Political economy in the classical tradition

In this chapter we explore the classical approach to political economy. The classical economists of the eighteenth and nineteenth centuries were the first to use the term “political economy.”¹ The period covered by classical political economy cannot be stated exactly.

We will divide our consideration of classical political economy into two parts: the argument for market self-regulation and the theory of value and distribution. The first part concerns the nature of the market system and its relation to the state. The second concerns production and use of the economic surplus. The second part draws on more recent contributions within the classical tradition. Although using elements of the classical analytical frame­work, these recent theories suggest an approach to political economy in some ways at variance with that of the classical economists themselves.

The classical approach frames the central themes of political economy in a distinctive way. Most fundamentally, the classical economists played a major role in introducing and elaborating two core ideas: the separability of the economy and the primacy of the economic sphere. The first part of this chapter emphasizes this side of the classical theory, which has special im­portance for the themes of this book.

Modern theorists working in the classical tradition (see Walsh and Gram,

For historical discussion of the term “classical economics” or “classical political economy” see Roll (1953:ch.

1980) tend not to frame issues of political economy in this way, however. In the second part of this chapter, we consider the implications of the theory of value and distribution for the central concerns of political economy as we define them in this book.

The founders of political economy perceive a change in the relationship between political life and the nonpolitical activities loosely termed the sat­isfaction of private wants. This perception leads to a redefinition and realign­ment of terms used to talk about social order, terms such as political society and civil society; private and public; economy and state. This realignment involves a shift of emphasis toward the idea that society organizes itself and develops according to its own laws, processes, and imperatives. The vitally important social institutions do not develop according to plans articulated and instituted by political decisions, but according to underlying and unin­tended imperatives of group life. If this is true, then history becomes less an account of political processes, conflicts, or deliberations, more an account of the unintended consequences of private activities. Adam Ferguson’s Essay on the History of Civil Society, published in 1773, marks an important moment in this shift of perspective. Ferguson expresses our idea in the following words:

If Cromwell said, [t]hat man never mounts higher, than when he knows not wither he is going; it may with more reason be affirmed of communities, that they admit of the greatest revolutions where no change is intended, and that the most refined politicians do not always know wither they are leading the state by their projects, (p. 205)

Political economy gave considerable impetus to the shift of focus away from politics in understanding the forces that account for the large historical movements that mold the social world. Adam Smith saw the rise of civilized society as the result of profit-seeking behavior rather than of any plan known to and instituted by a political process or public authority.

Marx took this idea much further. He described the process by which epochal changes were brought about in methods of production, social rela­tions, and ways of life, all as the unintended consequences of the pursuit of private gain. Marx’s materialist conception of history expresses with special force the subordination of politics and of the decisions of a public authority to the immanent and inexorable forces set loose and operating within society.

The emergence of political economy helped to mark the demotion of politics and the elevation of the nonpolitical part of civil life. Indeed, it contributes to the redefinition of civil life away from politics and in the modern direction of private affairs pursued outside of the household, in the world of business. The rise of political economy means the rise of civil society in contradis­tinction to politics.

The demotion of politics could hardly be better expressed than by the invisible hand metaphor of Adam Smith. Although Smith’s view is in some ways extreme, it very clearly articulates a new relationship between political and civil society (or politics and economics). This new relationship arises, in part, out of a rethinking of the possible and reasonable purpose of the state. To see this clearly, consider the following description of government provided by Steuart, and more in line with older ways of thinking:

The great art of government is to divest oneself of prejudices and attachments to particular opinions, particular classes, and above all to particular persons; to consult the spirit of the people, to give way to it in appearance, and in so doing to give it a turn capable of inspiring those sentiments which may induce them to relish change, which an alteration of circumstances has rendered necessary.

Steuart attempts to combine two important ideas. First, he expresses the notion (which we have emphasized) that change arises out of forces and processes immanent in society and not decided by the state. Second, at the same time, he sees a crucial role for the state in recognizing the necessity of those changes and leading society through them. Changes in what Steuart terms the “spirit of the people” are gradual and immanent rather than planned. Because these changes are gradual and immanent, they may escape the perception of the people. This failure may lead individuals to misjudge their own and society’s interest. The state must take a leading role in edu­cating individuals to their genuine interest, both private and public.

