For Stigler and for neoclassical economic theory, this productivity is the “immediate” cause, but the “mediate” cause is “a prior saving of consumption”, a prior “renunciation”.

Bohm-Bawerk:

Adam Smith's celebrated proposition therefore—"Parsimony and not industry is the immediate cause of the increase of capital"—is, strictly speaking, to be turned just the other way about. The immediate cause of the origin of capital is production; the mediate cause is a previous saving. (PTC, II.4, fn.30)

(Curiously, Stigler, in what is regardless a most lucid and intelligent review of utility theory, completely, wrongly and myopically denigrates and belittles the pivotal role of Bohm-Bawerk in giving philosophical consistency to neoclassical economic theory. This is not surprising given that Stigler simply lacked the philosophical training needed to assess these fundamental themes.)

Let us take a closer look at the reasoning of the Neoclassics, starting with Bohm-Bawerk.

The reason why economists failed in this simple task [of defining Capital] was that they did not allow the facts to speak for themselves. Instead of simply describing them as they were, explanations were read into them and added to them; one feature was pushed into the foreground, another kept in the background, a third was quite overlooked, while perhaps a fourth was entirely absent, but was read into them. When every man had thus imported his own particular views bodily into the facts, it was, of course, no wonder that everybody got something different out of them. (The Positive Theory of Capital. II.1.4)

“The facts speak for themselves”. Eugen Bohm-Bawerk, “the bourgeois Marx”, had already demolished the labor theory of value by uncovering its metaphysical premises. The “Value” of goods sold on the market – their “prices” – is the immediate “fact”, the empirical “phenomenon” that needs to be “described” and not “explained”. The task of economic science, as with the physical sciences, is not to “explain” phenomena but to link them together in a manner that makes them visible and “predictable” – so as “to let the facts, the phenomena, speak for themselves”, without the aid of an “explanation” that must be “superfluous” and redundant. The market price is not a “phenomenon” that can be “explained” with a “sub-stance”, an “es-sence”, a “hypo-stasis” – a “whatness” or “reality” that stands “behind” or “under” or “inside” the phenomenon. Such essentialism or substantivism as is proffered by the labour theory of value that seeks to go “behind and beyond” the empirical “facts” of market prices can be nothing more than pure meta-physics, sheer confabulation, pure fantasy. Esse est percipi: what you see is what you get. Economic science must be a theory that allows us to place the phenomena in a “regular and predictable” relation with one another so that they can be “described” mathematically.

And this is exactly what the new theory of marginal utility developed by Heinrich Gossen first, then by Stanley Jevons and by Karl Menger in Vienna – where Bohm-Bawerk taught, and so did Ernst Mach, the scientist behind this empiricist Berkeleyan “philosophy of science” – allows us to do. The “price” of a good cannot tell us anything about its “objective amount of value” or “utility” because the law of supply and demand tells us only what the actual, real, “visible”

valuation of goods is by market participants. Therefore, the price of a good can indicate only the relative and subjective “utility” of that good to its sellers and purchasers: a “utility” obviously not measurable in “quantities” but in terms of the subjective utility of the last marginal quantity offered in exchange for another good. The total utility of a good can be measured not cardinally but ordinally in “relative terms” calculated “at the margin” of exchange. Prices thus indicate the “marginal utility” of a good to its seller and purchaser relative to all other goods exchanged on the market.

Utility theory is therefore “meta-physical” in two important related respects: first, utility cannot be observed or measured intrinsically (just as space and time cannot because their “measures” have little to do with their “substance” – Menger) because it is an entirely “psychological” entity; and second, a fortiori, “marginal utility” involves a “counter-factual” (Sraffa) in that it relies on “utility gained or foregone” for each price change. Marginal utility – indicated by market prices – is not a “substance” that can provide a “social synthesis”, an inter esse – as did “labor” in the socialist “metaphysics”. Market prices represent only the “subjective valuations” of market participants. They unite only in their dividing human experience into incommunicable individual sensations that can be “connected”, “syn-thesised” socially, only in their “empirical” manifestations. Individuals co-ordinate choices only in their “self-interest”, only in their “atomicity”. Unlike the “totalitarian nightmare” of “collective socialist planning”, the market mechanism allows the “free competition” of self-interest – the “unplanned spontaneity” of “individual choice”.

The great merit of “economic science”, it is claimed by its chief ideologues, is to have shown that an “equilibrium” is possible, that it can “exist” at least mathematically without the Smithian “invisible hand”. But such “existence” is a pure abstract mathematical identity that has no substantive value or meaning whatsoever. Its value is purely “instrumental”. As we have established in our work on Nietzsche (what we have called “Nietzsche’s Invariance”), the “laws” of mathematics are pure formal identities (tautologies) that have no practical “content” and can have practical content only by losing their status as formal identities. Mach’s suggestion (in “The Economic Nature of Physics”, recently re-proposed by Patinkin) that their “content” is the saving of time runs up against Nietzsche’s (implicit) and Wittgenstein’s (explicit) objection that “saving time” is a substantive practical content entirely “logically” independent of the sole “truth” or value of mathematical identities – their being exclusively “formal logic” (what Arendt calls, wrongly, their “irresistibility” – in The Life of the Mind)! In other words, the abuse of mathematics to show the “rationality” of human choices in terms of adopting means to stated ends (something that Weber defended) is “abusive” because mathematical identities cannot by definition have any practical value in terms of “rationally” justifying any human course of action whatsoever. Mathematics is “empty” or meaningless when formal or “pure” and false as identity when “applied”: it is barren when pure and impure when fertile.

VALUE

There is no objective “quantity” such as “labor” to explain “prices” – no “substance” behind “value”. Value is quite simply the actual “phenomenon” indicated by market prices: no Freudian

“oceanic feeling” (in reply to Romain Rolland, Preface to Civilisation and Its Discontents), no Schopenhauerian “sympathy” (Mit-Leid) derided by Nietzsche – only the “physiological sign” of the subjective “marginal utility”, its “visible manifestation”, the body as the objectification of Will. Therefore, no “inter esse”: “labor” is the aimless “consumption” of the world by the Will – and the Will is “the thing in itself”. There is no “common being”, no “inter esse”, only strict phenomenalism, only “sensations” (Machian Empfindungen). To be is the same as to be perceived. Sichtbar machen: to render visible is the task of science, and to con-nect “facts” or “public sensations” in the simplest possible relation – mathematically – so that they can “speak for themselves”. In short, Simplex sigillum veri – simplicity is the seal of truth. Truth is “certainty”. That is the aim and scope of “science”.

It is not Labor that is the substance behind the Value that is distorted by market prices, as Classical Political Economy had it. Labor does not “create” pro-ducts or goods. Labor rather “consumes” what is already there, in Nature (!). (See for what follows the first chapters of Bohm-Bawerk’s Positive Theory of Capital.) Physical science tells us that nothing can be created; everything is conserved; everything is transformed. Labor simply “trans-forms” the natural resources available to it so as to be able to reproduce itself, to survive and provide (Bedarf) for its wants and needs. Labor has no “utility” therefore: it has only “dis-utility” in that it “needs” the existing “wealth” of Nature to preserve itself. The only way in which “labor” can “make possible” the pro-duction of Value, then, is by utilizing “labor-saving devices”. And that is the precise definition of Capital. It is Capital, not Labor, that allows human labor to be “productive”; it is “tools” that allow workers to produce more wealth and value: not in the positive substantive and objective sense that they would have if wealth and value were viewed as universal human endowments, but only in the negative subjective sense of providing for the wants of individuals by saving “labor” for them individually, reducing their subjective “pain” (Leid) of and “effort” of work, of the operari, its “strife” (Kampf) in a “world” in which “pleasure” (Lust) is only the “Provision [Bedarf] for Want”, the “satis-faction” of “unlimited wants”, their “partial extinction” – their ful-filment and com-pletion only in a negative sense of the appeasement of a want or desire, never in the positive sense of its full gratification, for that is impossible! Neither labour nor utility nor wants are intended as universal entities: they are all purely subjective but they are made “objective” through exchange in the market (this is a major definition in B-B[PTC]). That would be Nirvana, the extinction of all wants (Robbins). And it is only by “saving labor”, by “curbing the Will”, by “deferring consumption” that the “tools” of “productive capital” can be produced – precisely, by substituting present consumption with labor-saving tools.

Here then is the inversion of Max Weber’s proposition in the Ethik that saw the ascetic devotion to labor as the “specifically bourgeois economic ethic”. No! It is not “devotion to labor”, it is rather the “saving of labor devoted to consumption goods” that allows its diversion to the construction of “tools” or productive capital that will permit labor to be more productive! “Labour” is seen here as an abstract quantity, as labour-power that is made more or less productive by the “capital” or means of production that it uses. In the words of Bohm-Bawerk, Classical Political Economy has been stood on its head!

Adam Smith's celebrated proposition therefore—"Parsimony and not industry is the immediate cause of the increase of capital"—is, strictly speaking, to be turned just the other way about. The immediate cause of the origin of capital is production; the mediate cause is a previous saving. (PTC, II.4, fn.30)

It is “industry” and not “parsimony” that is “the immediate cause of the increase of capital”. But “industry” here does not mean “Labor”! It means the “renunciation of consumption goods in favour of labor-saving devices”, the “saving of labor” as the operari of the Will through the use of “productive capital”! “Labor” is not and cannot be the source of Value – because Value is “the saving of Labor as Want”! So here – finally! – we have what Max Weber was looking for but could not find with his definitions and approach in the Ethik: - “A specifically bourgeois economic ethic” in which “labour” and “capital” are antithetical and capital is mastery over – renunciation and sublimation of – labour as want, as poverty, as conatus! The Neoclassical Counter-revolution against the Socialist ideology of the industrial proletariat had finally arrived to found an “economic science”.

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

This is the conundrum of historical economic analysis that Joseph Schumpeter and JM Keynes set out to explain. Bohm-Bawerk himself allows of “Uncertainty” as a source of variations in “expectations” as to the marginal utility of “future goods”. But again this is something that can be “arbitraged” (agio) away by the market mechanism at any one time. As he rightly notes, neither “abstention” nor “Uncertainty” can determine marginal utilities or prices for the very simple reason that they are “negative” or “passive” emotions that cannot increase the “productivity” of “labor” through “labor-saving devices” or “means of production” or “capital”. “Abstention” in and of itself cannot be the source of Value. It has to be the “switched preference” between consumption and production goods – “abstinence” in this specific economic context involving “labor-saving devices” – that is economically relevant. It is not “frugality” or mere “industry” that leads to the “diversion of the existing powers of nature”, but the “diversion of time preferences” to labor-saving tools, the “substitution” – not the mere “abstinence” or “frugality” or “saving” – of consumption goods with labor-saving goods that leads to a different “distribution or exchange” of marginal utilities. Exchange is always “relative” but its “content” (marginal utility) can be of a “higher” or “lower” order for the individuals involved because of their “endowments” whose “stock” is raised by the preference for labor-saving devices. These are not strictly “time-saving devices”; they are “labor-saving” devices because the “object” is always to save “labor” to provide for given “wants”, which will rise in kind as more capital is employed in production through roundabout methods.

Wants expand to absorb the available output by labor: that is why economic “science” deals always with scarce resources. (Recall the description of economics as “the dismal science”.) Resources are inevitably “scarce” because human wants are insatiable and because wealth cannot be created but only conserved or transformed or consumed. Capital is therefore “stored-up labor” at a given time of exchange: not “labor” understood absolutely or positively as “utility”, but rather negatively as “dis-utility” at a given time, given that labor too is subject to time preference. Thus, Franklin’s “time is money” must be read as “money is saving of labor-time for provision of goods for immediate consumption [therefore not exchange values but only use

values] and diversion of it to production of labor-saving goods for the future production of goods [values-in-exchange] for consumption” (cf. Keynes, “money is a bridge between present and future”).

