Chapter 5. A Critique of the Conceptual Foundations of Economic Fundamentalism

Table of Contents

Introduction: The Contemporary Epochal Transformation in the Western Mind
The Excessive Western Faith in Objectivism

‘I perceive,’ said the Countess, ‘Philosophy is now become Mechanical.’ ‘So Mechanical,’ said I, ‘that I fear we shall quickly be asham’d of it; they will have the World to be in great, what a watch is in little; which is very regular, and depends only upon the just disposing of the several parts of the movement. But pray tell me, Madam, had you not formerly a more sublime Idea of the Universe?’

— Bernard le Bovier de Fontenelle[1]

The word Reason, and the epithets connected with it—‘Rational’ and ‘Reasonable’—have enjoyed a long history which has bequeathed to them a legacy of ambiguity and confusion.

— Michael Oakeshott[2]

Introduction: The Contemporary Epochal Transformation in the Western Mind

In the previous chapter, I provided a brief historical account of the social-contract tradition on which economic fundamentalism rests. In the next three chapters, I propose to extend that critique by looking at the epistemological foundations of that tradition in the cultural and philosophical movement called ‘the Enlightenment’. I will criticise its belief that reason and the scientific method can provide us with certain geometric knowledge of the natural and social world, concentrating in particular on the grossly exaggerated claims of rationalism and its tools. In the next chapter, I will extend that critique to positivist scientific beliefs, pointing out that science and social inquiry are only fallible human activities always subject to revision. I will then move in Chapter 7 to a discussion of the normative nature of social inquiry and to criticise claims to normative expertise. The effect of these three chapters taken together is to undermine the claims of social science and political and moral philosophy to a privileged position in the determination of government action.

The Enlightenment was central to the breakdown of the synthesised Ptolemaic–Aristotelian conception of the world. That particular synthesis—that paradigm, that intellectual trajectory—had not only provided the master narrative and the conceptual basis of the medieval world, it had informed Western philosophical, religious and scientific understanding for about 15 centuries.[3] Let me emphasise that influence again, lest its significance passes us by. The synthesised Ptolemaic–Aristotelian conception of the world provided the very basis of the medieval experience of reality. Incredible though it might seem now, that medieval Christian experience of reality was not only different from our understanding, it was as tangible, complete and self-evident as our modern experience of an impersonal and material objective reality, or as the ancient Greek experience of an even more ‘mythical’ reality.[4]

The Enlightenment, then, involved a radical cultural change, sweeping away what was said to be superstition and tradition and promising progress, equality, freedom and justice. This involved the formation of a new cosmology, which provided a new explanatory archetypal story and a different reality. This is the reality formed by the Newtonian world-view in which the universe is viewed as a machine—a self-sufficient mechanism involving the interaction of matter and forces—lacking purpose and meaning. It was only with Enlightenment thinkers such as Bacon, Descartes and Newton that the idea first emerged clearly that there were laws governing the natural world and that it was the role of natural philosophers or what we now call scientists to discover them. The earlier theory of scientific explanation developed by Aristotle was essentialist and had no room for such a concept.[5] As we will see later, this mechanical world-view still lies at the heart of contemporary economic thought, which seeks to model human beings and their interactions as a mechanical system.

We might note in passing that the fact that such different conceptions of fundamental realities have been held in all seriousness by people every bit as intelligent as us, should warn us against placing excessive confidence in our current intellectual constructs and the stories we tell about them. While we might have better institutions for checking knowledge claims, these cannot guarantee freedom from error.

Habermas, in his qualified defence of the Enlightenment, describes the project of modernity as

the effort to develop objective science, universal morality and law, and autonomous art, according to their inner logic. At the same time, this project intended to release the cognitive potentials of each of these domains to set them free from their esoteric forms. The Enlightenment philosophers wanted to utilise this accumulation of specialised culture for the enrichment of everyday life, that is to say, for the rational organization of everyday social life.[6]

Habermas believes that this project has unrealised potential for increasing social rationality, justice and morality. Contrary to Habermas—and as we will see below—many contemporary theorists see the Enlightenment story as having greatly diminished the apparent significance of humanity itself, its rational and volitional freedom and the emotional, aesthetic, sensory, imaginative and intentional qualities that had seemed most constitutive of the human experience until that time.[7] While the Enlightenment story placed rationality on a pinnacle, the conception of reason itself was narrowed. The classical notion of reason as a divine gift involving a normative dimension was displaced and reason was reduced to instrumentality and deductive logic. Indeed, human decision making was reduced to a mechanical system. In this scheme, the life of the imagination and the emotions was discounted along with judgement, experience and wisdom.

