Piketty’s Capital

 

Thomas Piketty is a relatively young economist who has spent most of his professional career teaching at the Paris School of Economics and the École des Hautes Études en Sciences Sociales after brief stints at MIT. He has collaborated with fellow École Normale Supérieure graduate Emmanuel Suez on comprehensive studies on income and wealth inequality. A chart of their data (similar to that shown above) is a frequently-used graphic (the one that looks like the Golden Gate Bridge) in Robert Reich’s current documentary film, Inequality for All. This figure shows the income of the top 1 percent of income earners as a ratio of the national income from the period from 1910 to 2010. It shows a dramatic peak just prior to the 1929 crash followed by a collapse in the years up to 1980 and then a dramatic rise back up to the same level of approximately 24 percent of national income that the one percent took home in the roaring twenties.

In March 2014 the English translation of Piketty’s latest book, Capital in the Twenty-first Century, hit the streets in the US. It contains over 600 pages (including notes) of remarkable data and graphics depicting the historic evolution of income and wealth in our world. It has been making quite a splash in the United States, it’s English translation coming as it has on the heels of Inequality for All. It has been enthusiastically reviewed by prominent Nobel Prize winning economist and New York Times columnist Paul Krugman in a recent issue of the New York Review of Books and by another Nobel-winning neoclassical economist, Robert Solow, in the New Republic. Scores of other reviews have come out since it’s publication by Harvard Press in March from both right and left. Martin Feldstein, the chairman of Ronald Reagan’s Council on Economic Advisers, felt it necessary to attempt to debunk Piketty from the right in a Wall Street Journal column recently. Michael Roberts has been regularly working at debunking Piketty in the pages of his blog from a Marxist perspective. Someone who has raised such praise and ire from both left (Roberts), middle (Krugman and Solow), and right (Feldstein) must be on to something.

Piketty’s book provides comprehensive documentation of the growing inequality that has the United States and Europe in its grip. But the forgotten element in this that Piketty brings to the discussion (if you have not read Ricardo and Marx) is that extreme inequality, in Europe at least, is not new. The inequality that has now established itself in both Europe and the United States is more like a return to the normal state of extreme concentration of wealth and income that ruled in the nineteenth century. It was only the great capital destruction of the inter-war years (and the threat posed by the success of socialist revolution in Russia – not so much emphasized by Piketty) that reduced inequality in the West in the twentieth century. Since then capital / GDP ratios have been steadily climbing back to the ratios that were common in the Gilded Age. Piketty calls this new reality “patrimonial capitalism” in that as economic growth chronically lags behind the rate of return that owners of capital can receive on their wealth, a tiny rentier class eventually emerges over generations that controls significant portions societal wealth and influence. This picture contradicts the story told by free market economists from Hayek to Kuznets to Milton Friedman and Paul Ryan that unregulated markets open doors to everyone to gain wealth. Instead, Piketty shows, the supposed triumph of capitalism in the wake of the fall of the Soviet empire, is more likely trending towards an entrenched structure of societal control by inherited wealth.

Piketty’s title seems to be modeled after that of the famous book by Karl Marx, but Piketty is no revolutionary, rather a socialist of the contemporary French type which much more resembles the Democratic Party of FDR than any nineteenth century socialist party. Not that he thinks that this enormous inequality is a good thing, far from it, but his solution is rather a (modest) tax on capital than overthrow of the capitalist system. In other writings in the recent past Piketty has also recommended a return to the high top tax rates used in the United States and Europe in the period from the Great Depression prior to the Reagan / Thatcher putsch.

Key concepts in the book:

1) Kuznets was wrong (Ricardo and Marx were right)

2) A return to simple models of the macro economy

3) The rise of patrimonial capitalism

Kuznets was Wrong (Ricardo and Marx were Right)

In his introduction, Piketty credits Simon Kuznets with the honor of pioneering the study of income and wealth disparities in his book from 1953, Shares of Upper Income Groups in Income and Savings. Kuznets was a native of Belarus who received the Nobel prize in 1971 for his work on national income accounting and economic growth. The Library of Economics and Liberty, an internet platform for the right-wing Liberty Fund, says of Kuznets the following:

“One of Kuznets’s more startling findings concerns the effect of economic growth on income distribution. In poor countries, he found, economic growth increased the income disparity between rich and poor people. In wealthier countries, economic growth narrowed the difference. In addition, Kuznets analyzed and quantified the cyclical nature of production and prices in spans of fifteen to twenty years. Such trade cycles, while disputed, are often referred to as ‘Kuznets cycles.'”

Piketty says, “According to Kuznets’s theory, income inequality would automatically decrease in advanced phases of capitalist development, regardless of economic policy choices or other differences between countries, until eventually it stabilized at an acceptable level. Proposed in 1955, this was really a theory of the magical postwar years referred to in France as the “Trente Glorieuse,” the thirty glorious years from 1945 to 1975.” The “regardless of policy choices” part to this quote brings to mind the fact that Kuznets was an admirer of Joseph Schumpeter, whose reluctant conclusion was that socialism was an inevitable development from capitalist society. Kuznets thought that this eventual Elysian condition of “acceptable” inequality would come to both sides of the Iron Curtain.

The remainder of Piketty’s book is a systematic demonstration that Kuznets was wrong and Ricardo and Marx had been right that “a small social group – landowners for Ricardo, industrial capitalists for Marx – would inevitably claim a steadily increasing share of output and income.” This had been true in the nineteenth century for Ricardo and Marx and Piketty predicts the trend that we have seen in the West since 1980 indicates that it will be true in the twenty first century. Kuznets was a pioneer to look at income share data, but he was looking at the wrong data set. He was looking at the period from 1913 to 1948, an anomalous period of revolution, war, and depression. When one “zooms out” to include the larger data set from 1700 to 2010, as does Piketty, the story looks more like the one that Ricardo and Marx had described and much less rosy that that depicted by Kuznets.

Return to Simple Models

Piketty presents simple models of the macroscopic economy, which he uses to illustrate theoretical concepts and manipulate his large database of income and wealth statistics. He uses these relationships as a guide to organizing his historical data, an example of which is shown above, representing the capital share in national income for a selection of rich countries during the the last quarter of the twentieth century. The graph illustrates a major theme of his book, the rising share of national income recovered by capital.

His data for this graph have been organized using his “first fundamental law of capitalism” (p. 52) as follows:

α = r X β

Where,

α = Share of income from capital in the national income

r = The rate of return on capital

β = The ratio of capital to national income

Piketty insists that this formula is “pure accounting identity” rather than a law which claims to identify causation, like Marx’s micro formula (See my post here):

Michael Roberts, Marxist economist and blogger, quarrels with Piketty on these grounds:

” . . . Piketty says that the share going to profit as opposed to wages depends on the ratio of total capital to income times the net rate of return.  But Marx says that what matters is how you get the rate of profit.  That changes Piketty’s equation to the net rate of return (r), or the rate of profit, is equal to share going to profits over wages (the rate of exploitation) divided by total capital. Piketty’s version shows he is only interested in the share going to profit and assumes a rate of return to do it. He has no theoretical explanation of how this r is reached.  Piketty is interested in distribution of income or value in a capitalist economy not in its production.  So he ignores Marx’s law of value.”

Well,  to this reviewer it seems not so much that he ignores Marx’s (and also Smith and Ricardo’s) law of value, but that Piketty is trying to expose the documented history of distribution in capitalism and DOES take it as a given that capitalists will have some part in our societies in the future. Piketty’s work is not aimed at Marxists, however, but rather at the conventional economists who, following Kuznets, have systematically ignored, explained away, or celebrated the tendency of capitalism to evolve towards extreme inequality. Roberts complains in his blog piece that Piketty doesn’t seem to have read much Marx at all, although there are references to Marx throughout the text and Piketty indicates familiarity with Volume I of Capital in, for example, Chapter 6 (page 229).

The theoretical debate over who gets what in capitalism has been going on for a long time, at least since Marx’s time. It perhaps came to a head in the period of the 1950s and 1960s in the famous debates between the “two Cambridges.” This was the debate between the economists from Cambridge, England (chiefly Joan Robinson and Pierro Sraffa) and the Nobel-winning economists from Cambridge, Mass (Robert Solow and Paul Samuelson at MIT) and their followers. The English side argued that the “neo-neo-classical” theories (in Joan Robinson’s parlance, those American Economists who revised and extended the analysis by the original developers of marginal utility theory: Marshall, Walras, Wicksell, J. B. Clark, and Wicksteed) relied on a theory, the marginal theory of value and distribution, which shielded from view the exploitation of the working classes which lies at the heart of capitalism in Marx’s view. They “see capitalist institutions – private property, an entrepreneurial class, a wage-earning class – as giving rise to conflicts between the classes.” (G.C. Harcourt, Some Cambridge Controversies in the theory of capital, page 2.) In contrast, the neo-neo-classicals “regard the marginal principle as of overwhelming importance for the theory of value and distribution. They thus emphasize the role of the possibilities of technical substitution, both of ‘factors’ and of commodities, one for another. The principle of scarcity and the relevance of relative ‘factor’ supplies for ‘factor’ prices and ‘factor’ shares’ are the natural corollaries of their approach, as is the neglect of the institutional and sociological characteristics of societies.” (ibid.)

In his crucial Chapter six, Piketty presents the another significant “law” of capitalism:

β = s / g

Where,

s = The annual savings rate in percent

g = The annual economic growth rate in percent

This formulation was originally posed by Harrod and Domar in the form

g = s / β

Piketty tells us that it was Solow (the author of the review referenced above!) who years ago introduced the “production function with substitutable factors” which implied that Harrod and Domar’s original formulation could be inverted to imply that savings (by capitalists) was the cause of economic growth (and justifies their reward). Piketty mentions the “two Cambridges” debate and throws off that “Solow’s so-called neoclassical growth model definitely carried the day.” He seems to agree with Mark Blaug’s conclusion (in The Cambridge Revolution Success or Failure?) that “The Cambridge UK theories are certainly logically consistent, even if they do not always hang together in a logically-consistent total framework of theories. They are possibly more realistic in some of their basic assumptions, although that statement is itself highly ambiguous. But they are not simpler, they are not more elegant, they are totally incapable of producing testable predictions.” (Blaug, p. 85.)

But in contrast to the Solow view, Piketty says,

“To be sure, the law β = s / g describes a growth path in which all macroeconomic quantities – capital stock, income and output flows – progress at the same pace over the long run. Still . . . . such balanced growth does not guarantee a harmonious distribution of wealth and in no way implies the disappearance or even reduction in inequality in the ownership of capital. Furthermore . . . . the law β = s / g in no way precludes vary large variations in the capital / income ratio over time and between countries. Quite the contrary, in my view, the virulence – and at times sterility – of the Cambridge capital controversy was due in part to the fact that the participants on both sides lacked the historical data needed to clarify the terms of the debate.” (page 232).

Indeed, to provide an estimate of this historical data seems to have been the primary motivation for Piketty’s research.

The rise of Patrimonial Capitalism

The third part of Piketty’s book presents his detailed development of the evolution of inequality in income and wealth in the world economy over the long term. The figure above is the one figure from Piketty’s book that apparently especially caught Paul Krugman’s eye, since it is the only figure accompanying Krugman’s New York Review summary. This figure provides the data for the key driver that Piketty sees as pushing our world into an increasingly unequal one. His mathematical expression for this is “r > g”. As long as the return on capital is greater than the growth rate of the economy, the owners of large quantities of capital will accrue rewards in excess of that required for their immediate needs and will continue to grow their wealth, relative to national income and relative to the mass of workers in the economy who have little savings or investment capital.

Roberts’s quarrel that Piketty provides no causative law for what exactly determines this “r” is true, as far as it goes. Piketty’s answer to this quarrel, I think, however, would be that it is really not important what causes “r”. He finds that, for whatever reason, it seems to be relatively stable over a very long time. We recall the money changers in the temple in the time of the New Testament and Shylock from The Merchant of Venice. The Marxist historian E.J. Hobsbawm reports in The Age of Revolution that “The French Assignats (1789) were at first simply French Treasury bonds (bons de tresor) with 5 percent interest, designated to anticipate the proceeds of the eventual sale of church lands.” This 5 percent rate happens to be very close to the one that Piketty assigns to the admittedly indefinite past and future in his Figure 10.10.

Joan Robinson complained bitterly (in Economic Philosophy and elsewhere) about Marshall’s explanation for the rate of interest as the “reward for waiting.” This seems to be on the same footing as the more sophisticated-sounding explanation of the “neo-neo-classicals” that it is the reward for the “marginal productivity of capital.” To a Marxist this is bunk, since capital is only stored labor. But whether this is a “reward for waiting” or surplus gleaned from prior labor or simply a reward for having money, the point is that  this reward has a long history, dating back at least as far as the money changers in the New Testament. Piketty is concerned not so much with how this rate is justified, but how it works in conjunction with other factors in the economy (namely “g”) to drive inequality.

What is wrong with Inequality?

Feldstein, in his notice of Piketty’s book in the Wall Street Journal wonders what’s all this fuss about inequality, “The problem with the distribution of income in this country is not that some people earn high incomes because of skill, training or luck. The problem is the persistence of poverty. To reduce that persistent poverty we need stronger economic growth and a different approach to education and training, not the confiscatory taxes on income and wealth that Mr. Piketty recommends.” I have written about this before. The data that I showed there (and which are consistent with the data in Piketty’s new book) convince me that this Republican shibboleth (that lower tax rates produce more growth and jobs for all) is a colossal sham.

If for no other reason, Piketty’s book will be important in the future for its demonstrating the vacuity of these Reagan-era claims that a rising tide will lift all boats and that capitalism is not a rigged game. Productivity in the US economy has been rising alright in the last forty years, but it is only the fortunes of the owners of the yachts in the harbors at Monaco and Cannes that have been rising. The incomes of the majority in the US have been stagnant throughout this post-Reagan era. It is no longer credible to say that this has nothing to do with the nature of the capitalist system or even with rates of taxation. Can one really believe that the pay of corporate executives (the “supermanagers” in Piketty’s parlance) would be rising as fast as Piketty has demonstrated that they have been with a taxation rate at the top level of 77 percent as it was in 1977, compared to the 39% that we have today (after going as low as 28% during Mr. Feldstein’s tour of duty in the Reagan administration)?

Piketty surely doesn’t think so. In Chapter 9 he considers inequality of income and the rise of the “supermanager.” He seriously considers the possibility that the dramatically increased rewards that he demonstrates have accrued to these top executives during the post-Reagan years is due to their “marginal productivity”, to changes in “social norms”, and to “meritocratic extremism.” He rejects all of these convenient (for the supermanagers) explanations. He comes to the same conclusion that I did in my previous post: “Specifically, the very large decrease in the top marginal income tax rate in the English-speaking countries after 1980 (despite the fact that Britain and the United States had pioneered nearly confiscatory taxes on incomes in earlier decades) seems to have totally transformed the way top executive pay is set, since top executives now had much stronger incentives than in the past to seek large raises.”

His Figure 14.1 is identical to the top tax rate curve that I showed in my prior post, concave in the middle of the twentieth century, the opposite of growth rates and average income. His Figure 14.2 (above) likewise shows that the concave curve for inheritance taxes is the exact opposite of the convex one for the top wealth share. It’s the top tax rate, stupid!

