In Making Sense of Marx, Elster himself specifies the ?social contradiction? of methodological individualism by referring to the nature of inference that proceeds from the individual to the whole. He states the ?paradox? as follows: all social action is considered to be the outcome of individual actions, yet generalising from what is true for any single agent or coalition of agents to what is true for all agents necessarily involves a ?fallacy of composition? (1985, pp. 44-45). This is so because ?economic agents tend to generalize locally valid views into invalid global statements; that is, individuals fail to perceive that causal relations that obtain ceteris paribus may not hold unrestrictedly? (1985, p.19). In short, when individuals act on the basis of mutually invalidating beliefs, unintended consequences result. Elster labels these unintended consequences ?counterfinality?. Essentially, counterfinality is the observable substance of the fallacy of composition.
It is quite clear, from Elster?s own statements, that he considers the ?social contradictions? of counterfinality and the fallacy of composition to be important in any adequate appraisal of economic methodology. He declares the ?extremely powerful? idea of ?social contradiction? to be ?Marx?s central contribution to the methodology of social science?; at least in so far as he (Marx) demonstrated ?that in a decentralised economy there spontaneously arises a fallacy of composition with consequences for theory as well as for practice? (1985, p.19). Yet, implicit in Elster?s own concept of the fallacy of composition is the existence of a priori constraints on individual action; and these constraints imply methodological limits on the individual as a primary unit of analysis: ?Insofar as the fallacy of composition revolves around the non-universality of a given property, a specific limit to universality is obviously a presuppositon. However, the refusal of Analytic Marxism to entertain supra-individual entities means that such limits are revealed only ex post facto as counterfinality? (Lebowitz, 1994, p.167).
In demonstrating the non-universality of a given property, Lebowitz refers to Cohen?s Structure of Proletarian Unfreedom. In Cohen?s classic example of collective unfreedom, ten people are locked in a room, and there is a single key on the floor. Since any one individual may pick up the key and leave the room, for each individual the property ?freedom? obtains. If we then impose the condition that only that person may leave the room, the individual property – freedom – fails to obtain universally. Lebowitz interprets this outcome as a limitation placed by ?global constraints?, that precede the action of any one individual (1994, p.167):
Significantly, in this [Cohen?s] example, we have prior knowledge that the relevant property (freedom to leave the room) is ?non-universalizable?. Knowledge of the specific whole in this case is prior in the explanatory order to understanding the conditional and contingent state of the individuals within this whole. More is involved than simply a question of epistemology; it is also an ontological question: the true properties of the individuals are only given by the characteristics of the whole.
Ironically, it is in the much vaunted theory of exploitation that the fallacy of composition implicit in analytic methodology most clearly obtains. Consider Roemer?s ?social withdrawal? criterion for exploitation. A coalition of individuals withdraw from society with their ?share? of society?s scarce commodities and resources: if each individual?s income and leisure hypothetically increases, while the assets of the members of the opposite coalition hypothetically decrease, the withdrawing coalition were exploited; if not then they were not exploited. To make any sense of this criterion of exploitation we must first know how an individual?s inalienable ?share? in the social capital is to be measured: ?How much could a worker produce if she or he had never been trained, socialized and educated in a capitalist system? If she or he had none of the values, emotions, and passions that the current system has generated?? (Hunt, 1993, p.100). Embedded in the social functioning of an economic system, such assets are not the inalienable properties of individuals, but have meaning and value only in relation to participation.
Hence, the central measures of Romerian exploitation – ?income? and ?leisure? and ?capital?, as well as the notions of ?justice? that sustain them – cannot be derived from the properties of individuals alone. Rather, these categories constitute the cultural artefacts of philosophical and economic analysis, their meanings implicit in a particular view of science, and a particular view of socio-economic reality, at a given point in historical time. The idea that ?economic knowledge? constitutes a psychological orientation to economic experience is exemplified in Geertz?s ideational definition of culture as a symbolic regulatory system of ?plans, recipes, rules, instructions – for the governing of behavior? (1975, p.44). Applying this definition, knowledge production within American academia may be thought of as contingent upon conventional understandings of what economics is: ?Man is precisely the animal most desperately dependent upon such extragenetic, outside-the-skin control mechanisms? for ordering behaviour? (p.44). Or, as Popper would have it, the rational economic individual is not the precondition of society, but a product ?created by the effort which life in an open, and partially abstract society continually demands from us? (1973, Vol. 2, p.176).