Weber’s Askesis – ascetic ideal – is not relevant to “the spirit of capitalism” because it understands “devotion to labor” as an ascetic end in itself! And it is also not relevant because it calls for “abstinence”, “parsimony” and “frugality” as a substitute for consumption! On the contrary, for the Neoclassics what occasions Value (does not “create” it, only “makes it possible through the diversion of the powers of nature”) is not “labor” as an end in itself, even for ascetic goals. Nor is it “frugality” as the “substitute for consumption”. This “moralistic” sense of “frugality” is absent in the Neoclassical “scientific and positivist” theories. Quite to the contrary, what occasions Value is the deferral of consumption and its diversion to, or substitution with, tools for production, that is, means of production as “labor-saving devices”! It is not “labor” that is the source of wealth or value, as Weber had it. Instead, it is the deferral of consumption that comes from the diversion of labour to the making of “labor-saving devices” or “capital” - or the sacrifice or deferral of goods for immediate consumption in favour of production goods that can then pro-duce those consumption goods with less labor and therefore be relatively more “valuable”! If labour were the true source of value, then more labour would produce more value; yet in reality labour produces more wealth as goods for immediate consumption that can “purchase” fresh labour through labor-saving tools. From which it follows that it is these tools or capital that produce greater wealth and potentially value-in-exchange”. Here time becomes the essential scientific element of Value. All capitalist economy is economy of time. Thus, “time is money” means “labor-time-saving devices” or capital – not “labor”! - is “money” or “generic social wealth” or “claim on social resources” – remembering that “labor” means “labor-power” or “productivity” in terms of “output per unit of time” - that is, not a “quantity” but a “rate”. The saving of labour time permitted by capital allows its owner to control more “labour as want”. The capitalist “can wait” (B-B).

[Marx was entirely right, reprising Hegel, in the Paris Manuscripts to highlight this antithesis between “labor-as-poverty” or “need” already evident (long before it became “dis-utility” for the Neoclassics) in Classical Political Economy, and “money-as-wealth” in the inverted world of commodity production (or “fetishism”). Hannah Arendt, again in On Revolution (ch.2, “The Social Question”, p.63), makes the fundamental mistake of misrepresenting Marx (!) as the avenging “people’s tribune” of this distorted notion of “labor-as-poverty” turning into the “blind rage” of revolution – forgivable perhaps if one considers the crude statements in the Communist Manifesto, but entirely philistine and vulgar when the rest of Marx’s work is canvassed. Her “poverty of philosophy” is to mistake Marx for Proudhon, the utopian author of Philosophie de la Misere. That poverty and freedom are two different concepts is blatantly evident. But that Marx ever made the mistake of confusing deliverance from poverty with freedom when in fact he was stating merely that “freedom” offers very little solace to those who are poor, is an accusation unworthy of Arendt’s otherwise admirable intellect. Again, we will look at this important “question” when we discuss Weber’s political sociology in Part Three.]

Only once we have comprehended this “reversal” (Um-kehrung) of the “specifically bourgeois economic ethic” that is operated by Neoclassical Theory is it possible for us to solve Weber’s “riddle” – his inability, even in the final paragraphs of the Vorbemerkung, to account for “the

spirit of capitalism” as “the devotion to labour [as a] calling which is, as we have seen, so irrational from the standpoint of purely eudaemonistic self-interest” (p.78). Indeed it is! – If we interpret “the spirit of capitalism” as Weber does – as “the devotion to labor” as an ascetic end in itself!

Rationalism is a historical concept which covers a whole world of different things. It will be our task to find out whose intellectualchild the particular concrete form of rational thought was, from which the idea of a calling and the devotion to labour in thecalling has grown, which is, as we have seen, so irrational from the standpoint of purely eudaemonistic self-interest, but which has been and still is one of the most characteristic elements of our capitalisticculture. We are here particularly interested in the origin of precisely the irrational element which lies in this, as in every conception of a calling. (Vorbermerkung, pp.75-8).

In the negatives Denken, “wealth” stands against and is the ob-jective of (Gegen-stand – standing op-posite) labour, not its pro-duct (bringing forth), just as in Schopenhauer the Body and the World are the “objectification of the Will”, its “variance” or “resistance” or “polarity” or source of “strife”. Wealth in its form as “labor-saving tools” or “capital” employs labour; labour consumes capital to earn its keep (wages or Lebens-mitteln, provisions), to produce in the sense of trans-forming wealth. But here the active part is capital, which is “stored consumption” or “prior saving”, whereas labour is the “passive” (passio, suffering) part, the part that “consumes capital” and in consuming affirms “the world”. Far from being an ascetic means of renouncing the world, then, as it was for the Protestant Work Ethic, labour is instead the most “worldly affirmation of the world” for the negatives Denken. Capital is “consumed” by labour after it has been “saved” by the capitalist: it is “delayed consumption” – hence the “time preference” theorized by Bohm-Bawerk as the source of “interest” or “profit”. Piercing the veil of Maya, seeing through the illusion of “striving” and “labouring”, the mortification of the body, the abnegation of the Will is the “renunciation” of consumption and the preservation of capital-as-wealth.

As we noted above, these features are lacking in Weber. Above all, the “mundanity” of wealth, its evanescence, is left unexplained and is yet another “inconsistency” in the “Protestant ethic” as a rationale for accumulation as an end in itself in the “spirit of capitalism”. Why “labor” at all, when the pro-duct of “labor”, this presumed “mortification of the body”, is in fact “wealth”? By contrast, this “evanescence” of wealth and its pursuit is the very centerpiece of Schopenhauer’s “system”, - “die Unwirklichkeit der Erscheinungswelt”, the unreality of the evanescent world and of the “Will to Life” (Simmel, Schopenhauer und Nietzsche, pp.29-30). In that case, Schopenhauer’s original version of Nirvana as “renunciation” (Entsagung) of the World and of the Will would be a far more “rational” goal for Weber’s innerweltliche Askese. But “the spirit of capitalism” becomes far more “rational” if we interpret it as Lionel Robbins does after the Neoclassical Revolution – that is, from the viewpoint of a truly “specifically bourgeois economic ethic”: according to Robbins in his Essay, contrary to Schopenhauer, “Nirvana is the satisfaction of all wants”! This is the “rational” conclusion if one sees “capitalism” as “the accumulation of Value and capital intended as labor-saving tools”! Devastatingly put, “the spirit of capitalism” then becomes “will to power” over living labor projected into the future!

The Will and its instrumental reason (Verstand), as understood by Schopenhauer, “work” reality/actuality, they “labour” the World, the subject/object of representations, to satisfy a “motivation” that is a “need”. This is the operari, the “consumption” of the World on the part of the Will. Because the Will is the obverse, the psychological analogue, of Kant’s thing in itself.

The ultimate foundation of social life is “the system of needs and wants”. The ultimate aim and purpose of society is to satisfy these needs and wants that are ineluctably “individual”. Not only is “the individual” and its “self-interest” the foundation of human society, not only is the satisfaction of “needs and wants” – their “provision” (Bedarf) – the essential aim of social life. But also the efficient satisfaction of these needs and wants depends on the “rational and systematic organization of free labor”. And this “free labor” is understood as “operari”, as mere, sheer “labor power” or “force” – a homogeneous and measurable “quantity” that does not itself “create” anything, pro-duce any goods, but rather “consumes” and “utilizes” the external world so as to satisfy and “provide” for its “wants” – wants that are deemed to be as “insatiable” as the Schopenhauerian Will.

In this operari there is no telos, no “qualitas occulta” (hidden quality or “ultimate cause”, Sch., WWR, p.106), no “causa finalis” in the endless chain of causation (samsara, the cycle of life) that is the veil of Maya (illusion). “The Will” is the “objectification of the Ding an sich”: but “Work” is the “motioning” of the Body, which is “the objectification of the Will”: it is meaningless motion (the Wirklichkeit of Vorstellungen), effort and toil – “dis-utility” or “pain” (cf. Hagenberg on Gossen!). Work is “consumption” of the World, and in this “consuming” it does not have “utility”. “Utility” is to be found “in the things” as they relate to “the Will as operari”, in the pro-duct of work, but work itself is only operari, consumption of the “means of work”, of the “means of production”. (This logical sequence may well be why Gossen’s early Fundamental Law that still privileged “labour” was untenable for Jevons and his epigones)

Although it pro-duces wealth mechanically, the worker or labourer uses the means of production as well as his own body. But whereas the means of production have “utility” to the extent that they help pro-duce new objects of “utility”, work itself is an “effort” to the labourer and is therefore a dis-utility. Thus, work is neither the “measure” nor the substance of wealth, but rather an expense, a consumption, an erogation of “Leid/Kraft” (pain/effort). The source of wealth must then be “negative”: wealth is not pro-duced but conserved, though it can be accumulated; wealth is consumption a-voided or post-poned/delayed: wealth is “saving”, it is “ab-negation”, ab-stinence, the refraining from or delaying of consumption. In this negative perspective, wealth is indeed not “infinite” but rather “indefinite” – just like Einstein’s universe – in the sense that, just like energy in nature, wealth cannot be “created” though it can be “conserved”, yet at the same time, because wealth is not an absolute quantity but rather a relative utility, wealth can be accumulated.

It is impossible to understand Bohm-Bawerk and the Austrian School, starting with Menger, without understanding Schopenhauer. But even in Smith we have the beginnings of this “empiricist and positivist” philosophy that can be traced back to Hobbes. In Hobbes’s “mechanicism”, the living activity of human beings is already described as a “Power” that can be used and appropriated mechanically. Wealth is not “pro-duced” by labour, because wealth too is a “Power” that can subjugate and appropriate the labour of others by means of “possessions” that are another form of “Power”. Wealth or possessions (from Latin potestas, power over things) allow their possessors to exercise “power” or influence over those who do not possess them. Thus, labour is the “price” (the “dis-utility”!) that must be paid for the “utility” of consumption, which is the “wealth” represented by the “Lebensmitteln”/Viktualien (food) and the means of pro-duction: these are what “give life”, “the means of life” (Lebensmitteln). It is the employer, the owner of wealth/capital who “employs”, who “gives work” (he is the Arbeit-geber or employ-er of) the worker; and it is the worker who “takes work” (Arbeit-nehmer, employ-ee) from the employer. It is not the worker who “gives labour” in the sense of “wealth-creating force” to the employer.

Furthermore, “utility” represents analogously the “principium individuationis” of Schop.’s “will” and its shapeless, protean subjectivity, its “fungibility” or “malleability”, hence its “exchangeable” (Simmel, “wechselseitig”) character because of its “manifestation” or “objectification” in any object or reality or “representation” (Vorstellung). Not to mention, of course, the “insatiable” nature of the Will, again analogous to that of accumulation. The attempt to avoid this “bottomlessness” is what moved Hayek to distinguish the notion of “individual” from that of “in-dividuum” (in ‘CRS’). Hence, the notion of “utility” already constitutes the “in-dividual” in its unbridgeable, impenetrable “subjectivity”, whereas “labour” contains immediately the concept of “inter-action”, of “social labour”. Consequently, economic science must start with the concept of “utility” if it wants to present social life as market exchange between atomized “in-dividuals”. Any economic theory that begins with “labour” will eventually encounter the problem that there is no such thing as “individual labour” and that indeed all labour is necessarily social labour.

Thus, “prices” do not require a search into “utilities”. Indeed, the very “subjectiveness” of “utility” is consistent with the usurpation of “the world” by “the Subject” for whom alone “the Object” is now posed (not “exists”, for this question is “inconceivable” given the relation/unity of the Object with the Subject in the Vorstellung, representation). The “relationship” between Subject and Object is now entirely “internalized”, “introspected” away into “mere mechanically ordered phenomena” because this is the status of ‘Vorstellungen’. “Reality” is now indistinguishable from “dream”; it is replaced by sheer “action or movement or displacement”, by “Wirklichkeit” where the nexus with “work/conatus” is evident.

Ultimately, “exchange value” or “value” must be re-translated into “command over living labour”, into a specific “employment” of living labour. But the brutally crude fact is that “command over living labour” (value) is dependent on the “political control” of use values (including “material resources”!); and this opens the way to a total re-formulation of the “nature and causes” of value in terms of “the market”, that is, in terms of the ability of “goods” to satisfy individual incommensurable “wants”. The proto-neoclassics (from Roscher and Knies to Dupuit to Gossen) therefore “invert” the Classical and Marxist analytical perspective: they easily take the existing

relations of property for granted and proceed to calculate empirically the role of the market in “satisfying wants” given the existing structure of property (“endowments”).

