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Organization
DOI: 10.1177/1350508404039853
2004; 11; 177
Organization
Fernando Leal Carretero
Book Review
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Book Review
War and Economic Theory: Ignoring the Evidence
Max Weber und Rational Choice, Zenonas Norkus. Marburg: Metropolis
Verlag, 2001. 576 pp.
In his much quoted but seldom properly read Structure of Scientific
Revolu-tions, Thomas S. Kuhn tried to teach us how an increasingly well-established
and widely accepted general theory of movement in the shape of Newton’s mechanics was separated from the proliferation of special or partial theories for all the other physical phenomena Newton had left unaccounted for: light and colour, electricity and magnetism, heat and fluids, combustion and mixtures. The last three centuries and a half have witnessed a growing ‘consilience’ that led through optics, chemistry, thermodynamics and Max-well’s equations all the way to relativity, quantum mechanics and the not-yet completed final synthesis of all physical phenomena into one Great Unified Theory or one Theory of Everything. It has always astonished me that, so far as I can see, no historian of ideas seems to have noticed the curious parallel in the ‘social sciences’. For after economics was finally established as the first general theory of exchange and wealth at the end of the 18th century, all sorts of smaller and more chaotic ‘theories’ have been devised again and again to try to account for everything human that does not seem to be included in economics.
Although the undeniable imperfection of these other ‘theories’, restlessly proliferating under the covering labels of psychology, anthropology and sociology—not to speak of the much older disciplines of history, law, ethics and politics—may easily account for the neglect of the historical parallel, it is a fact that the ‘social sciences’ have always tried to define themselves in relation to the increasing perfection and prestige of economics. There has never been an easy relationship here. This uneasiness is especially clear in the case of Max Weber.
A voracious and precocious reader of history and philosophy books, Max Weber was trained as a lawyer, but like many other lawyers before and after him, he was early on attracted to the study of economic phenomena. Yet he was born in a country where not only was it exceedingly difficult to get a good education in economic theory, but practically all chairs in economics were in the hands of men (yes, men) who scorned economic theory and were convinced they knew better. Germany was indeed a country where:
. . . economics [had] disappeared from the universities, and its place was taken, occasionally even under its name, by the study of the economic aspects of political
Volume 11(1): 177–184 ISSN 1350–5084 Copyright © 2004 SAGE (London, Thousand Oaks, CA and New Delhi)
science, an encyclopaedic collection of knowledge from various subjects. Whoever wished to define this study scientifically viewed it as a history of governmental administration, economic conditions, and economic policy continued into the most recent past. From this history one endeavoured, by adherence to the standards of value accepted by the authorities and the political parties, to derive practical rules for future economic policy in a way similar to that of the writer on military affairs who seeks to discover rules for the conduct of coming wars from the study of the campaigns of the past. In general, the investigator of the economic aspects of political science differed from the historian in that he was usually more concerned with the most recent past and with problems of internal politics, finance, and economic policy and was less intent on concealing his political point of view and quicker to draw from the past practical applications for the politics of the future.1
Zenonas Norkus is a Lithuanian scholar who writes a very convoluted German, not always syntactically correct. His book is long-winded and extremely pedantic, but it is also an honest attempt to explain what Weber was trying to do and what he managed to do. I don’t think Norkus succeeds very well. And one of the reasons for this lack of success in spite of so many pages full of distinctions and explanations, is that he has not understood that Weber—like so many economic historians, economic sociologists and eco-nomic anthropologists—was perfectly innocent of ecoeco-nomic theory. In con-trast with so many German professors of economics of his time, Max Weber respected economic theory; he even insisted that any aspiring social science should be defined in relation to it; but he did not master it. Weber’s ignorance of economic theory was certified long ago by two of his best friends, Ludwig von Mises and Joseph Schumpeter, who were also two of the most eminent economic theorists of the 20th century.2
We should clear this up right at the start. Norkus chooses to doubt the testimony of two professional economists who knew Weber quite well, who enjoyed long friendly conversations and discussions with him, and who were thus in a unique position to judge how much Weber knew about economic theory.3Norkus believes that the recent publication of the notes for a course
on economic theory that Weber gave in 1898 at the University of Heidelberg shows that Schumpeter and Mises must be wrong when they talked about Weber’s ‘almost complete ignorance’ of that theory or when they said that Weber ‘was not acquainted with the system of economic theory’.4
I am afraid this will backfire on Norkus himself, for even a casual reader of Weber’s notes will soon see that there is precious little economic theory in them. What we get instead is the usual cascade of definitions, distinctions and classifications, forcefully combined with historical aperçus, that was Weber’s unique brand of writing. There is no clear sense of what economic theory is really about in those notes. Many years after that course, another economist friend, Robert Liefmann, complained in a letter to Weber that the latter had engaged himself so little with economic theory, to which Weber replied that he ‘couldn’t do everything’ and that he had preferred to do other things that also ‘needed doing’.5Whatever those things were, they were not
economic theory. Weber himself says so. And this confirms the assessment of his friends Schumpeter and Mises.