But isn’t inequality required to provide incentives for effort in our merit-based economy? What is the problem with inequality? Don’t we need it? Isn’t this what made America “great”? There is a constant drone to this effect in the speeches of Republican congressmen (and women, unfortunately) in the US House of Representatives today. These questions and statements are a mixture of propositions that could conceivably be based in fact and those which are wholly “theoretical” in the worst (metaphysical) sense of the word. One could say that a doctor would be working the same way if he were compensated the same as a ditch digger assuming both received free public education for their skills and were provided with ample compensation to allow them both to enjoy the fruits of the productivity gains of the twenty-first century. Michael Roberts implies as much in a recent blog post. And one could also say that inequality, even the grotesque inequality that Piketty (and Ricardo and Marx before him) shows is the inevitable result of capitalism, is perfectly justified on moral grounds (on what moral grounds I couldn’t say, but don’t doubt that many would tell you this.) What is NOT possible to say, as Kuznets and many apologists for capitalism have said, is that capitalism and equality are partners and that capitalism does not lead to a society of a very small number of fabulously wealthy individuals buoyed up upon a sea of souls living in near or dire poverty. Not after the work that Piketty has done.

And it is also very clear that one cannot take refuge in the Declaration of Independence or any other document of the Enlightenment in justifying the extreme inequality that Piketty has revealed. Those words “All men are created equal . . .” cannot be written out of that document at this point. If one embraces inequality, one is really embracing the world that the American Revolutionaries fought against. It turns out that that fight is still very much on.

 

The Progress of Philosophy

Socrates from the Hall of the Philosophers in the Capitoline Museum

Does philosophy progress? Of course it does! From the Greek founder Parmenides’s Way of Truth and Way of Opinion with no connection between the two (anticipating Descartes’s error) comes Plato’s masterful elaborations. Aristotle’s critique of his teacher’s Theory of Ideas was an advance. But so was Sextus Empiricus’s critique of the essences of Aristotle.

Christianity’s triumph in Rome led to burial of the Sceptics’s insights, but to advances in logic in the Middle Ages. Hegel’s discovery of true contradictions was a watershed, which led to Marx’s critique of capitalism. Frege picked up on the Stoics’s discovery of propositional logic and today, thanks to Graham Priest and Jay Garfield, we appreciate Nagarjuna’s Buddhist scepticism.

Hobbes’s critique for all times of libertarian fantasies (whether of a “withering away of the state” or of tea party dreams) was strengthened and humanized by Hannah Arendt’s appreciation for the absolute human need for politics.

Yes, philosophy progresses, in fits and starts, but always moving forward in it’s search for truth.

Why Hegel?

When a discussion group decided to take up the subject of Georg Wilhelm Friedrich Hegel, my friend Charlton asked the question “Why Hegel?” No one tried to respond directly to Charlton at the time, but now, having gone through the discussion, which centered on the short book, Hegel, by Singer, I have endeavored to answer this question.

First let’s try to understand where the question is coming from. I haven’t asked Charlton, but I think it is fair to say that the general impression of Hegel among reasonably well-educated people in the United States today is that he was ‘one of those idealist German philosophers from the nineteenth century’ who was very popular then, but who couldn’t hold much interest for us in the twenty-first century. We are all materialists now. Besides, his writing was ponderous. Even Karl Marx rejected him!

The Hegel Debunkers

Before discussing the question “Why Hegel?” directly, I want to turn to some of his debunkers. Bertrand Russell was one of the perpetrators of a negative picture of Hegel. In his youth at Cambridge, Russell says in his Autobiography,

“Moore, like me, was influenced by McTaggart, and was for a short time a Hegelian. But he emerged more quickly than I did, and it was largely his conversation that led me to abandon both Kant and Hegel (page 54 of the combined edition of the Autobiography).”

Russell says in the The History of Western Philosophy:

“Hegel thought that, if enough was known about a thing to distinguish it from all other things, then all its properties could be inferred by logic. This was a mistake, and from this mistake arose the whole imposing edifice of his system. This illustrates an important truth, namely, that the worse your logic, the more interesting the consequences to which it gives rise (The History of Western Philosophy, end of the chapter on Hegel).”

Another modern critic was Karl Popper, whose chapter on Hegel in The Open Society and its Enemies is an unmitigated attack. He says,

“Hegel’s fame was made by those who prefer a quick initiation into the deeper secrets of this world to the laborious technicalities of a science which, after all, may only disappoint them by its lack of power to unveil all mysteries. . . . In order to discourage the reader beforehand from taking Hegel’s bombastic and mystifying cant too seriously, I shall quote some of the amazing details which he discovered . . . The question arises whether Hegel deceived himself, hypnotized by his own inspiring jargon, or whether he boldly set out to deceive and bewitch others. . . . How can this (Hegel’s) immense influence be explained? My main intention is not so much to explain this phenomenon as to combat it. . . . When in 1815 the reactionary party began to resume its power in Prussia, it found itself in dire need of an ideology. Hegel was appointed to meet this demand, and he did so by reviving the ideas of the first great enemies of the open society, Heraclitus, Plato, and Aristotle.”

It goes on like this for 69 pages.

Walter Kaufman provides a critique of Popper’s venom:

“Popper’s treatment contains more misconceptions about Hegel than any other single essay. . . . Popper has relied largely on Scribner’s Hegel Selections, a little anthology for students that contains not a single complete work. . . . Popper takes over such a gross mistranslation as “the State is the march of God through the world,” although the original says merely that it is the way of God with the world that there should be the State, and even this sentence is lacking in the text published by Hegel and comes from one of the editor’s additions to the posthumous edition of The Philosophy of Right — and the editor admitted in his Preface that, though these additions were based on lecture notes, “the choice of words” was sometimes his rather than Hegel’s . . . . The writings of Hegel and Plato abound in admittedly one-sided statements that are clearly meant to formulate points of view that are then shown to be inadequate and are countered by another perspective. Thus an impressive quilt quotation could be patched together to convince gullible readers that Hegel was — depending on the “scholar’s” plans — either emphatically for or utterly opposed to, say, “equality.” But the understanding of Hegel would be advanced ever so much more by citing one of his remarks about equality in context, showing how it is a step in an argument that is designed to lead the reader to a better comprehension of equality and not to enlist his emotions either for it or against it. . . . Popper writes like a district attorney who wants to persuade his audience that Hegel was against God, freedom, and equality — and uses quilt quotations to convince us.”

Enough said about Popper.

Marx on Hegel

Marx’s critique was more serious and has had more influence. Unlike Russell and Popper, Marx had a relatively deep understanding and appreciation of Hegel. There are two extended critiques of Hegel translated into English in the volume Early Writings by Marx, a partially complete Critique of Hegel’s Doctrine of the State of 1843 and a chapter in the Economic and Philosophical Manuscripts of 1844 entitled, “Critique of Hegel’s Dialectic and General Philosophy.” The former is a critique of Hegel’s last published work, Philosophy of Right. Hegel’s preface to this work is dated 1820. Marx evaluates only the third section of the third part of this work, on the state. In his critique of this work, Marx’s chief complaint seems to this reader to be that Hegel gets the cart before the horse when he declares the identity of state and civil society; that he gives preference to the state and neglects the (evil) influence of civil society.

I think this criticism is unfair. At the time Hegel was writing, Germany was still very much evolving out of feudalism. Hegel was in no way as aware in 1820 of the developments in England that we now call the “Industrial Revolution” that brought capitalism into being as Marx could be in the 1840s. By the time Marx was writing his Economic and Philosophical Manuscripts he was already steeped in the writings of the Scottish (Smith), English (Ricardo and Mill), and French (Say) economists and had devoured the latest empirical data on the state of the economy in England and, to a lesser extent, France. His moral outrage at the misery that capitalism inflicted on the working classes is palpable in his work from 1844 onwards. But this was a different world from Hegel’s world. In his outrage that Hegel couldn’t see the importance of capitalism in the tug of war between the state and civil society, Marx was being ungenerous, at least. It seems to me that both Hegel and Marx were right about this. Hegel was right as the first philosopher to incorporate the both/and of these two entities and to relate this linkage to a theory of consciousness that he had already developed in the Phenomenology. Marx was right to see the cruelty of the new civil society that grew out of the industrial revolution and to see that this evil infected the state.

The Modern View of Hegel

Many modern (especially continental European) commentators, however, think that this view is naïve; that Hegel represents a watershed figure in Western philosophy who has not been overtaken since. What is their argument?

Malabou and Derrida on Hegel

In his forty odd page preface to Catherine Malabou’s book, The Future of Hegel, Jacques Derrida answers our question, “Why Hegel?” as follows:

“The question cannot be limited or restricted to what one could or would want normally to categorize or include simply in the history of philosophy, even though, it must be said, Catherine Malabou treats this history with great rigour and unquestionable attention. No, nothing in the world can be in this way determined or pre-determined, for almost two centuries, whether or not we are aware of it or know about it (and in general we are aware of it, or believe we are aware of it), that does not entertain some sort of relation with the living tradition embodied by Hegel. It is simply not enough to recall the names of Marx and Heidegger, or the themes of ‘the end of history’, of ‘absolute knowledge’, of the ‘dialectic’, of the ends of this and the ends of that, the ‘death of God’, the ‘death of Man’, etc. These terms and themes are Hegel’s terms, we always finish by finding Hegel at the very origin of all these thematized and schematized ends. We are all the inheritors of Marx, of Heidegger, and a few others, and we often, perhaps always, have lived, for many decades, in the reassuring certainty that the Hegelian legacy is over and done with.”

Malabou’s book was an elaboration of her Ph.D. thesis at the Sorbonne taken under the direction of Derrida. The subtitle of her book is Plasticity, Temporality, and Dialectic. Each of these concepts is elaborated. A key emphasis of her book is encompassed in the phrase ‘voir venir’ (to see what is coming). She says (page 13 in the Introduction) “‘Voir venir’ in French means to wait, while as is prudent, observing how events are developing. But it also suggests that other people’s intentions and plans must be probed and guessed at. It is an expression that can thus refer at one and the same time to the state of ‘being sure of what is coming’ (‘etre sur de ce qui venir’) and of ‘not knowing what is coming’ (‘ne pas savoir ce qui va venir’). It is on this account that the ‘voir venir’, ‘to see what is coming’, can represent that interplay, within Hegelian philosophy, of teleological necessity and surprise.”

There is much more to say about Marabou’s book and much to say about other authors who have written persuasively on Hegel in the twnetieth century: Kojeve, Graham Priest, Gadamer, Jameson, and Zizek. And much to say about Hegel’s books, of course, especially the Phenomenology and the Logics. But this post has been too long delayed. I will try to say more about these in future.

Falling Rate of Profit?

The April issue of Monthly Review contains an article by the contemporary German Marxist scholar Michael Heinrich titled “Failure of the Falling Rate of Profit Theory – Marx’s Studies in the 1970’s.” Marx had maintained in Volume Three of Capital that there was a tendency for the general rate of profit to fall in capitalist economies, which tendency he maintained was part of the inherent logic of capitalism. This was not a view unique to Marx, of course. Adam Smith, for example, in Book I, Chapter 9 of The Wealth of Nations maintains that the rate of profit tends to fall over time due to completive forces. John Stuart Mill also argued that there was a tendency for the rate of profit to fall over time. But Marx made this an important part of his critique of capitalism in Volume Three of Capital. Heinrich, in his article and in chapter 7 of his recently translated book, An Introduction to the Three Volumes of Karl Marx’s Capital, also published by Monthly Review Press, maintains that this “law” applies only under certain specific conditions. To understand his argument, it is helpful to develop the simple math of Marx’s argument.

In Chapter IX of Volume I of Capital Marx had defined his terms:

C  =  Total capital
c  =  Constant capital or dead labor incorporated into capital goods
v  =  Variable capital or labor wages
C  = c + v
s  =  Surplus value produced by capitalist production

In Chapter III of Volume III of Capital Marx presents the definition of profit in capitalist enterprise:

By dividing both the numerator and denominator by v, we get what Morishima (1973, Marx’s Economics) called “the fundamental theorem of Marxism”:

What this equation clearly shows is that as relative investment (c/v in the denominator) increases, the rate of profit tends to fall, assuming a constant rate of exploitation (s/v in the numerator).

Constant Rate of Exploitation

In Chapter XIII of Volume III of Capital Marx presents his argument for “The Law of the Tendency of the Rate of Profit to Fall.” Marx starts with the example of a constant rate of exploitation. In his example the value of constant capital is varied from 50 to 400 currency units while in each case v is equal to 100 and the rate of surplus-value is 100%, or 100 currency units. He calculates the rate of profit in each case (s/C) and finds that the rate goes from 66.67 percent in the first case to 20 percent in the last case as investment is increased from 50 to 400 units. I think it is useful to see this graphically in the following figure. In this case of the “same degree of labour exploitation” the result is a falling rate of profit as relative investment, c/v, is increased.The figure illustrates this case. s/v is constant, meaning that the application of capital has not made an hour of labor more productive. This is surely not a very common situation. Why would a capitalist invest if he didn’t think that it would make labor more productive? This case results in a falling rate of profit: as the constant capital increases from 50 to 400 units, the rate of profit falls from 70% to 20%.

With this background in the simple math of Marx’s model I want to illustrate the impact of several additional cases as follows:

• Increasing c/v and Decreasing s/v

•  Increasing c/v and Increasing s/v (s/v < c/v)

•  Increasing c/v and Increasing s/v (s/v > c/v)

• Increasing c/v and Decreasing v (Constant s/v)

• Increasing c/v and Decreasing v (s/v > c/v)

Graphs similar to the case of constant exploitation are illustrated below for each of these cases.

Increasing c/v and Decreasing s/v

In this case I have assumed that the rate of exploitation would decrease as investment is increased. This is not a very realistic case, either, since it would imply that the surplus per worker decreases as more investment is supplied. Not surprisingly, the rate of profit falls in this case as well and to a lower level than in the case of constant surplus exploitation.

Increasing c/v and Increasing s/v (s/v < c/v)

 This is a more realistic case. Here, as investment is applied to the enterprise, the rate of extraction of surplus from an individual worker increases. For otherwise, why would the capitalist invest? In this case the rate of profit still falls, however, from an initial value of 70 percent, but in this case to only 40 percent.

Increasing c/v and Increasing s/v (s/v > c/v)

This case is set up so that the rate of growth of s/v (the slope of the line) is just greater than the growth rate of c/v. Unlike the previous cases, this case yields an increasing rate of profit. Is this a possible case? It certainly seems to me in cases where the rate of surplus extraction is greater than the relative value of capital invested that profits would rise. In any case, it seems to illustrate the incentive that capitalists have to increase s/v, by increasing the amount of surplus achieved (by monopoly, for example). This case assumes a constant variable capital.

Increasing c/v and Decreasing v (Constant s/v)

This next case illustrates the case where the variable capital following investment is driven down, either by decreasing the number of workers or by decreasing their pay, or both. In this case s/v, the rate of exploitation is constant. This turns out to be another case where the rate of profit falls, from 70% to under 20% as constant capital is increased from 50 to 400.

Increasing c/v and Decreasing v (s/v > c/v)

In this last case we assume that the rate of expenditure on wages and supplies (variable capital, v) decreases, the situation that one would think the capitalist investing in an enterprise would expect, but unlike the previous case with falling v, in this case the rate growth of the rate of exploitation, s/v, is greater than the rate of increase in relative constant capital, c/v. In this case, the rate of surplus starts at 100% of wages (v) but increases to 150% as investment is applied. Here we see that the rate of profit soars from the initial rate of 70% to 120%.

So what does this seem to show? To me it seems to show that, even in Marx’s world of pure competition, it is very possible for profit rates to increase, but for this to happen the rate of exploitation needs to increase more dramatically as more investment is applied. In our age of globalization and union busting, isn’t that what we see happening?

Tibetan Prayer Flags and the Five Buddha Families

This post is for Clay.

