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					Stewart Morris                           SPS Essay Notes                                 Page 1 of 110

1.1 Commercial society and modern liberty
   a) Were the American and French revolutionaries guided by classical conceptions of the
   b) What was „commercial society‟ seen to promise for politics in the later eighteenth and early
      nineteenth centuries, what to threaten?
   c) Why did Hegel claim that bureaucracy was the „universal class‟?
   d) Did Tocqueville believe that democracy in America offered an answer for France?

Geoff Hawthorn - Lecture Notes

The beginnings of the social sciences
      Starts in 18th century as the concept of society developed then
      Previously there had been two ways of thinking about society
              Ancient ethics - character and custom were related and eternal
              Exemplar history - learning from the past, lessons are timeless
      Still concept of force of time, but seen as moving cyclically, not in linear fashion
      Ancient divide between public and private spheres only
      Modern divide between religious and secular, political and social, legal and economic etc. -
       more complicated world
      Moves to commercial-industrial society at the turning point, marking massive qualitative
       change in the social structure
      Irreversible political change - revolution in France worried ruling classes elsewhere
      Intellectual change in 17th century - emergence of new natural sciences which owed nothing to
       superstition or imagination but everything to observation
      Eternal answers of ancient ethics and exemplar history no longer valid for modernity
      History was to be studied for its own sake, out of pure curiosity
      Debate still exists between history and sociology - which is explained by which?
              History explains sociology? Theories to fit the observed world…
              Sociology explains history? - Theories the world has to fit…

The categories of social and political
      Originally almost everything was political - government shapes society as it pleases, without
       having to worry about any external constraining influences
      In 18th century question was posed about how to escape rule of „divinely ordained‟ monarchs -
       opposition could think only in terms of republicanism
      More types of political system now than then
      Aristotle‟s Politics had been dominant political text since 13th century
      Machiavelli and others of his era assumed readers would know Aristotle
      Aristotle suggested man‟s „essential nature‟ was to become moral and therefore social
      Hobbes talked of alternative to this as pre-social „state of nature‟ where life was „nasty, brutish
       and short‟
      Machiavelli claimed that collective acts of will provided civic greatness - more Roman than
      War seen as leading to virtue, and virtue to greatness
      Decline of republic explained in terms of greed and selfishness
      Theories of the republic
             Politics is prior
             Cannot rely on getting politics right forever
      Aristotle claimed that size of polis was important - republic would not work when some
       citizens were unable to hear the herald‟s cry
      May 1789 important turning point - meeting of Estates General in Paris, where 3rd Estate
       comprised of ordinary people such as tradesmen and craftsmen
      Abbé Sieyes talked of a need to acknowledge the will of all, saying that France was no longer
       a series of „cells‟ but a single society
Stewart Morris                             SPS Essay Notes                                 Page 2 of 110

        „Nation‟ as idea of whole society - ultimate political reality uniting the productive and
         excluding the unproductive
        Estates General became National Assembly - will of the people always the „supreme law‟
        „Nation‟ close to „people‟ - Robespierre said the will of the people was virtuous and pure,
         compared to the despotic, vice-ridden government
        Intellectuals were left with dilemma:
               Ancient republic unsuited to modernity
               Presupposes an archaic order or induces despotism of democracy
               Democracy seemed as unpleasant and self-destructive an alternative as the ancient
               A case of „out of the frying pan, into the fire‟ - irreversible change

Ancient republic
        Anger in 18th century against absolutism
        Channel for this anger was that the republic - alternative state
        Turned into the idea of a „nation‟, or „people‟
        French alternative to nation-state, characterised by the Terror, seemed no good

North America
        Egalitarian Protestant republic
        Anger at increasingly active government in London - seen as alien and corrupt
        „Balanced constitution‟ would be where aristocracy rules on behalf of the people - this was
         unpopular, and US aristocracy was very limited
        Strong sense of „one people‟ defined in political terms - part of same nation-state - patriotic
        Idea of electing different representatives to different posts e.g. local/national
        Interpretations:
               Madison - America not a democracy but a republic - no direct rule
               Radicals - people included by representation therefore was a democracy
               Hamilton - a „representative democracy‟
        Aristocracy of character and education, not of wealth and birth
        Greatest fear was a concentration of power in anyone - still true in America today
        According to Aristotle, virtue was a „public good‟ and was homogeneous - instead people
         would vote in their own heterogeneous interests - change in view of what politics was for
        Protestant individualism had strong sense that all power corrupts

        Scottish universities far more active than English ones, which tended to be simply finishing
         schools for the aristocracy
        Politically very distant from English crown, but also hostile to ideas of republic
        Adam Smith: old conception of scarce, fixed amount of wealth stored as gold and silver (with
         wealth accumulation a zero-sum game) had been overturned
        Smith changed this
               Value created by consumption and production
               Virtuous circle where everyone‟s wealth could increase
        New society not in constant state of war - selfish interests could be reconciled
        Overall wealth could increase through specialisation, and division of labour
        Change from passionate talk of republic - honour, glory etc. - to talk of prudence, hard work
         and practicalities
        Smith warned that the labouring poor would become „stupid and ignorant‟ unless the
         government provided education to change this
        Smith was politically conservative - capitalism more important than democracy

        Benjamin Constant studied at Edinburgh and had been in France during the Terror
        Why was there the Terror?
              Not a state of emergency - Robespierre hardly threatened with defeat
              Republic did not destroy absolute power, just replaced it
Stewart Morris                           SPS Essay Notes                                 Page 3 of 110

              Real authors of the Terror seen as those who had invented absolutism previously,
               such as Richlieu and Louis XIV - Terror was the echo of the Wars of Religion
      Views on liberty
           Ancient liberty meant authority of the community
           Modern liberty meant authority of the individual
           People had less leisure time during which they could indulge in politics - more
           Saw dangers in indifference and in insufficient attention to education

Was the ancient republic defeated?
      Preconditions for existence of ancient republic had been undermined
      Security in collective ends no longer existed
      However, an alert body of citizens was still essential
      Ancient aspiration was retained in socialism - conflict with individualism of the bourgeoisie

Views on public life
      Distinguishing between the political, the social and the economic
      Language needed to contest absolutisms - only language available was that of the ancient
      Contrast developed between „ancient‟ and „modern‟ republicanism
      Adam Smith: prudent pursuit of material interests would enhance „mutual sympathy‟
      Smith often used as proponent of modern conservatism - but still very keen on importance of
       interdependence, education etc. to bind people together
      German thinking (especially Marx) rejected this

German thinking
      Government humiliated by French Revolution - had happened in France first
      Germany not a state until 1871 - previously had petty kings, princes and courts
      German had two choices:
            Imitate France - „advance comes in ceasing to be German‟
            Innovate - „Germany contains the opportunity for a different path‟
            Romantic thinking of Kant and Hegel
      Hegel - philosophy of „transformative reconciliation‟
      Romanticism:
            „We live in a world that we ourselves create‟
            Saw a yearning for bonding/community/spiritual identity
            German view of nationhood depends on birth, language etc. vs. French view
                (citizenship only)
      Hegel rejected emotional desire for community - needed rational thinking and institutions
      Kant:
            Affected by philosophical thinking of Scottish reformers, especially concerning
            „Radical dualism‟ between experience on the one hand and concepts on the other
            What do we do with thought?
            Many found Kant‟s cynicism hard to swallow
      Schelling and Hegel:
            Unity of subject and object
            A world exists beyond what we know about it - tendency towards unity in the world
            World hangs together because it is rational and logical
            Self-interpreting spirit (Geist) which realises itself through time until there is a
                known reason for everything, including reason itself

Effects on Germany
      Reason as the driving force behind everything
      Men are rational, and have a will to reason
      Reconciliation of this with political economists‟ society of self-interested individuals
      Smith‟s society prone to fragmentation and conflict
Stewart Morris                          SPS Essay Notes                               Page 4 of 110

      Our identity comes from our social relations (Hegel) including relationship between Stände
       (classes) or other status groups
      We transcend the division within ourselves by using reason to achieve social harmony
      To be free is to have private property
      How is rational law expressed politically? Place in division of labour marked by membership
       of a society or guild, and through these your will is expressed nationally
      Bureaucracy described by Hegel as „the universal class‟ - Hegel loved them as they apparently
       governed by reason alone
      Hegel wished for a system whereby the guilds and corporations would take their case to an
       assembly, which would pass laws for the King to sign (automatically)
      Those without property were seen by Hegel as being outside this scheme

Is there truth in what Hegel says?
      Although theological view has declined, Hegel‟s suggestion that everything exists according
       to reason is generally rejected nowadays - Hegel stretched his credibility with metaphysical
      Always a possibility of some things having occurred without reason e.g. evolution is a series
       of accidents
      Politics:
             Liberal - reflected concerns about extending democracy
             Good institutions seen as necessary
             No guarantee against tyranny in a democracy
      Rhetoric:
             Germans wanted political decision which was their own
      Political system based on property ownership, or vice versa? (Marx)

Liberty and democracy
      Bourgeois society leads to practical independence, which leads to intellectual independence in
       which social sciences could develop
      In France increasing hostility to monarchy and aristocracy
      Scottish political economists: fear that passion for power leads to corruption
      American solution was the separation of powers
      Anxiety that „public virtue‟ would be subsumed by private interest
      Smith put his faith in „sympathy‟ and good public education
      Hegel argued for representative interest groups and a separate bureaucracy
      In France there had been many political disturbances and despotisms
      Alexis de Tocqueville - wanted to find out how society could avoid authoritarianism
      Guizot: answer came not in thinking about form of government but about the state of the
       people, and what follows from that
      Britain not the answer to France‟s problem - in fact no model in Europe
      Looked to USA instead as model for the European future
      Five conclusions of „Democracy in America‟
             Democratic government instils sense of political rights (including property rights)
                which are expected, not given
             People did not immediately take property from the propertied classes - the right to
                own property gave people a respect for property
             Democracy may not be the most skilful government but can achieve political
                energisation of society, and government can therefore be effective - e.g. New
                England town meetings, everyone helps to determine their future, then works at it
             Energisation was facilitated by independence and Protestantism - see Quebec
                (Catholic) with its comparatively retarded political system
             Federalism - power of a great republic, security of a small one
      De Tocqueville interested in „character‟ - aristocratic versus democratic
      The aristocratic character:
             Formed in the context of seemingly eternal social difference
             Each group was restrained by others, but settled within the group
             Associated with liberalism - no need to persuade others to think like yourself
Stewart Morris                           SPS Essay Notes                                Page 5 of 110

      The democratic character:
             Sense of similarity between people
             Mobile and ambitious, energetic, egalitarian, restless
             The public imposes its beliefs - pressure of „the mind of all‟ on „the intelligence of
                 each‟ - intolerance of difference
             De Tocqueville noticed „public opinion‟
             Europeans now struck by massive paradox in America of conformity even as they
                 talk of freedom and liberty
             „modern liberty‟ could turn into conformity
             „The Lonely Crowd‟ - people told they are free when in fact they are slaves to public
             Extension of political rights did not prevent authoritarianism
      Political system did not solve this problem, so sociology emerged
      Term „sociology‟ coined in 1838 by Comte
      Comte talked of evolution from non-rational thought through metaphysical to scientific
      De Tocqueville could not stand Comte‟s thinking - „force of history‟ argument is suited to
       democratic society, but may lead to unacceptable fatalism
      De Tocqueville said Comte was ironing out differences, tensions and paradoxes in human
       societies, and ignoring individual ideas
      Move towards rationality naturally breeds conformity
      Possible to live in a society without conflict
      Marx accepted this but said such conflict could not be ironed out in bourgeois society
      Rationality would end conflict, but only in the context of socialism

A new anxiety
      Theories of „social evolution‟, not from Darwin‟s ideas, but pre-dating him
      Origin - moral confidence and anxiety in 18th and early 19th century
      Confidence about greater justice, prosperity, liberty, security and peace
      Anxiety about adverse consequences of industrialisation (poverty, unemployment), socialism
       (as a challenge to modern liberty), the irrelevance of religion and the difficulty of maintaining
       Enlightenment beliefs
      Smith: pursuit of utility guarantees stability
      Needed a rational account of history - overlap between reason and idealism
      Needed a history which justified progress in scientific way, to apply to all men in all
       conditions at all times
      Maine 1840s-80s:
             Compared Britain, Ancient World and India
             Tried to show that Greek was first language (common root of English and Sanskrit)
             Talked of rational administration
             Laws adapt to circumstance, but slowly
             Change from government by habit to government by interests
      Spencer:
             General theory of evolution suggested that for a theory to have real authority, it must
                be scientific
             Evolution related to adaptation to environment and competition - important themes of
                the period
      1880s onwards:
             Liberal society may produce poverty, cruelty, lack of care or empathy etc.
             „Collectivism‟ versus „individualism‟
             Reconciling modern liberty and collectivism would be a problem

Morality of modernity and Nietzsche
      People always trying to show the desirable to be natural or necessary
      Nietzsche said value of „values‟ had always been taken as given
      Morality itself was in fact the danger
      Utility of something does not explain how or why it emerged
      Emergence is through will to power, not through nature
Stewart Morris                         SPS Essay Notes                               Page 6 of 110

      Modern sense of „good‟ contrasts not with „bad‟ (a social category) but „evil‟ (specific to
      A „bad conscience‟ arises when a man finds himself „imprisoned‟ by society with his instincts
      Slave morality of „only those who suffer are good‟
      Resentment turns creative and gives birth to values e.g. Christianity, Protestantism, French
      Western conception of morality is the „triumph of the miserable‟
      Emotional escape from this morality is far easier than practical escape
      Nietzsche was pessimistic about culture and politics
             Saw politics as run by the financial bourgeoisie
             Decisions on war and peace taken away from leaders and given to people, who are
                infused by financial bourgeoisie with liberal, anti-war values
             Socialism „the fanciful younger brother of the almost expired despotism it aspires to
             Socialism „can only exist for brief periods here and there, and only through the
                exercise of extreme terrorism‟
      So what was Nietzsche‟s „way out‟?
             Was nostalgic for society where „a choice type of being is able to raise itself to its
                highest task‟
             Need to find a rational foundation for the „good public life‟
             Questions the very idea of progress - „the realisation of the model‟
      Interpretations of Nietzsche
             Seen as authoritarian, keen on Napoleon - ideal of „ubermensch‟
             Nietzsche‟s sister peddled parts of his philosophy to justify Nazism - entirely wrong
                as Nietzsche argues against collectivism
             Exposes extent to which philosophers had failed to question morality or society
             Could reason be used as an instrument of liberty, prosperity and peace?
      Influence in Germany
             165,000 copies of Thus Spake Zarathustra provided for WW1 troops
             Politics of Max Weber influenced by Nietzsche
             Strong influence on post-modern, post-structuralist philosophy of Foucault
             Way to attack bourgeois world is not to let anything be taken for granted - no need to
                criticise individual policy measures as that provides system itself with legitimacy

Benjamin Constant - ‘The liberty of the ancients compared with
that of the moderns’

Characteristics of ancient and modern liberty
      „Since we live in modern times, I want a liberty suited to modern times‟
      Ancient liberty:
            Collective debates among whole polis - „political liberty‟
            „Complete subjection of the individual to the authority of the community‟
            None of the liberties of the moderns
            Laws regulated customs
      Modern liberty:
            Rights enshrined in law
            Protection against arbitrary arrest and so on
            Right to express one‟s opinion even if against majority view
            Right to choose one‟s profession
            Right to dispose of or abuse property
            Right to come and go without permission etc.
            All these are types of „social liberty‟
      Ancient republics were restricted to narrow territory and were bellicose (warlike)
      Slaves were kept to work while the free men discussed politics
      Modern republics are incomparably larger
      War seen as a burden, so there is a tendency to peace
Stewart Morris                           SPS Essay Notes                                Page 7 of 110

      War and commerce as two ways of achieving the same end - to get what you want
      Commerce can be seen as conquest by mutual agreement
      Also a virtuous circle of peace and commerce e.g. safety at sea leads to the establishment of
       trade routes
      Changes:
             Increase in size of republic means decline in political importance for each individual
             End of slavery meant men had less time for politics
             No periods of inactivity among the moderns
             Commerce gave people a love of individual independence
      Greek politicians of the past talked of virtue, honour, glory
      Now the politicians talk of „commerce, finances, wealth and even luxury‟
      Effects of commerce:
             Makes the action of arbitrary power more oppressive than in the past, and arbitrary
                power must multiply itself to reach all areas - action of arbitrary power is made easier
                to elude, e.g. property is more difficult to seize
             Circulation of property - „invisible and invincible obstacle to the actions of social
             Authority itself placed in a position of dependence - if state is excessive, „money
                hides itself or flees‟ (Charles Ganilh) and all operations of the state are suspended.
                Power threatens and wealth rewards - to obtain favours of wealth one must serve
                wealth, and wealth will win over power
      Representative system is therefore necessary
      Danger that moderns might surrender political power too easily
      Aim for pursuit not of happiness but of self-development would keep this in check

Hont & Ignatieff - Needs and justice in The Wealth of Nations

Changes in attitudes
      In commercial societies, the „industry of the peasant‟ supports the „slothful landlord‟
      This arises from the division of labour - extra productivity allows the support of the
      Civic discourse: comparison of societies by forms of government and political liberty, while
       Hume and Smith compared governments on property rights and how well they met the needs
       of labourers
      Delegation of unproductive factors (e.g. army) was crucial to raising productivity of labour
      Consumption of rich and poor is no longer a zero-sum game
      Lack of moralising about spending - spendthrifts no longer seen as using up society‟s
      Subsistence of labouring poor requires bureaucracy to e.g. maintain grain prices and manage

Smith- The Wealth of Nations

Promises of commercial society regarding war
      „It is not out of the benevolence of the butcher, the brewer or the baker that we expect our
       dinner, but from their regard to their own interest‟
      In trade between town and country, „the gains of both are mutual and reciprocal‟
      In primitive hunter-gatherer societies, every man is suited to war and often called to be a
      In animal husbandry, some must stay behind to look after the settlement
      In manufacturing, „nature‟ does not take care of their work, so revenue lost to artisans means
       they must be paid to fight
      Improvement in the art of war has led to longer wars, so more support needed for the fighters
      Number of people who can fight is therefore smaller in a civilised commercial society
      Division of labour necessary also for improvement of art of war
Stewart Morris                           SPS Essay Notes                                Page 8 of 110

       Martial training for general populace seems unlikely - „the great body of the people becomes
        altogether unwarlike‟
       Industrial, wealthy societies are the most likely to be attacked
       Protection needed, either by
              Rigorous police force to ensure martial training - militia
              Rendering the trade of a soldier distinct from all others - standing army
       Standing army more effective than militia - is the only defence of civilised society against
        barbarous nations
       Expense of standing army grows over time - better firearms, ammunition, defensive structures
       Societies are generally turned against concept of war

Promises and threats of commercial society

General themes
       Increase in human ability to change things for the better - end to cyclical view of history
       Examples are political revolution in France and industrial revolution in Britain
       Massive qualitative change in social structure
       Previously there had been no external constraining influence on politics
       Machiavelli: men are greedy and selfish, in need of political virtue - threat of working classes
        running the show selfishly
       Aristotle: republic would not work where citizens could not hear the herald‟s cry - increase in
        size of society to nation-state
       Robespierre (vs. Machiavelli) - will of people is virtuous compared to despotic, vice-ridden
       „Despotism of democracy‟ unites the productive at the expenses of the unproductive
       Rousseau: laws were necessary to „force men to be free‟
       The people must determine the way in which the government acts
       Terror in France - alternative to ancien regime seen as just as bad
       Did not destroy absolute power, just replaced it - fear of concentration of power (esp. USA)
       Smith said selfish interests could be reconciled - no class war necessary
       Prudent pursuit of private interests would lead to „mutual sympathy‟
       „Civil society‟ of self-interested individuals
       Change from passion to practicalities - capitalism more important than democracy
       Transcend divisions and use reason to achieve social harmony
       Security in collective ends of honour and glory no longer valid as individuals came to the fore
       Germany could not imitate France - had to innovate
       Hegel - new institutions needed for nation-state „community‟
       Kant - empiricism was only valid way
       Hegel/Schelling - if everything has a reason, the existing order can be challenged as they have
        to justify their position
       Freedom in private property - but what about the dispossessed?
       Hegel - love of bureaucracy, desire for representation through guilds etc.
       Liberals - concerned about extended democracy
       Democracy no guarantee against tyranny
       Bourgeois society leads to practical independence which leads to intellectual independence
       Anxiety about „public virtue‟ lost, and replaced by desire to ensure private interest
       De Tocqueville - how to avoid authoritarianism - extension of property rights:
              Means that political rights are expected, not given
              Creates aspirations and respect for property
       Rationality leads to conformity - dual consequences of intolerance and reduced conflict
       Marx - such conflict ends only in communism

THREATS                                              PROMISES
Terror and authoritarianism                          Modern liberty
Seizure of property                                  Lack of threat to the unproductive
End to ancient liberty                               End to conflict through selfish cooperation
Stewart Morris                           SPS Essay Notes                                Page 9 of 110

Supervision notes

Introduction to commercial society
      What did the people of the time mean by it?
      Features:
             Wealthy - produced by growth of commerce, the „market‟
             Plurality of interests - economic roles linked to social roles
             Existence of private sphere of human activity, separate from the political
             Much larger communities - nation-states
      The particular and the universal had been pulled apart - Hegel
      Market becomes independent of politics and more of a focus than politics
      In ancient polis, no separation of public and private spheres - virtually everything was public
      Market mode of commercial society becoming dominant
      Commerce seemed more attractive than war
      Is regulation of the market necessary?
             Public goods
             Defence
             Protection of property
      Education - combination of merit good and public good
      Political alienation the main threat, individual liberty the main promise
      Constant - representative democracy vs. Hegel - some way to reconcile interest groups
      Take characteristics of commercial society and assess promises and threats of each
Stewart Morris                              SPS Essay Notes                                   Page 10 of 110

1.2 Marx before Marxism - laws of motion
   a) What grounds did Marx have for claiming that his conception of humanity‟s „species-being‟
      had a „real‟ as opposed to a „philosophical‟ basis?
   b) Why did Marx feel that it was necessary to uncover the „laws of motion‟ of modern society?

Essay notes

      Marx produced new ideas about political and legal system
           General view was that modern institutions developed either from themselves, as a
               consequence of their own benefits compared to ancient systems, or from the „general
               development of the human mind‟
           Marx disagreed - system had roots in the „material conditions‟ of life
           Anatomy of civil society to be sought in political economy
                 “It is not the consciousness of men that determines their being, but their
                 social being that determines their consciousness”

      Production a „social process‟ and modern „bourgeois relations‟ only a part of this
      Much of philosophy comes from reflections on pre-history
      Like Nietzsche, early human condition seen as struggle with nature and desire to achieve
       mastery over nature for man‟s own purposes
      Turning point came with development of tools which allowed a man to produce more than he
       could consume
      Potential for conflict then in who would share the surplus food, and potential for certain
       groups to appropriate the fruits of the labour of others#
      This is used to determine which circumstances have had the greatest effect in changing human
       civilisation - philosophy of „historical materialism‟

Struggle in human society
      Arises from production relations described above
      Man‟s power over nature always increasing through division of labour, but majority
       increasingly deprived of benefits of that power
      As this power increased, owners of power became relatively richer, as the division of labour
       increased the amount which the wielder of power was able to appropriate
      Sees capitalism as moving towards it own destruction as inequalities of the past are
       exacerbated by modern production methods
      History was itself moving towards final liberation of man
      Criticised as simple determinism - allows no room for individual influence
      Marxist response is that theory does not try to predict actions of individuals, but only predicts
       „mass phenomena‟ which obey „social laws‟
      Laws seen as just as incontrovertible as those of the natural sciences - dismissed other
       political, philosophical, religious and aesthetic thought as less rigorous and scientific than his

Two levels of human society
      Recurring theme in Marx‟s writings
      At the „base‟ there are the relations of production, while built on the base is a „superstructure‟
       of political institutions (especially the state), organised religion, laws and customs,
       philosophy, morality and ultimately human consciousness
      Struggle inherent in base was seen to express itself in superstructure, so an understanding of
       superstructure only possible if one first has full grasp of „laws of motion‟ at the base
      Criticised Hegel‟s „Philosophy of Right‟ for starting with abstract ideas, not concrete reality
      Hegel believed state came about as a result of a general „idea‟ which would succeed through
       its own superiority, while Marx saw the family and civil society (lower levels) as having
       turned themselves into the state
Stewart Morris                            SPS Essay Notes                                Page 11 of 110

      Marx disagreed that state bureaucracy was innately good - apex trusted lower circles with
       insight into the individual, while lower circles trusted apex with insight into universal - each
       end of bureaucracy liable to deceive the other
      Reduced likelihood of Hegel‟s claim that bureaucracy existed because of their superiority
      Marx described bureaucracy as „the idolatry of authority‟ - political state only „the mirror of
       truth for the different elements of the concrete state‟

Prospects for communism
      Laws of motion could identify what a communist state would be like in practice
      Marx believed communism could only come about after capitalism, so study of capitalism was
       the best way to comprehend the developments that would bring about communism
      No „shortcuts to socialism‟ in Marx‟s view - public needed a hatred of capitalism before
       socialism would be acceptable
      Fits in with historical materialism - history born of massed human desires, leading to
       creativity and progress
      In this view, capitalism had to have preceded industrialisation
      Marx searched for factors which encouraged large accumulation of capital in Middle Ages,
       and settled on emergence of civil society as principle reason - autonomous plane of economic
       activity had developed, free from constraints of politics or religion

‘Cardinal facts’ of capitalist production
      Firstly, the replacement of private property with „social property‟ through concentration of
       means of production in a few hands
                 “The appropriation is accomplished through the action of the imminent
                 laws of capitalist production itself”

      Trustees of the „social property‟ were pocketing all the profits of this trusteeship
      In an industrial nation, minimal amount of capital required for business start-ups would
       steadily increase - existing producers would use better but more expensive machines to stay
       ahead of the competition
      This was another immutable „law of motion‟ - even greater divide between owners of capital
       and those who were denied the chance to own capital themselves by these prohibitive start-up
      Power of capitalists “an alienated, independent, social power, which stands opposed to society
       as an object”
      Secondly, replacement of private labour with „social labour‟, through division of labour and
      Pressure for existing labourers to work longer hours, at the expense of those who would
       become unemployed as a result
      Surplus value of extra hours divided among capitalists as dividends
      Unemployed would be at the forefront of revolution
      Result of „cardinal facts‟ was replacement of a society in which all members participated with
       one where the vast majority were excluded from the labour and capital markets
      „Trinity Formula‟ - capital „monopolised by a certain section of society‟, advantages of
       improved use of land „transferred from the cultivator to the landlord‟, and labour „taken by
       itself does not exist at all‟ in that it depends on land and capital for its existence
      Class system developed out of these fundamental laws - owners of labour power alone,
       owners of capital and owners of land constituted capitalist class system
      Marx aimed to prove that modern political and social system could not be understood without
       first looking at the „laws of motion‟ governing the economic patters at the base of society

Supervision Notes
      Problem of separating base and superstructure, as superstructure feeds back into the base
      Expropriation of the proletariat terrible but was appropriate to material means of production
      Bourgeoisie have fulfilled their historical position and become redundant - no longer any need
      Unlimited productive potential of capitalism
Stewart Morris                          SPS Essay Notes                              Page 12 of 110

      Asked same questions as Keynes - why recession? why are the machines idle?
      Crises occur because „laws of motion‟ become fetters
      Very structure of capitalism which causes slumps - not deficiencies in means of production
      „People make history but not as they please‟
      Praxis - practical action - the world would not change unless society acted, but society was
       compelled to act by historical forces
      Marx complained that Hegel‟s philosophy was all in the head - world would not change
       through „contemplation‟ or „moral indignation‟
      Marx ducked question of what the future would look like
      Qualitative change follows quantitative change
      Capitalism organised by what is most efficient - ownership relations based on power and
       efficiency - but which comes first?
Stewart Morris                           SPS Essay Notes                               Page 13 of 110

1.3 Evolution
   a) Why were later 19th century social thinkers attracted to the idea of „evolution‟?

Peter Chedworth - Lecture Notes

      Darwin influenced by Malthus - idea of „no standing room‟
      Struggle for survival
             Between young to survive/mature
             For reproductive advantage
      Could be collective, not individual
      Different interpretations: individualistic in USA, collective in France
      Darwin believed in Lamarckian inheritance of acquired characteristics - discredited in
       mainstream biology now
      Sexual selection - development of characteristics to attract the opposite sex
      Diversified species able to „seize on many and widely diversified places‟ and therefore able to
       increase in number
      Evolution led to increasingly efficient „division of labour‟ within organisms - heart, liver etc.
      Spencer compared this to societies
      Darwin tried to avoid claiming that evolution was progress
      Social/human Darwinism - evolution of mind towards intelligence
      Sexual selection took place in humans as well
      Continuum between man and other animals - man subject to instincts too
      Survival of the fittest and human society - Darwin believed European countries were
       succeeding because of higher intellect of European peoples
      Public intervention interferes with natural selection e.g. hospitals, workhouses, vaccinations
      Galton pushed notion of natural (hereditary) intelligence
      Galton created eugenics and possible speeding-up of evolution
      Theory maybe a transfer from social science of e.g. Adam Smith to natural sciences
      Darwin had little understanding of mechanisms of inheritance

Darwinism, Social Darwinism and Social Context

Key themes
      “Even slow-breeding man has doubled in twenty-five years, and at this rate, in a few thousand
       years, there would literally not be standing room for his progeny”
      “I should premise that I use this term (struggle) in a large and metaphorical sense including
       dependence of one being on another”
      Individuals vary in many ways. Those with advantageous variations will achieve full
       development and reproduce, so the variation (could be adaptive/Lamarckian) will spread
       throughout the population while the disadvantageous ones will disappear
      “A struggle between the individuals of one sex, generally the males, for the possession of the
       other sex”
      „Survival of the fittest‟ was invented by Spencer
      Forms of organisms constantly tested against the particular environment in which they live
      A set of animals with their organisation only slightly diversified could not compete with one
       where the organisms were highly diversified
      Randomness:
             No inbuilt trend forcing a species to evolve in a certain direction
             No force (e.g. no God) makes species progress along preordained hierarchy of
             No „evolutionary ladder‟ that all species must ascend
             Evolution is open-ended with no single goal - purely directed by the demands of the
                 local environment on the population - no teleology (study of design or purpose)
Stewart Morris                              SPS Essay Notes                                    Page 14 of 110

Extended to humans and human societies
      Animals, like humans, possess a moral sense:
                 “Besides love and sympathy, animals exhibit other qualities connected
                 with social instincts, which in us would be called moral; and I agree with
                 Agassiz that dogs possess something very much like a conscience”

      Humans, like other animals, have a strong social instinct:
                 “The social instincts, which no doubt were acquired by man as by the
                 lower animals for the good of the community, will from the first have given
                 him some wish to aid his fellows, some feeling of sympathy, and have
                 compelled him to regard their approbation and disapprobation”

      Human intelligence (capacity for generalisation) seen as extension of ability to envisage
       thought processes of others
      Expressions of emotion emphasise continuum between man and other animals e.g. sneering -
       “The action is the same as that of a snarling dog”
      Expressions explained by two opposite principles:
            The principle of serviceable habits - e.g. dog in hostile position allows it to respond
                to danger, and makes it look formidable
            The principle of antithesis - e.g. dog in submissive position serves no biological need
                - simply done to look different to the opposite expression
      Facial expressions as proof of common origins - smile recognised everywhere
      Used the mentally ill - less culturally constrained - to understand instinctive expressions
      Antithesis in humans - shoulders shrugged, mouth open, hands out to one side
                 “At the present day civilised nations are everywhere supplanting
                 barbarous nations, excepting where the climate opposes a deadly barrier;
                 and they succeed mainly, though not exclusively, through their arts, which
                 are the product of the intellect”

      Natural selection in civilised nations:
                 “With savages, the weak in body or mind are soon eliminated; and those
                 that survive commonly exhibit a vigorous state of health. We civilised
                 men, on the other hand, do our utmost to check the process of elimination;
                 we build asylums for the imbecile, the maimed and the sick; we institute
                 poor-laws; and our medical men exert their utmost skill to save the life of
                 every one to the last moment. There is reason to believe that vaccination
                 has preserved thousands who from a weak constitution would formerly
                 have succumbed to small-pox. Thus the weak members of civilised
                 societies propagate their kind.”

