Jump to ContentJump to Main Navigation
Philosophy and the Historical Perspective$

Marcel van Ackeren

Print publication date: 2018

Print ISBN-13: 9780197266298

Published to British Academy Scholarship Online: January 2019

DOI: 10.5871/bacad/9780197266298.001.0001

Show Summary Details
Page of

PRINTED FROM BRITISH ACADEMY SCHOLARSHIP ONLINE (www.britishacademy.universitypressscholarship.com). (c) Copyright British Academy, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in BASO for personal use. Subscriber: null; date: 23 September 2021

History as an Interdisciplinary Dialogue: The Case of Philosophy and Economics

History as an Interdisciplinary Dialogue: The Case of Philosophy and Economics

(p.229) 15 History as an Interdisciplinary Dialogue: The Case of Philosophy and Economics
Philosophy and the Historical Perspective

Lisa Herzog

, Marcel van Ackeren, Lee Klein
British Academy

Abstract and Keywords

This chapter explores the history of philosophy as a resource for interdisciplinary research, drawing on the author’s work on Smith and Hegel for illustration. It briefly sketches some aspects of the relation between political philosophy and economics, and then describes a ‘post-Skinnerian’ approach to the history of philosophy that enters into a dialogue with historical thinkers, taking seriously their historical context but ultimately aiming at answering systematic questions. This approach allows us to garner the insights of thinkers who reflected in an integrated way about questions that today belong to different disciplines. It can help us to uncover implicit assumptions or theoretical gaps in contemporary approaches that are made invisible by the separation of research into different disciplinary fields. The chapter concludes by suggesting that the history of philosophy can inspire us to question the boundaries of disciplines and explore new avenues of research.

Keywords:   history of philosophy, interdisciplinary research, political philosophy, economics, Smith, Hegel, Skinner

15.1. Introduction

INTERDISCIPLINARY RESEARCH SEEMS TO BE the unruly stepchild of academia: everybody claims to love it, but many secretly sigh at the thought of it and ask why it has to be so difficult—and why everybody expects them to love it. For philosophers, it raises particularly touchy questions: so many topics once belonged to their field and then strayed into independent disciplines, leaving a discipline behind whose character, contours, and subject matter are highly contested. Expectations to undertake interdisciplinary research, raised by funding agencies or university administrations, often provoke fears: fears to have to justify one’s own existence; fears to have to ‘dumb down’ subtle conceptual frameworks to adapt them to empirical data; fears to have to give up what is most distinctive about philosophy. In underfunded universities and in an intellectual climate in which many doubt the value of the humanities, these fears are well founded. Can philosophy nonetheless make contributions to interdisciplinary efforts, and maybe even benefit from doing so?

In this chapter, I explore some of the ways in which the history of philosophy can be a resource for addressing interdisciplinary questions. I do so with regard to one specific area: the relation between political philosophy and economics.1 Similar arguments could probably be brought forward with regard to other areas, for example the relation between philosophy and biology, psychology, or theology. With regard to philosophy and economics, however, the case for interdisciplinary research that draws on their joint history is particularly strong. On the one hand, normative theories in philosophy, and especially theories about social justice, are often influenced by assumptions about the economic realm. On the other hand, many contemporary economic theories embody ideas by past thinkers that were once part of larger intellectual frameworks of political philosophy. The Great Financial Crisis has shattered the optimism of mainstream economics that (p.230) its abstract mathematical models fully grasp all that matters for understanding economic phenomena. It is, therefore, a good moment in time to return to the joint history of philosophy and economics.

To illustrate my claims, I draw on my 2013 study Inventing the Market: Smith, Hegel, and Political Theory. In it, I use the accounts of Adam Smith (1723–1790) and G. W. F. Hegel (1770–1831) as two paradigms for describing markets and their impact on society. Simplifying greatly, one can say that for Smith markets help to solve central problems of political philosophy: they pacify societies, create abundance, and reduce inequality and oppression. Influenced by a deistic world view, and against the background of a feudal society and the nascent Industrial Revolution, Smith argued for unleashing the emancipatory powers of markets. For Hegel, in contrast, writing half a century later, markets create problems: they disrupt the social order, generate poverty and inequality, and drive countries to practices of exploitative colonialism. Therefore, the centrifugal forces of markets should be counterbalanced by a strong state and an ethos of citizenship in which a higher form of freedom is realised. These two paradigms have had a powerful impact on the intellectual history of the Western world, in ways that precede the study of empirical data because decisions to address certain questions, by drawing on certain data, are themselves influenced by the choice of paradigm. Traces of the different evaluations of markets that these paradigms carry can be found up to this day, for example in different attitudes towards one’s occupation as a ‘job’ or as a Beruf (vocation) (Herzog 2013: ch. 4). But in many cases, Smith’s and Hegel’s rich and subtle accounts have lived on in crude, simplified forms. Returning to their writings is an opportunity to return to more complex, but also more ambivalent, pictures of markets.