Smith and Steuart, while writing at approximately the same time, judge the possible and desirable functions of government quite differently. Steuart does not directly participate in the devaluing of politics, although his accep­tance of the necessity of the laws of political economy points him in that direction. Smith travels the whole route and is driven that much faster to do so by his judgment of politicians, whom he considered “insidious and crafty animals” ([1776] 1937:435). This difference is important in understanding the meaning of political economy and the significance of its emergence in the late eighteenth century.

Smith’s judgment depends on his now well-known solution to the problem of economic order. The solution comes in two parts. First, nonpolitical group life (civil society) must organize and perpetuate itself more or less indepen­dently of political decision making. The unit that incorporates the work of satisfying private wants is a political unit, but within that unit the production and distribution of things needed to perpetuate private life is nonpolitical. Second, as we have seen Steuart arguing, the laws and imperatives of civil society must dominate politics. Economic laws constrain the statesman or politician.

In the classical approach the term political economy refers to a system of private want satisfaction made up of independent private agents. During the period of classical political economy, several distinct but related terms are used to refer to this system of want satisfaction: civil society, market economy, bourgeois society, capitalism, and others. Each term describes the way in which society becomes predominantly an economic rather than political sys­tem. As it grows in strength, this system tends to displace politics even though it initially appears under a political designation. It sets up an ordering prin­ciple for society which, since it is nonpolitical, challenges the idea of society as a political system. In the next section, we explore in greater detail the classical idea of a system of economic relations.

Civil society

In societies where the production of subsistence takes place within the family (or kinship group) and on the basis of the division of labor in the family, it must be subordinate to the goals and relations that make up family life. These goals and relations may include biological reproduction, paternal authority, child rearing and personality growth, nurturance, and so on. Provisioning of subsistence needs occurs, but in tempo with the noneconomic purposes of the family. These purposes also limit economic activity: The scale and composition of output are limited by the needs of the family, by the labor available within it, and by the division of labor appropriate to it. Thus we cannot reasonably envision a family organizing its productive activity along the lines of a factory, partly for reasons of scale and partly for reasons of social organization. Families large enough to provide the labor adequate to factory production are much too large to be proper families - that is, to continue to satisfy the social purposes of family life.

The embedding of the economic in noneconomic institutions (see Polanyi, 1957:71) means that the elements of material reproduction (the activities that form the division of labor) are united by noneconomic links. If the division of labor is restricted to the family, this means that the tasks will be allocated to family members appropriate to their status within the family (as male or female, child or adult, for example). This division also allows for the products of their labors to be brought together directly through personal contact. No contract intermediates. The problems of division and reunification are re­solved directly and on the basis of the structure and logic of family life.

If, now, we consider the separation of economic activities from the family, as from all social institutions, we must have a method for accomplishing this division and reunification. This method must occur within, and be appro­priate to, a new institution, the economy. Since the activities that constitute social reproduction do not take place within the family, nor are they assured by rules of direct political authority, they must be connected by a social bond that links otherwise independent producers. This bond is the exchange con­tract. As Karl Polanyi asserts, “it is not surprising... that a society based on contractus should possess an institutionally separate and motivationally distinct economic sphere of exchange, namely, that of the market” (1957:70). When contract replaces kinship, marriage, authority, religious associations, and other social institutions as the social link connecting the different parts of the reproduction process, the result is the emergence of the economy as a distinct institution. Now social production falls into the hands of legally independent, private producers, the social stock becomes so much private property, and labor becomes a commodity owned by the laborer until sold in exchange for money to the owner of capital. As a result of these devel­opments an idea emerges that is of central importance to political economy: the idea of a pure private property system within which all persons are property owners and relations between persons consist of contractual relations for the exchange of property.

When the economy is embedded in noneconomic institutions, individuals pursue their economic activities on the basis of motivations carried over from (originating in) those institutions. Family members engage in pro­ductive activity as part of their participation in the family. Their motivation stems from the familial bond: recognition of and subordination to paternal (or maternal) authority, desire to nurture, and so on. The disembedding of economic from noneconomic requires that individuals engage in economic activity on the basis of motivations peculiar to the economy itself. These motivations have been termed “self-seeking,” “self-aggrandizing,” and the like.

