Heterodox economics movement

Preface

The Heterodox Tradition in Economics began when Jean-Jacques Rousseau , a Swiss political philosopher of the Enlightenment and purported father of the French Revolution, wrote his book Discourse on Political Economy (Economie Politique) (1755) which became the entry on the subject in Diderot's Encyclopedie.

Utopians and Socialists

Rousseauvian Socialism

Jean-Jacques Rousseau, 1712-1788

Jean-Jacques Rousseau wrote Discourse on Political Economy (1755) , an article which contains no obvious economic theory and is merely a pre-taste of the political philosophy he was to lay out in his Social Contract (1762). His earlier polemical Discourse on Inequality (1754) - which argued that civilization had destroyed man's "natural goodness" and thus was the source on inequality - is prescient of the Marxian doctrine of "alienation".

Rousseau's work had little direct impact on economics, but exerted a substantial indirect influence. He shared with his fellow Enlightenment philosophers the faith in the existence of a "natural state" of society - which one could thereby extend to social equilibrium and "natural value" concepts - which were very much ingrained in the thinking of the Physiocrats and Adam Smith. His appeal to this state via his "natural man", the "noble savage" is reminiscent of the analogies formed in modern economics.

A thorough pessimist about existing human society, Rousseau recognized that this "natural state" was perverted by "civilization" and that the appetites and motivations of civilized man had been consequently corrupted and constructed by his interaction with society - "Man is born free and is everywhere in chains", he wrote in his famous opening to the Social Contract

The "natural state", Rousseau claimed, could only be achieved via wholesale social reform which envisioned a collective state with extra-personal dedication to a "General Will"''. Only in such a state, Rousseau asserted, could the true "natural man" exist and be truly free. It is these last observations that make Rousseau the father of Socialism (utopian and otherwise) - and earned him much emnity from later anti-Socialists such as Hayek

His publications got him arrested and his books were burned throughout France. He ran off to England, being hosted and supported by David Hume where he wrote his polemical Letters from the Mountain Soon he returned to France, where he wandered in poverty until his death in 1778.

Jean-Charles-Léonard Simonde de Sismondi, 1773-1842

Jean-Charles-Léonard Simonde de Sismondi was a French historian, an early socialist and great rival of Jean-Baptiste Say and the French Liberal School. Sismondi was against the capitalist industrial system, which he viewed as being detrimental to the interests of the poor and particularly prone to crisis brought by an insufficient general demand for goods.

His underconsumption thesis was shared by Robert Malthus, and sparked off the General Glut Controversy of the 1820s where their theories were pitted against those of Say, Ricardo and the Classicals.

Sismondi wrote, among other books, Nouveaux principes d'économie politique ou De la richesse dans ses rapports avec la population , Political Economy , Examen de la Constitution françoise (1815).

Utopian Socialism

St. Thomas More 1477-78? - 1535

St. Thomas More, saint, knight, Lord Chancellor of England, author and martyr, was born in London, 7 February, 1477-78; executed at Tower Hill, 6 July, 1535.

Of his writings the most famous is the Utopia

The volume recounts the fictitious travels of one Raphael Hythlodaye, a mythical character, who, in the course of a voyage to America, was left behind near Cape Frio and thence wandered on till he chanced upon the Island of Utopia ("nowhere") in which he found an ideal constitution in operation.

The whole work is really an exercise of the imagination with much brilliant satire upon the world of More's own day. Real persons, such as Peter Giles, Cardinal Morton, and More himself, take part in the dialogue with Hythlodaye, so that an air of reality pervades the whole which leaves the reader sadly puzzled to detect where truth ends and fiction begins, and has led not a few to take the book seriously. But this is precisely what More intended, and there can be no doubt that he would have been delighted at entrapping William Morris, who discovered in it a complete gospel of Socialism; or Cardinal Zigliara, who denounced it as "no less foolish than impious"; as he must have been with his own contemporaries who proposed to hire a ship and send out missionaries to his non-existent island. The book ran through a number of editions in the original Latin version and, within a few years, was translated into German, Italian, French, Dutch, Spanish, and English.

