Gabriel Lambert Hegel and Political Economy Page 1

‘Political economy [is] a science which does credit to thought because it

finds the laws underlying a mass of contingent occurrences.’ [189A] How
significant was the role of political economy in Hegel’s political theory?

‘Political economy’ can be interpreted as a particularly broad concept in Hegel’s

thought. It can be used to probe all property relations discussed by Hegel, including
his use of exchange and the market in general and to evaluate the social roles
ascribed to the individuals within civil society by their economic lives. Ultimately, to
evaluate their importance in his system of ideas, these concepts must be considered
in terms of their contribution to Hegel’s definition of freedom – the realization of the
will in a rationally-constructed society in which the universal and the particular are no
longer at odds. Hegel explicitly states that the driving forces in his conception of
society are conceptual rather than material and thus political economy itself would
never been seen, as it was for Marx, as the underlying reality of society. Instead, the
relationship between economic ideas and Hegel’s conception of the process of the
achievement of freedom through self-consciousness and an understanding of the
universal should be discussed.

For Hegel, a market economy was the mechanism through which the subjective
freedoms of civil society could be actualized. He made a distinction between civil
society as a universal sphere of egoism (which existed in every society) and as an
institutionalized, differentiated and distinct social sphere (which was a characteristic
present only in modern societies). Only in the latter case would the market underpin
freedom by giving every self-seeking individual the ability to exchange goods to fulfil
their desires and the opportunity to find meaning through one’s work (which one
would have chosen according to one’s taste and suitability). Moreover, the realities of
market exchange necessitated formalization in property law, the objective guarantor
of subjective freedom and execution by impartial courts of law, the subjective but
universally standard institutions that ensured each crime was appropriately
punished. Hegel stressed that this ability to have a distinct sphere in which
individuals could behave in a self-seeking way so that their wills did not come into
conflict with others (with certain exceptions) was one of the key strengths of modern
societies – the Oriental, Greek and Roman world had been unable to create a
comparably diverse and stable sphere for individuals and, in the case of Greece, had
ultimately collapsed as a result of being unable to deal with the expression of
particular opinion (Socrates).

Briefly, it Hegel provided an interesting explanation as to why consumption could

actually promote a form of freedom. Given that Hegel was so critical of arbitrariness
and insisted on the validity of objective moral content, one might expect him to
dismiss consumption as pandering to vain fashions. Rousseau had argued that
fulfilling desires and wants generated by man could not be consistent with freedom
and one might have expected Hegel to agree. But goods are products of human
rather than natural wants and desires since we have designed and constructed these
goods for ourselves. In this way, consumption leads us away from a reliance on
nature as a source to dictate desires and towards ourselves as the producer of wants.
The more we desire our own creations, the more free from nature we will be.

However, it is important to make several qualifying points with regards to economics

and civil society – while the market necessitated law, it is not the material nature of
the civil society which gives rise to such laws. In general, Hegel saw ideas as the
driving force of history, politics and all changes concerned with them. Civil society
and economic mechanisms were no exception, indeed Hegel commented that
historically civil society in the modern sense only arose in very recent history with
freedom of property only being fully recognised after the French Revolution. Laws
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emerged as part of the gradual historical process of the self-realisation of freedom

and property law could be seen as one of the final stages of the idealistic (rather than
materialistic) process. Secondly, while Hegel argued strongly for equality of
opportunity and even state education to ensure this in cases of parental neglect, he
recognised the fact that there would be inequality within society and, importantly,
did not simply see this inequality as a product of any economic or social system as
Rousseau might have. Rather, inequality of talents and ability was natural and to be
lamented and assuaged but not to be destroyed. Thirdly, the subjective rights of the
marketplace such as property law were always subordinate to other rights for Hegel –
for instance, if someone was starving to death, their right to a certain standard of
welfare made the theft of food a right of necessity but a right nevertheless. Thus
while a certain degree of inequality was acceptable, the right to a level of welfare
was a universal and inalienable right. This is only one example of Hegel’s restriction
of the operation of economic laws in the name of a more valued philosophical ideal
(which will be discussed in more detail later).