It is certainly plausible that motives of this sort will dominate persons set free from all connections to their fellows other than those associated with contract. Under these conditions, individuals fall back on themselves. They come to see themselves as separate, independent, and autonomous. Separated from institutional loyalties, they find their only remaining loyalty is to them­selves. The term “civil society” refers not only to a system of private want satisfaction regulated neither by the family nor the state, but to a system motivated by self-interest, within which “each member is his own end, every­thing else is nothing to him” (Hegel, [1821] 1952:267).^[7] Shlomo Avineri summarizes this idea as follows:

Civil society is the sphere of universal egoism, where I treat everybody as a means to my own ends. Its most acute and typical expression is economic life, where I sell and buy not in order to satisfy the needs of the other, his hunger or his need for shelter, but where I use the felt need of the other as a means to satisfy my own ends. My aims are mediated through the needs of others: the more other people are de­pendent upon a need which I can supply, the better my own position becomes. This is the sphere where everyone acts according to what he perceives as his enlightened self-interest. (1972:134)

Whether this accurately depicts the motivations of actors in the economy (and surely in important ways it does), it will be very familiar to anyone who has studied economic theory. Over the past two hundred years and more the development of economic analysis has been synonymous with the investi­gation of the logical implications of the assumption that individuals act on the basis of their self-interest (variously defined as profit seeking, utility maximization, and with other similar terms). Much of the agenda of economic theory has consisted of investigating the logical properties of a system of independent and autonomous property owners, each pursuing his self-interest and each constrained only by the requirement that he respect the property rights of others (including their right to property in their own persons). Such an agenda focuses on the validity of important propositions about the market economy. The most important proposition is that the market must succeed in assuring a reasonably stable process of the reproduction and distribution of things capable of satisfying the wants of those dependent on it. We will examine this proposition in the next section.

The self-regulating market

Because of their utilitarian leanings, many economists tend to assume that if the market succeeds in satisfying the private ends of participants, given those ends and given the means available to satisfy them, then it has ipso facto accomplished its human and social purpose. To achieve private ends is the same as to achieve the public good. The question about the market, then, is the following: Will a system of private persons pursuing their self-interest without overall regulation lead to a set of voluntary transactions (exchanges) that satisfy the wants of those persons to the greatest extent possible given the productivity of the capital stock and the original distribution of property? By now a vast literature exists addressing this question from various per­spectives.^[8] The following summary should give an intuitive sense of the issues at stake.

The market works well when individuals act both as buyers and as sellers. In selling commodities, the seller acquires the money needed to purchase the things that satisfy his needs. Those, for example, who sell their labor for a wage thereby acquire the money they need to purchase their means of con­sumption. Similarly, those who sell commodities they have produced thereby acquire the money (proceeds from the sale) needed to replace (and possibly expand) their means of production. In both cases, the sale of commodities leads to the purchase of other commodities. Indeed, the anticipated purchase of those commodities motivates the sale of products and of labor.

When each participant acts both as buyer and seller, money and com­modities “circulate” through the market. The market simply facilitates a rearrangement of property according to the wants of property owners. It is a social mechanism to assure satisfaction of private wants. It is also a passive mechanism because it does not affect the property or the wants satisfied by it. By working for himself (buying and selling), each person works for others. Each provides goods to others and money with which others can buy goods. When this circuit functions smoothly, the sale of commodities leads to the purchase of other commodities. At the same time, no guarantee exists that any particular commodity will find a buyer. Thus an individual seller who finds no demand for his goods will be unable to acquire the things he needs. This holds also for workers. No assurance exists that any individual worker or group of workers will find employment. Buyers may not exist for the kind of labor they have to sell. If they have only that kind of labor and nothing else, they will be unable to acquire the wages needed to purchase their means of consumption.

With nothing but the market to appeal to for income, individual hardship is inevitable. The classical economists do not count this against the market. Without this hardship the market could not create incentives that drive individuals to adapt their skills and means of production to the needs of others.

