Georges Bataille On Free-Market Utopianism
Say’s law, the prudent economy, and the accursed share
One fallacy of neoclassical and free-market economics is traceable to a non sequitur written by the eighteenth-century liberal economist Jean-Baptiste Say, author of what came to be called Say’s law, or the law of markets.
The Fallacy Behind Say’s Law
Say argued that markets needn’t worry about grinding to a halt from an oversupply of goods, because supply constitutes its own demand; as he wrote in his Treatise on Political Economy, “Inherent in supply is the wherewithal for its own consumption.”
To be sure, gluts can occur, Say acknowledged, but they can happen only temporarily because of some misconception about the particular goods that are in demand; in Say’s words, “a glut can take place only when there are too many means of production applied to one kind of product and not enough to another.”
But Say also makes the deeper claim that, “The superabundance of goods of one description arises from the deficiency of goods of another description.” What Say had in mind there was supply-side economics, the idea that supply is more fundamental than demand, and that the two equal each other in the aggregate because demand stems from supply.
That is, you have no standing to demand anything unless you’ve produced something or you have something to sell such as a commodity or a service. Producing output requires paying the suppliers of that output (assuming the products aren’t produced by slave labour or by some other coercion or fraud). That income in turn carries the potential to generate demand for the purchase of that output. Thus, demand is implicit in the means of production, which makes for a self-perpetuating economy.
If there’s excessive production of pencils, for example, this very misdirected exuberance indicates an implicit demand for something other than pencils. The energy devoted to the production of something carries some potential for fostering demand; if the demand isn’t for pencils exactly, it must be for something else.
Say’s law predicts there can never be long-standing unemployment or overproduction, because the market that creates those products has the inherent wherewithal to correct itself, to redirect its efforts. Yet John Maynard Keynes took the Great Depression to have proved that Say was mistaken, that there’s no such law.
Indeed, the flaw in Say’s thinking is found in the following statement of Say’s — and see if you can catch the fallacy: “As each of us can only purchase the productions of others with his own productions — as the value we can buy is equal to the value we can produce, the more men can produce, the more they will purchase” (my italics).
Did you catch the dubious presupposition? Say goes from speaking of a potential to speaking of an actuality. We can’t buy more than we can produce, he says, but he adds that the more we can produce, the more we will purchase. That doesn’t logically follow, because it’s possible to hoard or to waste money.
Jewish Prudence and the Folly of Hoarding Wealth
Here, though, is Say’s reason for making that leap:
It is worthwhile to remark that a product is no sooner created than it, from that instant, affords a market for other products to the full extent of its own value. When the producer has put the finishing hand to his product, he is most anxious to sell it immediately, lest its value should diminish in his hands. Nor is he less anxious to dispose of the money he may get for it; for the value of money is also perishable. But the only way of getting rid of money is in the purchase of some product or other. Thus the mere circumstance of creation of one product immediately opens a vent for other products.
Of course, just because a producer is eager to sell what he’s produced, doesn’t mean he’ll succeed. Even in the aggregate, there may be systematic flaws in human cognition or communication that prevent the market from reaching the envisioned equilibrium in which there’s full employment and no oversupply of goods.
Moreover, Say assumes that producers are just as eager to get rid of their money, because money’s value is perishable, and money is gotten rid of by purchasing some products.
This presumption of Say’s seems rooted in something like the pragmatism of Ecclesiastes: “He who loves money will not be satisfied with money; nor he who loves wealth, with gain: this also is vanity. When goods increase, they increase who eat them; and what gain has their owner but to see them with his eyes? Sweet is the sleep of a laborer, whether he eats little or much; but the surfeit of the rich will not let him sleep” (5:10–12).
The passage becomes even more forceful: “There is a grievous evil which I have seen under the sun: riches were kept by their owner to his hurt, and those riches were lost in a bad venture; and he is father of a son, but he has nothing in his hand. As he came from his mother’s womb he shall go again, naked as he came, and shall take nothing for his toil, which he may carry away in his hand” (13–15).
The biblical point is that hoarding wealth is unwise, but this hardly means that hoarding is impossible or even improbable, contrary to Say. The laissez-faire economics that’s based on Say’s law assumes as part of its efficient market mechanism that buyers and sellers exhibit the wisdom of Ecclesiastes, that they’re fundamentally rational. The author of Ecclesiastes laments, rather, that wisdom is in short supply; hence the need for Ecclesiastes to have been written in the first place.
Dominance, Decadence, and Sacred Waste
To make further sense of this, we should turn to Georges Bataille’s case for what he called “the accursed share.” Bataille had a very different view of human nature and of our role in the economy.
Whereas the liberal insists on the market’s ability to regulate itself, without the need for much government intervention, Bataille noticed that human irrationality is a feature, not a bug. According to Bataille, this irrationality generates an excess of value in our social interactions, which can be spent nonproductively and wastefully in the form of luxury or spectacle, for example. Alternatively, this accursed share can fester if we fool ourselves into thinking it’s not there, in which case the waste products become catastrophic as in the case of war, extreme self-sacrifice, or environmental catastrophe.
For Bataille, our irrational wastefulness flows from the sacred majesty of nature’s creativity. The sun’s expenditure of energy is wildly disproportionate to the needs of organisms. Instinctively, then, we don’t just follow the dictates of reason or adhere to the letter of the law, but channel the sublime, overflowing powers of nature.
