ignorance and liberty

Ignorance and Liberty

Running from antiquity to the present day, there is a single premiseuniting all those who believe in an open society: that the demand forliberty rests on the recognition of human ignorance—we need to be freebecause we are ignorant and fallible. Free social cooperation permits usto mobilize our knowledge and develop methods of discovery throughwhich we can explore the unknown and continually correct our errors.To assent to free cooperation is to accept critical discussion anddemocracy, and in this way we are able to increase our rationality andfurther political and economic development.

Improvement in the conditions of our lives, therefore, does not comefrom the omniscience attributed to some enlightened legislator orplanner. Ignorance and Liberty examines how the market liberates usfrom this idea of a privileged source of knowledge, by presenting themarket as a place not only where goods are exchanged, but also wheredifferent philosophical ideas and religious beliefs must cohabit. In thisway, new horizons are opened up and the sense of an absolute thatprevails in a closed world is undermined. Topics addressed include: • The liberty of the ancients compared with that of the moderns• The failure of psychologism and the question of private property• Mandeville and the Scottish moralists• Austrian marginalism• The destruction of liberty

This book will be of interest to the research community and advancedstudents in the fields of political theory, political philosophy and thehistory of ideas and social theory. It follows Infantino’s Individualismin Modern Thought (Routledge, 1998).

Lorenzo Infantino is Professor of Philosophy and Social Sciences atLibera Università Internationale degli Studi Sociali, Rome.

Routledge Studies in Social and Political Thought

1 Hayek and AfterHayekian liberalism as a research programmeJeremy Shearmur2 Conflicts in Social ScienceEdited by Anton van Harskamp3 Political Thought of André GorzAdrian Little4 Corruption, Capitalism and DemocracyJohn Girling5 Freedom and Culture in Western SocietyHans Blokland6 Freedom in EconomicsNew perspectives in normative analysisEdited by Jean-François Laslier, Marc Fleurbaey,Nicolas Gravel and Alain Trannoy7 Against PoliticsOn government, anarchy and orderAnthony de Jasay8 Max Weber and Michel FoucaultParallel life worksArpad Szakolczai9 The Political Economy of Civil Society and HumanRightsG.B.Madison10 On Durkheim’s Elementary Forms of Religious LifeEdited by W.S.F.Pickering, W.Watts Miller and N.J.Allen11 Classical IndividualismThe supreme importance of each human beingTibor R.Machan12 The Age of ReasonsQuixotism, sentimentalism and political economy ineighteenth-century BritainWendy Motooka13 Individualism in Modern ThoughtFrom Adam Smith to HayekLorenzo Infantino14 Property and Power in Social TheoryA study in intellectual rivalryDick Pels15 Wittgenstein and the Idea of a Critical SocialTheoryA Critique of Giddens, Habermas and BhaskarNigel Pleasants16 Marxism and Human NatureSean Sayers17 Goffman and Social OrganizationStudies in a sociological legacyEdited by Greg Smith18 Situating HayekPhenomenology and the neo-liberal projectMark J.Smith

19 The Reading of Theoretical TextsPeter Ekegren20 The Nature of CapitalMarx and FoucaultRichard Marsden21 The Age of ChanceGambling in Western CultureGerda Reith22 Reflexive Historical SocietyArpad Szakolczai23 Durkheim and RepresentationsEdited by W.S.F.Pickering24 The Social and Political Thought of NoamChomskyAlison Edgley25 Hayek’s Liberalism and Its OriginsHis idea of Spontaneous Order and the ScottishEnlightenmentChristina Petsoulas26 Metaphor and the Dynamics of KnowledgeSabine Maasen and Peter Weingart27 Living with MarketsJeremy Shearmur28 Durkheim’s SuicideA Century of Research and DebateEdited by W.S.F.Pickering and Geoffrey Walford29 Post-MarxismAn intellectual historyStuart Sim30 The Intellectual as StrangerStudies in spokespersonshipDick Pels31 Hermeneutic Dialogue and Social ScienceA critique of Gadamer and HabermasAustin Harrington32 Methodological IndividualismBackground, history and meaningLars Udehn33 John Stuart Mill and Freedom of ExpressionThe genesis of a theoryK.C.O’Rourke34 The Politics of Atrocity and ReconciliationFrom terror to traumaMichael Humphrey35 Marx and WittgensteinKnowledge, morality, politicsEdited by Gavin Kitchmg and Nigel Pleasants36 The Genesis of ModernityArpad Szakolczai37 Ignorance and LibertyLorenzo Infantino

Ignorance and Liberty

Lorenzo Infantino

RoutledgeTaylor & Francis Group

LONDON AND NEW YORK

First published 2003by Routledge11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canadaby Routledge29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2003. © 2003 Lorenzo Infantino

All rights reserved. No part of this book may be reprinted orreproduced or utilised in any form or by any electronic,mechanical, or other means, now known or hereafter invented,including photocopying and recording, or in any informationstorage or retrieval system, without permission in writing from thepublishers. British Library Cataloguing in Publication DataA catalogue record for this book is available from the BritishLibrary Library of Congress Cataloging in Publication DataA catalog record for this book has been requested ISBN 0-203-52232-X Master e-book ISBN ISBN 0-203-54796-9 (Adobe eReader Format)ISBN 0-415-28573-9 (Print Edition)

To my parents

vii

Contents

Acknowledgments ix

1 Introduction 1

‘True individualism’ and the market 1The harmful heredity of Platonic philosophy 2From the state of ignorance to the idea of society as a

spontaneous order 4Spontaneous orders and the birth of social sciences 7

2 The liberty of the ancients compared with that ofmoderns 8

Aspects of liberty: the market, critical discussion anddemocracy 8

Pericles: the market and an open society 11The market in the plays of Aristophanes 13The habitat of liberty 16Solon and the ‘struggle for law’ 19Athens and Sparta: liberty and tribalism 25Contractual freedom in Athens and Rome 29

3 The gnoseological roots of liberty and tribalism 32

Athens: ignorance and liberty 32Plato: re-establishment of the ‘privileged point of view on

the world’ 37The socio-economic characteristics of the Platonic city 41Aristotle: between tribalism and the market 48Cicero: between liberty and Platonism 56

viii Contents

4 The failure of psychologism and the question of privateproperty 62

Conversion versus critical discussion 62The doctrine of ‘manifest truth’ 66Harrington and Bernier: private property and freedom 69

5 Mandeville and the Scottish moralists: the discovery ofsociety as a spontaneous order 77

A science of Good and Evil is impossible: moral rules are aproduct of the social process 77

The question of economic value 82Ignorance, fallibility and the study of ‘latent functions’ 85Liberty as the habitat of development 89The origins of modern capitalism 94

6 Austrian marginalism: the limits of knowledge andsociety as a spontaneous order 99

Carl Menger and Adam Smith 99Menger and the subjectivist theory of value 101Against the German Historical School of Economics 103The conflict between the ‘Austrian’ and Walrasian

approaches 108Ignorance and disequilibrium 113Hayek: unification of the Austrian and Scottish

traditions 115Abstract order and mobilization of knowledge 120Property and freedom 126

7 The intellectualistic hubris and the destruction of liberty 128

There are no ‘privileged’ sources of knowledge 128Historicism, gnosis and utopia 133The myth of Sparta and the ‘two French revolutions’ 137The socialist roots of Nazism 144Liberty and change 147

Notes 151References 193Index 206

ix

Acknowledgments

I would like to thank Professor Giovanni Reale, who kindly respondedto my request to read the second and third chapters. I would also liketo thank Massimo Baldini, who read the entire manuscript. Over theyears, I have discussed the basic topics treated here with Dario Antiseriand Luciano Pellicani. My debt to both of them goes far beyond whatis indicated in the footnotes. Special thanks are due to Sergio Ricossa,who for me has always been a scientific and moral point of reference.Finally, many thanks to Mrs Gwyneth Weston, who translated myprevious book on Individualism in Modern Thought and to Mrs CoraHahn, who worked with me on this one. As usual, the responsibilityfor what remains is completely mine.

1

1 Introduction

‘True individualism’ and the market

Very often, when there is a demand for liberty, a high level ofknowledge and wisdom is attributed to mankind. And yet the mostauthentic liberal tradition takes the completely opposite point of view.Liberal institutions are advocated as a defense against human error.Ignorance and fallibility are our anthropologic traits.

During the twentieth century, Friedrich A.von Hayek spoke of ‘trueindividualism’ and ‘false individualism’.1 The former refers to thosewho believe that mobilization of knowledge and individual energies is anecessity caused by our ignorance. The latter refers to those whoattribute to all individuals knowledge of so-called ‘relevant data’ andnegate, in this way, the problematic situations that foster the need forliberty: ‘a factual assumption […] which is never satisfied in real lifeand which, if it were ever true, would make the existence of thosebodies of rules which we call morals and law not only superfluous, butunaccountable and contrary to the assumption’.2

The tradition that bases demand for liberty on the limits of humanknowledge is much more widespread than is commonly believed. It hasextremely profound roots, to which Karl R.Popper vigorously calledour attention. In The Open Society and Its Enemies, Popper points outthe gnoseological assumptions of liberty and tribalism, by going backto the events in Athens and Sparta. Liberty is nourished withgnoseological fallibilism; the bases of tribalism are absolutisticconceptions of knowledge.

Popper entered the field of political philosophy after he elaboratedin the Logik der Forschung (The Logic of Scientific Discovery) the ideaof fallibility of scientific knowledge. Scientific knowledge increases only

2 Introduction

to the extent that its assertions are subjected to criticism. Thus, errorscan be detected and new conjectures can be formulated in a processthat is continually open. Growth of scientific knowledge cannot occurin a context dominated by the fundamentum inconcussum, the‘privileged point of view on the world’. This leads to the idea offallibilism, fostered by critical discussion. Fallibilism is the name forliberty in the field of scientific research. And liberty is the name forfallibilism in the field of politics.

Obviously, the crux of the problem is to determine how to becomeliberated from the ‘privileged point of view on the world’. The traditionof ‘true individualism’ considers the market the source of freedom andliberty, because it is not only the place where goods are exchanged, butalso the point of encounter for men with different philosophical ideasand different religious beliefs. In order for the market to function, thesedifferent world-views must cohabit on an equal basis. Two factors leadto this end. The first is produced by contact among men, since it opensnew horizons and undermines the sense of absolute that prevails in aclosed world. The second factor is completely utilitarian: we put ourpersonal faith in the private domain, so we can participate in themarket and obtain the means to achieve our goals.

The market is like a powerful acid that irreparably erodes the‘privileged point of view on the world’. It replaces the fundamentuminconcussum with the recognition of our ineradicable ignorance andfallibility and the consequent competitive search for suitable solutionsto our problems. This occurs primarily on an economic level. But thelogic of competition involves the field of knowledge and branches outto the area of politics to become democracy.

The harmful heredity of Platonic philosophy

Where there is no market, there can be no gnoseological fallibilism anddemocracy. This is clearly shown by the events of the Athenian polis,which will be discussed in the following chapters. It is important hereto point out that the first and the most complete formulation of theconnection among the market, gnoseological fallibilism and democracycan be found in Plato, not because he supported an ‘open society’, butfor exactly the opposite reason. Plato’s objective was to re-establish aclosed society. He was interested in identifying the conditions thatmake it possible. This implies that identifying the habitat of a closedworld is the same as identifying that of an open one and then rejectingit.

Introduction 3

Plato was hostile to gnoseological fallibilism and democracy. AsJacob Burckhardt maintains, he wanted to achieve ‘completesuppression of the individual’.3 This aim was also clearly expressed inthe Laws, which are generally considered a watering-down of the planset forth in the Republic.

Athenian life was ‘polytheistic’. Max Weber describes it as follows:‘Hellenic man at times sacrificed to Aphrodite and at other times toApollo and, above all, […] everybody sacrificed to the gods of hiscity’.4 Polytheism involves that there is no science of good and evil. InWeber’s words, this means that ‘fate, and certainly not “science”, holdsway over these gods and their struggles’.5 Polytheism also involvesthat, with no science of good and evil, religious beliefs are a privatechoice. Though there may be an accepted public cult, it does notprevent the expression of individual choices as well.

Apropos of the life of the polis, Burckhardt writes: ‘Undoubtedly,the family gods of property, business, and love had much moreinfluence on feelings than the public cult in the temples’.6 AndBurchkardt adds: ‘the family and its gods were the only refuge for thesoul when it wanted to retreat from the polis. The polis could not,and in reality did not, want to interfere with the soul of theindividual’.7

Plato’s aim was completely different. He wanted to replacefallibilism with gnoseological absolutism. His objective was to establisha science of good and evil, whose decrees made all critical discussionand civil and political freedom impossible. Consequently, it is notsurprising that Plato thought all private cults should be repressed: ‘Noone shall possess a shrine in his own house: when anyone is moved inspirit to do sacrifice, he shall go to the public places to sacrifice, and heshall hand over his oblation to the priests and priestesses to whombelongs the consecrations thereof; and he himself, together with anyassociates he may choose, shall join in the prayers’.8 Moreover, Platoadded: ‘Shrines of the gods no one must possess in a private house; andif anyone is proved to possess and worship at any shrine other than thepublic shrines […], he that notices the fact shall inform the Law-wardens […]. And if anyone be proved to have committed an impiousact […] the Law-wardens shall judge […], and then shall bring theoffenders before the court, and shall impose upon them the due penaltyfor their impiety’.9 Therefore, Plato aimed to establish a sort ofreligious police, based on the delation. It is not by chance that he said:‘if any magistrate on hearing of the matter fails to do this, he himselfshall be liable to a charge of impiety’.10

4 Introduction

Plato’s plan implies ‘complete suppression of the individual’ and theconsequent repeal of all forms of critical discussion, and civil andpolitical freedom. The instrument intended to do this was thesuppression of private property and the institutions connected with it: acombination that we call ‘market’. Plato saw the market as adangerous tool that broadened the range of choices, and fosteredindividual freedom and critical discussion. This is why he wanted toabolish private property. He also wanted the city to be far from the sea,in order to avoid all contact with what was different and, consequently,could threaten the ‘privileged point of view on the world’. Thus, Platosaid that a seaside city ‘would need a mighty saviour and divinelawgivers, if, with such a character, it was to avoid having a variety ofluxurious and depraved habits’.11 He added that ‘the sea is, in verytruth, a right briny and bitter neighbour’, by ‘filling the markets of thecity with foreign merchandise and retail trading, and breeding in men’ssouls knavish and tricky ways, it renders the city faithless andloveless’.12 Therefore, in free economic activity Plato saw a power thatcould destroy gnoseological absolutism. And his objective was toannihilate that power.

Plato’s hostility to the market could not have been clearer. Since hisintention was to prevent an ‘open society’, he fought against privateproperty and the market. This will be dealt with more extensively inthe following chapters, where we also see that Aristotle, who defendedprivate property, did not hesitate to consider politics an ‘architectonic’science of society. Apropos of Aristotle’s position, Werner Jaeger rightlystates: ‘It is thoroughly Platonic in identifying the end of the State withthe ethical end of the individual; for this is the meaning of theproposition from which the inquiry proceeds, that the best State is thatwhich assures its citizens of the best life […]. In saying this, Aristotle isby no means subordinating the State to the welfare of the individual, asa liberal would do, but is deriving, as Plato does, the categories forjudging the value of the State from ethical standards that apply to thesoul of individual’.13

From the state of ignorance to the idea of society as a spontaneousorder

As we shall see later, in ancient Greece there was no lack of men withliberal political ideas. Solon spoke of the man’s ignorance, a state thatdoes not permit any certainty about the outcome of actions. Solon

Introduction 5

rejected all forms of intellectualistic hubris and realized that fate hasmore effect on human life than knowledge does.

In ancient Greece there was also no lack of outstanding supportersof critical discussion. For example, there was Socrates or Pericles.Therefore, it is easy to find in Athens important elements of ‘trueindividualism’. And it is consequent to see the social model of Athensas diametrically opposite to the social model of Sparta (and Plato).However, we can maintain, as Ortega y Gasset does, that ‘all theGreeks were blind to what today we call society’.14 In other words,Greek culture had no idea that society could be a spontaneous order(cosmos). Society was always considered an intentionally constructedorder (taxis). This prevented fertile comprehension of man’s ignoranceand fallibility from bearing better fruits.

Carried to its logical conclusions, gnoseological fallibilism destroysthe myth of the ‘great legislator’. First of all, fallibilism implies that,since rulers are ignorant and fallible as are all men, they should havelimited power. It also implies that, since no one knows how to solve allthe problems of social life, society cannot have a prescribed order;hence, the idea that society might be constructed intentionally must berejected. Consequently, a different path must be explored, liberating usfrom ‘our anthropomorphic habits of thought’, which lead us to believethat everything is ‘due to the design of some thinking mind’.15 And thisforces us to no longer see the social order as an external bond, imposedby political power; on the contrary, we have to see it as an internalbond, endogenously produced. Therefore, society is a spontaneousorder.

This brings to the foreground the theoretical contributions ofMandeville and the Scottish moralists (cf. Chapter 4), who were thefirst to consider society a spontaneous order. Their ideas had variousoffspring. For example, their works were preparative for the AustrianSchool of Economics (cf. Chapter 5). And yet, even before that, theirideas influenced Benjamin Constant, who studied for a time inEdinburgh, and the French post-revolutionary liberals, particularlyAlexis de Tocqueville. This explains why Constant strongly emphasizedthe contrast between the Spartan social model and that of Athens, andsaw in the latter the features of modern liberty.

It should be mentioned here that, in discussing Filangieri’s Scienzadelta legislazione (Science of Legislation), Constant said that Filangierihimself committed the unforgivable error of considering the legislator‘as a separate being, above other men, and necessarily better and moreenlightened than others’.16 According to Constant, if one accepts

6 Introduction

Filangieri’s statement, one might believe that legislation descends ‘fromheavens, pure and infallible, without need for intermediaries, whoseerrors falsify it, whose personal ambitions distort it, and whose vicesmisconstrue and override it […]. Legislation is the work of men and thework should not be trusted any more than the men’.17

Since Constant was aware of human ignorance and fallibility, hesupported the limitation of power. The ‘abstract recognition of thesovereignty of the people does not in the least increase the amount ofliberty given to the individuals’.18 In fact, ‘if we attribute to thatsovereignty an amplitude which it must not have, liberty may be lostnotwithstanding the principle, or even through it’.19

Constant’s analysis is extremely clear:

When you establish that the sovereignty of the people isunlimited, you create and toss at random into human society adegree of power which is too large in itself and which is bound toconstitute an evil, in whatever hands it is placed. Entrust it to oneman, to several, to all, you will still find that it is equally an evil.You will think that it is the fault of the holders of such powerand, according to the circumstances, you will accuse in turnmonarchy, aristocracy, democracy, mixed governments or therepresentative system. You will be wrong: it is in fact the degreeof force, not its holders, which must be denounced.20

Limitation of power can only be attained through the rule of law. Thisis an abstract order, which sets the boundaries among the actions ofindividuals. Thus, it preserves personal freedom, protects fromarbitrariness, and leaves undetermined the concrete order individualswill achieve.

Constant arrived at the conclusion: ‘What prevents arbitrary poweris the observance of procedures. Procedures are the tutelary deities ofsocieties: procedures alone protect innocence, they are the only meansfor men to relate to one another. Everything else is obscure: everythingis handed over to solitary conscience and vacillating opinion.Procedures alone are fully in evidence; it is to them that the oppressedmay appeal’.21 As we shall see, this abstract order is the legal structureof the market society.

Seconding Constant, Tocqueville was to say that ‘no people and noindividual, however enlightened they may be, can lay claim toinfallibility’.22 He recognized that ‘feelings and opinion are recruited,the heart is enlarged, and the human mind is developed by the

Introduction 7

reciprocal influence of men upon one another’.23 And he completelyentrusted the formation of the concrete social order to the ‘principle ofself-interest’,24 within the habitat of the rule of law, where allindividuals are on the same legal footing and mobilize the knowledgedispersed among them.25

All this agreed perfectly with the analysis that had been made by theScottish moralists, especially Adam Smith.

Spontaneous orders and the birth of social sciences

The discovery of ‘structures’ generated unintentionally by humanaction, i.e. which are not the result of a conscious plan, occured at thesame time as the birth of social sciences. This explains why Hayekwrites: ‘It would be no exaggeration to say that social theory beginswith—and has an object because of—the discovery that there existorderly structures which are the product of the action of many men butare not the result of human design’.26

We can identify an entire world of unplanned institutions, forexample, language, law, family, city, market and many others. And yetwe cannot forget that society itself is a spontaneous order. In otherwords, the bond which unites acting individuals has an internal nature;it is produced unintentionally by individuals themselves. As we alreadyknow, this has relevant political consequences. These will be discussedlater. Here, the most important point is something else. There is an‘objective’ world, the world of spontaneous orders, generated by theaggregation of our actions. It does not reflect our intentions. We oftenlook at it as at a surprisingly obscure universe. Hence, the need toexplain it. To this end social sciences were born. They help us tounderstand how actions aimed at a specific goal also produced (andproduce) norms and social institutions. In other words, social sciencesshed light on the function that norms and social institutions carry outfor our benefit.

A few pages before dealing with the ‘principle of self-interest’,Tocqueville wrote: ‘the science of association is the mother of science;the progress of all the rest depends upon the progress it has made’.27

Tocqueville added: ‘If men are to remain civilized or to become so, theart of association together must grow and improve in the same ratio inwhich the equality of conditions is increased’.28

8

2 The liberty of the ancients

compared with that of moderns

Aspects of liberty: the market, critical discussion and democracy

Liberty is not merely a political question. The problem can be clarifiedby comparing the liberty of the ancients with that of the moderns. Thisshows that, to deal with the question completely, we must examinejointly the economic, cultural and political aspects of the question.Even though it stresses the political aspect of liberty, BenjaminConstant’s classic text substantiates this.1 And Constant’s position isalso found in the work of Eduard Meyer, another classic author, whodwells on the economic aspects when comparing ancient and moderntimes, but points out the ties among economic liberty, political libertyand critical discussion.2

In more recent years, in dealing with ancient and modern conceptsof liberty, Karl Popper has dwelt on the problem of critical discussionand the growth of knowledge. And yet this has involved examinationof political and economic aspects as well.3 That is not all. It ismoreover important that Constant, Meyer and Popper see economicliberty as the basis of critical discussion and democracy.

There are also two authors, Lord Acton and Bruno Leoni, whoundoubtedly have compared the liberty of the ancients with that of themoderns to point out the connection among economic development,political development and the growth of knowledge; but their primaryaim is to identify the conditions that make possible liberty in themodern sense of the word.4

If by ‘liberty of the moderns’ we mean the possibility to criticize,dissent, compete, ‘falsify’ and innovate, all these authors agree whenthey maintain that this kind of liberty existed in Athens or Rome. Letus examine first how a strong connection among economicdevelopment, political development and an increase in knowledgeemerges from the writings of Constant, Meyer and Popper.

Liberty of ancients compared with moderns 9

Benjamin Constant

Constant asserts that, ‘of all the ancient states, Athens was the onewhich most resembles the modern ones’.5 Constant himself points out:Athens

was of all the Greek republics the most closely engaged in trade:thus it allowed to its citizens an infinitely greater liberty thanSparta or Rome. If I could enter into historical details, I wouldshow you that, among the Athenians, commerce had removedseveral of the differences which distinguished the ancient frommodern peoples. The spirit of the Athenian merchants was similarto that of the merchants of our days.[…]. In their relations withstrangers, we shall see them extending the rights of citizenship towhoever would, by moving among them with his family, establishsome trade or industry.6

Constant adds that in Athens liberty was the source of a process whichincreased knowledge, because liberty, ‘by submitting to all citizens,without exception, the care and assessment of their most sacredinterests, enlarges their spirit, ennobles their thoughts, and establishesamong them a kind of intellectual equality which forms the glory andpower of a people’.7 In other words, Constant shows how economicdevelopment, political development and growth in knowledge wereclosely connected in Athens. And he also sees economic liberty as thebasis of critical discussion and democracy.

Eduard Meyer

Meyer’s well-known essay, Die wirtschaftliche Entwicktung desAltertums, was a strong reply to Karl Rodbertus and Karl Bücher, whohad precluded that markets and exchange had ever been at the centerof ancient economy. In their view, the ancient economy was organizedaccording to the principle of òikos or self-sufficiency.8

Meyer writes: ‘From the sixth century Athens begins to competemore and more actively and, due to the superiority of its goods and thesplendid work of its vase painters, wrests one market after the otherfrom its ancient rivals’.9 And this has profound consequences: ‘With thepenetration of money and trade into every state and territory, all socialand economic relationships are radically transformed’.10 Previously ‘theCity-state was cruder; the city population with the nobility in control

10 Liberty of ancients compared with moderns

held sway over the politically dependent rural population. Now therural population is emancipated and the concept of citizen is extendedto all free inhabitants of the country’.11 ‘The first democracy developsin typical form in Athens, namely, different degrees of political rightsbased on property and individual contributions are eliminated’.12

Meyer also maintains that Athens was the site of great culturalfrenzy and that the ‘uninterrupted foundation of cities’ was the ‘realinstrument of civilization and the principal means of spreading it’.Thus, the East was attracted to Hellenic civilization, which waselevated to a ‘world civilization’.13 This was the beginning of acosmopolitanism that, according to Meyer, is exemplified by bothAthens and Rome.14

Therefore, Meyer does not merely point out the connection amongthe economic, cultural and political aspects. He maintains that it waseconomic development that set off political development and thegrowth in knowledge.

Karl R.Popper

From the historical point of view, Popper benefited from Meyer’smonumental Geschichte des Altertums, because he accepted its ideathat the establishment of the market led to democracy and the growthof knowledge.

We shall dwell mainly on the question of the market. Popper writes:colonization

led to cultural contacts; and these, in turn, created what wasperhaps the worst danger to the closed society—commerce, anda new class engaged in trade and seafaring. By the sixth centuryB.C., this development had led to the partial dissolution of theold ways of life, and even to a series of political revolutions andreactions. And it had led not only to attempts to retain and toarrest tribalism by force, as in Sparta, but also to that greatspiritual revolution, the invention of critical discussion, and, inconsequence, of thought that was free from magicalobsessions.15

As we can see, Popper associates the birth of critical discussion with theestablishment of the market. And that is not all. He ascribes the birthof democracy to economic development:


Perhaps the most powerful cause of the breakdown of the closedsociety was the development of sea-communications andcommerce. Close contact with other tribes is liable to underminethe feeling of necessity with which tribal institutions are viewed;and trade commercial initiative appears to be one of the fewforms in which individual initiative and independence can assertitself […] the naval policy of Athens was based upon its harbours,especially the Piraeus, the centre of commerce and the strongholdof the democratic party […]. Accordingly, we find that for morethan a century the empire, the fleet, the harbour, and the wallswere hated by the oligarchic parties of Athens as the symbols ofdemocracy and as the sources of its strength which they hopedone day to destroy.16

Consequently, Popper too stresses the connection among economy,politics and knowledge and considers the establishment of the marketthe basis for the origin of critical discussion and democracy.17

Pericles: the market and an open society

We can now try to trace the three dimensions of liberty, here identifiedwith the help of Constant, Meyer and Popper, back to Pericles. Sincethese authors consider economic liberty the basis of cultural andpolitical development, let us first examine Pericles’ attitude toward themarket.

Pericles states: ‘Because of the greatness of our city, the fruits of thewhole earth flow in upon us so that we enjoy the goods of othercountries as freely as our own’.18 Pericles counts the free importation ofgoods produced in other countries among the merits of his city. Thus,in Athens, liberty also meant free trade. Could it have been otherwise?

Karl Polanyi, an expert in the debate on òikos, poses the question asfollows:

democracy, in the Greek sense, required material safeguards toprevent the bribing of the public by the rich. As the only effectiveguarantee, the wealthy were to be prevented from feeding thepolitically active populace that was engaged in sitting on the jury,voting in the assembly, administering in the Prytany. To theAthenian mind, two seemingly contradictory requirementsfollowed—the distribution of food to be done by the polis itself,


yet bureaucracy was not to be permitted to enter. For democracymeant rule of the people by the people, not by theirrepresentatives nor by bureaucracy. Both representation andbureaucracy were looked upon as its antithesis […]. But howcould this distribution by the state be accomplished without abureaucracy? In Athens the food market served as an answer.19

In a democracy, where the citizenry was expected to do theadministering itself, the distribution of food required themarket.20

Therefore, Pericles takes up ‘the humble institution of the market’,21

because it can solve the economic problem and safeguard politicaldemocracy. But it is also obvious that the basis for critical discussionand the birth of democracy is the market. Commerce brings newvalues, new beliefs and new ideas.22 Competition among goods is acultural encounter. This leads to critical discussion and democracy,which become the way to deal with problems of the collectivity. It wasnot by chance that Pericles declared: ‘In our opinion action does notsuffer from discussion but, rather, from the want of that instructionwhich is gained by discussion preparatory to the action’.23

Pericles himself underscored the originality of the Athenianexperiment:

Our institutions do not emulate the laws of the others. We do notcopy our neighbors: rather, we are an example to them. Oursystem is called democracy, for it respects the majority and notthe few.24

And he pointed out:

the claim of excellence is also recognized; and when a citizen is inany way distinguished, he is generally preferred to the publicservice, not in rotation, but for merit. Nor again is there any barin poverty and obscurity of rank to man who can do the statesome service.25

Consequently, following Glotz, it can be said that ‘Attica became theclassic home of liberty’.26 More extensively, Glotz explains:

the Athenians, proud as they were of being free citizens, wereperhaps still prouder of being equal citizens. Equality was for


them the condition of liberty; it was, indeed, because they wereall brothers, born of a common mother, that they could be neitherthe slaves nor the masters of one another. The only words whichserve in their language to distinguish the republican regime fromall others were isonomia, equality before the law, and isegoria,equal right of speech.27

The fact is that ‘the principle of modern liberalism’ made itsappearance in Athens.28 ‘The State was called upon to use its power inthe service of the individual’.29 The crucial point is that interference ofthe state in the life of the citizens becomes unnecessary, because theysolve their problems by means of the market and by comparing theirindividual decisions.

All this happened—as Constant stressed—despite the fact that‘slaves took care of most the work’ and notwithstanding that ‘severalof the other circumstances which determined the character of ancientnations existed in Athens’.30 At this point, perhaps, one should acceptPopper’s more thorough evaluation:

I am far from defending everything that Athens did in building upher empire, and I certainly do not wish to defend wanton attacks(if such have occurred), or acts of brutality; nor do I forget thatAthenian democracy was still based on slavery. But it is necessary,I believe, to see that tribalist exclusiveness and self-sufficiencycould be superseded only by some form of imperialism. And itmust be said that certain of the imperialist measures introducedby Athens were rather liberal.31

Reflection on Popper’s comments will probably lead to the realizationthat Athens used slaves, because its own population was too small inrespect of the large economic activity.32 It follows that, in a context ofthe free circulation of people—which would be in perfect agreementwith Pericles’ statement that ‘Athens is thrown open to the world andwe never expel a foreigner’33 that phenomenon would not haveoccured. Slavery is not in the genetic code of liberty.

The market in the plays of Aristophanes

The presence of the market in Athenian democracy can be confirmed inthe plays of Aristophanes and should not be underestimated. Since the


market itself is the basis of critical discussion and democracy, anypossible evidence of its presence must be brought to light. However, wemust first answer the question of whether a play can be considered‘evidence’. Victor Ehrenberg says:

It is my belief that nowhere but in comedy are the facts of socialand economic life given merely as a background and to create anatmosphere. We must, of course, take into account all possiblesource of error, such as comic exaggeration and distortion, unrealand impossible events, ‘typical’ persons and topics. Even so, wehave in comedy excellent evidence of many real facts, above all ofthose relating to the general conditions of life which form thebackground of the comic plot34

because

the poet was one of the people, the theatre was an affair of theirs,and there was food for their natural delight in every kind of agon.The theatre was the Polis.35

Thus, if it is correct to use a play to learn how social cooperationoccurred, let us see what Ehrenberg manages to draw fromAristophanes.

First of all, ‘it is true that Athens received goods from almost everypart of the producing world’.36 It ‘never aimed at economic self-sufficiency, and neither in peace nor in war did the idea ever occur tothe Athenians of protecting attic production against import fromabroad’.37 Moreover, ‘the fact that Athenian silver coinage reached allparts of the world is perhaps indicated by a comic invention whenTheseus is said to have changed Charon’s fee into the typicallyAthenian two obols’.38 The market became

the centre of both trade and craftsmanship, and therefore theplace where one could hope to find every sort of work. Thiscoordination between production and sale, both of which weretypes of business on a purely monetary basis, made the market anorganized unit, where a widely specialized trade found safe andconvenient accommodation.39

That is not all:


the fact that part of the women’s home-production was sold inthe market makes it clear that even in this the most persistentbranch of home-industry the days of òikos-economy were pastand gone.40

The Athenians were the main protagonists of commercial traffic: ‘TheAthenian citizens ruled in ekklesia and trade, and none less in theharbor than in the market, that is to say, none less in emporia than inkapelia’.41

What about the metics?

If the metics had been so prominent in economic life as mostmodern scholars believe, it would be impossible that nearly all thetradesmen and merchants and artisans in comedy are citizens.Having an audience of citizens, or even of citizens and meticstogether, the poets no doubt usually preferred to present citizens,but they could not regularly depict general conditions which werecontrary to the real facts.42

Hence, the conclusion that ‘the modern view that pratically all trade,banking and craftsmanship were in the hands of metics is false’.43

Furthermore:

There was no division of labor between citizen and metic, in thesense that service of the State and agriculture were for thecitizen, trade and handcrafts for the metic […]. On the otherhand, even in vocations where metics formed the majority, theywere never so prominent that their position could be consideredanalogous to that of the citizen in agriculture. It is still moreincorrect to speak of a ‘deep social gap’ between citizens andmetics, for both, whether rich or poor, were on roughly the samesocial level, and actually formed one and the same social body.The unity of the bourgeois class must be extended to include themetics.44

Athens was an ‘open society’. ‘It was the large number of foreignerswhich won the Athenian high praise for their philoxenia’.45 ‘In Athensand even more in the Piraeus, there was a strange mixture of languageand dialect, of clothes and ways of life’.46

The picture that emerges from Aristophanes’ plays raises thequestion of what rules enabled people with different philosophical


and religious views of the world to live together? To answer thisquestion, we must discover the normative habitat of this type ofcohabitation.47

The habitat of liberty

Since the market was the economic basis of the Athenian polis, wemust establish what rules facilitated it and made critical discussion andpolitical democracy possible. Let us turn immediately to suggestionsfrom Acton and Leoni.

Acton considers Solon not only the ‘wisest man to be found inAthens, but the most profound political genius of antiquity’.48 Solon’sgreat merit was that he understood that concentrating power was not aproper response to political disorder.49 Acton says:

The upper class had possessed the right of making andadministering the laws, and he [Solon] left them in possession,only transferring to wealth what had been the privilege of birth.To the rich, who alone had the means of sustaining the burden ofpublic service in taxation and war, Solon gave a share of powerproportioned to the demands made on their resources. Thepoorest classes were exempt from direct taxes, but […] Solongave them a voice in electing magistrates from the classes abovethem, and the right of calling them into account. This concession,apparently so slender, was the beginning of a mighty change. Itintroduced the idea that a man ought to have a voice in selectingthose to whose rectitude and wisdom he is compelled to trust hisfortune, his family and his life. And this idea completely invertedthe notion of human authority, for it inaugurated the reign ofmoral influence where all political power had to depend on moralforce. Government by consent superseded government bycompulsion, and the pyramid which had stood on a point wasmade to stand upon its base. By making every citizen theguardian of his own interest Solon admitted the element ofDemocracy into the state’.50

Solon taught that it is ‘the essence of Democracy […] to obey nomaster but the law’.51

In reference to Pericles, Acton states that the period in which ‘theGreeks passed from dim fancies of mythology to the fierce light ofscience was the age of Pericles, […] the grandest movement in the


profane annals of mankind, for to it we owe […] much of ourphilosophy and far the better part of the political knowledge wepossess’.52 Furthermore: Pericles

resolutely struck away all the props that still sustained theartificial preponderance of wealth. For the ancient doctrine thatthe power goes with land, he introduced the idea that powerought to be so equitably diffused as to afford equal security to all.That one part of the community should govern the whole, or thatone class should make laws for another, he declared to betyrannical. The abolition of privilege would have served only totransfer the supremacy from the rich to the poor, if Pericles hadnot redressed the balance by restricting the right of citizenship toAthenians of pure descent. By this measure the class whichformed what we should call the third estate was brought to14,000 citizens, and became about equal in number with thehigher ranks.53

We come now to the central issue. Acton writes:

That none might be excluded by poverty, he caused the poor to bepaid for their attendance out of the funds of the state […]. Theinstrument of his sway was the art of speaking. He governed bypersuasion. Everything was decided by argument in opendeliberation, and every influence bowed before the ascendency ofmind.54

Acton maintains that Solon’s great merit was to have reversed theformula of authority and introduced a government based onconsensus. He asserts that Pericles governed by consensus, which wasreached by open discussion. This enables us to give a preliminaryanswer to the question of what conditions foster the liberty of themoderns. The answer is renunciation of a ‘privileged point of view onthe world’. In other words, the equality sought by Solon and Periclesexcludes the possibility of a pre-determined and sure person we canrely on to solve our problems. Mankind’s greatest need is knowledge,and the way to satisfy it is to discuss openly different solutions. Ineconomy and politics this happens by means of the market anddemocracy. However, discussion applies to all fields and leads to anincrease in rationality.


Thus, the first necessary condition for liberty is renunciation of the‘privileged point of view on the world’. This renunciation leads toequality before the law, a legal formula whose ‘manifest function’fosters the processes we call democracy and the market. In addition,besides this, equality before the law fulfils the ‘latent function’ to fosteranother and more profound procedure: that of mobilizing knowledge.It does this through the open discussion made possible by the lack of a‘privileged point of view on the world’ and by the consequentcontractual freedom related to the equality before the law. Therefore,Acton is right when he says that the Athenians ‘resolved to govern byconcurrence’.55

Consequently, it must be pointed out that liberty is made possibleby the renunciation of a ‘privileged point of view on the world’,which in legal terms is expressed by the principle of equality beforethe law. And one can conclude, as Bruno Leoni does, that ‘freedom isnot only an economic or a political concept, but also, and probablyabove all, a legal concept, as it necessarily involves a whole complexof legal consequences’.56 Moreover, it is possible to add that, ‘whilethe political approach […] is complementary to the economic one inany attempt to redefine freedom, the legal approach iscomplementary to both’.57

Leoni realizes that equality before the law is the institutionalexpression of the renunciation of the ‘privileged point of view on theworld’ and of the decision to rely on individualism, on a procedureopen to participation of subjects who are now on the same level. Theimmediate consequence of this is the independence of the law fromlegislation. The legislator who represents a ‘privileged point of view onthe world’ no longer exists: ‘as language and fashion are the productsof the convergence of spontaneous actions and decisions on the part ofa vast number of individuals, so the law too can, in theory, just as wellbe a product of a similar convergence in other fields’.58 This is whyLeoni stresses the concept of law in Athens and Rome (and also inEngland), which is a concept hostile to the revival of the grandlegislator and to the lack of independence of the law from legislation.59

In reference to Athens, Leoni says:

Tysamenes’ reformation of the Athenian constitution at the end ofthe fifth century offers us an example of a remedy against thisinconvenience that could be usefully pondered by contemporarypolitical scientists and politicians. A rigid and complex procedurewas then introduced in Athens in order to discipline legislative


innovations. Every bill proposed by a citizen […] was thoroughlystudied by a special committee of magistrates (nomotetai) whosetask was precisely that of defending the previous legislationagainst the new proposal.60

Apropos of Rome, he gets to the heart of the problem more directly: ‘itis said that the Romans had little taste for historical and sociologicalconsiderations. But they did have a perfectly clear view’ of the fact thatproduction necessarily involves very many people and implies longperiods of time.61 To support this, Leoni recounts what, according toCicero, was maintained by Cato the Censor:

Our own commonwealth was based upon the genius, not of oneman, but of many; it was founded, not in one generation, but in along period of several centuries and many ages of men […] therenever has lived a man possessed of so great genius that nothingcould escape him, nor could the combined powers of all the menliving at one time possibly make all necessary provisions for thefuture without the aid of actual experience and the test of time.62

Therefore, using the juridical question as a point of departure, Leonisees the independence of law from legislation as a consequence of therenunciation of a ‘privileged point of view on the world’. This line ofreasoning is exactly the opposite to Acton’s. Acton’s analysis startsfrom political considerations and arrives at the legal aspects; Leoni’spoint of departure is the legal question, which then brings to light thepolitical implications. Nevertheless, both of them show that economicdevelopment, political development and increase in rationality becomeinstitutionalized only in a normative habitat that places individuals onthe same formal juridical level and allows them to use all theknowledge they have to pursue their goals. We shall have occasionfurther on to examine more directly the concept of law in force inAthens and in Rome. Here it is worthwhile to stress how specificreferences to Solon can corroborate the main theoretical points dealtwith in the previous pages.

Solon and the ‘struggle for law’

To understand what Solon accomplished in politics, it is helpful to useRudolf von Jhering’s idea of the ‘struggle for law’. Jhering says:


The entire life of the law, embraced in a glance, presents us withthe same spectacle of restless striving and working of a wholenation, afforded by its activity in the domain of economic andintellectual production. Every individual, placed in a position inwhich he is compelled to defend his legal right, takes part in thiswork of the nation, and contributes his mite toward therealization of the idea of law on earth.63

Solon occupies a very important place in the history of the ‘struggle forlaw’. The profound economic changes that had occured and were stilloccuring were forcing a reform of the normative habitat. Werner Jaegerwrites:

the long succession of Ionian epigrams and poems which extolJustice as the basis of human society runs from the later portionsof the Homeric epics through Archilochus and Anaximanderdown to Heraclitus. As we might imagine, such praise of justiceby poets and philosophers did not precede the struggle to realizethe ideal, but was plainly a natural repercussion of the politicalstruggles which lasted from the eighth century to the beginning ofthe fifth. The poets of Greece proper, from Hesiod downwards,spoke of Justice in the same tone, and none more clearly thanSolon of Athens.64

What was the reform of the normative habitat supposed to be? Onceagain, let us follow Jaeger: ‘Homer shows us the earlier situation. Heusually describes justice by another word—themis […]. Themis is theepitome of the judicial supremacy of the early kings and nobles’.65 Butnow the ‘password’ is dike.

Dike means the due share which each man can rightly claim; andthen, the principle which guarantees that claim, the principle onwhich one can rely when one is injured by hubris—whichoriginally signifies illegal action. The meaning of themis isconfined rather to the authority of justice, to its establishedposition and validity, while dike means the legal enforceability ofjustice. It is obvious how, during the struggle of a class which hadalways been compelled to receive justice as themis—that is, as aninevitable authority imposed on it from above—the word dikebecame the battle-cry. Throughout these centuries, we hear the


call for dike, growing constantly more widespread, morepassionate, and more imperative.66

Dike coincides with the need for equal rights before the judge or beforethe law.67

This need is implicit in Hesiod’s use of dike. As it is known,already in The Theogony, he stresses the necessity of a justice basedon ‘true judgements’.68 However, in Works and Days, which attacks‘our bribe-swallowing lords, who love to judge such a cause as this’,69

he points out that riches acquired by deception and fraud can onlylast ‘for a little time’.70 He says that, in a city without justice, thosewho obey the law are penalized: ‘may neither I myself be righteousamong men, nor my son—for there it is a bad thing to be righteous—if indeed the unrighteous shall have the greater right’.71 He extolswork: ‘work is not a disgrace: it is idleness which is a disgrace. But, ifyou work, the idle will soon envy you’;72 and calls for socialcooperation.73

At this point, one wants to ask what Solon’s position is inrelationship to Hesiod. But this is not the crucial question. One mustremember that Hesiod’s ideas were not all his own. Let us follow onceagain Jaeger:

It is impossible to admit that Hesiod, in his Beozia, which wascertainly backward compared to the intellectual development ofthe Ionian cities, was the first to encounter such a need and hecould conceive of social pathos completely on his own. He onlyfelt it with particular intensity, in the struggle with thatenvironment, and became its standard-bear.74

This means that the roots of the struggle for law are Ionic as are thosein Solon’s struggle. Jaeger explains:

Throughout Solon’s life and work it is clear that he was deeplyinfluenced by Ionian civilization. Accordingly, we cannot doubtthat these new political ideals also originated in Ionia, theintellectual and critical centre of Greece […]. Solon’s thought isclearly inspired by Ionia. The early origin of the demand for equalright before the judge or before the law would justify theassumption that the ideal of isonomia […] is older than ourscanty evidence would prove.75


In fact, Solon himself described his political activity as an applicationof the ideal of equality before the law. It is not by chance that, aftersummarizing his provisions, he added:

These things I did by the exercise of my power, blendingtogether force and justice, and I persevered to the end as Ipromised. I wrote laws for the lower and upper classes alike,providing a straight legal process for each person […] I set up adefense on every side and turned about like a wolf among apack of dogs.76

In other words, Solon changed what needed to be changed, ‘but not byan arbitrary, personal act of the governor, but by the normativestrength of a new system, valid for today, tomorrow, and everybody’.77

Therefore, the problems of the collectivity cannot be solved merely byan arbitrary act. Anyone who thinks they can is blinded by intellectualhubris.

Solon’s true profundity was his constant awareness of human limits,which led him to affirm that ‘wisdom’s hidden essence, which aloneholds the key to everything, is the most difficult to discern’.78 Hence,his hostility to tyranny. Absolute power was offered to him, but herefused. He considered tyranny as a ‘very fair spot, but it had no waydown from it’.79 He rejected the idea of the omniscient legislator sostrongly that, ‘where it was well before, he applied no remedy, noraltered anything, for fear lest—“Overthrowing altogether anddisordering the state”—he should be too weak to propose a new modeland recompose it to a tolerable condition’.80 And he was quick torecognize that, ‘in all actions, there is risk and no one knows, whensomething starts, how it is going to turn out’.81 Later, when he wasasked whether he had formulated the best laws for the Athenians, hereplied: ‘the best they could receive’.82

Moreover, having recognized the limits of human knowledge, Solonunderstood that justice is not a concept than can be definedprescriptively in positive terms. He understood that the only justicepossible is the lack of injustice: ‘being asked what city was bestmodelled. “That”, said he, “where those that are not injured try andpunish the unjust as much as those that are”’.83

It was also clear to him that, when juridical principles arecontinually violated by legislation, the safeguards offered by the lawdisappear:


when these laws were enacted, and some came to Solon everyday to commend or dispraise them, and to advise, if possible, toleave out or to put in something of such and such passage, he,knowing that to do so it was useless, and not to do it would gethim ill-will, and desirous to bring himself out of all straits, andto escape all displeasure and exceptions, it being a hard thing, ashimself says—‘In great affairs to satisfy all sides’, as an excusefor travelling, bought a trading vessel, and, having leave for tenyears’ absence, departed, hoping that by that time his lawswould have become familiar.84

Obviously, Solon fully understood the importance of certainty of thelaw. And, consequently, he was aware that the continual impossiblesearch for the ‘best’ legal system, one that could ‘satisfy all sides’,negates the legal characteristics essential to a society that wants toavoid constant rivalry among groups to gain privileges and favors. Aswe already know, ‘where it was well before, he applied no remedy, noraltered anything’ and he promulgated only ‘the best laws’ theAthenians ‘could receive’.

We can now go more directly to the significance of Solon’s work.The underlying idea is that ‘neither the noble as such, nor the tyrant,both of them unaware of the complex reality at the basis of the cityand the well-being of its citizens, is capable of governing […]. In orderto govern, one must appreciate the value of a well developed system ofrules, specifically laws, and an honest system of justice’. Absoluteknowledge is only divine. No individual or social group is bearer of a‘privileged point of view on the world’.

