Adam’s Fallacy: A Guide to Economic Theology has critical implications not only for the official discipline of mainstream economics, but also for various contemporary anti-capitalist movements, which frequently reproduce ‘Adam’s fallacy’, inheriting the moral philosophy and dualisms that constitute this fallacy . Naturally, professional economists like Robert Solow , Brad DeLong and others have been quite actively seeking to dampen the book’s impact. However, the book contains several lessons that are crucial for people interested or involved in social transformation, especially after the collapse of the major 20th century socialist experiments. In this regard, Radical Notes (RN) decided to forward a few questions to Prof Duncan K Foley (DKF) for his responses, which we reproduce here. Readers might find other articles that we published earlier on the book helpful.
RN: You have distinctly mentioned right in the beginning of Adam’s Fallacy that for you this fallacy resides in the compartmentalization of spheres of life into the economic and the rest of social life. And you consider this dualistic view of social life as the essence of political economy and economics. Can you please elaborate on this? If this dualism is ideological can we understand it as essential for the reproduction of capitalist social life?
DKF: The specific fallacy is Smith’s claim that the pursuit of self-interest, which has to be balanced against regard for others in other human interactions, can be trusted to lead to good outcomes both for oneself and others in the context of competitive market interactions. This idea has reconciled many people to the morally troubling consequences of capitalist development. It leads, as I show in the book, to the development of political economy and modern economics as discourses which claim a “scientific” status but whose content is in one way or another a discussion of this moral philosophical question. The dualism may not be essential for capitalist reproduction, but it seems to me to be an inevitable outgrowth of the contradictions of capitalist social relations.
RN: Many radical political economists have opined that underlying neoliberalism there is a politics of separating the political from the economic. According to them this separation has a specific significance through which the influence of popular politics, especially that of the working class, is neutralized. By alienating the power of economic decision-making from the democratic institutions, and bestowing it on market forces and financial and other supra-national bureaucratic institutions, the capitalist forces disarm the subversive influences of the counter-hegemonic forces. Do you think this is the theological-political role of the neoliberal reformulation of Adam’s Fallacy?
DKF: This is a good example of Adam’s Fallacy. But note that, when it finds it convenient to do so, neoliberal discourse connects politics and economics in the formulation that democracy and free markets are preconditions for each other’s development. The content of democracy is often hostile to the neoliberal worldview, since voters do like measures increasing their economic security, redistributing income, and regulating the excesses of capitalist development. (They also like rising standards of living when capitalist development manages to deliver them.) The history of the twentieth century also throws doubt on the other half of this claim, since authoritarian political regimes have frequently been the sponsors of “free” market economic institutions.
RN: Can we reread Marx’s “critique” of political economy, not only in Capital but also in his direct political writings, as a critique of this dualism, since he seeks to produce an ideology-critique in his exposition of the capitalist socio-economic formation, especially when he presents his theory of commodity fetishism? In your chapter on Marx, you seem to indicate this.
DKF: Marx had a lively sense of the damage capitalist institutions can do to human personality and the potential for human development. His discussions of the problem of alienation, including the section of chapter 1 of Volume I of Capital on commodity fetishism, center on various ways in which capitalist society fragments human experience. On the other hand, I am not convinced that Marx completely integrated this vision into his more analytical work on economics and his theory of socialist alternatives. In Adam’s Fallacy, I argue that Marx’s sketch of socialist institutions in his comments on the Gotha Programme incorporates much of the dualism he critiques elsewhere. In broad outline the society pictured in this text functions very much like the capitalist society it is supposed to have displaced.
RN: Very importantly, you have noted in the preface and briefly explained in your chapter on Marx, that despite being the “severest critic” of capitalism he reproduces Adam’s fallacy in his theorization. You find this present especially in his attempt to concretize his vision of socialism. You say, “Despite his vigorous critique of the commodity form of production, Marx’s concrete vision of socialism carries with it a lot of capitalist baggage”.(151) Can you explain this a little bit? Further do you find this fallacy affecting his analysis of capitalism to some degree?