Prayer Flags are ever-present in the Tibetan landscape. Tibetans place them for protection over doorways or gates. They love to leave them on mountain tops and at mountain passes. The photo above shows prayer flags left on Vulture Peak in Rajgir, India, the site of recitation by Reverend Gotama of the Heart and Diamond Sutras, famous in the Zen tradition of China and Japan. These flags were no doubt left by Tibetan pilgrims at one of the most famous Buddhist sites in India. I took this photo on my trip in 2006.

This photo was taken by me at the first 4,000 meter pass on the way from Chengdu to Dzachuka, the headwaters of the Yangtze. This pass is not far from the famous Dzogchen Monastery, one of the most beautiful places in the world.  In addition to leaving prayer flags at such places, Tibetans also love to let fly on these occasions small prayer flags called Lung ta or wind horses. I was blue with altitude problems on top of this pass. We let fly a bunch of Lung ta on top of this pass.

Prayer flags typically contain images of five sacred animals. In the center is the Lung ta, or wind horse. Surrounding him are the dragon, the garuda, the snow lion, and the tiger. The prayers on the flags are in Tibetan script. I wish I could translate, but, alas, my Tibetan is not adequate. This is what Wikipedia says about these: “Surrounding the Lung ta are various versions of approximately 400 traditional mantras, each dedicated to a particular deity. These writings include mantras from three of the great Buddhist Bodhisattvas: Padmasambhava (Guru Rinpoche), Avalokiteśvara (Chenrezig, the bodhisattva of compassion, and the patron of the Tibetan people), and Manjusri.” Manjusri is the god of wisdom and learning. When I studied Tibetan we always recited Manjusri’s mantra as an aid to comprehension. 

The five colors of the prayer flags were associated with the five Buddha families. They are always arranged in the order of blue, white, red, green, and yellow. The best reference that I have on the five Buddha families is the book by the scholar / practitioner Reginald Ray, Secret of the Vajra World. The table below is a partial version of a table in his book.

Characteristic	Buddha Family
	Buddha	Vajra	Ratna	Padma	Karma
Color	white	dark blue	yellow	red	green
Position	center	east	south	west	north
Presiding Buddha	Vairochana	Akshobya	Ratnasambhava	Amitabha	Amoghasiddhi
Khanda	form	consciousness	feeling	perception	karmic formation
Element	space	water	earth	fire	wind
Primary function	being	thinking	consuming	relating	doing
Wisdom	all-encompassing space	mirror-like	equanimity	discriminating	all-encompassing
Enlightened style	spaciousness	clarity	generosity	love	efficiency
Neurotic style	spaced out	aggressive	territorial	grasping	competitive
Realm	god	hell	hungry ghost	human	jealous god

Plato’s Theory of Ideas (or Forms)

Plato’s Theory of Ideas (TOI) or Forms should surely be something that we understand pretty well, no? Many of us remember or have heard about the allegory of the cave:

Picture men dwelling in a sort of subterranean cavern with a long entrance open to the light on its entire width. Conceive of them as having their legs and necks fettered from childhood, so that they remain in the same spot, able to look forward only, and prevented by the fetters from turning their heads. Picture further the light from a fire burning higher up and at a distance behind them, and between the fire and the prisoners and above them a road along which a low wall has been built, as exhibitors of puppet-shows have partitions before the men themselves, above which they show the puppets. . . .

See also, then, men carrying past the wall implements of all kinds that rise above the wall, and human images and shapes of animals as well, wrought in stone and wood and every material, some of these bearers presumably speaking and others silent. . . do you not think that they would suppose that in naming the things that they saw that they were naming passing objects? . . . When one was freed from his fetters  . . .and to lift up his eyes to the light . . . what would you say would be his answer if someone told him that what he had seen before was all a cheat and an illusion, but that now being nearer to reality and turned toward more real things, he saw more truly . . .

And if he were compelled to look at the light . . . if you assume that the ascent and the contemplation of the things above is the soul’s ascension to the intelligible region, you will not miss my surmise, since that is what you desire to hear. But God knows whether it is true. But, at any rate, my dream as it appears to me is that in the region of the known the last thing to be seen and hardly seen is the idea of the good, and that when seen it must needs point us to the conclusion that this is indeed the cause for all things of all that is right and beautiful, giving birth in the visible world to light, and the author of light and itself in the intelligible world being the authentic source of truth and reason, and that anyone who is to act wisely in private or public must have caught sight of this (Book VII, the Republic, Shorey translation).

This passage seems to be making the following arguments:

• The objects of everyday experience are an illusion
• It is somehow possible to “free from the fetters” of that illusion
•  There exists a non-sensible reality of “ideas” that is “more real” than sensible objects
• There is a hierarchy of these ideas on top of which presides the “idea of the good”
• This idea of the good is the CAUSE for all things right and beautiful
• This idea is the “author” of this intelligible world that is the “authentic source” of truth

The allegory of the cave passage comes in the middle part of the Republic in which Socrates is discussing with Glaucon the kind of education required for the guardians of the ideal state. It had been preceded, in Book VI, by two other stories: 1) of the sun, which had been identified with the idea of the good and 2) the divided line, which presents an ordering of sensible and intelligible things. These two worlds are further divided into two classes each:  two classes of sensibles, “shadows, and then reflections in water and on surfaces of dense, smooth, and bright texture” and “that of which this is an image” and two classes of intelligibles, not available to the senses, mathematical objects and “that which reason itself lays hold of by the power of dialectics.”

The last significant allusion to the TOI in the Republic occurs in the Book X as part of the warm-up to the banning of poetry from the ideal state. Socrates says, “We are in the habit, I take it, of positing a single idea or form in the case of the various multiplicities to which we give the same name. . . Are we not in the habit of saying that craftsman who produces either of them (tables or couches) fixes his eyes on the idea or form, and so makes in the one case the couches and in the other the tables that we use, and similarly of other things” (Shorey translation, Book X). Socrates then goes on to identify three kinds of producers,  the craftsman, the painter, and the God, who create three different kinds of products, couches and tables, images of these sensible objects, and the ideas of these sensible objects.

These arguments, taken as a whole, may be considered to constitute Plato’s version of the TOI in the Republic. This theory may be the most powerful bit of metaphysics in the history of European culture, having a central role and influence in the dominant strands of European life, from Christian religion to contemporary philosophy and mathematics. What are we to make of this theory? What was the TOI and to what extent is it relevant to us today? To what extent did Plato remain faithful to this version of TOI in later dialogues?  I want to present the reactions of several commentators on these questions before tackling them myself. The commentators come from various places and times, one from Plato’s immediate circle, one from 500 years after Plato, and several from the century recently past.

• Aristotle
• Diogenes Laertius
• Bertrand Russell
• Harold Cherniss
•  Sir David Ross
• Hans-Georg Gadamer

Aristotle on the TOI

 It is no accident that in Raphael’s incredible fresco in the Vatican of the School of Athens Plato and Aristotle are shown together discoursing in the very center. Diogenes Laertius says that “Aristotle was Plato’s most genuine disciple.” He tells us that Aristotle joined the Academy at age 17 and stayed with Plato for twenty years. He says that Aristotle “seceded from the Academy while Plato was still alive.” To what extent did Aristotle remain a disciple and what caused him to leave the Academy?

Aristotle in his Metaphysics (987 a 29, Tredennick translation) says:

The philosophies described above (of Pythagoras and Parmenides) were succeeded by the system of Plato, which in most respects accorded with them, but contained also certain peculiar features distinct from the philosophy of the Italians. In his youth Plato first became acquainted with Cratylus and the Heraclitean doctrines – that the whole sensible world is always in a state of flux, and that there is no scientific knowledge of it – and in after years he still held these opinions. And when Socrates, disregarding the physical universe and confining his study to moral questions, sought in this sphere for the universal and was the first to concentrate upon definition, Plato followed him and assumed that the problem of definition is concerned not with any sensible thing but with entities of another kind; for the reason that there can be no general definition of sensible things which are always changing. These entities he called “Ideas” and held that all sensible things are named after them and in relation to them; for the plurality of things which bear the same name as the Forms exist by participation in them. . .

Further, he states that besides sensible things and the Forms there exists an intermediate class, the objects of mathematics, which differ from sensible things in being eternal and immutable, and from the Forms in that there are many similar objects of mathematics, whereas each Form is itself unique.

Now since the Forms are the causes of everything else, he supposed that their elements are the elements of all things. Accordingly the material principle is the “Great and Small,” and the essence <or formal principle> is the One, since the numbers are derived from the “Great and Small” by participation in the One. In treating the One as a substance instead of a predicate of some other entity, his teaching resembles that of the Pythagoreans, and also agrees with it in stating that the numbers are the causes of Being in everything else; but it is peculiar to him to posit a duality instead of a single Unlimited, and to make the Unlimited consist of the “Great and Small.” He is also peculiar in regarding the numbers as distinct from sensible things, whereas they hold that things themselves are <emphasis> numbers, nor do they posit an intermediate class of mathematical objects. His distinction of the One and the numbers from ordinary things (in which he differed from the Pythagoreans) and his introduction of the Forms were due to his investigation of logic (the earlier thinkers were strangers to Dialectic) . . .

So from very near to the beginning (Book Α) of his Metaphysics Aristotle confronts the TOI. He goes on to criticize the doctrine, saying that the TOI doubles the number of things in the world to explain. He says,

As for those who posit the Forms as causes, in the first place in their attempt to find the causes of things in our sensible world, they introduced an equal number of other entities – as though a man who wishes to count things should suppose that it would be impossible when they are few, and should attempt to count them when he has added to them. For the Forms are as many as, or not fewer then, the things in search of whose causes these thinkers were led to the Forms; because corresponding to each thing there is a synonymous entity apart from the substances (and in the case of non-substantial things there is a One over the Many), both in our everyday world and in the realm of eternal entities (Metaphysics, 990b).

He then re-frames the argument that Plato presented in the Parmenides dialogue and names it the “Third Man” argument (TMA). This is the argument that if X is a man due to the fact that he resembles the Idea of man, there must be a third “man” in whom the “man-ness” of these two is united.

Again, not one of the arguments by which we (Platonists) try to prove that the Forms exist demonstrates our point: from some of them no necessary conclusion follows, and from others it follows that there are Forms of things of which we hold that there are no Forms. For according to the arguments from the sciences there will be Forms of all things of which there are sciences; and according to the “One-over-Many” argument that “we have some conception of what has perished,” of perishable things; because we have a mental picture of these things. Again, of Plato’s more exact arguments some establish Ideas of Relations, which we do not hold to form a separate genus; and others state the “Third Man.” And in general the argument for the Forms does away with things which are more important to us as exponents of the Forms than the existence of Ideas; for they imply that it is not the Dyad that is primary, but Number; and that the relative is prior to the absolute; and all the other conclusions in respect of which certain persons, by following up the views held about the Ideas, have gone against the principles of the theory.

Again, according to the assumption by which we hold that the Ideas exist, there will be Forms not only of substances but of many other things (since the concept is one not only in the case of substances, but also in the case of all other things; and there are sciences not only of substances but of other things as well; and there are a thousand other similar consequences); but according to logical necessity, and from the views generally held about them, it follows that if the Forms are participated in, then there can only be Ideas of substances (Metaphysics, 990b).

Above all we might examine the question what on earth the Forms contribute to sensible things, whether eternal or subject to generation and decay; for they are not the cause of any motion or change in them. Again, they are no help towards knowledge of other things (for they are not the substance of things, otherwise they would be in things), nor to their existence, since they are not present in the thinks which partake of them. . .  Again, other things are not in any accepted sense derived from the Forms. To say that the Forms are patterns, and that other things participate in them, is to use empty phrases and poetical metaphors; for what is it that fashions things on the model of the Ideas?  . . . hence how can the Ideas, if they are substances of things, exist in separation from them? It is said in the Phaedo that the Forms are the causes both of existence and of generation. Yet, assuming that the Forms exist, still the things which participate in them are not generated unless there is something to impart motion (Metaphysics 991b).

In general, although Wisdom is concerned with the cause of visible things, we have ignored this question (for we have no account to give of the cause from which change arises), and in the belief that we are accounting for their substance we assert the existence of other substances of the former, our explanation is worthless – for “participation,” as we have said before, means nothing (Metaphysics 992a).

Aristotle makes a point here of speaking as a “Platonist.” What I take from this is that Aristotle’s criticism is that the Forms cannot be a separate ontological realm, but rather must follow substance, like a shadow follows the man. This seems like a reasonable complaint to me, whatever we think of the logic of Aristotle’s arguments.

Diogenes Laertius on the TOI

Diogenes Laertius probably lived in the third century AD and wrote biographies of dozens of the philosophers of the ancient Greek world from Pythagoras to Sextus Empiricus. The name by which we know him was probably a pseudonym. He was no philosopher and not necessarily a very reliable witness for the biographical facts that he provides in his books. His value today is chiefly that so many of the Ancient Greek texts have disappeared, leaving his quotations and references among the few scraps that we have about many of these writers. His entry on Plato is the longest of his texts, taking up an entire book in his Lives of the Eminent Philosophers (Book III in Volume I of the Loeb edition translated into English by R. D. Hicks).

What Diogenes says about the TOI is as follows:

Now Plato in conceiving of his theory of Ideas says (note by Hicks, cf. Phaedo, 96B): Since there is such a thing as memory, there must be ideas present in things, because memory is of something stable and permanent, and nothing is permanent except the Ideas. ’For how,’ he says, ‘could animals have survived unless they had apprehended the idea and had been endowed by Nature with intelligence to that end? As it is, they remember similarities and what their food is like, which shows that animals have the innate power of discerning what is similar. And hence they perceive others of their own kind.’

He asks the question as to whether or not Plato was a “dogmatist” thereby revealing his awareness, if not attraction, to Sextus Empiricus’s scepticism. He concludes that Plato is both a dogmatist and a sceptic: “To be a dogmatist in philosophy is to lay down positive dogmas, just as to be a legislator is to lay down laws. Further, under dogma two things are included, the thing opined and the opinion itself. Of these the former is a proposition, the latter a conception. Now where he has a firm grasp Plato expounds his own view and refutes the false one, but if the subject is obscure, he suspends judgment.”

Diogenes lists a series of doctrines of Plato, mostly apparently taken from the Timaeus: “The doctrines he approved are these. He held that the soul is immortal, that by transmigration it puts on many bodies (Hicks’s note: Tim., 42B ff), and that it has a numerical first principle, whereas the first principle of the body is geometrical (Tim., 54A ff) and he defined the soul as the idea of vital breath diffused in all directions. He held that it is self-moved and tripartite, the rational part of it having its seat in the head, the passionate part about the heart, while the appetitive is placed in the region of the navel and the liver (Tim. 69C ff).” We can see from this quote that Diogenes certainly had some notion of Plato’s philosophy, but also that he preferred the good story to deep understanding.

Bertrand Russell on the TOI

Here we have a modern philosopher who, while not an expert on Plato, was in any case a philosopher of first rank. In his widely popular History of Western Philosophy, Russell devotes a chapter to the TOI. He considers the TOI of “great importance” which is “partly logical, partly metaphysical.” The logical part Russell finds useful in its emphasis on the universal quality of certain words. He has no quarrel with these universal words as being “eternal” in that they have no place in space and time. I would have some quarrel here, but we will leave that for the moment. He explains the TOI with reference to the passages from the Republic about the bed and the parable of the cave that I have indicated above.

But, while Russell grants Plato his theory of ideas as universals, he convicts Plato’s TOI of a number of “obvious errors.” First of all, he says “Plato has no understanding of philosophical syntax. . .Plato makes a mistake analogous to saying ‘human is human.’ He thinks that beauty is beautiful; he thinks that the universal ‘man’ is the name of a pattern man created by God, of whom actual men are imperfect and somewhat unreal copies. He fails altogether to realize how great is the gap between universals and particulars; his ‘ideas’ are really just other particulars, ethically and aesthetically superior to the ordinary kind.”

