By Lisa Herzog
- Inventing the Market; Smith, Hegel, and Political Theory (2013)
- Just Financial Markets? Finance in a Just Society (2017)
- Introduces the reader to the thinkers who shaped our understanding of the market and its role in society
- Accessible to readers with little or no previous knowledge of Smith and Hegel
Inventing the Market: Smith, Hegel, and Political Theory analyses the constructions of the market in the thought of Adam Smith and Georg Wilhelm Friedrich Hegel and discusses their relevance for contemporary political philosophy. Combining the history of ideas with systematic analysis, it contrasts Smith's view of the market as a benevolently designed 'contrivance of nature' with Hegel's view of the market as a 'relic of the state of nature.'
The differences in their views of the market are then connected to four central themes of political philosophy: identity, justice, freedom, and history. The conceptualization of the labour market as an exchange of human capital or as a locus for the development of a professional identity has an impact on how one conceptualizes the relation between individual and community. Comparing Smith's and Hegel's views of the market also helps to understand how social justice can be realized through or against markets, and under what conditions it makes sense to apply a notion of desert to labour market outcomes. For both authors, markets are not only spaces of negative liberty, but are connected to other aspects of liberty, such as individual autonomy and political self-government, in subtle and complex ways.
Seeing Smith's and Hegel's account of the market as historical accounts, however, reminds us that markets are no a-historical phenomena, but depend on cultural and social preconditions and on the theories that are used to describe them. Inventing the Market as a whole argues for becoming more conscious of the pictures of the market that have shaped our understanding, which can open up the possibility of alternative pictures and alternative realities.
Jeffrey Church on Notre Dame Philosophical Reviews wrote:
"In Inventing the Market, the choice of thinkers by author Lisa Herzog [...] is justified by the observation that, besides Norbert Waszek’s historical study, ‘a systematic comparison of Smith’s and Hegel’s views on the nature and meaning of the market has not hitherto been undertaken’ (p. 8). Moreover, both authors remain ‘… among the most controversial, and most often misrepresented, thinkers of the last 250 years’ (p. 5). Besides, while Smith and Hegel ‘stand at the two ends of a scale of views about how much scope the market should be given’ (p. 9), both are able to see benefits of a market-oriented society. [...] Inventing the Market clearly is an excellent piece of scholarly effort as the various prizes won by Herzog for this work confirm. I feel closely identified with many of her claims but, particularly, with her view that ‘both philosophers and economists can benefit from a more historically situated approach to economic phenomena’ (p. 16). On the other hand, I also feel at odds with some of Herzog’s criticisms about the current state of Economics, not because I deny that many economists need to flee from their ivory towers or that I neglect much needed methodological innovation, but because I believe that some of these arguments are flawed.
"Her book, in line with recent literature, corrects the persisting, one-sided interpretations of Smith as a proto-libertarian and of Hegel as a statist central-planner. One of Herzog's contributions is to show that the two philosophers share much more in common on economic matters than is often thought, and hence that their views are more nuanced than the one-sided interpretations suggest. [...] the strength of the book lies in her application of Smith's and Hegel's views to contemporary debates in political theory concerning personal identity and communal responsibility, social justice, and the nature of freedom. She argues that Smith and Hegel represent two rival visions of commercial society that have animated and divided contemporary theorists on these issues. Herzog demonstrates that by returning to Smith and Hegel, we can bring greater sophistication to contemporary discussions. [...] Throughout the book, Herzog deftly incorporates a variety of voices from contemporary political theory, sociology, and economics. Her range is quite impressive, as is her ability to bring these classic texts into discussion without compromising the quality of the historical scholarship. The analysis of Smith and Hegel is excellent throughout, and the application of the two helps us think about these old problems in new and productive ways. I do, however, have a few concerns. [...] These, however, are relatively minor concerns about an otherwise rich and thoughtful study of these two philosophers."
About Lisa Herzog
Lisa Herzog studied philosophy, political theory, history, and economics at the Universities of Munich and Oxford and completed her doctoral thesis in political theory as a Rhodes Scholar at New College, University of Oxford. Her areas of research include political philosophy, philosophy of the market, business ethics, and the history of political and economic thought. Her work has appeared in journals such as Philosophy, Politics and Economics, Philosophy and Rhetoric and Deutsche Zeitschrift fur Philosophie, and she occasionally writes for newspapers such as Die ZEIT. She has recently received the Sir Ernest Barker Prize for the Best Dissertation in Political Theory and the Ernst Bloch Forderpreis. She is a Postdoctoral researcher at the Goethe University Frankfurt and the Institut für Sozialforschung.
