[Paleopsych] TLS: John Gray: The global mirage
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John Gray: The global mirage
The Times Literary Supplement, 2.6.7
http://the-tls.co.uk/archive/story.aspx?story_id=2077813&window_type=print
THE SPIRIT OF CAPITALISM. Nationalism and economic growth. Liah
Greenfeld. 541pp. Harvard University Press. £30.95. 0 674 00614 3.
Marxists and market liberals like to see themselves as deadly
adversaries, but they have a remarkably similar view of the world.
Both subscribe to a version of determinism in which economic forces
are the motor of history, and nationalism and religion are secondary
or marginal factors. Both look forward to a universal civilization in
which the cultural identities of the past have withered away, or else
retreated into private life. If Marxists and neo-liberals differ, it
is on a point of detail - the question of which is the more productive
system, central planning or the market economy - that history has now
settled. In their crudely rationalistic understanding of history,
politics and culture, and their quasi-religious faith that a radiant
future is near at hand, the two ideologies are at one. As Liah
Greenfeld puts it in the opening chapter of The Spirit of Capitalism:
Nationalism and economic growth, "Curiously, Marxism, abandoned in the
lands traditionally dedicated to its propagation and proved wrong by
experience, is remarkably similar to the dominant Anglo-American view
of the world."
The affinities between the two philosophies are not confined to the
textbook and the lecture hall. They are strikingly similar in
practice. Both have supported massive programmes of social
engineering, while steadfastly denying mounting evidence of their
human costs and perverse consequences. Like the Communists in the
1930s who cast a benignly sightless eye on the millions of lives
ruined or ended by Stalinism, Western free-marketeers have chosen to
ignore the vast social havoc and personal misery that has resulted
from neoliberal shock therapy in post-Communist Russia. At the same
time, both Marxists and neoliberals have been thoroughly unprepared
for the actual course of events. The disintegration of the Soviet
state was very largely a result of the power of nationalism - a force
that neither ideology has ever managed to encompass. It was not its
manifest economic failures or its repression of intellectual
dissidents, its endemic corruption or the devastation it wrought on
the environment that brought the Soviet Union down. It was nationalist
popular resistance in Poland and the Baltic states, together with
defeat in Afghanistan and the unintended consequences of Gorbachev's
far-fetched schemes of economic reform. The centrality of nationalist
movements in the events leading up to the Soviet collapse was not
perceived in the West, which - in a fateful coincidence whose damaging
consequences we are still suffering - was dominated by a free-market
ideology as primitive and reductive in its view of nationalism as
Marxism has ever been, if not more so.
In neoliberal ideology, modern capitalism embodies the moral culture
of individualism. By contrast, Greenfeld maintains that modern
capitalism owes its existence to nationalism. In a tour de force of
social theory and historical interpretation, she argues that modern
economies came about not through the emancipation of the rational,
utility-maximizing individual but from the emergence of national
consciousness. Contrary to Marxist and neoliberal determinism, there
is nothing inevitable about economic growth. Like nationalism itself,
it is a historical accident. Taking England, France, Germany, Japan
and the United States as case studies, Greenfeld provides historical
evidence for the thesis that "the spirit of capitalism", which
generates economic growth, is a by-product of the collective rivalry
inherent in nationalism.
The Spirit of Capitalism echoes Max Weber's celebrated argument that
modern capitalism is a product of "the specific and peculiar
rationalism of Western culture". According to Weber, market exchange
can be found in all societies, but in capitalism it is organized so
that it can be subject to exact calculation, and only in capitalism is
economic life oriented towards continuous growth. Famously, Weber
suggested that the emergence of growth-oriented economies owed much to
Protestantism, which supposedly put a high value on worldly success.
Greenfeld believes this was not an unreasonable hypothesis for Weber
to have advanced; even so, citing a number of studies showing that
early Protestantism did not revalorize economic activity in the ways
Weber suggested, she rejects it. The spirit of capitalism flows from
the collective sentiment of nationality, she believes, not from
religion. Here Greenfeld builds on an earlier work of her own,
Nationalism: Five roads to modernity (1992), to argue that nationalism
signifies much more than the post-Westphalian sovereign state. It is
the basis of modern society. "Nationalism", she writes, "is a form of
social consciousness, a way of cognitive and moral organization of
reality. As such it represents the foundation of the moral order of
modern society, the source of its values, the framework of its
characteristic - national - identity, and the basis of social
integration in it."
The Spirit of Capitalism is an immensely refreshing book, not least in
its destructive impact on the determinism that underpins recent
neoliberal theories and policies. Three implications of Greenfeld's
argument are worth stressing. Firstly, the link between capitalism and
individualism, taken for granted by Marxists and neoliberals, is an
accident of history, not a universal law. A culture of individualism
may have been present in the first exemplar of a modern economy,
seventeenth-century England, and successfully transplanted into
countries such as the US and Australia.
It did not exist in anything like the same form in France or Germany,
later converts to capitalism, and it was wholly absent in the most
astonishing conversion to capitalism - that of nineteenth-century
Japan. By the start of the twentieth century, the chief feature of
capitalism - sustained economic growth -was securely established in
countries where moral cultures varied enormously, and which have shown
no tendency to converge on Anglo-American individualism since that
time.) The strength of capitalism is due to its successful reshaping
of individual motivation on a new collective model. The vulgar Whig
view that the triumph of market capitalism is owed to the superiority
of its individualist values, which was so stridently trumpeted in the
fast-receding go-go days of the 1990s, is a myth.
