As is often pointed out marginalist economics tends to be characterised primarily by a couple of distinct axioms that operate ‘under the surface’ to produce its key results. Varoufakis and Ansperger neatly characterise these as: the axiom of methodological individualism; the axiom of methodological instrumentalism; and the axiom of methodological equilibration.
Having dealt with the third of these axioms at some length on this blog before, I wish to focus here on the first two and try to show that they are intimately intertwined with one another and ultimately grounded in a materialist ontology. In order to do this, we must go right back to the philosopher who, I think, more than any other lay the groundwork for marginalist economics; namely, the Ancient Greek philosopher Epicurus.
This may seem like a strange statement. After all, isn’t the axiom of methodological instrumentalism — which Varoufakis and Ansperger characterise as the assumption that “all behaviour is preference-driven or, more precisely, it is to be understood as a means for maximising preference-satisfaction” — isn’t this axiom ultimately derived from the utilitarian philosophy developed by the likes of Jeremy Bentham?
I would argue that this is simply not the case. In fact, very similar arguments can be found in the Epicurean philosophy which also aimed to maximise pleasure and avoid pain. In his Principle Doctrines, for example, Epicurus wrote,
The magnitude of pleasure reaches its limit in the removal of all pain. When such pleasure is present, so long as it is uninterrupted, there is no pain either of body or of mind or of both together.
This was then, among the Epicureans — who, by the way, were extremely cult-like — elevated to a sort of ethical maxim. In order to live the good life, one must pursue the maximum amount of pleasure and in the meantime avoid pain as best one can. Note that such a selfish doctrine is also at the heart of marginalist economics.
As is well-known, Epicurus’ ethical doctrines were intimately intertwined with his philosophy of materialistic atomism. What is less typically noticed is that such a philosophy is basically identical with the marginalist focus on atomistic individuals — that is, the first axiom that Varoufakis and Ansberger lay out; the axiom of methodological individualism.
Methodological individualism, according to John King who explored the history of the concept in his excellent The Microfoundations Delusion (which I reviewed for ROKE and did an extended post on for Naked Capitalism) notes how the principle was implicit in the marginalist revolution at the end of the 19th century, but that the term was only coined by Joseph Schumpeter in 1908 (pp52-53). The principle, according to Varoufakis and Ansberger, is basically “the idea that socio-economic explanation must be sought at the level of the individual agent”.
This is, in a very strong sense, an atomistic doctrine. This was noted in a very famous passage by Thorstein Veblen where he wrote in his Why is Economics Not an Evolutionary Science?:
The hedonistic conception of man is that of a lightning calculator of pleasure and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact. He has neither antecedent nor consequent. He is an isolated definitive human datum.
Clearly what Veblen has in mind is that, in marginalist economics, man is seen not only as an instrumental agent in pursuit of pleasure (Axiom 2), but also as a self-contained atom (Axiom 1).
This, of course, is identical to the Epicurean ontology which considers that the entire universe is made up of independent material atoms moving through an empty void known as ‘space’. This can be read in his Letter to Herodotus,
[E]ach atom is separated from the rest by void, which is incapable of offering any resistance to the rebound; while it is the solidity of the atom which makes it rebound after a collision, however short the distance to which it rebounds, when it finds itself imprisoned in a mass of entangling atoms.
Each atom is seen, like the individual in marginalist economics, to be completely cut off and self-contained. It is, then, of no surprise that Epicurean ethics involves individuals maximising pleasure and minimising pain — or, as the marginalists would put it, maximising utility and minimising disutility — it simply follows from the basic ontological position that he is putting forward.
This is where the notion of materialism also comes in. As I have pointed out on this blog before, materialism is really characterised by an attempt to get an impossible third-person, God’s eye perspective on both oneself and the universe. We might call this the ‘objectifying tendency’ inherent in the philosophy of materialism — it seeks to turn everything, including ourselves, in objects rather than subjects.
Such a philosophy is actually incoherent at the most basic level, but nevertheless we now see clearly that it is inherently tied up with the atomistic conception of the universe which was embedded in 19th century physical sciences and which was copied from the latter by marginalist economists. It is also, it should be said, entirely useless for economic analysis. As Keynes himself put it in his Treatise on Probability,
The kind of fundamental assumption about the character of material laws, on which scientists appear commonly to act, seems to me to be [that] the system of the material universe must consist of bodies … such that each of them exercises its own separate, independent, and invariable effect, a change of the total state being compounded of a number of separate changes each of which is solely due to a separate portion of the preceding state … Yet there might well be quite different laws for wholes of different degrees of complexity, and laws of connection between complexes which could not be stated in terms of laws connecting individual parts … If different wholes were subject to different laws qua wholes and not simply on account of and in proportion to the differences of their parts, knowledge of a part could not lead, it would seem, even to presumptive or probable knowledge as to its association with other parts … These considerations do not show us a way by which we can justify induction … No one supposes that a good induction can be arrived at merely by counting cases. The business of strengthening the argument chiefly consists in determining whether the alleged association is stable, when accompanying conditions are varied … In my judgment, the practical usefulness of those modes of inference … on which the boasted knowledge of modern science depends, can only exist … if the universe of phenomena does in fact present those peculiar characteristics of atomism and limited variety which appears more and more clearly as the ultimate result to which material science is tending. (pp286-287)
What many didn’t realise — indeed, I don’t think that Keynes did himself — is that such a criticism is one implicitly laid against the materialist ontological position itself.