Realism for Social Sciences: A Translational Approach to Methodology (Translational Systems Sciences, 36) 9819941520, 9789819941520

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Translational Systems Sciences  36

Ken Urai Masaaki Katsuragi Yoshiyuki Takeuchi   Editors

Realism for Social Sciences A Translational Approach to Methodology

Translational Systems Sciences Volume 36

Editor-in-Chief Kyoichi Kijima, School of Business Management, Bandung Institute of Technology, Tokyo, Japan Hiroshi Deguchi, Faculty of Commerce and Economics, Chiba University of Commerce, Tokyo, Japan

Ken Urai • Masaaki Katsuragi • Yoshiyuki Takeuchi Editors

Realism for Social Sciences A Translational Approach to Methodology

Editors Ken Urai Graduate School of Economics Osaka University Toyonaka, Osaka, Japan

Masaaki Katsuragi Graduate School of Economics Osaka University Toyonaka, Osaka, Japan

Yoshiyuki Takeuchi Graduate School of Economics Osaka University Toyonaka, Osaka, Japan

ISSN 2197-8832 ISSN 2197-8840 (electronic) Translational Systems Sciences ISBN 978-981-99-4152-0 ISBN 978-981-99-4153-7 (eBook) https://doi.org/10.1007/978-981-99-4153-7 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Preface

In the twenty-first century, there has been a growing interest in realism based on two philosophical debates. One is the emergence of speculative realism in the late 2000s and the other is Markus Gabriel’s (2013, 2017) assertion of a new realism. According to Harman (2018), speculative realism was first introduced in April 2007 at the Goldsmiths, University of London. This was a philosophy workshop entitled “speculative realism.” Four philosophers—Ray Brassier, Iain Hamilton Grant, Graham Harman, and Quentin Meillassoux—were presented at the workshop. However, they did not subsequently merge into a single speculative realism but forayed into separate ways under the name of speculative realism (Harman, 2018, p. 2). For example, Harman says that his Object-Oriented Ontology (OOO) and Meillassoux’s speculative materialism are opposites (Harman, 2018, p. 6). The new realism by Gabriel argues for a situation of existence that is neither metaphysics nor constructivism (Gabriel, 2017, pp. 5–8). Other concepts of realism have already been discussed in the social sciences. Roy Bhaskar’s critical realism (Bhaskar, 1975) has been at the center of the debate since the 2000s, and discussions about speculative realism and new realism have just begun. Table 1 shows the search results by the British Library’s catalog, Explore, with the titles “realism” and “social science.” Excluding duplicate results, 20 of the 61 results were books, 21 were journal articles, and 15 were book reviews. Additionally, 19 (48.7%) of the 39 results since 2001 contain the term “critical realism.” Table 2 shows the search results for the terms “realism” and “social science” in the Web of Science. Among the 32 results, 18 were journal articles and 14 were book reviews, and the term “critical realism” was included in 5 (15.6%) of them. There are several research books that deal with realism in the social sciences, including Sayer (1984, 1992, 2000, 2010), Danermark et al. (1997, 2019), Lawson (1997), and Elder-Vass (2012). This book neither deals solely with critical realism nor addresses realism in any specific field. By deliberately juxtaposing the ways in which researchers in various fields of social science think about and attempt to deal with existence and realism in their problem consciousness, this book aims to

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Table 1 Search results of the explore catalog in the British Library Year Before 1990 1991–1995 1996–2000 2001–2005 2006–2010 2011–2015 2016–2021 Total

Book 4 1 2 4 4 0 5 20

Journal-article 0 2 3 4 4 4 4 21

Table 2 Search results of the Web of Science

Year Before 1990 1991–2000 2001–2005 2006–2010 2011–2015 2016–2020 After 2021 Total

Journal-book review 0 2 5 4 3 0 1 15

Article 5 6 0 0 3 2 2 18

Thesis 0 1 1 0 0 0 0 2

Others 0 1 0 1 0 0 1 3

Book-review 2 9 2 0 0 1 0 14

Critical realism 0 1 0 6 5 7 1 20

Critical realism 0 2 0 0 0 2 1 5

highlight the commonalities and diversity among these fields. Additionally, the book sheds light on the substantial points of realism in social science methodology. Here, we raised three reasons to explain why interest in realism has increased. The first reason is the recent movements questioning post-modern philosophy, such as “new realism” in philosophy and critical realism in the philosophy of science. The second is a shift in experiences from the direct experiences of individuals to cognitive experiences through devices. In other words, what we think of as “experience” is becoming an experience of “things” projected onto the theoretical model that constructs the device. Third, the methodological premises of modern twentiethcentury science, reductionism and methodological individualism remain at a standstill. Based on these factors, the first part of this book provides recent discussions on realism in philosophy. The second part describes specific problems that have returned to realism in various fields of the social sciences, such as economics, cultural anthropology, management science, and statistics. This book clarifies what kinds of movements are taking place and consequently the direction in which the social sciences are heading in the future. Among the editors, Urai is a researcher in theoretical economics, Katsuragi in economic methodology, and Takeuchi in statistics and econometrics, and we are not experts on the central themes of philosophy, such as realism, that this book directly