But what was Weber then interested in? We get a very good hint from Weber’s own words at the beginning of those course notes:
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Economic activity is drilled into people through a process of adaptation that lasts centuries. The measure of planned economic activity in the modern sense was and is historically more or less developed according to race and—even within modern Western culture—according to profession, education, intelligence and moral char-acter, yet that development is in general imperfect. These individual and historical variations also concern the existence and action of purely economic motives. Abstract theory takes its starting point from the modern Western type of human being and his economic activity. It tries to find out the most elementary vital phenomena of those people who are economically fully educated.6
This ‘type of human being’ is the famous ‘economic man’ of John Stuart Mill, the infamous homo oeconomicus, and a good example of what Weber called an ‘ideal type’. Now Weber believed that this ‘unrealistic fiction’, this ‘utopia’, this ‘mathematical ideal figure’, was ceasing to be an imaginary construction as he spoke and wrote. The historical development of Western culture was bringing about people who were more and more like that construction. A new ‘type of human being’ was being ‘bred’. And what Weber wanted more than anything else was to find a way to describe historically how that had taken place. He thought that something really portentous had been happening, by which ‘man’ was increasingly becoming ‘economically rational’—something that he had never been before as far as the history of all cultures and all peoples showed to him—and that this event had con-sequences far beyond the relatively narrow field of economic activity. It is no wonder that his course on economic theory contains so little theory and so much history, and that what he taught later on and everything he ever wrote was just a part of the gigantic puzzle he was trying to put together—the history of that uniquely important event.7
None of this is particularly new. The writings of Tenbruck, Schluchter and Hennis—to quote the most important ones—have made us all aware of the basic elements of the ‘new Weber interpretation’, in spite of all those small differences in emphasis that always divide the specialists. So what has Norkus to offer beyond this? He believes that when trying to write the history of modern economic rationality Weber anticipated what is now called the ‘rational choice’ approach in the social sciences. Because of that anticipation we can, so Norkus says, understand better the different positions currently associated with the names of Mises, Becker, Samuelson, Herrnstein, Simon, Schelling, Riker, Coleman, Elster, Boudon, etc.8So, instead of using Weber in
the usual manner of Weber specialists such as Tenbruck, Schluchter or Hennis, that is, to locate Weber in the contextual history of economic thought, the history of social science, or the history of sociology, as it really happened at the turning of the 19th and the 20th centuries, Norkus proposes to use Weber to help us understand our own current epistemological and methodological debates on the nature and extent of rationality in human action.
all is said and done, all he offers for that particular purpose is the follow-ing:
● a fourfold taxonomy of ‘social action’ (the famous classification of instru-mentally rational, value rational, traditional, and affective ‘orientation’), ● a distinction between ‘formal’ and ‘material’ rationality,
● a threefold taxonomy of types of concepts (generic concepts, average types, and ‘ideal types’).
These three proposals are certainly very interesting and useful in many ways, but they do not amount either to a theory or to a method of analysis.9The
very fact that tons and tons of paper and ink have been spent even in trying to find out what Weber meant with any of these, shows that the chances of their being able to help us with our own conundrums are exceedingly thin. One thing should be clear by now: none of these proposals have been incorporated in any way into economic theory. As Schumpeter said,
. . . it makes precious little difference to the practical work of a[n economic] theorist whether Mr. Methodologist tells him that in investigating the conditions of a profit maximum he is investigating ‘meant meanings’ of an ‘ideal type’ or that he is hunting for ‘laws’ and ‘theorems’.10
Mises would have concurred with this opinion, insofar as he believed that Weber’s ‘ideal types’ were historical imaginative constructions having noth-ing at all to do with the concepts and models of economic theory. Thus Weber would have been the victim of a confusion due to his lack of understanding of economics proper.11
The essence of ‘rational choice’ is the idea that the kind of theory that economists have been able to construct and perfect ever since the discipline became well-established—all those wonderful propositions about market equilibria and disequilibria, arbitrage, the natural rate of employment, increasing and decreasing returns to scale, price discrimination, soft budget constraints, capital asset pricing, and so on and so forth—might be possible also for the kinds of problems studied by sociologists, anthropologists, political scientists and communication theorists, if only we take seriously the idea that people are by and large rational in the only sense that matters to economists. What is that? Gary Becker, one of the most eminent living economists, has tersely described this paradigmatic economic meaning as consisting of three assumptions: maximizing behaviour, market equilibrium and stable preferences.12 The clarity of this description contrasts with
Weber’s pretty vague distinctions and classifications, as it contrasts with most of the authors quoted by Norkus as having different ‘versions’ of the rational choice approach. Do I mean that there cannot be different versions? No, I don’t mean that. I only mean that most ‘versions’ discussed by Norkus are just not serious enough to warrant comparison with Becker’s proposal. And certainly Weber’s ideas do not belong here at all. They are just not theoretical. I think they may be useful, even very useful, for the historical interpretation of individual actions and events; but no theory is forthcoming from them.