Given this existing structure of property, of “endowments”, it follows that “labour power” is a “dis-utility” in that the worker needs “to consume the means of pro-duction”, including its body, in order to pro-duce “goods” that allow its reproduction. The “utility” of these goods lies in the satisfaction of the worker’s “wants”, one of which is survival. The meaning of “wealth” then is “stored resources”, delayed consumption: wealth is no longer “embodied labour power” because this would mean that only “labour power” can pro-duce “wealth”. Rather, “wealth” is “renunciation” of “the immediate satisfaction of wants”; wealth is sacrifice or Vernichtung, annihilation/suppression of the “Wille zur Leben” – something that is not done “in contemplation” but in the “active, effective renunciation” of the will to life. Nirvana is not a terminus ad quem, a summit, an apex to be reached “at the end” of an active process. As Schopenhauer explained, such an active search for pleasure will never lead to its satisfaction because the Will to Life is simply insatiable. On the contrary, Nirvana is “the active satisfaction or extinction of ‘wants’ through their renunciation”. And this renunciation (Entsagung) is a “saving”, a delaying of consumption that leads to the “accumulation of wealth”, of “resources”, in the shape of “future goods” produced through the exertion of the Arbeit, of “labour” by workers whose “wants” are in need of immediate provision! Not renunciation of this or that want, then: as Robbins insightfully put it, “Nirvana is the satisfaction of all wants” – that is to say, the total extinction of want, which is itself a task as endless as the pursuit of pleasure (Lust) by the Will is insatiable.

[Explain difference between “wealth” or use value and “value” or exchange value. This distinction does not exist for neoclassical theory because the two are identified.]Thus, whereas in Classical Political Economy the creation of Value is limited by the amount of labour or labour-power available, in neoclassical theory there is no such upper limit because Value is defined negatively in terms of “relative prices” that fix the distribution of existing “scarce resources” – that is, resources rendered “scarce” by the insatiable search of the Will for pleasure! In Classical Political Economy, the demand side (utility) can only determine the allocation of existing labour-power to the production of different use values and their relative market prices (exchange values). In neoclassical theory, instead, the creation of value, its accumulation, is indefinite and depends on the ability of the possessors of “endowments” to defer their consumption, to delay their gratification. “Labour” is not an “endowment” – it is simply the means to satisfy “need” or “want”; labour is “pain” or “effort” that needs to be exerted for the gratification of needs and wants. Roscher and Knies still attribute “exchange value” in terms of “the ability to satisfy wants” to “goods”, “the object”, to the “thing-in-itself”. (This is part of the “emanationism” [Parsons’s translation] that Weber criticized as a Hegelian residuum in Roscher-Knies.) Therefore, it still makes sense to ask “how the goods are pro-duced”, and to regress to “labour-power” or Arbeitskraft. Gossen’s initial Fundamental Theorem starts from this “Ptolemaic” perspective because it measures the utility of goods against the marginal utility of the labour-power applied to their production. Later, however, he will invert this perspective to sever once and for all the link between “goods” as a “pro-duct” and “goods” as “endowments” that are judged/valued according to their “ability to satisfy individual wants”, and therefore in terms of these “subjective” individual wants which are “inscrutable” except through the “willingness of people to pay money for them” (Dupuit and JB Clark, as well as Gossen). Now “labour” is no longer the “nature and origin” of wealth but simply another “negative good” to be “exchanged for

goods with the ability to satisfy the worker’s wants”. Labour becomes, not the “source of value”, but rather “the consumption of value, of the world”, of “resources” (“wage funds”), and therefore “immediate consumption”, non-Entsagung, enslavement to the world (mundanity), not deliverance from the world!

Similarly, “utility” exists only in the relationship of individuals to “things” and can only be defined “materially or objectively” in relative prices. The resultant “relativism” is unlike that of Einstein’s theory, but rather more like Schopenhauer’s “Principle of Sufficient Reason” according to which causation is an endless chain given to perception immediately, without necessity or contingency. (Cf. Cacciari, Krisis, p.24: “Al di fuori di questa analisi [neoclassica di Bohm-Bawerk] non poteva darsi nulla: nessuna ‘misura teorica’ o ‘legge del valore’. I rapporti di valore erano immanenti e relativi alla struttura del ciclo”. See also Simmel regarding the “Funktionen, d.h. in Relativitaten auf und verdanken sich wechselseitig alle ihre Bestimmtheiten,” p27 in ‘Schop. u. Nietzsche’. For distinction with Kant’s “absolutism”, see p24.)

The very subjectivity and ineffability of the notion of “utility” – the utilities of individuals can neither be compared nor measured, they are heterogeneous - gives much greater scope and weight to “the market mechanism” as a tool of social and not strictly “economic” regulation. It is the “self-regulation” of the market, its ability to reflect the “individual choices” of members of civil society that determines not just its Economic rationality – the maximization of individual utility and of social welfare in aggregate (hence, economics becomes the “science of choice”) but also its Political desirability, its osmotic function as “co-ordination” of the “free choices” of individuals. But here the oxymoron becomes evident: if indeed economics is a “science”, then clearly it cannot allow its opposite, choice! Here the determinism of economics as a “science” made mechanical by the conflict of individual self-interests clashes with the ostensible “choice” of individual market participants. If individual choice must be regulated by all other individual choices, it is evident that one can no longer speak legitimately of “individual choice”! Here Walrasian general equilibrium becomes entirely totalitarian. Rational choice is an oxymoron because the “rationality” of an individual’s choice is determined by knowledge of the choices of all other individuals. Yet once the choices of other individuals are known, the last remaining individual has no choice at all – because his “choice” will be determined by all other choices! (Cf. Hayek on one side and Walras on the other. - Also Loasby in his major work. It is obvious that the “subjectivist” notion of utility ultimately clashes with the “determinist” straitjacket of “general equilibrium”, especially at a “microeconomic” level – cf. Roscher’s reservations against the “idealist method” in favour of the “historical” one, in Principles of PolEcon. This leads Loasby to distinguish between “open” and “closed” systems.)

This may be the place to emphasize that “utility” is a singularly “subjective” metaphysical (the euphemism used is “psychological”) notion that can have no meaning outside of its “empirical” manifestations – relative prices.

But Smith’s notion of “wealth” is entirely different from “utility” when he privileges “the labour theory of value”, which is not dependent on the notion of “equilibrium” except in the Marxian sense of “simple reproduction”. The reference to “nations” gives Smith’s notion of “wealth” a far more “sociological” and “objective” flavour than “utility”.

This is a feature shared by the Old and Young German Historical Schools, whose notion of a Volksgeist was the real source of the “Methodenstreit”. (Roscher, for instance, in dismissing Gossen, notes the impossibility of measuring individual “utilities” for the economy as a whole [pp103-4] – revealing again his “objective” understanding of the notion – and dismisses also “the idealist method”, its “algebraic formulae” and “caeteris paribus” calculations which display a harmful scientistic reductionism against the spontaneity of “peoples” [see up to p110].) Note Hagendorf on Gossen: ‘Bourgeois economists since Jevons always speak of marginal productivity of labour instead, as “labour value” is considered a “dangerous” concept.’

But note also the following in Papadopoulos, ‘Karl Knies’:In the quest to find Karl Knies’s contribution to the emergence of marginal utility theory, one can find a reliable source in the writings of Carl Menger himself, the founder of the Austrian branch of neoclassical economics. In Appendix C of his first and most famous publication, Principles of Economics13, Menger makes direct reference to Knies’s aforementioned “richly suggestive essay” on value, criticizing, nonetheless, several parts of his theory, which he evaluates as leading to “doubtful conclusions.” First, he alludes to Knies’s definition of value as “the degree of suitability of a good for serving human ends,” to which he objects because he says that it confuses the nature of value with the measurement of value: “the measurement of value belongs as little to the nature of value as the measure of space or time to the nature of space or time” (Menger 1950, p.293). Thus, Menger understands Knies to attribute inherent value to goods, which obviously cannot correspond to the psychology of the newly born (Austrian) neoclassical methodology14. (pp14-5)

For Weber as for Schopenhauer and Nietzsche, there cannot be any “separation” (Trennung) in the Marxian sense between “labor” and the “means of production” because there was never any union between them! The human operari is entirely “instrumental” to its goal – the provision of want. There is and there can be no Gattungswesen, no species-conscious being, no “original union” of workers with tools because, if anything and quite to the contrary, the nature of human wants and the “scarcity” of their provision ensure that there is “conflict” between and among workers, let alone between workers and capitalists! Human beings are irreducibly and ontologically “things-in-themselves”; they are “Wills” or, as Nietzsche describes them, “instincts of freedom” that can “co-operate” or “col-laborate” to the extent that their “needs”, their “iron necessities” and their “wants” are provided for and satisfied.

But this instrumental “operari”, this “labor” itself does not have “utility”. Only consumption goods and production goods (called “intermediate goods”, that is, coming between “labour” and consumption goods) have utility: utility alone ultimately provides the “measure” or “value” or “price” of “the means of production” (or “intermediate goods”) and of consumption goods not in an “objective or substantive sense”, but merely from the

“viewpoint” (Gesichtspunkt), from the “per-spective” of the “individual choice”. Utility is an entirely subjective and inscrutable entity that can be “measured” as “Value”, not in absolute terms but only relative to the utilities of other individuals with respect to final consumption, that is, consumption of the consumption goods. Only thus can utility be given “social significance” or a “social Form”; only thus can it be “reified” – only through the “social osmosis” of the market pricing mechanism where individual Wills “clash” or “com-pete” for the same “scarce” consumer goods. And this Value can be calculated not just in an instantaneous or timeless analytical dimension as in Walrasian general equilibrium, but even in a temporal one, even as a “projection” toward “the future”, in terms of “time preference”, as in Bohm-Bawerk’s theory of “roundaboutness” designed to explain the existence of “interest” or “profit” (cf. his The Positive Theory of Capital).

In this novel Machian psychological perspective, “labor” can have no “utility” because it has no intrinsic “value” of its own, if separated from the means of production, from “inter-mediate” goods. Instead, “labor” is “effort”, it is the “objectification of the Will”, it is the “operari”, it is “Pain” (Leid) without “Pleasure” (Lust): “labor” is “dis-utility”! And the “marginal utility” of the consumption goods produced “to provide for the worker’s wants” – the wage - must be equivalent to the “marginal dis-utility of labor” if the production of consumption goods is to be optimal! Neoclassical economic theory from Gossen onwards begins with the notion that human living activity is “toil”, it is “effort”, it is “want” (Bedarf) and “pain” (Leid) in search of “provision” (Deckung). It follows from this perspective that human living activity is conceptually “separated” from its “object”, from its environment which supplies it with “the means of production”. And consequently human living labour is seen from the outset as pure and utter “destitution”, as “poverty”, as “want”. Accordingly, all means of production cannot serve as means for the expression or objectification of human living labour but rather as “labour-saving devices”, as devices or “inter-mediate goods”, that in Bohm-Bawerk’s exegesis “lengthen” the process of production, but not necessarily the actual “time” taken to produce goods, by inter-vening between the worker and the final product.

For the Neoclassics, then, “labour” and workers are by definition the factor of production that is in “want” or “need”, that suffers “toil” and “pain” and “dis-utility” – and that “needs” capital (the means of production or inter-mediate goods as “labour-saving tools”) in order to satisfy its “wants” that are made “immediate”, “urgent” – in contrast with the capitalist owner who can “defer” consumption – by the very fact that labour does not now have “provisions” for its subsistence and reproduction and survival!

What this means is that human living labour itself is already considered, for one, as a “tool”, as an instrument whose “productivity” can be measured in terms of “units of output per unit of time”. And for another, it is seen as an activity or a “labour power” that is purely abstract, mere “potentiality”, utter “possibility”, sheer “pro-ject”   not bound to a particular, specific mode of expression or activity. In practice, it is the latter “view” of living labor that serves as the premise that leads inexorably to the former conclusion! Max Weber's entire understanding of "free labour" is the sociological equivalent of this decadence and nihilism – not, pace Lukacs, a “destruction of Reason”, because “Reason” itself is the “summum bonum” that culminates in nihilism - of European thought. In this perspective, this “abstract labour” is sheer, naked, destitute poverty, barren misery – “potential” that can only become “actual” if, and only to the extent and manner that, it is allowed by “the laws of supply and demand” to come into contact as a tool with “the means of production” that are the “endowments” and “possessions” of the capitalist.

After Schopenhauer and Nietzsche, through to Machism and the neoclassics, the individual becomes a Unicum, echoed in Stirner’s The Ego and Its Own: - a bottomless pit or black hole of “utility/will” in which “truth” is only an instrument and no “common-ality” or “inter-esse” be-tween in-dividuals is epistemologically possible. What is “scientific” is not a “truth” that is an inter-est shared by human beings: rather, it is the mere agreement of perceptions or sensations – an agreement that does not reach beyond the mere coherence of these sensations. That is why Wittgenstein could observe that Mach’s thought experiments were not experiments at all, but rather grammatical investigations, that is, attempts to find agreement in the linguistic descriptions of perceived sensations.