Russell then goes on to consider what he says is “one of the most remarkable cases in history of self-criticism by a philosopher” in Plato’s dialogue, the Parmenides. Ironically, while he assumes that what Plato was doing here was in fact profound self-criticism, an assumption that is questionable, he seems to have not understood another case of self-criticism closer to home, namely Wittgenstein’s thorough- going critique of the theory of a book for which Russell wrote an enthusiastic introduction, the Tractatus. Russell relates the well-known passage from the dialogue in which Parmenides, in Athens with his purported sidekick Zeno to attend the Panathenaic celebrations, asks Socrates whether there were ideas or forms for such things as hair, mud, and dirt; a question which Socrates fumbles in confusion. This is the only location in a Platonic dialogue where Socrates is bested by an opponent, in which Parmenides utters the killing conclusion, “Yes Socrates,  . . . for you are still young and philosophy has not yet taken hold upon you, as I think it will later” (Fowler’s translation from the Loeb edition).

Parmenides goes on to argue, first, that whether the particular partakes of the whole or only a part, to either view there are objections. Russell says, “If the former, one thing is in many places at once, if the latter the idea is divisible, a thing which has a part of smallness will be smaller than absolute smallness, which is absurd.” And second, that when a particular partakes of an idea, the particular and the idea are similar, but this leads to an infinite regress because there would in that case need to be another idea embracing both the particular and the idea, and so on. This is Aristotle’s famous “Third Man Argument ” (TMA). When Socrates suggests (the interesting possibility) that ideas are only thoughts, Parmenides retorts that thoughts must be of something. This retort is pure dogma, in my view, of which more later. Parmenides goes on to say that ideas cannot resemble the particulars that they resemble (TMA again), that ideas must be unknown to us because our knowledge is not absolute, and that “If God’s knowledge is absolute, He will not know us, and therefore cannot rule us.”

These last two arguments constitute the “greatest difficulty” for the TOI, according to Parmenides. It seems that these concerns still linger around this point for the TOI. Witness the recent Stanford Encyclopedia article on the Parmenides (http://plato.stanford.edu/entries/plato-parmenides/#GreDif133) which ends with the statement, “The aptly-named Greatest Difficulty is then left as a challenge for future work”. The challenge remains, 2,500 years and counting. I will have more to say about this below.

Sir David (W.D.) Ross

Ross’s book, Plato’s Theory of Ideas, is probably the most thorough and even-handed single attempt to unravel the meaning of the TOI. Ross starts with the important question of the order of the dialogues. This is important because a significant quarter of opinion on the TOI (including Bertrand Russell, see above) has held that in the Parmenides dialogue Plato produces an attack on the TOI which causes him to make a change or to abandon the theory in later works. The reason that the order of the dialogues is so important in this question is that most scholars see the Timaeus dialogue and the Seventh Letter as containing confirmations of the TOI. If these are placed after the Parmenides, some other interpretation must be given to Plato’s apparent attack on the TOI there (or of the views expressed in the later writings). Ross lists the order of the dialogues according to six different scholars. In five out of the six the Timaeus is listed after the Parmenides (the sixth doesn’t list the Timaeus at all). Ross’s own ordering is as follows:

Birth of Plato, 429-427

• Charmides
•  Laches
• Euthyphro
• Hippias Major

First visit to Sicily, 389-388

• Cratylus
• Symposium
• Phaedo
• Republic
• Phaedrus
• Parmenides
• Thaetetus

Second visit to Sicily, 367-366

•  Sophistes
• Politicus

Third visit to Sicily, 361-360

• Timaeus
• Critias
• Philebus
• Seventh Letter, 353-352
• Laws

Death of Plato, 348-347

With this ordering established, Ross proceeds to consider Plato’s presentation of the TOI in the dialogues which bear on the TOI in chronological order.

The Beginnings of the Theory

In the early dialogues Socrates is engaged in questioning a series of interlocutors on the definitions of certain things: “temperance” in the Charmides, “Courage” in the Laches, “piety” in the Euthyphro, “beauty” in the Hippias Major. Ross points to the Laches as presenting the germ of the TOI in the view that “to every common name there answers a single entity which is referred to in every occurrence of the name.” Ross sees the implications of this discussion as:

• There is a real thing of which courage is a name
• This is one thing and not another
• Courage is a complex thing capable of being analyzed in its parts

He says that the Euthyphro is probably the first dialogue in which either of the words ιδέα or εidos appears: ‘Is not everything that is to be impious the same as itself, having impiety, a single Form (ιδέα)?’ I will try to compare this to Wittgenstein’s “Picture theory” of the Tractatus below. Ross presents a refutation of the theory of Ritter that there are six different senses in Plato’s use of the words ιδέα (Liddell and Scott (L&S): Ion. form) and εidos (L&S: that which is seen, the form, shape, figure). He concludes that “Plato means one and the same thing in every case; that nowhere is he speaking of concepts or of ‘the content of concepts’ but in every case of something which he considers perfectly objective, existing in its own right and not by virtue of our thinking of it.” He dismisses Ritter’s argument as a “product of nineteenth century conceptualism.”

Considering a passage in the Meno, Ross says that “The point is made that individual things are not always or in all relations instances of the same universals – that in some relations gold will appear no more beautiful than fig wood; but the point is not made that no particular is ever a true instance of an Idea, that the Idea is a standard or limit rather than a universal, and the relation of the individual to it is that of imitation, not of participation.”

The Phaedo

This dialogue presents the first sustained use of the TOI as a secondary theme to the primary argument for the immortality of the soul. In his discussion with Simmias, Socrates says, “If, as we are always saying, the beautiful exists, and the good, and every essence of that kind, and if we refer all our sensations to these, which we find existed previously and are now ours, and compare our sensations with these, is it not a necessary inference that just as these abstractions exist, so our souls existed before we were born; and if these abstractions do not exist, our argument is of no force? Is this the case and is it equally certain that provided these things exist our souls also existed before we were born, and that if these do not exist neither did our souls?” (79 D, Fowler’s translation) Since Socrates’s interlocutor here has no doubt about the certainty of the existence of souls, Plato here uses this as an argument for the existence of ideas. Not that souls are ideas, but that they are similarly eternal.

Later on in the dialogue Socrates says, “If anyone tells me that what makes a thing beautiful is its lovely colour, or its shape or anything else of the sort, I let all that go, for all those things confuse me, and I hold simple and plainly and perhaps foolishly to this, that nothing else makes it beautiful but the presence or communion (call it which you please) of absolute beauty, however it may have been gained; about the way in which it happens, I make no positive statement as yet, but I do insist that beautiful things are made beautiful by beauty (100 D).” It is clear that by the time of the Phaedo, Plato is firmly committed to the TOI.

Ross asks the question as to whether the TOI in the Phaedo implies the separate existence of the Ideas. He suggests that the reference cited above (79 D) implies that either 1) Plato failed to recognize that the doctrine of anamnesis implies previous direct knowledge of disembodied Ideas or 2) that he saw and accepted this. Ross here cites Aristotle’s “consistent statement” that Plato believe d in “separate” Ideas and says “it is very difficult to suppose that after nineteen years spend in Plato’s School Aristotle could have been so misinformed about so important a matter.” Harold Cherniss has a very different answer on the credibility of Aristotle’s testimony.  I will try to address that further on.

The Republic and the Phaedrus

The watershed that Ross finds in the Republic is that instead of declaring the particulars as real, he “from now on” is committed “until in the Sophistes he sees a better way” to “a false and dangerous disparagement of all particulars, in the supposed interest of Forms.” Ross goes through the passages on the Sun, the divided line, and the simile of the cave that I have presented above. He says that he wants to steer clear of interpreting these passages in light of what Plato says about the TOI in later dialogues. He says, “We are studying the development of Plato’s thought, and what we have to do is to try to discover what was in his mind when he wrote these passages.” With this Ross declares himself clearly on the side of the “Develomentalists” as opposed to the “Unitarians” represented by Shorey (The Unity of Plato’s Thought).

Ross provides a detailed evaluation of the divided line passage (509 D). Socrates here says, “Conceive then . . . as we were saying, that there are these two entities, and that one of them is sovereign over the intelligible order and region and the other over the world of the eye-ball, not to say the sky-ball, . . . Represent them then, as it were, by a line divided into town unequal sections and cut each section again in the same ratio . . . “

      The two regions are each separated into two:

1.  The visible or opinionable (δόξα)
   a.  The shadows of the original (εíκóνες)
   b.  The original particulars of the world
2. The intelligibles
   a.   The intermediate intelligibles (Διάνοια)
   b.   Νοûς (mind)

Ross feels that it is mathematics which Plato has in mind when he speaks about the intermediate intelligible. Plato’s theory is that geometry consists not in deducing by pure logic from pure figures, but in apprehending the implication of figures drawn by hand. Ross says that Plato “opposes in advance two theories which have found favor in modern times – the empirical theory represented by Mill, which holds that geometry is an inductive science reasoning from observation of sensible figures and reaching approximately true generalizations about them and the rationalistic or logistic theory which regards geometry as proceeding by pure reasoning alone from axioms, definitions, and postulates relating to perfect geometrical figures, without any need for spatial intuition.” The alternative theory that Ross leaves out here, is one which I will discuss in more detail below, constructivism or intuitionism.

The distinction between the two classes of intelligibles is the distinction between science, which proceeds from hypothesis, and philosophy, which resorts to the ‘first principle of the universe . . . . the summit of the intelligible world is reached in discussion by one who aspires, to make his way in every case to essential reality, and perseveres until he has grasped by pure intelligence the very goodness itself.” But exactly how is this supposed to happen? How does one know one is in the presence of this “essential reality?”

The Phaedrus is not concerned with the TOI but Ross finds one passage which is suggestive. There (247 c 3 – e 2) the Ideas appear as “the colourless, figureless, intangible, truly real reality, seen only by the steersman of the soul, reason.” The soul there “sees justice itself, temperance itself, knowledge itself, not the knowledge that comes into being nor that which differs according as it is concerned with different so-called realities, but real knowledge that is concerned with real reality.”

The Parmenides and the Theaetetus

The Parmenides dialogue became an attractor for scholarly debate in the twentieth century. Taylor says that it “has always been regarded as an extremely puzzling” dialogue “and the most divergent views have been held about its main purpose.” Its first part presents the famous criticisms of the TOI by Parmenides and Socrates’s inability to defend it. The second part presents a series of examinations of eight theses about the One and Unity which come to apparently contradictory conclusions. Taylor says “Now it is quite certain that Plato never dreamed of denying the law of contradiction (Plato, the Man and His Work, p 850). Graham Priest, in a very recent article (http://gramata.univ-paris1.fr/Plato/spip.php?article120) reaches the opposite conclusion. Shorey says that the dialogue “is not meant to be taken seriously” (The Unity of Plato’s Thought). Many others, including the present reviewer take it very seriously.

Vlastos started a storm of criticism with his “The Third Man Argument in the Parmenides” article from 1954 (reprinted in Allen, Studies in Plato’s Metaphysics). Plato never named the argument in the first part of the dialogue for the infinite regress of forms, the TMA, Aristotle did, but it has been known as such ever since. Vlastos represents the argument thus:

1.  If a number of things, a, b, c are all F, there must be a single Form F-ness, in virtue of which we apprehend a,b,c, as all F.
2.  If a,b,c and F-ness are all F, there must be another form, F-ness₁, in virtue of which we apprehend a,b,c, and F-ness as all F.

This seems to lead to an infinite regress. Vlastos claims, however, that the logic is flawed, in that the regress occurs because of the replacement of F-ness by F-ness₁. Vlastos proposed potential fixes to this argument using “self-predication”, but this need not concern us here. I actually think that Vlastos’s problem is manufactured by him, and not by Plato’s words. But a discussion of this would take us too far afield. The point that I want to emphasize here is that whether or not the TMA scuttles the TOI, or at least the “participation” version of it, Plato does not seem to have felt that it did so, since in the course of the discussion he has Parmenides say, “you are trying to define prematurely . . .  each one of the Forms, before you are properly trained” and “Only an ingenious man will be able to understand that for each thing there is some Kind, a being itself by itself, but only someone even more remarkable will be able to discover it and teach it to another who has already thoroughly examined all these difficulties” (135 b, translation by Arnold Hermann and Sylvanna Chrysakopoulou). These words seem to recognize the problem posed by the “greatest difficulty” but imply that some smart thinking will overcome it. Considering that this “greatest difficulty” is here dropped and not taken up again in Plato’s work (as far as we know) I see this in another light, as a leap of faith, when reason has failed.

I think that the “greatest difficulty” hits the nail squarely on the head: “There are many difficulties as well, Parmenides said, but the greatest one is this: if someone were to say that the Forms – such as we claim they must be – are not even fit to be known, one would be unable to prove him wrong, unless the disputer happened to be widely experienced and not unintelligent, and also willing to follow the proof through numerous remote arguments. Otherwise, the person who requires that they be unknowable would remain unconvinced (133 b).”  I, for example, remain unconvinced 2,500 years later.

What Ross says about this is mostly measured and sane. He says that of the discussion in the first part, “It does not express doubt about the theory itself, but does express doubt about Plato’s earlier formulation of the theory” and concludes that “What he (Parmenides) says of the Theory of Ideas is that it is fundamentally true, but that it has been proclaimed without that regard to precision of thought which only a training in dialectic can give. The object of the ‘second part’ of the dialogue is to furnish an example of that training.”

I won’t go on to discuss the eight theses of the second part of the dialogue except to say that, by its unfolding of contradictory results from the assumptions that either a One exists or that a One does not exist, it reminds me mostly of the chess match played by our hero against Mr. Endon in Samuel Beckett’s hilarious early novel, Murphy. Murphy, as part of his job at the Magdalen Mental Mercyseat (MMM) is required to visit each patient’s room every twenty minutes during the night to ensure that the patient had not “cut his throat” during the interim. So every twenty minutes Murphy enters Mr. Endon’s room, switches on the light, and makes a move on the chessboard arrayed in front of Mr. Endon on his bed. Mr. Endon has played his piece during the interim. Mr. Endon’s game (“Endon’s Affence”) consists in arraying his pieces fan-like onto the board and then withdrawing them as nearly as possible to their initial positions until the 43^rd move, after which “White (Murphy) surrenders.”

In his discussion of the Theaetetus Ross suggests that since in the Parmenides Plato claims that, without the TOI, discourse would be impossible; in the Theaetetus, which Ross reckons was written not long after the first part of the Parmenides, Plato leaves the TOI and turns to developing a theory of knowledge, upon which to build the TOI. That the Theaetetus ends in aporia is for me a telling indicator of the shakiness of the TOI itself.

The Sophistes and the Politicus

The Sophistes is the first dialogue in which Socrates plays a minor role. The chief spokesman in the dialogue is instead an “Eleatic stranger” visiting Athens from parts influenced by the famous Eleatics, Parmenides and Zeno. But this Eleatic is a critical thinker who is not a thoroughgoing monist like Zeno. The dialogue starts out referencing “yesterday’s discussion” in the Theaetetus dialogue between Socrates and Theaetetus. The discussion proceeds from the introductory question about the definition of the Philosopher, Statesman, and Sophist into a two-sided discussion between the young Theaetetus and the Eleatic stranger in which the argument really revolves around the old Parmenidian question of how “not-being” can exist. The opponents in this consideration of “not-being” are the materialists, who say that only that which is tangible is real, and the “Friends of the Forms.” Ross discusses four possibilities as to whom Plato is referring as the “Friends of the Forms”:

1. Megarians
2. Italian Pythagoreans
3. Platonists who had reverted to Pythagorean and Eleatic elements
4. Plato himself in an earlier phase.

