The science of political economy

The science that articulated this new society was political economy. The term itself had already been coined in the early seventeenth century, but it was only in the late eighteenth century that political economy came into its own [9]. Its founding text, The Wealth of Nations, was written in 1776 by Adam Smith. It is easy to discover Newton in this text.

Human beings as isolated bodies

Smith treats human beings as isolated bodies. They relate to one another not organically, but mechanically, through force and counter-force. The process is energized by scarcity, the gravitational force of the social universe, and is mediated through the mechanical functions of demand and supply – the earthly manifestations of Newton’s attraction and repulsion. To the naked eye, the interaction seems accidental, a matter of chance for better or worse. But in fact, there is logic, and indeed order, in the chaos.

Social order is created by the ‘invisible hand’

The hierarchical, dependent structure of the ancien régime is replaced here by the flat mechanism of inter-dependence. Social order, which previously had been imposed by God through the clergy and the royalty, is now created by the ‘invisible hand’ of competition. It is just like in nature. The anarchic interaction of natural bodies leads not to chaos but to equilibrium, and the same holds true in society. In the natural state of things, human beings constantly collide and act on each other through production and consumption. Like natural bodies, they, too, are numerous and relatively small, and therefore none can take over and swallow the others. There is no visible guidance, and none is called for. The system functions like clockwork, on its own. Indeed, it is outside intervention – particularly by monarchs and commercial monopolies – which upsets the spontaneous social order. And since this spontaneous order is the ultimate source of wealth, government intervention and other restrictions are necessarily harmful and should be minimized. The best system is one of laissez faire.

Checks and balances

And so Newton’s horizontal notion of force and counterforce became the substitute for vertical hierarchy – in the heavens as well as on earth. In France, Voltaire and Montesquieu found in his ideas a powerful alternative to the oppressive French monarchy. Benjamin Franklin and other tourists and exiles imported these ideas to the United States under the guise of ‘checks and balances’, which later reappeared as ‘countervailing powers’.[10]

calculus of pleasure and pain

During the nineteenth century, Newton’s notion of a ‘function’ invaded every science, natural and social. More and more phenomena were thought of in terms of a mutual interdependency between two otherwise distinct bodies. In neoclassical political economy, the key function became the relationship between price and quantity. The discipline, which emerged at the end of the nineteenth century and later consolidated into a new orthodoxy, anchored the relationship of price and quantity in Jeremy Bentham’s ‘calculus of pleasure and pain’, turning it into the main tool for understanding the fate of human societies.

Economic growth

It was a complete cosmological break. Instead of visible, hierarchical power, legitimized by wilful gods, there emerged a new ideology based on invisible, horizontal force, anchored in objective science.

The promise was huge. Socially, the new order undermined authoritarian rule. From now on, everyone – that is, every bourgeois citizen – could own property and be elected to public office. Materially, the new order helped break the uncompromising limits of nature. Wealth no longer depended on religious sanctity and princely robbery. It no longer hinged on redistribution. Instead, it was generated through a totally novel process: economic growth.

equilibrium, peace and mutual interest

For the first time in history, society did not have to cycle in a closed loop. The material envelope, previously defined by fixed resources, stationary technology and subsistence reproduction, was finally breached. Science and mechanized production created a new possibility: the expansion of the pie itself. Improving one’s lot no longer required conflict, war and violence – or, alternatively, compliance with Confucius’ ‘Third Way’ [???]. On the contrary, growth was most likely to occur in the context of equilibrium, peace and mutual interest.

Capital as agent of change

The principal agent of this revolutionary change was capital. It was in capital that the new sciences, the new techniques and the new political promise were jointly embedded. Capital was both the engine of growth and the vehicle of liberation.

But in order for capital to deliver, the political regime had to be entirely transformed. Divine right had to give way to natural right, sanctified ownership to private property, religion to rationalism, paternalism to individualism, obedience to self-interest and utility, hierarchical power to competition, absolutism to constitutionalism. It was a massive transition, and it could be realized – at least in theory – only through laissez faire. The new private economy had to be liberated from the shackles of the old politics. That was the mission of political economy.