use of it, knowing that you and everybody
else, having the same power as we have, would do the same as we do. []
we make you join our Empire, is for your benefits, but also for our own
benefits. We are trying to save you. 961
The novelty of RAND modelling was that it laid claims to universal

validity. It could be used for devising tactics for nuclear war as well as
welfare policies, all with mathematical precision and certainty. It truly
theorized every social situation as the war of all against all, in which
individual workers, consumers, employers, etc. acted as if they were the
Cold War generals trying to outwit their enemies.
In a moment we will come to the criticisms of this paradigm by
politicians and academics, but interestingly enough, it met with strong
opposition of the military elites. The modelling was criticized for
methodological issues, such as the guesswork required in quantification
of non-quantitative data or the criteria problem, that is, that the
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outcome of analysis is determined by the criteria used to study the

problem and the relative value of various factors depends on arbitrary
decisions of analysts. For example, the Air Force command insisted that
solutions should be ranked by considering the predicted military
personnel loss, whereas the RAND rationalists preferred ranking them
by the ratio of system cost to damage inflicted. 962 The army command
objected to the allegedly objective analysis and repeatedly emphasized
the importance of military experience and unquantifiable knowledge in
the decision-making process. However, McNamara, the Secretary of
Defense under Kennedy and Johnson, managed to break their resistance.
A team of eighteen analysts was charged with:
The task of rethinking all of the Army's standard operating procedures,
even down to the level of two-man well-digging detachments. Just as
workers, foremen and engineers had been shut out of decisionmaking at
the Ford Motor Company, [of which McNamara was the president before
working for the DOD] so frontline military personnel lost autonomy over
local decisions in accord with the rationale that analysts with equations
could make large- and small-scale decisions better than men in the field. 963
Another argument against the system analysis was that it put the
defense planning into the hands of civilians tied more closely to the
interests of the military industry than to actual military imperatives. 964
This view was most famously expressed in the farewell address of
Eisenhower in 1961, in which he warned about the danger that public
policy could itself become the captive of a scientific-technological elite
and stressed that we must guard against the acquisition of unwarranted
influence, whether sought or unsought, by the military-industrial
complex. 965 Amadae points to the fact that civilian oversight of the
military might not necessarily mean greater democratic control over it:
Whereas it is easy as to be distracted with the appearance that McNamara
and the defense rationalists were proponents of civilian control over the
U.S. armed forces, it is necessary to recall that arguments for such
authority are based on the premise that legitimate military authority be
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granted to serve the ends of representative government and to uphold the

Constitution. The new policy elite were altering the rules such that
authority over military procurement, strategy, and operations would be in
the hands of objective policy analysts, removed from democratic
politics. 966
Objection to system analysis was also raised in the Senate and voiced
in academia. The usefulness of such abstract methods was doubted, they
were dubbed a technocratic utopia, 967 and concerns were raised about
the ignoring of, or less generously, contempt for, democratic values and
processes by the technocrats, who regarded the President and Congress
as enemies of rationality and sought to eliminate politics from
decisionmaking. 968
When the new rational policy tools were presented in U.S. Senate
hearings, the RAND specialists admitted that they didnt know whether
they were actually more efficient or produced better results. 969 No one
had ever checked, because the scientists testified such evaluation
would be too costly and the evaluating staff could not be trusted to attain
the necessary objectivity. 970 Thus, no appeals to empirical reality were
made in the quest for achieving legitimacy for system analysis. It was
simply described as quantitative common sense 971 and achieved its
legitimacy insofar as [it] claimed to be based on scientific analysis. 972
To once again quote Amadae:
The new methods gained a de facto legitimacy before they had been tried
and debated in any public forum. The decision technologies did not filter
into mainstream practice from the world of academia, but were designed in
a hands-on manner to revolutionize national security decisionmaking and
to integrate budgeting with strategic planning in order to centralize
control. 973
Despite all this opposition, the new paradigm not only took a strong
hold in the military, but proliferated throughout policymaking. President
Johnsons War on Poverty policies were military not only by name, but
287
were also designed in accordance with RAND-based system analysis.

Policy analysis became an indispensible part of the academic curriculum
of American government officials as public administration courses
were replaced with public policy programs. 974 McNamara, three
months after ending his seven-year service (to date, the longest in
American history) as Secretary of Defense, became the head of the World
Bank and started introducing system analysis on a global scale. In the
following decades, the rational choice model, however abstract, managed
to spread around the world and even started to influence other areas of
knowledge, such as psychology, sociology, or biology. 975
To conclude this with a criminally linear and simplified account, this
is the story of how the liberals have done away with the fear of
collectivist encroachment on individual freedom. Politics as a sphere of a
singular tension between an alterable general will and individual freedom
was replaced by an apolitical sphere in which multiple tensions between
individuals take place. In a way, it can be said that liberal theory has
come full circle and came to take Hobbes aback by positing that society is
yet another facet of the anarchic state of nature, in which individuals
compete with each other as if they were military superpowers on the
verge of nuclear annihilation. Economic progress is no longer a force that
civilizes individuals (remember the old Doux-Commerce thesis [Chapter
24]), but on the contrary, it is merely a by-product of ruthless competition
between jealous (Chapter 24) individuals. And, obviously, an important
aspect of the state of nature is that it is natural. One can only adapt to it,
but one can never change it. Like the Melonians submitting to the laws
of the gods we believe, the job of policymakers (as they are no longer
politicians) is to study the oracular mathematical simulations and finetune the surrounding reality accordingly.
288
The political turbulences of the first decades of the twentieth century

led a group of liberal (or perhaps, already neo-liberal) thinkers to look for
a new conceptualization of politics. Faced with the fascist and communist
danger of collectivism, unsure whether capitalism is economically more
efficient than central planning and convinced that the third way taken
by the likes of Keynes is already on a slippery slope that leads to
totalitarianism, they embarked on the mission to save western (i.e.,
individualistic, scientific, capitalist) civilization from all its barbaric
enemies. Condensed to one paragraph, this is the basic premise of
Schumpeters Capitalism, Socialism and Democracy (1943), Hayeks The
Road to Serfdom (1944), and Poppers The Open Society and Its Enemies
(1945), and the axiom from which Arrow, Downs, and Buchanan later
operated.
The focal point for the classical nineteenth century liberals such as
Mill or Tocqueville has always been the tension between the individual
and the community. The individual had to be protected from the despotic
inclinations of the society, yet he could never be completely detached
from it. The surest way to rescue the basic ideas on which European
civilisation has been built 976 was to reinvent one of these ideas.
Specifically, the tension between the individual and society had to be
erased, which was achieved by defining the latter out of existence. 977
[Arrow] ruled out any means of assaying individual preferences into a
legitimately representative social outcome. [] He generalized the
definition of rational action, distancing himself from the marginalist
economists' fixation with maximization of utility under a budget
constraint, and introducing the more general concept of a well-ordered set
of transitive preferences. Arrow's impossibility theorem, [] defined the
underlying tenets for capitalist democracy while simultaneously
excluding any philosophical principles derived from Marxism. 978
289
The notion of popular sovereignty was perceived as a dangerous

myth of religious provenance, 979 and legitimization of the capitalist
democracy started to be built by means of system analysis. Its been
argued that this can be seen as yet another instance in the history of the
the tension between the ideal of liberal democracy and the tendency of
elites to develop means to control societal decisionmaking processes, as
since its inception, the drama of democratization has in part been about
conveying the appearance of inclusion while designing means to retain
actual control over decisionmaking in the hands of a social elite. 980
Mathematical models produced allegedly objective and impartial
knowledge on which policymakers could rely without worrying about the
general will.
Chapter 48:
In which modern consumption is studied as
a field of power and domination.
The production of consumption becomes
more important than the consumption of
production.
Gyrgy Lukcs
It is already a clich to argue that modern capitalism is based on a

contradiction between the producer values such as hard work,
discipline, and readiness to postpone gratification and the opposing
consumer ethic of commanded enjoyment, in which not to have fun
is an unforgivable sin. 981 But it is not enough to notice the modern
demand that people be hard workers by day and hedonists by night. 982
Thus, one of the standard topics of contemporary sociology is the
coupling of identity with consumption. However different are the theories
developed by Bauman, Baudrillard, Butler, Illouiz, Giddens, or Lasch,
they all point out that individual identities in the postmodern age are
essentially liquid, dynamic, and fragmentary. Theoreticians most often
disagree over the issue of the autonomy of the consumer. Some present
the postmodern era as an age of endless possibilities for individuals who,
freed from the opression of traditional mass identities of nationality,
class, or gender, can finally express their inner individualities through a
playful engagement in the spectacle of consumption. Others are less
optimistic, and present it as an age of constant manipulation of
individuals by the fashion, advertising, and mass media industries, which
is producing new hierarchies of power that are not necessarily less
oppressive than the traditional ones. But both sides generally agree that
consumption is now at the core of contemporary identity and thus, of
contemporary politics: the new you is shaped not by work roles but, for
those with money to spend, by patterns of consumption, 983 while the
292
politics of class, based on production, everywhere gives way to the

politics of cultural identity, built around consumption. 984
The issue of consumption certainly deserves the attention it gets, and
a lot of valuable research has been done in recent decades on this topic.
However, the main optics through which consumption seems to be
analyzed is the optics of the individual consumer. Hence, the topic of
identity. What is less studied is consumption as a societal structure,
consumption as a field of power, and consumption as a field of
domination. Let us make a few remarks on these issues in this chapter.
It is certainly an exaggeration to claim that the role consumption
plays in the constitution of identity is a novelty of the post-modernity. On
the one hand, as we have already noted (Chapters 7, 18, 27), this was
acknowledged long ago. On the other, it is doubtful whether such liquid
identity can really be treated as paradigmatic. As for instance
Wojciechowski argues, the ability to playfully engage in the spectacle of
consumption relies on an individuals economic standing, and even in the
privileged countries in the modern world-economy, many people are
barred from it and form their identities through other means than
consumption. 985 And in the peripheral countries, the identity matrix of
liquid consumption is available to a very narrow elite. As the world
economy is integrated, and core countries cannot be analyzed without
regard for the peripheral ones, one can hardly not ask whether the affluent
culture of conspicuous consumption isnt sustained by the sweatshops and
forced-labor of the subservient economies. (One might have noticed that
throughout this work I refrained from using the politically correct
categories of the developed and developing countries. This is
precisely because they should not be analyzed independently of each
other, but as two products of one process of international struggle for
293
domination. Today some countries are not underdeveloped but