As Cacciari puts it,

“I neoclassici definiscono un sistema generale d’equilibrio [di mercato]… che parte dalla individualita’ economica concreta e ne segue lo sviluppo fino alla costituzione di un sistema che non e’ se non l’incontro, empirico, impotente a operare qualsiasi metamorfosi, tra gli interessi specifici di ogni individualita’” (Cacciari, p.29)

These are interests that will remain inscrutable and insubstantial except as “empirically observable” relative prices. How to reconcile or “co-ordinate” these interests through “relative” market prices will become the principal problem of economics either “providentially” (Smith’s “invisible hand”) or abstractly (Walrasian General Equilibrium) or “a priori” (Misesian praxeology and its neo-Kantian concept of homo agens, game theory, rational expectations) or technically-empirically in relation to a General Equilibrium framework (Hayek’s and Robbins’s “science of choice” with its homo quaerens) or through “evolutionary institutional factors” (immanent, in Hayek and the New Institutional Economics, or transcendental, in Schumpeter’s “innovation”).

In this regard, the neoclassical notion of “the market” has an uncannily “democratic” structure in that it excludes theoretically “accumulation for its own sake” and “concentration” as its

“monopolistic” aberration (contra Weber’s protestant work ethic where individual accumulation and anti-competitive behaviour are seemingly unrestrained, even “ethically” – see below) by allowing the “social synthesis/osmosis” or the “reconciliation” of “subjective interests or utilities” through the self-regulating price mechanism.

The “equal exchange” that the market pricing mechanism serves to establish allows a co-ordination of individual activities in the sphere of material reproduction of society that can preserve the private ethical beliefs and customs of “individuals” whose “material self-interest” can be given “rational-scientific” free rein in the market whilst the Political sphere is kept well out of the ambit of individual beliefs. The market therefore achieves a double “equilibrium”: - by ensuring “equal exchange” and optimal satisfaction of individual “utility” in the material sphere, it preserves individual “freedom of expression” in the cultural sphere. It is the “scientific” rationality of the market, its ability “to maximize” the “wealth/utility” of the nation that permits the neutrality of the Political with regard to other spheres of social life. The bourgeois can co-exist with the citizen in light of this “rationality” of what can then be called appropriately “Political Economy” – an oxymoron for Antiquity, as Arendt reminds us (in The Human Condition) in that the “Political” is reduced to privatistic Volkswirtschaft and the latter is erected to the only appropriate real sphere of “individual choice”! Similarly, Weber’s “Protestant ethic” is marginalized in the wider, now irretrievably “secular”, neoclassical market equilibrium (see discussion below).

Contrast with Smith and Classical Political Economy

Compare Smith: - “without disposition to truck, barter, and exchange, every man must have procured to himself every necessary and convenience of life which he wanted”, ibid., p. 29” (discussed in M. Rothbard, The Present State of Austrian Economics, p.26, fn.46)

It seems explicable therefore why Smith saw “wealth” as arising from “exchange”. He had to start with “exchange” because this made it easier to disguise the division of social labour into separate, atomised individual labours. It is easier “to assume” exchange between “in-dividuals” first (that is, individual labours), and then to proceed to the “specialization” or “parcelisation” of social labour as a means to greater productivity and thence “utility”. Had Smith started with “specialization” (as Rothbard demands), he would have had to concede (as with Hobbes and Rousseau) that originally the division of labour is really the division of social labour. And then he would have had to explain how this “social labour” became an aggregate of “individual labours” without the collapse of the human community that was so reliant on “social labour” originally! Had Smith assumed the original primordial existence of “social labour”, he could never have come up with an explanation of “individual labours” through “exchange”! Rather, he would have had to interpose between social labour and individual labour the Trennung (the forced “separation” of social labour) that is brought about by the “invention” of private property! Even Rousseau and Proudhon, who famously labeled private property as “theft”, started with “individual labours” and thus condemned their critique of capitalism to the realm of “good intentions” or, as Marx labeled it, “primitive communism”. Instead, by starting with and assuming the “natural” existence of private property (that is, private ownership of the means of production and “alienability” of the worker’s living labour in exchange for dead labour), Smith could easily demonstrate how “exchange”

facilitated “specialization” and therefore the further division of (presupposed/assumed) individual labours.

Labour pro-duces the “value” that is in part “use value” but in part “exchange value” depending on the “exchangeability” of its “pro-duct” in the market – because some pro-duced use values find no real demand “in the market”, “in exchange”. The market determines through competition what is “socially necessary labour time” and what is not. But the real “nature and origin” of the “value” of commodities, what allows them finally to constitute “wealth”, is related politically to the “labour force or power” (Arbeitskraft, Roscher again) that it can command for fresh pro-duction, not their ability to satisfy individual “wants” or “utility”, so that the “value” pro-duced is actually independent of “subjective needs and wants” or “utility” in that it constitutes itself as “social wealth”, as a political power independent of the “subjective demand” of individuals, of “consumers”. The fact that the social synthesis or osmosis is operated through “the division of labour” made up of “individual labours” that are in turn mediated by the market mechanism of “exchange” – this fact means that “labour” is the “substance”, the “matter” that is the foundation, the “nature” of wealth, its fons et origo. That this “wealth” then goes to serve the “utility” sought by “self-interested individuals” is a secondary factor that leads to the determination of “individual market prices”. But these market prices in aggregate denote the “amount of labour” that goes materially into the pro-duction (bringing forth, for Roscher) of the “goods” that, in turn but only at last (!), “satisfy wants”.

By reifying “value” into a quantity, Smith can easily switch from the sphere of production to the sphere of exchange so that “value” becomes, not an independent political category of command over living labour, but rather a “market price” entirely dependent on the “exchange” of “subjective utilities”. The difference here is vital: the Marxian theory of value allows for the expanded reproduction of capitalist society, whereas both the labour theory of value and neoclassical theory must eschew any notion of “value” outside of “market prices” set by “market competition” in a state of equilibrium, of equivalent exchange! Therefore, as Schumpeter showed conclusively, the entire notion of “economic growth or development or evolution [Entwicklung]” is entirely missing from exchange-based equilibrium theories of capitalism both Classical and neoclassical.

Smith never poses himself this question of the “incommensurability” of “utility” for the simple reason that the brand of empiricism and utilitarianism that pervades British philosophy from Hobbes to JS Mill and Bentham has a “Newtonian” scientific paradigm as its framework in which “utilities” are commensurable! Hobbes’s Newtonian, mechanistic notion of “Power” says it all. The “analogy” between the “labour-power” of the “labour force” in the production of exchange value, and the “force” and “power” that was so visible in the rapidly “mechanized” industrial world in Newton’s time must have provided a “powerful” theoretical incentive for Smith to place “labour” as the “prime mover” of “value”. Exchange value and prices are only “relative” notions: they are the “value-in-exchange” of commodities: they lack therefore the “absolute” magnitude of Newton’s universal concepts on which natural science was founded. Even for the “empiricist” Smith, prices were clearly too “variable” to explain “value”: demand and supply are forces analogous to “action and reaction”, but these can only “equilibrate” or “cancel out” one another:

but they fail “to determine” the “quantum” of value “contained” or “embodied” in a commodity. And yet his absorption in the Sphere of Exchange meant that Smith was inveigled into a “reified” definition of “labour” as “the cost of reproduction of the labour force”, which failed to distinguish between “labour power” as a commodity for exchange on the market and “living labour” as the source of “value” which itself is not a “quantity”.

[Even in Smith, the physical body already constitutes a separate “will”, a Hobbesian “Power” opposed like an ob-ject, a “standing against”, an “op-position”, to all other “powers” and in conflict with them. It is this “civil war” that forces all individual powers “to exchange” for their survival (the equivalent of the Hobbesian social contract: alienation of one’s product to the market). (Recall that Schopenhauer’s account of the State is very similar to Hobbes’s, it is salus publica, mere Police.) But exchange presupposes private property which presupposes an “indivisible” subject (Kant, ‘Conclusion’ to KPV). Loasby adds that exchange is “a matter of life and death” – just as the exit from the state of nature into the status civilis was in Hobbes. So exchange is necessary because of the division of labour. But it is exchange that was supposed initially to make possible the division of labour! Thus it is clear that not the division of labour but the “separation” of social labour into individual labours makes exchange “a matter of life and death”. Obviously, this cannot result in “co-ordination” because there is no “alienation” of endowments to a “sovereign”, as there is in Hobbes for individual freedom. And therein resides a great difficulty with Smith’s own use of the two notions of wealth and utility, and his oscillation between labour value and market prices, - which was not resolved as a “specifically bourgeois economic ethics” (to paraphrase Weber) until the “psychological” neoclassical theory of marginal utility was developed to replace Smith’s “absolutist/rationalist” or “objective” notion of “value” and “wealth”.]

[Matters of interest: Hobbes finds the volitional source of the contractual or conventional basis of the status civilis in the “ultima ratio” of the self-preservation of self-interested individuals: the fear of death leads to the “agreement” to alienate individual independence – which never existed in the status naturae. The state of nature is a state of civil war by definition – so it is only a hypothetical state that justifies or “rationalizes” the civil state. Loasby offers the same “self-preservation” arising from the division of labour as a founding principle for “co-ordination”. But the two notions are very different. Exchange is a dira necessitas only if one presupposes “individual labours”, instead of “social labour”, which is historically and anthropologically the reality. In that case there is no “exchange” in the sense intended by Smith. So we are still in need for a “reason” for co-ordination. Moreover, even if one allows the dira necessitas of exchange, it still does not lead to co-ordination because there is no “alienation” of individual freedom to a “sovereign” central market authority. This point becomes overwhelmingly evident in Schop.’s own theory of the state with its Hobbesian-Kierkegaardian Pessimismus.]

It was the leading feature of Classical Political Economy that it gave “wealth” (as “value”) a spatial or quantitative definition, in absolute, even monetary, terms like “purchasing power”. This “positive” or “substantial” vision of wealth is to be contrasted with its “dreamlike negative” character in Schopenhauer (see Simmel, pp29-30), the “empiricist” aspect of which Smith finally apotheosises in the “invisible hand” that sanctions “providentially” the “co-ordination” of

“phenomenal” market prices at “equilibrium”. Schopenhauer and, through him, Mach preserve the “validity” of Newton’s mechanics but from a radically different epistemological perspective that removes the “dualism” of mind and matter “co-ordinated” by a universal “truth” (however hard to detect, as in Hume), and resolves it in the “phenomenology” of Will – an extreme “subjectivism” that, unlike British utilitarianism, does not preserve any simulacra of “egoism” and “utility” as “commensurable/sympathetic” entities (pace Schopenhauer’s “sympathy”), as an inter-esse of sorts, an “enlightened self-interest” like Smith’s that lies “accanto all’affermazione del sistema newtoniano” (Cacciari, Krisis, p.31, see pp.29ff).

The contrast with Schopenhauer in this regard is extremely significant – and it is this that will set neoclassical theory so far apart from Classical Political Economy. The all-important point is that “the social synthesis” now can no longer be found in the “measurement” of “labour” as the “nature and cause of wealth”, of “exchange value”, for the simple reason that from the perspective of the negatives Denken neither “labour powers” nor “utility” are “commensurable”, politically or quantitatively, as they were for Classical Political Economy, including its major critic, Marx! What is “commensurable” is “the fact of the exchange of goods to satisfy wants”. Here there is truly a “Copernican revolution” in process (Gossen). What all the “proto-neoclassics” (Roscher and Knies above all) reproach Ricardo and Marx for is their “fundamentalist” rejection of “use value” as an independent source of “exchange value” on the grounds that “natural or ‘external’ resources” (Roscher) do not seem to have any “exchange value” in that they are “freely available”. But Roscher and Knies “understand” the fact that “use values” can have a “scarcity value” given to them by “prior ownership” – so that in fact “exchange value”, in their perspective, becomes a far more “political” concept than it was for Ricardo and Marx because “exchange value” now can be calculated not just by the amount of “labour” contained in commodities but rather by the “ownership” of commodities with strategic political value, with strategic “use values”!