To be sure, this is only one among many ways in which interdisciplinary research can be conducted. It is also only one among many reasons why philosophers might want to turn to the history of their discipline. Nonetheless, it is a distinctive and important one. Entering into a dialogue with thinkers who drew the boundaries of disciplines in different ways helps us to unearth assumptions at the roots of contemporary theories, both in economics and in philosophy. It also challenges our current perception of their disciplinary boundaries, and suggests new ways of carving out the questions we address.

In Section 15.2, I briefly sketch some of the ways in which economics and philosophy are related. I then explore the way in which a dialogue with historical thinkers can deepen our understanding of these relations and generate new insights. I conclude with some reflections on how the history of philosophy can help us to challenge the boundaries of disciplines we currently draw, and open up new lines of enquiry.

15.2. Economics and Philosophy: Shared Roots, Shared Problems

Economics, like many other disciplines, has its roots in philosophy. Aristotle’s reflections on money (1959: I, 8–11), for example, have reverberated through the (p.231) history of Western philosophy. Medieval and early modern scholars have explored theories of property and extensively discussed the question of what makes prices just or unjust. It was in the 18th century, however, that reflections on economic phenomena became more widespread and developed into a coherent discourse. Adam Smith is often cited as the ‘father’ of economics as an independent discipline, but he could already draw on substantial theoretical work by predecessors. Smith did not want to separate economics from the social sciences and from moral philosophy: he saw it as part of a ‘system of social science’, as Andrew Skinner described it (1996). It was an unfortunate accident that Smith’s economic theories were perceived as separate from his philosophical writings—but while this was not part of his intention, it conformed to the general trend of disciplinary differentiation. In the early 19th century, David Ricardo (1772–1823) started the project of the mathematical formalisation of economic phenomena. Since then, mathematical models have been essential to the character and self-conception of economics. It was especially after World War II, in the context of the Cold War and the defence of the free market in the Western world, that the ‘rational choice’ approach became the signature feature of economics (see e.g. Amadae 2003). Roughly since the 1980s, ‘behavioural economics’ developed as a sub-branch that reintroduced deviations from the rationality of ‘economic man’, such as loss aversion, time-inconsistent behaviour, or attention to social norms (for an overview, see e.g. Camerer et al. 2003). It continued to do so, however, by mathematically modelling human behaviour and human interaction.

The separation of economics from philosophy meant that the description and analysis of key elements of the social realm now belonged to a different discipline: of work, of the production and distribution of goods and services, of money and trade, of poverty and riches. In political philosophy, how central these elements are considered to be depends on how one understands the field’s character. Ever since its beginnings in antiquity, political philosophy has moved between the poles of, on the one hand, the analysis of abstract principles of justice and the ideal social order, and, on the other, discussions and criticisms of concrete social phenomena. Different thinkers occupy different positions on this spectrum, and the closer they are to the more concrete pole, the more interested they tend to be in economic questions. If theories are to be ‘action-guiding’, after all, they need to take into account the social reality to which they are supposed to apply. Economic phenomena are a prime candidate for philosophical criticism: many injustices, dysfunctionalities, or other deviations from what one would consider a good society have to do with the economy. Thus, theories that aim at criticising injustices, whether from a ‘non-ideal, ‘critical, ‘feminist’, or ‘post-colonial’ perspective, do well to take seriously the insights of economics. For diagnosing injustices as well as for proposing remedies, this suggests that it is important to read economic analyses or to cooperate with economists—not least in order to avoid the charge of utopianism.

One might object, however, that this problem only concerns the ‘applied’ end of the spectrum, and that the core of political philosophy lies in the more abstract (p.232) end: in the formulation and defence of principles of justice and the description of an ideal society. Economic phenomena might seem too mundane to matter for these purposes. But political philosophy, even of the most abstract kind, is still political philosophy, and as such it deals with the reality of human beings living together in human societies. Economic questions are not just an add-on to this reality—they are part and parcel of it. Human beings are social animals who cooperate to satisfy their physical needs. Ever since the days of the hunter-gatherer society, they have divided work between them and benefited from the advantages of specialisation. Since then, economic questions have been intertwined with questions about privilege and power. It is therefore questionable whether we can completely separate intuitions about justice and about an ideal society from intuitions about economic structures. What is more likely is that we are influenced by deep-seated assumptions about the economic realm, and that these have an influence on how we conceive of an ideally just society. And it is also likely that these assumptions are in turn influenced by the economic reality we experience: by a reality in which work is done by slaves or by free people, in which products are locally produced or internationally traded, and in which there is economic growth or stagnation.