subservient, or in other words, they are underdeveloped, because they are
subservient.)
That being said, even if it is not the only or the most important facet
of contemporary power struggles, the regime of consumption is still one
of the primary spheres in which social hierarchies are produced, and thus
needs to be studied. However, arguably, what is much needed today is not
another study that takes the vantage point of the individual vis--vis the
world of consumption but rather studies of the regime of consumption on
its own, its spaces, its dynamics, its permutations. For the celebratory and
gloomy accounts of modern consumerism seem to simply describe two
sides of the same story. The pleasures of shopping can be disregarded as
shallow, blind, or narcissistic, but perhaps it is better to leave this
approach where it belongs, that is, on the psychiatrists couch, and accept
them as the very real pleasures derived from claiming power through
successful performance in the regime of consumption. The Lacanian
analysis that sees this in terms of the continual search for the unattainable
objet petit a that would finally fill the void in the subject 986 is very clever,
but useless when we want to analyze these issues in their systemic
context. Going back to the beginning of this book, we may once again
have a peak into Xenophons economic treaty:
I teach to those I want to appoint as stewards, and I second them also in
the following ways: I make sure that the clothing and the shoes I must
supply to the workers are not all alike, but rather some are worse and some
better, so that I may be able to honor the stronger one with the better things
and give the worse things to the worse. 987
Of course today the function consumption performs in the dynamics

of social stratification is no longer a consciously developed technique for
294
disciplining workers. Nevertheless, it does serve the same purposes as it

did in Xenophons Greece. Thus, arguably, we need more studies that
would focus on the infrastructures of consumption and the ways in which
they affect constellations of social and economic power, rather than more
studies on the subjective feelings and identities of individual consumers.
One example of the change in the infrastructure of consumption is
the shift in the regime of debt linked with the emergence of the
contemporary consumer culture. As we have seen, qualitatively new
social devices are historically very rare. The idea that debts can be paid
off with partial payments spread over time is likewise not new at all, but
it has acquired its current form only at the end of the nineteenth century
and in the first half of the twentieth century, 988 when the practice of
buying goods on instalment credit proliferated throughout society.
In the United States, during the mid 1920s, after decades of an
ineffective legal punitive campaign against the usurious loans, a group of
government officials and philanthropists sought to put an end to the loan
shark business by setting up an alternative in its place: a licensed smallloan industry that would at once provide workers with loans at reasonable
rates and educate them about Victorian values of thrift and saving. 989
Our immediate task, is not so much the lending of money as the
improvement of the financial management of families. [] I think I can
confidently predict that within a very brief period of time we will no
longer be thought of as moneylenders but as financial physicians to the
American family, 990 urged one of the reformers in 1935. As Calder
notes, although the founders of the personal finance industry were
explicitly against consumption loans (which they still described as
consumptive [Chapter 21]) and opposed consumerism when they saw
it, they in fact provided the important infrastructure of the modern debt-
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driven consumer culture. 991 It can be also argued that they helped to
legitimize it by bringing in a new category of reasonable and acceptable
individual credit in contrast to the excessive, consumptive one. Shortly
afterwards, once despised as a plebeian form of credit, instalment credit
trickled up the social ladder to become part of the middle-class way of
life, 992 and the discovery of debt as a mode of life was often equalled
with the discovery of industrial modes of production. 993 By 1930,
installment credit financed the sales of 60-75 percent of automobiles, 8090 percent of furniture, 75 percent of washing machines, 65 percent of
vacuum cleaners, 18-25 percent of jewelry, 75 percent of radio sets, and
80 percent of phonographs, 994 becoming the foundation of economic
welfare:
By augmenting consumer buying power, installment credit tremendously
expanded the manufacturing and retail base of the national economy, to the
point that today the sudden removal of credit buying from the economy
would cause immediate economic collapse. Such a scenario is hard to
imagine, and to keep it from happening the Federal Reserve, through its
manipulation of interest rates, uses consumer installment credit as a valve
to regulate stable economic growth. 995
Of course, the aforementioned claim that it was only in the twentieth

century that the people have discovered debt as mode of life is a gross
exaggeration. As we have seen (Chapters 3, 4, 5), debt as a mode of life
was discovered long before cash was. Therefore, the infrastructure of
modern consumer credit should be rather seen as yet another shift in the
debt regime, one that was more in accordance with the impersonal
economic exchanges mediated through bank money (Chapter 33).
The advertising industry is the customary whipping boy for anticonsumerist writers. 996 It is claimed that marketing creates modes of
consumption that exploit consumers by forcing them to buy more than
296
they need, pay more than they have to, and spend more than they
should. 997 Marketing aimed at children is especially despised, as even
hardline liberals have a hard time arguing that kids are homines
oeconomici, who treat advertisements as sources of neutral, merit-related,
information. The educational role of marketing to children is rightly held
up under scrutiny, although the moral outrage aimed at the companies
targeting kids with their advertizements seems a bit nave. First, one
could say that the parents are annoyed only because the consumer needs
of their children have to be paid for from their pockets. If an adult feels a
need for a new watch or a new cologne, it is not because he or she was
manipulated by an ad they saw, but because they really need it. If their
kid needs a lollipop or a doll, it suddenly becomes marketing abuse of
children. However, on a more serious note, one can simply say that it has
always been indispensible for all modern political systems to pay utmost
attention to educating children, whether by means of Lenins Pioneers,
Hitler Jugend, or Happy Meals.
The advertising industry is an easy target, but arguably it can only
work so well insofar as it feeds on the mechanisms of social stratification
through consumption. This is why the company that sells shiny electronic
toys can today be the highest valued company in the world: 998 the
pleasure of purchasing an iPhone is the pleasure of being able to pay
ones way into the elite. Moreover, every such purchase and then every
public display of the purchased item, reaffirms its status as a socially
desirable emblem of high status. The dynamics of this game fashion is
as complex as they come, but a few general tendencies have already been
outlined (Chapter 18).
In any case, when it comes to the regime of consumption, we must
remember that for all its excitement and pleasure, it produces at least as
much humiliation and shame. As long as consumption is a vehicle
297
through which social standing is acquired, it will be so. And in this

matter, the delinquent wearing counterfeited pirate labels of expensive
brands is far more subversive than the so-called conscious consumer
browsing for the most eco-friendly deal on fair-trade soy milk on their
iPads.
This context of the infrastructure of consumption could slso suit
discussions on internet surveillance. and more generally, on systems of
the collecting, manipulation, and distribution of information. The present
discourse that warns about corporate encroachment on individual privacy
misses the point. First, no one cares. It seems that the idea of being
watched and followed appears more attractive than scary. Arguably, it is
the opposite danger of being overlooked and unnoticed that terrifies
people. Moreover, the idea of some abstract being (admittedly more
divine than algorithmic) who watches over all our doings is hardly new in
most cultures. Secondly, and more importantly, the significance of the
technologies of surveillance lies primarily not in their proliferation as
such, but precisely in their unprecedented capacity to surround each and
every person with a personalized set of adverts in a direct and
instantaneous manner. Modern surveillance started in the realm of
production, as the Panopticon was originally devised not by Jeremy
Bentham, the philosopher, but by his brother Samuel, the engineer in
charge of the London dockyards. 999 In the following centuries, it has
revolutionized the ways people work and the ways they are made to work.
Now it encroaches on the field of consumption, and the effects of this
encroachment must be closely studied.
Chapter 49:
In which the sad frutilessness
of the postmodern left is discussed.
Postmodernism is a sick joke.
Terry Eagleton
In recent years, for a large portion of the academic Left and in the
popular discourse, the term neoliberalism has become the moniker for
everything that is wrong in the world. Neoliberal ideology, the
neoliberal way of thinking, the neoliberal world order in general are
all to blame for everything from dissolution of the welfare state to climate
change. Of course, that is not without a reason. But if the term is to retain
its analytical value, instead of becoming just another dirty word, we
should certainly contextualize it. Thus, in this chapter a series of the
neoliberal discourse, rival leftist discourses, and late capitalist economic
regime will be sketched to see how they complement each other. The
claim that the postmodern left is merely a cultural vector of late
capitalism 1000 is a known argument voiced by Marxists such as Eagleton,
Jameson, or Harvey. However, it will be argued that the Marxism itself is,
on a deeper level, part of the same equation.
But first, let us stay for a moment on neoliberalism as such.
Developed in the 1940s and 50s in libertarian, business-financed, thinktanks 1001 in the aftermath of the 1970s oil shock and energy crisis, it took
hold and replaced bastard Keynesianism as the new mainstream doctrine.
Neoliberalism is an amalgam of very old ideas, themes, and tactics. It
brings together presumptions about the naturalness and the neutrality of
money (Chapters 5, 13, 34), market exchange as a universal, selfregulating, somewhat providential mechanism of geometrical equalization
(Chapters 15, 23), an anthropology of homo economicus and an extremely
300
individualist outlook on society (Chapter 42), the old liberal, colonialist

