The political economy of GFW Hegel – a review article

Citation

Klikauer, T. (2012), "The political economy of GFW Hegel – a review article", International Journal of Social Economics, Vol. 39 No. 7. https://doi.org/10.1108/ijse.2012.00639gaa.001

The political economy of GFW Hegel – a review article

Article Type: The political economy of GFW Hegel – a review article From: International Journal of Social Economics, Volume 39, Issue 7

Ethik und Ökonomie in Hegel’s Philosophie und in Modernen Wirtschaftsethischen Entwürfen (Ethics and Economy in Hegel’s Philosophy and in Modern Economical-Ethical Concepts)

Albena Neschen,Felix Meiner Press,Hamburg,2008,298 pp. index,ISBN 978-3-7873-1866-7 (hbk), (Hegel-Studies Supplement, Vol. 49)

Keywords: Philosophy, Hegel

Today, we need the Microsoft-corporation and the Dell- or Toshiba-corporation to write an article, we search the internet on the Google-corporation’s search engine. We can have breakfast with cornflakes made by the Kellogg’s-corporation and drink café made by the Nestle corporation. After that, we drive a car from another corporation and watch TV upon returning (News-Corporation or The British Broadcast Corporation). Hence, Korton’s question, When Corporations Rule the World? (1995) has already been answered (Rowland, 2006). Perhaps, Hegel was among the first philosophers who engaged with today’s key economic institution: die Korporation or the corporation (Nederman, 1987; Merrill, 2000; Ross, 2008; Neschen, pp. 205-9). Hegel reflected on the political economy of for-profit organisations that, even during the mid-nineteenth century, already carried connotations of what they were to become: today’s multi-national corporations in a world of globalisation (Bakan, 2004; Schrijvers, 2004; Bolchover, 2005; Jackall, 2006; Adonis, 2010). Then as today, corporations are part of the economy and with it they are part of ethics. This raises the first question: can corporations have ethics? Economist Friedman (1970), for example, thought:

[…] corporate executives’ responsibility is […] to make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom […] adding […] the only entities who can have responsibilities are individuals […] A business cannot have responsibilities. So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no, they do not.

From a pro-business perspective, corporations are not responsible for what they do – just the individuals inside them. In that way management believes to be able to relinquish moral responsibility (Klikauer, 2010). Inside the corporate belief-system, cases like Enron, World.Com, Bernie Madoff’s Ponzi Scheme, Exxon Valdez, Shell’s Brent Spar, Nike’s sweatshops, Nestle’s baby formula baby deaths, Thalidomide, BP’s oil spill, Union Carbide’s Bhopal and so on have nothing to do with corporations.

On the other hand, there is a non-business oriented and perhaps less ideological view that comes, for example, from a philosophical-ethical perspective. French (1979) answered the same question in the opposite way: corporations came into being through a legal fantasy that assumes they are like legal persons (Bakan, 2004). Everywhere, legal systems have aided corporate capitalism (Korton, 1995) by giving corporations a person-like legal status even though, unlike real people, corporations never die. But the legal fiction has serious and real consequences (Chomsky, 1999). Like real people, corporations can buy and sell commodities and property and have legal obligations which can, of course, be limited. Hence, business has invented the “.ltd” (limited) to limit their liability. But corporations are not only legal fictions and economic organisations with real consequences they are also moral entities and therefore carry moral responsibilities as outlined in Hegel’s Philosophy of Right, 1821).

While the institutional setup of Hegel’s nineteenth century corporations (guilds, professional, and industrial associations) are very different from today’s multi-national corporations (shareholder-value and profit-maximisation), both are positioned inside the sphere of political economy that operates under the same ethical principles enshrined in Hegel’s Sittlichkeit. Neschen does not seek to deliver a precise historical interpretation of the organisational-institutional configurations of Hegel’s corporations but an application of his ethics of Sittlichkeit to modern corporations (Ross, 2008; Schmidt am Busch, 2011). Like Hegel, Neschen (2008) argues that both are inseparably belonging to the sphere of Sittlichkeit (ethical life). In short and despite their legal fiction and pro-business ideologies such as Friedman’s “corporations can’t have morals” corporations in fact are moral entities. Actions corporations undertake impact on human beings and thereby they enter the arena of morality and moral philosophy.