The citizens themselves […] are willing to destroy a great city,and the mind of the people’s leaders is unjust; they are certain tosuffer much pain as a result of their great arrogance. For they donot know how to restrain excess or to conduct in an orderly andpeaceful manner the festivities of the banquet that are at hand[…] they grow wealthy, yielding to unjust deeds […] sparingneither sacred nor private property, they steal with rapaciousness,one from one source, one from another, and have no regard forthe august foundations of Justice [Dike], who bears silent witnessto the present and the past and who in time assuredly comes toexact retribution.87


This is the culmination of Solon’s analysis:

Lawlessness [disnomia] brings the city countless ills, butLawfulness [eunomia] reveals all that is orderly and fitting, andoften places fetters round the unjust. She makes the roughsmooth, puts a stop to excess, weakens insolence [hubris], driesup the blooming flowers of ruins, straightens out crookedjudgements, tames deeds of pride, and puts an end to acts ofsedition and to the anger of grievous strife.88

What is ‘eunomia’? Eunomia is ‘a combination of conditions andactivities desired and fulfilled by the citizens, only if they are capable[…] of understanding the need for them and the possibility to attainthem’.89 In other words, Solon saw a solution in a normative habitatthat would be conducive to social cooperation, and social cooperationwas the main objective of his political action. It is not by chance thathe affirmed:

If you have suffered grief because of your wrong action, do notlay the blame for this on the Gods. You yourselves increased thepower of these men by providing a bodyguard and that is whyyou have foul slavery. Each one of you follows the fox’s tracks,and collectively you are empty-headed. You look to the tongueand words of a crafty man, but not to what he does.90

And in conclusion:

From a cloud comes the force to snow and hail, thunder from aflash of lightning, from powerful men a city’s destruction, andthrough ignorance the masses fall enslaved to a tyrant. If theyraise a man too high, it is not easy to restrain him afterwards.91

Therefore, when power is exclusively given to a person or a particulargroup, it is not surprising that development of social cooperation isthwarted and the power tends to become unlimited and uncontrollable.The alternative is to discover the conditions that prevent hubris, which,as has been mentioned before, originally ‘signifies illegal action’92 andmake free social cooperation possible. Such conditions must be thehabitat of individual action: the abolition of slavery for debt,protection of private property, encouragement to learn a trade, andliberty to make a will are a few measures Solon took to achieve


equality before the law and define the conditions conducive to socialdevelopment.

Solon himself described his work in these terms:

I brought back to Athens, to their homeland founded by Gods,many who had been sold […] and those who had fled undernecessity’s constraint, no longer speaking the attic tongue, aswanderers far and wide are inclined to do. And those whosuffered shameful slavery right here, trembling before the whimsof their masters, I set free.93

Hence, Solon opened the city or, as Felix Jacoby rightly claims,transformed the ‘clan State’ into the ‘citizen State’,94 by renouncing a‘privileged point of view on the world’ and trying to identify thenormative habitat for free social cooperation.

Athens and Sparta: liberty and tribalism

All this can be expressed in the words of Victor Ehrenberg:

A man of the middle line and therefore never a complete success,he [Solon] yet ranked among the Seven Sages. He reduced thepower of the noble clans and gave even the poorest citizens ashare in the state; he laid the foundations of what was to becomeAthenian democracy. He abolished slavery for debt, and made lifeat least tolerable for the small peasants and the growing numbersof artisans and traders; thus he opened the way to the economicand cultural greatness of Athens. He produced a new code of law,and made it possible for a society that was in the process of beingreshaped to be subjected to the rule of a state based on justice.95

Consequently, Constant is right when he identifies Athens as the firstexperiment in liberty in the modern sense. He maintains that‘individual independence is the first need of moderns’ and that we canconsider ourselves ‘modern men’, when ‘we wish each to enjoy our ownrights, each to develop our own faculties as we like best, withoutharming anyone’.96 This coincides with a normative habitat that makesfreedom of choice—‘one of the most precious’ rights97—possible foreach individual.

For the ancients, there was no freedom of choice. Personalfreedom


consisted in exercising collectively […] several parts of thecomplete sovereignty [and of admitting] as compatible with thiscollective freedom the complete subjection of the individual to theauthority of the community […]. All private actions weresubmitted to a severe surveillance. No importance was given toindividual independence, neither in relations to opinions, nor tolabour, nor—above all—to religion. The right to choose one’sown religious affiliation, a right which we regard as one of themost precious, would have seemed to the ancients a crime and asacrilege’.98

Constant adds:

In the domains which seem to us the most useful, the authority ofthe social body interposed itself and obstructed the will of theindividual. Among the Spartans, Therpandrus could not add astring to his lyre without causing offence to the ephors. In themost domestic of relations the public authority again intervened.The young Lacedaemonian could not visit his new bride freely[…]. The laws regulated customs, and as customs touch oneverything, there was hardly anything that the laws did notregulate’.99

Thus, the individual is ‘a slave in all his private relations’: ‘as a citizenhe decided on peace and war; as a private individual, he wasconstrained, watched and repressed in all his movements’,100 and alsoin his emotions. Fustel de Coulanges writes:

Sparta had just suffered a defeat at Leuctra, and many of itscitizens had perished. On the receipt of this news, the relatives ofthe dead had to show themselves in public with gay countenances.The mother, who learned that her son had escaped, and that sheshould see him again, appeared afflicted and wept. Another, whoknew that she should never again see her son, appeared Joyous,and went round to the temple to thank the gods. What, then, wasthe power of the state that could thus order the reversal of thenatural sentiments, and be obeyed?101

Citing Constant once again, we can say that ‘the aim of the ancientswas the sharing of social power among the citizens of the samefatherland: this was what they called liberty’.102 And yet permanent,


obligatory participation is the way to alter the individual,103 to keephim constantly outside himself in order to prevent the development ofcritical thought and to block any challenge to the status quo. Beforedeclaring any dissent or ‘falsification’ inadmissible, this situation tendsto wither individualism, which is the source of criticism andinnovation. Under these circumstances, the ‘army is simply themobilized society and the society is the quiescent army’.104 And, if thereis any dissent, the person responsible is immediately considered aforeign enemy, a conspirator driven by his individualism to plot againstthe ‘social whole’.105

This kind of life is like a ‘permanent military camp’.106 And so it waswhen compared to life in Athens. As is known, Lycurgus wasresponsible for the rules in Sparta, which we shall discuss in moredetail in the next chapter. However, at this point, it is necessary torecall that Lycurgus was supposed to have journeyed to Crete and towhat was then called Asia and Egypt. He ‘first arrived at Crete, where,having considered their several forms of government and gotacquaintance with the principal men among them, some of their lawshe very much approved of, and resolved to make use of them in hisown country’.107 Later he went to ‘Asia’. Plutarch says: ‘From Crete hesailed to Asia, with design, as is said, to examine the difference betwixtthe manners and the rules of life of the Cretans, which were very soberand temperate, and those of lonians, a people of sumptuous anddelicate habits, and so to form a judgment; just as physicians do bycomparing healthy and diseased bodies’.108 ‘The Egyptians say that hetook a voyage into Egypt, and that, being much taken with their wayof separating the soldiery from the rest of the nation, he transferred itfrom them to Sparta’.109

And yet Lycurgus would not have been able to pursue his goals, if hehad not presented his legislative initiatives as the will of the gods and‘justified’ them by recourse to a ‘privileged point of view on theworld’,110 and if he had not associated the harsh social discriminationwith respect for the conditions that foster it: the abolition of privateownership of land and the division of it into lots to be distributedaccording to state regulations.111

To clarify the situation further, it is worthwhile to refer to thewritings of Rostovtzev:

The peculiarity of Sparta was […] the creation of an absolutelyunique organization, intended to increase the military strength ofthe country. All social and economic relations were based on


absolute subordination of the individual to the state, and on theconversion of all the dominating class into a standing army, readyat any moment to take the field. Every adult Spartiate was, firstof all, a soldier. Though he had a house and family of his own, hedid not live there; and his days were not spent in providing forthem or in productive labor, but entirely devoted to constantmilitary training.112

Moreover:

Morally and socially the position of the Helots was deplorable.They were in absolute slavery to the Spartiates. They were keptunder constant supervision; and from time to time the mostvigorous among them were murdered. The most wary andintelligent of the young Spartiates were constantly moving abouttheir midst as secret agents of the government, turning up wherethey were least expected and dispatching undesiderable Helotswithout trial.113

Rostovtzev adds:

The Spartiates […] disapproved of foreign trade, and tried tomake home products satisfy their needs. They feared that foreigngoods bring with them new demands and new ideas. For the samereason they retained iron coinage as the only recognized mediumof exchange, though of course it was not current outside Sparta.The Spartiates kept a watchful eye on foreign visitors andresorted freely to the deportation of undesirable persons fromother countries. This spirit tended to isolate Sparta from the restof the world: she became self-centered—almost exclusively aninland power with strong army but without ships for war orcommerce.114

In this situation, ‘changes have the character of religious conversions orrevulsions, or the introduction of new magical taboos. They are notbased upon a rational attempt to improve social conditions’;115 theyare, instead, due to the permanent ‘alteration’ of the individual,116 whono longer has any private ‘refuge in which he might escape from’ topower.117 Every moment of life is taken up by politics, whichincessantly stirs up individuals and becomes omnivorous in keepingthem from withdrawing and then ‘reemerging’ with independent


opinions. In other words, individuals are prevented from withdrawinginto their own ‘microcosms’ and from introducing their personalproposals into the social process.

Therefore, there is an abyss between Lycurgus and Solon: itseparates the Eunomia of Tyrtaeus from the Eunomia of Solon. In theformer, which ‘belongs to Sparta’,118 the ‘popular assembly is themuster of the army: it votes yes or no to every proposal advanced bythe council, but has no right of proposing measures on its ownaccount’.119 And Sparta becomes the ‘symbol of oligarchic rule andcultural barrenness. Sparta is […] the […] example in history of thefact that authoritarian states may be able to do heroic deeds, butunable to create a lasting culture of their own’.120 The Eunomia ofSolon, on the other hand, contains isonomy, an idea of social orderbased on equality before the law.121 This is the habitat of liberty in themodern sense, which in Athens produced the ‘startling progress, theeconomic prosperity, the artistic grandeur’.122

Consequently, institutionalizing the conditions that fostereconomic and political development and the growth of knowledgemeans protecting the individual and his innovative choices. This is theprice, says Popper, we have to pay for ‘being human’.123 We can beauthentic human beings if, aware of everyone’s ‘inadequacy’, werenounce the ‘privileged point of view on the world’ and place ourtrust in that magnificent productive machine which is the socialprocess, open to cooperation from everyone. It is an unending processthat receives continual input from individuals. This input is sorted outand added to a level of knowledge that is unattainable by any singlehuman mind.

Contractual freedom in Athens and Rome

We have seen, especially in the writings of Bruno Leoni, that liberty,before being an economic concept, it is a juridical one, whichpresupposes the relinquishment of the ‘privileged point of view on theworld’ in a habitat of equality. Let us now examine the question moreclosely. We must see more clearly what all this means in terms ofhuman action. To do this, it is very useful to dwell on legal equalityand the choices available to the actor in an ‘open society’.

Certainly, the prerequisite of choice is opulence. And this does notcome only from economic development, which of course exists and is aresult of liberty. Equality before the law produces greater and more


direct ‘wealth’: that generated illico et immediate (here and now)because of the abolition of the ‘privileged point of view on the world’and the prescriptive rules it imposes on every moment in the life of theindividual and the group.

There is more. If we free ourselves from prescriptive rules we areimmediately free to choose; and we must choose. This happens on apersonal level. And yet there are also direct consequences on a sociallevel. If there are no longer prescriptive rules and the actors are free tomake choices in their lives, who guarantees that the actions arecompatible? How is it possible to have social order?

The answer to these questions is in the transformation of the rules,which are no longer prescriptive but merely simple instruments todetermine the boundaries of actions. Here Palmer’s theory seems veryperceptive. He maintains that the term dike postulates the idea of‘boundaries’ and indicates the portion of the world due to every thingor person.124 This means that, as in Dante’s definition, law becomes‘homines ad hominem proportio’.

The obvious result of the abolition of prescriptive rules iscontractual freedom. Indeed, it can be said that the choice, as it is free,coincides ipso facto with contractual freedom.125 Thus, socialcooperation can be seen as a means of attaining ends that have beendecided upon individually. This is why Solon did not hesitate tocompare general rules of conduct to money.126 And this explains why inAthens a normative discipline was elaborated in the ‘commercial courts[…], where the thesmothetes (the magistrates in charge exclusively ofcommercial affairs) granted legal protection not only to Atheniancitizens, but also to metics and to [foreigners] and also where, inconsideration of their particular needs, the parties obtained a sentencein the very short time of a month’.127

Therefore, Rudolf von Jhering mentions, with good reason, thatGreek law was the source of a group of late-Roman-law institutions,and this origin is revealed in the Greek names which were retained bythe Romans (hypotheka, hyperocha, antichresis, emphyteusis, arrha,parapherna, antipherna, proxeneticum, syndicus, etc.).128 Jhering alsosays:

The new era of Roman jurisprudence, which began at the end ofthe Republic with Quintus Mucius Scaevola, should beattributed to Greek science […]. This was the academic era ofRoman jurisprudence. The impulse for it came from Greekrhetoricians and grammarians, who gave courses in Rome.


Roman jurists took two new ideas from them: the establishmentof public schools, which were unknown until then; and thescientific method […], which was a way of thinking. All theadvances produced by this new method can be traced back tothe fertile influence of the Greek spirit on the Roman spirit […].Late Roman law would never have become what it becamewithout the contact with Greek science and with the very freeviews of the Greeks.129

It is easy to follow Jhering’s reasoning. Athens was well aware of itsgreat historical experience and of the challenge it launched againsttribalism. Because of its conquests, Rome was instead involved in anunavoidable process it had to accept.130

Cicero did affirm that ‘legum denique idcirco omnes servi sumus, utliberi esse possimus’131 And, even though this is not his only attitude (aswe shall see in the concluding section of the next chapter), it followsthat liberty is bestowed by a normative network that marks theboundaries of our actions, indicates what we cannot do and leaves usfree choice of how to act. Opening to the world necessarily eliminatesthe ‘privileged point of view on the world’ and prescription. And, as aresult, law can no longer coincide with custom; in other words, there isthe birth of law in the strict sense of the word, as norma agendi orabstract procedure valid erga omnes.

In Roman law, the Twelve Tables do not replace the moresmajorum, whose interpretation is the monopoly of a specialcollegium; but the institution of the praetor peregrinus and the birthof jus gentium mark the passage to a new phase and are an attempt torespond to general needs of people of different cultures and customs,who yet live together. Consequently, they require general, abstractrules with no content, which only indicate procedures. As Sir HenryMaine has pointed out, it is not by chance that mutual consentcontract was originally a juris gentium contract and fulfilled the needto simplify economic exchanges, putting the contracting parties on anequal footing.132 This is the death of status, intended as a set ofprivileges, and it explains why Maine himself summed up the passagefrom a closed society to an open one with the expression ‘from statusto contract’.133

What remains to be said is that contractual freedom, which is thefirst step toward full enjoyment of political rights, mobilizes specializedknowledge and skills as well as resources.

32

3 The gnoseological roots of liberty

and tribalism

Athens: ignorance and liberty

As we have seen, Solon’s basic thought is that human beings areprecluded from ‘wisdom’s hidden essence’. This means that the scarcitytypical of our existence is primarily scarcity of knowledge, so much sothat, ‘in all actions, there is risk and no one knows, when somethingstarts, how it is going to turn out’.1 ‘Fate brings good and ill to mortalsand the gifts of the immortal gods are inescapable’.2

What is to be done then? ‘Neither the noble as such, nor the tyrant,both of them unaware of the complex reality at the basis of the cityand the well-being of its citizens, is capable of governing […]. In orderto govern, one must appreciate the value of a well developed system ofrules, specifically laws, and an honest system of justice’.3 In otherwords, it is necessary to identify the normative conditions that makethe development of social cooperation possible (which helps uscompensate for our individual insufficiencies) and at the same timemake it impossible for whoever ‘follows the fox’s tracks’ to achieveunlimited power and enslave us.

We can and must do this. ‘If you have suffered grief because of yourwrong action, do not lay the blame for this on the Gods’.4 It is true thatwe cannot escape from the divine fate, but we can avoid a series ofnegative consequences due to our own actions. If the problem is causedby our lack of knowledge, the solution cannot be found by relying onthe intellectualist hubris of an individual or a particular group.Awareness of ‘not knowing’ leads to an ‘opening toward the world’and communication with others on an equal basis, broadens everyone’shorizons, and undermines the feeling that our meager knowledge isabsolute.

Therefore, it is necessary to eradicate the ‘privileged point of view

The gnoseological roots of liberty and tribalism 33

on the world’ and establish a ‘kind of intellectual equality’,5 based onrecognizing our common ignorance. In terms of rules, this meansequality before the law. As we have already pointed out, it is not bychance that Pericles stated: ‘In our opinion action does not suffer fromdiscussion but, rather, from the want of that instruction which is gainedby discussion preparatory to the action’,6 and added that there is no‘bar in poverty and obscurity of rank to man who can do the statesome service’.7

Protagoras—‘a theorist of the open society’8 and friend of Pericles,who commissioned him to draw up a constitution for the colony ofThurii—dwelt on the origins of civilization or, to put it better, theorigins of human society. He resorted to the myth of Prometheus,which also inspired Hesiod and Aeschylus. According to that myth,after they had created the mortals, the gods delegated to Prometheusand Epimetheus the ‘task of equipping them and allotting suitablepowers to each kind’.9 Epimetheus asked Prometheus to let him havethe job of distribution, and he did the job assigning to ‘some creaturesstrength without speed […] being careful […] that no species should bedestroyed’.10 Epimetheus also ‘equipped‘ the animals. And yet, since he‘was not a particularly clever person’, he did not realize that he had leftthe human race ‘unprovided for’.11

When Prometheus ‘came to inspect the work, and found the otheranimals well off for everything, but man naked, unshod, unbedded andunarmed’, he stole technology from the gods and gave it to man.12 Butthis was not enough. Human beings tried to ‘save themselves bycoming together and founding fortified cities but, when they gatheredin communities they injured one another for want of political skill, andso scattered again and continued to be devoured. Therefore, fearing thetotal destruction of our race, Zeus sent Hermes to impart to men thequalities of respect for others and a sense of justice, so as to bring orderinto our cities’.13

According to Protagoras, men are condemned to cooperate, becauseindividually they are insufficient. But it is impossible to havecooperation without justice. That is not all. In fact, for Protagoras,‘man is the measure of all things’14 and this, interpreted correctly,allows for a multitude of evaluations, since everyone has differentknowledge and different needs. (Moreover, as his knowledge is limited,man cannot say what form the divinity takes or whether or not itactually exists.)15

In the dialogue that Plato dedicated to him, Protagoras enters thescene as protagonist and ends as a mere ‘listener’ to Socrates.16

34 The gnoseological roots of liberty and tribalism

Socrates reevaluates, or to be exact, Plato has Socrates teachProtagoras a lesson. Clearly, we have here the old question ofknowing to what extent Plato’s Socrates corresponds to thehistorical Socrates. We shall deal first with the confutatory part ofhis work.17

Apropos of this part, Popper asserts that Socrates made ‘the greatestcontribution’ to faith in the open society and he died for his faith.18 Inparticular, Popper points out:

Socrates was not a leader of Athenian democracy, like Pericles,or a theorist of the open society, like Protagoras. He was, rather,a critic of Athens and of her democratic institutions, and in thishe may have borne a superficial resemblance to some of theleaders of the reaction against the open society. But there is noneed for a man who criticizes democracy and democraticinstitutions to be their enemy, although the democrats hecriticizes, and the totalitarians who hope to profit from anydisunion in the democratic camp, are likely to brand him assuch. There is a fundamental difference between a democraticand a totalitarian criticism of democracy. Socrates’ criticism wasa democratic one, and indeed of the kind that is the very life ofdemocracy.19

Is what Popper says legitimate? Yes, because Socratic ‘not knowing’ isthe basis of his ‘egalitarian theory of human reason’.20 The consequenceis that, owing to our ignorance, ‘to let no day pass without discussinggoodness and all the other subjects about which you hear me talkingand examining both myself and others is really the very best thing thata man can do’;21 and ‘life without this sort of examination is not worthliving’.22

In the dialogue with ‘politicians’, ‘poets’, and ‘artisans’, Socratesreprimands them for their ‘pretence of knowledge’.23 This is an ideathat, when referring to poets, he states in the following terms:

I soon made up my mind about the poets too. I decided that itwas not wisdom that enabled them to write their poetry, but akind of instinct or inspiration, such as you find in seers andprophets, who deliver all their sublime messages withoutknowing in the least what they mean. It seemed clear to me thatthe poets were in much the same case, and I also observed thatthe very fact that they were poets made them think that they


had a perfect understanding of all other subjects, of which theywere totally ignorant. So left that line of inquiry too with thesame sense of advantage that I had felt in the case of thepoliticians.24

Socrates complains that members of the various social categories thinkthey are the smartest, even in matters where they know nothing.Nevertheless, ‘the wisest of you men is he who has realized […] that inrespect of wisdom he is really worthless’.25 And, as a result of this, wemust systematically challenge all believed knowledge.

As we know, Socrates was accused of wanting to make ‘the weakerargument defeat the stronger, and teaches others to follow hisexample’.26 And yet, citing Popper, we can say that the Socraticrationalist ‘is simply someone for whom it is more important to learnthan to be proved right; someone who is willing to learn from others—not by simply taking over another’s opinions, but gladly allowingothers to criticize his ideas and by gladly criticizing the ideas ofothers’.27

Thus, it becomes imperative to resist any attempt to impose a‘privileged point of view on the world’, because no class or social groupcan claim to be a privileged source of knowledge. In other words, ‘notknowing’, which is a common feature of all of us, prevents anyonefrom claiming power on the basis of a presumed superior knowledge.However, the question is: what norms prevent affirmation of the‘privileged point of view of the world’?

In the previous chapter, we have stressed the legal aspects of liberty.Let us now follow Socrates. He maintained that ‘the jury does not sit todispense as a favor, but to decide where justice lies, and the oath whichthey have sworn is not to show favor at their own discretion, but toreturn a just and lawful verdict’;28 and asserted that ‘goodness andintegrity, institutions and laws, are the most precious possessions ofmankind’.29 This explains why Socrates rejected the chance to avoiddeath and preferred to die rather than violate the law.30

At this point, one must ask what laws and justice can be derivedfrom Socratic ‘not knowing’. The logical answer is that laws shouldnot dictate an obligatory existential content: they should simplydefine the boundaries among various actions and function as limitsnot to be overstepped. Consequently, justice is a concept that must beformulated in negative rather than positive terms. Everything that isnot prohibited is just. In fact, Socrates says: ‘Please do not beoffended if I tell you the truth. No man on earth, who conscientiously


opposes either you or any other organized democracy, and flatlyprevents a great many wrongs and illegalities from taking place in thestate to which he belongs, can possibly escape with his life’.31 Socratesdoes not try to determine what is just in positive terms, he proposesinstead to investigate what is not just. For him, this is the onlypossible goal, it is the obligatory landing-place for anyone who startsout with the idea of ‘not knowing’ and denies the possibility of the‘privileged point of view on the world’.

Socrates is a critic of what exists, whatever that happens to be.Therefore, the method he adopted was that of democracy. If so, can weattribute entirely to Socrates the ‘exhortative’ part of his work, the partthat Plato culminates in the ‘science of Good’ and the union ofknowledge, ethics and politics?32 If this part were true, there would bean obvious paradox. One would start from ‘not knowing’ and make itthe impossible basis for omniscience or, in any case, for theestablishment of the ‘privileged point of view on the world’.

Moreover, if Socrates had been an enemy rather than a critic ofdemocracy, his death would not have been such a great tragedy. Theintolerant Socrates would have been nothing more than a victim ofintolerance. Instead, there is a fatal misunderstanding in his sentence.As Xenophon says: ‘Socrates spent his life in lavishing his gift andrendering the greatest services to all who cared to receive them. Forhe always made his associates better men before he parted withthem’.33 And, after further illustrating Socrates‘ merits, Xenophonasks: ‘By this conduct, did he not deserve high honour from thestate?’.34

Nevertheless, despite his service to the collectivity, or more precisely,because of it, Socrates was condemned to death. Herein lies thetragedy. In order to throw more light on this, let us see how MaxScheler explains the ‘phenomenon of the tragic’. He writes:

The fact that it was his very courage and boldness that led himto that ‘glorious action’ of exposing himself to the mortaldanger which would annihilate him. It was a danger that aperson with even a mediocre intelligence could have easilyavoided […]. The fact that an attitude, full of ideals and valuesand dedicated to spiritual good, can become, under certaincircumstances, the very cause of the disaster—and necessarily—of a man amid the miseries of life […]. All this is ‘tragic’ in thehighest sense.35


Therefore, Socrates is a tragic figure, since he is ‘annihilated’ because ofhis own ‘glorious action’. If there had been a betrayal or an act ofcowardice, he would not have become the symbol of moral tragedy.

Plato: re-establishment of the ‘privileged point of view onthe world’

Democracy intensifies and multiplies social interaction.

It produces an increase in life […]. One lives in a very large world[…]. Man discovers that life does not consist only of what hepossesses […], that it is not defined exclusively by necessity, butthat, in addition to this and overcoming it, offers very manypossibilities[…]. Ipso facto, the individual discovers that living isa completely different problem from what it was in the archaictimes, when it was limited to what one possessed […]. But nowthe problem is almost the opposite: one must choose from manypossibilities. Life is symbolized by the cornucopia. One mustchoose!.36

Yet, the possibility of choice may be seen as liberty or as radicaldisorder, chaos. Pericles was the champion of the possibility of choice.His oration is not only a defense of democracy, but is probably also anattack on those who in Athens were planning to re-establish a blockedsociety and revive tribalism as the only possible alternative to the‘chaos’ of democracy.37 These people were afraid of the choice offeredby liberty. Eduard Meyer says: ‘political theories sprout likemushrooms. Even though they bring exceptional new proposals,everyone agrees that they seek their ideal in the past, in the antiquearistocratic constitution, in the governments of Crete and Sparta, evenin monarchy; and they decidedly and disdainfully move away fromAthenian democracy’.38 Meyer adds: ‘This reactionary theory has […]crudely formulated and adopted the concept […] that the citizen withfull rights must be materially independent, that manual labor is to bediscredited, and that money transactions and mortgages with interestare uncivil and should be forbidden’.39 In other words, ‘reactionarytheory’ was directed towards suppressing the ‘open society’.

To do this, one must first re-establish the ‘privileged point of viewon the world’, because it eradicates personal freedom of choice andcasts everyone’s life in the rigid mold of indisputable prescriptions.


Plato’s Socrates goes in this direction. He faces the crucial question ofchoice and asks himself:

if our welfare lay in the choice […], in knowing when the greaternumber must rightly be chosen and when the less, whether eachsort in relation to itself or one in relation to the other, andwhether they are near or distant? What would assure us a goodlife then? Surely knowledge, and specifically a science ofmeasurement, since the required skill lies in the estimation ofexcess and defect.40

And immediately afterwards, Socrates (or rather Plato) declares: ‘youhave agreed that when people make a wrong choice of pleasures andpains—that is, of good and evil—the cause of their mistake is lack inknowledge’.41 Therefore, a science of good and evil is possible and mustbe taught.

Obviously, the idea of phronesis, which can distinguish good fromevil, is rejected by Protagoras.42 But Plato, who is the prompter,immediately assigns the teaching of this science to the state; and he seesin Socrates, who is his champion for this task, the ‘bravest’ man ‘of allthose whom we knew in our time […] and also the wisest and mostupright man’.43

Nevertheless, what has to be done to accomplish phronesis and re-establish the ‘privileged point of view on the world’? An ‘open society’,which is based on the recognition of everyone’s ignorance, solves itsproblems by comparison and critical discussion, which is a publicprocess. Plato’s theory of knowledge adopts an arbitrary psychologism,so that rationality does not increase by trying in all possible ways todisprove our cognitive hypotheses, but by looking exclusively withinour soul and searching.

This sort of theory is based on a series of beliefs. First of all, onemust admit the existence of the soul. But it is not enough to saySocratically that everyone has a soul in the sense that everyone isindividually capable of judgment,44 which is developed throughpersonal autonomy made possible by the open society. If this were all,the Platonic problem of choice would remain unsolved, since we couldnot achieve the ‘privileged point of view on the world’. Somethingdifferent is needed. An uncontrollable metaphysical theory is required.Therefore, ‘the soul of man is immortal. At one time it comes to anend—which is called death—and at another is born again, but is neverfinally exterminated’.45 Moreover, it is not only our soul that exists


before our birth. ‘All these absolute realities, such as beauty andgoodness, which we are always talking about, really exist’.46 And ithappens that ‘we must have had some previous knowledge of equalitybefore the time when we first saw equal things and realized that theywere striving after equality, but fell short of it’.47 This means that,before our material life, ‘these realities exist’ and our soul exists: ‘it islogically just as certain that our souls exist before our birth as it is thatthese realities exist’.48

Plato will claim: ‘we speak of a self-beautiful and of a good that isonly and merely good, and so, in the case of all the things that we thenposited as many, we turn about and posit each a single idea or aspect,assuming it to be a unity and call it that which each really is’.49

Thus, it is clear that, if belief in the pre-existence of the soul fallsand, with it, belief in the pre-existence of ideas or essences, whatremains is psychologism. This is indefensible on a rational level, butmakes Plato’s first objective possible. It lets Plato remove knowledgefrom the social process (which is the unfortunate site of ‘opinions’).Nevertheless, this is not enough. In fact, if we all know everything,because our soul existed before, we cannot yet disapprove of those whothink differently from us. Something must be done to avoid concludingthat, as the ‘essences’ and souls exist before our birth, knowledge iseverybody’s.

Plato had already set the basis for freeing himself from theegalitarian theory of reason in Phaedo, where he says: ‘there are twoalternatives. Either we are all born with knowledge of these standards,and retain it throughout our lives, or else, when we speak of peoplelearning, they are simply recollecting what they knew before. In otherwords, learning is recollections’.50 But this is not yet sufficient. Science(episteme) is related ‘to that which is, to know the condition of thatwhich is’.51 And those who know ‘the reality [of the beautiful] itself’are ‘philosophers’ and not ‘doxophilists’.52 Consequently, thephilosophers, who are the only ones that know ‘the true being’, havethe monopoly of knowledge.

To reach this conclusion, Plato uses the well-known ‘myth of thecavern’:

Picture men dwelling in a sort of subterranean cavern with a longentrance open to the light on its entire width. Conceive them ashaving their legs and necks fettered from childhood, so that theyremain in the same spot, able to look forward only, and preventedby the fetters from turning their heads. Picture further the light


from a fire burning higher up and at a distance behind them, andbetween the fire and the prisoners and above them a road alongwhich a low wall has been built, as the exibitors of puppet showshave partitions before the men themselves, above which theyshow the puppets.53

Therefore, if men ‘are compelled to hold their heads unmoved throughlife’,54 they ‘would not have seen anything of themselves or of oneanother except the shadows cast from the fire on the wall of the cavethat faced them’.55

What can be done? ‘The excellence of thought […] never loses itspotency’.56 Thus, it is not cognitive ability that obstructs ourknowledge, but the place we occupy in the cave:

An eye that could not be converted to the light from the darknessexcept by turning the whole body. Even so this organ ofknowledge must be turned around from the world of becomingtogether with the entire soul, like the scene-shifting periactus inthe theater, until the soul is able to endure the contemplation ofessence and the brightest region of being. And this, we say, is thegood.57

Hence, there must be a real conversion, which means ‘the wheelinground of the “whole soul” towards the light of the Idea of God, thedivine origin of the universe’.58 And this is possible only if thephilosopher assumes the role of great educator. However, for this tohappen, there must be a polity ‘worthy of the philosophical nature’.59

‘If ever it finds the best polity as it itself is the best, then will it beapparent that this was in truth divine and all the other human in theirnatures and practices’.60 This means that philosophical knowledge is agift from God and it is ‘the divinity of each one, being that part which[…] dwells at the top of the body, and inasmuch as we are a plant notof an earthly but a heavenly growth, raises us from earth to ourkindred who are in heaven’.61 Therefore, the philosopher has a share ofdivine nature.

As we have seen, Protagoras said that ‘man is the measure of allthings’. But now Plato can say that God is, ‘for you and me, of a truththe measure of all things’,62 because the measure of the divine on thisearth is exclusively in the hands of the philosopher, who isconsequently entitled to hold power: ‘Unless […] either philosophersbecome kings in our states or those whom we now call our kings and


rulers take the pursuit of philosophy seriously and adequately, andthere is a conjunction of these two things, political power andphilosophical intelligence’.63

Since the philosopher is the only depositary of the ‘measure’ of God,he is the only legitimate holder of power; and, since he is the one whoknows the ‘true Being’, he can impose an obligatory existential contenton everybody. The social norms should define not only the boundarybetween various actions; in addition, they should prescribe, becausethey are shaped by an overall logic,64 the content of everyone’s life andthus solve the ‘problem of choice’. Ethics and politics come togetheragain; the government of the philosophers, which holds the ‘privilegedpoint of view on the world’, assumes the role of educator of the souland of the state.

In reference to this, Werner Jaeger writes:

Just at the point where we might expect to find the appearance ofsuch modern ideals as personal conscience and free individualethics, they are decisively rejected. Instead, we are referred to theauthority of objective philosophical truth, which claims to rulethe entire life of society, and therefore of the individual.65

More exactly, philosophy makes itself and politics sacred. And Platobecomes the ‘greatest of all classical theologians’.66

All of this should not be surprising. The ‘open society’ had shatteredthe old belief in the gods, which could no longer act as the principle forlegitimizing a revival of tribalism. Those who were nostalgic for theold, closed world had to find another principle; and the doctrine ofbeing served the purpose. There was a felt need for a stable point ofreference; and it was postulated that, hidden behind the open socialprocess, which was perceived as chaos, was a ‘stable figure of reality’.67

The deep-seated need for a motionless universe projected that figure onreality. This gave birth to the belief in a being whose ‘identicalconsistency enables it to be grasped by the identity of the concepts’.68

This is the belief on which Plato, strongly influenced by Parmenides,added further layers of beliefs and reasserted the ‘privileged point ofview on the world’.

The socio-economic characteristics of the Platonic city

Psychologism, therefore, consists of a double movement. It is aturning inward and also a projection on reality of one’s personal


solutions, which are presented (according to some belief) assomething definitive, unchangeable and superior. The social process,which subjects our theoretical hypotheses to controls and resists ourattempts to eliminate reality and make it conform to our projections,is suppressed.

Plato removes the social process. The philosopher, ‘associating withthe divine order, will himself become orderly and divine’:69 ‘he fixes hisgaze upon the things of the eternal and unchanging order, and seeingthat they neither wrong nor are wronged by one another, but all abidein harmony as reason bids, he will endeavor to imitate them and, as faras may be, to fashion himself in their likeness and assimilate himself tothem’.70

And yet the point is: what must be done to create the perfect city?First of all, the philosophers will ‘take the city and the characters ofmen, as they might a tablet, and […] wipe it clean’.71 They will not beconcerned with anything else ‘before they either received a clean slateor themselves made it clean’.72

the following observations should be made. A man who takes inhand a herd of animals, a shepherd, neatherd, horse breeder, orthe like, will never dream of trying to tend that herd without firstsubmitting the group to the purgation proper to it. He willseparate the sound animals from the sickly, the thoroughbredsfrom the mongrels, removing the latter to other herds, andexercising his tendance on the former, since he is well aware thatunless he thus purges his stock, he will have endless and fruitlesstrouble with bodies and minds already degenerate by nature or ill-management, which will further communicate a taint to thesound and unimpaired in body and disposition in the variousherds. With the lower animals this does not so much matter—theyonly call for mention by way of an illustration—but in the case ofman it is of the first concern to the legislator to discover andexplain the method of procedure appropriate to various cases, inthis matter of purgation as well as in all his other dealings withthem’.73

More specifically, in reference to the

business of social purification, the case stands thus. There aremany ways of effecting a purgation, some of them milder, somesharper. Some—the sharpest and best of all—will be at the


disposal of one who is at once autocrat and legislator, but alegislator who establishes a new society and new laws with lessthan autocratic power will be well satisfied if he can so much asreach his end of purgation by the mildest of methods. The bestmethod of all, like the most potent medicine, is painful; it is thatwhich effects correction by the combination of justice withvengeance, in the last instance, to the point of death or exile,usually with the result of clearing society of its most dangerousmembers, great and incurable offenders’.74

We now see that the principle on which the Republic should befounded is: ‘the best city is that whose state is most like that of anindividual man’;75 ‘that is the kind of a state […] that, when any one ofthe citizens suffers ought of good or evil, will be most likely to speak ofthe part that suffers as its own and will share the pleasure or the painas a whole’.76 There must be a situation in which ‘the greater numberuse the expression “mine” and “not mine” of the same things in thesame way’.77

This means that the principle on which the Republic must befounded is collectivistic. The soul of the individual must have noautonomy; it must be part of a single, great collective soul, in which theword ‘my’ loses its meaning of individual and acquires that of ‘our’.‘My’ suffering, extended to indicate the suffering of everyone belongingto the community, is simply and more exactly, our suffering.

This leads to communism of property, women and children. Therulers (or philosopher kings) and the guardians (or warriors) havecommunal refectories and must not possess wealth:

In the first place, none must possess any private property save theindispensable. Secondly, none must have any habitation ortreasure house which is not open for all to enter at will […]. Goldand silver, we will tell them, they have of the divine quality fromthe gods always in their souls, and they have no need of the metalof men nor does holiness suffer them to mingle and contaminatethat heavenly possession with the acquisition of mortal gold, sincemany impious deeds have been done about the coin of themultitude, while that which dwells within them is unsullied. Butfor these only of all the dwellers in the city it is not lawful tohandle gold and silver and to touch them nor to come under thesame roof with them nor to hang them as ornaments on their


limbs nor to drink from silver and gold. So living they would savethemselves and save their city.78

The Platonic Republic suppresses private property and the market. Theclass of farmers, artisans and merchants, which is the only class thatcan handle money, is a completely subordinate service class with nopolitical rights.

The family is also suppressed, and so is freedom to choose a spouse,which has as its basis:

the best men must cohabit with the best women in as many casesas possible and the worst with the worst in the fewest, and thatoffspring of the one must be reared and that of the other not, ifthe flock is to be so perfect as possible. And the way in which allthis is brought to pass must be unknown to any but the rulers, ifagain the herd of guardians is to be as free as possible fromdissension.79

In any case,

We shall […] ordain certain festivals and sacrifices, in which weshall bring together the brides and the bridegrooms […] thenumber of the marriages we will leave to the discretion of therulers, that they may keep the number of the citizens as nearly asmay be the same, taking into account wars and diseases and allsuch considerations.80

And

Certain ingenious lots […] must be devised so that the inferiorman at each conjugation may blame chance and not the rulers.81

In addition, all youths who have distinguished themselves in war orother enterprises should be awarded honors and other recompenses,above all ‘the opportunity of more frequent intercourse with thewomen, which will at the same time be a plausible pretext for havingthem beget as many of the children as possible’.82

At birth, these children will be ‘taken over by the officials appointedfor this, men or women or both, since, I take it, the official posts tooare common to women and men’.83 Moreover, ‘the offspring of thegood […] they will take to the pen or crèche, to certain nurses, who


live apart in a quarter of the city, but the offspring of the inferior, andany of those of the other sort who are born defective, they will bedisposed of properly in secret, so that no one will know what hasbecome of them’.84 And the mothers no longer recognize their ownbabies and will nurse children indiscriminately.85

The Republic is a planned society, an intentional structured order(taxis), which cannot be allowed to grow into an extended order(cosmos), because in such a case there would no possibility of planningand controlling it.86 And, if this occurs, there is a re-establishment ofthe free social process, choice and change; one cannot bequeath ‘a likelife’ to his ‘offspring’.87

Therefore, the question is: is the basic idea of Plato’s Republicdifferent from that of Lycurgus’ Sparta? First of all, both Lycurgus andPlato declare themselves proponents of the ‘privileged point of view onthe world’. Lycurgus had received his mandate from Pythia, and Platosays that the philosopher (that is, he himself) shares in divineknowledge. What is more, as Xenophon relates, had not Lycurgus‘forbade freeborn citizens to have anything to do with business affairs[and] insisted on their regarding as their own concern only thoseactivities that make for civic freedom’?88 Does not the class of artisans,farmers and merchants correspond to the Ilots used by Sparta? Was itnot Spartans who reproved as ‘frivolous’ the ‘devotion of time andattention to the mechanical arts and to money making’?89 And was itnot Lycurgus who told his fellow citizens that they would be safe aslong as they remained poor and did not want ‘each man to be greaterthan his fellow’?90

As for the family, had not Lycurgus prescribed that marriagesshould be contracted in the ‘prime of their manhood’ and requiredthe ‘elderly husband to introduce into his house some man whosephysical and moral qualities he admired, in order to begetchildren’91? And had he not authorized ‘in the case a man did notwant to cohabit with his wife and nevertheless desired children ofwhom he could be proud, […] to choose a woman who was motherof a fine family and of high birth and if he obtained her husband’sconsent, to make her the mother of his children’?92 Furthermore,was it not in Sparta that children were taken from their families andraised together?93 Was it not in that city that children considered‘puny and ill-shaped’ were ‘taken to what was called Apothetae, asort of chasm under Taygetus’?94 Did not Lycurgus ban foreignerswhose work was considered ‘needless and superfluous’ and expel ‘allstrangers […because] they should introduce something contrary to


good manners’?95 And did he not forbid foreign travel in order toprevent the acquisition of ‘foreign rules of morality’ and theimitation of different ‘manners of govenment’?96 And did not Spartagive rise to an intentionally structured order (taxis) of reduceddimensions?97

That is not all. As we already know, Lycurgus had imported hisconstitution from Crete and Egypt.98 Plato, who had visited Crete,duly extolled the laws of Sparta and Crete, which he considered‘sisters’.99 Plato even went so far as to say that the model wasEgyptian.100 It all works out perfectly. The collectivistic society he hasin mind is exemplified by the ‘oriental despotism’.101 The onlyvariation Plato introduces—and he is forced to introduce due to thedecline of the old religious beliefs—is to use philosophy as asubstitute for religion. Consequently, philosophy is a sort of belief,construed as the exclusive repository of truth and politicallegitimation.

After all, nephew of Critias (probably the author of the Constitutionof Athens, that fierce attack on the democratic institutions, usuallyattributed to the ‘Old Oligarch’) and of Charmides, the most importantexponents of the Thirty Tyrants, Plato grew up in a political-culturalsetting that was not only mortally hostile to democratic institutions,but was also highly aware that economic liberty is the basis of criticaldiscussion and political liberty.102 If ‘change […] is always highlyperilous’ and if opening society to the unknown threatens acquiredpositions and causes unbearable anxiety, the only solution iseradication of economic liberty. Plato knew the economic reasons forthe birth of the city:

The origin of the city […] is to be found in the fact that we do notseverally suffice for our own needs, but each of us lacks manythings […]. As a result of this, then, one man calling in anotherfor one service and another for another, we, being in need ofmany things, gather many into one place of abode as associatesand helpers and to this dwelling together we give the name of cityor state.103

This means that Plato also understood that economic activity is, to usea modern expression, a ‘positive-sum game’. Nevertheless, social andeconomic cooperation should not be based on individual negotiations,but should be completely subordinate to politics, because this makescritical discussion and political liberty impossible.


As we have already seen, Solon believed that institutions were likemoney,104 and that each person, restricted only by the general rules ofbehavior, could make use of them according to his or her personalneeds. Thus, the individual was granted great autonomy. Plato, on thecontrary, maintains:

he who provides for the world has disposed all things with a viewto the preservation and perfection of the whole, […]. For anyphysician or craftsman in any profession does all his work for thesake of some whole, but the part he fashions for the sake of thewhole, to contribute to the general good, not the whole for thepart’s sake.105

Here we are at the point of annihilating individual autonomy andlegitimizing any prescription on the part of those in power, who are theonly representatives of the whole, since they are the only repositories ofknowledge or of a ‘superior’ knowledge. They represent the ‘privilegedpoint of view on the world’, the part arbitrarily placed above theothers, which imperatively dictates to the rest of society what is goodand what is bad.106 As a result, the so-called common good—which inclosed societies claims to have specific, definable content—is simply anadvantage, established from time to time as necessary, for those inpower.107 This explains why Plato said that democracy assigns ‘a kindof equality indiscriminately to equals and inequals alike’, 108 or that‘equal treatment of the unequal ends in inequality’.109

With Plato, intellectual hubris reaches its most dramaticallyalarming heights. Plato was probably conscious of this. It issignificant that Callicles, one of his characters in Gorgias, reprimandsthe Platonic Socrates for apparent intellectualistic excesses. Here,following one of the fundamental rules of his dialogues, Platoweakens his critic’s position by ad hominem accusations and, as ifthat were not enough, unpleasantly presents Callicles as the personwho makes Socrates realize that he could be dragged off to prisonand accused of being a threat to liberty.110 Thus, hubris is absolved ofany responsibility.

Granted that Callicles is surely a parasite, whose cynicism isdetrimental to democracy; but he is shrewd enough not to presenthimself as an example of a democratic man. The models that he looksto are Themistocles, Cimon, Miltiades and Pericles. Nevertheless,Plato’s Socrates responds:


if what you previously spoke of as virtue is truly so, namely tosatisfy to the full your own appetites and those of others, but ifthis is not so, but, as in later argument we were compelled toadmit only those desires, the satisfaction of which make manbetter, should be indulged, not those which make us worse, and iffor this there is a special art—I cannot admit that any of thosementioned satisfied these demands.111

In other words, the objective is not to create, through democracy, anopen social process that can improve each person; on the contrary, it isto make the Other conform to our desire for omnipotence.

Callicles is right on target when he says that one should devoteoneself to philosophy ‘just so far as it is an aid to education’.112 On theother hand, Pericles himself had said: ‘We love […] learning withoutloss of vigor’.113 Plato went so far beyond the limits that he reversed thepositions of Socrates. And philosophy, once expression of doubt andcriticism, was transformed into an instrument of an unassailable truth.Socrates had declared: ‘I have never set up as any man’s teacher’;114 butPlato founds the Academy, a concept alien to Socrates and the Sophists,and offers to be a philosopher king.115

Aristotle: between tribalism and the market

The idea that there could be the ‘privileged point of view on theworld’ raises the question of who is the bearer of this point of view.In all likelihood, the following could happen: anyone who obsessivelyprojects his delusions of omnipotence on reality gives credence to theexistence of the ‘privileged point of view on the world’, which heclaims to hold. In any case, the central problem of politics can besummed up in the question: Who should rule? Apropos, Popperwrites:

It is my conviction that by expressing the problem of politics inthe form: ‘Who should rule?’ or ‘Whose will should besupreme?’, etc., Plato created a lasting confusion in politicalphilosophy […]. It is clear that, once the question ‘Who shouldrule?’ is asked, it is hard to avoid some such reply as ‘the best’or ‘the wisest’ or ‘the born ruler’ or ‘he who masters the art ofruling’.116


And the list could go on, because others could add: the technician, thesaint, this or that race, this or that class, and so on. ‘But such reply’,Popper continues, ‘convincing as it may sound—for who wouldadvocate the rule of ‘the worst’ or ‘the greatest fool’ or ‘the bornslave’?—is […] quite useless’.117

In other words, if we ask that question,

from time to time motivated by different arguments [we think]we have found the basis […] for justifying absolutely thepolitical power of some individual or group. However, such aclaim is irrational, since an attempt to justify power in thesense that someone or some group is inherently qualified torule […] is the same as looking for something which does notexist’.118

As we have seen in the previous chapter and also in this one, thiswas one of the great ‘discoveries’ of Solon, who tried to identify theconditions that nourish economic and social development.Consequently, if we want to pose the problem rationally, we mustignore the old question (Who should rule?) and try to answer a new,more appropriate one: ‘How can we so organize politicalinstitutions that bad or incompetent rulers can be prevented fromdoing too much damage?’.119 This was exactly what Atheniandemocracy tried to do.

Nevertheless, up to present times Plato’s work has continued toproduce its devastating effects. These are found primarily inAristotelian theory. Clearly, the purpose here is not to obviateAristotle’s criticism of Plato’s theory of knowledge. It has beenrightly written that, ‘when Plato wants to know something near tohim, the first thing he does is run in the opposite direction, movinginfinitely far away from it, beyond the stars. Thus, from a heavenlyplace, on the road back, he sees what he can say that makes senseabout things of this world’.120 He places his projections at a pointfar from the world, so that they cannot be revealed easily. Aristotle,on the other hand, claims to start out from ‘perception’ and then goon to the universal. In a ‘canonical’ excerpt of Posterior Analytics,he asserts: ‘As soon as one individual has come to a half in the soul,this is the first beginning of the presence there of a universal(because although it is the particular that we perceive, the act ofperception involves the universal, e.g., “man”, not “a man”Callias’.121 Hence, the identity of knowledge and the object known


becomes even closer and provides knowledge with a base, namely‘perception’, that cannot be confuted.

Therefore, precisely because this identity is closer, Aristotle’s theoryof knowledge remains strictly confined within the science of theimmutable. Aristotle himself asserts that the ‘nature of scientificknowledge […] may be made clear as follows. We all conceive that athing which we know scientifically cannot vary’;122 and specifies that‘scientific knowledge and intuition’ are always true and that ‘no otherkind of knowledge except intuition is more accurate than scientificknowledge’.123 This is why Popper not only maintains that Aristotle,with his theory of certain, demonstrable knowledge (episteme), isthoroughly bound to the distinction between truth and opinion; but healso accuses Aristotelian theory of leading to the complete weakeningof the ‘critical tradition’.124 It is only a short and consequent step fromthe science of the immutable to the idea of the ‘Supreme Good’. Thosewho think they have true knowledge also think they can dictate what isbest for everybody.