DKF: The economic institutions described in the Gotha Programme recapitulate many of the institutions of capitalism. Workers receive compensation in proportion to the labor time they expend, but after the “deduction” of funds for social purposes, including accumulation of the means of production. Both the distributional and macroeconomic aspects of this plan look more like capitalism, than, say, traditional agricultural society. Marx may have acknowledged this contradiction in separating the concept of “socialism” as a transitional system from “communism” as a somewhat utopian vision in which the dualisms underlying economics and political economy have somehow been transcended. Perhaps the way these issues appear in Marx’s analysis of capitalism center on his claim that the commodity form itself, which is Marx’s version of Smith’s division of labor, is at the root of the contradictions of capitalist society. This leaves us uncertain as to Marx’s attitude toward the division of labor. Does he think socialism or communism can sustain a complex division of labor without the deleterious effects capitalist social relations have on human relations and personality? Or does he believe that society can somehow do without the division of labor altogether, or that it can be sustained by some kind of conscious central direction?
RN: While delving into the actual practice of socialism, you note that the Russian and Chinese experiments were instances “of the modernizing face of Marxism as a path to capitalism”. Can we understand this use of Marxism as its reduction into an ideology for justifying nationalist capitalist practices, excising its revolutionary essence? If yes, do you think the possibility of such reduction is a sign of the presence of Adam’s Fallacy in Marx’s incomplete theorization of socialism and inconsistencies?
DKF: The Russian and Chinese experiments were revolutionary enough. It was only through the unleashing and organizing of revolutionary impulses that these regimes could survive modernization without being submerged in the capitalist world system. The economic content of these experiments was modernization and the establishment of recognizably capitalist institutions, industrial urbanization, proletarianization, the destruction of traditional agriculture, etc., in the countries involved. I don’t think it is completely satisfactory to characterize this complex of developments as a “reduction” of Marxism, since it involved a melding of Marxist ideas with nationalism and economic development. If Marx had produced a “purer” and more consistent critique of capitalism, his ideas might not have had nearly the influence they did on a world scale.
RN: Marxists have understood capitalism as a global (world) system, and have found national or regional underdevelopment intrinsic to uneven global capitalist accumulation. What do you think about the development theories (including the radical ones) that attempt to identify the internal and external constraints to endogenous development and inform national political economic practices for ‘catching up’, without rejecting the logic of capital, market and commodity production? Do you think such attempt is self-defeating, and reproduce Adam’s Fallacy – of combining self-interests with national goods?
DKF: History shows that capital accumulation reproduces unevenness on whatever stage it operates, and we have a pretty good notion of why this is true. The metabolism of capitalism Smith described, and the other political economists I discuss in the book elaborated, destroys existing institutions and creates backwardness as a precondition of its successes. Schumpeter expressed this in describing capital accumulation in the phrase “creative destruction”, but it is also behind Malthus’ demographic pessimism, Keynes’ anxiety about the stability of capitalist development, and Veblen’s vision of the clash between the pecuniary and workmanlike instincts. I doubt that the world will see any smooth “convergence” eliminating the phenomenon of uneven development. The pathos of development policy, especially in less-favored economies, lies in its constant temptation to sacrifice the actual conditions of well-being of the population to meet the (sometimes imagined) demands of the world market. Why not base economic policy on securing as best one can the actual conditions of life in a country, and create a base from which a society can exploit the world market rather than the other way around?
RN: Recent political mobilizations and struggles against neoliberalism, especially in Latin America, have once again brought the agenda of alternatives to capitalism to the fore. Many Marxists see in these struggles an alternative to productivist and vanguardist practices of the erstwhile socialist experiments. You too have noted,
The forces Marx saw as leading to revolutionary social change in capitalist societies remain potent and present…. The moment in which these forces might have concentrated in decisive centralized revolutionary change, however, has most likely passed. We live in an epoch in which these potential agents of change are dispersed into thousands of particular, often apparently unconnected, struggles over income distribution, social justice, environment protection, and personal security and freedom. It remains to be seen whether these moments of social transformation will coalesce to transform capitalist society”.(153-54)
Could you elaborate your idea of social transformation, in the context of these recent struggles?
