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“There is no economic world.”

There is no economic world. There is only an abstract economic description. It is wrong to think that the task of economics is to find out how the economy is. Economics concerns what we can say about the economy…

This thesis (adapted from Niels Bohr, the father of quantum theory[1]) is, to anyone not thoroughly debauched by philosophy, clearly nonsensical—the sort of postmodern tripe that embodies everything wrong with ‘theory’. Yet, it is quite the opposite. François Laruelle argues that any notion of ‘world’—as a priori/mnemotechnic cognitive mapping—is a product of philosophical thinking; in fact, he often uses the words ‘philosophy’ and ‘world’ interchangeably. Therefore, if the corpus of economics has a ‘world’, this implies that any worthwhile statements it makes are translatable into philosophy, which thus becomes privileged as a meta-discourse in relation to the ‘regional knowledge’ of economics. Such a role has been traditionally claimed by Marxism, as well as obliquely by disciplines such as psychoanalysis, whose proponents believe that they can have knowledge of the economy by imposing their concepts a priori upon whatever data is at hand (regardless of whether said theorist knows minutiae such as the difference between stocks and bonds…). To subvert this hierarchy—to argue that economics is properly non-philosophical, thus eliminating all grounds for the use of postmodern tripe—the thesis that ‘there is no economic world’ becomes essential. This paper presents a unified theory of economics and philosophy, arguing that economics consists of nonknowledge rather than knowledge (episteme/technē), that economics operates through unwriting or deconceptualizing the material of the other social sciences, and that economic models should not be viewed as attempts to represent the world, but as a radically non-Bayesian method of framing events in their contingency.

§1. World versus ‘World’

There is a famous story involving the British analytic philosopher A.J. Ayer and the French continental philosophers Georges Bataille and Georges Ambrosino, in a midnight conversation in January 1951 (Bataille, 2001: 111-3). Ayer introduced the simple proposition that “the sun existed before man,” which as a scientific realist he saw no reason to doubt. Ambrosino, a physician steeped in French phenomenology, insisted that “certainly the sun had not existed before the world.” Bataille, on the other hand, was agnostic. As he wrote afterwards (111):

This is a proposition that indicates the perfect non-sense that a reasonable proposition can assume. A common meaning must have a meaning within all meaning when one asserts any proposition that in principle implies a subject & an object. In the proposition: there was the sun and there were no humans, there is a subject without an object.

The easy way out of this dilemma (or as Bataille put it, this “abyss between French philosophers and English philosophers”) is to say that while Ayer was talking about the sun (as a well-defined scientific object composed of various elements, etc.), Ambrosino and Bataille were talking about ‘the sun’ (as ideal representation of the Real).[2] While Ambrosino had taken a purely idealist position, Bataille’s stance is much more interesting: he had, in fact, hit upon a problem that would later become known as the ‘arché-fossil’. This idea would be central to Quentin Meillassoux’s attempt to philosophize in a way that avoids what he calls ‘correlationism’—that is, the idea that “we only ever have access to the correlation between thinking and being, and never to either term considered apart from the other” (2008: 5), with ‘thinking’ and ‘being’ meant in the sense of ‘models’ and ‘objects’. In more visual terms, Meillassoux is searching for a way of doing philosophy that doesn’t just involve the imposition of a ‘grid’ of concepts (or ‘syntax’) upon the mass of data comprising the world—as has been the norm in philosophy since Kant’s Critique of Pure Reason.[3] An arché-fossil is any sort of scientific object or datum describing the state of the universe prior to the existence of subjects (e.g. humans) that could experience it—or, recalling the above anecdote: the arché-fossil describes the state of the world prior to ‘the world’. After introducing this concept, Meillassoux goes on to outline the ‘mechanics’ of why this idea is so immediately absurd to philosophers in the phenomenological tradition. The existence of ‘ancestral’ data implies (15):

  • that being is not co-extensive with manifestation, since events have occurred in the past which were not manifest to anyone;
  • that what is preceded in time the manifestation of what is;
  • that manifestation itself emerged in time and space, and that consequently manifestation is not the givenness of a world, but rather an intra-worldly occurrence;
  • that this event can, moreover, be dated;
  • that thought is in a position to think manifestation’s emergence in being, as well as a being or a time anterior to manifestation;
  • that the fossil-matter is the givenness in the present of a being that is anterior to givenness; that is to say, that an arché-fossil manifests an entity’s anteriority vis-à-vis manifestation.