Let us follow Aristotle more directly:

If therefore among the ends at which our actions aim there be onewhich we wish for its own sake, while we wish the others only forthe sake of this and if we do not choose everything for the sake ofsomething else (which would obviously result in a process adinfinitum, so that all desire would be futile and vain), it is clearthat this one ultimate End must be the Good, and indeed theSupreme Good.125

Here Aristotle means that there must be a hierarchy of ends. And thereis no doubt that each one of us needs such a hierarchy in order to act.But Aristotle makes no reference to the scale of preferences formulated,knowingly or unknowingly, by every individual. He is thinking of acommon scale of preferences and says:

It would be agreed that it must be the object of the mostauthoritative of the sciences—some science which is pre-eminently a mastercraft. But such is manifestly the science ofPolitics; for it is this that ordains which of the sciences are toexist in states, and what branches of knowledge the differentclasses of the citizens are to learn, and up to what point; and weobserve that even the most highly esteemed of the faculties, suchas strategy, domestic economy, oratory, are subordinate to the


political science. Inasmuch then as the rest of the sciences areemployed by this one, and as it moreover lays down laws as towhat people shall do and things they shall refrain from doingthe end of all the others. Therefore, the Good of man must bethe end of the science of Politics. For ever though it be the casethat the Good is the same for individual and for the state,nevertheless, the good of the state is manifestly a greater andmore perfect good, both to attain and to preserve. To secure thegood of one person only is better than nothing; but to secure thegood of a nation or a state is a nobler and more divineachievement.126

Consequently, politics is a higher order of activity than all the others. Itis the independent variable of the system. Exactly as Plato saw it,politics is an ‘architectonic science’, and as such, a part of ‘theoreticalscience’.127 In other words: ‘the ruler must possess intellectual virtue incompleteness (for any work, taken absolutely, belongs to the master-craftsman, and rational principle is a master-craftsman); while each ofthe other parties must have that share of this virtue which isappropriate to them’.128

Obviously, Aristotle raises the question of who is ‘bearer of theprivileged point of view on the world’ and must rule. His answeris:

Inasmuch as happiness is a certain activity of soul in conformitywith perfect goodness, it is necessary to examine the nature ofgoodness. For this will probably assist us in our investigation ofthe nature of happiness. Also, the true statesman seems to be onewho has made the citizens good and law-abiding men—witnessthe lawgivers of Crete and Sparta, and the other great legislatorsof history.129

However,

if there is any one man so greatly distinguished in outstandingvirtue, or more than one but not enough to be able to make upa complete state, so that the virtue of all the rest and theirpolitical ability is not comparable with that of the menmentioned, if they are several, or if one, with his alone, it is nolonger proper to count these exceptional men a part of the state;for they will be treated unjustly if deemed worthy of equal


status, being so widely unequal in virtue and in their politicalability: since such a man will naturally be as a god among men.Hence, it is clear that legislation also must necessarily beconcerned with persons who are equal in birth and in ability, butthere can be no law dealing with such men as those described,for they are themselves a law.130

The part counts for the whole. Hence, it is not surprising that Aristotlesees the polis as an intentionally constructed order (taxis) of reduceddimensions, as suggested by the models of Crete and Sparta:

Certainly experience also shows that it is difficult and perhapsimpossible for a state with too large a population to have goodlegal government. At all events we see that none of the statesreputed to be well governed is without some restriction in regardto members. The evidence of theory proves the same point. Law isa form of order; but an excessively large number cannotparticipate in order: to give it order would surely be a task fordivine power.131

Bound as he is to the idea of an intentionally constructed order,Aristotle is far from imagining the possibility of a great society. If at allpossible, this would have to be an intentional order, created by adivinity; but, according to Aristotle, this target is forbidden to men.Furthermore, still captive to his concept, he asks: ‘who will commandits over-swollen multitude in war? Or who will serve as its herald,unless he have the lungs of a Stentor?.132

Concerning economic activity, Aristotle disagrees with Solon’sstatement that ‘of riches no bound has been fixed or revealed tomen’.133 He poses the question as follows:

In the primary association […] (I mean the household) there is nofunction for trade, but it only arises after the association hasbecome more numerous. For the members of the primitivehousehold used to share the commodities that were all their own,whereas on the contrary a group divided into several householdsparticipated also in a number of commodities belonging to theirneighbors, according to their needs for which they were forced tomake their interchanges by way of barter, as also many barbariantribes do still; for such tribes do not go beyond exchanging actualcommodities for actual commodities, for example giving and


taking wine for corn, and so with the various other things of thesort.134

Unfortunately, at the side of this type of acquisition, ‘belonging in theorder of nature to householders’,135 there is ‘another kind ofacquisition, that is specially called wealth-getting’ (chrematistics).136

But this is ‘not natural’ because ‘to this kind it is due that there isthought to be no limit to riches and property’.137

It is obvious that his condemnation of ‘chrematistics’, which is theterm used for a market economy, is based on a very limited idea ofneed. Barter, which is a direct exchange of excess goods and, in anycase, represents a gain for the contracting parties (because theyimprove their positions by bartering), is considered an instrument forobtaining ‘actual commodities’ and satisfying ‘natural’ needs, whilemonetary exchange would be outside this sphere. This naive view leadsto the belief that needs are either ‘natural’ or ‘artificial’ and can bedefined once and for all.

Hence, it is not surprising that Aristotle—though acknowledgingthat ‘democracies are states in which all the people participate in allfunctions, oligarchies where the contrary is the case’138—reaches thefollowing conclusion:

At present we are studying the best constitution, and this is theconstitution under which the state would be most happy, andit has been stated before that happiness cannot be forthcomingwithout virtue; it is therefore clear from these considerationsthat in the most nobly constituted state, and the one thatpossesses men that are absolutely just, not merely justrelatively to the principle that is the basis of the constitution,the citizens must not live a mechanic or a mercantile life (forsuch a life is ignoble and inimical to virtue), nor yet mustthose who are to be citizens in the best state be tillers of thesoil.139

Moreover, Aristotle specifies that ‘those who are to cultivate the soilshould best of all, if the ideal system is to be stated, be slaves’.140 Andhe does not hesitate to indicate that the Egyptian and Cretaninstitutions are his model.141 He does not exclude the possibility ofprivate property, but this should always be distributed under thecontrol of the political power, because the citizens ‘will call property


“their”, meaning the property of them all, not of each of themseverally’.142

Thus, there is a clear continuity with Plato’s work. And yet, asOrtega y Gasset writes, ‘in Aristotle there is a surprising combinationof modernity (=relative modernity) and primitivism’.143 Aristotlerealizes that the ‘real cause’ of all social evils is not ‘the absence ofcommunism, but wickedness, since we see far more quarrels occurringamong those who own or use property in common than among thosewho have their estates separate; but we notice that those who quarrelas result of their partnerships are few when compared with the totalnumber of private owners’.144 Aristotle adds that ‘it is just to state notonly all the evils that men will lose by adopting communism, but alsoall good things; [… because] life in such circumstances is seen to beutterly impossible’.145

Aristotle understands that there are economic reasons for the originof a city.146 He believes that the Spartans did not have a ‘good’lawgiver,147 and that, in any case, there is no need to look for the ‘bestconstitution’, but a constitution ‘that is practicable under thecircumstances but an inferior one’.148 He stresses that the continualadoption of legislative provisions destroys the law.149 In general,legislative and/or economic interventionism is the ‘legendary jar with ahole in it’:150 ‘and this comes about when the decrees of the assemblyover-ride the law’.151 But what gives guarantees to the citizens is therule of law.152

In Aristotle we can also find early signs of what we now call‘consumer’s sovereignty’. He says:

About some things the man who made them would not be theonly nor the best judge, in the case of professionals whoseproducts come within the knowledge of laymen also: to judge ahouse, for instance, does not belong only to the man who built it,but in fact the man who uses the house (that is, the householder)will be an even better judge of it, and a steersman judges a rudderbetter than a carpenter, and the diner judges a banquet betterthan the cook.153

In keeping with this, Aristotle distinguishes between the use value andthe exchange value,154 and he explains that two objects to be exchangedmust be ‘commensurable’: ‘It is for this end that money has beenintroduced, and becomes in a sense an intermediate; for it measures all


things, and therefore the excess and the defect—how many shoes areequal to a house or to a given amount of food’.155

Finally, in Aristotle we find the principle of what today we call‘methodological individualism’. He asserts: ‘In every […] matter it isnecessary to analyze the composite whole down to its uncompoundedelements (for these are the smallest parts of the whole)’.156

Could Aristotle have freed himself from the Platonic restrictions?There is no doubt, as Polanyi points out, that ‘Aristotle discovers theeconomy’.157 But he does not discover or does not accept the socialprocess. And this discovery or acceptance is the only possible way torid ourselves of the ‘science of the immutable’. Nevertheless, exactlybecause ‘Aristotle discovers the economy’, there is an opening in hiswork, which can become an irreparable, devastating chasm. It is thedistinction between use value and exchange value. We can say thatthe use value, our personal evaluation, represents the doxa, whichnourishes the open process from which (by interaction on the market)the exchange value derives. In other words, interaction establishes theeconomic value and is also the means by which we search for thetruth. It is not by chance that, in connection with this, Georg Simmelwrites:

Objective economic value […] crystallized out of subjectivedemands because the form of equality and of exchange wasavailable, and because these relationships had an impartialitytranscending subjectivity which the single elements lacked.Those methods of cognition may well be subjective […]; butthey approach—even though by an infinite process of evokingeach other—the ideal of objective truth by the fact that eachfinds its supplement and therewith its legitimation through theother.158

And moreover:

Relativity is not a qualification of an otherwise independentnotion of truth but is the essential feature of truth. Relativity isthe mode in which representations become truth, just as it is themode in which objects of demand become values.159

As Popper stresses, this means that interaction is the means ‘by whichwe constantly transcend ourselves, our talents, our gifts’.160 It affectsour entire life, and not just economic exchange in the strict sense,161


and is the exclusive possibility we have of raising ourselves from the‘morass of our ignorance; how we throw a rope into the air and thenswarm up it—if it gets any purchase, however precarious, on any littletwig’.162 In such a way, we free ourselves from psychologism and‘epistemological expressionism’.163

Aristotle could have been helped by the distinction, which he evenintroduced, between ‘distributive justice’ and ‘commutative justice’.164

Distributive justice occurs when the rate of exchange is determined bythe status of the contracting parties. In this case, the distribution ofbenefits is based on political prescriptions, which define the socialstratification of a rigidly hierarchical system. Commutative justice, onthe other hand, occurs when there is voluntary free exchange. But hereAristotle strongly insists on the equality of the values exchanged, notrealizing that exchange is possible only if different use valuescorrespond to an equal exchange value. This is to say that the exchangeis possible because two goods, which have the same market value, areevaluated differently by their holders. As we shall see in Chapter 5, thefirst to understand all this were the Spanish late-scholastics. Aristotledoes not go so far.165

Cicero: between liberty and Platonism

As we mentioned toward the end of the preceding chapter, Cicerounderstood that liberty is a juridical problem. He even states that‘legum denique idcirco omnes servi sumus, ut liberi esse possimus’.166

This means that liberty comes from a normative web, which definesthe boundaries of our actions. This network does not suggest whatcontent we must give to our actions. We are free to choose whetherto buy or sell a good, enter into marriage, or make a donation. Andyet, once an action is taken, a set of legal rules is applied; it regulatestypical situations and defines rights and duties that, being oriented bythe principle of neminem laedere, safeguard the parties.

It is completely understandable that Rome should arrive at this ideaof interpersonal relationships. In Livy, we read:

The longer the war dragged on and success and failure altered thesituation, and quite as much so the attitude of men, superstitiousfears, in large part foreign at that, invade the state to such adegree that either men or else gods suddenly seemed changed.And now not only in secret and within the walls of houses were


Roman rites abandoned, but in public places also and in theForum and on the Capitol there was a crowd of women who werefollowing the custom of the fathers neither in their sacrifices norin prayers to the gods.167

In commenting on this passage, Ortega y Gasset says:

Livy, who wrote a history that is one of the most pleasant to read,as we know was not a great historian and we cannot expect fromhim further explanations. Nor can we expect from him deepunderstanding of the enormity of the fact that he recounts,without minimally changing the marvelous tranquillity of his style[…]. Nevertheless, for us this event is the official historicaldeclaration that Rome […] began to see itself faced with a worldof diversity.168

For men of different philosophical and religious ideas to live together,there must be an abstract normative network, which sets theboundaries among actions while allowing freedom of choice. Ciceroclearly explains what all this means. He says to Chrisippus:

When a man enters the foot-race, it is his duty to put forth all hisstrength and strive with his foot to trip, or his hands to foul, acompetitor. Thus in the stadium of life, it is not unfair for anyoneto seek to obtain what is needful for his own advantage, but hasno right to wrest it from his neighbor.169

In juridical terms, this is an insistent condemnation of dolus malus.Cicero asserts:

We do not need to discuss cut-throats, poisoners, forgers of wills,thieves, and embezzlers of public money, who should be repressednot by lectures and discussions of philosophers, but by chains andprison walls; but let us study here the conduct of those who havethe reputation of honest men.170

[We] must, therefore, keep misrepresentation entirely out ofbusiness transactions.171

Briefly stated, Cicero wants usefulness to coincide with honesty. In fact,he specifies: ‘our standard is the same for expediency and for moralrectitude’.172 And again:


The man who does not accept the truth of this will be capableof any sort of dishonesty, any sort of crime. For if he reasons,‘That is, to be sure, the right course, but this course bringsadvantage’, he will not hesitate in his mistaken judgment todivorce two conceptions that Nature has made one; and thatspirit opens the door to all sorts of dishonesty, wrong-doing,and crime.173

In other words, you should not damage your neighbor even when youare absolutely sure no one will ever find out: ‘Suppose, then, that agood man had such power that with a snap of his fingers his namecould steal into rich men’s wills, he would not avail himself of thatpower—no, not even though he could be perfectly sure that no onewould ever suspect it’.174

A possibility such as this of being able to insert your name secretlyin a will would have made Marcus Crassus happy, Cicero adds: ‘hewould, I warrant you, dance in the forum’.175

But the righteous man, the one whom he feels to be a good man,would never rob anyone of anything to enrich himself. If anybodyis astonished at this doctrine, let him confess that he does notknow what a good man is. If, on the other hand, anyone shoulddesire to unfold the idea of a good man which lies wrapped up inhis own mind, he would then at once make it clear to himself thata god man is one who helps all whom he can and harms nobody,unless provoked, by wrong.176

Cicero also concludes that, without respect for the general rules ofsocial living, it is impossible to keep even a band of criminalstogether: ‘For, if a robber takes anything by force or by fraud fromanother member of the gang, he loses it standing even in a band ofrobbers’.177 All this, plus what Cicero has Cato the Censor say in Derepublica (‘our own commonwealth was based upon the genius, notof one man, but of many; it was founded, not in one generation, butin a long period of several centuries and many ages of men […] therenever has lived a man possessed of so great genius that nothing couldescape him, nor could the combined powers of all the men living atone time possibly make all necessary provisions for the future withoutthe aid of actual experience and the test of time’),178 might havesuggested that the concurrence of utility and honesty is not a principleconsciously created by man, but that was established over time as an


indispensable condition for social living. And yet this is exactly whatCicero does not realise. He catches a glimpse of the historical process,but denies the competitive process, which is the main fuel of thehistorical process. The idea of governing by means of competition isforeign to him.

We probably have to agree with Pohlenz when he says that, eventhough it was ‘natural to refer to Panaetius’ for the ‘concreteproblems of present’, Cicero had Plato as his ‘great model both fromthe point of view of art and from that of thought’.179 Thus, despite hisclear understanding of the legal nature of the concept of liberty anddespite the emphasis he placed on the inadequacy of individual mindsand on the cultural enrichment produced by the historical process,Cicero indulges in praise of the ‘wise man’,180 who is the one mostlikely to have the ‘reason which is in Nature’,181 or in praise of thebest:

In a state ruled by its best men, the citizens must necessarily enjoythe greatest happiness, being freed from all cares and worries,when once they have entrusted the preservation of theirtranquillity to others, whose duty it is to guard vigilantly andnever to allow the people to think that their interests are beingneglected by their rulers. For that equality of legal rights of whichfree peoples are so fond cannot be maintained […] and what iscalled equality is really most inequitable. For when equal honor isgiven to the highest and to the lowest […] there this very‘fairness’ is most unfair; but this cannot happen in states ruled bytheir best citizens.182

Furthermore: ‘if the management of a state is committed to more thanone, you can see that there will be no authority at all to take command,for unless such authority is a unit, it can amount to nothing’.183

Romulus

first discovered and approved the principle which Lycurgus haddiscovered at Sparta a short time before—that a state can bebetter governed and guided by the authority of one man, that isby the power of a king, if the influence of the state’s mosteminent men is joined to the ruler’s absolute power.184

In keeping with this, Cicero maintains that it is possible to rationallyestablish universal ethics values:


True law is the right reason, in harmony with eternal, universaland unchangeable nature, whose orders remind man of his dutyand whose prohibitions distract him from deceit […]. It is notlegitimate to replace it with other law, nor change any part of itor completely cancel it, because neither the people, nor the senatecan dispense us from observing a law has no need of a SextusAelius to comment or explain it. In fact, it is not different inRome or in Athens or today or tomorrow. It is unique, eternal,unchangeable and capable of controlling people in any time.Because one is the lord and guide of all things, the god, whoconceived, created and enacted such a law.185

If the law of nature is the truth accessible to man, it is not surprisingthat Cicero goes so far as to state that the ‘the highest good, thestandard of all our actions, towards the attainment of which theyshould all be directed’ is deducible rationally.186

To conclude the discussion of Cicero’s Platonism, mention should bemade of his contempt for economic activities and his lack ofunderstanding of societies based on the market. He does not hesitate tosay:

Unbecoming to a gentleman, too, and vulgar are the means oflivelihood of all hired workmen whom we pay for mere manuallabor, not for artistic skill; for in their case the very wage theyreceive is a pledge of their slavery. Vulgar we must consider thosealso who buy from wholesale merchants to retail immediately; forthey would get no profits without a great deal of downright lying[…]. And all mechanics are engaged in vulgar trades; for noworkshop can have anything liberal about it. Least reputable ofall those trades which cater for sensual pleasures: fishmongers,butchers, cooks, and poulterers, and fishermen’.187

And, in reference to market cities, Cicero writes:

Maritime cities also suffer a certain corruption and degenerationof morals; for they receive a mixture of strange languages andcustoms, and import foreign ways as well as foreign merchandise,so that none of their ancestral institutions can possibly remainunchanged. Even their inhabitants do not cling to their dwellingplaces, but are constantly being tempted far from home bysoaring hopes and dreams; and even when their bodies stay at


home, their thoughts nevertheless fare abroad and go wandering.In fact, no other influence did more to bring about the finaloverthrow of Carthage and Corinth, though they had long beentottering, than this scattering and dispersion of their citizens, dueto the fact that the lust for trafficking and sailing the seas hadcaused them to abandon agriculture and the pursuit of arms.Many things too that cause ruin to states as being incitements toluxury are supplied by the sea, entering either by capture orimport; and even the mere delightfulness of such a site brings inits train many an allurement to pleasure through eitherextravagance or indolence. And what I said of Corinth mayperhaps be said with truth of the whole of Greece’.188

62

4 The failure of psychologism and

the question of private property

Conversion versus critical discussion

In the previous chapter, we have spoken about psychologism in Plato’swork. With the help of various critics, we shall now explain thisfurther.

In an essay published in 1860, Herbert Spencer writes:

Plato’s model republic—his ideal of a healthful body politic—isconsciously to be put together by men; just as a watch might be;and he manifestly thinks of societies in general as originated inthis manner. Still more specifically does Hobbes express this view.‘For by art’ he says ‘is created that great Leviathan calledCommonwealth’. And he even goes so far as to compare thesupposed social compact, from which a society suddenlyoriginates, to the creation of a man by the divine fiat […] thusthey both fall into the extreme inconsistency of considering acommunity as […] an artificial mechanism’.1

To assume that society can be constructed artificially, outside the socialprocess, and that our intentions can shape reality, is mere psychologism.Popper carefully analyzed this and has the following to say:

Psychologism is […] forced, whether it likes it or not, to operatewith the idea of a human nature and a human psychology as theyexisted prior to society […]. It is a desperate position because thistheory of a pre-social human nature which explains thefoundation of society […] is not only an historical myth, but also,as it were, a methodological myth. It can hardly be seriously

Failure of psychologism and question of private property 63

discussed, for we have every reason to believe that man or ratherhis ancestor was social prior to being human (if considering, forexample, that language presupposes society). But this implies thatsocial institutions and, with them, typical social regularities orsociological laws, must have existed prior to what some peopleare pleased to call human nature’.2

Popper is right. In fact, as was already mentioned, Plato projects on thereality a ‘human nature’ which precedes society and even precedes ourbirth. George Grote, who later than Spencer wrote a great deal aboutPlato’s work, shed light on the way Plato builds his theory. Grotestates:

He [Plato] regards as fictions the accredited stories respectingGods and Heroes, which constituted the matter of religious beliefamong his contemporaries; being familiarised to all throughvotive offerings, such as the robe annually worked by women ofAthens for the Goddess Athens. These fictions he supposes tohave originally obtained credence either through the charm ofpoets and narrators, or through the deliberate coinage of anauthoritative lawgiver […]. Once received into the general belief,which is much more an act of emotion than of reason, suchnarratives retain their hold.3

Grote concludes:

This is what Plato assumes as the natural mental condition ofsociety, to which he adopts his improvements. He disapproves thereceived fictions, not because they are fictions, but because theytend to produce a mischievous ethical effect, from the acts whichthey ascribe to the Gods and Heroes. These acts were such thatmany of them (he says) even if they had been true, ought never bepromulgated. Plato does not pretend to substitute truth in placeof fiction; but to furnish a better class of fictions in place of aworse. The religion of the Commonwealth, in his view, is tofurnish fictions and sanctions to assist the moral and politicalviews of the lawgiver, whose duty it is to employ religion for thispurpose.4

Therefore, Plato’s aim is to replace myths and old beliefs with newones. Grote maintains that, even if Plato ‘begins his career with the

64 Failure of psychologism and the question of private property

confessed ignorance and the philosophical negative of Sokrates’, hecloses his journey with the ‘peremptory, dictatorial affermative ofLykurgus’.5

From the point of view of knowledge, the logical consequence of allthis is that critical discussion, which is an aspect of the social processand corresponds to Socratic method,6 had to cede its place toconversion. Truth is no longer the impermanent product of a freeexchange of ideas. It is an attribute of a special group, the Platonicphilosophers, who possess knowledge that combines truth and virtue,to which everyone else must be converted. The change is not a result ofan open social process, but of a conversion. In fact, in Letter VII, Platosays:

Who is genuinely devoted to philosophy and is a man of Godwith a natural affinity and fitness for the work, sees in the coursemarked out a path of enchantment, which we must at once strainevery nerve to follow, or die in the attempt.7

This is why Hans Kelsen does not hesitate to write:

The rational speculation about concepts affords no direct accessto this experience; dialect is rather to be understood as a spiritualexercise similar to that of prayer. The knowledge of the good doesnot follow as a logical conclusion of the dialectical process; but itis an allotment of grace of the soul which has purified itself of allsensuality by meditation.8

Consequently, it is here useful to join Jaeger in asking the followingquestions:

Had not Plato […] taught that the Logos is the golden linkthrough which the Lawgiver and Teacher and his work areconnected with the divine Nous? Had he placed man in a universethat its perfect order and harmony was an eternal model for thelife of man?9

And we add: was it not in virtue of some divine wisdom that Platoproposed to cancel what exists?

To clarify the terms of the problem, one should heed the words ofParmenides:


The mares that carry me, as far as impulse might reach, Weretaking me, when they brought and placed me upon the much-speaking route Of the goddess, that carries everywhere unscathedthe man who knows; Thereon was I carried, for thereon themuch-guided mares ere carrying me, Straining to pull the chariot,and maidens were leading the way. The axle, glowing in its naves,gave forth the shrill sound of a pipe, (For it was urged on by tworouted Wheels at either end), even while maidens, Daughters ofthe Sun, were hastening To escort me, after leaving the House onNight for the light, Having pushed back with their hands the veilsfrom their heads. There are the gates of the paths of Night andDay, And a lintel and a threshold of stone surround them, Andthe aetherial gates themselves are filled with great doors; And forthese Justice, much-avenging, holds the keys of retribution.Coaxing her with gentle words, the maidens Did cunninglypersuade her that she should push back the bolted bar for themSwinging in turn in their sockets the brazen posts Fitted withrivets and pins; straight through them at the point Did themaidens drive the chariot and mares along the broad way. Andthe goddess received me kindly, and took my right hand with herhand, And uttered speech and thus addressed me: ‘Youth attendedby immortal charioteers, Who come to our House with maresthat carry you, Welcome; for it is no ill fortune that sent you forthto travel This route (for it lies far indeed from the beaten track ofmen), But right and Justice. And it is right that you should learnall thing, Both the steadfast heart of persuasive truth, And thebeliefs of mortal, in which there is not true trust. But neverthelessyou shall learn these things as well, how the things which seemhad to have genuine existence, permeating all thingscompletely’.10

Jaeger comments:

No one who studies this supernatural overture could ever supposethat the philosopher’s aim in this passage is merely to provide aneffective stage-setting. His mysterious vision in the realm of lightis a genuine religious experience: when the weak human eye turnstowards the hidden truth, life itself becomes transfigured. This isa kind of experience that has no place in the religion of theofficial cults. Its prototype is rather to be sought in the devotionswe find in the mysteries and initiation ceremonies […]. Indeed,


the ‘philosophical school’ was originally nothing but secularizedform of just such a religious conventicle’.11

Therefore, as we have already pointed out, if the historical Socrateshad coincided with Plato’s Socrates, there would not have been atragedy and we would not need Socrates’ work. But the fact is thatPlato was ‘Socrates’ Judas’.12 He was the one who most profoundlytheorized the counterrevolution, which was a reaction to theestablishment of the open society, the only real event thatrevolutionarized and revolutionarizes the history of man.13

The doctrine of ‘manifest truth’

If knowledge does not depend on a public procedure, in which everyconjecture can be subject to refutation, it is simply the result ofexercising psychic activity, which leads to a presumed sure anddemonstrable truth, to the belief in ‘manifest truth’.

Such a belief is a recurring temptation of man. It is also present inBacon and Descartes. Popper deals with this when he brings togetherBacon and Aristotle, Descartes and Plato.14 Popper’s thesis is perfectlylegitimate. One need only recall that Bacon maintains that truth isattained through an unprejudiced ‘reading’ of the ‘book of nature’; andDescartes believes that it is reached through ‘systematic doubt’, whichalso refers to the intellectualistic task of eliminating all prejudice.Popper adds that perhaps Bacon and Descartes ‘did not dare to appealto our critical judgement’, because they were afraid that this might leadto ‘subjectivism and arbitrariness’.15 But Popper is too optimistic hereand probably overlooks the attraction of the fundamental belief ofBacon and Descartes. As we know, this spurred Bacon to write TheNew Atlantis, which is a utopia where the exemplary life is that of themen of science, to whom public monuments are dedicated. As forDescartes, during his discovery of the method, he states in his personalnotes: ‘X novembris 1619, cum plenus forem enthousiasmo, etmirabilis scientiae fundamenta reperirem’.16 Hence, it is not surprisingthat Descartes sang the praises of Sparta, because the laws of that city,‘being all the invention of one man, they all tended towards the sameend’.17

In other words, it should be stressed that lack of understanding ofthe ‘logic of scientific discovery’ was accompanied by that of the socialprocess. In the first book of Politics, Aristotle asserts that the city


‘exists by nature’;18 and immediately after he says the same about thefamily. For a moment it almost seems the idea that society is aspontaneous order is taking hold. And yet it is a weak light, whichsoon fades and disappears completely before the solid, undisputedconcept of an order (taxis) intentionally constructed and thereforesubject to the sovereignty of political power. The same can be affirmedfor the position of Lycophron, who says that ‘law is a covenant’, aguarantee of men’s just claims on one another’.19 This is, perhaps, thefirst formulation of the contract theory. But contractualism, preciselybecause it assumes subjects can ‘respond’ intentionally to the questionof order, acts as a form of ‘false individualism’, which does not need asocial process to solve the problems of collective living. It is like sayingthat contractualistic theory is the result of an inability to conceive ofsociety as an independent, spontaneous normative source.Consequently, contractualism does not free itself from the dominanceof political power, does not separate the socio-economic element fromthe political, and does not give space to the autonomy of the civilsociety.

A good example of this can be found in Hobbes. And yet it is alsofound in a less ‘suspect’ form in Locke. As we know, for Locke the‘chief end’ of society is the ‘preservation of property’.20 Nevertheless, heidentifies ‘civil society’ with ‘political society’. He says:

It is easy to discern who are, and are not, in political societytogether. Those who are united into one body, and have acommon established law and judicature to appeal to, withauthority to decide controversies between them and punish theoffenders, are in civil society one with another.21

In other words, although ‘the end of civil society’ is ‘to avoid andremedy those inconveniences of the state of Nature’,22 the political pactis the intentional element at the origin of society. Therefore, it is thetask of politics to solve the problem of order. In fact, Locke claimsthere should be

an established, settled, known law, received and allowed bycommon consent to be the standard of right and wrong, and thecommon measure to decide all controversies between them. Forthough the law of Nature be plain and intelligible to all rationalcreatures, yet men, being biased by their interest, as well as


ignorant for want of study of it, are not apt to allow of it as a lawbinding to them in the application of it to their particular cases.23

Thus, the problem of order is exclusively a political one. And Locke,exactly because he believes in the existence of a law of nature which is‘plain and intelligible’, remains within the sphere of the doctrine of‘manifest truth’.24

This is why, when Leo Strauss asserts that Locke would give us ‘thesolution of the political problem by economic means’,25 he does notcapture the exact meaning of Locke’s proposal and, in addition, ismisleading in posing the problem in this way and offering a possiblesolution. To summarize Locke’s position, it would be better to saythat, since he emphasizes the importance of property, he realizes thatthe question is an economic one. Nevertheless, he continues to give topolitics a sovereignty which, though limited and controlled, is incontrast with his premises. To avoid this situation, it is necessary torenounce the idea of a ‘plain and intelligible’ natural law. But the voidleft by this renunciation must be filled; and this can only be done bydefinitively giving up any ‘privileged point of view on the world’ andtrusting in the social process. The economic must be separated fromthe political. There must be an awareness that the basic problem isscarcity of material resources, time and knowledge (without thisscarcity there would be no problem), and the solution must be soughtin a process of social cooperation, whose normative habitat must beidentified.

‘Discovering’ the society, or separating the civil society from thepolitical one, separates the civil society from the state. This sheds lighton the largest part of our life, the social dimension (interaction with theOther), which is obscured whenever the ‘privileged point of view on theworld’ re-emerges and renders the life of the individual and thecollectivity an exclusively political fact. In such a situation, the socialprocess as an open procedure of control, correction of errors andexploration of the unknown, is eliminated and replaced by the repeated‘celebration’ of the privileged source of knowledge. This leads toinstitutionalization of an enemy-scapegoat, who can be blamed for anyfailure and thus prevents, for as long as possible, that these failuresundermine the constituted order.26

Under these circumstances, everything real is interpreted (as Hegelwould) through the psychological projection of the one who is thisprivileged source of knowledge and that, for this reason, holds thepower. Obviously, there is no place for the social sciences, because


there is no social process or ‘open’ world in which to look fordirection. Therefore, the alternative is either a ‘privileged point ofview on the world’ and a holistic vision of reality or a lack of aprivileged source of knowledge and social sciences. In the formercase, the phenomena of collective life are presented as an intentionalproduct of whoever is in power or of ‘opposing powers’. In the lattercase, the facts are no longer the positive or negative projections ofsome psychologistic force, but originate in a social process. In thisprocess, there are undoubtedly intentional consequences (that need noexplanation); and yet there are also unintentional consequences, dueto the ‘process’, i.e., to the aggregation of all the actions one attemptsto explain by critical discussion.27 If so, the doctrine of ‘manifesttruth’ cannot be adopted as the gnoseological basis of the socialsciences. Above all, it cannot be the gnoseological basis of an opensociety.

In Locke, the relationship between ‘manifest truth’ and natural lawis clear. In reference to Locke’s position, Hans Kelsen says that ‘manyof the followers of the natural-law doctrine argue that one of theessential purpose of the state’ is ‘to protect the right of property’.28

Kelsen also asserts that ‘such statements’ are ‘made by generallyrecognized authorities’. And yet, he continues, these scholars do notexplain why the ‘natural-law doctrine’ may be considered a ‘strongbastion in the defense against communism’.29 In fact, Kelsen adds, ‘onthe basis of the natural-law doctrine’, it is also possible to maintainthat ‘private property is against nature and the source of all socialevils’.30 And here he uses, as an example, the position of Morelly.31 Butone should bear in mind also Rousseau and others.

Harrington and Bernier: private property and freedom

In speaking of Locke in particular, Pipes says that Locke’s TwoTreatises of Government mark a ‘regression’, because they rest ‘on themetaphysical concept of Natural Law rather than on politicalsociology’.32 There is no doubt that the doctrine of ‘manifest truth‘should be rejected. Consequently, it is easy to agree with Pipes’criticism of ‘the metaphysical concept of Natural Law’. But it ispossible to agree with him also when he asserts that the natural-lawdoctrine ignores the results obtained by political sociology. Here Pipesrefers to James Harrington, who published The Commonwealth ofOceana in 1756. Pipes says:


He [Harrington] was the first political theorist to viewpolitical power as a by-product of economics, or, morespecifically, of the distribution of property between the stateand the population.33

Pipes adds:

He [Harrington] talked of an ‘equilibrium’ of property rightsbetween crown and subjects, a notion which had great appeal inthe age of the mechanistic science. His thesis was as simple as itwas innovative: he who controls the country’s wealth controls itspolitics, in large measure because political power rests on militarymight and the armed forces must be paid.34

Pipes’ statements are correct. In fact, in Harrington’s work, we canread:

If one man be sole Landlord of a Territory, or overbalance thepeople, for example, three part in four he is Grand Signior: for sothe Turk is called from his Property; and his Empire is absoluteMonarchy.35

Moreover:

If the whole people be Landlord, or hold the Lands so dividedamong them, that no one man, or number of men, within thecompass of the Few or Aristocracy, overballance them, theEmpire (without the interposition of force) is a commonwealth.36

Hence, Harrington realized that there is no political freedom withoutprivate property. He understood that the existence of private propertymade political freedom and the growth of the West possible; and theabsence of private property condemned the peoples of the East tobackwardness and slavery. Therefore, once again, Pipes is correct whenhe says that Locke’s natural-law claims for private property is a‘regression’ in respect to Harrington, whose work offered somethingmore: the awareness of the connection between private property andpolitical freedom (not a mere petition).

Harrington’s is not the only work that might have helped Locke.Pipes also speaks of Henry Neville, but Jean-Baptiste Tavernier and,above all, Franc¸ois Bernier should be not neglected.


Bernier surely projected the strongest light on the connectionsamong property, freedom and growth. We do not know whetherBernier read Harrington. But his analysis is clear. He said:

I wish to explain how it happens that, although this Empire of theMogul is such an abyss for gold and silver […], these preciousmetals are not in greater plenty here than elsewhere; on thecontrary, the inhabitants have less the appearance of a moneyedpeople than those of many other parts of the globe.37

Bernier’s explanation was:

The King, as proprietor of the land, makes over a certain quantityto military men, as an equivalent for their pay; and this grant iscalled jah-ghir, or, as in Turkey, timar, the word jah-ghirsignifying the spot from which to draw, or the place of salary.Similar grants are made to governors, in lieu of their salary, andalso for the support of their troops, on condition that they pay acertain sum annually to the King out of any surplus revenue thatthe land may yield. The lands not so granted are retained by theKing as the peculiar domains of his house, and are seldom, if ever,given in the way of jah-ghir; and upon these domains he keepscontractors, who are also bound to pay him an annual rent.

The persons thus put in possession of the land, whether astimariots, governors, or contractors, have an authority almostabsolute over the peasantry, and nearly as much over the artisansand merchants of the towns and villages within the district; andnothing can be imagined more cruel and oppressive than themanner in which it is exercised’.38

Bernier also describes what happens in a system like this:

There is no one before whom the injured peasant, artisan, ortradesman can pour out his just complaints; no great lords,parliaments, or judges of local courts exist, as in France, torestrain the wickedness of those merciless oppressors, and theKadis, or judges, are not invested with sufficient power to redressthe wrongs of these unhappy people.39

The consequences are:

This debasing state of slavery obstructs the progress of trade andinfluences the manners and mode of life of every individual. There


can be little encouragement to engage in commercial pursuits,when the success with which they may be attended, instead ofgoing to the enjoyments of life, provokes the cupidity of aneighbouring tyrant possessing both power and inclination todeprive any man of the fruits of his industry. When wealth isacquired, as must be sometimes the case, the possessor, so farfrom living with increased comfort and assuming an air ofindependence, studies the means by which he may appearindigent: his dress, lodging, and furniture, continue to be mean,and he is careful, above all things, never to indulge in thepleasures of the table. In the meantime, his gold and silver remainburied at a great depth in the ground; agreeable to the generalpractice among the peasantry, artisans and merchants, whetherMahometans or Gentiles, but especially among the latter, whopossess almost exclusively the trade and wealth of the country,and who believe that the money concealed during life will provebeneficial to them after death.40

Bernier adds:

From what I have said, a question will naturally arise, whether itwould not be more advantageous for the King, as well as for thepeople, if the former ceased to be the sole possessor of the land,and the right of private property were recognised in the Indies asit is with us? I have carefully compared the condition of Europeanstates, where that right is acknowledged, with the condition ofthose countries where it is not known, and am persuaded that theabsence of it among the people is injurious to the best interests ofthe Sovereign himself’.41

It follows that

a tyranny […] owing to which those wretched people either haveno children at all, or have them only to endure the agonies ofstarvation, and to die at a tender age.42

Therefore,

a profound and universal ignorance is the natural consequences ofsuch a state of society as I have endeavoured to describe. Is itpossible to establish in Hindoustan academies and colleges


properly endowed? Where shall we seek for founders? Or, shouldthey be found, where are the scholars? Where are the individualswhose property is sufficient to support their children at college?Or, if such individuals exist, who would venture to display soclear a proof of wealth? Lastly, if any persons should be temptedto commit this great imprudence, yet where are the benefices, theemployments, the offices of trust and dignity, that require abilityand science and are calculated to excite the emulation and thehopes of the young student?’.43

As a result, the sovereign

is surrounded by slaves, ignorant and brutal; by parasites raisedfrom the dregs of society; strangers to loyalty and patriotism; fullof insufferable pride, and destitute of courage, of honour, and ofdecency.44

Bernier concludes:

Those three countries, Turkey, Persia, and Hindoustan, have noidea of the principle of meum and tuum, relatively to land orother real possessions; and having lost that respect for the right ofproperty, which is the basis of all that is good and useful in theworld, necessarily resemble each other in essential points: theyfall into the same pernicious errors, and must, sooner or later,experience the natural consequences of those errors—tyranny,ruin and misery.45

Consequently, the Platonic philosopher must convert all of society. Butthis is only possible if the habitat of critical discussion is eradicated.Thus, private property, the market and the entire system of laws andvalues associated with them, must be eliminated.

If this is so, it is surprising that Theodor Gomperz, in response to aquestion about the possibility of seeing Plato as a ‘forerunner of themodern socialists and communists’, asserts that these ‘modernmovements strive to obtain for the community as a whole’, while ‘Platoproposed to enact merely for his upper or ruling classes of warriors andguardians’.46 Gomperz does not realize that, even when collectivism isjustified by egalitarian ideologies, it is always accompanied by the‘privileged point of view on the world’. This means that thebureaucratic-military class, which hold that point of view, occupy a


higher social position. Hence, it is not the community that is considered‘as a whole’, but a part of it. Plato’s plan and that of moderncommunist movements follow the same path and produce the sameconsequences.

In 1920, Bertrand Russell correctly maintains:

It may be assumed that every teacher of Plato throughout theworld abhors Bolshevism, and that every Bolshevik regards Platoas an antiquated bourgeois. Nevertheless, the parallel isextraordinarily exact between Plato’s Republic and the regimewhich the better Bolsheviks are endeavouring to create.Bolshevism is internally aristocratic and externally militant.47

Later on, Russell says:

Sparta stood for oligarchy; so did Plato’s family and friends, whowere thus led to become Quislings. Their treachery is held to havecontributed to the defeat of Athens. After that defeat, Plato set towork to sing praises of the victors by constructing a Utopia ofwhich the main features were suggested by the constitution ofSparta. Such, however, was his artistic skill that Liberals nevernoticed his reactionary tendencies until his disciples Lenin andHitler had supplied them with a practical exegesis.48

Thus, Plato is considered a ‘forerunner’ of both Lenin and Hitler. Infact, the ideologists of National Socialism openly declared themselvesto be followers of Plato and the connection to him is clear in theirattempt to close society and establish the ‘privileged point of view onthe world’.49 In regard to the ‘link’ between Lenin and Hitler, it onlyseems surprising. Russell understood that Bolshevism is ‘internallyaristocratic’ and this is enough to render its egalitarianism a mereideological cover up.50

However, to be more precise, it is in the utopias that sprang up inAthens, in opposition to the democratic system, that we can find theearly tie between economic structure and political freedom. In otherwords, Harrington defended private property to defend freedom. Butthe first people in Athens to understand the connection between theeconomic and political aspects of social life were those who wereopposed to democracy. And here one must necessarily speak of Plato.

Apropos, Karl Popper writes:


Plato’s greatness as a sociologist does not lie in his general andabstract speculations about the laws of social decay. It lies ratherin the wealth and detail of his observations, and in the amazingacuteness of his sociological intuition. He saw things which hadnot been seen before him, and which were rediscovered in ourown time.51

Of the things Plato saw, Popper mentions the importance given to the‘economic background of the political life’, a ‘theory revived by Marxunder the name of historical materialism’.52

The Athenian oligarchs and Plato understood that private propertyand the market were the basis of an open society and that the re-establishment of the ‘privileged point of view on the world’ would bepossible only if private property and the market were suppressed:because there is no fundamentum inconcussum where there are privateproperty and the market. Private property, the market and criticaldiscussion go hand in hand. To eliminate critical discussion, privateproperty and the market must be abolished. This leads to a habitat thatcloses society and re-establishes the ‘privileged point of view on theworld’. There is no critical discussion where collectivism closes society.The abolition of private property and the market inhibits the free socialprocess, establishes conditions that make it impossible to challenge the‘privileged point of view on the world’.

On June 2, 1853, Marx writes to Engels:

On the formation of Oriental cities one can read nothing morebrilliant, graphic and striking than the old Franc¸ois Bernier […]:Travels Containing a Description of the Dominion of the GreatMogul, etc […] he remarks, among other things: […] theparticular condition and government of the country, namely thatthe King is the one and only proprietor of all the land in thekingdom, from which it follows as a necessary consequence that awhole capital city like Delhi or Agra lives almost entirely on thearmy and is therefore obliged to follow the king if he takes thefield for any length of time. For these towns neither are nor canbe anything like Paris, being virtually nothing but military camps,only a little better and more conveniently situated than the opencountry’.53

Engels replies on June 6:


The absence of property in land is indeed the key to the wholeEast. Herein lies its political and religious history.54

Therefore, it is truly ironic that, although Marx and Engels knew whata society without property was like, they still proposed for the Westwhat already was a very sad destiny for the people of the East.55

77

5 Mandeville and the ScottishmoralistsThe discovery of society as aspontaneous order

A science of Good and Evil is impossible: moral rules are a productof the social process

If the privileged source of knowledge is rejected, there can be noscience of Good and Evil. Locke insisted: ‘it appears not that God hasever given any such Authority to one Man over another, as to compelany one to his Religion’;1 he added that ‘no Peace and Security, no notso much as Common Friendship can ever be established or preservedamongst Men, so long as this Opinion prevails, that Dominion isfounded in Grace, and that Religion is to be propagated by force ofArms’.2 Nevertheless, until belief in manifest truth is accepted, thedanger of a revival of the ‘privileged point of view on the world’ shouldnot be underestimated. The only defense against this danger is to giveup that belief and uproot the plant that nourishes the claim of a scienceof Good and Evil. This is what Mandeville, Hume and Smith did withthe advance of the market and the birth of an open society.

According to Mandeville, ‘we are ever pushing our Reason whichway soever we feel Passion draw it, and self-love pleads to all humanCreatures for their different views, still furnishing every individual withArguments to justify their Inclination’.3 Therefore, there is no science ofGood and Evil: reason only justifies our preferences and what isadvantageous to us.