DKF: Political alternatives rest on some specific social-economic base, as an expression of some particular constellation of class interests and alliances. In the middle of the twentieth century Latin American politics tended to be dominated by a coalition of national capitalists and urban workers. The collapse of this coalition set the stage for the current political developments in these countries. (The collapse of this coalition also was a crucial precondition for the opening of Latin American markets to international capital through liberalized trade and investment.) It is not easy to maintain rigorous links between specific struggles for basic human rights and economic policy. Feminism, for example, has as many quarrels with the paternalistic face of capitalism as it does with capitalism itself, and in the immediate situation what women have to fight for is fuller access to capitalist institutions. It is capitalist industrialization that is producing a world environmental crisis, but it is easier to control the actual environmental impacts through market-oriented institutional reform than through changing the organization of production. But there is also tremendous cumulative power in social transformations, and a world which is decisively greener and less sexist would have to undergo transformations of basic capitalist institutions, too.
RN: If we are correct, right from the time when your paper entitled “Problems vs. Conflicts: Economic Theory and Ideology” (American Economic Review, Volume 65, issue 2, 1975) was published, a major concentration of your work has been a critique of methodological individualism that underlies much of the economic ‘ideologies’. Even in your highly technical and mathematical works, you have sought to expose the internal fallacies and inconsistencies of sophisticated economic theories. We see Adam’s Fallacy as a powerful indictment of the ideological/theological practices of economics as a discipline. What do you think is the future of this discipline and what should be the role of Marxist and radical ‘economists’ in the discipline? Can there be any meaningful exchange and collaboration between the orthodoxy and heterodoxy in the discipline, as some have attempted?
DKF: You certainly thought up a lot of hard questions for this interview! In some ways economics as a “discipline” is dissolving in front of our eyes. The idea of economics as a unified and universal science of allocation of scarce resources in the face of competing goals seems to be in decline. The practice of economics resembles more and more generic social science, with a focus on small problems that can provide the pretext for a dazzling display of modelling and econometric virtuosity. Physics, psychology, and sociology each in their way are encroaching on the traditional turf of economics. The traditional “big” questions of economics are increasingly of interest only to heterodox thinkers, who are old-fashioned enough to continue to work on issues the mainstream views as having been long settled beyond debate. I think economics has always reproduced itself through divisions between orthodoxy and heterodoxy. The role of heterodoxy in this long-standing division of intellectual labor is to make mainstream economists as uncomfortable as possible. Whether this constantly-reproduced interaction can rise to the level of “exchange and collaboration” remains to be seen.
Radical Notes
The Meaning of Adam’s Fallacy: An Interview with Duncan K Foley
Adam’s Fallacy: A Guide to Economic Theology has critical implications not only for the official discipline of mainstream economics, but also for various contemporary anti-capitalist movements, which frequently reproduce ‘Adam’s fallacy’, inheriting the moral philosophy and dualisms that constitute this fallacy . Naturally, professional economists like Robert Solow , Brad DeLong and others have been quite actively seeking to dampen the book’s impact. However, the book contains several lessons that are crucial for people interested or involved in social transformation, especially after the collapse of the major 20th century socialist experiments. In this regard, Radical Notes (RN) decided to forward a few questions to Prof Duncan K Foley (DKF) for his responses, which we reproduce here. Readers might find other articles that we published earlier on the book helpful.
RN: You have distinctly mentioned right in the beginning of Adam’s Fallacy that for you this fallacy resides in the compartmentalization of spheres of life into the economic and the rest of social life. And you consider this dualistic view of social life as the essence of political economy and economics. Can you please elaborate on this? If this dualism is ideological can we understand it as essential for the reproduction of capitalist social life?
DKF: The specific fallacy is Smith’s claim that the pursuit of self-interest, which has to be balanced against regard for others in other human interactions, can be trusted to lead to good outcomes both for oneself and others in the context of competitive market interactions. This idea has reconciled many people to the morally troubling consequences of capitalist development. It leads, as I show in the book, to the development of political economy and modern economics as discourses which claim a “scientific” status but whose content is in one way or another a discussion of this moral philosophical question. The dualism may not be essential for capitalist reproduction, but it seems to me to be an inevitable outgrowth of the contradictions of capitalist social relations.