Classical Political Economy was founded inevitably on “the labour theory of value” that even Smith (“the father of GE”, Arrow-Hahn) could not avoid as the “matter/substance”, the substratum or Kantian “ether’ of economic enquiry. Classical Political Economy, even in its “Marxist” critique, had completely overlooked the fact that “resources” are not a “given” and that “use values” are subject to “ownership”. Even if we agree with Marx that it is “socially necessary labour time” that determines market prices, the fact remains that it is “the market” that determines what is “socially necessary” labour time through “market demand”! But this market demand is neither “necessary” (say, for society to reproduce itself) nor is it independently fixed or “exogenous” to the capitalist mode of production itself – because it is the mode of production, the existing ownership of social resources, that conditions politically the mode of reproduction! Marx, of course, will determine that “living labour” is the ultimate political “use value”, the one that alone can “valourise” constant capital, that is, the means of production. Yet this re-opens and reiforces the reality of how “value” is a “political” notion that determines “exchange values” in terms of the “political ownership of use values”, - which once again raises the question of the “Trennung”, the separation of the means of production from “living labour”, not merely in terms of “ownership” but also in terms of what means of production are used to produce what commodities.

It is the great tragedy of Marxism that too many Marxists sought to turn Marx’s critique into an “objective pseudo-science” by placing the political violence of the “Trennung” in the background and privileging instead the “objective” production of “value” through “socially necessary labour

time”, almost as if “value” were a tangible “physical” property embodied in “commodities” themselves! The unfortunate result was the reductionist emphasis on “the inequality of distribution of product”, with which “exploitation” was entirely identified, rather than on the political command over living labour in the process of production and on the political use of the means of production both in terms of the political choice of the technologies to be adopted and of the pro-ducts to be made.

By so doing, Marxists opened themselves to the charge of “metaphysical mythology” coming from Bohm-Bawerk and the neoclassics, whilst enabling the latter “to conceal their own metaphysics”, that of “utility”, by expanding the source of “exchange value” to “use values” as well, by turning both into indistinct “goods”, and letting their “value” be determined by the empirically observable behaviour of market participants without questioning the prior “political ownership” of the “use values” constituted by the means of production. As Arendt and Habermas, among others, have observed, there is an undeniable tendency in Marx toward turning the “political” character of capitalist social relations of production, which they themselves fail to relate specifically to the “Trennung” of the wage relation, into an “instrumental” or mechanical “scientific” stage of human social evolution (now legendary is Marx’s attempt to dedicate Das Kapital to Charles Darwin) - effectively into a “Kapital-Geist” or late Hegelian dialectical teleology. (See further comments below on Weber and Arendt.)

Schopenhauer’s Ethics and Weber’s “Protestant Ethic”

Nietzsche’s and Weber’s inexorable “separation” or Trennung (“inexorable” because for him there is no existential basis whatsoever for conceiving of their “union”) of the worker from the means of production except on the basis of “individual ownership” - this separation reflects the “inescapability of bureaucratic rule over modern industrial work” and anticipates fatidically the philosophical synthesis operated by Heidegger only eight years later in 1927 with the publication of his epoch-making Sein und Zeit. Heidegger’s ontology of human Da-sein, of human being as “possibility” and “contingency”, is a philosophical reflection of the politically-enforced “separation” (Trennung) that Weber deems “inescapable” and that Heidegger will misconstrue philosophisch for phenomenological “inauthenticity” (Un-eigentlichkeit) and existential “estrangement” (Verfall). Pathetic (like Schopenhauer’s “sym-pathy” derided by Nietzsche, like Romain Rolland’s “oceanic feeling” refuted by Freud in Die Unbehagen der Kultur) will be Lukacs’s plaintive longing for the “enchantment” of “totality”, his late-romantic vision of the proletariat as “the individual subject-object of history” – just as equally pathetic will remain Heidegger’s appeals to “authenticity” in the face of the Vorhandenheit (instrumentality) of Technik. (The proximity of the two thinkers is reviewed by L. Goldmann in Lukacs et Heidegger.)

For the negatives Denken, the “romantic fantasies” of humanist thought fail to grasp the irreducible and overriding irreconcilability of human individual

“needs and wants”, the total absence of any “social syn-thesis”, the complete lack of any inter esse in human Da-sein. Life is “conflict”; it is “struggle”; it is Will to Power. But this ineluctable, physio-logical human conflict can and does allow for human co-operation in a purely instrumental sense, to achieve practical purposes that satisfy individual “needs and wants” with the aim of ensuring at least human survival (as Loasby put it, specialization makes exchange a matter of survival). Social institutions, both symbolic and political, can lead to the “socialization” of the instincts through “compromises” that channel human instincts of freedom toward the construction of an “ontogeny of thought” that stretches from the notions of consciousness and “ego-ity” (Ich-heit), to those of logic and mathematics, and then to science, individuality, society and the State. This “ontogeny of thought” is what allowed Weber to reconcile Nietzsche’s “true perspectivism and phenomenalism” with Neo-Kantian epistemology and Machian philosophy of science. Kant’s transcendental idealism remained fundamentally “subjective”. The universality of Pure Reason is questioned in the Critique of Judgement and made to retreat to the sphere of intuition and aesthetics, as Heidegger would argue later in the Kantbuch. Neo-Kantism is the avowal of this “retreat of Reason”, of the definitive abandonment of the summum bonum of German Idealism of unifying metaphysics with epistemology – a surrender presaged already by Kant in the Opus Postumum and the subject of the dramatic clash at Davos between Heidegger and Cassirer. The Natur-wissenschaften and the Geistes-wissenschaften will never be “united” again: the irretrievable “separation” of the Subject from the Object is finally conceded. No religion, no politics, no science and no State will ever be able to reconcile the abyss of Individualit, the Unicum of the “Soul” which can ex-press and “externalize” its “spirit” only through “symbolic and social forms”. This is the essence of “socialization” that mani-fests itself in all areas of human life even to such an extent that these “Forms” acquire “a life of their own”, until they become a “crystallized Spirit” (geronnener Geist) that dominates the lives of “individual souls”. The intellectual path of Lukacs from Die Seele und die Formen (adopting Simmel’s schema of “Soul” and “Forms” from the Philosophische Kultur) to the elaboration of the concept of “reification” out of the Marxian “fetishism of commodities” in Geschichte und Klassenbewusstsein describes faithfully and fatefully this polarization of the most advanced European thought between the Sozialismus on one side, from Marx to Lenin, and the negatives Denken on the other, from Schopenhauer and Kierkegaard through to Nietzsche and Weber and finally Heidegger:

At the time, then, it was Marx the ‘sociologist’ that attracted me and I saw him through spectacles tinged by Simmel and Max Weber. I resumed my studies of Marx during World War I, but this time I was led to do so by my general philosophical interests and under the influence of Hegel rather than any contemporary thinkers. (from ‘1967 Preface’, p.ix)

Indeed, it was Marx who first acknowledged this “flirtation” with Hegel (in the Preface to Kapital) and then coined the phrase “crystallized labor-time” [blosse Gerinnung von Arbeitszeit, Vol.1, Kapital] to indicate the “socially necessary labor time” that is “embodied” in the means of production used by living labor “to valorize” commodities in the process of production. Marx sought thereby to circumvent the obvious inconsistency that it is impossible for “market prices”, which are “subjectively” allocated according to “demand”, to determine what is “socially necessary” labor-time. And vice versa, it is impossible for us to determine this “socially necessary labour-time” without first knowing the “demand” indicated by market prices, because only this “demand” will determine what goods will clear the market and in what quantities. This is not to say that both “cost” and “demand” factors are needed to determine market prices – because the two accounts are mutually exclusive. Rather, what is needed is a theory that accounts for the institutional framework of “market capitalism”.

This is something with which the most discerning Marxists have struggled since the publication of Volume Three of Das Kapital. The finest among them have sought to reconcile the inconsistency by appealing precisely to this “crystallization” of labor-time through the “reification” of human living labor that the “fetishism of commodities” engenders through the market mechanism. (See especially Lukacs’s chapter on “Reification” in Geschichte and the final chapter on “Marxismo: Scienza o Rivoluzione?” in L. Colletti’s Ideologia e Societa’.) The insuperable objection to this “version” of Marx’s critique is that if “value” is sheer “mystification” and “fetishism”, then it is absolutely impossible for it to determine the quantitative allocation of social resources for production! Nor is it possible for us to discern a way to evade this “fetishism”! Lukacs himself confesses to the “overriding subjectivism” of this framework (p.xviii) and indeed to its affinity with Weber’s own brand of Neo-Kantian “rationalization” (as we will see later) and Heidegger’s phenomenological account of “inauthenticity” and “totality” in Sein und Zeit (p.xxii).

It is not an accident then if Karl Lowith focused on the convergence of the concepts of “rationalization” in Weber and of “alienation” in Marx in his appositely titled early work on Max Weber and Karl Marx. This complex web of “sociological forms” characterizes also Weber’s entire methodology from the “ideal type” (Simmel’s “Form”) as a “sociological form” to the hermeneutic Verstehen of social phenomena (clearly drawn from Dilthey) that allows the liberation of “social science” from its “normative content” (wert-frei, “value-free” science). Indeed, we will argue that Weber’s entire sociology and “Wissenschaftslehre” is founded on these Simmelian “sociological Forms” that allow him – as they do Schumpeter in the Theorie and the Austrian School generally, especially von Mises who had links with Weber – to conceive of the Rationalisierung in terms of its

“instrumental purpose” (Zweck-rationalitat – what we may call “mathesis”) and therefore “scientificity” that can be distinguished from its “Norm” or “Value” (Wert-rationalitat). Once more, we are back full circle to Simmel’s Neo-Kantian dualism of “Soul” (value, norm) and “Forms” (instrumental purpose). But in pursuing this schema, Weber moves very far from Nietzsche’s much more consistent and sophisticated philosophical Entwurf and his own original version of the Rationalisierung. Weber is more “ecumenical” than Nietzsche in highlighting the “irrational” elements of Kultur – in which Ratio and iron cage are “crystallizations” or “Forms” of the “Spirit or Soul”. Such a neat “Kantian” distinction would have seemed absurd to Nietzsche – part of that “moral theology” of German Idealism that he vehemently denounced. And indeed part of the “emanationism” that Weber himself had rebuffed when reviewing the “old” German Historical School in his Roscher und Knies.

This, not Weber’s version, is the true A-skesis, the abnegation of the Indian philosophers and the Christian saints embraced by Schopenhauer at the end of Book I of WWV. Indeed, it is surprising that Weber could draw the connection between “protestant work ethic” and “capitalism” but failed to examine the inconsistency between the accumulation of wealth and ascetic ideals, for one, and the invidious link between labour and wealth for another (see esp. p172, 174-5 of ‘PE’) except to note that the link waned after the initial wave of religious fervor (pp176 ff). “A specifically bourgeois economic ethic had grown up” (p176) says Weber, that allowed capitalists to regard wealth as a sign of divine grace whilst favoring the discipline that low wages induced in workers (p177; also Mandeville’s point). Weber rightly observes (p179 – “iron cage” of accumulation, p181) that the convergence between Socialists and Neoclassics came precisely over opposition to “monopolies and cartels”, that is, disruptions in the Sphere of Exchange (Cacciari makes the point also, ‘K’ at p29).

Despite the reference to “Entsagung” and Goethe and the “iron cage” (p181), at the very end of ‘PE’, it seems that Weber failed later altogether to consider or even mention Schopenhauer’s fundamental role in the “epochal” (Schump, even Blaug) rise of neoclassical theory and in breaking the link labour/value, which had begun to weigh politically after June 1848. (Cacciari highlights this development and makes it pivotal to his analysis in ‘PenNeg&Raz’. He also cites Blaug, ‘Econ.InRetrospect’.)

Weber does not broach these matters, he does not peer into “the black box” of the factory, in part because they are not directly relevant to his theme. Yet his purpose in researching the origins of “the Protestant work ethic” was to explore the rise of “the spirit of capitalism” in line with his “sociological” explanation of the rise of capitalist accumulation. Clearly for him capitalism is rather a “stage” or “moment” in the Rationalisierung whereby “the saint’s cloak” grows into “the iron cage” (stahlhartes Gehause) – an immanent bureaucratic and technocratic structure which is inhabited by the leitender Geist.

Another shortcoming in Weber’s account of the “innerweltische Askese” is its inability to account for the “Catholic/totalitarian” form of the Kapitalstaat traceable to Hobbes (see Tronti, ‘Stato e

Rivoluzione’, p259) which is clearly in contrast with the “Protestant” notions of Individualitat and property rights that go back to the jusnaturalist and Lockean liberal tradition. What Weber fails to delineate is the “incongruity” of the individualist roots of Protestantism and the liberalist understanding of “burgerliche Gesellschaft” and its Offentlichkeit (Koselleck, Habermas, Arendt) as against the “totalizing” tendencies of the Hobbesian analysis which is far more coherent and congruous with the “logico-historical” Entwicklung of social capital – a feature, this last, that finally engulfs not just Weber’s own Rationalisierung but also Schumpeter’s Entwicklung and indeed even the apparent “extreme individualism” of Neoclassical Theory when its Schopenhauerian foundations are properly examined. Once more, the Protestant work ethic is found deficient as an “interpretative key” of capitalist development in terms of both individual motivation and the centrality of “labour value” and, even more important, the specific “State-form” functional to and compatible with the “development” of social capital.