Table of Contents & Abstracts of Chapters
Abstracts originate from Oxford Scholarship Online.
The Introduction argues for the need to find an integrated approach for discussing the market and its meaning for society, which includes more dimensions that what mathematical economics focuses on. It argues that a comparison of Adam Smith’s and G.W.F. Hegel’s writing is a promising starting point for such an endeavour, because these two authors stand at the beginning of two important lines of thinking about the market, the classical liberal tradition and the tradition that reaches from the beginnings of sociology to modern communitarian thinking. Then, the methodology of the study is explained: a ‘post-Skinnerian’ approach that pays attention to the historical context of the authors under discussion, but also engages in a dialogue with their writings that explores their relevance for contemporary questions. Finally, an outline of the chapters to follow is provided.
This chapter explores Adam Smith’s construction of the market, which is epitomized in the famous metaphor of the ‘invisible hand’. It argues that in order to understand it correctly, it needs to be read against the background of Smith’s whole philosophical system and his deistic metaphysics. It discusses the way in which his moral philosophy and his economic theory hang together and analyses his complex notion of ‘naturalness’, which includes a role for human design. This also applies to markets, which Smith sees as functioning only against an institutional framework of property rights and, importantly, impartial laws. Under these conditions markets can lead to a situation in which all members of society flourish. Smith thus turns out to be not only an economist, but also a political thinker who reflects on the relation between market and society.
This chapter discusses G.W.F. Hegel’s view of the market, which can be found in his Philosophy of Right. After clarifying my interpretative approach to his political philosophy I describe how Hegel took up the economic theories of his time and integrated them into his account of ‘civil society’. ‘Civil society’ includes the free market as well as the institutions that stabilize it, such as the administration of law, the police, and the corporations. For Hegel, the market is both the sphere of ‘subjective freedom’ and at the same time a chaotic play of forces that threatens to undermine the cohesion and stability of society. Valuable and dangerous at the same time, the market therefore has to be embedded in the larger framework of Sittlichkeit, the most comprehensive institution of which is the political state.
This chapter discusses a worry that has often been raised about the market, namely that it creates unencumbered, ‘atomistic’ selves. After analysing the ways in which both Smith and Hegel see human beings as shaped in and through social contexts, it addresses their different conceptualizations of how people relate to others in the labour market: for Smith individuals sell their human capital, while for Hegel the individuals’ professional life has a deep influence on their identity. This implies that there are not only different degrees, but also different kinds of social embeddedness, and that the labour market can be an important locus of sociality within society. These sociological realities, which can differ from country to country, should be taken seriously in debates about the role and impact of markets on society as whole
This chapter deals with questions of inequality and desert in the market. First, it discusses on what conditions it makes sense to apply certain notions of desert to labour markets. It then turns to questions of poverty and social exclusion. While Smith and Hegel both hold that markets can help to eliminate discrimination, Smith thinks that markets lead to more equality and mutual recognition in the long run, whereas for Hegel they do the opposite, and political measures are required address the inequalities created by the free market. In conclusion, the relation between these two aspects of social justice, which concerns in particular the non-material dimensions of poverty, is discusses. It is argued that rather than focussing only on surrounding institutions, markets themselves also need to be made an issue in discussions about social justice
This chapter discusses the market’s relation to different notions and aspects of freedom. Markets are often described as place of negative liberty, but for Smith and Hegel they are also related to other, more ‘positive’ aspects of freedom. Markets offer both opportunities and risks for freedom understood as personal autonomy. For Smith, markets also help to secure freedom in the republican sense of living as a free citizen under the rule of law. For Hegel, in contrast, the freedom of belonging to a just society the principles of which one can endorse is threatened by markets, and needs to be secured by the political state. These different notions of freedom thus hang together in multiple ways, and need to be discussed within their social contexts, one of which is the market.
In this chapter the debate about different accounts of the market is put into a historical context. First, Smith’s and Hegel’s understanding of historical processes is analysed, which leads into to the question of whether economic phenomena can ever be understood in an ahistorical way. Smith’s and Hegel’s accounts show that their dependence on social and cultural preconditions, and on the self-fulfilling nature of social theories, makes this problematic. This means that in order to understand today’s markets we need to understand the ideas from the past that brought them about. Both philosophers and economists can benefit from a more historically situated approach to economic phenomena. This helps to understand pictures of the market as pictures, and thus opens up the possibility of alternative pictures and alternative realities.