Ross opts for option 4.

 He translates a long passage (248 C4 – 249 b 12) to the effect that that change, life, soul, and understanding have a place in that which is perfectly real; that both change and unchanging things (the Ideas) have reality. This is not to be understood as a great departure from the supposedly monist theory of Parmenides. In fact it is recognition of both of the two “worlds” in Parmenides’s poem. The stranger then takes the discussion to the “greatest of the kinds of forms”: Being, Sameness, Difference, Motion, and Rest. The conclusion here is that, “while no Form can be ‘mixed’ with another in the sense of being identified with it, there are three Forms – Being, Sameness, and Difference – that can be predicated of all Forms, certain pairs of Forms of which one can be predicted of the other, and other pairs of Forms of which neither can be predicated of the other.” The science which discovers how Forms blend and apply to one another is the science of dialectic, philosophy.

The stranger then brings the discussion then to a truly anti-Parmenidian conclusion: that “not-being” exists, as opposed to what Parmenides has said, and that “When we speak of not-being, we speak, I think, not of something that is the opposite of being, but only of something different (257 B).” The conclusions about not-being suggest the importance of context in determining what a Form is “different from.” He begins with the proposition that all discourse depends on the weaving together of Forms by the speaker or thinker. For example, consider the statement “Theaetetus flies”. Theaetetus flying does not exist, but Theaetetus exists and flying exists, so in asserting Theaetetus flies “we are not asserting of him something that does not exist, but simply something that does not belong to him, something ‘other’, i.e. other than all the things that do belong to him.”

Ross concludes his discussion of the Sophistes with an appreciation of the “communion of the classes . . . the discovery of certain very obvious relations between five terms.” He says, “ . . . what is important is the establishment of the principle that the Forms are neither a collection of entities standing in no positive relations to each other, nor yet are capable of entering into all storms of relations to one another – that they form, indeed, a system.” This is suggestive of Wittgenstein’s “games form a family” from the Philosophical Investigations; ironical, because I think Wittgenstein’s constructivism represents a true alternative to the TOI.

The Politicus, Ross says, “. . . contains one passage which is germane to the study of the doctrine of Ideas.” In this passage “Plato takes a point which he has not explicitly made in the Phaedrus or in the Sophistes, namely that not every possible division of a genus by the use of dichotomy (dividing into opposing theses) is likely to conform to the structure of the genus. By successive uses of dichotomy, the Stranger reaches the conclusion that statesmanship falls under the heading of ‘the tending of many animals together’, and the ‘younger Socrates’ proceeds to identify it with the management of many men together. . . Socrates has made the same mistake as one would who divided men into Hellenes and barbarians, or number into the number ten thousand and the other numbers; he is supposing that he has found a single class because he has given to a mere collection a common name.”

He conclude this chapter with a summary of his view of the evolution of Plato’s dialectic put forward in the Phaedrus, Sophistes, and Politicus as opposed to the view put forward in the Republic. “The objective of the dialectic is no longer to deduce all truth from a single transcendental truth. It is a more modest and a more realizable one – one with which Plato at least succeeds in making a beginning – that of tracing the relations of assertability and deniability that exist between Ideas, and the relations of genus and species that exist between them.”

The Timaeus and the Philebus

Timaeus the manga character was a legendary knight in the Battle of Atlantis. Timaeus in Plato’s dialogue of the same name is a famous astronomer and mathematician who leads Socrates around on a tour of Plato’s cosmology. The Timaeus (the dialogue) might well seem a regression in Plato’s thought from the more complex dialogues of the Parmenides and Sophistes to the more dogmatic version of the TOI of the Phaedo. The work is scarcely a dialogue at all, but rather an extended rant by Timaeus set only nominally within a discussion between Socrates; Hermocrates, apparently a retired Syracusan general, and Critias, the leader of the thirty tyrants. The dialogue starts with reference to the discussion presented in the Republic which is referenced as taking place “yesterday.” Socrates then briefly recapitulates the main themes of the Republic. The remainder of the Timaeus includes three chief parts: 1) an introduction discussing the origins of Mediterranean civilization, 2) the making of the soul of the world, and 3) the making of man’s soul and body.

The first bit is a fourth-hand story told by Critias of a tale told to him by his own grandfather when Critias was ten of a story originally told by Solon of a story told to him by a priest in the “Delta of the Nile”. The priest tells a brief story of the Egyptian people: “And the duration of our civilization as set down in our sacred writings is 8000 years. Of the citizens, then who lived 9000 years ago, I will declare to you briefly certain laws and the noblest of the deeds they performed . . .” (23 E). He tells Solon how “the Goddess had furnished you, before all others, with all this orderly and regular system, she established your State, choosing the spot wherein you were born since she perceived therein a climate duly blended, and how that it would bring forth men of supreme wisdom.” He tells him that “in this island of Atlantis there existed a confederation of kings, of great and marvellous (sic) power . . . ” This bit has little to say about the TOI but sets the stage for Plato’s “true” explanation of how order was instituted from the presumed chaos of the original universe.

What Plato attempts in the main central and concluding parts is “a thorough-going teleological explanation of the universe,” in the words of the Loeb translator Bury. At the beginning of the central section Timaeus gives us the distinction between Being and Becoming that Plato inherited from Parmenides’s poem, a dichotomy which has had incredible staying power in Western philosophy. Being is changeless, eternal, self-existent, the “world” of Ideas. Becoming is transient, not truly existent, the “world” of irrational sensation. If you will grant Plato this, all of the rest follows: the world soul, the δημιουρλος (Demiourgos), and the whole gamut of Western religion and dogmatic philosophy from Augustine to Berkeley and Kant and, yes, even Einstein.

In Timaeus’s words:

Now first of all we must, in my judgement (sic), make the following distinction. What is that which is Existent always and has no Becoming? And what is that which is Becoming always and never is Existent? Now the one of these is apprehensible by thought with the aid of reasoning, since it is ever uniformly existent; whereas the other is an object of opinion with the aid of unreasoning sensation, since it becomes and perishes and is never really existent. Again, everything which becomes must of necessity become owing to some Cause; for without a cause it is impossible to attain becoming. But when the artificer of any object, in forming its shape and quality, keeps his gaze fixed on that which is uniform, using a model of this kind, that object, executed in this way, must of necessity be beautiful; but whenever he gazes at that which has come into existence and uses a created model, the object thus executed is not beautiful (28 a, Bury translation).

Ross presents it as follows:

Thus the distinction of the Forms and sensible things is placed in the forefront of the discourse. The world, being apprehensible by the senses (he continues) (28 b 1 – 29 b 2) must have come into being, and have done so by some agency; and its maker must have looked to an unchanging model, i.e. to a Form; for only so will the product be good. The framer of the universe was good, and desired that all things should come as near as possible to being like himself. He therefore ‘took over all that was visible – not at rest but in discordant and unordered motion – and brought it from disorder into order’ (30 a 3-6). Since nothing that is without intelligence can be better off than that which has intelligence, and since intelligence cannot be present without soul, in framing the universe ‘he fashioned reason within a soul, and the soul within body’ (30 a 6 – b 6). The model used by the divine craftsman (the Demiourgos) could not be any particular living creature; it must be that which embraces them all, ‘for that embraces and contains within itself all the intelligible living creatures, just as this world contains ourselves and all other creatures that have been formed as things visible (30 c 2 – d 1).

What follows is Plato’s lone attempt at cosmology in his extant works, mostly modeled after Empedocles. Ross emphasizes how in the course of explaining this cosmology the “necessity” of the Ideas is emphasized, deriving from the assumption that nothing intelligible based on δοξα (opinion) could possibly be true. Reason must therefore be based on the Ideas. Why? This is the Platonic leap of faith elaborated by the TOI. Ross says, “Plato here (51 d 3 – 52 a 7) treats as the essential reason for believing in the existence of Forms the difference between knowledge and true opinion.” Thus the “mature” TOI of the Timaeus rests on the foundation of the Theaetetus. But the Theaetetus ends in aporia! In the Timaeus we go from aporia to faith.

In the Philebus we return to the traditional Socratic dialogue form in which Socrates teases out of Philebus’s student Protarchus acknowledgement that hedonism could never be the sole basis for ethics; in the course of which, as Ross says, “Plato returns to the problem which Parmenides had put to Socrates – how a Form can retain its unity and at the same time be present in many particulars. He first sets aside, as being popular, childish, and easy, two forms of the problem of how one thing can be many and many things can be one – the question how it is that many, and opposite, qualities can be united in a single substance, and the question how one thing can have many parts. The real problem for the philosopher, he maintains, does not concern the things that become and perish, but units like man, the ox, the beautiful, the good, i.e. Forms.” Ross mentions that “The reference to the Forms as units or monads is not paralleled elsewhere in Plato.”

Socrates says,

The first question is whether we should believe that such unities really exist; the second, how these unities, each of which is one, always the same, and admitting neither generation nor destruction, can nevertheless be permanently this one unity; and the third, how in the infinite number of things which come into being this unity, whether we are to assume that it is dispersed and has become many, or that it is entirely separated from itself – which would seem to be the most impossible notion at all – being the same and one, is to be at the same time in one and in many. These are the questions, Protarchus, about this kind of one and many, not those others, which cause the utmost perplexity, if ill solved, and are, if well solved, of the greatest assistance (15 b 1 – c 3).

Well at least Plato here is back to asking questions! But Ross explains that Plato never solves the first question, assuming that if he adequately handles the following, it will come along in the wash. How Plato attempts to answer the second question is to suggest that one must proceed by dichotomy (division) as described in the Phaedrus, the Sophistes, and the Politicus. Ross concludes that Plato never really solves this second question. I think the solution is impossible by logic; only by faith can it be achieved.

The Rest of the Book

After a brief discussion of the TOI in the Laws and the Seventh Letter, which illuminates nothing particularly new, in the remainder of his book Ross discusses several topics, the most significant being, to this reviewer, Aristotle’s depiction of Plato’s “unwritten doctrines” and his critique of the TOI. This is mainly offered as a response to Harold Cherniss’s influential book Aristotle’s Criticism of Plato and the Academy (ACPA), which argues that there never was an unwritten doctrine and that Aristotle’s arguments against the TOI are so fraught with logical flaws as to render them worthless.

To this Ross replies,

The strongest point in Professor Cherniss’s argument is one which he has effectively made – that what Aristotle says about Plato often betrays misunderstandings which a few well-chosen questions to Plato would have removed. Aristotle was not the pure blunderer that Prof. Cherniss makes him out to have been, but it must be admitted that he was too ready to adopt interpretations of Plato either because they fitted in with his own preconceptions, or because they gave him an opportunity of criticism. His long criticism in Books M and N of the Metaphysics, in particular, contains far too many instances of both of these faults, and Prof. Cherniss has exposed many of them with great skill. But I do not think for a moment that he has established his case that all that Aristotle says about Plato that cannot be verified from the dialogues is pure misunderstanding or misrepresentation.

Ross finds the claim by Cherniss that Plato gave no oral instruction to the members of the Academy including, for 19 years, Aristotle himself, to have little “intrinsic probability”. It should be remembered that Ross was no illiterate when it comes to Aristotle. He had been the general editor for the Oxford translation of Aristotle which appeared in 1908 and his translation of the Metaphysics is still used in the current edition of The (Oxford) Complete Works of Aristotle edited by Jonathan Barnes.

Retrospect

The last chapter of Ross’s book represents a summary of his thoughts on the TOI and was, he says in the preface, based on a lecture which he gave at the Queen’s University in Belfast in 1948. He begins:

The essence of the theory of Ideas lay in the conscious recognition of the fact that there is a class of entities, for which the best name is probably ‘universals’, that are entirely different from sensible things. Any use of language involves the recognition, either conscious or unconscious, of the fat that there are such entities; for every word used, except proper names – every abstract noun, even every pronoun and every preposition – is a name for something of which there are or may be instances. The first step towards the conscious recognition of this class of entities was, if we may believe Aristotle, taken by Socrates when he concentrated on the search for definitions. . . . Plato did see that what was common to all searches for definitions was the assumption that there are such things as universals. He saw too, that the objective difference between universals and particulars answers to the subjective difference between science and sense-perceptions.

Concerning Aristotle’s critique he says, “But, as we have seen, that doctrine (the syllogism) of Aristotle’s itself owes its origin to a metaphysical principle which Plato had discovered, that there are Ideas so related that one ‘drags’ another with it – in other words, to his faith that the world of Ideas forms a system of necessary relations. In the face of this community of thought between Plato and Aristotle, the question on which Aristotle lays so much stress, whether universals exist apart from particulars or not, seems almost to be a question of words.”

He further says,

What conclusions can be drawn from this? First, of course, that Plato consistently thought of Ideas as different from sensible things. Secondly, and with equal certainty, that he thought of them as completely objective, neither as thoughts nor as the ‘contents of thoughts; (whatever that phrase may mean (sic)), but as entities whose existence is presupposed by all our knowledge. Thirdly, that he thought of them as existing separately from sensible things; but to the question whether Plato consistently so thought of them no simple answer can be given.

As a possible answer to the third point he presents an analysis of the words used by Plato in the progression of his works which, on the one hand, imply or suggest the ”immanence” of Forms compared to the group implying or suggesting their “transcendence.” By immanence I assume that he means related but not ontologically separate from sensible things. By transcendence he means ontologically separate. What he finds is that in the early dialogues from the Laches to the Cratylus the words used are completely in the “immanent” category. With the Symposium through to the Sophistes, he finds a mixture of immanence and transcendence. Finally, in the Timaeus, he finds solely members of the transcendent group. In the Philebus he finds few references to the TOI, but those to words in the immanence group. So here in the end Ross places himself in the Developmentalist, as opposed to the Unitarian camp, but not to the extent that he maintains, against the apparent evidence, that Plato abandoned the TOI in later life.

Harold Cherniss

Harold Cherniss was for almost forty years a resident scholar at the Institute for Advanced Study at Princeton, from WWII until his death in 1987. He is the author of translations of Plutarch and a series of articles and books dealing with Aristotle’s criticisms of the TOI. His book, Aristotle’s Criticism of Plato and the Academy was widely praised by his peers, while many (Gregory Vlastos and Sir David Ross in particular) in the main disagreed with many of the details of his conclusions. I have briefly discussed Ross’s reaction to ACPA above. Here I want to focus on an essay that Cherniss composed in 1936, prior to ACPA, which I consider a credo in support of the TOI, “The philosophical economy of the theory of ideas.” This essay, originally published in The American Journal of Philology, was reprinted as the first article in R. E. Allen’s book, Studies in Plato’s Metaphysics.

Cherniss begins his article by complaining that Aristotle’s characterization of the TOI as a “superfluous duplication of the phenomenal world” distorts what Plato meant by the TOI. His purpose is expressed as follows: “The dialogues of Plato, I believe, will furnish evidence to show that he considered it necessary to find a single hypothesis which would at once solve the problems of these several spheres (ethics, epistemology, and ontology) and also create a rationally unified cosmos by establishing the connection among the separate phases of experience.” But why would one think that all of these spheres COULD be fully explained by a single hypothesis?