Ultimately, Schopenhauer does not simply lead to, is a precursor of, Nietzsche and Weber and Schumpeter as well as of Neoclassical Theory; but above all, Schopenhauer points straight back to Mandeville and Hobbes! Schopenhauer therefore assumes a “pivotal” role that is the keystone of our work.

There is an evident convergence between the Weberian “verstehen” and his understanding of the Protestant work ethic at the origins of capitalism, as the “spirit” that “inspired” accumulation, and the notion of “work” (Arbeit) that forms the basis of the labour theory of value (Myrdal’s “Real Value”) at first only to metamorphose into the “Subjective Value” of the neoclassical, not Benthamite, kind. It is the Benthamite notion of “utility” that still has the labour theory of value in mind, with “Labour” acting as the source of “Value” and therefore as the “social synthesis”, the dialectical substance that permits “the standpoint of society” and the utopian aim of “working toward a common goal”. “Labour” and “Value” are the inter-esse, the premise of “Social Value”, the foundation of the “communistic society” in Myrdal and Arendt, something they attribute to a technocratic closing of the sphere of “action” into “behaviour” or the “collective housekeeping in the interests of society (Volkswirtschaft)” (p16). They remonstrate against the “notion that economic analysis is capable of yielding laws in the sense of norms, and not merely laws in the sense of demonstrable recurrences of actual and possible events” (Myrdal, ‘PEinET’, p4).

Thus, they both fundamentally misunderstand the entire climactic change wrought by the negatives Denken and neoclassical theory. Weber’s revulsion at Marxist “historicism” that Myrdal invokes (p12) wished to preserve for the ‘Sozialwissenschaften’ the velleity of “scientific neutrality” that permeates “hermeneutic historicism” and that is evident in his reconstruction of “Kapital-Geist” (spirit of capitalism) as the manifestation of the Entseelung or “disenchantment” that leads from “the saint’s cloak” to the “stahlhartes Gebaude”. That “labour” is still central to “asceticism” and then to “accumulation” illustrates the proximity of verstehen to the German idealist tradition and indeed to the Newtonian scientific “enlightenment” understanding of British empiricism and utilitarianism. This is far more akin to the “communistic society” decried by Myrdal and Arendt than the radical “subjectivism” of neoclassical theory which is the virulent antithesis of the former. (According to Cacciari, M Blaug sees this epochal trans-formation of economic theory from “labour value” to “utility” but makes no mention of Schop. [‘PN&R’, p31, fn 22].)

The revolution that the negatives Denken operated consists precisely in this: - that all dialectical social syntheses are removed, beginning with Labour, and that now only the market mechanism can “objectify” the expression of “subjective wills” through the price system. No “social synthesis”, no “inter-action”, no “inter-esse” is possible against the background of “conflicting, strife-torn, individual” interests as

described by Schopenhauer but ‘ineffectually’ resolved by him in the moral “sympathy” of Nirvana, the apex of Entsagung. (Cf. Cacciari in ‘PN&R’.) Herein lies the “specifically bourgeois economic ethic” that Weber was looking for in vain to overcome the contradictions of the “Protestant work ethic” and that he mistakenly identified with Franklin’s brand of asceticism as a linear evolution of the Protestant ethic. The major point here is that this new “ethic” is provided by the negatives Denken and it really originates in Hobbes: it is more than just a “bourgeois economic ethic”; in fact it is a theory of the capitalist State-form consonant and conforming with the requirements of social capital.

Weber’s own political “tragedy” (and that of the GHS) may well have lain in his attempt to adapt Scholastic and idealist political categories in the form of Demokrat-, Parlamentar-isierung to the novel reality of social capital – even with the advent of Nietzsche. (This is something we will have to research.)

[The Ethics Of Negatives Denken - Utility As Calculus of Pleasure and Pain]

For Schop., Kant had correctly determined that the ultimate cause of our perceptions, the Dinge an sich, are absolutely inscrutable and “inconceivable” to us except as Erscheinungen that are given an “intelligible order” through our Verstand and then, at a higher level of conceptual order, by our Vernunft. But this Verstand/Vernunft is a merely “mechanical” or “instrumental” means of ordering “phenomena” into “representations” to enable us to make “sense” of “the world” immediately, that is, without the intervention of a metaphysical “entity” such as a “Pure Reason” that “stands outside of the World of representations”. The Verstand/Vernunft is a mechanical ability that stands “within” the World of causal Erscheinungen, and is itself a Vorstellung. Our ability “to order” Erscheinungen does not immediately give us the ability to deduce from or “transcend” the world of Vorstellungen to a higher “entity” or “identity” or “self-consciousness” that separates the Verstand/Vernunft from the “world of representations”. Indeed, all we can say is that “the World” is “my representation” in that my perception of the world is filtered and ordered mechanically and instrumentally by the Verstand/Vernunft and “trans-formed into” representations.

Even the Body through which ‘I’ perceive the Erscheinungen and through which, by virtue of the faculty of Verstand/Vernunft, ‘I’ link them causally into Vorstellungen – even this ‘Body’ is “my representation”. It is mere utopia, sheer fantasy to “leap” from the awareness of my representations and the immediacy of the “Principle of Sufficient Reason” which gives me the “certainty” (Wirklichkeit) of my experience of this “world”, to another “meta-physical” world of Dinge an sich of which I have no experience whatsoever, either as an Object (noumenon) that “causes” the Erscheinungen (phenomena) ordered as a “world of Vorstellungen” by my Verstand, or else as Subject, a causa noumenon, dictated (as in Kant) by the unfounded, imaginary logical “necessity” for a “free entity” that stands outside of the “totality” of causal links. In reality, my Body and my Verstand/Vernunft are themselves Vorstellungen that are immediately subject to, not “the totality” of the causal chain, but rather to its “infinite or indefinite extension”, of which they remain “necessarily” a part, a link – to which they remain subjected, to which they stand as “member”, not “subject”, as an intermediate cause and effect, not as “ultimate cause”.

And yet, for all this, ‘I’ still remain aware of a “force”, a “volition” that “operates” and “motivates” my Body, that “commands” it and causes it “to act” within this “world of

representations” and that therefore presents itself to me as an “actuality” (Wirklichkeit). This is my operari, my living activity, my Arbeit. This “force”, this “volition” of which ‘I’ can trace perhaps the “Motivation” (Motif) or sequence of “motivations” as an immediate “cause” or “causes” of which its “movements”, “motions” and “manifestations” are the effects – this “force or volition or sequence of motivations” I can only designate as “my Will”. Because “volitions” cannot be separated from the “representations” that my body perceives and that my body “occasions”, then the totality of these representations, both active and passive, that “re-present” the world to me go to constitute my will as the principium individuationis of the world. The world is made up of my representations that I perceive through my body. But my body is the ex-pression and objectification of my will. Therefore the world is made up of both my will and my representations.

As the principium individuationis, my will is not a “subject”, nor is it a “self” of which ‘I’ can be fully “conscious”: my will is not an “identity” or even an “entity”. But it is a “unity” as opposed to a “multiplicity” because I am conscious of its being a “source” of activity, a “will”, a “force’ beyond which my awareness and my Verstand/Vernunft cannot reach: my will is a qualitas occulta, an ultimate cause – it is therefore the Ding an sich, or rather, my will is the objectification of the Ding an sich given that the will “acts’ or “is prompted by” motivations whose ultimate source I cannot know but that are “objectified’ or “manifested” through my body.

That is why the body is the objectification of my will. And through the body, through the fact that my will perceives by means of the body that in the pursuit of its “volition” its “expression” or “mani-festation” is contrasted or op-posed by its “ob-ject”, its op-position or “Gegen-stand”, which is “the world”, then the will perceives the world as a hostile will, as a source of pain to its irrepressible search for “pleasure” which is restrained only by the “mechanical” operation of the Verstand/Vernunft based on the “attainability” or “feasibility” of its “wishes”. The fulfillment of every “wish” held by the will, the gratification of its “desire/conatus” or satisfaction of its “need” is met with the immediate “extinction” of the pleasure and gratification and satisfaction that such “success” entails. Consequently, the will is endless source of “dis-satisfaction”, of “needs”, of “desires” and “passions” that cause anxiety and “pain” (Lt. patire, suffer). The operari is “pain”: Arbeit is “pain”. The height of “satisfaction” for the will is the “extinction” of Pain; it is the Vernichtung of desire, or passion, and need. Therefore, the awareness of the “evanescence” of the will’s “objective” entails the instrumental deployment of the intellect to contain the will in its search for gratification. And this “deployment” of the intellect for the attainment of the will’s needs is the real meaning of A-skesis and Entsagung. It is “renunciation”, it is awareness of the satisfaction of the need and “sublimation” of its evanescence, of its perishable-ness, of its “fleeting-ness”, of its “transience”. Entsagung is not a “final goal”, a nec plus ultra; it is still part of a process, but at each “station” in its “progress” it is at once satisfaction of a need through “renunciation” of the will, Vernichtung of its endless insatiable striving; it is “a mirror to the world”. Robbins could properly claim that “Nirvana is the satisfaction of every desire” in this “negative” sense in which renunciation ultimately equals ful-filment and satis-faction of every desire. For marginalism this “equation” of satis-faction as extinction of desire is the essential basis for its calculation of market prices.

Equally “instrumental” is the Hobbesian “reason” that leads abstract individuals in the “state of nature” to opt for a social contract that erects the State so as to preserve individual “life”. This instrumental “reason” that con-nects the preservation of individual life with the establishment of social peace by means of the State can have no claim to any substantive status as “reason” because the preservation of individual life is at best an “instinct” that cannot found any form of rationality, whether substantive (ethico-moral) or mechanistic (as Hobbes thought it did as a ultima ratio aut dira necessitas ob metum mortis). It is to be noted that Hobbes’s “rationality”, the preservation of life, is only an ultima ratio that human beings adopt, not to defend “life” as a universal human interest, but only to preserve their in-dividual lives! Indeed, Hobbes maintains that it is “rational” for human beings to sacrifice even their innate “free-dom” so as to preserve this “individual life”. The thought would have seemed absurd to Rousseau for whom “freedom” was an “inalienable” human attribute. Obviously, Rousseau conceives of “freedom” in rationalist, not positivist, terms as an existential notion that is also a universal human interest with a substantive political content, whereas Hobbes conceives of “free-dom” as a purely “formal” category, that is (as Arendt wistfully noted in On Revolution) in opposition to (scientific and mathematical) “necessity”, and not in opposition to “coercion”. Hobbes conceives of “free-dom” mechanically as a simple field or realm of action as in the “state of nature” more akin to “degrees of freedom” in mathematics. (Similarly, Heidegger’s notion of Da-sein [human being as “being there”] was intended as “possibility” which then takes political overtones only in this sense of “contingency”, but always as a “private, individual” attribute.)

In a nutshell, my quest, provoked by your early work, was to answer this question (put in Kantian form): given that "value" is not and cannot be an "objective" entity, contrary to what Marx sought to prove with his "socially necessary labour time", how is it possible for the capitalist economy to function, that is, to reproduce and even expand the wage relation? (This is the classic question of economics that Hayek brought back to the centre of economic analysis - broadly put, how is a market economy "co-ordinated"? how is "the social synthesis" possible?) The important hint was in your genial link or nexus between "conflict" and "inflation": yet many questions remained unanswered. The task was not to  determine how to measure inflation but rather to understand the far deeper "meaning" of inflation as a "measure" of social conflict, - put differently, to establish what the institutional and instrumental use of inflation as a monetary category could be. But above all, the hardest task remained to explain how it was possible for a "mathematical" relationship between two obviously fictitious notions - that of "price" and that of "value" or "quantities" (cf. the title of Hayek's "Prices and Production") - to be "effectual", that is, to serve as the "rule of thumb" for the conduct, regulation and expanded reproduction of the wage relation (let us remember that "profit" is meaningless without its "negation" - money wages). Once we have established, with Nietzsche, that there is no "scientific truth", the question then assumes Weberian overtones, revolving around how it is possible for the "rationalisation" [Weber] of social reality to occur. To answer this question I had to revise Marx's own approach to the content and methodology of what we call "science" - including especially this thing called "economic science". 

