professor stefan collignon co-evolution of markets and states 1. what is modernity?

ProfessorStefan Collignon

Co-evolution of Markets and States1. What is modernity?


2

Introduction I. The transition from traditional to modern world A. Early modernity: 1453-1789B. Classical modernity: 1789-1914C. Late modernity: 1914-present

II. Modern worlds C. Definitions of modernityB. Institutions of modernityC. The values of modernity Conclusion


3

Introduction

What is modernity?


4

Introduction

The defining criteria:• Institutions: Markets and States• Values: enlightenment and

individualism


5

1. What is modernity?

Marx/Engels: Communist Manifesto (1848)– The bourgeoisie, wherever it has got the upper

hand, has put an end to all feudal, patriarchal, idyllic relations.

– It ... has left remaining no other nexus between man and man than naked self-interest, than callous “payment in cash” ... for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation ...


6


– Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones ...

– All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses, his real conditions of life, and his relations with his kind.


7

Introduction

I. The transition from traditional to modern world


8


Phases of modernity (Berman 1982)• Early modernity: 1453-1789

– Renaissance• Classical modernity: 1789-1914

(corresponding to the Long nineteenth century (1789-1914) in Hobsbawm's scheme)

• Late modernity: 1914-present


9


Early modernity: 1453-1789


10

1. What is modernity?• Late Middle Ages

– the commercial revolution• Early modern period

– spanning the period between the late Middle Ages (Renaissance) through the beginning of the Age of Revolutions.

– From the rise of city-states…• Secularized civic politics: Machiavelli• the early authoritarian nation states: princes and

principalities

– … to the formation of Nation States• French Revolution


11


• The Age of Enlightenment– Development of science, and

communications, increasingly rapid technological progress• Printing industry• Gunpowder• experimental sciences (Galileo, Keppler, Leonardo

da Vinci)

– Laying the ground for industrialization


12


• Globalizing character– the shrinkage of relative distances through

improvements in transportation – the rise of sustained contacts between

previously isolated parts of the globe• Emergence of the merchant class

– Trade with Levante, East and West Indies– exploration and colonization of the Americas


13


• Long distant trade and the emergence of capitalist economies– North Italian city-states, particularly Genoa,

Venice, Florence and Milan. – institutions became more sophisticated and

globally articulated. – Merchant banking– Book-keeping


14


• The rise and beginning of the dominance of the economic theory of mercantilism.– Positive trade balance– Protectionism

• The Golden Age of Piracy– Uncertainty and safety


15


• New ethics– decline of Christian theocracy, feudalism and

serfdom.– From Aristotles to Cicero– Roman law– Reformation

• the individuality of freedom• Protestant work ethics (Max Weber)

– Enlightenment• Les philosophes


16

1. What is modernity?• On the Freedom of a Christian (1520)

Dedicatory Letter Of Martin Luther To Pope Leo X, – A Christian man is the most free lord of all,

and subject to none; a Christian man is the most dutiful servant of all, and subject to every one.

– Man is composed of a twofold nature, a spiritual and a bodily. As regards the spiritual nature, which they name the soul, he is called the spiritual, inward, new man; as regards the bodily nature, which they name the flesh, he is called the fleshly, outward, old man..


17


• Adam had been created by God just and righteous, so that he could not have needed to be justified and made righteous by keeping the garden and working in it; but, that he might not be unemployed, God gave him the business of keeping and cultivating Paradise.


18


• So it is with the works of a believer. Being by his faith replaced afresh in Paradise and created anew, he does not need [121] works for his justification, but that he may not be idle, but may keep his own body and work upon it. His works are to be done freely, with the sole object of pleasing God.


19


Jean Calvin (1509 –1564)• A new foundation for individualism

– Separation between heaven and earth– God’s world: individual redemption by faith– This world: discipline, merit and work ethics

• A redefinition of usury– No longer “excess over principal” (Catholic

Church)– “excessive” interests


20


• Thirty Years War (1618–1648)– one of the most destructive conflicts in

European history mainly fought on German territory

– Conflict over religion and Habsburg Empire– Armies were expected to be largely self-

funding from loot taken or tribute extorted from the settlements where they operated.

– This encouraged a form of lawlessness that imposed often severe hardship on inhabitants of the occupied territory.