belief in the civilizing effects of commerce (Chapter 24) mixed with the
discourse of pragmatic realpolitik (Chapter 25), the Enlightenment
readiness to enforce freedom (Chapters 28, 31), a belief that scarcity is a
general human condition (Chapter 29), a distrust of the state (Chapter 32)
mixed with the hope that it will be strong enough to break all resistance to
liberal regimes of debt and property (Chapters 33, 35), and the the
abstract, mathematical, methodology and atomistic, physicalist imaginary
(Chapters 44, 47).
This in no way means that neoliberalism can be treated as the final
step in the linear evolution of economic knowledge, one in which all
previous developments would be accumulated. It is only for the matter of
composition that the themes of economic discourse were presented in a
chronological fashion. Thus, the same categories, albeit in different
constellations, could be used to analyze the fourteenth-century discourse
of Ibn Khalun (Chapter 12) or the eighteenth-century discourse of
Quesnay (Chapter 28). The fact that neoliberal doctrine is built around
age-old themes doesnt mean that it doesnt arrange them in novel ways,
sometimes producing qualitatively new effects. It seems that one such
effect is the change in the relationship between the society and the market
mechanism. It is Foucaults argument, that that the neoliberal governance
is focused not on the commodification of society, but subsuming it under
the logic of competition altogether: Not a supermarket society, but an
enterprise society. The homo economicus sought after is not the man of
exchange or man the consumer; he is the man of enterprise and
production. 1002 The market mechanism thus becomes the desired
paradigm not only for economic but for social organization as well.
Economic analysis extends itself to fields previously structured by
other discourses, such as the self or personal relationships. In Chapter 42
301
we have already seen Beckers take on that, someone else worth quoting
in this regard is the economist Migue:
One of the great recent contributions of economic analysis has been to
apply fully to the domestic sector the analytical framework traditionally
reserved for the firm and the consumer [...]. This involves making the
household a unit of-production in the same way as the classical firm. [...]
What in actual fact is the household if not the contractual commitment of
two parties to supply specific inputs and to share in given proportions, the
benefits of the households' output? 1003
As Illouiz shows, the prevalent theme of popular self-help books and,

in general, the discourse of the self is the metaphor of business and
entrepreneurship. 1004
People
are
encouraged
to
invest
in
their
development, periodically evaluate their performance, and look into

behavioral techniques to better micro-manage their affective life. In
romantic relationships, individuals are said to first freely chose from the
pool of possible partners and then negotiate the best possible deal that
will bring both parties the maximum amount of satisfaction. 1005
Relationships can be quantitatively evaluated, and if such balance-sheet
shows negative outcomes, their terms should be renegotiated. 1006 If that is
not possible, a search for a more fruitful relationship should ensue. Such
search wont take long, as one can always rely on internet dating services,
which quantify ones personal tastes, qualities, and characteristics, and
for a small charge instantly present a list of algorithmic best matches.
Another social sphere that has been colonized by geometrical logic
and economic reasoning is the law. The classical liberal principle of the
presumption of innocence gives ground to the principle of suspicion. The
difference between innocence and guilt rubs away, as they become not
two separate statuses, but rather the opposite poles of one spectrum. As
Edward Snowden has revealed, as data on each and everyone is collected
on a daily basis, and everyone is to some extent suspected, everyone is
302
potentially dangerous, the differences become quantitative and not

qualitative, and they are proclaimed by risk managing algorithms and not
the democratic justice system. Algorithmically constructed no fly lists,
the software analyzing real-time CCTV footage in the search for
suspicious behaviors, or the neither guilty nor innocent detainees at
the Guantanamo Bay Camp are different facets of this phenomenon.
Recalling Foucaults studies on apparatuses of discipline, one can see
how in a way this marks a return of the pre-modern paradigm of universal
guilt. 1007
Probably the loudest opposition to the neoliberal paradigm is voiced
today by the various groups of the so-called New Left or the poststructuralist left. They celebrate motifs of deconstruction, difference, and
diversity, praise themes of instability, flux, and free flow, and find
resistance to power in anarchic, nomadic, and heterogeneous localized
struggles. The primary structure of oppression for them is discourse,
which individualizes bodies in hierarchical ways and which bars them
from experiencing innocent pleasures. In their Marcusian and
Foucauldian versions, they stress the political capacities of libido and
sexuality, with body portrayed as a site of potential emancipation.
It is interesting how discourses that allegedly rely on strictly
materialist methodology that focuses on studies of socially constructed
structures of oppression easily end up promoting apolitical, individualist,
and essentially idealist scenarios of emancipation. Foucaults discourse
that speaks in the name of the body, begs to question whose body?
That of the privileged intellectuals and upper-class members of the core
countries who can free themselves to enjoy the pleasures of BDSM or the
sweatshop slaves who spend their days manufacturing the sex toys used
by the former?
303
Many argue that although the students in 1968 marched under

Marxist banners, their revolt can hardly be considered anti-capitalist. If
anything, it was anti-fordist. Neo-Marxists argue that it was little more
than a petit-bourgeois revolt, necessitated by the crisis of overaccumulation and the need to expand capitalism past the limits of the
rigid and conservative mass society. (One may say that this is an unfair
assessment that belittles the more ambitious projects of the late 1960s and
early 1970s. Maybe to some extent it is unfair. However, at any point in
history many heterodox political and economic projects were devised and
tried out, but only a fraction of them succeeded [Chapter 43]. And in this
book we are not concerned with the martyrological history of lost causes.
Notwithstanding the need for remembering the lost battles, the objective
of this particular study lies not in cultivating memories of the past defeats,
but in understanding how the winners have won.) Here is an exemplary
account of 1968s epilogue, as proposed by Harvey:
To resolve the crisis of over-accumulation during the 1970s, manifest in
stagflation [] the turnover of capital within markets (circulation)
accelerated. Mass markets broke into niches and became more
competitive. Public goods commodified and went to market. The shelf-life
of commodities reduced through product innovation, brand proliferation
and accelerated decrepitude. An aesthetic of the instantaneous, the
disposable and the temporary developed, by which taste could be
manipulated. Flexible consumption necessitated flexible production. A
reduction in capitals turnover time in circulation necessitated a reduction
in its turnover time in production. This was achieved by making labour
processes and labour markets more flexible. The ultimate in flexibility is
the virtual organization, with short shelf-times, perfectly responsive to the
changing needs of the market. The result was the break-up of the FordistKeynesian regime of accumulation, centred around the interests of
industrial capital, and its replacement by a regime of flexible
accumulation, centred around the interests of finance capital. 1008
Inspected with this lens, the postmodern left appears as a kind of

theoretical hangover from the failed uprising of 68, a way of keeping the
revolution warm at the level of language, blending the euphoric
304
libertarianism of that moment with the stoical melancholia of its

aftermath. 1009 By means of the classical structure/superstructure
argument, postmodernism thus is presented as the most recent
superstructure of late capitalism, as its cultural logic: 1010
Both postmodernism and capitalism share a contempt for stable identities,
unity and permanent ground; both valorise difference, flux and
heterogeneity. Indeed, the folly of postmodern cultural theory, according
to Eagleton, lies in its claims to be radical by transgressing fixed
boundaries of and limits whereas this transgression is exactly what
capitalism itself, in its endless pursuit of profit, thrives on. 1011
On the one hand, such Marxist critiques seem to correctly identify

important shortfalls of postmodern radicalism and convincingly cast
doubts on its emancipatory potential. On the other hand, the valid
intuitions about the postmodern condition dont save Marxist narratives
from being, well, Marxist narratives. As was pointed out before, Marxist
analysis is inherently flawed and cannot be treated as a serious solution to
contemporary problems (Chapters 37, 39). For what is the currently most
popular Marxist analysis of power struggles worth? The theorem
developed by Hardt and Negri is an impressively erudite but sadly
impotent vision of a coming global revolution in which the nebulous
multitude 1012 will overthrow the Imperial network of powers and
counterpowers 1013 and usher in global Communism, which, by the way,
looks suspiciously similar to a liberal utopia of universal human
rights. 1014 Their self-proclaimed anti-elitism and affinity for the
people would be perhaps one valuable feature of their analyses. But
their confident repetition of the old Second International formula that
capitalism digs its own grave 1015 brings in an apolitical, teleological,
perspective, 1016 and arguably ends up as yet another apology for modern
global capitalism. And their methodological reliance on theoretical and
philosophical sources (as opposed to a materialist study of economic
305
power structures), as well as their insistence on the importance of