The classical economists claim that only individual hardship can result from the market. That is, the income and welfare of a seller may suffer due to lack of demand for his product; but the income and welfare of the set of sellers as a whole cannot suffer in this way. The classical economists also argue that individual hardship will be temporary, lasting only so long as is required for the individual to adapt his skills and capital to producing goods in demand. David Ricardo, one of the major figures in political economy during the first half of the nineteenth century, summarizes what we have said so far about the market:

No man produces, but with a view to consume or sell, and he never sells, but with an intention to purchase some other commodity, which may be immediately useful to him, or which may contribute to future production. By producing, then, he nec­essarily becomes either the consumer of his own goods, or the purchaser and consumer of the goods of some other person. It is not to be supposed that he should, for any length of time, be ill-informed of the commodities which he can most advantageously produce, to attain the object he has in view, namely, the possession of other goods; and therefore it is not probable that he will continually produce a commodity for which there is no demand. ([1821] 1951:290)

This argument provides important support for the classical idea that while individuals may fail to find buyers for their goods, the market as a whole will not fail:

Too much of a particular commodity may be produced, of which there may be such a glut in the market, as not to repay the capital expended on it; but this cannot be the case with respect to all commodities; the demand for corn is limited by the mouths which are to eat it, for shoes and coats by the persons who are to wear them; but though a community, or a part of a community, may have as much corn, and as many hats and shoes, as it is able or may wish to consume, the same cannot be said of every commodity produced by nature or by art. (Ricardo, [1821] 1951:292)

The idea of a general failure of the market has a meaning significantly different from that of an individual failure. It means that the aggregate of goods that people need are available and yet cannot be bought and sold because the market mechanism that circulates money into the hands of those who need the goods has broken down. The very idea struck the classical economists as paradoxical. The French economist J. B. Say went so far (with the subsequent approval of Ricardo) as to assert the logical impossibility of overall market failure (a notion now referred to as Say’s law). Particular failure results from individual miscalculation or misfortune; systemic failure means that the market mechanism is inherently flawed. Systemic failure means that the market frustrates individuals even if they have made the “right” decisions regarding what goods to bring to market.

During the depression (as, for example, experienced in the world economy during the 1930s), productive capacity exists to produce the goods people want, but it is not used. Workers are available to set that productive capacity in motion, but they are not employed. Capital and labor stand idle because money is not in the hands of those who need their products. Had the workers been employed, they would have received incomes enabling them to purchase the products they needed but were not producing. Producers would then have made revenues, including profit that would justify the employment of labor. Otherwise, productive capacity remains idle because of inadequate demand, but demand is inadequate because of idle productive capacity. Thus workers are unemployed and lack purchasing power adequate to justify use of the idle productive capacity. This represents an instance of market failure if it results from the workings of the market taken by itself and not from efforts by government to regulate the market. The continuing debate in economics centers on whether the cause of market failure is in the market or outside. The classical economists tended to favor the second interpretation. They did so for the following reason.

So long as those who sell commodities use their money revenues to purchase commodities, effective demand (need tied to money) never leaves the market. The classical economists thought it would be irrational for sellers to hold money which, in their view, satisfies no need, when they could have com­modities. Workers must certainly (and rapidly) use up their wages in ac­quiring consumption goods. Producers, motivated by the desire to expand their capital and wealth, must use their money revenues to buy productive inputs capable of yielding profit (which, in general, money does not). As­suming that this is correct, and that agents act rationally, money will continue to circulate and aggregate demand will not falter.

The key, then, to the classical argument was the assumption that no rea­sonable motive could lead a seller to hold money rather than one of the goods money could buy. By purchasing such goods with his money revenue, the individuals as a group, though not in every case, will find buyers for their goods and will be able to acquire the things they want in proportion to the amount and value of what they have to sell.

An important problem in the argument summarized above for market self­regulation is that even were the market self-regulating, the satisfaction that the individual takes out of the market depends on the property he brings with him into the market. It is not his need that determines what he consumes, but his ability to satisfy the needs of others.

In some ways this characteristic of the free market can be thought of as a virtue. The market disciplines self-interest to work for the interest of others. In another sense, this characteristic of the free market sounds like a vice. It means that well-being depends on circumstances that it may be outside the power of the individual to affect. Self-interest may not provide the individual with the ability to satisfy the wants of others even if it provides him with the motive to do so. What we bring to the market can depend as much on accidents of birth and circumstances as it does on incentives and self-interest. The market then confirms these accidents and enables us to satisfy our wants only so far as those accidents allow.