DCP_0086 by Phillip Stearns

The notion of the arché-fossil underscores the tension between the world and ‘the world’. From the perspective of ‘the world’ there is either ‘world’ or ‘non-world’, whose boundary is set by the existence of an experiencing subject. Yet, by carbon-dating a meteorite (for example), it is possible to state that the ‘non-world’ and the world existed simultaneously (or: co-extensively), and moreover, that the evidence for this is given to us within ‘the world’. Philosophically, this is clearly unacceptable. Yet, it sheds some light upon an old Daoist koan:

庄子:“如果把天下就藏在天下,就不会被丢失,这是一般事物的通理”

“Hide the world in the world and the world will never be lost—this is the eternal truth.” ~Zhuangzi[4]

Zhuangzi is the same person who, upon waking up from a dream that he was a butterfly, wondered if he was actually a butterfly dreaming that he was a man. The anecdote is no doubt as popular as it is because of its stark opposition of ‘world’ (dream) and world (reality). A dream, after all, proceeds according to an internal logic where any sort of (arché-)hints that it is a dream, e.g. words on a page changing the second time you look at them, somehow don’t count. The most absurd events may occur in the most bizarre of settings, but any sense of contingency (the idea that it could be otherwise) is lost. If we take the lack of contingency in dreams as a principle, however, the very fact that Zhuangzi can ask whether he’s a butterfly or a man proves he isn’t dreaming! Zhuangzi’s query creates a false partition—with ‘dream’ and ‘non-dream’ as the only members of the state space—and is thus self-defeating: nonknowledge is in fact the most useful kind of knowledge he can have. So in order to avoid a performative contradiction, Zhuangzi must accept that the principle can’t be psychologically necessary. This gives rise to a fundamental contingency, where in order to make a convincing case that he is a butterfly, Zhuangzi has to argue that the current rules of psychology (and perhaps even of nature) would have to be able to be other than they are—the same position as Meillassoux!

For Meillassoux, this division of world and ‘world’ is the problem, and ought to be gotten rid of; Zhuangzi’s stance is similar, though his method eliminates this opposition in an entirely different way—which is the same as that of economics. Anyone accustomed to think in philosophical terms may be inclined, on reading the following sections, to suppose that the argument rests on a tacit assumption of this dyad. If such a supposition is found helpful, there is no harm in the reader’s adopting it as a temporary working hypothesis. In fact, however, no such division is made.

§2. Econo-fiction

To verify the claim ‘oil prices are manipulated by the USA’, a researcher could (in theory) physically go to each stage of the oil production/distribution process, from oil wells to spot or futures markets, to various nodes along logistical networks, to gas stations, etc. In the above claim, ‘oil price’ is well-defined as a variable; moreover, its role as subject of the sentence makes the former claim ‘economic’ in its genre. (Cf. the political statement ‘the USA manipulates oil prices’, with its focus on agency.) ‘USA’ is of course vague, but suffices for the problem at hand. The verb ‘to manipulate’ reifies (in this context), but is in principle observable. Our researcher could measure the ‘value added’ in each stage as it is expressed in price, then perform an (unavoidably qualitative) analysis of how fluctuations in the magnitude of this value-added (with respect to production costs, etc.) can be causally traced to the USA. In this context, economic methods would not per se be needed, only mercantile arithmetic. Economics is often thought of as simply an armchair version of our poor researcher’s task (implying that an ideal model is one that is just as complex as the real world). Yet, in the above statement economics acknowledges not the subject, verb, or object, but the preposition ‘by’: in a sort of econo-fiction, it shows the numerical properties that make ‘manipulation’ meaningful.