The moment of exchange of property was of particular importance for Hegel – in the
act of exchange, all parties are recognising several aspects about the goods
concerned. Firstly, before and after the exchange they are recognising the other’s
rightful possession of their property which strengthens the objectification of the
possessors will in that property, a recognition that is essential for the satisfaction of
the will in general. But more importantly, through the act of exchange itself, another
characteristic of property become clear, namely the universal quality of that
property. According to Hegel, all property has value in that it can be possessed by
the will of the owner, in that it can be used by the possessor for whatever purpose he
or she sees fit (this is the clearest demonstration of possession of the property) but
also that the property shares a common characteristic that is abstracted from its
specific use, specifically its value relative to other property (which can be measured
in monetary value). Therefore only through exchange (or perhaps an understanding
of the potentiality of exchange) can one recognise the value of one’s object. It is
important to note that exchange was not conducted for universal ends – the universal
was only a mean through which one’s self-interest could be better fulfilled. Thus even
if one is forced to recognise universality, one is doing so with the self as the
beneficiary causing civil society to be referred to as ‘egotistical universality’ by some
commentators.

Why was this significant? In a market economy in which division of labour is

occurring, it teaches one the lesson of reciprocity – that one’s own particular needs
can be satisfied only with the cooperation of others. One produces a certain kind of
good or service (whose value is determined by the labour input) which holds a
universal value and can therefore be exchanged for the goods or services of one’s
choice. It is partly this understanding of reciprocity that enables a society of such
diverse individuals to cooperate though the mechanism of the market alone is
insufficient to ensure permanent stability as we shall see. As labour becomes
increasingly divided this reciprocity becomes increasingly important as individuals
produce increasingly abstract products (say, a specific component in a machine, or a
particular legal service) in such a way that their reliance on others is constantly
increasing. Therefore, only with an understanding of the processes involved in
exchange can one appreciate the true nature of property and the reciprocity it
teaches in civil society.

Economic activity was also the key to other social functions for Hegel. The
corporations were not simply groups that represented a particular commercial
interest (though this was one of their functions). Rather, they gave their members an
identity, a certain social standing, a sense of security in their work as members who
Gabriel Lambert Hegel and Political Economy Page 3

were struggling would be supported by their peers and even access to the political
sphere where one could represent one’s corporation in the legislature. Furthermore,
corporations, like the moment of exchange, gave what would otherwise be self-
interested individuals an insight into the universal – all members have common
concerns, work patterns, difficulties and identities and thus are far easier to
empathise with than a random ‘individual’ with which one has little in common.
However, as corporations were limited to the commercial and non wag-earning class
this universality, even within each corporation, was fairly restricted. However the
‘estates’ (agriculture, commerce, and bureaucracy) shared some features, even if
they were less formalized – they still gave the individual an identity in common with
others who chose the same trade or profession and they gave a certain social
standing. Even more generally, any labour was a means to self-reliance and a form of
honour within society. Thus through the common experiences of different groups of
labour, self-interested individuals gains some knowledge of concerns wider than their
particular interests.

So far we have looked at some of the ‘laws’ Hegel had investigated using economic
analysis – the enabling of subjective freedom in a separate sphere of civil society,
freedom through consumption, the meaning of exchange and property and the social
identity that one’s economic life could provide. Now we turn to a more critical
approach of the material covered as we explore some of the problems thrown up
within civil society as a result of the market and see their solutions to lie in state
action. Furthermore, Hegel’s idea of civil society and it’s economic architecture as
merely an inferior stage that needs to progress to the state for the full realization of
freedom must be considered.

Firstly, as already hinted at, Hegel did not view an unrestricted market as conducive
to a stable society. The ‘invisible hand’ might help to organise production, but there
were several key flaws with relying on a pure laissez-faire approach. Firstly, there
were interest groups within the market that might conflict, the most obvious of which
were producers and consumers. As already mentioned, universal welfare was more
important for Hegel than objective property laws (though he would not have seen the
two as entirely mutually exclusive) and in times of crisis or unforeseen economic
difficulty, it was accepted that the public authority would step in to ensure this
welfare was not restricted. For instance, in the event of a crop failure, the state could
declare the hoarding of grain illegal.