Popper rejected methodological individualism: firstly, on philosophical grounds that the presumption of rationality is an outcome of socio-economic life, rather than a presupposition; and secondly, on practical grounds that the presumption of rationality is inessential to a falsificationist reference to external reality. Marx set his own method in opposition to both analytic ?idealism? and positivist ?objectivity?. By contrast with the analytic focus on ?an imagined activity of imagined subjects? and the empiricist obsession with ?dead facts?, the premises of Marxian science ?are real men, not in any fantastic isolation or abstract definition, but in their actual, empirically perceptible process of development under definite conditions? (1983, p.170). For Marx, a true science of human activity in society must elucidate the constraining conditions, through analysis of the profound interconnectedness of the part and the whole:
The social structure and the state are continually evolving out of the life process of definite individuals, but of individuals not as they may appear in their own or other people?s imagination, but as they really are; i.e. as they are effective, produce materially, and are active under definite material limits, presuppositions and conditions independent of their will (p.169).
Committed to the Cartesian priority of the part over the whole, analytic Marxism reduces Marx?s concern with the interconnections between individual action and social change to ?part of the exogenous data for the maximization problems? of individuals (Hunt, 1993, p.96). On the basis of the presuppositions of methodological individualism, economic ?reality? becomes nothing other than an abstract stage for the elucidation of outcomes arizing from infinite wants, under an implicit ceteris paribus assumption that psychological states of ?rationality? remain, in some way, eternally unchanging. In this way, distributional states may be taxonomically specified with reference to ?counterfactual? opposites, without reference to the generative processes of change. Certainly, Roemer?s analysis does not preclude speculation as to the counterfinality that might result if every individual in a Romerian exploited coalition ?rationally? withdrew from society. Yet, it is precisely where abstract ?speculation ends – in real life – that real, positive science begins: the representation of the practical process of development of men? (Marx, 1983, p.170).
In reality, the ?absurdity of the idea? that individuals might withdraw from economic activity as a practical prescription for working class action in a real capitalist economy is so ?transparent? as to leave no doubt whatsoever as to the ?strictly mental and hypothetical nature of the analysis? (Hunt, 1993, p.100). If economic knowledge is perceived to be scientific only insofar as it has implications for real human action in the real world, then Roemer?s formal solution to the problem of exploitation ?is not science, but science fiction? (Hunt, 1993, p.100).
Conceptualizing Change: The Limits to EquilibriumIn his Unified Field Theory David Bohm (1980) proposed a quantum physics in which the organization of the physical universe is such that what we regard as causal in reality is only the explicit, or phenomenal order of things. Just as DNA contains explicit elements of an implicate whole, so too every part contributes to and is enfolded in that whole. Bohm?s analysis of the mutually determining interplay among entities that constitute a physical whole is a contemporary example of Lukac?s ?principle of revolution in science?; it aims to reveal, beneath observable phenomena, the generative mechanisms of change. In the same way, the dialectical requirement for economic ?knowledge? is the identification of the ?intrinsic connection existing between economic categories or the obscure structure of the bourgeois economic system? (Marx, 1968, p.165).
Specifically, Marx was concerned with the ?inner divisions? of the capitalist system into production, circulation and exchange. To explore these inner divisions, the labour theory of value is an indispensable tool, enabling a distinction between labour and labour-power. Under Capitalism, labour-power is a ?factor of production? – the worker?s inalienable capacity to work – sold on the market like any other commodity; and the ?price? paid for labour-power (the wage) is ?fair? in so far as it is determined in accordance with the principles of supply and demand. Labour – the performance of a specified number of hours of work – can be sold only in an embodied form, in produced commodities. Crucially, the distinction between labour and labour-power – between spheres of production and exchange – implies that while labour is the determinant of surplus-value, that surplus is realizable only in exchange. This inner division, inherent in the concept of capital, appears in exchange where it ?determines both the sum total of the exchange which can take place and the proportions in which each of these capitals must both exchange and produce? (Marx, 1973, p.443).
For Marx, crises result from an inability to realise the surplus value of produced commodities in the sphere of exchange. This ?contradiction? in the proportions produced and exchanged (overproduction) can exist in conjunction with a competitive market only because it comes out of the fact that ?workers are important for the market as buyers of commodities. But as sellers of their commodity – labour power – capitalist society has the tendency to restrict them to their minimum price? (1978, p.391n). In other words, the continuous drive to increase the rate of surplus value (productivity increases above the real wage rate) in the sphere of production produces a ?barrier to the sphere of exchange? because the consumption of workers ?does not grow correspondingly with the productivity of labour?. As a result the production and exchange of commodities do not necessarily correspond simultaneously in specific and restricted proportions.
