Subjectivity in Political Economy: Essays on Wanting and Choosing (Routledge Frontiers of Political Economy 18)

SUBJECTIVITY IN POLITICAL ECONOMY

Political economy celebrates the idea of self-interest and depends on it. Yet vital questions about self-interest remain unanswered and unexplored. What is the self whose interests political economy celebrates? How do those interests relate to the self? And, in what does the self take an interest? Subjectivity in Political Economy explores the way political economy understands human motivation. In it, David Levine argues that the assumptions typically made by economists regarding want and choice cannot adequately lay a foundation for answering important questions about the design of economic institutions and the appropriate use of markets. Rather than assuming individuals know what they want and gain satisfaction from consuming what they imagine they want, we should think of economic institutions as involved in a process of self-seeking and self-discovery, in which knowing what we want is a result and not a premise. The volume examines the implications of this idea for political economy, especially for political economy’s normative goal: to offer guidance in shaping economic institutions conducive to individual freedom and meaningful satisfaction of individual want. Topics covered in the book include: the concept of subsistence; the idea of self-interest in classical political economy; the kind of knowledge necessary for economic action; the nature of want, choice, and rationality, the distinction between pleasure and happiness. The author gives particular consideration to normative concerns, especially the role and limits of the market. Subjectivity in Political Economy is an exciting and unusual contribution to political economy. David Levine offers a novel integration of the insights of political economy, philosophy, and psychology, applying them to vital foundational issues in political economy. David P.Levine is Professor of Economics at the Graduate School of International Studies at the University of Denver, USA.

ROUTLEDGE FRONTIERS OF POLITICAL ECONOMY 1 EQUILIBRIUM VERSUS UNDERSTANDING Towards the rehumanization of economics within social theory Mark Addleson 2 EVOLUTION, ORDER AND COMPLEXITY Edited by Elias L.Khalil and Kenneth E.Boulding 3 INTERACTIONS IN POLITICAL ECONOMY Malvern after ten years Edited by Steven Pressman 4 THE END OF ECONOMICS Michael Perelman 5 PROBABILITY IN ECONOMICS Omar F.Hamouda and Robin Rowley 6 CAPITAL CONTROVERSY, POST-KEYNESIAN ECONOMICS AND THE HISTORY OF ECONOMIC THEORY Essays in honour of Geoff Harcourt Volume One Edited by Philip Arestis, Gabriel Palma and Malcolm Sawyer 7 MARKETS, UNEMPLOYMENT AND ECONOMIC POLICY Essays in honour of Geoff Harcourt Volume Two Edited by Philip Arestis, Gabriel Palma and Malcolm Sawyer 8 SOCIAL ECONOMY The logic of capitalist development Clark Everling 9 NEW KEYNESIAN ECONOMICS/POST KEYNESIAN ALTERNATIVES Edited by Roy J.Rotheim 10 THE REPRESENTATIVE AGENT IN MACROECONOMICS James E.Hartley 11 BORDERLANDS OF ECONOMICS Essays in honour of Daniel R.Fusfeld Edited by Nahid Aslanbeigui and Young Back Choi 12 VALUE DISTRIBUTION AND CAPITAL Edited by Gary Mongiovi and Fabio Petri

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13 THE ECONOMICS OF SCIENCE James R.Wible 14 COMPETITIVENESS, LOCALISED LEARNING AND REGIONAL DEVELOPMENT Specialization and prosperity in small open economies Peter Maskell, Heikki Eskelinen, Ingjaldur Hannibalsson, Anders Malmberg and Eirik Vatne 15 LABOUR MARKET THEORY A critical reassessment Ben J.Fine 16 WOMEN AND EUROPEAN EMPLOYMENT Jill Rubery, Mark Smith, Damian Grimshaw 17 EXPLORATIONS IN ECONOMIC METHODOLOGY From Lakatos to empirical philosophy of science Edited by Roger Backhouse 18 SUBJECTIVITY IN POLITICAL ECONOMY Essays on wanting and choosing David P.Levine

SUBJECTIVITY IN POLITICAL ECONOMY Essays on wanting and choosing

David P.Levine

London and New York

First published 1998 by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 © 1998 David P.Levine All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by an electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Levine, David P., 1948– Wanting and choosing: essays on subjectivity in political economy /David P.Levine. p. cm. Includes bibliographical references and index. 1. Economics-Psychological aspects. 2. Consumer behavior. 3. Self-interest. 4. Need (Philosophy) I. Title HB74.P8L478 1998 330′.01′9–dc21 97–23783 ISBN 0-203-98119-7 Master e-book ISBN

ISBN 0-415-16661-6 (Print Edition)

CONTENTS

Preface

viii

1

INTRODUCTION

1

2

SUBSISTENCE

9

I

9

II 3

Wealth, inequality and difference

31

SELF-SEEKING AND THE PURSUIT OF HAPPINESS

41

I

Self-interest

41

Labor

52

The pursuit of happiness

57

II III 4

5

6

Subsistence in the classical theories

KNOWING AND ACTING

69

I

Uncertainty

69

II

Knowing what we want

82

III

Subjective and objective

94

WANTING AND CHOOSING

99

I

Wanting and choosing

99

II

Pleasure and necessity

118

NORMATIVE CONSIDERATIONS

125

Notes

139

Bibliography

145

Index

149

vii

PREFACE

Early in my academic career, I taught a year-long graduate course in the history of economic thought, the first part of which considered the classical theory of value at some length. While lecturing on Marx’s version of the classical theory, I was interrupted by a student who wondered why Marx considers value a “social substance” and the social form of the commodity, but treats use-value as if it were something natural: “the physical body of the commodity…the material content of wealth, whatever its social form may be.” I had no good answer to this question. Why restrict the social character of the commodity to its exchange-value? Why devote so much time and energy to value and so little to use, making the former a part of political economy, the latter the “work of history?” Why treat the usefulness of things in satisfying want as if it were something obvious, or of purely historical interest? At that time, I was much influenced by the developing revival of classically inspired theories of value, distribution, and growth. I shared the expectation that they might offer an alternative to the neoclassical idea, which emphasizes preferences and consumer demand at the expense of objective conditions. The alternative theories made price an attribute of a system of interdependence in reproduction, and thus sought to free price determination from any subjective considerations. Yet, here too, it seemed that the problem of want was too quickly gotten rid of, and that something important was being set aside to assure that consumer demand played no role. My unease with this treatment of want and use led to a series of preliminary efforts to explore the problem, most notably the first chapter of Economic Studies (1977), Part I of Volume I and Chapters 4 and 7 of Volume II of Economic Theory (1978 and 1981), Chapter 1 of Needs, Rights, and the Market (1988), and Part I of Wealth and Freedom (1995). The present volume continues the work begun in these earlier publications. Here, I consider in greater detail the problem of want and its satisfaction as that bears on the

ix

concerns of political economy. I consider some strengths and weaknesses of the usual ways of thinking, and offer the outline of an alternative better able, I think, to account for what it is we hope to accomplish through economic activity, and how we might best design our economic institutions for that purpose. This work remains preliminary in nature. No effort is made to present a systematic or comprehensive account of wanting and choosing, or more generally of the subject who wants and chooses. I restrict myself instead to indicating some limitations of the classical accounts of subjectivity in political economy, and to advancing some basic considerations that could lead in a more fruitful direction. Parts of Chapters 2 and 3 were first published in The Journal of Income Distribution, Volume 2, Number 1 (Summer 1992), and The European Journal of the History of Economic Thought, Volume 5, Number 1 (Spring 1998). Part of Chapter 4 first appeared in the Review of Political Economy, Volume 9, Number 1 (January 1997), and is published here with the permission of Carfax Publishing Company.

x

1 INTRODUCTION

Political economy celebrates self-interest. Indeed, political economy contributes significantly to dispelling that distrust of self-seeking typical of premodern thinking, which sees in self-interest a danger to group connection, and to the domination of the community over the member. Yet, vital questions remain unanswered and unexplored: What is the self whose interests political economy celebrates? How do those interests relate to the self? And, in what does the entity we refer to as a self take an interest? Some would say the self’s interests are what they are, that to say more is to destroy the freedom that makes self-interest meaningful. Others would insist that self-interest is driven by social norms, customs, habits; the self is a mere vehicle for social ends, not an end in itself. All of this matters, though economists hardly act as if it does. Content to take self-interest for granted, economists insist normative judgments can be made without exploring the self and its interests, by assuming that those interests are in want satisfaction, and that gaining the means to satisfy our wants, whatever those wants might be, has normative significance. Some, of course, will advance judgments about wants that distinguish higher from lower, those that simply define individual pleasure from those that have interpersonal, or even public, significance. Yet, even here, the wants whose satisfaction provides pleasure remain unknown, unquestioned, unexplored. This, I do not think is enough. Whatever significance distinguishing classes of want by their aesthetic or moral value might have, to make normative judgments about economic institutions, we must know more about individual want than a ranking of its objects provides. We must know more about want for a simple reason: Individuals do not always, or often, know what they want, truly want what they imagine they want, or gain satisfaction from acquiring what they think they want. This proposition is the premise and conclusion of this book, which seeks to

2 SUBJECTIVITY IN POLITICAL ECONOMY

explore its implications for political economy, especially political economy’s normative goal: to offer guidance in shaping economic institutions conducive to individual freedom and meaningful satisfaction of individual want. Few will find the proposition that individuals do not always know what they want novel or surprising. Problems in the interpretation of choice, and of behavior sometimes thought to involve choice, have been extensively discussed (see Gabriel and Lang 1995: Chapter 2). My purpose here is not to add either to the lament about the falsity of choice, or the celebration of freedom in choosing. That consumers sometimes know what they want, and sometimes do not, that they sometimes gain satisfaction from using or consuming the things they think they want, and sometimes do not, does, however, raise an important question: What qualities must an individual have to know what he or she wants, and to gain satisfaction in consumption? The answer to this question has less to do with information and opportunity than it does with the organization of mental life, and with the nature of the individual’s relation to the world outside. What remains poorly understood is not choice as opportunity, the dependence of choice on information, the falsity of choice where differences are slight, and so on, but the nature of the subject who chooses. The meaning of choice ultimately derives from the meaning of subjective action, by which I mean action associated with agency. It is the presence or absence of agency that is vital, and which I explore here. It is in its understanding of agency that political economy fails us when it attempts to speak of wanting and choosing. In questioning political economy’s understanding of the agent or subject of economic activity, I do not mean to question the concern economists have had with the subjective dimension. This concern has been real, not only in the political economy shaped by the utilitarian philosophy at the end of the nineteenth century, but also for the founders of political economy, especially Adam Smith and Karl Marx. What political economy has had to offer on subjectivity should not be dismissed or belittled. Nonetheless, much, indeed too much, has been taken for granted. In political economy, thinking about the consequences of self-interest or of preference-driven choice does not ground itself in any real understanding of the agent whose self has interests, and who makes choices. The problem, I suspect, stems from two sources. The first is a tendency to take what is most problematic for granted, as if saying the words want, need, preference, choice, were enough, and exploring

INTRODUCTION 3

their meaning and significance, except in a formal sense, unnecessary. This failing follows a lamentable lack of interest on the part of economists in the concepts and ideas with which they work. The desire to get on with the empirical, often policy-driven, exploration of the application of concepts poorly articulated in themselves leaves us knowing less about our own thinking than we must if our conclusions are to lead in directions we will ultimately find satisfying. The second problem is a tendency toward splitting, which is typical of thinking not only in academic discussion, but more generally. By splitting, I have in mind the separation, indeed polarization, of the moments of a single idea until those moments stand opposed to each other, and we can only hold onto one if we give up the other. Subject to splitting, our thinking takes on an “either/or” quality: Wants are subjective or they are not; individuals have free choice and the outcome expresses their true desires, or they do not and outcomes are imposed; wanting is self-interested, or it is other-regarding; the subject matter of political economy is an objective material process of reproduction and growth, or it is a subjective process of constrained maximization; the world is unknowable, or it can be known “with certainty.” All of these examples attest to a failure in thinking, and, therefore, in theory, to grasp the truth as the whole: subjective and objective, knowable and uncertain, self and other. This failure is nowhere more evident than in the so-called “schools,” “frameworks,” or “paradigms,” that many believe organize thinking in political economy. These schools and paradigms result from splitting apart and polarizing the aspects or moments of ideas. Schools form by concentrating attention on one or the other pole in the relationship, to the exclusion of its opposing moment. Thus, one school of economists makes price an attribute of an “objective” structure of material reproduction, including labor’s reproduction through consumption of a subsistence. Demand is taken to be an objective datum, depending, for example, on class structure, custom, or the rate of growth of the employed labor force, thus excluding by assumption (for example concerning returns to scale) any role of subjectivity in determining price. A second school treats demand as a function of preferences taken to be purely subjective, therefore indeterminate, and ultimately arbitrary. One school assumes perfect markets, and thus perfect knowledge including certainty; another assumes radical uncertainty, excluding meaningful knowledge about the future on which action might be based. One school sees in private enterprise a “very Eden of the innate rights of man,” while another sees in it the antithesis of human freedom,

4 SUBJECTIVITY IN POLITICAL ECONOMY

a crucible for the most dehumanizing forms of exploitation. For one, wealth results from hard work and frugality, for another it results from legally sanctioned theft. Without these oppositions born of the either/or thinking referred to above, we would not have “schools” of political economy and the attendant distrust of theory that must arise with its division into irreconcilable and warring camps whose truths cancel each other out. Once we fix on a single pole in a relationship, to the exclusion of its opposing moment, that pole becomes a caricature of itself. The subject becomes purely subjective, a locus of indeterminate desire: whim, impulse, caprice; or it becomes purely objective, a locus of external determination of desire in biological imperative, class position, or social custom. What gets lost in this is the idea of a subject acting in the world. After all, we are no more agents in our world if we are driven by whim or impulse than if we are driven by biological or social imperatives. Thus, the polarizing tendencies in thinking must have serious consequences for our understanding of those economic institutions suited to subjective action. What gets lost through splitting is the real autonomy of the subject, who not only acts, but is the agent of his or her action. Whether impulse-driven or the representative of a class, the individual does not, through action, express an autonomous self. Autonomy poses special problems of interpretation. For some, it refers to an absence of external constraint; for others it refers to a loss of any social connectedness or mooring. Some reject autonomy altogether, considering it an illusion. They do so because they equate autonomy with isolation from any external influence. Others embrace autonomy, but assume it requires that we treat what is outside the individual as so many objects or instruments to be used in the pursuit of a satisfaction constituted as a wholly self-referential condition. Here, again, splitting plays the decisive role, separating the objective and subjective aspects of autonomy, and making it impossible for us to imagine an autonomy capable of incorporating rather than denying relatedness. As I will argue below, wanting is a specific relation between the subject and a world outside. Wanting, then, connects subject and object. It is about the individual and his or her inner psychic state; but, this inner psychic state engages others in specific and important ways. We will not understand what it means to want if we assume that others play only the part of things, to be engaged as instruments for the gaining of pleasure through consumption. Nor will we understand wanting if we assume that the individual moment is of no consequence, since it

INTRODUCTION 5

disappears into the imperatives of social being enacted by observing customs and norms. The only way to attain a meaningful understanding of want is to understand the individual who wants, and the end to which wanting drives him (or her), as a unity of the subjective and objective. Understanding wanting and choosing in this way is the purpose of the essays brought together here. The essays presented here consider the subjective side of political economy. While they can be read separately, and each takes up a distinct aspect of the problem, they are also meant to add up to an assessment of political economy, and a foundation for establishing political economy on a sounder footing regarding the matter of its subjective dimension. I begin with the classical notion of subsistence, considering first the way the classical economists use the term, some modern interpretations of the subsistence idea, and the solution it offers to the problem of want, and of the agent who wants. Specifically, I suggest how problems with the idea of subsistence are linked to the matter of difference, and especially individuation. These problems have to do with the member’s relation to the group, the individual’s relation to society. Treating want’s object as a subsistence attaches the individual to the group, making him or her a member rather than an individual. The term subsistence tends to impede the development of an understanding of the economic organization of modernity. Yet, it also alludes to considerations about wanting relevant to modernity, considerations lost in later constructions that put aside any notion that being a person has preconditions and requirements, that our ability to want and choose is not a given, but an achievement. For this reason, even given its limitations, the subsistence idea has something to contribute to the development of a meaningful understanding of wanting and choosing. In Chapter 3, I take up the idea of the agent in political economy, the subject who wants and chooses, as that is understood first in the classical theory, then in the neoclassical. I take this agent to be the possessor of the “self” whose interests and satisfactions are the ends of economic activity. The problem is to know what a self is, where to find it, and in what it takes an interest. It turns out that the classical economists have something of value to say on this subject, and that Adam Smith’s thinking is not nearly so one-dimensional in this area as subsequent political economy might have us believe. In exploring Adam Smith’s ideas, it becomes clear that the problem of integrating the aspects or moments of the self is central to a conception of self-interest. Smith considers this a matter of the relation, and

6 SUBJECTIVITY IN POLITICAL ECONOMY

possible opposition, between passion and reason. Integration is the essential moment in being a self, and the question of what needs to be integrated is the essential question. In Section III of this chapter, I consider what post-classical late nineteenth-century political economy thinks about self-interest and the pursuit of happiness. There, I find that the problem is posed, but not addressed. The so-called neoclassical theory understands, as the classical often does not, that the self is an end in itself and not merely a means for furthering the group, especially for maximizing the growth of the national revenue or the wealth of the nation. Yet, having made the self an end in itself, the neoclassical economists assume that nothing more need be said, or perhaps can be said, without undermining normative conclusions that depend on the satisfaction assumed to result from the self’s gaining its ends, whatever those happen to be. In Chapter 4, I consider the problem of knowing as that bears on action. I consider both subjective and objective conditions for knowing, as well as the argument that knowing is not possible in an “uncertain world.” I locate the problem of uncertainty on the terrain of the opposition between traditional and modern modes of life. Certainty is connected to the givenness of behavior as dictated by customs, and by the attitude that what to do is not a matter of practical judgment rooted in reason, but of knowing customary behavior. Uncertainty arises with the breakdown of this more traditional mode of life, and the resulting elevation of the individual to the agent of his or her actions. Being the agent of conduct not already given, but shaped by deliberative thinking, makes us uncertain. It does not mean that we cannot find out what to do, or have any meaningful idea about the future. Understanding what it means to know and act, which is the topic of this chapter, is vital to any understanding of the subjective dimension in political economy. While economics considers the problem of knowing as a purely objective matter, a matter of the way the world outside is for the subject, the problem also implicates the individual’s internal life. That is, there are internal impediments to knowing as effective as, or more so, than those that face the individual as external constraints. These internal impediments have to do with the problem of self-knowledge, which I take up in the second section of Chapter 4. In Chapter 5, I consider the weaknesses of the dominant notion of what it means to want and to choose. I introduce some considerations that lead toward a revision of our thinking in this area that involves not only the things we want and choose, but also what it means to want and to choose. In particular, I consider the difference between thinking that

INTRODUCTION 7

what we want is a “thing” whose objectivity for us is overcome in our consumption of it, and thinking that what we want is to establish a relation between our inner, subjective, life and the world outside. I emphasize the distinction between consumption and use as attitudes toward the outside world, and the importance of considering rationality, not as a matter of consistent ranking, but as a matter of establishing meaningful self-boundaries that separate what is internal to the self from what lies outside. In the second section of this chapter, I explore the distinction between pleasure-seeking and the pursuit of happiness, with special concern for whether individual ends are finite and can be achieved. I emphasize the connection of happiness to the possibility of being a self, and being your self, in the world. In the concluding chapter, I consider briefly some normative implications of the ideas developed in the preceding essays. I draw a distinction between taking the basis for normative judgment to be an already formed and determined individual understood as a locus of wants and resources concretely given and fully determined, and a process in which our wants are not known from the outset, but develop as we seek to satisfy them. If we interpret self-interest in this second way, wanting becomes a process of self-discovery, and the satisfaction of want a process of reality testing, especially testing the reality of the self. I consider what it might mean to take being and becoming a self, rather than gaining fixed means for the satisfaction of already given wants, as the normative end of economic arrangements.

8

2 SUBSISTENCE

I SUBSISTENCE IN THE CLASSICAL THEORIES 1 The entire problem of the subjective character of want can be made to disappear if we can take the goods consumed to be already determined for the individual. Doing so assures that the individual plays no part in determining the ends to be achieved by using goods, and therefore in shaping his or her way of life. Suppressing the individual moment is the task of the concept of subsistence, most prominent in the classical theories. The concept of subsistence contrasts sharply with later notions of want, where the individual aspect dominates. This contrast establishes an opposition between the objective and subjective aspects of want, which become isolated one from the other. As a result, we must either treat want as a purely objective matter, having nothing to do with subjective deliberation and choice, or, as purely subjective, having its source in the individual taken on his or her own. As I have argued elsewhere (Levine 1988a: Chapter 1), isolating the two moments of want is the fundamental problem of political economy, and introduces the most damaging weaknesses into its understanding of economic life. To begin to develop a more effective concept of want, we must first overcome this tendency to set the two moments in opposition. As a beginning, I explore the original construction provided for us by the classical economists. For the classical economists, specifying a subsistence bundle of wage goods, determined independently of any subjective considerations,

10 SUBSISTENCE

anchors the theoretical treatment of core issues such as price determination, income distribution, and capital accumulation.1 Once we know the composition of this bundle and the magnitudes of its components, we can calculate the rates of profit and accumulation using the technical rules governing commodity production and simple assumptions regarding investment (Walsh and Gram 1980: 300). Thus, the primary concerns we usually associate with classical theory become purely objective, or at least are made to seem as if they are. Distribution and growth depend on productivity, first the productivity of labor into output, and second the productivity of output into labor as expressed in the subsistence, which is the amount of output needed to produce a unit of labor. Beyond its relevance to these core analytical concerns of the classical theory, the idea of a predetermined wage bundle speaks forcefully to contemporary issues having to do with the role and limits of the market in provisioning wants and needs. The idea of subsistence foreshadows the modern effort to understand problems of development and welfare using the concept of “basic need.” Concepts of subsistence and basic need challenge the claim of the market to be the appropriate institution for assuring that the member of the society can acquire the things he or she needs. Yet, the classical theory makes the market responsible for providing the means to satisfy basic needs, which are given independently of the market. There is, then, a tension in the classical theory since, while it makes the wage a price like any other, it also insists that labor’s price allow its owner (the worker) to afford a predetermined standard of living. As we will see, there is an element of obligation built into this construction. The subsistence is not merely the amount that workers must have to maintain themselves and their families; it is the amount due the workers in exchange for their productive contribution. This is not a matter of a return equal to productive contribution, but of obligation: the obligation of the group to assure that its members have the means to maintain the way of life appropriate for them. This obligation sits uncomfortably with the institutional setting in which the obligation is met by accidents of exchange: that there is a buyer for labor at a price adequate to allow the laborer to purchase the needed subsistence goods at their market prices. By linking the determination of the wage to subsistence, classical theory opens itself to a series of criticisms. Indeed, the idea of subsistence remains among the most problematic of those concepts distinctive to the classical theory. Because the idea of subsistence seems

SUBJECTIVITY IN POLITICAL ECONOMY 11

to carry with it a set of doubtful implications concerning the consumption habits of workers—their individuation, their variability across time, their ultimate independence of the market over time (in the long run), etc.—it opens the entire classical theory to potentially damaging attack. Indeed, to modern ears, the very term subsistence sounds archaic. How can a theory resting so heavily on that concept expect to be taken seriously, particularly two hundred years after the classical epoch? While much of the criticism of the classical subsistence idea carries weight, something of importance remains to be learned from the classical treatment of consumption, something that has gotten lost in the movement away from the subsistence notion. To see this, it will be helpful to consider the classical idea in some detail with an eye to distinguishing the meaningful from the archaic. Without questioning the roots of contemporary skepticism regarding the subsistence idea, particularly when applied to developed capitalist economies, we might also find something of value in the notion even for those societies Adam Smith would have called “civilized” or “wealthy.” I first present some of the different ways the classical economists use the term subsistence, and then consider some of the broader issues raised by the concept. 2 I begin with Adam Smith. Smith’s first use of the term subsistence relates it to the “necessaries of life” (p. 14).2 Since the term necessaries of life normally appears in the plural, we might assume that it refers to a variety of consumption goods, even though Smith later refers to corn as “the subsistence of the labourer” (p. 35, emphasis added). Further along on the page just cited, Smith treats the wage as regulated by the “average or ordinary” price of corn, “that necessary of life.” The idea, more or less explicit here, of a single wage good reappears in Ricardo’s theory, as Sraffa points out (Sraffa 1951). Elimination of variety in the wage bundle expresses the essence of the subsistence notion, which tends to suppress differences. Smith first defines subsistence, then, as a basket of necessaries, or a single necessity of life (food). If we separate the elements of this construction, we get two components of the subsistence idea: (1) Subsistence refers to a wage good, or basket of wage goods, and not to a monetary payment. (2) The subsistence goods are, in some sense, necessary to life. The concept of subsistence, interpreted as a basket of goods, causes little difficulty; and, at times, Smith restricts himself (at

12 SUBSISTENCE

least by implication) to this meaning. Note, for example, his use of the term to characterize consumption on the part of the capitalist, who “advances to himself…his own subsistence which is suitable to the profit which he may reasonably expect from the sale of his goods” (p. 56). The concept of necessaries of life, however, raises some important questions. According to Smith, “[a] man must live by his work, and his wages must at least be sufficient to maintain him” (p. 67). The necessity of the subsistence stems from the necessity of maintaining the worker, together with his family. Such maintenance cannot be assured by provision of physical (nutritional or caloric) intake: “By necessaries I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without” (p. 821). Apparently, things can be necessary without being “indispensably necessary.” Apparently also, the necessity of the subsistence imposes an obligation on society, since decency demands that society somehow assure that all can acquire at least their subsistence. There seems a contradiction between the idea that things can be necessary but not “indispensable.” This seeming contradiction lies at the heart of the difficulties a contemporary critic is likely to have with the classical notion. As I will attempt to show further on, such an inconsistency need not make Smith’s approach entirely wrong-headed. Rather, it may indicate a problem that remains to be solved. Smith does not solve this problem, but he does pursue it in a definite direction. This direction involves the distinction between necessaries, conveniences, and luxuries. Smith first notes this distinction on p. 16, indicating its significance further on when he states (with credit given to Cantillon) that “[e]very man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of life” (p. 30). In a progressive society, the wages of labor seem “evidently more than what is precisely necessary to enable the labourer to bring up a family” (p. 74). Indeed, the whole point of capital accumulation is to raise consumption above the level of necessaries of life. With improvements in methods of cultivation, half of society can be employed in providing things other than food, things capable of satisfying “the other wants and fancies of mankind” (p. 163). Smith refers to the satisfaction of the desire for “the conveniences and ornaments of building, dress, equipage, and household furniture” (p. 164).

SUBJECTIVITY IN POLITICAL ECONOMY 13

While it is never clear whether the worker enjoys conveniences and luxury, or is restricted to necessity, while other classes indulge in fashion, Smith provides evidence to indicate that workers’ subsistence might be thought to include conveniences and even luxuries. In discussing the relation of Europe to America, Smith switches from necessity to convenience, contrasting “convenience and use” with “pleasure and ornament” (p. 557), rather than necessity with luxury. Beyond this, in his analysis of taxation, Smith refers to the “luxuries of the poor,” such as tobacco (p. 823). Would it be completely inappropriate, then, to consider luxuries also part of subsistence? Is there some sense in which luxuries might be considered necessary? Once we distinguish the “indispensably necessary” from the necessary, we cannot exclude this possibility. To make this a useful or meaningful idea we would, of course, need to distinguish two meanings of “necessary.” An attempt in this direction will be pursued further on. Thus far, I have considered Smith’s use of the term subsistence within what Josef Steindl refers to as the “sphere of definition” (Steindl 1952:229). I have not considered how Smith sees the market adjustment between the laborer’s monetary payment and the cost of the subsistence. How do markets work to establish a systematic relation between the subsistence and the real remuneration of labor? Analysis of this problem brings into play an additional, and distinct, use of the term subsistence. When Smith shifts from analyzing the worker’s subsistence to analyzing his wage, he switches from necessaries and conveniences to the supply and demand for labor. Smith asserts that the “common wages of labor” depend on the circumstances of the wage contract, which counterpose “two parties, whose interests are by no means the same” (p. 66). The workers seek to raise wages, the capitalists to lower them (p. 66). Smith argues that it is not difficult to see “which of the two parties must upon all ordinary occasions have the advantage in the dispute, and force the other into compliance with their terms.” While “[i]n the longrun the workman may be as necessary to his master as his master is to him… the necessity is not so immediate” (p. 66). As a result, the wage bargain tends to press down the (real) wage. The downward pressure on the wage means, for Smith, that the idea of subsistence comes into play as the level “below which it seems impossible to reduce, for any considerable time, the ordinary wages even of the lowest species of labour” (p. 67). This definition of the subsistence identifies it with the lowest level to which the wage of the lowest paid part of the labor force can be reduced.

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In the context of the labor market, the subsistence wage has the significance of a minimum wage, which Smith naturally associates with the minimum costs of maintaining the laborer and his family. While it may seem natural to go from costs of maintaining the worker to the minimum below which the wage cannot be made to fall, we can also proceed in the opposite way and define the costs of maintaining the worker as the minimum below which the wage cannot fall (at least in the long run). The difference between the two procedures is that one connects the subsistence wage to obligation and requires that the wage adjust to it, while the other defines the subsistence in market terms, leaving any question of obligation, thus any implication of a normative dimension, out of account. In a progressive society, the wage floor will not normally come into play since the growing demand for labor tends to push the wage above its minimum (p. 69). Growing demand for labor attendant on rapid accumulation of capital enables workers to “raise their wages considerably above” that rate that is the lowest “consistent with common humanity” (p. 68). Under these conditions, the normative issues surrounding the subsistence become moot, and we can focus all of our attention on the increase in consumption levels made possible by economic growth. To be sure, doing so does not altogether suppress any normative considerations, since we may still wonder about the normative significance of increasing consumption levels. At the beginning of The Wealth of Nations, Smith attempts to suppress such questions by tying economic growth to the escape from poverty. Yet, as we explore his treatment of subsistence, the problem of poverty recedes, and the question of affluence gradually takes hold. So far as it does, the implicit normative issues regarding the end of economic growth come into play. Still, for the economist of the classical period, the matter of obligation must recede with rapid accumulation, which implies a wage greater than subsistence. Thus, under conditions of rapid accumulation, the normative aspect of the problem becomes less visible, as it has for those influenced by classical thinking. The observation that economic growth enables workers to raise their wage considerably above the rate “consistent with common humanity” suggests that the real remuneration of labor will deviate from the subsistence level in a progressive society. Yet, Smith does not put it this way. Instead, he asserts that the “subsistence of the labourer, or the real price of labour…is very different upon different occasions; more liberal in a society advancing to opulence, than in one that is standing still; and in one that is standing still, than in one that is going backward” (p. 35).