And that is what I have done in the works on Nietzsche (mainly in Part One, section 2 of "The Ontogeny of Thought") and Weber (mainly Part 3 dedicated to his methodology of social science). They are admittedly difficult works - because the subject-matter is difficult, involving a level of abstraction that would have tested even Marx himself, but one for which Nietzsche was far better equipped. So I am sending you now the draft chapters of the Nietzschebuch that I would be quite pleased for you to pass on to David. There is a whole universe of learning here; my greatest reward in life has been to have earned the financial freedom to be able to commit it to writing!

Once this analysis is understood, the musings of a Joan Robinson on "History versus Equilibrium" begin to sound like the kind of philosophical dualistic puzzles that keep undergraduates amused. The whole "intention" of neoclassical analysis was never to comprehend the capitalist economy as a "historical" reality, to reveal its "truth". The aim and practice of equilibrium analysis was never "to capture" or "photograph" a reality of any description. (Weber made this pellucid in the quotations I give in Part Three of the 'Weberbuch'.) Nor should neoclassical theory be confused as an "ideology" that somehow "distorts" this (fanciful notion of) "reality" (what Robinson and Lawson and others would call "history" or "the ontic"). A million times no! The power of neoclassical theory, and of equilibrium as the core aspect of it, is that it expresses "the will to power" of the bourgeoisie: it describes and understands life and the world NOT as it "should" or "ought" to be, least of all "as it is" - but rather as it MUST be for the bourgeoisie to be able to control the society of capital, to command living labour. In short, neoclassical theory is a pure instrument. Put it in Weber's own analytical framework, it is the purest expression of the "value-free rationality" that displays entirely the "freedom" of the bourgeoisie, subject to their will to power! That is what Weber called "the politics of responsibility" opposed to the moralising "politics of conviction" espoused and represented by the Sozialismus. For Weber (and I accept this) "ideology" belongs to the Sozialismus, not to the "rationality" of the bourgeoisie! Equilibrium theory and game theory with their "equilibria" are the bluntest "value-free" expressions of this will to power - the will to exploit and dominate - because they allow that "mathematisation" or rationalisation of social life that makes the reproduction of the society of capital dependent on the survival of the wage relation as its dominant institution. Here "rationality" and "freedom" are seen not as "positive values", as "ultimate truths" shared by and common to all human beings; they are seen instead "negatively" in terms of "choosing what conflict and strife among human beings make us choose"!

(Just to exemplify the total in-comprehension of this point by academic economists, this is from Prof. Harris's [Stanford] review of Robinson's "History v. Equilibrium":

Though critical of the concept and uses of equilibrium, Robinson was not a“Luddite”. She was too diligent and penetrating an analyst to dismiss the advantages,albeit recognized to be quite limited, of using the equilibrium concept as a tool foranalytical purposes. She herself used the device to great effect in her own work. Sheviewed it, at times, as a “thought experiment”, useful for solving “analytical puzzles”,even to the point of recognizing a “perverse pleasure” in this practice [1956, p. 147, n. 3].

Obviously, had Robinson truly recognised the significance of equilibrium analysis as a project of command over living labour she could never have used it "as a tool for analytical purposes" because the usefulness of neoclassical equilibrium theory does not lie in the "analysis", which is "meaningless" as Hayek first and then Myrdal [and Tony Lawson, da ultimo] showed, but in the "purpose", which is the mathesis of capitalist "command"! As Weber would put it, economic theory is not an end but a means, a tool; its rationality is not a Wert-rationalitat but a Zweck-rationalitat.)

This aspect of capitalist reality is entirely absent from Capitalism, Conflict and Inflation. The book valiantly and lucidly enucleates and explains the complex institutional interaction between the "phenomenon" of inflation and its "role" as the "measure" as well as a mediation of class antagonism as the product of a "trade-off" between money wages and unemployment levels. But it does not answer the basic question of how it is possible, not just institutionally but above all epistemologically, even ontologically (!), for inflation as a cognitive notion to serve as a "measure" of class conflict - as a tool (!) for the analysis of conflict. For inflation to be a "measure" of conflict, the bourgeoisie has to ensure that "conflict" remains within the institutional bounds that can be measured by inflation. Above all (and this is the most important point of all) "conflict" must be of such a "nature" that it is capable of being measured and mediated by the "phenomenon" of inflation.This in turn requires the elimination of all "values" other than the simple and blunt function of capitalist command over living labour represented by its political subordination to dead labour through the institutional form of the money-wage. Keynes's 'General Theory' is all here! This is his greatest discovery: - the money wage as the fundamental "unit" of measurement of social conflict in the society of capital; the centrality of the working class in that historical stage of capitalism - a "centrality" that the working class and

Keynesianism (!) are clearly losing and "ex-hausting" as the social conflict generated by the wage relation poses new "systemic risks" to the rule of capital.

From the epistemological angle, we must come to another realisation. Neoclassical analysis works on mathematical identities (equilibria). As Keynes would say, "one of two things": either the two sides of a mathematical equation are absolutely identical, in which case they cancel each other out (they "say" absolutely nothing - Wittgenstein); or else they are not identical (Nietzsche), in which case the "equation" is impossible. Yet it is the very ability of human beings to perform mathematical calculations and to treat them as "valid" that displays the full "value-lessness" of life and the world for Nietzsche (and for me), and that annihilates all notions of "truth", scientific or otherwise. I call this "Nietzsche's Invariance" (as in matrix algebra). (A literary example: you will recall that Winston Smith in Orwell's 1984 believes that it is "the truth" of the statement "two plus two makes four" that "saves" him from the arbitrariness of Big Brother's totalitarian power. What Nietzsche and I argue here instead - but so did Wittgenstein! - is that it is precisely our ability to conceive of mathematical identities that is the supreme proof that the "power" of Big Brother is possible!) Put in other words, if "truth" actually ex-isted it would not be "detectable" by us - because all criteria for "truth" need themselves to be "truthful" (a regressio ad infinitum). (Thomas Jefferson intuited the difficulty when he wrote: "We hold these truths to be self-evident..." But if "these truths" are "self-evident", why do we need "to hold them to be so"? The same applies to "mathematical and logical truths" - cf. Godel.)

Don Patinkin (an economist, clever enough to realise and acknowledge that "goods do not buy goods, only money does"!) also came very close to this pivotal point in the philosophy of mathematics, language and science. His response or objection was that mathematical equations "save time" in computation! But Wittgenstein will reply (maybe aiming his poker at him!): What does "time" have to do with mathematics and logic? Patinkin says that "time is a device to stop everything from happening at once". But Nietzsche will reply (almost his exact words): who tells you that everything does not happen at once? If mathematical and logical identities "say" anything, it is precisely that "all the powers of the universe are drawing to their own conclusion". (These conclusions were reached but inchoately as early as Nicholas of Cusa in the 1400s and then taken up by Leibnitz - and of course by Russell in his discussion of Leibnitz's "pantheism". None of them went as far as Nietzsche in confronting them "fearlessly" [I a m referring to the book of the 'Gaya Scienza' called "We, the Fearless Ones"].)

PATINKIN, DAVIDSON AND FRIEDMAN on Economic Theory and Mathesis:Note in passing this remarkable passage from Don Patinkin’s “The Chicago Tradition” at p58:“For one of the fundamental facts ofthe history of ideas is that in general the full implications of a set of ideas arenot immediately seen. Indeed, as has been frequently noted, if they were, thenall mathematics would be a tautology; for its theorems are implicit in theassumptions made. The failure to see such implications is also familiar frommany episodes in the history of economic doctrine: for example, from thetortuous and faltering manner in which the full implications of the marginalproductivity theory were developed.”

Patinkin does not notice that mathematics IS a “tautology” if we are faithful to his explanation as to why it is not one! The “mystery” to be solved is precisely this (!): how can a tautology “tell” us anything? Why does it not “destroy or eat itself up” the way Nietzsche said about “a snake biting its tail” or Janus entering and exiting “at the same time”? The reason is that mathematics does not “inform” us at all – yet it is not a “tautology”!! It is a pure “tool”, the purest “instrument” based on ENTIRELY CONVENTIONAL bases. Therefore its “application” to any “reality” or human praxis is always “false”, it is always INEXORABLY an “error” – the most inexorable error of all! - because it deceives us into assuming that the realities we “equated” are absolutely “equal”!! So it is not correct to say with Patinkin that “all mathematics would be a tautology…[IF] the full implications of a set of ideas [were] … immediately seen … [because] its theorems are implicit in the assumptions made”! The usefulness of mathematics is not in the fact that it allows us to work out “implications” in a “mediate” (not im-mediate or instantaneous manner)! The usefulness lies rather in the FACT (!) – in the PRACTICE! – of the conventional assumption of “equality of units”!! And this assumption is “false”, because it is either a tautology – a nothing – , or it is not, in which case it cannot be “true”!

This is how Heidegger puts the point that “time abridgement” is not the foundation or the “truth” of mathematical identities, in “Met.Fndtns of Logic”, p48:

Though with contingent truths the predicate is also in the subject(a latent identity), no rigorous proof can ever be carried out. Therelation of subject and predicate cannot be reduced to a mathematicalequation, but the analysis proceeds ad infinitum. In such ananalysis of historical truths into their identities, only God alonesees not the end of the process, for there is no end, but the wholeof the predicates' containment in the subject, because he sees, andnot through a step-by-step procedure, what resides in the series ofpredicates. (On the problem of analyzing concepts and the necessityof analysis, see also the passage cited by Couturat in Lalogique de Leibniz, p. 183, note 3: ostenditur ad perfectas demonstrationesveritatum non requiri perfectos conceptus rerum [it isshown that perfect concepts of things are not required for perfectdemonstrations of truths].)

This raises the question of the “divine intuition” that originates in Leibniz and is then taken up by Kant’s distinction of knowledge and being, the intuitus divinus in the CoJ, denied by neo-Kantians at pp66-9: If the unity of identity means the compatible harmony of whatbelongs together, then it is clear that both characterizations of theessence of truth, true as being the same and true as beingadequately perceived, surely go together and mean the samething.For Kant, both concepts, that of identity and of buth, are linkedtogether in the primordial unity of the synthesis of transcendentalapperception. [In Kant] identity is traced back, with the help ofthe buth of judgment, to the condition of the possibility of theexecution of every cognitive act. The "I'" is that subject whosepredicates consist in all representations, everything in any waycontributing to knowledge.Only now it becomes fully clear how this concept of knowledgeis connected with the idea of what s imply is and its being. Intuitusand identitas, as essential characteristics of truth andknowledge, the "logical" in the broadest sense, are derived fromthe simplicitas Dei as guiding ideal of what, in the genuine sense,is. Because the identity theory of judgment refers back to thesemetaphysical connections, to the construal of being mentioned,and because all judgment and knowledge is knowledge of beings,we must now also make clear how Leibniz orients the interpretationof being on the same ideal. Even the exemplary being, God,still appears in the light of a definite construal of being as such.

Mathesis is therefore the biggest lie of all! A lie so big that it makes possible ALL “values”! – Just as incorrect is the saying that “time is a device to ensure that everything does not happen at once”! In point of fact, everything does happen at once – for everything happens now, this moment (nunc stans, not nunc fluens)! Things that do not happen “now, this moment” – no longer “happen”! They are “stored” in memory, so that, as Nietzsche diabolically perceived, mathematics is possible and “laws of nature” are impossible precisely because “everything draws to its conclusion” in the hic et nunc! Time is a convention “connaturate” with mathesis because its “intra-temporal” definition (Heidegger’s “now sequence”) has nothing to do with “time itself”, or “the intuition of time”, or “primordial time”, which is “extra-temporal, as it were – just as mathematical “equations” have nothing to do with the temporal extrinsication of the entities equated! There is a “conceptual” extrinsication – but

then there cannot be actual “equality”! Mathesis is Janus-faced because it enters as it exits: it is “useful” only if its “equations” are “un-equal” (are applied to life and the world, intra-temporally); but it is “tautologous” if the “equation” is purely conceptual. And this shows that there can be no such “purely conceptual equation” – because it is “auto-phagous” or a-poretic, it enters as it exits! Small wonder Heidegger posits time “extra-temporally” as the “horizon” of Being! And Nietzsche shows what “vis inertiae” is needed to ensure “forgetfulness” – and how “memory” requires a countervailing “memory of the will” (that is, the will’s power to impose memory on us!).