Cherniss sees the TOI in the early dialogues as saving Socrates from falling into the “plight into which Democritus had fallen.” He portrays Democritus as being bitterly opposed to the relativism of Protagoras, yet vulnerable to counter attack because of his own ethical doctrines saying, “The law seeks to benefit the life of men but can do so only when they themselves design to fare well. For to those who obey it it indicates their proper goodness” (Democritus, fragment 248, Diels). Cherniss says of this, “This bald assertion of a difference between fair and foul things, virtuous and vicious actions offers no standard whereby to determine the difference.” Cherniss represents that the only way to establish such a standard is through a transcendental approach, the TOI. Too bad neither Cherniss nor Plato had had a chance to discuss this issue with Reverend Siddhattha Gotama (aka the Buddha) who simply pointed out that all of us (well, most of us) seek to avoid suffering caused by ego-grasping and that this can be done without resort to ontology!

Cherniss goes on to say that “The epistemological necessity for the existence of the Ideas is proved by the same indirect method as was used in establishing the ethical necessity.” He points out the ”brief and casual proof” discussed above to the effect that “if intellection is other than right opinion it follows that there exist separate substantive Ideas as the objects of intellection.” So here we have gone from epistemology to ontology.

Cherniss proceeds in this vein saying that,

The nature of the mental processes, then can be explained only by the hypothesis of Ideas. . . Knowledge as a special faculty dealing directly with its own objects must be assumed in order not only to explain the fact of cognition but also to make possible opinion and sensation as they are given by experience. The special faculty of knowledge, however, is characterized by direct contact of subject and object; since phenomena cannot enter into such a relationship with the subject, mediating organs being required in their case, it is necessary that the objects of knowledge be real entities existing apart from the phenomenal world and that the mind have been affected by them before the mental processes dealing with the phenomena occur. Only so can one avoid the self-contradictory sensationalism of Protagoras, the psychological nihilism of Gorgias, and the dilemma of Democritus.

One might say that Cherniss is just repeating the arguments of Plato in this, but to this reader, at least, these words seem to have been written by a true believer.

Hans-Georg Gadamer

Another take on the TOI is that of the continental scholar, Hans Georg Gadamer, who died in 2002 at the age of 102. He was a student of the young Heidegger at Freiburg University and later at Marburg. Gadamer is most well known as the author of Truth and Method, the elaboration of the theory of philosophical hermeneutics. While he was active and probably most well known as a researcher in this highly “postmodern” field, he was also a well-established classical scholar and the author of significant work on Plato, including studies translated into English in the books Plato’s Dialectical Ethics, Dialogue and Dialectic, and The Idea of the Good in Platonic-Aristotelian Philosophy. It would be a disservice to this significant scholar to try to summarize briefly what he has to say in these collections, but I want at least to present a couple of quotes to give the tenor of Gadamer’s approach to Plato.

In the article “Idea and Reality in Plato’s Timaeus”, published as Chapter 7 in Dialogue and Dialectic, Gadamer applies his hermeneutic method to the Timaeus. He starts out by saying,

If we intend to study and interpret any one of Plato’s puzzling dialogues carefully and with real concern for what is said in it, it is essential that we become aware of the hermeneutic preconceptions which have given us our image of Plato. That alone would clear the way for us. With a persistence bordering on the absurd, the prevailing form of interpretation in which Plato’s philosophy has been passed on to us has advocated the two-world theory, that is the complete separation of the paradigmatic world of ideas from the ebb and flow of change in our experience of the sense-perceived worlds. Idea and reality are made to look like two worlds separated by a chasm, and the interrelationship of the two remains obscure.

Is this “two-world theory” not a persistent part of Plato’s metaphysics? Gadamer goes on to discuss Aristotle’s “almost malevolent dialectical exposition” of the TOI. But he considers Aristotle to really be a “legitimate intellectual confederate” of Plato. This is implied in his book The Idea of the Good in Platonic-Aristotelian Philosophy and by the title of the last essay in Dialogue and Dialectic, “Amicus Plato Magis Amica Veritas”.

Gadamer provides a close reading of the Timaeus. An important point which he emphasizes is that in this dialogue, the only one which discusses the physical world in detail, Plato (Timaeus) says that the world was not created by the Demiougos, but put into partial order. And “the truly decisive point is that he orders what is pre-ordered. The crux of the argument here is that the god has to deal with a “mass” which is pre-ordered according to Necessity.” Plato thus sidesteps the “Argument from Evil” against the existence of the Christian god by leaving part of the world to the devil, necessity. He says, “Now one can also say that the creation of the world by the demiurge (or, to say the same thing, the knowing of the world by men) is every bit as much a kind of determination of the indeterminate, an ordering of the unordered. Certainly it is just as true in physics as it is in ethics that ordering is made possible by reason, or better said, that reason perceives the possible order and is therefore able to undertake bringing about.“ Gadamer emphasizes the “probable” nature of Timaeus’s views and the mythical setting for his presentation. This is not a philosophy lecture, but a piece of art.

He concludes,

In a sense, however, the mythical portrayal in the Timaeus is meant to be a deeper founding that that which the Socratic reflection about right living in the Philebus can provide. Here, instead of man who learns to seek and produce order in himself, the constitutional order of the world itself is under consideration. Of course it is evident in the Philebus too that the Good and the order of reality as a whole are the real concern. Viewed from man’s perspective, however, the indeterminate appears only as the realm which cannot be subjected to determination, into which one ‘lets matters drop.’ Now the given order of the world presents the demiurge, who exercises the proper ‘practice’, which one calls ‘nature’ with a general limitation. He can only do what is possible. But the ‘possible’ does not restrict him; rather it is more like an ontological opportunity. Only because of the reason already displayed in the realm of Necessity does the beautiful ordering of the visible world become possible at all. . . The utopian vision which functions in Plato as the overall framework for inquiry does not claim in any way to escape the real preconditions and necessities of the human and social task. After the Republic comes the Timaeus.

Conclusions

So we have finally come to the bit where the reviewer tries his hand at making sense of the TOI. Having reviewed half-dozen critical approaches to it, what strikes us as true? We asked earlier,

• What are we to make of this theory?
• What was the TOI and to what extent is it relevant to us today?
• To what extent did Plato’s remain faithful to this version of TOI in later dialogues?

In answer to the first and the last of these questions we must conclude that the picture painted by Socrates in the Republic of the TOI retains, at the end of Plato’s life, the central position in his philosophy that it did there. Yes, we see evolution and subtlety in the Parmenides, Sophistes, Politicus, and Philebus dialogues. Yes, we see aporia in the Theaetetus and the Parmenides. But in the end it seems that Plato retains his faith in the objectivity of the ‘world’ of ideas, in their separation from the ‘world’ of sensible reality, and their importance as a cause, in some way, of the Good.

But why is this relevant to us today? For one reason, because it still motivates and inspires many in our world. Consider the following from Albert Einstein, quoted in a recent article in the New York Review of Books by Ronald Dworkin on “Religion without God”:

To know that what is impenetrable to us really exists, manifesting itself as the highest wisdom and the most radiant beauty which our dull faculties can comprehend only in their most primitive forms – this knowledge, this feeling, is at the center of true religiousness. In this sense, and in this sense only, I belong to the ranks of devoutly religious men.

The most revered scientist of the twentieth century was a Platonist!

I mentioned this quote from Einstein to a physicist friend of mine and his reaction was “Einstein was wrong!” He was referring to the famous Einstein-Podolsky-Rosen paper of 1935 whose abstract reads,

In a complete theory there is an element corresponding to each element of reality. A sufficient condition for the reality of a physical quantity is the possibility of predicting it with certainty, without disturbing the system. In quantum mechanics in the case of two physical quantities described by non-commuting operators, the knowledge of one precludes the knowledge of the other. Then either (1) the description of reality given by the wave function in quantum mechanics is not complete or (2) these two quantities cannot have simultaneous reality. Consideration of the problem of making predictions concerning a system that had previously interacted with it leads to the result that if (1) is false then (2) is also false. One is thus led to conclude that the description of the wave function is not complete.

This is not the place to go into the details, but in papers from the 1960s and 1970s presented in the collection, Speakable and Unspeakable in Quantum Mechanics, the Northern Irishman John Bell set out experiments that could prove EPR right or wrong. Multiple experimental results have since followed Bell’s suggestion and proven quantum mechanics right and EPR wrong. In the process, the theory of a “certain” reality has gone by the wayside in physics. Reality is seen now rather as a probable affair in contrast to the metaphysical certainty of the TOI.

Not only science, but almost all metaphysics the West from Aristotle to Kant and the Abrahamic religions, Christianity and Islam, have been all deeply influenced by Plato. But there are several other grounds for critique of the TOI, besides the experiments proposed by Bell, one ancient and another more recent.

The Sceptical Critique

The transmitter of Pyrrhonian Scepticism, Sextus Empiricus, starts his book, Outlines of Pyrrhonism, with the following words:

 . . . some have claimed to have discovered the truth, others have asserted that it cannot be apprehended, while others again go on inquiring. Those who believe they have discovered it are the “Dogmatists” specially so called – Aristotle, for example, and Epicurus and the Stoics and certain others; Cleitomachus and Carneades and other Academics treat it as inapprehensible: the Sceptics keep on searching. Hence it seems reasonable to hold that the main types of philosophy are three – the Dogmatic, the Academic, and the Sceptic (Bury’s translation in the Loeb Classical Library).

While Plato is here initially spared the label “dogmatist,” Sextus makes clear that Aristotle falls in that category for proclaiming the truth and that the followers of Plato in the Academy are likewise thrown into a lesser category for denying that truth exists. Further on in the Outlines he considers Plato’s status,

Some people have said that Plato was dogmatic, others that e was aporetic, and still others that he was aporetic in some respects and dogmatic in others. For he shows, they say, a ‘gymnastic’ and aporetic character in his ‘gymnastic’ discourses, where Socrates is introduced either as making sport of someone ore as contending with Sophists, but a dogmatic character where he speaks seriously through Socrates or Timaeus or some such personage. Concerning those who say that he is dogmatic or that he is dogmatic in some respects and aporetic in others, it would be superfluous to say anything now; for they concede his difference from us. The question whether he is, strictly speaking, skeptical, we treat more fully in our commentaries; but now we shall argue in brief, against the school of Menodotus and Aenesidemus (for these most of all advanced this position), that whenever Plato makes statements about the Ideas or about the existence of providence or about the virtuous life being more choice worthy than the wicked, if he assents to these as being more plausible than not, he also abandons the Skeptic character since he gives preference to one thing over another as regards credibility and incredibility. From what has been said before it is very evident that this is alien to us (Mates translation, Outlines, I, 33).

I won’t go further into Sextus’s views here. I hope to consider him further in another post. Suffice to say that the sceptic finds Plato’s leap of faith in the TOI an unnecessary step too far. I agree.

The Intuitionist Critique

Another critical perspective on the TOI comes in modern times from the tradition of Intuitionism, founded by the mathematician Brouwer and championed by Brouwer’s student Heyting and the philosopher Michael Dummett. Intuitionism can be considered as based in the idea that no metaphysical doctrines are necessary to do mathematics. One starts from the self-evident and proceeds by construction, by proof. The elements of mathematics have no objective reality. They are the result of playing the game of mathematics. Heyting starts his book, Intuitionism, an Introduction, with the following example,

You ought to consider what Brouwer’s program was [L.E.J. Brouwer 1907]. It consisted in the investigation of mental mathematical construction as such, without reference to questions regarding the nature of the constructed objects, such as whether these objects exist independently of our knowledge of them. That this point of view leads immediately to the rejection of the principle of excluded middle, I can be best demonstrate by example.

He proceeds to compare two propositions about calculating the greatest prime number that is also a prime; one which can actually be calculated whereas there is no known method for calculating the other. Intuitionists reject the second. They consider an integer well defined only when a method for calculating it can be given. He says, “Now this line of thought leads to the rejection of the principle of the excluded middle, for if the sequence of twin primes were either finite or not finite, II (the second) would define an integer.”

Intuitionists deny the crucial assumption of the TOI, that intelligible entities are “real” in the sense that they have objectivity. Again, to me this seems a much more credible approach to intellection than the TOI: intellection is a game, a language game, as Wittgenstein called it in the Philosophical Investigations, in which the entire history of the culture has participated and one which follows rules. There is simply no need to take the step to declaring these intellections as existent in a world of their own. They exist in our world, as concepts, expressed in a given language.

Final Thoughts

My lack of credence in the TOI is not intended as a slight to Plato. He remains, 2,500 years later, the most consequential philosopher in the history of the West and probably the finest artist in the history of Western philosophy. We all follow in his wake. He is the philosophical Shakespeare, our consummate philosophical artist. But Plato’s argument for the TOI is unconvincing. It is a failed theory, even in its own terms, considering that the argument for it rests on the ability to arrive at knowledge of Ideas and that Plato’s arguments as to how this could be achieved in the Theaetetus all end in aporia. Ideas can’t be known and “Wovon man nicht sprechen kann, darüber muß man schweigen.”

Odd Economics

Kenneth Arrow made his PhD thesis into a book in 1951 (Social Choice and Individual Values). It remains one of the most remarkable works in the strange field of economics in the twentieth century. This is the book that launched a thousand (or more than fifty, anyway) attempts at refutation or compartmentalization by troubled neo-classical economists in the years following its publication.

The book starts off with the voting paradox, which Arrow attributes to E.J. Nansen (1896). This goes as follows: if A, B, and C are three alternatives and 1, 2, and 3 are three individuals and supposing that 1 prefers A to B and B to C (and therefore A to C), 2 prefers B to C and C to A (and therefore B to A), and 3 prefers C to A and A to B (and therefore C to B), then a majority (of two) prefer A to B but also B to C. A “rational” conclusion would be that the community prefers A to C; but, in fact, a majority prefers C to A. So the voting procedure has led to a result that is not “rational”. Unfortunately, this paradox is not resolved, but rather deepened as Arrow proceeds.

Starting from Bentham’s hedonistic calculus (refuted forcefully by Plato 2500 years ago in the Philebus) and the voting paradox (attributed to Condorcet by many), Arrow proves in math / logical notation that, given five conditions that most neo-classical economists would think should be honored in any theory of social choice, any solution to the social welfare question in which there are at least three alternative choices must either be imposed or dictatorial, thus contradicting two of the assumed conditions. His “possibility” theorem (in the original; it has been referred to as his “impossibility theorem” by many) “shows that, if no prior assumptions are made about the nature of individual orderings, there is no method of voting which will remove the paradox of voting . . . neither plurality voting nor any scheme of proportional representation, no mater how complicated. Similarly, the market mechanism does not create a rational social choice.” (Chapter V, Section 4).

In his last chapter Arrow shows that for “single-peaked preferences” majority decision does lead to an outcome satisfying five revised conditions, including the revision to Condition 1 to the effect that “the tastes of individuals fall within certain prescribed realms of similarity” and “provided the number of individuals is odd.”(!) Arrow then asks “Do these or possibly other mathematical restrictions have any social significance?” His answer is “I do not pretend to have any definite answer” but that uniformity of social attitudes actually is a condition of one prominent school of political philosophy, namely the “idealist school” of Rousseau, Kant, and T.H.Green. In a footnote he quotes Rousseau to the effect that the law of plurality is established by agreement, which must have been unanimous, at least in the beginning. Rousseau’s unanimous consent would, of course, satisfy Arrow’s revised Condition 1.

Arrow’s conclusion, however, is that even if some degree of consensus is taken as true, “Any view which depends on consensus as the basis for social action certainly implies that the market mechanism cannot be taken as the social welfare function since that mechanism cannot take account of the altruistic motives which must be present to secure that consensus.”

So there you have it; the smartest (oddest?) economist of his generation has proven that his “science” cannot be placed on a rational basis given the assumptions that are required for a market economy; and that a market economy cannot produce social benefit!  My guess is that the only neo-classical economists that are not worried about this are the ones that remain blind to the issues that Arrow has raised or those who don’t care that their “science” can’t even describe a logically possible world, much less our actual one.