A substantial literature has now developed questioning many of the claims of this Enlightenment tradition, which leading contemporary French philosopher Jean-François Lyotard (1924–98) calls the mood of modernity, and its associated grand narratives—the grand, large-scale theories and philosophies of the world, science, history, progress and freedom. These narratives are the stories our culture tells itself to legitimise its practices and beliefs, and which purport to grasp the truth, including the truth about society and—drawing on Wittgenstein—its language games.[8] In his critique, Lyotard tells us: ‘In contemporary society and culture—postindustrial society, postmodern culture—the question of the legitimation of knowledge is formulated in different terms. The grand narrative has lost its credibility, regardless of what mode of unification it uses, regardless of whether it is a speculative narrative or a narrative of emancipation.’[9]

These grand narratives are unable to contain our diversity, our incommensurable beliefs and us. Hence, for example, Lyotard rejects totalising social theories that are reductionist, simplistic and even ‘terroristic’.[10]

Similarly, American sociologist Richard Madsen and his colleagues warn us that:

There is a painful contradiction between what modernity promises and what it delivers. It promises—indeed demands—intellectual, moral, and political emancipation. Yet it delivers an iron cage…Morality, religion, and the whole normative dimension of social life get either pushed away or explained away…What goes typically unnoticed and unremarked [on] is how this apparent straightforward approach locks its adherents into a closed universe of diminished meaning and possibility.[11]

Of particular concern to this account is the extent to which the attempt by libertarian philosophers in the Enlightenment tradition to legislate a particular negative interpretation of individual freedom and their adulation of markets are threatening to again enslave us all.

Importantly, one of the defining moments of recent consciousness has been the recognition that the social and religious order is a human construction for which we ultimately have to take responsibility. This recognition prompted leading thinkers such as Friedrich Nietzsche (1844–1900), Michel Foucault (1926–84), Jacques Derrida (1930–2004) and Pierre Bourdieu (1930–2002) to attempt to dismantle the values defining modernity itself: reason, freedom and the autonomous self. Nietzsche—perhaps the first of the existentialist philosophers—was highly critical of contemporary German culture, dogmatic systems in philosophy including those of Plato and Kant, claims to truth and God as a single, ultimate, judgemental authority. In this spirit of questioning, he challenged the foundations of Christianity and traditional morality. He saw these dogmatic systems as inventions and conventions providing repose, security and consistency.[12] Foucault challenges the ability of the human sciences to offer universal scientific truths about human nature. He sees those claims as often being mere expressions of ethical and political commitments of a particular society—the outcome of contingent historical forces rather than scientifically grounded truths.[13] Foucault has, therefore, undermined the claims of the human sciences to neutrality by showing how the drive towards freedom and autonomy is an extension and deepening of practices of power.[14] Derrida, for his part, questioned the self-evident, logic and non-judgemental character of the dichotomies by which we live, such as legitimate/illegitimate, rational/irrational, fact/fiction or observation/imagination.[15] He sees these dichotomies as being defined culturally and historically and even reliant on one another, rather than being conceptual absolutes with stable meanings. Similarly, Bourdieu attempts to show that the things that are sacred to modern elites are social constructions and he tries to expose the hidden means by which the powerful and wealthy assert superiority[16] and reproduce themselves.

In summary, this questioning has discredited the story that has been told about knowledge since the Enlightenment. This is not to deny the achievements of the past few centuries in increasing our understanding of the natural world and in freeing us from some of the grosser superstitions that worried the medieval mind and which provided the justification for many unspeakable crimes—particularly at the hands of the Christian Church. Neither is it intended to diminish the enormous contribution of liberal and socialist thinkers and activists in the Enlightenment tradition in advancing the emancipation of ordinary citizens—a hope Habermas continues to entertain. Nor is it intended to deny the enormous improvement in average living standards in recent centuries. Nevertheless, and paradoxically, the Enlightenment, in its advocacy of radical scepticism in the cause of human emancipation, is seen increasingly as being bankrupt,[17] as having undermined its own story[18] and as having created a Kafka–Beckett-like state of absurdity and existential isolation.[19] Having undermined belief in God, society and tradition, radical scepticism has undermined belief in belief itself, including belief in reason.