Hume writes: ‘morality consists not in any relations that are objectsof science […] it consists not in any matter of fact, which can bediscovered by the understanding […] morality is not object of reason’.4

Hume asks himself: ‘But can there be any difficulty in proving that viceand virtue are not matter of fact, whose existence we can infer byreason?’5 And he answers:

78 Mandeville and the Scottish moralists

Take any action allowed to be vicious; wilful murder, for instance.Examine it in the lights, and see if you can find that matter offact, or real existence, which you can call vice. In whichever wayyou take it, you find only certain passions, motives, volitions, andthoughts. There is no other matter of fact in the case. The viceentirely escapes you, as long as you consider the object. You nevercan find it, till you turn your reflection into your own breast, andfind a sentiment of disapprobation, which arises in you, towardsthis action. Here is a matter of fact; but it is the object of feeling,not of reason.6

For his part, Smith says:

Reason cannot render any particular object either agreeable ordisagreeable to the mind for its own sake. Reason may show thatthis object is the means of obtaining some other which isnaturally either pleasing or displeasing, and in this manner mayrender it either agreeable or disagreeable for the sake ofsomething else. But nothing can be agreeable or disagreeable forits own sake, which is not rendered such by immediate sense andfeeling. If virtue, therefore, in every particular instance,necessarily pleases for its own sake, and if vice as certainlydispleases the mind, it cannot be the mind, it cannot be thereason, but immediate sense and feeling.7

Therefore, Mandeville, Hume and Smith all agree that facts must beseparated from values. This position is known as Hume’s law (whichsays prescriptions cannot be derived from descriptions), but it ischaracteristic of the theory of all three authors.8

This law strikes at the root of a claim to a science of Good and Evil;it is an impenetrable defense for freedom of conscience; and it is thebasis of communal living for people of different philosophical andreligious world-views. However, if the rules of morality ‘are notconclusions of our reason’,9 it remains to be seen where they comefrom. Here Mandeville, Hume and Smith point to the economicproblem. Mandeville writes:

I am willing to allow, that among the Motives, that prompt Manto enter into Society, there is a Desire which he has naturally afterCompany but he has it for his own Sake, in hopes of being thebetter for it; and he would never wish for either Company or any

Mandeville and the Scottish moralists 79

thing else, but for some Advantage or other he proposes tohimself from it. What I deny is, that Man naturally has such aDesire, out of a Fondness to his Species, superior to what otheranimals have for theirs. It is a compliment which we commonlypay to ourselves.10

To clarify his idea, Mandeville adds that need ‘is the cement of civilsociety’,11 and society is ‘enterely built upon the Variety of our Wants,so the whole Superstructure is made up of the reciprocal Services,which Men do to each other’.12

Hume confirms all this: ‘the situation of external objects is their easychange, joined to their scarcity in comparison of the wants and desiresof men’.13 And concludes that, if nature were not so stingy, namely ifthere were no scarcity of means, there would be no need for justice,because it would be replaced by ‘much nobler virtues’.14

Already in his Lectures, Smith asserts: ‘Nature produces for everyanimal thing that is sufficient to support it without having recourse tothe improvement of the original production’.15 And yet ‘such is thedelicacy of man alone, that no object is produced to his liking’,16 sothat ‘to improve and multiply the materials which are the principalobjects of our necessities gives occasion to all the variety of thearts’.17

This requires rapport with Others. Something must be here clarified.Man did not already have the natural gift of language and reason whenhe formed a relationship with his fellow man. This is the theory of thecontractualists, but Mandeville, Hume and Smith proposed a differenthypothesis. Mandeville writes:

If we examine every Faculty and Qualification, from and forwhich we judge and pronounce Man to be a sociable Creaturebeyond other Animals, we shall find, that a very considerable, ifnot the greatest Part of the Attribute is acquired, and comesupon Multitudes, from their conversing with one another.Fabricando fabri fimus. Men become sociable, by living togetherin society.18

[And] it is hard to guess, what Man would be, entirelyuntaught.19

And Hume states:


if it be found that nothing can be more simple and obvious thanthat rule; that every parent, in order to preserve peace among hischildren, must establish it; and that this first rudiments of justicemust every day be improved, as the society enlarges: if all thisappear evident, as it certainly must, we may conclude that it isutterly impossible for men to remain any considerable time in thatsavage condition which precedes society, but that his very firststate and situation may justly be esteemed social.20

Moreover, he continues: ‘This state of nature, therefore, is to beregarded as a mere fiction, not unlike that of the golden age whichpoets have invented’.21

Smith’s position is not very different. He says:

were it possible that a human creature could grow up tomanhood in some solitary place, without any communicationwith his own species, he could no more think of his owncharacter, of the propriety or demerit of his own sentiments andconduct, of the beauty or deformity of his own mind, than of thebeauty or deformity of his own face. All these are objects whichhe cannot easily see, which naturally he does not look at, andwith regard to which he is provided with no mirror which canpresent them to his view. Bring him into society, and he isimmediately provided with the mirror which he wanted before.22

It follows that everything that is strictly human is the result of arelationship with the Other; it originates as a requirement of therelationship itself without previous planning. This happens because,when we have to obtain something from the Other, achieving our endsdepends on the evaluation our counterpart makes of our conduct. Thisis why Mandeville mentions that ‘Men often will change theirResolution and act against their Inclination, that they may have thepleasure of continuing to appear in the opinion of Some, what they areconscious not to be in reality’.23 In other words, everyone tries to puthimself in the Other’s place and judge himself as he would be judged bythe Other. Hume explains this as follows:

In general we may remark, that the minds of men are mirrors toone another, not only because they reflect each other’s emotions,but also because those rays of passions, sentiments, and opinions,may be often reverberated, and may decay away by insensible


degrees. Thus the pleasure which a rich man receives from hispossessions, being thrown upon the beholder, causes a pleasureand esteem; which sentiments again being perceived andsympathised with, increase the pleasure of the possessor, and,being once more reflected, become a new foundation for pleasureand esteem in the beholder.24

We ‘measure’ our conduct by the expectations and judgments of others.As Smith says, ‘we must become the impartial spectators of our owncharacter and conduct. We must endeavour to view them with the eyesof other people, or as other people are likely to view them’.25 In thisway ‘our continual observations upon the conduct of others, insensiblylead us to form to ourselves certain rules concerning what is fit andproper either to be done or to be avoided […]. It is thus that thegeneral rules of morality are formed’.26

This has a series of consequences. First of all, the rules of morality,which ‘are not conclusions of our reason’, are a spontaneous product ofsocial relationships. Our reason itself comes from this relationship.This means that, when man questions his condition, he is already asocial being and, therefore, needs no special ‘contract’ to enter society.If, on the contrary, he has no language or reason, because he is not asocial being, he is incapable of drawing up the political pact thatgenerates society.27 In any case, politics does not produce social ties. Itis, instead, economic need that gives rise to reciprocal satisfaction ofwants through a process of cooperation, and creates the context thatmakes cooperation possible. In the words of Smith, the problem is:‘give me what I want, and you shall have what you want’.28 For this tohappen, everyone’s actions must have two parts: one to satisfy theobjectives of the actor; and the other to satisfy the needs of those weask to collaborate with us. If so, cooperation is possible, because theconditions for exchange are inherent in this division, even without anyspecific will or intervention.29

Consequently, the discovery of the social process by Mandeville,Hume and Smith, enables us to overcome the presumption thatconsidered the laws of living together a conscious product of man.These rules are a ‘spontaneous secretion’ of the relationship betweenpeople.30 Hence, they are the ‘result of human action, but not theexecution of any human design’.31 Since they originate alongside whatwe seek intentionally, they are correlative to the needs we try to satisfythrough our actions. If our needs or the way we satisfy them change,the rules also change. Social norms are not an Absolute; they are


relative and provisory products of the social process, which is aninexhaustible source of innovation.

Therefore, Mandeville, Hume and Smith were ‘Darwinians beforeDarwin’.32 They reasoned in terms of the superiority of those ruleswhich could most effectively and appropriately satisfy the needs ofcommunal life. They realised the limits of individual knowledge and thenecessity to rely on a procedure that is open to contributions fromeveryone and generates only provisory solutions. This is the death ofthe ‘privileged point of view on the world’, of its arrogance, and itsimmutability.33

The question of economic value

If moral norms are the product of the social process, economic valuesshould be so too. If the rules of communal living are the result of anaggregation of individual expectations, needs and preferences, whichare de-personalized during the social process and become ‘impartialspectator’, economic value must also be the result of this process. It isnot by chance that Hume states: ‘A man’s property is some objectrelated to him. This relation is not natural, but moral’.34

Thus, Smith could have given a very clear response to the problemof economic value. And yet, in the Wealth of Nations, Smith refersmany times to labor as ‘the real measure of the exchangeable value ofall commodities’;35 and maintains: ‘in that original state of things,which precedes both the appropriation of land and the accumulationof stock, the whole product of labour belongs to the labourer’.36 Wehave here the theory of labor-value, which is an essentialisticconstruction, based on the belief that there is a substance (labor) thatcan give value to things and that this value would exist apart fromindividual preferences and aggregations of preferences through thesocial process.

Such a theory is compatible with Locke’s theory of knowledge andnatural law; and in fact Locke supports it.37 But this is not compatiblewith renunciation of the ‘privileged point of view on the world’advanced by Mandeville, Hume and Smith and with the discovery ofthe social process. Friedrich von Wieser’s thoughts on the subject helpto clarify the question. In an obituary for Carl Menger, written in 1923,he states:

The classical economists observed economic world from above,from the idea of freedom, which was for them above everything


else; so that they represented economic world itself as the naturalplace of freedom. Since the public they addressed was, like them,in perfect agreement with the idea of freedom, nobody actuallycared that […] their line of reasoning was often inconsistent. Incontrast to the XVIII century, we are living in a time committedto the greatest expansion of freedom […] and therefore verycritical of it. The undisputed prestige that Adam Smith continuedto enjoy can be explained […] by the fact that, whenever histhought was in conflict with experience, he overlooked the logicalcontradiction facing him and he grasped a new concept more inkeeping with experience. On the other hand, Ricardo, desiring tobe consistent to the very end, always found himself contradictedby the facts.38

Wieser recognizes there is a question, but he cannot get to the bottomof it. It is not true that Smith, ‘whenever his thought was in conflictwith experience, overlooked the logical contradiction facing him and hegrasped a new concept’. The remnants of natural law, which emerge inthe Wealth of Nations, especially where Smith deals with the theory ofvalue, survive in him. And yet this does not make us forget, as LeslieStephen stresses, that Smith’s theory is primarily a ‘theory of themarket’ and Ricardo’s is a theory of ‘distribution’.39 To understandthis, one need only recall that Smith’s point of departure is the idea ofscarcity or read excerpts like the following:

Consumption is the sole end and purpose of all production; andthe interest of the producer ought to be attended to, only so far asit may be necessary for promoting that of the consumer. Themaxim is so perfectly self-evident, that it would be absurd toattempt to prove it. But in the mercantile system, the interest ofthe consumer is almost constantly sacrificed to that of theproducer […]. In the restraints upon the importation of all foreigncommodities which can come into competition with those of ourown growth, or manufacture, the interest of the home-consumeris evidently sacrificed to that of the producer. It is altogether forthe benefit of the latter, that the former is obliged to pay thatenhancement of price which this monopoly almost alwaysoccasions.40

The alternative is either to keep the bath water and throw out the babyor throw out only the bath water and keep the baby. In the former


case, Smith is the stool Ricardo stands on to make the greatness ofMarx possible.41 In the latter case, as we shall see more clearly in thefollowing paragraphs, he is the one who formulated the theory of the‘Great Society’ that was lacking in Athens and Rome.

If we follow this second path, the expression ‘classical economies’becomes misleading, because it is methodologically impossible to keeptogether the evolutionism of Mandeville, Hume and Smith with thephilosophical radicalism of Bentham, James Mill, Ricardo and JohnStuart Mill. We should not forget that Marx was the first to speakabout ‘classical economists’ in reference to Ricardo, James Mill andtheir predecessors.42 This was not by chance. It was essential to Marx’spolitical project to present the entire economy as a ‘theory ofdistribution’. And consequently any other tradition or possibleinterpretation had to be ‘obscured’. This is especially so in regard to amerely evolutionist theory (based on the lack or inadequacy of humanknowledge), which is an insuperable obstacle to establishing the‘privileged point of view on the world’ and to its psychologisticprojections on human destiny.43

Nevertheless, it is still useful to try to clarify the question. As weknow, Smith had been a student of Francis Hutcheson,44 who hadtried to explain value on the basis of the ‘fitness in the things toyield some use or pleasure in life’ as well as on the basis of‘demand’.45 When Smith’s Lectures was published, Cannan correctlypointed out Hutcheson’s debt to Pufendorf.46 First of all, Pufendorfsays that foundation of price is the fitness in things to satisfy needs,which makes them ‘capable of having a value’.47 But he adds, citingGrotius, that ‘want is the most natural measure of the Price ofthings’;48 and, furthermore, he asserts that ‘the want of the buyerraises the Price’.49

We have here two theories of value. The first is an essentialist one. Itattributes to things a ‘fitness’ pre-existent to the judgment of the actorand the response of the social process: this leads directly to the labor-value theory.50 The second theory is a subjectivist one. It is based on theevaluation of scarcity by the subject, who acts in relationship to othersand gives his evaluation to the social process.

It is important here to point out that the theory entrusting the lastresponse on value to the market process had been put forward by thelate Spanish Scholastics, who were faced with economic developmentand a need to defend themselves against monarchic interventionism.If the price is an ‘aestimatio a communitatibus civilibus facta


communiter’, it is the ‘right price’ and leads to ‘commutativejustice’.51

Grotius and Pufendorf were anti-mercantilists. Therefore, theybecame ‘Protestant Scholastics’.52 In other words, they accepted theeconomic theories of the Scholastics in order to defend the economicmechanism from state interference. They opposed a ‘legal price’,handed down by the administrative authorities, in favor of a ‘naturalprice’ determined ‘by the common judgement and estimate of men’;53 inother words, established by the evaluation of the participants to thesocial process.

This was the heredity Smith worked with. The subjectivist theory ofvalue combines perfectly with the discovery of the social process madeby him, Mandeville and Hume. The essentialist theory is correlative tothe idea of a ‘privileged point of view on the world’ and to the ‘scienceof immutable’. The former is a crucial contribution to understandingsocial phenomena. The latter is the legacy of the reaction to theappearance of the market in Athens, and it has been used against themarket and the ‘Great Society’ in the last two centuries.

It should be mentioned, although it will be clarified in the lastsection of this chapter, that ‘right price’, as a product of a particularmarket habitat, undermines the idea of a ‘supreme good’, seen as anobjective with specific existential content and replaces it with a‘common good’, seen as a set of conditions that allow for greatermobilization of resources, abilities and individual knowledge, becauseit guarantees everyone freedom of choice.54

Ignorance, fallibility and the study of ‘latent functions’

If we accept the fact that essentialism has nothing to do with what isstill alive in Smith today, it is easy to see how he not only denied thatthere could be a science of Good and Evil, but was always a tirelesscritic of human presumption. In a little-read section of the Wealth ofNations, Smith declares:

The over-weening conceit which the greater part of men have oftheir own abilities, is an ancient evil remarked by thephilosophers and moralists of all ages. Their absurd presumptionin their own good fortune, has been less taken notice of. It is,however, if possible, still more universal. There is no man livingwho, when in tolerable health and spirits, has not same share ofit.55


Smith’s condemnation of man’s great presumption is not surprising.Anyone who understands, as Smith did, that the major institutionsunderlying our life are produced unintentionally, immediately realizeshow vainglorious human life is. Smith writes: ‘I have never knownmuch good done by those who affected to trade for the publick good’;56

and he openly expresses distrust toward that ‘insidious and craftyanimal, vulgarly called a statesman or politician’.57

Unlike for Plato and Aristotle, for Smith politics is not the‘architectural science’ of an intentionally constructed order. Hismodel is Solon, whose behavior he considers a model of balance:‘When he cannot establish the best system of laws’, Solon limitedhimself to introducing the best that the Athenians ‘can bear’.58 Thefact is that, when it is not possible to ‘establish the right’, we canonly ‘ameliorate the wrong’.59 However, this is the road taken bythose who know how to ward off intellectualistic hubris, but not bythe ‘man of system’, the bearer of the ‘architectural science’. Such aman

is apt to be very wise in his own conceit; and is often soenamoured with the supposed beauty of his own ideal plan ofgovernment, that he cannot suffer the smallest deviation fromany part of it. He goes on to establish it completely and in all itsparts, without any regard either to the great interests, or to thestrong prejudices which may oppose it. He seems to imaginethat he can arrange the different members of a great societywith as much ease as the hand arrange the different pieces upona chess-board. He does not consider that the pieces upon thechess-board have no other principle of motion of its own,altogether different from that which the legislature might chooseto impress upon it.60

The ‘man of system’ does not realize that

any individual […] can, in his local situation, judge much betterthan any statesman or lawgiver can do for him.61 [And] thestatesman, who should attempt to direct private people in whatmanner they ought to employ their capitals, would not only loadhimself with a most unnecessary attention, but assume anauthority which could safely be trusted, not only to a singleperson, but to no council or senate whatever, and which would


nowhere be so dangerous as in the hands of a man who had follypresumption enough to fancy himself fit to exercise it.62

Therefore, the knowledge we have is dispersed throughout society. Thisis an irreparable blow to centralization and the idea of an authoritythat, presuming to be more ‘enlightened’ in its management ofeconomic activity, in the end holds a monopoly on accepted knowledge,resources and political power.

In the following section, we shall see how to respond to the‘presumption’ of the ‘man of system’ and to the ascertained dispersionof knowledge. Here it should be mentioned that Edmund Burke paidparticular attention to these themes. Even before the appearance ofSmith’s Moral Sentiments, in 1756 Burke had published, obviouslyunder the influence of Hume, A Philosophical Inquiry into the Originof Our Ideas of the Sublime and the Beautiful, where he states:‘sympathy must be considered as a sort of substitution, by which weare put into the place of another man, and affected in many respectsas he is affected’.63 Through Hume, Burke realized that the norms werefer to are a product of the social process. Consequently, it is notsurprising that Burke denounced intellectualistic hubris and later,following Smith, emphasized the problem of the dispersion ofknowledge.64

Burke writes:

We are afraid to put men to live and trade each on his ownprivate stock of reason; because we suspect that this stock in eachman is small, and that the individuals would be better to availthemselves of the general bank and capital of nations and ages.Many of our men of speculation, instead of exploding generalprejudices, employ their sagacity to discover the latent wisdomwhich prevails in them.65

Breaking away from the historical process, which is a by-product of thesocial process, is equivalent to entrusting oneself to ‘personal self-sufficiency and arrogance’, ‘the certain attendants upon those whohave never experienced a wisdom greater than their own’.66 To solveproblems there must be ‘the aid of more minds’67 so, Burke continues, ‘Icannot conceive how any man can have brought himself to that pitchof presumption, to consider his country as nothing but carte blancheupon which he may scribble whatever he pleases’.68

The fact is that.


Though you were to join in the commission all the directors ofthe […] academies to the directors of the Caisse d’Escompte, oneold experienced peasant is worth them all. I have got moreinformation, upon a curious and interesting branch of husbandry,in one short conversation with a Carthusian monk, than I havederived from all the Bank directors that I have ever conversedwith.69

Therefore, we should act ‘under a strong impression of the ignoranceand fallibility of mankind’.70 We are ignorant. Judged individually, weknow very little; knowledge is spread throughout a society. And, withwhat little we know individually, we should not become presumptuousbecause, in any case, knowledge is fallible.71

The positions of Burke and Smith coincide perfectly. We need onlycite Burke, when he says that ‘many of our men of speculation, insteadof exploding general prejudices, employ their sagacity to discover thelatent wisdom which prevails in them’, to give this agreement broadertheoretical extension.

Burke asserts that norms and social institutions have ‘latentwisdom’: they have a meaning or a function that we do not know,and it is proper to use our ‘wisdom’ to understand that meaning orfunction. The question is why the significance of norms and socialinstitutions is hidden. The answer is that for the most part they donot originate in conscious planning but as an unintentional outcomeof the social process, of individual actions intended for otherpurposes. We only know the purpose of our actions, but the actionscreate and activate norms used to gain our ends and those of others.From our limited ‘prospective’ we cannot discern the ‘function’ of thenorm. We have to combine the ‘prospective’ of Ego with that of Alterand try to understand what, other than our intentions, the socialprocess has responded and responds to. If social reality were aPlatonic ‘copy’ of our psychologistic projections, we would not needto make any inquiries. Since it is not and since it is an unintentionalproduct, we do not have a ‘manifest truth’ and must use our ‘wisdom’to account for the social world that our actions ‘secrete’ without ourawareness.

In the first section of this chapter, we have pointed out that the birthof the social sciences was a consequence of the fall of the doctrineaccording to which ‘truth is manifest’. Burke, who attributes theproduction of the principal norms and institutions to the social process,stresses that, because we have not created them intentionally, we must


devote ourselves to studying them and investigating their ‘latentfunction’.72 This makes his convergence with Smith (and Hume) evenmore profound.

Liberty as the habitat of development

The task of the social sciences, therefore, is to study the unintentionaloutcomes of intentional human actions.73 The unplanned consequencesmay be positive or negative. By studying the unintentionalconsequences produced by intentional human actions, the socialsciences try to identify the conditions that make certain events possible(when they are positive and desirable) or impossible (when they arenegative and undesirable).

What then is our major problem? Our ignorance and our fallibility.And what is the possible solution? To stop claiming that there can beany privileged source of knowledge and to start a process that iscontinually open and can mobilize the largest possible quantity ofknowledge. How is this to be done? As we have already indicated inthe second chapter, economic liberty and political liberty act as a‘latent function’ to permit that mobilization. Therefore, it is true—asWilliam W.Bartley III points out—that Smith’s economic work ispermanently directed toward throwing light on the ‘development ofthe wealth of nations and […on] the reasons why some nationsbecome richer than others and […on] the factors which determinephases of expansion or stagnation in the production of wealth’.74 Inother words, Smith’s aim is to determine the conditions that makeeconomic development possible or impossible. According to him,increase in wealth depends on mobilization of the knowledgedispersed throughout the society. Mercantilism considered politicalpower a source of superior knowledge. It assigned it the rank ofindependent variable and favored monopolies and state protection. Inthe wake of Mandeville and Hume, Smith eradicates the idea of theprivileged source of knowledge and invalidates the primacy ofpolitical power. He fills the void this creates with the social process,which mobilizes dispersed knowledge.75 Hume points out that, whendecisions are made by only one person or by a limited group, the‘least failure’ produces ‘inevitable ruin and misery’.76 He also saysthat, when there is ‘mutual succor, we are less exposed to fortune andaccidents’ and that, ‘by this additional force, ability, and security’,‘society becomes advantageous’.77 Ferguson, in a work much later


than Wealth of Nations, writes: ‘Wherever men are free to think andto act, errors will be incurred, and wrongs will be committed: but theerror that results from the freedom of one person is best corrected bythe concurring freedom of many’.78 Ferguson associated discretionarypower, arbitrary actions and all difficulties in correcting errors withthe existence of a ‘supreme legislature’.79

Therefore, it is clear, as Forbes correctly emphasized, that thedestruction of the omniscient legislator myth is the ‘most original anddaring coup of the social science of the Scottish Enlightenment’.80

Perhaps it can be said that Smith plays the same role in economics andsocial sciences as Socrates did in philosophy. Both start with the idea of‘not knowing’. One affirms the need for critical discussion and theother the mobilization of the knowledge dispersed throughout thesociety. The aim of one was the growth of rationality; the other alsothought about the growth of knowledge, but as a presupposition ofeconomic development.

What conditions foster the growth of rationality and economicdevelopment? To answer this question one must understand the ‘scienceof a legislator’.81 The legislator must know that

the spirit of system commonly takes the direction of that gentlepublic spirit; always animates it, and often inflames it even tothe madness of fanaticism. The leaders of the discontented partyseldom fail to hold out some plausible plan of reformationwhich, they pretend, will not only remove the inconveniencesand distresses. They often propose, upon this account, to new-model the constitution, and to alter, in some of its most essentialparts, that system of government under which the subjects of agreat empire have enjoyed, perhaps, peace, security, and evenglory, during the course of several centuries together. The greatbody of the party are commonly intoxicated with the imaginarybeauty of this ideal system, of which they have no experience,but which has been represented to them in all the most dazzlingcolours in which the eloquence of their leaders could paint it.Those leaders themselves, though they originally may havemeant nothing but their own aggrandisement, become many ofthem in time the dupes of their own sophistry, and are as eagerfor this great reformation as the weakest and foolishest of theirfollowers. Even though the leaders should have preserved theirown heads, as indeed they commonly do, free from thisfanaticism, yet they dare not always disappoint the expectations


of their followers; but are often obliged, though contrary totheir principle and their conscience, to act as if they were underthe common delusion.82

It is obvious that ‘some general, and even systematical, idea of theperfection of policy and law may no doubt be necessary’.83

But to insist upon establishing, and upon establishing all at once,and in spite of all opposition, every thing which that idea mayseem to require, must often be the highest degree of arrogance. Itis to erect his own judgement into the supreme standard of rightand wrong. It is to fancy himself the only wise and worthy man inthe commonwealth, and that his fellow-citizens shouldaccommodate themselves to him and not he to them. It is uponthis account, that all political speculators, sovereign princes areby far the most dangerous. This arrogance is perfectly familiar tothem. They entertain no doubt of the immense superiority of theirown judgement. When such imperial and royal reformers,therefore, condescend to contemplate the constitution of thecountry which is committed to their government, they seldom seeany thing so wrong in it as the obstructions which it maysometimes oppose to the execution of their own will.84

Consequently, ‘the science of a legislator’ is not an ‘architectonicscience’. Its subject are those ‘general principles which are always thesame’.85 This means it must be concerned with abstract generalnorms, which have no specific content and are valid for everyone. Inother words, they must be simple procedural rules, with noprescriptions that impose existential content on the life of the citizens.Law and custom are completely separate. In Sparta the law dictatedthe custom. As we know, ‘among the Spartans, Therpandrus couldnot add a string to his lyre without causing offence to the ephors’;and even sexual relationships were regulated. However, if we do nothave a science of Good and Evil, if we also know that morality is nota conscious creation of our reason, and if we take into considerationthe dispersion of our knowledge, the task of the legislator can only beto determine the norms that set the boundaries between the actions ofone with those of the others. This permits each one freedom of choiceand mobilization of all our knowledge, though it is partial andfallible, in response to problems that arise from our economiccondition.


The next step is a logical consequence. Safeguarding freedom ofchoice prevents the legislator from prescribing obligatory existentialcontent. In order to draw the boundaries among various actions, he canyet indicate what the actors cannot do. In fact, Smith states:

Proper resentment for injustice attempted, or actually committed,is the only motive which, in the eyes of the impartial spectator,can justify our hurting or disturbing in any respect the happinessof our neighbour. To do so from any other motive is itself aviolation of the laws of justice, which force ought to be employedeither to restrain or to punish. The wisdom of every state orcommonwealth endeavours, as well as it can, to employ the forceof the society to restrain those who are subject to its authorityfrom hurting or disturbing the happiness of another.86

From this we find, to use the words of John Millar, that ‘justice requireno more than that I should abstain from hurting my neighbour, in hisperson, his property, or his reputation; that I should pay my debts, orperform the services, which by my contracts, or by the course of mybehaviour, I have given him reason to expect from me’.87 In this way,Millar continues, the ‘line of duty suggested by this mere negativevirtue, can be clearly marked, and its boundaries distinctlyascertained’.88

As things stand, equality before the law consists of equal protectionin the sphere of individual autonomy, and liberty correctly assumes itsjuridical nature. This is why Ferguson says:

Liberty or freedom is not, as the origin of the name may seem toimply, an exemption from all restraint, but rather the mosteffectual application of every just restraint to all the member of afree state, whether they be magistrates or subjects. It is under ajust restraint only that every person is safe, and cannot beinvaded, either in the freedom of his person, his property, orinnocent action. If any one were unrestrained, and might do whathe pleased, to the same extent also every one else must be exposedto suffer whatever the free man of this description were inclinedto inflict’.89

In other words, liberty is a juridical concept. It is the idea that thelegislator must not prescribe what citizens must do, but limit himself toestablishing what they must not do. In such a way, there are well


defined boundaries between their actions.90 And it follows from thisthat liberty and justice become inseparable: without justice liberty turnsinto chaos and justice without liberty is merely the arbitrary, coerciveorder of whoever is in power.

Furthermore, abstract general norms make mobilization ofknowledge possible, but this mobilization must be motivated by privateproperty. Smith does not hesitate to write: ‘The attention of thesovereign can be at best but a very general and vague consideration ofwhat is likely to contribute to the better cultivation of the greater partof his dominions. The attention of the landlord is a particular andminute consideration of what is likely to be the most advantageousapplication of every inch of ground upon his estate’.91 And Fergusonwill say: ‘The trader, no doubt, may err in the pursuit of his gain; butthe principle from which he acts is so sensible to the experience ofprofit or loss, that the lessons of experience seldom need to berepeated’.92

Therefore, the abstract general norms that permit mobilization ofknowledge must also guarantee the security of private property,93

because the latter furnishes the motivation for the former.94

If this normative habitat exists, then each one, pursuing his ownobjectives, is ‘led by an invisible hand to promote an end which was nopart of his intention […]. By pursuing his own interest he frequentlypromotes that of the society more effectually than when he reallyintends to promote it’.95 This means that the normative habitat, whichpermits free mobilization of knowledge and resources, fosters a socialprocess that improves the conditions of the citizens. Hence, the‘common good’ is not a particular objective to be achieved, but theconditions that guarantee that process.96

Consequently, if one understands just how deceptive it is to believein a privileged source of knowledge and realizes that the only guaranteeis to provide a normative habitat that fosters a process always open toexploration of the unknown and correction of errors, one need nolonger ask ‘who should rule?’ but should choose to fight for theadoption of that habitat. This is why Mandeville peremptorily states:we must become aware that what we wish to

ascribe to the Virtue and Honesty of Ministers, is wholly due totheir strict Regulations […] a Nation ought never to trust to anyHonesty, but what is built upon Necessity; for unhappy is thepeople, and their Constitution will be very precarious, whose


welfare must depend upon the Virtues and Consciences ofMinisters and Politicians and not upon respect for the law.97

And Hume says:

Political writers have established it as a maxim that, in contrivingany system of government, and fixing the several checks andcontrols of the constitution, every man ought to be supposed aknave, and to have no other end, in all his actions, than privateinterest. By this interest we must govern him.98

The origins of modern capitalism

Determination of the normative habitat that makes developmentpossible is not the only contribution of the Scottish moralists. They alsooffered an explanation of how this habitat was formed.

Smith calls attention to ‘feudal anarchy’,99 the feudal situation wherethere was no central power that could subordinate all of society toitself. Smith makes the following diagnosis:

The introduction of the feudal law, so far from extending, may beregarded as an attempt to moderate the authority of the greatallodial lords. It established a regular subordination, accompaniedwith a long train of services and duties, from the king down tothe smallest proprietor […and yet,] after the institution of feudalsubordination, the king was as incapable of restraining theviolence of the great lords as before. They still continued to makewar according to their own discretion, almost continually uponone another, and very frequently upon the king; and the opencountry still continued to be a scene of violence, rapine anddisorder.100

It is not surprising that such a precarious situation produced resultsdifferent from those planned by the parties involved. Opposition of thegreat feudal lords to the crown brought unexpected results. AsFerguson correctly says, ‘the Barons of England, in times of high feudalaristocracy, knew not that the charters which they extorted from theirsovereign, were to become foundations of freedom to the people overwhom they themselves wished to tyrannize’.101

Ferguson’s words immediately bring to mind the rise of the ‘freetown’ and the growth of the city. Apropos of the cities, Smith writes:


They became […] so considerable that the sovereign could imposeno tax upon them […]. They were, therefore, called upon to senddeputies to the general assembly of the states of the kingdom,where they might join with the clergy and the barons in granting,upon urgent occasions, some extraordinary aid to the king. Beinggenerally too more favourable to his power, their deputies seem,sometimes, to have been employed by him as a counterbalance inthose assemblies to the authority of the great lords. Hence theorigin of the representation of burghs in the states general of allthe great monarchies in Europe.102

This suggests that the different situation of the inhabitants of the citiesand those of the countryside should be pointed out:

Order and good government, and along with them the liberty andsecurity of individuals, were in this manner, established in cities ata time when the occupiers of land in the country were exposed toevery sort of violence. But men in this defenceless state naturallycontent themselves with their necessary subsistence; because toacquire more might only tempt the injustice of their oppressors.On the contrary, when they are secure of enjoying the fruits oftheir industry, they naturally exert it to better their condition, andto acquire not only the necessaries, but the conveniences and theelegancies of life.103

Therefore, in the city certainty of the law created the habitat fordevelopment. ‘That industry […] which aims at something more thannecessary subsistence, was established in cities long before it wascommonly practised by the occupiers of land in the country’.104

Moreover, ‘if in the hands of a poor cultivator, oppressed with theservitude of villanage, some little stock should accumulate, he wouldnaturally conceal it with great care from his master, to whom itwould otherwise have belonged, and take the first opportunity ofrunning away to a town’,105 since ‘the law was at that time soindulgent to the inhabitants of towns, and so desiderous ofdiminishing the authority of the lords over those of the country, thatif he could conceal himself there from the pursuit of his lord for ayear, he was free for ever’.106

Smith’s comment is: ‘Whatever stock, therefore, accumulated inthe hands of the industrious part of the inhabitants of the country,naturally took refuge in cities, as the only sanctuaries in which it


could be secure to the person that acquired it’.107 Thus, the citybecame the ‘sanctuary’ of capital. The conditions for developmentwere created in the city. And ‘what all the violence of the feudalinstitutions could never have effected, the silent and insensibleoperation of foreign commerce and manufactures gradually broughtabout’.108

However, there is another point that must be emphasized. Foreigncommerce and manufactures ‘gradually furnished the great proprietorswith something for which they could exchange the whole surplusproduce of their lands’.109 This led to the extension of the normativehabitat of the city to the countryside. In fact,

When the great proprietors of land spend their rents inmaintaining their tenants and retainers, each of them maintainsentirely all his tenants and all his retainers. But when they spendthem in maintaining tradesmen and artificers, they may, all ofthem taken together, perhaps, maintain as great, or, on account ofthe waste which attends rustick hospitality, a greater number ofpeople than before.110

The most relevant fact here is the result:

The tenants having in this manner independent, and the retainersbeing dismissed, the great proprietors were no longer capable ofinterrupting the regular execution of justice, or of disturbing thepeace of the country […]. A regular government was establishedin the country as well as in the city, nobody having sufficientpower to disturb its operations in the one, any more than in theother.111

In keeping with his paradigm of a social science, whose task is to studythe unintentional consequences of intentional human actions, Smithconcludes:

A revolution of the greatest importance to the publick happiness,was in this manner brought about by two different orders ofpeople, who had not the least intention to serve the publick […].Neither of them had either knowledge or foresight of that greatrevolution which […] was gradually bringing about.112

Later on, John Millar was to write:


Whoever inquires into the circumstances in which these greatcharters were procured, and into the general state of the countryat that time, will easily see that the parties concerned in themwere not actuated by the most liberal principles; and it was not somuch their intention to secure the liberties of the people at large,as to establish the privileges of a few individuals. A great tyranton the one side, and a set of petty tyrants on the other, seem tohave divided the kingdom; and the great body of the people,disregarded and oppressed on all hands, were beholden for anyprivileges bestowed upon them […]. But though the freedom ofthe common people was not intended in those charters, it waseventually secured to them; for when the peasantry, and otherpersons of low rank, were afterwards enabled, by their industry,and by the progress of arts, to emerge from the inferior andservile condition, and to acquire opulence, they were graduallyadmitted to the exercise of the same privileges which had beenclaimed by men of independent fortunes; and found themselvesentitled, of course, to the benefit of that free government whichwas already established. The limitations of arbitrary power,which had been calculated chiefly to promote the interest of thenobles, were thus, by a change of circumstances, rendered equallyadvantageous to the whole community as if they had originallyproceeded from the most exalted spirit of patriotism.113

From all this we understand how superficial it is to consider theIndustrial Revolution the premise for capitalism. Things are different.It was the affirmation of the market society (with its normativehabitat) that permitted what we usually call the ‘Industrial Revolution’,namely, the growth of science and technology.114 Once again Smithsuggests:

Commerce and manufactures can seldom flourish long in anystate which does not enjoy a regular administration of justice, inwhich the people do not feel themselves secure in the possessionof their property, in which the faith in the contracts is notsupported by law, and in which the authority of the state is notsupposed to be regularly employed in enforcing the payment ofdebts from all those who are able to pay.115

And when this normative habitat is extended to many countries or isglobalized, the economic operator ‘is not necessarily the citizen of any


particular country. It is in a great measure indifferent to him from whatplace he carries on his trade; and a very trifling disgust will make himremove his capital, and together with it all the industry which itsupports, from one country to another’.116

99

6 Austrian marginalismThe limits of knowledge and society as aspontaneous order

Carl Menger and Adam Smith

In the Austrian School of Economics, Friedrich A.von Hayek was arepresentative of the fourth generation and the one who brought that‘tradition of research’ to its highest level. He maintained that CarlMenger, founder of Austrian marginalism, ‘was among the first inmodern times consciously to revive the methodical individualism ofAdam Smith and his school’.1

Probably, Menger would not have agreed with Hayek. And somecareless commentator might have added that Hayek goes too far. Butthis is not so. True, Menger did not hesitate to write that Adam Smith‘and his school predominantly strive for the pragmatic [intentional]understanding of economy, even where such understanding is notadequate for the objective state of affairs’, so that ‘the result is that thebroad realm of unintentionally created social structures remains closedto their theoretical comprehension’.2 It is also true that Menger himselfobserved that ‘this one-sidedness and these defects in the view ofproblems of economic policy on the part of A.Smith and his followersoffered enough points of attack for a scientific reaction’.3 However, thefact that he associated that ‘reaction’ to the name of Edmund Burkeshows that Menger misunderstood Smith.

For the founder of the Austrian school,

Burke was probably the first, who, trained for it by the spirit ofEnglish jurisprudence, emphasized with full awareness thesignificance of the organic structures of social life and the partlyunintended origin of these.4

Menger also adds:

100 Austrian marginalism

He taught most convincingly that numerous institutions of hiscountry, which were to a high degree of common benefit andfilled every Briton with pride, were not the result of positivelegislation or of the conscious common will of society directedtoward establishing this, but the unintended result of historicaldevelopment. He first taught that […] what had developedhistorically, was again to be respected […]. Herewith he madethe first breach in the one-sided rationalism and pragmatism ofthe Anglo-French Age of Enlightenment.5

Menger also throws light on the connection between Burke’s ‘views’and Savigny’s and Niebuhr’s ‘historical studies for the understandingof law’.6 And yet, though that connection is correct,7 Mengeroverlooks the influence (pointed out in the previous chapter) of Humeand Smith on Burke, who at first saw the social process through thedirect influence of Hume and later saw man as an ignorant andfallible being by borrowing Smith’s idea of the dispersion ofknowledge.

Nevertheless, when Hayek says that Menger was among the first‘to revive the methodical individualism of Adam Smith’, his judgmentis completely pertinent. In fact, both Smith and Menger maintainedthat individual action produces unintentional outcomes and that themajor social institutions (language, family, law, division of labor,market, money, city, state) are the unplanned result of humanactions, which simultaneously carry out ‘manifest functions’ or serveto reach the actor’s intentional objectives. The fact is that Mengerworked with insufficient information; and since he did not have inmind Burke’s debt to Smith, he placed Smith within the hyper-rationalistic tradition of Bentham, James Mill, Ricardo and JohnStuart Mill. If Menger had managed to see Smith as one of theprincipal discoverers of the social process, this would not havehappened. Smith’s ‘concessions’ to the theory of labor-value wouldalso have been seen in another light. They would have beenconsidered a natural-law survival, incompatible with Smith’sprincipal theories.

It is even more important to note that Menger, backed up by Burke(and thus Mandeville, Hume and Smith) and Savigny,8 formulated histheories using the figure of an ignorant and fallible human being. AsWilliam Jaffé says, homo mengerianus is not a ‘lightning calculator’; heis an ‘ill-informed creature, plagued with uncertainty, forever hoveringbetween alluring hopes and haunting fears, and congenitally incapable

Austrian marginalism 101

of making finely calibrated decisions in pursuit of satisfactions’.9

Ignorance and fallibility are anthropological traits, which areimpossible to cast off.

Menger and the subjectivist theory of value

To determine what theoretical questions Menger tried to answer, wemust place him in his cultural context. On the one hand, there wasthe Anglo-Saxon tradition, which was captive to the theory thatsays the value of goods comes from the cost of production (thelabor-value theory is merely one of its expressions). On the otherhand, there was the German Historical School of Economics, whichwas victim of the reification that considered society a whole, acompletely autonomous subject in respect to the social actors. Theformer tradition wanted to be individualistic, but was not successfulbecause it lacked an individualistic theory of value. The latter had asubjectivist theory of value, but it was curbed by its collectivism. AsKarl Milford correctly writes, ‘in the economists of the Germanhistorical school, the theory of subjective judgements has nomethodological significance, because it includes methodologicalessentialism: it could be said blind’; in the strictly Ricardianeconomists, ‘the individualistic principle is insignificantmethodologically, because it includes a theory of objectivejudgements, i.e., that principle is empty’.10

It would have been necessary, therefore, to connect value to manand his actions and no longer consider it a ‘fitness’ of goods that isindependent of what men want and what they feel they need. It wouldhave been necessary to show that, precisely because it is men who act,there is no social reality distinct from that of interpersonal cooperation.Menger showed this.

He revived the subjective theory of value. In two very long notesthat appear in his Grundsätze, Menger traces the significant stages ofthat theory from Aristotle to Schäffle.11 He cites a long passage fromAristotle which contains the following useful quotation: ‘for if men didnot need one another’s goods at all, or did not need them equally, therewould be either no exchange or not the same exchange’.12 For Mengerthe origin of human action and social cooperation is scarcity.13 Fromhere it is only a short step to the idea of ‘human life’ as a ‘process’.14 Itis a process in which ‘man, with his needs and his command of themeans to satisfy them, is himself the point at which human economiclife both brings and ends’.15


Menger explains his position in more detail. He states:

the value of goods arises from their relationship to our needs, andis not inherent in the goods themselves. With changes in thisrelationship, value arises and disappears.16

In other words,

From this it is evident that goods’ character is nothing inherent inthe goods, but merely a relationship between certain things andmen, the things obviously ceasing to be goods with thedisappearance of this relationship.17

Consequently, value is

a judgement economizing men make about the importance of thegoods at their disposal for the maintenance of their lives and well-being. Hence value does not exist outside the consciousness ofmen. It is, therefore, also quite erroneous to call a good that hasvalue to economizing individuals a ‘value’, or for economists tospeak of ‘values’ as of independent real things, and to objectifyvalue in this way’.18

Menger can now explain that exchange is determined by ‘theendeavor of men to satisfy their needs as completely as possible’.19

And he can show that it is an error to consider ‘the magnitude ofprice as the essential feature of an exchange’ and, ‘as a result of thismistake’, to regard ‘the quantities of goods in an exchange asequivalents’.20 ‘But equivalents of this sort are nowhere present inhuman economic life. If goods were equivalents in this sense, therewould be no reason, market conditions remaining unchanged, whyevery exchange should not be capable of reversal’.21 This means thatdifferent evaluations of the goods exchanged are concealed behind thesame price. Ego gives more importance to the good he receives thanto the one he gives up; and Alter evaluates what he obtains from Egohigher than what he gives up. If this were not so, exchange would beimpossible.

Driven by their needs, men make demands. This leads to prices,which in this process are ‘only incidental manifestations’, ‘symptoms’of the economic levelling ’between the economies of individuals’.22

Price is an unintentional consequence of intentional actions undertaken


to satisfy our needs. Thus, price is freed from any essentialism.Aristotle did not manage to give the right dynamism to the relationshipbetween use-value and exchange-value. In Smith values originate in thesocial process, but his theory does not include economic values (towhich he applied the labor-value theory). Menger manages to give ananswer that applies not only to the question of economic value, butalso permits him to deal with the problem of method.

Against the German Historical School of Economics

Even though they believed that personal evaluations were the basis ofeconomic value, the representatives of the German Historical Schoolof Economics refused to rely on the social process. They did this byadopting a clearly collectivist position. We have already seen howthey reified society and granted it an existence separate from that ofindividual social actors. On the contrary, when Menger says thatprices are derived from individual actions, he traces the phenomenonback to its elementary components. Thus, he avoids reifying the price,which is no longer something that can exist independently of theactions of someone; and these actions are the ‘smallest parts’ Aristotlespoke of.23 This is the same method that Menger himself would latercall ‘compositive’ and is better known by the name of‘methodological individualism’.24 It demolishes the claim of theGerman Historical School of Economics to separate society from theaction of individuals.

This had already been made clear in Grundsätze, but Mengerwould have to devote essays of a methodological nature to thesubject. Before dealing with the developments of Menger’s position,we must try to understand what it means to give society anautonomous existence in respect to the actions of individuals and seewhat the consequences are.

Reifying society and refusing to have it coincide with individualactions, with the process they foster and with the results theyproduce, is the same as introducing the ‘privileged point of view onthe world’. Consequently, there is a Truth that is not provided by theindividual or by the social process. This means that the free exchangeof social actors loses its legitimacy. In the Untersuchungen, Mengerquotes this important passage from Hildebrand: ‘[…] quae est inde abAdami Smithii aetate per Europan, divulgata doctrina, ea quidem haudimmerito in reprehensionem incurrit propterea, quod solis suis


quemque consulere rationibus jubet quodque, cum summan de lucrocontendendi licentiam poscat, si ipsam constanter persequantur omnes,omnem tollat honestatem singulorumque in singulos excibet bellumnecesse est’.25 Therefore, the individual and the social process must becontrolled. Once again politics becomes an independent variable of thesocial system and its task is to give ‘morality’ to economic activity andthe social life. The economic and other social subsystems that had beenbroken off from politics are once again absorbed by it.

The immediate consequence of this is the disappearance of thetheoretical social sciences, which, as we have shown in the previouschapter, originate when the free social process is discovered and the‘privileged source’ of knowledge is renounced. This is exactly whatthe German Historical School of Economics does not want to do. Itreintroduces the ‘privileged point of view on the world’ and everyevent must be related and subordinated to it. Hence, it declares thatit is impossible to have theoretical social sciences, because theycannot grasp the ‘unique and unrepeatable’ and must be replaced bydescriptive historical research. But the underlying reason for thisview is that, in order to have social science, everyone must beconsidered at the same level of ignorance and fallibility. This is theexact opposite of what is maintained by the ‘privileged point ofview on the world’.

Under these circumstances, it is understandable why Mengerconsidered the question of method the most urgent of his time.26 Thismoved him to make a direct attack against the ‘old’ (Roscher,Hildebrand and Knies) and the ‘young’ (Schmoller and his followers)German Historical School of Economics. Three points must beemphasized.

First, if the historical school ‘refuses to analyze economicphenomena’, it ‘precludes theoretical understanding of thesephenomena’.27 Consequently, ‘the description of concrete economicphenomena become the only legitimate objective of economicenquiry’.28 ‘This caused an enormous damage to our science, becausethe representatives of the German historical school neglected the factthat historical research can never replace theoretical research’.29 Inthe attempt to avoid the errors of aprioristic social philosophy andalso those of social physics and social biology, the German school‘only made the more serious mistake of renouncing analysis and thustheoretical understanding of social phenomena’.30 The fact is that ‘weunderstand phenomena by means of theories’.31 What seems to be


‘unique and unrepeatable’ is only an example of a ‘generalregularity’.32

Menger affirms the primacy of the theoretical moment in theconstruction of science. This position was later taken by Boehm-Bawerk and by Mises, who was to be involved more directly inprolonging the debate on methodology with the historical school.

Boehm-Bawerk says that facts do not speak by themselves and that‘what the outward eye cannot here unaided see, the mind mustconstruct by a series of abstract speculations’.33 He adds that it isimpossible to write ‘three pages on economic questions, even in thehistorical style, without general theory’; ‘and one can construct nogeneral theory without the use of abstract deduction’.34 ‘It is absolutelyimpossible to make a report upon a question of economics, much lessto discuss it, without touching upon general theoretical conceptionsand propositions’.35

On his part, Mises asserts:

Nothing is more clearly an inversion of the truth than the thesisof empiricism that theoretical propositions are arrived at throughinduction on the basis of a presuppositionless observation of‘facts’. It is only with the aid of a theory that we can determinewhat the facts are. Even a complete stranger to scientific thinking,who naively believes in being nothing if not ‘practical’, has adefinite theoretical conception of what he is doing. Without a‘theory’ he could not speak about his action at all, he could notthink about it, he could not even act.36

Furthermore:

Theories about action are implicit in the very words we use inacting, and still more in those we use in speaking about action[…]. The supporters of historicism were able to believe that factscan be understood without any theory only because they failed torecognize that a theory is already contained in the very linguisticterms involved in every act of thought. To apply language, withits words and concepts, to anything is at the same time toapproach it with a theory.37

Second, Menger maintains that the historical school’s claim to have aglobal view, and thus to know phenomena ‘in the totality and thewhole complexity of their nature’ is ‘not strictly feasible’.38 It is


impossible to know the Whole. Science ‘cannot provide understandingof human phenomena in their totality […], but it can provideunderstanding of one of the most important sides of human life’.39 Inother words: ‘we attain to a set of social theories, each of which, to besure, reveals to us only the understanding of a particular side of thephenomena of human activity. Accordingly, each abstracts from fullempirical reality’.40 Hence, knowledge is partial. We can ‘grasp’ onlyfragments of reality. That is why we must give up the pretence ofknowing the totality and try to reduce social phenomena to theirsimplest elements.41

Mises says: ‘The whole remains ineffable because reason andlanguage are unable to enter here’.42 Science ‘does not know how tofind a bridge between sentience and motion or between consciousnessand matter. What life and death are eludes its grasp’.43 It is ‘no part ofthe task of science to examine ultimate questions or to prescribe valuesand determine their order of rank’.44

Moreover, on a par with Menger, Mises asserts that knowledge,whether it be scientific or not, is always partial. The ‘maps’ we have donot coincide with the territory,45 because ‘our means of expression andof thought do not touch life in its fullness and wholeness’.46 Science inparticular deals only with ‘isolated fragments detached from the livingwhole and thereby killed’.47 Hence, the knowledge it provides us with isalways partial and, despite any of our claims, is also fallible: ‘a theorythat does not appear to be contradicted by experience is by no meansto be regarded as conclusively established’.48

Third, Menger’s response to the historical school, which presentssociety as a whole distinct from individuals and superior to them, is: ‘Ifnational economy was considered as a special unit differing from thesingular phenomena of human economy, one could easily draw theconsequence that national features should be the exclusive object ofscientific treatment in theoretical national economy, and that thesingular phenomena of human economy should be excluded therefrom.Not the general nature of the phenomena of human economy, not theirgeneral relationships, were henceforth to be the object of research inthe field of theoretical economics’.49 ‘The error of this doctrine isobvious’.50

The nation as such is not a large subject that has needs, thatworks, practices economy, and consumes; and what is called‘national economy’ is therefore not the economy of a nation inthe true sense of the word. ‘National economy’ is not a


phenomenon analogous to the singular economics in the nation towhich also the economy of finance belongs. It is in its mostgeneral form of phenomena a peculiar complication of singulareconomies which has been characterized by us more in detail inanother place.51

Menger concludes his analysis showing that the position of the GermanHistorical School of Economics is based on an attempt to affirm the‘privileged point of view on the world’:

Because several persons who have up to now been isolatedeconomically and continue to pursue their individual economicaims and efforts start trafficking in goods with each other (andthus really only undertake to pursue their individual interestsmore suitably than before), their previous isolated economies donot change into one common economy, nor is a new one addedto these […]. They do sacrifice their character as isolatedeconomies but not their character as singular economies. Thelatter would be the case only if each economic subject gave uphis individual economic aims and efforts, his economy, that is,and if the fullest possible satisfaction of the needs of allmembers of society were to become the common goal of alleconomic subjects.52

However, if individual subjects have to give up their own objectivesand wait for the decisions of a central political authority, this becomesan affirmation of the ‘privileged point of view on the world’, living insymbiosis with the idea that society is a whole distinct from singleindividuals and thus commits a ‘flagrant error of duplication’ ofreality.53

This is why Mises says that society is the name we give to thecooperation that takes place among human beings.54 In other words,order is endogenous to the system and not an exogenous impositionof those who hold the ‘privileged point of view on the world’.55 Thesocial order is spontaneous and unintentional; it is not a productintentionally created by the hand of an omniscient legislator. And it isthe presence of institutions that originate without previous planningthat opens, as Menger says, a ‘vast realm of fruitful’, scientific‘activity’.56 In dealing with the same subject, Hayek writes that ‘socialtheory begins with—and has an object only because of—the discoverythat there exist orderly structures which are the product of the action


of many men, but are not the result of human design’.57 Exactly as wehave seen in the previous chapter, this means that the social sciencesbegin with the discovery of a process that is driven by intentionalhuman actions but generates unintentional consequences. That is tosay, the social sciences originate with the discovery of the socialprocess and the renunciation of the ‘privileged point of view on theworld’.58

The conflict between the ‘Austrian’ and Walrasianapproaches

The Truth of the German Historical School of Economics is based ona ‘privileged’ knowledge of Good and Evil. This means that theGerman Historical School of Economics claims to have an ethicallysuperior point of view that embraces the whole and, therefore, mustnecessarily prevail over the partiality of every single discipline.Clearly behind such a view is the Hegelian concept of the state as the‘actuality of the ethical Idea’.59 Menger does not overlook this; andwhen the same concept is presented under the modest guise of an‘ethical orientation’ of the economy, he has no difficulty replying thatit is ‘a vague postulate of research devoid of any deeper content’.60

Later on, Mises asserts that the representatives of the GermanHistorical School of Economics described themselves as the‘intellectual bodyguard’ of the Prussian monarchy, ‘firmly convinced’that the ‘God-given leaders of the people were the dynasties,especially the Hohenzollern’.61

The German Historical School of Economics typifies romanticopposition to the advancement of the open society, not deceptivelydisguised by opposition to the market. However, threats to the opensociety also come from another source. By offering a solution to theproblem of economic value, the ‘marginalist revolution’ should have atleast redeemed economics from the ‘one-sided rationalism’ Mengererroneously also attributed to Adam Smith. Why? Since the origin ofprice is in the personal evaluations of each actor, it reflects preferencespre-existent to the rational moment; that is, preferences pre-exist theaction undertaken to satisfy them. This means that there can be noGood and Evil that is rationally deduced. If we add to this that thereare as many evaluations as there are men and that they change with theobjectives each one determines for himself and continuallyreformulates, it is no longer valid to claim that integration of personal


preferences can be entrusted to a ‘science of choice’ in the possession ofand administered by a single mind.