A Sceptical Defense of Rights

Amartya Sen’s 2009 book, The Idea of Justice, will, I think, come to be seen as summing up the intellectual legacy of this remarkable man. The book references hundreds of books, papers, and talks by this Nobel Prize-winning economist with a lifelong weakness for philosophy. Ideas from Sen’s long career starting with his early education at Tagore’s school in Bengal, Santiniketan, to his long years of teaching at Harvard make an appearance in this book. His subject is justice and the book is a comparison of competing theories of justice from Aristotle to Rawls. While the book is dedicated to the memory of John Rawls, with whom Sen taught for many years at Harvard, it is an argument for an alternative approach to Rawls’s justice as fairness, one which emphasizes comparative consideration of social choice and is inspired by Adam Smith’s “impartial spectator” as opposed to Rawls’s “veil of ignorance”.

The acknowledgements section of the book presents a lived history of impressive intellectual achievement throughout the last half of the twentieth century. Sen came from Presidency College in Calcutta in the fifties to study at Trinity College, Cambridge where, as a brilliant economics and philosophy student, he was elected to the Apostles, the elite intellectual club of Russell, Wittgenstein, and Moore. He there meets the greats of twentieth century economics and philosophy from both the left and the right sides of the political spectrum including Pierro Sraffa, Maurice Dobb, Dennis Robertson, and his doctoral thesis adviser, the “totally brilliant but vigorously intolerant Joan Robinson.” As his career travels from England to the United States, back to India, and back to England and the US again, his academic acquaintance reads like a Who’s Who of twentieth century philosophical and social thought. He mentions Isaiah Berlin, Richard Hare, Quentin Skinner, Herbert Hart, Simon Blackburn, and Ian Hacking among the British intellectual aristocracy to whom he felt he owed credit for their friendship and criticism. Among the famous American academics with whom he engaged were Kenneth Arrow, W.V. O. Quine, and Hilary Putnam, Robert Nozick, Thomas Scanlon, Michael Sandel, Ronald Dworkin, Martha Nussbaum and dozens of others beyond Rawls.

Transcendental Institutionalism versus Comparative Assessment

A central argument of the book is that the tradition which Sen calls transcendental institutionalism has led political philosophy into a blind alley, far removed from a large swash of human reality. He critiques this tradition from Thomas Hobbes through John Locke, Jean Jacques Rousseau, David Hume, and Immanuel Kant to John Rawls in our day. The emphasis in this tendency of political theory is on finding the perfect institution that would deliver justice. For Hobbes this is a strong state that overawes the savagery that Hobbes sees in humans as our natural bent. Locke (the confused man’s Hobbes) and Rousseau rest their case on a social contract to ensure security of life, liberty, and (in Locke’s case especially) property. Hume strikes me as not really serious about political philosophy but inclined to Tory-ism by psychological preference. It is Kant, tormented by the scepticism of Hume, that struggles to produce ultimate arguments for the one true ethics, the one true version of justice, in the form of his categorical imperatives.

This line of thought leads in the twentieth century to Rawls with his grounding of the theory of justice on a fantasized “original position” of equality which will deliver his “two principles of justice”  1) “Each person is to have an equal right to the most extensive basic liberty compatible with a similar liberty for others” and 2) “Social and economic inequalities are to be arranged so that they are both (a) reasonably expected to be to everyone’s advantage, and (b) attached to positions and offices open to all.” (A Theory of Justice, Chapter I, Section 11) This is Rawls’s “justice as fairness.” That this papers over or ignores existing power relations is believed by Rawls and Rawlsians to be justified by the assumption from which the argument starts of an original situation of equality. Would that such a paradise had been our common origin! Unfortunately, we live in a world in which power has not evolved from such impeccable roots!

Sen offers a gentlemanly critique of this tradition aimed at arriving at a more realistic theory of justice. His heroes in this pursuit are Hume’s good friend Adam Smith, the marquis de Condorcet (Jean Antoine-Nicolas Caritat), and Mary Wollstonecraft. He mentions Jeremy Bentham, Karl Marx, and John Stuart Mill in his hall of heroes, but he critiques Bentham severely, and scarcely mentions Marx and Mill except in lists of theorists with the first-mentioned thinkers. He credits Condorcet with invention of Social Choice Theory, the field of work for which Sen earned his Nobel Prize in 1998. In his comparative perspective he is “engaged in making comparisons in terms of the advancement of justice whether we fight oppression (like slavery, or the subjugation of women), or protest against systematic medical neglect (through absence of medical facilities in parts of Africa or Asia, or a lack of universal health coverage in most countries in the world, including the United States), or repudiate the permissibility of torture . . or reject the quiet tolerance of chronic hunger . . “

The Veil of Ignorance versus the Impartial Spectator

A key dichotomy for Sen is the contrast between Rawls’s “veil of ignorance” and Smith’s “impartial spectator” as a central technique for arriving at just results. Rawls’s famous thought experiment put the emphasis on a hypothetical original condition in which differences of wealth and power are assumed to be suspended and the participants in the process of choice are presumed to be free to develop just solutions: “Among the essential features of this situation is that no one knows his place in society, his class position or social status, nor does any one (sic) know his fortune in the distribution of natural assets and abilities, his intelligence, strength, and the like” (A Theory of Justice, Chapter 1, Section 3). In contrast, Smith’s approach in The Theory of Moral Sentiments was to rely on consideration of the views of an impartial spectator before arriving at a choice. Sen spends much of this book in a respectful critique of Rawls’s theory. Mine would be much shorter: Rawls’s theory ignores existing power relations. Since we will never be in a world without existing power relations, a theory that imagines what results would arise in a situation of hypothetical equality has very little cash value to us poor mortals.

Sen prefers Smith’s approach over Rawls’s since it allows for a more realistic consideration of our actions. The device of the impartial spectator is used by Smith throughout The Theory of Moral Sentiments. I count 60 incidences of this phrase in seemingly every possible kind of moral comparison. The first is in evaluation of the potential virtue of holding resentments against someone who had done another bodily harm: “But we admire the noble and generous resentment that governs its pursuit of the author of great injuries not by the rage that such injuries are apt to arouse in the breast of the sufferer, but by the indignation that they naturally call forth in the breast of an impartial spectator . . . “ (Part I, Section I, Chapter 5) The last is in Part VII, Section 4: “Those who write about the principles of jurisprudence attend only to what the person to whom the obligation is due ought to think he is entitled to get by force — what every impartial spectator would approve of him for getting in that way, or what a duly appointed judge or arbiter ought to require the other person to allow or do.” The device of the impartial spectator is Smith’s magic wand to resolve any issue of practical virtue. What Sen makes of this is to argue for public dialogue on issues of justice that come up for question. He says,

 In Smithian analysis, the relevant judgements can come from outside the perspectives of the negotiating protagonists; indeed, they can come from, as Smith puts it, any ‘fair and impartial spectator’. In invoking the impartial spectator, it is not, of course, Smith’s intention to give over the decision-making to the final arbitration of some disinterested and uninvolved person, and in this sense the analogy with legal arbitration does not work here. But where the analogy does work is in making room to listen to voices not on the grounds of their coming from the group of deciders, or even from interested parties, but because of the importance of hearing the point of view of others, which may help us to achieve a fuller – and fairer – understanding.

Another good quote from Sen about Smith’s outlook comes from his chapter on “Lives, Freedoms, and Capabilities.” He writes,

 Indeed, the entire approach of the ‘impartial spectator’, on which the view developed in this work draws, focuses on the relevance of the society – and people far and near – in the valuation exercise of individuals. . . . To note the role of ‘thinking, choosing, and doing’ by individuals is just the beginning of recognizing what actually does happen (we do, of course, as individuals, think about issues and choose and perform actions), but we cannot end there without an appreciation of the deep and pervasive influence of society on our ‘thinking, choosing, and doing’.

Anyone who has tried to have a conversation with a dyed-in-the-wool libertarian (any conversation with a libertarian will eventually bring you around to the “free” market and the quest for liberty) will recognize the attitude to which Sen is reacting here. I relay a thread of one such interaction in the post Investing in Gold. One could say that much of the theory of neo-liberal economics is based on the illusion of isolated individual choice against which Sen argues here.

This is admitted by the purest (and perhaps the smartest) neo-liberal economist of them all, Kenneth Arrow, another friend of Sen’s:

In addition to ignoring game aspects of the problem of social choice, we will also assume in the present study that individual values are taken as data and are not capable of being altered by the nature of the decision process itself. This, of course, is the standard view in economic theory (though the unreality of this assumption has been asserted by such writers as Veblen, Professor J. M. Clark, and Knight) and also in the liberal creed. If individual values can themselves be affected by the method of social choice, it becomes much more difficult to learn what is meant by one method’s being preferable to another. (Social Choice and Individual Values, 1951)

Precisely! And it is exactly this “difficulty” that has led theorists like Varoufakis to assertion of economics’ Inherent Error: It is not difficult, but impossible, to close this loop and likewise is it impossible to theorize coherently about individuals isolated from their society. (See my post Economics for Sceptics – Modern Political Economics.)

Social Choice Theory

Sen won his Nobel Prize for his work following up on Arrow’s development of Social Choice Theory (See his Nobel Lecture here). In Sen’s biographical sketch on the Nobel Website he tells of his early worry back in India where he first heard of it that Arrow’s “impossbility theorem” doomed welfare economics or democracy, or both. Much of Sen’s career was to be spent in working ways around Arrow’s paradoxes. I would refer the interested reader to Sen’s Nobel lecture for more details, but I will quote here his attempt from that lecture to define Social Choice Theory:

Social choice theory is a very broad discipline, covering a variety of distinct questions, and it may be useful to mention a few of the problems as illustrations of its subject matter (on many of which I have been privileged to work). When would majority rule yield unambiguous and consistent decisions? How can we judge how well a society as a whole is doing in the light of the disparate interests of its different members? How do we measure aggregate poverty in view of the varying predicaments and miseries of the diverse people that make up the society? How can we accommodate rights and liberties of persons while giving adequate recognition to their preferences? How do we appraise social valuations of public goods such as the natural environment, or epidemiological security? Also, some investigations, while not directly a part of social choice theory, have been helped by the understanding generated by the study of group decisions (such as the causation and prevention of famines and hunger, or the forms and consequences of gender inequality, or the demands of individual freedom seen as a “social commitment”). The reach and relevance of social choice theory can be very extensive indeed.

Suffice it to say that Social Choice Theory is an extension of the Benthamite calculus and the marginal utility theorists that followed Marshall in their development of what became welfare economics, the attempt to justify and explain (often using an impressive mathematical / logical apparatus) how consumer choice and benefit can occur in both capitalist and socialist (I am thinking of Lange here) societies. The fact that Arrow’s “impossibility theorem” said that this led to authoritarianism was a problem that Sen was very much interested to avoid. His work in analysis of famines, inequality, and discrimination against women would just not work in a Social Choice framework without a “broadening” of the theory. This he explains in The Idea of Justice can be done by:

1) Focus on the comparative, not just the transcendental
2) Recognition of the inescapable plurality of competing principles
3) Allowing and facilitating re-examination
4) Permissibility of partial resolutions
5) Diversity of interpretations and inputs
6) Emphasis on precise articulation and reasoning
7) Role of public reasoning in social choice

In other words, he attempts to abandon the vain effort to close the system of neo-liberal economics by permitting multiple outcomes and multiple reasons to bring about comparative good, rather than transcendental perfection. I doubt that neo-liberal economics’s severest critics would judge that this effort has been successful, but the Nobel committee was apparently convinced. The current reviewer must have great sympathy for the lifetime of effort of this man which has produced real good in the world by justifying efforts to do so.

Mary Wollstonecraft

As I have mentioned above, Mary Wollstonecraft is one of Sen’s heroes, and for good reason. He proudly repeats her rejoinder to Burke’s famous complaint against the French Revolution. In her letter to Burke, she has the temerity to point out the shallowness of Burke’s defense of the American colonies. By ignoring the institution of slavery in England’s American colonies, he was condemning millions of souls to intolerable suffering. While proclaiming the right of the owners of slaves to political independence, he was silent on the rights of those slaves.

But on what principle Mr Burke could defend American independence, I cannot conceive; for the whole tenor of his plausible arguments settles slavery on an everlasting foundation. Allowing his servile reverence for antiquity, and prudent attention to self-interest, to have the force which he insists on, the slave trade ought never to be abolished; and, because our ignorant forefathers, not understanding the native dignity of man, sanctioned a traffic that outrages every suggestion of reason and religion, we are to submit to the inhuman custom, and term an atrocious insult to humanity the love of our country, and a proper submission to the laws by which our property is secured.–Security of property! Behold, in a few words, the definition of English liberty. And to this selfish principle every nobler one is sacrificed.–The Briton takes place of the man, and the image of God is lost in the citizen! (A Vindication of the Rights of Man 1790)

Am uppity woman indeed! And one who put the great liberal / conservative Burke firmly in his place. That Wollstonecraft would be a hero of Sen’s is quite fitting, since he has been a champion of women’s rights in the twentieth century and a frequent associate of Martha Nussbaum, a twentieth century defender of the rights of women.

Critique of Bentham

One of the great problems for Sen in trying to extend a theory which is based in Bentham’s hedonistic calculus is that he realizes that Bentham’s hedonism cannot be justified as the sole principle of justice. As Moore pointed out 100 years before, Plato destroyed hedonism as a theory of ethics in the Philebus. The fact that 150 years of economic “science” has been based on this failed theory is an embarrassment to this profession, but also a big problem for Sen. An example of his approach to dealing with the problems that hedonism presents is his argument for recognizing that the fact that the poor don’t complain about their poverty is no reason to conclude that this it is justified.

The utilitarian calculus based on happiness or desire-fulfillment can be deeply unfair to those who are persistently deprived, since our mental make-up and desires tend to adjust to circumstances, particularly to make life bearable in adverse situations. It is through ‘coming to terms’ with one’s hopeless predicament that life is made somewhat bearable by traditional underdogs, such as oppressed minorities in intolerant communities, sweated workers in exploitative industrial arrangement s, precarious share-croppers living in a world of uncertainty, or subdued housewives in deeply sexist cultures. The hopelessly deprived people may lack the courage (or opportunity, my emphasis) to desire any radical change and typically tend to adjust their desires and expectations to what little they see as feasible. They train themselves to take pleasures in small mercies.

For many years Sen co-taught a class at Harvard whose curriculum included Jeremy Bentham’s article “Anarchical Fantasies”. This is Bentham’s rousing critique of the French Revolution and its Declaration of Rights, in response to which Bentham proclaims, “Natural rights is simple nonsense: natural and imprescriptible rights, rhetorical nonsense, – nonsense upon stilts.”

Bentham claims that the concept of natural right rests on a fallacy, namely, begging the question. In reaction to Article I of the French Declaration (“Men (all men) are born and remain free, and equal in respect of rights.”) Bentham responds, “All men are born free? All men remain free? No, not a single man: not a single man that ever was, or is, or will be. All men, on the contrary, are born in subjection, and the most absolute subjection – the subjection of a helpless child to the parents on whom he depends every moment for his existence.”

To Article II, which says “The end in view of every political association is the preservation of the natural and imprescriptible rights of man. These rights are liberty, property, security, and resistance to oppression.” Bentham responds, “That there are such things as rights anterior to the establishment of governments: for natural, as applied to rights, if it mean anything, is meant to stand in opposition to legal, – to such rights as are acknowledged to owe their existence to government, and are consequently posterior in their date to the establishment of government.”