In the process, most contemporary philosophers have rejected the views of Descartes, the father of modern philosophy, and his quest for an Archimedean fixed and immovable point on which to ground our knowledge—a grounding he thought he had found in his existence and his ability to think, certified by a non-deceiving God.[20] This just wouldn’t do in the absence of a non-deceiving God and in the face of the realisation that the language of argument presupposed what he was trying to prove. What is more, that language is a continuing social construct. Nor will it do to erect reason or nature as God substitutes. The moment one admits God, again, one also admits revelation as the source of knowledge superior to reason.

In relatively recent times, the search for absolute knowledge manifested itself in an extreme form in logical positivism, which viewed science as the ultimate arbiter of truth in a heroic struggle against ignorance and superstition.[21] As such, it was a utopian attempt to legislate what constituted scientific knowledge. Such scientific truth, it was claimed, was discoverable only by the enlightened mind cleansed of metaphysical beliefs. It could then set us free from the shackles of tradition and its associated institutions and build a new and better world. As we saw earlier, this optimism reflected a strong faith in progress and the perfectibility of humankind.

French philosopher Claude Saint-Simon (1760–1825), writing in the Cartesian tradition, had great faith in science and in industrialisation and advocated the reorganisation of society on positive scientific lines. Nevertheless, Auguste Comte (1798–1857), his secretary, is usually seen as the father of positivism. Comte had a similar faith in the power of science, particularly sociology, to advance human civilisation. He built his philosophy of positivism as a universal system around that faith. The logical positivists centred on the Vienna Circle of the 1920s and 1930s, building on Comte’s ideas, sought, in particular, to differentiate science from other thinking. They claimed that it was only through positivist scientific thought that a true view of the social and physical world was possible. This is truly a foundational project in the Enlightenment tradition.[22] This story involved four main beliefs:

  • the only things that are real are the things that are observable

  • all general names are only summary abbreviations for the numerous objects in reality

  • it is possible to distinguish between facts and values and consequently to have a social science that is factual and devoid of values

  • there is a unity of method between the natural and social sciences.[23]

These claims exercised a profound influence on philosophy and the philosophy of science from the 1920s to the 1950s and in the associated idealisation of formal theory. Most contemporary philosophers have, however, rejected logical positivism. In the words of leading contemporary Australian philosopher John Passmore, ‘Logical Positivism…is dead, or as dead as a philosophical movement ever becomes.’[24]

Philosopher of science Karl Popper (1902–94) even claimed to have done the killing:[25]

[T]hroughout my life I have combated positivist epistemology, under the name of ‘positivism’…I have fought against the aping of the natural sciences by the social sciences, and I have fought for the doctrine that positivist epistemological is inadequate even in its analysis of the natural sciences which, in fact, are not ‘careful generalisations from observations’, as it is usually believed, but are essentially speculative and daring; moreover, I have taught, for more than thirty-eight years, that all observations are theory-impregnated, and that their main function is to check and refute, rather than to prove, our theories. Finally I have not only stressed the meaningfulness of metaphysical assertions and the fact that I am myself a metaphysical realist, but I have also analysed the important historical role played by metaphysics in the formation of scientific theories.[26]

Two other leading philosophers, Willard Quine (1908–2000) and Thomas Kuhn (1922–96), are often also given the credit for killing positivism; and the foundational idea that philosophy can determine on a priori grounds the standards for scientific knowledge died with it. Indeed, the positivist ideal of a universal and substantive ‘logic of science’ was simply misguided.[27] Similarly, positivism’s attempt to divorce science from metaphysical beliefs—beliefs that attempt to describe the ultimate nature of reality—has failed. We will go into this is in a little more detail shortly.

