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Economics and Political : Marx, Keynes, and Schumpeter Author(s): Robert L. Heilbroner Source: Journal of Economic Issues, Vol. 18, No. 3 (Sep., 1984), pp. 681-695 Published by: Association for Evolutionary Stable URL: http://www.jstor.org/stable/4225467 . Accessed: 15/11/2013 23:53

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This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions J; JOURNAL OF ECONOMICISSUES Vol. XVIII No. 3 September1984

Economics and : Marx, Keynes, and Schumpeter

Robert L. Heilbroner

The centenaryconnection of the death of and the birth of J. M. Keynes and JosephSchumpeter is an historicalaccident that poses an unusualchallenge. One would think the occasion would provide an excusefor exploringthe lines of influenceemanating from Marx to Keynes and to Schumpeter,and the mutual interactionof the latter two. But that, I fear, would be disappointing.Marx exerteda profoundeffect on Schumpeter,as we all know.So far as Keyneswas concerned,Marx might as well have neverlived-at least that is the conclusionto whichI come whenreflecting on Keynes'sstatement that "the futurewill have more to learn from the spirit of Gesell than from that of Marx,"' a judgmentI attributeto the fact that Keyneshad probablyread more of Silvio Gesell thanof Marx. More interestingis thatKeynes and Schumpeter,each a toweringfigure in the twentiethcentury, seem to have exercisedvery little effect on one another. In his magisterialHistory of Economic Thought, Schumpeter refersto Keynesas "thefather of modernstagnation"-an appraisalthat in itself indicatesthe distancebetween them.2 That distancequite apart, it is clear that Keynes'smajor contributions-the bold use of aggregates as the pillarsof a new form of analysisthat we call ,the centralplacement of expectationsand , the emphasison liquid- ity-had no relevancewhatever to Schumpeter'smajor analytical work

The author is Norman Thomas Professor of Economics, New School for Social Research.

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This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions 682 RobertL. Heilbroner in the developmentof a new of profitsand of the businesscycle.3 And if Keynes seems to have given nothingto Schumpeter,Schumpeter gave as little in return.We know that Keynes read and commentedon Freidrichvon Hayek's The Road to Serfdom,published in Englandin 1944, but there is no recordof his havingread or writtenabout Schum- peter's incomparably more important , , and De- mocracy,published two yearsearlier. Thus the centenarydoes not providemuch occasion for the usualtrac- ing of filiationsand reciprocalinfluences. It does, however,serve another and moreuseful purpose: to raisewith rare clarity a questionabout which surprisinglylittle has been written.The questionis why economistscome to such differentconclusions about the common object of their scrutiny. I do not referto the notoriousdifferences among who seek to forecastnext month'seconomic performance. There is no more difficulty in understandingthis rangeof opinionthan thereis in understandingthe divergenceof meteorologists'predictions. The reasons are the same in both cases, and no cause for scandalin either.The real issue, whichmay indeedappear to have its scandalousaspect, arises when great economists, of the statureof our threeexemplars, direct their attention to whatI shall call the cosmologicalproblem of economics,namely, the social configura- tions of productionand -if you will, the macro and micro patterns-that ultimatelyemerge from the self-directedactivities of indi- viduals. That problem was first resolved by in his extra- ordinarydepiction of a society that generatedfrom its spontaneousac- tivity both a tendencytoward internal order and "external"expansion. Whatis remarkableabout Marx, Keynes, and Schumpeteris thatthey are among the very few who have proposedresolutions to this problemof an imaginationand scope comparableto that of Smith-but that theirreso- lutions differfrom one anotheralmost totally. In Marx's great schema the systemis destinedto pass throughsuccessive crises that both alterits socioeconomictexture and graduallyset the stage for a likely final col- lapseof somesort. In Schumpeter'sview, the dynamicsof the systemgive riseto a prospect of long-term,continually self-generated growth-not quitethe "hitchless" growthof Smith'smodel-but growthdependable and powerfulenough to formthe basis for Schumpeter's"plausible capitalism."4 In Keynesthe trajectoryis muchless certainbecause it dependson the outcomeof a tug of war betweenthe animalspirits of entrepreneursand the constraintsof saturablemarkets and propensitiesof thrift-a tug of war whose out- come, however,can be remediedby appropriategovernment intervention. Whatis different,not to say more scandalous,about this divergenceof