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addresses. Against this background, we would like to describe how we published this book. Originally, Urai and Takeuchi had a strong interest in the philosophy of science because of the research framework and methods they relied on, and since around 2000, they have been holding study sessions on the philosophy of science about once a year. In October 2007, Osaka University, where Urai and Takeuchi worked, and the Osaka University of Foreign Studies, where Katsuragi worked, were merged. A monthly study group on the methodology began in 2008 which involved Urai, Katsuragi, Takeuchi, and the graduate students who were interested in it. Subsequently, the study group began to include social science professors from other departments at Osaka University interested in the philosophy of science and methodology. Furthermore, the size of the study group began to expand with the participation of philosophers outside the university including Urai’s friends. In the winter of 2019, a little more than 10 years after the study group started, we had the opportunity to look back on the trajectory of the group’s activities. As a result, we concluded that the issues we are interested in and have worked on are all related to realism in each person’s field of expertise. Hence, the idea of compiling a book on “realism in the social sciences” was born. With the advice of philosophers, we decided to change the theme of this book from “realism in the social sciences” to “realism for the social sciences.” At the beginning of the project, we had the following ideas: first, the interest in realism is because of two problems faced by the social sciences: (a) the fact that “experience,” on which modern science has relied, has been transformed in its substantive position with the progress of science (experience is subordinated to theory?). (b) This might have resulted in the deadlock between methodological individualism and epistemology. Therefore, we speculate where the social sciences will head in the future by sorting out what specific issues caused the return to realism (and reality) in various fields of social sciences and what kind of movement it shows. However, as the research progressed, it became clear that there was great diversity in the way realism and reality were perceived and understood in the first place, depending on the objectives and circumstances of each field of social science. The results of our study suggest that rather than having a unified view (stance) of realism and reality, it may be more meaningful to value the differences, diversity, and range itself. Therefore, this book does not present a unified view of realism, reality, and actuality. Although the definitions of realism and reality may differ from chapter to chapter, we hope that this represents a corner of the current state of the social sciences. This book is unique in that it examines how the issues of realism and reality are viewed, understood, and dealt with in the various fields of social science, instead of examining them by philosophers and philosophers of science, who are researchers in their respective fields. This would seem to clarify how philosophical discussions, including philosophy of science, have been translated into the various fields of social science and specifically how they have been transmitted to researchers in each field. Since this process has a structure similar to that of translational science in clinical

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medicine, we have named the style of discussion in this book the translational approach. The remainder of this book is organized as follows: part I consists of five chapters. Chapter 1 addresses Critical Realism and Social Ontology. The argument starts with a criticism of economics for lacking reality, and proceeds to explain how reality was banished from the positivist tradition, presenting Social Ontology as a solution to retrieve reality for the social sciences. Chapter 2 presents a realistic examination of the problems of theory and ideology, drawing on Adam Smith’s astronomy, Marx, and Althusser. Chapter 3 presents a philosophical discussion from a realist standpoint on the problems of uncertainty and imagination, taking Keynes’s A Treatise on Probability and General Theory of Employment, Interest and Money as their subject material. Chapters 4 and 5 address directly the general problem of realism and the social sciences. In Chap. 4, an introductory question (three layers of misplaced concreteness) is presented based on Whiteheadian process philosophy and directed at the problem of realism and knowledge. Chapter 5 takes this introductory question as one starting point, and from the standpoint of “Realism for Social Sciences,” a new (or alternative of another kind) scientific methodology directed toward the academic knowledge of the future is proposed. The relationship among this methodology, predicate-oriented logic (or Logic for the Place of Nothingness), and Kantian practical reason is also discussed. In Part II, themes from or related to various fields of the social sciences, with or without the philosophical arguments and tools of the first part, have been developed in relation to reality or realism. Chapters 6 through 9 can be positioned as reality of “market,” especially from the field of economics. Chapter 6 reexamines the issue of democracy from the perspective of social choice theory. Chapter 7 discusses the reality of money (and credit) from the perspective of the general equilibrium dynamics of an economy. Chapters 8 and 9 question the general equilibrium market concept as a critical health care issue today. Chapter 8 treats the COVID-19 pandemic as a case study with a focus on government and public goods. In Chap. 9, the philosophical arguments of Chaps. 4 and 5 are translated into a social scientific issue by considering senility (Rosui) as a cause of death and the realist issue of memento mori. The argument and discussion treated in Chap. 9 as the “forces from below,” especially, can be positioned as a concrete example of the development of a new “collective knowledge” through the study of society, in the new scientific methodology proposed in Chap. 5. It would also be interesting to examine the reality of the market from the perspective of economic theory in relation to political philosophy. Chapter 10 takes up the controversial concept of “the social” by Hannah Arendt. By criticizing and enriching the concept, a new interpretation of the social is proposed, focusing on the importance of self-transcendence in social coordination and considering the similarities and differences between the market and the polis. The author argues that, in the social realm, two different kinds of power—subjective and objective— are entangled in their own ways. Chapter 11 explores the anthropological meaning of the reality. The importance of actuality as grasped through actual involvement in the field is also described with Lévi-Strauss’s simple “levels of authenticity” criterion. The author discusses reality