Lebowitz (1994) points out an evident fallacy of composition in the counterfinality of overproduction. Any individual capitalist can alter the technological composition of his or her capital, lower costs of production, and realise the additional surplus values thereby generated. Nevertheless, if we generalize from this locally valid statement to all capitalists, it becomes clear that limits to the rate of surplus value are given by totalities: the level of expenditures on means of production and consumption. Marx?s point about the logical priority of the whole is precisely that consideration of supra-individual entities is crucial to the revelation of constraints on individual autonomy, where the form of competition among individual capitals produces an inherent tendency to violate the proportional equalities of production and exchange: the ?necessary balance and interdependence of the various spheres of production and the proportions between them? is achieved ?through the constant neutralisation of a constant disharmony? (Marx, 1968, p.529).
For Marx, recurrent crises of overproduction are the visible manifestations of a conflictual relationship between these separate, and yet interdependent spheres of production and exchange: ?there would be no crisis without this inner unity of factors that are apparently indifferent to each other? (1968, p.500). At an ontological level, Cartesian commitments to equilibrium analysis do not permit articulation of the relationships among the ?unity of factors? that most concerned Marx. On the contrary, General Equilibrium Theory?s singular vision of ?economy? as the result of individual exchanges of sellers and buyers, confines interrelationships to the simultaneous resolution of competing desires in hypothetical environments where vector prices allow no excess of supply. By adding time preferences, Debreu?s proof of Walrasian theory provides a unique equilibrium where markets clear in all present and possible futures. The significance for more practical supporters of the theory is that it shows (contra Marx) that the only possible market clearing process in a market is that of perfect competition.
Yet, paradoxically, the logical consistency of Walrasian theory results from a rigour that ?dictates the axiomatic form of analysis? in complete disregard for ?the dynamics of convergence of an economy to Walrasian equilibrium? (Wientraub and Mirowski, 1994, http). In other words, Debreu rendered the model logically consistent, at the expense of consistency in relation to the actual functioning of an economy. Rather than model reality, Debreu?s mathematical formalism destroyed the ?illusion? of Walrasian correspondence to exchange economies by demonstrating ?once and for all, the disconnectedness of the Walrasian structure from its interpretations? (Wientraub and Mirowski, 1994, http):
The issue [of the actual motion of market economies] could not be avoided forever, however, and there was a long interval in the postwar period in which ?dynamics? were redefined to mean ?stability? within the mathematical economics community (Weintraub, 1991). In that context, the question was posed by Hugo Sonneschein whether the basic ?structure? of Walrasian general equilibrium models placed any substantial restrictions upon the uniqueness and stability of the resulting equilibria, and he proposed the startling answer: no, outside of some trivial and unavailing global restrictions.
For Weintraub and Mirowski, the importance of Debreu?s theory of value is precisely that ?it illustrates the intersection of technical, philosophical and historical concerns when it comes to telling what happens when the sublimity of pure mathematics (the music of reason, as Dieudonne calls it) meets the impurity of scientific discourse, a confrontation which can only be postponed but never altogether prevented? (1994, http). Whatever the analytic Marxists may think, the economic activities of individuals (including their own mathematical activities) are social activities, and therefore impure. Since ?reflection on the impure involves reflection of the relationship of order to disorder?, equilibrium analysis provides, at best, an inadequate and reified understanding of the determinations of exchange in actual economies. In his earlier work, Roemer seemed to be aware of these shortcomings, adding a ?caveat on the lineage? of his equilibrium model (1980, p.524):
Certain aspects of capitalist production are captured here, but perhaps not those aspects most important to Marx? the capitalist labor process is eclipsed in the present model: there is no theory of what determines technology, the real wage, and the organization of production.
Lebowitz (1994) goes further, arguing that Roemer?s treatment of property relations as analytically separate from relations of production introduces profound ?distortions and intolerances? into Marxian theory. Specifically, his treatment of production as no more than a set of technical relations obliterates the critical distinction between labour and labour power; and so necessarily circumvents a full analysis of the origins of profit, the coordination of production, and the forces that promote technological change. Adhering to tools of Walrasian equilibrium, analytic Marxists are unable to address the key interest of the dynamism of capitalism in producing constant revolutions in the processes of production.. Instead, they aim to tidy up the scope of Marxism by removing the study of disorder – and therefore the study of change – from the agenda.