immaterial value, 1017 and portraying the creative classes as the avantgarde of economic progress instead of an epiphenomenon of a global
distribution of labor is so characteristic of the caviar left that it is hard not
to concur with ieks acerbic remarks that Hard and Negri are some of
those unfortunate intellectuals who construct radical theorems
simply because they cannot bear the fact that they lead a life which is
basically happy, safe, and comfortable. 1018
Chapter 50:
The moment comes, when a reconceptualization of power struggles
becomes a matter of life and death. Global warming is only one, albeit
spectacular, facet of the problem. Speculating about the future is the easiest
way to make a fool of oneself. But to refuse to do so is to be an idiot in the
literal, Greek, sense of the word. The following issues are already affecting
the global ecosystem and livelihoods of millions of people and there is every
reason to believe that in the coming decades, they will only gain in gravity.
Shrinking water supplies, desertification of vast areas caused by
overharvesting and deforestation, deforestation as such, destruction of the
marine ecosystem through industrial overfishing and ocean acidification, and
decreasing biodiversity in other ecosystems are but a handful of examples of
the challenges that will have to be faced, let us not forget, in a context of
depleting natural resources. 1019 Global biodiversity is falling at a pace
(numerous studies show that the planet has lost around half of its species
since the 1970s 1020) precedented only by the Big Five mass extinctions that
marked the ends of geological periods. Meanwhile, the remaining
biodiversity is defended only insofar as it can be turned into an economic
resource, which is done by privatizing it by means of bioprospecting and
gene piracy, that is, a practice of patenting particular genes and whole
genotypes of living organisms, explicitly legitimized in 1980 by the U.S.
Supreme Court. 1021
It has been argued that the most important discovery of Marx is that
freedom has material preconditions; that we must survive in order to
live. 1022 Today, when the interests of the few, legitimized by modern
economics, this dominant science, and the science of domination, 1023 drive
us towards global ecological catastrophe, it may be necessary to reverse that
message: in order to survive, we must devise new ways to live.
308
It has been rightly pointed out that a sense of crisis has always been part
of modern culture. 1024 A conservative take on this phenomenon is that in each
generation, there are people who cry wolf, but the wolf never comes, so we
dont have to worry. I would argue that on the contrary, the sense of crisis is
so well-grounded in modern reality because flux and change, ephemerality,
and fragmentation have always formed its basis. 1025 One has simply to
understand that the crisis differs from the apocalypse in that it does not mark
the end of modern temporality, but is its constant condition. It is a
manifestation of the continuous process of revolutions, transformations, and
ruptures in everyday practices that reshape social structures. For the true
moral of Aesops fable is that eventually the wolf always comes.
I have no doubt that reasonable economic discourses can be constructed,
discourses that would take into account power struggles that are
simultaneously taking place on the level of the world market and international
distribution of labor, on the level of debt regimes, on the level of production,
and on the level of consumption. Discourses that would acknowledge the
specificities of local economies without losing sight of the global and
international economic processes. Economics that would draw insights from
other sciences, with the aim of enriching its own understanding of the world,
and not just to devour them in the process of establishing legitimacy for itself.
Insitutionalist discourses that would reject synthesizing, totalizing and
universalizing ambitions and which would cultivate awareness of their own
theoretical underpinnings and political biases.
At the same time, one should always remember that however humble
and reasonable a particular economic discourse is, it can never be treated as a
final answer to the questions of political economy. The ultimate task of
critical economic thinking does not end with devising a more adequate
understading of economy and fighting for a universal recognition of this or
that theory. Whenever such a fight is even partially won, the dynamics of
309
political economic processes are such that they hijack even the most
revolutionary ideas and use them to reinforce structures of privilege and
domination. Hence, the task of critical political economy lies not in replacing
the corrupted mainstream economics with new and innocent political
economy (we have had already too many such revolutions), but in
engaging in a never-ending movement in the search of better ways to
conceptualise economic/social processes, without ever becoming too attached
to any one such way, figure, or theory.
As was made clear before, this book had no intention of providing a
definite framework for analyzing economic power struggles. It has merely
tried to do the work of the arier-guard, rethinking the dynamics of economic
discourse to date in a way that hopefully allows us to broaden the spaces for
discussion. Although in the process of this inquiry it was necessary to
generalize and theorize historical developments, all analytical categories
should be treated as purely provisional and disposable tools. In any case, what
is proposed here, is not a discovery of historical logic, but merely a certain
logic of historical discovery. What is proposed here is a critique of
economism, but not a doctrine of post-economism, neo-economism or any
other fancy -ism. We really dont need another doctrine, already too many
spectres have haunted the people (Chapter 1)
311
NOTES:
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Newman, S. (2007) Unstable Universalities, Manchester: Manchester University Press, p. 2;

Nelson, R. (2001) Economics as Religion, University Park, Pennsylvania: The Pennsylvania
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Peet, R. (2007) Unholy Trinity: The IMF, World Bank and WTO, London, Zed Books, pp.
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Polanyi, K. (1957) The Great Transformation, Boston: Bacon Hill, p. 44.
Hodgson, G. (2001) How Economics Forgot History, London: Routledge, p. 248p. 232
Henderson, W. (1995) Economics as Literature, London: Routledge, p. 176.
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Klamer, A. (1990) Towards the native point of view, in : ed. Lavoie, D. Economics and
Hermeneutics, London: Routledge p. 22.
Madison, G.B. (1990) Getting beyond objectivism, in: ed. Lavoie, D. Economics and
9
10
Lavoie, D. (1990) Introduction, in: ed. Lavoie, D. Economics and Hermeneutics, London:
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11
Kroszner, R. (1990) On the microfoundations of money, in: ed. Lavoie, D. Economics and
12
Debord, G. (2006) Spoeczestwo Spektaklu oraz Rozwaania o spoeczestwie spektaklu,
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13
Schmitt, C. (1985) Political Theology, London: MIT Press, p.43.
14
Vries, J. (2008) The Industrious Revolution, Cambridge: Cambridge University Press, p.
4.
15
Lyotard, J. (1986) The Postmodern Condition: A Report on Knowledge, Manchester:
MUP, p. xxiv.
16
Newman, S. (2007) Unstable Universalities, Manchester: MUP, p. 4.
Cited in: Graeber, D. (2011) Debt: The First 5000 Years, New York: First Melville House
Printing, p. 25.
17
18
Graeber, D., Op. cit. , p. 25.
Cited In: Davies, G. (2002) A History of Money: From Ancient Times to the Present Day,
Cardiff: University of Wales Press, p. 23.
19
20
Graeber, D. , Op. cit., p. 23.
21
Ibid., p. 29.
312
22
Cited in: Ibid.
23
Davies, G. (2002) ,Op. cit., p. 20.
24
Graeber, D., Op. cit., p. 29.
25
Ibid., p. 32.
26
Goux, J.-J. (2001) From Unity to Dispersion: The body in modern economic discourse
in: Postmodernism, Economics and Knowledge. London: Routledge, p. 167.
27
Wood, D. (2004) Medieval Economic Thought, Cambridge: Routledge, p. 77.
Baeck, L. (1994) The Mediterrean Tradition in Economic Thought, London: Routledge, p.

31.
28
29
30
Davies, G., Op. cit., p. 42.
31
Ibid., p. 44.
32
Wood, D., Op. cit., p. 77-78.
33
Schefold, B. (1997) Reflections Of Ancient Economic Thought In Greek Poetry, in: (ed.)
Price, B. Ancient Economic Thought, London: Routledge, p. 117.
34
35
Ibid., p. 11.
Mirowski, P. (2001) Refusing the Gift in: Postmodernism, Economics and Knowledge.
London: Routledge, p.432.
36

25, 30.
37
38
39
Wennerlind, C. (2011) Casualties of Credit: the English Financial Revolution, 16201720, Cambridge, Massachusetts: Harvard University Press, p. 2.
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41
42
Wennerlind, C., Op. cit., p. 18-19.
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45
46
Ibid., p. 65.
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Sedlacek, T. (2012) Ekonomia dobra i za, Warszawa: Studio EMKA, p. 257-258.
48
313
Schefold, B., Op. cit., p. 125.
Reddy, W. (1987) Money and liberty in modern Europe, Cambridge: Cambridge

University Press, p. 70.
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50
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51
Ibid., p. 192.
52
Graeber, D., Op. cit., pp. 56, 58.
53
54
Graeber, D., Op. cit., p. 224-226.
55
Ibid., p. 225-226.
Starr, Ch. (1977) The Economic and Social Growth of Early Greece., quoted in: ibid., p.
227.
56
57
58
59
60
Ibid., p. 109.
61
Quoted in: ibid. p. 61.
62
Davies, G., Op. cit., p. 86-87.
63
Ibid., p. 27.
64
Ibid., p. 47.
Davis, M. (2001) Late Victorian Holocausts: El Nino Famines and the Making of the
Third World, London: Verso, p. 304,
65
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Kaniki, Tanzania Under Colonial Rule, London: Longman, p.115.
Iliffe, J. (1979) A Modern History of Tanganyika. Cambridge: Cambridge University Press,
p. 120.
66
67
Ibid., pp. 39, 41.
68
Chown, J. (1994) A History of Money: From AD 800, London: Routledge, p. 216.
69
Ibid., p. 217.
70
Wennerlind, C., Op. cit., p. 6.

42.
71
314
72
Schefold, B. (1997) Reflections Of Ancient Economic Thought In Greek Poetry, in: (ed.)
73
Ibid., p. 122.
74
Ibid., p. 121.
Baeck, L. (1997) Greek Economic Thought, in: (ed.) Price, B. Ancient Economic Thought,
London: Routledge, p. 150.
75
Tribe, K. (1978) Land, Labour and Economic Discourse, London: Routledge & Kegan, p.
59.
76
77
Ibid., p. 66.
Xenophon (1998) Oeconomicus in: Strauss, L. Xeonophon's Socratic Discourse, South

Bend, Indiana: St. Augustine Press, p. 36.
78
79
Ibid., p. 73-74.
80
Baeck, L. (1997), Op. cit., p. 149
81
Perrotta, C. (2004) Consumption as an Investment: I, London: Routledge, p. 19.
82
Ibid., p. 50.
83
Ibid., p. 20.
84
Schefold, B. , Op. cit., p. 128.
85
Baeck, L. (1994), Op. cit., p. 68.
86
87
Baeck, L. (1994), Op. cit., p. 70.
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Psalidopoulos, M. (ed) The Canon in the History of Economics, London: Routledge, p.2.
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90
Perrotta, C., Op. cit., pp. 21, 22.
91
Ibid., p. 17.
92
Ibid., p. 40.
93
Baeck, L. (1994), Op. cit., p. 20.
Strauss, L. (1998) Xeonophon's Socratic Discourse, South Bend, Indiana: St. Augustine
Press, p. 201.
94
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Clark, G. (2007) A Farewell to Alms, a brief economic history of the world, Princeton:
Princeton University Press, p. 68.
96
Perrotta, C., Op. cit., p. 8.
97
Ibid., p. 14.
98
Baeck, L. (1994), Op. cit., p. 77.
99
100
315
Ibid., p. 25.
Plato, Republic, Book VIII, p. 415, accessed at

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Bend, Indiana: St. Augustine Press, p. 8.
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103
104
Ibid., p. 71.
105
Ibid., p. 105.
Jedlicki, J. (2000) wiat zwyrodniay. Lki i wyroki krytykw nowoczesnoci, Warszawa:

Sic!, p. 185.
106
Brown, V. (2006) Adam Smith's Discourse: Canonicity, Commerce and Conscience,

London: Routledge, p. 188.
107
Keynes, J.M. [1930] Economic Possibilities For Our Grandchildren, in: (1963) Essays in
Persuasion, London: W. W. Norton & Company, p. 365.
108
109
Fine, B. (1996) 'From Political Economy to Consumption' London: Routledge, p. 138.
110
Clark, G., Op. cit., pp. 1-2.
111
Ibid., p. 3, 5.
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https://www.marxists.org/reference/subject/economics/malthus/, date of access: 29/10/2014.
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113
Xenophon., Op. cit., p. 73.
114
Rosicka, J. (1991) O wyobrani ekonomicznej Polakw, Krakw: Universitas, p. 18.
115
Ibid., p. 10-11.
Piketty, T. (2014) Capital in the Twenty-First Century, Cambridge, Massachusets: The