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and actuality in anthropology through an ethnographic study of the island of Sardinia. Chapter 12 addresses realism in management theory. The author explores the form of realism that exists between management phenomena and management theories and/or conceptual schemes that attempt to grasp the phenomena from a certain perspective. Chapter 13 discusses realism and reality in the fields of statistics and data science. The author points out that “the average man” concept proposed by Adolphe Quetelet turned the theory of errors into empiricist theory of statistics, and introduces a discussion of how we can understand the meaning of distributions. He also discusses realism in the Big Data age and its relationship with science. Finally, we thank the following participants from our study group for their comments on this book: Professor Kouta Fukui (Osaka University) and Professor Yutaka Tanaka (Sophia University). We would like to express our gratitude to Professor Murakami for her help in the editing work of this book, in addition to writing her own chapter. We also thank Yutaka Hirachi (Springer-Nature Japan) for editorial support. Toyonaka, Osaka, Japan

Ken Urai Masaaki Katsuragi Yoshiyuki Takeuchi

April 2023

References Bhaskar, R. (1975). A realist theory of science. Leeds Books. Danermark, B., Ekström, M., & Karlsson, J. C. (1997). Explaining society: Critical realism in the social sciences. Routledge. Danermark, B., Ekström, M., & Karlsson J. C. (2019). Explaining society: Critical realism in the social sciences (2nd ed.). Routledge. Elder-Vass, D. (2012). The reality of social construction. Cambridge University Press. Gabriel, M. (2013). Warum es die Welt nicht gibt. Ullstein. Gabriel, M. (2017). Why the world does not exist (G. S. Moss, Trans.). Polity. Harman, G. (2018). Speculative realism: An introduction. Polity. Lawson, T. (1997). Economics and reality. Routledge. Sayer, A. (1984). Method in social science: A realist approach. Hutchinson. Sayer, A. (1992). Method in social science: A realist approach (2nd ed.). Routledge. Sayer, A. (2000). Realism and social science. Sage. Sayer, A. (2010). Method in social science: A realist approach (Revised 2nd ed.). Routledge.

Contents

Part I 1

Realism in Philosophy

A Case for Social Ontology: Why Does Reality Matter for Social Sciences? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Masaaki Katsuragi

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Realities and Ideologies in Social Sciences . . . . . . . . . . . . . . . . . . . . Takashi Suzuki

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Between Probability and Animal Spirits: Reading Keynes . . . . . . . Naomiki Morinaga

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4

“Fallacy of Misplaced Concreteness” and the Reality for the Sciences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yasuto Murata

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Dynamic Constitution for the Place of Reality to Enclose and Nurture Our Knowing: Realism as a Methodology of Science . . . . . Yasuto Murata, Ken Shiotani, and Ken Urai

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5

Part II

Reality and Realism for Various Fields of Social Sciences

6

The Design of Democracy from a Market Point of View . . . . . . . . . 113 Ryo-Ichi Nagahisa

7

Reality of Money and Credit: The General Equilibrium Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 Hiromi Murakami

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Reality of Public Goods and Public Finances from the General Equilibrium Analysis, with a Case Study in Public Health During the COVID-19 Pandemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 Daisuke Kobayashi, Hiromi Murakami, and Ken Urai

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Memento Mori in Medicine and the Universality of Forces from Below: On the Reality of Markets . . . . . . . . . . . . . . . . . . . . . . 169 Daiichi Morii, Hiromi Murakami, and Ken Urai

10

Politics, Human Agency, and Reality: Rethinking Arendt’s Concept of ‘the Social’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 Tsuyako Katsuragi

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Thinking About ‘Community’ in Everyday Life . . . . . . . . . . . . . . . 217 Yasuko Imoto

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An Essay on the Realism of Management Theory: The Actuality of Management Phenomena and the Reality of Management Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 Izumi Mitsui

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Realism, Science, Statistics, and Data Science . . . . . . . . . . . . . . . . . 247 Yoshiyuki Takeuchi

Author Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 Subject Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259

Contributors

Yasuko Imoto is Associate Professor of Anthropology in the Graduate School of Humanities, Osaka University. Her research interests relating to past fieldwork in Sardinian villages focus on agro-pastoral social organization and relationships, cultural complexity, especially magic-religious practices and its “logic” in action. Her current interests include the complexity of everyday practices and capturing the “social” based on incommunicability. She is author of “Toshi no kōkyōkukan ni hasseisuru “Ichijiteki jiritsu zōn”: Rōma no Baobab Experience no katsudō kara kangaeru” [“Temporary Autonomous Zone that Occurs in Public Spaces in Cities: Activities of Baobab Experience in Rome”] (in Japanese) (Machikaneyama ronso 50, 2020) and coauthor of Kousakusuru chi: isyō, shinkō, jyosei (in Japanese) (Crossing of Knowledge Boundaries: Costume, Religious faith, Women, 2014). Masaaki Katsuragi is Associate Professor in the Graduate School of Economics, Osaka University. His research focuses on economic philosophy and social ontology. He is one of the introducers of Critical Realism in economics to Japan by translating Lawson’s Economics and Reality (1997) into Japanese. He also attended Cambridge Social Ontology Group as a regular member from the autumn of 2008 to the summer of 2010. Since then, he is an active advocate of Cambridge Social Ontology in Japan. Tsuyako Katsuragi is an independent scholar. She was a visiting scholar at the Centre of Latin American studies in the University of Cambridge (1999–2000). She is currently a member of CSOG (Cambridge Social Ontology Group). Daisuke Kobayashi is Visiting Associate Professor of Toyama University Hospital. He earned a BA in economics at Osaka University, and MPH in health