Economics can be defined as the science of non-discursive social relations, with a broad definition of ‘discourse’ such that one could equally say ‘non-conceptual’.[5] In fact, economics takes place through a process of deconceptualizing the findings of business, finance, and politics. As soon as you think you can understand an economic notion (e.g. an algebraic relation) intuitively and talk about it lucidly, economists develop a way to formalize it (via econometrics and so on) so as to make it entirely untranslatable into normal language. John von Neumann once remarked: “in mathematics you don’t understand things. You just get used to them.” This is exactly what Bohr was saying! By continually deconceptualizing its former results economics systematically prevents itself from creating a ‘world’. As in Roland Barthes’ famous formulation, the task of economics is to inexpress the expressible.[6]

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Piero Sraffa’s Non-Economics: An Introduction

[A pdf version is available here]

In its break from political economy, economics as a discipline was able to make use of the most sophisticated mathematical techniques of its time. However, in adopting this form (doubtless to achieve the status of a science), it has come under fire for its tactic of applying an effectively closed system of mathematical relations to a set of market phenomena which, as contemporary microeconomists show, is growing ever more comprehensive. This in itself would not be a problem if this did not run the risk of distorting its objects: economics is lambasted for many of its heuristic presuppositions (and ‘metaphysical’ concepts such as utility) which appear blatantly untrue in practice, but nonetheless work well in making sense of empirical data. Milton Friedman famously declared that as long as a methodology works, it does not matter whether its presuppositions are correct, but to those who remain unsatisfied by this claim, the question arises of why the theorems of economics, despite their deficiencies, work as well as they do—whether it may be possible, by means of a new perspective, to gain an almost meta-economic view by way of starting from the phenomena themselves and only from there building a theoretical edifice.

The first steps toward an answer may be found in the economic theories of a man who not only convinced Ludwig Wittgenstein to change the views propounded in his Tractatus Logico-Philosophicus but who also provided the pens and paper (not to mention much of the reading material) with which Antonio Gramsci wrote his Prison Notebooks—namely, an economic methodology which does not require marginalist concepts of supply, demand, equilibrium, or capital. The initial part of this essay aims to outline in brief the life and work of Piero Sraffa (1898-1983), to unravel some of the theoretical implications of his work for the research programme of marginalist economics, and to portray in a new manner the import of his research programme: as a Non-Economics.

 1.    Sraffa

“Mr. Piero Sraffa, from whom nothing is hid…” ~John Maynard Keynes[1]

Sraffa was born in Turin in 1898, his father an influential Professor of commercial law and his mother a highly cultured woman from a distinguished family. He was given a liberal education, being taught French, English, and German by his mother, in addition to his first language of Italian. He was characterized, in a polemical paper by his friend Gramsci, as having a “democratic-liberal intellectual background, that is to say, normative and Kantian, non-Marxist and non-dialectical” (Potier, 3-4), though this account cannot be accepted without reservations; the intellectual milieu of his day was “dominated by ‘neo-idealism’ or neo-Hegelianism, represented by the thinking of Benedetto Croce (1866-1952) and Giovanni Gentile (1875-1944)” (ibid, 3). He went on to study Law at Turin University, near the latter portion in his studies (1919) striking a friendship with Antonio Gramsci, who studied linguistics at the same university, which would continue until the latter’s death (ibid, 5). Shortly after this meeting, Sraffa joined the editorial team of the journal L’Ordine Nuovo and had friendly relations with the main journalists.

During the same period, Sraffa worked on his doctoral thesis on inflation in Italy since the first World War, a text which “reveals a profound knowledge of the literature on monetary and banking problems; not only the Italian…but also the English and American…and Swedish literature” (ibid, 6). The research for Sraffa’s thesis eventually led to a polemic against the banking practices of his time, then under the fascist policies of Mussolini. This rather “salty” essay (as described by the Italian committee which later awarded Sraffa the status of professor) enraged Mussolini, who demanded a retraction, which was not given because, Sraffa told his father, the paper was based on verifiable facts. Sraffa is also known to have debated via an exchange of letters with Gramsci at that time in matters of politics, one exchange being published in L’Ordine Nuovo. Sraffa’s trenchant criticism was not only directed at the fascist government of his day, however, but also at the methodological orthodoxy beginning to pervade economics departments throughout Italian universities; this culminated in an essay entitled “On The Relation Between Cost and Quantity Produced,” revealing several flaws in the work of Alfred Marshall, at that time the paragon of mainstream economics.