An important point with regard to mathematical equations is that “truth” is not a category even applicable to them. As Nietzsche rightly notes, if truth existed, it would not be noticed! If the definiens is identical with the definiendum, then no adaequatio is possible at all! Therefore equations must either be tautologous – be “nothing” in their “form” -, or be “substantive” in their applications, so that 3=1 plus 2 is a “tautology” at best or simply “in-adequate” at worst (we should not say “untrue”, unless it is simply to remind us that there is no “truth”). Yet the very fact that “truth” is conceivable, like all “values”, means that it does not ec-sist, it is not a “being” or even a proper concept. But the crunch is that because it is possible to have equations that are neither tautologies nor “true” shows the precise “space” in which mathesis ec-sists – as will to power, as rationalization of the world. And this Will to Power, this “place” is conceivable only intuitively in Nietzsche’s notion of time – where everything happens at once – now! Mathesis would not be possible were it not for the fact that there is no “truth”. Mathesis, as Cacciari puts it, “yields good results” – so it becomes a matter of (like Jevons in Keynes’s description) “predictions and regularities”.

Milton Friedman on Marshallian and Walrasian Methods:

The alternative that now appeals to me is that the difficulty is a different approach to the use of economic theory – the difference between what I termed a Marshallian approach and the Walrasian approach in an article I wrote many years ago (Friedman 1949, reprinted in Friedman 1953). From a Marshallian approach, theory is, in Marshall’s words, “an engine for the discovery of concrete truth”. In this view, “Economic theory…has two intermingled roles: to provide ‘systematic and organised methods of reasoning’ about economic problems; to provide a body of substantive hypotheses, based on factual evidence, about the ‘manner of action of causes’. In both roles the test of the theory is its value in explaining facts, in predicting the consequences of changes in the economic environment. Abstractness, generality, mathematical elegance – these are all secondary, themselves to be judged by the test of application” (Friedman 1953, pp. 90-91).On this view, there is no such thing as "the" theory, there are theories for different problems or purposes; there is nothing inconsistent or wrong about using a theory that treats the real interest rate as constant in analysing fluctuations in real income; the one theory may be more useful for the one purpose, the other theory for the other. We lose generality by this procedure but gain simplicity and precision.

From a Walrasian approach, “abstractness, generality, and mathematical elegance have in some measure become ends in themselves, criteria by which to judge economic theory. Facts are to be described, not explained. Theory is to be tested by the accuracy of its ‘assumptions’ as photographic descriptions of reality, not by the correctness of the predictions that can be derived from it” (Friedman 1953, p. 91). If the real interest rate enters one part of the model, it must be used in all, hence it is logically inconsistent and presumably invalid to regard it as a constant for one purpose but as variable for another.Source: The Journal of Political Economy, Vol. 80, No. 5 (Sep. - Oct., 1972), pp. 906-950

Friedman is wrong to say that the Marshallian approach gains in simplicity what it loses in generality – because the very “generality” of the Walrasian-Machian method “encompasses” the entire subject-matter it theorises, right from its “axiomatic” and therefore “simpler” premises, which Mach derived from the most fundamental experiences or sense-data, contra Husserl’s apodictic introspective method. Friedman is closer to the mark with the “photographic description of reality” of Walrasian method (its “frozen-ness in time”), which abstracts and generalizes away the

empirical variations from conceptually-derived “laws” of physical or social reality. In this sense, Machism bears a close resemblance to Misesian neo-Kantism and Mengerian “anti-historicism”. Note a little later in the piece Friedman’s monetarist parallel with Misesian theory disregarding “first-round effects” of monetary policy – in line with Hayek’s Ricardo effect approach. Again, “the long run”, and “wealth effect” fundamentals take precedence over partial analyses of economic reality in Marshall-Keynes. This shows that Friedman is not so “Marshallian” after all!

The homely beginnings of science will best revealto us its simple, unchangeable character. Man acquireshis first knowledge of nature half-consciouslyand automatically, from an instinctive habit of mimickingand forecasting facts in thought, of supplementingsluggish experience with the swift wings of thought190 THE ECONOMICAL NATURE OF PHYSICS.at first only for his material welfare. When he hearsa noise in the underbrush he constructs there, just asthe animal does, the enemy which he fears ; when hesees a certain rind he forms mentally the image of thefruit which he is in search of ; just as we mentally associatea certain kind of matter with a certain line inthe spectrum or an electric spark with the friction of apiece of glass. A knowledge of causality in this formcertainly reaches far below the level of Schopenhauer'spet dog, to whom it was ascribed. It probably existsin the whole animal world, and confirms that greatthinker's statement regarding the will which createdthe intellect for its purposes. These primitive psychicalfunctions are rooted in the economy of our organismnot less firmly than are motion and digestion.Who would deny that we feel in them, too, the elementalpower of a long practised logical and physiologicalactivity, bequeathed to us as an heirloom fromour forefathers? (Mach, PSL, pp.189-90)

All phenomena have now scientific status; the task of science is, first, to render visible (sichtbar machen) these phenomena, and then, second, to link them together and describe them in as simple and economical (and elegant) a manner as is possible for the description to be useful: simplex sigillum veri (simplicity is the seal of truth). The problem then becomes how to erect or construct a “scientific method or language” that banishes metaphysics and instead links the human observation of physical events with scientific logico-mathematical propositions that record reliably – or “truthfully”, given that “truth” is reduced to “reliability” or “certainty” - the regularity of those events. (The history of this con-fusion of “truth” with “certainty” in Western metaphysics and science is masterfully traced by Heidegger in The End of Philosophy.) So even in the Machian conception of science and experience, logical propositions and scientific statements are intimately connected. The

question was to establish the precise nature of such connection, the link between “observation” and “theory” – the Scholastic “adaequatio mentis et rei”. Wiener Kreis and Husserl on one side and Wittgenstein and Heidegger on the other.

Sichtbar machen and simplex sigillum veri. Machism lies at the crossroads of the discovery of this “processuality”, of not moving beyond the “instrumentality” of reason (as equal to Verstand in its mechanical character) whereby not only the perception of the world (Weltanschauung) becomes “subjective”, but also its entire “unfolding”, its entire “actuality” or “action” or “Wirklichkeit”, is seen in opposition to a static “Realitat”. The whole notion of “reality” as a “given and immutable world” gives way to the notion that there is no such thing as “objective reality”, a world of “things”, but rather a “becoming”. The “separation” of noumenon and phenomenon also disappears in Machism and merges in the Schopenhauerian fusion of “individual subject-object” in the “representation” effected by instrumental reason. This time it is the “thing-in-itself” that is entirely “eliminated” in favour of the “simple” mathematical con-nection between phenomena or “sensations” (Empfindungen) in an experimental relationship that is “predictable and regular” (Jevons).  Like Neo-Kantism and positivism, Mach’s phenomenology based on Empfindungen or sensory perceptions effectively instrumentalises science reducing it to the state of a mere “tool”, to its “predictive quality” or, in the phrase of one of the founders of the marginalist revolution, Stanley Jevons, to a set of  “regularities and tendencies”. There is here a virulent and total rejection not only of any “reality” or “substance” that may stand behind phenomena, of any “metaphysics”, but also of any Lukacsian or Heideggerian “totality” that may bridge a “gap” between subject and object by providing a historical telos in human praxis. Science is sheer “certainty” achieved in the “simplest” relations capable of being described and calculated with mathematical precision. The aim of science is certainly not that of discovering the ordo et connexio rerum idearumque; rather, it is the pragmatic aim of discovering “regularities and tendencies” that may exist, not in the world itself, but rather in our sensory perceptions that indeed constitute “the world”. In this sense, each sphere of human activity has its own “form” or “norm” that serves “to regulate” – to decipher and measure – that activity. If indeed there is any meta-physics in Machism, it is entirely Husserlian: Machism refers to a transcendental Ego that creates its own “world”, its own “Lebenswelt” – a “life-world” accessible only through introspection by the Ego of its most fundamental private and intimate experiences and sensations. (This essential link between and fusion of neo-Kantian positivism and Husserlian phenomenology in Machism is traced by Goldmann in Lukacs et Heidegger, p.61. See also the first chapter in Vattimo’s Introduzione a Heidegger titled “Neo-Kantismo, Fenomenologia ed Esistenzialismo”, at pp. 8 and 9, discussing similarities and differences of the three currents.)

…….

Value, Utility, Labour and Wealth – from Smith to Schopenhauer to Neoclassics

We note that the “economy” of the “Principle of Sufficient Reason”, its bland and ruthless reliance on the irrefutability of the “phenomenon” (Erscheinung) as the basis of human “scientific causal explanation” of events through the action of the intellect (Verstand) understood as purely instrumental reason, as against teleological or divine Reason, - quite simply, an empirical “tool” that orders our Vorstellungen or “re-presentations” of reality – this “economy” in representing the “relativity” or “subjectivity” of market prices, in denoting “objectively/socially” values that are entirely “subjective” – this economy is also the “economy” involved in the principium individuationis that allows Schopenhauer “to isolate” the “selfishness” of the Will to Life in its irrepressible striving for its own “interest”, without having to give it any “self-identity” or “self-awareness” or “self-consciousness” that would then engender the “dialectical” notion of inter-esse or inter-subjectivity or inter-action on which Hegelian and Marxist philosophies are based. In both cases it is the “empirical/perceptive/intuitive im-mediacy” of these notions (reminiscent of Hegel’s hic et nunc or Bertrand Russell’s “sense-data”) that allows Schopenhauer to regress to the jejune concept of “human nature” in the ‘Grundprobleme der Ethik’. (Note, incidentally, on the theme of instrumental reason, Joan Robinson’s definition of Economics as “a box of tools”, reprised by Schumpeter in the History, but now attributed to Pigou by Geoff Harcourt in “J. Robinson’s Early Views on Method”.)[Discussion of Sraffa and Wittgenstein in Sen.]

In classical thought,“value” has been seen not merely as a way ofgetting at prices (Smith, Ricardo, and Marxall discussed problems in going from valuesto prices), but also at making a descriptivestatement of some social importance. Tomany economists the idea of “value” appearsto be thoroughly wrongheaded. For example,Robinson invoked positivist methodology(she could be described as a “left-wingPopperian”) to dismiss any real relevance ofthe idea of value in general and its invokingin Marxian economics in particular. In herEconomic Philosophy, Robinson (1964) puther denunciation thus (p. 39):On this plane the whole argument appears to bemetaphysical; it provides a typical example ofthe way metaphysical ideas operate. Logically itis a mere rigmarole of words, but for Marx it wasa flood of illumination and for latter-dayMarxists, a source of inspiration.16

“Value will not help,” Robinson concluded.“It has no operational content. It is justa word.”

opting for a cost-based explanation (in linewith Sraffa 1960), we can rely entirely on“observed” facts, such as inputs and outputsand a given interest rate, without having toinvoke any “counterfactuals” (that is, withouthaving to presume what would havehappened had things been different).20 Thisis not the case with the utility-based explanation,since “marginal utility” inescapablyinvolves counterfactual reasoning, since itreflects how much extra utility one wouldhave if one had one more unit of thecommodity.The philosophical status of counterfactualshas been the subject of considerabledebating in epistemology. I see little meritin trying to exclude counterfactuals in tryingto understand the world.21 But I do know—from extensive conversations with Sraffa—that he did find that the use ofcounterfactuals involved difficulties thatpurely observational propositions did not. Itis not that he never used counterfactualconcepts (life would have been unbearablewith such abstinence) but he did think therewas a big methodological divide here.///

In pursuing the descriptive distinctionbetween utility and costs, Sraffa attachedimportance to the demonstration that hisaccount of the cost-based story (as in Sraffa1960) draws exclusively on observed information,rather than having to invoke anycounterfactual presumptions. This differsfrom the utility-based picture, since theconcept of marginal utility is constitutivelycounterfactual.

The temptation to see Sraffa’s contributionas a causal theory of price determination must be resisted…Everything here turns on the meaning of“determination” and the usage of that termon which Sraffa draws. The sense of “determination”invoked by Sraffa concerns themathematical determination of one set offacts from another set. To illustrate the point

(with a rather extreme example) a sundialmay allow us to “determine” what time it isby looking at the shadow of the indicator(gnomon), but it is not the case that theshadow of the indicator “causally determines”what time it is. The value of a clockdoes not lie in its ability to “fix”—rather than“tell”—the time of day. (p.1253)

Similarly, for Menger, the measure of value has nothing to do with the nature of value just as the measures of space and time have nothing to do with their nature or content.