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economics and quality management at Kyoto University. His research interests include health policy, health economics, and hospital management. He is an author of “The effect of centralization of health care services on travel time and its equality” (Health Policy 2014; 119(3)). He serves on committees of public hospitals and medical associations. Izumi Mitsui is Professor of Business Administration in the Faculty of Business Administration, Sonoda Women’s University. Prior to joining SWU, she was in Nihon University, Tezukayama University, and Fukushima University. Her research interests include management philosophy, history of management thought, and anthropological approaches to business administration. She is author of Shakaiteki Networking-ron no Genryū: MP Follett no Shisou [An Origin of Social Networking Theory: The Thought of MP Follett] (in Japanese) (2009), editor of Asia-kigyō no Keieirinen: Seisei Denpa Keishō no Dynamism [Management Philosophy of Asian Companies: Dynamism of Creation, Diffusion and Succession] (in Japanese) (2013), and coeditor of Enterprise as an Instrument of Civilization: An Anthropological Approach to Business Administration (2016), Enterprise as a Carrier of Culture: An Anthropological Approach to Business Administration (2019), Cultural Translation of Management Philosophy in Asian Companies: Its Emergence, Transmission, and Diffusion in the Global Era (2020), and Translating and Incorporating American Management Thought into Japan (2022). Daiichi Morii is Senior Researcher of Japan Medical Association Research Institute. He earned a BA in medicine at Osaka University, MPH in health policy at Emory University, and PhD in medicine at Osaka University. His medical specialty is infectious diseases. His research interests include relationship between hygiene behavior and social norms. He is an author of Jissen Iryogenba no Kodokeizaigaku [Behavioral economics in medical practice] (in Japanese) (2022). Naomiki Morinaga is a part-time lecturer in the French language and literature, at Utsunomiya University. His research interests focus on philosophy (especially Whitehead and Bergson), literature, fine arts, and subculture. He is the author of a monograph on Bergsonism: Michinarumono heno Seisei―Bergsonism: Seimeitetsugaku [Becoming Unknown―Bergsonism: Philosophy of Life], 2006 (in Japanese). And he is author of articles: “Retour de l’Évolution créatrice” in Disséminations de L’Évolution créatrice de Bergson, 2012; “Bergson seimeiron to gendai kagaku” [Theory of Life in Bergson and Modern Science] in Bergson dokuhon [Bergson Reader], 2006 (in Japanese); “Subculture to atarashii koukyousei―rekishi no owari ni toku wo motomete” [Subculture and the New Publicness―Seeking Virtue at the End of History] in Koukyoutetugaku 15―bunka to geinou kara kangaeru koukyousei [Public Philosophy 15―Publicness in terms of culture and performing arts], 2004 (in Japanese), etc.

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Hiromi Murakami is Lecturer in the Faculty of Fine Arts, Kyoto City University of Arts. She gained her PhD at Osaka University. Her areas of research are microeconomics, general equilibrium theory, and social choice theory. She is coauthor of “Replica core equivalence theorem: An extension of the Debreu–Scarf limit theorem to double infinity monetary economies” (Journal of Mathematical Economics 66, 2016) and “An Axiomatic Characterization of the Price-Money Message Mechanism for Economies with Satiation” (Journal of Mathematical Economics 82, 2019). Yasuto Murata is a philosopher and professor at Nagoya Ryujo Women’s University, specializing in contemporary philosophy, particularly Whitehead’s philosophy in terms of metaphysical cosmology, civilization study, philosophy of existentialism, philosophy of religion, philosophy of education, philosophy of management, and play theory. He has published many papers and authored/edited many books on these areas, including Whitehead and Existentialism (2008) and Heidegger and Whitehead (2001). He is a board member of the Japan Society for Process Studies and has presented many research papers and symposia at this society and has presented, organized, and chaired sessions at the International Whitehead Conference. Ryo-Ichi Nagahisa is Professor of Microeconomic analysis in the Department of Economics, and the Graduate School of Economics, Kansai University. Prior to joining Kansai University, he was with Toyama University, Department of Economics as an associate professor. He earned a BA in economics at Yamaguchi University, an MA and a PhD in economics at Kobe University. He is a leading researcher on social choice and welfare economics. His areas of research are the Arrow’s impossibility theorem, the axiomatic analysis of resource allocation problems, Nash bargaining theory, the interpersonal comparisons of welfare, and justice and moral codes. Publications: “A local independence condition for characterization of Walrasian allocations rule” (Journal of Economic Theory, 1991); “A characterization of the Walras rule” (Social Choice and Welfare, 1995), coworked with SangChul Suh, which is reprinted in The Legacy of Léon Walras Vol.2: Intellectual Legacies in Modern Economics (Edward Elgar 2001); “Arrovian social choice with psychological thresholds” (Journal of Mathematical Economics, 2016), coworked with Tomoyuki Kamo; and so forth. Ken Shiotani is a Japanese philosopher who graduated from the University of Tokyo with a bachelor’s degree in mathematics. He worked as a bureaucrat in the Ministry of Health and Welfare before pursuing his interests in the history and philosophy of science at the Graduate School of Arts and Sciences, University of Tokyo. Shiotani is an active member of various philosophical societies, including the Japan Society for Process Study, where he also serves as a board member. He has made significant contributions to the field of philosophy in Japan and beyond, with