Secondly, Greenfeld's book deals a death-blow to the legend that there
is anything uniquely rational about the type of economic activity that
produces economic growth. Quite to the contrary, Greenfeld - following
Weber - argues persuasively that utility-maximizing agents would not
engage in the pursuit of unending growth. Economic growth is a benefit
to nations, not necessarily to individuals. A rational
utility-maximizer would find nothing compelling in a life of incessant
striving. Indeed, in terms of pure economic self-interest, such a life
is plainly irrational. As Greenfeld puts it:
A Homo economicus, motivated solely by self-interest and rational in
the sense of strictly economic rationality . . . could not be
attracted to profit for profit's sake - which, we are reminded by
Weber, "from the point of view of the happiness of, or utility to, the
single individual, must appear entirely transcendental and absolutely
irrational" - and thus could not find the idea of economic growth
reasonable.
The spread of capitalism from England to France and Germany, and
beyond Europe to the United States and Japan, cannot be explained by
any increase in the economic rationality of individuals. It is as a
result of the increasing power of a mode of collective consciousness
in which individual economic rationality is subordinated to the power
and dignity of the nation.
These two points suggest a third regarding the pretensions of
economics. At present, the expertise of economists is more widely
sought by governments than that of any other social scientists; but
the prestige of economics as a discipline derives chiefly from its
remoteness from any actual society. Economists have aped natural
scientists in their fondness for mathematical modelling, but, unlike
those of natural scientists, the models of economists are notably
lacking in predictive power. This is only to be expected, since the
very respects in which economics as currently practised most resembles
the natural sciences are those in which it is most humanly
unrealistic. In the real world, human beings do not maximize or
optimize the satisfaction of their wants; they stumble along, their
actions guided not by any calculation of utility but by their sense of
self-identity, the meaning or lack of it they find in their daily
activities, and whatever solidarity they can call up with others.
Economic life is not a free-standing sphere of activity, but an
outgrowth of the religious, political and moral life of those who
engage in it. This fact, so strikingly absent from the minds of most
economists today, was a truism to Adam Smith. It is hardly accidental
that his great inquiry into the nature and causes of economic growth
should be entitled The Wealth of Nations. Like other practitioners of
political economy in the eighteenth and nineteenth centuries, and in
sharp contrast with most economists nowadays, Smith had a highly
developed sense of history, and rarely mistook his own theoretical
constructions for social facts. Writing of the state of the economics
profession in the United States towards the end of the nineteenth
century, Greenfeld observes:
The idea of science among American intellectuals who professed
themselves economists could not reflect the nature of their social
subject matter, of which they were ignorant; nor could it reflect a
deep understanding of the activity of natural scientists, of which
they were ignorant as well.
One might add that the conception of the method appropriate to the
study of economic activity to which the majority of economists
subscribe today does not reflect a familiarity with the history of
their own subject - of which they are also ignorant.
By returning the study of capitalism to the intellectual disciplines
where it belongs - sociology and history - Greenfeld's book deserves
to bring about a paradigm shift in the understanding of economic
growth. That is not to say her argument must be accepted as it stands.
She is right to argue that capitalism is not the product of any one
religion, but it seems cavalier to suggest (as she sometimes comes
close to doing) that religion has not been a major influence on
economic development. There are doubtless many reasons why Russia has
not managed to achieve a modern market economy, but the
anti-capitalist moral culture of Russian Orthodoxy must surely be
important among them. On the other hand, one should not make the
mistake of thinking that Russia never experienced a period of rapid
economic growth - it did precisely that towards the end of the
nineteenth century. It is therefore a reasonable question why this
achievement was not sustained. Greenfeld's answer is that the sense of
national identity in Russia was not linked with success in economic
competition with other countries as it was in England, France and
Germany. But one might equally well reply that national consciousness
was never as highly developed in Russia as it was in England or
France, say. After all, Russia remained a land empire, unlike these
other countries, and the Russian State remains to this day an imperial
construction. If Russia has not achieved sustained economic growth,
one reason may be that it has not become a nation state.
A salient fact about our current circumstances is that in much of the
world the modern State has collapsed. A monumental project of
nation-building is under way in China, which is reflected in the rapid
economic growth that has been recorded in some parts of the country.
But in much of post-Communist Russia and parts of former Yugoslavia,
large areas of Africa, much of the Middle East and parts of Asia such
as Afghanistan and Pakistan, there is nothing resembling an effective
modern nation state. In any future that can be realistically foreseen,
it is extremely unlikely that there will be nation states in these
parts of the world. If economic growth is a by-product of national
consciousness, their future is bleak. Greenfeld comments that much of
what is seen as globalization "is a reflection of the specific
American tradition - its peculiar business ethic, which condones and
encourages competition on an individual basis, and which is a product
of the nature and development of American national consciousness".
Greenfeld is right to note the absurdity of the belief that singularly
American practices and values can be made universal. But her argument
has wider, and - for some people, at least - more disturbing
implications.
The popular idea of globalization was based on the belief, propagated
by neoliberal ideologues and endorsed by the majority of economists,
that economic growth is a result of the adoption of free markets.
Today's evangelists for globalization are at one with Marx's disciples
in believing that history is a process of convergence on a single
economic system. In this view, we are on the brink of a new era, in
which the rising prosperity achieved by some capitalist countries over
the past few centuries will be replicated worldwide. If Greenfeld is
even half right, this is a delusion: global capitalism is a mirage,
just like Communism.
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