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions Economicsand PoliticalEconomy 683 views fromthe divergenceof forecastsabout next month'seconomic per- formance?The answeris that each model servesall too plainlyto under- pin or substantiatethe politicalvalues of its proponent.Marx's projection of a crisis-ridden,unstable has an obviousaffinity with his explicitpolitical animus against capitalism and his hopes for socialism. Schumpeter'splausible capitalism is clearly supportiveof his conserva- tive socioeconomicviews. And Keynes's conceptionof an economy in whichgovernment intervention could assurefull -could in- deed abolish scarcityitself within the span of a single generation-un- questionablyprovides a propitioussetting for the liberal societythat was his avowedpolitical .5 The scandal,then, is that these three great economists-and if they, then what of the lesser lights?-seem to have resolved the cosmological problemnot by looking into their telescopesbut into their hearts, pro- jecting into the skies the constellationsthey wished to see there. How, then, shall we explain this congruenceof political economy-the name we shall attach to the large-scalescenarios of socioeconomicchange- and economics,the processof analysisthat undergridsthe scenario? Let us see if we can accountfor this problemin the most directway, simplyby admittingthat it is nothingbut a scandal.In otherwords, let us proposethat the politicalconclusions of our trio are added,exogenously and arbitrarily,after their analyses are complete, more or less in dis- regard,or even in the face of, conclusionsto which their economicshas led. This thoroughlydiscreditable idea, whichsuggests that economistsdoc- tor or simplyignore their "economic" results when they turnto "political economy"has, in fact, a good deal goingfor it. At the end of The General Theory Keynesdefends the "moderatelyconservative" implications of his analysisas well suitedto preserve"the traditions which embody the most secureand successfulchoices of formergenerations."6 With the benefitof hindsight(and I daresayeven ex ante) we can see that this statementis little more than wishfulassertion. Keynes's social outcomeassumes the most extraordinarypassivity on the part of the capitalistclass-acquiesc- ing withouta murmurin the euthanasiaof its auntsand uncles,as well as in a marked diminutionin the stakes of the game-while taking for grantedcontinuing working-class agreement on "themost secureand suc- cessfulchoices of formergenerations." Marx would have scoffedat such a naive prognosis.From anothervantage point and for differentreasons so did Hayek.I see no way in whichKeynes's chapter on "SocialPhiloso- phy" can be presentedas the reasonedconclusion of the economicin- vestigationthat has precededit.

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions 684 RobertL. Heilbroner

The case of Schumpeteris more complex.The idealizedplausible cap- italism of Capitalism, Socialism, and Democracy, as Schumpeter himself wrote, contains"no purelyeconomic reasons why capitalismshould not have anothersuccessful run."7 The socialistfinale of Schumpeter'sdrama thereforerests wholly on extraeconomicfactors, namely,on the subver- sion of the capitalistspirit by the corrosiverationality of capitalism'soff- spring,the intellectualframe of mind.8As with Keynes,there is no clear chain of causalityor even of consistencyleading from the economic to the political.Indeed, the very success that Schumpeterpredicts for cap- italismwould seem to inclinethe outcomein anotherdirection, dispelling the skepticismof the critics, perhapseven giving rise to a spirit of neo- conservatism.This leaves unansweredwhy Schumpetercame to such a perverse conclusion (a matter about which I will offer a conjecture shortly), but assuredlyit also makes clear that Schumpeter'spolitical economydoes not emergeinexorably from his economics,any more than does thatof Keynes. Marxis of coursethe key figurehere. In the generalview, the political economyof Marxismis inherentin Marx'sanalysis of capitalism.But is it? If by "politicaleconomy" we mean a scenarioleading not merelyto crisisbut to socialism,I am certainthat virtually all Marxiststoday would agreethat Marx's economics implies no such conclusion.One can validly claimthat Marx'sanalysis points with overwhelminglikelihood, although not absolutecertainty, toward a climacticfailure for the system.But the aftermathof that failureneed not be socialism.It may not even be revo- lution.The politicalconsciousness of the worker,instead of being beaten into finesteel on the anvilof history,may simplybe hammeredinto sensi- bility.That is what AdamSmith foresaw in The Wealthof Nations,so far withgreater prescience than Marx.9Or capitalismmay end with the mass bourgeoisificationof its workingclass, as Engels complainedat the end of his days.10 So the discreditablesuggestion that economicsproposes, and political economy subsequentlydisposes as the author wishes, has some discon- certingevidence in its favor. Perhaps,however, that fact is not quite so discreditableas it may at first appear.The lack of strict connectionbe- tween economicsand politicaleconomy may only revealthe underdeter- minationof the sphereof politicsby that of economics,or if you will, the largeamount of play in the linkagesthat connectthe material"base" with the political "superstructure."As E. P. Thompsonhas bitingly argued, we would have a greatdeal to worryabout if the politicalconclusions of economistsfollowed with iron certitudefrom their economic analyses." Nevertheless,a large amountof play in the linkagesis not the same as