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numerous book reviews, translations, reports at international conferences, and interdisciplinary collaborations. In addition, Shiotani has lectured at Chiba University, Hosei University, and Waseda University. His extensive background and involvement in the philosophical community have made him a respected and valuable member of the academic community. Takashi Suzuki is a professor of economics in the Department of Economics, MeijiGakuin University. His main research interest has been general equilibrium theory and he has written several articles in this field. His recent book Fundamentals of General Equilibrium Analysis (World Scientific 2019) summarizes his work. He is also interested in political philosophy, in particular philosophy of John Rawls (Justice as Fairness), and now preparing a monograph (in Japanese) on this subject which is based on lectures delivered at the university. Yoshiyuki Takeuchi is Associate Professor of Applied Statistics and Econometrics in the Graduate School of Economics, Osaka University. His research interests focus on data science including statistics. In addition, he has been working on the history of statistical thought, in particular the migration of the mathematical statistics into Japan, and the anthropology of business administration. He is author of “On a Statistical Method to Detect Discontinuity in the Distribution Function of Reported Earnings” (Mathematics and Computers in Simulation 64(1), 2004) and is coeditor of Enterprise as an Instrument of Civilization (2016), Tekisuto Keiei Jinruigaku [Textbook: Anthropology of Business Administration] (in Japanese) (2019), and Translating and Incorporating American Management Thought into Japan (2022). Ken Urai is an economist and professor at the Graduate School of Economics at Osaka University, specializing in economic theory, particularly in the field of mathematical economics (general equilibrium theory). He has authored numerous papers on equilibrium analysis of the economy, drawing on general equilibrium theory and fixed-point theory, as well as introductory and research books on mathematics for economics. In addition to his expertise in economics and mathematics, Urai has also been involved in interdisciplinary research activities that include philosophy, scientific methodology, and other fields. He has served as a director, councilor, and vice president of the Japanese Society for Mathematical Economics, and as a board member of the Japan Society for Process Studies, among others. Urai’s contributions to the field are numerous, including his book Fixed Points and Economic Equilibria (World Scientific Publishing, 2010), as well as articles such as “General Equilibrium Model for an Asymmetric Information Economy without Delivery Upper Bounds” (B.E. Journal of Theoretical Economics 18(1), 2017), “An Axiomatic Characterization of the Price-Money Message Mechanism for Economies with Satiation” (Journal of Mathematical Economics 82, 2019), and “Generalization of the Social Coalitional Equilibrium Structure” (Economic Theory Bulletin 11, 2023). His expertise in economic theory and mathematics, as well as his interdisciplinary research interests, has made him a respected and influential figure in the field of economics.

Part I

Realism in Philosophy

Chapter 1

A Case for Social Ontology: Why Does Reality Matter for Social Sciences? Masaaki Katsuragi

Abstract It is indubitable that social sciences must inform us of the reality of the social realm. However, there is no consensus among the social sciences regarding what social reality is. Furthermore, positivist social sciences, such as economics, are inundated with theories whose reality is seldom cared about, defending the methodology by instrumentalism. Positivism must have begun to ground our knowledge of reality. How has reality vanished from the positivist tradition, and how could it be regained? Bhaskar (1997) answered this question. However, his real novelty is that he made explicit the ontology presupposed by positivism, reflecting actual scientific practices. If reality in the social sciences is at issue, the methodologies of the current disciplines would not help. It is a social ontology that provides the foundation for this fundamental research.

1.1

Realism for Social Sciences?