Menger was aware of all this. Just as he rejected the ‘ethicalorientation’ of the German Historical School of Economics, he alsorejected the idea that economics can claim to be an ‘architectonicscience’ of society for any other reason.

As is known, the ‘marginalist revolution’ is associated with Jevonsand Walras as well as with Menger. Although they had differentmotivations, Jevons and Walras really thought they could makeeconomics a science for ‘molding’ society. Jevons’ work is linked toBentham’s and the utilitarian tradition. He says: ‘Pleasure and pain areundoubtedly the ultimate objects of the calculus of Economics. Tosatisfy our wants to the utmost with the least effort—to procure thegreatest amount of what is desirable at the expense of the least that isundesirable—in other words, to maximize pleasure, is the problem ofEconomics’.62 Creating more confusion, he also asserts that ‘there maybe motives of uprightness and honour that may’ suggest statesman toadopt measures of higher order.63

For his part, Walras sees in the social sciences ‘the mechanics ofmoral forces’.64 He specifies:

the law of human activity will be scientifically established just asthe law of the earth’s movement around the sun is by theexplanation of its double abstract movement of circular rotationon its axis and elliptical movement around the sun. This showsthe rational character of general kinetics and the analogy with thenature of physics.65

Furthermore, Walras opposes individualism;66 and maintains that‘collective ownership’ is preferable to ‘private ownership’.67

Consequently, there is an evident ‘architectonic’ inspiration inWalras’s work, particularly that of Saint-Simon.68 Menger, who carriedon a brief correspondence with Walras, makes ‘every effort’ to win himto his side,69 but with no success. Menger’s final judgment is as follows:‘A conformity does not exist between us. There is an analogy ofconcepts in a few points but not in the decisive questions’.70

Menger was perfectly right. The subjectivist theory of value shouldhave given greater force to the ideal of social process. However,Walras goes in exactly the opposite direction. He wants to substitutefor the market a mathematical instrument, the theory of generaleconomic equilibrium. According to this theory, a pre-determined


optimum is reached. But the subjectivist basis of value shows that thesocial process mobilizes the knowledge of everyone and createsadvantages that cannot be predetermined. The subjectivist basis ofvalue suggests also that the advantages of exchange are not themaximum ones; they are only those which permit exchange and socialcooperation.71

In typical models of general equilibrium, prices are unknown. Infact,

In the typical models of general equilibrium, prices are initiallyunknown. And the theory serves precisely to calculate the pricesrequired in order to attain the harmony of individual equilibriawith the general equilibrium [so that] the final optimum condition(the Paretian optimum) is actually pre-arranged: one alreadyknows where one wishes to arrive. Rationalism is teleological,reason knows a priori what the optimum is like, and it is a matterof persuading the maximizing individuals to go towards itsimultaneously.72

Thus, it is not difficult for Menger to understand that ‘the one-sidedlyrationalistic mania for innovation in the field of economy’, with theintentional ‘dissolution’ of the normative habitat that makes a marketsociety possible, ‘inexorably leads to socialism’.73 If these statementsare applied to the theory of general economic equilibrium, they mightseem out of place, but they are not. This is clearly implied by thecriticism of the idea of general equilibrium made by Hans Mayer, astudent of Friedrich von Wieser.

First of all, Mayer observes: ‘Recent literature has emphasized thefact that the elements of equilibrium do not and should not contain thevariable of time, because the simultaneous interdependence of all thevariables is implied’.74 Therefore, the system of equations ‘cannotdescribe the economic process as such’.75

To achieve or to sustain movement (economic cycle), there mustbe a free uncompensated force or a difference in potentialcontinually reproduced among the various forces. There isnothing like this in a simultaneous system of interdependence ofthe theory of equilibrium. In this system, once the reciprocal andonly the reciprocal movement of the elements ceases […]; in otherwords, when all the elements have found the position in whichthey maintain the equilibrium, no force would be free to break


this state of rest […]. It is not possible to deduce from the systemof general interdependence either the continually reproducingcycle of economy […], or an economic process that undergoesprogressive or regressive variations.76

What happens? Mayer answers:

There are two possible hypotheses. The first is that the forcethat keeps the system of equilibrium in continuous movementis endogenous. This might be, for example the periodicalrenewal of needs […]; but then the system of interdependenceof all the elements would be shattered, because an element,that is active and not determined by reciprocity, woulddominate the others. The second is that the force that keepsthe system in continuous movement is exogenous. This showsthat the pattern of equilibrium does not take into considerationthe scientific principle, continually advocated by therepresentatives of the equilibrium theory, according to whichthe task of science should be ‘to describe as simply andcompletely as possible’ the facts observed […]. The description[…] of equilibrium [is therefore] seriously lacking […]. Thesystem would not be closed and, once again, theinterdependence would be shattered.77

Moreover, the advocates of the theory of general economic equilibriummaintain that, since the number of equilibrium equations is the same asthe number of unknowns, there is only one solution to the economicsystem, so that to a certain value of each element (price, demand,supply, production costs, etc.) there is always only a singlecorresponding value of the others’.78

Nevertheless, on the basis of facts and mathematical procedures,we find that, if given a certain starting point, there is not one butthere are more, and perhaps many, equilibrium solutions’.79

Indeed, the fact that in any economy, when the combination ofitems by an economic subject (both in the simpler case of anisolated economy and in that of an economy in a price-orientedmarket) lacks strict univocal correspondence of the elements,there is a variety of possible correspondences (merely becausemost utility functions are discontinuous and there is not one but


usually more, often many, equally optimal combinations ofelements)’.80

The same conclusion is reached if the problem is approached from thestrictly mathematical side.

A single solution is possible […] only when all the equations arelinear. But generally the equilibrium equations are not linear.The price equations contain the product of quantities exchangedtimes price (both unknown), which result in quadraticequations, and thus in four solutions for two equations with twounknowns; and in the general case of mn+n-1 equilibriumequations, there is an enormous indefinable number ofequivalent mathematical solutions. In addition, there areimaginary solutions and those without any economicsignificance. Therefore, the solution to the problem isindeterminate and, in principle, indeterminable.81

There is more. In the theory of general equilibrium, ‘by definition, thereis no profit’.82 Hence, even if we wanted for a moment to exclude theimpossibility of substituting a system of equations for the extensive,complex market process, the fact remains that, since this system isindeterminate, an ‘exogenous’ variable must be introduced, which isthe ‘privileged point of view on the world’, imposed by the politicalauthority for planning.83 This explains why the Austrian school hasalways opposed the idea of making economics a discipline based onmathematics. Even though Menger was familiar with the mathematicalmethods, he expressed his opposition directly to Walras. Mises furthersays:

Of primary importance is what is set forth in words in thepreliminary statement that has to serve as the starting point forfurther mathematical elaboration. This statement, however, isnon-mathematical. Whether or not its further elaboration inmathematical terms can be useful depends on the correctness ofthis non-mathematical statement.84

Consequently, what must be clear is that, behind the equations ofgeneral economic equilibrium, is the idea of economics as an‘architectonic science’ of society.


Ignorance and disequilibrium

As we have seen, Mayer pointed out that, in the theory of generalequilibrium, ‘by definition there is no profit’. This lead to a criticism ofthat theory no longer directed to its internal structure, but to itsgnoseological assumptions. Menger acutely states:

‘The exchange of less easily saleable commodities forcommodities of greater marketability is in the economicinterest of every economizing individual. But the actualperformance of exchange operations of this kind presupposes aknowledge of their interest on the part of economizingindividuals.85

What really happens is that, due to the ignorance of the actors, thesystem is always in disequilibrium. It is impossible and irrelevant toknow what Menger had in mind when he wrote that passage. Whatdoes count is that it strikes at the root of all systems of planning andalso at the theory of general economic equilibrium. In fact, it shed lighton the ignorance of all social actors. The little knowledge each one hasis not enough to pursue his personal interests perfectly. And, all themore reason, this prevents each one from being able, individually, todeal with the entire economic problem of society.

Boehm-Bawerk said that only where there are ‘infinite grounds forcontrasting valuations’ are there ‘infinite opportunities for exchange’.86

This is due not only to the division of labor but also to the effect ofdifferent knowledge.87 In any case, if men were all perfectly equal andhad equal ability, knowledge and skills, there would be no change ‘todisturb the balance’.88

By proposing to show how value ‘would exist’ in a ‘perfectstate’,89 Wieser throws light on how the exchange value is‘disturbed‘ by, among other things, ‘human imperfection’ and‘error’.90 Mises emphasizes that, in order to achieve harmony inproduction, there would have to be a ‘god-like’ planner, an‘omnipotent and omniscient Deity’, capable ‘to descend to take inhand the government of human affairs’.91 Only an ‘unfailing’ mindof this kind could include in his vision ‘everything which is ofsignificance to the community’ and ‘weigh the conditions of distantparts and future centuries’.92

Mises goes a step further. Given our state of ignorance, he explainsthe meaning of competition as part of the social process. Mises says:


Another popular doctrine works with the mistaken concept of‘free competition’. At first, some writers create an idealcompetition that is free and equal in conditions—like thepostulates of natural science—and then they find that theprivate property order does not at all correspond to this ideal.But because realization of this postulate of ‘competition that isreally free and equal in conditions’ is believed to be the highestobjective of economic policy, they suggest various reforms. Inthe name of the ideal, some are demanding a kind of socialismthey call ‘liberal’ because they apparently perceive the essenceof liberalism in this ideal. And others are demanding variousother interventionistic measures. But the economy is not aprize contest in which the participants compete under theconditions of the rules of the games. If it is to be determinedwhich horse can run a certain distance in the shortest period oftime, the conditions should be equal for all horses. However,are we to treat the economy like an efficiency test to determinewhich applicant under equal conditions can produce at lowestcosts?93

Here Mises is saying that, apart from the formal rules of equality, anyimpediment to the free use of knowledge and special abilities negatesthe raison d’e^tre of social cooperation and reduces its possibleproductivity. If cooperation/competition is the means for mobilizing thedifferent knowledge and abilities of each person, any obstacle to thefree mobilization of these differences is an attack on the reasons thatcreate the need for cooperation and its possible effects. As Misesstresses, ‘it is the social spirit, the spirit of social cooperation, whichforms, develops, and upholds societies. Once it is lost, the society fallsapart again. The death of a nation is social retrogression, the declinefrom the division of labor to self-sufficiency’.94 It is in such a way that‘the social organism disintegrates’.95

The decline of the Roman Empire was only a result of thedisintegration of ancient society which after reaching a high levelof division of labor sank back into an almost moneyless economy[…] want and misery set in simply because an economic orderworking on a lower level in respect of the social division of laboris less productive. Technical skill was gradually lost, artistic talentdecayed, scientific thought was slowly extinguished […]. The


death of nations is the retrogression of the social relation, theretrogression of the division of labor’.96

This is why

Of all accusations against the system of Free Trade and PrivateProperty, none is more foolish than the statement that it is anti-social […] and that atomizes the body social. Trade does notdisintegrate […]. The division of labor is what first makes socialties: it is the social element pure and simple.97

Therefore, Mises is perfectly aware that an increase in knowledge andsocio-economic development comes from the process of cooperationthrough competition. Competition is a way to explore the unknown,seek solutions to our problems, and correct our mistakes.

Hayek: unification of the Austrian and Scottishtraditions

Hayek is not only the major representative of the fourth generation ofscholars of the Austrian School of Economics. He is also the one who,conscious of Menger’s debt, by way of Burke, to the Scottish moralists,has emphasized the connection between Mandeville, Hume and Smithand the representatives of Austrian marginalism. This involves theseparation of Smith from the utilitarianism of Bentham and his school.

Hayek poses the question clearly. He says:

there is here a problem of the division of knowledge which isquite analogous to, and at least as important as, the problem ofthe division of labor. But, while the latter has been one of themain subjects of investigation ever since the beginning of ourscience, the former has been as completely neglected, although itseems to me to be the really central problem of economics as asocial science.98

Two points must be explained further. As we already know and asHayek himself was to show, (1) the problem of the division ofknowledge was not neglected by Mandeville, by the Scottish moralistsand by Burke and (2) it is not a problem only of economics but of allsocial science.99 This clarified, it must be pointed out that Hayek’s


main dispute is with the theory of general economic equilibrium. Heasserts:

In the usual presentations of equilibrium analysis it is generallymade to appear as if these questions of how the equilibriumcomes about were solved. But, if we look closer, it soonbecomes evident that these apparent demonstrations amount tono more than the apparent proof of what is already assumed.The device usually adopted for this purpose is the assumptionof a perfect market where every event becomes knowninstantaneously to every member. It is necessary to rememberhere that the perfect market which is required to satisfy theassumptions of equilibrium analysis must not be confined to theparticular markets of all the individual commodities; the wholeeconomic system must be assumed to be one perfect market inwhich everybody knows everything. The assumption of aperfect market, then, means nothing less than that all themembers of the community, even if they are not supposed to hestrictly omniscient, are at least supposed to know automaticallyall that is relevant for their decisions […]. The statement that,if people know everything, they are in equilibrium is truesimply, because that is how we define equilibrium. Theassumption of a perfect market in this sense is just another wayof saying that equilibrium exists but does not get us any neareran explanation of when and how such a state will comeabout.100

In other words: ‘if we want to make the assertion that, under certainconditions, people will approach that state, we must explain by whatprocess they will acquire the necessary knowledge’.101

In more direct terms, the problem is: how can the plans of theindividual actors be harmonized? Since the theory of generalequilibrium states that all the operators, even if they are notomniscient, know the relevant data, equilibrium is assumed; it is not anobjective to be attained. The subjects live in equilibrium, which ispermanent, because the knowledge they have allows each one topredict correctly what the other will do. But how is this knowledgeacquired?102

At this point, Hayek’s research goes in three directions. Let’s followeach one separately.


A. Hayek asks the theoreticians of general equilibrium to explain howthe actors acquire the necessary knowledge, but he gives theexplanation himself. ‘Nothing is solved when we assume everybody toknow everything’.103 Therefore,

it is difficult to defend economists against the charge that forsome 40 to 50 years they have been discussing competition onassumptions that, if they were true of the real world, would makeit wholly uninteresting and useless. If anyone really knew allabout what economic theory calls the data, competition wouldindeed be a very wasteful method’.104 ‘But which goods are scarcegoods, or which things are goods, and how scarce or valuablethey are—these are precisely the things which competition has todiscover’.105

Consequently, competition is a ‘procedure for the discovery of suchfacts as, without resort of it, would not be known to anyone, or at leastwould not be utilised’.106

It follows that the equilibrium, which is the presupposition of thetheoreticians of the general theory, is only a ‘state of affairs’ that the‘process of competition tends to bring about (or to approximate)’.107

This means that competition is a ‘voyage of exploration into theunknown’.108 It is the tool we use to acquire the knowledge we do nothave. If we had the ‘relevant data’ postulated by the theory of perfectcompetition, we would not need competition. As a result of this, theeconomic system is always in disequilibrium, as is the actor. The actoris in a state of disequilibrium because he has needs that must besatisfied. And, only if he had enough knowledge, he would alreadyknow which needs to satisfy and how to satisfy them.

Hayek goes further and explores more deeply. He says:

If we can agree that the economic problem of society is mainlyone of rapid adaptation to changes in the particularcircumstances of time and place, it would seem to follow that theultimate decisions must be left to the people who are familiarwith these circumstances, who know directly of the relevantchanges and of the resources immediately available to meet them.We cannot expect that this problem will be solved by firstcommunicating all this knowledge to a central board which, afterintegrating all knowledge, issues its orders. We must solve it bysome form of decentralization.109


Like Smith, Hayek points out the problem of the dispersion ofknowledge in society. And he solves it just as Smith did:

The ‘man on the spot’ cannot decide solely on the basis of hislimited but intimate knowledge of the facts of his immediatesurroundings. There still remains the problem of communicatingto him such further information as he needs to fit his decisionsinto the whole pattern of changes of the larger economicsystem.110

Therefore:

In a system in which the knowledge of the relevant facts isdispersed among many people, prices can act to co-ordinate theseparate actions of different people in the same way as subjectivevalues help the individual to co-ordinate the parts of his plan.111

Why is this so? Because prices indicate what is requested or notrequested in the market and how appropriate our actions areeconomically. Consequently, we ‘must look at the price system as mucha mechanism for communicating information if we want to understandits real function’.112 And this suggests that the most important fact is‘the economy of knowledge’ by which the system operates, namely, ofhow little individual participants must know in order to act correctly.113

In other words, by merely watching the price trend of the products thatinterest them, individual operators can adapt their activities to changes‘of which they may never know more than is reflected in the pricemovement’.114

B. Hence, omniscience is not human and no one can claim that ‘allforces of society be made subject to the direction of a singlemastermind’.115 It is important to understand that because we areignorant and fallible we must trust in interpersonal processes. In fact,‘insofar as such processes are capable of producing a useful orderwhich could not have been produced by conscious direction, anyattempt to make them subject to such direction would necessarily meanthat we restrict what social activity can achieve to the inferior capacityof the individual mind’.116

It follows that collectivist theory, by exalting the wisdom of anindividual or a limited group entrusted with the management of thesociety, justifies the ‘privileged point of view on the world’, whereas ‘it


is the individualist who recognizes the limitations of the powers ofindividual reason and consequently advocates freedom as a means forthe fullest development of the powers of the inter-individual process’.117

Since this process mobilizes the knowledge that is dispersed in a societyand creates interaction, it raises us from our limited level and allowsfor a growth of rationality. Therefore, when the truth or the falsenessof a statement

is no longer decided on the basis of a logical argument andempirical test, but by examining the social position of the personwho made it, when in consequence it becomes the membership ofa class or race, and when […] it is claimed that the sure instinct ofa particular class or a people is always right, reason has beendefinitively driven out.118

Indeed, ‘if there were omniscient men, if we could know not only allthat affects the attainment of our present wishes but also our futurewants and desires, there would be little case for liberty’.119 But we arenot omniscient. Consequently, we need liberty. It is

essential in order to leave room for the unforeseeable andunpredictable; we want it because we have learned to expect fromit the opportunity of realizing many of our aims. It is becauseevery individual knows so little and, in particular, because werarely know which of us knows best that we trust the independentand competitive efforts of many to induce the emergence of whatwe shall want when we see it.120

C. Hayek, in perfect agreement with Hume, maintains that ‘the rules ofmorality are not the conclusions of our reason’.121 He stresses how lawhas been ‘as little invented by any one mind as language or money ormost of the practices and conventions on which social life rests’.122

However, Hayek underscores an aspect of the problem which, thoughobviously present in Mandeville, Hume and Smith, is not emphasized.He points out that it is impossible for the mind to direct its owndevelopment. Hayek writes:

From the belief that they had achieved the old ambition of seipsam cognoscere mentem, and that they had reached a positionwhere they were able to predict the future course of the growth ofReason, it was only one step more to the still more presumptuous


idea that Reason should be able to pull itself up by its ownbootstraps to its definitive and absolute state. It is in the lastanalysis this intellectual hubris, the seeds of which were sown byDescartes, and […] already by Plato, which is the common trait inHegel and Comte. The concern with the movement of Reason asa whole not only prevented them from understanding the processthrough which the interaction of individuals produced structuresof relationships which performed actions no individual reasoncould fully comprehend, but it also made them blind to the factthat the attempt of conscious reason to control its owndevelopment could only have the effect of limiting this verygrowth to what the individual directing mind could foresee.123

This means that ‘the growth of the human mind is part of the growthof civilization; it is the state of civilization at any given moment thatdetermines the scope and the possibilities of human ends and values.The mind can never foresee its own advance’.124

The intellectualistic hubris is what Hayek calls ‘abuse of reason’,‘constructivism’ and ‘fatal conceit’.125 All these names denote the same‘architectonic’ ambition, which is present in Plato and claims it ispossible to shape society as one likes according to a plan. It is apsychologism, based on the ‘privileged point of view on the world’.

Abstract order and mobilization of knowledge

The central question is expressed by Hayek in the following terms:

Knowledge exists only as the knowledge of individuals […]. Thesum of the knowledge of all the individuals exists nowhere as anintegrated whole. The great problem is how we can all profitfrom this knowledge, which exists only dispersed as the separate,partial, and sometimes conflicting beliefs of all men.126

In other words, we must identify the habitat that offers the conditions‘that makes maximum use of the knowledge of all’.127

Like the Scottish moralists, the Austrian school paid particularattention to the institutional normative setting. We see this in Wieserwhen he says:

Boehm-Bawerk and I […], like all the economists trained inAustria […], have come to economics through jurisprudence


and we have always been grateful to the strong impulse thestrict discipline of law gave to our knowledge of economics.Private law, which is still an unsurpassed theoretical model, iscommercial law, and law of economy. Its clear juridicalformulas are full of economic elements. Similarly, when thehistory of Roman law shows the evolution of these juridicalformulas, it is also a part of economic history. This is why theAustrian jurist is a scholar of economic history. We eagerlyacquired all this rich material. However, the clear manner inwhich it was presented to us challenged our youthfulenthusiasm. We viewed jurisprudence as a complete science,which did not offer new tasks; we want to know what powerthe law gave to the legislator. So, we set aside the writtencodes and turned to the unwritten laws that regulate alleconomic life of society.128

In the work of Menger, there was already evidence of this attitude ofobserving economic phenomena and, at the same time, the normativesetting. Menger clearly states:

Property […], like human economy, is not an arbitrary inventionbut rather the only practically possible solution of the problem[…] imposed upon us by the disparity between requirements for,and available quantities of, all economic goods […]. As a result, itis impossible to abolish the institution of property withoutremoving the causes that of necessity bring it about—that is,without simultaneously increasing the available quantities of alleconomic goods.129

For his part, Boehm-Bawerk, from the time of Rechte und Verhaltnissevom Standpunkte der volkwirtschaftlichen Guterlehre, declared that hewanted to ‘inquire into the body of law as an economic structure’.130

Boehm-Bawerk believed, as an acquired fact, that ‘a certain amount ofthe “historical-legal” or “social” element is sure to be present in alleconomic phenomena’.131 In more detail, he asserts:

There literally exists no price nor any form of ‘distribution’(except perhaps highway-robbery and the like) withoutcontaining at least some legalistic-historical aspect. For, in everycivilized community, there must always exist some social orderwhich will apply when two members of that society get into


contact with each other, and thus determine the nature of thatcontact. It is, therefore, either saying too little or too much, whenanyone claims the phenomena of distribution for the ‘social’, asdistinct from the ‘natural’, category; or it is but an empty truism,which, in its very concept, applies to every single economic orsocial phenomenon, for obviously a Robinson Crusoe could noteven so much as ‘barter’ with himself. One member of a societycan only trade with another if both can acquire ownership of thegoods to be exchanged under the existing social order. Anystatement attempting to express more than that truism is too far-reaching.132

And Mises explains: ‘Economic action demands stable conditions.The extensive and lengthy process of production is the moresuccessful the greater the periods of time to which it is adapted’.133

‘The progressive intensification of the division of labor is possibleonly in a society in which there is an assurance of lasting peace. Onlyunder the shelter of such security can the division of labor develop. Inthe absence of this prerequisite the division of labor does not extendbeyond the limits of the village or even of the individualhousehold’.134

Mises adds: ‘All violence is aimed at the property of others. Theperson—life and health—is the object of attack only in so far as ithinders the acquisition of property’.135 ‘The war ends when the actualrelation is recognized as one worthy to be maintained’.136 ‘Violence andLaw, War and Peace, are the two poles of social life; but its content iseconomic life’.137

Mises stresses:

The doctrine of natural law has erred in regarding this greatchange, which lifts man from the state of brutes into humansociety, as a conscious process; as an action, that is, in which manis completely aware of his motives, of his aims and how to pursuethem. Thus was supposed to have been concluded the socialcontract by which the State and the community, the legal order,came into existence. Rationalism could find no other possibleexplanation after it had disposed of the old belief which tracedsocial institutions back to divine sources or at least to theenlightenment which came to man through divine inspiration.Because it led to present conditions, people regarded thedevelopment of social life as absolutely purposeful and rational


[…]. We can ‘explain’ the birth and development of socialinstitutions by saying that those who accepted and best developedthem were better equipped against the dangers of life than thosewho were backward in this respect.138

We have begun this section by pointing out, in agreement with Hayek,that the ‘great problem’ is to identify a normative habitat that canmobilize the knowledge dispersed throughout society. We have seenhow the Austrian school paid attention to the normative-institutionalquestion and how it clearly indicates a habitat which protects privateproperty. This means choice, contractual freedom and the market. Thefollowing question arises: what characteristics of juridical norms permitall this?

The normative habitat of such a system must be made up of ‘rulesof just conduct’,139 that is, rules which, in order to preventinjustice,140 express what harm the actor must not do to the Otherand indicate, in positive terms only, the ‘procedure’ the actors mustfollow to attain objectives decided upon individually. In otherwords, everyone is free to choose whether to be seller, buyer,Catholic, Jew, etc.; and this gives content to everyone’s life.However, once the content of the action has been chosen, the‘procedure’ or ‘form’, which has been established by the norms, isthe same for everyone, and is intended to safeguard the free choiceof everyone. This is the same as saying that the law regulates typicalsituations, that its norms are applied to all actors who, by theirautonomous decisions, produce certain situations. Therefore, thesenorms are not directed toward anyone in particular. They areabstract, formal and empty.141 They are like algebraic expressionswith their known values (procedures) and unknown values. Ourchoices and actions are fit into these expressions and give concretevalues to unknown or empty values.142

Hence, life in an open society is based on an abstract order which,by setting the boundaries among actions, guarantees the establishmentof a concrete order but leaves it undetermined; it makes it depend onthe decisions the actors decide to take. Hayek says: ‘all that is trulysocial is of necessity general and abstract in a “Great Society”, and assuch will limit but not fully determine our decisions’.143 Thus, liberty isa juridical concept, law and liberty are ‘inseparable’.144 Since theindividual must be freed from any prescription of a positive nature, thismeans that justice is likely to be defined only in negative terms. It isadvanced by determining what is unjust.145


It is obvious that all this implies that, as objectives are decidedindividually, they are not subject to a common obligatory hierarchy,which is what happens when prescription takes the place of choice.146

In other words, we cooperate with others for objectives we normally donot know, because no one is required to reveal them. When the Otherasks us to do something for him, we must decide whether it isworthwhile to accept or refuse his request, but the motives behind thisrequest usually remain unknown. It follows that we may becooperating in achieving objects we might disapprove of, if we knewwhat they were.147

In this kind of system, the common element is ‘entirely abstract’.148

‘It is not attachment to particular things but attachment to the abstractrules […] which will guide its members in their actions and will be thedistinguishing attribute’ of a free society.149 The common good is not aspecific objective or a concretely defined optimum; it is a normativesetting that, by abolishing prescription and permitting everyone tofreely mobilize his knowledge and resources, increases ‘everybody’schances as much as possible—not at every moment, but only “on thewhole” and in the long run’.150

To safeguard this system of abstract rules, first of all it is necessaryto impede that legislation destroys the law. Legislative interventionism,which then becomes the instrument of economic interventionism, mustbe avoided, because it destroys equality before the law and thecertainty of the law. It is important to understand that

The freedom of the British which in the eighteenth century therest of Europe came so much to admire was thus not, as theBritish themselves were among the first to believe and asMontesquieu later taught the world, originally a product of theseparation of powers between legislative and executive, but rathera result of the fact that the law that governed the decisions of thecourts was the common law, a law with which parliament onlyrarely interfered and, when it did, mainly only to clear updoubtful points within a given body of law.151

Therefore, it is perhaps possible to say that ‘a sort of separation ofpowers had grown up in England, not because the “legislature” alonemade law, but because it did not: because the law was determined bycourts independent of the power which organized and directedgovernment, the power namely of what was misleadingly called thelegislature’.152


Substitution of legislation for law has serious consequences.Changing majorities can arbitrarily break general abstract rules andreplace them with provisions intended to serve the interest of thegroups that are stronger at the moment. This is why Hayek adds thisbitter comment: ‘though I firmly believe that government ought to beconducted according to principles approved by a majority of thepeople, and must be so run if we are to preserve peace and freedom, Imust frankly admit that if democracy is taken to mean government bythe unrestricted will of the majority I am not a democrat, and evenregard such government as pernicious’.153

There is more. Interventionism is encouraged by a very dangerousoptical illusion:

Since the value of freedom rests on the opportunities it providesfor unforeseen and unpredictable actions, we will rarely knowwhat we lose through a particular restriction of freedom. Anysuch restriction, any coercion other than the enforcement ofgeneral rules, will aim at the achievement of some foreseeableparticular result, but what is prevented by it will usually not beknown. The direct effects of any interference with the marketorder will be near and clearly visible in most cases, while themore indirect and remote effects will mostly be unknown and willtherefore be disregarded. We shall never be aware of all the costsof achieving particular results by such interference.154

Finally, another way to violate the abstract order is by manipulatingmoney. The order is perfectly abstract only if the money ‘is not relatedat all to a specific purpose’, but to the ‘totality’ of them.155 And yet,when monetary manipulations alter the market data, these distortionscaused by governments make money the instrument for activities thatseem profitable at the moment but which never would have beenundertaken without those manipulations.156 In other words, sincemoney is not neutral, variations in its value do not determine acontemporaneous and equal variation of all prices. Because of anexpansive monetary policy, there are products whose prices increasebefore others. This creates artificial advantages that seem to encouragedevelopment in certain economic sectors, but in the end, when allprices have been realigned, what seemed advantageous at the beginningis no longer opportune. This destroys resources which have beenartificially removed from a physiological use and are no longeravailable.


Property and freedom

Therefore, starting out from the fallibility of knowledge, Austrianmarginalism makes it clear that renunciation of the ‘privileged point ofview on the world’ crosses the entire territory of the open society. Wedo not have a science of Good and Evil. We do not have a positive testfor definitively establishing scientific truth. We do not have subjectswho are the exclusive bearers of the truth and are thus entitled toirrevocable power. We do not have a positive test for justice. And wedo not have a test to establish definitively what is economicallyadvantageous. What we can do from time to time for knowledge,politics and the economy is to eliminate those presumptions orparadigms which, compared to the new hypotheses emerging from thesocial process, prove to be incapable of identifying and solving ourproblems. If we ‘protect’ some concrete, predetermined solution, we areoutside the logic of an open society.

Another point clarified by the Austrian school is the relationshipbetween private property and personal freedom. Menger, Boehm-Bawerk and Wieser maintained that all human action is economic,since man lives under conditions of scarcity. Boehm-Bawerkemphasized that action is economic also because time is scarce. This ledMises to say:

If all goods were ‘free goods’, man would economize only withhis personal activity, i.e., with the application of his personalpower and his passing life […]. Only in a Cockaigne populated bymen who are immortal and indifferent to the passage of time, inwhich every man is always and everywhere perfectly satisfied andfully sated, or in a world in which an improvement in satisfactionand further satiation cannot be attained, would the state of affairsthat Gottl calls ‘privation’ not exist. Only in so far as it does existdoes action take place; as far as it is lacking, action is alsolacking.157

Consequently, human action is always economic. It is economic in the‘narrower sense’, when it takes place within the monetary sphere.158

And it is economic in a broader sense when it takes place outside thatsphere. It is always economic, because it requires the use of resources(including time), which are scarce.

If action is always economic, people without resources cannot actfreely. They have no personal freedom. Mises states this as follows:


There can be no freedom of press where the government ownsevery printing office. There can be no free choice of profession ortrade where the government is the only employer and assignseveryone the task he must fulfill. There can be no freedom tosettle where one chooses when the government has the power tofix one’s place of work. There can be no real freedom of scientificresearch when the government owns all the libraries, archives,and laboratories and has the right to send anyone to a placewhere he cannot continue his investigation. There can be nofreedom in art and literature where the government determineswho shall create them. There can be neither freedom ofconscience nor of speech where the government has the power toremove any opponent to a climate which is detrimental to hishealth, or to assign him duties which surpass his strength and ruinhim both physically and intellectually.159

Mises adds:

As soon as the economic freedom which the market economygrants to its members is removed, all political liberties and bills ofrights become humbug. Habeas corpus and trial by jury are a shamif, under the pretext of economic expediency, the authority has fullpower to relegate every citizen it dislikes to the arctic or to a desertand to assign him ‘hard labor’ for life. Freedom of the press is amere blind if the authority controls all printing offices and paperplants. And so are all the other rights of men […]. A man is free asfar as he shapes his life according to his own plans. A man whosefate is determined by the plans of a superior authority, in which theexclusive power to plan is vested, is not free.160

Apropos of the same subject, Hayek says:

Economic control is not merely control of a sector of human lifewhich can be separated from the rest; it is the control of themeans for all our ends. And whoever has sole control of themeans must also determine which ends are to be served, whichvalues are to be rated higher and which lower—in short, what weshould believe and strive for.161

Hence, personal freedom exists only where there is private ownershipof resources.

128

7 The intellectualistic hubris and the

destruction of liberty

There are no ‘privileged’ sources of knowledge

In a famous passage from Laws, Plato says that ‘change […] is alwayshighly perilous’.1 However, as we have tried to point out from the veryfirst chapter, a society is open because it is open to change or, to bemore precise, because it is the institutionalization of change. Thisoccurs primarily through the renunciation of the ‘privileged point ofview on the world’, of the fundamentum inconcussum.

While Solon, Pericles and Protagoras were the first to try to identifythe habitat of the open society, Plato was the one who, in view of theadvancement of the market, critical discussion and democracy, tried toidentify the habitat of the closed society. Undoubtedly, an open societywas a threat to the Athenian aristocracy, who wanted to monopolizethe government of the city. And it is known that Plato belonged to apowerful aristocratic family. The advancement of the mercantile middleclass was seen by the aristocracy as an illegitimate ousting from power.This led to the reaction of men like Plato, who can be considered theprototype of the proletarianized intellectual.2

However, the motivations for Plato’s theoretical works are not themost important issue. What counts is that their objective is to restore aclosed society. This could not be accomplished by trying to revive thedeclining belief in the ancient Greek religion and the cult of theOlympian gods;3 it required a more sophisticated strategy.

There is a point that should be clarified immediately. The claim thatcritical reasoning ended belief in the Olympian gods is anoversimplification that obscures the most important part of the processand overlooks the fact that reason itself is a product of those events. In

Intellectualistic hubris and destruction of liberty 129

other words, the opening to the world weakens the need for a givenbelief or institution and creates the space for critical discussion. Reasonwas not the instrument that caused the death of the ancient Greekreligion, because critical discussion advanced only after the opening tothe world had weakened the sense of the absolute with which theancient beliefs were experienced.4

Thus, critical reasoning is born when gnoseological absolutism dies.Using reason to re-establish the ‘privileged point of view on the world’ isthe same as denying it. One falls, as Hayek says, into the ‘abuse ofreason’ or, more precisely, into psychologism, which is an attitude thatleads to viewing events and social institutions as ‘the outcome of motivesspringing from the minds of individual men’.5 The social process isabolished. Truth is no longer the temporary and always partial result of acontinual confrontation between ‘conjectures and refutations’, but theuncontestable verdict of a privileged source of knowledge.

William Bartley writes:

The Western philosophical tradition is authoritarian in structure,even in its most liberal forms. This structure has been concealedby oversimplified traditional presentations of the rise of modernphilosophy as part of a rebellion against authority. In fact,modern philosophy is the story of the rebellion of one authorityagainst another authority, and the clash between competingauthorities. Far from repudiating the appeal to authority as such,modern philosophy has entertained only one alternative to thepractice of basing opinions on traditional and perhaps irrationalauthority: namely, that of basing them on [… an] authority’6 thatis presumably rational.

In other words:

The church should be replaced by intellectual intuition,intellectual intuition by sense experience, sense experience by aparticular language system. And so on. These revolutions havehad a depressingly similar pattern. And since […] the patternitself dooms the revolution to failure, future philosophicalrevolutions that remain within this pattern cannot succeed,7

because they go on to identify a new fundamentum.

In addition to what Bartley asserts, the only thing to say is thatthe monotony of this ‘story’ concerns not only ‘modern philosophy’

130 Intellectualistic hubris and the destruction of liberty

but has affected philosophy from its beginnings. Plato asserts thatthe ‘individual’s duty is to understand the true doctrine […] and livein obedience to it, the city’s to accept this doctrine from a god orfrom the human discoverer […] and make it law’.8 And yet Platohimself is the citizen who is bearer of this knowledge and the onewho gives a ‘fundamentum’ to his projections in the name of apresumed reason.

Popper rightly states:

Socrates had only one worthy successor, his old friendAntisthenes, the last of the Great Generation. Plato, his mostgifted disciple, was soon to prove the least faithful. He betrayedSocrates, just as his uncles had done. These, besides betrayingSocrates, had also tried to implicate him in their terrorist acts, butthey did not succeed, since he resisted. Plato tried to implicateSocrates in his grandiose attempt to construct the theory of thearrested society; and he had no difficulty in succeeding, forSocrates was dead.9

Plato understands that the ‘privileged point of view on the world’cannot be re-established by resorting to belief in the old Greekreligion, because this belief has been weakened by the opening tothe world.10 He replaces it with the belief that philosophicalknowledge is a gift of god which can be attained only byconversion, which is ‘the wheeling round of the whole soul towardsthe light of the idea of God’.11 However, if this is the case, such atype of philosophy, though ‘means death of the old gods, it is itselfreligion’.12 It is the ‘supreme stage of a new self-assurance on man’spart, under whose foundations lie vanquished a wild army ofdarksome forces […it is] the triumph of the intellect over a wholeworld of rough and unformed powers’.13

Thus, Plato carries out the operation that Bartley sees accomplishedin modern philosophy, when it replaces ‘traditional and perhapsirrational authority’ with a new authority, which is presented asrational. While Plato maintained it was possible to know ‘pure being’,in like manner Descartes says that the ‘chains of reasons, all quitesimple and quite easy, which geometers are wont to employ in reachingtheir most difficult demonstrations’, gave him the opportunity to‘imagine that all the possible objects of human knowledge were linkedtogether in the same way’ and that ‘there was nothing so remote that itcould not be reached, nothing so hidden that it could not be


discovered’.14 In other words, man can know everything. ‘The world ofreality and the world of thought are two cosmoses that coincide, eachof them compact and continuous, in which nothing remainsfragmentary, isolated and unreachable’.15 To be human is not ignorancebut knowledge; and this shows how unreal the Cartesian ‘methodicaldoubt’ is and how different it is from ‘real doubt’, namely, from theuncertainties and risks of life.16

All this has serious consequences. If the power of God is ‘effortless’,because the ‘power of thought moves everything’,17 even the humanintellect, which is part of divine nature, can change the world as itpleases. At this point regression to animism becomes the illusion ofbeing able to eradicate the principle of reality. It is a return to magic.The philosopher wants to obliterate what exists; he wants a new worldand he knows the ‘formula’ that guarantees he will achieve both hisdesires.18

However, we may not like the world the philosopher wants to build;we can argue that it is impossible to have a science of Good and Evil.In that case the philosopher will provide for ‘social purgation’.19 He isauthorized to do this, because of his superior knowledge and he mustdo it. If he did not, he would be responsible for a ‘sin of omission’.20 Toavoid this, his only alternative is to have his own life coincide with‘innocent sin’.21 His actions must be directed toward achieving suchnoble objectives, which absolve him from the crimes that must becommitted.

Thus, we are faced with a ‘fabricated’ tragedy. The actors operate onfalse premises, and the only tragic aspect is the fate of the victims. Thefalsity of the premises is due to the intellectualistic hubris at the originof it. The philosopher claims to be the only one to know Good andEvil, and this seems to justify the tragedy. But this is a deception whichis probably also self-deception, because of the good will men feel forthemselves. Indeed, if we are humble enough to recognize that we areall equally ignorant and fallible, the ‘tragic knot’ is immediately untied.Nobody is the bearer of absolute knowledge. And recognition of thisdoes not force us to commit any (‘innocent’) crimes.

Even if one has such courageous humility, human existence is still adrama. But liberty helps us to face the uncertainty of life.22 This meansthat change itself is the means we use when looking to solve ourproblems and limit uncertainty. In such a way we avoid transformingthe collective life into one tremendous tragedy or, to put it differently,we free ourselves from the tragedy ‘fabricated’ by the unquenchable


thirst for power of some blood-thirsty minority, whose crimes arecompletely unjustifiable.23

Bartley points out:

Comparatively few persons enjoy the give-and-take of criticism orthink to any purpose other than to dominate. Nonetheless,science—which is utterly dependent on criticism and detachment,and on thinking for the sake of the truth rather than the sake ofdomination—has come into being, and has flourished, during thepast four hundred years.24

Bartley asks himself ‘how has this happened?’.25 His answer is that itwas a result of competition.26

The question then becomes: what is the habitat of competition? Thefirst step in identifying this habitat is to reject the idea of a ‘monopolyof truth’, namely, to refuse the ‘belief that knowledge may legitimizeitself by its pedigree’.27 Because, aside from the fact that there are manypossible sources and that we often are not even aware of them, ‘pure,untainted and certain sources do not exist’;28 ‘all sources are liable tolead us into error at times’.29

Therefore, no one can aspire to represent the ‘privileged point ofview on the world’. We must give up the ‘justificationist metacontext oftrue belief’, where the task of intellect is ‘to justify, verify, confirm,make firmer, strenghten, validate, vindicate, make certain, show to becertain, make acceptable […] cause to survive, defend particularcontexts and positions’.30 We must realize that ‘there are all kinds ofsources of our knowledge; but none has authority’.31 We must give upthe idea of a ‘privileged source’, of a ‘fundamentum inconcussum’; wemust not substitute a rational authority considered true for a rationalauthority considered false. If all sources can lead us into error, we mustalways reason critically. Our problem is to use the following formula:

How can our intellectual life and institutions be arranged so as toexpose our beliefs, conjectures, policies, positions, sources ofideas, traditions, and the like—whether or not they arejustifiable—to maximum criticism, in order to counteract andeliminate as much intellectual error as possible?32

We need a metacontext that includes the concept of fallibility. Thiscomes with the renunciation of the ‘privileged point of view on theworld’ and the affirmation of the egalitarian theory of rationality, of


which equality before the law is the consequent institutional-normativeprecipitate.

All this permits us to see the real objective of trying to ‘paralyze’ thecriticism of others by presenting it as the product of ‘corrupt’ thoughtof a class, race, religion or other social group. We are faced here with a‘protective’ barrier set up to defend the ‘privileged point of view on theworld’. And this negates ‘intellectual equality’ among men, because itsaim is to prevent the affirmation of a fallibilist metacontext thatincludes the concept of fallibility, i.e., of critical discussion and all thatit signifies.33

Historicism, gnosis and utopia

Recognition of our ignorance and fallibility leads to an open society.The presumption of holding a ‘monopoly of the truth’ destroys allsystems of liberty and is conducive to the revival of tribalism.

Popper used the term ‘historicism’ to categorize all those doctrineswhich, by presuming to hold a ‘privileged point of view on the word’,make politics an ‘architectonic science’ of society and, at the same time,claim they can direct the historical development of humanity. Thus,‘historicism’ is fostered by the idea of a fundamentum inconcussum,which supplies the gnoseological ‘legitimacy’ for prefiguring futurehistorical development. And yet these prefigurations, like the‘privileged point of view on the world’, are not at all rational.Historicist ‘prophecies’ are unconditioned and have no rational basis,because they do not indicate the conditions that would make thempossible. This is why Popper speaks of ‘oracular philosophy’ as well asof historicism.34

Other authors use other names to refer to the same phenomena.Before dealing with some of them, it is important to stress, asmentioned before, that critical rationalism is ‘linked up with therecognition of the necessity of social institutions to protect freedom ofcriticism, freedom of thought, and thus the freedom of men’.35 In otherwords, since no one is the exclusive depositary of rationality,rationality itself can only be the product of a social process open toeveryone.

Consequently, the thesis of Eric Voegelin, according to whichmodernity is nothing more than the ‘growth of gnosticism’, issurprising.36 If this were so, many causal relationships would not existand it would no longer be possible to distinguish betweenpsychologism, which is the basis of the ‘privileged point of view on


the world’ and its historical-social projections, and criticalrationalism, which is its negation. Let us see how Voegelin explainshis position:

Christianity had left in its wake the vacuum of the de-divinizednatural sphere of political existence. In the concrete situation ofthe late Roman Empire and the early Western politicalfoundations, this vacuum did not become a major source oftrouble as long as the myth of the empire was not seriouslydisturbed by the consolidation of national realms and as long asthe church was the predominant civilizing factor in theevolution of Western society, so that Christianity in fact couldfunction as a civil theology. As soon, however, as a certain pointof civilizational saturation was reached, when centers of layculture formed at the courts and in the cities, when competentlay personnel increased in royal administration and citygovernment, it became abundantly clear that the problems of asociety in historical existence were not exhausted by waiting forthe end of the world. The rise of gnosticism at this criticaljuncture now appears in a new light as the incipient formationof the Western civil theology. The immanentization of theChristian eschaton made it possible to endow society in itsnatural existence with a meaning which Christianity denied toit. And the totalitarianism of our time must be understood asjourney’s end of the gnostic search for a civil theology […].Gnostic movements were not satisfied with filling the vacuum ofcivil theology; they tended to abolish Christianity […] with themore radical immanentization of the eschaton [gnosticism]became openly anti-Christian.37

Therefore, gnosticism would be a perversion of Christianity, an attemptto achieve on earth the promised reign of the hereafter. Voegelin alsomaintains that ‘the movement had a long social and intellectualprehistory, but the desire for a re-divinization of society produced adefinite symbolism of its own only toward the end of the twelfthcentury’;38 and here Voegelin declares that the ‘first clear andcomprehensive expression of the idea’ is to be found in ‘the person andwork of Joachim of Flora’.39 He adds that this idea reached itsculmination in Marxism and Nazism.

We lack space now for a critical examination of all Voegelin’saffirmations. We shall limit ourselves to the central idea of his


thesis. which claims to make all of modernity coincide with theattempt to make the Christian eschaton immanent. This will allowus to use certain elements of Voegelin’s diagnosis in a way that isless restrictive and in agreement with what is maintained in thisbook.