RN: Many radical political economists have opined that underlying neoliberalism there is a politics of separating the political from the economic. According to them this separation has a specific significance through which the influence of popular politics, especially that of the working class, is neutralized. By alienating the power of economic decision-making from the democratic institutions, and bestowing it on market forces and financial and other supra-national bureaucratic institutions, the capitalist forces disarm the subversive influences of the counter-hegemonic forces. Do you think this is the theological-political role of the neoliberal reformulation of Adam’s Fallacy?
DKF: This is a good example of Adam’s Fallacy. But note that, when it finds it convenient to do so, neoliberal discourse connects politics and economics in the formulation that democracy and free markets are preconditions for each other’s development. The content of democracy is often hostile to the neoliberal worldview, since voters do like measures increasing their economic security, redistributing income, and regulating the excesses of capitalist development. (They also like rising standards of living when capitalist development manages to deliver them.) The history of the twentieth century also throws doubt on the other half of this claim, since authoritarian political regimes have frequently been the sponsors of “free” market economic institutions.
RN: Can we reread Marx’s “critique” of political economy, not only in Capital but also in his direct political writings, as a critique of this dualism, since he seeks to produce an ideology-critique in his exposition of the capitalist socio-economic formation, especially when he presents his theory of commodity fetishism? In your chapter on Marx, you seem to indicate this.
DKF: Marx had a lively sense of the damage capitalist institutions can do to human personality and the potential for human development. His discussions of the problem of alienation, including the section of chapter 1 of Volume I of Capital on commodity fetishism, center on various ways in which capitalist society fragments human experience. On the other hand, I am not convinced that Marx completely integrated this vision into his more analytical work on economics and his theory of socialist alternatives. In Adam’s Fallacy, I argue that Marx’s sketch of socialist institutions in his comments on the Gotha Programme incorporates much of the dualism he critiques elsewhere. In broad outline the society pictured in this text functions very much like the capitalist society it is supposed to have displaced.
RN: Very importantly, you have noted in the preface and briefly explained in your chapter on Marx, that despite being the “severest critic” of capitalism he reproduces Adam’s fallacy in his theorization. You find this present especially in his attempt to concretize his vision of socialism. You say, “Despite his vigorous critique of the commodity form of production, Marx’s concrete vision of socialism carries with it a lot of capitalist baggage”.(151) Can you explain this a little bit? Further do you find this fallacy affecting his analysis of capitalism to some degree?
DKF: The economic institutions described in the Gotha Programme recapitulate many of the institutions of capitalism. Workers receive compensation in proportion to the labor time they expend, but after the “deduction” of funds for social purposes, including accumulation of the means of production. Both the distributional and macroeconomic aspects of this plan look more like capitalism, than, say, traditional agricultural society. Marx may have acknowledged this contradiction in separating the concept of “socialism” as a transitional system from “communism” as a somewhat utopian vision in which the dualisms underlying economics and political economy have somehow been transcended. Perhaps the way these issues appear in Marx’s analysis of capitalism center on his claim that the commodity form itself, which is Marx’s version of Smith’s division of labor, is at the root of the contradictions of capitalist society. This leaves us uncertain as to Marx’s attitude toward the division of labor. Does he think socialism or communism can sustain a complex division of labor without the deleterious effects capitalist social relations have on human relations and personality? Or does he believe that society can somehow do without the division of labor altogether, or that it can be sustained by some kind of conscious central direction?
RN: While delving into the actual practice of socialism, you note that the Russian and Chinese experiments were instances “of the modernizing face of Marxism as a path to capitalism”. Can we understand this use of Marxism as its reduction into an ideology for justifying nationalist capitalist practices, excising its revolutionary essence? If yes, do you think the possibility of such reduction is a sign of the presence of Adam’s Fallacy in Marx’s incomplete theorization of socialism and inconsistencies?
DKF: The Russian and Chinese experiments were revolutionary enough. It was only through the unleashing and organizing of revolutionary impulses that these regimes could survive modernization without being submerged in the capitalist world system. The economic content of these experiments was modernization and the establishment of recognizably capitalist institutions, industrial urbanization, proletarianization, the destruction of traditional agriculture, etc., in the countries involved. I don’t think it is completely satisfactory to characterize this complex of developments as a “reduction” of Marxism, since it involved a melding of Marxist ideas with nationalism and economic development. If Marx had produced a “purer” and more consistent critique of capitalism, his ideas might not have had nearly the influence they did on a world scale.