A collected edition of More's English works was published by William Rastell, his nephew, at London in 1557; it has never been reprinted and is now rare and costly. The first collected edition of the Latin Works appeared at Basle in 1563; a more complete collection was published at Louvain in 1565 and again in 1566. In 1689 the most complete edition of all appeared at Frankfort-on-Main, and Leipzig. Lakowski compiled a full bybliography of More's writtings, see: LAKOWSKI, Romuald Ian. A Bibliography of Thomas More's Utopia; Early Modern Literary Studies 1.2 (1995): 6.1-10

John Locke, 1632-1704

John Locke was an empiricist philosopher, natural law social thinker and Whig political theorist, John Locke was nonetheless a rather traditional Mercantilist in his economics. Locke developed a theory of money in his 1691 Considerations , after Child's promoted low interes rate.

Locke introduced the concept of "money as convention" as well as, following Bodin, the main elements of the QuantityTheory of Money, notably the concept of "velocity".

In his 1690 Treatises , he proposes a quite explicit labor theory of value. In his 1692 Consequences Locke adheres to a demand-based theory of value. John Law (1705) did much to clarify the confusion between them.

Locke also proposed a theory of property in his 1690 Treatises . The right to property, Locke claims, is derived from the labor of those who work it. More specifically, he perceives that as "labor" is naturally "owned" by the person in whom it is embodied, then consequently anything that labor is applied to, is similarly "owned" by the laborer -- a rather proto-Marxian notion. Locke's "natural labor theory of property" stands in stark contrast to that of Hobbes, who conceived of property merely as a State guarantee, and of Grotius, who contended that property emerges from social consent.

Robert Owen, 1771-1858

Robert Owen, an utopian socialist, founded the famous New Lanark Mills in Scotland as an example of the viability of co-operative factory communities.

Many industrialists actually visited these "model factories" and some even adopted parts of Owen's system. Owen attempted to extend these into agriculture - advocating collective farming, as in New Harmony, Indiana. Although most of these efforts failed, he continued on his social work - becoming the head of one of the largest trade union federations in Britain in 1843.

Étienne Cabet, 1788-1856

Étienne Cabet was a lawyer and journalist and a politician of the left-wing newspaper, La Populaire. His political activities led to his exile in England, after being condemned to death in 1834. He published Lettres sur la crise actuelle, six letters in one volume.

In his 1839 utopian novel, Voyage en Icarie Cabet introduces communism as the greatest realization of democracy and the direct descendent of Christian principles.

François-Marie-Charles Fourier, 1772-1837

"Le bonheur ne consiste qu'à satisfaire ses passions... Le bonheur, sur lequel on a tant raisonné ou plutôt tant déraisonné, consiste à avoir beaucoup de passions et beaucoup de moyens de les satisfaire." Fourier

Charles Fourier, a French socialist philosopher, is the creator of Fourierism, a moral system of social organization based upon what he called the passional attractions. Fourier was an outright utopian: anti-state, anti-industry, anti-liberal, anti-competition and anti-urban He distanced himself from the socialists who wanted the abolition of private property.

A contemporary of Saint-Simon, the "half mad" Fourier envisaged a utopian society in "natural harmony" with the cosmos that could be achieved by non-violent means. He advocated the setting up phalanxes, a type of production and consumption co-operative enterprise or society. Through his main publications and the monthly review Réforme industrietlle and the daily newspaper Démocratie pacifique, Fourier collected numerous followers, many of whom attempted (and failed) at setting up these mini-societies. He was highly disliked by the Marxians.

In the United States, Fourierism was introduced to the American public in 1840 when a New Yorker named Albert Brisbane published a compendium of Fourier's writings entitled Social Destiny of Man: or Association and Reorganization of Industry . Brisbane also posted a column in The New York Tribune in March of 1842 and it reached the Transcendentalists in particular with Emerson's essay on "Fourierism and Socialists" .