Since Rawls’ path-breaking work—but arguably also much earlier, despite lacking the label—political philosophers have used the method of ‘reflective equilibrium’, that is, of bringing judgements about concrete cases and abstract principles into ‘one coherent scheme’, by ‘dropping and revising some, by reformulating and expanding others’ (Rawls 1975: 8). As Rawls himself notes, these judgements come from ‘all levels of generality’, and ‘there are no judgments on any level of generality that are in principle immune to revision’ (ibid.; see e.g. Thacher 2006: 1647ff. for a discussion). It can be doubted whether our reflective equilibria can exclude judgements about the economic realm. Practical experiences, empirical data about the economy, and theoretical accounts—concepts, models, and pictures, in a very literal sense, of economic phenomena—are likely to influence our judgements about what a just society would be. Pieces of knowledge of economic theories and economic realities, however patchy, belong to the repertoire of ideas, assumptions, and judgements from which we build our theories. John Maynard Keynes once warned that ‘practical men who believe themselves to be quite exempt from any intellectual influence’ can end up as the ‘slaves of some defunct economist’ (1936: 383f.). Political theorists need to be aware of this danger as well. One way of confronting it is to make one’s assumption about the economic realm as explicit as possible. As I will argue in Section 15.3, delving into the history of the two disciplines can help one to do so.

Thus, political philosophy needs economics, the more so the more it addresses ‘applied’ questions, but arguably also at a more abstract level. On the other hand, economics needs philosophy. But while the former claim is acknowledged by at least some philosophers, the latter is disputed by many economists. Many understand themselves as scientists whose methods resemble, more or less, the methods of the natural sciences, even if it may be harder to perform experiments. But the (p.233) methodology of economics raises numerous thorny questions, and it has been in philosophy—the ‘philosophy of economics’, as the field has called itself—that these questions have been discussed (for an overview, see e.g. Hausman 2013). This is not the place to rehearse these discussions, so let me just briefly mention two issues. One is the question of how to make sure that the parameters used in economics models and in the specification of empirical studies correspond to the underlying social reality. As Spiegler has recently argued in a remarkable study (2015), this question cannot be answered by these methods themselves; it requires preceding empirical explorations that draw on qualitative insights. A second issue—which also brings in the historical dimension—is the ‘self-interpreting’ (Taylor 1985) nature of human beings. Human beings can adapt their behaviour to theories, making them self-fulfilling or self-undermining. This raises questions about the possibility of prediction in the social sciences, and about the usefulness of extrapolations from the past.

So far, so good, one might say: economics needs ‘philosophy of economics’, as a subfield of the philosophy of science. But does it also need political philosophy? One way of asking this question is to ask whether economics can be a value-free social science. This question has been hotly debated, and there are good reasons to doubt that the answer can be positive (for critical discussions, see e.g. Mongin 2006, or Hausman & McPherson 2006, especially 211ff.). If economics is not value free, one cannot simply ‘realise’ principles derived from political philosophy by drawing on value-free ‘ends-means statements’ taken from economic theories. Rather, one needs a more integrated debate in which the value judgements implicit in economic theories are made explicit. Some of them may seem rather harmless at first glance; for example, they may describe certain ideals of consistency in reasoning and decision-making, or include the assumption that ‘having more’ is better, ceteris paribus, than ‘having less’. But such value judgements are often built into economic theories at such a fundamental level that they can influence the outlook of economists even in places where it is all but obvious that they are appropriate, for example when ‘having more’ is applied to carbon-intense economic growth. To be sure, one can also build economic models and theories that incorporate different value judgements—but this requires an acknowledgement of the judgements made, and a willingness to defend them against competing judgements. With this, one has already entered the field of political philosophy.