Darwinism and eugenics
      Galton argues that
            There is variation in intelligence between human beings - “It is in the most
                unqualified manner that I object to pretensions of natural equality”
            Variation is inherited - e.g. of the 286 judges appointed to the bench between 1660
                and 1865, 109 had relatives who were also eminent
      So Galton created eugenics, the science of intelligence - and the possible speeding-up of the
       evolutionary process though social/racial policy benefiting the reproduction of the „fit‟

Lasting impact of Darwinism
      A metaphor for industrial capitalism? Marx to Engels:
                 “It is remarkable how Darwin recognises in beasts and plants his English
                 society with its divisions of labour, competition, opening up new markets,
                 „inventions‟ and the Malthusian „struggle for existence‟
Stewart Morris                              SPS Essay Notes                                     Page 15 of 110

      Naturalising social struggle? J. Moore:
                 “Both Malthus and Darwin believed in the beneficent necessity of the laws
                 of nature that give rise to a struggle for existence in human populations”

      Promoting Victorian values? J. Munoz-Rubio:
                 “Darwin‟s theory promotes the naturalisation of individualism. It justifies
                 meritocracy and the free-competition ethos. Hence it is a product of a
                 specific phase in the history of British capitalist-production and property

      But broadly correct even though it was socially construed. N. Eldredge:
                 “No naturalist evolutionary biologist…entertains the slightest doubt that
                 natural selection is the deterministic process underlying adaptive
                 evolutionary change”

      Marx‟s ambivalence towards Darwin - a good theory even if it is a product of its times:
                 “It is in this book that the historico-natural foundations of our theory can
                 be found”

Is Social Darwinism alive today?
      Hernstein and Murray argue that today‟s society places a particular premium on knowledge.
       Those who are best able to handle knowledge (e.g. those with higher IQs) are those most
       likely to succeed:
                 “The twenty-first century will open on a world in which cognitive ability is
                 the decisive dividing force…social class remains the vehicle of social life,
                 but intelligence now pulls the train” (The Bell Curve, 1994)

      Schooling for the deprived seen as useless, even counter-productive, because it forces less
       intelligent children to be good at things which they cannot be good at
      Divide into cognitive elite and cognitive peasantry

Neo-Darwinism or sociobiology

Darwin’s emphasis on organisms
      Darwin focused on organisms, not societies
      Had little understanding of mechanisms of inheritance
      Over-reliance on Lamarckian mechanisms

Precursors to neo-Darwinism
      Mendel‟s experiments on peas in the 1860s cause Mendel to conclude that they contain some
       „hidden instructions‟ for the next generation - not understood until 1900
      Weismann saw that eggs and sperm cells remain segregated from the rest of the body when
       they are born, suggesting continuity of the „germ-plasm‟ from one generation to another
      Combination of Darwin and Mendel in 1930s became basis of „modern synthesis‟ - a
       genetically-based neo-Darwinism
      1953 - Watson and Crick discover DNA
      Gene-copying process can include mistakes and mutations - the source of evolution
      Leads to gene-centred view of the world - organism seen as evolutionary vehicle for the
       replication of genes and genetic variations
      Defining assertion is that genes make their hosts do things (such as eat, survive, have sex and
       rear offspring) which allow them to replicated
Stewart Morris                              SPS Essay Notes                                     Page 16 of 110

      “We are all survival machines for the same kind of replicator - molecules called DNA - but
       there are many different ways of making a living in the world, and the replicators have built a
       vast range of machines to exploit them…DNA works in mysterious ways”

Sociobiology and social behaviour
      Problem of altruism - how is selfish gene theory compatible with altruistic behaviour?
      Selfish genes not the same as selfish organisms
      Evolution of people as replicators of genes which really matters
      Sex-relations and reproduction - Dawkins, The Selfish Gene:
                 “At the moment of conception…the father has invested less than his fair
                 share (i.e. 50%) of resources in the offspring. Since each sperm is so tiny,
                 a male can afford to make millions of them every day. This means he is
                 potentially able to beget a very large number of children in a short period
                 of time, using different females…Female exploitation begins here”

      Parent-offspring relations - Selfish Gene:
                 “Now look at it from the point of view of a particular child…He is twice as
                 closely related to himself as he is to any brother or sister, and this will
                 dispose him to want his mother to invest in him more than in any
                 particular brother or sister”

                 “A mother is equally related to all her children, born and to be born. On
                 genetic grounds alone she should have no favourites…”

      Altruism in kin selection - Blood relatives cooperate to increase average genetic fitness of
       members of the network as a whole
      Key concept is inclusive fitness - an individual‟s fitness may be sacrificed by an act of
       altruism, but such an act may benefit the passing on of his/her genes
      Reciprocal altruism - pure altruism between unrelated individuals, expect reciprocation at a
       later date
      A society based on reciprocal altruism (with cheating kept in line) will enhance genetic fitness
       and can be evolutionarily stable

Critiques of Dawkins and sociobiology
      The whole analysis reflects, justifies and naturalises the values and inequalities of our society:
                 “What is inscribed in the theory of sociobiology is the entrenched ideology
                 of Western society: the assurance of naturalness, and the claim of its
                 inevitability” (Sahlins, „The Use and Abuse of Biology‟)

      What about humans? How can we be gene-replicators and yet have the capacity to override
       our genes? Dawkins:
                 “We alone on earth can rebel against the tyranny of the selfish

      Is Dawkins „having his cake and eating it‟?
      Reductionism: bodies reduced to genes leads to the organism as a whole being underestimated
       - Stephen Jay Gould says:
                 “Bodies cannot be atomised into parts, each constructed by an individual
                 gene. Hundreds of genes contribute to the building of most body parts”

      Emphasis on gene and reproduction is dangerous:
           Scientifically - underestimates relations between organisms and environments -
              organisms do not just adapt to environments but modify those environments to suit
           Socially - search for genes for intelligence, homosexuality etc. and new forms of
              (attempted) eugenics e.g. The Bell Curve - cloning of the most intelligent in
              repressive societies? individually driven eugenics in freer societies?
Stewart Morris                               SPS Essay Notes                                       Page 17 of 110

John Burrow - Evolution and Society

Intellectual method
      Evolutionary positivism (e.g. Spencer) became entrenched in society as orthodox view
                 “The aspiration to create a science of morals and legislation, the central
                 ambition of social thinking of a positivist complexion since the 17 th
                 century, was incarcerated in utilitarianism”

                 “We are as yet groping in the dark, and know not yet what to study, or
                 hardly what facts we want to get, to found our science” Hunt

      Climate of concentration on change - not coherence and stability
      “The tension between the romantic-historical and the positivist approaches to society could
       only be reconciled, for the Victorians, by some theory of social evolution”
      Spencer - pretension to omniscience - Darwinism as panacea
                 “Utopia…turns out to be the necessary consequence of natural laws”

Problem of what to do with the poor
      „Social Darwinism‟ only a subspecies of entire intellectual movement - deducing political
       recommendations from biological laws

Justification for empire-building
      Man as part of nature, not outside it
      Social theorists could explain racial differences in terms of environmental differences
      Natural selection - in sociology the principle explains too much, can be made to suit any
      Problem of struggle for existence between whom - individuals? groups? nations?
      Victorian English could predict future of „backward‟ societies
      Lubbock talked of „the future happiness of our race‟

Geoff Hawthorn - Enlightenment and Despair

      Spencer had scientific education
      1860s „First Principles‟ - fragmentary notion of „evolution‟
      Spencer equated development of organism over time to development of different types of
       organism over time, and equated succession of societies to development within societies - was
       wrong in this respect
      Was also confused about competition, significance of political institutions, analogy between
       organisms and societies
      Science and religion could be reconciled by clear demarcation between knowable and
      Spencer was against belief in interventionist rather than causal account of evolution
      Consigned the unknowable to first place in scientifically accessible causal chain
      „Evolution‟ as social development of community
      Driven by „persistence of force‟ - homogeneity is unstable, „force‟ makes it heterogeneous -
       differentiation within & between organisms, species, societies
      Adams:
                 “Unbroken Evolution under uniform conditions pleased everyone, except
                 curates and bishops”

                 “It was the very best substitute for religion: a safe, conservative, practical,
                 thoroughly Common-Law deity”
Stewart Morris                              SPS Essay Notes                                      Page 18 of 110

      Ward - distinction needed to be made between „genetic‟ (what man had inherited) and
       „teleological‟ (what man, thus educated, could make of himself)
      Revolt against formalism i.e. old philosophers - adoption of pragmatic point of view
      Suggestion of social evolution driven not by variation, natural selection and heredity, but on
       „invention, exponential accumulation, diffusion and adjustment‟ - Ogburn

Problem of what to do with the poor
      Spencer appealed to American desire to accept inequality:
                 “to make men who are equal in liberty, that is, in political rights and
                 therefore entitled to the ownership of property, content with that inequality
                 in its distribution which must inevitably result from the application of the
                 law of justice”

      Sumner claimed Spencer had:
                 “rescued social science from the domain of cranks, and offered a definite
                 and magnificent field in which to work, from which we might hope at last
                 to derive definite results for the solution of social problems”

      Inequality not just inevitable and pre-destined but the mark of freedom
      Galton and Pearson accepted Spencer as a convenient excuse for not helping the poor:
                 “Give educational facilities to all, give a minimum wage with free medical
                 advice and…you will find that the unemployables, the degenerates and the
                 physical and mental weaklings increase rather than decrease”

                 “The quality of a society is lowered morally and intellectually by
                 artificially preserving those who are least able to take care of themselves
                 and behave well”

Supervision Notes

Lamarck vs. Darwin
      Spencer was both Lamarckian and Darwinist - blurring of the boundaries at that time, as no
       one understood mechanism completely
      Lamarck - everyone has a chance vs. Darwin - more cut-throat
      If Darwin is useful for explaining class structure in Victorian times then perhaps Lamarck
       more useful for modern times - education, self-improvement
      Darwinism essentially conservative, Lamarckism essentially revolutionary
      Anti-sociobiology argument of social sciences is that society changes far more quickly than
       genes do
      Parsons - „who needs Spencer?‟
      „Social Darwinists‟ misnomer - just plain Darwinists
      Real „Social Darwinism‟
            Ideas of a society taken from other societies where they appear successful e.g. paper
                money, or Japanese adaptation of British navy, German firms etc.
            Seems far more convincing than genetic explanations
      Late 19th century social thinkers attracted to it because it allowed them to evade the social and
       naturalise the social

The poor and empire-building
      Other ingredients of Darwin
            The poor are not capable of self-improvement - should simply not be there - are like
                waste along the road to self-improvement
            Social rather than biological explanations would have allowed for inferior societies to
                learn techniques of the leaders
      Natural selection in economics - firms without profit motive will fail
Stewart Morris                          SPS Essay Notes                               Page 19 of 110

      Large proportion of people who are genetically superior - smugness at being British, and at
       being Darwin
      Explanations for the poor:
            Genetic inheritance
            Moral (social/cultural) deficiency - was popular Victorian explanation
            Lacking social resources and human capital - e.g. no books in house, poor schools
                     Links to Willis - „Learning to Labour‟ - because of environment, no reason
                         to take one‟s chances with resources which are lower than those of middle
                         class, so values of e.g. success at school are rejected - low expectations of
                         what it can achieve
                     Has been noted that in USA, fall in unemployment is related (after a time
                         lag) to a rise in SAT scores
                     Almost Keynesian idea of kick-starting improvement
Stewart Morris                            SPS Essay Notes                                Page 20 of 110

1.4 Max Weber - History, Economics and Politics
   b) Outline Weber‟s attempt to resolve the „Methodenstreit‟
   c) What were Weber‟s reasons for stressing the uniqueness of Western capitalism?

Geoff Ingham - Lecture Notes

      Max Weber born 1864 died 1922
      Major figure in rejection of general enlightenment project - the idea that we could use reason
       to understand what we are like and what we do
      Related to increasing professionalisation and specialisation of academia and the role of the
       academic expert in political practice
      Discussed the relationship between what we know and what we ought to do
      Economics as major social science discourse in 20th/21st century
      Weber thought we ought to know the grounds on which assumptions about the market were
       based - Methodenstreit started in Economics

Weber’s relationship to Economics - background
      Critique of classical/neo-classical economics espoused by Smith, Ricardo and J.S. Mill
      Assumptions of these groups:
             model of market comprised of individual utility maximisers
             equilibrium reached by „invisible hand‟ of price and profit mechanism
             state has minimal role confined to defence, law and order and provision of public
             economics becoming positivist, searching for objective laws in same way as natural
             Mill complained of lack of results from this method, but concluded this was because
                natural science approach had not been applied rigorously enough
             at the end of the day markets would clear with no scarcity and no surplus
             politics as technique - what we ought to do was pushed aside, subordinate to
                technical adjustments
             marginal utility theory of Walras and Marshall
             optimal allocation of resources achieved through individual maximising behaviour
             Jevons said theory was benchmark against which to evaluate policy - “if reality does
                not correspond to its abstractions, it is not economics that is at fault but the real world
                that is in error”
             removes need for redistribution by government

Weber’s relationship to Marxism - background
      Marx against this neo-classical model
      His „laws of motion of modern society‟ were not economic laws
      But still positivist - suggested that he uncovered laws himself
      Weber rejected any idea of „laws of motion‟
             Said no relationship between economic and social liberalism
             „Scientific socialism‟ is an oxymoron

Weber’s relationship to the historical sciences - background
      This was a loose school of thought in the 19th century - historians and social scientists such as
       Roscher and Knies were arguing for a distinctive method
      They opposed the analytical, deductive method of economics, claiming that people do not
       behave in a rational way
      Spoke for radical empiricism - learning from narrow areas of history in the belief that the facts
       will speak for themselves
Stewart Morris                               SPS Essay Notes                                  Page 21 of 110

        Still shared with the positivists a belief in an objective, ordered social reality waiting to be
         discovered - one group saw this reality in terms of theory, the other in terms of facts
        Weber described this as the Methodenstreit - conflict of the methods - whereby the territory
         was divided between different social scientists with different methods
        Weber‟s vision was of one universal social science
Table 1: Differences between theorists and radical empiricists
Objective reality, no matter which cultural context      Cultural meanings - understanding the spirit of the
it appears in                                            age with empathy and intuition
Nomothetic                                               Ideographic
„Social physics‟ with one prescriptive model -           Singular, unique events e.g. Western capitalism
same law works at all times and in all places            could have happened once and only once - not a
                                                         single model for all times and all places
                                                         History as a once-and-for-all process
Fact                                                     Value
Also some significance but no impact on our              Once-and-for-all process has some significance
interpretation of history                                which needs interpretation

Max Weber -
Roscher and Knies: The Logical Problems of Historical Economics

Introduction by Guy Oakes
        In Weber‟s view, systematic thought distorts reality
        No sociocultural problem can ever be conclusively solved and no sociocultural phenomenon
         exhaustively described:
                   “the presuppositions of the social sciences remain variable into the
                  indefinite future”

        Weber wanted to consider the conceptual framework within which the social world could be
         an object of scientific investigation
        Like the subject matter of the social sciences, the components of this framework are
         susceptible to change, and thus likewise represent possible objects of sociocultural
        Yet he also complained of a „methodological pestilence‟ in the social sciences and pointed out
                  “In order to walk, it is not necessary to know the anatomy of one‟s legs.
                  Anatomy is only of practical importance only when something has gone

        But no author contributed more prolifically to this obsession with methodology than Weber
         himself, publishing over five hundred pages of „methodological remarks‟ between 1903 and
        Weber said that under two conditions could metatheoretical reflections prove valuable:
              If it contributed to the education of the individual social scientist
              If „radical shifts in the points of view which constitute any item as an object of
                  investigation have taken place‟
        Essential components of the Methodenstreit:
              Purpose of sociocultural knowledge - are the sociocultural disciplines nomological
                  sciences? Should they aim to find „deductive-nomological‟ laws to deduce solutions
                  to all sociocultural problems, or should they attempt to reproduce or recreate the
                  unique properties of sociocultural phenomena just as they were experienced?
              Properties of sociocultural phenomena - is the subject matter indistinguishable from
                  that of any other science, and therefore susceptible to the same sorts of methods
                  employed in natural science, or are such methods logically inappropriate?
              The method employed - should every legitimate scientific investigation proceed
                  according to the same method? Or is there a reason why satisfying solutions to
Stewart Morris                              SPS Essay Notes                                    Page 22 of 110

                 sociocultural problems can be reached only by employing methods peculiar to this
            Domain of sociocultural problems - how are the problems of the sociocultural
                 sciences to be defined? What are the criteria for the definition of a sociocultural
      Positivist resolution (e.g. by J.S. Mill) of the Methodenstreit:
            Every science has the same purpose of uncovering laws of nature
            All phenomena are the possible objects of laws of nature
            There are no methods of investigation peculiar to the sociocultural domain, and any
                 which are must be defective and illegitimate
            Social sciences in a „backward state‟ - no laws of mind and society have been
                 established - this was a „blot on the face of science‟ (Mill)
      Weber rejected this view, claiming instead that:
            The sociocultural sciences have a definitive theoretical purpose, object, methods and
            Certain aims and principles of the sociocultural sciences cannot be included among
                 the aims and principles of the natural sciences
      Weber‟s intentions
            Providing arguments intended to refute the positivist resolution of the Methodenstreit
            Claiming that a number of closely related responses to the positivist position are also
                 mistaken, especially the „intuitionalist‟ resolution
            Providing a sketch of his own solutions

Introduction - Weber’s attack on positivism
      Weber‟s main arguments:
            The establishment of a hypothetico-deductive system of nomological laws is not the
                aim of sociocultural sciences
            Sociocultural phenomena have definitive properties which distinguish them from the
                subject matter of other sciences and rule out the possibility of a natural science of the
            There is a peculiar method of identifying, explaining and describing sociocultural
            „The facts‟ do not speak for themselves - they do not identify themselves as
                constituting sociocultural problems. There is no sociocultural observation language,
                theoretically neutral and logically independent of the way we see these phenomena
                and the questions we pose about them. Rather, it is our „theoretical interest‟ or
                erkenntnisinteresse -which constitutes any collection of phenomena as a sociocultural
                problem - observation language is invariably „theory-laden‟
      Discovery of „laws‟ not the aim of any science, let alone social sciences - generalisations „may
       have extraordinary heuristic value‟ but have „no causal status‟.
      Correlations have no intrinsic theoretical value for any sociocultural science:
                 “It is obvious that historical reality, including those „world-historical‟
                 events and cultural phenomena which we find so significant, could never
                 be deduced from these formulae”

      Because of this the ultimate purpose of concept formation could not be the deductive
       arrangement of concepts and laws

Introduction - Weber’s attack on intuitionism
      Various anti-positivists aimed to find a property of the sociocultural sciences whose
       description is sufficient to distinguish these fro the natural sciences
      That distinctive property is not a peculiar kind of „intuition‟ which can only be achieved in the
       social sciences - a „reproduction‟ of the „immediate experience‟ embodied in some
       sociocultural phenomenon
      Nor is it a diffuse, unanalysable feeling, the alleged result of a putative ability to participate
       empathetically in such a phenomenon
                 “As long as „reproduction in immediate experience‟ remains on the plane
                 of „feelings‟, it will produce in the historian and his reader first-person
Stewart Morris                               SPS Essay Notes                                      Page 23 of 110

                 value feelings that are intrinsically unarticulated. There is no guarantee
                 at all that these value feelings will correspond in any way to the feelings of
                 the historical persons with whom the writer and reader empathise.”

      Weber sees intuitions as methodologically dangerous for two reasons:
                 “They obscure the awareness that „intuition‟ is constituted by the
                 emotional contents of the observer, not by those of the „epoch‟
                 described…‟mutual participation in the feelings of others‟ is withdrawn
                 fron the domain of demonstration and verification”
                 “Causal analysis may be repressed in the search for a „total character‟
                 which corresponds to the „feeling of totality‟…this „total character‟ is
                 affixed to the „epoch‟ like a label.”

      A summary of his arguments against the positivists and intuitionists follows. Consider any
       empirical proposition.
                 “Neither the „substantive‟ qualities of its „object‟ nor the „ontological‟
                 peculiarities of the existence of this „object‟ nor, finally, the kind of
                 „psychological‟ conditions required for its acquisition are of any
                 consequence as regards its logical content and the presuppositions on
                 which its „validity‟ are based”

      Any empirical position - within all sciences - presupposes some conceptual apparatus which
       supplies criteria for the intelligibility and truth of the proposition.

Introduction - Weber’s Theses
      The domain of the sociocultural is constituted by „meaningful‟ and therefore „understandable‟
       human conduct. Meaningful human conduct is identifiable only by reference to the „values‟
       of the actors who engage in this conduct.
      Because the objects of the social sciences are „meaningful‟, because „values‟ can be ascribed
       to them, they are also possible objects of „interpretation‟
      Within the sociocultural sciences „our criteria for causal explanation have a unique kind of
       satisfaction‟, a consequence of our „causal interest‟ in subjectively meaningful conduct
      „In the analysis of human conduct, our criteria for causal explanation can be satisfied in a
       fashion which is qualitatively quite different‟ from the way they are satisfied in the natural
                 “As regards the interpretation of human conduct, we can, at least in
                 principle, set ourselves the goal not only of representing it as „possible‟ -
                 „comprehensible,‟ in the sense of it being consistent with our nomological
                 knowledge. We can also attempt to „understand‟ it.”

      Such interpretation must be articulated in such a way that it can be verified. This is a criterion
       for explanatory success in the social sciences.
      The project of discovering sociocultural laws makes no contribution at all to the satisfaction of
       these criteria. Such laws “are intrinsically of absolutely no significance for the interpretation
       of „action‟”.
                 “Because of the content of the concept of „culture‟, this invariably means
                 that such an account is complete only when we have knowledge of a nexus
                 into which understandable human action - or, more generally, „behaviour‟
                 - fits, a nexus which is conceived as determinant of behaviour. Why is this
                 the case? Because the „historical‟ interest is anchored in this theoretical

      The sociocultural disciplines have a distinct theoretical goal to which the project of
       establishing a set of nomological laws makes no contribution
             No equivalent of „understanding‟ or „interpretation‟ in the natural sciences
             Theoretical goal has an „axiological foundation‟ - „anchored in our historical interest‟
                - but is not epistemologically grounded.
             An understanding is required of the conditions for the existence of subjectively
                meaningful conduct, an account of the motives (beliefs, reasons, desires, intentions,
Stewart Morris                               SPS Essay Notes                                     Page 24 of 110

                 purposes and rationales) which would provide a satisfactory explanation or a
                 sufficient ground for such conduct.
      Therefore, a distinction can be made between the properties of the subject matter of the natural
       sciences and that of the sociocultural sciences, not on ontological grounds, or by reference to
       the intrinsic properties of these objects, but on axiological grounds, by reference to the
       definitive features of our theoretical interest in meaningful human conduct
      The discovery, confirmation and refutation of sociocultural theories rest upon a variety of
       knowledge with no equivalent in the natural sciences, so there is no unified logic of scientific
      Any item is constituted as an object of the sociocultural sciences only if it is „subjectively
       meaningful‟ and „values‟ can be ascribed to it

Creative synthesis
      Reflection concerning value relevance is the ultimate basis of the historical interest
      The assumptions under which „action‟ becomes an object of scientific investigation logically
       exclude the establishment of equations which represent causal relations as the aim of such an
      The „creative‟ character of historical action is simply a consequence of the following
       consideration: from the point of view of our „conception‟ of historical reality, the causal
       course of events is susceptible to intensional and extensional variations in meaning
      No necessary relation of any kind between the extent and significance of the „intrinsic value‟
       of the „creatively‟ acting man and his conduct, on the one hand, and the consequences which
       may be causally ascribed to him and his conduct, on the other.
                 “The specific historical task of the cultural sciences is profoundly
                 antithetical to the aims of all disciplines which attempt to reduce
                 phenomena to causal equivalences. The conception of differences in
                 causal status as differences in axiological status is the definitive category
                 of the cultural sciences.”

      The principle of creative synthesis has the following consequence: in the course of „cultural
       evolution‟, we have become increasingly „adept‟ at the „recognition‟ and intellectual
       comprehension of timelessly valid „norms‟.
      This alone suggests that an allegedly „empirical‟ psychology is not a „presuppositionless‟
       analysis in the sense that it implies no valuations.
      On the contrary, it represents an evaluation of „cultural evolution‟ from the standpoint of a
       „value‟ the validity of which is presupposed: the value of „valid‟ knowledge
      The objectifying disciplines employ a purely theoretical, value-free conception of their subject
       matter as objects of „observation‟.
      Therefore, the unity of the ego that „takes a position‟ cannot be a possible object of the
       objectifying sciences. This is because the ego cannot be „described‟, only „experienced‟.
      History provides reports concerning the „acts‟ of personalities, attempting to establish a
       context in which the full, experienced reality of human values and desires is „reproduced in
       immediate experience‟.
      It follows that history is a subjectifying discipline.
      „Interpretation‟ of an object which has aesthetic, moral or intellectual value, or any
       conceivable cultural value at all, is not a constituent of a purely empirical-historical account -
       one which explains concrete „historical entities‟ in terms of concrete causes. On the contrary,
       it constitutes the formation of an „historical entity‟.

Schumpeter - History of Economic Analysis
      Weber‟s doctrine turns on two concepts - the Ideal Type and the Meant Meaning.
      Held that in the social sciences explanation means more than just description - involves the
       understanding of „cultural contents‟, the interpretation of meanings - hence the term
       Interpretive Sociology (Verstehende Soziologie)
      No sense in asking what the falling stone is about, beyond stating the law of its fall. But there
       is sense in asking what a consuming household is about.
      In order to make headway with the analysis of the latter, the observer must understand his
       subject of research in a sense which he cannot and need not understand the falling stone.
Stewart Morris                          SPS Essay Notes                               Page 25 of 110

      He must create types which, though not necessarily pure like the economic man, are
       abstractions in that they possess only essential and lack non-essential properties: they are
       logical ideals.
      We try to get an understanding of what such a type does, feels and says, by asking not what
       his actions, feelings and utterances mean to us, the observer, but what they mean to the type
       under research - the meanings that the types intend to attach to themselves and their
      Not really an economist at all, and ignorant of what economists actually did. Weber saw no
       objection of principle to what economic theorists actually did, though he disagreed with them
       on what they thought they were doing i.e. on the epistemological interpretation of their

Carlo Antoni - From History to Sociology

Value judgement
      Value, however much it may be a living an active force, is not being, the unique possible
       object of knowledge.
      Hence, a value judgement ceases to be a judgement at all but an objective attitude, an extrinsic
       act of sympathy and antipathy which determines the importance of the objective being.
      The „sciences of the spirit‟ are concerned with the individuality of facts, while the natural
       sciences are concerned with their arrangement into various uniform laws.
      Once he had freed himself from the delusion that science could point the way to true being,
       the real task of the scientist would be revealed as that of furnishing information and methods
       of thought, of clarifying and aiding in the rationalisation of activity, and of pointing out the
       consequences of given actions.
      Science would indicate to whoever wished to act according to any given value judgement
       what means he had at his disposal and what unavoidable secondary results would be brought
       about by the employment of those means.

Historical School vs. Classical School
      Weber pointed out that it was not enough to merely relive in order to understand, nor was
       immediate and inarticulate intuition enough
      History was a science and therefore had to use conceptual tools, and never could a conceptual
       knowledge be reduced to mere reliving
      Argued that there was a role for the ethical, aesthetic and religious norms in allowing the
       scientist to decide which fact, or historical individuality, should be assigned importance and
      After this, however, all should proceed objectively, without reference to extra-scientific
      Freedom of will seemed to stand in direct opposition to the possibility of a causal historical
      Weber tried to resolve this by identifying freedom of the will with rationality; not with
       Kantian rationality (i.e. morality) but with practical rationality as presented by the strict
       correlation of means to ends
      As an impulse to action, the end was also the cause and thus the whole of human activity
       could be framed within the concept of causality
      But there was a problem - human activity is not always free and rational
      Weber made a division between the construction of an ideal and rational activity on the one
       hand, and the description of the real, concrete activity on the other.
      The latter will, in comparison with the former, reveal the irrational deviations and the
       intervening causes which determine them.
      Hypotheses seen as heuristically useful in that they allowed one to conceive how an action
       would have gone had it developed rationally
      The so-called „laws‟ of political economy were not natural laws (as the Classical School held)
       but were ideal types - models which could be used for distinguishing between rational and
       irrational economic actions.
Stewart Morris                           SPS Essay Notes                                Page 26 of 110

      Since there was no guarantee that it was followed in practice, the „ideal type‟ could not be an
       historical force. Even less could it be seen as an end in itself, or a practical ideal.
      Weber‟s economic science seems to be concerned with relativity. Actually, he wished for the
       ideal type to correspond as closely as possible to concrete historical reality.

W.G. Runciman -
A Critique of Max Weber’s Philosophy of Social Science

More on Weber’s views
      It is a fundamental assumption of Weber‟s that sociology is a matter of discovery, not
      Not with the positivists as the criterion of validation common to the natural and social
       sciences presupposes nor requires a common procedure
      Still more inappropriate to read him as concerned to expound some alternative form of
       modified idealism, since most of his criticisms are directed against those who so exaggerate
       the differences that they thereby remove the explanation of human action from the realm of
       science altogether
      Weber‟s position is a self-conscious and deliberate attempt to „have it both ways‟
      He agrees with the Positivists that the social sciences are value-free and causal, but denies that
       this agreement is incompatible with the view that there is nevertheless a difference of kind
       between natural and social sciences
      He insisted categorically on the logical independence of judgements of fact and judgements of
       value and the consequent irrelevance of the social scientist‟s own aesthetic or moral opinions
       to the validity of his proffered explanations.
      Yet the social scientist‟s values do still, according to Weber, enter into his investigation at a
       prior stage, since the scope and form of this investigation must depend upon „value-relevant‟
       presuppositions neither derivable from nor testable against the empirical findings which issue
       from it.
      Weber says he does not mean that values enter into scientific enquiry either in the sense that
       science aspires to logically and empirically correct and „valuable‟ results or in the sense that
       the selection of a topic for study already involves a value-judgement.
      Yet despite this, he says things which make the interpretation excusable. In his editorial of
       1904 he had spoken of the pursuit of scientific knowledge as resting upon the presupposition
       of the value of scientific truth as such, and in the „value-freedom‟ essay itself he speaks of
       „value-relevance‟ as referring to the „philosophical interpretation of the specific academic
       interest which determines the selection and formulation of an empirical investigation‟.
      The answer to these apparent contradictions is that to Weber neither issue distinguishes the
       social sciences from the natural.
      Weber did believe that social scientists‟ „values‟ in some sense dictate the terms in which their
       hypotheses are formulated
      But he did not believe either that the truth or falsehood of social-scientific hypotheses is in any
       way a matter of „values‟ or that a particular value-judgement is ever required by any given set
       of facts
      Sees a value-judgement as untenable only if it is internally inconsistent, or incompatible with
       some other value-judgement simultaneously affirmed, or with known matters of fact.
      Sees a need for decision in matters of value, not in matters of fact - commends Mill‟s
       statement that „if one proceeds from pure experience one comes to polytheism‟.

Supervision Notes

The Methodenstreit - background
      Objectivity argument is narrower interpretation of the Methodenstreit argument
      Geisteswissenschaften goes down slippery slope to relativism
      Does is therefore have any objective status?
      Modern economics based on victory of Naturnwissenschaften
      But are these economic „laws‟ always valid? e.g. equation of Phillips curve
Stewart Morris                           SPS Essay Notes                               Page 27 of 110

      „Laws‟ themselves are based on assumptions about human behaviour
      Current cultural values must impact on the way we understand history as a narrative
      Weber claimed that Naturn… and Geistes… were both wrong
      Problem of Geistes…was that we can‟t know whose „intuition‟ is more valid
      Problem with Naturn… is that it makes unfounded assumptions
      Example as follows:
             Given all the conditions, „ceteris paribus‟ clauses etc., the laws of supply and
                 demand work perfectly
             But the fact that I didn‟t buy a particular item on a particular day would be
                 insignificant, compared to the Wall Street Crash, operating under the same „laws‟
             Need to decide which is most important to study, though the same „laws‟ apply
             In social science things should not be analysed for their theoretical significance but
                 for their impact on human history
      The laws are seen to apply but there is no one objective reality
      The laws work within the once-and-for-all process of history
      Weber talked of verstehen - understanding - whereby human actions are interpreted as having
       meanings to both the participant and the observer, not just causes
      Weber‟s saw his work on Protestantism and capitalism as adding to the marginal utility
       analysis of Marshall, Walras etc. - saying why these laws operated (or didn‟t) by explaining
       that Protestants acquired capital and profit for the glory of God
      Weberians would claim that while there was no need to empathise with a moth flying towards
       a light (this could be seen in terms of a photochemical reaction) it would be useful to
       understand the motives which drive a consuming household
      There is a suggestion, from the naturn… school, that revolutions occur when the gap between
       expectations and income has grown sufficiently large
      But whether or not a revolution will happen cannot be based on this model - there are many
       other factors, such as the legitimacy of the political system - for example, in 1389 the Poll Tax
       produced popular indignation, but the peasants had no concept of revolution, and sought
       redress by pleading with the King
      Weber would have said that such a theory could only be understood in one particular type of
       political system
      For Weber, the assumptions and „ceteris paribus‟ clauses were ignored at our peril - this was
       where all the interesting theory lay

The Methodenstreit - Weber’s resolution through ‘ideal types’
      The „ideal type‟ is the observer‟s construction of what is interesting to study
      The observer will select what is important in the once-and-for-all process of human history by
       means of relevance to his own values
      „Value-freedom‟ does not mean freedom from values but the freedom to choose what to study
       based on the values you hold - constrained by e.g. authoritarian government
      E.g. a socialist could not deduce the optimum course of action, but could say that given your
       goals, this is the most cost-effective way to achieve it
      With socialist bureaucracy, efficiency would take precedence over debate
      Naturn… lost out where non-quantifiable values were concerned - e.g. would an increase in
       political freedom be acceptable if it incurred a small penalty in economic growth?
      Weber went on to construct „ideal types‟ of bureaucracy and of political legitimacy
      This was described as „relative objectivity‟ - the „ideal type‟ is explicit, with the sociologist
       putting his cards clearly on the table
      If everyone analyses something subjectively, everyone knows where they stand (inter-
       subjectivity) but no position can be truly objective
      What ideal type to use can be disputed for two reasons
             It is not important or relevant according to the political inclinations of the objector
             It is inconsistent within its own terms
      So how is consensus ever arrived at, outside an authoritarian model?
      How is complete relativism prevented?
             If something does fit the facts, you cannot claim that it is objective truth
             If something is inconsistent within its own terms, you can claim that it is objectively
Stewart Morris                           SPS Essay Notes                               Page 28 of 110

1.5 Liberalism, sociology and political science in the USA
   a) What distinguishes the questions that Americans expected a social science to answer in the
      first half of the twentieth century?