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Rather than identifying subsistence with the wage floor, as he does when analyzing the wage bargain, Smith reverts to his more general notion of a wage basket. This complex use of the term runs Smith into some difficulty since he recognizes that the subsistence minimum may not be the effective determinant of wages even in the long run. Thus, while discussing the effect of taxes on wages, Smith states that the “demand for labour…regulates the subsistence of the labourer, and determines in what degree it shall be either liberal, moderate, or scanty” (p. 815). On one side, the average price of provisions determines the “quantity of money which must be paid to the workman” (p. 815), while, at the same time, the demand for labor determines the price of labor, and, thus, given the prices of provisions, whether the worker can purchase a liberal, moderate, or scanty subsistence. In other words, Smith moves back and forth between a notion of subsistence linked to obligation and one far removed from normative considerations, embedded instead in the presumed objective operations of a capitalist market economy. The contradictions of Smith’s position come to a head when Smith asserts that the wage must be high enough to enable the worker “to purchase that quantity of those necessary articles which the state of the demand for labour… requires that he should have” (p. 822). The implied shift in focus from the idea that the subsistence determines the bundle of goods the worker can acquire (his real wage) to the idea that the demand for labor determines that bundle has potentially damaging implications for the subsistence idea, and for those aspects of the classical theory linked to it. The seriousness of the problem increases if we interpret the subsistence to include conveniences. The problem noted above raises important questions concerning the classical theory of the labor market. While I cannot explore these in detail here, one specific difficulty needs to be mentioned. The classical economist tended to assume that supply and demand in the labor market determine the real wage. We could justify this assumption in different ways. One, of course, would be to restrict ourselves to a barter economy. Indeed, classical writings do, at times, seem to support the idea that workers exchange their laboring capacities for their subsistence without money intermediating. Alternatively, we might interpret the classical theory as one relevant to a monetary economy, but one in which money is a produced commodity. This would make the monetary economy much like a barter economy. If we assume that the purchasing power of money is determined by its cost of production, then the distinction

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between money and real wages loses much of its significance. If the wage bargain is made in money terms, it is still a bargain over real purchasing power. Perhaps a more appealing option would be to assume that the prices of wage goods do not vary with the cost of labor. This might be a reasonable assumption for an economy of small firms acting as price takers. In this case, the bargain over the money wage would govern real wages. Any of these options would allow us to speak of the supply and demand for labor determining the money wage, and thereby also determining the real wage. We need, then, to ask if the money wage determined in this way determines the subsistence, or if the subsistence, in some indirect way, governs the supply and demand for labor, the wage bargain, and the money wage. Once we start from a money wage and assume that, given the prices of means of consumption, money wages allow the worker to acquire necessaries, conveniences, and even luxuries, we can only with difficulty prevent workers from settling on distinct, or individualized, consumption bundles. Smith considers this outcome typical of the wealthy consumer. Once the “expence of any one dress comes to be very moderate, the variety will naturally be very great.” Under these circumstances, the rich cannot distinguish themselves by the expense of their dress, and “naturally endeavour to do so by the multitude and variety of their dresses” (p. 649). While Smith has no intention of extending this argument to the class of workers, the logic of such an extension cannot wholly be denied on the assumptions advanced above. Considering this possibility, we need to consider whether the terms necessity and subsistence can be applied where the levels of prices and money wages enable workers to individuate their modes of consumption. The classical economists were in the habit of thinking of workers and capitalists as different sorts of people (Ricardo even refers to them as “races”). Modes of consumption are intimately bound up with the distinction between kinds of persons (classes in Marx’s sense). Different modes of consumption mark out different modes of life. The concept of subsistence has traditionally marked out a class of persons, so that its use is bound up with a vision of society divided not into individuals, but classes. Thus the notion of subsistence connects us to a world that places serious restrictions on the equality of persons. The classical idea of subsistence denies differences within classes, thus denying the individuation of persons, while asserting differences between classes, thus denying an important element of the equality of

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persons. Yet, the subsistence notion, in its modern form, involves a push for greater equality when used as the basis for an argument that all members of society should have equal access to those things required for satisfying “basic needs” (somehow defined). Thus, when we apply the notion of subsistence to a class-divided society, it supports only equality within classes, but when we begin to question class divisions, the subsistence idea becomes a powerful part of the argument for equality, an equality, however, gained at the expense of individuation, and thus of the development of the subjective dimension of want. Smith understands that, in consumption, to increase quantity means to alter quality. To consume more really means to change the components of the consumption bundle. Hegel, who was, in matters of political economy, a student of Smith, refers to this as the multiplication of wants, and considers it the key characteristic of need in what Smith calls civilized society (Hegel 1952:126–7). Hegel connects this multiplication explicitly to the process of individuation that creates differences relevant to defining the particularity of persons. The possibility that workers will develop individual modes of consumption cannot be separated from their development of more complex modes of consumption encompassing a large and expanding variety of wage goods. This connection makes clear the significance of the classical tendency to think in terms of a single wage good (corn), and by so doing finesse the difficulties created by use of the subsistence notion. Clearly, the simpler the composition of the wage bundle (the fewer items it contains), the simpler the translation from money to real wages, and the less relevant the money wage in the analysis of wage determination. Furthermore, the less variable the composition and magnitude of the wage bundle, the clearer and more meaningful the translation from money to real wages, and the less significant the money-wage calculation. Evidently, then, Smith finds it necessary to maintain several (sometimes conflicting) notions of subsistence. This fact takes on added importance when we consider Smith’s analysis in relation to those of Ricardo and Marx. The treatment of the problem by Smith’s followers continues to raise fundamental issues about the role of obligation in regulating markets, and about the implications of individuation for determining modes of consumption.

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3 Whether or not Ricardo has, as some argue, a “corn model,” he clearly thinks about the wage as if it were composed in substantial part of corn, and speaks of the wage as if it were paid to the worker in units of corn. For Ricardo, the wage consists of “a certain quantity of food and necessaries” (p. 15).3 When Ricardo considers the wage transaction, he does not consider it inappropriate to “suppose a labourer to be paid a bushel of corn for a week’s work” (p. 19), or to think of the corn product as being “divided between the farmer and the labourer” (p. 35). From the very outset, then, Ricardo seeks to suppress the monetary nature of the wage transaction, or, at least, to treat it as insignificant to the analysis of income distribution and workers’ consumption. Ricardo starts out with a clear-cut notion that the subsistence wage is a quantity of real output (usually corn) a part of which (typically half) can be traded by the laborer “for other things, such as fuel, soap, candles, tea, sugar, salt” (p. 20). Thus, Ricardo continues the classical habit of thinking about the wage as a well-defined bundle of specific means of consumption determined prior to any monetary valuation or transaction. Once we know the composition of the wage basket, the prices of its elements determine the money wage, or the “natural price of labour,” which “depends on the price of the food, necessaries, and conveniences required for the support of the labourer and his family” (p. 93). The movement from real to money wages poses no special problem in this case. Implicitly, Ricardo assumes an unchanging basket of necessaries, whose composition is uniform for all workers (at least all workers within given classes). Wages rise when the “natural price of those necessaries on which the wages of labour are expended” rises (p. 96). This theme repeats itself throughout The Principles of Political Economy and Taxation. Thus: “a tax…on raw produce, and on the necessaries of the labourer…would raise wages” (p. 159); “the only adequate and permanent cause for the rise of wages is the increasing difficulty of providing food and necessaries for the increasing number of workmen” (p. 296); “[d]iminish the cost of subsistence of men, by diminishing the natural price of the food and clothing, by which life is sustained, and wages will ultimately fall” (p. 382). Ricardo, more than Smith, draws a sharp connection between the idea of a basket of wage goods determined prior to prices, and the idea of the “necessaries of life,” or those things “necessary to enable the labourers, one with another, to subsist and to perpetuate their race” (p. 93). The idea of the maintenance of life grounds the idea of necessaries. This, in

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turn, determines the price of labor (money wage) given the prices of wage goods. The relative insignificance of the monetary side parallels the relative insignificance of the market. The market plays no part in determining the (natural) wage, but only acts as a mechanism for providing the necessaries to the worker once he becomes proprietor of his own laboring capacity. This new status, as owner of his labor, does not affect what he gets, but only how he gets it. He must now use money to acquire his subsistence. This does not, in the classical theory, allow monetary considerations to bear on the amount and composition of the subsistence. In this context, the notion of subsistence provides a meaningful basis for determining workers’ consumption. Like Smith, however, Ricardo does not find this group of ideas entirely satisfying. The first difficulty arises from the possibility that the price of labor “estimated even in food and necessaries” will vary “at different times and in the same country, and very materially…in different countries.” This variation arises because of the dependence of the “natural price of labour” on “the habits and customs of the people” (pp. 96–7). The analytical power of Ricardo’s original framework for analyzing workers’ consumption depends on the extent to which the necessaries of life are well defined, and do not change over the analytically relevant period. Any variation within that period casts the whole method into doubt. To see this more clearly, consider Ricardo’s comments on variations in the level of workers’ consumption. According to Ricardo, the fewer the wants of, and the cheaper the food consumed by, the workers, the more “the people are exposed to the greatest vicissitudes and miseries” (p. 100). The reason for this is that, if there is a deficiency “of the chief article of their subsistence, there are few substitutes of which they can avail themselves” (p. 101). By implication, then, the greater the wants of, and the more expensive the food consumed by, the workers, the wider the scope for substitution in response to price changes. The more restrictive the subsistence, the more it conforms to the classical idea, the less well it does the job of assuring the maintenance of the worker over time. This adds an interesting dimension to the Ricardian analysis. From the text it is not entirely clear what dangers confront the workers’ subsistence, and from which a higher level of living might provide security. If these dangers occur in a period shorter than that during which “habit and custom” change, they raise questions about the factors responsible for determining the composition and variability of the

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subsistence. They point toward a notion of substitution difficult to reconcile with the fundamental meaning of the subsistence idea. The possibility of substitution must undermine the classical treatment of workers’ consumption since it reverses the causal links emphasized by Ricardo when he insists that the price of labor depends on the prices of wage goods. Now, a change in the price of one or another item currently a part of workers’ consumption does not change the price of labor, but, rather, the composition of the wage bundle. This makes the wage bundle a dependent variable, shifting the emphasis from the necessaries of life to the money wage. Since this shift occurs when workers enjoy a standard of living high enough to allow different modes of consumption equally consistent with their maintenance, it casts doubt on the idea of necessaries of life. With the progress of manufacture, the balance of consumption shifts away from food (corn), while, according to Ricardo, unlike the demand for food, “the demand for any particular manufactured commodity, is subject not only to the wants, but to the tastes and caprice of the purchasers” (p. 263). This aspect of the determination of workers’ consumption takes on added significance during Ricardo’s treatment of effective demand. If workers’ consumption only encompasses the bare necessities, a deficiency of demand can arise due to limits on the composition of the wage bundle. “If every man were to forego the use of luxuries, and be intent on accumulation, a quantity of necessaries might be produced, for which there could be no immediate consumption” (p. 293). Thus, under one of the classical interpretations of the subsistence idea, it is inconsistent with the process of capital accumulation because it inhibits demand. Fortunately for the process of accumulation, if not for the subsistence notion, men do not satisfy themselves with “necessaries” (at least narrowly conceived). The wish to expand and multiply consumption “is implanted in every man’s breast” (p. 292), and thus the demand for commodities is unlimited. While its use will constrain the demand for any particular commodity (“the demand for corn is limited by the mouths which are to eat it” (p. 292)), “the same cannot be said for every commodity produced by nature or by art” (p. 292). Since this is the case for all men (including workers), we cannot easily agree that changes in the prices of wage goods determine changes in money wages. Not only can a rise in the price of some wage good lead to a fall in its consumption (due to substitution), but (and perhaps of greater significance), a fall in the price of a wage good could lead either

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to an increase in its consumption or, more radically, a change in the composition of the wage bundle (adding a new commodity).4 This new item of workers’ consumption might, then, become a part of custom and habit and, therefore, of the workers’ “subsistence.” As Maurice Dobb points out, the direction of causation built into classical theory is reversed since “a change in wages might itself be the cause of a change of habit” (Dobb 1928: 94, emphasis in original). Such a possibility creates serious problems in applying the Malthusian population principle to the labor market, since that principle requires a prior specification of a wage floor determined by the “true” subsistence. Ricardo applies the population principle to assure adjustment of the wage to the costs of necessaries (p. 16). Once, however, the subsistence includes more than food and the bare necessaries, it can vary with the wage without depriving the worker of his physical maintenance. On one side, a fall in the subsistence need not imply a reduced supply of labor, and, on the other, a rise in the wage may mean a more varied subsistence rather than a larger family. In other words, workers may have more things to spend their wages on than expansion of their numbers. This makes the wage floor difficult to locate, and raises the broader question: What is the end workers seek to attain when they go about determining what they will spend their wages to acquire? 4 Among the classical economists, Marx presents the clearest statement of the idea that subsistence determines workers’ consumption. Yet, Marx’s effort to enunciate a clear and consistent classical theory of workers’ consumption leads him to the same complications encountered by his predecessors. Marx begins with the connection between the wage (or, more precisely, the “value of labor-power”) and the costs of maintaining or reproducing the worker. These costs, and therefore the required wage, are “determined, as in the case of every commodity, by the labor-time necessary for the production, and consequently also the reproduction, of this special article” (p. 171).5 The labor-time neces sary to reproduce labor-power (or the laboring capacity of the worker) depends on the labor-time required to produce “a given quantity of the means of subsistence” needed for the “maintenance” of the worker (p. 171). Marx, thus, introduces into the core of his theory the two aspects of the classical subsistence idea: (1) the idea of a predetermined basket of

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wage goods, and (2) the idea that the magnitude and composition of this basket are predetermined by the necessity of maintaining the worker. While Marx sets out from the Ricardian idea that labor is a commodity like any other whose price must therefore depend on its costs of production, he immediately distinguishes labor from other commodities, and in so doing casts the classical method in doubt. This doubt must eventually extend to the very idea that labor can be treated as a produced commodity (see de Vroey 1985). Because “the number and extent of [the workers’] so-called necessary wants” are “the product of historical development” and vary with “the degree of civilization of a country,” it follows that, in contradistinction “to the case of other commodities, there enters into the determination of the value of laborpower a historical and moral element” (p. 171). This observation leads Marx to arguing that the normal level of workers’ consumption must ultimately determine their remuneration rather than vice versa. “The value of labor-power is determined by the value of the necessaries of life habitually required by the average laborer. The quantity of these necessaries is known at any given epoch of a given society, and can therefore be treated as a constant magnitude” (p. 519, see also pp. 171 and 523). Statements of the type cited here constitute definitions of the subsistence, and do not establish any systematic connection between the subsistence and the laborer’s actual remuneration. To make this connection, Marx introduces his version of the classical idea that subsistence refers to a minimum level of workers’ consumption. This idea of a real wage floor, together with the argument that the “reserve army of the unemployed” (Chapter XXV) presses the real wage down to its minimum (see Levine 1988b), assures that workers’ consumption will tend to the subsistence level. Marx’s labor market theory completes the work begun with the specification of the (historically given) necessaries of life insofar as the necessaries of life equal the minimum wage or wage floor. This is not, however, clearly the case. According to Marx, “[t]he minimum limit of the value of labor-power is determined by the value of commodities, without the daily supply of which the laborer cannot renew his vital energy, consequently by the value of those means of subsistence that are physically indispensable” (p. 173). Thus, the effective minimum is the physical rather than the historical and moral subsistence. At this point, Marx’s argument sounds virtually Malthusian. Marx is quick to point out, however, that this minimum must not be confused with the value of labor-power. “If the price of labor-power

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falls to this minimum, it falls below its value, since under such circumstances it can be maintained and developed only in a crippled state” (p. 173). Marx does not, however, show how the value of laborpower, rather than the (Malthusian) minimum of physical subsistence, constitutes the wage floor effective in the labor market. In searching for an effective minimum, Marx reverts to the idea of a physical subsistence. By so doing, he deprives the historical subsistence of its anchor. Since the historical subsistence depends, in part, on the “habits and degree of comfort in which the class of free laborers has been formed” (p. 171), it must vary with habit, and therefore with the worker’s experience of consumption in the past, which must depend, as Dobb points out, on the wage. Yet, if the subsistence depends on habit and custom, which depend on the wage, then wages determine subsistence rather than vice versa. Indeed, for historical development to affect the “degree of civilization” experienced and attained by the worker, it must bring about a deviation of the wage from the subsistence to bring about those changes in the subsistence implied by the inclusion of a moral and historical element in its determination. Perhaps it is this difficulty that leads Marx to the virtual abandonment of the classical subsistence notion when he concludes that the price of labor-power is not given “but only its minimum limit, which is moreover very variable” (p. 610). This remarkable statement brings to mind the conclusion drawn by Adam Smith, and cited above, that the wage must be at a level sufficient to allow the worker “to purchase that quantity of those necessary articles which the state of the demand for labour…requires that he should have” (1937:822). 5 Before turning to more recent uses of the classical subsistence notion, I will briefly summarize the different meanings of the term found in the classical theories so far considered. While not inconsistent in all cases, these different meanings do not clearly add up to a single integrated and coherent concept. 1 The wage bundle The most general, common, and least problematic meaning of the term identifies subsistence with a bundle of wage goods regardless of how that bundle might be determined. This makes the term subsistence synonymous with the real wage, and subject to those difficulties associated with measuring real wages. In the classical theories, the notion of a wage bundle tends to carry

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a special implication noted above. It implies a sameness of consumption habits across workers treated as members of a class. 2 The given or predetermined wage bundle Classical economists also use the term subsistence to indicate that the wage (the natural price or value of labor) is determined by the wage bundle rather than determining the size and composition of that bundle. This adds a direction of determination to the first subsistence notion, suggesting that its components do not depend on market and monetary relations (which is not necessarily implied by the identification of the subsistence with the real wage). 3 The necessaries of life The classical economists normally argue that the subsistence bundle determines the wage rather than vice versa because it consists of those items “necessary” or “required” for the “maintenance,” “production,” or “reproduction” of the worker. This adds a whole new dimension to the notion of the wage bundle and demands that we begin to think about what workers need and why they need what they need. This notion of subsistence introduces the element of obligation, making it a normative concept. The classical theories specify necessities of life in two different ways: (a) The physical subsistence The subsistence is “indispensably necessary” (Smith) or “physically indispensable” (Marx). (b) The moral and historical subsistence This level generally depends on “habit,” “custom,” “history,” and “degree of civilization.” It is “moral” rather than physical. All three classical theorists surveyed above introduce an element of this kind into their treatment of workers’ consumption. Doing so makes the subsistence notion more plausible, for them and to us, but rests uncertainly with the other elements of the idea. Now, we must confront the core problem of reconciling the subsistence notion with variability. This means that we must reconcile variability of the subsistence with its determination independently of the market and the money wage. 4 The minimum level of workers’ consumption Within the context of an argument to establish that the subsistence level has a behavioral significance (tends to equal the wage resulting from interactions in the labor market), the classical economists identify subsistence with the wage floor. Doing so would seem to take us away from the considerations emphasized by the other three meanings.

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Reconciling the wage floor notion with the other meanings was a project of the classical theory of the labor market, one accomplished with only a limited degree of success. The tendency to shift among these different uses of the term subsistence reveals a tension in the idea the classical thinker seeks to express through the term. This is a tension in the role of the market, and in the role of the individual actor. The idea of subsistence suppresses any role the individual might play in determining what he or she consumes, thus any real individuation in consumption. The problem, then, is to reconcile this idea with the part played by individual wanting and choosing in shaping individual consumption. Since the market only makes sense where individuals play a part in shaping their ways of life through determining what they want, the subsistence notion conflicts with the idea that we acquire the things we want through exchange. Tensions and contradictions arise in the classical theory of consumption because it attempts to retain the notion of subsistence, while conceiving a world in which the market plays a significant part. 6 Although the term subsistence may sound archaic, it continues to find a place in more recent thinking. Indeed, all the meanings we associate with the classical subsistence notion reappear in twentieth-century theories of price determination and economic growth. Even the narrowest idea of the physical necessities of life appears, first in von Neumann’s theory (von Neumann 1945), and, again, briefly at the outset of Sraffa’s analysis of prices and distribution. There, Sraffa assumes that workers’ consumption enters the analysis “on the same footing as the fuel for the engines or the feed for the cattle” (Sraffa 1960:9). To be sure, contemporary authors normally associate the term subsistence with one of its less restrictive meanings. Nonetheless, the narrower use does reappear, often as a starting point from which to move toward one of the other meanings (see Walsh and Gram 1980). If nothing else, this indicates the continuing power and importance of the subsistence approach to the problem of workers’ consumption. One recent use of subsistence identifies it with a bundle of wage goods determined exogenously, although not necessarily by a “biological level of living” (Steedman 1977:21). Garegnani (1985) emphasizes this interpretation, which allows the historical and moral element to enter into wage determination (see also Walsh and Gram

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1980:175). Mainwaring (1984:9) suggests a behavioral context for this notion when he asserts that “the rate of permanent increase” of the subsistence “due to the consolidation of these ‘moral’ and social elements is assumed to be sufficiently slow that at any one time the subsistence wage can be regarded as a datum.” The usefulness of this suggestion depends on our ability to treat the wage bundle independently of the vicissitudes of the wage bargain, at least regarding long-run prices and the underlying tendencies of capital accumulation and economic growth. The level of subsistence will not depend on the level of the money wage rate if we assume that changes in subsistence are slow enough to allow us to consider the wage bundle a datum. The treatment of workers’ consumption as a datum conforms to the classical definition of subsistence. By so doing, of course, it leads us directly into the difficulties that beset the classical effort to make the wage bundle determine the money wage given the prices of wage goods. Because of the difficulty in defining the subsistence outside the confines of a primitive minimum level of life, and because of the difficulty in altogether excluding the money wage from entering into determination of the level of workers’ consumption, some thinkers turn to the minimum wage notion in an effort to secure the classical method. The interpretation of the subsistence as the level “below which real wages cannot be depressed” (Harris 1978:199) reconciles the subsistence wage idea with the possibility of a higher level of workers’ consumption, and with the possibility that the level of workers’ consumption might vary with the wage bargain. Once we interpret the subsistence as a minimum, and allow the actual remuneration of labor to rise above the subsistence (even in the long run), we must divide the wage bundle into two parts, one we treat as fixed and allow to appear “among the means of production,” while the other varies with the division of the net product between profits and “wages” (Sraffa 1960:9– 10; see also Walsh and Gram 1980: Chapter 13). The division of the wage bundle into a true subsistence and a variable component reconciles, on a formal level, the requirement of a minimum acceptable level of workers’ consumption with the likelihood that workers’ actual consumption will rise above that level. However, so long as workers’ consumption remains above the subsistence, the idea loses much of its ability to anchor a theory of distribution. Indeed, under these conditions, we have no obvious method for determining which parts of the consumption bundle are to be treated as subsistence and which as “surplus” (Sraffa 1960:9). Formally, we need to make such a distinction for each of the individual items of workers’

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consumption. Not only does such an effort meet with intractable difficulties, it becomes utterly impossible if workers combine their “fixed” and “variable” wages to acquire more expensive means of consumption rather than larger amounts or more variety. The issues raised by the effort to divide the wage into parts, one of which corresponds to subsistence, bring to mind the effort to define a minimum standard of living, or poverty line. Indeed, the concept of a poverty line carries much the same significance as does that of subsistence. The difference is that we need not assume that the wage tends toward it. The poverty line divides groups of workers rather than parts of the wage of the individual worker. It turns out that the level of the poverty line is essentially arbitrary, so that the part of consumption that, in the spirit of the classical theory, ought to be the most determined is the least so. Still, the impetus behind the effort to specify a poverty line is not so different from that behind the classical theory of the subsistence wage. That impetus remains with us, and for good reasons. The impetus stems from the sense that the wage cannot be treated as the price of a commodity like all others because it has to do with the welfare of human beings. It, therefore, carries a burden of obligation, expressed by the idea that it not be allowed to fall below some minimum level. What becomes problematic in the aftermath of the decline of the classical subsistence notion is how we go about determining this minimum in a meaningful way. What is missing from the classical theory is a full account of the normative dimension, and of the way it must place limits on the market determination of consumption consistent with the multiplication of want and the individuation of consumers. All the classical theorists reviewed here refer to a normative dimension as a constraint on consumption, and suggest that it plays a prominent role in setting the subsistence. Yet, for all the classical theorists, obligation excludes individuation. The normative claims of the subsistence are always claims of equality, a level of living that allows for no individuation in consumption. Thus normative argument and the subjective dimension are placedin conflict. The contemporary effort to divide the wage bundle into subsistence and surplus parts has clear classical roots in Ricardo’s division of workers’ consumption into “corn” and manufactured goods, and in Smith’s (or Cantillon’s) distinction between necessaries, conveniences, and luxuries. That effort runs into the problems typical of the classical theory, since it becomes progressively more difficult to identify the true subsistence within a bundle that includes conveniences and luxuries.

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Yet the problem of identifying the true subsistence remains. In thinking about distribution, we still need to know something about the urgency of need, especially about when we need the things we consume, and when we only want them. The classical treatment, with its division of wants into classes, speaks to the problem of need and want that underlies contemporary debate over the limits of the market. The categories of need and subsistence challenge claims made for the universality of the market as the institution appropriate to the distribution of things that satisfy wants. As Marx was well aware, the subsistence idea conflicts with the logic of a capitalist economy. In particular, it challenges the virtue of making labor (or labor-power) into a commodity, since doing so only makes the worker’s acquisition of his or her subsistence problematic. Perhaps for this reason, the classical theorist tends to underplay the moral element in the subsistence, which, if emphasized too much, would threaten the argument for use of markets. Indeed, any emphasis on the moral element will tend to justify government regulation of the market since it will tend to subordinate market outcomes to extra-market considerations. This makes the laissez-faire argument, so central to Smith and Ricardo, less than fully consistent with their conception of wages and workers’ consumption. Clearly, for those unable to make use of markets to secure their subsistence, the moral element in the concept of subsistence speaks against the market. Then, unless we can interpret this failure as one of will or character, it becomes a failure of the market, and the basis for market-limiting policies. Post-classical, choice-centered theories circumvent the problem of obligation by treating all consumption as essentially discretionary. Terms such as preference emphasize the openness of the consumption decision, the availability of options, and the relevance of thinking in terms of tradeoffs. Notions of want and need work poorly in this framework, since both, if in different ways, suggest a degree of necessity. Of course, introduction of a minimum subsistence solves the problem of assuring the worker’s maintenance only in a formal sense.6 Still, it makes clear the hazard of attempting to treat the wage as we might treat the prices of other commodities because, with the wage, the livelihood of the worker is at stake (see Lindblom 1977:47). To treat the wage as if it were a price like any other assumes the absence of limits society must place on the property system to assure the integrity of citizens. We can subject workers’ consumption to the vicissitudes of supply and demand only if we opt for a minimal interpretation of social obligation (such as

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proposed by Robert Nozick 1974). Otherwise, our economic organization must incorporate mechanisms to assure an acceptable level of consumption defined, to a degree, independently of current market conditions. The term subsistence alludes to this requirement without establishing how it can be satisfied. 7 To make the idea of subsistence effective, we must treat it as a wage floor, and to make that idea plausible, we must allow the subsistence to vary with the worker’s actual remuneration. One way to reconcile these two requirements is to treat labor’s actual remuneration as the wage floor. The level of remuneration in the recent past determines what will be considered historically and morally necessary, and “puts a ratchet behind any change in the level of real wages that actually occurs” (Robinson 1956:49). Theoretically, then, it remains to determine how this ratchet is made effective. Robinson suggests an “inflation barrier,” but this only operates under special circumstances. More generally, the classical method for treating real wages as, in important respects, a datum, requires an analysis of the downward inflexibility of wages under fairly general circumstances. The downward inflexibility of wages carries special significance in economics not only for the theory of wages, but also for the Keynesian argument against the selfregulating capacity of capitalist market economy. Critics of Keynes view downward inflexibility of wages as an arbitrary empirical assumption. Yet, exploration of the classical subsistence notion suggests we view the matter differently. Let me put this point another way. Critics of Keynes treat the assumption of wage inflexibility as an analytical weakness that impairs the generality of the theory. Some defenders, in response to this criticism, attempt to show that Keynes’s theory does not depend on any special assumption concerning the inflexibility of wages. They may be correct (and clearly Keynes’s theory calls into question arguments that wage flexibility would assure full employment). Yet, it may also be the case that assuming downward inflexibility enhances the analytical power of the theory, making it more meaningful if not more general. Recent contributions to the analysis of labor markets can help clarify this matter (Okun 1981; Kaldor 1985). The labor market, in the more advanced sectors of modern economies, incorporates a premium on stability of the wage relation both regarding the level of wages and security of employment. This stability reflects itself in the development

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of commitments to modes of life that incorporate fixed expenditures and the renewal over time of a pattern of consumption. The idea of a mode of life that lends stability to workers’ consumption (Levine 1981:141– 5), corresponds well to the classical idea of a historical subsistence governed by the achieved “level of civilization.” The advantages that accrue to firms that establish long-term labor contracts and a stable work force underwrite the security of these modes of life for workers. By proceeding on this basis, we can revive the idea of necessaries, now interpreted as those means of consumption needed to maintain an existing and established mode of life. This suggests we understand luxuries as items with the potential to become incorporated into modes of life, but not yet established as such. Interpreted in this way, luxuries can become necessaries if they succeed in becoming components of modes of life, for example as the result of a permanent increase in the real wage.7 The difference between necessaries and luxuries, then, is partly temporal and partly social-historical. This line of argument connects us to the classical subsistence notion and its more modern advocates. Their notion contains an important insight into the workings of a market economy. We will better appreciate this insight the more sharply we separate it from three assumptions generally maintained by the classical theorists. The first of these is the assumption that the real wage is determined by the wage bargain, so that money plays no part in the vicissitudes of workers’ consumption. The second is the assumption that the subsistence determines both money and real wages. The third assumption is the irrelevance of individuation in modes of consumption and modes of life for workers. At any point in time, the subsistence is determined prior to the wage, and restricts the process of wage determination. This does not, however, mean that the subsistence determines the wage. A wage higher than subsistence can contribute to changing the level of subsistence, since it allows for changes in modes of consumption that could become permanent. This is the practical meaning of the classical notion that the subsistence has a moral or historical element. A meaningful statement of the classical idea would be the following: the subsistence constrains the wage and the wage determines the subsistence, but the subsistence does not determine the wage in either the long or the short run. It is all the more important to give up part of the classical intent in employing the subsistence idea when we realize how it is tied to treatment of workers as a consuming class. We lose much of importance in the theory of the market when we abstract from the role of

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consumption in establishing individual differences between persons (including workers). To avoid this loss, we need to consider the money wage an important force in itself, since it is the monetary form of the payment that allows its recipient to compose his or her own mode of consumption and associated form of life (Levine 1988a: Chapter 1). We cannot simply derive the money wage from the subsistence, since it is out of the monetary payment that the worker composes his or her subsistence bundle. The approach briefly outlined above can integrate several of the different uses of the classical subsistence notion. It makes use of the notions of necessaries of life and the wage floor. By so doing, it focuses attention on the central claim of the classical theory that we must treat wage determination by specifying a wage bundle that cannot be contingent on market circumstances in the short run, especially the “scarcity” of labor (however defined). It turns out that we can secure this insight of the classical theory without incorporating some of its problematic aspects associated with the idea that the wage should be treated as a datum. II WEALTH, INEQUALITY, AND DIFFERENCE The decline of the classical theory brought with it the decline of the notion of subsistence as an important foundation for thinking about consumption and wages. The indifference of the concept of subsistence to individual decision-making made it an unlikely candidate for a theory that might illuminate the workings of a modern economy. The same qualities that made the subsistence seem more relevant during the early stages of capitalist development, which is also the period of classical political economy, have, however, given the concept a measure of appeal to modern-day economists concerned with less developed economies. By exploring the connection between subsistence and development, we can learn something important about the meaning and limits of the subsistence idea. 1 In his discussion of the fourteenth-century historian Ibn Khaldun, Nawfal Umari emphasizes the contrast in objectives between traditional and modern economies. For Khaldun, the “habits and customs” of primitive society are not conducive to social differentiation, but aim

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instead at establishing and maintaining “membership in the corporate group” (Umari 1992:96). Since differentiation “threatens the cohesiveness of the group,” sameness governs want satisfaction. This leads directly to the notion of subsistence as the end of economic activity, rather than as something for which primitive peoples must settle because they are unable to get more. Subsistence is not only enough, seeking more would be socially disruptive. Thus, “because the articulation of customary needs must be held below an already limited productive potential, ‘necessary’ needs predominate in primitive culture” (p. 97). The predominance of necessary needs in primitive society calls into question the idea that providing subsistence could be the goal around which to shape a development strategy. The satisfaction of subsistence needs can be accomplished without economic development, if by subsistence we mean those needs whose satisfaction establishes membership in, and binds the member to, the group. However, for basic need defined with a more modern reference point, as the need associated with the modern individual, growth and development can play a decisive role. Indeed, economic development not only makes satisfaction of (traditionally defined) subsistence needs insufficient, it fosters change in the idea of what is a basic need. Adequate health care, nutrition, education, and so on mean something radically different in the traditional setting than they do in the modern. This is because needs, including basic needs, are the subject of development, and are contingent on the mix of traditional and modern elements. Consider health care as a basic need. The statement that health care is a basic need tells us very little unless we can answer the question: what health care? Does our basic need include preventive medicine? Homeopathic medicine? Open heart surgery? Organ transplants? Abortion? Similarly, the statement that education is a basic need must also answer questions about the amount and kind of education. Is education simply a matter of induction into the customs of the group through inculcating knowledge of group-constituting myths? Or, does the basic need for education mean offering the individual a formative experience adequate to foster autonomy within the setting of social institutions driven by subjective wanting and choosing? When we take the idea of basic need satisfaction to be an end of development, we attempt to make subsistence, which derives from premodern society, an important element of our understanding of modernity, or at least of what modernity could and should be. Doing so makes the equality we associate with subsistence central to

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development. Thus, one student of the so-called “basic needs strategy” notes how it “places in the forefront of national objectives, along with the promotion of higher growth rates, a more equitable distribution of income and wealth” (Dell 1979:292). Appeal to concepts of equality should warn us of the presence of elements of the subsistence idea, including those linked to obligation. As I suggest above, equality is an important implication of subsistence, although for the classical thinker this is the limited equality of consumption within the class of workers. More equitable distribution as a goal of development follows from the presumed universality of basic needs, the same universality suggested by A.K.Sen in speaking of capabilities and entitlements (Sen 1987). If we can identify certain needs as universal to persons, then the inequality implied by the poverty of some citizens means that, for them, basic needs are not being met. This may or may not require true income equality, depending on whether incomes exceeding the level of basic needs can be tolerated for some while others remain below that level. Nonetheless, a call to make satisfaction of basic needs a prime objective of development is a call to redistribute income from the more affluent classes to those whose basic needs are not met. So far as emphasis is placed on capacities in defining basic needs, linking development to basic needs brings into play subjective considerations generally suppressed in the classical subsistence notion. Unless the capacities referred to are purely physical, their intro duction treats need on a more abstract plane than does the idea of a basket of wage goods. This abstraction connects need to the self-determination of agents, and to the abilities an individual must develop to act as an agent in his or her life. The capacities in question are essentially the capacities to be fully a person in a world where autonomy is a vital part of what this means: capacities associated with exploiting individual interests and talents in developing a life plan, and capacities associated with citizenship, or, more generally, with making individual freedom meaningful. Thus, basic need, unlike the older subsistence, requires that we understand what the individual needs to be a subject, whose wants cannot be treated in the same way we treat the fuel of the engine or the feed of the cattle. The capacities secured by the satisfaction of basic needs are those demanded if the members of society are to define life plans and have a reasonable chance of making them real. Then, even as the basic needs language brings to mind certain more traditional ideas of want, it also seeks to embed those ideas in a more modern setting. Subsistence refers to specific goods and the particular needs they satisfy; basic need refers to general classes of need (education,

