Friday, May 19, 2006

Against Reification Of Property Rights (Part 1)

Dean Baker has made his new book available for downloading. I have read the first chapter so far. That chapter is an overview of the remainder of the book. Baker notices that much commentary in the United States, both by conservatives and liberals, pictures liberals as arguing for government interventions into the markets. Conservatives are pictured as arguing against government interventions. This false picture hampers the development of intelligent policy. According to Baker, markets and property rights are not some neutral and natural pre-existing institutions which liberals try to regulate. Rather, markets and property are themselves constituted by government "interventions". (When Greg Mankiw writes, "Baker thinks that American conservatives are not in favor of capitalism with free, competitive markets, as is often claimed, but instead want to use the power of the state to make the rich even richer", his contrast and his naturalization of competitive markets shows that he misses Baker's point.) Both liberals and conservatives advocate active government interventions, and it cannot be otherwise. The difference between them is that conservatives advocate government intervention on the side of the wealthy and powerful to increase their wealth and power.

I appreciate Baker's practical concern and his attempt to encourage commentators to adopt a more intelligent framing of present-day policy concerns. I want to point out, however, that Baker's thesis is not novel. It can be seen as echoing ideas in any of several traditions. I will mention:
  • Marxism
  • Institutionalism and legal realism
  • Austrian economics
In the remainder of this post, I point out ideas in Marxism related to Baker's position. (Not that I think Baker is a Marxist or that the label is of any importance.) In succeeding posts I will point out texts in the other two traditions mentioned above that frame issues like Baker does.

Marx argued that capitalism tended to confuse observers into believing that social relations were natural relations. Marx called this sort of mistaken understanding of social relations commodity fetishism. In addition to Section 4 of Chapter 1 of Volume 1 of Capital, important Marx texts on this point include the distinction between classical political economy and vulgar political economy in the "Afterword to the second German edition" of Capital; Chapter 50 and, in fact, all of Part 7 of Volume 3 of Capital; and the addenda on "Revenue and its sources. Vulgar political economy" in part 3 of Theories of Surplus Value. There is also this text from Marx:
Economists have a singular method of procedure. There are only two kinds of institutions for them, artificial and natural. The institutions of feudalism are artificial institutions, those of the bourgeoisie are natural institutions. In this they resemble the theologians, who likewise establish two kinds of religion. Every religion which is not theirs is an invention of men, while their own is an emanation from God. When the economists say that present-day relations - the relations of bourgeois production - are natural, they imply that these are the relations in which wealth is created and productive forces developed in conformity with the laws of nature. These relations therefore are themselves natural laws independent of the influence of time. They are eternal laws which must always govern society. Thus, there has been history, but there is no longer any. There has been history, since there were the institutions of feudalism, and in these institutions of feudalism we find quite different relations of production from those of bourgeois society, which the economists try to pass off as natural, and as such, eternal. -- K. Marx, The Poverty of Philosophy

Probably, Lukás' essay, in which he develops the concept of reification, is the most important commentary on Marx for my purpose. In effect, Baker is arguing against the reified nature of so much contemporary thought on economics and politics.

  • Baker, Dean (2006). The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer, Washington: Center for Economic and Policy Research.
  • Lukács, Georg (1968). History and Class Consciousness: Studies in Marxist Dialectics, Cambridge: MIT Press.
  • Marx, Karl (1887). Capital, V. 1
  • Marx, Karl (18??) Capital, V. 3
  • Marx, Karl (1971). Theories of Surplus Value, Part III, Moscow: Progress Publishers.


Rich C said...

I'm not sure if you've changed your mind having had more time to read CNS, but I think you have somewhat mischracterized Baker's views. I don't mean this either as a criticism of you or of Baker (I like you blog immensely and I'm a fan of his), but it does not seem to me that Baker is in any way acknowleding or pointing to a reification of markets. Property rights, yes, but not of markets. Baker appears to argue that different definitions of property, as well as a wide range of other goverment policies, serve to shield the wealthy and the affluent from competition, while exposing workers to competition. But Baker does not suggest that the nature or impact of competition is any different from what one would expect on the basis of neoclassical economics: increased supply of (say) doctors should be expected to lower the price of health care, just as an increased supply of janitors should be expected to lower the price of cleaning services. Philip Mirowski, especially in his recent Markomata paper, provides an interesting contrast by explicitly considering the variety of differnt market institutional forms (described and catagorized in terms of their algorithmic structure), and the various human interest they might serve.

Robert Vienneau said...

A fair point. Baker does talk about supply and demand in a conventional way. Mirowski is always interesting to read, and economics should talk about markets, as defined by institutional structure. No such thing as "the market" exists.

I think Baker's interest in practical politics inhibits him from taking a strong stand in favor of minority theoretical views in economics. I suspect he would rather argue for a political position based on a majority or conventional theoretical position.

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