Thus, despite the fact that economics and political philosophy have developed into two rather different enterprises, there are good reasons for both to retain an interest in the other. This, in fact, is a weak way of putting the point; more radical critics would say that turning their back on the other discipline, respectively, has been fatal for both philosophy and economics. Thus, political philosophy that does not deal with economic questions is criticised, especially but not exclusively from Marxist corners, as a bloodless abstraction that fails to capture essential parts of the social reality and therefore risks ending up in promoting falsehoods. Economic theorising that forgets its roots in philosophy and its normative content (p.234) is criticised, especially from heterodox corners, as an ideology that masks unequal power relations and serves as a smokescreen for exploitative economic relations. It is not too difficult to find instances in both disciplines in which these charges seem justified. But there is also a growing awareness of these problems in both camps, and of the fruitfulness of interdisciplinary approaches. In Section 15.3, I argue that exploring the history of both disciplines offers exciting opportunities for interdisciplinary encounters, and can deepen our understanding of these disciplines.

15.3. Why Turn to the History of Philosophy and Economics?

The reading of historical texts can be understood,2 in the words of Mark Philp, as a ‘dialogue across historical periods’ (2008: 144f.). This dialogue is not too different, in principle, from dialogues with contemporary texts and their authors. But if one party is present only in her writings, unable to defend herself against misunderstandings or unjust accusations, we need to take particular caution. If we treat historical authors as if they were contemporaries, we risk projecting our own ideas and prejudices on them, foregoing the opportunity to learn from them. Quentin Skinner’s famous 1969 essay is a landmark in the fight against a naive, simplistic reading of historical texts that pulls them away from their contexts and disregards their intentions (1969, see also 2002). Skinner exhorted theorists to ‘learn to do [their] own thinking for [themselves]’ (1969: 52) when they want to address contemporary issues, and to take the importance of contexts seriously when they read historical texts. The Cambridge school that followed Skinner’s approach has contributed greatly to deepening our understanding of how the thinkers of the Western canon were embedded in the political contexts of their time.

The achievements of the Cambridge school, however, do not preclude the possibility of other approaches to historical thinkers. On the contrary: by providing us with clearer and more fine-grained pictures of thinkers in their context, they make it easier to enter into a dialogue with them that aims, in the final analysis, at more than purely historical insights. One can think of a purely ‘historical’ ‘Skinnerian’ reading as one end of a spectrum that moves towards more ‘systematic’ readings. At the other end of this spectrum, there are ‘non-Skinnerian’ approaches that do not care at all about the voice of the historical author, either because they naively assume that there are no obstacles to our understanding of their ideas, or because they consciously give up the search for ‘original meaning’ (Rorty 1982: 151). This far end of the spectrum has rightly been criticised by more historically oriented authors as using the historical texts as mere ‘sounding-board[s] for current disciplinary preoccupations’ (Tribe 2008: 259).

But this does not mean that one could not both listen to the voice of the historical author and connect their insights to contemporary questions—in a (p.235) ‘post-Skinnerian’ approach (Herzog 2013: 11). This requires paying attention to similarities as well as differences between the ideas, arguments, and concepts brought forward by the historical authors and our own ones. To be sure, to do so one has to assume that there is some shared conceptual ground between the historical authors and ourselves (see also Bevir 1994). But such ground does indeed exist, as questions about social order, about justice, or about how to define, justify, and delineate political power have occupied political thinkers with otherwise very different world views, who lived in very different circumstances than those under which we ask these questions today.

This dialogical approach is ‘instrumental’ in the sense that it does not read historical authors exclusively for their own sake. But this is an ‘instrumentalism’ that exists in any collective endeavour, whether historical or contemporary, in which the ultimate aim is to deepen one’s understanding together with others. Against the objection of ‘instrumentalism’ one can raise the counter-objection that by reading historical authors without any interest in systematic questions, one denies them the status as thinkers worth taking seriously with regard to systematic issues and questions. Putting them on a pedestal and denying any tensions and weaknesses in their arguments would mean not treating them as co-equal partners in conversation. This, by the way, is also how many of the historical authors we read today related to other, earlier authors, for example thinkers from Greek and Roman antiquity.

Such a dialogue across the periods can also be extremely fruitful for interdisciplinary research, such as research at the intersection of political philosophy and economics. The most straightforward reason is that it allows us to unlock the insights of thinkers such as Smith and Hegel, who aimed at an integrated ‘system’ in which philosophy and economics both had their place. While we may reject their ambitions as megalomaniacal, we can still benefit from the fact that these ambitions created incentives to think about the relation between different fields.3

Taking the scholarship on the historical context of thinkers like Smith and Hegel seriously means that we can draw on a number of contrasts for generating insights both about their theories and about our own. Economic historiography provides us with sufficient information to get some sense of the historical realities to which their theories referred. We can compare these realities to today’s realities, and their theories to the theories and conceptual tools we currently use for capturing today’s realities. Often, there are continuities between earlier and contemporary theories, but this does not mean that the realities that these theories intend to describe have remained the same. And even today’s realities may have been influenced by earlier theories, because, as mentioned, human beings are ‘self-interpreting animals’ and our economic realities are at least in part socially constructed.

