Sunday, October 3, 2010

Bernstein's Hegelian Argument for Regulation Misses Mark

Setting aside the absurd framing of the TARP bailout scheme at the beginning of the article (i.e. either bailout or do nothing), there are interesting things to say about the Hegelian argument J.M. Bernstein examines in his recent NYTimes article for "The Stone".

But first, let me say why the framing of the issue at the beginning of the article misses the mark. It insinuates that we had only two choices: a) undertake some kind of bailout scheme or other, or b) do nothing and let the "market take care of itself". This is absurd: it rules out so many other things we might have done at the time, especially nationalization. Many commentators, not all of whom were on the Left, considered the possibility of nationalizing some of the banks. Even Bush was entertaining the idea. One of the most emailed NYTimes articles at the time was this. This isn't a far-Left idea, though I wish more of those were on the table. Paul Krugman's proposal was for short-term nationalization, which is a pretty standard procedure in Western Europe. The idea is simple: if the public is going to bailout a bank that has driven itself in the ground, the people who drove it into the ground should be shown the door and the company should be placed under public control (this includes the company's assets). And at some point the company may be re-soled to capitalists and the public coffers see a net gain as a result of this transaction. Yet in the US, our ruling class likes to pretend that we have the distinction of "maintaining private ownership" in cases like this, so such options weren't pursued.

So, setting aside the manifest stupidity of the "do nothing and let markets work their magic" option, there were plenty of non-bailout options on the table that are blotted out of the analysis in this article. Yet, despite all of the other options, Berstein's whole piece is about whether the bailout was good qua bailout (and I agree, that even qua bailout it was a fucking lemon).

This leads us into our first objection to the bit about Hegel. I like very much Bernstein's rather clear and succinct summary of some of Hegel's arguments in the Phenomenology. But his application of these ideas here seems imprecise.

Take Bernstein's own summation of one of Hegel's arguments, and you'll see what I mean:
What makes the propounding of virtue illusory — just so much rhetoric — is that there is no world, no interlocking set of practices into which its actions could fit and have traction: propounding peace and love without practical or institutional engagement is delusion, not virtue. Conversely, what makes self-interested individuality effective is not its self-interested motives, but that there is an elaborate system of practices that supports, empowers, and gives enduring significance to the banker’s actions. Actions only succeed as parts of practices that can reproduce themselves over time. To will an action is to will a practical world in which actions of that kind can be satisfied — no corresponding world, no satisfaction. Hence the banker must have a world-interest as the counterpart to his self-interest or his actions would become as illusory as those of the knight of virtue. What bankers do, Hegel is urging, is satisfy a function within a complex system that gives their actions functional significance.
I endorse most all of this. And I endorse the Hegelian claims about practices, the dialectical relationship between agency and institutional structure, the sense in which actions come to have meaning only in certain institutional contexts, etc. But here's the rub: it is not clear that upshot of Hegel's arguments is that we simply need more regulation.

If the problem is the "interlocking set of practices" and institutions that constitute contemporary capitalism, then it is unclear that a modest change within those very institutions could resolve the problems Bernstein draws our attention to. It seems like the obvious inference to draw after reading the summary of Hegel here is that the basic institutional structure of capitalist societies are the problem. And if that's right, then we can't very well accept a putative solution to the problem that begins by accepting the very legitimacy of those institutions.

In fact, the idea that a couple of regulatory tweaks could solve the problems raised by the present crisis seems as delusional as the moralistic "knight of virtue", for similar reasons. The moralist is delusional precisely because she fails grasp that without institutional reconfiguration, her pleas for different practices have no possibility of being effective. But in a similar fashion Bernstein expects a couple of regulatory tweaks to do the trick, without even so much as giving a passing thought to serious institutional reconfiguration of the basic structure of contemporary capitalism. This evinces a misunderstanding of the real upshot of the Hegelian claim here: that as long as we have a set of interlocking institutions and practices that make it rational for capitalists to continue doing what they're doing, we will continue to face instability, crisis, social misery, overproduction, and system-level irrationalities.

Bernstein's argument tacitly assumes that financial regulation (helpful thought it would be as opposed to doing nothing) is all that can be done to curtail the instability of capitalism. But even Hegel, who certainly had lapses in political judgment, gave us reason to think that the deep problems of modernity could not be solved within the liberal state. This thought also emerges in Hegel's Aesthetics, where he rejects early bourgeois societies as "prosaic", non-beautiful, and alienating. Marx drew heavily on these arguments when he wrote some of his most brilliant early works, particularly "On the Jewish Question".

The argument in "On the Jewish Question" is Left-Hegelian through and through. One of the most interesting arguments is that the liberal state is a form of alienation. The argument runs as follows. Human beings are social, and we have lived for most of our history in various kinds of social formations. But in liberal capitalist societies, our social aspects are disavowed, even as they are manipulated and relied upon to make capitalist societies function (i.e. they require elaborate schemes of social cooperation and coordination). In liberal capitalist societies, we bifurcate society into two realms: public and private. We think that the public realm of the state is the realm of the social, of politics, etc. In this realm we are citizens, equal before the law, etc. But in our "private" existence, our actions take shape within the interlocking set of capitalist institutions and practices that Bernstein describes in his article. That is, in our "private" lives we are encouraged to be all the things capitalism encourages us to be: self-interested, competitive, exploitative, etc.