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions Economicsand PoliticalEconomy 685 a total absenceof connectionbetween the analyticalwork of economics and the cosmologicalfindings of politicaleconomy. When all is said and done, it would be difficultto sustaina Marxianview of capitalism'sun- foldingif one startedfrom a Schumpeterianeconomic model, or to per- ceive conservativeor liberal constellationsin the heavensif one looked throughthe telescopedesigned by Marx.That there is somelinkage, how- ever loose, betweenthe economiccore and the politicaloutcome is per- haps best exemplifiedby Schumpeterhimself, whose socioeconomiccon- clusion seems completelyat odds with his strictlyeconomic assumptions and analysis.For on furtherinvestigation, key elementsin the discrep- ancy between the two disappear.This is because in crucial respects Schumpeter'ssocialism is surprisinglylike capitalism.It is governedby the same principlesof "efficiency"-betterachieved than under - ism, Schumpeterexpects-and it retains the all-importantdivision be- tweenmanagers and workers. Socialism is, in a word,a morerational form of capitalism.12 This tolerantappraisal of socialismwould seem to make Schumpeteran exampleof his own worstenemy, the intellectualapplying his subversiverationality to the capitalistsystem. But he avoids this ig- nominiousfate becausehe can assurehis carefulreaders that the conse- quencesof the passagefrom one systemto anotherwill have little or no adverseeffect on the chancesfor successof the "supernormalquality" of bourgeoisminds.'3 The conservativeprinciple is therebyvindicated, de- spitethe transitionfrom capitalism to socialism. Our inquirymust thereforedelve a little more deeply. Grantingthat politicaleconomy develops only politicalpossibilities within its economic core, what is it that explainsthe differingcores themselves,and how do we accountfor the politicalpossibilities that seem to inherewithin them? To put the matter differently,assuming that strictlyeconomic analysis will lead economistsof the most differingpersuasions to agree about the outcomeof a clearlydefined economic problem-say, the effecton of an increasein the demandfor labor-how do we explainthe original differencein "persuasions,"and how do these differencesaffect the out- come that emergesfrom a sharedanalytic method? There are, I think, two distinct, albeit related, explanationsfor this problem. The first calls attentionto differingspecifications of the em- pirical elementsfrom which economic models are constructed-that is, of differentreal-world attributes that appear,in stylizedform, as partof the scenario.Here one beginswith the vision of Adam Smith,with its firma- ment of government,its planetarybodies of classes,its gravitationallaws of behavior.Smith's initial model allows us to illustratehow dramatic can be the effectof introducinga new empiricalelement. The case in hand

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions 686 RobertL. Heilbroner is 'sinsertion of the empiricalassumption of limitedland resourcesinto Smith'smodel. The analyticalconsequence of this altered real-worlddelineation of the systemis thathitchless growth is turnedinto a stationaryimpasse, with immenseconsequences for politicaleconomy as well as for economics. (I have often reflectedthat anothersuch real- world assumption-namely, a willingnessof landlordsto use their rising rents to capitalistundertakings-would have effectively post- poned the stationaryterminus for a very long time. Malthuswas ideally suitedto make this "finding,"but did not.) Thus the introductionof new empiricalelements, whether in the initial givensof behavior,constraints, or institutionalsettings, is clearlycapable of alteringthe conclusionsof which analyticalprocesses drive the argu- ment,as well as suggestingdifferent likelihoods of politicaloutcomes. The same is true of differentlyperceived or interpretedaspects of real-world processes.Consider for examplethe respectivetreatments of "technology" in Marx, Keynes,and Schumpeter,meaning by that term the incorpora- tion of technicaladvance through machinery. Marx depicts this process in the main as the displacementof living labor by dead labor. This has vast implicationsfor the long-rundynamics of Marx'sschema, insofar as the displacementof living labor narrowsthe basis from which surplus and profitare derived,and also in that the emphasison labor dis- placementserves to undermineconsumption and therebyto introducean undertowof contractioninto the economicprocess. By way of contrast, Schumpeter'sview of technologyplays up a diametricallyopposite role. It is the means by which new marketsare created, the source of that "perennialgale of creativedestruction" that fills the sails of the capitalist armada.14Labor displacementis thereforeignored, insofar as the crea- tion of new demandspresumably creates new employmentopportunities as well. Finally,we note that in Keynes,technology plays no explicitrole at all. Capitalinvestment is treatedwithout regard to qualitativechange. (It could hardlybe otherwiseif we are to take seriouslythe suggestion that the marginalefficiency of investmentcould be reducedto zero in a singlegeneration.)15 Keynes's treatment of technology-which is to say, his lack of recognitionwith respect to its qualitativeeffect-forces his system into a kind of Ricardiansqueeze, where the marginalefficiency of investmentbecomes as immovablea barrieras the differentialqualities of land. In this way, three differingperceptions of the empirical"facts" of technology profoundlyalter the concepts with which the analytics of economicsis concerned,and as a result, the socioeconomicdrama that is set into motionby these concepts.A secondinstance is also worthno-