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nutrition, health, housing) without specifying exactly what they include or how they get satisfied. The idea of basic need, then, incorporates an abstraction. This is the same abstraction we make when we speak of capacities rather than outcomes. Modern societies place this abstraction in the forefront, treating their members as bearers of right, rather than the occupants of predetermined social positions. As a bearer of right, the individual is treated as a potential, to be realized or achieved, rather than as the living out of an already given, that is customary, role, as the reincarnation of the ancestors, or as fate’s object. Thus, talk of basic needs, although in some ways referring to subsistence, places us squarely in the context of modernity rather than invoking a genuinely traditional sense of what we need and how our needs will be satisfied. Development should bring with it the satisfaction, or the reasonable prospect for satisfaction, of need, but only of developed needs. This takes us beyond the limits of subsistence, and into the realm classical economists refer to as luxury, riches, and wealth. 2 A need for wealth (or luxuries) arises and subsistence ceases to be enough when society begins to develop an internal differentiation according to rank that must be marked by different modes of consumption and ways of life (Umari 1992:103). Luxury, then, marks difference, as subsistence establishes sameness. The pursuit of wealth makes sense because the ends of social organization have altered in a specific direction, toward establishing difference rather than sameness. This is, first, a difference in rank or status within a hierarchy linked to birth and ascribed social position. The difference along this dimension establishes an order of leadership in society necessary for cohesion once the cohesion assured by sameness is lost. The connection of subsistence to sameness and wealth to difference suggests a connection between wealth and the development of the separation of persons. If this is the case, the term subsistence, or at least the restrictions that it invokes, might apply wherever the separation between persons must be suppressed. This happens not only in primitive societies, but in other settings where tolerance of difference is a problem. The difference that has significance for pre-capitalist society embodies a need for wealth and a limit. While the need for wealth stems from the necessity of inequality for social cohesion, the limit on wealth stems from the givenness of the structure of inequality and of the

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hierarchy of social position. R.H.Tawney characterizes this situation in the following way: Each member has its own function, prayer, or defense, or merchandise, or tilling the soil. Each must receive the means suited to its station, and must claim no more. Within classes there must be equality; if one takes into his hand the living of two, his neighbor will be short. Between classes there must be inequality; for otherwise a class cannot perform its function, or—a strange thought to us—enjoy its rights. Peasants must not encroach on those above them. Lords must not despoil peasants. Craftsmen and merchants must receive what will maintain them in their calling, and no more. (Tawney 1962:23) In those pre-capitalist societies sufficiently differentiated to need wealth as a marker for social hierarchy, wealth sponsors difference. This makes the amassing of wealth a meaningful activity, but only up to the point consistent with customary social differentiation. Then, you have enough wealth when you have enough to establish your position in a welldefined, and often stable, hierarchy of rank. Before capitalism, the question how much wealth is enough could be answered in principle, for a particular society at a particular historical moment, even if in some cases the amassing of wealth threatened to get out of hand. We know how much wealth is enough in the same way we know the subsistence: as a matter of custom and tradition that carry a moral significance. Indeed, it would not be inaccurate to speak (as Adam Smith sometimes does) of the different subsistence of the different classes. Capitalism alters the idea of difference by removing it from the world of ascribed position, and placing it into a world where differences have something to do with individual abilities. This eliminates the customary element, and makes amount of wealth a matter of individual attainment. It, thus, eliminates the limit on wealth we associate with precapitalist hierarchy. Under capitalism, and therefore for modernity, “enough wealth” becomes a contradiction in terms. Because of this, the classical economists’ effort to use the subsistence idea in their account of capitalist economic organization involves them in an uncertain mix of the elements of modern and premodern social organization. Adam Smith suggests we attribute the result that no amount of wealth can be enough to an inherent impulse to have more. He tends to equate self-interest with self-aggrandizement. If we assume that humans are

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ultimately motivated by self-interest, and that self-interest is served by the accumulation of privately owned wealth, then a system of economic organization that centers on allowing the free pursuit of self-interest must be one marked by a tendency toward wealth expansion. By curbing self-interest, premodern society sets limits to the amount of wealth. By freeing self-interest, modern society breaks apart those limits. The same motive exists in both settings; the only difference is the constraints it does or does not face. An alternative line of argument, closer to the one Marx pursues, focuses attention on the specific end that amassing private wealth might accomplish, that is on the specific interest it might serve. We need not assume, then, that all self-interest is served by wealth accumulation, but instead wonder what ends are served by wealth accumulation, and why they take on such importance. In attempting to identify the specific aspiration bound up with wealth accumulation, it helps to return to the idea that wealth provides not the means of subsistence but the means for establishing difference. If we connect wealth to the differences between persons, rather than the satisfaction of subsistence need, then the question just raised about the kind of self-interest gained through acquiring wealth becomes the following question: What kind of difference does private wealth accumulation establish? Since what distinguishes difference in modern society is its connection to self-determination, that you are not born to your position, but achieve it, it follows that the relative positions marked by amounts of wealth are open to persons independently of birth or other natural condition. In other words, differences arise for persons who are, in an important sense, equals: they are equal in their initial access to difference. Then, the achieved differences must be consistent with an underlying equality of status, expressed in the idea that all persons are equally property owners, although they may own vastly unequal amounts of property, and in that sense are unequal. This combining of equality and inequality is the kind of difference attained by wealthholders in a modern, capitalistic, society. Normatively, the image just drawn is more compelling, the less we assume that prior access to wealth significantly determines what the individual can or cannot achieve. As many have pointed out, however, this seems a highly implausible assumption, at least for those whose access to wealth falls short of the amount needed to facilitate the development and exercise of autonomy. However we judge this matter, it remains the case that, under capitalism, equality and inequality are

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combined in a unique way, which follows from, and supports, a use of wealth that would be corrosive of pre-capitalist society. Following this line of thinking, Marx insists that the difference sponsored by private ownership of wealth is the difference in amount of wealth (Marx 1977: Chapter 4). To understand Marx’s point, we need to consider that wealth exists for its owner not simply or primarily as an accumulation of useful things, means of consumption or luxury goods, but as an accumulation of value. It is, then, the accumulation of wealth measured by its value (in monetary units) that provides self-interest with this peculiar end. In other words, the object of acquiring wealth becomes abstract, no longer the specific goods whose consumption establishes social position, but the value the sum of those goods represents. When summed, of course, their particular features and connection to particular need get put aside. Thinking of want in abstraction is a hallmark of modern society, where money value is used to establish social position. This abstraction also distinguishes basic needs, as discussed in the development literature, from the subsistence we associate with primitive, and even traditional, society. Once we treat wealth simply as an amount measured in monetary units, then the only difference between wealth owners is the difference in the amount they own. Thus, if self-interest is to be an interest in wealth accumulation, it must be an interest in acquiring wealth not for its use but for its amount; and if this is an interest in establishing difference, it is an interest in establishing a difference in amount of wealth owned. As Marx points out, this difference in amount of wealth has no limit (Marx 1977:253) because it is the quantity of wealth, and not the usefulness of its elements, that counts. If, then, wealth owners seek wealth simply to have more of it, more than others for example, then their wealth-seeking has no limit. This does, indeed, seem to be the case under capitalism. It does not, however, resolve the original question. We still need to know why having more wealth, more wealth than you have had in the past, or more wealth than others have, might be the end of self-interest. Why is self-interest an interest in establishing a position in a hierarchy of wealthiness? The answer provided by Adam Smith, not in The Wealth of Nations, but in the work that precedes it, The Theory of Moral Sentiments, refers to the pursuit of esteem in the eyes of others. If the end of self-interest is the honor or esteem of others, then rank looms large in the pursuit of wealth. If amount of wealth determines rank, self-esteem will depend on wealth accumulation. In this case, the need for wealth is a need to take

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on a specific existence in the eyes of others. This being-for-others, when organized around wealth, undermines any limit of need, and any possibility that there might be enough wealth. Curiously, this result makes wealth function in a decidedly premodern manner, and for characteristically premodern ends. Achievement, understood as the attaining of social position through the private accumulation of wealth, refers us not so much to individual capacities as to the individual taking on a social role. This role, as Smith, Marx, and Weber all observe, undermines any autonomy we might attribute to individual action, since it subordinates the individual to his or her wealth. Marx treats the individual consumed by the end of capital accumulation as dominated by his property; Weber refers to him as the “steward” of his capital. Thus, the preeminently capitalistic way of life locks the individual into a social position inconsistent with any real subjective determination of a life plan. In this, the idea of capacities and potentials gets displaced by that of a drivenness to amass wealth as the basis for attaining social position. Making honor the end of self-interest has the effect of subordinating the individual to others and to the group. The more we are motivated by the esteem of others, the more we are motivated to pursue ends defined in relation to them, and to the virtues and values stressed by our society, those virtues and values whose attainment bestows honor. Seeking honor means seeking an explicitly social identity. It makes us work for others and for the group. It is not surprising, then, to find the pursuit of wealth treated as a virtue because it does indeed serve the group by enhancing the nation’s wealth. This is exactly Smith’s argument, which still carries weight in societies devoted to wealth accumulation, where it is assumed that private accumulation is a virtue because it is thought to serve the greater good of the group, and not just enhance the welfare of the individual capitalist. The connection of wealth accumulation to honor also connects the motivational structure of a modern, capitalist, society to that of the more traditional society, where honor is the end of social achievement. The difference is in the specific means for attaining honor, and the nature of the hierarchy that determines the esteem in which the individual is held. Under capitalism, this hierarchy is quantitative and (at least in principle) independent of birth, so the motivational structure centering on honor incorporates a breakdown in the limits, especially on amount of wealth, typical of a pre-capitalist society. Under capitalism, there is no limit, and thus never enough wealth.

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The coming together of two principles, one traditional, one modern, pushes aside any limit to wealth in finite want. The first principle is the use of wealth to establish esteem in the eyes of others; the second is the principle of equality of persons. The convergence of these principles makes esteem a matter of amount, and of place in a quantitative hierarchy, where all are equal as persons (having the social status of property owners and citizens), though radically unequal in amount of property, and thus in the measure of personhood through wealth. For there to be enough wealth, the end of being a person must be separated from that of rank in the eyes of others. To gain this end, a radical change must take place in the subjective meaning we attach to the connection with others, one that leaves behind the more traditional significance of that connection in which the self is held hostage by others and by the community.

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3 SELF-SEEKING AND THE PURSUIT OF HAPPINESS

I SELF-INTEREST 1 Integrating the subjective dimension means taking more explicitly into account the connection between want and the subject who wants. Want does not stand on its own, but has roots in a concept of the subject, whose want expresses those attributes we associate with being a subject. Linking want to subject also establishes a clear separation between “human” wants, and wants unconnected to qualities of humanness. In the classical theory, the human element in want involves a connection to self-interest, which some would argue is the central concept of the classical construction of market economy. Yet, however important this concept to the classical theorists, we find surprisingly little in their writings to guide us in understanding the self whose interests are the driving force in market economy, or the self as origin of want. While, in The Wealth of Nations and in Ricardo’s Principles of Political Economy, we find little that adds up to a concept of the self or of self-interest, there is a relevant discussion in Smith’s earlier work: The Theory of Moral Sentiments. In that work, Smith treats the self as the matrix of reason and passion. Smith does not set about to articulate a notion of the self as the entity whose interests are at stake in market affairs, but such a notion is implicit in a set of concepts he does articulate, including, in particular, the notion of “self-command.” If we

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consider, for a moment, what it is that gets commanded, we move a step closer to a classical notion of the self or subject. “Self-command” for Smith means command over the passions. That is, he makes self-command mean command over the self, and he makes the self equal the passions (Smith 1969: 387–425). This equation of self with feelings is primary. Yet, the interpretation that equates self with feelings, however plausible, runs into difficulty because of the emphasis Smith places on sympathy for others.1 The feeling for others, especially the capacity to consider ourselves in their place and act on that basis, is in part a function of reason, but only in part. It is also an emotional capacity (Oakley 1994: Chapter 3). Because of this, it must be part of the self considered as the passions. According to Smith, the sympathy we feel for others does not engage us so much in feeling what others feel, as in placing ourselves in their situation (Macfie 1967:49). We do not become others; we know how we might feel if situated as they are. We cannot do so, of course, if our feelings are not in some sense the same as the feelings others have, so that imagining ourselves in their situation gives us access to feelings in ourselves that are comparable to what those in that situation feel. Sentiments, then, are not purely personal, but involve a connection to others, even if that connection is mediated by an intellectual effort, of placing ourselves where they are. This means that sympathy combines feeling and reason, which suggests the important part reason plays in the moral sentiments. Smith’s emphasis on the connection with others makes his understanding of self-interest somewhat complex. To capture some of this complexity, I will distinguish between self-interest narrowly and broadly conceived. Self-interest narrowly conceived is an interest in feeling states and satisfactions unconnected to the well-being of others. Self-interest broadly conceived refers to the entire set of possible satisfactions available to and pursued by the self, including those that derive from sympathy for others. What goes on within the self, broadly conceived, includes a capacity to transcend self-interest, narrowly understood. Smith refers to this capacity as if it were a kind of person in its own right: the “impartial spectator.” While acknowledging that our desire to attain ends associated with (narrow) self-interest is much stronger than our interest in others, Smith also insists that, rather than our selves being absorbed wholly in the pursuit of (narrow) selfinterest, we also adopt a perspective, that of the impartial spectator, from which we are no longer at the center (Smith 1969:161–2). This is a

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standpoint for judging our own action that, while internal to us, is not partial to our interests. The individual’s ability to adopt the standpoint of the impartial spectator expresses his or her being in a world of others. Being impartial means relating to the interests of others on the same plane as your own; in this sense it is a standpoint that takes others into account. Yet, beyond simply taking others’ interests into account, the impartial spectator, because he concerns himself impartially with all particular interest, has a general or universal standpoint. This universality means that, when we adopt the standpoint of the impartial spectator, we adopt the standpoint of the self in general rather than in its particular manifestations as wrapped up with its particular ends. This is another dimension of the distinction between narrow and broad self-interest. What allows us access to the experience of others is that others are also selves. Thus, reference to self and self-interest is not inevitably a reference to a concrete, particular, system of personal ends and motivations, but may be a reference to something that transcends particular ends. This transcendence of the particular gets lost in postclassical depictions of individual wanting and choosing, which are treated as wholly particular to the individual. The idea that we cannot make interpersonal comparisons, or in any way judge individual want, stems from the premise that want is irreducible. It assumes that want is not the expression and instantiation of a general idea, the idea of being a self, but refers to whatever the uniquely particular actor seeks for his or her self. Once, however, we insist that individuals have access to the subjective states of others, we take their ends and motives not to be whatever they happen to be, but to express something more general, the self in general, which is something to which all selves have access, because it is something they all are. If we are to follow Smith, then, we must distinguish the two aspects of the self: the particular and the universal. Indeed, Smith, does so when he distinguishes between self-interest and self-command. Self-interest refers to our concern with our particular ends; self-command enables us to concern ourselves with the fact that all persons have particular ends, and therefore takes us to a more general plane. While Smith interprets sympathy as a constraint on, or redirection of, self-interest, he also treats sympathy as implying that the self has an interest in others. This suggests that self-interest follows not only passions involving our inner states of pleasure, but also passions involving our experience of the inner state of others (however indirect and mediated that experience may be).

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While we can interpret the self in self-command as the passions, the idea of an other-regarding passion suggests that living with others is not simply the product of command over our passions, but of passion itself. If this is the case, then self-command might be read the other way around. That is, rather than equate the self with the passions in need of command, we might understand the self as the agent that commands its passions. In this conception of the self, reason plays an important role either in guiding the passions so they will best achieve their end, or in overcoming the passions (or certain of them) to assure regard for others and for higher principles. Reason also links the self to ideals that originate outside, and depend heavily on the desire for esteem, which is a passion, and thus of the self, and yet a connecting point outside the self. Of course, if the self is the agent that commands the passions, selfinterest cannot be equated with any particular set of ends to which a given individual aspires at any given moment. The interests of the self are more general than this. It is this general dimension of interest, which is also a more general dimension of want, that Smith is attempting to capture. Interpreting the self as the agent that commands its passions links Smith’s conception with others that divide the individual’s inner world into an emotional driving force, or set of forces, and a conscious or purposive agency that channels, bridles, and organizes those forces. Smith’s interpretation has something in common, for example, with Freud’s structural model of the mind in which the id is the locus of (or contains) the passions, while the ego and superego act somewhat like Smith’s self: to constrain, or possibly re-direct, the passions. One difference is that, where Smith emphasizes the other-regarding passions, Freud does not. Only in post-Freudian theory does this idea regain prominence. Yet, the idea of control, which plays a central role in Smith’s notion of self-command has a strong affinity with Freud’s construction. Both make finding how mental life can be suited to living with others a central concern; and, both find control over passion vitally important. 2 The term self-interest already invokes reason since the pursuit of selfinterest, even if motivated by passion, is not the same as the drivenness we associate with the work of passion in its unmediated state. Acting directly out of passion, without mediation, means acting without any intervention of thought either as calculation or as idea. Acting on

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interest presumes that passion is attached to a particular object or action because of the idea we have about the object. In this case, the idea is the translator of passion into interest. The term self-interest, then, takes us beyond the work of the passions.2 In doing so, it presumes a part of the mind that is not the passions, but the translator of passion into interest, the part Freud refers to as the ego. Under a broad interpretation, the ego is also a part of the self, so that the self and passions are not coterminous. Nonetheless, so long as the ego does nothing more than translate passion into interest, for example by taking into account the outside world, that is by reality testing and adapting means to ends, the passions still drive self-interest. They are its real substance and center, if not the whole. How we judge the role of reason is vitally important. We can treat it as a tool used to assure that passion best achieves its end; or, we can interpret it as part of the process that forms that end. Put another way, we can understand want as the expression of an inner drive, and thinking as a means for better attaining want; or, we can understand thinking as an element of want itself, the “thoughtful element in want” as I refer to it in Chapter 5. As we have seen, it is not just reason that commands passion, it is the feeling for others Smith calls sympathy that commands and constrains those feelings that lead us to disregard others (Oakley 1994:46). This makes it more difficult to discern, in the complex of passion and reason, where exactly the self is to be found, and in what exactly its interest lies. After all, sympathy is also an important part of the self, and therefore an object of self-interest; and yet the end of sympathy is the welfare of others. This means that self-interest can be an interest in others (other selves). The notion of sympathy, then, makes it difficult clearly to identify the object of self-interest, at least given the term’s usual (narrow) connotations. Smith’s answer to the question as to what is the end of self-interest compounds the difficulty since it leads us away from the self and towards others, but in a direction different from that laid out for us by the notion of sympathy. This answer emphasizes the pursuit of power and wealth. If we wonder, as Smith does, why individuals have such an interest in wealth and power, what the self gains for itself when it gains these two connected objectives, the answer, according to Smith, is the regard of others: “to deserve, to acquire, and to enjoy the respect and admiration of mankind, are the great objects of ambition and emulation” (quoted in Oakley 1994:51; see also Heilbroner 1982). However, this answer, as we will see below, runs into significant problems. Even for

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Smith, or perhaps I should say especially for Smith, the pursuit of admiration through wealth, rather than achieving the ends of the self, takes us further from that state in which the self achieves its true end. Smith insists that the desire for the admiration of others plays a primary part in shaping and directing self-interest. Yet, he goes a step beyond equating self-interest with pursuit of approbation of others. After all, the praise of (particular) others is in its way partial, especially if it is connected to doing things those others perceive to be in their selfinterest. For Smith, our interest includes a more universal end, the approbation of the impartial spectator. We enjoy being worthy of approbation, even where none is actually bestowed upon us: “We are pleased, not only with praise, but with having done what is praiseworthy” (Smith 1969:211). Once we take pleasing the impartial spectator as our end, we make universal values part of the end of our self-seeking. This does not mean that we give up our partial ends, but that our ends must combine two dimensions: one partial, one universal. The latter is the object of the impartial spectator. This brings the distinction between self-interest and self-command into play. To gain the approbation of the impartial spectator, we must do things that require self-command: “Where little self-command is necessary, little self-approbation is due” (Smith 1969: 247). In other words, we gain real approbation only when our acts are guided by how we anticipate the impartial spectator will judge them. Insofar as we consider this praise of the self a prime element of what we seek for ourselves, then self-interest cannot be served without selfcommand, since without the latter, we can gain no esteem in the only eyes that really matter: those of the impartial spectator. The great passion driving self-interest is an interest in the image of the self existing outside. This “outside” is not only outside the individual, the individual’s mind, psyche, or self (in the broad sense), but outside that part of the mind preoccupied with narrow self-interest. Self-interest is an interest in a state of mind only gained by the self if provoked in others, including the other within the self: the impartial spectator. The pursuit of self-interest, then, could hardly make us more dependent on others. Indeed, the mutual dependence in a division of labor emphasized later in The Wealth of Nations is by comparison a purely external dependence. That, within a division of labor, we seek others to gain from them the things we need provokes our self-interest and makes it an (instrumental) interest in others. That we need others to gain our self-feeling, however, means that the self in which we take an interest exists for us in others. Indeed, the mutual dependence of the

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division of labor develops out of this deeper dependence, since it is the latter that provokes the interest in wealth that leads to the division of labor as a means of increasing wealth and making the nation wealthy. The question persists about the pursuit of wealth as the activity and end of a free person. Why would the owner of wealth use it to acquire more wealth, and can this use of wealth be said to express genuine selfdetermination? Smith’s answer to this question, alluded to above, is a troubling one if we interpret his theory as one in which pursuit of wealth accumulation establishes true self-determination. According to Smith, happiness cannot be attained by the restless striving to attain a higher station in life, but consists instead “in tranquillity and enjoyment” within a “permanent situation” (Smith 1969:250). This image hardly fits the life of the capitalist, with its never-ending pursuit of more. Indeed, we may wonder if this construction does not fit best the more traditional hierarchical society, made up of fixed positions or ranks, than the modern world Smith deals with in The Wealth of Nations. Yet, given Smith’s conviction on the matter, the question remains: Why does a wealth owner, free to use that wealth as desired, presumably therefore to the end of achieving happiness through tranquillity, devote himself or herself to the pursuit of gain through accumulation?3 Smith’s answer refers us to avarice, which “overrates the difference between poverty and riches” (Smith 1969:250), and “the pleasures of vanity and superiority,” which are “seldom consistent with perfect tranquillity, the principle and foundation of all real and satisfactory enjoyment” (Smith 1969:251–2). How do we interpret avarice, superiority, and vanity? On one side they seem clearly ends individuals pursue at their discretion in the expectation of gaining the feeling we assume shapes self-interest. As ends we freely choose, they must be part of our self-determination, and therefore freedom. Yet, if Smith is correct, we do not choose them in any realistic expectation of attaining satisfaction or happiness. On the contrary, our pursuit of these ends must prevent our attaining that state— of tranquillity—in which alone satisfaction and happiness can be gained. Still, satisfaction and happiness must be the self’s true ends, and the state of tranquillity is readily enough understood as a self-feeling attained when we escape the inner turmoil of the divided self, and discover the comfort associated with being (at home with) ourselves rather than striving to become something we are not. If this is so, the activity typical of the capitalist does not suggest real selfdetermination, but the self’s external determination in the eyes of others, and the striving to attain an alien selfhood whose attainment is

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always just out of reach, and, if attained, would in any case only assure self-alienation. Smith leaves his reader with a classic dilemma about the self and its pursuits. Why does the self, when set free of external coercion, pursue an end whose attainment assures it will be unhappy and unsatisfied, and whose attainment is in any case excluded by the terms of its pursuit? Why do we run from the state of tranquillity, and the implied selfintegration that means satisfaction with our selves, into a state of unrest and unhappiness? How can we talk of self-determination, and therefore freedom, when the self drives toward goals that assure dissatisfaction? The answers to these questions have to do with the self’s dependence on recognition by others, a dependence central to Smith’s conception in The Theory of Moral Sentiments (see Macfie 1967:71–5). The need for recognition establishes the dilemma that to be ourselves we must gain the esteem of others, but doing so makes our selfhood contingent on our ranking in their eyes. Once placed into this dilemma, we seek to overcome it by attaining the highest station available to us in the vain expectation that the esteem attached to this station will assure the recognition needed to make our selfhood real. Yet, in a free society based on individual property, station depends on amount of wealth, which is not limited. The struggle for esteem, then, becomes a struggle to accumulate wealth, which can never end, since we can never have enough. Freedom, which means self-determination, means attaining station and thus the esteem of others, which means the never-ending accumulation of wealth, which assures we will never attain the state of tranquillity where happiness and satisfaction are possible. Freedom, then, means unfreedom; self-determination means subordination of the self to the accumulation of wealth, and thus determination not only by others (whose recognition we seek), but by our own property whose growth is the means to recognition. This construction destroys the limits of a world in which station was given and more or less unchangeable. Wants in such a world derive from social position and the demands of living a way of life consistent with that position. Now, instead, wants are not limited, freedom means freedom from limits not only of a fixed traditional hierarchy of stations, but of the state of tranquillity to which Smith refers. Within that state, our wants are clearly finite. When we give up that state, wants grow seemingly without limit.

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3 In the sense just outlined, Smith uses a concept of the self, one that either equates self with passion or makes the self a divided system combining passion and reason. Yet, he does not make the concept he uses explicit, nor does he organize its elements in a consistent and compelling way. Some of the problems just outlined in the concept of the self arise because Smith takes both passion and reason more or less for granted. To his way of thinking, neither needs its own account since each stems from our natural constitution. In a sense, then, passion and reason are the theoretical primitives; the self is what we construct by combining them. Since the struggle within passion, and between passion and reason, is taken to be given, we do not learn much about their origins. In this more basic sense, Smith does not provide us with a real concept of self or self-interest. The absence of a real concept of self in classical theory has a bearing on the question of the relation between subjective action and objective determination. If we take freedom to be the characteristic of a subject, who knows, wills, and acts, then the limits the classical understanding places on self-determination are limits it places on freedom in the name of determination. In the classical theory proper, the pursuit of wealth marks the freedom of the members of the property-owning class. At the same time, the members of this class are only truly free to pursue one end, the growth of their capital, and in this they are only formally free. They are not the subjects, but the agents of the real subject. This real subject is capital, an objective system whose intrinsic rules govern the actions of its “representatives” (as Marx sometimes refers to them). In Smith’s language, the individual’s self-interest drives him, as if by an invisible hand, to achieve ends not his own, and of which he may be unaware. Freedom means the property owner’s right to dispose of his property as he sees fit, including the capitalist’s right to use his capital for whatever ends suit him. Freedom means that the object is made subordinate to the will of the subject (the individual). Necessity is the hidden force that turns the pursuit of private ends into the system of economic reproduction and expansion; it is the hidden determination of the system of freedom that arises, not from outside as a rule or law, but from the inner workings of that system itself. In this conception, freedom and necessity are bound together, since necessity is the working out of a result only possible in and through self-determination. Yet, the self-determination that leads to this result is, in reality, the turning of the seeming subject of action (in this case the capitalist) into

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the agent of a real subject (capital, or the market system as a whole). This is the unity of freedom and necessity characteristic of political economy in its classical phase. This way of uniting freedom and necessity, however, destroys any notion of a real subject by turning self-seeking into its opposite. That is, the self is never gained, but only used as an instrument for socialhistorical ends. There is virtue in this if we assume from the outset, as most classical thinkers do, that there is something suspect about the pursuit of the ends of the self, that doing so conflicts with obligation and the ties with others that make group life possible. 4 As we have seen, the emphasis on self-seeking we associate with classical political economy poses a problem of limits, specifically the limitlessness of want represented especially in the pursuit of monetary gain. Premodern thinkers, most notably Aristotle, viewed the breakdown of these limits with anxiety. This anxiety has something to do with the shift from need to want, necessity to freedom. In the arena of want, the development of freedom means a limitlessness that threatens social order and community. Where does this danger originate? Is it in the emergence of self-interest, or in the weakening of constraints on self-interest? Does self-interest inherently threaten order, or only when it takes the amassing of private wealth as its end? One answer to this question is implicit in Smith’s notion of the tranquillity achieved by living in what he calls a “permanent situation” (Smith 1969:250). To gain satisfaction by living within a permanent situation requires that the self identify with its situation. If this situation confirms the values and ideals of the larger order, then the happiness gained by identifying self with situation is also a confirmation of the meaning and significance of that order. Pursuit of self-interest, then, does not challenge social order or the group ends it embodies. Yet, if pursuit of self-interest means rejecting any given situation in favor of a life devoted to change, in which no permanent situation exists, then pursuit of self-interest does not confirm any larger social order. Instead, self-interest is inherently corrosive of any group ends other than those that confirm the restless pursuit of wealth, and the change in station attaining greater wealth assures. The danger so far identified arises because no permanent situation satisfies the self. However, even if it does, it must still matter how that permanent situation connects to the values and ideals of the larger

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order. If the ends pursued to maintain an appropriate permanent situation provide happiness for the self but nothing for the community, then the community gives way to a world of private lives connected only by the demands of mutual dependence in want satisfaction, and reciprocal respect for property. Presumably, however, Smith’s permanent ends retain at least a measure of connectedness to a larger community, including a regard and concern for others going beyond the purely instrumental. Given that they do, it seems doubtful that (narrow) self-interest could conform to them. The solution that made The Wealth of Nations a success is that social order can be assured even if the individual is set free to pursue a private interest that is self-regarding (narrow self-interest), and not limited by the interest in a permanent station.4 It is, after all, Smith’s argument that the market, consisting of independent property owners pursuing selfregarding interests, works to assure the provision of subsistence and the growth of the national revenue. The demands of the social order are not directly imposed on the member, but emerge as the unintended outcome of the exercise of the individual’s freedom to determine and pursue his or her own ends. This development is intimately connected to a change in the nature of the wants that drive economic affairs. The idea of subsistence expresses the limit of want in need, the need to maintain a way of life appropriate to social position. One implication of the idea of subsistence is that needs, rather than being individuated, are a matter of group membership. Of course, uniformity of need implies the commonality, or even uniformity, of members that clearly marks their subordination to the group. The multiplication of need endangers the group precisely because of its link to individuation. Thus, the erosion of the limit of want in need is an erosion of subordination to the group. The selfdetermination of want undermines the member’s determination by the group, and thus the group itself. How can we cope with this elevation of the status of self-seeking that threatens to overthrow the limits that hold the social order together? The first answer in political economy seeks to make self-interest a means to an end rather than an end in itself, although elements of the latter creep in.5 The end is wealth, but not primarily as a means to satisfy the individual (achieve narrow self-interest); rather, at the beginning, wealth is a means to provide subsistence to the population and security for the nation (see Smith 1937:428). Smith begins The Wealth of Nations by observing that some nations are so poor they cannot support their old or ill members, while some are

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so rich they can support many who do no productive work. He then asks what makes some nations wealthy, some poor. His answer, in brief, is that wealthy nations free up the forces of self-interest and private property by adopting the social institutions we associate with a capitalist economy. The myth of the savage state serves to justify the introduction of capitalist institutions, which are rooted in the pursuit of self-interest. Yet, these institutions are justified not by their link to selfinterest, but because of their link to wealth and the emergence of wealthy society. In this construction, wealth is important not because it liberates the self, but because it better assures subsistence. This is a very important idea, and one which Marx takes over from Smith. The tactic adopted by the classical economists to deal with selfinterest depends on preserving a “higher” purpose for it to serve. When we unwrap this higher purpose, however, we find at its core self-interest once again, but no longer as mere means. When the classical economists argue that self-interest can be harnessed to an (unintended) purpose not its own, they have in mind the nation as a whole. Yet, as the system of self-interest gained strength, the national end lost its clear difference from the ends of individual citizens. Soon, there was no convincing answer to the question: What other use does the wealth of the nation have than to enhance the welfare of individual citizens? II LABOR 1 Smith begins his work on political economy with the idea that labor produces wealth. First, Smith wants to replace the idea that wealth is amassed by redistributing a given amount with the idea that wealth results from our efforts to produce it. This has significance for understanding the origins of wealth both domestically and globally. Nations are wealthy not because they expropriate, or exploit, or get the better of, others, but because they do a better job of realizing their own potential. Smith’s argument seeks to bring responsibility for wealth and well-being home. Instead of seeing the other as source, Smith finds within the nation the source of its own wealth. Beyond dispelling the idea that wealthy society becomes so by taking wealth from others, Smith wants to counter the idea that land produces wealth, and to place human activity squarely in the forefront. Here again

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it is not the other—what is external (in this case nature)—that determines self, but the self determining itself. By implication, this also removes wealth from the sphere of necessity, and places it into the sphere of freedom (of human creativity). This contributes something important to changing self-interest from means to end. Yet, people have labored throughout history without producing wealth, so a question remains: When does labor produce wealth? To place mankind’s destiny into its own hands, people must labor, but in a particular way. To make the source of wealth internal, there must be development of a definite kind and toward a definite end. This development makes determination of wealth an internal matter. For Smith, the nation must transform itself so that its activity (labor) produces wealth, and its responsibility is for itself. How does the nation make its labor produce wealth? For Smith, this is an organizational and institutional question, the answer being the institutional arrangements we now refer to as capitalism or private enterprise. The key lies in placing the means of production into the hands of persons who will use them to create more wealth, and especially more means of production. The idea that labor produces wealth can only be valid if the amount of wealth is linked to the amount of labor, so more labor produces more wealth. For Smith, the measure of wealth is value, and the unit of value is money. Thus, the claim that labor produces wealth leads to a claim about labor and value (or price): the so-called labor theory of value.6 This theory makes value, the measure of wealth, independent of want. The amount of wealth does not vary with demand for it, and thus with the wants of its eventual consumers. The amount of wealth is, in this sense, an objective fact of life governed by productivity and the distribution of labor between tasks that produce wealth and tasks that do not (productive and unproductive labor). The theory of value that measures wealth independently of want establishes the domination of the objective over the subjective in economic life, making the determination of want irrelevant to the system that assures its satisfaction. This is surely an odd result. The formal justification later advanced, the assumption of constant returns to scale, hardly seems to hold for Smith, who emphasizes the division of labor (which, adopting the more modern language, would seem to imply increasing returns). Why then, within Smith’s classical conception, assume that want does not enter into the determination of the magnitude of value?7 What danger does the classical theorist perceive in the possibility that value might not be a wholly objective matter?