The inextricable “ethics-economy” linkage is also an area of applied moral philosophy that has been most thoughtfully examined in Albena Neschen’s recent book. Neschen approaches the theme of Ethics and Economy in Hegel’s Philosophy in four chapters:

1. 1.

   Chapter one highlights “Economic wealth in the context of religion, ethics, and politics in the early phase of Hegelian philosophy” (1785-1797).

2. 2.

   The second part continues with “The economic sphere of needs and labour in Hegel’s concept of Sittlichkeit during his Jenaer Phase” (1801-1807; Levine, 2009).

3. 3.

   The third chapter is on “Ethical responsibility in bourgeois society in Hegel’s developed philosophy” followed by “Ethics and modern economy – Hegel’s Philosophy”.

The book concludes with On the Problems of an Ethical Foundation for the Economy.

The introduction states, “Hegel’s philosophy contains no answers for contemporary problems” (p. 13). If this were the case, one wonders why, for example, Hegel had 9,700,000 Google-hits in 2011? Why does the US Congress Library list no less than 137 books on Hegel in 2010 and 2011? Why does Hegel’s “Phenomenology” remain number 66 on the 100 Most Influential Books ever written (wikipedia.org) and why are there annual conferences in several countries discussing Hegel? It might be hard to explain Hegel’s ongoing popularity by simply viewing Hegel’s philosophy as philosophical history, or for the romantic reason of a never existent mid-nineteenth century distorted notion of Germany’s past (Zengotita, 2005), or by simply referring to the interest of a few isolated and marginalised Ivy-tower experts on a topic that has long passed its use-by-date. Perhaps, a more reasonable explanation for the enduring popularity of Hegel is in fact that people still refer to Hegel in search for answers.

When searching for “answers to contemporary problems”, it appears that Hegel remains surprisingly contemporary. Just four recent books on Hegel may provide further discomforting evidence for Neschen’s claim: Anderson (2009) has shown how Hegel’s ethics of recognition assists those oppressed in today’s society to emancipate themselves from structures of domination; Honneth (1995) provides useful insides into recognition and misrecognition inside current society; virtually the same applies to multicultural societies (Taylor, 1994), and to management (Klikauer, 2010). Nevertheless, Neschen is correct in saying that “in contrast to contemporary business ethics, Hegel does not consider ethical norms to be the foundation of liberal economy” (p. 15; Lichtheim, 1971; MacGregor, 1984). This is precisely why business ethics exists. It is an ideological cover for something that does not exist. Hence, The Servants of Power’s (Baritz, 1960; Brief, 2000) continuous ideological claim that business is ethical. Neschen is correct in pointing out that Hegel would disagree with this notion. Being the philosophy of freedom, Hegelian ethics cannot consider an economic system as ethical that is not based on human freedom but on instrumental rationality enshrined in means-ends, cost-benefit, the bottom line, cost-cutting, efficiency, value-adding, and shareholder-value, i.e. profit-maximisation (Magretta, 2002).

Hegel’s ethical notion of “universal freedom and equality of the Geist/mind” (p. 26) is contradictory to the present economic structure that has created substantial inequalities. Not surprising, “Hegel judged modern economic society (Ökonomiegesellschaft) as negative” (p. 34) viewing “the Volksgeist (people’s spirit) as alive during times of happiness when economic hardship and excessive inequalities of wealth are avoided” (p. 35). Both have accompanied Hegel’s liberal capitalism of the eighteenth and ninteenth century, they have accompanied twentieth century social-welfare capitalism, and they are still prevalent in today’s twenty-first century corporate capitalism. In fact, the inequalities between the global rich and poor and between the rich and poor inside many countries, as Hegel noticed, have widened (wikipedia.org/Gini). And so have income inequalities between CEO’s and workers. According to CNN.money.com, the CEO-worker wage gap was 525:1 in 2000. Already, Hegel warned of a society with two extremes, extreme poverty and exorbitant wealth (p. 35). Staggering levels of inequalities – Hegel’s extreme poverty and exorbitant wealth – appear to be an enduring feature of today’s political economy. The splitting of society into rich and poor, haves and have-nots, and owners and non-owners annihilates Sittlichkeit and prevents people from achieving ethical, mutual, and equal recognition (Honneth, 1995).