Belknap Press of Harvard University Press.
116
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118
119
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Quoted In: Perrotta, C., Op. cit., p. 38.
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Clark, G., Op. cit., p. 66-67.
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123
Coyle, D. (2014) GDP: A Brief but Affectionate History, Princeton: Princeton University
Press, p. 16.
124
125
Ibid., p. 23.
126
Quoted in: Ibid., p. 21.
Foucault, M. (2008) The Birth of Biopolitics: Lectures at the Collge de France,1978

1979, edited by Sellenart, M. Davidson, A. Fontanaand, A. Ewald, F. Basingstoke: Palgrave
Macmillan p. 282.
127
Nelson, R. (2001) Economics as Religion, University Park, Pennsylvania: The

Pennsylvania State University Press
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Nelson, R., Op. cit., p. 24.
130
Baeck, L. (1994), Op. cit., pp. 35-36, 40.
131
All quotes from the Bible come from the New King James Version.
$JDPEHQ*&]\PMHVWXU]G]HQLH"LQ$JDPEHQPrzewodnik Krytyki

Politycznej, Warszawa: Wydawnictwo Krytyki Politycznej, p.89.
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Agamben, G. (2011) The Kingdom and the Glory, Stanford: Stanford University Press, p.
47.
133
134
Ibid., p. 66.
135
Ibid., p. 227.
Maifreda, G. (2012) From Oikonomia to Political Economy, Farnham: Ashgate, p. 193195, 198.
136
137
Wood, D. (2004) Medieval Economic Thought, Cambridge: Routledge, p.35.
138
Ibid., p.36.
139
Hunt, E. (1986) Property and Prophets, New York City: Harper & Row, p. 4.
140
Perrotta, C., Op. cit., p. 59-60.
141
Baeck, L. (1994), Op. cit., p. 124.
142
Quoted in: Perrotta, C., Op. cit., p. 48.
143
Hunt, E., Op. cit., p.7.
144
Ibid.
145
317
Quoted In: Perrotta, C., Op. cit., p. 49.
Quoted in: Marshall, P. (2008) Demanding the Impossible, A History of Anarchism,

London: Harper Perennial, p. 76.
146
147
Quoted In: Wood, D., Op. cit., p. 64.
148
Wood, D., Op. cit., p. 56.
149
Quoted In: Ibid., p. 56.
150
151
Rosicka, J. (1991) O wyobrani ekonomicznej Polakw, Krakw: Universitas, p. 18-19.
152
153
154
Perrotta., Op. cit., p. 48.
155
Baeck, L., Op. cit., p. 24.
156
Ibid., p. 28.
157
Wood, D., Op. cit., pp. 43, 50.
158
159
Quoted in Perrotta, C., Op. cit., p. 67.
160
161
Ibid., p. 32.
162
163
Moser. T. 'The idea of usury in Patristic literature' in Psalidopoulos, M. (ed) The Canon
in the History of Economics, London: Routledge, p. 24.
164
165
166
Baeck, L. (1994), Op. cit., p. 26.
167
Ibid., p. 132.
168
Ibid., p. 148.
Kaye, J. (1998) Economy and Nature in the Fourteenth Century: Money, market
exchange, and the emergence of scientific thought, Cambridge: Cambridge University Press,
p. 139.
169
170
171
Ibid., p. 116.
172
173
Ibid., p. 55.
318
174
Kaye, J., Op. cit., p. 81.
175
Ibid., p. 85.
176
Ibid., p. 119.
177
178
Kaye, J., Op. cit., p. 83-84.
179
Ibid., p. 94.
180
Aristotle, quoted in: Ibid., p. 52.
181
Ibid., p. 46.
182
Illustration from 1847 translation Aristotles Ethics, obtained at:

http://california.anarchoblogs.org/2009/10/page/3/, date of access: 3/11/2014.
183
Aristotle, quoted in: Kaye, J., Op. cit., p. 44.
184
185
Beattie, A. (2009) False Economy, New York: Riverhead Books, p. 134.
186
Ibid., p. 135.
187
Baeck, L. (1994) Op. cit., pp 97-98.
188
Ibid., p. 101.
189
Ibid., p. 105.
190
Ibid., p. 99-111.
191
Ibid., p. 106.
192
Ibid., p. 112.
193
Ibid., pp 153, 156, 159.
194
Ibid., p. 162.
195
Kaye, J., Op. cit., p. 21;
Baeck, L. (1994) Op. cit., p. 112.

Wallerstein, I. (2011) The Modern World System I: Capitalist Agriculture and the
Origins of the European World-Economy in the Sixteenth Century, Berkeley: University of
California Press, p. 30.
196
Quoted In: Maifreda, G. (2012) From Oikonomia to Political Economy, Farnham:

Ashgate, p. 134.
197
198
Davies, G., Op. cit., p. 172-173.
199
Baeck, L. (1994) Op. cit., p. 115.
200
Ibid., p. 177.
201
202
Maifreda, G., Op. cit., p. 132.
203
Kaye, J., Op. cit., pp. 30, 156.
204
Baeck, L. (1994) Op. cit., p. 170.
205
Quoted in: Wood, D., Op. cit., p. 104.
206
Baeck, L. (1994) Op. cit., p. 70.
207
Quoted In: Wood, D., Op. cit., p. 106.
208
Wood, D., Op. cit., pp. 106-107.
209
Davies, G., Op. cit., pp. 30-32.
319
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Klyuev, V. de Imus, P. Srinivasan, K. (2009) Unconventional Choices for

Unconventional Times: Credit and Quantitative Easing in Advanced Economies,
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213
Baeck, L. (1994) Op. cit., p. 128.
214
Ibid., p. 139-143.
215
Perrotta, C., Op. cit., pp. 62, 78.
216
Federici, S. (2009) Caliban and the Witch, New York: Autonomedia, p. 26.
217
218
Ibid., p. 145.
219
Ibid., p. 46.
220
221
Ibid., p. 26.
222
Ibid., p. 27.
223
Baeck, L. (1994) Op. cit., p. 144.
224
Federici, S., Op. cit., p. 34.
225
226
227
Baeck, L. (1994) Op. cit., pp. 148-149.
320
Quoted in: Jacoby, R. (2011) Bloodlust: On the Roots of Violence, New York: Simon and
Schuster, p. 29.
228
229
Kaye, J. (1998) Op. cit., p. 88.
230
Ibid., p. 88.
231
Ibid., p. 50.
232
Ibid., p. 164.
233
Ibid., p. 74.
234
Ibid., p. 76.
235
Ibid., p. 147.
236
Quoted in: Kaye, J., Op. cit., p. 70.
237
Wood, D.., Op. cit., p. 53.
238
Baeck, L. (1994) Op. cit., pp. 148-149.
239
240
241
Ibid., p. 124.
242
Ibid., p. 99.
243
Ibid., p. 176.
244
Ibid., p. 215-216.
245
Ibid., p. 159.
246
Ibid., p. 132.
247
Ibid., pp. 143, 168-169.
248
Ibid., p. 229.
249
Ibid., p. 98.
250
Baeck, L. (1994) Op. cit., p. 160-161;
Perrotta, C., Op. cit., p. 80-81.

251
252
Olivi, quoted In: Perrotta, C. ., Op. cit., p. 81.
253
254
255
Baeck, L. (1994) Op. cit., p. 160-161;

256
257
258
Ibid., p. 88.
259
Ibid., p. 84.
260
261
321
Calder, L. (1999) Financing the American Dream, Princeton: Princetion University

Press, p. 114.
262
Porter, R. (1997) Introduction, in: (ed.) Porter, R. Rewriting the Self, London: Routledge,
p. 3.
263
264
Ibid., p. 8.
Burke, P. (1997) The Self from Petrarch to Descartes, in: (ed.) Porter, R. Rewriting the
Self, London: Routledge, p. 18.
265
Martin, J. (2004) The Myths of Renaissance Individualism, New York: Palgrave

Macmillan, p. 125.
266
267
Burke, P., Op. cit., p. 18.
Langholm, O. (1998) The legacy of scholasticism in economic thought, Cambridge:

Cambridge University Press, p. 162.
268
269
Quoted in: Maifreda, G., Op. cit., p. 94.
270
271
272
273
274
275
276
277
Maifreda, G., Op. cit.. 57-58.
278
279
Ibid., p. 119.
280
Baeck, L. 'The Mediterranean trajectory of Aristotle's economic canon' in: Psalidopoulos,

M. (ed) The Canon in the HIstory of Economics, London: Routledge, p.21.
281
282
Xenophon (., Op. cit., p. 25.
Burke, P. 'Foreword' in: Eds. Brady, A. Butterworth, E. (2010) The Uses of the Future in
Early Modern Europe, Routledge: London, p. x.
283
322
284
Ibid., p. 8.
285
Baeck, L. (1994) Op. cit., p. 163.
286
Kaye, J., Op. cit., p. 219-220.
287
288
Ibid., p. 64.
289
290
291
Quoted in: Davies, G., Op. cit., p. 235-236.
292
293
Ibid., p. 150.
Dunn, E. (2008) Prywatyzujc Polsk, Warszawa: Wydawnictwo Krytyki Politycznej,

pp. 57, 60.
294
295
296
Ibid., p. 23.
297
Hume, D. (1965) Essential works of David Hume, London: Bantam Matrix Books.
298
Sedlacek, T. (2012) Ekonomia dobra i za, Warszawa: Studio EMKA, p 235.
299
Ibid., p 231.
Campbell, C (1989), The Romantic Ethic and the Spirit of Modern Consumerism,
Oxford: Basil Blackwell, p. 39.
300
301
Ibid., p. 39.
302
Ibid., p. 18.
Lipovetsky, G. (1994) The Empire of Fashion, Princeton: Princeton University Press, p.

19.
303
304
Ibid., p. 22.

