Economic Basics for Civil Society: theories developed by Hegel and Marxist political economy

Lyubov V. Nechaeva, School of Governance and Politics

Abstract

Before Georg Hegel the concept of civil society didn’t present a coherent and comprehensive theory. It was he who made a significant step forward to design a complex multifaceted picture basing himself on the critical analysis of capitalist economic system and its changes which created prerequisites for certain social relations, namely civil society. The importance of Hegel’s scientific research is often underestimated due to the fact that he is often addressed to classical political economists as laissez-faire theory is in some point consonant with what he offers. On the other hand, civil society and its impact on economic relations coincide with Marxism, which, like Hegel, criticize classical political economy for its excessive personal utilitarianism. Combining features of both sets of economic ideas, Hegel proposes an alternative view and in this article we shall try to elucidate its uniqueness.

Key words: civil society, the failure of civil society, crisis of overproduction, development of human capacities

Main body

The worldwide known German philosopher Georg Hegel was the first to give a comprehensive theoretical framework for the civil society concept which was presented in his fundamental book «Philosophy of Right». According to Hegel, the appearance of civil society category is possible only in a certain historical context. A state develops faster than society creating a proper combination of political, economic and social relations where an individual can freely realize his interests (Ershova,2015). Europe with its capitalism has a crucial meaning in this case as entrepreneurial spirit and culture contribute greatly to a brand new person who is aware of his needs and understands how to communicate with others pursuing his goals. Then Hegel explains that such individual is not egoistical in nature as each person’s action intends to satisfy not only his interests but also the ones of society. Despite the fact that people differ in their requirements, they have some needs in common, and a number of new enterprising individuals, outcomes of developing capitalism, influence on a state when they act together. For the first time in history power of society is comparable with one of a state, and people are opposed to government. This is what Hegel calls civil society.

The first critical onslaught was offered by Karl Marx in 1843 (Pelczynski,1984). He did not adhere to the opinion that civil society is an essential part of harmoniously organized structure of people’s community. Otherwise, Marx identified several contradictions in Hegel’s theory. The main direction of his critics consists in trend towards an inevitable pauperization of masses which leads to social instability and results in failure of civil society. Marxist and marxist-influenced works include the same logic: a state is viewed as helpless in the face of poverty, civil society must be therefore abandoned (Kain,2014). Nevertheless, there is no consensus among Marxists whether their interpretation is right and reasonable. Phillip J. Kain, considering himself a Marxist, withholds his consent on collapse of civil society. According to Kain, Marxism is mistaken in its statement that Hegel did not foresee the issue of poverty. He tried to prove it and to address this problem deriving arguments from the Philosophy of Right.
Looking ahead, Hegel offers a solution to the problem of income inequality, poverty and pauperization through intervention of government into regulation of economic relations and its reinforcement on the market. This thesis is combined with acceptance of Smith’s prospective: behind each individual’s action lies a purpose of personal needs satisfaction (Avinery,1972).The same opinion can be traced in A. S. Walton’s rhetoric. In his writings Walton mostly focuses on Hegel’s critics of personal self-concentration and pursuit of private interests which are the central elements of utilitarian political economy (Pelczynski,1984).

Considering all the mentioned views, what Hegel offers is a coherent concept which includes critical review on capitalistic economy system based primarily on principles of political economy. Unlike Marxism, sustainable social development and harmonious coexistence of people is possible within the framework of free market. What is more, private property and ownership of the means of production are an essential part of economic relations (Pelczynski,1984). Pursuit of personal interest, significance of a state in the structure of economy and corporations are economic basics for the civil society concept by Hegel. In this article we shall analyze these elements in order to prove economic viability of Hegel’s theory through comparative analysis as a scientific method.

Pursuit of personal interests

In historical discourse philosophical works by Hegel and Marxism were preceded by political economy. Its appearance dates back to the 17th century and also owes a great deal to Adam Smith with his book Wealth of Nations. What is interesting, Hegel with his theory is sometimes qualified as a follower of Ricardo and Smith’s views (Pelczynski,1984).. However, we can ensure that this statement is a misconception. Nevertheless, it makes sense to sketch key points of political economy before drawing any definite conclusions. According to this theory society consists of individuals with highly utilitarian views on economic relations. Each individual is aimed at satisfaction of private interests which are viewed only as rational ones. Likewise hedonics, political economists shared a prospective that some universal laws rule and determine actions of an individual in different spheres particularly in the economic one (Pelczynski,1984). Harmony between people can be achieved, as they are governed by the same rules. Thus, economic relations need only a minimum government intervention as this system is self-regulated.