Why does realism matter in social sciences? Some may think the answer is obvious because the object of research in social sciences is nothing but the reality of our world, and the discipline must inform us of the true cause of problems by penetrating the disguise. However, others, facing the same question, may be reminded of the profound troubles in theorising the social realm. The social realm appears tangible because it consists of people and material objects. However, the object of research is not the physical existence of people or objects. Social scientists are supposed to examine and explain their behaviours, norms, and relations. The ultimate object of social research is not tangible; hence, it is not sensorily perceivable as a material existence. Still, you need to arrive at the very object of research on the basis of our empirical knowledge if you intend to remain an empirical scientist. Additionally, compared to natural sciences, the object of research is historical, emergent, processual, and always developing; therefore, it is not static or stable. This M. Katsuragi (✉) Graduate School of Economics, Osaka University, Toyonaka, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_1

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M. Katsuragi

complexity may give the finishing blow to the hope of naïve realism in terms of theorising. A common, but desperate, measure to avoid these types of difficulties may be called abstract at best and just omission at worst. As I have spent most of my life in the economics department, let me take an example from economics. When these theoretical omissions require compensation for the loss of totality of a real object, theorists often smuggle non-real elements into their theorising, such as consumer’s ‘rational behaviour’, which requires predetermined, perfectly consistent evaluation of all possible choices or all possible combinations of goods and services. Only this ‘abstraction’ allows economic theorists to create and wield mathematical functions supposed to explain and predict consumer’s behaviour. Clearly, human beings do not exercise this rigid rationality, and no one knows their own mathematical formula, according to which they are supposed to behave. However, if you make this complaint in an economics classroom, you would be ‘corrected’ immediately by the instructor. Economics students should first learn in a classroom the simplification of the subject matter to make rigid mathematical reasoning possible. Mathematical reasoning is thought to give economic arguments undisputable objectivity and the power to precisely predict events. Friedman (1953) argued that more than 60 years ago, complete realism was impossible, and the predictive power of a theory was more important than the reality of the assumptions. Economics students also found a case of anti-realism and an emphasis on prediction in the literature on science philosophy, which is almost the same as Friedman’s idea under the banner of instrumentalism. Instrumentalism is the opposite of realism in science philosophy and asserts that the function of a theory is to connect observational input to observable output (Bird, 1998, p. 125). Theory itself has no other meaning. Lawson (1997) argued against this economic trend more than a quarter century ago. In his book Economics and Reality, he observed problems both inside and outside the academy, gathering voices ranging from newspapers to academics, such as ‘No reality please. We’re economists’ (The Times Higher Education Supplement, 1994, March 25), or ‘Existing economics . . . bears little relation to what happens in the real world’ (Coase, 1999, p. 2). Has the problem he raised been solved since then? Definitely not yet, as Lawson has continued his campaign to reform the discipline until now (Lawson, 2015, 2019, 2022). This problem was also corroborated by Krugman’s (2009) testimony, who wrote that the economics profession went astray because economists mistook beauty, clad in impressive-looking mathematics, for truth, following the aftermath of the financial crisis. In terms of the methodology, nothing has changed in this dismal discipline without any breakthrough for the last five decades, to say the least. Students are taught abstract formulas that represent socio-economic categories (e.g. consumption, production, technical progress, or innovation) without any comprehensive articulation of the reason why these abstract formulas could or should explain reality. The use of mathematical formulas in economics comes from positivism originating in August Comte, who thought that science comprises the laws of phenomena and uses rational prediction (rather than direct exploration) so that science would

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avoid falling into vain erudition, which accumulates only facts and fails to deduce one fact from another (Comte, 1908, p. 25). However, positivism is thought to be quite natural in mainstream economics without any reservation that even the word ‘positivism’ is not mentioned in classrooms. How do such methodologies come in the first place?

1.2

Reality Banished from the Positivist Tradition

It was David Hume who woke Immanuel Kant from his dogmatic slumber, although not literally, as Kant himself confessed in his Prolegomena. A glance at the history of Western philosophy shows that metaphysics, since classical antiquity was almost annihilated by an epistemological turn of philosophy, started at the time of Hume and Kant. Then, Hume tied a long-lasting Gordian knot grappled with by philosophers of successive generations from Kant to Russell, Popper, and beyond. Hume thought that the origin of our legitimate knowledge must eventually be grounded on the corresponding impressions. If these original impressions could not be identified, the idea at issue has no ground in our experience anymore. Thus, he doubted the foundation of theology and metaphysics because the ideas in these disciplines he thought had no corresponding impressions in our experiences. Amongst these metaphysical ideas, he used the concept of causality to summarise his argument in a pamphlet he wrote anonymously. ‘Tis evident, that all reasonings concerning matter of fact are founded on the relation of cause and effect, and that we can never infer the existence of one object from another, unless they be connected together, either mediately or immediately. (Hume, 1978, p. 649)

Causality is important because it is the relationship between cause and effect, which enables us to infer from one empirical fact to another. Hume analysed the idea of cause into, ‘contiguity in time and place’, ‘priority in time’, and ‘a constant conjunction betwixt cause and effect’. Then, he argued that ‘[b]eyond these three circumstances . . . I can discover nothing in this cause’ (Hume, 1978, pp. 649–650). Here, the relationship between cause and effect is replaced with a constant conjunction between events, and the metaphysical idea of cause, which implies the necessity of the emergence of effect, has evaporated simultaneously. Apart from custom or human psychology, Hume argued that nothing guarantees a connection between the two events. With the annihilation of metaphysical causality, ‘all reasoning concerning matter of fact’ lost objective necessity altogether. It must be true that this scepticism is a prerequisite for the emergence of probability. By introducing probability as a method of ‘verification-like’, positivist social scientists dare to make predictions based on their statistical data analysis, by which they believe they are having contact with reality, although Hume wrote that Nay, I will go farther, and assert, that he could not so much as prove by any probable arguments, that the future must be conformable to the past. (Hume, 1978, p. 651)