According to Neschen, Hegel critiques “the modern property-owning bourgeois with a sole interest directed towards securing and accumulating wealth” (p. 40). This creates two extremes. There is an ownership class that exists as shareholders (capitalists) and a petit-bourgeois class that is exposed to extraordinary levels of consumerism. The latter has even mutated into a form of sickness: Affluenza (Hamilton and Dennis, 2005). In other words, Hegel was right while Marx was wrong (Marx, 1843, 1890; Hyppolite, 1969; Aboulafia, 1978; Arthur, 1983; Andersen, 1990; Kedourie, 1995; Fraser, 1997; Laylock, 1999; Fine, 2001). Bourgeois society developed a so-called middle-class of petit-bourgeois consumerism. This class has taken up individualist and petit-bourgeois values such as selfishness. It failed to fulfil Marx’ prediction that a revolutionary proletariat will emerge that will fight against capitalism. What occurred was not a revolutionising of workers but a pacification of workers who have taken up middle-class values in a process that ended Berthold Brecht’s proletarian milieu (Brecht and Ottwald, 1932) as a Farewell to the Working Class (Gorz, 1982).

During the mid-nineteenth century Hegel and Marx could have never foreseen that roughly 100 years lager Fordist mass-production, and with it mass-consumption appeared. Nevertheless, Hegel and Marx were keen students of enlightenment philosophers and economists such as Adam Ferguson, David Hume, James Steuart, and professor of moral philosophy, Adam Smith (p. 42; Pack, 2010). Perhaps, even more than by British and Scottish Enlightenment philosophers and economists, Hegel was influenced by Rousseau’s “Discourse on the Origin and Basis of Inequality Among Men (1755) in which Rousseau warns against taxation without the people’s consent” (pp. 51 and 53). Today, Rousseau’s consent has been reduced to no more than a four-yearly ritual of ticking-a-box, commonly framed as elections. Rousseau alerted to one of the greatest failures of Hegel: the never mentioned issues of democracy!

In 1797, Hegel moved to Frankfurt which was, as it is now, “the city of the mercantile money aristocracy” (p. 55) where Hegel engaged in a fundamental critique of Kantian ethics arguing that Kant suppresses human needs and desires through artificial commandments (lebensfremde Gebote). This turns morality into something alien and dead (p. 53). Kantian categorical imperatives, for example, appeared to Hegel as lifeless as the so-called laws of capitalist exchanges. Both Kant’s categorical imperatives and liberal economic laws seemed to share a static notion of natural laws that were uncritically adopted into the realm of living human beings (Horkheimer, 1937). The pinnacle of this has been Adam Smith’s fantasy of an “invisible hand”. It represents perhaps one of the more striking products of nonsense produced by economists in an attempt to explain how individual selfishness can create economic welfare for all. Since this cannot be done, the illusion of an “invisible hand” was Smith’s ideological cover-up metaphor that eclipsed the inability of economic theory to explain the contradiction between selfishness and common welfare. While Adam Smith sought to masquerade this contradiction, Hegelian dialectics highlights it as a Sittlichkeit preventative fact. According to Neschen, Hegel argued that only when our political economy is truly supportive of an ethical system (das sittliche System) can Sittlichkeit be achieved.