Marxist model contrasts sharply with this anthropocentric theory which utilitarian political economy presents. According to Paris Manuscript, economic system is rational only when society pursues to satisfy co-operative interests. Imperative of private benefit and competition on the free market result in social disharmony and instability. This obstructs development of human capacities, violating therefore logic of historical development. Marx did not share Hegel’s prospective that civil society was a community of rational individuals, whose private interests could harmoniously coexist (Pelczynski,1984). To prevent public order from inevitable failure civil society must be eliminated and reorganized on the basis of co-operation.

Hegel’s writings were definitely influenced by classical political economy and at the same time they included empirical observation of economic development which existed in the 19th century. He suggested the following philosophical framework: economic system is a machine, it forms competitive relations between individuals who pursue satisfaction of their private needs. Thus, he accepts this basic principle of political economy, but with certain reservations. According to Hegelian theoretical framework, individual’s pursuit to satisfy interests cannot be reduced to ends of economic activity (Pelczynski,1984). Social relations with its economic sphere have important educational functions. We can interpret it through Hegel’s conception of «education», under which development of an individual depends on his struggle with barriers of the outside world. Dualism of mind is presented as «physical needs» and «the chain of these external necessities» (Hegel,2011). In order to satisfy these needs an individual has to overcome obstacles. Thus, pursuit of private interests is an essential part of human capacity growth. Continuing in the same direction, connection between an individual and the external world is expressed by an action, it can be considered as «the first embodiment of freedom» (Hegel,2001). By action civil society with its members master nature, what allow them to shape externality and adjust it to their needs.

State regulation as a solution to «failure of civil society»

With a more precise view it becomes clear that Hegel doesn’t belong to classical political economists. On the contrary, he attacks all of the central key provisions of this theory and its followers. We arrive to such conclusions owing to the notes made by Hegel’s students during his lectures.
According to classical political economy one of its core elements is a principle of laissez-faire: when government influence on market is limited, people prosper best pursuing their interests in order to satisfy them. Unrestricted actions of individuals in economic relations are regulated by essential harmony of market which Adam Smith named «the invisible hand» (Pelczynski,1984). In fact, economy can’t be self-regulated. One can clearly see it from Great Britain’s experience (Georg Hegel used this country as an example of the most developed civil society which existed in the nineteenth century). The real consequences of laissez-faire led to problems of overproduction, poverty and pauperization of people who couldn’t overcome ups and downs of constantly changing economic environment. Social disproportions and income inequality are determined as the main problem of England. Hegel makes the point that a person with a larger income needs less for livelihood, whereas smaller capitalists need larger proportion for the same purposes. In the long run, capital concentrates in fewer hands. According to both Hegel and laissez-faire adepts monopolies have disastrous consequences to economy, but this one, a monopoly of capital, is" the worst kind of monopoly" (Hegel,2001).

Thus, poverty torments society and one may pertinently ask how this major problem can be solved or at least eased. Hegel suggests two possible scenarios. The first one is as follows: if wealthy class can be obliged to help those in need, or if direct measures can by applicable to public institution in order to struggle impoverishment, subsistence level will be easily maintained without additional steps by workers, but this violates Hegel’s principle of «individual independence and self-respect» (Hegel,2001).Such charity is therefore an inappropriate way of addressing the problem of pauperization.Nevertheless, people themselves can derive livelihood from their own efforts. They increase productivity which results in overproduction. Market doesn’t have a required number of consumers, supply exceeds demand leading to a crisis. Hegel concludes that «despite excess of wealth, civil society is not wealth enough», formation of impoverished masses is inevitable (Hegel,2001). This is the main direction of Hegel’s criticism. Marxists call it a «failure of civil society». What is interesting, Marxists don’t presuppose a solution to social poverty. Civil society with capitalist market must be simply eliminated.

Actually, this Marxist interpretation is mistaken because civil society by Hegel suggests an efficient solution to poverty. The philosopher views a government with its intervention into various social spheres, particularly into the economic one, as a key instrument of regulation, what is similar to Marxism prospective. Before we move on to justification for the just mentioned ideas, we shall discuss one interesting aspect of laissez-faire concept failure. According to Hegel, the problem of overproduction in Great Britain always drove people beyond the country borders. As a result, colonization became an immanent part of what is called economic success experienced under laissez-faire. The colonized territories were regarded as market for metropolis production at the same time offering unlimited possibilities in terms of resources. This led to unprecedented economic growth of Great Britain. Thus, in Hegel’s interpretation a concept of «the invisible hand» and its ability to solve economic problems without measures by a government are attempts by political economists to give out desirable for valid. One can say that Great Britain flourished guided by laissez-faire only with strong reservations.