Fourier developed his ideas in the following publications: Théorie des quatre mouvements et des destinées générales, 1808, in-8°; Traité de l'association domestique et agricole, Paris, 1822, 2 vol. in-8°; Sommaire de la théorie d'association agricole, ou attraction industrielle, Besançon, 1828, in-8°; Le Nouveau monde industriel, ou invention du procédé d'industrie attrayante et combinée, distribuée en séries passionnées, Paris, 1831, in-8°: La Fausse Industrie morcelée, répugnante, mensongère, et l'antidote, l'industrie naturelle combinée, attrayante, véridique, donnant quadruple produit, Paris, 1835-36, 2 vol. in-12.

Ricardian Socialism

Introduction

The Classical Labor Theory of Value:

Adam Smith stated: "The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.... Labour was the first price, the original purchase-money that was paid for all things." However Smith's formulation was not very clear cut: he also said that the value of a commodity in one's possession as consisting of "the quantity of the labour which he can command...." Smith, on other passages, explained the market price of labor as the source of its effect on exchange value.

David Ricardo, in his Principles of Political Economy and Taxation cleared Smith's early inconsistencies: "The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labour which is necessary for its production, and not as the greater or less compensation which is paid for that labour".

The emerging socialist movement seized on the political implications of this conclusion.

"So if cloth or cotton goods be divided between the workman and his employer, the larger the proportion given to the former, the less remains for the latter," socialists began to claim. This gave origin to the movement called "Ricardian Socialists".

Engels said:

"Insofar as modern socialism, no matter of what tendency, starts out from bourgeois political economy, it almost without exception takes up the Ricardian theory of value. The two propositions which Ricardo proclaimed in 1817 right at the beginning of his Principles, 1) that the value of any commodity is purely and solely determined by the quantity of labour required for its production, and 2) that the product of the entire social labor is divided among the three classes: landowners (rent), capitalists (profit), and workers (wages)--these two propositions had ever since 1821 been utilized in England for socialist conclusions, and in part with such pointedness and resolution that this literature, which had then almost been forgotten and was to a large extent only rediscovered by Marx, remained surpassed until the appearance of Capital.

"The actual extent to which Marx's theory of value is a straightforward outgrowth of Ricardo's, and to which it was a preexisting Hegelian philosophy with Ricardian elements grafted on, is an issue in dispute.7 But for the present purpose, we will treat Marx's theory of value as relevant to our study to the extent that it is amenable to a Ricardian approach."

Dr. Charles Hall, 1745-1825

Dr. Charles Hall on his book The Effects of Civilization on the People in European States (1805), one of the earliest works of British socialism, took the Ricardian labor theory of value to its logical extreme - i.e. the concept of labor exploitation.

Hall draws a contrast between civilization and savagery, and becomes immediately struck by the greater inequalities in the former. Contemporary socialists often misquoted his claims, exagerating and inventing for effect. (e.g. only 1/8th of total product was kept by labor).

Thomas Hodgskin, 1787-1869

Thomas Hodgskin was on of the earliest anarchists. On his book Popular Political Economy (1828), perhaps the best textbook in socialist economics at the time, Hodgskin took the Ricardian labor theory of value to its exploitation logic, but preferred to criticize the social organization rather than recommend any utopian visions for it.

Curiously Hodgskin later became involved with "The Economist", the famous British weekly publication, founded in 1843 by a group of Manchester's textile industrialists, a strong advocate of classic liberalism and laisse-faire economic policies.

John Gray, 1799-1850

John Gray, a failed businessman, was among the first Ricardian Socialists to stress the "human element" in the destructiveness of competition. He recommended co-operative institutions for exchange and production, as a substitute method.

Gray wrote Lecture on Human Happiness (1825), The Social System (1831), Remedy for the Distress of Nature (1842) and Money"" (1848).