Capitalism thrives on selfishness, a condition that the New York Times once called: “The age of ‘me-first’ Management” (Crittenden, 1984). Inside this, the holistic character of human beings is destroyed through the raw economic dependency that humans experience as a lifeless mechanism. Neschen emphasises that private property represents no more than a lifeless dividing force set up against humans (p. 62). As a result, bourgeois capitalism focuses on private property and relinquishes the open public domain (Plato’s polis; Habermas, 1988) in favour of a consumptive private domain reflective of the Greek oikos (p. 64). Reflections like these make Hegel the only philosopher among German idealism who engages in economic theories, the industrial revolution, and speculations on what both mean for ethics and human beings. Hegel’s philosophy dealt with new economic theories and the industrial revolution which actually took roughly 100 years. It was a slow evolution rather than a rapid revolution. Hegel saw the dawn of industrialism and capitalism in Germany that followed British industry and the only true political revolution during Hegel’s life – the French Revolution – as the beginning of The Great Transformation (Polanyi, 1944) and a new historical epoch (p. 64).

In the wake of these social and economic developments, Hegel realised that human life had become linked to external, material, and economical objects (Dingwelt) and conditions. These exist beyond the realm of individual influences. As a consequence, people become subjugated to the egoism of ownership (Egoismus des Habens, p. 85). It destroys Hegel’s ethics of a human being as holistic sensual-spiritual unity (sinnlich-geistige Ganzheit). Accordingly, Hegel demands that political economy has to be subsidiary to Sittlichkeit (moral life). In other words, economics has to be part of Sittlichkeit. It can never be the other way around. Otherwise the wealth of bourgeois society will not be distributed equally and will be concentrated in the hands of a few resulting in pathologies, damaged lives, and an extermination of Sittlichkeit.

Chapter two places economy and labour inside Hegel’s concept of Sittlichkeit (p. 89; Sayers, 2007) highlighting the centrality of Sittlichkeit below which economic affairs are to be placed (p. 91). For Hegel, it is Sittlichkeit that sets the history of mankind in motion. This motion is directed towards the realisation of human freedom. By themselves, economic affairs are incapable of such historic movements (p. 103). Hence, political economy should never exist disconnected from Sittlichkeit (das sittliche Ganze). Neschen emphasised that economics cannot be “left to its own destiny” (Hegel, p. 109) because of “the bestiality of absolute economic thought and action” (p 121). This bestiality of economic affairs can be found in the ideological idea of liberal market economics, its factual expressions in widespread poverty during the nineteenth century, and in the sheer “unpredictability and randomness of economic affairs” (p. 144f.; Sherover, 1979). In several places, Neschen observes Hegel’s notion of a randomness of economic activities and its negative effects on human beings. This frequently exposes workers more than their masters to seemingly uncontrollable effects of economic poverty cycles. Hence, the post-2000 global financial crisis (GFC) was not a new phenomenon at all. Roughly 200 years earlier, the so-called “Panic of 1819” may well have been the first major financial crisis of capitalism. It caused, like the GFC of our times, widespread foreclosures, bank failures, and unemployment which, of course, impacts more on workers than their masters (who receive a Golden Parachute, cf. Lehman Brothers, AIG, etc.).

Surprisingly, Hegel’s famous master-slave dialectics is reduced to one page in Neschen’s book (p. 152) where the author simply states:

[…] the relationship between master and slave does not represent a critique on society for Hegel. It is neither an example for any particular historical epoch nor does it apply to class divisions in capitalism.

This is despite a significant volume of literature that argues otherwise (Marcuse, 1941; Kojève, 1947, 1969; Holz, 1968; Arthur, 1983; Ritsert, 2006). Interestingly, Neschen argues that no meaning that can be derived from Hegel’s master-slave dialectics might assist us in explaining and critiquing economic affairs.