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions Economicsand PoliticalEconomy 687 tice: the divergenteffects that follow from different perceptions of another real-worldprocess, , universallyrecognized as a centralcon- stitutiveelement of the capitalistsystem. Competitionfor Marx is very differentfrom competition for Schumpeteror Keynes.It arisesin the first place as an aspectof the mannerin which"value" expands, the basiccon- ception of Marx'sanalysis. The expansionof value means that the class dominanceof capital over labor, expressedin the ownershipof labor's productby capital,must be continuouslyreaffirmed and extended.That takes place inter alia throughthe effortsof capitals (firms) to displace other capitals.The numberof such capitalsis thereforeof little conse- quence:competition will be as stronga force in a worldof a few "monop- olies" as in one of numeroussmall enterprises.'6Competition for Marx is thereforeessentially an eliminativeprocess ("One capitalistalways kills many"), a processthat again serves to directthe systemtoward an outcome that conforms with Marx's vision of instabilityand eventual failure.'7 One would think that such a depictionof competitionwould be con- genial to Schumpeter'sworld of competitivemonopolies. But now the Schumpeterianview of technologyalters the argument.Competition in Schumpeterhas no connectionwith the relation of capital to labor. It refers to the actions of pioneeringfirms that establishpositions of stra- tegic advantage,followed afterwardby the adaptiveefforts of less ven- turesomeenterprises. Competition entails social losses amongthose firms whose productsor processesare outmoded,but this is more than over- balancedby the gains to societyof its pioneers.Competition is not there- fore an eliminativeprocess but a stimulativeone. Ratherthan one cap- italist killing many, one pioneer opens the way for others to follow."8 From yet anotherperspective, competition in Keynesplays neitheran eliminativeor a stimulativerole. As in Adam Smith,it is a disciplinary process,maintaining a commonrate of returnamong contending units of the factors of production.In the Keynesianworld of ,competi- tive entrepreneursconstantly scan the field for profitableinvestment op- portunities,one eye on the rate of ,the otheron the marginaleffi- ciency of .They therebybring about a convergenceof profit rates toward a central rate, as in Smith and Marx. In Keynes'sworld, however,competition is essentiallyneutral with respectto growth,em- ployment,and the outcome of the capitalistprocess. It is animalspirits, not competition,that drive the system forward;and it is the narrowing of investmentopportunities, not competition,that destabilizesor derails it. Thus, as with technology,the observable,empirical process of com-

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions 688 RobertL. Heilbroner petition is differently understood by our three exemplars, bringing differ- ent economic, and political economic, results in its train. Why do these specifications of an observable, empirical reality vary so much from one observer to the next? One answer is that the research object itself is con- stantly changing, so that the social universe examined by economists in different eras makes possible, or encourages, different generalizations or empirical emphases. The importance of the Napoleonic wars in bringing to Ricardo's attention the crucial role of rent has often been cited as an instance of this kind. In a similar manner, the rise of a distinct public "sec- tor," and a spread of Fabian socialist ideas, paved the way for Keynes's proposed use of government intervention as a control variable in a man- ner hardly available to Marx. Such new aspects of reality unquestionably require the formulation of new forces or constraints. Let us, however, make the assumption that this was not the main reason for the differing analyses of Marx and Keynes and Schumpeter, assuming-quite correctly, I believe-that examples of labor-displacing, -creating, and employment-neutral competition could be discovered in the capitalist processes that all examined. Under this assumption, how do we account for the differences in their models? That stringent question introduces another dimension into the problem. Now we must pay heed to a source of differing perceptions that lies out- side the interpretation of real-world facts or processes, a source that Mark Blaug has called "characterizingvalue judgments." By this phrase Blaug means the "choice of subject matter . .. the mode of investigation . .. the standards of reliability of the data . . . and the criteria for judging the validity of the findings"-all inseparable from scientific work, but none decidable on the basis of empirical observation alone.'9 Blaug is certainly correct in calling attention to these unavoidable sub- jective elements that enter into the most scrupulously positive statements. But this subjective element is not merely a matter of choosing between alternative gestalts, like the rabbits and storks of optical illusions. The act of choice, the "preanalytic cognitive act" to use Schumpeter's phrase, also involves what Blaug calls "appraising value judgments"-that is, moral or value-laden judgments. I have previously written that these judgments are also unavoidable because no social observer approaches his research object in the detached existential frame of mind of the natural scientist. He or she is a member of the community, inextricably bound up with its fate.20Rather than repeating my argument, I shall let Schumpeter state my case for me:

Analytic work begins with the materialprovided by our vision of things, and this vision is ideologicalalmost by definition.It embodiesthe picture

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions Econom;csand PoliticalEconomy 689

of things as we see them, and whereverthere is any possible motive for wishing to see them in a given ratherthan anotherlight, the way in which we see things can hardlybe distinguishedfrom the way in which we wish to see them.21

My point, then, is not merely that economists of varying persuasions- I shall return to those persuasions-form different characterizing judg- ments, but that these differences will necessarily embody moral and po- litical preferences in addition to value-free gestalts. This is because there is no manner of describing a social universe without these valuational elements. What we call "society" cannot be depicted as a collection of androids. Its very humanness brings wish, hope, purpose, and under- standing into the elemental stuff of the social universe itself. We are here at the level of elemental posits that form the basis-the "hard core," in Imre Lakatos's phrase-of all scientific generalizations. Adam Smith's perception of an order-bestowing was, of course, the first and most powerful of these conceptual leaps, endowing the empirical realities of the economic process with hitherto unperceived systemic properties (and, let me emphasize, political implications).22 Another such example, closer to our subject, is illustrated by 's conception of the economy-or rather, Marshall's analysis nicely reveals the consequences, both analytic and political, of failing to make such a conceptual leap. In the opening pages of his Principles Marshall gathers all the neces- sary components to create a "Keynesian" model of the system. He has distinguished between intermediate and final payments. He has separated transfer incomes from factor incomes. He has even used the term Na- tional Income. But he has also rejected the one additional concept needed to reach a Keynesian view. Debating the distinction between consumers and producrs goods-a distinction that provides the necessary sep- aration of economic motives required to build a macro model-Marshall has decided that the distinction is not fruitful, because for both classes of goods are the tools required to explain . Thus the concentration of economics (as an "engine for the discovery of con- crete truth") on the problem of price formation blocks the possibility of its use for the problem of the determination of the level of .23 Can we discover conceptual differences at this abstract level that also account for the divergences among Marx, Keynes, and Schumpeter? One springs immediately to mind. This is the Marxian penetration of the fa- cade of relations into the social realm, an act of "socioanaly- sis," as I have termed it, comparable to the conceptual organization of philosophic discourse by Plato and of the unconscious mind by Freud.24

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions 690 RobertL. Heilbroner

Marx discovereda set of relationshipswithin the social process that had no directlyvisible empiricalappearance, but whose organizationaland politicalimportance was all-pervasive.This was his perceptionof a sub- stratumof abstract labor-an "essence"of the concrete (and incom- mensurable)labors of the trappersof beaver and stalkersof deer that appearedwhen tasks were performed,not to produceuse-values for the laborer but saleable objects (commodities) for their owners. This ab- stract aspect of labor, unperceivedby Smith or Ricardo, providedthe basis for a theory of value that servedat once to endow capitalismwith its structuraland dynamictendencies and its politicalsignificance. This is not the place to defendor expoundMarx's concept, but only to point out that the idea of value permeatesall of his analysis,endowing "objects" such as capitalwith social meaningsthat they could not otherwisehave, and imbuinginert "things"with tense social significance. It is not surprising,then, that Marx'smodel containspolitical possi- bilities of a differentkind from those of Keynes and Schumpeter.The Schumpeteriananalog to Marx'svalue substratumis nowherespelled out explicitly.I thinkit residesin a conceptionof the social processas regu- lated by a naturalhierarchy of talents,organized into social classes.25The presenceof such a class hierarchyis taken for granted.It is the premise, not the problem.From this premiseemerges the specialcase of capitalism, in which the essentiallyunadventurous bourgeois class must providethe leadershiprole. It does so by absorbingwithin its ranksthe free spiritsof innovatingentrepreneurs who provide the vital energythat propels the system.26The underlying"preanalytic" cognitive vision is thus one of a routinizedsocial hierarchy,creatively disrupted by the giftedfew. This is not an analyticconcept comparable to Marx'sidea of value,but it is a socio-politicalpremise of vital importancein constitutingSchumpe- ter'seconomic world. One such consequenceis the depictionof profitas the rewardfor the unique function of the entrepreneur,a rewardthat cannotbe legitimatelytraced to any otherfactor. In a circularflow, zero- profiteconomy, can only enter,on Schumpeter'spremises, as the transientreturns accruing to entrepreneurs-inventors,innovators, pioneers.In Schumpeter'sview this has nothingto do with the power of capitalover labor. As with Marx, I want neitherto defendnor expoundthe Schumpeter- ian view, but only to underscoreits immensesignificance for the very constitutionof the economicmodel itself. His model then unrollswithout a trace of the antagonismbetween labor and capitalthat is built into the Marxianmodel along with its conceptualmaterials. If Schumpeternone- thelessintroduces antagonistic elements, it is by way of a deusex machina,