Geoff Hawthorn - Lecture Notes

Social sciences and relationship to history
      In Europe the social sciences can be seen as a series of attempts to intellectually capture the
       movement from old regimes and economies to new ones
      History was sometimes seen as an organising principle of society (e.g. Marxism)
      This was never a prevailing view in America
      Emphasis on social „science‟, not social „history‟ - limited history to speak of

      The USA was a nation created on Enlightenment principles, construed in legal/constitutional
       terms rather than institutional
      Closer connection between legal and political theory
      American politics as extended argument over interpretation of the constitution itself?
      While in Europe society is seen as preceding the individual, in America the individual
       precedes society - individuals built the institutions of modernity from scratch
      In seeing the individual as a citizen, disposition to return to „original position‟
      The force of time was either absent or seen as a corrupter
      The system was always seen on its own terms, not as a result of some historical process or in
       terms of competing ideologies

Individualism and conservatism
      Initially Spencer‟s individualist philosophy was extremely popular in the USA
      The question was not „how to get liberty‟ but „given liberty, how does one get a society?‟
      No need to „define‟ liberalism - just „refine‟ it
      Concern with social „problems‟ such as immigration and expansion of cities
      However this has become essentially conservative - „how do we preserve the perfection of the
       atmosphere in which the republic was founded?‟
      De Tocqueville talked of the inducement to conformity brought about by the system - anxiety
       of individualism leads to comfort in conformity
      Yet conservatism in the European sense has no purchase - no „ancien regime‟ to preserve
      In Europe, government was seen as a fact, and the question of „what is the best government‟
       was high on the agenda, while in America, government was seen as a regrettable necessity,
       and the state was constructed to make the concentration of power as difficult as possible
      American social science driven by questions about what might interfere with rights and
       interests, especially groups, combinations, cartels or „trusts‟
      This includes also party machines - reaction in cities following 1890s promoting popular
      The state was seen as an arena in which interest groups could battle for influence
      Models of pluralism and threats to pluralism sprang up
      Conspiracies are a popular idea e.g. role of „military-industrial complex‟
      Socialism was seen as a subversive threat, out to destroy the liberalism on which the society
       was founded

View of itself
      US interests were extended to the world with a belief in the self-evident righteousness of
       liberal democracy, and how it could be encouraged in developing countries
      Obvious simplification and danger of caricature, as American social science affected
       enormously by European intellectuals who fled or moved to US, for example Schumpeter
Stewart Morris                              SPS Essay Notes                                   Page 29 of 110

      American social science has been very influential in conveying a picture of social science
      It perceives itself as being based on universal virtues and timeless truths
      The earliest politics and sociology was ahistorical, more cyclical - what was true for Athens
       and Rome was true in all circumstances
      This transformed into linear theories in Enlightened Europe from the 18 th century
      Under the new intellectual power, the USA, there was a return to an ahistorical sense - related
       to conservatism
      Hofstader: “how can a people progress if they have started near to perfection?”
      Enlightenment society conceived at a particular point in time but whose self-conception is
       existing out of time
      Timeless truths of (moral) psychology, moral principle, even „political/social science‟, which
       in virtue of being timeless are amenable to „scientific‟ analysis

Geoff Hawthorn - Enlightenment and Despair

Background of American social science
      No „old order‟ to rebel against, so the radical rhetoric of the European Enlightenment was
       deployed for essentially conservative ends.
      Attempt to maintain slaves by Southerners was compared to a traditional European „estate‟,
       but was seen by them as an extension of the property of individuals
      Institutions in Europe do not merely serve to constrain individuals, but also partly define a
       person (by his individual membership of them) from birth to death - e.g. state churches
      Inducement to conformity - no man could dare to see himself as „above‟ or „below‟ another,
       so conformity developed in the name of liberty and equality
      Americans are unable to pass any responsibility onto an institution, so is forced to examine
       himself as an individual to a much higher degree than in a more structured society
      Progression not of society (seen as nearly perfect from the outset) but of material
       improvement and technical advance within the society
      Difficult to reconcile material improvement with established ideal of perfect (somewhat
       innocent) society - primitive populism of South and West against the trusts, banks and
       politicians of the East
      In Europe, liberalism as a critical principle became undermined by socialism
      In America, country had set itself against patriarchy, but there was also no nostalgia for
       „solidarity‟ and „mutual obligations‟ which allowed socialism to gain a foothold elsewhere -
       collective restraint and institutional domination of socialism seemed to represent patriarchy
      In Europe, Durkheim claimed that to be an intellectual was to criticise, not merely the ways in
       which different groups sought to achieve their ends, but also the ends themselves
      In America, the ends have been given in the ideological sense and also in the very constitution
       of the society itself - to mount an argument against them is to mount an argument against
       America, and thus to disqualify it from serious consideration
      At issue are only the means of achieving those given ends
      Therefore, Americans have been deprived of the theoretical apparatus which allows one to
       locate one‟s critical principles in an imaginary future state, which would be made real by the
       inexorable passage of time
      American intellectuals have also been crippled by the dogmatic, fearful influence of their
       native liberalism
      Peculiar status of American intellectual - his criticisms have usually come from within the
       native liberalism, and it is from within that liberalism that he himself has been challenged
      Anti-intellectualism was more often expressed in America than in Europe, as in the latter
       continent deference to intellectuals is taken for granted
                 “Often vigorous, critical and even radical, but in its very radicalism
                 literally conservative and definitely unhistorical, leaning always to more
                 technical prescriptions than to truly intellectual ones.”
Stewart Morris                              SPS Essay Notes                                      Page 30 of 110

History of American social science
      First sociological ideas before Civil War, in defence of slavery
      Southern planters angry at perceived exploitation by northern capital
      Also growing talk in the north of abolition
      Presented acute difficulties
      John Calhoun said that northern politicians and southern planters - who presided over a
       society „vastly more favourable‟ for „free and stable institutions‟ than anything in the north -
       should combine to preserve what wealth they had
      Fitzhugh argued that to banish the threat of socialism the north, like the south, required a
       society of estates, a truly conservative society in which the higher orders took responsibility
       for the lower and the lower toil for the higher
      Problem that in America there were enough unexploited resources for everyone to become his
       own capitalist
      „Social Darwinism‟ was very influential. According to Henry Adams:
                  “Unbroken Evolution under uniform conditions pleased everyone, except
                 curates and bishops. It was the very best substitute for religion; a safe,
                 conservative, practical, thoroughly Common-Law deity”

      Seemed to resolve the Americans‟ puzzle about their history
      Spencer had shown that America could recover its nearly perfect but militant past in a wholly
       perfect industrial future, and thus be assured of progress:
                 “to make men who are equal in liberty, that is, in political rights and
                 therefore entitled to the ownership of property, content with that inequality
                 in its distribution which must inevitably result from the application of the
                 law of justice”

      Sumner claimed Spencer had:
                 “rescued social science from the domain of cranks, and offered a definite
                 and magnificent field in which to work, from which we might hope at last
                 to derive definite results for the solution of social problems”

      Sumner believed that the social classes owed very little to one another - that inequality was
       not merely inevitable and pre-destined but was also the mark of freedom
      Problems of rural Americans with falling world prices led to migration to cities - Chicago
       doubled in population in one decade (1880s)
      Source of difficulty amongst the urban middle classes - Progressive movement
      Many reformers from urban churches, seminaries and theological colleges - investigations of
       deprivation and despair
      Soon joined by charities, who commissioned reports and published journals, and by
       „muckraking‟ journalists (read for the first time by a largely literate and urban population)
       who competed by publishing ever more shocking exposés
      Massive reform in education 1860s-1900s
      By 1900s more professors of sociology in America than in whole of Western Europe
      Most took up sociology at the instigation of Spencer
      However, all but Sumner in the 1890s had departed in either of two ways:
             First group (e.g. Lester Ward) saw unrestricted laissez-faire as causing misery and
                 waste - distinction between the „genetic‟ (what inheritance, in the Lamarckian sense,
                 had made of man) and the „teleological‟ (what man, thus educated, could make of
             Second group preached a „pragmatic‟ point of view and a revolt against formalism
                 e.g. William James, who argued that as all human activity could be interpreted as the
                 outcome of a survival instinct, so therefore could thinking be - what we think is what
                 is useful to us, and may only be assessed by its utility - therefore no „monism‟ of
                 theology or of naturalism
      1920s history of institutional, not theoretical change. Albion Small of University of Chicago
       later realised that to secure sociology‟s unquestioned acceptance in the universities,
       sociologists had to suppress their moral and political interests and insist instead on the
       scientific status of what they were doing
Stewart Morris                            SPS Essay Notes                                Page 31 of 110

      !930s changes much more theoretical - influence of European ideas e.g. under Talcott Parsons
      Parsons argued that other theorists converging towards same idea of how society was possible
       - answer was by individuals‟ voluntary adherence to the social facts of the normative order
      Argued that social systems were stable because of the imperative to be so
      However, the only evidence of this was the very stability it was supposed to explain
      This theoretical enterprise was a failure on its own terms, but came to be very influential
      Disregarded differences among Europeans, and between Europeans and Americans -
       selectively reinterpreted them to look more like American social thinkers
      Problem had changed. Reforming sociologists wholly preoccupied with how to establish
       some social cohesion, while Pareto group were increasingly exercised by question of how
       once it had been established it could be secured
      European social theory: how to secure a coherent liberalism on the ruins of a crumbling and
       increasingly illegitimate patriarchy
      American social theory: how to secure a coherent liberalism on the basis of nothing at all -
       more difficult as without institutions men are likely to undermine themselves in the most
       illiberal sort of constraint

Louis Hartz - The Liberal Tradition in America

Liberalism and conservatism
      “The basic ethical problem of a liberal society is not the danger of the majority…but the
       danger of unanimity”
      When Americans face “military and ideological pressure from without” they close ranks,
       which “transforms eccentricity into sin” and dissent into danger of subversion and betrayal
       e.g. „red scares‟ of 1920s & 1950s
      “An absolute national morality is inspired either to withdraw from „alien‟ things or to
       transform them: it cannot live in comfort constantly by their side.”
      Messianism and tendency to depict opponents not merely as such but as evil
      Kennan: Americans tend to judge others “by the extent to which they contrive to be like
      Hartz: This is made all the easier “because we have been so much alike”
      “European liberalism, because it was cursed with feudalism, was forced to create the mentality
       of socialism, and thus was twice cursed. American liberalism, freed of the one was freed of
       the other, and thus was twice blessed.”
      American radicals are within the liberal process as kindred spirits, not outside it as wholesale
      Classic solution to conflict between majority rule and minority rights - if a nation is united on
       the desirability of liberalism the majority will have no interest in destroying it for the minority
      Sympathy operates when groups have enough in common to identify with one another
      Supreme Court has been practical answer - a false fear has produced a fantastic American
       system of checks
      Absence of a cause/need for political philosophy in early days
      Reaction of Southerners, borrowing feudal arguments from Europe, was false - defending not
       feudalism but slavery
      Did not symbolise appearance of something new (unequal Americans) but disappearance of
       something old (slavery) - not a Southern problem with American liberal tradition, and did not
       fit any category of Western social theory

Dorothy Ross - The Origins of American Social Science

      Characterises American social science as having „liberal values, practical bent, shallow
       historical vision and technocratic confidence‟
      To its critics, it looks „ahistorical and scientistic, lacking in appreciation of historical
       difference and complexity‟
      Modelled on the natural sciences to a far higher degree
Stewart Morris                           SPS Essay Notes                              Page 32 of 110

      In America „the social world is composed of individual behaviours responding to natural
       stimuli, and the capitalist market and modern urban society are understood, in effect, as part of
      National ideology of „American exceptionalism‟ - America occupies an exceptional place in
       history based on her republican government and economic opportunity
      Seen as being exempt from qualitative change in the future
      Many social scientists tried to „carve out within or beneath history a realm of nature that
       would ward off the lingering fears of decline and insure the realisation of a harmonious liberal
       society sometime in the future‟
      Attempt to subject history to scientific control
      Ancient rule that method be appropriate to its subject matter was challenged - subject matter
       of social science is historical, while method is scientific
      American social science may just mirror the characteristics of American society - uniformly
       liberal, practical and technocratic because citizens are uniformly liberal, practical democrats
       who value technology - however, it was developed by an increasingly distant social class so
       this argument is dubious
      Ross argues not for a stable liberal consensus but for a „constant quarrel with history‟ e.g.
       Protestant and Republican ambivalence towards capitalist development and historical change
      Exceptionalist framework not only contained but also stimulated conflict, and its power of
       containment was repeatedly tested
      American uniqueness is overstated - great differences between social scientific systems in
       Europe as well -Germany most historical of all, then France, then Britain
      But not on a single continuum - e.g. similarities between American and continental social
       science which were lacking in England, e.g. late 19 th-century sense of national crisis and
       concern with historical change
      Exaggeration of American exceptionalism has perhaps become a self-fulfilling prophecy
Stewart Morris                           SPS Essay Notes                                Page 33 of 110

5.1 Nietzsche
   a) In what sense, if any, was Nietzsche a political philosopher?
   b) What did Nietzsche mean by calling Christianity „Platonism for the people‟?
   c) What did Nietzsche think that it was possible to learn from the past?

David Runciman - Lecture Notes

      History and politics look very different going backward than going forward
      People nowadays would probably say they are unable to think of an alternative to capitalism,
       but imagine that there might be one - wait and see what history has in store
      If a group in Germany in 1890 were asked about its future, they would talk of radical change
       in the form of socialism or nationalism - it would have been a risky bet to say that capitalism
       would eventually triumph
      There was a general sense that alternatives to capitalism were emerging, but there was no view
       of „wait and see what history has in store‟ - aimed to promote or challenge these alternatives
      German history in a nutshell:
             1890-1910…Not much changed
             1910-30…Massive political turbulence, economic collapse, hyperinflation 1924,
                 mass unemployment 1929
             1930-50…Germany destroyed, and country rebuilt by its conquerors in two separate
                 parts (East and West)
             1970…Situation seems unchanged and set in stone - Berlin Wall appears natural
             1990…Reunification - capitalism closer to 1890-1910 than to any other time period
      Those who predicted no change were wrong (from 1910-90) but right (from 1990 onwards)
      Arbitrary cut-off points
      1890 an important starting point because of Nietzsche and German Socialist Party

Nietzsche - personal
      Went mad in 1890 - was end of his writing career
      Not taken seriously by traditional scholars
      Very prolific
      1864 became professor at 24 years old
      „The Birth of Tragedy‟ written at age 28
      Gave up university life at 32 and travelled for 12 years
      By 1910 Nietzsche was much more famous and popular
      Claimed as an intellectual forebear by socialists, nationalists, racists and even feminists
      Nietzsche hated all the above groups though, and offended them initially

What Nietzsche had to say
      All the big ideas which had sustained European history - God, rationalism, Christian morality,
       justice, science, democracy etc. were all hollow and empty
      In their place one needed a sense of life being about the „will to power‟ - humans imposing
       their power on each other and on the world
      1880 account of how empty ideas were themselves the product and outcrop of the will to
      Christianity seen as outlet for expression of will to power for those who were initially
       repressed - a „slave morality‟ to constrain activities of those who dominated
      Hollowness of modern civilisation a result of the will to power
      Suggestion to throw off this empty morality and realise the essential struggle within
      Replaced „truth‟ with „truthfulness‟ - facing up to the world as it is
      This „truthfulness‟ could never be achieved by codes of morality or religion
Stewart Morris                            SPS Essay Notes                                Page 34 of 110

Implications for politics
      New horizons opening up
             Man breaking free from „civilised‟ past
             Idea of openness, fluidity
             Range of options available
      People must act
             Human beings need to impose themselves on the world
             Must make some personal decision
             Distinction between decision and action no longer exists
      Politics is an empty, squalid exercise, which constrains the will to power - must be left behind
      A „higher‟ (i.e. more „truthful‟) politics is possible
             Coercion (good in Nietzscheian sense) vs. law (good in „moral‟ sense)
             War state more „truthful‟ than peace-time state
             Nietzsche accused of being heartless, but took suffering very seriously
             Views on torture e.g. boiling people in oil - people now find it hard to imagine and
                 laugh at it - was expression of same will to power
      Justice as a form of mastery
             We must admit the violence inherent in the law
      Sees politics as lower, higher and for what it is - only in Nietzsche are they so combined
             Lower (like Marxists)
                       “Everything a man does in the service of the state is contrary to his nature”
                       “Viewed from the highest biological point of view, states of legality can
                           never be anything but exceptional states, since they are partial restrictions of
                           the true will of life, which is bent upon power”
                       “And how could there exist a „common good‟? The expression is a self-
                           contradiction: what can be common has ever but little value”
             Higher (like post-Marxists)
                       “Actual philosophers are commanders and law-givers: they say „thus shall it
                           be!‟…Their knowing is creating, their creating is a „law-giving‟”
                       “The essential thing in a good and healthy aristocracy is that it accepts with
                           a good conscience the sacrifices of innumerable men who for its sake have
                           to be suppressed”
             For what it is (like Nationalists, Weber, Schmitt)
                       “Do not seek the appearance of justice, if you are not called to the terrible
                           vocation of the just man”
                       “How ludicrous I find the socialists, with their nonsensical optimism
                           concerning the „good man‟…and the party opposed to them is just as
                           ludicrous, because it does not admit the element of violence in the law, the
                           severity and egoism in every kind of authority”
                       “Life itself is essentially appropriation, injury, overpowering of the strange
                           and weaker”

Essay notes

Lessons from history
      Cultures lost creative drive and became decadent - Greek and Roman
      Knowledge as virtue (Socrates) rejected by Nietzsche - the more we know about reality the
       more frightful we realise it is
      Socrates and Plato represent extreme decadence - ironically one of mankind‟s supreme
      Jews‟ relationship to their God (messianic principle) led to Judaism‟s own overthrow
      Christianity‟s intent on exploring to its furthest recesses the glory of God‟s world (through
       science) led to its overthrow
      Knowledge is pursued in the interest of supporting a moral order
      Philosophers had refused to admit their own bias
      Attacks philosophers for constructing unattainable utopias
      Thus Spake Zarathustra - „Superman‟ converts every „thus it happened‟ to „thus I willed it‟
Stewart Morris                           SPS Essay Notes                                Page 35 of 110

      Nietzsche says it is nonsense for philosophers to talk of facts - should stick to values
      Jibes at Germans for the especial „slave morality‟ of the Reich
      Nihilism - where humanity‟s highest values begin to devalue themselves
      Conscience as internalised form of social control
      Other philosophers think in an ahistorical way
      “A revolt which has two thousand years of history behind it and which has only been lost sight
       of because it was victorious” - Jewish slaves‟ revolt in morality
      Man as meaning of history
      Man who can make promises must be preceded by man who is predictable
      Man in pre-history - „social straightjacket‟ to make this happen
      Medieval punishment was horrific, but “how much blood and horror lies at the basis of all
       „good things‟!”
      “No cruelty, no feast: that is what the longest period in human history teaches us”
      “History interpreted as divine reason”
      “Constant testimonial to an ethical world order and ethical ultimate purpose”
      History informs badly about revolutions

Kaufmann - Nietzsche: Philosopher, Psychologist, Antichrist

Ways of looking at history
      Historical: Monumentalistic - concentration on heroes of the past for comfort and inspiration
      Unhistorical: Antiquarian - past as an object worthy of respect simply because of its age
      Supra-historical: Critical - historian as judge, passing sentence on events
      Nietzsche says historical method prevents us from being happy - men „need to know how to
       forget at the right time as well as how to remember‟
      If man was unable to forget anything - totally „historical‟ - he would be incapacitated for life
      Nietzsche - “the historical and the unhistorical are equally needed for the health of an
       individual, a people and a culture”
      Talked of „an excess of history‟ and the „hypertrophy‟ of „the historical sense in our times‟
      Supra-historical - people „believe that the meaning of existence will come to light
       progressively in the course of its progress”
      Historical man has faith in his own future
      Supra-historical man is he “for whom the world is finished in every single moment and its end
      Juxtaposed to life as wisdom
      Nietzsche was concerned with study of „history for the sake of life‟ so disregarded supra-
      While aesthetics may be supra-historical, moral values are not
      „Hopes‟ of history that value is “to circumscribe…an everyday melody…to elevate it, to
       intensify it into a comprehensive symbol”
      History does not reveal values in the sense that what succeeds is thereby proven to be
       valuable: “The goal of humanity cannot lie in the end but only in its highest specimens”
      Historical and supra-historical are integrated: what can an additional two millennia bring to
       light that we could not find in contemplating great philosophers of past two millennia?
      We judge artists and philosophers by their masterpieces
      Nietzsche rejects infinite worth of human soul

Warren - Nietzsche and Political Thought

Approaches to history (again)
      Each approach to history, if divorced from a total conception of „life‟, stifles action and leads
       to mysticism, passivity and meaninglessness
      Monumental history:
            no conception of causality, necessity, contingency, continuity
            effects at the expense of causes - a collection of „effects in themselves‟
            but does demonstrate human potential
Stewart Morris                              SPS Essay Notes                                     Page 36 of 110

      Antiquarian history:
             appeals to self-reflective sense of identity
             with monumental, provides good view of history from perspective of agent
             but incapable (together) of relating knowledge of contingencies to action itself
      Trans-individual history:
             unrealistic detachment - „positivism‟ rejected
             passivity and paralysis in face of own knowledge by making history seem separate
                 from and superior to the present
      Critical history:
             changes determinacy of history into a resource for the future
             needs nihilism to be possible
             objectivity relative to Christian-moral world-view - “position outside morality, some
                 point beyond good and evil”
             but tough to achieve because of “countless things that humanity acquired in earlier
                 stages, but so feebly and embryonically that no one could perceive their acquisition”
             Need for „virtue of modesty‟ in questions of knowledge

Supervision notes
      Need to talk more about learning from „past‟ rather than „history‟
      Need to say more on genealogy as a form of history
      Make sure past is Nietzsche‟s past
      Germany revered historians - Nietzsche was reacting against this
      When you see where something has come from, you can free yourself from it
      But Nietzsche very past-oriented himself - all his heroes from past, especially Greeks
      Don‟t get fixed on „knowledge‟ or „history‟ as academic study - Nietzsche tried to liberate us
       from both
      What history teaches us is not necessarily the „truth‟
      Ancient Greek state was geared towards culture - maybe creativity comes from lack of
      Nietzsche judges everything by culture - general view of how he thinks
      Creativity is very important to Nietzsche
      Nietzsche very critical of state - his version of history does not put history at the service of the
       state but at the service of life
      Nietzsche can be analysed in terms of old methods of history described above
      Make clear differences between history an genealogy
      Late Nietzsche vs. early Nietzsche

Cambridge Companion to Nietzsche

Genealogy as a form of history
      “We are unknown to ourselves, we men of knowledge”
      Genealogy - manner in which something originated settles questions of its nature
      While one does well to begin by considering how something may have originated, he is also
       insistent that this settles nothing
      By their fruits - not merely their roots - that you shall know them
      Looks into moral prejudices in terms of origins, but also:
                 “Have they hitherto hindered or furthered human prosperity? Are they a
                 sign of distress, of improvement, of the degeneration of life? Or is there
                 revealed in them, on the contrary, the plenitude force and will of life, its
                 courage, certainly, future?”

                 “The value of these values themselves must first be called into question -
                 and for that there is needed a knowledge of the conditions and
                 circumstances under which they grew, under which they evolved and
Stewart Morris                          SPS Essay Notes                               Page 37 of 110

      Genealogical enquiries intended to provide this kind of preparatory „knowledge‟, and it is this
       further „demand‟ that his larger philosophical enterprise is intended to meet (among other
      Genealogy is more than history - it is an unmasking of pretensions of universality and self-
       serving claims to spirituality
      Kaufmann says Nietzsche is not defending master morality and attacking slave morality, but
       when he describes on in terms of „excellence‟ and the other in terms of „misery‟ and „pathos‟
       what more is there to say? Who would prefer to be a slave than a master?
      Morality is a leveller - rewards obedience rather than higher ideals such as greatness, heroism,
       artistry, and so devalues the achievements of those who are superior - an injustice?
      Slave morality (Kant) is about passing judgement on others in moral categories that may not
       be their own
      Master morality (Aristotle) also passes judgement, but the judgements are self-directed,
       concerning one‟s own virtues
      Far more common to universalise a negative commandment than a positive one - the law
       proscribes drowning someone, but does not order one to save a drowning person
      Point of genealogy is to demonstrate the difference between the values of the weak and the
       virtues of the strong
      Note that slave morality is not characterised by political weakness (the ruled rather than the
       ruler) but a pathetic state of mind, a „reactive‟ set of emotions
Stewart Morris                             SPS Essay Notes                               Page 38 of 110

5.2 Weber and politics
   a) What were Weber‟s fears about socialism?
   b) What did Weber value in capitalism?

David Runciman - Lecture Notes and Classes

        Noted how Poles in eastern Germany seemed to be doing better than Germans in population
         terms - „breeding‟ as they were willing to work for low pay
        Weber took it for granted that German culture was greater than Polish culture
        Weber very much opposed Marxist views that economies come first - believed German
         culture comes first
                 “The economic policy of a German state, and equally, the criterion of
                 value used by a German economic theorist, can therefore only be a
                 German policy or criterion”

Main Weberian themes
        „Modernity‟ - disenchantment, bureaucratisation, rationalisation etc.
        Two basic themes:
               Politics as power and how to deal with it
               Leadership
        Distinguishes „living from politics‟ and „living for politics‟
        In favour of nationalism:
               Important for Germany
               Machtstaat and kulturstaat
        Saw revolution as unsettling and dangerous
        Clearly ambivalent about democracy
        Can only understand why in terms of power, leadership and responsibility

Text snippets

Power and true democracy
        These do not go together
        Weber thinking of Athenian-style true democracy vs. Machtstaat of representative democracy
        Weber very much in favour of German culture - opens up a distinction between the intimate
         (art) and the public (culture)
        To become a Machtstaat, certain virtues must be renounced - “Only communities which
         renounce political power are able to provide the soil on which other virtues may flourish”

Distinction between parliament and parliamentary government
        It is possible to have a parliament with no political power
        Leaves open the question of how democratisation and parliamentary government can absorb
         each other

        Universal suffrage so fundamental as part of the process of democratisation
        Some arguments can no longer generate meaningful political dynamic
        Democratisation is where democracy has so infilitrated the political process that they no
         longer argue about it - arguments are set in the context of democracy instead
        Vote needs to be made meaningful - representatives need to be seen to be having a real share
         in the power of the state
        Resurgence in popularity of voting during war
Stewart Morris                          SPS Essay Notes                              Page 39 of 110

      Good will of politician is not „niceness‟ - simply being responsible to those who voted him in

      Seen as too democratic - rules out party compromise and gives only yes/no answers
      Schmitt - no compromise: heterogeneity puts the brake on political decision-making
      Weber - liked compromise: defends representative democracy

Responsible politics
      This is generated through representative democracy
      Problems with leaks and interviews
      Problem with German system where Kaiser was not accountable to voters
      System where people resign: British politicians are spokesmen for parties (c.f. American
       politicians - hardly ever resign as they have a more direct personal mandate)
      Weber sees British system as good balance between personal and impersonal in political life
      Implication is that a few well-chosen resignations could have prevented First World War

Blind faith in parliament
      Date: Germany has been defeated in war and was drawing up new constitution
      Blind faith in majority is an „opposite but equally undemocratic extreme‟ - wrong kind of
      Implies pendulum swinging between parliament with no power (undemocratic) and parliament
       with absolute power (also undemocratic) - president can emancipate democracy and save

W.G. Runciman - Social Science and Political Theory

      Social sciences must be „value-relevant‟
      Marx offers a cure for society, Weber offers only a diagnosis
      „Rationalisation‟ and „disenchantment‟ are key themes
      Authority
            Traditional (customs etc.)
            Rational-legal (belief in legality of e.g. elected president)
            Charismatic (devotion to one person as an icon) - unstable unless transformed into
                one of the other two by rationalisation

W.J. Mommsen - Max Weber and German Politics
      Weber did not claim that capitalism would benefit the proletariat
      Could not conceive of a genuine alternative to capitalism
      Only alternatives were within capitalism
             Pure ethically-conscientious syndicalist socialism
             „Cultural affirmation through adaptation to the social demands of technology‟
      Marx‟s theory of concentration only partially correct
      Disputed inevitability and indeed predicted opposite - „an inevitable and prolonged capitalist
      No theoretically conceivable form of socialism could realise those ideals championed by
       socialist theory
      Appropriation of means of production riddled with economic handicaps, such as lack of
       rational management and accounting practices of entrepreneurial firms
      “Any rational, unified socialist economy would retain the expropriation of the workers”
      “It would only go one step further in the expropriation of private workers as well”
      Socialism‟s freedom from competition, speculation and recurring economic crises would be at
       the cost of “a decrease in the formal, calculating rationality of capitalism” (only possible
       through “subjugation of the worker to domination by entrepreneurs”
      Precisely this rationality which made it succeed all other economic systems
Stewart Morris                              SPS Essay Notes                                     Page 40 of 110

      Massive increase of bureaucracy leads to even firmer rules - „the iron cage of the future‟
      Advancement of working class within capitalism was possible, in the interests of both workers
       and capitalists
      Socialist experiments seen as retarding this development
      Saw SPD as little threat
      Only two alternatives: radical anarchist politics, or revisionism focusing on the contemporary
      Epistemological method of social science is to immunise the capitalist system against every
       criticism - methodological insufficiency
      Society itself cannot govern - needs political institutions
      Recognised „class struggle‟ but took socialist theories seriously only as ethical points of view
      Hardening of Social Democracy in Marxist dogma was a fundamental cause of the stagnation
       of Germany‟s political development
      Split „classes‟ into economic class (Klasse) and status group (Stand), the latter being based on
       lifestyle and social „estimation‟, and compared these to „power‟
      Some social positions much more to do with one of these than the other two
      Those who were advantaged in any one category could use this to accrue privilege and
       rewards more commonly associated with the other two
      However they remained independent (unlike in Marx)
      Inequality due to the market, not so much due to private property
      Market capacity - the skills you bring to the labour market
      Much larger number of social classes than in Marx

Weber - Political Writings

      Capitalist businesses could only develop where law was practised in one of two ways:
            As in England, law in the hands of advocates who, in the service of their clientele
                (men with capitalist interests) devised the appropriate forms for conducting business,
                and from whose ranks emerged judges strictly bound by precedent
            In the bureaucratic state with its rational laws, where the judge makes a decision
                having seen all the available documents
                 “Just as so-called progress towards capitalism has been the unequivocal
                 criterion of economic modernisation since the Middle Ages, so the equally
                 unequivocal criterion for the modernisation of the state has been progress
                 towards a bureaucratic officialdom based on recruitment, salary, pension,
                 promotion, professional training, firmly established areas of
                 responsibility, the keeping of files, hierarchical structures of superiority
                 and subordination.”