The German philosopher G. W. F. Hegel was quick to underscore this limit of the self-regulating market and to see in it an argument for government intervention.

Not only caprice, however, but also contingencies, physical conditions, and factors grounded in external circumstances may reduce men to poverty. The poor still have the needs common to civil society, and yet since society has withdrawn from them the natural means of acquisition and broken the bond of the family... their poverty leaves them more or less deprived of all the advantages of society, of the opportunity to acquiring skill of education of any kind, as well as of the administration of justice... and so forth. The public authority takes the place of the family where the poor are concerned in respect not only to their immediate want but also of laziness of disposition, malignity, and the other vices which arise out of their plight and their sense of wrong. ([1821] 1952:148-9)

Private interest and public good

The argument summarized in the previous section has important implications for the relation between the public agent (state) and the system of private relations (economy). We now turn to those implications.

Adam Smith’s now classic formulation of the link between private interest and public good in a market economy depends heavily on the argument that markets, if allowed to, will regulate themselves. Smith develops his argument as part of a critique of the policy of placing “Restraints upon the Importation from Foreign Countries of such Goods as Can be Produced at Home.” Smith begins by noting that the “monopoly of the home market” resulting from restraints on imports encourages certain domestic industries and increases the share of labor and capital devoted to those industries ([1776] 1937:420). But he questions whether this serves the public good. Serving the public good means increasing the “general industry of society” or channeling that industry in “the most advantageous direction.”

The linchpin in Smith’s argument is the assumption that society’s capital stock is always fully utilized and that the problem of market failure outlined in the preceding section does not arise. Assuming full utilization of capital stock, the effect of policies that restrain trade (in this case imports) can only be on those lines of industry in which the capital stock is invested. The importance of the composition of investment (its distribution across indus­tries) is for two interconnected concerns: (1) the ability of the capital stock to satisfy needs and (2) the profitability of the capital. If our policies direct investment into the wrong industries, this will reduce profitability and less adequately satisfy private needs. Smith summarizes these ideas as follows:

No regulation of commerce can increase the quantity of industry in any society beyond what its capital can maintain. It can only divert a part of it into a direction into which it might not otherwise have gone; and it is by no means certain that this artificial direction is likely to be more advantageous to society than that into which it would have gone of its accord.

Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of society which he has in view. But the study of his advantage naturally or rather necessarily leads him to prefer that employment which is most advantageous to the society. ([1776] 1937:421)

For Smith, profit measures the advantage to the individual of alternative employments of his capital:

But it is only for the sake of profit that any man employs a capital in the support of industry; and he will always, therefore, endeavor to employ it in the support of that industry of which the produce is likely to be the greatest quantity either of money or of other goods, (p. 423)

By leaving the decision on the direction of the flow of labor and capital in the hands of the individual (capitalist), we allow profit to determine the development of industry. The capitalist is the agent, and not the directing force. Indeed, no individual or group takes responsibility for directing eco­nomic development. The concern for profit channels investment in the most socially advantageous way. It assures that revenue and industry will increase as rapidly as possible.

The individual intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention, (p. 423)

Summarizing the classical approach to the relation between private interest and public good: Under its normal workings, and in the absence of regulation from outside, the market will assure the full utilization of society’s capital stock. Given the overall amount of capital and labor available to society, the proportions devoted to different industries should depend on profitability because profitability measures the contribution each industry can make to the size of the social revenue and to the growth of social wealth. The only way to assure that profit directs investment is to place that investment into private hands and subject it to decisions based on self-interest. This works because self-interest is best served by the pursuit of profit. Given that profit seeking is a private rather than public motive, this approach argues against public guidance of investment. Public regulation means, for the classical economists, that something other than profitability will determine invest­ment. The unregulated but self-ordering market will encourage the growth of society’s capital stock and achieve the public good.