RN: Marxists have understood capitalism as a global (world) system, and have found national or regional underdevelopment intrinsic to uneven global capitalist accumulation. What do you think about the development theories (including the radical ones) that attempt to identify the internal and external constraints to endogenous development and inform national political economic practices for ‘catching up’, without rejecting the logic of capital, market and commodity production? Do you think such attempt is self-defeating, and reproduce Adam’s Fallacy – of combining self-interests with national goods?
DKF: History shows that capital accumulation reproduces unevenness on whatever stage it operates, and we have a pretty good notion of why this is true. The metabolism of capitalism Smith described, and the other political economists I discuss in the book elaborated, destroys existing institutions and creates backwardness as a precondition of its successes. Schumpeter expressed this in describing capital accumulation in the phrase “creative destruction”, but it is also behind Malthus’ demographic pessimism, Keynes’ anxiety about the stability of capitalist development, and Veblen’s vision of the clash between the pecuniary and workmanlike instincts. I doubt that the world will see any smooth “convergence” eliminating the phenomenon of uneven development. The pathos of development policy, especially in less-favored economies, lies in its constant temptation to sacrifice the actual conditions of well-being of the population to meet the (sometimes imagined) demands of the world market. Why not base economic policy on securing as best one can the actual conditions of life in a country, and create a base from which a society can exploit the world market rather than the other way around?
RN: Recent political mobilizations and struggles against neoliberalism, especially in Latin America, have once again brought the agenda of alternatives to capitalism to the fore. Many Marxists see in these struggles an alternative to productivist and vanguardist practices of the erstwhile socialist experiments. You too have noted,
Could you elaborate your idea of social transformation, in the context of these recent struggles?
DKF: Political alternatives rest on some specific social-economic base, as an expression of some particular constellation of class interests and alliances. In the middle of the twentieth century Latin American politics tended to be dominated by a coalition of national capitalists and urban workers. The collapse of this coalition set the stage for the current political developments in these countries. (The collapse of this coalition also was a crucial precondition for the opening of Latin American markets to international capital through liberalized trade and investment.) It is not easy to maintain rigorous links between specific struggles for basic human rights and economic policy. Feminism, for example, has as many quarrels with the paternalistic face of capitalism as it does with capitalism itself, and in the immediate situation what women have to fight for is fuller access to capitalist institutions. It is capitalist industrialization that is producing a world environmental crisis, but it is easier to control the actual environmental impacts through market-oriented institutional reform than through changing the organization of production. But there is also tremendous cumulative power in social transformations, and a world which is decisively greener and less sexist would have to undergo transformations of basic capitalist institutions, too.
RN: If we are correct, right from the time when your paper entitled “Problems vs. Conflicts: Economic Theory and Ideology” (American Economic Review, Volume 65, issue 2, 1975) was published, a major concentration of your work has been a critique of methodological individualism that underlies much of the economic ‘ideologies’. Even in your highly technical and mathematical works, you have sought to expose the internal fallacies and inconsistencies of sophisticated economic theories. We see Adam’s Fallacy as a powerful indictment of the ideological/theological practices of economics as a discipline. What do you think is the future of this discipline and what should be the role of Marxist and radical ‘economists’ in the discipline? Can there be any meaningful exchange and collaboration between the orthodoxy and heterodoxy in the discipline, as some have attempted?
DKF: You certainly thought up a lot of hard questions for this interview! In some ways economics as a “discipline” is dissolving in front of our eyes. The idea of economics as a unified and universal science of allocation of scarce resources in the face of competing goals seems to be in decline. The practice of economics resembles more and more generic social science, with a focus on small problems that can provide the pretext for a dazzling display of modelling and econometric virtuosity. Physics, psychology, and sociology each in their way are encroaching on the traditional turf of economics. The traditional “big” questions of economics are increasingly of interest only to heterodox thinkers, who are old-fashioned enough to continue to work on issues the mainstream views as having been long settled beyond debate. I think economics has always reproduced itself through divisions between orthodoxy and heterodoxy. The role of heterodoxy in this long-standing division of intellectual labor is to make mainstream economists as uncomfortable as possible. Whether this constantly-reproduced interaction can rise to the level of “exchange and collaboration” remains to be seen.
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