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions EconomZcsand PoliticalEconomy 691 the skepticalintellectual whose dubious rationaleI have alreadymen- tioned. We can only speculate as to why Schumpeterfelt impelled to mountthis drama.Perhaps, as I have elsewheresuggested, it was his way of squaringaccounts with Marx-recognizing the historicityof capital- ism, while still maintaininghis conservativestance with respect to the permanenceof hierarchyitself.27 I have less to say with respect to Keynes. The socio-politicalunder- pinningsof The General Theory do not departmuch from Marshall,even thoughKeynes makes the leap from a micro to a macroperspective. It is perhapsthe retentionof Marshall'sliberal, individualistic underpinnings that accountsfor Keynes'sfailure to resolvethe contradictionsof his own judgment,calling capitalism at one momenta system"that doesn't deliver the goods,"and at the next assumingit to be the vehiclefor a transforma- tion of our societyinto a worldof abundance.28 Keynes'svery ambivalencemay, however,provide an excusefor a few words,necessarily sketchy, on two questionsthat our analysisraises. The firstis why one personwill be motivatedto findone characterizinggestalt in the social world and anotherperson another.We do not know. No doubtpersonal as well as social forces determineour cognitiveprocesses, but thatis sayingnext to nothing. More interestingis whetherwe can describethe conceptualpolitical elementsthat our evaluatingselves projectinto the world. Here we can venturea preliminaryremark with regardto the quintessentialcontent of the radical,conservative, and liberal perspectives. I believethat the core of the radicalview, personifiedby Marx,is a diagnosisof the humancon- ditionas one of unnecessarythralldom to institutionscreated by humanity itself. The ultimatebasis of the conservativepoint of view, exemplifiedby Schumpeter,is the assertionthat social hierarchyis the necessarycondi- tion for social continuity.And the basis for liberalism,embodied in Keynes,lies in an assessmentof the social conditionas perhapsdistaste- ful, but not intolerableor beyondimprovement. From these three views flow the politicalorientations associated with each-the radicaldesire to throw off unnecessarythralldom, the conservativeeffort to supportand adaptto necessaryhierarchy, the liberalprogram of pragmatismand so- cial amelioration. There is, to be sure, a dangerthat this attemptat clarificationwill be seen as a structurelessrelativism, each personconstructing his or her own social realitywith no possibilityof evaluatingone gestalt as againstan- other.29I hope the tone of my remarksindicates that this is not my intent. My own "persuasions"incline me toward a radicalperspective, not alone for those mysteriousreasons of preferenceabout which little

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions 692 RobertL. Heilbroner can be said, but because I believe that the radicalview has greaterex- planatorycapabilities than other perspectives.Nevertheless, I would not wish to claim exclusive virtues for such a view. There are important lacunae in the radical gestalt, above all with respectto the originsand uses of power. These questionsare more squarelyaddressed in a con- servativeview, such as that put forwardby Schumpeter.One does not have to subscribeto Schumpeter'sidiosyncratic conceptions of social elites to be madethoughtful by his stresson the persistenceof hierarchy. Keynes,too, espousesan importantpolitical concept in the very melior- ism that makeshim an easy targetfrom both the radicaland conservative perspectives.In a world where the best has often been the fatal enemy of the good, thereare salutarylessons to be learnedfrom Keynes's liberal skepticismand perhaps naive good faith.