In Hegel’s rhetoric poverty is an integral part of society, its grounds lie in human nature and social structure (Hegel,2001). Immense differentiations of wealth are a cause of different opinions towards each other which has disruptive effects on harmony among people and sense of mutual equality. A.S. Walton says that origin of this inequality is «unmediated drive towards personal accumulation which results in crises of overproduction» (Pelczynski,1984). The only solution to this problem is an early mentioned colonization which cannot be considered as an appropriate way out. Instead, Hegel proposes a state regulation. In his volume «Philosophy of Right» he points out that polarization of masses, poverty and pauperization exist only «when the activity of civil society is unrestricted» (Hegel,2001). This does not actually mean expropriation and nationalization in order to expand public sector. Secure of property should be guaranteed along with maintenance people welfare. One can fairy admit that state regulation is a relatively abstract concept, its direct expression is what Hegel calls «The Police and the Corporation» (Kain,2014). This averts «the failure of civil society». It consists of three main social institutions: government, police, and corporations. With their assistance satisfaction of community needs will be ensured: «the commodities are available in adequate quantity and at not too high price». Police provide not only observation of laws but justice in general (Ershova,2015). As Hegel views welfare as a right, justice has a crucial importance for income distribution particularly (Hegel,2001). Government uses taxation to equalize wealth among people (Kain,2014).. This instruments helps to avoid a problem of charity which only eases tensions but doesn’t present an ultimate solution to poverty. «Subjective assistance» is therefore minimized (Kain,2014).

Corporations

In fact over the centuries people were chained in freedom of their actions: they used to spend a whole life in a certain place where they were born taking over for their parents in a traditional family occupation. As bourgeois society develops, its element, a person, loses his natural essence and understanding of his social role (Ismagilov,2016). Erich Fromm named this psychological phenomenon «escape from freedom»: people are no longer restricted in their right to succeed in the favorable conditions formed in capitalistic Europe, but a wide range of emerging opportunities lead to fear of confusion how to deal with them, in other words they are afraid of this unknown industrial world. Following Hegel’s dialectics developing industry simplifies a concept of individuality or even distorts it, because in the current economic relations system a person can find the grounds for self-determination only as an appendage of a machine or as a subject of industrial function. At the same time an early mentioned new brand individual transforms into an alienated and «one-dimensional man» according to fundamental volume by Herbert Markuse (Ismagilov,2016).

Marxism has the same problem of alienation, but it doesn’t view this feeling as a problem. What is interesting, in its various criticism of civil society by Hegel this mental phenomenon was spared. In contrast, according to Hegelian theory, an individual with lost feeling of self-determination is an obstacle to social harmony. «The corporation» is an instrument to tackle this problem.

A wide range of social needs requires multiple functions to satisfy them, this leads to differentiation of a workflow as each individual has his own distinct function. In other words, a worker is in charge of a personal contribution to production. Through membership in a corporation an individual receives recognition from other members (Kain,2014). Being at the same time elements of what Hegel calls «the universal», they understand roles of each other and their places during production process (Hegel,2001). Thus, a worker is no longer an abstract part of a giant factory machine. This type of relations have a significant importance for one more reason: it leads to a psychological change in perception of each other. Members of corporation are equal and free subjects of industrial relations. Such attitude helped to overcome the traditional feudal dichotomy between landlords and vassals (Ismagilov,2016). Economic participation is therefore voluntary driven by private interests and necessity to satisfy one’s needs. The same offer classical political economists. Nevertheless, Hegel’s concept of corporations is deprived of utilitarianism, because in order to satisfy one’s requirements, members of community make input to what later will be redistributed among them (Kain,2014). Continuing in this direction, a corporation is «an atom» of civil society; its well-being is a part general welfare.

