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The hidden deficit of economic theories PDF Print E-mail
The Labour Movement-Economy
2_Kemerovo_krifo-elleimaBoth the theory of 'free markets' and that of Marxism have idealised the aspect on which they have laid emphasis. They have overlooked the fact that, in order to work, their theory must take into account the human psyche in its entirety.

Idealisation in the theory of 'free markets'
Chronologically, the first fundamental error was that of Adam Smith. The theory of the 'invisible hand' contributed to the window-dressing of an automated system of economy. It adopted utopian prerequisites for the smooth operation of the market system; it was based on the assumption that the competition of private enterprise, through the motive of self-interest and all its strategic techniques, is capable of ensuring the good as a 'invisible hand'.[i] Over this point there is an idealisation, an illusion, a tendency of theory towards an absolute implementation, that is, a totalitarianism. This totalitarianism has an enormous political, historical, and cultural cost, and is compatible with those who work together for the maintenance of a system which can only euphemistically be said to be that of a 'free market'.

A real free market has never existed, nor have there been up to the present the possibilities and preconditions which would permit and support the creation and operation of such a system. What there has been is a feudal starting-point and a commercial and industrial nomenklatura of wealth, a leisure class[ii] in essence, which was privileged in terms of institutions, property, and business. The nomenklatura of wealth made use definitively of the privileged position which its strength allowed it, guarding the circulation of goods[iii] within the boundaries of its interests, buying politicians, states, and groups in society, even from among its opponents.

What we have to do with, then, is a theory defective from its start, with an inner totalitarianism, which acknowledged only one side of the reality of the matter, in spite of any critical observations its creator may have made as he honestly came into contact with this side of the reality.

The anthropological factor
Just like any other current of thought, the doctrine of free markets encountered its obstacles and limitations in the field of practice and implementation too. The policy of the redistribution of wealth through institutions - such as the taxation system, tax expenses, the reform and restructuring processes - was constantly entrapped by the acuteness of a conflict and by the anthropological deficit of the rising wealthy, the rising social strata and classes, which, unfortunately, set as a primary principle of all the love of money and of the power which its acquisition entails.

It was the same anthropological factor which prompted oppressed Italy, immediately after its liberation, to forget the experience of a lack of freedom and to hasten to proclaim its own mare nostrum.

It is by this anthropological factor that problems are created. Not including in the reckoning the anthropological foundation, by any theory, proves to be a fundamental deficit on its part, because it excludes from its horizon a truly progressive and viable plan. Wherever the ignoring of the anthropological factor is encountered, idealisations develop, together with a fruitless critical radicalism or else narcissism.

Idealisation in Marxist theory
The ignoring of the anthropological factor was the reason why the first wave of the economic change of the Bolshevik revolution was a failure, and why, necessarily, it was followed by the New Economy Policy, advocated by Lenin, the great inspirer of the revolution.

Thus we arrive at Marxist socialist theory, which was also forced to perform an idealisation, in its efforts to acquire persuasiveness. It ignored the role of the human psyche and its involvement with competitiveness and the deep-seated tendency of man towards individualism and wealth. It did not examine the anthropological, psychological, and cultural depths of the systems which it attempted to overthrow. It concentrated its dynamic on the complete overthrow of the institution of property, as a primary means of breaking up the cohesion of the two dominant classes, which, in its opinion, were recycling the economic system. These two classes consisted of:

a. the alienated petits / middle-class bourgeois, who later, during the Russian Revolution, had to co-exist for a long period and on certain, controlled, terms, with the peasants, and

b. the very powerful wealthy, who raised the major issue. They were the main, paternalistic, strategic shaper of the game who laid down its rules. This state of affairs was supported by all those who had found themselves a niche in the system, on their own scale, or who expected to have the horizon of the economic and social hierarchy open, so as to join their own elite, as well as those who did business through the dream quality of their desire, and through their entrepreneurial scope and safeguarded fortunes in life.

This latter doctrine too was entrapped in its own theoretical idealisation and mutated into a totalitarianism, as it was unable to remain unaffected by anthropological narcissism. Although it could become a political lever for changes and the complementing of developments in the systems, this could also be said - with certain qualifications - of Adam Smith's Wealth of Nations.

Here it would be an omission not to acknowledge the importance of the critical approach of the work The Great Transformation by Polanyi.[iv] Similarly, we should be aware of the problématiques behind the dialogue over the successes and failures of Marxism and its contribution to human civilisation. We can see the mark of this history stoically impressed both on economic, social, political and cultural failures, and on certain serious successes. We can, therefore, acknowledge to Marxism a role of complementary balance, which, however, came about in conditions of conflict, power, and self-interest. The corruption of power in the case of a nomenklatura which held power and which had transferred the field of its power from the economic cycle of surplus value to political and communications surplus value became more acute. It had, furthermore, operated also as a holder of collective property, and, given its political accessibility, as an intermediary, as a representative of collectivity - and this was a form of fundamental totalitarianism.[v]

Marxist theory has overlooked the fact that man - at the present point of his evolution - in order to work effectively, needs the stimulus of the principle of competitiveness. The theory of 'free markets', on the other hand, has ignored the neoplastic tendencies of greed, thus being contemptuous of the fact that in order for competitiveness to yield results, its institutional state regulation which will protect common goods and human rights is required.

The results are evident.

'Existent socialism', in despising the value of the principle of competitiveness,[vi] has not been able to provide the human psyche with adequate incentives for effective work and has not been able to stand up to the competition in the economy and equipment which the West has imposed upon it.

'Existent' free markets have not been able to 'self-regulate' and the uncontrolled tendency towards greed has derailed the global economy with the well-known results which we are experiencing after the crisis in the stock markets of 2008.

In both cases, the idealisation attempted has not succeeded in hiding the integration deficit created by ignoring the importance of the human factor for their viability.

Ioannis Zisis, Writer

Photo from Wikimedia

[i] Zisis, Ioannis, Economic Theories and Reality [in Greek].
Veblen, Thorstein, The Theory of the Leisure Class [Greek version], publ. Kalvos, 1982.
Zisis, Ioannis, Redistribution of Resources: Utopia or a Mature Demand? [in Greek].
Pantazis, Apostolos, The 'Historical Functionalism' of Karl Polanyi [in Greek].
Moutsopoulou, Ioanna, The State in the Free Economy: A State for a few or a State for All ?
Zisis, Ioannis, Competitiveness and Regulation: The Misunderstanding of an Inevitable Relation [in Greek].

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