It is in this part of Bentham’s argument that Sen bases his critique. His general argument is that Bentham assumes that rights must be based on legal authority, but to say that there are rights to “liberty,property, security,  . . . ” stands on much the same ground as for Bentham to declare, as he did, a utility based ethics. The argument as to which should be used as the basis for legal standing is one of competing ethical theories. The rights argument cannot be dismissed so easily.

A Sceptical Defense of Rights

In his penultimate chapter Sen argues that public reasoning can lead to a justification of rights.

The force of a claim for a human right would be indeed seriously undermined if it were possible to show that it is unlikely to survive open public scrutiny. However, contrary to a commonly offered reason for scepticism and rejection of the idea of human rights, the case for it cannot be discarded simply by pointing to the fact – a much-invoked fact – that in repressive regimes across the globe, which do not allow public discussion, or do not permit free access to information about the world outside the country, many of these human rights do not acquire serious public standing. The fact that monitoring of violations of human rights and the procedure of ‘naming and shaming’ can be so effective (at least, in putting the violators on the defensive) is some indication of the reach of public reasoning when information becomes available and ethical arguments are allowed rather than suppressed. Uncurbed critical scrutiny is essential for dismissal as well as for justification.

Not a knock down argument for human rights, perhaps, but an argument good enough for a sceptic till another comes along.

It is election season in the United States. The Republican Party’s “Big Idea” this year, as it has been since the 1980s, is that low top tax rates inspire the “job creators” to hire more workers and give them more pay. This “Big Idea” is, of course, a bald-faced and cynical lie. It is bald-faced because there is ample data to contradict it and it does not follow from analysis of the logic of the question. It is cynical, because this lie is hiding a fact that they refuse to grant: that what low income tax rates surely do is to advance the interests of the top 1% of wealth holders, even if that means that overall economic growth is held back as a result.

To get at the logical part, let’s consider the following question: “Imagine yourself a small business woman (a job creator in their parlance) who is deciding how much money to take out of her business for personal income. Let’s assume that she would be in the top income tax bracket. If the top income tax rate is 25%, as Mitt Romney and Paul Ryan proposed, would she have more incentive to keep that money in the business (grow the business and hire more workers) than if that rate were 75%? Remember that the tax rate applies to the money that she takes out of the business, not on the money that she keeps in.“

Once you have considered this question carefully, I think you will come to the conclusion that I have: The 75% rate gives much more incentive to the “job creator” to invest her small business income in the business, rather than to take that money out of the business and pay a high income tax. The 25% upper income tax rate, on the contrary, gives the incentive for the small business operator to take the money and run, since the income tax burden on money taken out of the business as personal income is so very low.

Now let’s consider the evidence. The graph above presents data on income growth since 1961 in the United States, compared with the top rate of income tax. The income data come from World Bank data on GDP. I converted annual income estimates in inflation-adjusted 2010 dollars to an annual rate of change. The income tax rate data are available from several sources. Full data have been presented by the National Taxpayers Union (History of Federal Individual Income Bottom and Top Bracket Rates). Since 1961 the average growth rate in average per capita income in the United States has been 5.5 percent. During the years when the tax rate was equal to or higher than 70%, from 1961 through 1975, the average per capita income growth was 6.2 percent. During the years when the top tax rate was less than 40 percent (from 1992 to 2007), the average per capita income growth rate was 3.6 percent.

Now let’s compare the data as a correlation. The graph above shows a reasonably good correlation coefficient, indicating a positive trend in income growth with increased top tax rate. Of course, there were a lot of factors that went into higher rates of income growth in the 1960s and 1970s, when the top tax rates were 70% or greater, than in recent years, when the tax rate has been successively lowered (almost exclusively by Republican administrations). But I think we can take this correlation as some evidence, at least, that the Republican’s “Big Idea” is false. And this analysis has been based on average per capita income. If one were to look at the median income, the situation would be worse for the working person because of the increase in inequality since 1980.

So much for the Republican Party’s “Big Idea” that low top tax rates inspire the “job creators” to hire more workers and give them more pay. By asking the question above we see the faulty logic of this. And the income growth statistics bear out this conclusion. Now let’s consider the cynical part. Why are the Republicans so interested in lowering the tax rate on top income earners, if it is bad for the national economy in general?

This last bit of the story is shown in the graph above: There has been a significant increase in inequality in proportion to the drop in the top income tax rates that we have seen under successive Republican presidents and Congressional majorities. These data come from studies by University of California sociology professor Willam Domhoff (Wealth, Income, and Power). After forty years of reduced tax rates (from the 70-95 percent that they were for forty years before) the proportion of US wealth held by the top one percent of wealth holders has gone nearly back up to where it was in 1929, before Roosevelt’s Congress raised the rates precipitously. The portion of the nation’s wealth held by the richest Americans in 1929 was about 44% when the top tax rate was 24%. The top rate rose to 63% during the thirties and 91% in 1945, and it remained over 70 % until 1976. By 1976 the portion of the nation’s wealth held by the 1% had fallen to 20%. High top rates succeeded in reducing wealth disparity. But then the Republicans took over. The top tax rate was lowered to as low as 28% during the Reagan years and to 31% in 1992. As we all now remember, Clinton raised the top rate to 40%, and then lowered it to 39%. Bush II lowered it to the current 35%, where it remains. By 1995 the wealth portion of the rich was back up to 39% and it has remained in that neighborhood since.

This graph shows this wealth data as a correlation. It shows an even stronger (negative) correlation between the wealth of the one percent and the top income tax rate than for income growth. There is a very clear correlation that promises good news for the one percent as the tax rate is lowered.

But what is the causation here? Does inequality cause low rates of growth because the top tax rates are too low? We have seen that poor income growth is correlated with low top income tax rates and we have seen that low tax rates are highly correlated with increasing concentration of wealth. As a final comparison, let’s plot the income growth and wealth concentration data together. The graph above shows these data as a time series. I don’t have income growth data prior to 1961, but for the comparisons after 1976, when I have data for both income growth and wealth concentration, we see that as wealth concentration increased in the post-Reagan years, income growth dropped significantly.

The final graph here shows income growth and wealth concentration as a correlation. Here we find the strongest correlation of all indicating that as concentration of the wealth increases income growth declines. This is a conclusion that makes sense. Poorer people spend relatively more of their income in the general economy than the rich. So increasing wealth concentration results in less overall economic activity and lower rates of growth in average incomes. So does increased inequality suppress economic growth? It appears that it does. Do lower top tax rates increase wealth concentration into the hands of the very well off. Yes, it it appears they do. And that is not such a difficult conclusion to understand. The only remaining question is why the US electorate would stand for this.

There is little question what is going on here in the Republican message: Lower the rate to fatten the one percent, even though this reduces not just wealth equality, but also overall economic growth in society. It doesn’t just grab more of the pie for the rich; it also reduces the overall growth rate of the pie. How has this been possible? Well, it seems to this reviewer that it has been possible because, regardless of the bad outcomes for the overall economy of low top income tax rates, the elites benefit famously. And they are able to control the process through their influence in Congress and by funding massive advertising and media campaigns to keep the electorate misinformed. This has accelerated with the Citizens United decision by a Republican-nominated Supreme Court.

So in conclusion: The “lower the top income tax rate to grow the economy” message, which is the Republican Party’s “Big Idea”, is a bald-faced and cynical lie. The question is not why we should raise the top rate to 39% again, as Obama has suggested, but why we should not raise it to 75%. I will leave that as another question for you to ponder.

Bad Samaritans

Ha-Joon Chang is not widely known, even among economists, in the United States, but he is a rock star in his native Korea. He is not mentioned in the index or the bibliography of the recent neo-liberal tract, Why Nations Fail, by Acemoglu and Robinson. But on a recent trip to Busan, the Republic of Korea’s second largest city on the southern coast, I stopped beside Haeundae Beach to take in the scene. I began a conversation quite quickly (in English, my Korean is rudimentary) with two Korean businessmen and somehow, when the conversation came around to the state of the world’s economy, I mentioned that I was reading Chang’s 2007 book, Bad Samaritans. At first the Koreans didn’t recognize the name, but that was because I had used the Westernized word order for his name, Ha-Joon Chang. “Oh,” the one guy said, “Chang Ha-Joon! I am reading that book too.”

Chang is currently a professor in the Faculty of Economics at Cambridge University (Cambridge on the Cam). You can find his mini-biography on his blog here: http://hajoonchang.net/my-background/. He is the author of a number of texts (he lists 14 books on his blog) in the economics of development, including the recent work, 23 Things They Don’t Tell You about Capitalism. For a quick summary of these 23 things you might look here: http://www.huffingtonpost.com/ian-fletcher/a-review-of-ha-joon-chang_b_840417.html.

Bad Samaritans, first published in 2007, is a devastating critique of the neo-liberal theory of development. At the end of the prologue Chang lists the following heterodox positions that he will argue:

• Free trade reduces freedom of choice for poor countries
• Keeping foreign companies out may be good for them in the long run
• Investing in a company that is going to make a loss for 17 years (Nokia) may be an excellent proposition
• Some of the world’s best firms are owned and run by the state
• ‘Borrowing’ ideas from more productive foreigners is essential for economic development
• Low inflation and government prudence may be harmful for economic development
• Free market and democracy are not natural partners
• Countries are not poor because their people are lazy; their people are ‘lazy’ because they are poor

The resulting book, while perhaps not as ‘cool’ as the 23 Things book, is full of tongue-in-cheek humor backed up with well-informed factual argument. The book includes examples from development stories around the globe, but especially from his native Korea. The theories of the neo-liberal visionaries are devastatingly criticized in the book, but for the most part he does not attack them by name. Rather, he describes examples of policies implemented by the World Bank and International Monetary Fund (IMF) which have been informed by neo-liberal development theory and points out how these policies have often led to the opposite outcome from what their proponents claim for them. An exception to this rule is Thomas Friedman, neo-liberal journalist, whose book The Lexus and the Olive Grove is isolated for criticism in Chapter 1 as embodying the fictitious history of neo-liberal development theories, as opposed to the real history of less-than expected success or outright failure.

For me the most revealing story in the book comes in the early going in Chapter 2 in which Chang reviews the history of how today’s rich countries became rich. He conclusively shows that this was not by following the free trade policies that have been advocated by the World Bank and IMF to developing countries in the past forty years.

Chang resurrects a long forgotten work in economics by Daniel Defoe, the author of the famous character of Robinson Crusoe. Defoe had a colorful career besides his life as an author of literature. He was a businessman, tax collector, political commentator, and spy for both Tory and Whig governments. He was also an economist. Defoe’s book on economics, A Plan for the English Commerce (1728), tells the story of how the Tudor monarchs, Henry VII and Elizabeth I, used “protectionism, subsidies, distribution of monopoly rights, government-sponsored industrial espionage and other means of government intervention to develop England’s woolen manufacturing industry – Europe’s high-tech industry at the time.” Defoe’s character, Robinson Crusoe, is often used as an example by neo-liberal economists of homo economicus, the rational self-interest seeker who drives the development of free market economies. But Defoe’s actual work on economics shows “that it was not the free market but government protection and subsidies that developed British woolen manufacturing.” This is opposite of the story told by Acemoglu and Robinson. They give credit to the abandonment of protectionism as the spur to Britain’s growth, but it doesn’t occur to them that without that protection, Britain’s growth wouldn’t have gotten off the ground.

After the Napoleonic Wars when the protectionist policies of the Tudors had been able to establish British manufacturers as the most efficient in the world, these manufacturers recognized that free trade was now in their interest. The manufacturers agitated in favor of the abolition of the Corn Laws that kept low cost grains from being imported to feed the industrial workers of the New Britain. It is at this juncture in the history of the industrial revolution in Britain that David Ricardo, economist, politician, and stock-market player, originated the theories of free trade that are parroted by neo-liberal economists today.

Ricardo’s theory of comparative advantage “argued that trade between two countries makes sense when one country can produce everything more cheaply than another. Although this country is more efficient in producing everything than the other, it can still gain advantage by specializing in things in which it has the greatest cost advantage over its trading partner.” Chang admits that Ricardo’s theory is correct “within its narrow confines.” However, when one country is technologically backward compared to another, “it takes time and experience to absorb new technologies, so technologically backward producers need a period of protection from international competitions during this period of learning. . . . Ricardo’s theory is, thus seen, for those who accept the status quo but not for those who want to change it.”

A perfect example of this is the United States in the nineteenth century. Adam Smith had argued that the Americans should not develop manufacturing. Thomas Jefferson agreed. But thanks to Alexander Hamilton, who became America’s first Treasury Secretary at the age of 33, a different policy was followed. Hamilton’s Report on the Subject of Manufactures from 1791 presents a rationale for what became the program for development of industry in the United States. The core of this idea was that “a backward country like the US should protect its ‘industries in their infancy’ from foreign competition and nurture them to the point where they could stand on their own feet.” Following the issuing of Hamilton’s report to Congress the average tariff on foreign manufactured goods was raised from 5 percent to 12.5 percent, but this was far short of his recommendations. But after Hamilton’s death (after the famous duel at Weehawken with Aaron Burr) his program was adopted in full. After the War of 1812, the US Congress raised tariffs to an average of 25 percent. Once elected in 1860, Lincoln raised industrial tariffs to the highest levels so far in US history. This was justified by the expenses of the Civil War, but tariffs on manufactured goods remained at the 40 to 50 percent level until the First World War, the highest of any country in the world at the time. How many Americans realize this fact about their history?

And despite having the highest tariffs in the world, the US in the nineteenth century was the fastest growing economy in the world. Free trade economists have argued that this was in spite of protectionism, but Chang points out that the same story has been repeated over and over again in the century that followed; by Germany, Sweden, France, Finland, Austria, Japan, Taiwan, and Korea.

Another example of a cherished neo-liberal policy story where the facts look much different from the theory is told in his Chapter 7 on financial prudence. Low inflation is gospel for neo-liberalism. “Inflation is bad for growth – this has become one of the most widely accepted economic nostrums of our age.” But during the 1960s and 1970s while Brazil’s average inflation rate was 42 percent per year, its per capita income grew at 4.5 percent per year. During the period when Brazil embraced neo-liberal policies between 1996 and 2005, its inflation rate dropped to 7.5 percent per year, but its per capita growth rate also dropped to an average of 1.5 per cent per year. A similar story played out in Korea, which had inflation rates close to 20 percent in the 1960s and 1970s while its economy was growing at ‘miracle’ rates of 7 percent per year. Chang insists that “I am not arguing that all inflation is good. . . . But there is a logical jump between acknowledging the destructive nature of hyperinflation and arguing that the lower the inflation rate, the better.” The inflation rate does not have to be in the 1 -3 percent range for economic growth to occur. The examples of Brazil and Korea show this.

There is much else in this book which debunks long cherished apparent truths of neo-liberal development economics: the story of Finland’s refusal to permit significant foreign investment in their country; the story of the Pohang Iron and Steel Company (POSCO), which grew to be the third largest steel company in the world (in 2008), but started as a state-owned (Korean) enterprise; the story of the economic success of Singapore with its state-owned premier airline and a host of government-linked enterprises in telecom, power, transport, semi-conductors, shipbuilding, engineering, shipping, and banking. All of these stories (and others) are worth reading.

You can hear Chang talking to Amy Goodman in 2009 about Bad Samaritans here: http://www.democracynow.org/2009/3/10/economist_ha_joon_chang_on_the. He comes across as either extremely naive in the ways of US politics or completely deadpan in his reply to Amy’s question that the proper response to the financial crisis of 2008 would have been to nationalize the US banking sector. He gives very reasonable arguments why this should have been done and points out that many countries have had successful growth with essentially public ownership of banking; for example, France. He doesn’t seem to realize how crazy we really are. Apparently he hasn’t been watching Fox News.