P.J. Kain says, «Membership in a corporation is evidence of one’s skill, regular income, and means of support» (Kain,2014). Groups with the same interests, needs should be represented by corporations to act more efficient in order to lobby for their demands and concerns.Germany was an embodiment of ideal corporation concept (Hegel,2011). Its disintegration led to the downfall of the Roman Empire, but at the same time gave a rise to rapprochement between the towns. They formed trade guilds (the Hanseatic League is the best-known example). Corporations promoted growth of civil society. Hegel had to admit that as historical phenomenon such trade alliances had exhausted themselves and then substituted with labor unions. There is a certain inequality between workers and managers which runs counter to what was among members of the Swabian and Hanseatic Leagues. In many other ways, functions of labor unions coincide with those of corporations: feeling of recognition in the eyes of others, sense of having accomplished things not only for one’s personal welfare but also for common good of community (Kain,2014). A labor inion also provides options for personal growth by educating workers and encourages civil initiative by assisting its members in their struggle for better working conditions.
We should point out one more interesting thing about corporations. Each corporation is a part of certain social sphere, its members are directly involved in various processes and know them from the inside, Thus, workers are experienced enough to represent major interests in national assemblies. Hegel says that this will be beneficial to both corporations and a state, as fair representation of interests promote justice. One can notice here an important educative function, as workers can themselves determine correlation between interests of their corporation and «the state with its affairs», it will allow them to be more rational in further decisions and judgments (Hegel,2001). By the way, Hegel could get this idea from constitutional reforms initiated by Wilhelm von Humboldt (Kain,2014).

As can be seen from the preceding remarks, theoretical essence of corporations aims at solving many practical problems. Hegel offers an alternative variant of social development which allows to smooth out the two early mentioned questionable points: charity and overproduction. Charity within corporation loses its subjective part, each worker makes a contribution to his labor union, and then can also get it back, so it doesn’t violate the major principle of «self-sufficiency and honor» (Hegel,2011). As for overproduction leading to impoverishment of masses, classical political economy allows emergence of crisis but only by accident, unlike Hegel and Marxists who consider overproduction to be a logical outcome of non-regulated economy. But what if crises are not always crises of overproduction? Hegel’s corporations also address this issue. By maintaining socially acceptable standard of living, labor unions make input to human capital formation. Increase of personal income stimulates growing demand, thereby overcoming overproduction (Kain,2014). Thus, Marxist conviction of civil society failure remains unsubstantiated.

Conclusion

In this article we made an attempt to prove that civil society by Georg Hegel is an alternative theory, which includes refined elements of political economy and withstands criticism of Marxism, thus proving its effectiveness.

First, it was suggested that pursuit of private interests is not an end in itself, but a constitutive element of human capacities development. Actions taken in order to satisfy needs are expression of freedom which aims at mustering nature, thus customizing the external world according to people’s requirements.

Second, we tried to prove non-substantiation of Marxist statement that civil society will inevitably fail. Crises of overproduction are an outcome of constant drive towards wealth. It results in uneven distribution of income and creates polarization of masses. Immense inequality deprives society of harmony and stability, because under such social conditions, namely struggle for survival of the strongest (the wealthiest), people cannot peacefully coexist. Through reinforcement of government presence on the market Hegel suggest a solution to overproduction.

Third, what Hegel calls «the corporations» (labor unions in historical context) are essential part of civil society for a number of reasons. Feeling of alienation was formed by developing industrial relations. Over time it deprived a worker of his identity, turning him into an abstract part of a plant. Membership in a corporation is recognition of individual’s qualification and capacities; it also instills social values and values of human coexistence. If a worker contributes to the common welfare, it will return to him when in need. Corporations are also a great tool to address the problem of overproduction. They invest in development of human capital through different forms: education, assistance in struggle for better working condition and etc. Improvement of personal abilities helps to implement new knowledge and opportunities to raise income. Workers can thereby increase demand and prevent appearance of excessive production on the market.

References

1. Avineri S. (1972) Hegel’s Theory of the Modern State. Cambridge: Cambridge University Press.
2. Ershova I.V. (2015) Hegel’s Civil Society Concept and the Contemporary Notion about it.. // GISAP: History and Philosophy. No.5. P.33-35.
3. Hegel G.W.F. (2001) Philosophy of Right. Kitchener: Batoche Books Limited
4. Ismagilov I.R. (2016) (Economicheskaya Problematika v Filosofii Prava G.W.G. Gegelya // Pravovoye Pole Sovremennoy Economiki. No. 8. P.68-72.
5. Kain, P. J. (2014) Hegel and the Failure of Civil Society// The Owl of Minerva1. Vol. 46. No 1. P.43-65.
6. Pelczynski Z.A. (1984) The State and Civil Society. Cambridge: Cambridge University Press.