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The determination of want in need holds an answer to these questions. Given this determination, needs change not to express the subjectivity of needy persons, but to express the growth in the population of those dependent on the market for their subsistence. This growth, in turn, follows the growth of capital. As capital expands, demand for labor expands, and as demand for labor expands, the need for subsistence increases, but its object does not change. As demand grows, the scale of production increases. In the world of Adam Smith, this means costs of production decline, and the value of the product falls. This is not, however, a matter of the determination of value in a subjectively based demand function, but follows instead from the wholly objective condition of demand growth derived from growth in the population of wage laborers. This wholly objective interpretation continues with Ricardo, although the idea that value declines with accumulation due to increasing returns emphasized by Smith gives way to its opposite: the rising cost of wage goods due to the diminishing fertility of the soil. Yet, while this outcome may fit more comfortably with the subjective interpretation that comes to dominate at the end of the nineteenth century, it is in spirit much closer to the classical theory. Wants remain an objective matter, ruled by the need for subsistence, and varying with the magnitude of the employed labor force, not with any subjectivity of the individual workers treated as consumers. 2 In the classical period, the problem of producing, and increasing the production of, wealth dominates. Implicitly, the idea is that there is not enough wealth. The purpose of political economy is to facilitate, through appropriate state policy, the production of more. This is meant to be a theory and policy for the transition to wealthy society. Because there is not enough wealth, we must devote ourselves to producing more, which means that many remain unfree. Further, because there is not enough wealth, the many must live at subsistence, that is without wealth. Given this construction, we might assume that the theory can tell us when there is enough wealth and how society approaches this point. For Smith and Ricardo, however, this is not the case. After all, how can there be enough wealth if wealth satisfies not subsistence needs (necessity), but need beyond subsistence?8 Ricardo’s defense of Say’s law exemplifies the classical attitude toward the problem of knowing when there is enough wealth. He argues

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that, while we might have as much as we want of any given thing (bread or shirts for example), we can never have as much wealth as we want.9 Implicit in this judgment is a division of the idea of want into two parts. First, want is for particular things, whose acquisition provides satisfaction. This want is finite, and has a well-defined relation to a particular object. It is objective for the person who wants. Second, there is want as such, abstracted from its particular incarnation. This want must become a want for something definite, but is not thereby limited. This want without limit lurks under the surface of political economy in its classical period, emerging here for Ricardo as part of his argument against the idea that demand might limit production. Want does not limit itself in its satisfaction. If anything, the satisfaction of want creates new wants. The process has neither limit nor end. Put another way, the self has neither limit nor end. The classical economists see the limit of want, not when there is enough wealth for all, but when as much wealth as can be produced is produced. Thus, for Ricardo, natural necessity or scarcity limit satisfaction, an idea that takes root at the end of the nineteenth century. Because there is not enough wealth, the economy must be organized not to provide for individual satisfaction or happiness in the present, but to establish the foundation for that possibility in the future. While the system of self-seeking creates the material foundation for human freedom, Marx argues that it also excludes the producers of wealth from the freedom wealth affords. This establishes a division in society that cannot be overcome without overcoming self-seeking, which is its basis. To say this, of course, is to separate self-seeking from freedom, the former being both means and impediment to the latter, but certainly not its substance. Yet, what is freedom if not the self-determination that can only come out of self-seeking? Surely freedom is both the process by which we seek our selves and the result, which is the finding of the self we refer to as self-determination. While the problem of self-determination is central to Marx’s conception, something essential is missing there. This something essential has to do with Marx’s way of thinking about the self or subject. This way of thinking appears early in his discussion of estranged labor, and in the complexities that attend his effort to explore the relation between labor and that characteristically human activity by which the subject becomes real in the world. As we have seen, labor cannot be the activity of self-realization since labor means alienation of the laborer. This means that self-realization must await the elimination of labor, and particularly of the need to exchange labor for subsistence.

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Yet, labor is the only concept Marx provides for thinking about the activity of making the subjective objective. Clearly, the problem originates in the way Marx takes capitalism to suppress the uniquely human quality of human activity, especially labor. Then, if we are to know that quality, we must find in labor the self that laboring extinguishes. In a way, the labor theory of value does just this, since it insists that the activity that estranges the product from its producer produces the wealth capable of setting the subject free. Following Hegel, this makes labor, which has become the object (the slave) of an external subject (the master), the creative force in history. Labor produces surplus-value, which is the fuel for the growth of wealth. Recall Adam Smith’s ambivalence about the consistency of wealth accumulation with human happiness. Smith finds the pursuit of wealth derivative of the human desire for admiration in the eyes of others. He concludes that, while wealth satisfies this need, it is not ultimately a source of human satisfaction because it undermines tranquillity and fosters a struggle for position. Since happiness comes with tranquillity, wealth, which provides satisfaction of a basic human passion, does not lead to happiness. Marx’s viewpoint carries forward Smith’s ambivalence since Marx also links happiness with tranquillity, or “contentment” as he terms it (1972:74). Yet, perhaps following Hegel, Marx sees more in the pursuit of wealth than the desire for admiration and social status. He sees there the possibility for a “many-sided” human development free from the necessity to labor. Marx understands wealth as the myriad of human possibilities, the multiplication of wants and of the means for their satisfaction. We might infer from this that, with the coming of wealthy society, the subject will for the first time receive fully its due. Thus, the claim would be that domination of the object over the subject, definitive of the classical moment in political econ omy, is the reality of a social order based on the pursuit of wealth through subjection of labor. Only by overcoming this order, which means completing its mission, can the subject take its place in the world.

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III THE PURSUIT OF HAPPINESS 1 That pursuit of self-interest turns, for Smith, into the pursuit of unhappiness (endless accumulation) clearly indicates a problem at the center of the idea of self-interest. Specifically, it indicates that attaining those ends individuals pursue as their own, in a context where the ends of others cannot be imposed on them by force, does not imply attaining a state of mind we could refer to as satisfaction or happiness. Rather than attaining their own ends, individuals work for esteem in the eyes of others, an esteem now attained by the amassing of private wealth. The virtue in doing so is that it brings about the transition to wealthy or civilized society. In this construction, the individual and his or her interests are molded to serve the larger historical process of economic development, a process for which the happiness of participants is at most an accidental, and always an uncertain, byproduct. On one reading, the classical texts raise self-seeking to the level of the organizing principle of society, thus overcoming the distrust of the self and its pursuits that precedes the modern period. Yet, at the same time, these texts treat self-seeking more as means than as end. In this sense, they make it subordinate to higher virtues. For Marx and his classical predecessors, self-seeking and self-interest are not so much ends in themselves, as the means to the construction of a wealthy society, a society in many ways beyond the pursuit of self-interest. Virtue lies, then, not in gaining the self, but in the unintended consequences of its pursuit. Marx places this virtue beyond civil society and capitalism rather than within. The goal of economic development is a form of society whose virtues are in many ways violated by the process of their coming to be. Yet, before Marx undertakes his systematic exploration of political economy, he has an idea of self-seeking, which he views favorably, one that is not about capital accumulation and the amassing of private wealth, but about self-realization through labor. This conception of selfrealization appears mainly, however, as an implication of its negation under capitalism. When production falls under the domination of capital, the labor process ceases to enable the laborer to realize his or her subjectivity in the object, but instead creates a product hostile to that realization. The hostility of his product to the worker, who becomes the source of the power of another, means that the power created in creating

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wealth denies the worker any possibility of realizing his or her own subjectivity through the production and use of wealth. Rather than the realization of the subject in the object, labor sacrifices the subject to the object: under these conditions, labor is “self-sacrifice,” an activity that “belongs to another; it is the loss of…self” (Marx 1972:74). According to Marx’s critique of political economy, the agents in whose hands and at whose expense the growth of wealth will take place find only diminished selves: selves taken up with wealth accumulation, or exploited by those preoccupied in that way. The pursuit of these forms of selfhood cannot be the true end of economic activity. This interpretation of market society as one in which the individual is preoccupied with a problematic, even diminished, selfhood contrasts sharply with the thinking that follows the classical period in political economy. Toward the end of the nineteenth century, a change takes place that shifts self-seeking from means to end, loses track of the link to wealth accumulation, and denies that the self sought is in some way problematic or diminished. Indeed, now there is nothing more than pursuit of the self’s ends taken as they are. Two ideas largely absent in earlier thinking come to dominate: choice and scarcity. In looking more closely at each of these ideas, we gain insight into the progression of thinking in political economy, and into what is lost and gained as economics emerges out of political economy. 2 Let me begin with the idea of choice, and the associated notions of satisfaction and happiness. In a way, it will seem odd, at least in retrospect, how little mention we find in the earlier theories of satisfaction if not happiness as a vital end of economic activity.10 To be sure, Smith does consider happiness and associated concerns in his The Theory of Moral Sentiments, and Marx’s early work explores matters that bear heavily on the prospects for happiness and satisfaction. Yet, when both turn later to political economy, neither happiness nor satisfaction is given special consideration. This does not mean, of course, that happiness and satisfaction have no importance for their later theories. It could mean instead that the connection between wealth, the concern of political economy, and happiness, a concern of the earlier texts, is largely taken for granted. It might also be, however, that, in different ways, both Marx and Smith saw the attainment of happiness as something to be sought outside political economy, in the state of society attained after the processes

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typical of a capitalist economy (linked to the growth of wealth) have completed themselves. We might understand this lacuna in the classical texts better if we consider more closely the way the earlier economists thought about the use of things, and how that differs from the thinking of those that followed them at the end of the nineteenth century. After all, if economic activity is to connect to the attainment of happiness, it must be in the connection between happiness and the acquisition of wealth. One possibility, though it is not the only one, is that the use of wealth is the place to look for this connection. Smith and Marx talk about what they term value in use or use-value. Each good has a use (or possibly more than one, but all linked into a set of uses). Our end in acquiring the good is to use it in the way that corresponds to its inherent usefulness. When used, the object might get used up. If the need for which it is used continues, reappears, or gets reproduced, then another use-value will be needed. While, evidently, use satisfies need, the emphasis is on use and need (objective) rather than satisfaction (subjective). In this context, even the statement that use of the appropriate object satisfies the need for which it is meant does not lead us inevitably to a subjective satisfaction linked to happiness. It may, but it may not. The term satisfaction may tell us instead that the good fits the need, and in its use removes (satisfies) that need, at least temporarily. Nothing in this suggests a connection of the need to subjective experience, as would be required by a notion of satisfaction that implicates the individual and his or her prospects for happiness. Rather, using and needing entail no individual expression or experience, and, instead, are given to the individual as objective conditions, determined outside. While the classical economists assumed usefulness was a necessary condition for a good to take on significance in the world of exchange and value, that was as far as they assumed the matter of use took us. Beyond being a necessary condition, usefulness has nothing to do with value, or surplus-value, or capital accumulation. Marx explicitly notes that use-value cannot be or determine (exchangeable) value since exchange equates goods with different uses. For the source of this equality, we must look elsewhere than use. Marx says this without much discussing it, taking it to be self-evident, which it would be if we take usefulness as an objective property of the good that varies in nature from good to good. Then, the equality of goods cannot stem from their use, or from the need for which they can be used. The point to emphasize

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here is that two different goods (different use-values) do not have different amounts of use, but different uses. The utilitarian theory disrupts this construction of the world of goods. It treats the use of goods as a matter of their capacity to satisfy their owners or consumers. Thus, Jevons (1888:43) quotes Senior to the effect that utility “denotes no intrinsic quality in the things which we call useful; it merely expresses their relations to the pleasures of mankind.”11 Use is now derived from satisfaction (in effect satisfaction is what we use goods for), a subjective state of mind of the user, now consumer, rather than an objective capacity of the good or thing. The theory moves away from notions of use and need, toward notions of want, desire, and consumption. As we have seen, Ricardo’s critique of Say’s law anticipates this movement. That critique had, implicit in it, a division of the concept of want into two parts. The first was linked to definite objects, and determined in an objective relation with them. This part of the idea of want was inherently finite. The second had to do with goods in general. It was neither definite—tied to a particular good —nor finite. Thus, echoing Smith and Ricardo, Alfred Marshall tells us that “[t]here is an endless variety of wants, but there is a limit to each separate want” (Marshall 1930:78). This distinction takes on significance as the basis for the notion of diminishing marginal utility. For economists at the end of the nineteenth century, as we increase the amount of a good consumed, we decrease the increment in satisfaction gained. For this to make sense, we must have two units of measure, one objective (the unit of the commodity whose amount is increasing at a steady rate) and one subjective (the unit of utility, which is increasing, but at a decreasing rate). The neoclassical economists, like their predecessors, took the first measure for granted, treating it as if it were purely objective, even physical. By taking it for granted, the entire burden of the subjective was made to fall on the psyche of the user or consumer, since the thing itself was wholly objective. Thus, subjective and objective were sharply separated. This separation made the matter of utility purely subjective, even to the point of suppressing its dependence on a system of need and use.12 Changing the concept of want brought a change in the notion of satisfaction from something we associate with finding the thing for which we have a need and using it to satisfy that need, to something we associate with achieving a more general state of mind. This state of mind was termed pleasure or happiness (two concepts not as clearly distinguished as they might be).

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Happiness was thought to be something derived from satisfaction, and achieved in the relation between consumer and the object of consumption. Note how little happiness is to be found in the earlier political economy. Workers might gain their subsistence, but this did not make them happy. In gaining their subsistence, workers used and consumed goods. The end for which these goods were used was not, however, to gain a state of mind, but to assure the workers’ maintenance. Use of objects achieves reproduction rather than satisfaction. Similarly, capitalists might succeed in making profit and increasing their capital, but this was not assumed to make them happy. Even if we use the term satisfaction for the state the capitalist gains by accumulating capital, it is not the satisfaction gained from the use or consumption of objects. It is the satisfaction gained from the accumulation of value, and the prospect of having more value, not from consuming the goods that embody value. In classical political economy, neither workers nor capitalists pursue satisfaction in the sense of the word that comes to dominate at the end of the nineteenth century. After the classical period, gaining a measure of happiness through the consumption of things becomes the end of economic activity and the normative basis for judging economic organization. Once satisfaction is abstracted from its connection to particular need and use, becoming a general quality derived from all goods capable of providing it, satisfaction relates to particular goods quantitatively rather than qualitatively. Different goods provide their consumers different amounts of one thing: satisfaction. It is no longer a matter of getting the thing you need, but of getting as much satisfaction as you can from the things you can acquire. Satisfaction is a matter of degree, and therefore a basis for comparing different goods and measuring them. Not only is satisfaction now a matter of degree, however, it is also a matter of the particular individual, and of what does or does not provide him or her with satisfaction. Again, the matter of satisfaction is not that of setting the useful thing in relation with the objective need it is designed to satisfy, but of each potential consumer determining for himor herself how satisfying having that thing will be. There is, then, in this construction, an abstraction from the particularity of need. This abstraction is not new. On the contrary, the classical economists emphasized just this aspect of wealth, whose components are subject to a single measure as so much value. Indeed, the interpretation advanced by the neoclassical economists also takes us from wealth as a mass of discrete useful things to wealth as a sum of value. The point is to deal with the universal aspect of the commodity as the component of wealth, that

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aspect that makes all commodities, no matter how seemingly diverse, embodiments of the same thing: value. To deal with this universal aspect of wealth, both classical and neoclassical theories connect the particular objects of wealth to something we might term an abstracting force. This force constitutes the universal in the particular; it imprints the object with an economic significance. For the classical economists, this force is labor; for the neoclassical economists, it is the consumer’s subjective desire for the object. Thus, for the classical economists, abstracting seems to be an objective process and condition of the object, while, for the neoclassical, it is something subjective. For the neoclassical economists, the abstracting force cannot be labor, which is understood to be a particular concrete thing (a factor of production), and therefore no real subject capable of the abstraction needed to constitute value. Rather, the abstracting force is in the only real subject: the individual consumer. The key idea becomes that of the consumer subjectively ranking goods according to the amount of satisfaction each provides. Ranking takes on significance because a limit is placed on the availability of goods that restricts consumption to a point short of complete satisfaction. We cannot have everything we might want; we cannot be fully satisfied with what we have or can get. Because of this limit, we will benefit by ranking goods and seeking to acquire those that will provide us with a greater measure of satisfaction. What significance does the change in the meaning of satisfaction noted above have? What is gained and what is lost by it? The answer leads directly to the role of the individual subject in political economy. Early political economy treats the individual as representative of his class, and treats his motivations as derivative of class membership. In a sense, individual subjects only exist in the capitalist class, whose members pursue a subjective (self) interest. Yet, even their subjective interest is a ruse, since the individual remains the unwitting agent of his class, and, indeed, the unwitting agent of history: the steward of his capital (Weber 1958). This is the realm of necessity masquerading as individual freedom: the worker who is the free proprietor of his laboring capacity, and free of any other property than his laboring capacity; and, the capitalist who is wealthy, but driven by historical forces beyond his understanding or mastery. In the aftermath of this construction, at the end of the nineteenth century, political economy decides to recognize the subject who wants, who chooses, and who seeks happiness understood as satisfaction of the self.

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3 Making want subjective poses a problem for political economy: the problem of limits. So long as wants are objective and finite, they can be satisfied. Whether this leads to the attainment of happiness is another matter. Still, the finiteness of want does make whatever happiness derives from want satisfaction attainable. Even then, however, happiness can only be attained if means are available. So, the attainment of happiness depends both on the finiteness of want and the availability of means. In neoclassical economics, there is a certain ambiguity on this matter, well expressed by Alfred Marshall, who believes that wants and desires are “limited and capable of being satisfied” (Marshall 1930:73), and also believes, as Smith did, that the desire to use wealth to attain distinction is strong in the human heart, and must lead to pursuit of variety and change in wants and means. The idea of diminishing marginal utility assumes that wants are limited and satisfiable. Yet, the idea of scarcity, which makes choice and allocation necessary, applies where wants are not self-limiting, but limited instead by the means available. The issue of the limit of want is an important one, which bears further consideration. The finiteness of want, emphasized by Marshall in words virtually identical to those Ricardo borrows from Smith, is in its way misleading. We may treat a particular good in relation to a particular want. In much contemporary economic theory, however, the conceptual basis for doing so is not laid, and, indeed, the subjective interpretation makes our effort to do this problematic. This is because individual want defines the usefulness of the good, which is defined by the subjectivity of its consumer and not for that consumer. Just as the kind and measure of satisfaction gained from the good are contingent on individual subjectivity, so is the nature and measure of the good itself. Introducing any notion of an amount of the good (not in a physical sense, but measured as units of usefulness, which alone are relevant) independent of the subject violates a basic principle. Thus, the particular and finite element of the theory rests on a very frail foundation. This is not surprising in a theory that makes everything subjective, and therefore leaves no room for any objectivity other than that provided by the physical world. This becomes clearer when we treat the good, as the theory insists we do, as the embodiment of productive factors each capable of forming itself (when combined with other appropriate factors) into different

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goods with different uses (objective) and utility (subjective). While the good once formed in a particular way may have a specific use and meaning to the individual (that is, an individual significance), the factors it embodies do not. Thus, once we treat the good as the embodiment of factors, its finiteness erodes. This erosion is already implied in the idea that, while the want for a particular good might be finite, because wants are various and changing, want as such has no comparable limit. This means that the want for the factors embodied in the particular good does not share the finiteness of the want for the good itself. Thus, the seeming limit on want asserted by Marshall is, from the economic point of view, no limit at all. Because goods embody factors not inevitably tied to particular want, want for the factor embodied in the good is not limited as is the want for the good itself. Because means are limited, and because satisfaction can be gained from different goods, if to different degrees, the economic problem gets defined as one of constrained maximization. This whole construction rests on the idea of factors of production existing as so much potential to become particular goods, but not yet specific to the particularity of those goods. That is, it rests on the idea that factors of production, primarily labor and capital, are malleable.13 Labor as a factor of production in this sense cannot be the particular concrete labor that produces a particular good, but Marx’s abstract labor capable of producing all particular useful things, but not yet specified to them. What makes labor abstract is not its physical features, the natural presence of an abstract producing force, but its social development under capitalism. Capital is similarly treated as a factor of production, an implement or means. This conception of capital as “produced means of production” makes it unavoidably particular, just as the labor that produces a particular good is defined by the nature of that good, and the unique demands of its production process. Capital, in this guise, is not malleable; it cannot become the producing apparatus of different useful things.14 Treating the factors in abstraction from the particular goods they might be used to produce involves finding an abstracting force, which we cannot find so long as we hold to the idea that the factors represent, for the economy, the physical forces of the natural world given to it. The natural world provides no subject capable of constituting factors in the abstract—so much labor, so much capital. Yet, it is exactly this abstraction that underwrites the idea of choices forced upon the subject by the magnitude of his or her desire confronting the limits of the means available. Only because we face tradeoffs, must we choose, individually

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and collectively, among alternative uses for our resources. The economic problem is one of constrained choice, and economics is about knowing and calculating these tradeoffs so we can make the best choices. The best choice is the one that maximizes our satisfaction given preferences and resource constraints. All of this rests on the idea that when we want a particular thing, we do not want what that thing has in particular to offer. Rather, we want the satisfaction that thing is capable of affording, but which we can also get elsewhere. This satisfaction is a personal experience, which, while at the heart of the positive and normative judgments of economic theory, is not explored in its own terms: What experience of the self does the term satisfaction evoke? How does that experience attach itself to particular things, more to some than to others? Why does the attachment of this experience to things vary for different individuals so that individuals gain their satisfaction from different things? Why does this subjective experience have normative significance? Why, in other words, does private satisfaction also carry some universal significance in the construction of social institutions? Why do different individuals refer to their private experience of objects as if it were the same thing (satisfaction), although for economists it is not? Let us see where political economy has arrived by this route. The original political economists did not consider the problem of efficient use of resources. Subsistence consists of things people need; in the face of need, tradeoffs are not relevant. The surplus was assumed to be used predominantly for investment in more capital. Luxury consumption was the reward of the capitalists and others who lived off the surplus, but its composition had little to do with economic affairs. It did not matter what the rich spent the non-invested part of their income on since, however profligate, their expenditures were not considered a significant component of the national product. Only if the population as a whole, including the working part, had to make choices and decide what to consume according to some inner impulse, would consumption decisions, through their effect on demand and therefore price and output, matter.15 Otherwise, a theory of consumption and demand would not be relevant to any of the important economic processes. Even if consumption matters, it still needs to be limited by the external condition of scarce resources. After all, we might have a theory in which the individual subject and his or her wants mattered, without assuming that what limits want satisfaction is the availability of scarce factors of production. Assuming scarce factors of production introduces all the confusions attendant upon the need to identify an abstracting

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force in nature that could constitute malleable or abstract factors whose alternative uses mean that we face tradeoffs and choices. 4 The shift in the treatment of want, ushered in by the subjective interpretation, brings with it a new problem for political economy, one that would not occur to the earlier, classical, theorist. Now that want emanates out of the individual, knowledge of want must also be knowledge the individual has of his (or her) self. The assumption that individuals know what they want has central importance to the role of the market and the limit of government. Knowing what you need in the world of the early economists was a very different kind of knowing than knowing what you want, what will bring satisfaction, even happiness, in the world of the economist at the end of the nineteenth century. Knowing what you want in this new world of political economy means knowing yourself, which was unnecessary in the world of the original political economy. You can use things properly without selfknowledge, but you cannot choose things that will lead to happiness without that knowledge. In his Theory of Political Economy, Jevons insists that in economics, “we must necessarily examine the wants and desires of man” (Jevons 1888:39). Wants, then, are not simply a prior condition for economic calculation, they are part of the subject matter of economics. Economics studies the laws governing want and consumption. By this, Jevons has in mind that economics will examine, for example, the progression of utility with the increase (or decrease) in the consumption of a particular commodity. The idea that we must understand something about the nature and laws of want to have an economic theory distinguishes the modern from the classical period of political economy. This is natural considering that once want becomes subjective, or at least once the subjective aspect becomes important, want also becomes problematic. It is no longer a natural fact or historical condition determined by tradition and custom. It is, rather, something that has its subject in each consumer. This notion of the subject is essentially foreign to the classical economists, and for this reason want is not a problem for them.16 It turns out, of course, that we learn very little about want from the post-classical economists, even those who ostensibly make want their subject.17 Jevons attempts to show how marginal utility diminishes, but this is really only an assumption. His theory of want, like those of his

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followers, is less a theory than a mathematical model that incorporates arbitrary, if in some sense plausible, assumptions about want. The paltry results of the thinking about want ushered in by Jevons’s robust assertion about the need for a theory of consumption also follows directly from the way Jevons and his followers make want subjective. Indeed, the more subjective want becomes, the less we can know about it, especially as it appears for others.18 The assumptions that emerge in this context have more to do with the convenience they afford in developing (particularly mathematical) results than with any convincing argument for their plausibility. The more subjective we assume want to be, the less we can know about it. This also follows for the subject (or self) who wants. The more we take this subject to be purely subjective, the less we can know about it. This, however, poses problems for the subject whose self-knowledge is the basis for want satisfaction. The problem of knowledge just introduced has its root in the transition from a social condition in which want is given to the individual to one in which the individual must determine what he or she wants. In this transition, the hold of tradition over the individual erodes; and, in our search for grounding, we can no longer appeal to the idea that want is governed by custom. The result, that want is set loose from custom and tradition, constitutes the individual as the center and source of want. In other words, individual determination of want is not a matter of arbitrary assumption, as in the application of methodological individualism of various kinds, nor is it evidently implied by a primordial notion of rational action and maximizing behavior. Rather, individual determination of want results from the erosion of traditional social structure, and from the implied redefinition of the relation between the member and the group. Understanding the modern notion of the individual in this way has significance for the way we interpret want and its satisfaction. Specifically, it makes the individual and his or her want a result, and not a presumption. We can no longer assume that what is meant and contained in the idea of individual want is self-evident, somehow attaching itself to the empirical reality of physically or juridically separate entities to which we attribute the experience of want, satisfaction, and happiness. What we have instead is the result of a historical process: the transition from tradition to modernity. Then, to understand the real nature and meaning of want, including its normative significance, we must understand something about modernity and the

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construction of the individual, which is accomplishment.

arguably its great

4 KNOWING AND ACTING

I UNCERTAINTY 1 The possibility of self-knowledge depends on the knowability of the self, which depends on internal and external conditions including the knowability of the world outside. While knowability is essential to selfknowledge, the more radically subjective the subject becomes, the greater the obstacle in the path of knowing. Obstacles placed in the path of knowing are, of course, also obstacles placed in the path of acting. Because of this, making the world radically subjective makes the world no place for the subject, the agent who knows and acts. Without necessity (the objectivity of the world), there can be no freedom (the subject who acts in the world). It is not surprising that, with increasing dominance of the subjective aspect, the possibility of knowing diminishes even as the importance of doing so increases. In economics, the concept that captures what is problematic about knowing, and therefore acting, is uncertainty. Economists who speak of uncertainty tend to attribute it to the objective, external, world, which they sometimes describe as being uncertain. However plausible this way of speaking about uncertainty, it also causes problems. These problems have to do with what it means to attribute uncertainty to the state of the world, particularly to being in the flow of “historical” time.1 Economic theory understands the economy as a system of action and interaction. Systemic outcomes depend on individual decisions, which depend on individual purposes and plans. This need not imply that the system is nothing more than the sum of its parts, that knowing the ends

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and resources of individuals tells us all we need to know about the whole, or that we should take the uniquely particular ends of individuals to be our irreducible starting point, as Hayek (1955), for example, suggests. It does imply that, however we construct the relation of part to whole, it remains important to treat the parts not as we might those of a mechanical or biological organism, but as parts of a system of human interaction, These parts include individuals acting to realize ends, and, because of this, economic theory must have a subjective dimension. Even classically inspired theories, with their emphasis on objective processes and forces, have this subjective side. To be sure, some classically influenced economists have lately attempted to depict price systems without the subjective dimension, in essentially technical terms, much as Piero Sraffa does, at least in the first parts of his wellknown essay. The effort to do so runs up against severe limits, however, most notably in dealing with workers’ consumption. These limits demand fuller consideration of what I refer to here as the subjective dimension. Some economists also assume that any reference to the subjective aspect means introducing a choice-theoretic apparatus of the sort that has developed under the influence of the utilitarian philosophy. That is not my intent here. I do not consider insistence on the subjective dimension equivalent to a plea for micro-foundations, or for a choicetheoretic apparatus. There are other ways, and, in this chapter, I pursue one of them. 2 A critique of the possibility of knowing has developed out of Keynes’s General Theory. For economists influenced by this way of thinking, knowing is undermined because it requires certainty. By making “to know” equal “to be certain,” and by assuming that the world is not a place in which it is reasonable to be certain, uncertainty is made a force against knowing. Thus, one theorist opposes knowledge on one side to “ignorance and uncertainty” on the other, implicitly equating knowledge with certainty (Vickers 1994:29). Having equated knowledge with certainty, it is a small step to the conclusion that knowledge and action based on it are not possible. Given uncertainty resulting from placing decision-making into the flow of “historical time,” understood as a sequence of unique situations, it follows that we “can never know the end or conclusion to which action will actually take us” (Vickers 1994: 211). Indeed, the further we take the notion of the uniqueness of

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events, the less plausible the claim that we can acquire the knowledge needed to support action aimed at shaping the future.2 Yet, if we cannot connect what we do to the outcome we intend, we cannot act, since acting carries the significance of an effort to realize a plan or intent, and thus refers to the subject’s characteristic way of being in the world. I use the term connect to leave open the specific meaning of the relation between knowing and acting. Certainty is one form of connection; but there are others. Radical uncertainty refers to a state in which knowing is not possible, and thus implies its disconnection from acting. Davidson refers to this state as “true uncertainty” to distinguish it from one in which probabilistic calculations or intuitive judgments of future outcomes can be made. Under conditions of true uncertainty “today’s decision makers believe that no expenditure of current resources on analyzing past data or current market conditions can provide reliable statistical or intuitive clues regarding future prospects” (Davidson 1991:130). I do not think the idea of acting really applies under these conditions. Indeed, Davidson goes on to say that, under true uncertainty, decision makers either avoid choosing altogether because they “haven’t got a clue,” or follow animal spirits.3 While some observers may find the disconnection between outcome and intent logically embedded in the notion of history, and therefore self-evident, much still depends on interpretation. When I get into my car in the morning to drive to work, I cannot know with certainty if or when I will arrive. Any number of mishaps along the way can break the smooth continuity between plan and outcome. I may have an accident or a seizure. I may be hit by the remnants of a meteor, or suddenly recall that today is a holiday. In this sense, I cannot know the end or conclusion of my action ahead of time. Yet, in another sense I can. My decision to drive to work will in most cases lead to the expected outcome; I know what I am doing, and my action based on expected outcome makes sense. Why I am able to know the outcome of action in this sense of knowing is important, and I return to it below. The foregoing suggests that we distinguish between two different senses of uncertainty. According to the first, I am uncertain when I think something is true about the world, especially the likely future shape of events, but acknowledge that I could be wrong. Uncertainty in this sense does not necessarily bear on action, or bend it in a particular direction. Uncertainty in the second sense of the term means that I consider the future course of events unknowable, and act accordingly.4 It is only this second sense of uncertainty that carries the sorts of implications claimed by economists who make uncertainty a force in economic affairs.5