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Therefore, Hume’s understanding of causality became a scandal of empiricism: knowledge must be founded on experience, but experience does not reveal the objective necessity of causality. If we cannot infer that empirical (not purely logical) matter with certainty, we cannot expand our objective knowledge beyond our direct experience. For those who accepted Hume’s assertion that causality is reduced to event regularities, the problem was thought to lie in the uncertainty or unverifiability of objective regularities (i.e. in the field of epistemology). The problem of inductive logic became an urgent issue to be solved to establish science philosophy in the nineteenth century. John Stuart Mill, an active advocate of positivism, attempted to rescue the empiricist tradition from such a plight by elaborating on ‘the canons of induction’ (Mill, 1843, Book III, Chap. VIII), but failed to address the problem. Bertrand Russell, who inherited the same frame of thought from empiricism, seems to have had no other choice, but to simply enshrine ‘inductive principles’ relying recursively on the principle of inductive logic, that is, based on innumerable human experiences thus far. The sixth chapter of his The Problems of Philosophy is dedicated to the problem of induction. We are all convinced that the sun will rise to-morrow. Why? Is this belief a mere blind outcome of past experience, or can it be justified as a reasonable belief? (Russell, 1912a, p. 94)

He then refers to the Earth’s rotation and its relation to the sun in order to solve a problem of induction. This larger picture explains why tiny humans regularly see sunrise every morning. However, this was not the end of the story. Certainly, unless the sun, the earth’s rotation, and its positioning are not broken, the sun is expected to rise tomorrow as well. However, Russell’s philosophy should provide the ultimate certainty of our knowledge. He asks again, why? The laws of motion and gravitation must also be valid for tomorrow. The problem reappears in terms of induction. The laws of motion and gravitation cannot be justified with certainty if past experiences do not guarantee future occurrence of events. Is it impossible to establish scientific laws without blind beliefs in event regularities induced by past experiences alone? Popper’s falsifiability as a criterion for demarcation has also been proposed as a solution to this problem. The proposed criterion of demarcation also leads us to a solution of Hume’s problem of induction—of the problem of the validity of natural laws. The root of this problem is the apparent contradiction between what may be called ‘the fundamental thesis of empiricism’—thesis that experience alone can decide upon the truth or falsity of scientific statements . . . This contradiction arises only if it is assumed that all empirical scientific statements must be ‘conclusively decidable’, i.e. that their verification and their falsification must both in principle be possible. If we renounce this requirement and admit as empirical also statements which are decidable in one sense only—unilaterally decidable and, more especially, falsifiable—and which may be tested by systematic attempts to falsify them, the contradiction disappears. (Popper, 1968, p. 42)

Popper maintained Hume’s scepticism and never accepted induction as a verification method. Simultaneously, he did not question Hume’s formulation of the problem. Event regularity as causality was intact in Popper’s argument (Popper, 2002, pp. 55–86).

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Russell further pushed Hume’s assertion about causality. He replaces causality with functional relations. We found first that the law of causality, as usually stated by philosophers, is false, and is not employed in science. We then considered the nature of scientific laws, and found that, instead of stating that one event A is always followed by another event B, they stated functional relations between certain events at certain times, which we called determinants, and other events at earlier or later times or at the same time. (Russell, 1912b, p. 26)

Causality has now become a functional relationship in a strain of the empiricist tradition. Mainstream economics is in this tradition and has fervently created functional relations to solve their problems. This methodology of economics was endorsed by Russell before its foundation. What we really want to know for the solution of social problems and for the improvement of our civilisation is the real cause of these problems. If Russell’s argument of causality is applicable to social sciences, social scientists should seek real functional relations. Ideally, the functional relations suggested by theorists should be tested negatively using statistical data based on the convention of statisticians. This may be roughly consistent with the position of Popper. However, in practice, most economic theorists create functional relations whose relevance to reality has never been articulated or argued as a formal discipline. Economists’ conventions alone, which are difficult to explain in a reasonable ordinary language, judge the value of these works. Most economic statisticians are earnestly mining event regularities from all available data for occasional purposes with the slightest regard to a systematic understanding of the nature and structure of the whole economy. If rigor and logical consistency as a mathematical system of economics are important for economists’ identity, general equilibrium theory should be placed at the bottom of all economic research. However, there is no longer such respect for the fundamental theory at all because the progress of this ideal foundation of all economic theories has been stalled for nearly half a century. Ultimately, economic students will learn unreal functional relations to explain a purely imagined economy or matter of course of reality and be trained to find statistical relations amongst data with little regard to the generative mechanisms behind the data. The ‘cause’ of statistically discovered regularities, if any, is simply explained by stopgaps or remains mystic. The ideal may be fine, but the practice of economics is far different from the ideal. Therefore, something is wrong or missing. Thinkers before the foundation of current economics cared about reality, but what reality did they care about? Hume believed that our perception and corresponding objects are real. However, he doubted the reality of purely metaphysical and theological ideas that lacked original impressions. Whether something was true to perception was the criterion of reality on which all our knowledge should be built. Now, we are witnessing a paradox or irony 284 years after Hume wrote Treatise. Hume pursued reality based on perception of annihilating suspicious authoritative ideas from classical antiquity and Christianity. Comte attempted to reduce the explanation of facts to its real terms (Comte, 1830, p. 4) so that human beings could disengage from the theological and metaphysical state of the human mind for the progress of civilisation. Nevertheless, at the end of this tradition, functional