This definition of the public good supports a strong argument in favor of the free market, one that economists otherwise as opposed as Smith and Marx both recognize. Smith and Marx both argue that the free market has as its historical purpose the development of society’s material technical productive foundation, its capital stock. The “invisible hand” organizes the pursuit of private gain into the historically significant project of developing social wealth. Smith sees this as a transition from the “savage state of man” where men are “miserably poor” to “civilized society” in which “all are abundantly supplied” ([1776] 1937:lviii). Marx argues that capitalism has as its “historical mission” to develop the “material forces of production” and to create an “appropriate world market” ([1894] 1967b, Vol. 111:250). In this view, the economy disembedded from other social institutions has a raison d’etre. This raison d’etre is (1) an unintended consequence of self-seeking, so that it can be treated as a hidden, or implicit, social purpose and (2) accomplished through the accumulation of capital on the part of independent wealth holders.

Classical economics assumes the existence of a public good connected to, but distinct from, private ends: the growth of society’s capital stock. But, the classical approach contends that the public good so defined will best be accomplished without the intervention of a public agent. This judgment, if correct, resolves the problem of economic order raised earlier in this chapter. The self-regulating market displaces the decisions of a political agent. Indeed, were the state to make well-conceived decisions in accordance with the laws of political economy it would guide society to just those ends best achieved when the state does not act. It can do no more. Very likely, however, it will do considerably less. Given uncertainty regarding the wisdom of political decisions, better to make the development of society an unintended conse­quence of private acts and decisions, to allow and encourage the displacement of political society by civil society.

The state and society

Within classical economics, then, what remains for the state to do, especially with reference to the world of private affairs? We refer again to Adam Smith:

According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understanding: first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expence to any individual or small number of individuals, though it may frequently do much more than repay it to a great society. ¢[1776] 1937:651)

Under the last heading, of public works and public institutions, Smith has in mind primarily those aimed at facilitating commerce (roads, bridges, ca­nals), and “promoting instruction of the people” (p. 681).

Imagine a state concerned exclusively with national defense, the admin­istration of justice, public works, and education. Given a narrow enough definition of justice, and assuming that definition well established and well accepted, political deliberation would concern itself at most with a limited range of issues involving the extent of these activities. Indeed, such a state would finance and maintain a standing army, some schools, the courts, and the highways. It would not deliberate on the appropriate ways of life in a well-ordered society; it would not concern itself with collective judgments on the nature of the public good; it would not take responsibility for the welfare of those whose private activities fail adequately to sustain them. Just as civil society displaces political society, administration replaces politics.

And yet the classical economists, including Smith, do not go quite so far as to deny the existence of a public good irreducible to (for example the sum of) private ends. Smith identifies this public good with the magnitude (and rate of growth) of the national product. Clearly a large and growing product will generally benefit individuals as well as the state. Still, the benefit of a large national product is both for the individuals and for the state as a whole. Were we to consider more than just the size of the product, then the equation of public with private ends would become less self-evident. Even given such a split, it can still be argued, for certain definitions of the public good, that a private market economy best achieves that good (if unintentionally). This is the argument we think of as distinctly classical.

The classical argument has more recently given way to one (associated with the neoclassical approach) that defines the public good so as to equate it with a sum (or other aggregate) of private interests. We should not, however, move too quickly to an interpretation of the classical approach to political economy that equates it with this more recent method. To do so loses sight of an important tension in the classical approach absent in the modern. This tension exists in the effort to retain an older notion of the public good while denying the necessity of a public agent who takes responsibility for assuring that private affairs contribute to the public agenda. Smith would like to see public ends accomplished without (or with a minimum of) public life. This hope is an important part of classical thinking. It sets up a problem for subsequent theories, one that leads in different directions.

Recall the contrast drawn earlier in this chapter between Smith and Steuart. The former favors the demotion of politics while the latter tries to retain the idea that politics and the state have an important role beyond public admin­istration and national defense. For Steuart, the state takes a leading role in the private sphere: molding private interests, limiting self-seeking, educating persons to a “higher” viewpoint (the public interest). As we will see in the following chapters, none of the modern approaches to political economy is entirely comfortable with this idea. Several reject it entirely, and this is typical of political economy. Others leave it only a very limited role to play. In this, political economy is very much a part of the modern temperament, which, following Smith, doubts both the necessity that the state take a leading role and its competence to do so. Political economy comes more and more to view the state as an agent acting for private interests rather than an agent entrusted with responsibility for a public good irreducible to private interest. How could the state, acting as the agent of private interest, take responsibility for raising individuals to a higher standpoint? Clearly, we can hardly expect it to do so.