John Francis Bray, 1809-1895

John Francis Bray turned to the Ricardian labor exploitation thesis and recommended the setting up of worker co-operatives in a communal property system. Bray wrote Labour's Wrongs and Labour's Remedy (1839) and A Voyage from Utopia (18??).

Saint-Simonism

Claude Henri de Rouvroy, Comte de Saint-Simon, 1760-1825

Henri de Saint-Simon is the founder of the "Saint-Simonian" movement, a type of semi-mystical "Christian-Scientific" socialism that pervaded the XIXth Century.

Saint-Simon contibutions were crucial for the development of the social sciences: his call for a "science of society" on the same standing as the natural sciences, was highly influential on Auguste Comte and the sociologists and was responsible for the initial scientific pretensions of economics. Thomas Carlyle, Michel Chevalier, John Stuart Mill and Léon Walras were adepts of Saint-Simonism.

Saint-Simon proposed the reorganization of society with an elite of philosophers, engineers and scientists leading a process of industrialization tamed by their "rational" Christian-Humanism. His advocacy of a "New Christianity", a secular humanist religion, was to have scientists as priests. This was actually taken up by two of his followers -- Barthelemy-Prosper Enfantin (1796-1864) and Saint-Amand Bazard (1791-1832) -- and the Simonist movement became influenced by bizarre mysticism and ritual.

Saint-Simon's vision was highly influential on French society ( and more generally, throughout Europe) all through the 19th Century, including the Emperor Napoleon III. The political highwater-mark of Saint-Simonism was perhaps the French July Revolution of 1830. But the influence of Saint-Simonism on future versions of socialism was more pronounced. Saint-Simon's "scientism" was particularly influential on the development of Marxian doctrine -- and, for that same reason, Saint-Simon was condemned by Hayek (1952).

Saint-Simon was one of the first to identify the process of "industrialization" in Europe, but his concern with the laboring classes was more reserved, although he streesed the "unnaturalness" of unemployment. In general, Saint-Simon's elitism distinguished him from the later more "labor-orientated" socialist thinkers -- notably those radicalized by the 1848 Revolution, such as Blanc and Proudhon.

Saint-Simon's enthusiasm for the "spontaneous harmony" of the "organism" of industrial society has led some to claim that he was really a Classical Liberal in disguise. The Saint-Simonian critique on private property was due more to his followers (notably Enfantin) than himself. But Saint-Simon was clearly a dirigiste in economic policy.

The influence of Saint-Simonism on socialism was pronounced. Saint-Simon's "scientism" was particularly influential on the development of Marxian doctrine, what made Saint-Simon to be condemned by Hayek (1952).

Revolutionary Anarcho-Socialism

Pierre-Joseph Proudhon, 1809-1865

Pierre-Joseph Proudhon was a French socialist-anarchist. To his famous own question: "What is property", title of his book, , Proudhon would answer: "property is theft".

Proudhon proposed a complete reorganization of society that abolished most of its "trappings", including money and the state itself. He advocated communitarianism as the form of reorganization of society. He argued that "goodwill" would emerge naturally once these "social constructs" were gone. Marx was one of his most severe critics and wrote Poverty of Philosophy (1847) directly against Proudhon. Léon Walras (1860) also criticized Proudhon.

Jean-Joseph Louis Blanc, 1813-1882

Jean-Joseph Louis Blanc was a radical French socialist. A journalist, Louis Blanc was greatly responsible for unleashing the 1848 Revolution with his 1841 account of the corruption of the orleanist regime. By 1848 Blanc's issued a pamphlet which called for state-fostered industrial employment via producer cooperatives that would replace private industry.

Blanc expressed the communist ideal of "from each according to his ability, to each according to his needs", and converted the rebellious Parisian masses to the socialist cause, giving the whole revolution a decidedly more labor-oriented tone.

Blanc was talked by the working classes into seating in the provisional government, a post where he stood very uncomfortably between republicans like Lamartine and radicals like Blanqui, being distrusted by both.