This brief and necessarilyincomplete exploration of the causes of dif- ferencesin economicsand politicaleconomy changes our initialquestion. We no longer ask, "Whydo economistsarrive at differingoutcomes?" but rather,"How can they not?"If differingcognitive and moralgestalts inextricablylodge withinthe conceptsof the discipline,it is no surprise that differentobservers see different"" when they examinethe social flux. Indeed,the questionnow shiftsas to how we groupunder the singlerubric of "economics"or "politicaleconomy" the intellectualpro- ductions of such differentparentages. The answer must be that these differentproductions, for all their variations,still display a family re- semblance.Our last task is thereforeto bringthis resemblanceto the fore, to discoverwhat it is that Marx, Keynes, and Schumpeterhave in com- mon,rather than what they do not. I believe there are two such unifyingcharacteristics. The first I have alreadymentioned. It is the recognitionof a commonobjective that unifies the work of all economists-knowingly or not-because it provides a commonproblematic for their gestalts,values, researchefforts, and ana- lytic work. The common objectiveis the explanationof the sequential configurations-the path the dynamics-of the "material"activities of societieswhose orderarises as an unintendedby-product of the interplay of self-interestedactors. The InvisibleHand, the of motion of cap- italism, the prospectsfor plausiblecapitalism, the possibilityof social interventioninto the determinationof the level of economicactivity are all examplesof this problematic,brought within a single disciplinebe- cause of the sharedintellectual ambition of its practitioners. The second bindingcharacteristic is a common approachto the un- ravelingof the problematic.The approachis called "scientific,"although

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions Economics and Political Economy 693 the precise meaning and the exact procedures of science vary consider- ably from one investigator to the next. Nonetheless, in some large sense all believe that the dynamics of economic (and of political economic) change can be understood from a perspective that is more rigorous- more -like-than is the method we can apply in seeking to understand the political or religious or cultural or social sequences of history. The economic core and its political economic penumbra, with all its value- laden properties, is perceived as unfolding in some orderly, tendential manner. With all due allowance for error and accident, and for the limi- tations of thought and understanding, it is the shared belief of economists that the pattern of events will display, however faintly, the structure of some order-bestowing force. To employ a figure of speech that I have used before, economic science believes that events will display regularities, much as iron filings, sprinkled on a sheet of paper above a magnet, will reveal, however indistinctly, the presence of fields of magnetic force. All economics and political economy is thereby united by its belief in the presence of properties that give coherence to the sequence of con- figurations that economists study. If behavior is erratic or unpredictable, or if the constraints are unknown or unknowable, or if the initial setting is indistinct and ambiguous, the grand task of all economists is doomed to failure. It may well be, as Adolph Lowe has written, that this is indeed the threat, insofar as our social research object is losing the properties of reliable short-run maximizing behavior produced by an earlier, harsher social setting. If that is the case, economics and political economy must perforce become primarily a matter of praxis-that is, of imparting social order-with theory dependent on the success of this political effort.30 Thus I conclude with a definition of economics that is not, in its formal aspects, very different from that of the conventional formulations. Eco- nomics is an inquiry into the consequences of foreseeable behavioral paths in settings in which there are clearly perceived constraints. The difference is that I believe the conceptual elements of the investigation-the specifi- cation of the relationships into which the social actors enter, the resistance they encounter, the motivations that impel them-to be intrinsically im- bued, of necessity, without scandal, and indeed of right, with valuational presuppositions. Values and beliefs about the inevitability of hierarchy, the emancipatory thrust of humankind, or the necessity for making the best of things, are present from the beginning, unavoidably coloring and shaping the concepts out of which the analysis emerges and the cosmo- logical projections in which it ends. In this sense, politics comes first, be- fore economics, and political economy is the precursor to, not the product of, economics. Marx, Keynes, and Schumpeter thus simply give us striking

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions 694 RobertL. Heilbroner examplesof this universalcondition of social inquiry,torn between its deep-rootedprompting and its analytic procedures,striving to make a scienceout of morality.