Secondly, Hegel saw problems inherent in the market system that was, even with its
flaws, necessary for the upholding of subjective freedom in civil society.
Mechanization, while giving one a greater conception of the universal
interconnectedness of individuals, also had detrimental effects. As one’s produce
became increasingly detached from one’s desires, one would become alienated from
one’s labour. Furthermore, as specialization and mechanization continued, an
increasing number of people would be doing increasingly more mundane and
simplistic tasks while machines gradually took the place of the work force. the
product would be a large segment of the population being alienated from their work
(a process that was especially painful after the empowerment and identity given to
one’s work by the corporations) and, more dangerously increasing concentration of
wealth in fewer and fewer hands alongside the increasing numbers of the ‘poor’. This
group, eventually forming ‘the rabble’ were, for Hegel, an unsolvable economic
product of the market economy – they could not objectify their wills through property
and would become detached from civil society and state and believe only in their
alleged right to a living without working. In other words, they were completely cut off
from the possibility of becoming truly free, or truly human.
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Why do these problems matter? In both cases, Hegel was following an economic
rationale to demonstrate that the problems generated by the market economy were
unsolvable by the economic paradigm in which he was operating. Marx’s answer was
to continue with such line of thought to come up with a new economic theory.
Hegel’s was to argue that civil society (ie: the particular the relations between
individuals within the context of a market economy) required regulation and
improvement by the state, revealing that economic thought, while necessary for his
system of ideas, was simply part of an intermediary stage of thought on the way to
the full realization of human freedom. State regulation of the economy has already
been mentioned, though it is worth adding that even the corporations, the
embodiment of the universal within civil society required supervision by the state to
ensure their representation of their particular industry did not become too forceful.
Hegel never fully solved the second problem (the creation of a ‘rabble’ incapable of
achieving freedom). If the state employed them, overproduction which already was
the cause of their poverty, would be exacerbated, if their welfare was provided for,
they would loose the dignity of self-reliance and the honour of work while private
charity would have the same effect.

However, Hegel did tackle the more general problem of civil society – however much
people enjoyed subjective freedom, they remained ‘egotistically universal’ and their
wills could not be rational without the state. The culmination of Hegel’s political
system is a moment where all people recognise their dependence on a rational state.
This dependence is not merely passive though – through their own self-reflection
they have come to understand the universality of reason, a universality that is
embodied in the state. Through this understanding. people’s wills become
harmonious under the umbrella of the state and their actions become both truly free
(as they are truly rational) and are consistent with the universal. This culmination
reveals the inadequacy of the type of freedom supported by civil society and the
market economy – the former represents universal altruism while the latter is merely
universal egoism which, as has been demonstrated, creates serious problems that
state regulation needs to resolve.

While Hegel viewed political economy as a useful tool to analyse society, it was not
the dominant tool he chose to employ in his political theory. Instead he applied
philosophy to history to generate a ‘stage’ theory very different from the Scottish
economic thinkers he admired. He too was concerned with the ‘internal’ reality of
society but viewed this reality as one based in ideas rather than material conditions.
Therefore political economy could never be as integral to Hegel as, say, his concept
of freedom which did govern his overall understanding of philosophy and history.
However, it was still a useful tool – it pointed to a universal understanding of property
that manifested itself through property exchange, it revealed labour as a foundation
for social identity and it could be used to discuss the freedom inherent in
consumerism. Even if the state was the culmination of Hegel’s system of ideas, the
market remained an important mechanism within civil society and, as such, was
revered by Hegel for giving individuals their due subjective freedom, a freedom that
older states have been unable to provide.

Bibliography
Elements of the Philosophy of Right, Hegel (CUP 2008)
Lecture on the Philosophy of World History in Political Writings, Hegel (CUP 1999)
pp197-224
A History of Modern Political Thought, Hampshire-Monk (Blackwell 1992) pp428-482
Hegel’s Theory of the Modern State, Shlomo Avineri (CUP 1972) pp221-238
Hegel, Frederick Beiser (Routledge 2005) pp261-281
Gabriel Lambert Hegel and Political Economy Page 5

Hegel: A Very Short Introduction, Peter Singer