But it turns out, Marx argues, that although this is the way things appear in capitalism, they are really upside down in this picture. In fact, the so-called atomistic private level of our society is the level of our "real existence". The public realm, on the other hand, is the alienated form which our social nature takes in capitalism. That is to say, the State is merely an abstraction, a collective fantasy of sorts. To think that our actions only have political or social weight when acting in our capacity as citizens, in and through the institution of the state, is to radically misunderstand contemporary societies.

To carry forward this critique, Marx draws a distinction between political emancipation and human emancipation. Political emancipation refers to a catalogue of individual rights, that is, a series of legal provisions that weren't applicable to all in feudal societies. But political emancipation, Marx argued, wasn't enough. In short, political emancipation was merely emancipation on paper. Marx didn't think that we could really be emancipated as long as the basic configuration of institutions in capitalism remained as they were. Political power could not be equally distributed unless economic power was equally distributed. Thus, human emancipation meant somethings far stronger than mere political emancipation. Human emancipation means an end to the institutions and objective conditions that produce alienation. It means an end to an irrational system marred by deep internal contradictions.

If the problem is really the basic structure of social institutions in our society, as Bernstein suggests, it is unclear that regulation is the obvious remedy. I am with Marx here in thinking that the basic upshot of the Hegelian setup that Bernstein describes is that we need radical transformation of the basic structure of capitalist societies, rather than superstructural tweaking.


dnw said...

Wonderful critique. I’ve been struggling to formulate an intelligent response. I agree that it does not necessarily follow from Hegel’s arguments that the solution to the crisis is more regulation, instead of a radical transformation of society’s base structures, but we must consider via the superstructure vs. base dichotomy the threat of calling the former changes “minor” and over-valorizing the intentionality of the pre-evental participants. Adrian Johnston talks about the pre-evental “discipline of time,” or the way that minimal legislative measures which in no way disturb a system’s explicit functioning can eventually take on major repercussions. Say, the “minor” goals of Gorbachev’s perestroika, which unknowingly led to the total disintegration of the communist system, versus the reforms of FDR, conversely, which were bold and emancipatory, but which ultimately reinforced liberal capitalism. Clearly, the counter-argument to Johnston is that we are reduced to passive, resigned observers who can only wait for the big Event which will never come. So Bernstein’s thesis is not incompatible with explicitly emancipatory efforts. My point is not that Bernstein’s suggestion for more regulation is enough, that we can sit around waiting for these minor reforms to bring emancipation, but do I support more regulation? Absolutely. I disagree with how he posits regulation as a force of reason which undoes the fantasy of markets: isn’t regulation the very support of the market fantasy as such? The fantasy is that we can ever have a fair, equitable market.
And on another note, I’m not sympathetic to your closing point that Marx heralds an end to a system marred by deep internal contradictions. It’s the contradictions which allow capitalism to function (rather than mar it), and the contradiction-less society seems the true utopian fantasy.

t said...

The bit about contradictions is a big issue, so I'll leave that to one side for now. Also- on the base/superstructure stuff, I'm curious to know what you think of MacIntyre's take on it (see a recent post that quotes him). Whatever else is true, Marxism is a social theory in which production is emphasized (whereas bourgeois political economy tends to focus merely on consumption and circulation). So an approach that leaves the basic structure productive institutions intact seems to be susceptible to the Marxist (i.e. Left-Hegelian) critique I make in the post.

I think we should make some distinctions among surface level reforms. There are reforms that open up the field of future struggles, and there are reforms that tend to discourage such struggles. Some reforms lead to increased confidence and well-being of the oppressed, increasing opportunity for future struggle and more ambitious demands (I would place healthcare and education reforms in this category, for example).

So I'm not against all reforms- and I'm not even against all reforms that aren't in the service of increased short-term struggle. But we need to be clear that they ARE reforms, first of all. That is, we need to be clear that they are surface level fixes that still leave fundamental problems unsolved. And second of all, we need to be clear that some "reforms" are so tepid that they have the double effect of both changing nothing substantial at all, AND convincing aggrieved parties that they've won what they were after. An example of this phenomenon is Obamacare. Single-payer, which I support, is very much a reformist measure (it still relies upon capitalist production to generate the tax revenue which funds it, for instance). But Obamacare isn't even really a reform: it's a further entrenchment of the status-quo private system with a couple of ornaments here and there (e.g. the ban on recision).

So, this is all to say that I agree with you about the possibility of relatively small measures being sparks for more substantial changes in the future. But we need to be clear that not all reforms are like that (which you point out)- and we need to be clear that reforms of that sort don't actually do the heavy lifting, but place people in more favorable conditions to do it themselves.

Anonymous said...

the contradictions of capitalism are not a source of perpetual stability. They are the leverage that Marx argued that we can use to create a new society. The sense in which Marxism is not utopian is the sense in which he thought there was a viable route from here to a better world, that is, he thought he could show that capitalism created the possibility for a better society. The contradictions are to explain the present crisis we're in. This isn't to say that capitalism will collapse on its own- it won't (it will have to be pushed). But that it is possible to push it, and that it is possible to have an egalitarian society, speaks to the sense in which the contradictions can be used as leverage to change the system.