By using the term modernity for ideas and institutions that arehostile to one another, Voegelin makes it difficult to understand thereal enemies confronted by gnosticism and how we have to defendourselves from it. He rightly says that ‘Gnosticism as a counter-existential dream world can perhaps be made intelligible as theextreme expression of an experience which is universally human,that is, of a horror of existence and a desire to escape from it’.40 Ifso, gnosticism needs to eliminate the principle of reality. Voegelinhimself admits this when he writes that ‘the critical exploration ofcause and effect in history is prohibited’; ‘consequently the rationalcoordination of means and ends in politics is impossible’, andeverything becomes a ‘magic’ operation.41

As we have repeatedly emphasized, the premise of all this ispsychologism, the activation of projective ‘logic’. Hence, it is difficultto understand why Voegelein absolves Plato of all responsibility.42 Hementions authors who agreed with that absolution.43 But this cannotmodify the fact that in Plato knowledge is, as we have repeatedlystressed, a pure conversion, the rejection of any critical discussion.Voegelin does not realize that the doctrine of Being, which is‘ungenerable and imperishable’, ‘whole, unique, immovable andwithout end’,44 is the ‘counter-existential dream‘ that opposes and triesto negate reality.45 This raises two questions.

First, it is true that ‘what the Alexandrians have to offer under thename of gnosis is of course very different from the systems of aBasilides or a Valentinus’.46 But the ‘Christian gnosis of Clement orOrigen unequivocally explains itself as an attempt to satisfy thegnostic appetites of their contemporaries in a legitimate fashion. Tothe Oriental gnosis and its crude symbolism they oppose their owngnosis, which is largely derived from Greek philosophy’.47 Here it isnecessary to note that Origen, ‘the greatest and most important writerof the Church in Greek, has a complicated relationship with theworld of gnosis. His dialectic relationship with this world is equivocaland dangerous […]; […] in his polemics with the gnostic master, heuses the same allegorical principles as his adversary. In addition toharsh criticism and interpretative skill, he shares the sameengagement as the master for penetrating the mystery of the


Scriptures. He sees in them the pre-existence and downfall of the soul,the “principles” of the divine world that are found in the thoughts ofhis adversaries’.48

Thus, it can be said that gnosticism ‘perverts’ Christianity. But wemust acknowledge that the ‘counter-existential dream’ has moreancient roots. As for Christianity in particular, one must stress, asPopper does, that if it recommends the ‘creation of myth as a substitutefor Christian responsibility is a tribal Christianity. It is a Christianitythat refuses to carry the cross of being human’.49 Popper himselfsuggests that one should be wary of ‘these false prophets’, since what‘they are after, without being aware of it, is the lost unity oftribalism’.50

Second, if we identify the gnostic roots of the doctrine of Being andsee it as a reaction to the advancement of the open society and theinstitutionalization of change, what Voegelin left in a zone of totalshade becomes clearer. Modernity and gnosticism cannot coincide,because one is the worst enemy of the other. In Athens, Rome andEurope, where the ‘Great Society’ was established, modernity hasalways had its basis in the market; and this led to the renunciation of afundamentum inconcussum, because the market is where people ofdifferent religious and philosophical world-views come together. It is atotal break with tribalism. Consequently, it is difficult to understandthe historical-political significance of the open society and theunrestrained fear of a world that is adapting to a life without a single,obligatory, unquestioned and unquestionable fundamentum. Thisexplains the reaction against such a world, which appears overturned,desecrated and lacking in direction, and the attempt of activists toreplace it with the ‘counter-existential dream’.51 Modernity cannotcoincide with gnosticism, because all the energies of the gnosticmovement are directed against it.

Once the above questions have been clarified, there is still one pointthat requires brief discussion. We must ask ourselves whether there isany relationship between utopianism and gnosticism. First of all, itseems there is a difference in circumstances. While the utopist gives a‘detailed description’ of the New World, the gnostic concentrates hisenergies in destroying what exists and waits for the final liberationfrom this simple reversal.52 Without taking anything away from thisdistinction, there still remains the fact that in both cases there is a‘dream’ of eliminating the principle of reality and the open society.53

This happens because both the utopist and the gnostic want to establishthe ‘privileged point of view on the world’.


The myth of Sparta and the ‘two French revolutions’

Every time there is an advancement of the market and the open society,tribalism makes an appearance. We have seen that even in Descartesthere is praise for Sparta, because its laws, ‘being all the invention ofone man, tended towards the same end’.54 Surprisingly, we have evenfound Montesquieu among the celebrators of the Spartan system.55 Thelist of those who explicitly or implicitly showed their preference for theliberty of the ancients is very long. With keen perception Constantmentions Mably and Rousseau.

Constant writes:

The abbé de Mably, like Rousseau and many others, hadmistaken, just as the ancients did, the authority of the socialbody for liberty; and to him any means seemed good if itextended his area of authority over that recalcitrant part ofhuman existence whose independence he deplored. The regret heexpresses everywhere in his works is that the law can only coveractions. He would have liked it to cover the most fleetingthoughts and impressions; to pursue man relentlessly, leavinghim no refuge in which he might escape from its power. Nosooner did he learn, among no matter what people, of someoppressive measure, than he thought he had made a discoveryand proposed it as a model. He detested individual liberty like apersonal enemy; and whenever in history he came across anation totally deprived of it, even if it had no political liberty, hecould not help admiring it. He went into ecstasies over theEgyptians, because, as he said, among them everything wasprescribed by the law, down to relaxations and needs:everything was subjected to the empire of legislator. Everymoment of the day was filled by some duty.56

There is more:

Sparta, which combined republican forms with the sameenslavement of individuals, aroused in the spirit of thatphilosopher an even more vivid enthusiasm. That vast monasticbarracks to him seemed the ideal of a perfect republic. He had aprofound contempt for Athens.57

As for Rousseau, Constant says:


I shall show that, by transposing into our modern age an extentof social power, of collective sovereignty, which belonged to othercenturies, this sublime genius […] has nevertheless furnisheddeadly pretexts for more than one kind of tyranny.58

Is it really true that Mably and Rousseau extolled Sparta? There is nodoubt. Among the many passages in which Mably takes Sparta as amodel to be followed, it is worthwhile to pause over the following:

‘The salvation of the country is not yet lost […]. You, Phocion,[…] in your compassion for your unhappy compatriots, preventtheir ruination. You are our Lycurgus. Why do you not recreatein Athens the miracle of Sparta? Would we today honor thislegislator as the wisest of men, to whom Greece owed sixcenturies of prosperity, if he had not had the courage to forcethe Spartans to appreciate justice and virtuous habits? Followhis example […]. Virtue is not yet extinguished in every heart[…]. Like Lycurgus, you will still find thirty citizens to helpyou.59

And what about Rousseau? He speaks of Sparta as a ‘Republic ofdemi-Gods rather than of men’.60 He maintains that it is an error toimprove the institutions, because ‘the thing to do would have been tobegin by purging the threshing floor and setting aside all the oldmaterials, as Lycurgus did in Sparta’.61 And he sees in Athens a ‘mosttyrannical aristocracy governed by learned men and oratores’.62 Nordo Helvétius and Holback hesitate to praise Sparta.63 And Diderotstates:

In France the reason for the protest against tax collectors isexactly the same as it is elsewhere. I would like there to be onlytwo classes: soldiers and suppliers. I would like my soldiers to betreated well and I do not care if my suppliers are rich. I use thetax collectors to strip them and I strip the tax collectors. Tacitly, Irevive the government of Sparta. If my suppliers think they aredifferent from Ilots, they are wrong. I plan and do on a large scalewhat Lycurgus did on a smaller one.64

Moreover, as Jacob Talmon writes, the ‘Jacobins took from Mably, notless than from Rousseau, their idea of virtuous, egalitarian happiness.On the very eve of Thermidor, Saint-Just brings with him copies of


Mably to the Committee of Public Safety, and distributes them amonghis collegues, the other dictators of Revolutionary France, in order towin them over definitively for his plan of enthroning virtue, andthereby completing and insuring the regeneration of the French people,and the emergence of a new type of society. Finally, Babouvismadopted Mably’s Communism’.65

Here is what Babeuf says:

De facto equality is not a chimera. It was successfully achieved bythe great legislator Lycurgus. He managed to establish anadmirable system in which the costs and benefits of the city wereequally shared. The necessities for living were an inalienable rightof everyone; and nobody could have more than necessary.66

Saint-Just asserts that ‘intelligence is a sophist, which drags virtue tothe gallows’.67 He says one must avoid falling into the ‘corruption of amercantile Republic’.68 For this reason, he declares that the real citizen‘does not possess more goods than it is allowed by the law’.69 Heproposes that children be educated the way they were in Sparta:‘Children belong to their mothers up to the age of five […]; then to theRepublic until their death […]. The youth, the citizen belong to thecountry. Children are raised to love silence and to disdain rhetoric.They are educated to be laconic’.70 Furthermore, they ‘must dresssimply in every season. They sleep on mats eight hours a day […] andthey eat together and are fed only roots, fruit, legumes, cheeses, breadand water’.71

We are in the new Sparta. Obviously, this presupposes thereappearance of the omniscient legislator and the suppression of allindividual autonomy: there is no critical discussion, there is nodemocracy, and there is no private property or market. It is nowunderstandable why Guglielmo Ferrero identified not one but ‘twoFrench revolutions’, the revolution of 1789 and that of the 18thBrumaire, but which really began on June 2, 1793.

The events of June 2 were of inestimable importance. Theymarked the definitive failure of the first French revolution of1789, the revolution […] of Mirabeau and Talleyrand, whoattempt to give France a representative government based onpolitical freedom. The second revolution, which would negate thefirst one, was about to begin. It was the revolution of 1799 […],that of the constitution of the VIII year and the Consulate, which


produced the first totalitarian government in Europe […]. Evenafter one hundred and fifty years, this dualism of revolution stilldivides the world. The present struggle is nothing more than anextension. The Anglo-Saxons fight for the revolution of 1789;totalitarian regimes for the one of 1799.72

Ferrero continues:

The Convention […] did not represent legitimate power. Itrepresented only a part of France. The supporters of the ancienrégime were not able to contribute to its formation. They wereexcluded both as candidates and as electors. The Convention onlyrepresented revolutionary France. It did not concede the right ofopposition to Catholics and Monarchists. A representativeregime, founded on the principle of popular sovereignty, islegitimate only if it respects the right of opposition of theminority. Even though the Convention did not enjoy this basiclegitimacy, it was able to claim a second-order legitimacy, becauseit recognized the right to oppose revolutionary France […]. Untilthen, there had been a war between revolutionary France and theancien régime. Now there was another within the Revolutionitself. The moderate majority of the Convention was annihilated.Once its leaders were beheaded, the majority left Paris anddispersed. For almost two years, no more than two hundred andfifty deputies would sit. It was the end of all discussion. The smallMontagnard minority, with its organized armed bands of Parisianplebeians, tyrannized the Republic. The right of opposition wasmore and more restricted. There were only the Montagnards, aminority of the Convention, which only represented a minority inFrance.73

However, in 1790 Burke had already formulated his desecratinganalysis of the events of the French revolution:

In the weakness of one kind of authority, and in the fluctuation ofall, the officers of an army will remain for some time mutinousand full of faction, until some popular general, who understandsthe art of conciliating the soldiery, and who possesses the truespirit of command, shall draw the eyes of all men upon himself.Armies will obey him on his personal account. There is no otherway of securing military obedience in this state of things. But the


moment in which that event shall happen, the person who reallycommands the army is your master—The master (that is little) ofyour king, the master of your Assembly, the master of your wholerepublic.74

Burke not only foresaw the (Napoleonic) destiny toward which Francewas headed, but he also understood why it was inevitable.

We are but too apt to consider things in the state in which we findthem, without sufficiently adverting to the causes by which theyhave been produced, and possibly be upheld […] if learning, notdebouched by ambition had been satisfied to continue theinstructor, and not aspired to be the master.75

But this did not happen. People did not understand that, ‘when ancientopinions and rules of life are taken away, the loss cannot possibly beestimated. From that moment we have no compass to govern us, norcan we know distinctly to what port we steer’.76 We lose sight of thefact that ‘which in first instance is prejudicial may be excellent in itsremote operation’.77 We do not realize that, because of our ignoranceand fallibility, ‘very plausible schemes, with very pleasantcommencements, have often shameful and lamentable conclusions’.78

Burke asks: ‘is every landmark of the country to be done away in favorof a geometrical and arithmetical consitution?’79 The revolutionpresumed to establish in society the precepts of an ‘architectonicscience’, whose objective was to reconstruct the social institutions aftertheir destruction. Consequently, ‘by following those false lights, Francehas bought undisguised calamities at the higher price than any nationhas purchased the most unequivocal blessings’.80 This example meansoverturning ‘all orders, ranks, and distinctions’; there would be a‘universal anarchy, joined to national bankruptcy’; ‘three or fourthousand democracies should be found into eighty-three’ by means of astrong central power.81

Burke adds:

The ears of the people of England are distinguishing. They hearthese men speak broad. Their tongue betrays them. Theirlanguage is in the patois of fraud, in the cant and gibberish ofhypocrisy.82

And again:


We are not the converts of Rousseau; we are not the disciples ofVoltaire; Helvétius has made no progress amongst us […]madmen are not our lawgivers. We know that we have made nodiscoveries, and we think that no discoveries are to be made, inmorality,—nor many in the great principles of government, nor inthe ideas of liberty, which were understood long before we wereborn altogether as well as they will be after the grave has heapedits mold upon our presumption, and the silent tomb shall haveimposed its law on our pert loquacity.83

Burke’s final judgment is that the ‘state has fallen by the hands of theparricides of their country, called the Revolutionists andConstitutionalists of France: a species of traitors, of whose fury andatrocious wickedness nothing in the annals of the frenzy anddepravation of mankind had before furnished an example, and whom Ican never think or speak without a mixed sensation of disgust, ofhorror, and of detestation, not easy to be expressed’.84

In addition, Burke believed that the enemies of monarchy ‘were notthe enemies to its faults’.85

Tocqueville, in the wake of Burke, would also dwell on this point.Starting from the idea that the task of liberal democracy is to extend‘the sphere of individual freedom’ and give ‘the utmost value to eachman’,86 he says: ‘Many institutions of the ancien régime have passedinto the new society. They have only changed their name’.87 Tocquevilleoffers the following explanation:

If I were asked how that portion of the ancien régime could betransported, enlarged, into the new society, I would answer that,if centralism did not disappear during the Revolution, it wasprecisely because it was the principle of the Revolution.88

The revolutionaries used

central power to destroy and rebuild everything according to theirplan; they thought that only that power could accomplish theirgoals. They said that the State should have unlimited power.89

Exactly like Burke, Tocqueville believes that in the culture of thevarious reformers ‘there was no idea of liberty’.90 And he does nothesitate to accuse Voltaire of this. He asserts:


After a three-year-stay in England, he recognized liberty, but didnot love it. The skeptical philosophy of the English fascinatedhim, but their political institutions did not attract him: he saw inthem more vices than virtues. In his letters from England, whichare his masterpieces, Parliament receives the least amount ofattention. Above all, he admired the English freedom of press, buthe did not concern himself with political freedom, as if freedomof press could exist without political freedom.91

Not to mention the physiocrats who, finding nothing that seemed toconform to their ideals, ‘looked for them in the heart of Asia. I do notthink it is an exaggeration to say that none of them refrained, in theirwritings, from enthusiastic praise of China’.92

Tocqueville also reaches another important conclusion:

It is usually believed that the destructive theories, which arefashionable today under the name of socialism, are of recentorigin. This opinion is wrong. These doctrines were common atthe time […of the physiocrats]. While the latter aspired to anomnipotent government to change social institutions, the otherwanted an omnipotent power to undermine the foundations ofsociety.93

Therefore, one might say, as Cochin does, that ‘anarchy gives rise topopular societies and the Jacobin horde rises from the corps of theancient France, just as the bees of Aristaeus rose from the entrails ofthe dead bull’.94 Cochin wants to stress that, well before the outbreakof the revolution, the ‘spirit of Jacobinism’ was already present inFrench society. This spirit is nothing more than intellectualistic hubris,the presumption of being the holder of the only possible truth, of beingable to eradicate the present wicked institutions and found a perfectsociety. A new Sparta is required, and it should have the ‘fanaticalcertainty’ of redesigning reality.95 Once again the liberty of the ancientsand that of the modern are completely on a collision course. They areperpetuating the conflict between the models of Sparta and Athens,between tribalism and an open society. The outcome of the Frenchrevolution was a real disaster. France found itself in worse economicconditions than those before 1789, and so it lagged even farther behindEngland.96 And the world has inherited a revolutionary myth that isdeceptive and liberticide.


The socialist roots of Nazism

The idea that there can be a ‘privileged’ source of knowledge alwaysviolates the egalitarian theory of rationality, and this always producesilliberal social systems. However, the strength with which the‘privileged point of view on the world’ is affirmed can be of varyingintensity. The space for autonomy can be limited to a minimum orcompletely eliminated. Absolute monarchy, which claimed legitimacyfrom God, never managed to ‘destroy all the intermediate powers’,97

nor did it ever plan to completely eradicate all traditions on thegrounds that they are the fruit of old prejudices. Nevertheless, when theFrench revolution ‘taught the people to regard their wishes and wantsas the supreme criterion of right’, it abrogated ‘intermediate powers’.98

The representatives of systems based on tradition certainly oppose theadvancement of the market; and yet, because they are still in power,they cannot declare war on what exists. To do this, one must feel‘proletarianized’ by the open society. Hence, the ‘counter-existentialdream’, which can occur only after totally eradicating the institutionsresponsible for proletarianization.

As we know, this is why, when the aristocrat Plato has already beenousted from the government of the city, he wants the complete cleaningof the canvas. And this is why most extremist leaders of the Frenchrevolution came from the social classes that felt most threatened by theestablishment of the ‘Great Society’. In other words, revolutionarieshave never been members of a class on the rise but of ‘classes involvedin a process of social decay’.99

Thus, we can also explain why the Girondists, who representedclasses on the rise, claimed rights but did not propose razing Frenchsociety to the ground. They were reformers, while the most extremistleaders were ‘enemies to the monarchy’ but not of its ‘faults’; they wereenemies of the open society.

A similar phenomenon can also be seen in Germany. As Mises says,‘German liberalism had not yet fulfilled its task when it was defeatedby étatism, nationalism, and socialism’.100

Bismarck and his military and aristocratic friends hated theliberals so thoroughly that they would have been ready to helpthe socialists get control of the country if they themselves hadproved too weak to preserve their own rule. But they were—forthe time being—strong enough to keep a tight rein on theProgressives. They did not need Lassalle’s support.101


Apropos of this, Friedrich von Hayek writes: ‘the doctrines which hadguided the ruling elements in Germany for the past generation wereopposed not to the socialism in Marxism but to the liberal elementscontained in it’, as for example its internationalism.102 And yet, ‘whenit became increasingly clear that it was just these elements whichformed obstacles to the realization of socialism, the socialists of theLeft approached more and more those of the Right’.103

Such a state of affairs is evident in the fact that Spengler thought ofregaining socialism by freeing it from Marx and his ties to politicaleconomy. Spengler asserted:

Today one suspects that Marx was merely the step-father ofsocialism. Socialism contains stronger and more ancient elementsthan Marxian criticism of society. These elements existed beforeMarx and they blossomed even without him and against him.They are not found in writings but are in the blood. The futurewill be decided by blood.104

Spengler asked himself: ‘If socialism is not Marxism, what is it’?105 Andhe replied:

There is already a presentiment; but, since we are preoccupiedwith plans, points of view and objectives, nobody dares to admitit. We avoid the crucial decisions of past times and take refuge instale, weak ones, like those of Rousseau and Adam Smith. Everyaction should be against Marx, but he is invoked by everyone.The time for political programs has passed […] Today there isonly one task: to free German socialism from Marx. I say Germansocialism, because there is no other. This truth too is one that willnot be hidden for long. We Germans are socialists, even thoughwe never speak about it. It is impossible for others to be socialists.I do not see this as a ‘compromise’, an allusion, or a reference: itis a destiny.106

Spengler’s conclusion is:

The old Prussian spirit and the socialist principle, which are nowin fratricidal combat, are one and the same thing. We do not learnthis from literature but from the inexorable reality of history,where pure ideals, principles and theoretical conclusions are


replaced by blood, unexpressed ideas about race, and a unifyingthought that has become a balance of body and spirit.107

Sombart sees the open society as a ‘tower of Babel’.108 He agrees withthe idea of purifying socialism of all Anglo-Saxon contamination toprevent it from becoming ‘a capitalism in an inverted form’, and heopenly declares that ‘German socialism is anti-capitalism’.109 Just asMarx considered his socialism ‘the riddle of history solved’,110 Sombartbelieves that the Führer takes orders ‘only from God’, the ‘supremeLeader of the world’, and that Führertum is a ‘progressiverevelation’.111

It should be added that Lassalle did not hesitate to say that the ‘stateis God’ and Bebel told Bismarck that ‘German Social Democracy is asort of preparatory school for militarism’.112 This is why Mises writes:

If the communists had seized power in Germany, they would nothave adopted a less aggressive policy than the Nazis did. Strasser,Rauschning, and Hugenberg were personal rivals of Hitler, notopponents of German nationalism.113

Soviet militarism confirms all this. As Hume emphasized, the fact isthat ‘whoever chooses the means, chooses also the end’;114 or, asTocqueville explained, when the ‘means are the same’, the resultscannot be anything but the same.115 What is left of Marxism, if weeliminate all the frills and promises used in a real act of social slight-of-hand, is the absolute centralization of power and the militarization ofsociety. It is the new Sparta.116 Obviously, those who believe thatsocialism and Nazism must be kept separate might object that theformer intended to proceed (and has proceeded) in suppressing privateownership by relying on only one plan of production and distribution,while the other retained private property. And yet this does not makeone system better than the other. Nazism maintained private ownershipof the means of production and entrepreneurship only ‘seemingly andnominally’.117 In fact, in the so-called Zwangswirtschaft, theentrepreneurs

do the buying and selling, pay the workers, contract debts, andpay interest and amortization. There is no labor market; wagesand salaries are fixed by the government. The government tellsthe shop managers what and how to produce, at what prices andfrom whom to buy, at what prices and to whom to sell. The


government decrees to whom and under what terms thecapitalists must entrust their funds and where and at what wageslaborers must work. Market exchange is only a sham. All theprices, wages, and interest rates are fixed by the central authority.They are prices, wages, and interest rates in appearance only; inreality they are merely determinations of quantity relations in thegovernment’s orders. The government, not the consumers, directsproduction. This is socialism.118

This is a crucial point. When the market and its mobilization ofdispersed knowledge is abandoned, because the ‘members of thegovernment and its assistants’ are believed to be ‘more intelligent thanthe people and they know better what is good for the individual thanhe himself knows’,119 this is a belief in the ‘privileged point of view onthe world’. But the planners, the ‘Führers and the Duces are neitherGod nor God’s vicars’.120 A state whose members do not acknowledgethat ‘one rule’, namely, ‘to do whatever seems at the moment to beexpedient’ in Duces’ eyes, is ‘a state without law’.121

Liberty and change

Ortega y Gasset writes:

Living does not mean entering a place we have previously chosen,as we do for the theater after dinner. It means finding ourselvessuddenly and without knowing how, thrown into, immersed inand projected into a world […] this world. Our life is a perpetualsurprise. It is an existence without previous consent. We areshipwrecked in a universe we have not chosen.122

We are all ‘shipwrecked’. There is no one who does not share thiscondition of ‘original ignorance’.123 Awareness of this helps uscooperate with others; above all, it protects us from ourselves, fromour presumption and from the destructive claim that one of us can actas a ‘privileged’ source of knowledge. Robert Nozick has made a longlist of famous people who could be asked to provide us with a plan foran ideal society.124 And yet: which one should be chosen? And whatshould the characteristics of this society be? Nozick says: ‘The idea thatthere is one best composite answer to all of these questions, one bestsociety for everyone to live in seems to me to be an incredible one’.125


He continues: ‘the idea that, if there is one, we now know enough todescribe it is even more incredible’.126

The difficult struggle man has been involved in since the time ofancient Athens is among those who consider themselves ignorant andfallible, and thus believe there must be free social cooperation, andthose who fear liberty and fight it in the name of superior knowledge,of which they declare themselves to be the bearers. Recognition of ourignorance and fallibility has taught us tolerance and made it possiblefor people with different philosophical and religious world-views to livetogether. It has brought us to the egalitarian theory of reason andjuridical-formal equality, where general abstract norms define the limitsof our actions but we are left to choose the content of our life. It is ahabitat that recognizes fallibility, so it permits us to explore theunknown and correct our errors. Private ownership and the marketbring economic development; democracy produces politicaldevelopment; and critical discussion leads to an increase in ourrationality. In other words, we need comparison and competition. Atthe same time, this habitat allows us to avoid intellectualistic hubrisand find new solutions by mobilizing our knowledge. Therefore, ourproblem is an ‘ecological’ one;127 we must create an institutional-normative context that permits us to live by competition.

As we know, Solon had already understood that we need liberty,because we are ignorant.128 In our time, Hayek brings up the questionrepeatedly and stresses that we cannot explore the unknown andcorrect our errors unless we have free institutions.129 Despite hisjuridical positivism, Kelsen states that the ‘cause of democracy becomesdesperate if we begin with the idea that we can know absolute truthand understand absolute values’.130 He adds that ‘relativism is theworld-view that the idea of democracy implies’, since ‘democracyconsiders the political will of everyone equal and respects all politicalbeliefs’.131 In other words: ‘majority rule, which characterizesdemocracy, is different of any other kind of government because, bydefinition, it presupposes an opposition—the minority—but alsobecause it recognizes this opposition politically and protects itsfundamental rights by means of fundamental freedoms’.132 WhenBartley acutely observes that ‘knowledge is a primary component ofcapital and epistemology is the economics of knowledge’,133 he wantsto show that competition cannot be renounced.

All these positions make it clear that there must be free socialcooperation. Apropos, the following reflections of Adam Smith stilloffer convincing explanations:


The sentence with which the elder Cato is said to have concludedevery speech which he made in the senate, whatever might be thesubject, ‘It is my opinion likewise that Carthage ought to bedestroyed’, was the natural expression of the savage patriotism ofa strong but coarse mind, enraged almost to madness against aforeign nation from which his own had suffered so much. Themore humane sentence with which Scipio Nasica is said to haveconcluded all his speeches, It is my opinion likewise that Carthageought not to be destroyed,’ was the liberal expression of a moreenlarged and enlightened mind, who felt no aversion to theprosperity even of an old enemy […]. France and England[…could not] envy the internal happiness and prosperity of theother, the cultivation of its lands, the advancement of itsmanufactures, the increase of its commerce, the security andnumber of its ports and harbours, its proficiency in all the liberalarts and sciences […]. These are all real improvements of theworld we live in. Mankind are benefited, human nature isennobled by them. In such improvements each nation ought, notonly to endeavour itself to excel, but from the love of mankind, topromote, instead of obstructing the excellence of itsneighbours.134

This means that with liberty, which is a ‘procedure of discovery’, weimprove our conditions of life through change. Objections are alwaysraised by all those who grant ‘protections, favors, and privileges’,135

and by those who aspire to a superior social rank, which they snatch,one and for all, with no competition.

From its first appearance in Athens, the open society has alwaysprovoked the same reactions. It is a radical break from the tribal past;it is the real, great revolution of humanity. Consequently, allmovements to suppress liberal society are counter-revolutions, nomatter what they are called or what ideals they use to hide their realobjectives.136 Plato is the one who best theorized the first reaction tothe open society. As we have seen, he was inspired by the systems ofCrete and the Sparta of Lycurgus who, in turn, repeated the measuresalso in force in ancient Egypt. Plato tried to reinstate tribalism, bymeans of a model of society inspired by ‘oriental despotism’. Thisexplains why Jaeger, though not completely aware of the gravity of theproblem, maintained that ‘in Plato’s Republic Hellas produced a boldideal worthy to be matched with the priestly theocracy of theOrient’.137 The fact is that with the idea of the divine origin of


knowledge Plato perfected the ‘first philosophical theodicy’, a religionthat, though in contrast with the old popular beliefs, is a ‘modus deumcognoscendi et colendi’.138 Totalitarianism was born from thepresumptuous science of Good and Evil and faith in a republic of thevirtuous. The ‘philosophers’ of Plato, the goddess of reason of the‘philosophes’, the ‘industrialists’ of Saint-Simon, Hegel’s ‘general class’,Comte’s ‘scientific class’, Marx’s ‘proletariat’, the class ‘sui generis’ ofDurkheim, and Hitler’s ‘race’ all aspire to an ‘architectonic science’ ofsociety in which each citizen ‘can have no more freedom than a soldierin the army’.139

This is the militarization of society. The virtue of the ‘hero’ opposesthe corruption of the ‘merchant’. However, when the ‘privileged pointof view on the world’ eliminates the control made possible by liberty,there are fewer conditions to prevent men from doing the worst whenthey are at their worst. We often forget this, because we do not realizethat civilization not only gives us direct advantages, of which we mayalso be uncertain, but also permits us to avoid some very sad ‘failures’.We do not imagine that ‘the worst’ man can do, when we renounce theinstitutions of liberty and entrust ourselves to the presumedomniscience of someone, includes all possible kinds of degradation,infamy and bestiality.

151

Notes

1 Introduction

1 Hayek (1949), pp. 1–32.2 Hayek (1982), vol. 2, p. 20.3 Burckhardt (1929), vol. 1, p. 267.4 Weber (1991), p. 148.5 Ibid.6 Burckhardt (1929), vol. 1, p. 459.7 Op. cit., pp. 460–1.8 Plato (L), 909 d–e.9 Op. cit., 910 c–d.

10 Op. cit., 907 e.11 Op. cit., 704 e.12 Op. cit., 705 a.13 Jaeger (1948), p. 275.14 Ortega y Gasset (1948), p. 13.15 Hayek (1982), vol. 1, p. 36.16 Constant (1822), p. 36.17 Op. cit., p. 39.18 Constant (1988a), p. 175.19 Ibid., my italics.20 Op. cit., p. 176.21 Op. cit., p. 292.22 Tocqueville (1994), vol. 2, p. 34.23 Op. cit., pp. 108–9.24 Op. cit., pp. 121–4.25 Op. cit., p. 111.26 Hayek (1982), vol. 1, p. 37.27 Tocqueville (1994), vol. 2, p. 110.28 Ibid.

2 The liberty of the ancients compared with that of moderns

1 Constant (1988b).2 Meyer (1895).

152 Notes

3 Popper (1966).4 Acton (1877), Leoni (1991).5 Constant (1988b), p. 312.6 Op. cit., pp. 315–6.7 Op. cit., p. 327.8 The thesis of Rodbertus (1865) and Bücher (1912) was taken up again by

Max Weber, who wrote (1976, p. 394): ‘In Antiquity […] the developmentof international trade was connected with the consolidation of unfreelabour in large slave households. Therefore, the exchange economy was asort of superstructure; beneath it was a constantly expandinginfrastructure of natural economy in which needs were met withoutchange.’ The historical ‘break’ represented by Athens escapes Weber(1968, vol. 3, pp. 1343–9), who is not capable of emphasizing theprofound differences between the polis of Athens and Sparta.Nevertheless, Weber sees the economy organized on the principle of òikosas ‘state socialism’ (1976, pp. 37–79) and relates the lack of politicalliberty to the lack of economic liberty.

9 Meyer (1895), p. 710. Meyer even maintains that in Athens industry andcommerce were as important as they were in England in the eighteenthand nineteenth centuries (op. cit., p. 726).

10 Op. cit., p. 712.11 Op. cit., p. 714.12 Op. cit., p. 717.13 Op. cit., p. 726.14 Ibid., note 1. Here Meyer states that Athenian and Roman

cosmopolitanism influenced Christianity. It is worthwhile to cite whatEhrenberg says on the subject (1969, p. 249): ‘Within the widespreadmixture of Greeks and Orientals, the relations between Greeks and Jewsdeserve special mentioning […]. Influence was at first small and one-sided,from the Greeks upon Jews; of the latter the upper classes wereHellenized. Influence the other way round cannot be denied, thoughJewish and later Christian universalism largely grew from Greek roots’;see also Ehrenberg (1951), p. 164.

15 Popper (1966, vol. 1, p. 176). It is useful to recall here that Ortega yGasset (1960b, p. 411), who was also one of the beneficiaries of Meyer’shistorical research, wrote: ‘Greek culture, if we call so what goes to makeup our “classicism”, began long before in the colonies. Above all, scienceand philosophy were originally a colonial adventure’. Apropos of this,Jaeger (1965, pp. 99–100) specifies: ‘Their [of Ionians] work in thedevelopment of the Greek spirit was to set the individual free—and it wasso even in political life. In general, then, the Ionian colonies wereincapable of co-ordinating the energies of their free individual citizens,and of using them to strengthen their own power; but it was Ionia whichfirst released the political forces which, in the firmer framework of themainland Greek cities, helped to create a vitally new ideal of the state’.And Russell (1947, p. 20) maintains: ‘What may be called in a broadsense, the Liberal theory of Politics is a recurrent product of commerce.The first known example of this was in the Ionian cities of Asia Minor,

Notes 153

which lived by trading with Egypt and Lydia. When Athens […] becamecommercial, the Athenians became Liberal […]. The reasons for theconnection of commerce with Liberalism are obvious. Trade brings meninto contact […], and in so doing destroys the dogmatism of theuntravelled’. See also Kirk (1974) pp. 276–9.

16 Popper (1966, vol. 1, pp. 177–8). Regarding the fact that the inhabitantsof Piraeus were ‘more’ democratic than ‘those of the city’, see alsoAristotle (C), 5, 3, 1303b.

17 It is helpful to point out here that Fustel de Coulanges (1980, p. 320)considers Athens the same as other Greek cities and maintains that ‘theGreeks did not have a clear idea of liberty; individual liberty never hadany guarantee among them’. Nevertheless, Fustel de Coulanges writes: ‘thecities were almost always brought to the strait of putting arms into thehands of the lower orders. It was in this way that at Athens, and in all themaritime cities, the need of a navy and the battles upon the water gave thepoor classes that importance which the constitution refused them. TheThetes raised to the rank of rowers, of sailors, and even of soldiers, andholding in their hands the safety of their country, felt their importance,and took courage. Such was the origin of the Athenian democracy’ (op.cit., pp. 318–9). Fustel de Coulanges admits also that in Sparta eloquencewas unknown, while in Athens ‘men reflected and weighed reasons.Discussion was necessary’ (op. cit., p. 324). Moreover, he writes: ‘Thearistocracy of wealth had another merit; it impressed upon society and theminds of men a new impulse. Having sprung from labor in all its forms, ithonored and stimulated the laborer. This new government gave the mostpolitical importance to the most laborious, the most active, or the mostskillful man […] made instruction the first need, and intelligence the mostpowerful spring of human affairs. We are not, therefore, surprised thatunder this government Greece and Rome enlarged the limits of theirintellectual culture, and advanced their civilization’ (op. cit., pp. 316–7).Nevertheless, it should be stressed that Fustel de Coulanges attributed the‘opening’ of Athens to warfare. This could more appropriately be said ofRome. We shall deal with this point later on.

18 Thucydides (A), II, 38.19 Polanyi (1977), pp. 172–3.20 Op. cit., p. 167.21 Op. cit., p. 165.22 Finley (1958), pp. 26–7.23 Thucydides (A), II, 40. In reference to this, it should be mentioned that in

the Acts of the Apostles (17), where St Paul speaks of Athens, he stressesthat ‘the Athenians in general and the foreigners there had no time foranything but talking or hearing about the latest novelty’. This is anaffirmation of the method of critical discussion.

24 Thucydides (A), II, 37.25 Ibid.26 Glotz (1996), p. 128.27 Op. cit., p. 129.28 Pohlenz (1947), p. 116.

154 Notes

29 Glotz (1996), p. 130. In this connection, it is also helpful to recall whatPohlenz (1947, p. 116) writes: ‘every citizen must maintain his freedom tothink and to act independently and to express his opinion, while the stateshould intervene as little as possible in the private life of individuals’.

30 Constant (1988b), pp. 314–6.31 Popper (1966), vol. 1, p. 181.32 Meyer (1895), p. 711. In reference to the same subject, Thomson (1950,

p. 200) wrote: ‘The industrial development in Attica had been hamperedin its early stages by shortage of labour. That […] is why Solon […] passedlaws against idleness and encouraged the immigration of foreign artisans.These immigrants […] could acquire civic rights by obtaining admission tothe phratries’.

33 Thucydides (A), II, 39.34 Ehrenberg (1951), p. 9. Ehrenberg (op. cit., p. 8, note 1) quotes also the

following statement of Burckhardt: ‘Aristophanes, welcher, sobald er vonbestimmten Einzelnen redet, der stärkste Verleumder sein darf, kann, woer Handlungsweisen überhaupt schildert, nur Sachen gesagt haben, welchejedermann kannte und kenntlich fand’. In reference to the plays ofAristophanes as a source for the economic life in Athens, see also Nicosia(1935).

35 Ehrenberg (1951), p. 37, my italics. Ehrenberg (op. cit., p. 42) states:‘There is a telling story reported in the two anonymous Lives ofAristophanes that the tyrant Dionysios wanted to know all about politeiaof Athens, that is to say, its people and its institutions, and that Plato senthim the plays of Aristophanes’.

36 Op. cit., p. 138.37 Op. cit., p. 141.38 Op. cit., p. 141. Ehrenberg (op. cit., p. 219) adds: ‘Money appears in its

real function, as the permanent and necessary basis of life for everyindividual human being. We are left in no doubt that money was in factthe basic factor in Athenian economy’.

39 Op. cit., p. 133.40 Op. cit., p. 127.41 Op. cit., p. 149.42 Op. cit., p. 160.43 Op. cit., p. 150.44 Op. cit., pp. 161–2. Ehrenberg also stresses that it is ‘a historical fact that

these leading politicians belonged to the middle class of businessmen.They gradually displaced the aristocratic leaders, the men from the greathouses’ (op. cit., p. 120).

45 Op. cit., p. 152.46 Ibid.47 It should be mentioned here that the exchanges accepted by the market

obviously required contractual freedom, which will be discussed morefully later in this chapter. What must be pointed out now is thatcontractual freedom exists in a normative habitat; namely, it requires amore profound rule, which we will discuss in the next section.

48 Acton (1877), p. 9.

Notes 155

49 Op. cit., p. 10.50 Ibid., my italics. It is helpful to recall what Fustel de Coulanges (1980, p.

306) writes on this subject: The code of Solon […] corresponded to a greatsocial revolution. The first peculiarity that we remark in it is that the lawsare the same for all. They establish no distinction between the Eupatrids,the simple free men, and the Thetes […]. Solon boasts in his verses ofhaving written the same laws for the great and the small’.

51 Acton (1877), p. 10.52 Op. cit., p. 11.53 Op. cit., p. 12.54 Ibid.55 Op. cit., p. 14.56 Leoni (1991), p. 4.57 Ibid.58 Op. cit., p. 9.59 Leoni points out how prices also originate from ‘the convergence of

spontaneous actions and decisions on the part of a vast number ofindividuals’ (op. cit., p. 10). Leoni here is obviously indebted to Mises,who will be discussed in Chapter 6.

60 Op. cit., pp. 78–9. Leoni adds: ‘Of course, proponents could freely arguebefore the general legislative assembly against the nomotetai in order tosupport their own bills, so that the whole discussion must have been basedmore on a comparison between the old and the new law than on a simpleoration in favor of the latter. But this was not the end of the story. Evenwhen the bill had been passed at last by the assembly, the proponent washeld responsible for his proposal if another citizen, acting as a plaintiffagainst the proponent himself, could prove, after the law had beenapproved by the assembly, that the new legislation had the same gravedefects or that it was in irremediable contradiction with older laws stillvalid in Athens’.

61 Op. cit., p. 88.62 Ibid. For a more complete reading of the passage, see Cicero (A), II, 1.63 Jhering (1915), p. 2.64 Jaeger (1965), p. 102.65 Op. cit., pp. 102–3.66 Op. cit., p. 103.67 Ibid. See also Jaeger (1947), pp. 352–72.68 Hesiod (A), 85.69 Hesiod (B), 35–40.70 Op. cit., 320–35.71 Op. cit., 270.72 Op. cit., 310.73 Op. cit., 345. For more about Hesiod as ‘discoverer’ of scarcity, see also

Polanyi (1977), p. 149.74 Jaeger (1994), p. 19. For a comparison of Hesiod and Solon, see also

Masaracchia (1958), p. 217.75 Jaeger (1965), p. 99 and p. 442, note 20.76 Solon (A), 36.

156 Notes

77 Ferrara (1964), p. 94.78 Solon (A), 16. Solon’s awareness of human ignorance is shown by the

following passage from Plutarch (A, 2, 2): ‘others assure us that hetravelled rather to get learning and experience than to make money. Itis certain that he was a lover of knowledge, for when he was old hewould say that “each [he] day grew older, and learnt somethingnew”’.

79 Plutarch (A), 14,8. It is useful to refer to the following passage fromAristotle (D,11): ‘the common people had believed that he would bringabout a complete redistribution of property, while the nobles had hopedhe would restore the old order or at least make only insignificant changes.Solon, however, set himself against both parties, and while he would havebeen able to rule as a tyrant if he had been willing to conspire withwhichever party he wished, he preferred to antagonize both factions whilesaving the country and giving it the laws that were best for it, under thecircumstances’.

80 Plutarch (A), 15, 1.81 Solon (A), 16.82 Plutarch (A), 15, 2.83 Op. cit., 18,7. Apropos, Pericles said: ‘we respect the authorities and laws,

especially those which are ordained for the protection of the injured aswell as those unwritten laws which bring upon transgressor admitteddishonor’ (Thucydudes, A, II, 37).

84 Plutarch (A), 25, 6.85 Leoni is a particularly strong supporter of the idea of certainty of the law

in Athens and Rome (1991, pp. 76–94).86 Ferrara (1964), p. 104.87 Solon (A), 4.88 Ibid.89 Ferrara (1964), p. 79.90 Solon (A), 11.91 Op. cit., 9.92 Cf. note 63 above.93 Solon (A), 36.94 Jacoby (1949), p. 38.95 Ehrenberg (1969), p. 244. See also Ehrenberg (1996), pp. 50–76. It is

worthwhile here to quote the following passage from Gundert (1942, p.150): Solon contributed ‘the idea which made it really possible to form thepolis […], the idea of law, of Dike’. On the same subject, G.De Sanctis(1939, vol. 1, p. 483) writes: ‘[…] nor were many ancient or modernlegislators as even tempered or humane as he was or as respectful of thedignity of the individual and the sanctity of the law’. For an outstandingjuridical treatment of Solon’s work, see also Cantarella (1957), pp. 837–45.

96 Constant (1988b), pp. 321–3.97 Op. cit., p. 311. Cf. also Ortega y Gasset (1960b), pp. 413–7.98 Constant (1988b), p. 311.99 Ibid.

Notes 157

100 Op. cit., pp. 311–2.101 Fustel de Coulanges (1980), p. 213. Unfortunately, the episode recounted

by Fustel de Coulanges was repeated in the totalitarian regimes of thetwentieth century.

102 Constant (1988b), p. 317.103 I am using an expression of Ortega y Gasset (1957), pp. 79–98. In

reference to the same subject, Scheler (1954, p. 88) wrote: ‘Man becomesmore of an animal by associating himself with the crowd, and more of aman by cultivating his spiritual independence. Thus everything that tendsto promote an absolutely collective existence […] will tend to make theindividual more of a hero, and at the same time more of a clod, in that itstultifies as a spiritual personality’.

104 I am using Spencer’s expression (1884), p. 46.105 The dissenter is considered an external enemy and becomes the

‘scapegoat’ for any failure of the group in power. Social life is‘interpreted’ by means of a ‘conspiracy theory of society’. See Popper(1966), vol. 2, p. 94.

106 I am using Weber’s expression (1968), vol. 3, p. 1360.107 Plutarch (B), 4,1. Herodotus (A,I,65) recounts ‘that it was from Crete

that Lycurgus brought’ the legislation of Sparta.108 Plutarch (B), 4,4.109 Op. cit., 4,7.110 Op. cit., 5,4, where it is possible to read the following passage: ‘he goes

to Delphi to consult Apollo there; which having done, and offered hissacrifice, he returned with that renewed oracle, in which he is calledbeloved of God, and rather God than man; that his prayers were heard,that his laws should be the best, and the commonwealth which observedthem the most famous in the world’.

111 Op. cit., 8,1–9.112 Rostovtzev (1926), p. 210.113 Op. cit., p. 211.114 Op. cit., pp. 211–2.115 Popper (1966), vol. 1, p. 172. To corroborate what Popper says, we

should add that militarism exists in symbiosis with the hero and withcharismatic power. This, as Weber says (1968, vol. 3, p. 1115), ‘knowsno abstract laws and regulations and no formal adjudication’. There is a‘privileged point of view on the world’, a situation in which objective lawflows from the highly personal experience of divine grace and god-likeheroic strength and rejects all external order solely for the sake ofglorifying genuine prophetic and heroic ethos’ (ibid.). In reference to thesame subject, Ortega y Gasset (1960a, p. 140) writes: ‘Only closed, self-contained populations, whose life is confined and geared towardthemselves, have […] a temperature […] high enough to heat plain andsimple reality and make it incandescent […] by transforming it intomythological fulguration’. This is exactly what did not happen in Athens,where ‘the picture of the gods which the comic poets paint reveals aprofound and moving disillusionment. “Myth did perish”’ (Ehrenberg,1951, p. 266).

158 Notes

116 This is also shown by the totalitarian regimes of the twentieth century.117 The word ‘refuge’ is Constant’s (1988b), p. 318. Perhaps it is not by

chance that in Greek philosophy, which was produced by a society thatrecognized individualism, ample space was reserved for the idea of the‘soul’. See also Polanyi (1977), p. 147.

118 Jaeger (1965), p. 95.119 Ibid.120 Ehrenberg (1969), p. 245.121 Op. cit., pp. 244–5.122 Op. cit., p. 245.123 Popper (1966), vol. 1, p. 176.124 Palmer (1950), pp. 149–68. Biscardi (1982, p. 354) comments on

Palmer’s view: ‘Thus, we immediately come upon the acceptable idea oflaw as a limit to the claims of individuals’. In addition, Biscardi (op. cit.,pp. 355–6) rightly points out that this is equivalent to a liberation fromthe ‘principle of heteronomy’ of closed societies.

125 Paoli (1976), pp. 461 and ff.126 Demosthenes (A), 208–14.127 Biscardi (1982), p. 11. Cf. also Paoli (1933), pp. 177–86.128 Jhering (1965), p. 440. On this subject, there is a very significant essay by

Paoli (1976, pp. 31–78) on Comici latini e diritto attico.129 Ibid.130 This also led to an attempt to overcome the ‘crisis’ caused by the ‘opening

to the world’ by turning to an imperial solution, which concealed aserious form of illegitimacy, because ‘legally and constitutionally theemperors received their power from the hands of the senate and people ofRome. In actual fact, the principate of the successors of Augustusdepended on the good-will of the army’ (Rostovtzev, 1957, vol. 1, p. 77).See also Ferrero (1921, vol. 1, pp. 1–74) ; Ortega y Gasset (1941b, pp.53–107; 1960a, pp. 148–55).

131 Cicero (D), 146.132 Maine (1977), p. 196.133 Op. cit., p. 100.


1 Cf. note 81 of the previous chapter.2 Solon (A), 3.3 Cf. note 86 of the previous chapter.4 Cf. note 90 of the previous chapter.5 It is an expression of Constant: cf. note 7 of the previous chapter.6 Cf. note 23 of the previous chapter.7 Cf. note 25 of the previous chapter.8 Popper (1966), vol. 1, p. 189.9 Plato (C), 320 d.

10 Op. cit., 320 d–e.11 Op. cit., 321 c.

Notes 159

12 The idea of using technology to compensate for insufficient natural traitswas developed in more recent times by Scheler (1973), Ortega y Gasset(1939) and Gehlen (1988).

13 Plato (C), 322 b–c.14 Protagoras (A), 1.15 Op. cit., 4.16 Jaeger (1986), p. 119.17 Op. cit., p. 38. The ‘confutatory’ part of Socrates’ work is what induced

Antiseri (1999, p. 216) to consider the Socratic position the same asfallibility. There is also the ‘exhortative’ part, which will be referred tolater in the text.

18 Popper (1966), vol. 1, p. 189. Obviously, Socrates’ criticism was sofeared by the tyrants that, under the government of the Thirty, Critiasand Charicles ordered Socrates to stop teaching. See Xenophon (A), I, 2,31–8.

19 Popper (1966), vol. 1, p. 189.20 Ibid.21 Plato (A), 38 a.22 Ibid.23 I am adopting an expression used by Hayek in another context (1978) p.

23.24 Plato (A), 22 c. Therefore, Socrates did not believe in the superiority of

any professional occupation. He relied instead on the special knowledgeconnected with each profession. Xenophon (A, IV, 7, 1) says: ‘For Inever knew a man who was so careful to discover what each of hiscompanions knew. Whatever it befits a gentleman to know he taughtmost zealously, so far as his own knowledge extended; if he was notentirely familiar with a subject, he took them how far a well-educatedman should make himself familiar with any given subject’.