We have a conflict here, if you will, between Jewish prudence and French extravagance. The rationalist conceit that markets can safely be left to their devices is based, in effect, on Jewish humanism and monotheism, and only superficially on the pseudoscientific trappings of neoclassical economics.
Gluts, recessions, and hoarding indicate a more disturbing, rather Nietzschean reality. Indeed, to Bataille’s point about our channeling of nature’s ecstatic excesses, we can add what I’ve called “the basics of cynical sociology”: we don’t just leave room for an “accursed share,” for excess value that’s doomed to be wasted, but we adopt the power dynamics from most social animal species, which divide society roughly into masters and slaves; and that’s so even in socialist or egalitarian societies that are designed to curb such structural animality.
With that in mind, we can infer that wealth-hoarding is evidently a means of signaling alpha dominator status, as distinct from the subordinate status of the lower classes in the pecking order.
Likewise, gambling with wealth, speculating in the stock market, using capital not to finance productive ventures but to facilitate schemes for extracting a further fortune from the creation of debts and rents, avoiding taxes by parking your wealth in a tax haven — all such familiar tactics of the super-rich are irrational and insolent from the “Jewish” perspective, but are natural and perhaps even sacred from the “French” one.
Likewise, the watershed election of Donald Trump as the American president represents a broader societal implosion: instead of just the rich signaling their too-big-to-fail status with their reckless extravagance, the disenfranchised majority contributes to the social decline by demonstrating they understand their economy is a sham. Thus, these masses either refrain from voting (leaving the voting to dueling extremists and hotheads) or they eventually vote to sabotage or to troll the “dysfunctional” establishment, by introducing a bull to the China shop.
Yet Bataille’s point would be that Republican malfeasance is dysfunctional or corrupt only from a moralistic standpoint; in evolutionary terms, Republican support for plutocracy (for the dominance of the rich few over the poor many) is perfectly normal (animalistic). Tyranny is normal while social equality is virtually miraculous (anti-natural).
Contrary to prudent, scientistic economics, the goal of politics and economics may not be the optimization of efficiencies, but a cryptoreligious celebration of higher orders of humanity — not “higher” morally, to be sure, but elevated in terms of their extravagance, their embodying of sacred waste.
In the distant past, we first conceived of superheroic “gods,” when the royal families dominated the lower castes. Likewise, capitalism props up a middle class only by accident, when circumstances permit such as at the end of a world war or when progressive, Enlightenment values of equality and of human rights manage to overtake the inherent tendencies of capitalism to perpetuate the ancient, evolutionary dominance hierarchies. Now it’s the irreligious plutocrats and kleptocrats that flourish with unearned, accursed shares of wealth, to the detriment of the duped majorities that flail about in equally wasteful, misdirected “populist” revolts.
Guilt-ridden billionaires like Bill Gates and Warren Buffett announce their intention to give all their wealth away. Their largesse is based on the Jewish intuition that there’s no point in hoarding wealth because when we die we carry none of our possessions with us. But their philanthropy would have appalled the comical ancient early Pharaohs, for example, who buried their wealth and even their courtesans and servants with them.
But the attempt to tame our inclinations to hoard wealth and to position ourselves such that we can lord it over some minions may be as futile in the long run as trying to snuff out the sun by blocking your view of it with your hand.
It’s no accident that powerful people hoard wealth, as the psychologist Paul Piff showed with his social experiments. In one of them, Piff brought in hundreds of subjects to play a rigged game of Monopoly. A flip of a coin decided who would be the rich player with extra advantages, and who would be the poor one. Hidden cameras showed that the lucky players tended to act out in dominant ways, belittling the poor player, more loudly moving their Monopoly piece around the board, eating more of the communal pretzels, and so on. And afterward none of the lucky players credited their success in the game to the coin flip, contrary to that obvious fact.
In short, Piff found that money makes you mean, that poor people are more generous than the rich, and that the rich justify their dominance by subscribing to a warped view of reality and ignoring the extent to which luck plays a factor in success. Most importantly, Piff’s experiments entail that anyone would fall prey to this power dynamic. Some people may be more prone to selfishness or rudeness than others, but it’s the position of relative dominance itself that’s corrupting, so that anyone who occupies that social role, even someone who goes from rags to riches, is liable to lose sight of her conscience and empathy.
“Rational” Economies Channel Nature’s Savagery
If the market were an efficient mechanism operating on prudent actors, and if supply and demand were rationally interrelated, there would be no obscene oversupply in the long run. But this leaves open the question of the purpose of this efficient mechanism. What would be the end towards which we’d be efficiently heading?
As it turns out, Bataille would point out, free markets create monopolies in a boom-and-bust cycle, along with a cadre of billionaires who hoard or waste their wealth instead of investing it in productive enterprises. They do this because their power corrupts them, because their role in society is to serve as superheroic alpha figures, once worshipped as avatars of gods. Society creates psychopathic kings or other dominators as symbols of the sun’s ludicrously-inefficient, which is to say excessive power.
The Jewish or moralistic view is that we should be prudent in light of God’s greatness. We should fear God, follow his commandments and not pretend we can challenge his supremacy.
Neoclassical economics replaces religious faith or fear of God with ideal rationality, but of course human logic is impotent next to the mind-shattering scale of nature’s creative power. This is why even in our secular economies, our best and brightest businesspeople bend to genetic pressure, take up their thrones, and dictate in their corporations like pitiless monarchs. We store up wealth and waste it, spitting in the face of the poor, just as the universe wastes whole galaxies, hurling them into black holes with savage indifference to morality or efficiency.