      Compares bureaucracy and capitalism:
                 “The same, decisive economic basis is common to both, namely the
                 „separation‟ of the worker from the material means of conducting the
                 activity of the organisation - the means of production in the economy, the
                 means of war in the army, or the means of research in a university
                 institution or laboratory, and the financial means in all of them.”

      Difference between workers in the two - of public-sector workers:
                 “They are less free, because there is no hope of winning any battle against
                 the state bureaucracy and because no help can be summoned from any
                 authority with an interest in opposing that bureaucracy and its power,
                 whereas this is possible in relation to private capitalism”

                 “If private capitalism were eliminated, state bureaucracy would rule
                 alone. Private and public bureaucracies would then be merged into a
                 single hierarchy, whereas they now operate alongside and, at least
                 potentially, against one another, thus keeping one another in check.”
Stewart Morris                              SPS Essay Notes                                       Page 41 of 110

      State must be appropriate to nation:
                 “Anyone for whom the historical tasks of the German nation do not take
                 precedence, as a matter of principle, over all questions of the form the
                 state should assume…will not be open to the arguments advanced here”

                 “Compelling objective circumstances will ensure that a German state
                 under parliamentary rule will look different from any other state”

      Different nations have different historical „obligations‟
      Of Russia and English-speaking society: “We have the accursed duty and obligation to
       history and to the future to resist the inundation of the entire world by these two powers”
                 “The very existence of a great power like Germany is an obstacle in the
                 path of other Machtstaaten, particularly of Russia with its peasants,
                 hungry for the land because of the lack of culture there, and the power
                 interests of the Russian state church and bureaucracy.”

      Weber‟s use of term Herrenvolk (master people) is often misinterpreted - he meant a people
       where each person was master of their own life and responsible for their political fate
      Protection of Germans in the east:
                 “The German race should be protected in the east of the country, and that
                 the state‟s economics policies ought to rise to the challenge of defending it.
                 What makes us feel we have a right to make this demand is the
                 circumstance that our state is a nation-state.”

                 “The German peasants and day-labourers in the east are…coming off
                 worse in a silent and bleak struggle for everyday economic existence in
                 competition with an inferior race”

      German nature of German economic policy:
                 “As an explanatory and analytic science, political economy is
                 international, but as soon as it makes value judgements it is tied to the
                 particular strain of humankind we find within our own nature”

                 “The economic policy of a German state, and, equally, the criterion of
                 value used by a German economic theorist, can therefore only be a
                 German policy or criterion”

      Aggressive nationalism:
                 “Our successors will hold us answerable to history not primarily for the
                 kind of economic organisation we hand down to them, but for the amount
                 of elbow-room in the world which we conquer and bequeath to them”

                 “The ultimate and decisive interests which economic policy must serve are
                 the interests of national power”

      Worried about „compulsory cartelisation‟ of entrepreneurs - one form of socialism
      If state shares in profit and loss of a syndicate, it has an interest in high profits and low wages,
       just like a private company, and the private members of the syndicate would expect the state
       to guarantee profitability
      In the eyes of the workers, „class state‟ would not have been overturned
                 “The fate of a worker who works in a mine does not change in the slightest
                 if the pit is a private or a state concern”

      Difference is that “it is impossible to strike against the state”
Stewart Morris                             SPS Essay Notes                               Page 42 of 110

                 “The two bureaucracies would then be a single body with identical
                 interests and could no longer be supervised or controlled”

      Such a state would also have to “take is share of the workers‟ hatred, which is directed at the
       entrepreneurs at present”
      “Socialism of entrepreneurs” (see problems above) vs. “socialism of consumers”
      The latter could never be organised - people have desire to provide for themselves, no
       leadership possible
      Communist manifesto wrong:
             No ever-increasing class of permanently unemployed „paupers‟
             Contraction in number of entrepreneurs is far too simple, and not valid at all for
             Rapid rise in bureaucracy of private sector, with no interest in a proletarian
             Growth in number who have a vested interest in the capitalist order
             Hope of revolution following crisis largely defeated by 1918 - Reichsbank and
                 businessmen themselves have taken steps to reduce number of crises, e.g. switch
                 from ruthless competition to creation of cartels
      More sober expectations:
             Economic production becoming increasingly „socialised‟ - share companies with
                 salaried managers are taking the place of individual entrepreneurs, and state
                 businesses being set up which no longer depend on risk and profit of any private
                       Accurate, though a share company often conceals financial magnates who
                           control the general meeting
                       Increase in officialdom and in rentiers - “the official, not the worker, rules
                           completely and exclusively”
             Hope that unity in the working class will increase due to increased use of machines -
                 anyone can work at a machine, so no longer division into skilled, unskilled etc.
                       Increase in semi-skilled workers - those put at the machine and trained on
                           the spot
                       But still specialists to a considerable extent - decline but not elimination of
                           occupational specialisation
                       At the same time, professional specialisation and need for professional
                           education is growing
                       Workers in this position not on piece-wage or weekly wage but on yearly
                       Worker hates the foreman more than the factory owner, and the factory
                           owner more than the shareholder, despite the shareholder being the one who
                           draws income with no work, the industrialist‟s arduous mental work, and the
                           foreman‟s similarity to the worker
             Increasing standardisation or uniformity of production, so only in the highest circle
                 of entrepreneurs does the old free spirit of the past still rule - easier to manage
                 production even without traditional enterprise skills
                       Officials do have to be educated in a quite definite way and have the
                           character of an „estate‟ - trained at commercial high schools, aim to distance
                           themselves as far as possible from the proletariat
      So, predictions of catastrophe devalued, replaced with evolutionary view
      Expects socialist society of the future to develop out of this slow transformation
      Assuming increasingly regulated, cartelised economy was to arise - who would regulate it?
       Who would take over and command it?
      Whether the syndicalists like it or not, they will need to rely on ideologues from the
       intellectual strata to run the state and those whose are trained to run businesses (entrepreneurs)
       to run businesses
      Russia as an experiment - capitalists vindicated if it succeeded, socialists vindicated if it failed
      Trotsky was an obstacle to this - unwilling to place his faith in propaganda coup if it
       succeeded, so wanted revolution in Germany as well
      Test to see if socialists are worth talking to:
             What is their attitude in relation to evolutionary dogma?
             What is their attitude towards peace? Is it more important than revolution?
Stewart Morris                               SPS Essay Notes                                     Page 43 of 110

Weber - Other Notes
        Lack of „freedom of contract‟ in socialist economies
        Type of coercion, difficult to present style of coercion, which helps stronger economic agents
         by guaranteeing their property
        Authoritarian constraint:
                  “the more relentlessly can authoritarian constraint be exercised within
                  them, and the smaller will be the circle of those in whose hands the power
                  to use this type of constraint is concentrated”

        Sees socialism like a religion - „salvation from class rule‟
                  “Not the rentier, the slave-holder and the banker who suffer the ill will of
                  the worker, but almost exclusively the manager and the business executives
                  who are the direct opponents of workers in wage conflicts”

        Rationalisation as inevitable but unique to the West - cultural explanation e.g. Protestantism
         and the Spirit of Capitalism - Puritan tradition of sober worldly activity, riches a sign of God‟s
         favour, and wealth should be reinvested to create the basis for further dutiful work rather than
         used to consume worldly pleasures
        Humanitarian goals (whether liberal or socialist) were doomed by inexorable growth of
         rational bureaucracy
                  “More and more the material fate of the masses depends upon the steady
                  and correct functioning of the increasingly bureaucratic organisation of
                  private capitalism. The idea of eliminating these organisations becomes
                  more and more utopian.”

        May have been too one-dimensional - many forms of capitalist organisation in modernity

APPARENT BENEFIT OF                  ACTUAL NEGATIVE                         WEBER‟S SOLUTIONS OR
MODERNITY                            CONSEQUENCES                            ESCAPES
Increase in human powers             Enslavement to new forms of             None
Choice and control over society      Impersonal control over                 Parliamentary control of
and nature                           individuals, bureaucratic power         bureaucracy, government by
                                                                             elected elite
Secularisation, liberation from      Crisis of belief, loss of meaning       Humanistic liberal values
forced belief                        and ethical rules
Rational reason - end of             Relativity of values, dominance         Remain true to one‟s own
uncritical faith                     of mundane material goals               values, pursue science in ethical
                                                                             manner, charismatic leaders
Reflexive sense of self-             Others may be treated as                Defend individual human
individuality                        instruments or objects                  creativity
Rational approach to mind and        Loss of sensuality, physicality,        Protect private love/desire
body                                 eroticism
Dynamic expansion of                 Domination by impersonal                None
capitalism                           market forces

Supervision Notes

        Weber means many different things by „socialism‟
              Marxism
              Socialisation
              Socialists - splits into responsible and irresponsible
        Not consistent with Marx‟s effort to socialise the proletariat
        Marx: advancement of working class vs. Weber: advancement of whole society
        Marx: difference in German and Polish proletariat explained in terms of class, while Weber
         says it is explained in terms of „national culture‟
Stewart Morris                          SPS Essay Notes                               Page 44 of 110

      Fears of „officialdom‟
      Difference between responsible politician and responsible businessman in relations with the
             Businessman: escape bureaucracy - narrow focus on the thing you‟re doing
             Politician: use bureaucracy responsibly
      Under socialism, politicians take over business
      Weber working for „socialisation‟ of Germany
      Entrepreneurs did not live up to ideal because capitalist „spark‟ had slightly faded
      Bourgeoisie incapable of being political leaders
      Politically quite socialist, but not economically
      Bureaucratic machine as oppressive (even if it provided social justice & welfare)
      Capitalism and democracy provide workers with welfare, not bureaucracy
      Capitalism could stagnate under these circumstances

Later views
      After WW1 Weber becomes more socialist
      Weber keen to portray himself as „responsible‟ - vs. Luxemburg et al
      SPD 1890 starts to work with state under Bernstein
      Bernstein defeated - SPD claims it is still revolutionary
      But in WW1 side with German state, revealing themselves as German nationalists, not
      Weber says Lenin et al saw war as a means to revolution
      Choices for SPD
            Carry on war and hope for revolution
            Stop fighting and secure Russian revolution
      Weber said Lenin was „responsible‟ to negotiate a way out of the war - feared socialists like
       Trotsky who wanted revolution at all costs
      Make references to Russian revolution in essay on socialism!
      Lenin an interesting case for Weber - revolutionary, but understood responsibility of power

Types of socialism
      Different varieties of socialists:
            Lenin - revolutionary
            Luxemburg - idealist
            Trotsky - idealist
            Germans before war
            Germans after war
      Lenin may possibly be a responsible socialist
      Weber most feared the idealists
      Also feared that socialisation would be stultifying
      Socialist parties were democratic
      Paints two different types of democracy in negative light:
            Swiss-style: always same people, with 50-60 year tenure
            Where the participants are paid
      Socialism generates certain types of democracy
      Weber saw these types of democracy as dangerous
      Weber believed Britain and America had resisted socialism by having the most advanced
       democracies - discipline in Parliament of having to speak directly and realistically to people
      Was scared of socialists, not socialisation - saw the latter as inevitable
Stewart Morris                         SPS Essay Notes                             Page 45 of 110

5.3 Schmitt
   a) Why did Schmitt believe politics was impossible in a world without war?
   b) How did Schmitt distinguish between liberalism and democracy?

David Runciman - Lecture Notes and Classes

Weimar Constitution and Schmitt
      Schmitt built Weimar‟s tension between parliamentary and presidential government into a
       complete philosophy of the state
      Need to get into a mindset where liberalism and democracy are separate
      Schmitt also added „socialism‟ to these two as a constituent of the Weimar republic
      Sees any liberal democratic party as inherently contradictory
      Liberalism:
             Freedom of property
             Freedom of expression
             Freedom of association
             Direct representation
             Not libertarianism (free-for-all) but system with inviolable rights enshrined in law
             Proportional representation is a liberal concept - many parties producing different
      Democracy:
             Voice of the people
             What people have in common is given political representation
      Socialism conflicts with liberalism - freedom of property
      Schmitt identified liberalism with:
             Plurality, compromise, indecision
             Parliament
             Conversation
      Democracy identified with decision
      Schmitt said freedoms of liberalism must be the will of the people to work in practice
      Democracy must take precedence over liberalism
      Friend and foe philosophy:
             Who to include and exclude from state
             Potential for war
      Can there be a decision for liberalism?
             Initially thought yes - either liberalism or democracy, hard to reconcile them
      For socialism?
             Socialism could be reconciled with democracy
             E.g. there could be a socialist president
      Many inspired by way in which Schmitt took politics seriously in its own right
      1932 enforcement of Article 48 (allows President and armed forces to assume total power)
       caused many to lose faith in Schmitt
      Reichstag dominated by centre and centre-left, while Presidency fought between Hindenburg
       and Hitler
      Hindenburg‟s preferred Chancellor (von Papen) refused by Reichstag, so Hindenburg
       dissolved Reichstag
      Distinction between legality and legitimacy (liberal and democratic respectively)
      How did Nazism/fascism fit in?
      Schmitt became spokesman for Nazi regime, but said his decision was made when
       Hindenburg assumed power, not Hitler
Stewart Morris                             SPS Essay Notes                               Page 46 of 110

Schmitt - The Crisis of Parliamentary Democracy

Liberalism, democracy and parliamentarianism
      Liberalism as representing weak bourgeoisie
                 “Christ or Barrabas, the liberal answers with a motion to adjourn the
                 meeting or set up an investigative committee”

      Parliament as a creation of liberalism
      Thoma:
             Parliamentarianism not founded on liberalism in Germany as in Britain or France, but
                on Weimar and its authors - Weber, Neumann, Preuss
      Schmitt:
             Refused to accept that because there was no better alternative to parliamentary
                government, there can be no discussion of its principles
             Said that Weber et al were simply developing the arguments of „classical‟ liberalism
             Believed in looking at concept of Parliament first, then at its function
             Essence of parliament is openness and discussion, which liberalism recognises as
                means of reason and the tools with which to cement „the victory of right over might‟
                 “The development of modern mass democracy has made public discussion
                 an empty formality”

      Liberalism:
             Discussion forces those in authority to declare positions and discuss alternatives
             Free press and freedom of opinion provide public with information on what is being
                 done and why
             By these means, citizens control the use of power
             Discussion creates ideas and opinions, from which „general will‟ and „public good‟
                 emerge - „general will‟ as ultimate claim to legitimacy
             Depends on belief that political conflict can be transformed into a matter of opinion
      1918-19 no „Germans as such‟ but radically different ideas e.g. sympathy for Soviet-style
       socialism, nationalism etc.
      Preuss believed exclusion of bourgeoisie would lead to „Bolshevist terror‟ and said there were
       two alternatives - „Wilson or Lenin‟
      Ended up with democratic power moderated by liberal institutions
      Weber saw danger in „caesarism‟ and opposed direct election of many public offices - but not
      Demagoguery - through populism - as the greatest danger to modern states
      Weber believed President should use his powers only in „temporarily insoluble crises‟
      Parliament balanced by President to ensure that a „crisis of Parliament‟ did not become a
       „crisis of the state‟
      Much opposition to Weimar:
             Traditional-authoritarian (e.g. those wanting return to Kaiserreich)
             Nationalist (e.g. Hitler)
             Radical left (e.g. Russian model)
      Socialists said parliament just a shadow of political reality, and was part of a network of
       overlapping interests in press, parties and economic interest groups
      Schumpeter:
             Parliament a different institution to that described by liberal theory due to vast
             Parliament was now meaningless - manipulated not by debate but by external events
             Real conflict not in politics but in economy and society - class identification with
      Weber:
             Worried about political parties as their professional means of winning support would
                 appeal to irrational side of many voters
      Schumpeter:
             Irrational factors more important than debate on issues
Stewart Morris                               SPS Essay Notes                                   Page 47 of 110

                 Reichstag speeches no longer addressed to the floor but to the nation
                 Parliament just a „puppet of the people‟
                 Same view as Schmitt - parliament had become an executive body which would not
                  just talk but also act
      Schmitt:
                  “Small and exclusive committees…make their decisions behind closed
                  door, and what representatives of the big capitalist interest groups agree
                  to…is more important for the fate of millions of people, perhaps, than any
                  political decision”

             Saw Parliament as an „antechamber‟ for concealed interests
      Presidential power to use force against rebellious Lander was used often by Ebert, as were
       attempts to solve economic problems
      Schmitt suggested President‟s role was to act for “the security and defence of the constitution
       as a whole”
      Thoma:
             Democracy does not imply any substantial beliefs or politics - is simply a matter of
                forms and procedures such as secret ballots, majority rule and due process
             Contrasted Weimar‟s liberal democracy (indirect, representative) with radical
                democracy based on egalitarianism, plebiscitary elections and referenda
      Smend:
             “Rationalistic belief in the productive power of a political dialectic as the form of the
                automatic achievement of political truth”
             Except for general attachment to liberty, real contents of political life were secondary
                - primary factors were elections, ministerial responsibility, budgetary decisions,
                procedural regulation
      Schmitt:
             Believed parliamentary democracy could not unite the political classes in Germany
                as it had done among the English bourgeoisie in the 18th century
                  “The essence of the democratic principle…is the assertion that the law and
                  the will of the people are identical”

             Therefore the rulers must equal the ruled, the state must equal the voters etc.
             This implies identity of quantitative (numerical majority) with qualitative (justice)
             One-tenth of electorate could petition the Reichstag to call a referendum on a law
             Weimar not „just representative‟ or „just democratic‟ but more complex
      Legal positivism - law as separate from moral/political enquiry
      „Normative power of the factual‟ - Meyer
      Anschutz:
             “The capacity to use state power is not defined through rightful inheritance but
                 through its actual possession”
             “Legitimacy is not a characteristic of state power”
             Separates justice of laws from their effectiveness
      Schmitt rejected this - did not reveal political sources of law and state
      Linked constitutional interpretation of people‟s legislative power to the office of the President
      Said that President should ban „unconstitutional parties‟
      If practice contradicts theory, legitimacy of Parliament is reduced
      Saw the press as active in the creation, not just reflection, of public opinion
      “Parliamentarianism advanced at the same time and in the closest alliance with democracy,
       without either of them being carefully distinguished from each other”
      Parliament no longer has capacity to build a political elite
      Parliament is only „true‟ when public discussion is taken seriously and implemented
      „Discussion‟ all about establishing truth and justice, whereas Parliament has become a place of
       „negotiation‟ - where each side is set in their ways
      In this case „openness‟ is no longer appropriate
                  “Provisions concerning the independence of representatives and the
                  openness of sessions function as a result like a superfluous decoration,
                  useless and even embarrassing”
Stewart Morris                              SPS Essay Notes                                      Page 48 of 110

      Parties seen as „social or economic power-groups calculating their mutual interests and
       opportunities for power‟
      Masses „won over through a propaganda apparatus whose maximum effect relies on an appeal
       to immediate interests and passions‟
                 “Parliament itself appears as a gigantic antechamber in front of the
                 bureaus or committees of invisible rulers”

      Bentham: “In Parliament ideas meet, and contact between ideas gives off sparks and leads to
       evidence” - Schmitt says like satire to quote this now
                 “Every actual democracy rests on the principle that not only are equals
                 equal but that unequals will not be treated equally. Democracy requires,
                 therefore, first homogeneity and second - if the need arises - elimination or
                 eradication of heterogeneity”

      Schmitt cites the example of the British Empire to claim that „a democracy can exclude one
       part of those governed without ceasing to be a democracy‟
      Universal suffrage seen as a liberal, not democratic idea
      “Modern mass democracy rests on the confused combination of both”
      Rousseau claimed that a „general will‟ only existed where the people were so homogeneous
       that there was unanimity
      “Democracy is correctly defined as the identity of governed and governing” - modern mass
       democracy attempts to realise this but is confronted by a Parliament designed for
      Bolshevism and fascism not necessarily antidemocratic
      A concept of „the people‟ with a general will makes no sense as voting is private
      Modern system as a “contradiction of a liberal individualism burdened by moral pathos and a
       democratic sentiment governed essentially by political ideals”
      J.S. Mill recognised conflict as well - majority could crush the minorities, even if the minority
       was right - as a liberal and a positivist, Mill was horrified
      Schmitt wanted „a new feeling for order, hierarchy and discipline‟

Schmitt - Concept of the Political
      Political as an arena requiring authority, not general law - decisions are singular, absolute and
      Historical conjunction of liberalism and democracy has obscured our concept of „the political‟
      Parliamentary politics rests on compromise - temporary, occasional, never decisive
      Such arrangements can never resolve claims of equality - democracy challenges a legitimacy
       which is based on discussion
      Liberalism substitutes procedure for struggle
      Legitimacy and legality stand in contrast
      Only by means of friend/enemy distinction does the question of our willingness to take
       responsibility for our own lives arise
                 “Each participant is in a position to judge whether the adversary intends
                 to negate his opponent‟s way of life and therefore must be repulsed of
                 fought in order to preserve one‟s own freedom of existence”

      This raises the stakes in politics
      Simple criterion of politics is the friend/enemy distinction
      Schmitt challenged idea that every political party must be permitted freely to compete for
       parliamentary representation and governmental power
      A totalitarian movement which legally captures the legislature could forge new constitution
       and state
      Argued in 1932 that only those parties not intent on subverting the state should be allowed to
      Sought to drastically strengthen powers of president
      Did so, but president did not take advantage - Hindenburg failed to eliminate political
       challenges as he was over-concerned with constitutional legitimacy of his actions
      When state and society penetrate each other it is no longer true that state equals politics
Stewart Morris                               SPS Essay Notes                                  Page 49 of 110

                 “Purely social matters become affairs of state - as must necessarily occur
                 in a democratically organised unit”

                 “Everything is a t least potentially political”

                 “Democracy must do away with all the typical distinctions and
                 depoliticisations characteristic of the liberal 19th century”

      State can be universal (standing above society) but not total (pervading every aspect)
      Friend/enemy - distinction between public and private enemy
      Liberals have “tied themselves to very illiberal, essentially political, and even democratic
       movements leading to the total state”
      No liberal politics, only a liberal critique of politics - internal struggle against the power of the
                 “Liberal thought evades or ignores state and politics”

      18th century progress seen as humanitarian-moral and intellectual-spiritual
      19th century progress seen as economic-industrial-technological
      Economy judged as essentially peaceful - like Constant - winning by exchange not war
      Strauss:
             Schmitt undertakes criticism of liberalism in a liberal world
             Need a horizon beyond liberalism in order to understand it

Supervision Notes

Liberalism and Democracy
      Need to distinguish between dictatorship and totalitarianism
      Complex distinction between liberalism and liberal democracy
      Schmitt is arguing against liberal democracy, not liberalism per se
      Sees liberalism as contaminated by democracy
      Liberal parliaments perfectly capable of making decisions - until they become democratic
      Examples of liberal states are Britain and America - hardly „weak‟
      Liberalism goes back to Hobbes and Locke - state rules some aspects of life, not others
      When contaminated by romanticism - „freedom‟ as holy grail - things go wrong
      Problem with Weimar was that it is liberal-democratic, not liberal
      Two views:
             Liberalism existed viably, but was corrupted
             Liberalism was always flawed and fulfilled its destiny
      Essays on Schmitt stand out when complexities within dichotomies are detailed
      Schmitt says he thought Nazism was dictatorship (which he was not against) but did not
       realise that it had become totalitarian
      Dictatorship vs. totalitarianism:
             Dictatorship is when ruler has absolute power - only affects you when decrees are an
             Totalitarianism is where state uses power in a total way - need to conform even
                 without specific decrees - led to by penetration of state into society, combined with
      Liberal democracy seen as leading to total state

      Potential conflict is important - Schmitt is against actual conflict
      What happens when people try to tackle potential for war e.g. League of Nations
            Cannot abolish war
            In fact lead to horrible war fought by sanctions, embargoes & by civilians
            Prophetic
      Different types of war - public and private enemy
Stewart Morris                           SPS Essay Notes                                Page 50 of 110

      Liberal war emphasises humanity against inhumanity (e.g. Kosovo, Iraq) while democratic
       war is between two sides who respect each other - enemy is not morally disapproved of, but
       just poses an existential threat (e.g. two World Wars)
      Sees e.g. League of Nations as political - nations using their power outside of discussion,
       competing to be the ones to take a decision
      Some kinds of parliaments not ruled out
      Leaders of nations (accountable to public) meet in e.g. League of Nations, so it is still liberal-
      Legality and legitimacy debate creeps in here
      Maybe Schmitt no longer applies with nuclear war?
      No, we still have Schmittian wars

      American constitution is greatest liberal document of all - but includes directly elected
      Shows how to create a strong state
      Liberal states best of all at vanquishing their enemies
      Mill also opposed secret ballot - destroys intellectual debate
      Be careful with ideas of „freedom‟ - looks crude unless explained
      Liberal democracy, not liberalism, leads to total state
      Liberal-democratic - people choose who leads them, and then constrain them

Bits and bobs
      State can only command allegiance if there is no dispute about where sovereignty is located
      Schmitt claimed sovereignty was the power to decide when this situation had arisen
      The sovereign is whoever can set aside all law and constitution and declare a state of
       emergency, defining who counts as friend and who as foe
      Sovereignty as the right to declare a reversion to the state of nature - Stirk and Weigall
      The constitution decides who will exercise this sovereign power


      Democracy as the more „political‟ form - mass, direct, plebiscitary democracy especially
      But democracy is no „ideal‟ alternative

Democracy the problem?
      Politics (friend/enemy distinction) is separate sphere to religion (good/evil), economic
       (more/less profitable) and art (beautiful/ugly)
      These other aspects are neutral
      Background to this is liberalism - the natural theory of the state
      Neutralisations and depoliticisations are a consequence of liberalism - the thing Schmitt may
       be attacking is the one which results in the distinction of politics in the first place
      Democracy drags these other domains into the political realm
      Neither could be satisfactory for Schmitt
      Liberalism half-right because it sets out state-society distinction, but does it in such a way that
       democracy will try to deneutralise
      When Schmitt talks of the „total state‟ he refers not to The Third Reich but to Weimar
      Liberalism trivialises politics by making these other domains neutral - makes itself irrelevant
      Democracy says that politics should be important
      Schmitt aimed for a government between extremes of totalitarianism and trivialisation
      Leader must take account of neutral domains but not be swamped by them
Stewart Morris                          SPS Essay Notes                               Page 51 of 110

      There is a liberal form of pluralism - trying to neutralise the state
      Pluralist theory says state is one entity among many
      Why do we need government in addition to the other entities?
      Friend/enemy distinction can be a life/death distinction so stands above the others

Liberal politics impossible?
      Line about „no liberal politics‟ always quoted, but maybe out of context
      Schmitt attacks individualism
      A „pure‟ politics is a distrust of all things which restrict freedom
      Individualism is the negation of the political
      Doesn‟t follow that there can‟t be a liberal politics
      Liberalism not always associated with individualism e.g. American constitution „to make a
       more perfect Union‟
      In such despair about Weimar that Schmitt did not want ambivalence to creep in
      When individualism meets democracy, conflicts are inevitable
      US state silent on certain issues but certainly not a negation of the individual
      Schmitt not an „anti-Foundational‟ thinker like Nietzsche - was out to save politics, not
       destroy its foundations
      Error of liberalism to think that friend/enemy distinction comes through discussion and reason
Stewart Morris                          SPS Essay Notes                               Page 52 of 110

5.4 The obligation to obey the law
   a) Do we have an obligation to obey the law?

Essay Notes

Introductory concepts
      Some sense of „obligation‟ instilled in us during the process of socialisation
      Difference between „having an obligation‟ and „being obliged‟ e.g. Hart‟s gunman example:
             If a gunman orders a clerk to hand over his money (with a credible threat that he will
                shoot to kill) then the clerk, if he obeyed, „was obliged‟ to hand over the money
             But he did not have an „obligation‟ or a „duty‟ to obey
      Gunman could be seen as the sovereign habitually obeyed and the orders are general - courses
       of conduct, not single actions.
      „Being obliged‟ is about beliefs and motives with which actions are done - in this case, an
       assessment that the cost of non-compliance would be serious harm
      „Having an obligation‟ is a matter of legal fact, or a moral principle, or both
      Not just an order backed by a threat
             Can include cases of forced conformity to a general morality
             Can include laws which confer upon individuals the legal power to create structures
                of rights and duties within the coercive framework of the law (e.g. contract law,

‘Predictive interpretation’
      Defines an obligation in terms of the likelihood that the person with the obligation will suffer
       a punishment or „evil‟ at the hands of others in the event of disobedience
      States obligation not in psychological terms but in empirical terms
      Hart says this view is wrong
             Deviations are not merely a prediction that hostile reactions will follow, but are the
                reason or justification for such actions
             The predictive interpretation suggests that if there is no chance of you being caught
                (for example, having successfully bribed the police) you no longer have an obligation
      Another definition is required

Hart’s definition
      Implies existence of a general rule, not a one-off order
      General demand for conformity is insistent and social pressure brought to bear on those who
       threaten to deviate is great
      Obligation has three common characteristics:
             Insistence on importance or seriousness of social pressure behind the rules
             Rules are necessary for maintenance of social life or some highly-prized feature of it
             Recognition of sacrifice or renunciation on the part of the person with the obligation
      Obligations can be seen from internal and external points of view - you can assert that a
       particular group accepts the rules without yourself accepting the rules
             A red light is a signal to the driver to stop (internal)
             It is also a sign that people will probably stop driving (external)
      Problem with predictive theory is that it defines internal point of view out of existence

Social contract theory
      Conventional wisdom (once revolutionary doctrine) that government derive power from
       consent of the governed
      Social contract: “I have committed myself (consented), therefore I am committed (obligated)”
      Tacit consent - best interpretation seems to be that a silent man is taken to consent if the man
       himself is aware that this assumption is being made
Stewart Morris                             SPS Essay Notes                                    Page 53 of 110

Group membership
      In Locke‟s theory any oppressed citizen has the right to disobey
      Disobedience could be carried out by those who are part of a group - obligation to disobey
      “Law X is inconsistent with our (not my) moral convictions, therefore I ought to disobey”
      Wolff:
                 “To be true to one‟s principles is either a metaphor or else an elliptical
                 way of describing loyalty to other men who share those principles and are
                 relying on you to observe them”

      Seems exaggerated, but commitments to „principles‟ are also usually commitments to a group
      „Selling out‟ (giving up heretical principles in favour of the orthodoxy) is seen as a betrayal
       not just of one‟s principles but also of the group

Types of group
      Obligation begins with membership which can, in its broadest sense, begin with birth into a
      Real obligation comes with wilful membership
             From a minimal „Menshevik‟ point of view, it is continued membership above a
                 certain age
             From a maximal „Bolshevik‟ point of view, it requires a public profession of the faith
                 and long-term involvement in group activities - at the extreme end we find societies
                 with tests, initiations and oaths
      State can be viewed as an „ideal or potential community‟, obligating its members to oppose
       those who act legally but immorally in its name
      Those who disobey a collaborationist government after military defeat (or a satellite
       government after peaceful capitulation) often claim that the state has been betrayed, and that
       they are obligated under their previous membership to resist
      However, they cannot claim that all their fellow citizens are so obligated
      If resistance was successful, while active collaborators could be punished, those who simply
       refused to join the fight could not be, as they never acquired a duty to do so
      Obligations from wilful conduct suits small groups such as secret societies much better than it
       does the state, established churches or some vague concept of „humanity‟
      Groups in which wilfulness is maximised can rightfully impose greater obligations than those
       where membership is effectively inherited, unless of course membership of the latter group is
       seconded by voluntary participation in the activities of that group as well
      This is why, according to Rousseau, small societies are generally „morally superior‟ to large
       ones; they can impose greater obligations on their members

Obligation to disobey
      This arises when obligations incurred in some small group come into conflict with those
       incurred in a larger, more inclusive group (generally the state)
      When the small group is a secondary association (overruled by the state) it ought to yield
       without conflict to the primary association (the state, with its monopoly on the legitimate use
       of violence)
      „Selling out‟ is simply a matter of behaving like a member of a secondary association
      Conflict occurs when groups are formed, and their aims announced, which are „secondary
       associations with claims to primacy‟
      Important distinction though:
             „Total claim to primacy‟ - when commanded, its members must challenge the
                established legal system, overthrow and replace one government with another, attack
                the very existence of the larger society
             „Partial claim to primacy‟ - larger society is asked to recognise their primacy in some
                particular sphere and so limit its own primacy - members are only obliged to disobey
                certain laws at certain times
      The latter are not „revolutionary‟ in any sense, but when the state labels them „rebels‟ or
       „subversives‟ they often need to transform themselves into revolutionaries for the purposes of
Stewart Morris                            SPS Essay Notes                                Page 54 of 110

      The historical basis of liberalism is the transformation of disobedience or heresy into mere

Partial claim to primacy not recognised?
      Locke: splits people into those inside the society or outside it
      Inside society:
             citizens (who fully recognise the primacy of the state, though certain areas of social
                life may be out of the government‟s reach)
             rebels (who seek to replace the government and its laws)
      Outside society:
             emigrants (who have left society to renounce social obligations)
             aliens (who cannot commit entirely to their new society, but have certain obligations
                in reward for its protection)
      Membership of a group with partial claims to primacy falls into none of these categories
      Various groups united in belief that they have no claim to the moral supremacy or political
       sovereignty of the wider society
      Figgis claims that sovereignty is just a „venerable superstition‟ and in reality „it is as a series
       of groups that our social life presents itself‟

Prima facie obligations to the state
      Walzer: prima facie obligation to obey the state, as it is the most inclusive society of which we
       are a part - not unreasonable, provided that the state provides equally to all its members
       certain essential services
      But this simply means that disobedience must always be justified
      There is also a prima facie obligation to honour engagements, defend the groups and uphold
       the ideals to which you have committed yourself
      Limited civil disobedience rarely threatens the existence of the state
      Criminal disobedience is a different matter:
             Activities of criminals endanger us all, so they cannot claim to be acting in a different
                 sphere from the state
             Criminals do not make any claim to primacy - seek only to evade, not limit, the
                 authority of the state
             Only association is with the state itself, and this is being rejected

Wilful membership?
      Wilfulness of state membership can only be described in terms of joining or not joining
       secondary associations - „internal emigration‟ - which offer partial alternatives to state
      If groups within which people learn to object are repressed by the state, the state can no longer
       be seen as a voluntary association
      Aristotle and utilitarians attempted to skirt round this by dismissing social contract theory
       altogether - obligation to state is instead defined in terms of state‟s value, in achieving the
       „highest good‟
      Major difficulties:
             State with no toleration of minorities will be of no benefit to these minorities - rather,
                it will have a net cost
             Cannot include those with universalist or internationalist pretensions (e.g. Roman
                Catholic Church)
             No true pacifist would feel that a war-mongering state was aiming towards his
                definition of a „higher good‟
             States may not pursue the „highest good‟ but the „lowest common denominator‟
             No universal definition of this „higher good‟
             Pateman: utilitarian theory not an argument for obligation at all, simply an argument
                for obedience - as voluntarism has been abandoned, no sense of obligation left
             State is redefined as fragile, continuously reassessed bond between governed and
Stewart Morris                              SPS Essay Notes                                    Page 55 of 110

      Liberal form of social contract theory suggests that all participants in a social contract are able
       to see its advantages
      By virtue of being a promise, the social contract transforms obedience into obligation -
       substantive political freedom and equality are given up or exchanged for the protection of the
       liberal state
      Insurmountable flaw in this theory is that there has been no explicit social contract in the first
       place - more a „social diktat‟ which is not inclusive of all members of society

Democratic view
      Central plank of liberal-democratic state is the alienation by voters, through elections, of their
       right to make political decisions
      Democratic view of the state (McBride):
                 “A society that formed a single voluntary association for certain purposes
                 and that consisted of a plurality of voluntary associations for other
                 purposes - both the respective purposes (of the largest association and the
                 others) and the identities and memberships of the sub-associations could
                 be conceived of as fluctuating in response to conditions”

      Leaves fairly fragile model of the state

Moral questions
      Singer argues that our ultimate obligation to obey the law is a moral, not legal one
      Moral considerations are ones which one is prepared to apply universally and which are (for
       the individual in question) more important than other universal considerations such as
       aesthetics or etiquette
      A special obligation within a democracy, which is not present in other types of society. Singer
             All have equal power, and majority have no tendency to oppress minority - is a fair
                compromise between competing forms of power (but can this exist? certain
                minorities which prove threatening to the majority will be oppressed if majority act
                in their own self-interest)
             Taking part in a decision-making process gives rise to an obligation to act as if one
                had consented to be bound by the result (but is participation in the process voluntary?
                will all interest groups be included in the process?)