(p.236) While it may sometimes be possible to pursue systematic pairwise comparisons between historical theories, historical realities, contemporary theories, and contemporary realities, I do not mean to suggest that we should attempt to proceed in a mechanical way. There is no standard recipe for how to generate insights in such cross-temporal, cross-disciplinary dialogues. Some of the questions we intend to address to historical texts may turn out to be unanswerable or uninteresting. But we may also discover new questions, or new ways of addressing certain topics. We may discover topics that historical authors covered, and that have fallen into the cracks between the disciplines. Or we may discover that our contemporary accounts still follow the trodden paths opened up by earlier pioneers, but which may fail to grasp contemporary phenomena because the realities have changed. Thus, we should embark on this journey in the spirit of a healthy pragmatism, open to whatever insights we might end up gaining (cf., similarly, van Ackeren 2014). The more explicit we are about our own questions and assumptions and about the ways in which we arrive at our conclusions, the better—but sometimes we may not even be able to achieve full clarity about how exactly a historical text has helped us to better understand a systematic issue.

Let me illustrate this approach by providing a few brief examples from my work on Smith and Hegel. As mentioned, their accounts have contributed to shaping two paradigms of how to think about markets and their role in society. As such, their texts can help us to understand the pervasiveness of certain assumptions in today’s economic and philosophical theories that are not at all self-evident—and many of these assumptions have to do with the ways in which economic and philosophical questions continue to be intertwined, even though the two disciplines have parted ways.

One such assumption concerns the question of how much morality or virtue can be expected from market participants. Many economics textbooks quote only a handful of passages from Smith’s opus magnum, An Inquiry into the Nature and Causes of the Wealth of Nations. One of them is the phrase about ‘the butcher, the brewer, or the baker’ whose ‘regard to their own interest’, rather than their ‘benevolence’, provides us with our dinner (Smith 1976a: I.II.2). This quote, together with the metaphor of the ‘invisible hand’ (Smith 1976a: IV.II.9, see also Smith 1976b: IV.I.10), developed a life of their own, separated not only from Smith’s The Theory of Moral Sentiments, but also from their immediate contexts in the Wealth of Nations. They colluded to create a picture of markets as based exclusively on self-interested behaviour, and as not requiring any obedience to moral norms. But, at the risk of inconsistency but without thematising it, the same models of markets also assume that individuals will obey legal norms without any problems—otherwise, the idea, pivotal for many economic models, that market participants respect property rights and that markets can be legally regulated, does not make any sense. Later, this assumption was loosened by economists, notably Gary Becker, who modelled human behaviour in a way that treats even legal norms as just another source of costs. This led to a field of research on its own, the ‘law and economics’ approach. But it did not incite economists working in (p.237) other fields to ask whether the effects of markets would continue to be beneficial if an increasing number of market participants did not obey legal, let alone moral, norms whenever the chances of discovery were sufficiently low. Smith himself never assumed that individuals would drop all moral concerns once they entered the market, and he also seems to have expected them to obey legal norms, not because of utility calculations but because many laws express basic principles of justice that individuals have good reasons to accept (see e.g. Smith 1976b: II.II.1–2). His reflections on the ‘lower prudence’ of market participants show that he cared deeply about questions of morality in market societies (Smith 1976b: VI.I). The answer he came up with is a kind of virtue that is by no means the highest of all virtues, but that can be expected from everyone and that helps individuals to achieve economic security, not at the costs of others, but together with them (see also Herzog 2011; 2016: 54f.). Hegel added another argument that is developed only rudimentarily in Smith: in his account of the estates and corporations, he theorises the social spaces in which individuals are socialised and develop their economic preferences (Hegel 1942: §§202–7, §§250–6; for a discussion, see Herzog 2015). Today, questions about the social mores produced by markets and their moral qualities are raised only rarely, mostly by sociologists. But Smith’s whole defence of markets—of which modern economists are eager heirs—depends on his assumptions about the character traits of market participants.