Notes

1. J. M. Keynes, The General Theory of Employment, Interest, and (New York: HarcourtBrace, 1936), p. 355. 2. , History of Economic Analysis (New York: Oxford UniversityPress, 1954), p. 1172. 2. See G. L. S. Shackle, The Years of High Theory (London: Cambridge UniversityPress, 1973), pp. 144, 145, 270. 4. Schumpeter,History, pp. 572-640. 5. See J. M. Keynes, "Economic Possibilities for Our Grandchildren" (1930), reprintedin Essays in Persuasion (New York: W. W. Norton, 1963). 6. Keynes, General Theory, p. 380. 7. Joseph Schumpeter, Capitalism, Socialism, and Democracy (New York: Harper& Row, 1942), p. 163, n. 7 (his italics). 8. Schumpetertends to treat the "rationalspirit" of capitalism in an un- critical fashion, stressing its rationality of means and overlooking its irrationalityof ends. This may embroilhim in the same "SpuriousProb- lem" as that which he saw as Max Weber'sundoing. See his History, p. 8,n.4. 9. Adam Smith, (New York: Random House, 1937), pp. 734, 736. 10. See Hal Draper, Karl Marx's Theory of Revolution, vol. 2 (New York: MonthlyReview Press, 1978), p. 62. 11. E. P. Thompson, The Poverty of Theory (New York: Press, 1978); see especiallychap. 1. 12. See my analysis: "Was SchumpeterRight?" in Schumpeter'sVision, ed. ArnoldHeertje(New York: Praeger,1981). 13. Schumpeter, Capitalism, Socialism, and Democracy, p. 204 n. The foot- note deserves to be quoted in extenso: "The modal individual in the bourgeois class is superior as to intellectual and volitional aptitudesto the modal individualin any other of the classes of industrialsociety. This has never been establishedstatistically, and hardly even can be, but it follows from an analysisof that process of social selection in a capitalist society." 14. Ibid.,pp. 84, 111. 15. Keynes, General Theory, p. 220. 16. See the very lucid exposition in John Weeks, Capital and Exploitation (Princeton, N.J.: PrincetonUniversity Press, 1981), p. 152-66. 17. Karl Marx, Capital (New York: InternationalPublishers, 1967), p. 763. (Somewhat less colorful language, with the same intent, is to be found in the 1977 edition [New York: RandomHouse]). 18. Schumpeter, Capitalism, Socialism, and Democracy, pp. 117-18; Theory of (Cambridge, Mass.: Harvard University

This content downloaded from 129.100.58.76 on Fri, 15 Nov 2013 23:53:07 PM All use subject to JSTOR Terms and Conditions Economics and Political Economy 695

Press, 1949), p. 65; Business Cycles, vol. 1 (New York: McGraw Hill, 1939), pp. 130-92. 19. The Methodology of Economics (New York: Cambridge University Press, 1980), pp. 131-32,265. 20. Robert Heilbroner, "Economics as a 'Value Free' Science," Social Re- search 40 (Spring 1973): 129-33. See also K. Mannheim,Ideology and Utopia (New York: HarcourtBrace, 1936), pp. 116-17. 21. Schumpeter,History, p. 42. 22. It has often been remarkedthat Smith built a Newtonian model of a so- cial system, but it should not be lost to sight that he also built a social model of a Newtonian system. Moral and political values are openly ex- pressed in his descriptionof and prescriptionsfor the functions of gov- ernment,the characteristicsof the three social classes, and the roles of sympathy,benevolence, and prudence in the regulationof our daily be- havior. See my "Socializationof the Individualin Adam Smith,"History of Political Economy 3 (1982): 427-39. 23. Alfred Marshall, Principles of Economics (New York: Macmillan, 1948), pp. 64, 78-79. The "engine"figure of speech is quotedin Keynes's Essays in Biography(New York: W. W. Norton, 1951), p. 171. 24. See my :For and Against (New York: W. W. Norton, 1980), p. 21 and chap. 4. 25. Schumpeter, Imperialism and Social Classes (Cleveland: World Publish- ing, 1955), pp. 137, 160. 26. Schumpeter, Capitalism, Socialism, and Democracy, p. 134. 27. Heilbroner,"Was Schumpeter Right?" 28. J. M. Keynes, "OnNational Self Sufficiency,"Yale Review (June 1933): 760-61. It is noteworthythat Keynes's political economy did not depend on his analytic economic breakthroughs.J. Ronnie Davis has shown in The New Economics and the Old Economists (Ames: Iowa State Uni- versity Press, 1971) that many "Keynesian"policy proposals had been worked out by U.S. economists prior to the General Theory. 29. I am indebtedto David Harveyfor this point. 30. Lowe's thesis is most succinctly stated in R. Heilbroner,ed., Economic Means and Social Ends (Englewood Cliffs, N.J.: Prentice Hall, 1969), pp. 169-70. Lowe proposes to rescue economics by making control over behavior its primary task, thereby restoringpredictability to social out- comes. This "politicaleconomics" would indeed rescue the usefulnessof theory, but only by subordinatingit to the praxis of behavior-shaping intervention.Needless to say, there is a wide range of options for such interventions.The full argumentis set forth in A. Lowe, On Economic Knowledge (New York: Harper & Row, 1964; White Plains, N.Y.: M. E. Sharpe, 1983).

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