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Keynes argues that the unknowability of the future compromises the formation of the long-period expectations on which investment in real capital must be based. That we cannot know the outcome of long-lived investment undertaken today enhances the allure of short-term investment, which can be easily and rapidly liquidated due to changing circumstances. The difference between short-term and long-term investment is the difference between investment in real capital (plant and equipment) and in financial assets. Uncertainty about the future leads to the dominance of financial assets, which has significant consequences for economic growth and employment. Keynes argues that, as capitalism matures, there develops a struggle of capital against itself. Capital in its all too solid form (real capital) faces a challenge it cannot win from capital in its all too evanescent form (financial capital). The battle takes place in the arena of value. What seems to be the real basis for the market value of capital— its productivity—is shown by Keynes to melt into air, as a new valuation rooted in speculation displaces the older valuation rooted, so it seemed, in what was objective and real (see Keynes 1936: Chapter 12, and Levine 1984). The Keynesian critique places the burden of uncertainty on the objective side, at least in principle (see Minsky 1975:64–7). In other words, it attempts to make uncertainty an attribute of the world in which decisions are made rather than a subjective orientation of the individual to the world. This attempt has its most vivid expression in the formulation according to which we live in an “uncertain world.” Presumably, it is not the world that is uncertain, however, but the individual. Placing the burden of uncertainty on the objective side means not that the world is uncertain, but that uncertainty is the reasonable response of the individual to living in the world. Thus, Keynes suggests that, on some matters of concern for economics, “there is no scientific basis on which to form any calculable probability whatever” (Keynes 1937). From this observation, Keynes draws the radical conclusion that we “simply do not know.” The individual has the capacity for knowing, so uncertainty does not originate on the subjective side. It is the external world that confounds any effort to use that capacity. Yet, though we do not know, still we must act, and to act, we must decide. To decide, Keynes suggests we might appeal to a “convention” according to which we assume that the existing state of affairs will continue “except insofar as we have specific reasons to expect a change” (Keynes 1936:152). The more this convention governs action, the more we can expect “continuity and stability” in economic affairs. In the end, however, Keynes considers

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this convention too “precarious” to assure the needed connection between knowing and acting. It might be said, of course, that assuming the future will be much like the past unless we have some reason to expect otherwise, or, more generally, that there is continuity and stability, is the sine qua non of human action so far as the world outside is concerned. The individual who experiences radical doubt on this score must find him- or herself altogether incapacitated. Reference to this necessary basis for human action as a mere “convention” reveals a great deal about Keynes’s attitude toward economic affairs. Clearly, so long as the convention is effective, action will work well enough much of the time. If it does, this would imply that, while the world may not be organized in a way that makes perfect knowledge possible or even meaningful, neither does it justify the radical uncertainty Keynes suggests is the realistic attitude toward it.6 For Keynes, a number of factors undermine the convention, and the link between knowing and acting it implies, factors primarily having to do with the increasing dominance of financial markets. He expects that this growing dominance will tend to disorganize the industrial circulation, and the activity of enterprise on which it depends, to the point that the convention no longer holds in that arena, and the energies of wealth-holders shift to financial speculation. The culprit, then, is not uncertainty as a general matter, but the uncertainty imposed on industry by speculative movements in financial markets. Keynes’s argument regarding speculation and enterprise applies the simple notion that acting can only take place where we can assume that the difference between past and future (within the relevant planning horizon) is normally or predominantly made up of expectable changes. We may note in passing that, without this condition, speculation makes no more sense than industry. Those who make a living through financial speculation also assume that patterns governing the movement of asset prices are knowable, though, again, without certainty, and that those who know them best stand to make money by acting on that knowledge. The advantage Keynes attributes to financial speculation over investment in industry has to do with their differing time horizons, which is to say how far into the future we must be able to make predictions for acting to be reasonable. Given the connection between knowing and acting, the uncertainty that expresses the breakdown of the convention to which Keynes refers cannot govern the functioning of an economic system. Rather, it makes the functioning of that system impossible, which I take it is Keynes’s

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point. His argument does not suggest that we build a theory of capitalism centering on the idea of radical uncertainty, a theory that might replace that of his classical or neoclassical predecessors, but that we see in the erosion of the convention, which is the erosion of the condition for knowing needed for action, the erosion of the very foundation for economic activity. 3 To understand the functioning of an economy, including a capitalist one, we must set out not from radical uncertainty, but from the conditions for knowing and acting. What, then, is the basis for the knowledge necessary to and appropriate for economic activity? One answer to this question invokes rules, perhaps understood as social constructs that constitute an order within which behavior is predictable because rule-governed. The rules that govern traffic flow provide, under some conditions, adequate predictability to make trip planning a sensible activity. Do the rules governing investment yield the same result? If they do, then Keynes’s problem disappears. Much depends on whether the rules determine outcomes—what is produced and how it is produced—or provide a context within which agents pursue private ends not set by any external rules— exchange contracts entered into in the pursuit of profit. This distinction has considerable importance for our problem. Indeed, it marks out two radically different contexts of interaction. In one, outcomes are largely preordained by custom and tradition; in the other, outcomes depend on subjective ends and decisions. Appeal to custom becomes problematic with the emergence of a (modern) world in which the primary rule is change, and custom is significant mainly as an obstacle to change. To act in the world presumes that tradition does not dictate outcomes, which are not already given to us, but indeterminate to a degree. This indeterminacy is the context for the pursuit of subjective ends, including those referred to by the term “self-interest.” It is the indeterminacy of ends and action oriented toward its subjective significance that makes uncertainty a specifically economic problem. Understood in this way, uncertainty is not only consistent with action, it is necessary to it. In a world ruled by custom and tradition, or in a world where outcomes are fully planned and controlled, both uncertainty and economic action would be excluded. It is certainty and not uncertainty, then, that impedes acting.

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In a premodern context, the future is essentially the same as the past. Because of this, prediction, so far as everyday matters having to do with economic affairs are concerned, is not an issue. We may take action to secure, so far as possible, against adverse conditions, but we do not face decisions so much as we follow customary practice organized around existing know-how. Whatever protections against the vicissitudes of the uncontrollable are possible under and consistent with culture and social organization get built into the structures of conduct. Certainty is the attitude of the member of a customary social order toward the traditions that constitute that order. The power of tradition stems from the necessity that it be taken as given, and followed not because it makes sense to the individual, or serves that individual’s private ends, but because it subsumes the member into the community. Certainty, as a subjective matter, stems from the givenness of ways of life, which means that they cannot be questioned. Since they are not to be questioned, we are not uncertain about them. In this respect, traditional society would seem to be more predictable than modern; and, in ways relevant to questions of want satisfaction, this is true, at least up to a point. Yet, the problem is more complex. To see this, I will consider somewhat more closely the distinction between uncertainty in the premodern and modern settings, in the world ruled by tradition and the world ruled by the market. Under the rule of tradition, and of a hierarchy of authority sanctioned by custom, unpredictability stems primarily from two sources. The first is the lack of control over the natural environment on which subsistence depends. The second is the organization of social life into systems of personal dependence, which makes outcomes contingent on the caprice of those on whom we depend. While these are significant causes for uncertainty about the future, those living in the world structured this way do not formulate their problem in the language of uncertainty, but in the language of fate. The language of fate attributes systemic outcomes to the caprice of those (forces and persons) having the power to affect them. Powerlessness is the fate of most living in this world. Their lack of power means that acting in the modern sense is not part of their lives. Issues of decision-making under uncertainty do not arise as they will later when responsibility for outcomes devolves onto the individual. In the modern world, the individual is thought to have the power to affect outcomes relevant to life plans. Social organization bestows this power insofar as it endows all with rights, particularly the right to own and dispose of property, and insofar as most have at least some property.

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In this world, uncertainty about outcomes does not result from their dependence on caprice, whether of nature or of others. On the contrary, the market, because it is a system of impersonal relations and not of personal dependence (Levine 1988a: 79–84), improves predictability of outcomes. The organization of markets to incorporate large numbers of transactions minimizes the individual’s impact on cost, price, and demand. The greater scope of the market helps turn caprice into statistical regularity.7 Similarly, the orientation toward control and subordination of the natural world to human ends leads to ever more predictability of outcomes dependent on natural processes. With respect both to nature and to social structures, modernity increases predictability, as it must if it is to be the context for subjective action. Yet, while modernity overcomes the unpredictability typical in premodern settings, it also undermines the kind of predictability typical of those settings, which stemmed from the subordination of interaction to fixed rules. Because the rules no longer hold, custom no longer governs want and need; the methods of production are not given, but subject to change; the future is always different from the past, and cannot be fully known from knowledge of what is or has been. In a world ruled by custom, as we have seen, the past rules the future; what we have been and already know determine what can become. In the modern world, this is no longer the case. Marx treats this dissolution of a stable world for the individual as primarily a matter of objective conditions. Because capitalism is organized around the endless expansion of capital, and because the expansion of capital is fueled by profit and profit is determined in large part (for Marx) by the margin between cost and price, capitalism seeks to revolutionize the methods and means of production to increase productivity and therefore profitability. Capitalism becomes a process of transformation of the conditions of production. This is the flux that comes to dominate Marx’s thinking in his mature economic writings.8 Now, the past no longer provides a sure guide to the future, whose difference from the past is a result of organizing life around change. If, as a result, we become uncertain about our selves and what we can or should do, this is not the uncertainty built into the flow of time per se, but the uncertainty built into the way modernity reconstructs the flow of time to accommodate the process of change. In his mature work, Marx emphasizes the effects of this process on the objective conditions of life under capitalism, primarily employment. Instability associated both with technological unemployment and cyclical fluctuations in output and the demand for labor makes

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livelihood uncertain for most workers. The threat of loss of subsistence implied by unemployment is among the most objective kinds of insecurity the individual can feel. Marx emphasizes it virtually to the exclusion of any uncertainty that might persist even for the worker whose employment is secure. 4 When we insist that the world is “uncertain,” and mean by this that it is in an important sense unknowable, we form a judgment about the external context for acting. Consideration of the distinction between traditional and modern society does not, however, fully support this judgment. On the contrary, it seems to suggest that modernity is a uniquely appropriate context for knowing and acting. Yet, the feeling of uncertainty persists, and seems specifically connected to modernity rather than to the world of tradition. While we may no longer feel subject to the whim of fate, a feeling characteristic of life in a more traditional context, we now seem to live under enhanced uncertainty. To account for this, it may be helpful to consider not only the objective, but also the subjective aspect of the problem. In a world ruled by fate, we do not know and act, but are acted upon. Uncertainty becomes important when fate no longer rules, because we must act, and yet doubt the basis for our action and its likely outcome. Uncertainty, then, expresses a subjective attitude toward the world, subjective in the specific sense that it is an attitude only appropriate for an (acting) subject. Only a world that, at least in principle, constitutes individuals as subjects can impose on them the need to know as a basis for action. This is the context of modernity. Because the burden has been placed on the individual, the question of the individual’s attitude or orientation toward the world becomes important. That is, uncertainty can be a response not only to the unpredictability of the world, but also to the responsibility placed on the individual in that world. This latter is the subjective side of the problem. On the objective side, what stands in the way of acting is the inability of the agent to predict and control outcomes because they are wholly determined by external forces. On the subjective side, what stands in the way of acting is the inability of the subject to form and act on plans due to factors bound up with self-doubt. Self-doubt is also a kind of uncertainty, in this case about what the agent wants or intends, and about the agent’s ability to act effectively, even assuming an appropriate objective context, in the effort to satisfy want and realize intentions.

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Let me briefly consider this problem of self-doubt in the context of a question having special importance in economics: What does it mean to know what we want? To act, as I have used the term here, requires that we know our (subjective) ends. If we doubt those ends, do not know what we want, then we cannot act. Knowing what you want is an implication of self-knowledge, just as not knowing what you want is an implication of self-doubt. Economics generally assumes that property owners know what they want, but does not provide any convincing argument to support this assumption. No problem of knowing what we want arises in the classical theory because it incorporates the idea of subsistence. Subsistence need is given to the individual by history and culture. Appeal to subsistence suppresses the individual or subjective aspect of wanting. It is precisely because of the suppression of the individual aspect of want that the individual encounters no special problem of knowing what he or she wants. One would think, then, that the problem of knowing would take on importance after the classical period, when the individual element in want becomes the dominant aspect, so that want is no longer given by subsistence, but must be determined by and for each individual. Yet, it is just this individual determination of want that enables the neoclassical theorist to circumvent any problem of knowing in the area of want. Neoclassical theory identifies individuals with their wants. The individual, viewed subjectively, is a preference ordering, and, viewed objectively, an endowment of resources. This construction sidesteps the problem of knowing in the area of want, since agents do not develop or discover what they want, but are defined by wants treated as given. It is also observed that where individual want is concerned, no one other than the individual can know what will bring satisfaction, it having been assumed that satisfaction is a wholly subjective matter. If this is the case, we can have no grounds for questioning the individual’s want, but neither can we have any grounds for accepting it. If the psychic lives of others are wholly inaccessible to us, we cannot draw the conclusion that they gain satisfaction from consumption, even consumption of things we observe them to “choose.” We simply cannot know. Yet, if we do not know, we cannot insist that, by acquiring what the individual chooses, he or she will gain satisfaction. This means we cannot draw normative conclusions from the outcome for individuals of juridical freedom to choose. In particular, we cannot draw the conclusion that freedom to choose will, under appropriate conditions, lead to a normatively optimal outcome.

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The more radically subjective we assume wanting to be, the less compelling any conclusion we might draw about welfare based on the observed acquisition of things individuals choose to consume. Yet, the more we simply identify the individual with his or her wants (equate the individual with a preference ordering), the more we suppress the subjective aspect of wanting and knowing: that they are the activities of an individual agent acting in the world.9 Only because of the emphasis on the subjective, do knowing and wanting become problems. Yet, making want radically subjective stands in the way of knowing, and has important implications for the knowability of the world. The problem of knowing arises precisely because of the importance of the subjective aspect: choices, decisions, and purposes. Neoclassical theory eliminates this problem by replacing the subject with the two constructs: preference orderings and endowments. The classical theory avoids the problem by appealing to the notion of subsistence. In different ways, each theory eliminates the problem of knowing by eliminating the subject who needs to know. Once the subject enters, as it does in Keynes’s theory, it becomes a matter of importance to establish what about the subject’s orientation toward the world makes knowing possible. Keynes does not do this since he takes the objective world to be unknowable. This objective world consists of subjects co-acting in ways that make outcomes dependent on their plans and decisions. This dependence of outcomes on subjects is what undermines the knowability of those outcomes. It is something about subjectivity, then, that leads to radical uncertainty. Far from originating in objective conditions, uncertainty originates in the subject’s freedom from external constraints on action. What makes subjectivity the source of radical uncertainty? The answer takes us to the heart of the conception of the individual in modern economics. In this conception, the individual is radically subjective, not simply a locus of decision and action, but an irreducibly particular and unique event. Knowledge of one individual does not provide knowledge of others. Knowledge of the self does not bring knowledge of others; nor does knowledge of others aid in developing self-knowledge. Then, because the world consists of subjects, it must be unknowable. If the world is made up of individuals with irreducibly particular desires, experienced rather than known even by those individuals themselves, then this world cannot be known. The critique of economic theory based on uncertainty imports this idea, accepting the principle that the market consists of the irreducibly particular. So much is implied in the idea of “historical time” introduced

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as an alternative to the timelessness of the general equilibrium theory. Placing economic processes into historical time means insisting “on the uniqueness of the economic moment” (Vickers 1994:198). The more we take the subject matter of political economy to be unique events occurring in historical time so conceived, the less we can know of that subject matter, since knowing is finding the universal in the particular. Then, indeed, we can neither know, nor can we act on knowledge in a way that unites plan and outcome. This idea would have been foreign to the classical economists. The problem does not arise for Adam Smith because he assumes that pursuit of self-interest orients us toward others. Smith takes the ends of selfinterest to be of two kinds: honor and wealth. The pursuit of honor means the pursuit of esteem in the eyes of others, and thus adapting ourselves to their expectations. The pursuit of wealth means the subordination of our own ends to the production and sale of goods that meet the needs of others. Thus, pursuit of self-interest means adaptation to others, to their needs and their regard. This means that our ability to apprehend other individuals does not result, as Hayek suggests, from the arbitrary assumption that they are like us, but from our being within a system of interaction in which we each orient ourselves toward others. In The Wealth of Nations, the division of labor plays the key role. Self-interest drives us to subordinate our actions to providing a marketable commodity, which is a good of use to others. By pursuing our self-interest, we come to occupy a position in a system of interdependence (division of labor) mediated by exchange. For this to work, of course, it must be possible for us to know what others want, so there must be an implicit assumption about knowing that underlies the conclusion about the system of interaction. Smith assumes that individuals have the capacity to put themselves into the situation of others, and thus to know what others experience and feel, which makes acting according to others’ needs a real possibility. The capacity to put yourself in the situation of the other, joined to the other-oriented implication of the pursuit of wealth, makes acting possible. When seeking wealth means production and sale of commodities, subjective ends contain an objective dimension. They orient the producer to learning what others want and need, then acting according to that knowledge. So long as pursuit of wealth means production of goods for the market, it orients self-interest toward serving the needs of others. Once, however, pursuit of wealth means seeking after speculative gains through buying and selling financial assets, this connection of self to

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other is broken. The capitalist’s goal gets detached from the social end of maximizing the nation’s wealth. If the pursuit of wealth is not tied to its production, Keynes and his followers have good reason to doubt that Adam Smith’s famous hypothesis about the social benefits of selfseeking holds. Since the end of the nineteenth century, economists have come to doubt the possibility of knowing what others want independently of their observed choices. By setting aside the principle of the know-ability of the other (for example, by rejecting any interpersonal comparison of utility), we set aside one of the needed supports for action. By setting aside the principle that acting in self-interest drives us to produce for others, we set aside the other support for action, and open the door to the uncertainty arguments considered here. 5 Since acting presumes both uncertainty and predictability, it poses problems of interpretation. These cannot be solved if the uncertainty we are dealing with is radical uncertainty as defined above. They can be solved, however, if our uncertainty about the future does not mean that we haven’t a clue, but only that one of the things we know about the future is that it is not fully determined by the past, and that the plans we make in the present may or may not work out in the world of the future. That we have good reason to assume our plans will work out does not make us certain. Yet, that we cannot know with certainty how our plans will work out does not make us radically uncertain. Being uncertain means doubting what we know, what we want, and what we can accomplish. Radical uncertainty means doubting to the point that we cannot know what we want or what steps will enable us to gain what we want. Uncertainty does not impede action. On the contrary, as I suggest above, uncertainty is a necessary context for action, insofar as it indicates we live in a world where possible futures are not foreclosed by custom and tradition. Radical uncertainty does impede action, since it disconnects the future from the plans we have for it in the present. Certainty is an attribute of the member of a community where behavior is fixed by custom; it results from the prior determination of conduct by fixed and given traditions. In the traditional world, the attitude of certainty confirms the power of predetermined ways of life. In a world of change and flux, the “modern world” as Marx describes it, the attitude of certainty impedes acting.

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Economics is about the structure of interaction in the modern world, where rules of interaction do not determine outcomes, but only structure the pursuit of ever-changing and developing ends by equally changeable means. This world favors those who can live with uncertainty. Yet, the loss of certainty can lead not to a condition in which we are able to act in the world, but to radical doubt. In the state of radical doubt, the loss of certainty means the loss of any basis for knowing what to do, and even what to want. While this loss is not simply a matter of institutions, it has important roots in the way our institutions are organized. I take this to be implied in Keynes’s understanding of the way capital markets function, in Schumpeter’s notion of creative destruction, and in Marx’s conception of capitalism as a system of change and development. Institutions can attempt to eliminate uncertainty, and with it the kind of action constitutive of modern economic systems. This happens, for example, when the market is wholly eclipsed by planning. Alternatively, institutions can eliminate certainty without providing any basis for knowledge, radically disrupting the link between past and future. When this happens, certainty gives way to radical uncertainty. Then, institutions destroy the older basis for conduct without establishing something solid to replace it. Finally, institutions can disrupt the older basis for conduct, creating the space associated with uncertainty, without destroying the foundation for knowing required for acting. An important normative question about the structure of economic institutions is, then, the question: How can we secure the uncertainty that makes acting possible? II KNOWING WHAT WE WANT 1 While political economy has made the problem of knowing what we want a matter of the external environment of wanting, of information and uncertainty, the problem does not end with consideration of these objective conditions for want satisfaction. Knowing what we want is also a subjective matter, with subjective conditions that may or may not be satisfied. These subjective conditions, as I suggest in the first section of this chapter, bear on the normative judgments .made in political economy. The subjective conditions for knowing what we want have to

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do with the construction of the subject who wants, and with the internal structure of the subject’s psychic life. Failure to know our wants begins to implicate what lies inside when we want not for our selves but for others, for example when what we think we want is really what others want us to want. Our wants, then, do not express our self-determination, but our determination by something outside our selves. This is the idea Thorstein Veblen develops at length, although in economics it dates back at least to Adam Smith. Distinguishing self-determination from external determination presumes a distinction between what is inside and outside the self. For this distinction to have meaning, the individual must establish a self separate from, and bounded in relation to, the selves of others. Speaking of self-determination, then, means speaking of self-boundaries, and of the self as a unit in the world. The problem of knowing what we want is a problem of knowing this self. That is, we cannot know what we want if we do not have a reasonably firm sense of who we are. Having a sense of who we are should not be taken for granted. For any individual, it may happen, but it may not. If it does not, then we cannot speak meaningfully of the individual’s action as stemming from his or her wants, or expressing his- or her self-interest. While the preconditions for establishing a bounded self are a matter of psychic structure, and to that extent cannot be satisfied by economic activity, they also implicate economic organization, which can significantly affect the individual’s capacity to establish a separate self. Yet, beyond this, the design of economic institutions embodies a judgment about the nature of a separate and secure self, and about the capacity for self-knowledge appropriate to an individual capable of being a center of initiative, therefore of wanting and choosing. In this way, psychological considerations and those of political economy converge, since the latter incorporates, whether knowingly or not, a judgment about the formation of appropriate psychic organization. This point may become clearer if we consider an example. The longstanding debate over appropriate measures to alleviate poverty clearly implicates economic organization. For those who believe that poverty results from a failure of will, a safety net only exacerbates the problem it is meant to ameliorate. Consider, in this connection, R.H.Tawney’s formulation of the position on poverty adopted by the Puritans: Convinced that character is all and circumstances nothing, he sees in the poverty of those who fall by the way, not a misfortune to be pitied and relieved, but a moral failing to be condemned, and in

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riches, not an object of suspicion… but the blessing which rewards the triumph of energy and will. (Tawney 1962:230) This understanding of character and circumstance becomes embedded in economic institutions, which are shaped not to secure the welfare of those who fail to do so on their own, but to force all individuals to fend for themselves, and, in so doing, develop exactly that character whose absence leads them into poverty. The design of institutions, then, embodies a judgment about the process of character formation: that it happens best when the individual is least sustained by others and by collective institutions. This judgment rests on an understanding (however implicit) of psychic organization and psychic process; and, in this way, the problems of institutional design and psychic formation interconnect. The institutions judged most suitable to character development, given the understanding just alluded to, are those of the free market, the market unconstrained by social obligations and connections other than those of private property and contract. This follows from the idea that character develops best when the individual is left on his or her own. Thus, the design of economic institutions follows a judgment regarding character. The same principle holds in the arena of wanting and choosing. For those who see in the psyche a simple, unified, entity centering on a unitary desire for pleasure or satisfaction, no problem of self-integration can intervene between want, choice, and satisfaction. The presumed unity of desire, and the identification of its objects, precedes judgment, and unifies action. Knowing what we want is not a problem, in part because want is not something we know; it is something we simply have (or feel). This way of thinking about psychic organization leads to all the familiar judgments about the design of economic institutions based on normative criteria centering on the idea of constrained maximization. If this way of thinking is suspect, then so must be these judgments regarding the design of institutions. The standard, if implicit, judgment that psychic organization is unified by a unitary desire excludes any problem of integrating a self and attaining self-knowledge because it takes the subject of wanting for granted. Yet, only by establishing self-boundaries can we establish a subject for wanting and acting. The problem of wanting and choosing becomes, then, one of identifying the subject who wants. This includes, for example, determining whether the consumer is really the agent of

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another who determines what he or she wants. Without a bounded self, consumers cannot know what they want because they do not want, but only seem to. Rather, it is something outside that wants the object through the medium of the consumer, and thus the want is alien to the consumer who seems to be its source. The division in want expresses a division between will and action. The consumer’s will is put outside, into another person, an institution, or even an idea; so the direct subject of choice and action is not its real subject. Speaking of the subject of the consumer’s action being outside need not imply interpersonal relations of domination, though it might. The individual acting for external ends may or may not be acting in service of the self-interest of other individuals or groups. The problem is more complex than this. This complexity has to do with the role of ideas in determining the end of wanting and choosing. As I argue in the next chapter, individual action is motivated by ideas, specifically by ideas (that is, ideals) about the self. When pursuit of a self-ideal motivates conduct, then the question of self-determination becomes one of the consistency between self-ideal and autonomy: Is the self-ideal consistent with the individual’s desires and aspirations to be a person in his or her own right, with original talents, and with interests and wants developed out of a life experience (see Kohut 1977)? Consider the individual whose ideal of his (or her) self involves achievement in a profession for which he (or she) has little or no talent; or, consider the individual with an overpowering moral self-ideal that blocks the pleasures of life, pleasures that would otherwise provide great satisfaction; or, consider the individual whose self-ideal is that of an intellectual, but whose real satisfactions come from woodworking or gardening. In each case, the individual experiences a division between self and self-ideal. Then, the wants attached to achieving the self-ideal must, if satisfied, negate those other aspects of the self connected to contrary needs. For such individuals, wanting and choosing cannot be a matter of self-determination. The problem of integrating a self-ideal with original and developed talents and desires is also a problem of what is internal and what is external to the self. An ideal whose attainment is otherwise selfnegating is alien to the self. While internal, it is also external in that it represents alien demands made on the self, and thus precludes the attainment of any real satisfaction. Thus, for example, the successful performance of a self-negating duty does not assure happiness, but provokes anger, even though it might connect action to self-ideal. Similarly, an individual who finds real pleasure in pulp fiction but

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forces himself to read Shakespeare, which he finds boring, sacrifices satisfaction to attaining an alien self-ideal. He consumes not for himself but for another, in this case an internal other that represents a socially defined ideal-self. When self-ideal blocks self-integration, the individual finds his or her self divided internally: on one side, the self-ideal, whose attainment is essential to any feeling of satisfaction in life; on the other side, selfintegration, whose attainment is the basis for any sense of ownership over what we do in the world, and any real satisfaction in our accomplishments. When a particular action or object serves one end at the expense of the other, we experience ambivalence. We are both attracted to and repelled by the object; and, in this strong sense, want and do not want it. The ambivalent consumer attaches two opposing valences to the object, one positive and one negative. These valences correspond to two aspects of the consumer’s self. For Adam Smith, the problem I refer to here as ambivalence and division in want appears as the problem of opposition between reason and passion, and within the passions between those that are selfregarding and those that involve regard for others. For Smith, wanting what reason and sympathy for others dictate can mean not wanting the object of our passion for our selves (our self-interest in the narrow sense). This is because reason and the other-regarding passion contain the ethical element in wanting, that we want not simply what gives us pleasure, but also what secures our place in a world of others taking into account their rights and needs. Ambivalence, then, arises out of a conflict between desire and duty, interest in self and interest in other. The conflict within passion, and between passion and reason, arises because the self-regarding passion contains no thought of others. Indeed, one could say that passion, as it is generally understood in political economy, contains no thought at all.10 The absence of the thoughtful element creates a split between passion and reason, which work for opposing ends. Then, wanting does not think, and thinking does not want. Because the thoughtful element is missing or suppressed, the self as the passions becomes all concrete, consisting of the immediacy of an impulse toward the very specific and concrete objects expected to yield pleasure.11 Jevons’s notion of utility, which is the object’s link to the pleasure of the particular individual, incorporates this idea of passion as all concrete. For reason, however, the self is also abstract. Since reason dictates we respect the self in others, it understands the self on a more general plane, one abstracted from our particular desires and pleasures. Thus,

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the split between passion and reason is also a split between the particular and the universal in the structure of the self. Reason understands that all the particular selves, with their particular passions, have in common the quality of being a self. Reason makes this common quality its end, which makes reason both opposed to, and yet consistent with, (selfregarding) passion, which also has the self for its end, albeit the particular self. A problem arises of unity and division because the particular aspect drives the self in a direction different from that in which it is driven by its universal aspect. Passion and reason part company. Then, to follow either is to work both for and against the self. Passion and reason part company when passion drives us toward ends that do not respect the self in others, and reason dictates ends that passion finds unsatisfying. Put another way, the issue is whether self-interest incorporates an interest in others, and whether respect for others means we must sacrifice our own ends. 2 When we speak of ambivalence, we refer to a situation that drives the individual from pole to pole of an inner division. In this state, the individual cannot know his- or herself as a whole, but only one or the other of its conflicting parts. In mental life, the tension spawned by inner division leads to a specific outcome or action: projection. Projection means experiencing one pole of our ambivalence, not as an internal state of mind, but as something outside us, in others. Thus, for example, we might seek to remain virtuous in our own eyes by projecting our selfinterested impulses onto others. We, then, experience others as selfinterested in relation to us, whether they are or not, because doing so allows us to avoid acknowledging our own self-interest. Those who never tire of accusing others of self-interest, and who can always discover self-interested motives behind the conduct of others, whether it is there or not, are most likely making others the repositories of their own projected self-interest. The accusations directed at others not only divert attention from themselves, but express their ambivalence about their interest in themselves. Projection creates in us the false sense that we are not ambivalent at all, that we do know what we want, and that obstacles to our gaining what we want are not within, but outside, in the world of others striving to gain their interests rather than ours. Thus, we attain certainty of ourselves by disavowing vital parts of our self-experience.

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We cannot fully understand this phenomenon without considering the element of threat embedded in ambivalence and uncertainty. The reason we project parts of our selves onto others is that those parts pose a threat to us, a threat we remove by burdening others with it. The accusations directed at others would otherwise be accusations directed at ourselves, and, in this sense, a threat to our selves; thus projection shifts the danger from the self-in-us to the self-in-other. Division and projection result from a danger to the self perceived to emanate from one of its poles. If we follow the classical division into self-regarding and other-regarding poles, then projection results from a danger perceived to originate in one or the other of these poles. The other-regarding pole may, for example, seem punitive and self-denying, always insisting we sacrifice pleasure for duty; or the self-regarding pole may threaten us with a loss of virtue, and of the affirming ties with others assumed to originate in our having a virtuous self. We cope with these dangers by attributing their source not to ourselves, but to others, whom we experience as punitive toward us, or self-regarding at our expense. In either case, the danger to the self remains the essential point in ambivalence and subjective uncertainty. It is this danger, experienced first as an internal matter, then as emanating from outside, that marks the individual’s world as one in which defense of the self is the primary task. Thus, the world comes to consist of individuals preoccupied with self-protection at the expense of others, and is made dangerous precisely because all are preoccupied in this way. Each experiences others as potential threats to security. Now, consider more closely projection as a way of coping with a problem in self-interest. Self-interest becomes a problem because it is perceived to be a threat to the self. The idea that self-interest may threaten the self will, at first glance, seem implausible, if not logically inconsistent. It becomes less implausible once we recognize the internal complexity of the self. The threat self-interest poses is that we will lose hope of realizing our self-ideal. If the latter includes the idea of duty as self-denial, or otherwise demands self-sacrifice, then any conduct motivated by self-interest threatens the happiness we hope to attain by realizing our ideal self. We must, then, cope with the threat posed to us by our own self-interested impulse, which we can do through projecting it onto others. Yet, projection that begins as a defense against seeing ourselves as self-interested can provide a justification for acting on self-interest, the justification that doing so is only a response to the self-interest of others.