25 Plato (A), 23 b, where Socrates adds: ‘that is why I still go about evennow on behalf of the God, searching and inquiring among both citizensand strangers, should I think some one of them is wise; and when itseems he is not, I help God and prove it’.

26 Op. cit., 19 b–c.27 Popper (1999), p. 84.28 Plato (A), 35 c.29 Plato (B), 53 c. Socrates’ respect for the law is confirmed in this incident

recounted by Xenophon (A, I, 1,18): ‘For instance, when he was on theCouncil and had taken the counsellor’s oath by which he bound himselfto give counsel in accordance with the laws, it fell to his lot to preside inthe Assembly when the people wanted to condemn Thrasyllus andErasinides and their collegues to death by a single vote. That was illegal,and he refuted the motion in spite of popular rancour and the threats ofmany powerful persons. It was more to him that he should keep his oaththan that he should humour the people in an unjust demand and shieldhimself from threats’. The episode is also mentioned in Plato (A), 32 b.

30 It is here useful to recall what Calamandrei writes (1933, p. XXVII): ‘Atthe heart of Greek history, there is a trial, in which an innocent person

160 Notes

rises to defend the sanctity of the sentence that unjustly condemned himto death. The noblest words ever pronounced about the intangibility ofsentences and the most convincing apology ever offered for the politicalneeds that require an unjust sentence to be carried out, come from thatprison where Socrates, by refusing to flee from punishment, sublimelyexpresses that principle and bears witness to it with his sacrifice’.

31 Plato (A), 31 e.32 See also Maier (1978, vol. 1, pp. 100 and ff.), Jaeger (1986 pp. 62–3)

and Popper (1966, vol. 1, pp. 29–30 and 306–13).33 Xenophon (A), I, 2, 61–2..34 Op. cit., I, 2, 64.35 Scheler (1923), p. 250. Obviously, the tragedy would not be possible ‘in

a world that was a part of an “ethical, cosmic order”, in a world inwhich human powers were directed according to the needs of unificationand harmony’ (ibid.). And it is also obvious that ‘a ‘satanic’ worldwould suppress the tragic, neither more nor less than a divine world’(ibid.).

36 Ortega y Gasset (1960a) pp. 414–5, my italics. In reference to liberty asa possibility of choice, see also Minogue (1968), pp. 165–81..

37 Popper (1966), vol. 1, p. 187.38 Meyer (1895), pp. 27–8.39 op. cit., p. 28, my italics. It is worthwhile recalling what Popper says

about this (1966, vol. 1, p. 188): ‘Unwilling and unable to help mankindalong their difficult path into an unknown future which they have tocreate for themselves, some of the educated tried to make them turnback into the past. Incapable of leading a new way, they could onlymake themselves leaders of the perennial revolt against freedom. Itbecame the more necessary for them to assert their superiority byfighting against equality as they were […] incapable of that simple andordinary generosity which inspires faith in men, and faith in humanreason and freedom’.

40 Plato (C), 357 a.41 Op. cit., 357d, but already in 345 e. See also Plato (E) and Plato (G). In

the former case (87 d) we find: ‘if there exists any good thing differentfrom, and not associated with knowledge, virtue will not necessarily beany form of knowledge. If on the other hand knowledge embraceseverything that is good, we shall be right to suspect that virtue isknowledge’. Later, (in 88 c) science is considered the same as happiness:‘everything that human spirit undertakes or suffers will lead to happinesswhen it is guided by wisdom, but to the opposite, when guided by folly’.And the science of choice as the science of good is an idea that is alsofound in the Republic: ‘it should be our main concern that each of us,neglecting all other studies, should seek after and study this thing—if inany way he may be able to learn of and discover the man who will givehim the ability and the knowledge to distinguish the life that is goodfrom that which is bad, and always and everywhere to choose the bestthat the conditions allow’ (Plato, G, 618 c).

42 Plato (C), 361 b.

Notes 161

43 Plato (F), 118 a.44 For a more detailed discussion, see Popper (1966), vol. 1, pp. 301–2.45 Plato (E), 81 b.46 Plato (F), 76 e.47 Op. cit., 75 a.48 Op. cit., 76 e.49 Plato (G), 507 b.50 Plato (F), 76 a.51 Plato (G), 478 a.52 Op cit., 480 a.53 Op. cit., 514 a–b.54 Op. cit., 515 b.55 Op. cit., 515 a.56 Op. cit., 518 c.57 Op. cit., 518 c.58 Jaeger (1986), p. 295.59 Plato (G), 497 b.60 Op. cit., 497 b–c.61 Plato (I), 79 a.62 Plato (L), 716 c.63 Plato (G), 473 c–d.64 Op. cit., 511 b.65 Jaeger (1986), pp. 158–9.66 Op. cit., p. 285.67 Ortega y Gasset (1941c), p. 531.68 Op. cit., p. 533. On the same page, Ortega y Gasset says that this belief

is characterized by the ‘absolutism’ of ‘pure trust’ in ‘definitiveknowledge’. ‘Only what is science of the immutable, and therefore isitself immutable, is knowledge’. For a fuller criticism of ‘Eleaticism’, seealso Ortega y Gasset (1941a).

69 Plato (G), 500 d.70 Op. cit., 500 c.71 Op. cit., 501 a.72 Ibid.73 Plato (L), 735 b–c.74 Op. cit., 735 d–e, italics added; see also 736 a–b–c. It is also useful to

quote the following passage: ‘They may purge the city for its betterhealth by putting some of the citizen body by sending off colonies likebees swarming off from a hive, or they may bring people in from othercities and naturalize them so as to increase the number of citizens. Solong as they work on a reasoned scientific principle following essentialjustice and act to preserve and improve the life of the state so far as maybe, we must call them real statesmen according to our standards ofjudgement and say that the state they rule alone enjoys good governmentand has a real consitution’ (Plato (H), 293 d–e). Therefore, the PlatonicRepublic is different from Athens and is not ‘open to the world’. As weshall see, the model followed is that of Sparta.

75 Plato (G), 462 d.

162 Notes

76 Ibid.77 Op. cit., 462 c.78 Op. cit., 416 d–e, 417 a, my italics.79 Op. cit., 459 d–e.80 Op. cit., 459 e.81 Op. cit., 460 a.82 Op. cit., 460 b. If we also consider that the age for marriages was

established by the state (op. cit., 460 d–e) and that the idea is toimprove the race (op. cit., 459 a–c), we can understand that, as will beclearer later, we are here faced with true eugenetic prescriptions.

83 Op. cit., 460 b.84 Op. cit., 460 c.85 Op. cit., 460 d.86 Which, as Plato says (op. cit., 423 b) jeopardizes its ‘unity’, namely the

centralized government.87 Op. cit., 372 d.88 Xenophon (C), VII.89 Plutarch (B), 24, 3.90 Op. cit., 19, 10.91 Xenophon (C), I. Cf. also Plutarch (B), 15, 12.92 Xenophon (C), I. Cf. also Plutarch (B), 15, 13.93 Plutarch (B), 16, 7.94 Op. cit., 16, 2.95 Op. cit., 9, 4 and 27, 7.96 Op. cit., 27, 6.97 In fact, Plutarch says (op. cit., 24, 1, my italics): ‘Their discipline

continued still after they were full-grown men. No one was allowedto live after his own fancy; but the city was a sort of camp, in whichevery man had his share of provisions and business set out, andlooked upon himself not so much born to serve his own ends as theinterest of his country’. Apropos of the communism of Sparta, seePöhlmann (1912) vol. 1, pp. 75–99). Moreover, the requirement inthe Republic of making the ‘boys spectators of war’ (467 c)originates with Tyrtaeus, as we see in Laws (624 e, 661 a); see alsoJaeger (1986, p. 409, note 270).

98 See Chapter 2, pp. 25–9. In Plato we find: Minos ‘ordained for hispeople these very laws, which have made Crete happy through thelength of time, and Sparta happy also, since she began to use them; forthey are divine’ (Plato, (M), 320 b).

99 Plato (L), 683 a.100 Op. cit., 799 a. In the Egyptian system, there was a lack of private

property, the state pervaded all aspects of life, and it was inconceivable tohave a personal life separate from the official or public one.

101 I am using the expression ‘Oriental despotism’ as Wittfogel (1957) does,when he speaks of the ‘hydraulic civilizations’, which included Egypt.Because of the huge ‘hydraulic’ works, the state was, in these systems, theonly owner of the land and means of production. From the eighteenthcentury on, the expression ‘Asiatic society’ was used to refer to this type

Notes 163

of social order. If we use Wittfogel’s schema, we can say that modernsocialism is nothing more than an ‘Asiatic restoration’. Though Marx andEngels were critical of the ‘Asiatic mode of production’, they proposed itagain as a way of overcoming western capitalistic systems. On theconnection between private property and freedom, see Chapter 4.

102 For the influence of Critias on Plato, see Jaeger (1986), p. 248; andPopper (1966), vol. 1, p. 187. The idea that, in order to make criticaldiscussion and political liberty impossible, it is necessary to preventeconomic freedom is also found in the utopias of Hippodamus of Miletusand Phaleas of Chaledon, whom Aristotle speaks of in Politics. Meyer(1895, p. 28, note 1) maintains that the ‘ideal’ of these utopias, like all ofthe ‘reactionary theory’, was the constitution of Sparta. Pöhlmann (1912,vol. 1) also agrees that these projects were profoundly anti-democratic.

103 Plato (G), 369 b–c.104 See note 105 of Chapter 2.105 Plato (L), 903 b–c–d, italics added.106 The idea that individuals are subjected to a state of intellectual and moral

minority, while the sapient minorities embody everything, is the basis oftwentieth-century totalitarian experiences. The passage from Plato showshow deep the roots of this idea are and how in more recent times it hasgenerated the so-called ‘sociologistic theorem’, according to which thewhole is greater than the sum of its parts. When examined closely, thismeans that one part is superior to the others and must have a greatervalue than they do. For a wider discussion of this point, with reference toRousseau, Hegel, Comte, Marx and Durkheim, see Infantino (1998a).

107 It is not by chance that, in the Republic (506 e), we find: ‘let us dismissfor the time being the nature of good in itself.

108 Plato (G), 558 c.109 Plato (L), 757 a.110 Plato (D), 486 a–b.111 Op. cit., 503 c–d112 Op. cit., 485 a.113 Thucydides (A), II, 40.114 Plato (A), 33 a.115 This idea was far from the thought of Democritus (A, 247), who said: ‘I

would rather find a single causal law than be the king of Persia!’. UsingGerman terminology, the Sophists can be compared to Privat-Dozenten,paid exclusively by those who seek them out.

116 Popper (1966) vol. 1, p. 120.117 Ibid.118 Antiseri (1995), p. 20.119 Popper (1966), vol. 1, p. 121.120 Ortega y Gasset (1958), p. 156.121 Aristotle (A), II, 19, 100 a–b, 15–2.122 Aristotle (B), VI, 3, 2.123 Aristotle (A), II, 19, 100 b, 8–10.124 Popper (1991), p. 151. Jaeger (1948, p. 261) says that Aristotle’s political

doctrine ‘presupposes Plato’s later theory of Ideas’.

164 Notes

125 Aristotle (B), I, 2, 1–2.126 Op. cit., I, 2, 4–8, my italics. For the prescriptive nature of the laws, see

also op. cit., V, 3.127 Plato (H), 259 e, 260a.128 Aristotle (C), I, 5, 1260 a, 7, my italics. Jaeger (1948, p. 275) correctly

writes: ‘Aristotle is by no means subordinating the state to the welfare ofthe individual, as a liberal would do, but is deriving, as Plato does, thecategories for judging the value of the state from ethical standards thatapply to the soul of the individual’.

129 Aristotle (B), I, 13, 1–3.130 Aristotle (C), III, 8, 1284a, 1–2. In this passage from Politics, it would

seem that the political man must be a philosopher. However, inNicomachaen Ethics (X, 7, 1) Aristotle asserts that ‘intellect’ is ‘thedivinest part of us’, free of all obligations, which is not true of politicalactivity. Consequently, the philosopher, who is the possessor of trueknowledge, must indicate to the politician the purpose of the action.

131 Aristotle (C), VII, 1326 a, 4, 5. It is here useful to add that Aristotle (C,1076a) shares Homer’s idea, according to which ‘the rule of many is notgood: let one be the ruler’.

132 Op. cit., VII, 4, 1326b, 7.133 Op. cit., I, 3, 1256 b, 9.134 Op. cit., I, 3, 1257 a, 12.135 Op. cit., I, 3, 1257 a, 13.136 Op. cit., I, 3, 1257 a, 10. It should be pointed out that the expression

‘chrematistics’ had already been used by Plato in Gorgias (477 e), wherehe asserts that ‘chrematistics’ liberates people from poverty. And yet Platoadds that, among chrematistics, medicine and justice, the latter is themost important (478 b). Therefore, it is essential that the political powerrigidly control economic activities.

137 Aristotle (C), I, 3, 1256 b, 9. In keeping with the condemnation of‘chrematistics’, there is also a condemnation of interest on loans (op. cit.,I, 3, 1258 b, 13).

138 Op. cit., VII, 8, 1328 b, 1–2.139 Op. cit., VII, 8, 1328 b, 2.140 Op. cit., VII, 9, 1330 a, 9.141 Op. cit., VII, 9, 1329 b, 1.142 Op. cit., II, 1, 1261 b, 9.143 Ortega y Gasset (1958), p. 239.144 Aristotle (C), II, 2, 1263 b, 9.145 Ibid.146 Op. cit., I, 1, 1252 b, 8. However, complete awareness of the advantages

of the division of labor is already found in Xenophon (B), VIII, 2, 5–6.147 Op. cit., VII, 13, 1333 b, 12.148 Op. cit., IV, 1, 1288 b, 2.149 Op. cit., II, 5, 1269 a, 14.150 Op. cit., VI, 3, 1320 a, 4.151 Op. cit., IV, 4, 1292 a, 4.

Notes 165

152 Op. cit., IV, 4,1292 a, 3. Cf. also IV, 5, 1293 a, 5. Moreover, see Aristotle(B), V, 10, 1134a, 3.

153 Aristotle (C), III, 6,1282 a, 10. In addition to the idea that every one ofus is the best judge of his needs, it could be said that the so-called‘consumer’s sovereignty’ includes the fact that each one possessesdifferent information. This theme will be treated at length in thefollowing chapters.

154 Op. cit., I, 3, 1257a, 11.155 Aristotle (B), V, 5, 1133 a, 18–23. However, Aristotle adds (op. cit., V, 5,

1133 a, 32): money ‘exists not by nature but by law’, not taking intoaccount that the monetary order is spontaneous and not constructed.

156 Aristotle (C), I, 1, 1252 a, 3. On Aristotle as a source for Menger’s‘methodological individualism’, see Chapter 6.

157 Polanyi (1971), pp. 64–94. See also Berti (1993), pp. 298–9.158 Simmel (1978), p. 114.159 Op. cit., p. 116.160 Popper (1979), p. 147.161 For economic in a ‘strict sense’, I mean monetary exchange. See Mises

(1981b), pp. 156–8.162 Popper (1979), p. 148.163 Op. cit., p. 147.164 Aristotle (B), V, 8, 1129 a–1133 b. Jaeger (1948, pp. 259–92) maintains

that Politics (from which we have taken the positions least hostile to theopen society) contains various levels of writings that reflect an evolutionin Aristotelian thought. This thesis is hard to accept, because parts Jaegerconsiders written at the same time contain contradictions. It seems moreacceptable to say, as has been stated in the text, that Aristotle discoveredeconomics but not the social process. This creates a permanent‘confusion’ (Rothbard, 1996, vol. 1, p. 14); see also Schumpeter (1997,pp. 60–5). It should be added that this ‘ambivalence’ and perhaps also his‘extreme sensuism’ (Ortega y Gasset, 1958, p. 165) made it possible forAristotle to become the official philosopher of a Catholicism that did notwant to (and could not) be ‘the abolition of the old Adam’. Theexpression ‘abolition of old Adam’ is from Passarin d’Entrèves (1952), p.36.

165 We shall deal with this in chapter 5.166 See note 131 of Chapter 2.167 Livy (A), XXV, I.168 Ortega y Gasset (1960a), p. 143.169 Cicero (C), III, 10, 42.170 Op. cit., III, 18, 73.171 Op. cit., III, 15, 61.172 Op. cit., III, 18, 75.173 Ibid..174 Op. cit., III, 19, 75.175 Ibid.176 Op. cit., III, 19, 75–6.177 Op. cit., II, 11, 40.

166 Notes

178 See note 62 of Chapter 2.179 Pohlenz (1959), vol. 2, p. 269.180 On praise of the ‘wise man’, see in particular Cicero (C), III, 3, 14 and III,

4, 16–7. Cf. also Cicero (A), I, XXIX, where he says: ‘A wise man shouldbe acquainted with these changes, but it calls for great citizens and for manof almost divine powers to foresee them when they threaten, and, whileholding the reins of government, to direct their courses and keep themunder his control’. Therefore, the politician imposes his will on the world.

181 Op. cit., III, 5, 23.182 Cicero (A), I, XXXIV.183 Op. cit., I, XXXVIII. Therefore, ‘what you have just mentioned was a

great misfortune. For it was the institution of this office [Tribunate] thatbrought about the decline in the influence of the aristocracy and thegrowth of the power of the multitude’ (Cicero, B, III, VII).

184 Cicero (A), II, IX.185 Cicero (A), III, fr. VI.186 Cicero (B), I, XX.187 Cicero (C), I, 42, 150.188 Cicero (A), II, IV, my italics. To complete this, it should be remembered

that Cicero (C, I, 20, 68) suggests that ‘there is nothing more honorableand noble than to be indifferent to money’.

4 The failure of psychologism and the question of private property

1 Spencer (1860), pp. 90–1. In his Principles of Sociology, Spencer (1921,vol. 1, p. 592) repeats the criticism he made in his essay of 1860.

2 Popper (1966), vol. 2, p. 93.3 Grote (1867), vol. 3, p. 186.4 Op. cit., p. 187.5 Op. cit., vol. 1, p. XI; see also Zeller (1888), pp. 484–5. In Pohlenz’s

(1966, p. 164) different assessment, there is no awareness of the socialconsequences of Plato’s theory of knowledge.

6 Grote (1867), vol. 1, p. VIII. For Grote’s work, it is helpful to see theextended comment of John Stuart Mill (1978), where among other thingsMill says: ‘its [Plato’s] weak side is that it postulates infallibility, orsomething near it, in rulers […]; or else ascribes such a depth ofcomparative imbecility to the rest of mankind’ (op. cit., p. 436).

7 Plato (N), 340 c.8 Kelsen (1938), p. 106.9 Jaeger (1961), p. 66.

10 Parmenides (A), 1.11 Jaeger (1964), p. 96, my italics. Apropos of Parmenides, it is also useful to

recall what Popper (1991, p. 12) writes: ‘The revelation received byParmenides, and his conviction that a few may reach certainty about boththe unchanging world of eternal reality and the unreal and changing worldof verisimilitude and deception, were two of the main inspirations ofPlato’s philosophy. It was a theme to which he was for ever returning,oscillating between hope, despair, and resignation’.

Notes 167

12 Ryle (1947), p. 169. Ryle’s assertion is stated in his review of Popper’sThe Open Society and Its Enemies, a work which inflicted a hard blow onPlatonism. See also Antiseri (1997).

13 Ortega y Gasset (1960b, p. 415) maintains that political revolutions beginwith philosophy. As Ortega knew, philosophy came with the affirmationof the open society. Therefore, it is not critical reason that reacts againstliberty, but its opposite: nostalgia for tribalism, which often adopts thename of philosophy to achieve its animistic projections.

14 Popper (1991), pp. 13–5.15 Op. cit., p. 5.16 Cited by Ortega y Gasset (1960a), p. 401. Apropos of Parmenides, see

also Ortega (op. cit., p. 402).17 Descartes (1960, p. 45). Hayek called attention to this passage repeatedly:

cf. Infantine (1998a), p. 5.18 Aristotle (C), I, 1252b, 8.19 Op. cit., I, 3, 1280b, II. Also Plato refers to Lycophron in his Gorgias and

Republic. See Popper (1966), vol. 1, pp. 116–19.20 Locke (1924), p. 158. More exactly, men join together in society ‘for the

mutual preservation of their lives, liberties and estates, which I call by thegeneral name—property’ (op. cit., p. 180).

21 Op. cit., p. 159.22 Op. cit., p. 160.23 Op. cit., p. 180. See also p. 123.24 To confirm this, it is useful to read more of Locke (1954, p. 111): ‘this law

of nature can be described as being the decree of the divine will discernibleby the light of nature and indicating what is and what is not in conformitywith a rational nature, and for this very reason commanding orprohibiting. It appears to me less correctly termed by some people thedictate of reason, since reason does not so much establish and pronouncethis law of nature as search for it and discover it as a law enacted by asuperior power and implanted in our hearts. Neither is reason so much themaker of that law as its interpreter, unless, violating the dignity of thesupreme legislator, we wish to make reason responsible for that receivedlaw which it merely investigates’. Correctly, Sabine (1963, p. 530) pointsout: ‘even if some moral values are admitted to be self-evident, it is farfrom obvious that they take the form of innate individual rights’. Leyden(1954, p. 46) writes: ‘Locke’s starting point is simple: it consists in thefactual statement that men can reason […]. His next step […] is to showthat men not only can reason but are obliged to use their reason,inasmuch as it, i.e. reason as the discursive faculty, is an essential propertyof theirs and their special function is to exercise this faculty […]. Thus thevery question at issue, namely, whether or not reason is an essentialquality of humanity, is decided affirmatively by reason itself. Moreover, itis from a merely factual statement concerning man’s essential nature thatmoral proposition is inferred that he has a duty to live in conformity withthis nature’. Bobbio (1971, p. 36) notes that in Locke ‘frequent remarksabout natural law […] are astonishingly naive and acritical’.

168 Notes

25 Strauss (1959), p. 49. Apropos of Strauss, see also Cubeddu (1996), pp.382–4.

26 Cf. note 106 of Chapter 2.27 Sombart (1923, p. 9) writes: ‘We have to look for the founders of modern

sociology among the famous adversaries of natural law and, particularly,of contractual theory’. Sombart’s statement is very partial. He misses thepoint that it is not natural law and contractualism as such that prevent thebirth of the social sciences (and not only of sociology); the real obstacle isbelief in a manifest truth, which in one way or another justifies the‘privileged point of view on the world’. For a fuller discussion ofSombart’s essay, see Mongardini (1970, pp. 77–132) and Sartori (1979,pp. 201–2). That Locke’s natural law could not serve as the basis foreconomic theory was forcefully shown by Parsons (1968). However,Parsons was not aware that Mandeville, Hume, Smith and the AustrianSchool of Economics base their theories on the idea of ‘social process’. SeeInfantino (1998a).

28 Kelsen (1949), p. 156.29 Op. cit., p. 157.30 Ibid.31 Op. cit., pp. 157–9.32 Pipes (1999), p. 34.33 Op. cit., p. 32.34 Ibid.35 Harrington (1924), p. 15.36 Ibid.37 Bernier (1914), p. 223.38 Op. cit., pp. 224–5.39 Op. cit., p. 225.40 Op. cit., pp. 225–6.41 Op. cit., p. 226.42 Ibid.43 Op. cit., p. 229.44 Op. cit., p. 230.45 Op. cit., p. 232.46 Gomperz (1905), vol. 3, p. 106.47 Russell (1962), pp. 28–9.48 Russell (1947), pp. 12–3. See also Russell (1991), pp. 121–5.49 Cf. Hoernlé (1937), pp. 166–82.50 The similarities between communism and national socialism will be treated

at greater length in Chapter 7. For further critical remarks about Plato, seeFite (1934), Winspear (1940). In defence of Plato, cf. the classical work ofLevinson (1953); see also Popper’s (1966, vol. 1, pp. 323–43) response to it.In addition, cf. the volume edited by Bambrough (1967).

51 Popper (1966), vol. 1, p. 38.52 Ibid.53 Marx-Engels (1953), pp. 97–8.54 Op. cit., p. 99.55 For a more extensive treatment, see Infantino (1983), pp. 30–8.

Notes 169


1 Locke (1983), p. 26.2 Op. cit., p. 33.3 Mandeville (1924), vol. 1, p. 333. It is helpful to add that Mandeville

defined Descartes as a ‘vain reasoner’ (op. cit., p. 181).4 Hume (1930), vol. 2, pp. 176–7.5 Op. cit., p. 177.6 Ibid.7 Smith (1976a), p. 320.8 We have here to recall that Kant (1993, p. 494) writes that ‘the former

knowledge of our ignorance, which is possible only on a rational basis, isscience’. Kant also speaks of Hume as ‘one of those geographers of humanreason’ (ibid.). In the attempt to separate what is science from what is not,Kant himself took on the role of ‘geographer of human reason’. It is usefulto mention the propositions he set down toward the end of‘transcendental analytic’: ‘We have now not only traversed the region ofthe pure understanding, and carefully surveyed every part of it, but wehave also measured it, and assigned to everything therein its proper place.But this land is an island, and enclosed by nature herself withinunchangeable limits. It is the land of the truth (an attractive word!),surrounded by a wide and stormy ocean, the region of illusion, wheremany a fog-bank, many an iceberg, seems to the mariner on his voyage ofdiscovery, a new country, and while constantly deluding him with vainhopes, engages him in dangerous adventures […] before venturing uponthis sea […] it will not be without advantage if we cast our eyes upon thechart of the land that we are about to leave, and to ask ourselves, firstly,whether we cannot rest perfectly contented with what it contains, orwhether we must not of necessity be contented with it, if we can findnowhere else a solid foundation to build upon; and, secondly, by whattitle we possess this land itself, and how to hold it secure against all hostileclaims’ (op. cit., p. 205). The ‘stormy ocean’ is obviously the endlessbattlefield of metaphysics. In referring to phenomenal knowledge,however, Kant considered Newton’s theory true. For a critique of Kant’stheory of knowledge, cf. Popper (1991), pp. 184–200 and also see note 36of this chapter. Apropos of the problem of metaphysical theories, Poppermade a distinction between metaphysical ones—which as such cannot beconfuted—and rational ones, criticizable because they can be comparedwith some well-established piece of ‘world 3’ (a scientific theory, amathematical theorem, a logical conclusion, another metaphysical theory)that we are not willing to renounce. On this point, see Popper (1991;1983, vol. 3), Bartley (1984), Antiseri (1999).

9 Hume (1930), vol. 2, p. 167.10 Mandeville (1924), vol. 2, p. 183.11 Op. cit., p. 350.12 Op. cit., p. 349.13 Hume (1930), vol. 2, p. 199.14 Ibid.

170 Notes

15 Smith (1976c), p. 487.16 Ibid.17 Op. cit., p. 488.18 Mandeville (1924), vol. 2, p. 189. To use the words of Hayek,

Mandeville’s position allows us to free ourselves ‘from the erroneousconception that there can be first a society which then gives itself laws […]erroneous conception […] which from Descartes and Hobbes throughRousseau and Bentham down to contemporary legal positivism hasblinded students to the true relationship between law and government’(Hayek, 1982, vol. 1, p. 95).

19 Ibid.20 Hume (1930), vol. 2, p. 198.21 Ibid.22 Smith (1976a), p. 110. According to Popper (1976, p. 111, note 7), this

passage suggests that a child brought up in a desert until adulthood ‘couldnot develop a self. It means that ‘we are not born as selves’ or, moreexactly, ‘we have to learn that we are selves’ (op. cit., p. 109); this happensthrough social relationships with others. Popper adds: ‘the upshot of allthis is that I do not agree with the theory of the “pure self”. Thephilosophical use of the term is due to Kant and suggests something like“prior experience” or “free from (the contamination of) experience”; andso the term “pure self suggests a theory which I think mistaken: that theego was there prior to experience, so that all experiences were, from thebeginning, accompanied by the Cartesian and Kantian I think’ (op. cit., p.111).

23 Mandeville (1924), vol. 1, p. 52.24 Hume (1930), vol. 2, pp. 82–3.25 Smith (1976a), p. 114.26 Op. cit., p. 159, italics partially added. For a fuller treatment of this point,

see Infantine (1998a), pp. 24–7 and pp. 30–1.27 In his Essay on the History of Civil Society, Ferguson (1966) reached the

same conclusions as Mandeville, Hume and Smith. Nevertheless, Hume(1983, vol. 1, p. 263) had advised against the publication of that work;Smith considered it partially plagiarized from his Lectures (Carlyle, 1810,p. 299). The Essay contains numerous ‘errors’, including praise of Sparta,because there was the rule ‘to preserve the heart entire for the public’(Ferguson, 1966, p. 247). According to Schumpeter (1997, p. 184, note16), Ferguson ‘enjoyed’ an ‘unmerited reputation’. See also Lehmann(1930), Kettler (1965), Schiavone (1961) and Attanasio (1999). Ratherthan using Ferguson’s Essay, here we shall use his Principles of Moral andPolitical Science, which is a much later and more mature work.

28 Smith (1976c), p. 493.29 For a fuller treatment, see Infantine (1998a) pp. 34–6.30 The expression ‘spontaneous secretion’ comes from Ortega y Gasset

(1937, p. 118), who also says (op. cit., p. 117): ‘living together and societyare equipollent terms. Society is what is produced automatically by thesimple fact of living together. It unavoidably secretes customs, habits,language, law’, and so on. This is why de Jasay (1996, p. 55) writes:

Notes 171

‘Regarding politics as a last resort, a desperate remedy to be used when allelse fails, is far from being the sickly symptom of the negation of man as asocial being, and of an unnatural “atomistic” and “abstract”individualism […]. On the contrary, it is man as a social being who has theleast need to resort to politics, precisely because he commands […]voluntary cooperation’. See also de Jasay (1997), pp. 143–85.

31 I am using an expression from Ferguson (1966), p. 122.32 ‘Darwinian before Darwin’ is an expression Sir Frederick Pollock (1890,

p. 42) used to refer to Burke and Savigny. Nevertheless, as we shall see inthe next section, Burke was influenced by Hume and Smith. In referenceto this, see Hayek (1967, pp. 103–4, note 21). Hume (1997, p. 162) said:‘No form […] can subsist, unless it possess those powers and organs,requisite for its subsistence. Some new order or economy must be tried,and so on, without intermission; till at last some order, which can supportand maintain itself, is fallen up’. Hayek (1967, p. 119, note 53) maintainsthat Erasmus Darwin transmitted the ideas of Hume to his nephewCharles. On Smith as an evolutionist before Darwin, see also Huxley(1900), p. 78 note 1.

33 Nozick (1974, p. 314) writes that evolution is a process chosen by ‘amodest deity, who does not know precisely what the being he wishes tocreate is like’. More exactly, one should say that evolution is the only pathleft to those who recognize their ignorance and fallibility. Obviously, thisis an ‘active evolutionism’ in the sense that man is an indefatigable seekerof new environments.

34 Hume (1930), vol. 2, p. 196. Mandeville (1924, vol. 2, p. 349) hadalready sustained: ‘if you want or like a thing, the Owner of it, WhateverStock or Provision he may have of the same, or how greatly soever youmay stand in need of it, will never part with it, but for a Consideration,which he likes better, than he does the thing you want’. Thus, forMandeville, value clearly has a subjective basis, which comes frompersonal evaluation.

35 Smith (1976b), vol. 1, p. 47.36 Op. cit., p. 82.37 Locke (1924), pp. 28–31.38 Wieser (1923), p. 86.39 Stephen (1900), vol. 2, pp. 191–3.40 Smith (1976b) vol. 2, p. 660. It is also interesting to read the following

passage: ‘Every faculty in one man is the measure by which he judges ofthe like faculty in another. I judge your sight by my sight, of your ear bymy ear, of your reason by my reason, of your resentment by myresentment, of your love by my love. I neither have, nor can have, anyother way of judging about them’ (Smith, 1976a, p. 19). Smith knew thatsocial values begin with a personal evaluation.

41 This is what we obtain from Napoleoni (1970).42 Marx (1972), part 3, pp. 498–523.43 On the economic language used by Marx as a cover for his psychologistic

projections, see Infantino (1998a), pp. 52–6.

172 Notes

44 For a complete analysis of Hutcheson’s influence on Smith, see Scott(1900, 1937).

45 Hutcheson (1747), p. 209. Cf. also Hutcheson (1755), vol. 2, pp. 53–5.46 Carman (1896), p. XXVI. It should be mentioned that, among the texts

Hucheson had his students use, there was Pufendorf’s De officio hominis etcivis, translated by his predecessor Gershom Carmichael (Scott, 1937, p. 34).

47 Pufendorf (1769), p. 460.48 Ibid. See also Grotius (1925, vol. 2, p. 426), even though there is also

reference to the cost of production (op. cit., p. 427).49 Pufendorf (1769), p. 460.50 Reference to labor as a measure of value is also found in Hutcheson

(1747, p. 210; and 1755), p. 54).51 Apropos of the economic theories of the Scholastics, Schumpeter (1997, p.

98) says: ‘they listed all the price-determining factors, though they failedto integrate them into a full-fedged theory of demand and supply. But theelements for such a theory were all there and the technical apparatus ofschedules and of marginal concepts that developed during the nineteenthcentury is really all that had to be added to them’. On the theory of theScholastics, see also Grise-Hutchinson (1952), Rothbard (1976, pp. 52–74, 1996, vol. 1, pp. 99–133), Kauder (1965), De Roover (1974) andChafuen (1986). It is worthy of note that, if we carry the economictheories of the late Scholastics to the extreme consequences, we have akind of overturning of the traditional image of Scholasticism and makeway for theoretical Franciscan Scholasticism and its nominalisticconclusions.

52 Schumpeter (1997), pp. 116–8.53 On the concepts of ‘legal price’ and ‘natural price’, see Pufendorf (1769, p.

464).54 Rothbard (1996, vol. 1, pp. 435–74) judges Smith harshly for, among

other reasons, the ‘space’ devoted to the labor-value theory in the Wealthof Nations. What must be clear here is that the major responsibility is notSmith’s, but of those who came after and were not capable ofunderstanding that essentialism is not central to Smith’s work and issimply an inheritance he almost totally freed himself from.

55 Smith (1976b), vol. 1, pp. 124–5.56 Op. cit., p. 456.57 Op. cit., p. 468.58 Smith (1976a), p. 233. For Solon, see note 82 of Chapter 2.59 Ibid.60 Op. cit., pp. 233–4. Among the men of ‘system’, Smith includes the

French physiocrats, so he disagreed with Quesnay’s idea that the ‘politicalbody’ can ‘thrive and prosper only under a certain precise regimen, theexact regimen of perfect liberty and perfect justice’. Smith thinksdifferently. He maintains that, ‘if a nation could not prosper without theenjoyment of perfect liberty and perfect justice, there is not in the world anation which could ever have prospered’ (Smith, 1976b, vol. 2, p. 674). Itis worthwhile to add the concuring judgment of Tocqueville on thephysiocrats (1952, pp. 259–60): ‘According to the economists [the

Notes 173

physiocrats], the State does not only have the task of governing the nation;it also has the task of moulding it in a particular planned way; it isresponsible for forming the spirit of citizens according to a pre-arrangedmodel, equipping them with the principles and sentiments it considersnecessary. In reality, its rights and powers have no limits; not only does itreform men, but it also transforms them; if it wished to, it could makethem different from what they are! Baudeau says “the State makes of menall that it wishes”. This remarks sums up all their theories’. See also Schatz(1907, pp. 80–112); and Cheinisse (1914, pp. 11–33).

61 Smith (1976b), p. 456.62 Ibid.63 Burke (1975a), vol. 1–2, p. 117, my italics.64 We should remember that it was Hume who put Smith and Burke in

contact, when he sent Burke a copy of Moral Sentiments (Fay, 1960, pp.9–10). Smith was to describe Burke as the only person he knew, whosethinking on economic subjects was exactly the same as his own, evenwithout any previous agreement (see Dunn, 1941). Burke (1975c, vol. 5–6, p. 141) accepted the ‘invisible hand’ idea, namely, the idea that ‘men,whether they will or not, in pursuing their own selfish interests’ achievethe ‘general good’. Smith’s ‘invisible hand’ will be dealt with in the nextsection.

65 Burke (1975b), vol. 3–4, p. 346.66 Op. cit., p. 357.67 Op. cit., p. 457.68 Op. cit., p. 440. Even the words Burke used (‘that pitch of presumption’)

seem to repeat those of Smith.69 Op. cit., p. 487.70 Op. cit., p. 562, my italics.71 It is useful to mention what John Stuart Mill (1985, p. 120) said: ‘That

mankind are not infallible; that their truths for the most part are onlyhalf-truths; that unity of opinion, unless resulting from the fullest andfreest comparison of opposite opinions, is not desirable, and diversity notan evil, but a good’. Despite this, Mill did not recognize how fertile thesocial process is, and he did not hesitate to write (1892, p. 531): ‘Humanbeings in society have no property but those which are derived from, ormay be resolved into, the laws of the nature of individual man’. Moreover,he theorized the ‘stationary state’ (Mill, 1965, vol. 2, p. 754). Heconsidered the ‘classic’ theory of value definitively established; and thisproduced the following comment from Mises (1981b, p. 30): ‘An error ofthis kind on the part of such a man must ever stand as a warning to alltheorists’. It is useful to add that Spencer (1995, pp. 95–100) formulatedthe ‘law of equal freedom’ to put everyone in condition to exercise hisspecial abilities. On this last point, see also Rothbard (1977, pp. 212–16;1991, pp. 57–60).

72 For a classic study of ‘latent functions’, see Frazer (1909). Merton, (1968,p. 120) writes that ‘the distinctive intellectual contributions of thesociologist are found primarily in the study of unintended consequences(among which are latent functions) of social practices’. And Hirschman

174 Notes

(1991, pp. 35–6) states: ‘One of the great insights of the science of society—found already in Vico and Mandeville and elaborated magisteriallyduring the Scottish Enlightenment—is the observation that, because ofimperfect insight, human actions are apt to have unintended consequencesof considerable scope. Reconnaissance and systematic description of suchunintended consequences have ever since been a major assignment, if notthe raison d’e^tre, of social science’. What Hirschman does not stateexplicitly is that we can become aware of our ‘imperfect insight’ onlywhen there is no ‘privileged point of view on the world’. If he had stressedthis, he could not have claimed at the same time that attention tounintentional consequences is a basic characteristic of ‘reactionaryrhetoric’. The Whigs were not reactionary. Duo si idem dicunt non estidem. On the problem of ignorance in the social sciences, see also Mooreand Tumin (1949) and Schneider (1962).

73 Here it is necessary to add that even the natural sciences study non-planned results, a task, as explained in the text, that leads to identifyingthe conditions which make certain events, that we consider positive ornegative, possible or impossible, respectively.

74 Hartley (1989), p. 137.75 Cropsey (1987, p. 635) declares that in Smith there is a ‘close conjunction

of economics and political philosophy’. Perhaps it would be more exact tosay that there is a close tie between economics and theory of knowledge.

76 Hume (1930), vol. 2, p. 191.77 Ibid.78 Ferguson (1792), vol. 2, p. 510.79 Op. cit., p. 477.80 Forbes (1966), p. XXIV. It would probably be more correct to say that

merit for the destruction of the ‘legislator myth’ goes to Mandeville andthe Scottish moralists.

81 The expression ‘science of a legislator’ is Smith’s (1976b), vol. 1, p. 468.See also Winch (1978, pp. 159–60) and Haakonsen (1981, p. 92).

82 Smith (1976a), pp. 232–3. For his part, Hume (1903, p. 499, note 1) hadalready asserted: ‘Of all mankind, there are none so pernicious as politicalprojectors, if they have power, nor so ridiculous, if they want it: as, on theother hand, a wise politician is the most beneficial character in nature, ifaccompanied with authority, and the most innocent, and not altogetheruseless, even if deprived of it’. It is not by chance that Hume (op. cit., p.50) himself criticized ‘Plato’s plans of government’ and also (Hume, 1903,p. 159) the ‘platonist’: ‘thou art thyself thy own ideal. Thou worshippestthy imaginary perfections; or rather, sensible of thy real imperfections,thou seekest only to deceive the world and to please thy fancy, bymultiplying thy ignorant admirers. Thus, not content with neglecting whatis most excellent in the universe, thou desirest to substitute in the placewhat is most vile and contemptible’.

83 Smith (1976a), p. 234.84 Ibid.85 Smith (1976b), vol. 1, p. 468.86 Smith (1976a), p. 218. Smith (op. cit., p. 82) also says: ‘Mere justice is,

Notes 175

upon most occasions, but a negative virtue, and only hinders us fromhurting our neighbour. The man who barely abstains from violating eitherthe person, or the estate, or the reputation of his neighbours, has surely verylittle positive merit. He fulfils, however, all the rules of what is peculiarlycalled justice, and does every thing which his equals can with proprietyforce him to do, or which they can punish him for not doing. We may oftenfulfil all the rules of justice by sitting still and doing nothing’.

87 Millar (1803), vol. 4, p. 267.88 Ibid.89 Ferguson (1792), vol. 2, p. 458. See also Hume (1930), vol. 2, pp. 203–4.90 Ortega y Gasset (1941b, pp. 71–3) correctly maintains that the concept of

‘liberty’ held in Rome was of the juridical type. However, he adds thatmodern liberalism has replaced that idea with a ‘certain number offreedoms’ in the plural. What Ortega does not understand here is that the‘freedoms’ (in the plural) are the product of liberty or, in other words,freedom is the counterpart of liberty.

91 Smith (1976b), vol. 2, p. 833.92 Ferguson (1792), vol. 2, pp. 425–6, my italics.93 Hume (1930), vol. 2, pp. 228–9.94 It is worthwhile quoting what Smith (1976b, vol. 2, pp. 729–30) writes

about the ‘Asiatic society’ which, as said in Chapter 3, is a system wherethere is no private ownership of the means of production. ‘In China, andin several other governments of Asia, the executive power charges itselfboth with the reparation of the high roads, and with the maintenance ofthe navigable canals. In the instructions which are given to the governor ofeach province, those objects, it is said, are constantly recommended tohim, and the judgement which the court forms of his conduct is very muchregulated by the attention which he appears to have paid to this part of hisinstructions. This branch of publick police accordingly is said to be verymuch attended to in all those countries, but particularly in China, wherethe high roads, and still more the navigable canals, it is pretended, exceedvery much every thing of the same kind which is known in Europe. Theaccounts of those works, however, which have been transmitted toEurope, have generally been drawn up by weak and wondering travellers;frequently by stupid and lying missionaries. If they had been examined bymore intelligent eyes, and if the accounts of them had been reported bymore faithful witnesses, they would not, perhaps, appear to be sowonderful. The account which Bernier gives of some works of this kind inIndostan, falls very much short of what had been reported of them byother travellers, more disposed to the marvellous than he was’. Smith isreferring to the Voyages of Bernier (1914), who had understood the lackof private ownership is the material basis of ‘oriental despotism’. Evenbefore Smith, Hume (1903, p. 123), who had learned from Harrington,criticized the Chinese social system.

95 Smith (1976b), vol. 1, p. 456. Furthermore, Hume (1930, vol. 2, p. 231)asserts that the system of private ownership, which arose unintentionally,led to the awareness that the interest of each individual is ‘advantageousto the public’.

176 Notes

96 Since Smith was looking for the conditions that nourish the socialprocess, Montesquieu comes to mind as his model. And there is no doubtthat Inquiry Into the Nature and Causes of the Wealth of Nations owessomething to Considerations sur les causes de la grandeur et la dècadencedes Romains, where Montesquieu (1949–51, vol. 2, p. 173) writes:‘There are general causes […] for effects in all monarchies, they glorifythem, they keep them in power, and they bring about their downfall. Allevents depend on these causes and, if a battle, that is, a particular cause,has determined the downfall of a state, there was a general cause toexplain why the state had to perish in a single battle. In brief, the generaltrend carries along all particular events’. In other words, Montesquieubelieved that social science should seek the conditions that make aspecific event possible or impossible. When Millar was describing Smith’slessons to Dugald Stewart, he said that Smith ‘followed the plan thatseems to be suggested by Montesquieu; endeavouring to trace the gradualprogress of jurisprudence […] from the rudest to the most refined ages’(Stewart, 1976, pp. 274–5). Forbes (1954, p. 646) observes that ‘thisnotoriously is what Montesquieu does not do’. Actually he stressed theimportance of free choice (Montesquieu, 1990, pp. 70–1); he recognizedthat the provisions adopted by Solon and the love of work that existed inAthens were pertinent (op. cit., p. 21); he repeatedly mentioned thatSparta had borrowed its system from Crete; he underscored that the ‘lawsof Minos, of Lycurgus and of Plato suppose a particular attention andcare, which the citizens ought to have over one another’s conduct’ (op.cit., p. 17); and he read Bernier. Nevertheless, he did not hesitate to statethat Lycurgus brought Sparta to ‘grandeur and glory’, by means of ‘soinfallible’ institutions that ‘it signified nothing to gain a victory over thatrepublic without subverting her polity’ (op. cit., p. 16). And he pointedout ‘another example’ in the Paraguay of the Jesuits (ibid.).

97 Mandeville (1924) vol. 1, p. 190, my italics.98 Hume (1903), p. 40. Obviously, all of Smith’s work goes in the same

direction. Apropos, Hayek (1949, p. 11) writes: ‘the main point aboutwhich there can be little doubt is that Smith’s chief concern was not somuch with what man might occasionally achieve when he was at his bestbut that he should have as little opportunity as possible to do harm whenhe was at his worst. It would scarcely be too much to claim that the mainmerit of the individualism which he and his contemporaries advocated isthat it is a system under which bad men can do least harm’.

99 Smith (1976b), vol. 1, p. 386.100 Op. cit., pp. 417–8.101 Ferguson (1792), vol. 1, p. 314.102 Smith (1976b), vol. 1, p. 404.103 Op. cit., p. 405.104 Ibid.105 Ibid.106 Ibid.107 Ibid., my italics.108 Op. cit., p. 418.

Notes 177

109 Ibid.110 Op. cit., p. 420.111 Op. cit., p. 421.112 Op. cit., p. 422, my italics.113 In addition to Smith’s, Ferguson’s and Millar’s explanation of the origin

of capitalism, it is useful to cite Guizot (1924, p. 33): ‘the empire fellbecause none wished to be of the empire, because citizens desired to beonly of their own city. Thus we again discover, at the fall of the Romanempire, the same fact which we have detected in the cradle of Rome,namely, the predominance of the municipal form and spirit. The Romanworld had returned to its first condition; towns had constituted it; itdissolved; and towns remained’. Guizot also points out ‘the idea of theempire’ and the ‘Christian Church’ (ibid.). And he asserts: ‘Whilst, inother civilizations, the exclusive, or, at least, the excessivelypreponderating dominion of a single principle, of a single form, has beenthe cause of tyranny, in modern Europe, the diversity of elements, whichconstitute the social order, the impossibility under which they have beenplaced of excluding each other, have given birth to the freedom whichprevails in the present day. Not having been able to exterminate eachother, it has become necessary that various principles should existtogether—that they should make between them a sort of compact […] inEurope liberty has been the result of the variety of the elements ofcivilization, and of the state of struggle in which they have constantlyexisted’ (op. cit., p. 26). For a recent discussion of the theory accordingto which capitalism originates in ‘feudal anarchy’, see Baechler (1971)and Pellicani (1988). Cf. also Minogue (1998).

114 See also Infantine (1998b), pp. 63–4 and the bibliography cited.115 Smith (1976b), vol. 2, p. 910.116 Op. cit., vol. 1, p. 426.


1 Hayek (1949), p. 4, note 3.2 Menger (1996), p. 153.3 Op. cit., p. 154.4 Ibid.5 Op. cit., pp. 154–5.6 Op. cit., pp. 157–8.7 On this point, see Hayek (1967) pp. 103–4, note 21 and the bibliography.8 When Menger speaks of rationalistic ‘one-sidedness’, which is what we

have called psychologism, he is undoubtedly indebted to Savigny (1831, p.136). To illustrate Savigny’s thinking, it is useful to mention that heparticularly insisted on the unintentional origin of language and law (op.cit., pp. 26–7). The following statements are helpful in understanding hisopposition to the psychologism of the French tradition. First of all: ‘Whenwe lose connection with the great entirety of the world and its history, wenecessarily see our thoughts in a false light of universality and originality.

178 Notes

There is only the historical sense to protect us against this’ (op. cit., p.135). Moreover: ‘An important historical problem is never so exhaustedor settled, as that no further progress is possible’ (op. cit., p. 142). Andfinally: ‘All this effort to improve the legal conditions by sweeping strokefrom above, which aims to govern everything more and more, is nothingbut another extension of the unfortunate trend that has characterizedpublic life for so long […]. The supporters of this view think that theworld can be greatly improved by orders and regulations. Though theirintentions may be very noble, most of those who embitter our lives withexcessive regulations claim they are doing it for our own good, and expectour gratitude’ (Savigny, 1816, p. 2). Savigny’s statements are a permanentargument against the myth of the omniscient legislator.