Political philosophy embodies similarly unquestioned assumptions. For example, one of the reasons why Smith rejected Rousseau’s condemnation of modern society, despite great respect and sympathy for his work, is the fact that not even the poorest members of society would profit from a return to pre-modern times—everyone would be worse off. Similar intuitions stand behind Rawls’ appeal to the ‘difference principle’ in his A Theory of Justice, which holds that social and economic inequalities must be to the greatest benefit of the least advantaged members of society (1971: 302). This idea has often been understood as a defence of free markets compared to planned economies: a free market economy leads to a greater pie, which means that at least in theory, everyone can be better off than in a scenario with a smaller pie. This suggests, however, that an assumption about economic growth is central to the intuition behind this argument—and it is one that we have inherited from Smith, in whose account it is the growth of the economy, made possible by free markets, that solves numerous problems that marred feudal societies. But today we have good reasons to question this reliance on growth—not only because growth rates might slow down, but also because climate change forces us to rethink the permissibility of economic growth as we know it, at least for societies that have already achieve a certain standard of living. In a post-growth scenario, the institutional frameworks we have become used to may not be able to achieve the normative goals they were supposed to fulfil in Smith’s and Hegel’s visions (see also Herzog 2016 for a discussion).

Last but not least, what the history of philosophy can also teach us is to pay attention to gaps or blind spots in our current ways of thinking about (p.238) phenomena. One example is the almost complete neglect of discussions of large organisations in contemporary political philosophy. Smith, with his focus on free markets rather than organisations, has here set the tone for much later theorising. He was aware that in many real markets, organisations—for example the East India Company—play a major role and create normative challenges of their own. He was, in fact, extremely critical of them (see Smith 1976a: V.I.7ff.), and probably hoped that they would be crushed by the forces of market competition once their unjustified privileges were abolished. This line of thought, however, was taken up very rarely compared to the reception of his radiant picture of free markets. Hegel’s theory of the estates and the corporations was similarly neglected compared to other aspects of his account, despite the fact that they fulfil a crucial function in his system: as the place in which individuals are socialised into larger groups beyond the family, they form the bridge between the atomistic individualism that reigns in the ‘system of needs’ (Hegel 1942: §§189–201) and the harmonious unity of the state (Hegel 1942: §§257–340). They are the spaces in which individuals learn to look beyond their own interest to take care of others, and to settle internal disputes through mechanisms of collective decision-making. As such, they prepare individuals for the role of political citizenship in the state.

Contemporary theories of justice often assume, implicitly or explicitly, a dichotomy between ‘the market’ and ‘the state’, following conceptual patterns that we have inherited from the past, but that may not adequately reflect today’s situation. For this dichotomy de-emphasises the various social structures and institutions that lie on the meso-level: corporations, associations, and various other organisations. They are the social spheres in which individuals experience ‘the market’ and ‘the state’: as employees of business organisations or public administrations, as customers or clients, or as citizens who have to deal with state bureaucracy. The number of instances in which we deal directly with other individuals who are independent producers or providers of services is overshadowed by the number of instances in which we deal with those who are members of organisations and act from within their organisational roles. Corporations are among the largest and most powerful institutions of our societies; in a globalised world, their influence often extends beyond the boundaries of nation states. Economists have provided some explanations for why organisations—or ‘hierarchies’, as they call them—emerge in free markets: as Coase has famously argued (1937), the costs of concluding market transactions can be so high that it is more efficient to integrate transactions into a firm. The ‘theory of the firm’ has extended this line of argument in a number of ways (see e.g. Alchian & Demsetz 1972; Williamson 1973; 1975; Jensen & Meckling 1976). But it has barely considered the political dimensions of corporations: their legal construction, their internal power relations, their influence on democratic decision-making, or the ways in which they can impose risks on others. Political theorists have started to explore the nature of corporations (Ciepley 2013), the moral challenges internal to organisations (Herzog forthcoming), and the role organisations should play in a just society (see e.g. Miller 2010). (p.239) This is an area in which reading historical texts in their context, and comparing the historical reality to which they referred to today’s reality, can alert us to the mismatch between current theories and current realities: we might be using conceptual schemes that are not up to date for describing the globalised economy of the 21st century.

15.4. Challenging the Boundaries between the Disciplines

In this chapter, I have argued that the history of philosophy can provide valuable insights for interdisciplinary research. One final way in which it can do so should not be left unmentioned: it can challenge our very conception of different disciplines and their boundaries. The mainstream of Anglophone political philosophy of recent decades has focused on rather abstract principles of justice. The social sciences, in contrast, were understood as providing factual insights about the social world. With normative premises from philosophy and empirical premises from the social sciences, action-guiding claims can be derived—or so the story went.