Individual autonomy and modern democracies
      Wolff:
                 “I have an obligation to obey the laws which I enact, or those which my
                 agent enacts in strict accordance with my instructions. But how can it be
                 claimed that I have an obligation to obey laws made in my name by a man
                 who has no obligation to vote as I would, or indeed no effective way of
                 discovering my preferences?”

      If obligation rests on a promise, once the promise is given one ceases to be autonomous
      Representative democracy can diverge easily from the will of the people
      Exacerbated in modern democracies with need for technical knowledge, discussion of
       increasingly complex issues, secrecy surrounding national security concerns
      Modern representative democracy is not simply the executive of the will of the people - more
       like political stewardship - in Plato‟s terms, „elective guardianship‟
      May be arguments for individual obedience to state, but these do not confer an obligation
      Could these laws still be legitimate at the price of individual autonomy?
             Rousseau: when a political community deliberates together on the „general good‟,
                 and embodies its deliberations in general laws, it acquires legitimate authority over
                 all member of the deliberating body
             Moral obligation to obey laws willed by collectivity
      Fails when modern democracies seen in the light of Wolff‟s criticisms - majority cannot be
       seen as taking part in the deliberative process
Stewart Morris                            SPS Essay Notes                                Page 56 of 110

      Argument often accompanied by suggestion that state can repress individual „in the interest of
       his own true self‟ but this begs the question of how the state can have a better idea of this than
       the individual himself
      Model proposed by Rousseau works only with a unanimous, open, direct democracy, a model
       which is virtually impossible in practice and which presupposes a lack of the very conflicts on
       which politics is built

Wolff’s thoughts on prima facie obligations
      Sees idea of prima facie obligations as double counting
      Some philosophers use term as shorthand to say advantages of compliance outweigh
       advantages of disobedience
      If this is all they have in mind, they have no right to add it to other pointers to compliance, for
       it has already been taken into account
      However, if it includes some other concept, this has just been left as a matter of fact and not

Edmonson and Raz
      Edmonson claims that we should obey the law if, in breaking it, we would undermine the
       authority of the law to an audience
      Raz claims that in a sensible and just society, a „respect for the law‟ can be built up, which is
       seen as a factor in its own right
      But these are just two factors - neither can be seen as overarching or outweighing all reasons
       to disobey the law (such as loyalty to secondary associations) - they certainly do not, on their
       own, account for an obligation to obey the law

Concluding comments
      Wolff:
      “A band of robbers ride into town with guns drawn and demand all the gold in the bank. They
       are called criminals. They return the next year on the same day and repeat their demand.
       Again they are called criminals. They put on uniforms and return each year on the same day.
       Eventually, they are called tax collectors. Finally, the smallest and least offensive of the
       bandits rides into town unarmed and the townspeople give him their gold without a struggle.
       The state has arrived.”
      For better or for worse, the state is held together in only the most fragile way by the tacit
       consent of individuals to obey laws which fit in with what they personally believe.
      The law does not by its definition include contingencies for moral obligations - it might
       compete with moral obligations for the sympathy of a jury in a court of law, but this is
      Minor civil disobedience can be transformed into mere nonconformity by a state which agrees
       to limit its primacy or can, if repressed, be transformed into revolutionary fervour and threaten
       the very existence of the state itself
      This civil disobedience will always be with us, and should be respected, as a separate and all-
       enveloping obligation to obey the law simply does not exist in modern democratic societies

Supervision Notes

Different ways to approach question
      Need to disentangle legal from political questions
      Ways to approach it:
            Consent
            Groups - Walzer
            Legal question
      Singer etc. mostly about political obligation - is different
      Singer‟s democracy implausible?
            Many types of participation
Stewart Morris                           SPS Essay Notes                               Page 57 of 110

               Democracy is not just whether or not your vote counts - also to do with free press,
                right to trial by jury, right to use the law for protection
             Difference between having a personal input and voting out governments
             Separation of powers
             If people don‟t vote, they don‟t care - surely this does not render the state illegitimate
      Edmonson:
             Difference between obeying the law and not fighting system which creates the law
             Don‟t interfere with those whose job it is to administer the law
             Fits in with Walzer - allowed to break the law, but not to resist arrest
             Some groups e.g. American militias often breaking laws which have nothing
                specifically to do with their sphere - anarchists, not civil disobedients
      Raz claims law is morally meaningless
      Resisting arrest:
             Could communicate your message to the world
             Conscientious objection - resist arrest, can run away (e.g. dodging draft)
             Civil disobedience - involves not resisting arrest, makes a statement because
                authority of law is respected
      Separation of legal and political:
             In authoritarian state, the state and the law are exactly equivalent - no „rule of law‟
                with its own obligation
             In liberal state need to separate law and state
      Groups:
             When membership of a group gives rights against the state, is this pluralism or
             Difference between groups and individuals does not apply when talking about legal
                arguments - groups do not jump red lights together
             Individual principles do not undermine the state, but group principles do, as they bear
                down on the individual (e.g. I cannot fight in the war as I am a Quaker)
      Basic liberal assumption that state is oppressive
      State becomes unstable if groups are too powerful
      If people don‟t take part in the state, do they have a right to complain?
      Withdrawal from the state is much more than not voting - also withdrawal from benefits of
       police, health services, even use of the currency
      E.g. Clinton had only 50% turnout in his election as US President, but legitimacy never
      Timeframe to change the law in a democracy is very long - in some cases over a lifetime
      But difference (see Poll Tax as example):
             Very bad at getting the laws you do want
             Very good at disposing of the laws you don‟t want
             Many people felt an influence in getting rid of Poll Tax, but very few had any
                influence in drafting its replacement
      Might be that direct confrontation - frightening a government - is the most effective way of
       changing a law
      Modern protests more violent than e.g. in 1960s

Lecture notes

The duty to obey the law
      If there is a reason to do something independent of the law, then complying with that reason is
       not complying with a duty to obey the law
      If there are reasons to do something independent of the law, there may also be good reasons
       for doing things that are not in accordance with the law, regardless of the fact that the law
       does not consider these good reason
      The duty to obey the law is not a duty „other things being equal‟
             Laws are drafted in general terms in advance of events
             Unreasonable to expect each law to contain exceptions
      „Protected‟ or „exclusionary‟ reasons vs. „weighted‟ reasons:
Stewart Morris                          SPS Essay Notes                               Page 58 of 110

                „Protected‟ reason rules out possibility of comparison with other reasons, but does
                 not negate them - exclusion is by kind, excluding any action on the basis of reasons
             „Weighted‟ reason outbalances other reasons, thereby negating them
      If the duty to obey the law excludes but does not outweigh other duties, then when duties
       clash, both still stand as duties:
             When one duty outweighs another, the balance of reasons is the sole result of moral
             When one duty excludes another, the clash remains morally significant, as both still
                 stand as duties
             If both duties still stand, when duties clash, the performing of the right action also
                 requires the performance of a wrong one
             If the wrong action is performed in the context of performing a right one, the wrong
                 action can still be understood as having been „owned up to‟ or even „made up for‟
      If when we break the law in performing an action which we have good reason to perform, if
       we do not feel that there is anything to „own up to‟ or „make up for‟, there is no independent
       duty to obey the law

Conscientious objection and civil disobedience
      Conscientious objection:
            Personal response to law taking form of refusal to comply with what law demands of
                you as an individual
            No necessary implications regarding the demands that the law makes on others i.e. no
                implication that the law is unjust
            No appeal to something beyond the law, but relates directly to requirements of law in
                a particular case
            Needs to be based on something more than a whim if it is to be justified; needs a
                moral reason that has weight against moral reasons of the state
            Tests for strength of moral reasons cannot be made by the state, as the state has its
                own moral reasons
            Tests for strength must be formal, involving things such as lengths of time for which
                beliefs have been held, evidence of conviction in other actions, association in groups
                with others on the basis of convictions
            Test may also include willingness to endure punishment, but this cannot be sole test
                of moral conviction as it would allow the state to decide
      Civil disobedience (type 1):
            Response to a law considered wrong as a law, not just wrong for the given individual
                refusing to obey it
            Protest takes form of refusing to comply with the individual law
            This may involve confrontation depending on the nature of the law (i.e. the law has
                to be resisted, and therefore the state has to be resisted)
            Nevertheless, this protest must minimise evasion and violence, and must accept
                punishment when it comes - punishment cannot be evaded
            Acceptance of coercion can be seen as definitive test of the merit of the disobedience
                in such cases
      Civil disobedience (type 2):
            Response to a law considered wrong as a law, or in special circumstances to a policy
                of government considered wrong but unchangeable by legal means
            Protest takes form of symbolically breaking a token law (e.g. laws of trespass, or
                laws of the highway)
            Must avoid confrontation and all forms of violence
            Test of merit of this protest is its deliberate symbolic value, so the test is not just
                acceptance of punishment, but also peacefulness, lack of unnecessary disruption,
                good organisation and so on
            Symbolic value particularly important in cases of protest against policy, because such
                protests may be hard to distinguish from objections to the basic democratic structure
                of the state
Stewart Morris                            SPS Essay Notes                                Page 59 of 110

Nozick’s theory of the state
       Locke: individuals have natural rights to their own persons and property, and natural rights to
        punish the violation of those rights (so long as punishment is proportionate to the
       Individuals in possession of these rights will find it difficult to enforce them „proportionately‟
        without outside help - result would be endless rounds of escalating enforcement
       Individuals join together to attempt joint enforcement - in the state of nature „groups of
        individuals will form mutual protection associations‟
       The most successful groups will be those who offer reasonable means of settling disputes
        between their members, and fair, efficient means of settling disputes between members and
       These protection associations will conflict; these conflicts can be resolved only if:
              One defeats the other in some kind of battle
              Each comes to dominate a separate geographical area, with a fixed border in between
              They take their dispute to a separate agency and abide by its decisions, turning
                 themselves into a single, federated association
       In each case the result is a single dominant agency in each geographical area
       In each area some individuals („independents‟) do not wish to join a protection agency, but
        wish to enforce their own rights; these individuals are under no obligation to join such an
       The dominant protection agency cannot however allow them to enforce their own rights,
        because in some cases enforcement would inevitably be excessive, and the protection agency
        would not be protecting its members adequately against the risk of being the victim of
        excessive enforcement
       Protection agency must stop the independent from enforcing his rights until it determines
        whether his rights were indeed violated
       This represents a breach of the rights of independents, who have a right to the self-
        enforcement of rights
       Rights can only justifiably be breached if the breach is compensated: “something fully
        compensates a person for a loss if and only if it makes him no worse off than he would
        otherwise have been”
       Providing the independents with the services of the agency, free of charge if they cannot
        afford them, would be one such compensation
       The dominant protective agency would then be a „minimal state‟, having a monopoly of the
        claim to use force within a given geographical area, its services made available to those who
        cannot afford it by redistribution from those who can
       No other form of state is justified; no other form of redistribution is justified

       Anyone who possesses land in the area controlled by the state has tacitly consented
       Owner is free to join another commonwealth or to begin a new one - this last bit may no
        longer apply as there are no unclaimed parts of Earth
       While a man continues in this society, he is tacitly consenting (like living in a household while
        he finds it convenient to do so - will obey rules of household)

       Three basic legitimations of domination:
              The authority of the „eternal yesterday‟ - habitual and ancient orientation to conform
              The authority of charisma
              The authority of legality - by virtue of belief in the validity of legal statute and
                  functional „competence‟ based on rationally created rules
       In reality, obedience is determined by fear and hope

       Government requires prestige, not just force, as force alone generates resentments which are
        increasingly difficult to suppress - despotisms are short-lived
Stewart Morris                           SPS Essay Notes                                Page 60 of 110

      Source of authority and prestige is primarily the ability to maintain order, not the ability to
       dispense justice

      Authority is a quality of communications, not a quality of people
      To say someone has authority is a shortcut for saying that they have the capacity to issue
       authoritative demands
Stewart Morris                              SPS Essay Notes                                     Page 61 of 110

5.5 Welfare State
   a) Does the welfares state turn citizens into clients?
   b) Does bureaucratisation of the welfare state inevitably threaten its aims?
   c) Do democratic states inevitably become welfare states?

Claus Offe - Contradictions of the Welfare State

Tension between capitalism and democracy
      Marx and his liberal contemporaries assumed that capitalism and democracy could not mix
      Liberals saw freedom as the most valuable accomplishment:
             Needed protection from egalitarian threats of democratic mass politics
             Feared „class legislation‟ by the unpropertied, uneducated majority
      Marx on the other hand saw mass democracy as exacerbating social conditions by
       withdrawing political guarantees from the socially dominant - this would cause the proletariat
       to question the economic foundations of bourgeois society
      But all major advanced states today are democracies
      How to we explain this compatibility? This assumes there is a tension which must be bridged,
       mediated and stabilised
      This is by no means certain - Lenin says they are compatible as democracy serves to deceive
       the masses, as in Russia 1905-17
      Also pluralist-elitist theories: people can elect to change the system but to not do so -
       therefore appear generally content with socio-economic order
      Lenin postulates dependence of democracy on class power, while the latter suggests a total
       independence of class and power

Continued compatibility
      Main reasons for compatibility:
            Mass political parties and party competition
            Keynesian Welfare State (KWS)
      Only a specific type of capitalism can peacefully coexist with democracy
      KWS adopted in all Western countries, irrespective of which parties were in power
      Effect has been:
            Unprecedented and extended economic boom favouring all capitalist economies
            Transformation of industrial and class conflict to distribution-centred,
                institutionalised conflict

      Bowles talks of politically instituted „accord‟ which
                 “represented, on the part of labour, the acceptance of the logic of property
                 and markets as the guiding principles of resource allocation, international
                 exchange, technological change, product development and industrial
                 location, in return for an assurance that minimal living standards, trade
                 union rights and liberal democratic rights would be protected, massive
                 unemployment avoided, and real incomes would rise approximately in line
                 with labour productivity, all through the intervention of the state, if

      Working-class organisations had reduced their demands and projects
      Change in perspective after devastations of WW2 and discrediting of Communism by Russia
      Mutual stimulation of economic growth and peaceful class relations seen as best way forward
      Mode of production was no longer at stake
      Especially suited to democracy as it involved „more/less‟ and „sooner/later‟ questions, not
      Consensus concerning basic priorities, desirabilities and values of the political economy,
       namely economic growth, social security and military security
Stewart Morris                           SPS Essay Notes                               Page 62 of 110

      „Interclass growth-security alliance‟
      Capitalist economy in not a zero-sum game, so playing it like a zero-sum game is in no one‟s
      Each class has to appreciate the interests of the other:
             Workers acknowledge role of profits in securing future employment and income
             Capitalists accept the need for high wages and welfare state expenditure to secure
                 effective demand for their products and ensure a happy, healthy, well-trained and
                 well-housed working class
      Ideological origins of KWS are heterogeneous - from socialist to Catholic-conservative
      Best defined by utility:
             More industrial conflict, which would disrupt production, with massive economic
             Stronger tendency for people to avoid becoming wage-workers
             No built-in stabiliser to partly uncouple changes in demand from changes in
      Continued economic growth limits the extent to which benefits are actually claimed

      Innovations and their healthy effects may have reached their limits
      Does not solve all socio-economic problems of advanced societies
      Problems solved by welfare state -e.g. absolute poverty - are no longer high on the political
       agenda, in part due to the success of the welfare state in eradicating them
      Two conflicting problems:
             Production/exploitation
             Demand/realisation
      Trade-off here - as the demand problem has been solved, the supply problem has increased
      Deficit spending may contribute to „stagflation‟
             Capital made scarce and costly
             Welfare may be disincentive to work - undermines dynamic of growth
             Employment more costly and rigid
             Pressures to adjust to changing market conditions have been reduced
             Leads to unprecedented public debt
      Strategic intention of Keynesian economic policy to promote growth and full employment
      Strategic intention of KWS is to protect those affected by risks of industrial society and create
       some measure of social equality
      The latter is feasible only to the extent that the first is successful
      Main failures:
             A victim of its own success - inhibited the positive function of crises in capitalism
                 i.e. the process of „creative destruction‟
             Undermines incentives to invest and to work
             No equilibrating mechanism to eliminate self-contradictory consequences - logic of
                 democratic party competition and social democratic alliance remains undisciplined
                 by „economic reason‟
      „The welfare state eats the very hand that feeds it‟ - Esping-Anderson
      Supply-side economics - main principles:
             Public sector is an intolerable burden on private sector - uses up investment capital
             Work ethic is undermined by benefits payments
             Middle class suffocated by high tax and inflation
      Two inherent reasons why welfare state is threatened:
             State intervention only works so long as economic actors do not expect it to be
                 applied routinely (rational expectations theory) - this forces ever-higher doses of
             Creates a „new class‟ of welfare workers with vested interest not in solving problems
                 but in redefining and expanding them
      Political economy may be moving from a growth economy to a „zero-sum society‟ -
       institutional arrangements for conflict resolution will come under strain
      Threats of disorganisation in „organised capitalism‟
Stewart Morris                           SPS Essay Notes                               Page 63 of 110

      Stagflation destroys basis for co-operative relations among collective actors
      Intraorganisational problems: solidarity of trade unions rests on assumption that gains of the
       collective action are at the expense of a third party, not at the expense of some groups within

Assessment of current situation
      So are we heading back to a situation where mass political participation and economic
       freedom are antagonistic?
             YES: increase in institutionally unmediated social/political conflict, not channelled
                through organised groups like political parties, and whose solutions it is hard for the
                state to reach
             NO: analogy between early and late capitalism is very limited - conflict now is not
                simple class conflict of past, but is highly fragmented
      Löwenthal sees two dangers:
             Totalitarianism: seeks to define „public interest‟ itself
             Conflict of interests: equates „public interest‟ with empirical outcomes of political
      Parties must steer a course between being a „class party‟ and a populist „catch-all‟ one

Wolin - Democracy and the Welfare State

Social democracy and democratic socialism
      Weber: social welfare is not a special category of state functions but is shaped by the
       fundamental purpose of promoting state power
      Many socialists have mistakenly identified the welfare state with socialism, thereby
       incorporating socialism into the problem posed for democracy by the welfare state
      Socialism evolved towards statist mentality because social theorists could not decide whether
       socialism was a subcategory of democracy or vice versa - difference is crucial in deciding
       which requirements take precedence
      First half of 20th century saw an intellectual change in that the basic failure of capitalism was
       no longer seen as a problem with the mode of production, but a basic failure to distribute fairly
       from the cornucopia it was developing
       Hard to see what is socialist in idea of „social democracy‟ - has helped to affix welfare
       policies as strong feature of capitalist state - helps capitalism
      Hard to see what is democratic in idea of „democratic socialism‟ - democratic critique of
       welfare state is against a political arrangement which denies a conception of „democracy as
       political action‟ in the fundamental sense of using power to constitute a collaborative world

Political implications
      What are the political implications of classing citizens as „needful objects of state power‟?
      Result is that we now have a „political economy of capitalism‟
      Capitalism has changed from small-scale production to large oligopolies and government
      Welfare is a graft on the modern state - it is not constitutive of it
      Rather, the modern state is constitutive of welfare - sets its terms
      Social conception of welfare state:
             Sees it as conditioned by human needs - poor, unemployed, disabled, handicapped
             Does not ask about the political meaning of the choice of those categories - these are
                 largely arbitrary in nature
             Undesirable consequences such as dependency seen as side-effects - understood in
                 apolitical terms - a „welfare addiction‟ seen as being a personal problem, like a drug
                 habit - Reagan talked of „spider‟s web of dependency‟
      To „break the welfare culture‟ is to break the political culture of the poor (and hence their
      But other working-class ties exist as well e.g. kinship, gangs, underground economy, minority
Stewart Morris                          SPS Essay Notes                               Page 64 of 110

      In the era of economic polity, the welfare state is the Reason of State (Staatsräson)
      Transition, through democracy, to Welfare-State Reason (Wohlfahrstaatsäson)
      “Reason of State looks to the being rather than the well-being of a state” - Henry Parker
      Parliament seen as having right to exercise any powers under Reason of State
      State combines repressive and welfare functions - e.g. need to register for handouts
      Social democrats recognise some kind of state authority - allows the state to pursue non-
       capitalist aims
      Reason for the welfare state is yearning for totality, rationalisation, coordination,
       systemisation - in Europe it arose largely out of structure put in place during war
      “Non-suppressive extinction of difference”

Titmuss - New Essays on the Welfare State

Democracy & welfare
      People grow less and less concerned with democratic ideals as the state increases its power
      „Democratic skills and a sense of responsibility‟ need mobilising to close the gap of inequality
      Early 20th century people questioned the condemnation of the poor
      Poor Law rested on assumptions about how people ought to behave - if poverty was a matter
       of ignorance it was the moral duty of one class to teach the other how to live - this was
       founded on a „knowledge about‟ the poor rather than acquaintance with them
      Belief now is that poverty is a problem of economic and industrial organisation, not individual
       character and waywardness - such an advanced view is found mainly in modern societies
      National Insurance:
             National Health Insurance, set up in 1911, really was insurance - a single man
                received the same payouts as a man with a wife and children for nearly 40 years
             Now insurance element has disappeared entirely
             Services developed in no coherent order to cater for certain categories of individual

Means testing etc.
      One interpretation says that a process of social betterment for working classes has been taking
       place since 19th century, and welfare sate is only its most recent incarnation
      Maintenance of welfare state has become an article of faith
      Criticism focused mainly on egalitarian aims - claimed that welfare state should not pursue
      Macleod and Powell: “why should any social service be provided without test of need?”
      Dangers:
             Spread of „Welfare State‟ stereotype by middle-class press - widens class divisions
             Relaxation of market discipline
      With break-up of Poor Law, more „states of dependency‟ defined and recognised as collective
      Since introduction of progressive taxation in 1907 remarkable development of social policy
       through fiscal system
      Taxation no longer just a means of helping poor at the expense of the rich, and is no longer
       seen as an intrusion into „sacred‟ private property
      Support for children went from small payment in 1909 for those on low incomes to gradually
       larger payments, in 1920 extended to all taxpayers, then to those at university - move from
       support for childhood dependency to support for „individual self-improvement‟
      Continuous search for a „subsistence minimum‟
Stewart Morris                          SPS Essay Notes                             Page 65 of 110

Supervision Notes
      Offe: as political parties break down into pressure groups, welfare state becomes the
       mechanism by which people are organised
      Need to bring in some political philosophy about e.g. what welfare actually is
      Mill never considered welfare state: was worried about poor cancelling their own debts if
       they took power
      Welfare is less open-ended than utilitarianism - it is about needs, not wants
      Surprising that democratic states did not become utilitarian states
      Why do some democracies have more welfare than others?
      Why does it stop at welfare, and not go further towards communism?
      America:
              Federalism
              Ideological gap with communism
              Origins of welfare sate in 1930s New Deal
              Main difference is world wars - in Europe states gained total control of economy
      Welfare sate as a side-effect of war - government is unhappy to relinquish control
      Why does it stay constrained? Not a response to democratically expressed needs and wants at
       all, but a means by which states express their „stateness‟
      Why are views on welfare constrained so much? E.g. Thatcher promised to „roll back the
       frontiers of the state‟, but the state actually grew
      Why is there always an underclass?
      Involved in underground economy - don‟t want to register with welfare state - there is a power
      Should state provide for those who are habitually out of work? Provides mainly for time-
       specific needs:
              When ill, there is a hospital
              When unemployed, there are benefits
      Tyranny of the majority:
              Happier with universal benefits than means-tested ones
              Attention on marginal seats - by definition these are middle ground
              Has fulfilled its purpose in allowing capitalism to live with democracy
              Democratic states have become middle-class states
      Taxation:
              Democratic states tax far more than thought possible 100 years ago (around 6%) but
                  far less than thought possible 20 years ago (top rates of 98%)
      End up posing questions about future of welfare state - start concrete, end abstract
Stewart Morris                          SPS Essay Notes                              Page 66 of 110

16.1 Theories of Capitalist Society
   a) Critically discuss any two of the following theories: the flexible specialisation thesis (Piore
      and Sabel), regulation theory or a variant of New Institutionalism
   b) „There is a widespread perception that capitalism has been undergoing a period of radical
      transformation, but there is no agreement on the direction in which it is developing.‟ Discuss.

Christel Lane - Lecture Notes

      Gives prime influence to trans-national factors
      More emphasis on commonalities than differences:
            Mode of production is private
            Competition within capitalism
            Production for profit
      Competition forces capitalists to increase productivity
      Pinpoints periodic crises due to overproduction
      Conflict between large and small-scale capitalists - small-scale capital would be wiped out
      Stagist model of economic development - immutable laws
      For Marxism:
            Growing internationalisation
            Rapid technological change
            Increasing productivity drive
            Neo-liberalism on the increase
      Against Marxism:
            Capitalism seems much more resistant than Marx believed
            Convergence has not progressed at speed that Marx imagined
            Focuses too much on economic determinism

New Institutionalism
      Social institutional frameworks - patterns of habitualised social action
      Works on many levels, from personal interaction right up to education, finance and industry
      Provides templates for economic behaviour
      E.g. British financial system leads to short-termist view
      Varieties:
             Historical
             Sociological
             Rational choice theory
      Historical:
             Path-dependence - changes happen at particular times
             Some differences in institutions themselves cause conflict
             Cognitive and moral templates - thought pattern transmitted by institutions
      Sociological:
             Do not distinguish between institutions and culture
             Cultural orientations become solidified within institutions
             Focus on reproduction and stability, not real change
      Institutions seen to exert immediate influences on society
      Focus on diversity between societies
      Different to the radical change and convergence of Marxism

Flexible specialisation theory
      First introduced by Piore & Sabel in 1980s
      Radical change occurring - „second industrial divide‟
      Optimism - new ways of organising political economy to lead Western societies back to
      Fordist mass-production is under challenge
Stewart Morris                          SPS Essay Notes                              Page 67 of 110

      Changes in markets and production paradigms
      Mass production:
             Standard goods, high volume
             Special purpose machinery
             Unskilled labour, high division of labour
             Economies of scale
             Constant innovation in process technology needed
             Output must increase all the time - relies on expanding mass markets for cheap,
                standardised goods
             Institutions needed to match production and consumption
      Flexible specialisation:
             Wide range of goods
             General purpose machinery
             Skilled and polyvalent labour - can be redeployed
             Economies of scope
             Still cheaper than fully customised goods
             Cooperation between producers and consumers
             Different producers in the chain must coordinate activities and agree on standards for
                labour - bidding down of labour costs is impossible as labour is skilled
             Example may be Benetton clothes - draw on a vast number of small, independent
                producers, then market them as Benetton
             „Industrial districts‟ where producers conglomerate are needed
             Economic ties often overlaid with social/political ties as trust and cooperation are
             Some large firms have changed themselves to operate like small firms - less
                hierarchy, less bureaucracy
             Competition is stifled
             Right conditions can develop naturally or can be produced by policy
      Most economies comprise a mixture of mass production and flexible specialisation, but one
       will dominate
      To be viable each type needs its own framework of institutions

A meta-theory of history
      Non-Marxist view of economic history - anti-determinist
      „Branching tree‟ model of history

                 Craft Production

                 Mass Production

    Mass production           Flexible
    with international        Specialisation

      Very difficult to move backwards on this tree

Economic crises and divides
      Established institutions no longer relevant to the production paradigm
      Economic divides likely to occur
             External e.g. Oil crises and Bretton Woods collapse
             Internal e.g. fragmentation of mass markets
      International Keynesianism would solve these crises, but very difficult to achieve and thus not
       politically favoured by Piore and Sabel
Stewart Morris                           SPS Essay Notes                              Page 68 of 110

Criticisms of flexible specialisation theory
       Seems very attractive in many ways - clear message, suggestive line of argument and
        optimistic (almost romantic) views on trust etc.
       Marxist criticism:
             goes too far, suggesting nothing has changed in capitalism
             theory makes very bold generalisations
       Logic of binary contrast:
             Oversimplifies historical periods and individual countries
             Neither mass production nor flexible specialisation have ever dominated completely
             However, Piore and Sabel did not claim this
             Two ideal types cannot deal with diversity
             A different system might talk of:
                        Diversified Quality Production (e.g. Germany)
                        Diversified Quality Mass Production (e.g. Japan)
                        Mass Production (e.g. USA)
                        Flexible Specialisation (e.g. Italy)
       Piore and Sabel fail to set out criteria for whether MP or FS dominate
       „Industrial districts‟
             Can this be generalised to a national economy?
             Very open to world economy so trust relationships can be undermined
             Significant, but whole paradigm should not be based on this minor phenomenon
       Skewed view of large firms
             Focus too much on production arrangements
             e.g. decentralised production may go hand in hand with centralised finance
             Focusing on production efficiency ignores monopolies and oligopolies
       Theorists are so committed to flexible specialisation that they may ignore other systems

Regulation Theory
       Popular among French (Boyer, Aglietta, Lipietz) and British (Harvey, Jessop) political
       Theory arose to understand crises of capitalism
       Like a more flexible and open Marxism
       Dismiss class conflict as sole motor of history
       Worked with neo-classicals
       Capitalism is seen as crisis-ridden and must be „solved‟ by regulation - everything from
        government to informal accepted modes of thinking
       Fuses Marxist and institutionalist approaches
       Sets regimes of accumulation against modes of regulation
       Regimes of accumulation:
              Pattern of productive organisation
              Pattern of income distribution
              Pattern of consumption
       Modes of regulation:
              Institutional norms
              Regulating networks
              Together seen as securing adjustment to regimes of accumulation
       Accumulation is the stabilisation over a long period of the allocation of net product between
        production and consumption (Lipietz) or the macroeconomic regime stabilising production
        and consumption (Jessop)
       Mode of regulation secured by international, national, regional and local groups
       The methods of regulation need to be appropriate
       Methods of regulation:
              Wage relations
              Forms of enterprise
              Inter-firm relations
              Banking and credit
              The state
              Welfare provision
Stewart Morris                             SPS Essay Notes                             Page 69 of 110

             International trade
             Ideology and education
      Norms, networks, institutional practices and the adjustment of individuals are all needed
      Workers need to be adequately prepared for work in either mass-production (unskilled) or
       flexible specialisation (skilled)
      Uniformity at international level yet diversity at local/regional level
      These institutions often developed historically and do not tend to change quickly
      Regulation does not automatically match accumulation - they are matched by lucky chances in
       historical development
      Struggle and negotiation between capital and labour still seen as important (like Marx)
      Process of „historical co-evolution‟ - Jessop
      Stagist model of historical development:

                 Extensive regime of accumulation and competitive mode of regulation

                                  Crisis of overproduction

                 Intensive regime of accumulation and monopolistic mode of regulation

                                  Decline in profitability and international instability

                 From late 60s/early 70s

      Is this neo- or post-Fordism?