21


– The Thirty Years War was ended with the treaties of Osnabrück and Münster, part of the wider Peace of Westphalia• Solution: Huius regio, eius religio

– The beginning of the modern system of autonomous states• Althusius invents federalism


22


• The English Revolutions

1. English Civil Wars and the Commonwealth period (1640-1660)– Parliament challenged King Charles I's

authority, engaged in civil conflict against his forces, and executed him in 1649.

– Followed by a ten-year period of republican government, the "Commonwealth", before monarchy was restored in the shape of Charles' son, Charles II, in 1660


23


2. The Glorious Revolution of 1688• Constitutional monarchy was established

when James II was replaced by William III and Mary II as monarch

• The Whig Revolution– The source of modern Liberalism

• Foundation of the Bank of England (1694)


24


• The modern Revolutions

1. The American Revolution– Political upheaval during the last half of the

18th century in which thirteen colonies in North America joined together to break free from the British Empire, combining to the United States of America

– Rejecting the authority of the Parliament of Great Britain to govern them from overseas without representation

• „No Taxation without Representation!“


25


– By 1774 each colony had established a Provincial Congress, or an equivalent governmental institution, to form individual self-governing states

• The British responded by sending combat troops to re-impose direct rule.

– Through representatives sent in 1775 to the Second Continental Congress, the new states joined together to defend their respective self-governance

– managed the armed conflict against the British known as the American Revolutionary War (1775–83, American War of Independence).


26


– On 4 July 1776, Congress issued the United States Declaration of Independence, rejecting the monarchy on behalf of the new nation.

– British monarchy, by acts of tyranny, could no longer legitimately claim their allegiance

– The war ended with the American victory in October 1781, followed by formal British abandonment of any claims to the United States with the Treaty of Paris in 1783.


27


• The American Constitutions– The first American constitution was called the

Articles of Confederation and Perpetual Union• Adopted in 1781• A loose confederation of states• It failed because of collective action problems

– Public debt, security, Shay Revolt

– The Constitution of the United States established a strong federal government.

• The “Miracle of Philadelphia”, ratified in 1788• The United States Bill of Rights (1791), comprising

the first 10 constitutional amendments guaranteed many "natural rights”


28


– The American Revolution was the result of a series of social, political, and intellectual transformations in early American society

• American Enlightenment.

– Standing in the “left” or progressive Whig tradition, Americans rejected the holism of oligarchies common in aristocratic Europe at the time

– Development of republicanism based on the Enlightenment understanding of liberalism and individualism

• the creation of a representative government responsible to the will of the people


29


– Natural rights that were influential in justifying the revolution, and attempted to balance a strong national government with relatively broad personal liberties.

– The American shift to liberal republicanism, and the gradually increasing democracy, caused an upheaval of traditional social hierarchy and gave birth to the ethic that has formed a core of modern political values


30


2. The French Revolution (1789–1799) • a period of radical social and political

upheaval in French and European history. • The absolute monarchy that had ruled

France for centuries collapsed in three years.

• French society underwent an epic transformation as feudal, aristocratic, and religious privileges evaporated under a sustained assault from liberal political groups and the masses on the streets


31


– Old ideas about hierarchy and tradition succumbed to new Enlightenment principles of citizenship and inalienable human rights

– Etats généraux (May 1789)• The Estates-General was organized into three

estates, respectively: the clergy, the nobility, and the rest of France.– On the last occasion that the Estates-General had met, in

1614, each estate held one vote, and any two could override the third.

• Prise de la Bastille (14 Juillet 1789)• Déclaration des droits de l‘homme et du citoyen

(August 1789)


32


• The emergence of political ideologies– Left and Right– Jacobinisme– Liberté, Égalité, fraternité– Conservatism


33


B. Classical modernity: 1789-1914


34


The “long 19th century” (Hobsbawm)• A period of growing prosperity and social

tensions• Exit from the Malthusian Trap

– Clark

• Industrial Revolution– Eric Hobsbawm: it 'broke out' in Britain in the

1780s and was not fully felt until the 1830s – Industrialisation in “advanced” nations


35



36



37



38


• Industrialisation in Britain– Up to 1750 “Smithian Growth”

• Expansion of commerce, growth of markets, improved allocation of resources by specialisation

