118 ALTERNATIVE VIEWS OF ECONOMICS

norms, or even by processes of reaching understanding’ (Habermas in Dews 1986, p. 175). In this manner, capitalist institutions impede the selfdetermination of humans through open and equal discourse. Yet unlike many critics of capitalism on the left, Habermas is cautious not to opt merely for a state socialist replacement of capitalism. In fact, his resistance to socialism, conventionally understood as state ownership and control of society’s means of production, appears to be founded upon much the same problem: social interaction is constricted in this instance because state administrative action becomes bureaucratic.15

Keynesian economics and the ‘scientization of politics’

Bureaucratic state administration plagues not just socialism, but modern capitalism as well, albeit to a much lesser extent. Since Keynes’ delegitimation of natural law cosmology, the state has increasingly replaced markets in the steering of economic activity within capitalist economies. The Keynesian or neoKeynesian variant of economics has become the science of this administrative steering. To a considerable degree, this form of economics is a perfect example of what Habermas has in mind when he speaks of the ‘scientization of politics’. Within the framework of Keynesian economics, the problems of macroeconomic stability, as well as those of economic justice in the forms of the distribution of income, wealth, and opportunity, become technical questions to be solved by economic experts. Because the problems are understood as merely technical ones, they appear to be beyond the political sphere.16 The full nature of the problems, as well as the full array of options for their solution, is rarely given an open public forum.17 Instead, politics is reduced to the electorate’s casting a choice for one or another candidate with his or her team of economic experts.

A more concrete example of the manner in which Keynesian economics furthers this ‘technocratic consciousness’ is to be found in the problem of stagflation. Since the addition of the Phillips Curve analysis to the Keynesian framework in the late 1950s, the depiction of a trade-off between unemployment and inflation has become common. Accordingly, attempts to reduce unemployment are seen as exacerbating inflation, whereas attempts to reduce inflation are seen as resulting in higher unemployment. When translated into politics, this trade-off appears as a scientifically understood inevitability—a harsh fate of a cruel world. The political parties which generally represent the interests of labour typically identify unemployment as the evil to be fought; those generally representing the interests of capital identify inflation as the major problem. The public discussion goes no further and the electorate votes for one or the other.18

The presumed trade-off between unemployment and inflation is set forth ceteris paribus—that is, assuming no institutional change. But why would economic scientists limit their analysis in this manner? A disinterested observer, not schooled in the nature of modern social thought, might conclude that such

SCOPE AND GOALS OF ECONOMIC SCIENCE 119

reluctance to address questions concerning institutional change belies political conservatism on the part of the economics profession. But although conservatism is the social consequence, it is not intended. Instead, it is for methodological reasons that economists shy away from fully investigating the potential for institutional change: social institutions are built upon and sustained by social values, and the discipline’s positivistic credo leads practitioners to believe that a rational understanding of values is not possible. The result, in terms of social consciousness, is that the positivistically defined inflation-unemployment tradeoff is what science reveals as our options. Thus, rather than disclosing the realm of social potential, Keynesian economics acts (albeit without intent) to restrict social consciousness as to the options for improving human welfare.19

Since the 1930s, Keynesian economics has become the most central intellectual component of a technocratic ideology. The reason for this is that the problem of economic stability has taken on a political importance second only to defence. Thus, from a Habermasian perspective, Keynesian economics is an important component of an ideology, the ‘singular achievement’ of which is:

to detach society’s self-understanding from the frame of reference of communicative action and from the concepts of symbolic interaction and replace it with a scientific model. Accordingly the culturally defined selfunderstanding of the social life-world is replaced by the self-reification of men under categories of purposive-rational action and adaptive behavior.

(Habermas 1970a, pp. 105–6)

Keynesian economics has, of course, suffered a considerable decline both politically and theoretically in recent times in favour of a return of confidence in the ‘magic of the market’, and a renaissance of the ideology of a natural law cosmology. Habermas does not, however, look upon this general shift as a progressive change. Instead, he sees it as merely a:

policy of shifting the burden of problems back from the state onto the market—a policy which…has nothing to do with democratization, which rather effects a further uncoupling of state activity from the pressure for legitimation emanating from the public sphere, and understands by ‘freedom’ not the autonomy of the life-world, but a free hand for private investors.