After the fall of the revolutionary government Blanc remained exiled to Britain, until 1871. Gradually he tempered his radicalism, calling only for State involvement in social programs and income redistribution. Blanc's ideas were to be very influential on later State socialists like Lassalle. Blanc refused to endorse the Paris Commune of 1870-1.

Blanc publisehd several books, some very large. Among his works we can mention: L'Organisation du travail - excerpts. (1839), Lettre sur la terreur, Histoire de dix ans : 1830-1840, Vol I to Vol. V (1841), Histoire de la révolution française, 12 vols, 1847-62, Le Droit au Travail (1848), Cathécisme des socialistes (1849), La révolution de Février au Luxembourg (1849), Lettres a l'Angleterre, Vol. I , Vol. II (1863), L'État et la commune (1866), Histoire de la révolution de 1848 (1870), Histoire de la Constitution du 25 février 1875 (1882) and Quelques vérités économiques (1911).

Mikhail Alexandrovich Bakunin, 1814-1876

Bakunin was an anarchist and a well-known Russian revolutionary. He is and often considered to be one of the "fathers" of modern anarchism.

Born in 1814 in Tsarist Russia, Bakunin quickly developed a burning hatred of injustice. At age 21 he resigned from the army and began to mix in democratic circles. Nine years later he met up with radicals like Proudhon and Marx in Paris. At this point he had formulated a theory which saw freedom being achieved by a general rising, linked to revolutions in the subject nations.

His campaigns for "democracy" and "anti-colonialism" made him "public enemy number one" in the eyes of most European monarchies. In 1848 he was expelled from France for supporting the independence for Poland.

Bakunin played a leading role in the May insurrection in Dresden where he was arrested and sentenced to death. The Austrian monarchy also wanted him, so he was extradited and again sentenced to death. But before he could be executed Russia demanded his extradition and he spent the following six years jailed without trial in the Peter and Paul Fortress an then was exiled to Siberia, from where he escaped in 1861.

As his ideas developed further and Bakunin became an exponent of anarchism. While agreeing with much of marxian economic theory, he rejected Marx's authoritarian politics he was responsible for the major division within the "International". His disagreements with Marx caused him to be expelled form the Communist party.

While Marx proposed that socialism could be built by taking over the state, Bakunin looked forward to its "destruction" and the creation of a new society based on free federations of free workers. Taking over the state, Bakunin reasoned, would only replace the old tyrans with new ones, a phenomenon the Russian Revolution of 1917 confirmed.

He cautioned the intelectuals against trying to take power and create a "dictatorship of the proletariat". The notion that a small group of people, no matter how well meaning, could execute a "coup d'etat" was for Bakunin a heresy against common sense. More than sixty years before the Russian revolution he warned that a new class of intellectuals and semi-intellectuals might seek to step into the shoes of the landlords and bosses, and deny working people their freedom.

For Bakunin governments are the means by which a minority rules. As "political power", for him, meant the concentration of authority in a few hands, he declared, it must be abolished. Instead there must be a "social revolution" which will change the relationship between people and place power in the hands of the masses through their own federation of voluntary organisations.

A political activist and revolutionary, Bakunin never found enoug time to finish writing a single book. His legacy is composed mostly of manifests and small unfinished works.

Marxist Socialism

Marxist Socialism was a movement mainly led by Friedrich Engels (1820-1895), Karl Kautsky and the Marxian School, Georges Sorel (1847-1922) and G.D.H. Cole (1890-1959) based upon marxist economics.

"Marxist economics" is an economic theory of capitalism centered Marx's critical analysis of David Ricardo's theory of value.

"From the viewpoint of pure economic theory, Karl Marx can be regarded as a minor post-Ricardian". Paul Samuelson,The American Economic Review, March 1962, pp. 12-15

"Marxist socialism", or "socialism" as conceived by Marx himself, also called "mechanical socialism" supposes a class war, resting on the clear-cut distinction devised by Marx, and conceives a logically developed system of the control of the economy by government. For Marx the emergence of the new socialist society would be revolutionary.