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This is an important result. It indicates how what begins as a perceived danger to the self, our own self-regarding impulse, is transformed into the whole of the basis for individual conduct. What begins as a threat to virtue (self-regarding conduct) is made into a virtue when it is perceived not to reflect our inner character, but to be imposed on the self from outside. The concept of virtue plays an important part in this dynamic. To the degree that we find virtue in self-denial, acting on self-interest must undermine virtue, and with it the inner feeling that we have, in our selves, something of value. Yet, this danger self-seeking poses for our feeling of self-worth turns into an orientation toward self-interested action based on division and projection. First, to maintain our self-worth we project our more self-regarding impulses onto others: we are not self-regarding, they are. Then, in response to a world of (perceived or real) self-interested actors, we must act in our self-interest, if only to defend our virtuous self from the danger posed to it by others. The transformation of self-interest from vice into virtue was a central theme of the original political economists. Taking the inevitability of self-interest in guiding action as a premise, political economy sought to design and promote an economic system organized around self-interest, a system whose outcome best serves both private and public ends. This system was the free market, free in the sense of unrestricted by obligation and non-contractual connection. Living in a world Organized through free markets, self-interest must inevitably become the end for each individual. As Hegel puts it, the world of the market is the world in which each relates to others as instruments for want satisfaction, therefore as a means rather than end: “each member is his own end, everything else is nothing to him” (Hegel 1952:267). Following the political economists, Hegel argues that this orientation, which would seem to conflict with the notion of ethical conduct as conduct having due regard for the self-in-other, has ethical standing. For Hegel, it is the reciprocity of self-seeking that grounds its ethical claims: In the course of the actual attainment of selfish ends… there is formed a system of complete interdependence, wherein the livelihood, happiness, and legal status of one man is interwoven with the livelihood, happiness, and legal status of all. (Hegel 1952:123)

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As the political economists sought to demonstrate through their theories, the pursuit of self-interest leads each individual to provide for the needs of others, and ultimately to serve the national interest. To satisfy our needs, we must devote ourselves to producing what others want, so that pursuit of our self-interest drives us to serve others. This is the universal aspect of self-interest. It is universal in that its end, while explicitly the well-being of the particular individual, is also implicitly the well-being of others. This classical theme in political economy expresses the transformation of the vice of self-interest into a virtue. It does the same work, at the level of theory, that projection does at the level of the individual psyche. There should be a link, then, between the classical theme and the process of projection. We can see the connection between the two in the way both make conduct motivated by self-interest inevitable; and both make it a virtue. They do so by establishing a division: for one between the immediate (private) and ultimate (social) end of self-interested conduct, for the other between the self- and otherregarding components of the psyche. Thus, the transformation of selfinterest from vice to virtue rests on an initial division of the self that cannot be overcome, but only managed for the greater good of the community. As I suggest above, it is the distrust of self-interest, the sense that it corrodes community and undermines ethical conduct, that requires a division through which self-interest is opposed, not only by the community, but by the self as well. The opposition of the self to its own interests underlies the arguments of the political economists. Thus, while political economy appears as the science that makes a virtue of self-interest, this is only in appearance. Underlying this appearance is the contrary idea: that self-interest must be made, even if unintentionally, to serve an end other than the self. This peculiar reversal, by which the market makes the self work against itself, is well understood in moral arguments for the market. These arguments emphasize the discipline of the market. To succeed in the market, the individual must be industrious and frugal. Workers must work hard; and entrepreneurs must devote their profits to investment. This is not a world for the lazy, profligate, or otherwise self-indulgent. Demanding discipline, the market uses the self for its own ends. Yet, if this is all we can say about self-interest, that indirectly and unintentionally it serves the interests of others, then self-interest remains not an end in itself but a means. For the political economists, it is the means to public ends; for the individual, it is the means to protect

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the (virtuous) self against an external danger. If this is the case, neither construction establishes the self as an end in itself, however dominant the role of self-interest in the worlds so constructed. Yet, making the self a means must make serving the self-in-other of little value, since its object (the other self) is of no greater value than the object of selfinterest (our self). Once we deny self-interest its normative value, we also deny that serving others can have any normative standing. Can we find something more, then, in the pursuit of self-interest than this selfnegation? Hegel sees more of value in self-seeking than this serving others, or serving the community. He also insists that the self must be a substantive end in itself. If it is not, then, the subjective aspect becomes a servant of larger objective forces, a mediating point, or a means to an end not of its own making. This would make choosing a ruse, and wanting the way the individual serves the group or the species. For the self to be an end in itself, it must take on an ethical value. If it does, then, rather than being a danger to the group, it becomes a positive force in group life. This means that self-interest must be validated. The market can play an important role in this validation of self-seeking. Outside the market, in the family and in the community, the individual must subordinate his or her subjective ends to a larger corporate interest. Only in the market is the pursuit of self-interest the explicit and accepted end. This observation, when combined with the considerations advanced above, would seem to place us into a dilemma. The classical argument for the market treats self-interest as a vice. The market, then, has virtue for us because it transforms self-interest from end to means. Yet, the market also liberates, indeed celebrates, self-interest, insisting that it does have ethical standing in its own right. On one side, the market offers a uniquely appropriate setting in which to experience our selfregarding feelings in others, and thus as an external threat. It does the psychic service of validating our self-regarding conduct vis-à-vis others, not as an expression of ourselves, but as a defense of self against an onslaught from outside. On the other side, the market offers us the opportunity to experience the self-regarding aspect of our persons, not as a danger to self and other, but as an ethically valid pursuit in itself. Once we experience this aspect of our persons not as a danger to be denied and displaced, but as a part of ourselves to embrace and acknowledge, the necessity of division and projection, which arise because of the perception that self-interest is a threat, dissipates. Thus, self-seeking appears in two decidedly different ways: as division and

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projection centering on an endangered selfhood, and as self-integration in a world where the pursuit of self is no longer denied ethical standing. The market emerges in response to self-interest experienced as a danger; and it emerges as a response to the experience of self-interest as an end in itself. Political economy has played its role in both constructions, in liberating the self, and in setting the self against itself. Disregard for the self-in-other is the danger we experience in a world organized on the plan set for it by political economy: the so-called “free” market. There, the individual’s impulse to reduce others to instruments of his or her want is experienced as the danger that he or she will not only be used by others for their own ends, but reduced to nothing more than a means. In other words, the danger always exists that the reciprocal element in self-seeking will weaken or disappear. For some, the institutions of private property and contract, in themselves and by themselves, are enough to secure the reciprocal element in self-seeking, and assure the individual against the danger of being turned into an object. If this is the case, it is not the market as such that assures the ethical standing of self-interested conduct, but a particular kind of market: the free market constituted by nothing more than private contract and a legal structure that limits itself to securing property right. Formally, this is the case, at least for those who own something of value. It is the case in the same way, however, that being legally free to choose, and offered sufficient options among which to choose, assures that acquiring what we want leads to satisfaction. The argument for the ethical standing of the free market runs into the same difficulty as does the argument for a direct connection between want and satisfaction. The legal recognition of our autonomy as property owners does not assure that the contracts into which we enter express our self-interest, or recognize our willing and choosing. The ambivalence considered above challenges this conclusion as much as it does the usual conclusions of political economy concerning the welfare implications of voluntary transactions. 3 The problems in wanting and choosing just considered can be expressed in the language of the particular and universal, as problems in maintaining what is unique about ourselves (particular) in a world of others, also unique but also selves (universal). To acknowledge my self as a unity of the particular and universal means to see in it a particular instance of a universal—selfhood—which also exists outside, in others.

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Yet, this only happens because others recognize this universal (self) in me. The alternative is that others see themselves (their particular selves) in me; they seek to make their selves immediately the substance of selfhood (universal) and to make my self either a replication of theirs, or a selfless object appropriate for use for their ends. In either case, one self is treated as the container for the other. This situation undermines any development of the idea that selfhood (universal) exists equally, if differently, within and outside. For individuals who find themselves in this situation, the inner world (subjective) and world outside (objective) mirror one another, each tending to suppress the (universal) self shared with others in the effort to make reality nothing but particular—the self held exclusively as our own. When self-seeking becomes a striving to equate being this particular self with being a self, and thus denies the validity of (different) other selves, the milieu for pursuit of self-interest becomes a danger to the self. Economics expresses this suppression of the universal when it insists on the “uniqueness of the decision maker’s epistemic status” (Vickers 1994:218). So far as this means that we equate the individual’s “epistemic status” with what is unique about him or her, we deny any real existence to what is universal about the individual. The resulting reality of selves that are all particular (unique), then, defies any truth claims advanced about it. The more we imagine our world made up in this way, the less it contains any truth we could know. We cannot find ourselves in the world if the self we have inside does not also exist outside, in others and in the community. About a self that is all particular, there is nothing shared with others that could make their selves a potential frame for the realization through recognition of our own. Others, then, cannot, and do not, recognize our selves, which means they must be a threat to us. We cannot really know what to do, how to act, and who we are in this world of wholly particular selves clashing in the pursuit of incommensurable ends, because we can never know what is wholly particular.

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III SUBJECTIVE AND OBJECTIVE 1 In light of the considerations advanced in this and earlier chapters, what might we say about political economy’s effort to deal with its subjective and objective moments? The neoclassical theorist found the earlier classical theory inadequate for insisting that want be determined by subsistence and class membership. Yet, in modern economics, subjective determination has come to mean no determination. Indeed, the theory that makes want into arbitrary preference makes the system of want satisfaction arbitrary. The most vital premises of economic theory have to do with the nature and end of want. Yet, what is most significant about these premises is precisely the absence of any rooting in a conception of the self and its determination adequate to ground individual ends and interests. Whether we assume the division of labor and its reproduction within a class structure, or the system of preference orderings and endowments, we make the determination of want, and therefore of the self, arbitrary. Want as necessity (the need for subsistence) and want as freedom (preference) here stand opposed; yet, neither affords a satisfactory understanding of how wants are determined. What we do not find in either construction is the idea that wants arise out of selfdetermination, and not the arbitrary preferences and passions of the undetermined individual, or externally imposed customs and norms. This unity of freedom and necessity is also the unity of the universal and particular aspects: the individual whose want instanti ates a universal self-ideal, and thus who wants the self (including other selves) as it wants itself. This is the point missing in Adam Smith’s account of the self as passion and reason: the idea that passion may or may not incorporate self-determination. To question the relation between passion and selfdetermination is to question the identification between the passions and the self, and to suggest that a passion felt by the self may not be a passion of that self. Doing so does not deny that the passions are a part of the self, but only the assumption that passions are of the self whatever their object and origin may be. Questioning the passions in this way raises another question: When are wants and interests those of a self; and when are they not? If selfalienation becomes an important consideration in dealing with the

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problem of self-interest, we must ask what implications the condition of self-alienation might have for our understanding of self-interest. This is a matter of the connection of the self to autonomy. Can we speak of a self as origin of action and decision if that self is not autonomous, but subject to, or the agent of, another? If we cannot, then we cannot ignore the question of the relation between want and autonomy. Smith does not consider the kind of want consistent with autonomy, but instead makes autonomy, or self-determination, a matter of control over passion (he equates self-determination with self-mastery). Selfdetermination, rather than referring either to action dominated by feeling or to feeling dominated by reason, could refer to the self that knows and is able to find its own ends. If we could find this self, we might overcome the separation of the subjective and objective moments in political economy, and achieve a real synthesis. 2 For some who find the classical moment lacking in a concept of subjective want, but are otherwise sympathetic with certain of its concepts, the problem is one of recasting classical ideas in the framework of preference-based choice. Doing so provides the muchneeded “microeconomic foundation” for a theory whose more macroeconomic insights lack any clear rooting in a process of individual decision-making. Whether approaching matters in this way achieves a true synthesis, or merely makes the classical theory a special case of the neoclassical, can be debated. The real difficulty, however, lies elsewhere. The approach that seeks micro-foundations does not deepen the choice-based theory in such a way as to establish, in the act of choosing, a real self-determination that marks the autonomy of the person who chooses. It does not advance our understanding of selfdetermination and self-interest in a direction that might lend determinacy to a theory whose subjectivism repels all real determination of its subject matter. The search for micro-foundations does not so much overcome the indeterminacy of the neoclassical idea, as pass that indeterminacy along to the classical, further undermining the latter’s, albeit uncertain, notion of determination in what is objective. A real synthesis must be found elsewhere, and on a different basis. The term synthesis used in this connection carries the wrong connotations if it suggests we somehow combine elements neither of which can stand on its own, and each of which repels the other. Indeed, the pursuit of micro-foundations fails because it seeks to make one side

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more adequate by adding to it the concerns of the other, a project not likely to work well, since it does little to address the real weaknesses of either element. Combining inadequate elements does not make for an adequate whole. Synthesis understood as adding together, or subordinating one to the other, does not promise much of a solution to the problem of subjectivity in political economy. In seeking a solution to the problems raised here, it might help to consider more closely the terms subjective and objective as I have used them, and as they take on significance in political economy. It is, after all, the subjectivity of want that causes the problem for the modern-day economist, just as it is the lack of a subject, and thus the objectivity of want, that marks the limit of the classical arguments. “Subjective” refers to what is internal to the decision-making agent, and undetermined by external factors. “Objective” connotes determination by what comes from outside. Thus two connected issues arise: (1) what is inside and what is outside, and (2) the connection of determinacy to what comes from outside. “Subjective” implies the presence of a subject defined by the boundaries that identify a center of action and initiative, or of willing and acting. This subject is also purely subjective when its willing and acting are driven wholly by forces internal to it. “Objective” means without a subject when it is determined independently of willing and acting. Yet, the subject may also be objectively existing, as it is when it exists for itself only in existing for others. And, the objective may be subjective when its determination operates through the interaction of a system of self-acting agents (subjects). It remains for political economy to find necessity in freedom, the objective in the subject, without giving up the freedom that makes a true subject. This means finding real self-determination, which we can only do if we give up the idea, typical of political economy, that self-interest is all about the uniquely particular, and that the system of self-interest is all particular ends and means. Seeing the particular aspect has been the greatest accomplishment, but also the greatest failing, of political economy. It is, after all, political economy that validates the pursuit of particular ends. Yet, it is also political economy that, in doing so, loses track of the universal selfhood that lives in and through the particular selves whose ends drive economic activity. Finding a real concept of self-determination, and thus self-interest, would allow us to give up the arbitrary and conflicting assumptions about the ends of the self that characterize the moments of the development of political economy. Only by ridding ourselves of these

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assumptions can we hope to develop a conception of economic life on a sound basis, one free from contingent determination—of want in need, in class position, in the division of labor, and so on—yet still capable of generating a determinate conception of want as something more than arbitrary preference.

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I WANTING AND CHOOSING 1 Wanting and choosing are no simple matters. They entail complex mental capacities, often poorly developed or seriously undermined. Yet, in economics, and more recently in other social sciences, wanting and choosing seem simple matters indeed. What makes them simple is the equation of wanting with preferring, that is, ranking alternatives in order of the amount of satisfaction we anticipate they will provide, or simply organizing objects in order of choice without any suggestion of a subjective end. Understood in this way, wanting is subsumed into choosing, since the point of interpreting want as preference is that it provides a basis for choosing according to the order in which options are preferred. At its core, this idea about human motivation has an important subjective meaning, one I have emphasized in the above essays. It means that human behavior is best understood when we assume that individuals know what they want, strive to gain the things they want most, and are satisfied when they succeed. As plausible as they seem, these assumptions conflict essentially with much that we know about mental life. Given the importance of these assumptions in the social sciences, it cannot but be supposed that this conflict has consequences for the conclusions social scientists draw about a wide range of phenomena, from welfare economics to international politics. The prospect that these consequences might be significant suggests that we consider how revising our thinking about wanting and choosing

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to incorporate our understanding of mental life might affect interpretation of social phenomena. In the present chapter, I explore this possibility. First, I consider some problems in the prevailing interpretation of wanting and choosing; then, I suggest revisions more in line with the nature and meaning of mental life. My intent is to suggest some formulations that might be usable as alternatives to those centering on “rational” or constrained choice. In considering the subjective aspect of economic affairs, the idea of rationality must take on special importance. Rationality has to do with the (psychic) boundary between inside and outside. Our capacity for reason is our capacity to know and feel a sense of the reality of our selves, and, thus, to distinguish self from not-self. Rationality has to do, then, with integration of the self into a unit, or with its unit status. This connection of reason to unit status and self-boundaries has gotten lost in the social sciences. With it, we have lost something important in our understanding of the characteristic activities of a self, including those activities we refer to as wanting and choosing. Much current thinking makes rationality and choice two aspects of a single idea. Most economists, and many other social scientists, think that rationality does not involve unit status, but means making a kind of choice. I begin with this idea, and with the notion of want that goes with it. I recognize that, in undertaking an exploration of the conceptual limitations of the prevailing notion of choice, I risk finding myself faced with a dilemma. To evaluate the prevailing idea of choice, I must discover in it something concrete and distinctive. In other words, I must assume that the so-called “rational choice theory” makes a claim or set of claims subject to judgment on analytical, conceptual, or empirical grounds. Yet, both adherents and critics often write and speak in a way that casts doubt on this assumption. It is not, for example, uncommon for critics of economics to question its theory of choice on the grounds that its claims for generality make it vacuous. At the same time, adherents equate criticism with misunderstanding by showing how all apparently anomalous cases only appear so because of misinterpretation (which is synonymous with interpretation outside the assumptions of the rational choice idea). This state of affairs impedes clear thinking on the vital questions of wanting and choosing. The education of economists may have something to do with this, since it has come to equate understanding the economist’s way of thinking with facility in its use. This equation diverts energies from exploring conceptual foundations to development of technical skills. As a result, the best trained practitioners of the

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method are often of little assistance in the effort to find out what that method is about. In the following, I claim, and to some extent argue, that the rational choice approach is distinctive, and that it says something arguable. I begin by indicating what I think that something is. In doing so, I advance some claims that run counter to the judgments of adherents, particularly those who would make the theory impervious to criticism by denying it concrete meaning.1 Rather than accepting the legitimacy of this strategy, I proceed on the assumption that we will learn more if we take seriously the notion that the rational choice approach advances specific claims concerning what it means to choose. 2 Consider the economist’s notion of choice. To understand this notion, we need to make some assumptions. Assume, first, that individuals face the possibility of acting in (or upon) the world, and that others have neither power nor authority to direct that action. In this, albeit limited, sense, the individual acts on his or her own initiative. Markets sometimes carry the interpretation of worlds in which action depends on individual initiative in this sense. Assume, further, that the individual acts to maximize, or at least improve, an aspect of his or her state of mind variously termed happiness, satisfaction, utility, or welfare. These terms have much in common, but they are not the same. Since my main concern is with want, I will use the term satisfaction, which has the simplest connection with want. This leaves open the question whether satisfying our wants improves our welfare, provides utility, or makes us happy. However, within the choice-based theory, want satisfaction improves welfare and stimulates a state of mind readily termed happy, or at least happier. The individual’s action affects his or her state of mind either positively or negatively. The action also affects the outside world. The individual changes the world by making use of things in it. This use is of a special kind called consumption. Individuals consume things, sometimes to take satisfaction in them, sometimes to change them into, or produce, things they believe will satisfy them better. If we consider the set of actions on the external world that improve the state of mind just referred to, the individual can be said to want to engage in those actions. More simply, the individual wants to consume (perhaps in order to produce) some set of objects in the world. The individual wants

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to improve his (or her) state of mind, to increase his (or her) level of satisfaction. This is all he (or she) wants; it is all he (or she) could want. One point in this demands closer attention. I define want in relation to state of mind. This has some implications further on. Had I defined want in relation to a state of the organism, those implications would change. It may not be necessary or even legitimate, within the choicecentered framework, to link want to mind. I will do so nonetheless, out of the conviction that our object is to consider those wants that involve thinking.2 For a person, wanting is a complex experience not equivalent to the needs that motivate animals in their interchange with the natural environment. What makes us human makes our minds the centerpoint in our connection with the world we live in. The thoughtful element in want causes the problems. When I refer to the thoughtful element in want, I do not intend to separate out a special set of wants involving ideas from those more closely connected to the organism’s natural impulses. That is, I do not mean to distinguish between the requirements of the organism, and the ends it pursues because of values or ideals it holds. On the contrary, as should become clear further on, I consider all wants (whether explicitly involving values or not) to have a thoughtful element at their core. Furthermore, when I refer to the thoughtful element in wanting, I am not mainly concerned with the use of cognitive faculties to facilitate want satisfaction. Use of thinking to facilitate want satisfaction separates wanting from thinking, since the latter is a means for the former. Wants, then, are assumed fully formed without regard to thinking and the specific goals we pursue by thinking. By contrast, the thoughtful element in wanting refers to the way in which what we want gets bound up with the ends of thinking, so that thinking is not primarily a means but a shaping of ends. Different objects can satisfy the individual’s want, repair his or her unsatisfied state, to different degrees. This means that the individual has a single, undifferentiated want. Many different objects can satisfy this single want, but not to the same extent. Some yield more satisfaction than others. While each individual’s want is unitary, different individuals want differently. What will satisfy us depends on our want, which is special to us. This means that objects satisfy the wants of different persons to different degrees. The idea of singular want is a sticking point. There is little in the canons of rational choice theory that explicitly supports the contention that it operates with a unitary notion of want. Nineteenth-century thinkers, of course, made no bones about the matter. Yet, in this, as in

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other aspects of theory, a kind of progress has been made in the work of generalizing, minimizing assumptions, and formalizing the apparatus of analysis. We are left with a theory that makes measuring the degree of satisfaction a matter of discretion, and claims to assume nothing about the subjective dimension of the whole matter other than that it accords with consistency of choice. Why, then, insist that the theory operates within a framework committed to a special conception of want? In one way, the notion of unitary want follows from that of trade-offs (including the notional tradeoff involved in the ordering implied by preferring). Yet, this only shifts the issue one step back. What do we mean by tradeoffs? Does the term refer to a judgment of the extent to which different objects provide satisfaction, and a recognition that consumption of one good means the sacrifice of the satisfaction provided by another, with the attendant comparison of degree of satisfaction? If so, then ranking assumes unitary want. It assumes we can measure the amount of satisfaction of different opportunities along a single dimension, so that we can judge which is greater. Alternatively, does tradeoff simply refer to the availability of alternatives that, given our resources, we could acquire, but do not? The second interpretation says nothing about whether our wants are unitary or multiple. Indeed, it claims to make no assumptions about the subjective aspect of choosing. The two interpretations lead in decidedly different directions. The first ties wanting and choosing to certain relationships and carries some specific implications. The second aims at a level of generality that enables us to apply it to all human (and some not so human) behavior. While I will not advance a full argument in support of the more contentful interpretation, I will briefly indicate why I think it, in the end, the better interpretation. First, the more general our core concepts, the less meaning they will have, and the less we will communicate in using them. In other words, if we use the term tradeoff in the second sense, we protect our theory from a critique that centers on the unity of wants, but we drain our theory of its power to help us understand what it means to want and to choose. In practice, we formally depict choosing, rather than making sense out of it. Second, I think something like the first interpretation of tradeoffs is implied in the term and in the way economists (reasonably enough) want to use it. In other words, economists are in the business of conveying meaning, especially when they do theory. In this case, the meaning is that different objects will satisfy us to different degrees, we know what those different degrees are, and we base our choice on them. This does

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mean singular want and ranking based on a subjective measure of satisfaction. In most cases, the objects available for satisfying wants fail fully to do so. We can, however, change those objects by exchange or production into others capable of giving us more satisfaction. If we are free to dispose of our objects as we see fit (e.g. we freely own them), and if they can be transformed into other objects by exchange and production, we must make choices. The objects we own, together with the objects we might make them into through production or exchange, make up a set of opportunities for want satisfaction. Knowledge of the ability of objects to satisfy our want enables us to rank them according to the extent to which they yield satisfaction. Rationality is our capacity to order opportunities according to their ability to satisfy our want (Arrow (1951) and Elster (1983)). A rational choice is an action that maximizes our satisfaction given the limits set by the opportunities available. Rationality so defined relates means (objects) to ends (want), and is in this sense instrumental. That is, it treats the world outside as an instrument for our end, and rational faculties as instruments of want (Weber 1978:24–6). Our choices might fail us for three sorts of reasons. First, the objects chosen might provide less satisfaction than would others available to us. This could happen to those who lack the time, information, or ability (e.g. intelligence) needed to make the best choice; they might make mistakes. Those working within the choice-based framework emphasize failures of this type, and have devoted considerable energy to thinking about them. A second way choosing might fail to bring satisfaction involves the possibility that the individual might be unable to choose because he or she lacks something inside: the capacity for self-directed action (Elster 1983:21). For choosing to take place, an individual with a capacity for self-directed action must meet a world of opportunities. Choice-centered theories normally take this capacity for granted, and devote their energies to specifying the opportunity set and the ranking of options. Doing so sidesteps important conditions for rationality associated with the autonomy of the individual. Failure of rationality can result from failure of autonomy, and thus from an inability to choose, or at least to act as a real agent of one’s choices (Shapiro 1981). A third kind of failure has to do with the possibility that our orientation to the world allows us to choose, but not to rank. If we choose but do not rank, then we cannot judge the rationality of our action by the degree to which it satisfies our want. Whether the ranking

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of objects according to their capacity to satisfy want makes sense depends on how we understand the nature of want and the end whose attainment is what we want. A closer consideration of want can shed light on how acquiring what we want may leave us unsatisfied. 3 Why do different objects satisfy different persons to different degrees? Or, why do some objects satisfy some persons but not others? This second formulation raises a troubling possibility. If objects, rather than providing the same person with different amounts of satisfaction, only provide satisfaction or the lack of it (i.e. because satisfactions are themselves particular and multiple for the individual), then choosing would involve a different process from ranking. In this case, our search is not for the most satisfying object, but for the satisfying object. Our want poses a question of right or wrong rather than more or less. We still make choices, but choosing involves judgment of the specific fit between want and object. Choosing questions the qualities of want and object. The dimension along which we judge quality in making choices gets lost in the choice-centered framework. Choice means thoughtful action, and thoughtful action presupposes judgment. In choice-centered theories, judgment means measuring objects by the amount of satisfaction they provide. Because the theory treats wanting as unitary, the only judgment possible is one of degree. Thinking, reasoning, choosing equal ranking. To judge quality, we need a basis for judgment different from intensity of want (which is purely quantitative). We need to think of the origin of want within the person as something other than a one-dimensional void. What makes the qualities of objects relevant, and on what basis do persons judge those qualities? We can best answer this question, I think, by referring to the person’s character. Our character is the mainspring of our action; as David Shapiro puts it, “no action is out of character” (Shapiro 1981:22). Our character, far from being like a void, is a matrix of thoughts, ideas, and feelings, more or less well articulated, more or less consciously apprehended, that we have about ourselves and our situation in the world. When we act on our wants, and when we judge objects suitable to us, it is because want and object fit our character. We judge objects, then, not by how much satisfaction they might provide, but by their suitability to us, whether they fit our character of not.3 The link between acting and character can help explain the diversity of wants, and their focus on particular objects.

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The diversity of objects and wants begins to make sense when we link it to the differences between persons.4 Our use of objects incorporates them into our life projects. They help us express our sense of self and realize those plans that arise out of the idea we have of who we are. Of course, this is not all that objects do for us. Some have public or collective purposes; some involve little more than our physical needs (e.g. the bandages we use when we suffer injury). Leaving these other uses aside, however, our connection with things is a way we experience our selves. We can express the core idea in the following way. Persons have unique and particular (in this sense subjective) inner lives. These lives consist of ideas, thoughts, perceptions, expectations, wants, fears, and so on. Inner mental life is not, however, exclusively, or even primarily, inner-directed. It involves imagined relations with objects and persons. In this sense, our inner life is a part of our involvement in the world. Our wants relate us to the outside world in just this manner. To want something is to imagine (anticipate) an involvement with it (e.g. to imagine using it). When we act on our wants, we attempt to make real what we have imagined might be so. This tells us something important about the relation of subjective to objective. Our want is an imagined experience in the world. Acting on it will confirm or deny what we have imagined. Imagining is the content of the mind; the action affirms or denies that content. Thus, along with our other goals, when we act on our wants, we engage in the work of reality testing. A dissatisfied want is a failed test. It is also a failed connection between inner and outer, subjective and objective. The idea of reality testing in this sense plays an important part in my interpretation of wants and rationality. I will speak of reality testing as if it were synonymous with want satisfaction because I think establishing the reality of our inner (imagined) life is what we want. Yet, it is the connection to the outside world (of things and persons) that we imagine, so the reality we test has a more concrete significance; it is the reality of a connection between the self and the world outside the self. On a deeper level, this is what it means to act in character. The idea of acting in character resonates with an older notion, that of self-seeking. When we take this notion literally, it means seeking after the self, or the activity by which we seek our selves in the world, and thus outside us. The objects we want exist outside. Their significance for us derives from their capacity to affirm and express in an objective external thing the reality of our inner sense of who we are. If the relation to the object outside confirms the sense we have of ourselves, it enables us to find ourselves.

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Reality testing, self-seeking, and acting in character all make wanting a matter of thinking. We can see this more clearly if we bear in mind that the (imagined) connection between what is internal to the mind (subjective) and what exists outside (objective) links, or anticipates linking, the ideal with the real. What is internal is a self-ideal. Reality testing means testing the reality, or the capacity to be real, of this ideal, testing, in particular, whether our ideal-self exists, or can be made to exist, for others. What we want, then, is not a thing capable of satisfying a mindless desire, or, more exactly, capable of satisfying a desire that rules mental functioning. Rather, what we want is to identify ourselves with an ideal, which is to say, we want to realize an ideal by connecting with external (objective) things. 4 In contrast to the choice-centered way of thinking, I will refer to the conception of want rooted in the connection between inside and outside as a relational conception.5 Of course, wanting always relates an agent to something outside, and in this sense choice-based theories also involve a relational moment. Yet, in choice-based theories, the relation, like the thought process that anticipates it, is an instrument of want. In the relational conception, the relation to the object is not simply a means, but an end in itself. Put another way, the self-ideal includes, and, indeed, is organized by, a relationship with others. Since the ideal becomes real when it exists for others, it is an ideal of a way of being in relation to others. Choice-centered theories treat both objects and other persons as instruments of satisfaction, rather than opportunities for connection. The difference between this idea and the one advanced here becomes especially vivid when persons want unsatisfying or harmful experiences, a phenomenon Freud investigates under the heading “compulsion to repeat.”6 The problem Freud faced was that of reconciling the persistent seeking after unsatisfying experiences with the principle that the motive force of mental events is “an avoidance of displeasure or a production of pleasure” (Freud 1961:1). The difficulty he faced does not differ essentially from that faced by the choice-centered theory in making sense of wants that are by nature self-frustrating. We may be able to subsume wants of this type into the choice-centered way of thinking, but in doing so we pay a high price. The price we pay is to limit severely, or even make wholly formal, our use of the term satisfaction. To gain satisfaction will mean nothing more than to acquire (and

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consume) the object (or opportunity) we choose from the set available to us. This makes the term satisfaction, clearly one of our central concepts, superfluous. When we identify satisfaction with the consumption of the object we think we want, we are satisfied even though we are frustrated; or, perhaps, frustration is satisfying.7 All this underscores the importance of clarifying what the term satisfaction really entails. This is not simply a matter of choosing a definition for purposes of analytical simplicity. It also means attempting to understand something about the human experience of gaining satisfaction. This is a vitally important element of a convincing account of wanting and choosing. Thinking organized around pleasure-seeking struggles against the meaning we need to convey when we think about our attachment to unsatisfying or harmful experiences. This struggle has led to revision of the idea that human motivation centers on pleasure-seeking, and its replacement with the notion of object-seeking (see Fairbairn 1952).8 The emphasis in this revision is on the idea that, in human motivation, the need for a connection between inner mental life and the world outside is more fundamental than the need for pleasure or satisfaction. An unsatisfying connection meets our need better than none at all. When unsatisfying connections are the only ones that make sense to us or fit our character, then being unsatisfied is what we want. If pursuit of connection rather than pleasure is the basis of want, then it comes into play not only in cases of frustration and pain, but also in cases where wants can be satisfied (are for satisfying and pleasurable experiences). The idea of wanting as an imagined relation with the world of persons and things fits this interpretation well. When we seek a genuinely satisfying experience, we expect confirmation of an imagined relationship with the world outside. Satisfaction can result from such success when our want is not inherently self-defeating, and does not have frustration as its goal. When we succeed in establishing a satisfying connection, satisfaction is derivative of the resulting fit between our inner sense of our selves and the world outside. Acting in character means pursuit of such a fit, whether our character involves satisfaction or frustration, pleasure or pain. 5 What does it mean for an object to fit our character? What about objects allows for their involvement with our sense of self? If our connection with things is to have meaning for us, it must be a meaning embedded in

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the object’s human qualities. By the human qualities of objects, I have in mind the social meaning those objects embody. One way of thinking about this meaning is to consider the place of an object in a system of use or social practice.9 A telephone is not simply a material object (so much plastic, metal, etc. organized in a particular way), it has a set of interconnected uses that give it meaning in a way of life (or, possibly, in a number of ways of life). This meaning is objective (even if not material) in that it is defined by society for the individual rather than vice versa. It is this objective meaning, or connection to systems of use and forms of life, that I have in mind when I refer to the human qualities of objects. While important, this notion of a social meaning can only take us so far in understanding the use of objects, including objects having economic significance. To see this, consider some of the objects whose use evokes significant subjective experiences: admission to an art museum, tickets to a concert or a movie, home furnishings, and so on. From the point of view of their economic significance, these are all commodities that have a meaning and significance going beyond the inner life of their owners. Yet, their meaning to those who will use them is also subjective, since it varies from individual to individual as the objects evoke individually specific memories and feeling states. Because so many objects carry a subjective meaning, it would be a mistake to interpret them exclusively on the basis of an objective use given to, and defined for, the individual by society, culture, and so on. Doing so eliminates the uniquely individual moment in use and consumption. The qualities of objects relevant to our use of them, then, while objective for us, also connect to subjective experience, specifically the subjective experience of using an object to evoke or connect to subjective states, which in their links to objects also become objective. Thus, just as our effort is to make our subjective being objective by making it exist for others, so also do objects become subjective in connection to the special significance they have for us, the connection they establish with our personal histories, and with our unique character. Without their human qualities, things could only connect to our physical needs (warmth, nutrition, etc.). Here, again, we would lose the significance of the diversity of objects. What purpose could such diversity serve for the reproduction of the species? The human qualities of objects play a different part in our lives. Our connection with these qualities is part of the reality testing referred to above. By using objects according to their objective and subjective meanings, we engage in a