This turning away from the Enlightenment and modernity involves a rejection of the claimed privileged status of science and of rationality, the belief in universals—absolute truths, universal values and a common human nature—and in progress and in the perfectibility of humankind. In particular, there can be no final appeal from an objective viewpoint to an attainable ultimate truth.[28]

Importantly, respected American cultural historian Richard Tarnas believes a great epochal transformation comparable with that of the Enlightenment is occurring in the Western mind in reaction to the dissolution of the foundations of the modern world-view, which has left us bereft of certainties.[29] Contemporary Australian theologian Duncan Reid sums up this dissolution very well.[30] For Reid, this paradigm shift has two interrelated aspects. The first involves a shift away from Western political, cultural and economic predominance. The realisation that other cultures—which are also enjoying rapid improvements in material welfare—have fundamentally different perspectives on the human condition has led to a questioning of our fundamental cultural assumptions. This shift is accompanied by a change within the Western scientific world-view and a sense of disillusionment with the technology it has given us. In particular, the Newtonian mechanistic world-view has been undermined because Newtonian physics has been discredited completely as an answer to any fundamental question about the nature of the world.[31] That view is not just limited as an explanation of physical reality; it is fundamentally flawed, however much it might continue to serve as a convenient fiction in describing the behaviour of relatively large objects—the sorts of objects that we perceive around us.

At a deeper level, physics has come to understand reality, not in terms of atomism—discrete particles that can be described independently of all others—but as a complete network, the most basic elements of which are not entities or substances, but relationships:

All entities, even inanimate entities, constituted as they were by their ‘experiences’ of being in relationship, could now be understood as subjects which adapt to their environment. Reality was no longer to be ‘grasped’ solely by analysis and reduction to component parts. Understanding had to be reinterpreted in a less dominating, more participatory way, as the perception of parts interacting in the context of an indivisible totality.[32]

No longer are the properties of things seen as being fixed absolutely with respect to some unchanging background, rather they arise from interactions and relationships.[33] As renowned mathematical physicist Roger Penrose (b. 1931) confirms, the fundamental entities in physics are not events in space and time but rather processes, and space and time emerge only at a secondary level.[34] Thus the idea that ‘science’ can view the world from outside—as a disembodied observer—has been discredited. Similarly, the reductionist method—in which phenomena are simplified until they can be described by simple mathematical equations—is undermined. Even the Platonic view of natural laws as eternal and absolute has been questioned, along with any simple idea of causality.[35]

The second aspect of this paradigm shift has been a crisis of meaning in Western epistemology:

The whole Western philosophical tradition had worked on the assumption that knowledge…was accessible through language. But now the word…has been unseated from its place of honour. Language, rather than an inadequate but in principle perfectible attempt to refer to some intelligible metaphysical reality beyond itself, has come to be seen as a self-contained system in which reference is to the system itself.[36]

The common thread in these two crises is the loss of any sense of objective certainty in the physical sciences or in political–cultural matters. As a consequence, we have to deal with a new and profound sense of historical relativism and the belief that there can be no overarching ‘absolute’ or unifying principle that can reconcile all the relativities of human thought and experience. Additionally, we are shifting from a particular privileged explanatory paradigm—the Newtonian world-view—to a world in which there is no privileged perspective and no privileged archetypal story, a world full potentially of existential uncertainty, even terror.

More optimistically, for American pragmatist Richard Bernstein, these crises are creating a public space in which basic questions about the human condition can be raised anew.[37] Specifically, Bernstein believes that there is something wrong with the ways in which questions in relation to rationality have been posed in the past, and he points to a need for the conversation to move beyond objectivism and relativism. He believes that what he calls the attacks on the tyranny of method open the way to a new conversation on rationality and to ‘a more historically situated, non algorithmic, flexible understanding of human rationality, one which highlights the tacit dimension of human judgment and imagination and is sensitive to the unsuspected contingencies and genuine novelties encountered in particular situations’.[38]

Similarly, Tarnas tells us that the dissolving of old assumptions and categories could permit the emergence of entirely new prospects for conceptual and existential reintegration with richer interpretive vocabularies and more profound narrative coherencies.[39] He warns us, however, that in the absence of any viable, embracing cultural vision, the old assumptions remain in force, providing an increasingly unworkable and dangerous blueprint for human thought and activity.