(Habermas in Dews 1986, p. 181)

Neoclassical economics and distorted communication

Just what Habermas’s ideal society would look like in terms of concrete social institutions is not clear. He argues for legal equality and maximum individual self-determination: ‘That degree of legal equality should be achieved which will allow at the same time the greatest possible measure of individualism, and this

120 ALTERNATIVE VIEWS OF ECONOMICS

means space for individuals to shape their own lives.’ Yet he insists that individual freedom must be understood more broadly than as a mere ‘abstract right’, since ‘[t]he individual cannot be free unless all are free, and all cannot be free unless all are free in community’ (Habermas in Dews 1986, p. 147). He is also a democrat in the widest sense of the term.20 He is committed to open political processes in which all participate in the determination of their collective fate. He is for ‘the enlightenment of political will, [which] can become effective only within the communication of citizens’ (Habermas 1970a, p. 75). His ideal is the same as Marx’s—that humanity make itself with will and consciousness. This would require social institutions which provide maximum space for free human interaction, for uncoerced political discourse. Only through such discourse can a rational consensus on truth be attained.

But what assurance is there that a consensus is in fact rational? Habermas argues that there is a rationality embedded within communication itself. Communication in which understanding is sought always raises certain validity claims; ‘anyone acting communicatively must, in performing any speech action, raise universal validity claims and suppose that they can be vindicated’ (Habermas 1979, p. 2).21 In other words, the individual claims to be: (1) saying something comprehensible; (2) saying something true; (3) qualified to make the claim; and (4) sincere in making the claim. Participants in fully open and uncoerced conversation reach a rational consensus only ‘by the force of the better argument’. This concept of a rational consensus suggests what Habermas calls an ‘ideal speech situation’. Indeed, for Habermas, this ideal speech situation is implied in the very possibility of speech:

an ideal speech situation is necessarily implied in the structure of potential speech, since all speech, even intentional deception, is oriented toward the idea of truth. This idea can be analyzed with regard to a consensus achieved in unrestrained and universal discourse.

(Habermas 1970b, p. 372)

It would, of course, be utopian to suppose that ideal speech situations might exist in all human interaction. But this utopian conception serves as a counterfactual against which reality can be compared. It serves in this sense much as a Weberian ‘ideal type’. For present purposes, this utopian conception suggests how, from a Habermasian perspective, neoclassical economics might be seen as uncritical at best and ideological at worst. Neoclassical economics focuses principally upon what Marx termed the ‘sphere of circulation’ or the market nexus. Self-interested individuals are depicted as entering freely into the transactions of such markets. Indeed, in the history of this doctrine, the expansion of markets has typically been equated with an expansion of human freedom. However, from a Habermasian perspective, and a Marxian perspective generally, the almost exclusive focus on the market nexus reveals a preoccupation with mere appearance or surface reality. The charge is that

SCOPE AND GOALS OF ECONOMIC SCIENCE 121

neoclassical economic doctrine fails to penetrate beneath this surface in such a way as to grasp the underlying causal forces of which markets are merely the epiphenomena.

More concretely, neoclassical economics views individual decisionmaking in an asocial and ahistorical manner. All actors are formally free in the marketplace in that the market contract cannot be concluded without the voluntary accordance of all trading partners. However, if, as Marx pointed out in the extreme instance, the free choice is to work for the capitalist class or starve, then this idea of freedom is wanting. It is no more than the Mafia’s ‘offer you can’t refuse’. Freedom in this sense is a mockery of the Enlightenment ideal,22 even if the options in modern capitalism are less stark than ‘work or starve’.

Because in a market all participants must agree freely to the contract for a transaction to occur, they appear to be equals in free self-determination. But in an important sense this is merely appearance. They may in fact be highly unequal as a consequence of their socialization and this may bear significantly on how well they fare within a competitive market economy. Mainstream economics ignores the social formation or socialization of its market participants. The resultant ideological thrust is that the child of a Rockefeller and one of a prostitute have equal freedom. Each merits what it achieves; each is to blame for what it fails to achieve.

In a market economy decisions are made instrumentally. Mainstream economics depicts these given ends as utility maximization for the worker/ consumer and profit maximization for the firm. The market system minimizes the extent to which workers, consumers, and business decisionmakers might meet in what Habermas calls ‘discursive will formation’ to assume democratic control over the nature of work, over what it is that might constitute rational consumption, and over what might be socially ideal business decisions. Even if neoclassical economics were assumed to capture authentically the individual instrumental decision-making within the market system, it does not do so critically. Consequently it presents the market system itself as a given, if not the most crucial, social component of the natural order.

Habermas’s ideal is undistorted communication. The ideal is that participants in discourse put aside all motives but the pursuit of agreement according to the best reasoned argument. In the marketplace, by contrast, the process is instrumental or strategic: the goal is to persuade the other to behave in a manner most advantageous to oneself. This persuasion does not celebrate undistorted communication as an ideal. If undistorted communication should be the most profitable strategy, then so be it. But if distorted communication might be yet more profitable, then it would be the ideal. If sophisticated psychological ruses succeed in persuading the other in one’s favour, they are the ideal.23 This ‘psychotechnic manipulation of behaviour’ perpetuates a social order in which ‘men…make their history with will, but without consciousness’ (Habermas 1970a, p. 118). The persuasion within the marketplace could not be further from Habermas’s ideal in which ‘no force except that of the better argument is

122 ALTERNATIVE VIEWS OF ECONOMICS

exercised, and…as a result, all motives except that of the cooperative search for truth are excluded’ (Habermas 1975, p. 108). And because neoclassical economics uncritically accepts this opportunistic instrumentalism, it fails the standards which Habermas wishes to set for critical social theory.