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meaningful act. Our way of life, then, connects us to an objective reality. Our projects succeed because, or to the extent that, they are relevant to that reality, and capable of involving the human qualities of objects. The success of our projects, including the satisfaction of our wants, confirms the reality of our imagined connection to the world outside. If objects have meaning, a connection to them (ownership, use) connects us to that meaning. This is the significance objects have for us. Given this significance, we can identify an important limitation in the way the choice-based theories imagine the use of objects. Choice-based theories assume that we use objects by consuming them; and, in many cases, this is no doubt correct. Yet, use and consumption do not carry the same connotations. When we own or use objects, we relate to them in a way that involves their remaining outside, or separate from, us. In owning and using things, we sustain a connection with them that only in certain cases destroys (uses up or consumes) them. Thus, if, in our thinking, we emphasize owning and use rather than consumption (seeing the latter as a special case of the former), it would help us think differently about how we relate to objects in satisfying our wants. It would place emphasis on our connection with an object, and with the meaning that object bears. We do not consume our apartment when we live in it; we involve ourselves in a particular way of life. To live in a building divided into separate apartments each divided into separate rooms is to live separately with people. To think of the use of an apartment as providing shelter, or the satisfaction of a purely subjective want, misses the point. Sheltering the body may help account for what all forms of housing have in common. Sheltering the person makes different houses suitable to different persons. Chairs and couches make sense in the same way. They allow us to be together separately, and, by their different design, reflect our inner sense of who we are through our surroundings. Aesthetic objects (paintings, craft products) enable us to involve our inner psychic reality with something outside capable of speaking to or evoking that reality. Here, again, I may run counter to the economist’s more general interpretation of consumption (which includes use as a special case) in attributing to it a specific connotation. In fact, economists have little interest in consumption. Their interest is in consumer choice. Consumption comes after choice. For the economist, whether the consumer aims to consume or to preserve the world is entirely up to him (or her). The theory holds regardless. Formally, this is indeed the case. That is, if we interpret rational choice as a way of formally depicting

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choice, rather than as a theory of the nature and meaning of choice, the issue I raise here is not relevant.10 But, if rational choice incorporates, implicitly or explicitly, a theory, then the issue raised here matters. Again, I will proceed on the assumption that economists intend that their theories incorporate significant judgments. One of these has to do with the relation of the individual to the world outside implied in the notion of consuming. The instrumental (means-end) construction of that relationship has implications for our understanding of wanting and choosing. The terms consumption and use suggest different attitudes toward the world of things. Both terms refer to ways in which we make things our own, have them participate in our projects, and express some aspect of our sense of who we are. Yet, the two terms characterize differently the way we make things our own. When we consume objects, we make them ours by obliterating their difference from us. If all we do is consume objects, then our action in the world is an assault on its objectivity. Everything outside either becomes a part of us, or remains irrelevant to us. By contrast, ownership and use sustain the objectivity of the world. They are ways of relating to the world that maintains its difference from us, while involving it in our projects, and in our work of living out our sense of who we are. The individual’s connection to an objective world helps establish the reality of his or her otherwise purely subjective state of mind. In this sense, use includes reality testing. When our projects succeed, and we satisfy our wants, we confirm their meaningfulness; we make them real for others and for ourselves. In realizing our ends, we realize ourselves. By contrast, to consume the world destroys the externality of objects, and with it the possibility of making the subjective real. Human want is for satisfaction or fulfillment of the self. Meaning is the stuff that fills the self. Because of the specificity of who we are, and the separateness of ourselves from others, we want different things than others want. Connections with different objects affirm the differences between persons. The need for such connections explains the diversity of objects (Hegel 1952:126–9). 6 With the long tradition of relational thinking, and the insight it could provide into the nature of wants, it may seem odd that economics (where want has pride of place) has resisted the idea so successfully, for such a long period, and with increasing rather than diminishing

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strength. The capacity of economics to do so has several roots. Two of particular relevance are the following. A first root of the power of economic reasoning lies in its implicit assertion that the claims of relational interpretations, whether true or not, do not matter. They do not matter because, if our aim is understanding the economy, the specific nature of want counts little so long as wants meet what seem minimal conditions (i.e. those associated with instrumental rationality). By, mistakenly I think, inferring ranking from choice, choice-based theories can find preferences acting in virtually all decision-making. Since action also means deciding on a course of action, and thus rejecting alternatives, we can frame action in a choice-based language whether wants are relational or not. The fault in reasoning along these lines lies in the requirement that we interpret choice as a purely formal matter. Rejection of alternatives does not imply ranking of alternatives, and it makes a difference whether we understand choice in connection to ranking or not. If ranking does not stand behind choice, we cannot draw the usual conclusions regarding the relationship between choice and welfare that we draw when we assume that persons rank their opportunities. I suggest in the foregoing that the economist’s framework does invest choice with a specific meaning connected with the ranking of alternatives. If this suggestion is correct, then it would be a mistake to employ that framework where choice does not stem from ranking. Doing so would confuse the meaning and significance of decisionmaking, and mistake the grounds on which decisions are made. A second root of the economist’s disinterest in the foundations of choice lies in the fact that economics has, since its inception, insisted on the transparency of want. To the mind of the economist, people know what they want, want what they want, and are satisfied when they get what they want. To be sure, these claims are in part corollaries of the formal interpretation of want and choice. Indeed, if we assume that the term tradeoff refers to objectively existing alternatives, and not to the act of a subject ranking and choosing according to the expected degree of satisfaction, it does not much matter if we want what we want, or are satisfied when we get it. Yet, the claim that getting what we want will satisfy us, not formally, but substantially, carries conviction. This claim accords with deeply felt beliefs, or perhaps I should say hopes, people have about their lives, and the expectations they might reasonably entertain about their futures. However deeply rooted the hope that the only problem want poses for us is that of gaining access to satisfying objects, it is as often false as

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true. In the modern world, people often do not know what they want. They may instead only “think that they want or are interested in what actually they only believe they should want or be interested in” (Shapiro 1981:26). If we do not know what we want or want what we think we want, we are unlikely to be satisfied when we acquire what we think we want. No possibility poses a greater threat to choice-based ways of thinking about rationality. We cannot give up our commitment to the transparency of want without endangering the associated idea of the meaning our search for satisfaction in the world has for us. This raises, again, an issue alluded to earlier. Choosing requires an agent with the capacity for choice. Yet, there is very good reason to doubt the assumption that we can take this capacity for granted. In Heinz Kohut’s words, the phenomena of choice “require for their explanation the positing of a psychic configuration—the self— that, whatever the history of its formation, has become a center of initiative; a unit that tries to follow its own course” (Kohut 1977: 244–5). In this interpretation, the capacity to choose is a developmental achievement. If this is correct, we cannot infer choice from the presence, in the perspective of the viewer, of alternatives. The psychic reality and meaning of the act determine whether what we view is or is not to be understood as an act of choosing, i.e. an act by a subject capable of choice. What does it mean, then, to choose, if we do not equate choosing with selecting from what the observer interprets as alternatives? First, of course, it is not the observer’s interpretation that establishes choice, but that of the individual observed. If that individual experiences himself driven to a selection independently of his will, and not in service of his self, he will not interpret the action as a choice. He will experience coercion, though he appears from outside to be free. Clearly, an addict who chooses alcohol over food may be “free to choose,” but this does not mean that he (or she) has the capacity to choose. Yet, even less extreme examples raise similar difficulties. Thus, preoccupation with the judgment of right and wrong in choosing clearly places the matter of choice outside the individual, whether it be a matter of fashion, art, or food. In such cases, as in the case of addiction, there is no real choice. Some might argue that choices are all of these kinds, that we never really choose, if choosing means being free, not only of overt coercion, but of adaptation of the self to external expectations, often internalized as a striving to do the “right” thing. The social construction of action seeks to make it always explicable by the imperatives of adaptation to social roles given to the individual from outside. If this is the case, then

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choice, and especially the normative implications of choice for welfare, must be questioned. Yet, clearly, when Kohut refers to the self as a “center of initiative,” he intends to get beyond the purely adaptive self, even though he understands the self to be shaped by, and to thrive in, its interaction with others. Kohut’s self exists in its relations with others without disappearing into those relations, as the socially constructed, or purely adaptive, self does. It is the alternative implied in Kohut’s construction that I think offers us a meaningful way of thinking about the self, its wants, and its capacity to choose. For this alternative to make sense, we must clearly establish the significance the separation between persons has for the emergence of a self pursuing its own self-ideal in connection with others. To be for itself, the individual must take initiative in the world. This means that the individual’s self-ideal is not wholly shaped by questions of right and wrong in choosing, but by questions of which choice fits his or her character, understood as a unique endowment shaped by a unique experience, an experience with others, but not one in which the individual disappears into others. It also means that there must be a significant arena of choice in which ethical considerations do not apply, the needs of others do not govern outcomes, and the individual is, indeed, “free to choose.” That, for real choosing to take place, the individual must remain separate within his or her relations with others, makes choosing an accomplishment, and the capacity to choose an attainment. Our understanding of the developmental achievement marked by the attainment of the capacity to choose bears on how we talk about satisfaction. Clearly, it makes the connection between want, choice, and satisfaction complex and problematic. In so doing it challenges the more traditional meaning attributed to wanting: what we want, why we want it, what we gain when we acquire what we want. 7 If the problem of choice of objects is a problem of interpretation (i.e. of their meaning), rather than a problem of estimating the degree to which they will satisfy want, then, whether the choice is correct or not depends on the accuracy of the interpretation, and the quality of the individual’s self-understanding. The problem of what is or is not rational in action and in the world appears in a different light when posed in this context. Much modern thinking collapses rationality into the means—ends calculation. While this calculation is an undeniable part of the problem,

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I want in the following to consider briefly other potentially more important aspects of rationality linked to relational interpretations of human action.11 I suggest above that the rationality of our choices depends on interpretation and self-knowledge. On the side of interpretation of the world, rationality means thinking and acting according to the way the world is, or the way it might be. Since acting in the world means bringing about a change (however small), rationality connects us not so much to what is as to what might be. We do not, of course, always know how the world is or could be. That we make mistakes does not mean that we are irrational. We can get around this difficulty by thinking of rationality as a capacity for finding out how the world is and might be, including especially a willingness to know. This willingness involves a strength to cope. With this strength, you might be wrong, but you would not be irrational. Without this strength, being wrong involves not only mistakes, but an active refusal to know. Our interpretation of wanting and choosing incorporates specific, concrete, judgments about the relation of subject to object, of inner world to external reality. The refusal to know referred to here is a way in which the actor relates to the world outside. This way of relating will, in important ways, prevent a meaningful interchange between inner and external worlds by closing off the former from the latter (Fairbairn 1958: 374–5). This notion of irrationality conforms well to normal usage in which a failure to accept judgments imposed by reality testing is the essence of irrationality. The refusal to know can stem from different sources. We may be unwilling to allow the world to be different from what we want it to be. Reality testing becomes impossible when we insist that the world outside either does conform, or must be made to conform, to our subjective inner life. Whatever the world is or could be, we relate to it as though it must be (or be made to be) what we experience inside (in our imagination). This way of relating to the world denies the difference between subjective and objective by making the objective an extension of the subjective. This happens when we assume that our want is adequate grounds for an expectation of satisfaction, and thus that nothing but the availability of objects stands between want and satisfaction. This is the attitude toward want embedded in the economist’s arguments. It ignores a whole set of conditions want must satisfy before it can find an appropriate object, conditions bound up with want’s coherence, intelligibility, internal consistency, and so on. Such an attitude toward the world

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ignores the process of discovery of the real possibilities, and interpretation of the true meaning, of things. This process of discovery and interpretation intermediates between want and satisfaction. I have used the term irrational to refer to an orientation to the world that denies it a separate reality as something other than an extension of inner psychic life. Such a failure of rationality is a failure to see the world as something separate from our immediate experience of it (Shapiro 1981:35–9). This way of experiencing the world makes it essentially subjective. The rationality-as-choice idea interprets the world as consisting of objects capable of satisfying wants specific to particular persons. In doing so, it makes objects derive their meaning from subjective want. The significance of the world outside varies with, and is contingent on, want. If I want something, it is meaningful to me; if I do not want it, it has no meaning for me. I create the relevance of the world. This conclusion is already implied by the idea of consumption as the typical relation of persons to things outside. Consumption destroys the objectivity of things consumed. Want precedes consumption; it consumes in imagination as a prelude to consuming in reality. This kind of wanting expresses a dissatisfaction with the objectivity of the world. If rationality requires acceptance of the objectivity of the world, the attitude toward the world typical of the choice-based interpretation is not rational. By contrast, the relational interpretation requires a world outside, and independent of, subjective desire. Without this separation, no relation is possible. Rationality is, in part, a way of relating to a world whose objective meaning has relevance to, but is not contingent on, the individual. Acceptance, or comprehension, of the objectivity of the world is the real basis for self-directed action in the world (Shapiro 1981:38). Interpretation of the world, and judgment of the fit between things and individual character, are important because of our need to find ourselves in a world that is outside, and separate from, us. This connection to a separate reality enhances and confirms our sense of our own reality. Establishing the separation between ourselves (subjective) and the world outside (objective) establishes the boundaries that define our selves; it assures the unit status to which I refer at the beginning of this chapter. The attitude toward the world centering on its consumption does not incorporate a clear separation between subject and object, and therefore cannot establish clear self-boundaries. Failure to establish secure self-boundaries undermines the sense of the reality of the self in

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the world, which, as I emphasize above, demands that the self relate to an objective world outside, including a world of others whose recognition of the self assures its reality for itself. Recognizing this separation is what we mean by rationality. Rationality is one important condition our attitude toward the world must meet if we are to succeed in forming a connection capable of enhancing the reality of our inner life. It includes a capacity to know and accept the objectivity of the world, to define ends capable of being realized in the world, and to seek relevant means to those ends. In thinking about the rationality of action, the important questions are: Do the individual’s ends make sense? Do they incorporate recognition of others, and, more, generally, of an objective external world? The important question is not whether those ends are ranked consistently, or whether the means chosen are appropriate to them. The existence of appropriate means depends on whether the ends are consistent with the nature of the world we live in. Consider, for example, agoraphobia (Habermas 1981:17). Someone who is afraid of open spaces can act rationally from the stand-point of ordering preferences—consistently ranking closed spaces above open— and from the standpoint of using appropriate means to achieve his or her ends (for example, avoiding open spaces). Such action may be intelligible to others, and appropriate to the person’s inner psychic reality: the person avoids open spaces for reasons. These reasons are knowable, both to the phobic person, and to those clinically trained in diagnosis and treatment of phobic disorders. A person so trained will see the actions of the agoraphobic as filled with meaning. Yet, agoraphobia remains irrational. Intelligibility does not assure rationality. Agoraphobia is irrational because of what it implies about the orientation of the individual to the world outside. However real and understandable the subjective experience of a threat from outside, no such threat exists. The experienced threat from the outside is, in reality, the projection into the world outside of an inner experience. The role of projection means that, for the agoraphobic, the separation between what is inside and what is outside is not well established. To experience the world as threatening when it is not is irrational even when the experience is fully explicable. The phobic personality fills the outside world with a subjective meaning. This denies the objectivity of the world. In cases such as the above, we evaluate the rationality of action not on the basis of the relation of means to ends, or even the intelligibility of the action, but on the basis of the action’s meaning, especially its

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implications for the capacity of the person to accept the boundaries between self, others, and the world outside. An orientation to the world based in reason sustains the objective meaning of the world, and thus enables us to act in the world, to pursue our life projects, make choices, and satisfy our wants. It does not fill the world with objects we must either shun or consume. Instead it fills the world with meaningful objects whose objectivity allows us, through our relationship with them, to discover who we are and what we want, to confirm the reality of our inner lives, and to satisfy ourselves. Because of its distinct interpretation of wants, choice and rationality, the relational understanding affords us a standpoint from which to judge the wants of individuals, the choices they make, and the ability of society to enable its members to act rationally and be self-directed. The rationality-as-choice idea is also designed to make such judgment possible. Yet, it falls far short of providing us with the concepts we need if we are to know the rationality of our action and the extent to which society allows us to act rationally. Instead it insists on the idea of consuming subjects relating to a world devoid of any meaning other than its capacity to satisfy their want. If we intend to make sense of the world, however, we need to see how it can satisfy our wants and affirm our ends without losing its separateness from us. II PLEASURE AND NECESSITY 1 Is the world outside a world of things with which the individual carries on an intermittent and external relation aimed at taking pleasure? Or, is the world outside a place in which the individual finds him- or herself? How does the pursuit of pleasure orient us in the world, and what is the relation between seeking pleasure and seeking self? Much is at stake in deciding between different answers to these questions. Conclusions we might draw from thinking that individuals are in the business of making calculations of how best to take pleasure in a world of things differ substantially from conclusions we might draw from thinking that (even in relation to things) individuals seek recognition of themselves in a world of others. The idea of pleasure-seeking looms large in our thinking about the individual’s relation to the world outside. It does so because it

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represents an elemental modality of that relation. In its simplest terms, the relation of self to not-self is a desire whose satisfaction yields pleasure. Yet, the pursuit of pleasure, which promises satisfaction, may instead lead to a compulsive repetition of the pleasure-giving act (see Desmond 1987:24–5). Thus, freedom turns into necessity, pleasureseeking into a drive-dominated and ultimately unsatisfying repetition. Why? Compulsive repetition, or pleasure-seeking, means that satisfaction recalls desire, and thus leaves us unsatisfied. This might happen because the object toward which our desire leads us is not our true object. If it is not, then finding the object cannot satisfy desire. Finding our object may also fail to satisfy desire if desire attempts to take the place of an essentially different motivation, one whose end only seems the object of desire. This object that seems, but is not, desire’s is the feeling of being a self (see Kohut 1977:45). When we confuse pleasure with the feeling that comes from being yourself in the world, the pursuit of pleasure cannot end. I anticipate this distinction between pleasure and the feeling associated with being yourself in Section I of this chapter where I consider the distinction between consumption and use, and the connected distinction between relationship-seeking and pleasureseeking through the consumption of objects. Here, I explore further the distinction between pleasure-seeking and self-seeking. Many believe that pleasure-seeking is the substance of human motivation. Thinking this way either fails to distinguish pleasure from happiness, or finds happiness in a quantum of pleasure. Then, enough pleasure amounts to a state of happiness. Equating pleasure with happiness, however, equates a transitory experience with an enduring, or potentially enduring, self-state. Put another way, this equation fails to distinguish between a momentary contact with the world, and a state of living or being in the world. Many also believe that humans, like animals, are biologically driven to seek pleasure. The failure of this perspective is clear enough when we consider that the drive to seek pleasure is marked by the movement beyond the limits set by biological needs (nutrition, procreation, and so on). To understand this, we need to place pleasure in a context of mental life. This means that we understand pleasure as a way we mark the significance of a psychic experience. Understanding pleasure this way retrieves a meaning lost when pleasure-seeking is taken to emanate from physiological need. The emotional marking of experience enlists body and mind in a joint interpretation of the world. Our concern here is

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with the nature of the interpretation marked for us by the experience we call pleasure. 2 The end of pleasure-seeking in relation to things is the feeling derived from their consumption. Since consumption eliminates the pleasuregiving object, the production of the sought-after feeling also extinguishes that feeling, and the search must be renewed. This everrenewed search for pleasure is an important part of life, the part made up of our sensual experience of (tasting and feeling) the world outside. This is the purest case of pleasure-seeking as a mode of contact with, rather than a way of living in, the world. The more important consumption of things to our equilibrium, the more we have made this form of pleasure-seeking a way of life. As I suggest above, consumption of things should be distinguished from their use. Using an object sustains it in relation to the self. Because of its relation to the self, the object can help its owner live out, and express externally, an inner reality. Use of objects, therefore, need not imply failure of selfhood, or the compulsive seeking for pleasure as a stand-in for a true self-state. The true satisfaction of the self results when it attains its characteristic end: to be real in the world, which means to find itself in the world outside. The relation that can establish selfhood is a relation that finds and acknowledges selfhood in another, or the relation of recognition (Hegel 1977:178–96).12 Recognition satisfies the self’s need to be real. But, since recognition is a relation with another, if the other is to any significant extent deprived of selfhood, recognition is not possible, and the relation will not make either self real. If recognition is reciprocal, and in this sense use of other is also reciprocal, then it sustains self and other in a relationship. The exchange contract can do this, but only if it meets certain conditions, having to do with the status and situation of the parties. Each party must be free not only in a formal legal sense, but in the sense that each has the capacity to act as a center of initiative. Markets existing within a larger context that secures the autonomy of property owners can realize the idea of reciprocity in recognition and use referred to here. It is this larger context that determines what can and will be accomplished by the market, and therefore also the market’s normative significance. Within an appropriate context, one capable of securing the individual’s autonomy, the market can provide a means for realizing autonomy

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through relations with others and through the acquisition of appropriate goods. Recognition can provide satisfaction if it contributes to making real a self-ideal, which, by becoming real for others, becomes that much more real for the individual. This is the realization of an ideal I have earlier linked with the thoughtful element in want. The satisfaction gained in realizing a self-ideal is the positive recognition of the self (approval). Approval can, however, come at a cost. If the person gains approval by self-sacrifice, the approved self becomes an alien self. Winnicott (1965) refers to this alien internal presence as the “false self.” Adopting a group ideal for the self exemplifies this difficulty. When identification with the internalized ideal means compliance with the external ideal of the group, and loss of self into the group, it challenges autonomy. We can speak of the alien internal ideal as an internal other, internal because it is part of the self, alien because it is hostile to it. The problem of the internal other is the same problem of division and integration considered in the previous chapter. Emergence of the internal other compounds the difficulty we face in distinguishing a true self-state from a feeling that stands in for such a state. We experience pleasure when we live up to our ideal. But, much depends, as I suggest here, on the relation of this ideal to the self. When we succeed in our profession, master a new skill, lose or gain weight, denounce injustice, or make a self-sacrifice, are we identifying with an internal other, or being ourselves? Is the feeling that we gain the pleasure of merger into the group (loss of self) or the satisfaction of an enduring self-state? The answer depends on the consistency or inconsistency of our ideal with the demands of being a self. The feeling derived from professional success may be a pleasure in mastering others, satisfying a sadistic and repressive internal other. It may be the pleasure of being what we think or hope others will admire, whether or not doing so expresses and realizes our real talents and interests. Or, it may be the satisfaction we experience when we can be ourselves in our relations with others. Happiness is the satisfaction we feel in being ourselves. Our problem is to distinguish happiness from the pleasure of identification with the internal other. Difficulty also arises when identification with the internalized ideal means denial of the (external) other. The unit achieved through merger excludes others (any who are different). The world consists of only one: “the I that is we and the we that is I” (Hegel 1977:110). In this case, the

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pleasure attendant upon merger excludes any other, since to be other means to differ from the self. Happiness means finding an ideal that can be real without loss of self. The presence of the internal other impels us to define integration of self as merger with other. In doing so, it prevents integration because it makes integration mean alienation of self (identification with the internal, or alien, other). This means devoting our lives to pursuits alien from ourselves, which therefore demand self-denial. Happiness, by contrast, depends on integration, which presupposes the replacement of the internal other with an ideal whose attainment is consistent with being a self. The happy self acknowledges its limitations: it will not be the universal (the only one); it will not merge with the object. But, in failing to be the universal, it does not become irreducibly particular (the particular self of the self-interest celebrated in political economy); it is not alone and forlorn. Precisely because the individual integrates universal and particular, he or she can relate to others and to things in ways that sustain, rather than master or destroy, them. Recognizing and accepting their own particularity makes it possible for individuals to recognize the self in others, without being threatened by the difference implied by the existence of other selves. By doing so, of course, individuals establish the prospect that others will relate to them in ways that also sustain rather than master or destroy. This is the relation of mutual regard through which we seek others so that we can be our selves in relation to them. This being a self in relation to the other makes the self real. The “other” referred to here is the world of both real and possible selves, each limited, and, in its way one-sided, each taking its place and leaving space for others. Some are what the self might have been, or could imagine itself being, but is not. Some share aspects of what the self is or might become. And, some share little but the quality of being a self. Happiness is being yourself in this world of others. But, being yourself is only possible if your ideal self is something you can be. We have gotten into the habit of viewing happiness as a superficial accomplishment, a reaction formation against the darker reality of our lives. Those who seem the most happy must, by the evidence of their happiness, be the furthest removed from reality. If this is so, then happiness is a “mere” state of mind, and the pursuit of happiness a superficial and unworthy purpose in life. I will refer to this as false happiness. False happiness denies reality, while true happiness finds in reality a good enough basis for being a self. Thus, true happiness may seem less happy than false; but it is more real. True happiness puts

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pleasure in perspective by keeping in mind that its attainment is a temporary experience, and not a state of being in the world. Thus, a happy person can experience pleasure without making pleasure-seeking or its denial a way of life. Happiness can be a marker for its opposite. But, the feeling that happiness is unreal does not make unhappiness the truth of being in the world. Unhappiness can as easily be the product of an intense attachment to a fantasy that can never be realized. We achieve true unhappiness when we give up hope without giving up desire. The unhappy consciousness (Hegel 1977: paras. 225–30) knows that its desire (to be one with the object) will never be fulfilled. Confronted with this truth, it does not give up desire, but only the prospect of satisfaction. The truly unhappy may pretend to be happy, and even convince themselves that they are. But, the underlying reality is that of dissatisfaction and inadequacy. Only by making the world inadequate can the truly unhappy gain a modicum of self-feeling. Even then, that selffeeling is unhappiness. In an unhappy world, being a self (thus being happy) means being unhappy. Pleasure and desire set a foundation for happiness. They are consciousness of self and other in its most primitive form. This consciousness of self and other drives the ongoing struggle over selfboundaries, and over the modalities of being with others that constitute movement toward an integrated self-state. Because, as often as not, individuals get stuck along the way, the more primitive modalities come to stand in for the unattained states. Consumption substitutes for use, merger for recognition; treating others as objects provokes them to treat us in the same way. Getting stuck can take many forms, including those that attempt to abandon the goal of being a self. Repudiating our goal does not, of course, get us unstuck. Happiness comes not from discarding pleasure and desire, but from integrating them into the more mature state I refer to as being a self.

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6 NORMATIVE CONSIDERATIONS

1 Economic activity is usually thought to be about providing the material means to secure welfare. Welfare judgments provide the basis for evaluating policy options and alternative institutional arrangements. Yet, knowing what secures welfare, or even in what our welfare consists, is no easy matter. In the preceding chapters, I have explored some contenders: subsistence, basic need, satisfaction, pleasure, and happiness. I also considered the pitfalls of an alternative some economists consider attractive: avoiding any grounding for welfare judgment by accepting that choices made express the preferences of the individuals making them whatever normative implications preferences do or do not have. That individuals may not know what they want and may not gain satisfaction from consuming what they think they want challenges the usual way in which economists go about making normative judgments concerning economic policy and the design of economic institutions. The strong claims made for use of markets are often grounded in the connection between markets and individual choice, therefore in the connection between choice and satisfaction. Arguments against markets often ground themselves in the notion that wants are not essentially individual, so that the individual is not the primary authority on satisfaction. This is not so much because the critics of the market believe that individuals do not know what they want, as it is because those critics insist that making want an individual matter confounds the effort to achieve well-being, whose reference point is not the individual, but the community. The ideas developed in these essays lead in a different direction. I do not take the problematic relation between what we think we want and

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what will lead to happiness to imply that, while the individual does not know what he or she wants, someone else does, or that the referent for want should be the group and not the individual. On the contrary, I take the kind of satisfaction that will lead to happiness for the individual to have substantial normative significance. Thus, while insisting that being a self is the end we identify with welfare or well-being, and that being a self means leading a life in a way unique to the individual’s capacities and interests, I do not assume that individuals know how to do this, or know how to do it well; nor do I assume that, if the individual does not know how to lead his or her life, this means that someone else does. Rather, what I suggest is that, since being a self is an individual matter, the problem of the design of institutions conducive to human happiness and satisfaction is a matter of making those institutions conducive to enabling individuals to find out what they do not know. In other words, I suggest that we make self-seeking, understood not as seeking to aggrandize the self, but to find the self, the end of economic activity. What implications might this suggestion have for normative judgment in economics? In this chapter, I briefly review the three main criteria used for normative judgment: growth, equity, and efficiency. I indicate how the considerations advanced in the preceding essays might bear on these criteria.1 Consider, first, economic growth and the magnitude of the national product as ends of economic organization. Since before Adam Smith, economic growth has been the most compelling concrete objective political economy associates with the design of economic institutions. Traditionally, the normative significance of economic growth has been tied, as Adam Smith attempted to tie it, to the transition from poverty to wealth, from a situation where there is not enough to satisfy basic, subsistence, needs, to a situation where the satisfaction of those needs can be assured. In Chapter 2, I raise some doubts about the coherence of this idea by questioning the conception of basic needs. If the idea of basic needs lacks coherence, or otherwise fails as a foundation for normative judgment, then we must seek the normative significance of growth and development elsewhere. Looking elsewhere immediately directs our attention toward a more difficult problem: the normative significance of wealth. In Chapter 2, I link wealth to difference. I argue that the importance of wealth is not in assuring subsistence, but in affording the material basis for difference. If this is correct, then the normative significance of wealth must derive from the normative significance of difference. I distinguish two kinds of difference that might have such significance. The first is the difference

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between classes or strata: in premodern societies, wealth is used to secure position in a class or social group. The second is the difference between individuals; in modern society, wealth makes possible differences in ways of life that set individuals apart, marking them as different persons. In seeking the normative significance of wealth accumulation, we must look to these two kinds of difference. To establish a difference between ranks in a tradition-bound society, wealth is needed, but only a fixed amount. Difference of this kind does not, then, provide a normative basis for an argument for capital accumulation. Indeed, because capital accumulation tends to erode traditional hierarchy, its normative significance cannot be that of maintaining a fixed hierarchy rooted in natural difference or divine judgment. If we reject the ideal of rank as an end in itself, then the only normative argument for economic growth is the one that supports the accumulation of capital to the point at which society can offer all its members a measure of wealth adequate to maintain individual difference. There is, in this, a kind of basic-need argument. If we understand that the individual’s basic need is to be a particular, distinct, self, then the problem of welfare becomes one of understanding what individuals need to be themselves. The solution to this problem is by no means obvious, particularly if we reject the assumption that individuals already know the answer. In order to answer this question, we need to know what is essential to being a self. This last argument draws our attention away from the growth of wealth to the matter of the equality or inequality of its distribution. A second long-standing line of argument concerning welfare, and the normative judgment of economic arrangements, centers on the matter of equity in the use of, rather than the overall amount of, wealth. The normative significance of equity, like that of economic growth, has two different roots, one in social position, one in individual right. According to the first, equity means equality, and equality is achieved at the expense of difference. If this is the case, then the normative significance of wealth accumulation is suspect, since it fosters differences in amount of wealth, and arguably is achieved only when such differences are encouraged. Thus, those who favor equity as equality distrust economic growth, which they rightly view as the enemy of any radical social equality. Radical equality is, in its way, a perplexing basis for normative judgment. On one side, it challenges traditional normative ideals underlying status hierarchy. In this respect, it connects to modernity. On

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the other side, however, radical equality challenges the normative significance of individual difference sustained by the use of wealth. In so doing, it challenges modernity. Indeed, the challenge that radical equality poses to difference threatens to reabsorb the individual into the group, which is, after all, the end of traditional normative ideals. Without making the ideal of individual difference its center, equality threatens to turn the individual back into the group member. Norms centering on the primacy of community and social solidarity built on identification between self and other make the individual secondary. In the form of arguments for non-market economic institutions, these arguments revive the notion that the economy should be embedded in non-economic political and/or familial structures. By suggesting a return to the embedded economy, and retreat from social differentiation, arguments for equality incorporate a normative judgment that is, in its way, inconsistent with the idea of the economy and the long-standing project of political economy. All of this holds so long as we interpret equity as equality. According to the second interpretation, however, equity means not equality but fairness. Unlike equality, fairness connects normative judgment to consideration of individual opportunity, including the opportunity to attain very different outcomes depending on talents, ambition, and so on. The issue of normative judgment shifts away from achieving equality, to judging what sorts of differences are fair, meaning what sorts of differences between individuals are consistent with the idea of individual achievement, and what sorts are external, or even hostile, to that idea. The normative ideal of fairness focuses attention on the individual in the abstract, understood as a potential. Treating the individual as a potential links up with the norm of freedom we associate with modernity: the social organism does not define the individual’s life according to already determined and fixed norms of behavior, customs, or rules. Instead it establishes itself as the context for individual selfdetermination, understood as a process of self-seeking. In this process, the individual neither knows nor becomes him- or herself independently of the process of living a life as the realization of a unique potential. Social institutions, including those of the economy, have normative value insofar as they facilitate this process rather than imposing a premature closure on it. They do so by linking institutions to individual rights. Institutions, then, are concerned to protect right rather than custom.