Criticisms of regulation theory
      Regime accumulation seen as both global and national
            Possible that global will overshadow national - global regulator has less control
            Which is prior? Sometimes national ones can change global ones (e.g. Japan in
            Don‟t have mechanisms to understand transition
            Differences between transition phenomena and fundamental ones
      Does not just focus on production - whole process of capital accumulation instead
            However does not spell out the sort of political system or actors which best suit the
            Shares simplicity of Piore and Sabel - just two types
      But probably most sophisticated of four theories

Sabel - Work and Politics

Different methods of production
      Mass producing firms rest on sizable and stable demand for their products
      Skilled get more skilled while demand for unskilled increases
      In traditional perspective, technically advanced firms are likely to be large and backward firms
       likely to be small
      Fordism is a recent development - Michigan 1913 was first automobile assembly line
      Still many small firms for specialised parts
      Conflict between specialisation of labour and specialisation of firms
      Specialisation of labour needs more specialised machinery
      Needs growing market for output, or there is no point in expanding
      Stable (bottom of business cycle) and unstable (difference) components of demand
      New specialised machinery cannot be put to alternative use during downturns
      High stable demand therefore increases concentration of large firms
      Less stable markets more suited to small firms
      E.g. bread and cars (MP) vs. quality sweets and construction machinery (FS)
      Decentralisation is a reaction to uncertainty, not boom and bust per se
Stewart Morris                            SPS Essay Notes                               Page 70 of 110

       Lack of training of unskilled workers - cheaper to recruit skilled workers than train unskilled
        workers to become skilled ones

       Presumes capital costs are relatively fixed and labour costs relatively variable
       Political and institutional factors - cannot draw conclusions from just looking at production
       E.g. trade unions
              Subcontracting and decentralisation to minimise risk to managers
              Can prohibit emergence of small firms altogether - wages are so high that marginal
                  producers are kept out
       E.g. socialist government
              May see small firms as difficult to control both politically and economically

       Does progress in division of labour erode skills of all workers in the plant?
       No, creates demand for mixture of new skills, e.g. semi-skilled, blue-collar - repairing,
        installing, supervising

The end of Fordism?
       Break-up of mass markets
       Fordism takes hold in developing countries, which compete with developed world
             Competition by imitation, which over time gets faster
             Eventually the imitators become innovators (e.g. Japan)
             So long as factories in the imitating countries just execute the routines of the leaders,
                they will remain peripheral - so may move to small scale for innovation
       People getting more used to choice
             Some goods less appealing as more and more are sold
             Real wages increase so consumers can experiment more with their tastes
       Therefore flexibility is essential
       Tension between MP and FS - rapid changes in production goals
       Neo-Fordism with flexible automation is alternative view

Essay notes
Focus on modern successes                           Focus on modern failures
Supply-side economics                               Roots in Leftism but less class-conscious than
Lack of government may be better, possibly          Definite focus on government (but not absolute)
Branching tree model - different options, no        See many influences on history - not just class
accidents                                           struggle and path-dependence
See great institutional change recently             Historical nature means view of slow institutional
Regulation can educate workers for either mass production or flexible specialisation
Criticisms                                          Criticisms
Allows for two systems, no more                     Global overshadows national
Industrial districts overplayed                     Lack of mechanisms to understand transition
Industrial districts do not happen on their own     Does not make definite judgements on correct
Needs coordination from producers                   political system for model
Naïve faith - „romantic‟ views on trust
Stifles competition
Lack of criteria to decide which dominates
More prescriptive in terms of system                More prescriptive in terms of details
dismissal of international Keynesianism
says MP needs large government, with lots of
regulation, FS less so
Stewart Morris                           SPS Essay Notes                              Page 71 of 110

Supervision notes

Views of Fordism
      Flexible specialisation focuses entirely on production, while regulation theory is broader
      Flexibility also a major part of regulation theory
      State receives limited emphasis in regulation theory
      FS talks of „functional flexibility‟ and polyvalence, also flexibility of technology and temporal
       flexibility in bringing innovations to the market
      Not the same as the right-wing „numerical flexibility‟ which has less focus on training, more
       on ease of employment/unemployment of workers

Political/economic factors
      Cannot say that these are ignored by FS
            Requires certain institutional environments e.g. industrial districts
            Or requires international Keynesianism as an alternative
            Established ways of cooperating
      Cynicism about priorities of managers is focused on Britain
      Much more cooperation and state activism in e.g. Germany
      System of poaching employees is stifled as it can be harmful

Stagism in historical development
      Can be reconciled with „happy accidents‟ - refers to transitions
      Regulation theory does not entirely ignore class consciousness
      FS has a more actor-oriented view of change - strategic choice
      Crises in capitalism may come from over-regulation e.g. Mitterand - mode of regulation did
       not match method of accumulation
      Scope for regulation has diminished as economies have become more open

Bits & bobs
      Diversified Quality Production (Germany) - example is Mercedes
            Every customer gets his own car by choosing trimmings, colours etc.
            Diversity within mass production
      Globalisation makes industrial districts difficult to achieve
      Large firms can act like small firms - internal markets, DQP etc.
      Relationship between global and national developments
            Hirst & Thomson - universality will suppress diversity
            Which is prior?
            Most influential countries will shape global institutions
      Class struggle in regulation theory
            Mentioned more at theoretical than empirical level
            Wages vs. profits culture still an issue even if it sounds old-fashioned
Stewart Morris                              SPS Essay Notes                               Page 72 of 110

16.2 Relationship between finance and industry
   a) Discuss the relationship between financial and industrial capital in any two European
      societies and draw out the implications for corporate ownership, control and performance
   b) Compare and contrast the consequences of two European systems of corporate governance

Christel Lane - Lecture Notes

Historical development of industry-finance nexus
         Influences growth of firms and structure of ownership/control
         Internal (organic) growth vs. external (acquisitive) growth
         Internal control (managers) vs. external control (financial institutions, shareholders)

         Firms tended to expand gradually and from retained capital
         Cotton: not capital-intensive
         No need for separate investment banks
         Focus on overseas
         Mid-19th century regional development banks, but overreached themselves in 1880s and
          became cautious afterwards
         End of 19th century development of stockmarket
         Access to stockmarket made easy from a legal standpoint
         Banks discouraged from taking large stakes in firms
         Lack of information on quality of equity led to lack of long-term loans
         Consequences:
               British firms possibly starved of capital
               Some say capital was available, but was denied to new industries
               Banks and stock market fostered short-termism among managers
               More external control than most countries
               External growth made easy by stock market - fairly uncontrolled, and rationalisation
                   was not encouraged

         Industrialisation had an early spurt, then proceeded slowly
         Finance for small firms came mainly from retained profits
         Lack of development of banks or stockmarket
         Overseas focus
         Turn of the century - firms pooled financial resources in holding companies
         Consequences:
               Family capitalism preserved
               Holding companies prevented integration and development of large companies
               Also impeded development of financial institutions

         1830-1860 sudden expansion in industry
         Very large and long-term capital requirements for e.g. iron and steel
         Appropriate banks created deliberately - first developed in 1870s
         Accumulated deposits of small savers
         Savings banks and investment banks at the same time - „universal banks‟
         Consequences:
               Banks developed industrial expertise
               Internal rather than external control - banks had representation on „supervisory
                   board‟, a second board of directors unlike anything in Britain
               Banks especially prominent when capital requirements were high
               Banks often acquired some ownership when firms were in financial difficulties
Stewart Morris                           SPS Essay Notes                             Page 73 of 110

                Internal not external growth
                When external, banks insisted on post-acquisition rationalisation
                Legal system in favour of banks - stunted growth of stockmarket

Finance and industry
      For firms to function, access to capital is needed (doh!)
      Mode of regulation of capital has far-reaching consequences for firms
      One of the defining features of different varieties of capitalism
      Impact on firms:
            Ownership and control
            Self-perception
            Pattern of growth
      Impact on sectors:
            Acts as agent of rationalisation
            Inter-firm relations
      Impact on economy:
            Stability and growth in SMEs
            Industrial structure (by size of firm)
            Innovation activity

Contemporary financial systems in Britain, France and Germany
      Britain and Germany have largely preserved historical systems
      France has fundamentally changed, from financial holding companies through a state-led
       system to an eventual market-oriented one
      Britain and Germany are still mainly based on retained profits - only when these are
       insufficient is external finance called upon
      In Britain this is generally through the stockmarket, in Germany through banks
      Britain‟s stockmarket capitalisation is 90-100% of GDP, compared to Germany‟s 20%

France pre-1983
      Move to state-led, bank-credit oriented system
      More state-based than Germany
      Lasted until about 1983
      Under control of state, move to stockmarket, followed by withdrawal of state
      Consequences for economy e.g. creation of „national champions‟
      Storey and Walker describe it as „state tutelage‟
      Others less negative - say that pre-WW2 backwardness had been overcome
      Strong penetration of public and private banks by state
      Interchange of political and economic elite - „pamtoufflage‟ where public sector workers put
       on the „golden slipper‟ of private-sector directorships
      Sometimes capital went to the most politically favoured, not the most efficient
      Focus on bank credit left stockmarket underdeveloped

France post-1983
      State took a back seat from 1983, as it believed that national policy was less effective in a
       more open economy
      Abandoned national credit and pricing of credit
      French firms became short of credit in the short run
      France deliberately modified their stockmarket on the Anglo-American pattern - futures
       markets etc. were introduced
      Increase in stockmarket capitalisation from 9% in late 70s to 25% in late 80s
      Political elites also retained a „visible hand‟ and made sure that French firms were not exposed
       to „international predators‟
      Existing shareholders were given priority in obtaining more shares
      Made sure that 25% of major firms were owned by French banks or other French firms
      Redevelopment in banking system - move towards German system
Stewart Morris                             SPS Essay Notes                                  Page 74 of 110

         Some banks such as Credit Nationale bought so many businesses that they came close to
         Banks have never created German-style relations with firms because of changes in the
         Became a mix of German-style banks and cross-ownership and British-style stockmarket

Ownership and control

         Owners (shareholders) have no direct relations with management of firm
         No ownership psychology developed
         Investment funds very cautious with their money, so ownership highly dispersed to spread risk
         Most single investments are less than 10%
         Stockmarket has mainly eliminated family ownership and control
         Control is now external and indirect
         Chief executives have great autonomy and power, but decisions are constrained by share
          movements and investors‟ expectations
         Quick, high returns on investments expected
         Financial orientation, not production orientation
         Bank membership of boards of directors is frowned upon

         Much more highly concentrated ownership
         90% of companies have single shareholders owning 10% or more
         Preserved family ownership
         More of an ownership psychology
         Much cross-ownership
         Determines control relations - banks and other firms
         Ownership interests checked by employee representatives on boards
         Profit not only component of managers‟ interests - also market share, stability
         Market discipline not as strong as in Britain
         Banks may step in to prevent a hostile takeover
         Hostile takeover is very rare

         Family ownership more intact
         Ownership psychology more developed
         Larger firms more widely owned
         Concentration of firms not as large as in Germany
         No strong formal shareholder control
         Hostile takeover as infrequent as in Germany
         Market discipline and calls for more shareholder value impinging on firms
         Political elites remain powerful
         Neither external nor internal control is especially strong
         Labour is not represented as well as in Germany
         CEO virtually autonomous
         Stability before immediate profit - but this is changing as stockmarket becomes increasingly

         Ownership of common stock:
              Britain: institutions (e.g. pension funds) over 50%, banks 2.3%, government 0.2%
              Germany: non-financial organisations 42.1%, banks 10%
              France: foreign 35%, government 5.8%
Stewart Morris                            SPS Essay Notes                            Page 75 of 110

         Different conceptions of the firm:
               Britain: primacy of shareholders‟ interests, no other important stakeholders, market
                   must be liquid and transparent
               Germany: residual concept of firm as social institution, with obligations to
                   employees, suppliers, community
               France: social model, but less strong than Germany
         Managers:
               Britain: performance pay, share options
               Germany: longer-term contracts

Windolf & Beyer - ownership relations
         AB means A owns (some of) B

Reciprocal clique (e.g. Japan)

Pyramid (e.g. France & partly Germany)

Star (e.g. Germany)

Circle (e.g. partly Germany)

Inverted star (e.g. Britain)

How do these affect performance?

         Positive consequences:
               Free and flexible capital market
               High transparency (but future prospects of e.g. high-tech are unknown)
               High liquidity
               Allocates savings to most efficient users of capital
               Takeover and control mechanisms reliably reward the most efficient
               Knock-on effect into lively market in venture capital
               Attracts international investors and dealers
         Negative consequences:
               Encourages short-termism in investment, fixed capital and human resources
               Negative impact on employee commitment, especially at managerial level
               Firms are atomistic and less likely to cooperate
Stewart Morris                             SPS Essay Notes                            Page 76 of 110

        Positive consequences:
              Managers can be more long-termist
              Benefit from banks‟ knowledge of wider industry - internal consultants
              Allows maintenance of owner control and greater accountability of managers
              Often protects firms from hostile takeover - but assistance linked to demands for
        Negative consequences:
              Banks might misuse their power
                        On supervisory boards can vote on small electors‟ behalf
                        Dominate the capital markets - borrowers, lenders, advisors, stockbrokers
                        Defence is that there is a lot of competition between many banks in
              Banks impede innovation by reducing capital transfer
              Good at incremental innovation
              Less good at radical innovation
              Venture capital market has remained undeveloped
              Undermine competition - but prevent „raider capitalism‟
              Failure of stockmarket previously
                        No longer valid as Frankfurt is growing
                        But German firms have not rushed to be quoted, even very large firms

        So many changes that it is difficult to establish performance so far
        French Bourse has increased its standing as a stockmarket
        But CEOs are more constrained than before

A battle of the systems? Convergence or divergence?

Influence of EU on convergence
        Common regulatory standards
        Modernisation and expansion of stockmarkets
        German company law is sound according to Germans, British company law is sound
         according to Brits - EU cannot legislate
        Great internationalisation of finance
        Global supremacy of US system is entrenched

        Foreign raiders, state losing control
        French firms are undercapitalised
        Bigger rush to stockmarket, open to sell-out to US investment funds
        In many firms the biggest stakeholder is foreign
        Will impact on CEOs - more pressure to produce profit
        Pessimism: many think loss of state system was wrong

        Much less convergence than France
        Signs that managers taking on American ideas about „shareholder value‟
        Remain committed to bank credit-based system
        No rush towards floatation
        Barely 1/6 of public limited companies were quoted in second half of 1990s
        Ratio of shares to total financial resources same as in 1970s
        Cross-holdings still extensive
        Capital concentration
        Immune to stockmarket and foreign raiders
        Performance pay and share options for managers
Stewart Morris                             SPS Essay Notes                              Page 77 of 110

         Most firms believe long-termism will not be surrendered
         „Production-oriented‟, not finance-oriented capitalism
         Banks committed to strategic interest in firms

         Capitalists equally keen to maintain British system
         Stockmarket pre-eminence is unchallenged
         Changes at the margins
         1988 Hampel report - to get a closer relationship between shareholders and firms
         Increased stakes by some large fund managers in some large firms
         New emphasis on corporate strategy and long-term value in annual reports, not just past
         Cadbury report - concerned with reducing power of managers

Forced convergence?
         Jonathan Storey claims that only an open and flexible financial system (Anglo-American) will
          persist in long term, and others must adopt system or lose market share
         Capital will always go where return is highest
         Battle of the systems likely to continue for a long time
         What is best suited to post-Fordism? Flexibility vs. growth of new industries
         Growing global interconnectedness
               Growing capital requirements from globalisation and technology
               Some firms may be forced to go to the stockmarket
               Capital needed to support a takeover
         Lively changes in stockmarket feed the stockmarket itself - increase in dealing in
          unproductive areas

Dimsdale & Prevezer (eds.) -
Capital Markets and Corporate Performance

Britain - McWilliams & Sentance
         Small business is more risky, needs more advice
         Erosion of relationship banking and declining power of branch managers

Prevezer & Ricketts

Contractual relations in the UK
         These are arms-length
         Contracts are detailed and renewed periodically - specific penalties threatened

Property rights of shareholders
         Britain
                Managers accountable to shareholders
                Shareholders encouraged to be „outsiders‟
                Takeover threat in place of direct monitoring
         Germany
                Transfer control barriers
                Public companies can issue non-voting shares to an amount equal to all voting shares
                Equity without surrender of control

Board structure and monitoring
         Monitors must be the major shareholders - much to lose if monitoring fails
Stewart Morris                           SPS Essay Notes                             Page 78 of 110

      British managers describe companies in terms of profits, returns on investment, price-earnings
       ratio and shareholder value
      German managers talk of products and turnover, market share and number of employees
      Banks not so dominant as made out to be - assets of top 3 are 14% of German economy,
       compared to 18% in Britain
      Banks hold 9.1% of all supervisory board mandates, against 12.5% for trade union
       functionaries and 25.8% representatives of other companies
      Businesses prefer banks to supervise compared to these other two groups
      Stockmarket - trading in domestic shares is higher in Germany than in Britain

Buxton (ed.) - Britain’s Economic Performance

Stockmarket - Derek Morris
      Takeovers in UK have replaced internal restructuring
      Stockmarket does not provide an especially strong, effective or efficient way of disciplining
       poor managerial performance or for creating incentives to correct it
      Creates valuation errors by investors and acquiring companies, especially over-optimistic
       valuations by the latter - can lead to takeovers which have no (or negative) effect on
       managerial performance

Corporate Governance - Conyon and Peck
      Principal-agent problem - imperfect information prevents suitable reward structure
      Transactions costs
           o Specifying all eventualities
           o Negotiating with all contract parties
           o Formally writing contracts
      When these costs are prohibitive, corporate governance mechanisms take over
      Incentives not very strong
      CEO salary has negative relation to market performance
      Information bias in favour of executive directors over non-executives
      Many shareholders leads to a lack of monitoring - monitoring as a public good
      No a priori basis for asserting that pension fund managers would be any good at running an

Berger and Dore (eds.) - National Diversity and Global Capitalism

      No debate between communism and capitalism any more - only styles of capitalism
      Anglo-Saxon - owners expect rapid return on capital
      Inward investment - effective market access by acquisition and takeover
      German foreign direct investment is 1% of manufacturing GDP compared to 4% in USA
      Why no change in Britain to European system? „Competition among rules‟ means that
       Germany is converging instead, despite better industrial performance

‘Anglo-Saxon’ model
      Equity finance for businesses
      Shares in the hands of fund managers
      Bank-company links are weak
      No extensive cross-holdings
      Insider trading and bankruptcy regulations
      Takeovers common
      Unitary boards of directors
      Individual merit leads to pay and training differentials
Stewart Morris                             SPS Essay Notes                              Page 79 of 110

‘Rhineland’ model
        Debt finance by banks
        Close bank-company links as banks are shareholders, proxies for smaller shareholders,
         participate in supervisory boards and are lenders of last resort
        „Stakeholders‟ are a much stronger idea
        Implicit contracts between managers and shareholders
        Takeovers unusual
        Consensus given higher priority


                                    BRITAIN                             GERMANY
Companies                           5%                                  40%
Households                          28%                                 16%
Financial institutions              58%                                 15%

Stakeholders and management in Britain
        Pride of place given to investors
        Possibly due to no „relationship banking‟
        Any bank which intervenes to assist a customer in difficulty will have its seniority as a debtor
         reduced - disincentive to intervention
        Necessary to bid for a company when 30% ownership is achieved (vs. 50% in Germany)
        90% of 200 companies thought City was too short-termist
        Insider trading legislation (only recently introduced in Germany)
        Corporate restructuring brought about by change in ownership
        Rules on disclosure of information lead to dominance of accountants (vs. German respect for
         engineers, scientists etc.)

Consensus and employee representation
        Britain: increased social provision undermines competitiveness
        Europe: seen as prerequisite for stable (long-term) growth

        Takeovers keep managers on their toes, but makes them focus on short term
        High dividends move funds away from R&D

Supervision Notes
        Two systems lend themselves differently to state intervention
        German system allows government to subsidise SMEs through banks
        Loan guarantee scheme - also now adopted in Britain
        Possibly better system in Germany for seeing it through - less competitive
        Has been criticism of banks in Germany, saying that they don‟t control well enough
        „Structural flexibility‟ in Britain
        Tactical rather than strategic management in Britain
        Feedback mechanism into venture capital - because firms can be quoted easily, the venture
         capitalist sees a chance of making more money on investment
        Arguments against radical change in Germany rarely work in practice
Stewart Morris                            SPS Essay Notes                                 Page 80 of 110

16.3 The State’s role in the economy
    a) Does the national state still have a role to play in the direction of the economy? Discuss in
       relation to at least two European countries.

Christel Lane - Lecture Notes

       Since the 17th century the national state has been the sole political authority with exclusive
        possession of a defined territory
       In the past there was no political challenge to the state
       Post-war state defined more in economic terms
       Capitalism organised „within and through the nation-state‟ - Crouch and Streeck
       Up to 1970s consensus was that state should play major role
       Changes due to internationalisation/globalisation
       Rise of neo-liberal political ideology
       1980s acceptance of this new doctrine, but there has been a reaction in the 1990s


Era of the state is over
       National governance ineffectual and undesirable in the face of globalisation
       Market mechanism has replaced state control

Coordination by international bodies
       Rise of e.g. EU, World Bank, WTO
       Urge political efforts to recapture public control of international bodies
       Still a necessity for political governance in some form

State more important than before
       International competition has intensified
       Companies develop niche strategies to compete
       States must create favourable conditions
       State as a container of distinct business practices

State as important as before, but with different functions
       Has had to reassess functions
       Function as a developer of institutions with favourable impact on development
       Multinationals cannot escape state regulation
       Reciprocal dependencies have developed

State has to share power with international bodies
       State still very important but is interconnected with other states and entities



                                                               Int. Org.

State still very important but has changed its nature and its form
       Change from nation-state to competition-state
       Partial „hollowing-out‟ of the state has occurred
Stewart Morris                          SPS Essay Notes                               Page 81 of 110

      Jessop:
            State still responsible for production and consumption
            Structural transformation and strategic reorganisation
            State has ceded certain capacities to „supra-national‟ governance bodies and also to
               „sub-national‟ regions - „neo-Schumpeterian workfare state‟
            Main objective is to keep foreign investors happy - productivist reordering of social
               policy which subordinates welfare and wealth redistribution
      Cerny:
            „Competition state‟ - globalisation can both expand and undermine the state
            Domestic autonomy reduced but competition state pushed into expansion in order to
               keep the local economy competitive
            The more it tries to do, the greater the pressure on its autonomy and effectiveness

Jessop - Post-Fordism and the state
      Growth dynamic no longer autocentric
      Key macroeconomic policy instruments lose their efficacy
      National character of money is subordinated to flows of international currencies
      Wages seen as costs of production, not as sources of domestic demand
      Managing internationalisation needs new legal forms, reform of currency and credit,
       technology transfer
      „Schumpeterian workfare state‟
              promotes innovation in open economies to improve structural competitiveness
                 through supply side intervention
              social policy subordinated to labour flexibility
      „Hollowing out of the state‟
              Supranational regimes
              Resurgence of local and regional government
              Translocal and transnational linkages
      State as site of struggle among competing global, supranational, national, regional and local
      Manages political linkages on a global scale in the interests of its citizens
      Counter-tendency in popular search for transparency and democratic accountability and
      National state best placed to deal with social conflicts and redistribution policy
      On the one hand must manage internationalisation
      On the other is the only political body which could prevent growing divergence between
       global market dynamics and conditions for institutional integration and social cohesion
      Still has a role until the supra-national organisations have democratic legitimacy

Boucek - Developments in post-war French political economy

      Industrial competitiveness rather than reconstruction became main priority
      Commitment to defence of Franc had increased inflationary pressures
      European Monetary System prevented counter-cyclical policy such as devaluations and
       deflationary measures
      Substantial programme of privatisation
      Barriers to competition reduced, including state subsidies e.g. Renault had to repay subsidy

Bornstein et al (eds.) - The State in Capitalist Europe

      Strict division between Ministry of Economics and Bundesbank
             Entrenched power of the latter
             Chosen by central banks of German Lander
      Financial capital highly concentrated - Deutsche, Dresdner, Commerzbank
Stewart Morris                            SPS Essay Notes                                Page 82 of 110

            Banks have immense influence over firms
      Labour
            Strong, structured set-up
            Resistant to globalisation

      Long-term debt from banks important - similar influence
             Underdeveloped stockmarket - more insulated
      State has massive influence in banking sector
             Institutions like Credit Nationale and Credit Lyonnais - state-led
      Treasury and Bank of France - joint participation in Conseil National du Credit
      Officials at Treasury often direct industrial policy
      Weakness of unions
             Lack of tripartism in incomes policy

      Capital:
             Strict division of interests between financial and industrial managers
             British firms normally rely on internal funding
             Stop-go cycle caused by interest of financial capital? Deflations and high export
      Labour:
             Strong socially, but loosely organised
      Britain less interventionist in industrial policy
      Incomes policies have failed as unions are too strong

      Relative autonomy of state affected by organisational factors
      Role of state in accumulation and legitimisation
      Oil prices - not much a state can do

Hirst and Thompson - Globalisation in Question

Introductory ideas
      State creates the conditions for effective international governance
      International economy not „globalised‟ but „internationalised‟ - states play important role
      States to become less „sovereign entities‟, more components of an international polity
      Central functions may be to legitimate supra-national and sub-national governance
      „Regulation of populations‟ - people less mobile than money, goods or ideas - remain

Historical context
      Nation-state‟s claim to exclusivity in governance is historically specific
      Depended on international agreements e.g. Treaty of Westphalia 1648
      Autonomy of states was a precondition for effective monopoly of power within

Capital movements
      Capital is mobile and has no national attachments
      Labour is nationally located and relatively static
      New public mood for liberalism
      Business activity is primary, while political power only protects world free trade system
      Godsend for right wing after policy failures of early 1980s
      Also revolutionary left sees futility of reformist left (national social democratic strategies)
Stewart Morris                             SPS Essay Notes                           Page 83 of 110

      National politics to become more like municipal politics: politics of morality and mundane

War and peace, and comparisons of countries
      Without possibility of war, state is less significant
      State to define who is and who is not a citizen, and who can or can‟t receive welfare
      Are businesses so constrained?
      Still massive income differences between countries - rich countries exclude poorer ones
      Revolutionary economic strategies not viable in Third World

      International, national and regional powers must be „sutured‟ together in well-integrated
      Nation-state is central to this process
      Extreme globalisation theorists do not recognise this - see global markets and multinational
       companies as ungovernable
      National governments are purely municipalities of the global market in this view
      Not globalisation but internationalisation, so national policy remains viable and indeed
       essential to preserve modern styles and strengths of national economic base

Essay notes

      State has turned into a „competition-state‟
             New tasks to play in representing and helping MNCs, making them internationally
             Other functions are withdrawn
             But new kinds of intervention and regulation
             More than just regulatory competition
             Attractive for inward investment
             Jessop talks of innovation activity - not just a right-wing argument
             Creation of international regimes to make outward investment easier - direct subsidy
                no longer an option in the EU but there are ways to bend rules
             Cerny - by being active in this process, the state undermines itself further
      Mobility of international capital has increased following breakdown of Bretton Woods

                            Free capital                     monetary
                            movements                        policy

                                       Fixed exchange rate

      Fiscal policy restricted because of constraints of monetary policy
      Structure of states
            Federal and regional in Germany
            Regions responsible for some of state functions
            Federal government has very specific tasks, directed by regions
            Federal has become more important
            Taking on East Germany increased power of state - set up new institutions which
                persisted after their „useful‟ life
      Financial adjustment between states in Germany to prevent regional inequality
      Recent injection of resources into biotechnology
Stewart Morris                           SPS Essay Notes                                Page 84 of 110

      In Britain by contrast, high degree of centralisation - not necessarily interventionist
      Dominance of Treasury in economic policy
      Regional Development Agencies in UK
            Not generally seen as influential
            Those for Scotland and (especially) Wales are more powerful

      Note difference between international (e.g. WTO) and supranational (e.g. some parts of EU)
      Much of French stuff is out of date
            Stock market no longer underdeveloped
            French state no longer has such influence in banking sector
      Germany - supervisory boards participate only in emergency
Stewart Morris                           SPS Essay Notes                            Page 85 of 110

16.4 The Transition from State Socialism to Capitalism
   a) Has „transition‟ in the former state socialist countries been a success? With hindsight, would
      a transformation of the economy, without a change in the political system, have secured
      economic prosperity?
   b) Outline the course of transformation in Russia and Eastern Europe. Was „big bang‟ a better
      strategy than a more evolutionary process of change?