Jean-Pierre Potier (13-14) provides a summary of this essay[2] (which was to earn Sraffa a full professorship at the University of Cagliari in Sardinia) that is fairly lucid even to the layperson in economics:

Between 1924 and spring 1925, Sraffa worked on a major essay that attacked the foundations of the orthodox analysis of the great English neo-classical theorist, Alfred Marshall…. Sraffa examined the law of non-proportional returns in Marshall’s model of static partial equilibrium, which established a symmetry between relations of demand and supply as regards the value of commodities. Previously, classical economists had given prominence to two separate laws of returns. The law of increasing returns was created by Adam Smith and associated with the process of the division of labour in industry―a problem of dynamics, in the category of ‘production’. The law of diminishing returns, on the contrary, set forth by Turgot, then by David Ricardo in connection with the problem of agricultural rent, is also a problem of dynamics, but in the category of ‘distribution’. Marshall tried to combine these two orientations in a single law of non-proportional returns, to set up his theory of prices. This law can be represented by a U-shaped curve, connecting average cost and output. The situation of a firm is studied, independently of that of other firms, in a framework of free competition. In this model, the normal case is that of diminishing returns (or increasing costs).

Sraffa foregrounded how Marshall’s explanation concerning the exceptional existence of increasing returns (diminishing costs) evolved ‘internal economies’ followed by ‘external economies’ of the firm. He nevertheless developed his attack to focus criticism on the problem of diminishing returns. In Marshall’s theory, the supply curve of a firm is independent of the supply curve of other firms and moving from the firm to the industry, the aggregate means a simple transposition. According to Sraffa, this analysis is unacceptable, because it does not take the interdependences into account: the conditions of production of a firm necessarily have an effect on those of its competitors. After having shown the incompatibility between the case of diminishing returns and the conditions of particular equilibrium, Sraffa concludes by considering, for the particular industry, ‘the case of constant costs as being normal, rather than that of increasing or diminishing costs’, in keeping with the opinion of Ricardo. This situation is, to his mind, the only one compatible with the equilibrium of free competition, or at least a ‘first approximation of reality’.

Sraffa was later invited by Keynes to write a summary of this essay in the Economic Journal―a prestigious opportunity granted due to the quality of an English version of his paper on the Italian banking crisis published several years before―which he entitled “The Law of Returns Under Competitive Conditions.” It is worth noting that Arthur Pigou was willing to reconsider his whole position in the light of this paper (Potier, 17). In addition to his summary, Sraffa attempts in his paper to “reformulate and rehabilitate” the concept of ‘surplus’—first developed by William Petty in the 17th century—and the notion of the economy as a circular process, first introduced by the physiocrat François Quesnay in the 18th century (Roncaglia, 31-2).

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The Economist Who Refuted Wittgenstein

However, in the Philosophical Investigations Wittgenstein abandons the idea of language as axiomatic representation of the world, and the idea of the ‘unspeakable’. Discussions with [Piero] Sraffa seem to have played their part in his abandonment of the latter. In this connection, there is an anecdote that Wittgenstein himself liked to tell his pupils, one of whom – Malcolm – recounts it thus in his biography of the master: one day, as they were travelling together on the train from Cambridge to London, ‘Sraffa made a gesture, familiar to Neapolitans and meaning something like disgust or contempt, of brushing the underneath of his chin with an outward sweep of the finger tips of one hand’.21

The gesture can only acquire a specific meaning from the context in which it is performed, thus contradicting Wittgenstein’s idea that every proposition had to have a precise place in the axiomatic order of rational language, independently of the various contexts in which it may be employed.22

21: Malcolm, 1958: 69.
22: According to Malcolm (1958: 69), the object of the discussion was Wittgenstein’s idea ‘that a proposition and that which it describes must have the same “logical form”, the same “logical multiplicity”’; according to von Wright, as Malcolm reports in a footnote, the object of the discussion was the idea that each proposition should have a ‘grammar’. In a conversation (21 December, 1973) Sraffa confirmed the anecdote, telling me that von Wright was right.

Roncaglia, A. (2000). Piero Sraffa: His Life, Thought, & Cultural Heritage. New York: Routledge, pg. 23, endnotes pg. 44.

For a brief skeptical discussion of whether Wittgenstein was really refuted, see here.