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Since the central concept underlying normative judgment based on equity is the concept of achievement, it will be helpful to explore that idea more closely, especially in light of some of the considerations advanced in earlier chapters. The question that arises here is the following: What achievement on the part of the individual has normative significance? Or, what is it that individuals strive to achieve, and gain satisfaction in achieving? This question does not arise, of course, for those who take the individual at his or her word, assuming that whatever he or she strives for will, if gained, yield satisfaction and happiness. If this is not the case, then we must know something about achievement to establish a normative basis for judging policy and institutional arrangement. This leads again to the matter of being a (or your) self. Before taking this matter up directly, I will review one more grounding for normative judgment in economics: efficiency. The goal of efficiency has its roots in the idea that individual satisfaction is in itself a, if not the, normative end. Individual satisfaction becomes the basis for normative judgment when the individual is made the normative end. More than this, individual want has this normative significance when we take connections between individuals to be means, and not ends in themselves. In these respects, efficiency has strong links with equity and growth. There is, however, an important distinction to be drawn. Efficiency, unlike equity, does not concern itself with the individual as a potential. Rather, efficiency arguments start out from the individual concretely determined: a bundle of preferences and endowments already given. This means, for example, that social interaction and social connection (relatedness to others) cannot be taken as ends, but only as means to attain happiness understood as the maximum of satisfaction. By contrast, equity arguments allow us to consider happiness not only in the end, but also as participation in the process of self-seeking and selfdiscovery. The distinction between understanding the individual and his or her ends in the concrete and the abstract (as a potential) is a vital one for grounding normative judgment. I take it to be an important motivation in Sen’s appeal to “capacities” and “entitlements.” Efficiency arguments take the individual’s ends to be knowable at the outset. Equity and growth arguments are not inherently tied to this understanding, and therefore raise a set of important questions about the meaning and end of self-seeking, questions alluded to above: What achievement on the part of the individual has normative significance; and what does it mean to be a (or your) self?

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2 As I emphasize throughout these essays, to understand self-interest, we must understand its object: the self. We can, of course, assume that this object is whatever it happens to be, that nothing more can be said. If we do so, however, we undermine any attempt to establish normatively compelling judgments about institutions involved in the pursuit of selfinterest, including those judgments common in political economy having to do with freedom of choice and its implications for individual welfare. Why, if we take the self for granted in this way, should we have any special concern for its interests, or its ends, or its legal freedom to pursue them? Why assume that individual ends have any value, even the value we associate with happiness, satisfaction, or individual welfare? In asking these questions, I do not mean to suggest that individual satisfaction has no value, but only that what value the individual has as an end follows from the individual’s capacity to be a self. In other words, it is the development of an individual self that we value, and not the mere development of the organism into a physically separate and mature human being. Put another way, the genuinely human element derives from the development of that unique mental structure we call a self. Once we understand the self as a structure, we can ask about the nature, shape, and emergence of this structure: when it exists, when it does not, when it is fully formed, when it is in some way blocked in its development, when it is the mainspring of action, and when it only seems to be. If, then, the usual strictures of economists regarding choice, freedom, and the market apply where we can assume the pursuit of selfinterest has meaning, then assuming that the self cannot be taken for granted must narrow, and possibly alter, the application of the economist’s conclusions, which apply only where a mature and autonomous selfhood can be assumed to exist. The self to which I refer here is a mental capacity rooted in a structuring of mental life. Let me briefly summarize the defining characteristics of this structure. In the first instance, our self is an idea we have of who, or what, we are. Our ability to act as a center of initiative depends on this idea. Autonomy, including the autonomy associated with the normative claims of economic institutions, has little meaning for an organism driven by a mindless impulse. Only with the moment of deliberation (thinking) does autonomy emerge as a relevant characteristic of the organism’s life.

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This makes ideas vital to any notion of choice, or of selfdetermination in wanting. When I use the term idea, I do not mean to suggest that how we think of ourselves can be stated in so many words, that we are always aware of the many dimensions of our idea of ourselves, or that we can always articulate in words even those dimensions of which we are aware. The term idea has a broader connotation, that of an integrating mental construct that organizes our interaction with the world by shaping interpretations of situations, events, and objects, and then directing action. The idea that directs the action we designate by the terms wanting and choosing is the idea of the self, or self-ideal. The idea of the self speaks to the question: how do we view ourselves in relation to others and to the world outside? Yet, when we think of the self in this way, an important quality seems to recede into the background. The self has a quality of continuity over time, and durability in the face of impressions, influences, and experiences involving the world outside. We express this quality of the self when we speak of it as a structure. The notion of structure need not conflict with the notion that the self is an idea. Still, accounting for structure requires that we interpret the idea of self in a particular way. A mental structure is not so much something in the mind, as it is a way of organizing mental life. The term structure refers to the mental activity that organizes our experience of the world in accordance with a prior organization of our inner, mental life. We have our own way of interpreting, experiencing, and responding to, the world. We shape our experience of the world not only by acting in it (and by deciding and choosing how to act), but by interpreting the experience that results from our decisions and actions. Our way of being in the world is not constantly fluctuating in response to stimuli from outside. Instead, it actively organizes those stimuli in accordance with internal principles. Without this quality, autonomy would be meaningless. That is, if who we are varies continuously with the impact of external impressions, we are the product of those impressions, and not an agent who shapes a part of our world according to subjectively meaningful projects and ends. Indeed, in one sense it is this quality of continuity in mental organization that we refer to when we speak of autonomy. The self is a set of principles and a mode of organizing them that helps to assure constancy in the world. To some extent, then, the self is a closed system. It responds along pathways that, once developed, resist change. It finds ways of interpreting the world consistent with a preexisting idea. Individuals

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resist change not by ignoring contrary experience, but by making sense of seeming inconsistencies in a way that reconciles them with an existing idea (see Marris 1974). There is, then, a conservatism inherent in the idea of a self, though this conservatism does not preclude initiative and innovation. Part of the durability of the self stems from the fact that its organizing principles and response pathways are largely unconscious. Indeed, the idea of mental structure is the idea that we can respond to the world without rethinking it. Placing much of our experience of the world, and our response structure, outside of awareness allows us to devote attention to matters of concern, and with which we choose to be concerned. It avoids the disabling overload experience of the world would otherwise bring. Yet, the fact that much of the self is outside awareness also lends it durability. We can only with difficulty alter a way of relating to the world much of which is inaccessible to us.2 Our experience of our selves has a second important dimension. The term self refers as much to a way we feel as to a way we think. We experience our selves as centers of initiative when we feel safety, security, and confidence in our actions and decisions. This feeling allows us to assert ourselves in ways consistent with the connection between agency and initiative. The feeling of security in the self defines its emotional space. Security implies a kind of boundedness, secure in respect for, and defense of, the space of the self. The feeling of security allows us to define self and other so that the other’s quality of being external to us is not experienced as a threat. The feeling of security in our selves allows us to know where we end and others begin, to establish the boundaries vital to knowing and acting on what is ours and what is not, what is inside and what is outside. The development of a sense of self involves an experience of separateness from others. It can only be achieved with the development of those boundaries that make agency meaningful and possible. I may know my separateness from others well enough to stand up when my name is called without experiencing the kind of separateness that allows me to act in the world. Even knowing who I am in a group does not prevent me from attempting to transfer my agency onto others or take it from them, to make them responsible for what I do, or take responsibility from them for what they do. The real separation of persons depends on (and may contribute to) the perception of separation from things, but the two are not the same. The other side of separation is integration: establishing the self as a unit in the world. Only by attaining “unit status” (Winnicott 1989) can

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we secure our separate being. The key to this attainment is the integration of the elements, parts, or moments of the self. Security in the self, then, means integration. The more insecure and fragmented we feel about ourselves, the more difficulty we have in sustaining the idea that we are agents of our actions, or in taking clear and decisive action stemming from our own judgment. Cohesion is a vital quality of a sense of self adequate to provide the mainspring of agency. Any fundamental ambivalence or split in the idea of the self undermines its capacity to center action. A cohesive self unifies its elements so that overall, if not in all instances, they reinforce each other. The components of the self can work together in different ways, some more consistent with the notion of a center of initiative than others. When the aspects of the self work against each other, self-estrangement is a likely outcome (Shapiro 1990). An insecure person may operate with an aggressive and (rigidly) decisive self-conception, so that the intensity of his decisiveness measures the intensity of his insecurity. The attitude toward the world expresses an idea contrary to the underlying feeling that creates it, the underlying insecurity expressing itself as rigidity. The person (mis) understands himself to be secure and decisive. He falls under the spell of the false self created to hide his insecurity from others, but especially from himself. By banishing the other reality of the self to the unconscious, he prevents himself from knowing himself. Such selfestrangement only makes sense if the self has more than one dimension. This situation can foster the feeling of certainty so important in some versions of economic theory. Certainty, then, reflects a psychic state fostered by a radical doubt about the self, and the effort to banish that doubt from conscious experience of the self by replacing it with its opposite: a rigidity that assures a clear and decisive response under all possible situations. We can say, then, as I suggest in Chapter 4, that radical doubt and certainty are not only opposites, but poles of a single experience: the experience of an insecure self. 3 We can use the considerations just introduced to draw some conclusions regarding the problem of satisfaction as the end of economic activity, specifically by linking the idea of satisfaction to that of self-integration. Integration does not satisfy the self, but makes satisfaction a possibility by making it possible for the individual to establish attainable goals and achievable ideals. Self-integration also means integration of goals, just

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as divisions in the self mean that goals attained will conflict with those parts of the self suppressed in their pursuit. Not only, however, is selfintegration the basis for integration of goals, it is also necessary if our goals are to be realistically attainable. Without the moderating influence of integration, goals may be unattainable because they express a onesided, extreme, and therefore false selfhood. Thus, any talk of real satisfaction presumes integration. Economic institutions cannot secure integration, This is because the end of economic activity is not self-integration, but the expression and realization of the self through its activities. Economic institutions frame that activity, and can be designed to do so in a way that affords the individual an opportunity for self-realization through the use of things and the exercise of talents and skills. The idea of self-integration, then, establishes not a goal for the economy, but a boundary. This boundary cannot be defined by political economy in the way, for example, some attempt to define the limits of the market in economic terms. Traditionally, those limits are set by market failures such as externalities, unemployment, or public goods. Using market failure as our basis for knowing the market’s limits sets those limits in economic terms. Since, however, the most basic limit of the market is the boundary between securing self-integration and expressing the talents and interests of an integrated self, it cannot be established on the basis of those concerns typical of economic calculation. Rather, this limit can only be set if we know what demands are made on social institutions by the goal of self-integration. Where those demands are involved, economic interaction is inappropriate, since it makes assumptions that do not hold (the assumptions of an integrated selfhood). If normative judgment of economic institutions requires knowing this boundary between the economic and the non-economic, that judgment cannot be made on the basis of the concepts provided by political economy. If a normatively compelling economy is one that enables individuals to achieve satisfaction so far as circumstance allows, then to know it, we must know not simply the way markets operate, but also the way self-integration develops. This means that the normative aspect of political economy cannot be well known by economics taken on its own, but requires that we go beyond that boundary within which economic interaction occurs to concern ourselves with the structure of the self, and the framework within which that structure can develop and emerge. The specific implication this conclusion has for design of institutions is for the so-called free market. The distinction between policies that insist on free markets, and those that favor limiting the market, lies in

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their different understanding of the individual. The former either take selfintegration for granted, or consider it of no consequence. They question neither the individual’s ends as they are, nor the individual’s ability to judge the impact of contracts on his or her well-being. The policy that insists on limiting the market implicitly understands that self-integration cannot be taken for granted, and that buyer beware cannot be the whole of the protection provided for the individual from the system of interaction based on self-interest. This is not, however, because the market fails, but because there are some ends it cannot, by its nature, accomplish. Successful markets do not secure integration, or protect the individual from predatory others. Rather, successful markets are limited to a set of outcomes excluding those that prevent or damage self-integration. This, then, is the difference between markets and free markets: the latter, unlike the former, include, indeed even promote, outcomes that threaten the self. 4 I have argued that central to normative judgment about the market is the dividing line between the economic and the non-economic, and that we can best establish this dividing line on the basis of an understanding of self-integration. Yet, I have also argued that being a self means succeeding in satisfying certain wants, which implies that we can only be a self when the world we live in has the capacity to afford us the opportunity to satisfy those wants (the wants associated with realizing a self-idea in relations with others). This capacity is not primordial, but the result of a process of growth and development. Because of its connection to the economy’s capacity to provide for the satisfaction of wants, economic growth can be vital to achieving the normative ends of economic organization, as the classical econo mists all believed it was. This conclusion raises an important question about the growth process: How can we know when we have enough wealth, if wealth is not limited externally, by scarcity, but by the limit of need and want?3 This question, of course, assumes that wants and needs have limits, an assumption not typically favored in political economy. Yet, as we have seen, there are wants that can be satisfied, and uses of wealth that require a finite amount. The problem is that there are also wants, such as those bound up with pleasure-seeking or wealth accumulation, that cannot be satisfied, and there are uses of wealth for which growth in amount is both end and means.

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We can, of course, impose an external limit on the individual, for example by restricting consumption to subsistence, somehow defined. Yet, doing so conflicts with the individual’s freedom to define and pursue his or her own life plan. Can we respect freedom within limits? The best answer to this question would be one that allows individuals to find their own limits; but this answer only works where individual want is finite, and can be satisfied. The problem of the limits to growth, then, can be formulated as a problem of the limit of want. Growth has limits only in a world where individual want has limits (can be satisfied). Limits are consistent with individual self-determination when want can be satisfied not because it is determined by customs and fixed traditions, but because the self and its satisfactions are finite. The possibility of want satisfaction has much to do with the distinction discussed in the last chapter between pleasure-seeking and happiness. Subordinating pleasure-seeking to the pursuit of happiness would make the need for individual wealth finite, and satisfaction possible. Since its beginnings, political economy has questioned the consistency between happiness and the goal of wealth accumulation. Thus, Adam Smith insists, as we have seen, that the dissatisfaction implied by the striving to amass private wealth precludes the contentment that can only be attained by settling into a fixed position. To be sure, this idea has strong premodern connotations, conjuring up as it does the image of a hierarchy of social position. Nonetheless, it also resonates with the idea that the kinds of attainment associated with wealth accumulation cannot yield happiness because they entail a limitless striving, and a dissatisfaction with what is and can be. The end of wealth accumulation has a connection with that of pleasure-seeking not so much because the accumulation of wealth brings the transient pleasure discussed in the last chapter, though it might, but because wealth accumulation, like pleasure-seeking, involves an attempt to gain by repetition what cannot be otherwise secured: self-integration and the self-feeling that only self-integration can offer. Finite want is a corollary of self-integration, as the restless pursuit of more is a corollary of selfdivision. Finite want requires that the goal of happiness replace that of the pursuit of pleasure through consumption or through the accumulation of wealth. What we have today are economic institutions organized to facilitate the pursuit of pleasure through consumption and through limitless accumulation of wealth. These institutions are suited to individuals whose degree of self-integration is inadequate to make meaningful for

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them the goal of being your (finite) self in the world of others. Only when this goal becomes meaningful can we expect to reshape institutions in a way better suited to it. 5 I will conclude with a comment on the idea that satisfaction of the self should be made the normative end of economic institutions. For some, this is by now taken to be obvious. With the influence of the utilitarian philosophy on welfare economics, the idea that the individual and his or her satisfaction should be the goal of economic activity has been taken more or less for granted. Yet, taking satisfaction of the self for the normative end need not mean taking individual satisfaction for that end, at least not as the individual has been understood in political economy. There, the term applies to the empirically existing human being in all his or her particularity, with all of his or her contingent qualities, experiences, and interests. It has been my suggestion throughout this book, however, that we distinguish this (empirical) individual from the person possessed of an integrated self, and thus of the capacity for acting as a center of initiative, and as a subject of wanting and choosing. So far as this is correct, taking the individual, as understood in political economy, as the end is by no means the same as taking the self as end. This distinction also bears on the question of the part to be played by collective ends, or more specifically by concern for others as an end. Here, I have suggested that concern for others be taken to mean concern for the self-in-others. Concern for the self-in-other encompasses a concern for the conditions that might secure the development of the selfin-other, or, perhaps, repair damage done to that self. All of this depends on how we understand the relation between the particular and universal aspects of the self, how being a (particu lar) self, and pursuing our particular self-interest, implicates the more general condition of being a self, shared with others. If being a self means both being particular and unique, thus different from others, and being a particular instance of selfhood, and thus the same as others, then self-interest implicates others not simply as potential means, but as part of our end. Thinking this way can help us avoid the conundrums inevitably encountered in the effort to secure a just economy by overcoming selfinterest, for example by subordinating it to a collective good. This subordination of self-interest can take different forms, including those that look like the liberation of the self. Thus, in Adam Smith’s classical

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formulation, self-interest becomes a means to an external end, and thus becomes a negation of the self. Smith is aware of this, noting as he does how the pursuit of wealth accumulation takes us away from the state of contentment in our condition. Those who reject market institutions are, of course, no less hostile to self-seeking, and for much the same reason: its presumed conflict with group ends. Once, however, we understand that self-seeking has both universal and particular moments, the necessity to protect others, and the community, from the self becomes less urgent. The urgency felt by those who distrust self-seeking stems ultimately from the perception that these two moments are irretrievably opposed, and that self-seeking goes on without regard to the self in general, including the self-in-other. Once the moments of the self are split apart in this way, self-seeking becomes the pursuit of the wholly particular ends of the individual defined and pursued at the expense of others except insofar as external constraints (such as the “free” market) assure that we take others into account as possible means. The greatest significance self-integration has for political economy, then, is in this integration of the universal and the particular that makes self-seeking consistent with regard for others, and thus with ethical order, and thereby allows us to imagine economic institutions that secure the pursuit of self-interest without undermining life with others.

NOTES

2 SUBSISTENCE 1 In the following, the term classical economist is used in a broad sense to include Marx as well as his “classical” predecessors. This is not meant to imply the absence of important differences between Marx’s method and that employed, for example, by Smith and Ricardo. 2 All references to Smith in this chapter are to The Wealth of Natiom (1937). 3 All references to Ricardo are to The Principles of Political Economy and Taxation (1951). 4 I explore how this idea might alter the theory of consumption in Levine (1981: 215–33). 5 All references to Marx are to Capital Volume I (1967). 6 The solution is not altogether different from that employed in the neoclassical theory (see Koopmans 1957:59). 7 This analysis benefits from the introduction of a number of consuming classes (Levine 1981:166–9).

3 SELF-SEEKING AND THE PURSUIT OF HAPPINESS 1 Smith’s notion of sympathy, and especially its connection to Hume, is considered in Macfie (1967: Chapter 3). See also Heilbroner (1982). 2 Albert Hirschman (1977:31–2) considers some implications of this difference, and of the mediation of passion implied in self-interest. 3 This point is discussed by E.G.West in his Introduction to The Theory of Moral Sentiments (1969:38). 4 This solution is, of course, not original to Smith; see Hundert (1994). 5 This oversimplifies a bit. Adam Smith does not consider self-interest merely a means, but attempts to define its appropriate position as part rather than whole (1969:283–93). Still, a strong argument can be made

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6

7

8

9

10

11 12

13 14 15

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17

that, “the belief, so popularly accepted in the economic world, that Smith was primarily an individualist, is the very reverse of the truth. For him, as for Hume, the interests of society were the end” (Macfie 1967:54). Marx disputes this formulation saying that labor produces value, while labor and land together produce wealth (this probably has to do with his confusion about labor and value). Of course, in the classical theory want does play a part since for any good to have a value it must be of use, and since the effective demand for goods affects whether they individually can command money in exchange, and thus have any value (see Smith 1976:74). The problem is compounded for Ricardo, who departs from the classical spirit first systematized by Adam Smith. He does so by excluding the idea of the transition to wealthy society in favor of the rule of diminishing productivity. Ricardo identifies the limit to the growth of wealth not in a state of abundance, where there is enough wealth to assure subsistence and the security of the nation, but in external limits to production. Ricardo’s argument actually comes from Adam Smith; so we can take this idea to be characteristic of the dominant thinkers in political economy of this period. Happiness, as a broader concept, has an important part to play; but the utilitarian categories (e.g. pleasure and happiness interpreted in its terms) are not central to classical thinking. On the divide between Smith and the utilitarians, see Macfie (1967: Chapters 3 and 4). There is, in this, a distinction between usefulness, which might be objective in the classical sense, and utility, which is subjective. I elsewhere explore the idea that goods are not the purely objective confronting, in the consumer, the purely subjective (Levine 1988a: Chapter 2). The treatment of land enters into the same difficulties (Levine 1977: Chapter 7). A substantial literature has struggled with this problem; for a survey, see Harcourt (1972). Although, even here, this possibility was averted by the assumption, spelled out by Ricardo, that the supply of goods could be expanded without limit at a given cost. As we have seen, Smith and Marx struggle with aspects of subjectivity, although this struggle does not impinge in any fundamental way on their economic arguments, nor does it enter into the way they think about the role of need in economic affairs. The exception to this is in the quantification of the need of the capitalist, which becomes the need for wealth without limit. Alfred Marshall makes this point against Jevons (Marshall 1930:76–7).

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18 Thus, the famous modification of the utility theory introduced in the twentieth century to the effect that we must exclude the “interpersonal comparison of utility.”

4 KNOWING AND ACTING 1 Some of these comments apply to Frank Knight’s interpretation, which locates uncertainty in attributes of consciousness that impose a practical limitation on knowledge (Knight 1971:210). 2 Knight attributes uncertainty directly to this uniqueness of events and distinguishes it from risk on that basis (1971:233). 3 It is unclear why only radical uncertainty should be considered true uncertainty, or why the possibility of making probabilistic calculations about the future means we are not truly uncertain. Even where strict calculations can be made, if the probability is less than 100 per cent, we will be uncertain of the outcome. If we toss a coin, knowing the probability of heads to be 50 per cent does not make us certain of the outcome of a single toss, even though we may be able to predict with considerable accuracy the outcome of a large number of tosses. Since we are also uncertain where probabilities can be calculated, I will use the term radical rather than true uncertainty for those situations in which, as Davidson (1991) puts it, we haven’t got a clue. 4 A third sense of uncertainty involves a state of mind in which, whatever the predictability of events, the subject having to act cannot decide what to do. This uncertainty involves self-doubt, which I consider farther on. 5 That I can, in at least one sense of the term, know the future does not imply the certainty that would result from what economists refer to as full or perfect knowledge. The critique of equilibrium theory sometimes focuses attention on its assumptions about knowledge. This leads to the construction of problematic arguments of the following sort: Because a phenomenon (profit or liquidity for example) is precluded by the assumption of perfect knowledge, that phenomenon exists because of the imperfection of knowledge. However, what may be a relevant defect in equilibrium theory may not be a significant insight into the nature of market economy. 6 One alternative is to treat decision as “choice in the face of bounded uncertainty, bounded…by what our reflective awareness of the world and of history and events teaches us to conceive as the possible” (Vickers 1994:105 and 209). Bounded uncertainty is neither uncertainty in Keynes’s sense, since it does not mean that what we do is no more than the visceral urge toward action rather than inaction, nor certainty in the general equilibrium sense, where what we do must always lead to the result intended. It is, instead, uncertainty bounded by knowing, and,

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9

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11

because of this, it denies any inherent opposition between knowing and uncertainty. This might be a step in the right direction, but it assumes most of what we need to establish. We still need to understand why uncertainty is bounded, what about the world makes acting reasonable. Of course, scale does not assure regularity; but, it contributes to countering personal dependence and the capriciousness implied by it. The idea of capitalism as a system of change raises the problem of continuity in change. Marx offers an uncertain solution in his notion of expanded reproduction. Following the spirit of the classical theories that precede him, Marx conceives capitalism as a system of reproduction of a social division of labor, and at the same time conceives this system as one of constant structural change. The two ideas rest uneasily together, and the device of imagining technical change within a system of reproduction works poorly. After Marx, the economist who comes closest to confronting this difficulty is Schumpeter, who attempts to conceive capitalism as a process of “creative destruction,” and, at the same time, to derive creative destruction from a framework of equilibrium (Schumpeter 1934). Sen (1973) points out some of the limitations of reducing the problem of decision-making to one of identifying a preference ordering as revealed in choices. On the thoughtful element in want, note Charles Taylor’s insistence that “our human feelings and emotions are constituted by our understanding of them” (Taylor 1982:276). “A reaction to reality must be inhibited if it is to become a response to a conception of reality, and for this a time boundary is required. Delay must be interposed between the pressure of the situation (whether body or environment) and the response to it. Further, a boundary must be established between the inner and outer, for what is outer must be taken in, there transformed to conception, and that conception ultimately perhaps represented by an objectification in a material medium. The symbolic form so created partakes of both inner and outer and unites them” (Edelson 1971:89–90).

5 WANTING AND CHOOSING 1 Perhaps the most famous instance of this strategy is the theory of “revealed preference.” Taken literally, arguments that interpret preference in this way do not make choosing a subjectively meaningful action, and thus cannot be criticized on grounds linked to the specific meaning they attribute to preference-based choice. 2 Perhaps it would be more accurate to say that since we are considering want, we must inevitably consider thinking as an element of wanting. To

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10 11 12

quote Joseph and Anne Marie Sandler (1978), “[a]fter a certain point in the child’s development we cannot speak of a wish which does not have ideational content.” Judgment is not entirely or always predominantly conscious, since the problem is to fit our character, which has unconscious roots. John Rawls (1971:27–9), in a different context, points out the difficulty utilitarianism has in taking into account the differences between persons. For a systematic exposition of the relational conception, see Hegel (1977: particularly Part IVA); see also Mitchell (1988). One rational choice theorist refers to this phenomena as “counteradaptive preferences” (Elster 1983). See Elster (1983) for a discussion of hard cases. The term object as used here refers to the other in connection with whom the individual seeks to make real a self-ideal and self-feeling. For further discussion see Douglas and Isherwood (1979) and Levine (1988a). I have borrowed some of the language here from Wittgenstein (1953). Compare Elster’s notion of the “thin theory of rationality” (1983: Chapter I). For further discussion see Habermas (1981: Chapter I). The importance of recognition has been emphasized by Benjamin (1992).

6 NORMATIVE CONSIDERATIONS 1 I explore this matter at greater length in Levine (1997). 2 Freud emphasizes the way we banish our interpretations and responses from awareness when they involve conflict. We place some of our idea of self and other into our unconscious to avoid confronting inconsistencies and contradictions whose experience might threaten us. 3 I explore this question at greater length in Levine (1997).

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INDEX

abstracting force 61 achievement 128–7 acting 70, 71–1, 77, 104–4 agency 1, 33, 129–30 agoraphobia 116–15 ambivalence 85–6, 132 autonomy 3, 37, 84, 94, 103, 129, 130 avarice 46

Dobb, Maurice 20 economic growth: ends of 13; limit of 140; as normative goal 125–4, 134–3 economy, boundary of 133 education 32 effective demand 19 efficiency 128 embedded economy 127 equality 32, 36, 38, 126–5 equity, see equality esteem 37–8, 44–4, 47, 55, 79 expectations 71

basic need 10, 16, 31–3, 125, 126 capacities 32–3 capacity to choose 112–11 capital: as factor of production 63; real and financial 71, 72, 80; as subject 48 capitalism 35, 38, 51, 52, 56–6, 75 certainty, see uncertainty character 83, 104–4, 107 choice 1, 64, 78, 95, 101, 112–12 classes 15–6, 61 community 49–9 compulsion to repeat 106–5 consumer 61, 84 consumption 18–9, 101, 109–8, 115, 119 custom 73, 74, 127

factors of production 63–3, 65 fate 74, 76 freedom 47, 48, 49, 52, 54, 62, 68, 93, 96, 112–11, 118, 127, 135 Freud, Sigmund 43, 44, 106–5, 142 Garegnani, Pierangelo 25 happiness 46, 55, 56, 57–9, 62, 101, 118, 121–21, 128, 135 Hayek, F.A. 69, 79 health care 32 Hegel, G.W.F. 16, 55, 89, 121 hierarchy 34, 38, 126 historical time 68, 69, 79 human qualities of objects 108–7

Davidson, Paul 70 desire 118, 122 division of labor 45, 79 149

150 INDEX

impartial spectator 42, 45 individual 61–1, 66–6, 74, 75, 76–6, 126–6, 136–5 individuation in consumption 15, 16, 29, 30, 50, 108 inflation barrier 28 internal other 120

necessaries of life 11–11, 17, 19, 21, 23, 29 necessity, see freedom neoclassical economics 5 Nozick, Robert 28

Jevons, William S. 59, 65, 66, 86 judgment 104

passions 39, 43–3, 48, 85–5, 94 persons, differences between 34, 105, 110–9, 113, 125–4, 142 pleasure-seeking 107, 117–17, 135 political economy: normative goal of ix–1; schools of 2–3 poverty 13, 26, 83 preference 27, 93, 97, 142 projection 86–7, 89, 116–15 psychic organization 82–3

Keynes, John Maynard 28–9, 69–73, 78, 81 Khaldun, Ibn 31 Knight, Frank 140 Kohut, Heinz 112, 113 labor 51–5; alienation of 56–6; as factor of production 63 labor market 14–5, 17, 29 luxuries 29, 33–4 Mainwaring, Lynn 25 Malthusian population principle 20, 22 market: discipline of 90; does not determine wage 18; failure 133, 134; free 88–8, 91, 134; and predictability 75; limits of 10, 27–8; recognition through 119–18 Marshall, Alfred 59, 62 Marx, Karl 1, 20–2, 36–7, 54–4, 56– 7, 75–5, 81, 138, 140, 141 micro-foundations 94–4 mode of life 29 modernity 4, 33, 35, 38, 67, 73–5, 81, 127 mutual regard 121

opportunity 127

rational choice theory 100–8, 110 rationality 100, 103, 114–15 reality testing 105–4, 109, 114 reason 42, 43–3, 48, 85–5, 100, 117 Ricardo, David 16–20, 53, 54, 59, 138 right 33, 75, 128 Robinson, Joan 28 rules 73 satisfaction 57–62, 64, 77–7, 85, 101, 104, 107, 112, 115, 118, 128, 133, 136 Schumpeter, Joseph 81, 141 self: absence of concept in classical theory 48; adaptive 112–11, 120; boundaries 82, 100, 116, 131–30; certainty of 87; command 39–42; danger to 87; determination 36, 46, 48, 84, 94; divided 46, 47, 85–6, 94, 132;

INDEX 151

doubt 77; as end 5; false 120, 132; feeling 118, 122, 131; ideal 84–4, 105–4, 113, 120–19, 129–30; integration of 5, 85, 132–2, 136; knowledge 68, 114; loss of into group 120, 127; recognition of 47, 119–18; seeking 106, 125, 127; universal and particular 43–2, 45, 86, 92–2, 121, 136–5 self-interest ix, 39–51, 129; ethical validity of 91; as interest in others 79; serves higher purpose 51, 56, 89– 9, 137; as threat to group 49–9, 137; as virtue 88–8; and wealth accumulation 35, 44 Sen, Amartya 32, 128 Shapiro, David 104 Smith, Adam 1, 5, 35, 37, 55, 57–7, 79–9, 82, 85, 94, 135, 137, 140; concept of self-interest 39–51, 138; concept of subsistence, 11–16; on labor and wealth 51–2 speculation 72, 80 splitting 2–3, 7 Sraffa, Piero 24, 69 Steindl, Josef 12 subject 1, 3, 39, 48, 55, 61, 66, 68, 76, 95–5 subjective and objective 59, 95–5, 108–7, 116 subsistence: bundle 7–10, 17, 23; and development 31–3; and difference 11; and equality of persons 15–16; luxuries part of 12; market provision of 12, 21–2;

obligation in 10, 11, 13, 14, 23, 26; suppresses individual 24, 26–7, 50, 77 sympathy for others 42, 44, 80, 85 Tawney, R.H. 34, 83 tradeoffs 102 tradition, see custom tranquility 46, 49, 55 Umari, Nawfal 31 uncertainty 68–81, 87, 132, 140, 141 unemployment 76 unhappy consciousness 122 use 58, 108–8, 119 utilitarian theory 59, 69, 136 utility 59, 86, 140 value 36, 53, 55, 58, 61, 71, 138 Veblen, Thorstein 82 Vickers, Douglas 69, 92 von Neumann, John 24 wage: minimum 12–13, 20, 21–2, 25, 28–30; money and real 14, 16, 17, 29, 30 want ix–1, 3–4, 59; abstract nature of 33, 37, 60–61; connection seeking 107; ethical element in 85–5; knowledge of 65–5, 77–9, 82–93; limits of 47–7, 49–9, 54, 62, 135– 4; multiplication of 16, 109; and need 27; relational conception of 106, 111– 10, 115; subjective 7, 65–5; thoughtful element in 86, 102, 120, 141, 142; unitary 102–102 wealth:

152 INDEX

accumulation 46–6; and difference 33–8, 125–4; enough 35, 47, 53, 135; normative significance of 125–4; origins of 51–1 Weber, Max 37 welfare 123, 126 Winnicott, Donald 120