Macmillan, p. 123.
305
306
Stavrakakis, Y. (2006) Objects of Consumption, Causes of Desire: Consumerism and

Advertising in Societies of Commanded Enjoyment, Gramma 14, pp. 86,87.
307
Quoted in: Hawkes, D. (2001) Idols of the Marketplace, New York: Palgrave Macmillan,
p. 248-249.
308
309
310
Burke, P., Op. cit., p. 18.
Fine, B. (1996) From Political Economy to Consumption in: (ed.) Miller, D.

Acknowledging Consumption, London: Routledge, p. 139.
323
311
Xenos, N. (1989) Scarcity & Modernity, London: Routledge, pp.91-92.
312
Veblen, T. (1970) The Theory of the Leisure Class, London, Unwin Books, p. 70.
313
Xenos, N., Op. cit., pp. 91-92.
314
Hunt, A. (1996) Governance of the Consuming Passions, London: Macmillan Press, p. 8.
315
Ibid., p. 8.
316
Ibid., p. 22.
Vries, J. (2008) The Industrious Revolution, Cambridge: Cambridge University Press, p.

47.
317
318
Hunt, A. (1996) Governance of the Consuming Passions, London: Macmillan Press, p. 2.
319
Montesquieu, quoted In: Vries, J., Op. cit., p. 47.
Hunt, A. (1996) Governance of the Consuming Passions, London: Macmillan Press, pp.
xii-iii.
320
321
Ibid., p. 26.
322
Ibid., p. 22.
323
Ibid., p. xii.
324
325
326
Vries, J., Op. cit., p. 46.
Reinert, S. (2011) Translating Empire: Emulation and the Origins of Political Economy,
Cambridge Massachusets: Harvard University Press, pp. 71-72.
327
328
329
Harris, J. G. (2004) Sick Economies, Philadelphia: University of Pennsylvania Press, p. 3.
330
Quoted In: Harris, J. G., Op. cit., p. 3.
331
332
Baeck, L. (1994) Op. cit., p. 187.
333
Maifreda, G., Op. cit., pp. 91-93.
334
335
Ibid., p. 137.
336
Ibid., p. 113.
337
338
339
Ibid., p. 32.
340
324
341
342
343
Wood, D., Op. cit., pp. 80, 125.
344
345
346
Calder, L., Op. cit., p. 70.
347
Ibid., p. 77.
348
349
Baeck, L. (1994) Op. cit., pp. 175, 177.
350
Ibid., p. 178.
351
Ibid., p. 182.
352
Ibid., p. 185.
353
Ibid., pp. 180, 184.
354
Ibid., p. 178.
355
Ibid., pp. 191-192.
356
Ibid., p. 194.
357
Ibid., p. 195.
358
Ibid., p. 196.
359
Maifreda, G., Op. cit., pp. 137, 139.
360
361
Maifreda, G., Op. cit., pp. 171, 174.
362
Quoted In: Maifreda, G., Op. cit., p. 173.
363
Clment, A. (2003) "The Influence of Medicine on Political Economy in the Seventeenth

Century" History of Economics Review, p. 2.
Foucault, M. (2009) Security, Territory, Population, Lectures at the Collge de France,

1977-1978, (eds) Sellenart, M. Davidson, A. Fontana, A. Ewald, F. London: Palgrave
Macmillan, p. 68-69.
364
365
366
Ibid.
367
Ibid., p. 168-169.
368
Ibid., p. 55.
369
Foucault, M. (2009) Security, Territory, Population, Op. cit., p. 75.
370
371
Ibid., p. 214.
372
Davenant, quoted in: Clment, A., Op. cit., p. 8.
373
374
Polanyi, K. (1957) The Great Transformation, Boston: Beacon Hill.
375
376
Clment, A., Op. cit., p. 15.
377
Ibid., p. 1.
325
Christensen, P. (1994) Fire, motion, and productivity, in: (ed.) Mirowski, P. Natural
Images in Economic Thought, Cambridge: Cambridge University Press, p. 270.
378
379
Ibid., p. 249.
380
381
Translated by Clment, A. and quoted in: Clment, A., Op. cit., p. 4.
382
Clment, A., Op. cit., pp. 5-6.
383
384
Ibid., pp. 203-204.
385
386
Ibid., p. 5.
387
Ibid., p. 12.
388
Ibid., p. 13.
389
390
Calder, L., Op. cit., pp. 211-212.
391
Harris, J. G., Op. cit., pp. 1-2.
392
Amariglio, J. Ruccio, D. (2001) 'From Unity to Dispersion: The body in modern

economic discourse' in: Postmodernism, Economics and Knowledge. London: Routledge,
pp. 143, 150.
393
Ibid., p. 144.
394
Beattie, A. (2009) False Economy, New York: Riverhead Books, pp. 129-130.
395
Ibid., p. 131.
Lachmann, (2000) Capitalists in Spite of Themselves, Oxford: Oxford University Press,

p. 17.
396
Milonakis, D., Fine, B. (2009) From Political Economy to Economics, London:

Routledge, p. 209.
397
398
Baeck, L. (1994) Op. cit., p. 123.
326
399
Ibid., p. 130.
Quoted In: Milonakis, D., Fine, B. (2009) From Political Economy to Economics, Op.
cit., p. 209.
400
California Press, pp. 152-153.
401
402
Ibid., p. 156.
Weber, M. (1905) The Protestant Ethic and the Spirit of Capitalism, accessed at:
https://www.marxists.org/reference/archive/weber/protestant-ethic/, date of access:
13/11/2014.
403
404
Lachmann, Op. cit., p. 229.
Agamben, G. interviewed by Sacco, G. (2010) in: Agamben. Przewodnik Krytyki

Politycznej, Warszawa: Wydawnictwo Krytyki Politycznej, p.105-106.
405
Hengstmengel, J. (2011) The role of divine providence in seventeenth-century economic

thought. An examination of the Taylor thesis, MA thesis at Erasmus University Rotterdam,
p. 42.
406
Aquinas, T. (1957) Summa Contra Gentiles, accessed at:

http://dhspriory.org/thomas/ContraGentiles3a.htm#71, date of access: 14/11/2014.
407
p. 226.
408
Keynes, J.M. (1935) The General Theory of Employment, Interest and Money; accessed
at: http://www.marxists.org/reference/subject/economics/keynes/general-theory/ch23.htm
date of access: 17/11/2014.
409
Quoted In: Hirschman, A. (1997) The Passions and the Interest, New Jersey: Princeton
410
411
Harris, J. G., Op. cit., p. 7.
Smith, A. (1759) The Theory of Moral Sentiments VII.II.22, accessed at:

http://www.econlib.org/library/Smith/smMS.html, date of access: 17/11/2014.
412
Quoted in: Nelson, R. (2001) Economics as Religion, University Park, Pennsylvania: The
Pennsylvania State University Press, p. 44.
413
414
Mirowski, P. (2001) 'Refusing the Gift' in: Postmodernism, Economics and Knowledge.
London: Routledge, p.435.
415
416
iek, S. (2008) In Defense of Lost Causes, London: Verso, p. 456.
417
Hirschman, A., Op. cit., p. 52.
418
419
Hirschman, A., Op. cit., pp. 59-60.
420
421
Quoted in: Hirschman, A., Op. cit., p. 74.
327
Rothschild, E. (2001) Economic Sentiments: Adam Smith, Condorcet, and the

Enlightenment, Cambridge, Massachusets: Harvard University Press, p. 8.
422
423
Ibid., p. 8.

424
425
Hirschman, A., Op. cit., pp. 79-80.
Reinert, S. (2011) Translating Empire: Emulation and the Origins of Political Economy,
Cambridge Massachusets: Harvard University Press, p. 18.
426
427
Ibid.
428
Ibid., pp. 15-16.
Wallerstein, I. (2011) The Modern World System II: Mercantilism and the Consolidation
of the European World-Economy, Berkeley: University of California Press, p. xix.
429
430
Reinert, S., Op. cit., p. 29.
Quoted In: Reinert, S. (2011) Translating Empire: Emulation and the Origins of Political
Economy, Cambridge Massachusets: Harvard University Press, p. 16.432 Reinert, S., Op. cit.,
pp. 24-25.
431
433
Ibid., p. 25.
434
Ibid., p. 28.
Agamben, G. (2005) State of Exception, Chicago: The University of Chicago Press, p.

13.
435
436
Colbert, quoted in: Reinert, S., Op. cit., p. 17.
437
Quoted in: Reinert, S., Op. cit., p. 21.
McCloskey, D. (1990) If You're So Smart: The Narrative of Economic Expertise,

London: The University of Chicago Press, p. 43.
438
List, F. (1841) The National System of Political Economy, I.I.12, accessed at:
http://www.econlib.org/library/YPDBooks/List/lstNPECover.html, date of access:
18/12/2014.
439
Foucault, M. (2008) Birth of Biopolitcs: Lectures at the Collge de France, 1978-1979,