This movement will be thoroughly analyzed in the article Marxist Socialism

Fabian socialists

Article under construction

FABIANISM is the doctrine of the Fabian Society , a small but influential group of British socialists. This society grew out of the Fellowship of the New Life, founded in 1883 which looked to ethical reform and utopian community making for the regeneration of society. A group which included Frank Podmore and Edward R. Pease broke away from the Fellowship to found the Fabian Society in 1883. George Bernard Shaw joined in 1884; Sidney Webb in 1885.

The essence of Fabian doctrine lay in Sidney Webb's theory of the continuity of development from capitalism to socialism. Webb argued that the economic position of the workers had improved in the nineteenth century, was still improving and might be expected to continue to improve. Fabians literature seem often to be unconscious of the relevance of class distinctions and shows no belief at all in a class struggle as the instrument of change.

The "Fabians" avoided the revolutionary tactics of more orthodox Marxians. The middle-class Fabians were more directly involved with politics and practical gains - through contacts not only in the "International Labor Party", trade unions and cooperative movements but also throughout the entire British political apparatus (Liberals and Tories included). "Fabians" were named after Fabius Cunctator, the famous Roman general which opposed Hannibal as they were "biding their time" until they would "strike hard".

Fabians were the British counterpart of the German Marxian revisionists and influenced by the English Historical school. The "Fabian Society", an upper-middle-class intellectual group, emerged in 1884 as a strand of latter-day utopian socialism. They became known to the public firstly through Sidney Webb's Facts for Socialists (1884) and then through the famous Fabian Essays in Socialism

Sidney J. Webb and his wife, Beatrice Potter Webb (married 1892), "the Webbs" were at the core of the Fabian Society. They wrote numerous studies of industrial Britain, alternative economic arrangements (esp. cooperatives) and pamphlets for political reform. Their system was based on the Ricardian theory of rent which they applied to capital as well as land (and labor as well - their opposition to high labor incomes was also an issue). Their conclusion was that it was "the state's responsibility to acquire this rent". They were known "to combine an ounce of theory with a ton of practice".

Practice, for the Fabians, was to influence public opinion in the direction of their ideal. This was to be accomplished not through mass organization but rather by the selective education of the powerful "few". The "London School of Economics" (L.S.E.) was founded in 1895 by the Webbs.

The Fabians disintegrated in the 1930s for several of reasons. Among them we could mention that the Webbs' admiration of Soviet Russia displeased to too many in their group, the ascendancy of the British Labour Party on the back of trade union activism had rendered the Fabians superfluous, they lost control of the L.S.E. when Cannan and Robbins turned it on a decidedly Jevonian track and finally their intellectual influence during the 1930s was overshadowed by that of Keynes.

Bibliography

• HAYEK, F. A. The Road to Serfdom: Text and Documents Edited by Bruce Caldwell. Foreword by Bruce Caldwell. Introduction by Bruce Caldwell. First published in 1944. The Collected Works of F. A. Hayek, The University of Chicago Press, 2007. ISBN 0226320545
• SAINT SIMON, 'Du Systeme industriel', Oeuvres,
• SISMONDI, J.C.L. Simonde de, Nouveaux Principes d'Economie Politique ou de la Richesse dans ses Rapports avec la Population, 2 vols, Paris 1819.
• SHAW, G. Bernard. The Transition to Social Democracy, in: Fabian Essays in Socialism, ed. G. Bernard Shaw, American Edition Ed. by H.G. Wilshire, New York: The Humboldt Publishing Co., 1891

External Links

• ROUSSEAU, Jean-Jacques.Page at The History of Economic Thought Website
• STEDMAN-JONES, Gareth. Saint Simon and the liberal origins of the socialist critique of Political Economy. King's College, Cambridge University

• The London School of Economics at the HET website