Let’s look at it from a different angle. Norkus explains carefully—and this part of the book (chapter 3) is really useful—that Weber shifted his position somewhat in his later years. At the time he started coordinating the massive work Outline of Social Economics he was basically interested in serious Organization 11(1)
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expositions of economic theory (which he commissioned from professional economists, especially Schumpeter and Friedrich von Wieser), but he intended the work to offer more, namely the study of non-economic phenom-ena (e.g. law, religion, urbanization) insofar as they are both conditioned by economic activity and have an impact on economic activity. His studies on Protestantism and the ‘spirit’ (Weber’s own scare quotes) of capitalism were an example of what he had in mind under the name of ‘social economics’. But as he worked on this gigantic project, Weber started to develop his idea of a ‘comprehensive sociology’ as a kind of extension of ordinary economic theory, as he understood, or rather misunderstood, it. He thought that the very same concepts and methods that had produced such great results when applied to narrow economic activity (exchange and wealth) could be extended and applied to other human non-economic phenomena. This would be then ‘sociology’ in a new sense, opposed to all the nonsense and rubbish that went under that name at the time.13
A superficial reading of Weber at this stage might seduce someone into thinking that he was anticipating Becker’s ‘economic imperialism’, but that’s not at all the case (nor does Norkus imply it, by the way). As I said before, Weber had no proper sense of theoretical economics, so the concepts and methods he wanted to extend and apply to law, religion, and so on, were not then, and are not now, part of economics. Weber thought they were, but he was simply wrong. It was the mistake of someone who had not delved deeply enough into the subject. He was haunted by the phantom of the ‘ideal type’ of ‘economic man’, and he didn’t see that this so-called ‘ideal type’ was not the point of economics. The point was rather the emergence of economic order under certain specified conditions.
This emergence of order is what all economists who have ventured outside of economics, from Pareto and Mises through Buchanan and Becker to Akerlof and North—all economists who have believed that the exogenous variables of an economy can be ‘endogenized’—have always tried to theorize about.14One can find all sorts of interesting things in Max Weber, but one
does not find this. And one does not find it, either, in all those so-called ‘economic sociologists’, like Richard Swedberg, who continue making prom-ises they cannot keep.15For the result of that shift in Weber’s conception of
‘sociology’ was inevitable: as Norkus said, Weber ended up imagining an ‘economic sociology’ which would be the study of economic phenomena from a different, special, non-economic point of view. From the original idea of ‘social economics’, which was quite a good one, as far as it went, to the conceptual confusion of ‘comprehensive sociology’, and from that to the final idea of ‘economic sociology’, the disaster is complete.
are substantial and they are here to stay. They are increasingly getting Nobel prizes for their efforts, and rightly so. Never have the prospects of economic theory as a general social science been brighter than in our own days. Not everything is gold in ‘economic imperalism’, of course, but there is a fair amount of it. The value of Norkus’s book is thus mainly negative: it shows what we shouldn’t be doing.
Notes
1 Ludwig von Mises, ‘Sociology and History’, first published in 1929. Trans-lated by George Reisman as chapter 2 of Epistemological Problems of Economics, Auburn, AL: Ludwig von Mises Institute, 2003, p. 76. The reader should be reminded that the words ‘science’ and ‘scientifically’ in this quotation correspond to German Wissenschaft and wissenschaftlich, i.e. they refer to any systematic and well-established academic subject.
2 Mises, Epistemological Problems, pp. 72, 79; Schumpeter, History of Eco-nomic Analysis, New York, Oxford University Press, 1954, p. 819. For a more well-rounded view, see also the references to Weber in Mises, Notes and Recollections (South Holland, IL: Libertarian Press, 1978) and Critique of Interventionism (Irvington-on-Hudson, NY: Foundation for Economic Educa-tion, 1996), as well as Weber’s obituary in Schumpeter, The Economics and Sociology of Capitalism, ed. Richard Swedberg, Princeton University Press, 1991, pp. 220–229.
3 Norkus acknowledges this friendship on p. 121 of his book, but feebly concludes that the contact with Mises and Schumpeter would ‘surely have left some mark’ in Weber’s grasp of economic theory.