My brief reflections on the relation between economics and political philosophy have hinted at some reasons why one might want to doubt this model and the idea that the two disciplines can and should be pursued separately. In today’s academic environment, interdisciplinary work that crosses the boundary between them is often considered an afterthought, something to be done alongside ‘real’ disciplinary endeavours. But the history of the disciplines shows that the way in which their boundaries are carved out has changed considerably over time. It would require quite some Whiggishness to think that today’s disciplinary boundaries are the best of all possible boundaries. Instead, listening to the arguments, implicit and explicit, by past thinkers about how they saw these boundaries can be an invitation to reconsider today’s disciplinary self-understanding. This does not mean that we should aspire to returning to the grandiose ‘systems’ of the past. But we might consider integrating some discourses, more than is currently the case, if the arguments for doing so stand up to scrutiny. Many social issues and problems do not follow the cut-off lines between disciplines or theoretical approaches. In most real-life phenomena, small scale or large scale, ‘political’ and ‘economic’ factors are narrowly intertwined. If we want to address them, we need to draw on insights, arguments, and methods from various fields.

While a full defence of new ways of defining the relationship between economics and political philosophy lies beyond the scope of this chapter, let me conclude by sketching the contours of a form of theorising that takes Smith’s and Hegel’s reasons for integrating philosophical and economic thought seriously. One might call it ‘less ideal theorising’: an approach that is closer to the social sciences than philosophers have often been in recent years, but with a clear and confident philosophical perspective that accepts the unavoidability of normative commitments. It does not claim to replace other forms of theorising, but to (p.240) supplement them. Instead of developing the principles of a well-ordered society under ideal circumstances, as the Rawlsian ‘ideal theory’ does (Rawls 1971: 243ff.), it focuses on the non-ideal circumstances of today’s world and asks how improvements might be achieved.4 It takes seriously the complexities of social and economic issues—which make the ‘realisation’ of a seemingly simple principle, such as Rawls’ ‘difference principle’, a dauntingly complex task—and integrates insights from economics, sociology, and psychology. It sees human beings not as abstract entities who follow their interests like particles that obey the laws of gravity, but as socially embedded agents with a plethora of motives, including moral motives. By widening its focus from pure ‘ideal theory’, and by engaging more closely with real-life issues and those who explore them empirically, political philosophers can gain new and innovative insights which, in the end, may even lead to better ‘ideal theory’. The history of philosophy can be an inspiration for experimenting with different kinds of theorising, drawing the boundaries of disciplines in different ways. This is one among many reasons why it continues to matter for contemporary theorising.


Bibliography references:

Alchian, A. A. & Demsetz, H. (1972), ‘Production, Information Costs, and Economic Organization’, American Economic Review, 62: 777–95.

Amadae, S. M. (2003), Rationalizing Capitalist Democracy: The Cold War Origins of Rational Choice Liberalism (Chicago IL, University of Chicago Press).

Aristotle (1959), Politics, trans. H. Rackham (London, Heinemann).

Bevir, M. (1994), ‘Are there Perennial Problems in Political Theory?’, Political Studies, 42: 662–75.

Camerer, C. F., Loewenstein, G., & Rabin, M. (eds) (2003), Advances in Behavioral Economics (Princeton NJ, Princeton University Press).

(p.241) Ciepley, D. (2013), ‘Beyond Public and Private: Toward a Political Theory of the Corporation’, American Political Science Review, 107/1: 139–58.

Coase, R. H. (1937), ‘The Nature of the Firm’, Economica, ns 4/16: 386–405.

Hausman, D. M. (2013), ‘Philosophy of Economics’, in E. N. Zalta (ed.), The Stanford Encyclopedia of Philosophy, http://plato.stanford.edu/archives/win2013/entries/economics/ (accessed 13 October 2017).

Hausman, D. M. & McPherson, M. S. (2006), Economic Analysis, Moral Philosophy, and Public Policy (New York, Cambridge University Press).

Hegel, G. W. F. (1942) [1820–1] Philosophy of Right, trans. with notes T. M. Knox (Oxford, Clarendon Press).

Herzog, L. (2011), ‘Higher and Lower Virtues in Commercial Society: Adam Smith and Motivation Crowding Out’, Politics, Philosophy and Economics, 10/4: 370–95.

Herzog, L. (2013), Inventing the Market: Smith, Hegel, and Political Theory (Oxford, Oxford University Press).

Herzog, L. (2015), ‘Two Ways of Taming the Market: Why Hegel Needs the Police and the Corporations’, in A. Buchwalter (ed.), Hegel and Capitalism (New York, State University of New York Press), 147–62.

Herzog, L. (2016), ‘The Normative Stakes of Economic Growth: Why Adam Smith Does Not Rely on “Trickle Down”’, Journal of Politics, 78/1: 50–62.