• Rule of law, improved enforcement of property rights and contracts

• Reduced risk for credit, insurance, information

– After 1750: technology becomes the main engine of growth• Productivity in farming produced surplus and higher

population• Reduction of rent-seekers• Systematic technical innovation


39


• External relations– Empire: Rivalry between Britain and France– Catch-up in the underdeveloped rest of Europe

• Germany and Scandinavia, Italy, Russia

– Empire and Colonialism• Deindustrialisation in India

• The Gold Standard– The monetary framework of the global

economy– The City as the core and hub of the system


40


• Increasing social tensions– The poverty of the working class– Emergence of Socialism

• Anarchism of Bakunin and Proudhon• Social democracy and Marx and Engels • Trade Unions

– Early attempts of welfare by the state• Bismark’s social insurance for health and widows


41


• The emergence of nation states– Napoleonic wars and reaction to French

universalism– Unification of Germany and Italy


42

I. What is modernity?

C. Late modernity: 1914-present


43


The of Age of Extremes (Hobesbawm)• The Totalitarian backlash against modernity

– Dumont: re-instating holism in an individualised society• The anti-Enlightenment tradition

– The Soviet Union as a non-monetary economy– Fascism as surrender of individual liberties

• Two World Wars– Holistic ideologies and modern technologies– Economic destabilisation


44


• The Golden Age– Social Welfare state – Political liberalism– Global opening

• Bretton Woods as economic framework– External stability – Social compromise


45


• Cold War and the deterrent equilibrium of ideologies– Holism in the East, individualism in the West– New articulations in national independence

movements (Asia, Africa)

• After Bretton Woods– The neoliberal roll-back of the state– Monetary instability and nationalism– Financial globalisation


46


• After the Fall of the Berlin Wall– Reconstructing markets in holistic states– The rise of holistic conservatism

• Globalisation and emerging economies in Asia– Developing domestic markets through the

world market– The driving force of growth


47

II. Modern worlds


48


A. Definitions of modernity


49


• Anthony Giddens– “Modernity” refers to modes of social life or

organisation which emerged in Europe from about the 17th century onwards and which subsequently became more or less worldwide in their influence• Modernity has a time and place• 20th century takes us beyond modernity


50


– Inherent in the idea of modernity is the contrast with tradition (Anthony Giddens, 1990: 36)

– Modernity breaks up traditions because it make human reflexivity individual based• Reflexivity arises from being connected with others,

keeping in touch• Traditional reflexivity is the collective monitoring

of individual action: Moral und Sitte (Hegel)• Modern reflexivity is the monitoring of collective

habits by individuals with respect to the reasonableness of these rules and habits


51


– As a consequence individual generate change based on reason (the enlightenment project)• Traditional certainties dissolve• Rational certainty promises greater security than

traditional explanations• But rational certainty dissolves itself, as science

undermines certainty – Probability and stochastic models– Heisenberg’s Unschärfe

– Thus, the modern world becomes a fundamentally uncertain and insecure world


52

1. What is modernity?• Karl Marx

– The major transformative force shaping the modern world is the capitalist system• Decline of feudalism and agrarian production• Industrial production by wage labour for national and

international markets

– The omnipresent profit motive• “The expansion of value, which is the objective

basis or main-spring of the circulation M-C-M becomes his [the capitalist’s] subjective aim, and it is only insofar as the appropriation of ever more and more wealth in the abstract becomes the sole motive of his operations, that he functions as a capitalist (...)”


53


– The restless never-ending process of profit-making alone is what he aims at. The boundless greed after riches, the passionate chase after exchange-value, is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser. The never-ending augmentation of exchange-value, which the miser strives after, by seeking to save his money from circulation, is attained by the more acute capitalist, by constantly throwing it afresh into circulation.

Karl Marx, Capital Vol I, chapt IV


54


• Max Weber: the disenchanted world– Modern = occidental rationalism

• From the disintegrating religious world images arises the profanity of modern culture

– Differentiation of value-spheres• Science, law and morality, art

– Instrumental rationality• States and bureaucracies (Verwaltungsstaat)

– Reliable, efficient Beamte

• Markets and common law (Privatrecht) as institutional framework

– Efficient allocation of resources


55


• François Lyotard: postmodernism– Shifting away from faith in humanly engineered

progress• “it must be clear that it is our business not to supply

reality but to invent allusions to the conceivable which cannot be presented.”