4 See Max Weber, Grundriss zu den Vorlesungen ¨uber allgemeine (‘theore-tische’) National ¨okonomie (1898), T ¨ubingen, Mohr Siebeck, 1990. For Schumpeter’s and Mises’ words, see History of Economic Analysis, p. 819, and Epistemological Problems, p. 79.
5 From letters in the Merseburg archives, quoted by Wilhelm Hennis, Max Webers Fragestellung: Studien zur Biographie des Werks, T ¨ubingen, Mohr Siebeck, 1987, pp. 125–126, n. 25. Norkus knows this passage, for he quotes from the same source, yet he is not moved by Weber’s explicit professio ignorantiae.
6 Weber, Grundriss, p. 29; Weber’s italics; my translation.
7 I myself happen to think that Weber’s diagnosis is wrong, that no such event has occurred, that people are what they have always been, and that the much praised or despised rationalization has such severe limits that it can almost qualify as epiphenomenal, at least in the way and degree Weber conceived of it. However, this is too large a topic to discuss in a book review.
8 Incidentally, Norkus excludes many important characters in this story, such as Pareto, Coase, Allais, Stigler, Arrow, Sen, Buchanan, Tullock, Olson, Kahneman and Tversky, Selten, Gigerenzer, whilst including many minor ones—a sign that he is a bit lost in the literature.
9 I have nothing against taxonomies. They are often the beginning of science. But they are not the end; and, uncombined with proper causal models, they are analytically powerless. Norkus believes (see his ch. 9) that the answer is to show that Weber’s taxonomy of action was less rigid than it appears, and Organization 11(1)
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that many more combinations are possible (14 instead of the usual four). But, apart from the lack of examples that vitiates Norkus’s proposal, he doesn’t seem to see that a large taxonomy is still only a taxonomy. His attempt at constructing a ‘five filter model’ on the analogy of what he thinks is Elster’s ‘two filter model’ misconceives completely the real import and specificity of Elster’s mechanism-based approach.
10 Schumpeter, History, p. 819.
11 See Epistemological Problems, pp. 77–98; also Theory and History: An Interpretation of Social and Economic Evolution, New Haven, CT: Yale University Press, 1957, passim.
12 See The Economic Approach to Human Behavior, The University of Chicago Press, 1976, p. 5. One of the most rewarding results of Becker’s approach is that so-called irrational behaviour on the part of individual households or firms is shown to be severely limited by budget constraints and market interaction, so that the emerging order can be rational in spite of much individual ‘irrationality’, ibid., pp. 153–168. See also Gary S. Becker and Kevin M. Murphy, Social Economics: Market Behavior in a Social Environ-ment, Cambridge, MA: Harvard University Press, 2000.
13 Norkus has some savoury quotations that bear repeating. According to his friend, the psychiatrist and philosopher Karl Jaspers, Weber said in his Heidelberg farewell speech, ‘Most of what goes under the name of sociology, is a fraud’ (p. 48); and to his friend, the economist Robert Liefmann, he said: ‘If I have now become a sociologist (according to my official contract), it’s just in order to make an end to all that circus of collective concepts’ (p. 142; my translations). These ‘collective concepts’ refer to those that avoid refer-ence to the actions of individuals, a perennial temptation of social scientists, as we know. ‘Methodological individualism’, as Schumpeter baptized it (Das Wesen und Hauptinhalt der theoretischen National ¨okonomie, Berlin, Duncker & Humblot, 1908, Part I, ch. 6), has always been a trademark of economists, but most other social scientists keep struggling with it and even debating its pertinence—another sign of the gap I referred to at the beginning of this review.
14 One of the most rewarding exercises in intellectual history would be a comparison of the first (and failed) attempts at extending the reach of economics to the whole of social science, i.e. of founding a ‘general soci-ology’, namely, those of Pareto (starting around 1897 and culminating in his Trattato di sociologia generale in 1917), Mises (who later changed the name of ‘sociology’ to ‘praxeology’ for the ‘general theory of human action’), and, to a certain extent, Weber himself. It would also be fascinating to compare those efforts to the almost contemporaneous, and also failed, project of extending linguistic theory in the direction of a ‘general theory of signs’ or ‘semiotics’. Certainly the same kind of ignorance of linguistic theory is rampant among philosophers and social and cognitive scientists pretending to work on language or other symbolic ‘systems’.
Economists and Sociologists (Princeton, NJ, Princeton University Press, 1990). Most economists he interviewed then (Arrow, Solow, Becker, Schelling, Olson, and, perhaps less clearly, Akerlof) kept saying to him what they missed in sociology, and what sociologists could contribute, but it is now obvious that Swedberg was not listening.
Fernando Leal Carretero
Departamento de Estudios Socio-Urbanos, Universidad de Guadalajara, M´exico
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