David Lane - Lecture Notes

State Socialism - philosophy
      A form of economic organisation of a country which is against markets and private property
      Sees capitalism as interdependent system of markets, property and class
      Market itself believed to generate class differences
      Believes priorities should be decided by „rational‟ politicians, not by „irrational‟ market
      Dependence on economic planning
      Cooperation replaces competition - seen as a „higher value‟
      Politics as single centre of control - not duality of polity and economy
      Politics replaces civil society

State Socialism - features
      Public ownership of means of production
      Production is for use not for exchange
      Economy to meet human needs, not human wants
      Democratic production on a rational basis
      Plan for whole economy, broken down into inputs and outputs of each industry or enterprise
      System of administrative control of all the units of production
      Socio-economic structure is treated as a single organism - includes social institutions,
       education, family etc…

Criticisms of markets
      Does not work to serve human needs but artificially created human „wants‟ - does not take
       into account social costs and cannot discriminate between current and future needs
      Anarchic and uncontrollable - „invisible hand‟
      Sum of individual preferences is not the preference of the whole
      Create an illusion of equality and freedom, obscuring unequal distribution of wealth and
              Marxists claim that dominant class hold hidden power through market
      It is undemocratic - action is not the consequence of individual choices expressed through
       demand schedules
              In practice supply creates its own demand, rather than the other way round
              Monopolists can fix prices and wages, controlling the level of unemployment
              Advertising can influence consumers to dispose of income
      Controllers and owners of market economy have political power outside public control
      Robert E. Lane argues that market asserts one set of values and ignores others which may not
       be exchangeable but which still contribute to human happiness
              Collective goods such as education and culture
              Others such as health, patriotism, community, collective interests

Means of control
      Hierarchies (as in state socialist economies)
      Markets (as in capitalist economies)
      Networks

Features in practice
Stewart Morris                           SPS Essay Notes                              Page 86 of 110

      Motivation derived from ideology
      Property was owned publicly through the state
      Efficiency through planning
      Effectiveness through centralisation
      Control through political leadership
      Integration through state welfare and institutions
      Gratification through work as there was a collectivist orientation

Successes of the system
      In many ways the system did work, proving that a modern society can operate without a
       market or private property
      In the 1960s the Soviet economy was self-sufficient, and the second largest economy in the
      State socialist systems were set up after wars, revolutions or economic collapse - only Russia
       and Yugoslavia had self-imposed communism though
      When the communists took over most countries were in a state of low industrial development
      All societies had stagnated under repressive feudal rule - capitalism had not developed to the
       same extent as Western Europe or the USA
      State socialism arose out of the collapse of the previous system, not after successful capitalism
      Was undoubtedly successful for primary and secondary industrialisation when the market was
       not working
      Leaders of state socialist countries claimed they would outstrip capitalist economies
      Even in 1980s growth rates compared favourably to those of capitalist societies - often 3-4%
       p.a. or more
      However, growth rates not high enough to meet expectations of politicians
      From 1970s and 1980s communications improvements allowed Eastern Europe to see
       developments of Western societies
      Institutions began to develop their own agendas - did not act like part of overall plan
      Degeneration into „instrumental rationality‟ with each level of bureaucracy pursuing its own

Problems with the system of planning
      Lack of freely functioning price system
            Difficult to measure relative scarcities
            No automatic system to rank preferences or ration scarce commodities
            Some things which were in great demand vanished almost instantly - shortages
            Overstocking was often a problem as well
            Difficult to price goods with an economic rent
      Incapable of combining efficiently the factors of production
            Great wastage of energy and inefficient use of factors and commodities
            In USSR planners had to deal with 10 quadrillion units of political and economic data
                per year
      Did not cope with shift from economy of extensive development to one of intensive
       development - productivity of labour declined
      Did not secure individual satisfaction
            Personal expectations were not fulfilled
            Substitutability was not developed
      Centralised political system became focus for criticism of economic failure
            If capitalist economy goes wrong, people are less inclined to blame politicians
      Absence of transparent transactions led to corruption
            Development of black market due to shortages - goods would find their own price
            Often the bureaucrats themselves would sell scarce goods illegally
            Socialism falsely assumes that a socialist society will be altruistic

Paths of reform
      Reform within state socialism - strong state under the Party
      Radical restructuring - keep public property but introduce market, disband planning and Party
Stewart Morris                          SPS Essay Notes                              Page 87 of 110

      Total shift to capitalism

Accepted critiques
      Scale and complexity of system could not be handled by planners in an effective way
      Planners were not altruistic - this led to bureaucratic control
      Citizens lacked entrepreneurial drive and innovation
      Political privilege led to economic privilege, and in turn, political corruption
      There was a need for markets to be introduced

Early reforms
      From the mid-1960s declines in growth led to demands for internal reform
      The planning system was reformed slightly
      The market was introduced, but unsuccessfully
            When economic reforms began to bite, the political will to allow bankruptcy and
                unemployment did not exist
            Some believed that markets would eventually break down the political system
            This has not been the case in China or Vietnam
      Gorbachev tried to introduce reforms
            Maintenance of central planning, full employment and the welfare state
            Radical political reforms
            Limited introduction of the market
      In 1989-91, the state socialist governments of Eastern Europe collapsed
      By 1991 only China, North Korea, Cuba and Vietnam are nominally state socialist countries
      Leaders of Eastern European states tried to mould societies in the image of Western capitalism
            Definition of the state - new states formed from old ones (e.g. Czechoslovakia,
                Russia, Yugoslavia)
            Move to the market system
            Move from hegemony to democracy or polyarchy
            Creation of a civil society (groups autonomous of the state)
      Current thinking emphasises the „footprint‟ of the past and the reconstitution of old elites

The move to democracy, markets and civil society
      Radical policy shift, especially integration with abroad (foreign capitalist societies)
      Reformers from the West favoured free-market capitalism and extensive privatisation
      Assumed economic liberalisation would create conditions for political liberalisation
      Assumed reduction in inequality through general increase in living standards
      Seen as creating the right conditions for democracy
      IMF believed in „Big Bang‟ theory - that sudden change in the system would be best tactic
      IMF assisted Mazowieckí government in bid for power in Poland
      Lipton and Sachs (from USA) gave policy advice
      Theory that because governments were strongest early in their rule, should act decisively and
       immediately on election
      Realised that workers from declining state sector would try to block reforms
      Reforms therefore had to be irreversible - transaction costs of moving back to state socialist
       system would be enormous
      Groups within the political system would therefore be unable to influence the economic
      Tough economic policies seen as leading to rapid economic growth
      West pledged support if countries followed these policies:
             End excess demand & the shortage economy
             Create competition through deregulation, free trade, private sector liberalisation, de-
                 monopolisation of state sector, making currency convertible so foreign firms could
                 buy businesses
             Provide social safety net of benefits
             Allow Western advisors to provide „know-how‟ for businesses, society and the state
      State sector continued in the short term due to divide between IMF and World Bank over
Stewart Morris                           SPS Essay Notes                              Page 88 of 110

               IMF believed that privatisation would create propertied classes, and the other features
                of capitalism would naturally follow - privatisation would make managers act like
                „good capitalists‟
            World Bank believed macro-economic reform and the creation of market institutions
                should come first, otherwise countries would lack the expertise needed to run private
                businesses - no experienced capitalist class
       Oskar Lange argued for a „market socialism‟, with reforms based on:
            Reducing number of „control figures‟ and combining factors of production
            Greater responsiveness among managers to market trends, so greater managerial
                authority over e.g. sizes, design of output
            Prices and outputs still fixed by state, but revenue derived from outputs above the
                planned outputs could be used by the individual enterprise
            Minimum wage scales fixed nationally

Effects of the transition
       Industrial production fell considerably (e.g. 32.1% in Czechoslovakia 1991), as did
        agricultural production (to a lesser degree)
       Retail prices rose considerably (e.g. 585% in Poland 1990) - this was important as many
        people had their savings wiped out - created huge problem for welfare state
       Hyper-inflation had been tamed by 1992, but still often very high (around 25% p.a.)
       Unemployment increased (e.g. 13.8% of labour force in Poland 1992) as rust-belt industries
        such as metalworking and coalmining were closed down
       This partly led to an increase in organised crime, murder and suicide
       There was also a move back to more socially traditional views on women at work - often
        women were forced back into housework or part-time work
       Inequality rose greatly as well
       The welfare state collapsed under its own weight - too many people were unemployed or poor
       The economic problems were not just a decline but a severe depression
       By 1998 Russia‟s GDP had fallen to around 55% of its 1989 level
       In the same period, the GDP of Moldova had fallen to around 30% of its 1989 level
       Only Poland and Slovenia had recovered to their 1989 levels
       These figures show far deeper decline than either the USA during its Great Depression or the
        Soviet Union during the Second World War
       There has been inequality between countries in foreign investment flows - Hungary and the
        Czech Republic have received a lot of investment, while Russia and Belarus have received
        very little
       This inequality is generally caused by perceptions of political instability
       Purchase of domestically-produced goods fell relative to foreign goods
       Consumer goods market seemed to be working reasonably well by 1992 though - there were
        few shortages compared to before
       In 1996 a World Bank report studied attitudes to past, present and future political and
        economic regimes:
Table 2: Past, present and future regimes in descending order of preference
                                        CEE                              Russia
        Political                       Future, Present, Past            Past, Future, Present
        Economic                        Future, Past, Present            Past, Future, Present

       There was a rise in traditional „post-Communist‟ parties in many countries in their 1994
        elections, appealing to those who objected to market reforms
       The methods of privatisation were varied between countries:
Table 3: Methods of privatisation
        Method of privatisation                          Countries where this was dominant method
        Equal-access voucher privatisation               Czech Republic, Lithuania, Mongolia
        Sales to outside owners                          Estonia, Hungary
        Management-employee buyout                       Russia
Stewart Morris                             SPS Essay Notes                                Page 89 of 110

       Privatisation was very difficult to manage politically
       It was easy to sell off small industries and services, and this was fairly successful, but selling
        larger factories was much more of a problem
       It was difficult to determine the prices of government-owned assets, and some were simply
        not worth buying
       This was particularly the case in Russia, which may explain the high proportion of
        management buyouts
       A very large number of companies were left in state hands, especially the larger industries
       Eastern Europe and the Baltics have recovered far better than the CIS countries: in the
        former, average 1997 GDP was 95% of the 1989 level, while in the latter it was only 56%.
       Poverty increased dramatically in some places:
Table 4: The increase in poverty
        Country                          % in poverty 1987-8                % in poverty 1993-5
        Czech Republic                   0                                  1
        Hungary                          1                                  2
        Poland                           6                                  14
        Russia                           2                                  44
        Ukraine                          2                                  63
        Kyrgyzstan                       12                                 86

       Those countries with the lowest GDP tended to have the most inequality
       There seems to be some relationship between political and economic transformation:
Table 5: The relationship between political and economic transformation
                                                      Extent of economic transformation
                                           No data      Little         Partial          Great
        Extent of         Great                                        Romania          Hungary
        political                                                                       Czech Rep.
        transformation                                                                  Estonia
                          Partial          Mongolia                    Bulgaria
                                           Macedonia                   Ukraine
                          Little           Bosnia       North Korea    Tajikistan       China
                                           Yugoslavia   Turkmenistan Kyrgyzstan
                                           Cuba         Belarus        Uzbekistan
                                           Vietnam                     Kazakhstan

       China is the only clear exception to this relationship
       Countries which have either radically reformed or reconstituted state socialism have on the
        whole been more successful than those which have mixed bits of both
       Geography has been an important factor in promoting political and economic reforms in
        Eastern Europe
       History is also a factor - before communism, the Czech Republic and Hungary were more
        bourgeois than many other countries
       The success of countries after communism depends partly on how successful they were during
        the communist era
Stewart Morris                           SPS Essay Notes                               Page 90 of 110

John Eatwell et al - Transformation and Integration

Civil Society
      „A democracy is more than elections.‟
      Democracies sustained by civil society where a large number of non-state organisations
       flourish, with cultures of compromise, respect for minorities and social/personal integrity
      Two concerns about civil society:
             Political language today might not make compromise possible - people may retreat
                 from political discourse if disillusions by betrayal in the past, disappointed with
                 difficulties of change or preoccupied with concerns of daily life- this may lead to
                 populists and demagogues taking control
             Corruption, ranging from old-boy networks to violent organised crime - „the risk is
                 that the transition could be hijacked by corruption, leading not to a social market
                 economy, but to a captured market economy‟ - rise in corruption due to
                 „disorientation of norms‟. On the Corruption Perceptions Index by Transparency
                 International, out of the 20 most corrupt countries, 9 were „transition economies‟
      Problems of state socialist system have led people to distrust all government intervention,
       leading to an over-reliance on the market mechanism
      This overlooks three facts:
             No major economy has ever achieved successful modernisation without a mixture of
                 „free enterprise‟ and state intervention (e.g. in international trade, financial
                 institutions, infrastructure investment, corporate organisation and even corporate
             There exist a wide variety of „market economies‟ from Britain and the USA to
                 Germany, Japan and Scandinavia, and there is no unique model to follow - however
                 these economies have in common a general reliance on markets within a stable
                 framework of law, custom and institutions. Economic models should not just be
                 picked „off the shelf‟ with no reference to people‟s history, prejudices or politics
             An efficient market economy requires a lot of self-regulation - countries need rapid
                 spread of information, protection of customers and employees, trust between market
                 participants and a system to enforce the honouring of contracts - these require time to
      Transition economies therefore are simultaneously having to dismantle the state apparatus of
       the past and build a new state. The complexities of this dual task are the source of much of
       the economic disruption.

Shock therapy vs. gradualism
      Study of transition economies was dominated by disagreements over this in first few years
      Now the debate is largely historical, as the shock therapy has already happened - question is
       what to do next

Social Democracy
      Components of social democracy as follows:
           Fostering of dynamic power of market system but with no presumption that the
             market alone is socially efficient - sees weaknesses in market system
           Commitment to equality of opportunity, and a recognition that opportunities will not
             be equal when income inequality is large - geater equality is seen as linked positively
             to social efficiency
           Dedication to fairness and justice in economic affairs - a policy is economically and
             socially inefficient if those who suffer the adverse consequences of desirable
             economic change get little benefit from it
           A desire to see the widest possible participation in economic decision-making e.g.
             through trade unions or through political system
           Recognition that economic progress must be based on sustainable development,
             which conserves biodiversity and natural resources for our descendants

Main proposals of report
Stewart Morris                          SPS Essay Notes                               Page 91 of 110

      Restoration of public responsibility and the construction of an efficient state capable of using
       the dynamism of the market to secure transformation
      Introduction of more efficient tax and customs systems
      Policies against corruption
      Regeneration of local government
      Enforcement by the state of property rights
      Need to reform and reduce military apparatus, increasing civil authority over the armed forces
      Institutional, microeconomic reforms are the key to macroeconomic stability

Administrative reform
      Strong and legitimate public institutions are needed - ministry of finance, social security
       system, parliament, local government, anti-monopoly organisations, taxation and customs,
       central bank, statistical office, civil service training etc.
      Inherited public administration tended to be fairly small
      Experienced officials associated with old regimes were dismissed (esp. Czechoslovakia)
      Public service offers low legitimate income and little prestige
      Many experienced officials left to work in private sector, trading with their contacts and
       government know-how
      In many countries the habits and routines of former systems persist
      Effective administration is possible - for example, in Russia the state has been able to carry
       out a radical privatisation policy
      While the merits of the policy are debatable, the ability of the Russian state apparatus to
       implement the policy has been clearly demonstrated
      The State Committee for Property was able to pay higher than normal salaries due to external
       financing, aiming to implement a policy in the interests of many people (distribution of state
       property), and using the traditional Soviet method of launching a campaign

Human resources
      Many of the more able and experienced officials have left the state sector to join the private
       sector. Similarly, the ablest young people are also tempted by the prestige and higher salaries
       of the private sector. Public service does not hire the staff it needs but the staff it can get.
      The measures required are new for the countries concerned, and officials have little experience
       in applying them, for example the design of measures to stimulate private investment
      The human and institutional inheritance makes „normal‟ market behaviour less likely than in
       long-standing market economies
      Old state apparatus is unsuitable to implement the policies - was a rule-creating bureaucracy,
       not a Weberian rule-observing bureaucracy - executive agencies had legislative power.
       Furthermore it was also a rule-evading bureaucracy. This creates instability e.g. foreign
       investors find that many different agencies claim authority in matters relating to foreign
       investment, and do not know which one to trust
      Selection is hampered by favouritism (often based on political allegiance) and nepotism,
       formal entrance requirements are frequently ignored, and a career civil service has yet to be
      Training is worthwhile, but no substitute for tackling structural problems such as low salaries,
       which often lead to corruption
      The absence of clear laws and an internalised legal culture leads to arbitrary decision-making
      Overlapping ministries engage in bureaucratic conflicts
      Fiscal problems constrain even the most able officials in what they can achieve
      Prolonged political uncertainty will inevitably reduce the time horizons of officials
      Human resources are also important in the question of EU enlargement - not enough
       experience among officials to implement health, safety and environmental standards

Administrative pathologies
      Criminalisation of public administration e.g. deputy mayor of a Volga city had a dispute with
       another deputy mayor, so sent gangsters to the other city
      Corruption due to low salaries - but can be reduced (e.g. in Hong Kong, with Independent
       Commission Against Corruption)
Stewart Morris                           SPS Essay Notes                                Page 92 of 110

      Attraction of technically-advanced but less cost-effective solutions
      Example is Hungarian bank clearing system - work began in 1987 on a giro system using
       French technology, which by 1994 was still not functioning correctly
      By contrast Poland‟s paper-based National Clearing House, set up in 1993, has worked
       effectively although technically backward
      Tendency to give exclusive attention to one fashionable issue at the expense of others is a
       problem e.g. while privatisation goes on, there is still a need to ensure that state-run businesses
       are working efficiently
      Strategies for reducing corruption:
             selecting officials for honesty and capability
             changing reward structure (raising salaries, rewarding actions which limit corruption)
             penalising corrupt behaviour, especially at the highest levels
             gathering information which increases chances of detection (auditing, internal
                security, encouragement of whistle-blowing, checking bank accounts, information
                from the public)
             restructuring the principal-agent-client relationship to remove the combination of
                monopoly power, discretion and little accountability (e.g. introducing competition,
                reducing officials‟ discretion, rotating officials functionally & geographically)
             changing attitudes about corruption (training, education, personal example)
      Successful struggle against corruption can yield substantial economic benefits

      This is especially important in Russia - reduction of military claim on resources
      Formulation of foreign policy objectives, determination of military budget, procurement,
       presentation of military‟s needs to other departments and the public, should all be civilian
      In Russia the Ministry of Defence consists mainly of military officers - it is usual for the
       Minister of Defence to be a general himself
      Two aspects to establishing civilian control
             Determining size, tasks and budget of the armed forces
             Ensuring that military are well paid, have good living conditions and social respect
      Those who are made redundant should be helped to find alternative employment (e.g. tax
       inspection, customs, police). In reality many are in the informal sector, unemployed or
       engaged in crime.
      Many senior officers „dream of reconstructing the dinosaur armies of the past‟

Fiscal problems
      Four main reasons for fiscal problems:
            Transfer of control from state-owned enterprises to private ones from which taxes
                must be collected - private firms good at tax avoidance and tax evasion
            Innovations such as VAT take time to introduce and enforce
            In a democratic political system increasing taxes is likely to be unpopular
            Transition economies have faced a severe depression
      Need to promote personal and business initiative, so income tax should be kept low and tax
       breaks given to new entrepreneurs
      Importance of indirect taxes and wealth taxes (e.g. natural resources, real estate, vehicles)
      Natural resources taxes are important in Russia, as resources such as oil and gas generate a
       high proportion of the national income
      Very difficult to use tariffs as the customs service is so ineffective
      Property taxes are a good source of revenue, but property owners are a powerful political force
       who use their influence to keep property taxes low

Public institutions and social trust
      Crime is a serious sociological problem throughout the region
      Some economists and officials of international agencies have taken a tolerant line on crime
       and corruption, arguing that protection rackets simply privatise the enforcement of property
       rights. However this approach must be rejected:
Stewart Morris                            SPS Essay Notes                                Page 93 of 110

                Crime and corruption raise transactions costs, making doing business more expensive
                Monopoly power is conferred on favoured clients, reducing economic competition
                More honest international businesses are discouraged from investing
                Public decisions are often based not on how favourable they are for society, but on
                 which decisions generate the highest bribes or which are backed by the most feared
                The high murder and injury rates are a waste of human potential
                Public desire to tackle crime may lead to support for extremist politicians

Shock vs. gradualism in macroeconomics
      Dilemma has been overplayed
      Transition economies face three major tasks: stabilisation, institutional change and capacity
      Often little choice over whether to move quickly or slowly
      Some tasks are necessary immediately (e.g. price liberalisation, exchange rate unification,
       ending of state monopoly on foreign trade, legalisation and promotion of private enterprise)
      Institution-building and capacity restructuring naturally take time
      Shock therapy could only really be applied to East Germany through reunification - elsewhere
       more attention needed to be paid to the appropriate sequence of policy measures
      Choice of low or high speed was only available within a very narrow range:
             elimination of subsidies - keeping subsidies slows down inflation but may place an
                 intolerable burden on the budget
             reduction of trade barriers - beneficial with respect to competition and foreign
                 investment, but also destroyed some previously profitable businesses
             introduction of convertibility - led to worse terms of trade and inflationary
             privatisation of state enterprises - effects are less intense and less revenue is raised as
                 a result if government tries to sell its businesses quickly and cheaply
      No built-in superiority for either gradualism or shock therapy - depends on conditions in the
       individual country, and practical, not dogmatic, political decisions should have been taken

Kovåcs & Dallago (eds.) - Economic Planning in Transition

Different types of planning
      Initiative planning - the announcement of macroeconomic and growth targets, and targets for
       the activity of state agencies and state-owned enterprises, to create an environment that
       influences the decisions of private enterprises
      Regulative planning - as above, but also actively tries to influence the decisions and activities
       of the private sector via incentives to private agents
      Indirect planning - allocation of centralised resources is tied to implementation of the plan, so
       those enterprises which comply will benefit economically, and establishment of government-
       controlled „market‟ parameters (prices, interest rate, taxes, exchange rate etc.) in order that the
       plan might work
      Direct planning - also known as administrative, dirigiste or command - plan includes
       administrative orders to implement the plan and the way in which state resources will be
       allocated - targets may be expressed in physical units of production, and implementation is

Claus Offe - Varieties of Transition

Fundamental differences between state socialism and capitalism
      In democratic capitalist societies there is no overall social objective that is placed on a
       pedestal as the measure of all things
      Societies of this type are „pluralist‟
Stewart Morris                           SPS Essay Notes                                Page 94 of 110

      They do not relate to the age in which they exist as if it were the implementation phase of a
       global and dominant „project‟ - instead they exhibit a constant dynamic of multi-dimensional
       change which is predominantly perceived after the event
      The opposite is true with state socialist societies, pursuing the goal of „communism‟
      Consensus in mid-1990s that state socialist society is not an appropriate means of delivering
       communist goals
      Comparisons between state socialism and capitalism:
             On the one hand we have control without self-observation, on the other self-
                 observation without control
             On the one hand technological creativity without the economic destruction of
                 obsolete structures, on the other (frequently) destruction without creativity
             On the one hand a macro-social project goal without change, on the other change
                 without a goal
             Capitalism shows micro-planning at the individual company level but macro-anarchy
                 at the level of the national economy, while macro-planning of state socialism is not
                 able to deal with micro-anarchy at an individual business level
             Misleading euphemism to speak of „planned economies‟ as they rarely worked
                 according to plan, precisely for the reason that there was a plan in existence -
                 susceptible to unpleasant surprises „from below‟
             Capitalism creates „reserve army of labour‟ and a „mountain of commodities‟ waiting
                 for buyers, while state socialism features mangers waiting for workers and workers
                 waiting for key supplies
      Freedom of speech
             In capitalist, democratic countries you can say what you like, but no one will listen
             In state socialist countries you are not allowed to say anything you like, but precisely
                 for this reason what you do say will be heard
      Capitalism works even when no economic actors are altruistic - communism requires a much
       more highly developed socialisation to function
      Order of preference may be: exemplary socialism, exemplary capitalism, factual capitalism,
       factual socialism

Types of revolution
      Problem of changing from a society based on a model to one where no model exists - Western
       democracies, in advising the transition economies, tried to come up with some kind of
       definitive model for the first time
      1989 upheaval in USSR satellites (GDR, Czechoslovakia, Hungary, Poland, Bulgaria,
       Romania) is distinguished from classical modern revolutions (France, Russia, China) in that it
       was not informed by a theory of revolutionary progress nor implemented by a revolutionary
       elite which gained power by non-institutional means
      This was also true of how these satellite countries fell under Soviet power in the first place -
       the change occurred as a consequence of external control following the Second World War
       and not of upheaval from within
      While the theoretical map for „capitalism to socialism‟ has existed since the 19 th century, until
       1989 there was no similar theory of the reverse transition - this had to be created very quickly
      State socialism underwent no endogenous collapse but just „rotted away‟
      With the exception of Romania, the upheaval occurred without violence
      Former state socialist countries had no choice but to copy the institutional framework of the
       highly industrialised nations - without reference to the setbacks those nations found on the
       path to becoming modern capitalist states

GDR and Czechoslovakia
      Seen as „state socialist success stories‟
      Integration is primarily economic
      Change in regime between 1989 and 1990 took place fairly quickly
      Change a result of swift break with the past, not of ongoing conflicts, reform movements etc.
      Militarily they are both front-line states
      Industrial potential was well-established and constantly expanded due to wide-scale pre-war
       industrialisation, and per capita industrial output was correspondingly high
Stewart Morris                           SPS Essay Notes                                Page 95 of 110

      Both had a strong labour movement before communist takeover
      GDR was less than a full nation, while CSR consisted of two titular nations in a federation
      Political repression in the two countries was of a moderate level (by Eastern standards)
      Internal organisation was more of an ideal „cadre bureaucracy‟ than in the other four
      Economic elites and disgraced political elites were largely replaced (especially in GDR)
      Change in regimes took the shape of old elites capitulating - no compromise necessary
      Prospects of European integration have already been realised for GDR and are likely for
       Czech Republic
      Internal and external minorities were not the basis of conflicts
      History of attempts to reform economic policy had ended by 1960s due to adequate output and
       relative immunity to crises
      History of domestic opposition was short and not dramatic - intellectual dissidents and
       opposition church circles mainly - rest of population were paid enough to not protest
      Both developed their own constitutions after establishment of new order
      Under old regime the private sector was small and diminishing - not only industry but also
       agriculture and services were almost totally nationalised
      Both countries traditionally had strong links with Western Europe

Poland and Hungary
      Change in regimes required almost a decade and consisted of repeated confrontation between
       the governing elites and social movements (Poland) or negotiations between rival elites
      Calls for civil rights and rights of participation were heard at an earlier stage and had greater
      Minority conflicts referred predominantly to Hungarian minorities abroad
      Regarded as militarily less sensitive by Warsaw Pact strategists
      National identity formed largely by „victim‟ status - Hungary with the Soviet intervention in
       1956, Poland with a history of being fought over by two major powers, Germany and Russia
      This led to specific „national Communist‟ system of rule
      New constitutions have taken form of regenerations and revisions of old ones
      Private sector was large and has grown - in Poland mainly agriculture, in Hungary mainly
       commerce and services

Bulgaria and Romania
      These were agrarian countries integrated largely through political repression
      Abrupt and violent collapse of regimes described by Juan Linz as „sultanist‟
      Changes not prepared by internal opposition to regime but as a result of conflicts involving
       domestic minorities, namely the Turks (Bulgaria) and Hungarians (Romania)
      Russian Orthodox Church is state religion
      At the first free elections members of the old elites were returned to power
      Continuity has been maintained in the elites
      Neither was ever the focus of international attention:
             Bulgaria was characterised by historically rooted, unswerving loyalty to Russia
                 among both the masses and the elite
             Romania was characterised by extreme repression so there was little deviation from
                 Russia in domestic policy

Was the GDR a special case?
      The most obvious difference is that the GDR dissolved itself and merged with the West
       German state. The inhabitants of the former GDR were subordinated to the legal, economic,
       currency and social system of the former FRG.
      There had been little evidence of a dissident movement or internal opposition, so the new
       political leadership did not come „from above‟ or „from below‟ but „from outside‟
      The old elite did not continue, so never had the chance to put a spanner in the works of
Stewart Morris                          SPS Essay Notes                               Page 96 of 110

      The GDR was, uniquely, able to „afford‟ a replacement of 50% of the judiciary and large
       sections of the academic intelligentsia
      „Western standards‟ were asserted in all walks of life, with West Germany providing the
       leadership and East Germany resigned to learning
      This caused discouragement and demoralisation, devaluing the labour potential and causing
       massive unemployment in a country where previously 90% of women were involved in the
       world of work
      Industrial production fell by a third between 1989 and 1991 as Western companies moved
       their superior products into the new market
      Unemployment rose to around 40%, a level unprecedented in industrial history
      It is also unusual in that the blame can be put largely on state agencies such as the
       Treuhandanstalt privatisation agency, who worked on the principle of „return of property first,
       compensation second‟
      This unemployment persists despite high migration to West Germany, as it is the most able
       and motivated East Germans who are migrating
      This has created a time pressure for transition - the East must catch up in order to avoid a
       demographic disaster
      The opposition in the GDR consisted mainly of reformist socialists, seeing their country in
       terms of an economic system rather than national identity - they wanted a reformed GDR, not
       no GDR whatsoever
      This effectively excluded them from taking part in the reform process after unification
      Other countries aimed to „push‟ their citizens on the „path to Europe‟ - the GDR on the other
       hand had been „pulled‟ into Europe by the FRG
      Population was treated as politically immature and unable to make its own judgement - made
       little contribution towards shaping its own future
      Residents are saddled with feelings of backwardness compared to West Germany
      Strong federal structure of Germany in danger of being damaged - previously it guarded
       against religious or cultural divides, but threat of an Ossi vs. Wessi divide
      German case needs to be seen not as something different from all the others but as an example
       for them - the West will need to „pull‟ the Eastern European countries if they are to succeed if
       they are to catch up
      But if East Germany continues to struggle behind the West, other countries may be tempted to
       reject the Western example and find their own paths to modernisation

Minxin Pei - From Reform To Revolution

China and Vietnam
      The three pillars of orthodox communism - the party-state, a planned economy and communist
       ideology - have been made hollow by:
            the increasing technocratisation of the state at the expense of the Party
            the rapid transformation into a market economy
            the retreat of communist ideology from a revolutionary-utopian doctrine to a set of
                conservative-defensive dogmas that serve principally to legitimise the continual rule
                of the autocratic regime
      Generally those communist states at a lower level of economic development have remained
       authoritarian (with the exception of Albania, whose opposition finally won in 1992)

Regime transition
      Regime transition from communism is qualitatively different from transition from
       authoritarianism, as it involves the dual process of democratisation and marketisation.
      These could happen together, or one before the other, giving three possible routes of
      Secondly, in transitions from communism, limited reforms tend to become revolutions when
       the balance of power between state and society precipitously shifts in favour of the latter
      This occurs as a result of the accelerated institutional decay of the state and the rapid
       mobilisation of previously excluded social groups
Stewart Morris                             SPS Essay Notes                                Page 97 of 110

        Changes in regimes lead to significant and qualitative restructuring of state-society relations
         through the redistribution of power between the political entities (the state) and social, cultural
         and economic organs (society)
        The most ambiguous form of regime transition discussed is that from a communist regime to a
         post-communist authoritarian one
        We may consider that, even if political freedoms and liberties have not been forthcoming,
         China and Vietnam have seen an increase in freedom in economic terms
        Special attention is paid to the mass media and private economic sector because:
              These are both arenas where society and state compete for control
              They are both power-producing sectors which generate political and economic
                  resources coveted by the state and by society
              They are both indicators of the progress of regime transition from communism
Table 6: Patterns of transition in established communist regimes

                           More developed              Moderately developed        Less developed

Soviet-installed           Democratisation via         Democratisation via         Democratisation via
regimes                    elections or peaceful       elections, with the         elections, with ex-
                           revolutions, with the       opposition unable to        communists taking
                           opposition in control       maintain control            control (Mongolia)
                           almost immediately          (Bulgaria)
                           (Poland, Hungary,                                       No transition (North
                           Czechoslovakia, East        Transition via violent      Korea)
                           Germany)                    revolution, with ex-
                                                       communists taking
                                                       control (Romania)

Homegrown communist        Democratisation             No transition (Cuba)        Democratization via
regimes                    leading to national                                     elections, with the
                           disintegration and the                                  opposition in control
                           collapse of old regimes,                                after two elections
                           resulting in mixed                                      (Albania)
                           regime types, civil war
                           and ethnic violence                                     Ongoing transition to
                           (Soviet Union,                                          market economy
                           Yugoslavia)                                             without
                                                                                   (China, Vietnam)

Problems of comparing China and Russia
        Level of economic development
              China predominantly agrarian with low level of development, Russia predominantly
                  industrial at moderate/high level (but with wide regional disparities)
        Sociological characteristics
              China had low urbanisation (18.9% in 1979) and high illiteracy (23.7% in 1982)
                  while Russia had fairly high urbanisation (65.7% in 1986) and negligible illiteracy
              China had higher ethnic homogeneity (87% Han Chinese) while in the USSR non-
                  Russians accounted for 50% of the population
        Sequences of reform
              Chinese reform started in the economy, while Soviet reform was led by political
                  liberalisation after a brief, abortive attempt at economic reform in 1985-6
        Generational differences of elites
              China was ruled by first-generation founders of People‟s Republic, more committed
                  to maintenance of Communist grip on power, while Post-Brezhnev ruling elites in
Stewart Morris                           SPS Essay Notes                              Page 98 of 110

                 Russia, represented by Gorbachev, were fourth-generation, post-totalitarian rulers
                 thrice-removed from the communist revolutionary experience

Shared political-institutional characteristics
      Both countries were ruled by a communist regime with a monist party-state, a planned
       economy, and a Marxist-Leninist ideology as its legitimating principle
      Reforms in each country were triggered by intra-elite power struggle (China 1976-8, Russia
      Both were homegrown regimes that game to power through communist-led revolutions

Differences between transitions from authoritarianism and communism
      No simple authoritarian regime possessed such a tightly organised ruling party
      The scope of civil society was substantially broader in authoritarian regimes - these pre-
       existing organs of civil society have acted as coalition partners of the opposition and
       facilitated transition
      All authoritarian regimes had market economies with private property rights, while
       communism did not, vastly complicating the transition
      For the masses, one of the best indicators of government performance is economic well-being
      If the government has sole responsibility for the economy, belief in key communist values and
       priorities will suffer, and there will be dissatisfaction with the political system
      There are three main routes of transmission from state socialism to capitalism:
             The evolutionary authoritarian route (marketisation possibly followed by
             The revolutionary double-breakthrough route (democratisation followed by
             The simultaneous single-breakthrough route (democratisation and marketisation at
                 the same time)
      Typical indicators of democratisation include the holding of open and free elections, the
       freedom of press, association, religion and public gathering
      Typical indicators of marketisation are the size of the private sector relative to GNP and the
       dominant modes of resource allocation