– Heterogeneous claims to knowledge• The end of rationality as we knew it• No “grand narrative”: “Let us wage war on totality”

– Revival of anti-Enlightenment tradition• From German romanticism to Nietsche to Derrida


56


• Jürgen Habermas– The concept of communicative rationality re-

integrates rationality into a coherent system, but keeps it changing.

– Reference to Wittgenstein• Linguistic turn is combining the articulation of

individuality with the validity of common knowledge


57


B. Institutions of modernity


58


• Modern institutions are drivers of change– From the static to the dynamic world– “emptying of time” (Giddens, 1990: 18))

• Pre-modern time contains space as the definition – When contains where– Sun clocks versus mechanic clocks (18th century)

• Time and space are dominated by “presence”, localised activity

• Modern time tears space away from place: abstract space and empty time

– Fostering relations to the distant and abstract

– Discontinuity, change


59


• Disembedding– Lifting out of social relations from local

contexts of interaction and restructuring across indefinite spans of time and space

– From possession to property– Money as the bridge in time– Individualisation

• Emancipation from community

– Need for trust and experts• Banking and central banking


60


• Markets– The abstract space for transactions– The space in which individuals show up

• Merchants• Debtors – creditors• Consumers and rational choice

– Exchange of utilities– Introducing time into the space of markets:

money as a means of payment• Interest: value in time• The beginning of modernity


61


• States– The framework for interiorizing the externalities

of individualised, decentralised action– Re-instating certainty by focal points for

collective action– The general validity of laws– Sovereignty as the location of authority in the

abstract communal space


62


C. The values of modernity


63


• The centrality of individuals– Plato’s description of holism

• the individual should subserve the interests of the whole (universe, city, tribe, race…)

– Poppers definition of individualism• the human individual is an end in himself/herself• society (the whole) is there to serve individual self-

fulfilment• Dumont has shown:

– each society contains both – what matters is: which principle dominates?


64


• This course aims to show – how markets and states are the product of

modernity – And how they have shaped modern values and

how in return they shape values• Institutions and values are codetermined• Endogenous process

– These values are not universal, but universalisable• There is no “iron law” or necessity that this process

will succeed (or fail)• Not teleology


65


• Globalisation is universalising the values of modernity and individualism– The mechanism is the market– The nature of states and politics are

transformed in the process• Positive adjustment: democratisation• Negative adjustment: totalitarianism and

fundamentalism


66


• This course aims to show – What have been the drivers of modernity:

• Why did it win out over traditional societies?

– My argument: not external drivers• Like profit motive• Utility• Wealth seeking

– But the inner logic of monetary market economy and the legal framework necessary to sustain it.


67

Bibliography• Marshall Berman (1982), All That Is Solid Melts Into Air: The

Experience of Modernity; Penguin Books• Merry E. Wieser-Hanks (2006), Early Modern Europe, 1450-1789;

Cambridge History of Europe• E.S. Hunt and J.M. Murray, 1999. A History of Business in Medieval

Europe: 1200-1550; Cambridge UP• E. Cameron (ed.) 2001. Early Modern Europe. An Oxford History,

Oxford UP• Anthony Giddens, 1990. The Consequences of Modernity. Polity

Press• E. F. Rice and A. Grafton. 1970. The Foundation of Early Modern

Europe, 1460-1559; (2nd edition), WW Norton, New York and London

• Habermas, 1998. Die postnationale Konstellation, Suhrkamp, Frankfurt


68

Bibliography

• Joel Mokyr, 2009. The Enlightened Economy. An Economic History of Britain 1700-1850, Yale University Press

• Gordon Wood, 1969. The Creation of the American Republic, University of North Carolina Press – For a short version see: G. S. Wood, 2002. The American Revolution. A History.

N.Y.

• Eric Hobsbawm, 1994. The Age of Extremes: The Short Twentieth Century, 1914-1991; Penguin

• Popper 1995. The Open Society and its Enemies, Routledge• Zeev Sternhell, 2006, Les anti-Lumières. Du XVIII siècle à la guerre

froide. Fayard, Paris• Francois Lyotard 1982. Réponse à la question: qu‘est-ce que le

postmoderne?; English in: Lyotard, 1984. The Postmoder Condition: A Report on Knowledge, Manchester University Press

professor stefan collignon co-evolution of markets and states 1. what is modernity?

Documents

early modernity

institutions of modernity

definitions of modernity

phases of modernity

present slide

individualism slide

industrialization slide

modern world slide