It is important to note at this point that a substantial portion of the differences between Habermas’s and neoclassical economics may be traceable to differing conceptions of human nature. Mainstream economics assumes that all behaviour is not only self-interested, but calculatingly selfinterested. Habermas, by contrast, appears to hold out for the possibility of human behaviour, which although perhaps still self-interested, is not calculatingly so: ‘I speak of communicative actions when social interactions are co-ordinated not through the egocentric calculations of success of every individual but through co-operative achievements of understanding among participants’ (Habermas 1982, p. 264). To the extent that this passage implies the possibility of altruism, neoclassical economics would rule it invalid on the grounds of the so-called free-rider problem.24

EXPANDING THE DOMAIN OF COMMUNICATIVE

ACTION

It is a frustrating aspect of Habermas’s project that he has not provided more concrete examples of just what more ideal social institutions might look like. His vagueness on this score is captured in the following passage:

I can imagine the attempt to arrange a society democratically only as a selfcontrolled learning process. It is a question of finding arrangements which can ground the presumption that the basic institutions of the society and the basic political decisions would meet with the unforced agreement of all those involved, if they could participate, as free and equal, in discursive will-formation. Democratization cannot mean an a priori preference for a specific type of organization, for example, for socalled direct democracy.

(Habermas 1984, p. 186)

Presumably, undistorted communication will be necessary for the evolution of more rational social institutions. But this would seem to beg the question of what institutional changes might permit an expansion of realms for undistorted communication. And on this score, it would appear that in spite of Habermas’s apparent reticence to address concrete institutional change,25 there is one area in modern democratic societies that calls for transformation more than any other to be in a better conformity with his conception of democracy as a self-learning process. That area is the workplace. It could be argued that the workplace is the most important remaining domain of unfreedom in modern industrial society. Most workers neither own nor control the tools and resources with which they work. They experience little participation in the nature of one of the most, if not

SCOPE AND GOALS OF ECONOMIC SCIENCE 123

the most, central activities of their lives. They are bossed about, often within highly bureaucratic and authoritarian organizational structures. Because they must frequently take and execute orders uncritically from above, the workplace does not socialize them in democratic self-determination. Indeed, they are socialized in its opposite—in unquestioning obedience to authority. Given the central importance of the workplace, it would be surprising if these authoritarian attitudes did not spill over into other domains of the social world.

A move toward worker ownership and control of the firms in which they work could constitute an important step in the ‘decolonization of the lifeworld’. It would not only directly expand the area of communicative action, it would also be important in socializing citizens to recognizing the rationality of open discoursive will-formation in other social spheres. In fact, it seems to fit Habermas’s ideal rather closely in so far as that ideal is:

to arrest the destruction of solidaristic forms of life and to generate new forms of solidaristic collective life—in other words, life-forms with possibilities for expression, with space for moral-practical orientations, lifeforms which offer a context within which one’s own identity and that of the others can be unfolded less problematically, and in a less damaged way.

(Habermas in Dews 1986, p. 144)

As an aside, it is interesting to note that workplace democracy is politically attractive from the vantage points of both the right and left. Yet it is neither capitalism nor socialism. The differentia specifica of capitalism is that workers are separated from ownership and control of the tools and resources with which they work. The differentia specifica of socialism is state ownership of these means of production. Workplace democracy can be conceived to vest ownership, control, and responsibility with those most intimately connected to the means of production. In accordance with the preferences of the political right, it maintains the sanctity of both private property and free markets. And the elimination of current capital-labour strife might well eliminate the need for much state intervention (e.g., in workplace safety, labour-capital dispute arbitration). In accordance with political preferences on the left, workers would no longer be ‘alienated’ from the means of production. They would work with democratic rights of self-determination in community settings. No longer would an underclass be needed to hold down wages and bear the greatest costs of the deflationary phase of the political business cycle which results from capitallabour strife.

At first glance it appears odd that a body of doctrine such as mainstream economics, which has since its modern beginnings celebrated human freedom, would essentially ignore the unfreedom of the workplace. In fact, although workplace democracy has been an important goal of many noted social reformers for practically 200 years, it is possible to take economics degrees in most US colleges and universities without ever coming into contact with the topic. There