9 Jaffé (1976), p. 521.10 Milford (1996), pp. XXX–XXXI.11 Menger (1994), pp. 286–8 and pp. 292–5.12 Aristotle (B), V, 8, 1133 a, 27–9.13 One of the reasons why Menger misunderstood Smith might be the fact

that in the Wealth of Nations the origin of exchange is a presumed human‘disposition’, while the idea of scarcity, which is present in Mandeville andHume, can be found in the Lectures of Glasgow, which were found andpublished after Menger’s main works were published.

14 Menger (1994), p. 154.15 Op. cit., p. 108.16 Op. cit., p. 120.17 Op. cit., p. 54, note 4.18 Op. cit., p. 121. Menger’s theory would obviously have been subscribed

to by Protagoras who, as we know from Chapter 3, maintained that ‘manis the measure of all things’. Apropos of Menger’s influence on Simmel,see Infantine (1998a), pp. 106–14.

19 Menger (1994), p. 192.20 Ibid.21 Op. cit., pp. 192–3.22 Op. cit., p. 191.23 See Chapter 3, note 156.24 The term ‘compositive’ comes from a manuscript note of Menger, found

by Hayek (1979, p. 67, note 4). The expression ‘methodologicalindividualism’ was coined by Schumpeter (1908, p. 90).

25 Menger (1996), p. 173.26 Op. cit., p. XIV. See also Menger (1889), p. 2.27 Menger (1889), p. 2.28 Ibid.29 Ibid.30 Ibid.31 Menger (1996), pp. 23–4.32 Op. cit., p. 24.33 Boehm-Bawerk (1890), p. 261.34 Op. cit., p. 260.35 Ibid.

Notes 179

36 Mises (1981b), p. 28.37 Ibid. For a detailed description of Mises’ method, cf. Infantine (1998b),

pp. 79–139.38 Menger (1996), pp. 24–5.39 Op. cit., p. 60.40 Op. cit., p. 59.41 For an extensive treatment of Menger’s methodology, see Antiseri (1998),

pp. 5–45.42 Mises (1981b), p. 45.43 Op. cit., p. 44.44 Op. cit., p. 49.45 Op. cit., p. 47.46 Op. cit., p. 46.47 Op. cit., p. 44.48 Op. cit., p. 30, my italics. Here Mises seems to be in direct opposition to

the idea of ‘conclusive verification’ à la Schlick.49 Menger (1996), pp. 65–6.50 Op. cit., p. 66.51 Ibid.52 Op. cit., p. 178, note 12953 Boehm-Bawerk (1962a), p. 61.54 Mises (1957), p. 251. This is an idea that appears in all of Mises’ writings,

beginning with Nation, Staat und Wirtschaft (Nation, State, andEconomy) and Gemeinwirtschaft (Socialism).

55 Hayek (1982), vol. 1, p. 36.56 Menger (1996), p. 158.57 Hayek (1982), vol. 1, p. 37. For a complete explanation on ‘Austrian’

bases of the evolutionary theory of social institutions, see Hazlitt (1998).58 Although it emerges from the text, it should be stressed that the positions

of the German School of Law are very different from those of the GermanHistorical School of Economics. The former, influenced by Burke, includesthe idea of the social process and rejects the claim of an ‘architectonicscience’ of society. The objective of the latter is completely the opposite.Evidence of this contrast is the fact that Schmoller (1883, p. 250), did nothesitate to accuse Menger of being an exponent of the ‘Burke-Savignyschool’.

59 Hegel (1991), p. 275. It is not by chance, therefore, that Weber (1949, p.7) reproached his ‘honored master’ Schmoller, who wanted to make theuniversity the center for training employees ‘loyal’ to the state, totransform the university itself into a ‘theological seminary’—except that itdoes not have the latter’s ‘religious dignity’.

60 Menger (1996), p. 226.61 Mises (1969), p. 14; Mises (1983a), p. 27.62 Jevons (1888), p. 37.63 Op. cit., p. 25. Obviously, all this weakened the subjectivism of the

marginalist theory, which would also be criticized by Marshall (1969, p.676), in the attempt to give new life to the theory of the cost ofproduction. More recently, the claim to rehabilitate even the theory of

180 Notes

labor-value would come from Cambridge. On this point, see Robinson(1956) and the critical comments of Lachmann (1958).

64 Walras (1896), vol. 1, p. IV.65 Op. cit., vol. 2, p. 459. Clearly, as will soon be explained in the text,

Walras’s objective of a ‘physics of behavior’ contradicts his own discoveryof the subjective base of value. Here there is the introduction of amechanistic hypothesis, which goes back further than Newton to Descartesand strongly influences English utilitarianism and French positivism.

As Guyau (1885, p. 5) correctly points out: ‘Bentham’s disciplescompared their master to Descartes. ‘Donnez-moi la matière et lemouvement, said Descartes, ‘et je ferai le monde’. Bentham could say, inhis turn, ‘Give me human affections, joy and sorrow, pain and pleasure,and I shall create a moral world. I shall produce not only justice, but alsogenerosity, patriotism, philanthropy, and all the amiable and sublimevirtues in their purity’. The following remarks of Rudolf Eucken (1912, p.195) are pertinent to the subject: ‘The concept of law has passed from thedomain of man to that of nature, and here receiving a new form, hasreturned with it to man […]. This is a striking example of the manner inwhich man projects his own image into the cosmos and receives it backagain, enlarged and transformed. From the one point of view this appearsa mere circle, an anthropomorphic process’. For a fuller treatment of thisproblem, see Taylor (1967), pp. 37–69.

66 Walras (1896), vol. 2, p. 457.67 Walras (1909), p. 295.68 See Kauder (1965), p. 92, note 7 and its bibliography.69 Op. cit., p. 100.70 Ibid.. Cf. also Antonelli (1953), pp. 269–87.71 Infantine (1988a), pp. 34–6.72 Ricossa (1988), pp. 11–12.73 Menger (1996), p. 159.74 Mayer (1937), p. 654. Here Mayer cites, among others, Rosenstein-Rodan

and Morgenstern, two scholars in the Austrian tradition.75 Ibid.76 Op. cit., pp. 654–5.77 Op. cit., pp. 655–6.78 Op. cit., p. 660.79 Ibid.80 Ibid.81 Op. cit., pp. 660–1.82 Op. cit., p. 670.83 All this show how necessary it is to separate the Austrian position from

the Walrasian one, which Boudon (1986, p. 63) does not do. It is,however, important to mention here that Pareto (1972, p. 171) believed itwas impossible to replace the market with the system of equations ofgeneral economic equilibrium: ‘in the case of 100 individuals and 700goods there would be 70,699 conditions (in reality a great number ofparticular details, which we have disregarded so far, would increase thisnumber further); then we would have to solve a system of 70,699

Notes 181

equations. As a practical matter, that is beyond the power of algebraicanalysis, and it would be still further beyond it if we considered thefabulous number of equations which a population of forty millionindividuals and several thousand goods would entail. In that case the roleswould be changed; and it would no longer be mathematics which wouldcome to the aid of political economy, but political economy which wouldcome to the aid of mathematics. In other words, if all these equations wereactually known, the only means of solving them would be to observe theactual solution which the market gives’. Barone (1935, p. 288, some italicsadded) in his sensible essay on The Ministry of Production in theCollectivistic State specifies: ‘Some collectivist writers […] hope that withorganized production it is possible to avoid the dissipation anddestruction of wealth which such experiments involve, and which theybelieve to be the peculiar property of “anarchist” production. Therebythese writers simply show that they have no clear idea of what productionreally is, and that they are not even disposed to probe a little deeper intothe problem which will concern the Ministry which will be established forthe purpose in the Collectivistic State’. Barone also explicitly states thatthe equations of equilibrium ‘are not soluble a priori., on paper’ (ibid.).Nevertheless, in the preface to the German edition of Barone’s Principii dieconomia politica (Grundzüge der Theoretischen Nationalokonomie,1935, p. 10) and then again in Capitalism, Socialism and Democracy(1987, p. 173) Schumpeter gives credit to the idea that Barone had solvedthe problem of calculation in a socialist economy, namely, that he hadshown how to replace the market with a system of equations.

It should be added that Pareto (1935, p. 1473, para. 2137) wouldrealize that, to determine the maximum of society, ‘some hypothesis’ mustbe introduced to makes it possible to compare the ‘heterogeneous’individual preferences and put them in order. In other words, the‘privileged point of view on the world’ must be introduced.

84 Mises (1981b), p. 117.85 Menger (1994), pp. 260–1.86 Boehm-Bawerk (1959), vol. 2, p. 216.87 Op. cit., p. 172.88 Boehm-Bawerk (1962b), p. 260. Schumpeter (1961, p. 32) maintains,

without however drawing all the necessary conclusions, that Boehm-Bawerk was ‘indeed the first who expressly said that the whole value ofthe product must in principle be divided between labor and land, if theprocess of production is to proceed with ideal perfection. This, of course,requires that the whole economic system be accurately adapted to theproduction undertaken, and that all values be appropriately adjusted tothe data; that all economic schemes work harmoniously together and thatnothing disturb their execution’. We now know that Menger had alreadyreached those conclusions. This is the basis of Kirzner’s (1973) theory ofentrepreneurship, where profits arise from conditions of disequilibrium. Inother words, the entrepreneur identifies what needs are unsatisfied by thecurrent offer and tries to satisfy them. If there were no disequilibriumthere would be no entrepreneurship and no profit.

182 Notes

89 Wieser (1893), pp. 60–1.90 Op. cit., p. 61.91 Mises (1981a), p. 207.92 Ibid. The thesis usually connected with Mises’ name is the one in which

planning is destined to failure because the abolition of private ownershipand the market destroy the system of prices and make economiccalculations impossible (op. cit., pp. 97–130). This thesis, which developsWieser’s ideas (1893, pp. 66–74), casts a shadow on the fact that Mises’primary objection to planning is gnoseological, because it is concernedwith the impossibility of there being an omniscient planner. However, afew words should be said about the so-called apriorism of Mises and itscompatibility with gnoseological fallibilism, which Mises himselfmaintains at various times in his writings. Mises (1966, p. 57) asserts:‘The a priori sciences—logic, mathematics, and praxeology—aim at aknowledge unconditionally valid for all beings endowed with the logicalstructure of human mind’. All of this is incompatible with gnoseologicalfallibilism, and leads us to believe in the existence of a ‘pure self prior toexperience. The idea of a ‘pure self is completely in contrast to theevolutionism of the Austrian School of Economics and Mises too.Different is the concept of the primacy of theory in the construction ofscience. This only means that research always starts off from a nucleus ofinitial hypotheses and that it make use of the deductive method. But thesehypotheses are not asserted by any ‘pure self, free from contamination oflife and its problems (cf. Infantine 1998b, pp. 31–9 and the bibliographyindicated there).

93 Mises (1977), pp. 59–60.94 Mises (1981a), p. 275.95 Ibid.96 Ibid. To support Mises’ thesis, it is useful to cite Rostovtzev (1957, vol. 1,

p. 509): ‘the imperial power […] lost almost completely, save for someirrelevant formulae, the last remnants of its constitutional character as thesupreme magistrature of the people of the Empire. It now resembled thePersian monarchy of the Sassanidae and its predecessors in the East, themonarchies of Babylonia, Assyria, Egypt, and the rest’. In other words,the autonomy of civil society and free mobilization of knowledge weresuppressed.

97 Mises (1981a), p. 276.98 Hayek (1949), p. 50.99 See Hayek (1949), pp. 1–32 and Hayek (1979). It is also useful to stress

that in Mises the division of labor includes the division of knowledge,and competition is in any event a means of mobilizing differentknowledge. See Rothbard (1991), pp. 27–30.

100 Hayek (1949) pp. 45–6, my italics.101 Op. cit., p. 46.102 It is well known that Hayek makes his first strong attack on the theory of

general economic equilibrium in Economics and Knowledge. When thisessay was first published it contained a note in which Hayek stated that‘some of the most stimulating suggestions on problems closely related to

Notes 183

those treated here have come from his [Mayer’s] circle’ (Hayek, 1937, pp.34–5, note 1). And he cited the following works: Mayer (1932) andRosenstein-Rodan (1930, 1934). When Hayek included Economics andKnowledge in Individualism and Economic Order, the note in questionwas eliminated. Boehm (1992, pp. 20–2) claims that in this way Hayek’sdebt to Mayer and Rosenstein-Rodan and Morgenstern disappears.Kirzner (1995, vol. 2, pp. VII–XIX) maintains that this accusation isunjustified and shows the ‘break’ among those authors and Hayek.

It should be added that Hayek’s criticism of the general theory ofeconomic equilibrium, which was different or perhaps more direct thanMayer’s, strikes at the gnoseological presuppositions of generalequilibrium. And it should also be borne in mind that in those years, inLondon, Hayek closely examined Menger’s methodological studies,because he edited a reprint of Menger’s works. He also acquired broaderknowledge of the Scottish tradition, which puts the problem of thedispersion of knowledge at the center of its paradigm.

103 Hayek (1949), p. 95.104 Hayek (1978), p. 179.105 Op. cit., p. 181.106 Op. cit., p. 179.107 Hayek (1949), p. 92.108 Op. cit., p. 101.109 Op. cit., pp. 83–4.110 Ibid.111 Op. cit., p. 85.112 Op. cit., p. 86. Prices act as an irreplaceable parameter and, as Smith says

(1976b, vol. 2, p. 630) make it possible to channel resources ‘in theproportion which is most agreeable to the interest of the whole society’.In other words, for economic action in the narrower sense prices are whatsocial norms are for action in general. Prices and the ‘impartial spectator’are points of reference for individual action. If price is the relationship inwhich one good is exchanged for another, the norm is the relationship inwhich one service is exchanged for another. See Infantine (1988a), pp.34–6.

113 Hayek (1949), p. 86.114 Op. cit., p. 87.115 Hayek (1979), p. 152. Here too we see the connection between Hayek’s

position and the Scottish one.116 Op. cit., p. 154.117 Op. cit., p. 152.118 Op. cit., p. 159.119 Hayek (1960), p. 28.120 Ibid.121 Hayek (1988), p. 66.122 Hayek (1960), p. 148.123 Hayek (1979), pp. 391–2.124 Hayek (1960), p. 24. Hayek (1952) devoted a work of theoretical

psychology to the inability of the mind to understand and explain itself.

184 Notes

See also Mises (1966, pp. 90–1; 1978a, p. 15) on the brain as a‘spontaneous order’.

125 Hayek (1979, 1960, 1988).126 Hayek (1960), pp. 24–5.127 Hayek (1988), p. 78.128 Wieser (1923), p. 96.129 Menger (1994), p. 97.130 Boehm-Bawerk (1962a), p. 55.131 Boehm-Bawerk (1962c), p. 160.132 Ibid.133 Mises (1981a), p. 34.134 Mises (1985), p. 25.135 Mises (1981a), p. 34.136 Op. cit., p. 32. It is useful to remember what Simmel said (1978, p. 99)

apropos of this: ‘inter-individual exchange […is] a peace treaty and bothexchange and regulated exchange […] originated together’. Weber (1965,pp. 20–1) made a distinction between ‘adventurer’ and capitalisticentrepreneur, placing the latter within a framework of certainty of thelaw.

137 Mises (1981a), p. 34.138 Op. cit., pp. 32–3.139 Hayek (1982), vol. 1, 55.140 Op. cit., p. 110; see also op. cit., vol. 2, pp. 35–6.141 It is useful to mention here what Weber wrote (1978, vol. 2, p. 667, my

italics): ‘From the juridical point of view, modern law consists of “legalpropositions”, i.e., abstract norms the content of which asserts that acertain factual situation is to have certain legal consequences’.

142 A paradigmatic example of an abstract, empty social norm is ‘salutation’.It acts as habitat for all possible social relationships. On this point, seeOrtega y Gasset (1957), pp. 201–11.

143 Hayek (1982), vol. 2, p. 11. Hayek (op. cit., p. 114) expresses the sameconcept as follows: ‘an abstract order […] must leave undetermined thedegree to which the several particular needs will be met’. In treating thistheme, Weber (1978, vol. 1, p. 75) said that the ‘pure laissez-faire state[…] would leave the economic activity of individual households andenterprises entirely free and confine its regulation to the formal functionof settling disputes connected with the fulfillment of free contractualobligations’. Furthermore, (op. cit., vol. 2., p. 657): ‘every concrete legaldecision be the application of an abstract legal proposition to a concretefact situation’; perhaps it would be more correct to say that ‘everyconcrete legal decision’ fits into an abstract legal proposition.

144 Hayek (1982), vol. 1, p. 52.145 Op. cit., vol. 2, pp. 42–4. It is necessary to add that, if we had the

knowledge required to define justice in positive terms, we would not needsocial and moral norms. Writing against Bentham and his school, Hayek(op. cit., p. 20) rightly says that they ‘must proceed on a factualassumption of omniscience which is never satisfied in real life and which,if it were ever true, would make the existence of those bodies of rules

Notes 185

which we call morals and law not only superfluous but unaccountableand contrary to the assumption’. And moreover (ibid.): ‘the factor whichmakes rules necessary […is] our ignorance’. Finally (op. cit., p. 127):‘Both freedom and justice are values that can prevail only among menwith limited knowledge and would have no meaning in a society ofomniscient men’. Obviously, as we shall see later on in the text, generalabstract norms are the ones that defend us better from ignorance.

146 Hayek rightly says (op. cit., p. 110): ‘So long as collaborationpresupposes common purposes, people with different aims are necessaryenemies who may fight each other for the same means’.

147 Ibid.148 Op. cit., vol. 2, p. 12.149 Ibid.150 Op. cit., pp. 114–5.151 Op. cit., vol. 1, p. 85.152 Ibid.153 Op. cit., vol. 3, p. 39. Mises had already written on this question in the

twenties (1985, p. 170): ‘The […] basic defect of these parties is that thedemands they raise for each particular group are limitless. There is, intheir eyes, only one limit to the quantity to be demanded: the resistanceput up by the other side. This is entirely in keeping with their character asparties striving for privileges on behalf of special interests […]. Peoplehave been coming to recognize this ever more clearly and have begun tospeak of a crisis of the modern state and of a crisis of the parliamentarysystem. In reality, what is involved is a crisis of the ideologies of themodern parties of special interests’. Later on, Mises (1998, p. 91) added:‘it is a tragic error to believe that democracy and freedom are compatiblewith interventionism’.

154 Hayek (1982), vol. 1, pp. 56–7.155 Here I am using an expression of Simmel (1978), p. 212.156 See Mises (1983a), pp. 1–20 and the bibliography indicated.157 Mises (1981a), p. 79, my italics.158 Op. cit., pp. 156–8. Cf. also Mises (1981b), pp. 107–9.159 Mises (1969), pp. 51–2.160 Mises (1966), p. 287.161 Hayek (1976), p. 92.

7 The intellectualistic hubris and destruction of liberty

1 Plato (L), 797 d.2 For more about Plato’s political ‘vocation’, cf. Reale (1997), vol. 2, pp.

285–8. On the idea of ‘intellectual proletariat’, see Pareto (1974), p. 182.For a complete treatment of the role played in modern times by the‘proletarianized intellectuals’, cf. Pellicani (1975; 1995).

3 Jaeger (1961), pp. 41–2.4 Ortega y Gasset (1958), pp. 261–2.5 Popper (1966), vol. 2, p. 194.

186 Notes

6 Bartley (1984), p. 109.7 Op. cit., p. 84.8 Plato (L), 645 b.9 Popper (1966), vol. 2, p. 194.

10 Ehrenberg (1951, p. 266) writes: ‘It was not only myth that perished.Myth is always subject to poetic license or rationalistic interpretation andskepticism. It was faith itself, expressed in cult and prayer, of which theinner decay was characterized by a great number of parodies of both cultand prayer’.

11 See Chapter 3.12 Jaeger (1964), p. 72.13 Op. cit., p. 23.14 Descartes (1960), p. 50.15 Ortega y Gasset (1941a), p. 16.16 Ortega y Gasset (1940), p. 191.17 I am using here an expression from Xenophones (A), 25.18 Ortega y Gasset (1921, p. 99) says that utopianism, the idea that the

principle of reality can be cancelled, is ‘magic’. In reference to Marx’sutopianism, Boehm-Bawerk (1959, vol. 1, p. 297) spoke about ‘dialecticalhocus-pocus’.

19 See note 74 in Chapter 3 and its related text.20 I am using an expression from Scheler (1923, pp. 265–6).21 Ibid.22 On the problem of uncertainty, Hayek (1949, p. 66, note 21) rightly says:

‘The point is that, while it is easy to protect a particular person or groupagainst the loss which might be caused by an unforeseen change, bypreventing people from taking notice of the change after it has occurred,this merely shifts the loss onto other shoulders but does not prevent it. If,e.g., capital invested in very expensive plant is protected againstobsolescence by new inventions by prohibiting the introduction of suchnew inventions, this increases the security of the owners of the existingplant but deprives the public of the benefit of the new inventions. Or, inother words, it does not really reduce uncertainty for society as a whole ifwe make the behavior of the people more predictable by preventing themfrom adapting themselves to an unforeseen change in their knowledge ofthe world. The only genuine reduction of uncertainty consists in increasingits knowledge, but never in preventing people from making use of newknowledge’. This means that, by permitting mobilization of knowledge,liberty defends us from uncertainty.

23 Hume’s law, dealing with the impossibility of deriving prescriptivepropositions from descriptive ones, puts an end to the pretense of giving arational basis to our political-ethical absolutism. Apropos of this, Weber(1991, p. 118) considered it completely ‘vulgar’ to use ‘ethics as a meansof being in the right’.

24 Bartley (1984), p. XXI.25 Ibid.26 Ibid.27 Popper (1991), p. 25.

Notes 187

28 Ibid.29 Ibid.30 Hartley (1990), p. 173.31 Popper (1991), p. 24.32 Bartley (1984), p. 113, see also p. 182.33 Reference to Marx and Marxism is obligatory here. The idea that thought

is determined by one’s class gives rise to what Mises called ‘polylogism’.Obviously, this is a path anyone can follow. The exponents of the GermanHistorical School of Economics even maintained that the logical structureof thought and human action is subject to change in the course ofhistorical evolution. Racial ‘polylogism’, which assigned a specific logic toeach race, came afterward. As Mises (1981b, p. 189) correctly observed,this is only a way to ‘dethrone’ the cognitive process and affirm the‘privileged point of view on the world’; in addition, this is ‘inconsistent’with the premises themselves of ‘polylogism’, because no reason is given toexplain why the thought of one faction or group should not be subject tosocial determinism. Mises (1957, p. 145) also raises these objectionstoward Mannheim and ‘sociology of knowledge’, proponents of‘polylogism’. Popper (1966, vol. 2, p. 217) accuses sociology ofknowledge of neglecting the ‘social aspect of science’ and overlooking thefact that the results achieved do not depend on who states a propositionbut on the controls it is publicly subjected to. Apropos of this, see alsoSchumpeter (1997), Stark (1958) and Merton (1968). Burke (1975b, vol.3–4, p. 239) said that the power or weakness of a theory does not residein the party ‘it comes from’.

34 Popper (1966), vol. 1, pp. 7–10 for ‘historicism’; vol. 2, pp. 224–80, for‘oracular philosophy’.

35 Op. cit., vol. 2, p. 238.36 Voegelin (1952), p. 126.37 Op. cit., pp. 162–3.38 Op. cit., p. 110. See also Voegelin (1975).39 Voegelin (1952), p. 110.40 Op. cit., p. 167.41 Op. cit., p. 170.42 Op. cit., pp. 61–75.43 Op. cit., pp. 124, note 25.44 Parmenides (A), 8.45 Jaeger (1961, p. 106) says: ‘It is significant that all these properties are

obtained by negating certain properties of the sense-world’. The world tocome—the social process—is only appearance; the world of being is thetruth. This is why Jaeger (ibid.) asserts: ‘He has no intention that hisdoctrine of the Existent should explain the natural world of multiplicityand motion; but in his remarkable doctrine of the world of appearance heendeavors to explain the errors of those men who have put duality inplace of One, as the primal substance, and motion in place of that whichpersists unchanged’. What occurs is that ‘facts and places of the divine’ areprojected on ‘the mythical screen’. They are ‘steps towards a new identity,an attempt to reconstruct on different bases an image of an individual in

188 Notes

crisis. The intellect that works under the influence of the gnostic mythstrives to regain its original unity’ (Filoramo, 1983, p. 84).

46 Jaeger (1961), p. 54.47 Ibid.48 Filoramo (1983), p. 10.49 Popper (1966), vol. 2, p. 242, my italics.50 Ibid.51 On gnosticism, in addition to Filoramo (1983), see Jonas (1963), Doresse

(1973), Puech (1973), Grant (1966), Pétrement (1984) and Benelli (1991).It should be pointed out that my position contradicts Durkheim (1959, p.54), according to whom Plato’s collectivism and modern collectivismcannot be assimilated, because the ‘sentiments’ of the former are ‘at theroots of communism’ and are ‘of all times’, while the latter is the productof a more specific social process.

52 Pellicani (1996), p. 693. On the more general subject of gnostic activism,see Pellicani (1975, 1995) and Talmon (1960).

53 On Utopia, see Buber (1949), Munford (1923), Cioranescu (1972) andBaldini (1994).

54 See note 17 of Chapter 4.55 Cf. note 96 of Chapter 5.56 Constant (1988b), pp. 318–9.57 Op. cit., p. 319.58 Op. cit., p. 318.59 Mably (1767), pp. 183–4.60 Rousseau (1997a.), p. 11.61 Rousseau (1997b), p. 17562 Rousseau (1997c), p. 8.63 Helvétius (1973), pp. 289–90; Holbach (1999), vol. 2, p. 312.64 Diderot (1963), p. 202. Praise of Sparta can also by found in the

Encyclopedic under the heading Lacédémone (Republique de); on thesame subject see Guerci (1979), p. 97.

65 Talmon (1952), pp. 64–5.66 Babeuf (1965), pp. 209–10.67 Saint-Just (1946), p. 282, my italics.68 Op. cit., p. 292.69 Op. cit., p. 294.70 Op. cit., pp. 303–4, my italics.71 Op. cit., p. 304. In addition: ‘all children will wear the same kind of

clothing until they are sixteen years old; from sixteen to twenty-one theywill wear the uniform of the worker, and from twenty-one to twenty-fivethat of the soldier’ (ibid.). See also Morelly (1950), pp. 314–5. Theremoval of children from their parents is one of the primary and mostlasting objectives of all collectivist regimes. Even without taking intoconsideration the pathological fantasies of Fourier (1967, pp. 89–131), itshould be mentioned that even Marx and Engels (1988, p. 227) proposedthe abolition of the ‘bourgeois family’ and the replacement of ‘homeeducation’ with ‘social’ education, which really means political education.On this subject, see also Bebel (1988, pp. 229–32).

Notes 189

72 Ferrero (1986), pp. 121–2, my italics.73 Op. cit., p. 122, my italics.74 Burke (1975b), vol. 3–4, pp. 524–575 Op. cit., p. 335.76 Op. cit., p. 334.77 Op. cit., p. 311.78 Ibid.79 Op. cit., p. 302.80 Op. cit., p. 280.81 Op. cit., p. 303.82 Op. cit., p. 369.83 Op. cit., p. 345.84 Burke (1975c, vol. 5–6, p. 168). Burke’s attitude toward the English

revolution of 1688 was very different: he strongly defended it and it iseasy to understand why. Lord Acton (1907, pp. 118–9) asserted: ‘tospeak truly, our two greatest writers, Burke and Macaulay, have takenpains to show that the Revolution of 1688 was not revolutionary […],that it was little more than a rectification of recent error, and a return toancient principles. It was essentially monarchical. The king wasacknowledged to be a necessity in the then state of England […].Nothing was done to determine whether the future belonged to the Toryor the Whig’. Actually, that ‘revolution’ did nothing more than restoredpolitical legitimacy and the certainty of the law. Therefore, as HannahArendt (1963) also noted, this explains the success of the Americanrevolution, which was exclusively directed toward establishing aninstitutional framework favorable to individual freedom and economicdevelopment.

85 Burke (1975c), vol. 5–6, p. 168.86 Tocqueville (1848), p. 2418.87 Tocqueville (1952) p. 112.88 Op. cit., p. 129.89 Op. cit., p. 135.90 Op. cit., p. 210.91 Op. cit., p. 209.92 Op. cit., p. 213.93 Ibid.94 Cochin (1979), p. 140. On the French revolution, see also Cobban

(1964), Furet and Richet (1973), Furet (1966).95 Talmon (1952), p. 135.96 Crouzet (1967), p. 173.97 Tocqueville (1952), p. 135.98 Acton (1862), pp. 410–7.99 Pellicani (1974), p. 200.

100 Mises (1969), p. 23.101 Op. cit., p. 31.102 Hayek (1967), p. 168.103 Ibid.104 Spengler (1924), p. 1.

190 Notes

105 Op. cit., p. 2.106 Ibid.107 Ibid., my italics.108 Sombart (1937), p. 5.109 Op. cit., p. 146.110 Marx (1988), p. 103.111 Sombart (1937), p. 194. Mises (1983b, p. 34) had the following to say

about the evolution of the German Historical School of Economics: ‘Suchwas the progress of German Academic economics from Schmoller’sglorification of the Electors and Kings of Hohenzollern to Sombart’scanonization of Adolf Hitler’. Mises (1978b, p. 103) also recounts thatSombart would have liked to change the title Die drei Nationalökonomieto the more significant one of Das Ende der Nationalökonomie (The Endof Economics). Sombart confessed to Mises that he did not do it ‘out ofconsideration for his colleagues, who were earning a livelihood fromteaching economies’. What is important to note here is that the objectiveof the open society’s enemies is always the same: to eradicate the marketand the science that studies its laws, in order to reassert the primacy ofpolitics.

112 See respectively Mises (1969), p. 32 and Hayek (1967), p. 169, note 1.This is why Spengler (1924, p. 8) praised Bebel, in whose party there wassomething ‘soldier-like’ that distinguished it from the ‘socialism of allcountries: the marching step of battalions of workers, the silentdetermination, the discipline, and the courage to die for something thattranscend the individual’. He also praised the ‘spartacists’ (ibid.). AndSombart (1937, p. 160) said that Lassalle, ‘in the time of the bleakestManchester period, under the spell of his teacher, Fichte, represented theidea of the state in eloquent words’.

113 Mises (1969), p. 148114 Hume (1930), vol. 2, p. 236.115 Tocqueville (1952), p. 135.116 On Nazism and Plato, see Hoernlé (1937), pp. 178–81 and Rawson

(1991), pp. 331–43.117 Mises (1981a), p. 485; Mises (1969), p. 56; Mises (1998), p. 6.118 Ibid. This is an opportunity to clarify a point. When the market is

manipulated through political interventionism, private ownership nolonger guarantees the contractual freedom of the social actors, even if it isformally in effect. In other words, if relevant economic data are altered sois the choice of the operators. Pascal (1938, p. 177), going back toRobertson, maintains that the condition of private ownership is anindication of the relationships that exist between the holders of politicalpower and the civil society. To tell the truth, as Smith had already done,Robertson (1835, p. 104) delved more deeply. Indeed, in reference to theTurkish system of government, he wrote: ‘It is the distinguishing andodious characteristic of eastern despotism, that it annihilates all otherranks of men, in order to exalt the monarch; that it leaves nothing to theformer, while it gives everything to the latter; that it endeavors to fix in

Notes 191

the mind of those who are subject to it, the idea of no relation betweenmen, but that of a master and of a slave; the former destined to commandand to punish, the latter to tremble and to obey’. Robertson understoodvery well that the most important characteristic of closed systems is toraise political power to the rank of ‘privileged point of view on theworld’. Even when this does not lead immediately to formal abolition ofprivate ownership, it causes its substantial suppression. Marxismfollowed the former route, Nazism the second. The objective of theScottish moralists, who believed in a regime of liberty, was to eliminatethe ‘privileged point of view on the world’ and rigorously protect privateproperty. By considering the ‘philosopher class’ a privileged source ofknowledge and advocating the abolition of private property, Marx turnedtheir position upside down. ‘Control’ of private property and its abolitionfunction as protection of the ‘privileged point of view on the world’. OnMarx and the Scottish moralists, see Pascal (1938), Forbes (1954), Meek(1954) and Lehmann (1960).

119 Mises (1969), p. 47.120 Ibid.121 Op. cit., p. 46. In keeping with this, see Schoenbaum (1967); Turner

(1985); Barkai (1990). On Fascism, cf.: De Felice (1966); Sarti (1971);Melograni (1972); Settembrini (1978); Sternhell (1978); Milza (1991);Griffin (1993) and Neocleous (1997).

122 Ortega y Gasset (1981), p. 35, my italics.123 Ortega y Gasset (1958), p. 267.124 Nozick (1974), p. 310.125 Op. cit., p. 311.126 Ibid.127 Bartley (1990), p. 243, my italics.128 See note 87 of Chapter 2.129 See note 120 of Chapter 6. It is worthwhile adding what Popper (1991,

pp. 28–9) says: ‘The more we learn about the world, and the deeper ourlearning, the more conscious, specific and articulate will be ourknowledge of what we do not know, our knowledge of our ignorance.For this, indeed, is the main source of our ignorance—the fact that ourknowledge can be only finite, while our ignorance must necessarily beinfinite’. On ignorance in economics, see also Stigler (1961), Sowell(1980), O’Driscoll and Rizzo (1985).

130 Kelsen (1929), p. 100.131 Op. cit., p. 101.132 Op. cit., pp. 101–2.133 Bartley (1990), p. 14, my italics.134 Smith (1976a), pp. 228–9, my italics.135 Mises (1977), p. 17.136 Rightly Settembrini (1982) spoke of ‘true revolution’ and ‘false

revolution’ in reference to the advantages produced by an open societyand the damage caused by many so-called political ‘benefactors’ or

192 Notes

‘heroes’. Previously, Settembrini (1978) had spoken of Fascism as a‘counter-revolution’, and, what is more, an ‘imperfect one’.

137 Jaeger (1986), p. 299.138 The expressions in quotation marks are from Jaeger (1964), respectively

from p. 36 and p. 174.139 Here I am using an expression from Mises (1969), p. 52.

193

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206

absolute monarchy 59, 144absolutism 3abstract order 6; and the mobilization of

knowledge 120–5Academy 48Acton, Lord 8, 16–18, 19Anglo-Saxon tradition 101Antisthenes 130Apothetae 45Aristophanes, plays of 13–16Aristotle 4, 66, 101, 103; between

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9; contractual freedom 29–31; habitatof liberty 16–19; ignorance and liberty32–7; market in plays of Aristophanes13–16; Meyer 9–10; Pericles 11–13;Popper 10–11, 13; private property 74–5; Solon and the ‘struggle for law’ 19–25; and Sparta 25–9, 143

Austrian School of Economics 5, 99–127;conflict with Walrasian approach 108–12

authoritarian state 25–9 Babeuf, F.N. 139Bacon, F. 66barter 52–3Bartley, W. 89, 129, 130, 132, 148Bebel, F.A. 146being, doctrine of 41, 135Bentham, J. 84, 100Bernier, F. 70–3, 75‘best men’, rule by 59Boehm-Bawerk, E.von 105, 113, 121–2,

126

Bolshevism 74Bücher, K. 9Burckhardt, J. 3bureaucracy 12Burke, E. 87–9, 99–100; French revolution

140–2Bismarck, O.von 145 Cannan, E. 84capitalism: origins of modern capitalism

94–8; see also economic activity,market

Carthage 61Cato the Censor 19cavern, myth of the 39–40centralism 142change, liberty and 147–50Charmides 46children 44–5, 139China 143choice 29–30, 37–8, 123; lack of in Sparta

25–9Christianity 134–6Cicero 19, 31, 56–61cities; characteristics of the Platonic city

41–8; and countryside 94–6; maritimecities 4, 10–11, 60–1

civil society 67–9classical economists 84Clement 135closed society 2–4, 128Cochin, A. 143collectivism 73–4, 103, 118–19; Aristotle

53–4; Platonic city 43–8colonization 10–11commercial courts 30common good 85, 93, 124commutative justice 56competition 113–15, 117, 132

Index

Index 207

Comte, A. 150consensus, government by 16–17Constant, B. 5–6, 8, 9, 25–6, 26–7, 137–8consumer sovereignty 54consumption 83contractual freedom 29–31contractualism 67, 79Convention, the 140conversion 40; vs critical discussion 62–6cooperation 21, 30, 33, 124, 148–9;

competition and 113–15; Scottishmoralists 81–2; Solon 24

Corinth 61cosmopolitanism 10countryside, city and 94–6Crete 27, 46, 52, 149Critias 46critical discussion 8–11, 12, 16–19, 75;

conversion vs 62–6critical rationalism 128–9, 133–4custom, law and 26, 91 democracy 8–11, 12, 47–8, 148; habitat of

liberty 16–19; Hayek 125; socialinteraction 37; Socrates 36

Descartes, R. 66, 130–1, 137development: economic 8–16, 89–94;

liberty as the habitat of 89–94; political8–11, 16–19

Diderot, D. 138dike 20–1disequilibrium 113–15, 117distribution 83–4distributive justice 56division of knowledge, problem of 86–7,

115–20Durkheim, E. 150 economic activity 71–2; Aristotle 52–6;

Cicero 60–1; see also marketeconomic development 8–16; liberty as the

habitat of development 89–94economic value see valueEgypt 27, 46Ehrenberg, V. 14, 2518th Brumaire revolution 139–40empiricism 105Engels, F. 75–6equality 12–13, 138–9; legal 17–18, 20–2,

29–31equilibrium 109–12, 116, 117;

disequilibrium 113–15, 117essences 39essentialist theory of value 84–5

ethical orientation 108–9ethics 59–60, 77–82eunomia (lawfulness) 24exchange 52–3, 55–6, 81, 101–2; see also

economic activity, marketexchange value 54–5 fallibilism 1–2, 5fallibility 100–1, 132–3, 148; ignorance

and the study of ‘latent functions’ 85–9‘false individualism’ 1family 44–5Ferguson, A. 89–90, 92, 93, 94Ferrero, G. 139–40feudal anarchy 94Filangieri, 5–6food, distribution of 12Forbes, D. 90French revolution 137–43, 144Fustel de Coulanges, N.-D. 26 general econonomic equilibrium theory

109–12, 116, 117German Historical School of Economics

101, 103–8, 108–9Germany 74, 144–7Girondists 144Glotz, G. 12–13gnosis 133–6God 40–1Gomperz, T. 73good: common good 85, 93, 124; supreme

good 50–1, 85Good and Evil 38, 108–9; impossibility of

science of 77–82Grote, G. 63–4Grotius, H. 84–5 habitat, normative 16–19, 24–5, 56–7,

148; liberty as habitat of development89–94; mobilization of knowledge 120–5

happiness 51, 53Harrington, J. 69, 74Hayek, F.A. von 7, 99, 100, 120, 127,

129, 148; Germany, socialism andMarxism 145; mobilization ofknowledge 120, 123–5; ‘true’ and ‘falseindividualism’ 1; unification of Austrianand Scottish traditions 115–20

Hegel, G.W.F. 108, 150Helots 28Helvétius, C.-A. 138Hesiod 20, 21

208 Index

Hildebrand 103–4historical materialism 75historicism 133–6Hitler, A. 74, 150Hobbes, T. 67Holbach, P.-H. d’ 138honesty 57–8hubris, intellectual 22, 24, 47, 120, 131,

143human nature 62–3Hume, D. 82, 87, 89, 100, 115, 146;

morality 77–82; private interest 94Hume’s law 78Hutcheson, F. 84 ignorance 100–1, 148; and disequilibrium

113–15; fallibility and study of ‘latentfunctions’ 85–9; and liberty in Athens32–7

immutable, science of the 50individual: subordination to the state 25–9individualism 119; methodical 99–101;

methodological 55, 103; ‘trueindividualism’ and the market 1–2

industrial revolution 95–7institutions 120–3intellectual hubris 22, 24, 47, 120, 131,

143intentionally constructed order 5, 52interpersonal relationships 56–61; see also

social processinterventionism 124–5Ionia 21isonomy 29 Jacobins 138–9, 143Jacoby, F. 25Jaeger, W. 4, 20–1, 41, 64, 65, 149Jaffé, W. 100–1Jevons, W.S. 109Jhering, R.von 19–20, 30–1Joachim of Flora 134justice 18–19, 33, 35–6, 92–3; the struggle

for law 20–3 Kelsen, H. 64, 69, 148knowledge: growth of 8–11; mobilization

of 120–5; partial 105–6; philosophers’monopoly of 39–41; Plato’s theory of38–41; ‘privileged’ see ‘privileged pointof view on the world’; problem ofdivision of knowledge 86–7, 115–20

labor 82

land 71, 72, 75–6Lassalle, F. 144, 146‘latent functions’ 85–9law 35–6, 54; abstract order and

mobilization of knowledge 120–5; andcustom 26, 91; equality before the law17–18, 20–2, 29–31; independencefrom legislation 18–19; natural 59–60,67–9; Solon and the ‘struggle for law’19–25

legislation 5–6, 124–5; independence oflaw from 18–19; science of a legislator90–2

Lenin, V.I. 74Leoni, B. 8, 16, 18–19, 29limitation of power 6Livy 56–7Locke, J. 67–8, 69, 77, 82Lycophron 67Lycurgus 27, 29, 45–6, 59, 149; see also

Sparta Mably, G.B. de 137–9Maine, Sir H. 31‘man of system’ 86–7Mandeville, B. de 5, 93–4; morality 77–82‘manifest truth’, doctrine of 66–9marginalism see Austrian School of

Economicsmaritime cities 4, 10–11, 60–1market 4, 8–16, 75, 136; Bernier 71–2;

critical discussion, democracy and 8–11; maritime cities 4, 10–11, 60–1;under Nazism 146–7; Pericles and 11–13; perfect 116; in plays ofAristophanes 13–16; ‘trueindividualism’ and 1–2; see alsocapitalism, economic activity, exchange

marriage 44, 45Marx, K. 75–6, 84, 145, 146, 150Mayer, H. 110–12, 113Menger, C 99–109, 110, 112, 113, 121,

126; and Adam Smith 99–101; vs theGerman Historical School of Economics103–8; and the subjectivist theory ofvalue 101–3

mercantilism 89methodical individualism 99–101methodological individualism 55, 103metics 15Meyer, E. 8, 9–10, 37Milford, K. 101militarism 27–8, 146, 150Mill, J. 84, 100

Index 209

Mill, J.S. 84, 100Millar, J. 92, 96–7mind, growth of 119–20minority, right of opposition of 140Mises, L.von 108, 112, 144, 146;

competition 113–15; partial knowledge106; private property and freedom126–7; social institutions 122–3; theory105

mobilization of knowledge 120–5modernity 133–6Mogul Empire 71–3, 75monarchy, absolute 59, 144money 54–5; manipulations of 125Montagnards 140Montesquieu, C. de S. 137moral rules 59–60, 77–82 national economy 106–7natural law 59–60, 67–9Nazism (National Socialism) 74; socialist

roots 144–7needs 79, 81–2, 101–2Neville, H. 70Niebuhr, B.G. 100normative habitat see habitat, normativeNozick, R. 147–8 òikos (self-sufficiency) 9Olympian gods 3, 33, 128–9omniscience 117, 118–19open society 11–13, 15, 38opposition, right of 140order: abstract 6, 120–5; intentionally

constructed 5, 52; politics and problemof 67–8; spontaneous 4–7

Origen 135–6Ortega y Gasset, J. 5, 54, 57, 147 Palmer, L.R. 30Parmenides 41, 64–5partial knowledge 105–6Pericles 5, 16–17, 33, 37; market and open

society 11–13philosophy 46, 48, 129–30; philosophers’

monopoly of knowledge 39–41phronesis 38physiocrats 143Pipes, R. 69–70Piraeus 11, 15Plato 36, 49, 128, 135, 144, 149–50;

characteristics of the Platonic city 41–8;harmful heredity of Platonic philosophy2–4; private property 4, 73–5;

psychologism 62–6; re-establishment ofthe ‘privileged point of view on theworld’ 37–41, 130; and Socrates 33–4,38, 47–8, 66, 130

plays of Aristophanes 13–16poets 34–5Pohlenz, M. 59Polanyi, K. 11–12, 55political development 8–11, 16–19political power 89politics: object of 50–1; problem of 48–9;

and problem of order 67–8polytheism 3, 33, 128–9Popper, K.R. 29, 35, 50, 55, 66; Athens

10–11, 13; Christianity 136; fallibility1–2; historicism 133; market, criticaldiscussion and democracy 8, 10–11;Plato 74–5, 130; psychologism 62–3;Socrates 34, 130; who should rule? 48–9

poverty 16–17power: distribution in Athens 16–17;

limitation of 6; political 89preferences, scale of 50–1presumption 85–7price 84–5, 102–3, 118private property 93; Aristotle and 53–4;

and freedom 69–76, 126–7; Nazism146–7; Plato and 4, 43–4

privilege, abolition of 16–17‘privileged point of view on the world’

(fundamentum inconcussum) 2, 34–6,47, 82, 112; bearer of 48–9;collectivism and 73–4; GermanHistorical School 103–4, 107; re-establishment of 37–41, 75;renunciation of 17–18, 128–33

procedures 6production 83; under Nazism 146–7Prometheus, myth of 33property see private propertyProtagoras 33–4psychologism 38–9, 41–2, 120, 129, 134,

135; failure of 62–9Pufendorf, S. 84–5 reactionary theory 37religion 26, 128–30; Christianity 134–6;

gnosis 133–6; polytheism 3, 33, 128–9representation of burghs 95Republic, Plato’s 41–8revolution, French 137–43, 144Ricardo, D. 83–4, 100Rodbertus, K. 9

210 Index

Rome 8, 10, 19; contractual freedom 29–31; interpersonal relationships 56–61

Romulus 59Rostovtzev, M.I. 27–8Rousseau, J.-J. 137–8Russell, B. 74 Saint-Just, L. de 138–9Saint-Simon, C.H. 150Savigny, F.von 100scarcity 79, 101, 126Scheler, M. 36Scholastics 84–5Scottish moralists 5, 7, 77–98; Hayek and

unification of Scottish and Austriantraditions 115–20

self-interest 7, 93–4self-sufficiency (òikos) 9Simmel, G. 55slavery 13, 28Smith, A. 7, 103, 108, 115, 148–9;

authority of the state and capitalism 97;city and countryside 94–6; conditionsfor economic development 89–93passim; economic value 82, 83–4;feudal anarchy 94; human presumption85–6, 87–8; Menger and 99–101;moral rules 77–82

social cooperation see cooperationsocial process 68–9; Cicero 56–61; German

Historical School and 103–8; moralrules a product of 77–82

social sciences 104, 108; birth of 7socialism 143; roots of Nazism 144–7society 107–8; as spontaneous order 4–7Socrates 5, 33–7, 90; critic of democracy

34–7; Plato and 33–4, 38, 47–8, 66,130

Solon 4–5, 25, 32, 49, 52, 86, 148;distribution of power 16; eunomia of29; institutions compared to money 30,47; and the ‘struggle for law’ 19–25

Sombart, W. 146soul 38–9Sparta 5, 10, 52, 54, 66, 74, 149; Athens

and 25–9, 143; French revolution and137–9, 143; law and custom 26, 91;Plato’s Republic and 45–6

Spencer, H. 62

Spengler, O. 145–6spontaneous order: and birth of social

sciences 7; society as 4–7state 4; authoritarian 25–9; essential

purpose of 68–9Stephen, L. 83‘struggle for law’ 19–25subjectivist theory of value 84–5, 109–10;

Menger and 101–3supreme good 50–1, 85 Talmon, J. 138Tavernier, J.-B. 70themis 20theories 104–8Tocqueville, A. de 5, 6–7, 7, 142–3, 146totalitarianism 139–40, 150totality of knowledge 105–6trade see economic activity, exchange,

markettragedy, moral 36–7tribalism 1, 37; Aristotle 48–56;

Christianity and 136; Sparta 25–9‘true individualism’ 1–2, 5Twelve Tables 31tyranny 22 use value 54–5usefulness, honesty and 57–8utopia 133–6 value, economic 54–5, 56, 82–5;

subjectivist theory of value 84–5, 101–3, 109–10

values 59–60, 77–82virtue 51–2Voegelin, E. 133–5Voltaire 142–3 Walras, L. 109–10wealth: Plato’s Republic 43–4; power and

16–17; see also private propertyWeber, M. 3, 152Wieser, F.von 82–3, 113, 120–1, 126women 44 Xenophon 36, 45 Zwangswirtschaft 146–7

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