The evolutionary authoritarian route
      Reformers pursuing this route view democratisation not only as unnecessary but also as an
       obstacle to marketisation
      They point to the lack of favourable preconditions in their countries for instituting democratic
       policies and fear that political instability would jeopardise economic reform
      Deng Xiaoping: “in a large country like China, many things will be impossible without a
       centre to lead the nation”
      Nguyen Van Linh: “It is not our policy to hasten renovation of the political system while
       preparations are still inadequate…any adventurous step in this direction would certainly lead
       to political instability”
      Almost exclusive to South-East Asia, this model rejects state-socialism and neo-liberalism,
       assigning an important role to the state, ruled by a technocratic-authoritarian regime
      Reforms in China and Vietnam have shared three main similarities:
             Gradualism
             An agriculture-first approach
             Integration into the world economy
      This has resulted in remarkable GDP growth, with China averaging 8.8% in 1979-1990
      Such high levels of economic performance produced a „cushion effect‟ that countered the
       erosion of political legitimacy
      Market reforms have produced spillover effects as the pluralizing effects of market forces
       penetrate the political process and transfer economic resources from the state to society
      This has not led to any great increase in political contestation, but has increased the costs of
       state-sponsored repression as society develops countervailing capabilities against the state
      Deng Xiaoping‟s flirtation with political reform ended after pressure from hardliners
Stewart Morris                          SPS Essay Notes                               Page 99 of 110

      It could be argued that Gorbachev‟s early economic reforms were prompted by the same set of
       motivations, although in his case, this led to revolution
      There is a phenomenon of „queue-jumping‟ whereby the liberal intelligentsia, with their new-
       found economic resources, become more vocal in their criticism of the government
      There may be the problem of overcoming opposition from hardliners. Solutions may be:
             Rely on a high degree of elite consensus, built by a supreme leader focused on
                 marketisation - this is unreliable due to factional fighting and varying skills at
             Undermine hardliners‟ support from the bottom up - not by overt political means but
                 through covert economic means (self-enrichment opportunities and material
                 incentives). This provides an exit route for less favoured politicians. However it
                 generates its own problems:
                       Turns a politically powerful group from the old system into an economically
                          privileged group in the new one - however, this will be balanced out as it is
                          more difficult to monopolise economic power than political power
                       Because of inequity, and low public opinion of apparatchiks, this exit option
                          is only available when levels of mass political mobilisation are low - once
                          their self-enrichment is made public and subject to press scrutiny, the exit
                          option may be closed off
      An example may be Taiwan, where a one-party system was gradually democratised during the
      Theoretical factors:
             Increased pluralisation via market society
             Economic performance replaces ideology as the basis for political legitimacy
             Post-communist elites may relax from within as third- or fourth-generation rulers
                 spring up
      This is of course an optimistic scenario, especially when applied to China

The Revolutionary Double-Breakthrough Route
      This is the most common form of regime transition in the more developed communist states.
      In the most successful examples (Poland, Hungary, Czechoslovakia, East Germany) the
       political phase of this transition was generally quite short (up to 2 years). By comparison, in
       Russia the first phase took seven years (1985-91)
      The first phase had its driving forces originating in society, and a „shock therapy‟ approach to
       economic transition was applied immediately after the democratic breakthrough
      There are three clear patterns:
             Soviet-installed regimes with weak homegrown legitimacy experienced instant
                 collapse as soon as it became clear that the Soviet Union would no longer support
                 their communist systems by the use of force
             The first breakthrough did not always lead to the immediate establishment of
                 democratic post-communist governments - this depended largely on the strength of
                 opposition movements before (or in Russia, during) the collapse
             In homegrown communist regimes, the actual breakdown was more prolonged and
                 produced traumatic consequences - civil war in Yugoslavia, general social chaos in
                 Albania, and a failed coup, national disintegration, ethnic violence, mini-civil wars
                 and economic collapse in the Soviet Union
      This type of transition leads in the first stage to a curios form of government - non-market
       economic polyarchy. Democratic processes and institutions operate in a non-market economy
       which is incapable of sustaining, nor compatible with, democratic politics
      Escalating economic crises, influence of Western economic ideas, intellectual bankruptcy of
       market socialism, public euphoria following the fall of the old regimes and the popular
       mandate given to new democratic governments all encouraged „shock therapy‟
      Criticisms of shock therapy bolstered by unanticipated difficulties in its implementation
       (especially privatisation) and high social costs such as falling production, runaway inflation,
       rising unemployment and declining standards of living
      By 1993 it was clear that shock therapy in Russia had failed
      Assumptions of shock therapy
Stewart Morris                          SPS Essay Notes                             Page 100 of 110

               Machiavelli‟s injury-benefit rule: injuries should come all at the same time, while
                benefits should be granted little by little - gradualist approach might run high
                political risks
             „Honeymoon effects‟ of newly-elected governments - reforms should be
                implemented when governments are strongest
             Non-market polyarchy would be an unsustainable form of democracy - direct control
                of economy leads to erosion of democratic rule
      Did not work in practice - high social costs caused numerous reformers to be replaced with ex-
       communists (e.g. in Poland, Bulgaria, Lithuania)
      Such complications can be seen as an inevitable part of the political transition process, and
       while perhaps a threat to reformists, less of a threat to democratic regimes (following example
       of southern Europe and Latin America - lack of antidemocratic, extremist mass movements)
      Presidential powers often very strong e.g. Yeltsin - “the transition to a parliamentary form of
       rule would be extremely difficult, undesirable and, I believe, inadmissible”
      After the 1993 crisis Yeltsin banned many opposition parties and newspapers, dismissed
       dissident regional leaders, disabled the Constitutional Court, forced a new constitution giving
       the president overwhelming power and withdrew his promise to run for re-election in June
       1994 - move to a „soft authoritarian‟ transition model
      Problems of non-market polyarchies:
             Predominance of industrial proletariat, absence of commercial middle class
             This gave old elites opportunities for self-enrichment
             Democratic state assumes leading role in development of market economy, the goal
                of which is, paradoxically, to get the state out of the marketplace
             Using power of state involves two main risks
                      Overloading fledgling democracy with responsibility for managing
                          collapsing democracy
                      Allowing groups whose interests will be hurt by marketisation to gain access
                          to political influence through electoral means to oppose reform
             Politically mobilised industrial labour force was clear threat to reform

The Single Breakthrough Short Cut
      Appears to be the most attractive option
      In practice, such a transition has not occurred, expect possibly Hungary 1988-9 before it was
       replaced by democratic regime
      Why such an absence of this route to reform?
             Reformers need to form a powerful single-purpose alliance
                       In China and Vietnam this included market-oriented supreme leaders,
                           moderate technocrats, the liberal intelligentsia and the peasantry
                       In the Soviet Union it included the liberal intelligentsia, nationalist forces,
                           reformers inside the establishment, segments of the urban population and
                           industrial labourers
                       In most Eastern European countries included parts of industrial labour force,
                           the intelligentsia, religious groups and moderate reformers
                       Such an alliance seldom endured through either evolutionary authoritarian
                           or revolutionary double-breakthrough routes - what worked in one phase
                           tended to dissolve in the other
                       Difficulty in maintaining alliance committed to both democratisation and
             Transition depends on stable balance of power within alliances. Simultaneous
                 transition would see constantly shifting resources between groups in the alliance -
                 impossible to maintain a balance of power
             Simultaneous transition needs cooperation and compromise between those forces
                 within the regime and those opposing it - demands basic consensus on goals and pace
                 of reform
             Short cut is least practical where it is most promising - fundamental weakness of
                 Russian regime meant opposition had little incentive to accommodate it
             Whenever communist governments tentatively tried such an approach, they were
                 swept from power once Soviet military support was withdrawn
Stewart Morris                           SPS Essay Notes                             Page 101 of 110

Barriers to reform
      Sequential problem solving brings with it the risk of getting stuck
      In authoritarian case, structural factors favouring democracy not sufficient for its inauguration
             ruling elites‟ resistance to democratisation
             institution of pro-government, patronage-client system capable of mobilising
                 grassroots support against democratic forces
             opposition‟s poor coalition-building skills
      In democratic-breakthrough transitions, drive towards a market system may get stuck because
       of short-term economic difficulties and structural complexities of transforming economy
             descent into chaos (e.g. Albania)
             ethnic conflicts (e.g. Yugoslavia, Georgia, Moldova, Armenia, Azerbaijan)
      Reversals are likely, especially where regime transition was purely cosmetic
      Much admiration in former Soviet Union for Chinese model due to latter‟s growth rates

Main groups
      China and Vietnam
            rapid move to market economy
            absence of democratic reform
            increase in civil and economic freedoms
      Hungary, Poland, Slovenia, Czech Republic
            irreversible change to market economy
            new democratic governments survived political crises
      Slovakia, Estonia, Latvia, Lithuania, Russia, Ukraine
            late start, severity of macroeconomic crises, external shocks and high concentration
                of military-industrial complex slowed democratic and economic reform
            variation within group, with Russia and especially Ukraine lagging furthest behind
      Croatia, Georgia, Armenia, Bulgaria, Romania, Moldova, Belarus, Kyrgyzstan, Albania,
            democratisation less advanced and consolidation more problematic
            armed conflicts with neighbouring states over territory (Croatia, Armenia)
            ethnic conflicts and strong conservative forces (Georgia, Moldova)
            weak democratic governments (Albania, Bulgaria, Kyrgyzstan)
            control by autocratic former communists (Belarus, Russia, Mongolia)
            variation in market reforms, especially weak in Kyrgyzstan, Albania, Mongolia
            stagnation and frequent reversals likely
      Serbia, Kazakhstan, Uzbekistan, Tajikistan, Turkmenistan, Azerbaijan
            except for Serbia, all were formerly poor and dependent on primary commodities
            democratic reform very slow - change in form of government but not in regimes
            weak opposition in Soviet Central Asian republics, repression in Serbia
            most likely to follow authoritarian route of China and Vietnam

Reasons for variation
      Elite choice - but constrained by historical-structural features of their societies
      Levels of attained economic development - more modern societies achieved rapid
      Penetration of planned economy and socialist welfare state - where penetration was low,
       progress towards marketisation was more rapid
      Legacies of previously limited reforms - where such reforms had previously been attempted,
       embryonic and informal market institutions, small groups of entrepreneurs, networks of
       commercial relationships and public tolerance for private property and relative income
       inequality existed, easing the transition
      Partial political openings - most reformers in USSR came of age during Khrushchev‟s „Thaw‟
      Past resistance - countries with histories of mass resistance to Soviet regime saw more rapid
Stewart Morris                           SPS Essay Notes                              Page 102 of 110

      Transitions demonstrate that the reformer can seldom rely on existing institutions of the
       communist party-state to serve as instruments of change.
      Reform sapped their vitality, reduced their power, corrupted their integrity and accelerated
       their decay.
      The principal forces of change came from society.
      Although most reformers‟ ability to manage change declines over time, there are opportunities
       early in the reform process to slow this decline and mitigate its negative effects, by the right
       sequencing of reform initiatives
      A reformer‟s ability to manage change is likely to decline much faster if the initial opening is
       created in the political process rather than in the economy
      There is little evidence to support the theory that democratisation will aid market reforms and
       improve economic performance
      A reformer‟s ability to manage change is inseparable from his ability to build and maintain
       support - both domestic and external, economic and political.
      Foreign support alone should not be relied on for ambitious reform programmes
      Reformers should pursue support-building by appealing to groups with significant
       membership sizes and politically affordable demands
      Whichever route is taken to reform, the state is weakened by the market society, hindering its
       ability to extract resources, regulate, enforce laws and mobilise people politically
      During the transition all former communist states experienced similar socio-economic
       problems such as tax evasion, fraud, communal violence and an explosion of social vices
      Prospect of re-strengthening state is limited due to distrust and corruption
      Weak state can survive if there is a strong civil society

Which route is the least costly exit from communism?
      China:
             Rapidly increasing standards of living
             Civic and economic freedom increased
             Improved status as major world power
             Destroyed orthodox communism but saved authoritarian rule - „breathing space‟
      Soviet Union:
             Collapse of Soviet Empire, many states gained independence
             New democratic governments installed
             Immense political, social and economic costs
             Armed conflict, anarchy, decline in standards of living
             Fall in international standing with economic status reduced to that of developing
                 country in need of assistance (or meddling) from IMF and World Bank
      Remains to be seen which route will result in lower total transitional costs
      Gorbachev was a definite failure as a reformer, achieving virtually none of his goals with
       glasnost and perestroika, presiding over total collapse of Soviet economy
      Deng, despite harsh rule, was a more skilful reformer - pragmatic enough to embrace and
       defend capitalism („communism with Chinese characteristics‟)
      However this only relates to first phase - does not answer question of which system is best in
       establishing a democratic political system based on a market economy?
      The answer is ambiguous. Unique historical circumstances meant a huge variation between
       countries which went down the democratic double-breakthrough route, with some limited
       successes (e.g. Hungary, Czech Republic, Poland) and disastrous failures (e.g. Russia)
      Chinese route has shown some promise in transforming a huge developing communist state
       via peaceful and evolutionary means
      Chinese routes is similar to that previously followed by Western Europe since the Industrial
       Revolution and dozens of developing countries since World War II
      Successful examples of democratisation in these states brighten the prospects for China,
       especially in developed coastal areas such as Shanghai
      Critical test of Chinese model is whether its future leaders will be able to redistribute the
       benefits of capitalism to its poorer interior, while holding on to peripheral regions with large
       ethnic minorities and the potential for nationalist revolution similar to that in the USSR.
Stewart Morris                         SPS Essay Notes                            Page 103 of 110

16.5 Japan and East Asia
   a) Is there an East Asian „model‟ of capitalism?
   b) Is East Asian economic organisation „culturally‟ determined?
   c) Is it true to say that what were formerly Japan‟s strengths ultimately became weaknesses?

Geoff Ingham - Lecture Notes

Account of the East Asian ‘miracle’
      Japan was in ruins post-war, having lost territory to Korea and Taiwan
      Korea was divided between the mainly agricultural South and the more industrial North
      Within 30 years, Japan, Taiwan and South Korea were at the centre of this „economic miracle‟
      Japan‟s economy had become the world‟s second largest in GDP terms
      Taiwan‟s economy had grown by 10.6% p.a. during the 60s and 70s, with similar changes in
       South Korea
      By 1988, Japan had a higher GDP per capita than „organic core‟ (Western Europe and
       America). However, Taiwan was only on 31.1% of „organic core‟ GDP per capita, while
       South Korea was at 20.2%.
      So first and foremost the Asian miracle was a Japanese one - first country to change (1960s)
       and for about a decade the „miracle‟ was exclusively Japanese
      Japanese growth drove through changes in other countries - „reverse domino effect‟, not just
       because of shared characteristics
      Japan exported not just capital but also its system
      What are the shared traits between Japan and other East Asian success stories?
             Few natural resources
             Received Marshall Aid from USA
             Previously part of Japanese empire
             Buddhist/Confucian traditions (note conflict with Weber)
             Government-planned export-led strategies for growth
      Hamilton and Biggart specify the differences between the economies, and argue instead for a
       „systemic accumulation‟
             More than just a process of accelerated industrialisation
             Not just a remodelling of the economy along Japanese lines
             Countries became a capitalist archipelago, linked in economic, not geo-political
             By 1980, transpacific trade exceeded transatlantic trade, and by 1990 it was 1.5 times
             But during the 1980s, intra-Asian trade exceeded transpacific trade
             Friedland referred to the „Asianisation of Asian economies‟ - becoming more focused
                 on regional market
             At first the goods produced by Japan were seen as shoddy; they were labour-
                 intensive and cheap
             The US has an important role - the Pax Americana guaranteed their defence, so there
                 was no need for high military spending
             US was a „consumer of last resort‟ - vast consumer spending would always be able to
                 absorb Japanese products, as cheap imports were essential in maintaining the mass-
                 consumption norm
             US also granted them special favours such as membership of GATT (even when their
                 economy was virtually closed)
             The organisational form of the Japanese economy was exported to other countries -
                 that of hierarchical integrated subcontracting within an industry, within an economy
                 and within a region
             A change in the terms of trade led the US to pressure Japan to revalue the Yen
             America made a point of opening up the Japanese economy
             By the 1970s Japan tried to resist this pressure and made a bid for global hegemony -
                 the first non-military attempt at global hegemony in history
      Ozawa attempts to demonstrate this process of „systemic accumulation‟ with a diagram of the
       „East Asian Space-of-Flows‟ (see below)
Stewart Morris                           SPS Essay Notes                               Page 104 of 110

      Japan was able to preserve co-operative, not competitive, relations between its kairetsu as the
       markets grew in East Asia
      There has been a tendency to underestimate the level of Japanese involvement
      The foreign expansion of Japanese businesses was based on minority ownership - this applied
       to 80% of foreign subsidiaries compared to around 20% in France and Germany
      Arrighi and Ozawa say the East Asian „miracle‟ was down to two factor - the consequences of
       the „Pax Americana‟ and the systemic relationship between the various countries

Japan - industrial structure of Keiretsu
      The reasons given for Japan‟s decline are often the same as those given for its success
      Keiretsu are „enterprise groupings‟
      Until the 19th century all commercial and financial activities were controlled by a few major
      In 1868 after the restoration of the Emperor, merchant families were given control of the new
      These were organised into zaibatsu - controlling kinship groups - after privatisation
      Within the zaibatsu there were extensive cross-holdings, with virtually none outside
      The four main zaibatsu were Mitsui, Mitsubishi, Sumitomo and Yashuda

      The USA, after their 1945 occupation, aimed to break up the zaibatsu, who had supported the
       war effort and were seen as an un-American form of capitalist organisation
      Those in control of holding companies - the „56 designated persons‟ - were required to sell
       their shareholdings, and the zaibatsu were broken up into smaller companies
      However, the old zaibatsu families bought the stocks back through the banks, which were
       largely owned by them
      These became keiretsu - a looser term
      The ten largest shareholders in Toyota held 36% of stock (in the USA the top 20 would
       normally hold under 10%)
      This concentration of power and control meant that the businesses were easily manipulated
      This was lauded in the 1980s, but denounced in the 1990s as cronyism
      Stable, long-term predictable patterns and plans were seen as giving the stability which the
       West lacked
      The keiretsu were not as dominant as had often been claimed - the top level of industry was
       highly concentrated, but there was also a large SME sector
      In the mid-1970s over 50% of employment was in firms of less than 300 employees,
       compared to around 20% in the UK and US
      Japanese economy relied on its SMEs - „norms of goodwill‟, which could be seen in terms of
       semi-feudal dependency, must exist between smaller and larger firms
      In the 1980s it was argued that this system had many advantages:
             Externalisation of risk in a recession - workers were laid off in the SME sector, while
                 those in larger industries kept their „jobs for life‟ - top layer is preserved and stable
             Externalisation of innovation - keiretsu would specify only the demands on their
                 products, rather than designing them themselves (c.f. Ford in USA - would design
                 and test e.g. cylinder head themselves, then put it out to tender and choose by price -
                 Japan had quality competition as well as price competition)
             Lower costs of employment in SME sector - subcontracting does not require
                 employment insurance
             Kanban or „just in time‟ system meant that things were delivered as they were
                 produced, rather than holding huge surpluses (in the end, this led to environmental
                 costs of minibuses!)
Stewart Morris                           SPS Essay Notes                             Page 105 of 110

The Japanese Developmental State
      Gerschenkron saw the Japanese state as exemplar in the promotion of businesses
      The state consciously borrowed „best practice‟ from other economies
      The state was in more control than in other economies
      Two main roles of state - regulator/coordinator of planned market economy through MITI, and
       investor (rather than typical consumer state in the West) through Bank of Japan
      This role as an investor may be partially to blame for current problems of paralysis with
       economic insecurity, compounded by low welfare provision - the state continues to pump
       money into the economy but it is being saved, not spent
      Such a system is facilitated by social networks between the state and business leaders
      Such norms of goodwill only function where there is an asymmetric balance of power, so such
       a system would be hard to export to the West

The state as a regulator of competition
      This was run by Ministry of International Trade and Industry (MITI)
      Created markets during the 1970s and 80s, and created conditions so that products could sell
      Attempted to create a comparative advantage in highly capital-intensive high-tech goods
             Controlled links between Japanese market and internal markets. USA tolerated this
                 protectionism, turning a blind eye.
             Stimulated domestic firms.
      State as doorman - decided which products and companies would be allowed into Japanese
             Foreigners forced to sell patents, licences and expertise - not just products - and were
                 given a loyalty payment for doing so - allowed Japanese to learn and copy Western
                 production methods
             Control of foreign direct investment
             Stringent „safety controls‟ and other blocking devices which excluded many foreign
      State as stimulator of domestic enterprise
             Debt finance dependent on Bank of Japan
             Investment in projects approved by MITI was almost risk-free
             Long-term view with commitment to the survival of the kairetsu
             All this debt finance meant Japanese economy was „over-leveraged‟
             Promotion of certain industries e.g. automobiles - in 1960 Japan produced 140,000
                 cars, by 1980 this was up to over 8,000,000
      Ruling elite or kanmin ittai - „todai-takkai- zaitai‟ („Tokyo, Government, Business‟)
      This is now seen as cronyism
      Turned into a legitimacy problem in the social system - led to suicides, weeping on TV etc.
      Talk of amakudari - literally „descension from heaven‟ - when referring to the governing elite,
       who carried a halo of authority
      There was great horizontal mobility between government and business leaders - 75% of
       bureaucrats end up in private industry, normally in their early 50s
      Now this social system is collapsing, the economic system based on it also begins to collapse

      Businessmen did not need to lobby and pressurise government as they were already part of it
      The state and market were not seen as rivals, but the state was believed to be the source of the
       market‟s success
      MITI, the Bank of Japan and the Ministry of Finance were highly integrated
      As the system weakens, they grow apart as self-interest turns into self-preservation
Stewart Morris                           SPS Essay Notes                               Page 106 of 110

The state as investor
Table 7: 1960-86 Government activity as % of GDP
                 CONSUMPTION            INVESTMENT           TRANSFERS
USA              18.7                   1.9                  12.3
UK               19.2                   4.2                  18.0
West Germany     17.3                   3.9                  19.2
France           14.3                   3.9                  24.4
Japan            8.8                    7.3                  10.3

      Major difference in consumption was defence spending
      Investment in large public service projects
      Household and private savings very high - Fiscal Investment and Loans programs
      Private savings seen as important to Japanese growth
      Now seen as one cause of downturn - Japanese individuals refuse to spend enough - Keynes
      Japanese savings not just „locked away‟ - went to Ministry of Finance for investment
      Belief that a degree of insecurity was needed to make people self-reliant - welfare provision
       was low
      Savings have recently increased, largely due to this insecurity (24% 1990, 28% 1998)
      At the same time, private-sector investment has fallen (26% 1990, 17% 1998)
      In contrast, USA had investment exceeding savings
      Policy-makers have lost influence over economic direction in all countries - Japan especially
      No amount of „pump-priming‟ seems to be working

The labour market
      Labour in Japan has a dualistic nature
            Lifetime employment practices in keiretsu with wage rises linked to age - accounts
                for around 25% of population
            Highly flexible SME sector - cushion against lifetime employment sector - would
                take the punishment in recession
      Cultural values:
            Enterprise as surrogate family
            Badges, rewards etc. for quality of labour - „Employee of the Month‟ and so on
            Cultural factors tend to be exaggerated
      „Invented tradition‟
            Lifetime employment very recent idea - 1950s
            Quality of work post-war was very poor - shoddy goods from small skilled sector
            High turnover of skilled workers previously had led to a need to offer lifetime
                employment - the sociologist Nakane and the keiretsu heads said that workers should
                be trained and offered jobs for life, and if they „sold their CV‟ they would be
                blacklisted nationally
            Norms of reciprocity and goodwill partially created by this sanction system - relates
                to power structure of Japanese society
      Independent union power was weak:
            Enterprise unions were established to outdo traditional industrial unions
            The state organised a national wage-bargaining session in the spring - the shunto
            Wage increases were based solely on inflation, not on productivity

Features of Japan - summary
      Concentration of power
      Close integration of credit and capital - tolerates greater levels of debt, guaranteed by state
      Continually reconstructed social consensus and hierarchy of power

Japan’s decline
      Immediate cause of recession was 1989-90 collapse of stockmarket
Stewart Morris                           SPS Essay Notes                             Page 107 of 110

       Household and financial sector‟s assets were depleted, especially banks
       Japan bought US bonds which defers impact of Japanese recession on America
       If these debts were recalled,, US government spending would need to be cut

Reasons for decline
       Japan would not accept conventional Western economic wisdom e.g. taxes increased in a
        period of falling demand
       Consumers refuse to spend on imports - are actively encouraged to buy Japanese goods
       Japan „dumps‟ goods abroad, impeding the development of foreign industries
       „Black hole of debt‟ which had been covered up - banking system is bankrupt

Suggested solutions
       Japan should increase its money supply
       Financial system requires restructuring and downsizing (as happened in UK and USA)
       Regulations in banking system need to be loosened - a „big bang‟
       Widespread public indignation that foreigners are dictating economic policy
       Krugman says that Japan does not understand the nature of its own problems
       Murphy claims Krugman is wrong - this same bureaucratic elite engineered the „miracle‟

       Banks are controlled directly by the Ministry of Finance - quasi-public
       Recent attempt to weed out very worst banks with bond issue
       „Social banking‟ - banks in Japan have been encouraged to lend to unprofitable industries
       Unit of analysis is not the individual firm but the economy as a whole
       Not so much political pressure - more about structure of system - balance of power different to
        other advanced economies

Response of bureaucracy
       Power struggle within bureaucracy - reluctant to respond to outside pressure, or elite would
        destroy own power base
       Governing class believes it still has the resources to deal with problems and that over time
        things will get better
       If elite were to accept the „Washington Consensus‟, they would lose power and control
       Merton talks of bureaucracy‟s „trained incapacity for innovation‟
       Liberal democratic governments want to change things - partly due to US pressure - but are
        fighting with massive vested interests

Main challenges
       Need to repair the situation without disturbing the structure of the economy
       USA has made a comeback with its own layers of subcontracting - e.g. computer
        programming and silicon chip manufacturing
       Venture capital model seems to have worked well in USA
       Japan is trying to transplant the American corporate culture, but it is not working
       Also trying to keep a niche in hardware and industrial software (e.g. controls for lifts)
       Social relations for production of money do not work as they do in the West
       There was an administrative right to credit
       In the West, only states may create money and only if certain conditions are met
       Japan had different parameters for creation of credit - e.g. if companies were unprofitable
       Claim is that Japanese elite has found it difficult to keep the „conveyor belt‟ moving
       Still generates a huge current account surplus, leading to constant upward pressure on the Yen
        and consequent deflationary effects
       Stockmarket has been shored up with public funds
       Some business have been allowed to go bust
       No internal credit ratings or proper accounting system - Japan has 1/10 of the number of
        accountants in Britain, and needs to employ foreign accountants
Stewart Morris                           SPS Essay Notes                               Page 108 of 110

Remaining problems
      Decades of over-capacity
      Strong social structure which is hard to dismantle
      Chronic insecurity - banks won‟t lend, people won‟t spend or borrow
      Pump-priming in this case is like „pushing on a piece of string‟ - Keynes
      Any downsizing would create even more insecurity
      USA is ambivalent due to trade issues

Inoguchi & Okimoto - The Political Economy of Japan

Internationalisation - Japan’s Adaptation
      Profound changes in industrial production, labour force allocation and export composition, but
       very limited change in imports - clear discrepancy
      Gary Saxonhouse: import structure not at all abnormal - based on comparative factor
       endowments such as small size of country, lack of natural resources, distance from other
       advanced economies
      Yoichi Shinkai - financial system changing under dual impact of deregulation and
      Huge amounts of capital at low interest rates (set by state) gave Japanese corporations a
       competitive advantage
      Edge is being eroded as regulatory controls are removed
      As companies gain greater access to money abroad, and banks find more outlets for their
       capital overseas, the high debt-to-equity ratio could fall significantly, leading to a loosening of
       traditional ties between banks and businesses
      Possible consequences are loss of long-term time horizon and increasing preoccupation with
       quarterly profits - but not to same extent as foreign firms due to culture of kaisha (large blue-
       chip corporations)
      Eventual convergence has been exaggerated

Political institutions and policymaking
      Japanese institutions also have external impact - looking at external-internal interplay
       differently from above
      Extraordinarily high perception of vulnerability vis-à-vis international environment - when
       faced with external shocks and national crises, public and private sectors work together for
       achievement of collective goals
      Japan allows foreign ownership in some industries (e.g. semiconductors) much more than
       others (e.g. processed lumber products)
      Okimoto gives political explanation - relationship between bureaucracies, Liberal Democratic
       Party, and LDP‟s grand coalition of support groups
      Degree of freedom from interest group pressures and political interference varies over time
       and by issue area - structure of Japanese government is far from monolithic - wide variations
       across institutions and policymaking coalitions with respect to levels of politicisation, interest
       group pressures, bureaucratic autonomy etc.

Sheridan - Governing the Japanese Economy

      Aim was to maximise growth while maintaining balance of payments
      Urgent need to replace outdated plant and equipment
      Limited amounts of foreign currency used to buy raw materials by government
      National Income-doubling plan of 1960 launched by MITI - government economic policies to
       ensure maximum utilitisation of the labour force - making better use of unemployed or
       underemployed labour in poor half of dual economic structure
      Of ten postwar national economic plans, this was the most effective in capturing the public
       imagination and was also the most successful
Stewart Morris                           SPS Essay Notes                               Page 109 of 110

      Called for average GDP growth of 9% per year for first three years
      Three activities particularly emphasised:
             Government takes responsibility for increase in social overhead capital facilities -
                 port and harbour facilities, rail transportation, public highways, industrial water
                 supply - and providing social security services
             Increase in education, training and research - financial and other assistance to
                 research and development in science and technology
             Elimination of dual structure of economy - reducing wage differentials between large
                 and small enterprises, agricultural and manufacturing industries, and different regions
                 - plan to mobilise workforce in agricultural sector to join industrial sector, and fierce
                 regional competition for government subsidies
      Plan was a definite success - 1955-67 GNP grew by three times in real terms, while
       international trade grew by a factor of five (with an increasing trade surplus) and full
       employment was achieved
      Problem about 1970 of growth having been achieved at expense of environment and quality of
      Also problem of permanent labour shortage

Arrighi - The Long Twentieth Century

Some background & views
      By 1970, 11 of the top 50 banks in the world were Japanese - by 1990, 22
      Their asset share of these top 50 also increased, even more dramatically - 18% in 1970, 48%
       in 1990
      Not a question of industrialisation as such - many places have industrialised in the period, few
       have seen similar income rises (only Japan and „Four Tigers‟ of Taiwan, South Korea, Hong
       Kong and Singapore
      Singapore and Hong Kong closely involved in creation of Asian Eurocurrency markets
      Taiwan has „specialised‟ in foreign currency reserves, holding $82.5 billion, the largest stock
       in the world
      South Korea has experienced an explosive growth in foreign direct investment $100 million
       p.a. in 1970s to $625 million in 1987
      Four Tigers surpassed both USA and Japan as leading investors in ASEAN countries
      1950s, US promoted separate integration of Japan and its former colonies within its own
       networks of trade, power and patronage
      1960s, US moved towards promoting mutual integration centred around Japan
      Explosive growth in Japanese exports not due to any aggressive neo-mercantilist stance by
       Japan - more due to US government need to cheapen supplies essential to its power pursuits
      O‟Connor - US „warfare-welfare‟ state in 1960s - increasing fiscal extravagance needed
       Japanese goods to support it

Japanese subcontracting system
      More decentralised structure of productive activities - primary subcontractors, secondary
       subcontractors etc. - direct control from top layer not always present
      In 1973 value added to finished vehicle by major car manufacturers was only 18%, as opposed
       to 43% for top three companies in US and 44% for Volkswagen and Benz in Germany
      In 1981 Toyota produced 3.22 million cars with 48,000 employees, while General Motors
       produced 4.62 million with 758,000 employees
      Subcontracting in Japan is far more stable - less renegotiation, less competition, similar goals
      Blurred relationship between large firms and subcontractors - often overlap in use of plant, ex-
       employees etc.
      Large trading companies - sogo shosha - supply materials to smaller firms and extend
       managerial, financial and marketing assistance to them
      Because of system, Japanese big business is better able to take advantage of and reproduce
       wage and other differentials in reward for effort between different segments of the labour
Stewart Morris                          SPS Essay Notes                            Page 110 of 110

      Finally, the subcontracting system has developed symbiotically with the abundant and highly
       competitive supply of labour in the East Asian region
      Contributed to take-off of regional economic miracle
      Contributed even more decisively to strength of Japanese subcontracting system, allowing
       Japan to strengthen its competitiveness in the world economy at large
      “Japan has done so well by specialising in the pursuit of profit in the East Asian region and
       letting the United States specialise in the pursuit of world power”

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