Neschen’s third chapter is on Hegel’s critique of the egoism found among bourgeois property owners (p. 159) highlighting that modern society has created atomised individuals while simultaneously making them economically dependent on one another (p. 161). Among atomised and selfish individuals of bourgeois society no social welfare, mutual care, and moral trust can exist (p. 179). Global poverty has been made dependent on the economic randomness (p. 180). This can be seen on globalisation, managerial decision-making, global sub-contracting, supply-chain management, outsourcing, manufacturing relocations, sweatshop labour, and so on. Hegel’s noted that economists believe there are valid, general economic laws among the swarm of arbitrary actions (Wimmeln von Willkühr) that make up the economy (p. 183). He emphasised that this is the sphere of moral peevishness (moralische Verdriesslichkeit, p. 184). In short, the disconnection between Sittlichkeit and economics destroys Hegel’s concept of a moral good that is enshrined in the idea of freedom which seeks to actualise itself as the world’s final destination (p. 174).

The final and perhaps weakest chapter relates Hegel’s writings on economics and ethics to several prominent current German thinkers on ethics in the economy. Neschen’s exceedingly short conclusion of just five pages (pp. 275-80) notes Hegel has developed a comprehensive and well-founded theory of ethical totality (das sittliche Ganze, p. 278). Neschen writes Hegel does not reject liberal market economies outright. To some extent, this is certainly correct given Hegel’s view on the importance of property as the foundation of capitalism and as the key element of bourgeois society. Not to forget Hegel’s notion for state protection of private property rights. On the other hand, Hegel also saw “the cynicism of laissez-fair liberalism” (p. 279). Being the philosopher of freedom (Franco, 1999), many of Hegel’s key concepts are contradictory to liberal economics. These are human not economic freedom, the master-slave dialectics, recognition, alienation (Smith, 1994; Sayer, 2003), the Dingwelt (world of objects), and above all Sittlichkeit. Finally, Hegel remains an outspoken critic of the growing tendency of economic polarisation into a few rich and many poor people.

In sum, Neschen’s work provides a comprehensive and insightful examination of Hegelian ethics as applied to economic affairs. Perhaps, Hegel has been one of the last philosophers before instrumental rationality inside universities neatly separated philosophy from economics, business, and management studies (Horkheimer, 1937; Marcuse, 1966). Today, many in economics, business- and management-studies with a PhD struggle with the “P” because their PhDs are deprived of philosophical thinking. Neschen’s book highlights the trilogy of philosophy, ethics, and economics. These are inseparable. Hegelian philosophy demands the reversal of what is found today. It demands a return to a situation where ethical life (Sittlichkeit) occupied the prime position located above and not outside of economics. Hegel tells us that the primate of philosophy over economics cannot be reversed. The opposite is to be found inside today’s universities where business-, management-, and economic-professorships outnumber those in philosophy by far.

In conclusion, the weaker side of Neschen’s work is her somewhat insufficient acknowledgement of the problems the reversal from “philosophy→economy” to “economy→philosophy” has caused in society. The marginalisation of ethics in favour of economic success, competitive advantage, wealth accumulation, shareholder-values, profit-maximisation, etc. has created serious pathologies that can be viewed as misdevelopments (Fehlentwicklungen), disorders or social pathologies (Honneth, 2007, p. 4). In wider society, the deliberately engineered decline of ethics in favour of economics, business, and management has led to individuals who “know the price of everything and the value of nothing” (Oscar Wilde; Varul, 2005). It has also created a petit-bourgeois mindset of egoistic property-owners just as Hegel predicted. What Hegel could not predict, however, was the advent of Fordist mass-production and mass-consumption underscored by corporate mass media which reduces human beings to a mere shopping unit inside mass-production and mass-consumption.

Today, Hegel’s property-owners exist in the form of shareholders and mindless petit-consumerists. Above that, Hegel’s critique of stratospheric disparities between rich and poor are our reality. 80 per cent of humanity lives on less than $10 a day while 22,000 children die each day due to poverty (Unicef; Singer, 1972; Pogge, 2007; Pogge and Horton, 2008). In short, Neschen’s work is a timely reminder that Hegel’s philosophy is not restricted to well-known subjects such as recognition, alienation, freedom, the master-slave dialectics and so on, but extends deep into political economy. Above all, it directs our attentions to the pathological consequences of disconnecting ethics from economics. Humanity is deemed to suffer.

Thomas KlikauerSchool of Management, University of Western Sydney, Syndey, Australia