London: Palgrave Macmillan, p. 6.
440
Third World, London: Verso, pp. 293, 294.442 /HV]F]\VNL$Skok w nowoczesno,
Warszawa: Krytyka Polityczna, pp. 92-93.
441
443
Ibid., p. 92.
444
Ibid., pp. 95-96.
328
445
Davis, M., Op. cit., p. 295.
Wallerstein, I. (2011) World System III: The Second Era of Great Expansion of the
Capitalist World-Economy, 1730s-1840s, Berkeley: University of California Press, p. 150.
446
447
Quoted in: Wallerstein, I. (2011) World System III., Op. cit., p. 150.
448
449
450
451
Ibid., p. 46.
452
Ibid., p. 52.
453
Ibid., pp. 70-71.
454
Ibid., p. 84.
455
456
Baeck, L. (1997) Greek Economic Thought, in: (ed.) Price, B. Ancient Economic
Thought, London: Routledge, p. 160.
457
458
459
Hirschman, A., Op. cit.
460
Ibid., pp. 20-21.
461
Ibid., p. 27.
462
Ibid., p. 54.
463
Ibid., p. xxii.
464
Ibid., p. 65.
465
Ibid., pp. 108, 110.
466
Ibid., p. 42.
467
Ibid., p. 54.
468
Graeber, D., Op. cit., p. 331-332.
469
Hirschman, A., Op. cit., p. 33.
470
Ibid.p. 34.
471
Ibid., p. 34.
472
Ibid., p. 43.
473
Ibid., p. 58.
474
Ibid., p. 60.
329
California Press, p. 252.
475
p. 55.
476
477
Hawkes, D. (2001) Op. cit., pp. 53-55.
478
Ibid., p. 85.
479
Ibid., pp. 67-68.
Taussig, M. (2010) The Devil And Commodity Fetishism In South America, Chapel Hill:
The University of North Carolina Press.
480
481
Comaroff, J. (Ed.) Modernity and Its Malcontents: Ritual and Power in Postcolonial
Africa, Chicago: The University of Chicago Press.
482
Hawkes, D. (2001) Op. cit., p. 87.
483
Quoted in: Hawkes, D. (2001) Op.cit. , p. 81.
484
Ibid., p. 78.
485
Hawkes, D. (2001) Op.cit., p. 79.
486
Ibid.
487
Ibid., p. 89.
Hawkes, D. (2010) The culture of usury in Renaissance England, New York: Palgrave
Macmillan, p. 135.
488
489
Ibid., p. 164.
490
Ibid., p. 163.
491
Hawkes, D. (2001) Op.cit., p. 100.
492
Hawkes, D. (2010) Op.cit., p. 164.
493
Hawkes, D. (2001) Op.cit., p. 89.
494
Ibid., pp. 91-92.
Quoted in: Foucault, M. (2009) Security, Territory, Population: Lectures at the Collge
de France, 1977-1978, Op.cit., p. 52.
495
496
497
Rothschild, E., Op.cit., p. 74.
498
Ibid., p. 60.
Quoted in: Thompson, E. P. (1993) Customs in Common, London: Penguin Books, p.

201.
499
500
Maifreda, G., Op.cit., p. 115.
330
501
Ibid., pp. 180-181.
502
Ibid., p. 181.
Christensen, P. (1994) Fire, motion, and productivity, in: (ed.) Mirowski, P. Natural
Images in Economic Thought, Cambridge: Cambridge University Press, p. 271.
503
504
Ibid., p. 256.
505
Ibid., p. 257.
Mirowski, P. (1995) More heat than light. Economics as social physics: Physics as
natures economics, Cambridge: Cambridge University Press, p. 155.
506
507
Jacobsen, S. (2013) Physiocracy and the Chinese model, in: (eds) Ma, Y., Trautwein, H.,
Thoughts on Economic Development in China, London: Routledge, pp. 13-14.
508
Ibid., p. 12.
509
Ibid., p. 14.
510
Ibid., pp. 25-26.
511
Ibid., p. 25.
512
Ibid., p. 22.
513
Rothschild, E., Op.cit., p. 34.
514
Ibid., p. 20.
Foucault, M. (2011) Narodziny biopolityki: Wykady w Collge de France,1978-1979,

Warszawa: Wydawnictwo Naukowe PWN, pp. 161-162.
515
516
Arendt, H. (2000) Kondycja ludzka, Warszawa: Aletheia, p. 96.
517
Graeber, D. Op.cit., p. 374.
Foucault, M. (2009) Security, Territory, Population: Lectures at the Collge de France,

1977-1978, Op.cit., p. 48.
518
519
Ibid., pp. 65-66.
Foucault, M. (2008) Birth of Biopolitcs: Lectures at the Collge de France, 1978-1979,

London: Palgrave Macmillan, p. 32.
520
521
Terranova, T. (2009) 'Another Life : The Nature of Political Economy in Foucault's

Genealogy of Biopolitics' in: Theory Culture Society 26, p. 245.
Quoted in: Foucault, M. (2009) Security, Territory, Population: Lectures at the Collge
de France, 1977-1978, Op.cit., p. 95.
522
523
Hodgson, G. (2001) Economics & Utopia, London: Routledge, p. 104.

Routledge, p. 224.
524
525
Sartre, J.P. (1976) Critique of Dialectical Reason. London: New Left Books, p. 123.
526
Foucault, M. (2005) The Order of Things, London: Routledge, p. 279.
527
331
Xenos, N. (1989) Scarcity & Modernity, London: Routledge, p.3.
Quoted in: Foucault, M. (2009) Security, Territory, Population, Lectures at the Collge
de France, 1977-1978, Op.cit., p. 30.
528
529
Xenos, N. (1989) Op.cit., p.3.

1977-1978, Op.cit., p. 59.
530
531
Ibid.. 41-42.
532
Ibid., p. 37.
533
Ibid., p. 41.
534
Ibid., p. 37.
Tribe, K. (1978) Land, Labour and Economic Discourse, London: Routledge & Kegan,
p. 66.
535
536
Ibid., p. 78.

1977-1978, London: Palgrave Macmillan, p. 44.
537
538
Ibid., p. 85.
539
Tribe, K. Op. Cit., p. 90.
540
Quoted in: Polanyi, K. (1957) The Great Transformation, Boston: Beacon Hill, p. 103.
541
542
543
Xenos, N., Op.cit., p.22.

London: Routledge, pp. 133-134.
544
545
Ibid., p.133.
Marx, K. (1875) Critique of the Gotha Program,

http://www.marxists.org/archive/marx/works/1875/gotha/ch01.htm, date of access:
16/03/2011.
546
547
Arendt, H. (2000) Kondycja ludzka, Warszawa: Aletheia, p. 144.
548
Xenos, N., Op.cit., p.43.
549
Ibid., p.44.
Mill, J.S. (1965) Principles of Political Economy, Toronto and Buffalo: Toronto
University Press, p.757.
550
551
Quoted in: Nelson, R., Op.cit., p. 31.
552
Xenos, N., Op.cit., p. 46.
332
Keynes, J. (1963) Economic Possibilities for our Grandchildren, in: Essays in

Presuasion, New York and London: W.W. Norton, p. 376.
553
554
Ibid., p. 372.
555
Xenos, N., Op.cit.., p.47.
556
Ibid., p.22.
557
Foucault, M. (1988) The Political Technology of Individuals. in: (eds) Martin, L.

Gutman, H. Hutton, P. Technologies of the Self, p. 160.
558
Ross, D. (2002), Ireland: History of a Nation, New Lanark: Geddes & Grosset, p.226.
Third World, London: Verso.
559
560
Ibid., p. 28.
561
Ibid., p. 47.
562
Ibid., p. 34.
563
Ibid., p. 53.
564
Quoted in: Davis, M., Op.cit., p. 53.
565
Ibid., p. 48.
566
Ibid., p. 31.
567
Ibid., p. 31.
568
Ibid., p. 33.
Gallagher, T. Gallagher, .M (1987) Paddy's Lament, Ireland 1846-1847: Prelude to

Hatred, Boston: Mariner Books, p. 85.
569
570
Davis, M., Op.cit., p. 152.
571
Ibid., p. 36.
572
Ibid., p. 37.
573
Ibid., p. 33.
574
Ibid., p. 38
575
Ibid., p. 41
576
Ibid., p. 326
577
Ibid., p. 26
Wallerstein, I. (2011) World System III: The Second Era of Great Expansion of the
Capitalist World-Economy, 1730s-1840s, Berkeley: University of California Press, p. 154
578
579
Quoted in: Davis, M. (2001) Op.cit., p. 324
580
Wallerstein, I. (2011) World System III., Op.cit., p. 159
581
Quoted in: Wallerstein, I. (2011) World System III., Op.cit., p. 160
582
Davis, M. Op.cit., p. 26
583
Ibid., p. 142
584
Ibid., p. 111
585
Quoted in: Davis, M. Op.cit., p. 111
586
Ibid., p. 299
587
Ibid., p. 311
588
Davis, M. Op.cit., p. 312
589
Ibid., p. 9
333

Enlightenment, Cambridge, Massachusets: Harvard University Press, p. 59
590
591
Ibid.

University Press, p. 216
592
Foucault, M. (1991) Remarks on Marx : conversations with Duccio Trombadori, New

York : Semiotext(e), p. 171
593
594
Ibid.
Langholm, O. (1998) The legacy of scholasticism in economic thought, Cambridge:

Cambridge University Press, p. 33
595
596
Quoted in: Langholm, O. (1998) Op.cit., p. 145

Macmillan p. 8
597
598
Langholm, O. (1998) Op.cit., pp. 196-197
599
Ibid., p. 198
600
Schefold, B. Op.cit., p. 112
601
Wallerstein, I. (2011) The Modern World System II., Op.cit., p. 114
602
Ibid., p. 113
603
Wallerstein, I. (2011) The Modern World System I., Op.cit., p. 16
604
Wallerstein, I. (2011) The Modern World System III., Op.cit., p. 170
605
Harris, J. G., Op.cit., p. 2
Quoted In: Hirschman, A. (1997) The Passions and the Interest, New Jersey: Princeton
University Press, pp. 86-87
606
334
Smith, A. (1776) An Inquiry into the Nature and Causes of the Wealth of Nations,
IV.9.51, accessed at: http://www.econlib.org/library/Smith/smWN.html, date of access:
27/11/2014
607
Quoted In: Brown, V. (2006) Adam Smith's Discourse: Canonicity, Commerce and
Conscience, London: Routledge, p. 126
608
609
Warszawa: Wydawnictwo Naukowe PWN, p. 50