Herzog, L. (forthcoming), Reclaiming the System: Transformational Agency in Organizations.

Jensen, M. & Meckling, W. (1976), ‘Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure’, Journal of Financial Economics, 3: 305–50.

Keynes, J. M. (1936), The General Theory of Employment, Interest and Money (London, Macmillan).

Miller, S. (2010), The Moral Foundations of Social Institutions: A Philosophical Study (New York, Cambridge University Press).

Mongin, P. (2006), ‘Value Judgments and Value Neutrality in Economics’, Economica, 73: 257–86.

Philp, M. (2008), ‘Political Theory and History’, in M. Stears & D. Leopold (eds), Political Theory: Methods and Approaches (Oxford, Oxford University Press), 128–49.

Rawls, J. (1971), A Theory of Justice (Cambridge MA, Belknap Press of Harvard University Press).

Rawls, J. (1975), ‘The Independence of Moral Theory’, Proceedings and Addresses of the American Philosophical Association, 48: 5–22.

Rorty, R. (1982), Consequences of Pragmatism: Essays 1972–1980 (Minneapolis MN, University of Minneapolis Press).

Skinner, A. (1996), A System of Social Science: Papers Relating to Adam Smith (Oxford, Clarendon Press).

Skinner, Q. (1969), ‘Meaning and Understanding in the History of Ideas’, History and Theory, 8 (1): 3–53.

Skinner, Q. (2002), Visions of Politics, vol. 1: Regarding Method (Cambridge, Cambridge University Press).

Smith, A. (1976a) [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, 2 vols, ed. R. H. Campbell & A. S. Skinner; textual ed. W. B. Todd (Oxford, Clarendon Press; New York, Oxford University Press).

Smith, A. (1976b) [1759–90], The Theory of Moral Sentiments, ed. D. D. Raphael & A. L. Macfie (Oxford, Clarendon Press; New York, Oxford University Press).

(p.242) Spiegler, P. (2015), Behind the Model: A Constructive Critique of Economic Modeling (Cambridge, Cambridge University Press).

Taylor, C. (1985), ‘Self-Interpreting Animals’, in Philosophical Papers, vol. 1: Human Agency and Language (Cambridge, Cambridge University Press), 45–76.

Thacher, D. (2006), ‘The Normative Case Study’, American Journal of Sociology, 111/6: 1631–76.

Tribe, K. (2008), ‘Review of Fricke/Schütt (eds), Adam Smith als Moralphilosoph’, Adam Smith Review, 4: 258–62.

van Ackeren, M. (2014), ‘Was Bedeutet der Aktuellen Philosophie ihre Geschichte? Positionen—Probleme—Pragmatismus’, Zeitschrift für Philosophische Forschung, 68/3: 305–27.

Williamson, O. (1973), ‘Markets and Hierarchies: Some Elementary Considerations’, American Economic Review, 63: 316–25.

Williamson, O. (1975), Markets and Hierarchies: Analysis and Antitrust Implications (New York, Free Press).


(1) I use the term ‘political philosophy’ in a broad sense, without distinguishing it from ‘political theory’.

(2) See also Herzog 2013: 11–14. The next paragraphs follow the arguments presented there.

(3) We can also do so without having to endorse the grander metaphysical claims that underlie these ‘systems’, but this means that we have to pay particular attention to places in which these metaphysical claims shine through otherwise metaphysically unassuming arguments.

(4) In fact, Smith himself offers some insightful remarks about the nature of what he calls the ‘spirit of system’ (Smith 1976b: VI.II.2.15), and which is, arguably, similar to ‘ideal theory’. He describes the seduction of the imagination through the beauty of some ‘appearance of utility’ applied to ‘systems of civil government’ (Smith 1976b: IV.I.11). As he puts it: ‘The man of system … seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it’ (Smith 1976b: VI.II.2.17). This passage has sometimes been read as expressing a conservative, ‘laissez-faire’ strand in Smith’s thought. But Smith’s statement here is a methodological one, about how to bring about political reform—it is not a substantive statement about the ideals towards which one should strive. The aim of political leaders, for him, should be ‘to promote the happiness of those who live under them’ (Smith 1976b: IV.I.11). A truly virtuous politician will therefore resist the ‘spirit of system,’ and ‘[w]hen he cannot establish the right, he will not disdain to ameliorate the wrong; but like Solon, when he cannot establish the best system of laws, he will endeavour to establish the best that the people can bear’ (Smith 1976b: VI.II.2.16, cf. also Smith 1976a: IV.V.Digr.53).