Hegel and Wall St

I’m afraid I don’t have time to explain this in any detail. But Hegel is perhaps my favourite philosopher. I worked out I’d like to know more about Hegel when so many of the people who interested me seemed to somehow go back to Hegel. R.G. Collingwood is a good example, but lots of others. My own perhaps idiosyncratic, and from the point of view of someone who’s seriously studied philosophy amateur view is that the enlightenment gradually gathered steam through to Hume, who then awoke Kant from his dogmatic slumbers. There are lots of people – like Popper for instance and I suspect Hayek – for whom Kant is the apotheosis of the Enlightenment. But for me it’s Hegel. I could go on about why, and I’ve already said I don’t have time. But I don’t want to let this article, which I really like, get away without quoting it.

Anyway, the joke is that though I did a course on Hegel, with Richard Campbell who could reduce any passage, not matter how apparently impenetrable to something simple and compelling, I still find it almost impossible to read Hegel. I don’t know how much Hegel was joking when he said (or is he just reputed to have said) that he didn’t understand his own philosophy until he read it French translation, but I must say, I think that’s hilarious.

And so to the article  . . . Here is J. M. Bernstein expounding a ‘Hegelian’ approach to the issue of the day – the role of ‘selfishness’ in society in the light of the GFC.

. . . Hegel, of course, never directly wrote about Wall Street, but he was philosophically invested in the logic of market relations. Near the middle of the “Phenomenology of Spirit” (1807), he presents an argument that says, in effect: if Wall Street brokers and bankers understood themselves and their institutional world aright, they would not only accede to firm regulatory controls to govern their actions, but would enthusiastically welcome regulation. Hegel’s emphatic but paradoxical way of stating this is to say that if the free market individualist acts “in ¹ own self-interest, ² simply does not know what ² is doing, and if ² affirms that all men act in their own self-interest, ² merely asserts that all men are not really aware of what acting really amounts to.” For Hegel, the idea of unconditioned rational self-interest — of, say, acting solely on the motive of making a maximal profit — simply mistakes what human action is or could be, and is thus rationally unintelligible. Self-interested action, in the sense it used by contemporary brokers and bankers, is impossible. . . .

The discussion of market rationality occurs in a section of the “Phenomenology” called “Virtue and the way of the world.” Believing in the natural goodness of man, the virtuous self strives after moral self-perfection in opposition to the wicked self-interested practices of the marketplace, the so-called “way of the world.” Most of this section is dedicated to demonstrating how hollow and absurd is the idea of a “knight of virtue” — a fuzzy, liberal Don Quixote tramping around a modern world in which the free market is the central institution. Against the virtuous self’s “pompous talk about what is best for humanity and about the oppression of humanity, this incessant chatting about the sacrifice of the good,” the “way of the world” is easily victorious.

However, what Hegel’s probing account means to show is that the defender of holier-than-thou virtue and the self-interested Wall Street banker are making the same error from opposing points of view. Each supposes he has a true understanding of what naturally moves individuals to action. The knight of virtue thinks we are intrinsically good and that acting in the nasty, individualist, market world requires the sacrifice of natural goodness; the banker believes that only raw self-interest, the profit motive, ever leads to successful actions.

Both are wrong because, finally, it is not motives but actions that matter, and how those actions hang together to make a practical world. What makes the propounding of virtue illusory — just so much rhetoric — is that there is no world, no interlocking set of practices into which its actions could fit and have traction: propounding peace and love without practical or institutional engagement is delusion, not virtue. Conversely, what makes self-interested individuality effective is not its self-interested motives, but that there is an elaborate system of practices that supports, empowers, and gives enduring significance to the banker’s actions. Actions only succeed as parts of practices that can reproduce themselves over time. To will an action is to will a practical world in which actions of that kind can be satisfied — no corresponding world, no satisfaction. Hence the banker must have a world-interest as the counterpart to his self-interest or his actions would become as illusory as those of the knight of virtue. What bankers do, Hegel is urging, is satisfy a function within a complex system that gives their actions functional significance.

Actions are elements of practices, and practices give individual actions their meaning. Without the game of basketball, there are just balls flying around with no purpose. The rules of the game give the action of putting the ball through the net the meaning of scoring, where scoring is something one does for the sake of the team. A star player can forget all this and pursue personal glory, his private self-interest. But if that star — say, Kobe Bryant — forgets his team in the process, he may, in the short term, get rich, but the team will lose. Only by playing his role on the team, by having an L.A. Laker interest as well as a Kobe Bryant interest, can he succeed. I guess in this analogy, Phil Jackson has the role of “the regulator.” . . .

We know that nearly all the financial conditions that led to the economic crisis were the same in Canada as they were in the United States with a single, glaring exception: Canada did not deregulate its banks and financial sector, and, as a consequence, Canada avoided the worst of the economic crisis that continues to warp the infrastructure of American life. Nothing but fierce and smart government regulation can head off another American economic crisis in the future. This is not a matter of “balancing” the interests of free-market inventiveness against the need for stability; nor is it a matter of a clash between the ideology of the free-market versus the ideology of government control. Nor is it, even, a matter of a choice between neo-liberal economic theory and neo-Keynesian theory. Rather, as Hegel would have insisted, regulation is the force of reason needed to undo the concoctions of fantasy.

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