610
611
Brown, V., Op.cit., p. 179
612
Ibid., p. 161
613
Ibid., p. 170
614
Rothschild, E., Op.cit., p. 7
615
Ibid., p. 88
616
Ibid., p. 62
617
618
Quoted In: Rothschild, E., Op.cit., p. 69
619
Ibid., pp. 61-62
620
Rothschild, E., Op.cit., p. 87
621
Ibid., p. 54
622
Ibid., p. 65
623
Ibid.
624
Ibid., p. 79
625
Rothschild, E., Op.cit., pp.35-36
626
Quoted in: Rothschild, E., Op.cit., p. 79
627
Ibid., p. 80
628
Wood, D., Op.cit., pp. 141-142
629
Rothschild, E., Op.cit., pp. 22-3
630
Ibid., p. 33-34
631
Ibid., p. 81
632
Davies, G., Op.cit., p. 71
633
Ibid., p. 51
634
Ibid.
335
635
Ibid., p. 54
636
Ibid., pp. 78-79
637
Quoted In: Davies, N. (1996) Europe: a History, Oxford: Oxford University Press, p.358
638
Davies, G., Op.cit. p. 153, 155
639
Graeber, D., Op.cit., p. 291
640
Ibid., p. 338
Bernstein, P. (1998) Against the Gods, the remarkable history of risk, New York: John
Wiley & Sons, p. 93
641
642
Davies, G., Op.cit. p. 258
643
Ibid., pp. 263, 310-311
644
Ibid., p. 257
645
Wennerlind, C., Op.cit., p. 169
646
647
648
Ibid., p. 170
649
Ibid., p. 175
650
Davies, G., Op.cit., pp. 209, 293-294, 297
651
Hawkes, D. (2001) Op.cit., p. 100
652
653
Ibid., p. 146
654
Ibid., p. 149
655
Ibid., p. 96
656
Kaye, J., Op.cit., pp. 73-74
Marx, K. Engels, F. (1848) Manifesto of the Communist Party, accessed at:

https://www.marxists.org/archive/marx/works/1848/communist-manifesto/, date of access:
28/11/2014
657

658
659
Ibid., p. 87
660
Ibid., p. 78
661
Ibid., p. 112
662
Ibid., pp. 81, 84
663
Marks, K. (1951) Kapita, tom I:DUV]DZD.VLNDL:LHG]DS
336
664
Ibid., p. 170
665
Ibid., p. 112-113
666
Ibid., p. 76
667
Rosicka, J. (1991) O wyobrani ekonomicznej Polakw, Krakw: Universitas, p. 20
668
Wood, D., Op.cit., pp. 24-25
669
Langholm, O. (1998) Op.cit. , pp. 168-169
670
Marks, K. (1951) Op.cit., pp. 228-232
671
Ibid., p. 76
Robinson, J. (1974) An Essay on Marxian Economics, Second Edition, London:

Macmillan, p. 22
672
Quoted In: Rose, M. (1994) Authors and Owners, Cambridge, Massachusets: Harvard
673
674
Ibid., p. 18
675
Rose, M., Op.cit., p. 9
676
Ibid., p. 11
677
Ibid., p. 12
678
Ibid., p. 15
679
Ibid., p. 105
680
Ibid., pp. 92-93
681
Quoted In: Rose, M., Op.cit., p. 84
682
683
Arendt, H. (2000) Kondycja ludzka, Warszawa: Alatheia, pp. 229-230
684
Rose, M.,Op.cit., p. 6
685
Quoted In: Rose, M., Op.cit., p. 119
686
Rose, M., Op.cit., pp. 74-77
687
Quoted In: Rose, M., Op.cit. Press, p. 77
688
Ibid.
689
690
Brown, V., Op.cit.
Smith, A. (1759) The Theory of Moral Sentiments VII.II.104, accessed at:

http://www.econlib.org/library/Smith/smMS.html, date of access: 2/12/2014
691
692
Smith. A. (1989) Teoria uczu moralnych, Warszawa: PWN, p. 203
693
Smith, A. (1759) The Theory of Moral Sentiments IV.I.8, Op.cit.
694
337
Ibid.
695
Peil, J. 'Deconstructing the canonical view on Adam Smith' in: Psalidopoulos, M. (ed)
The Canon in the History of Economics, London: Routledge, p. 84
IV.2.43, accessed at: http://www.econlib.org/library/Smith/smWN.html, date of access:
2/12/2014
696

London: Routledge, p. 18
697
698
Mirowski, P. (1988) Against Mechanism. New Jersey: Rowman & Littlefield, p. 207
699
Brown, V. ., Op.cit., p. 170
700
Tribe, K., Op. Cit., p. 101
701
Peil, J., Op.cit., p. 70
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Marx, K. Engels, F. (1848) Manifesto of the Communist Party, Op.cit.
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Wallerstein, I. (2011) The Modern World System IV., Op.cit., p. 80

786
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Thompson, E.P. (1966) Op.cit., pp. 420-421
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Ibid., pp. 155-156
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795
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801
Hobsbawm, E. (2013) Jak zmieni wiat. Marks i marksizm 1840-2011, Warszawa:

Krytyka Polityczna, p. 43
802

Historical Materialism, Volume 20 Issue 2, pp. 15-16
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804
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Milonakis, D., Fine, B. (2009) From Political Economy to Economics, Op.cit., p. 243
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807
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Milonakis, D., Fine, B. (2009) From Political Economy to Economics, Op.cit., pp. 113114
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811
Ibid., p. 110
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813
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Porter, T. (1994) Rigor and practicality, in: (ed.) Mirowski, P. Natural Images in
Economic Thought, Cambridge: Cambridge University Press, p. 150
815
Mirowski, P. (1995) More heat than light. Economics as social physics: Physics as
natures economics, Cambridge: Cambridge University Press, p. 194
816
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818
819
Amadae, S. M. Op.cit., p. 222
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820
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Mill, J. S. (1844) On the Definition of Political Economy; and on the Method of

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Alborn, T. (1994) Economic man, economic machine, in: (ed.) Mirowski, P. Natural
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823
824
Ibid., p. 201
825
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826
Ibid., p. 212
827
Alborn, T., Op.cit., p. 215
828
Ibid., p. 211829 Jevons, W. (1871) The Theory of Political Economy, III.39, Op.cit.
830
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831
Alborn, T., Op.cit., p. 207
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IV.2.10, Op.cit.
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Mises, L. (1990) Money, Method, and the Market Process, Massachusetts: Kluwer
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846

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850
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Hodgson, G. (2001) How Economics Forgot History, London: Routledge, p. 138
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868
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Hutter, M. (1994) Organism as a metaphor in German economic thought, in: (ed.)

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Hodgson, G. (2001) How Economics Forgot History, London: Routledge, p. 209
Robbins, L. (1932) Essay on the Nature and Significance of Economic Science, London:
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Ibid., p. 22

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Hirschman, A. (1997) The Passions and the Interest, New Jersey: Princeton University
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893
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Natural Images in Economic Thought, Cambridge: Cambridge University Press, p. 65-66
895
Mirowski, P. (1988) Against Mechanism. New Jersey: Rowman & Littlefield, p. 30
896
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Cohen, B. (1994) Newton and the social sciences in: (ed.) Mirowski, P. Natural Images
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897
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Mirowski, P. (1988) Op.cit., p. 46
899
900
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901
902
903
904
Ibid., p. 43
905
Nelson, R., Op.cit., p. 32
906
Quoted in: Hawkes, D. (2001) Op.cit., p. 225
Economic Thought, Cambridge: Cambridge University Press, p. 148
907
908
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909
Porter, T. (1994) Op.cit., p. 149
McCloskey, D. (1998) The Rhetoric of Economics, London: The University of Wisconsin

Press, p. 143
910
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Porter, T. (1994) Op.cit., p. 156
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Porter, T. (1994 Op.cit., p. 159
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915
Milonakis, D., Fine, B. (2009) From Economics Imperialism to Freakonomics: The

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Keynes, J.M. [1925] A Short View of Russia, in: (1963) Essays in Persuasion, London:
921
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Keynes, J.M. [1926] Op.cit., p. 316
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928
929
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Bateman, B., Op.cit., p. 78
931
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938
Bateman, B., Op.cit., p. 73, 75
939
/HV]F]\VNL$Op.cit., p. 296, 301
940
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941
Ibid., p. 117
348
942
Ibid., p. 206
943
Ibid., p. 207
944
Ibid., p. 222
945
Ibid., p. 132
946
Ibid., p. 194
947
Ibid., p. 133
948
Ibid., p. 135
Quoted in: Escobar, A. (2010) Planning, in: Sachs, W. (ed.) The Development
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949
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Escobar, A., Op.cit., s. 149
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Apter, D. (1959) Nationalism, government, and economic growth, Economic

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952
953
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Quoted in: Escobar, A. (2010) Planning, in: Sachs, W. (ed.) The Development
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954
955
Faigon, L. (2002) Mao: A reinterpretation, Chicago: Ivan R. Dee, p. 134
Amadae, S. M. (2003) Rationalizing Capitalist Democracy, Chicago: Chciago University

Press, p. 78
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957
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Amadae, S. M., Op.cit., p. 40
959
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960
Ibid., p. 77
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961
962
963
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964
Ibid., p. 62
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965
966
967
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968
Ibid.,p. 69
969
970
Ibid., p. 73
971
Ibid., p. 63
972
Ibid., p. 11
973
Ibid., p. 72
974
Ibid., p. 71
975
Ibid., p. 8
976
Hayek, F. (2006) The Road to Serfdom, London: Routledge, p. 13
977
978
Ibid., p. 83
979
Ibid., p. 22
349
980
Ibid., p. 30-1
981
Bell, D. (1996) The Cultural Contradictions Of Capitalism, New York: Basic Books;
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Illouz, E. (1997) Consuming the Romantic Utopia, Berkeley: University od California
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982
983
Marsden, R. (1999) The Nature of Capital, Marx after Foucault, London: Routledge, p. 7
Clark, J.D.C. (2003) Our Shadowed Present: Modernism, Postmodernism, and History,
Stanford: Stanford University Press, p. 4
984
Wojciechowski, W. (2014) Ponowoczesna wizja tosamoci jednostki a wykluczenie

materialne, unpublished paper, p. 36
985
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Advertising in Societies of Commanded Enjoyment, Gramma 14, p. 93-94
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Calder, L. (1999) Financing the American Dream, Princeton: Princetion University

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988
989
Ibid., p. 153
990
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991
Calder, L., Op.cit., p. 112, 155-156
992
Ibid., p. 157
993
Ibid., p. 260
350
994
Ibid., p. 201
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Ibid., p. 206
Debord, G. (2006) Spoeczestwo Spektaklu oraz Rozwaania o spoeczestwie

spektaklu, Warszawa: PIW
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