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relations instead of causality, whose reality is not cared about, are flourishing, at least in current economics.

1.3

Criticism of Positivism

There is little doubt that natural science has made remarkable progress in the last 300 years, and the undisputable part of scientific knowledge is not only a product of human imagination or a metaphor. Certainly, any scientific knowledge can be doubted and argued at any time. Rather, such criticizability is the nature of science. We could assume that we have only unfalsified hypotheses. I am not attempting to deny Hume’s spirit of scepticism or Kant’s critique of the limits of our knowledge. You can legitimately ask why your current scientific knowledge is believable. However, the position of this chapter is to ask why a social science, such as economics, could be unrealistic although the methodology of mathematical modelling resembles that of the natural sciences in appearance. The answer lies in Bhaskar’s (1997) criticism of positivism. Being true of our perceptions is not the only meaning of reality. Being the true cause of a perceived phenomenon is also a meaning of reality. For example, if you oppose appearance to reality, as Russell (1912a) did, the meaning of reality is something hidden in our direct perception but the true cause of the appearance. Hume’s view of causality rejects this meaning of reality. Hume’s formulation is the regularity between appearances, or between effects, and not cause and effect. In this sense, it is evident that regularities between events have no relevance to causality. However, this argument may be confusing. Consider the following simple example. Hume (1978) analysed the collision of billiard balls. Here, a hydrogen explosion is analysed. If a match is struck in a hydrogen-filled place, an explosion can occur. First, I would perceive my striking match, and then I would perceive a sudden explosion. This succession of events could happen not only for me but also for others. Therefore, this succession could be an example for examining an event regularity and causality. Observation of the surface phenomena would tell us that my striking match is the cause and an explosion is the effect. Is a connection between these two events necessary? Certainly, this is not necessary. Successful explosions depend on a tremendous number of conditions of the place and the components constituting the event. For example, there must be enough hydrogen and oxygen in the air. If the match fails to burn due to dampness, although I strike it, it could not ignite the explosion. Therefore, it seems to be a matter of course, even if event regularities in general do not hold anytime anywhere: the succession of appearances has no necessity anymore. Natural necessity lies in the scientific reality of the phenomena, that is, burning hydrogen, or a sudden process in which two atoms of hydrogen combine with one of the oxygen atoms to form water. This is the scientific cause of hydrogen explosions. This description of reality, or causality, is not perceivable in the experience of a hydrogen explosion by striking a match, although it is not only a simplification, metaphor, or sheer product of our imagination.

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Simultaneously, I am not asserting that this scientific reality describes the thing-initself of ‘the oxygen explosion’, nor is the ultimate real description of an event. Scientific reality is something discovered by the movement from surface phenomena to the causal structures and mechanisms. I have used the word reality as interchangeable with causality, as mentioned previously. I did not do so accidentally. The very meaning of real in Bhaskar (1997) is being a cause of something or having causal powers, although Bhaskar himself did not define it explicitly in the book. Therefore, what Hume skepticises is the reality of the world beyond our daily perception. Consequently, it is a matter of course that descendants of Hume’s tradition avoid thinking about reality beyond direct perception and tend to flee into instrumentalism. However, modern science has revealed that, beyond our perception of everyday life, scientific reality does exist as the cause of phenomena with natural necessity. Additionally, scientific reality cannot be reduced to ordinal perceptions and regularities. Is Bhaskar’s idea of real begging the question? It must be ‘yes’ for those who want to know the ultimate justification of scientific knowledge. However, it is definitely ‘no’ for those who want to know the reason why positivist social sciences, such as economics, fail to ensure the same level of success and reliability as natural sciences, notwithstanding the methodological resemblance. Bhaskar’s idea teaches us the difference between the practices of positivists and those of natural scientists. Positivist social scientists have exercised a methodology similar to that of natural sciences in appearance. However, their understanding of the causal structure of the world is radically different from that of natural scientists. They are doomed to fail in theorising the reality of their subject matter. The success of natural sciences is a major premise of Bhaskar’s argument and not something should be argued or demonstrated. His question was, ‘What must the world be like for science to be possible?’ (Bhaskar, 1997, p. 23). He called his question transcendental following the style of Kant’s argument and the answer to this type of question ontology. It is contingent that the world is such that science is possible. . .But given that science does or could occur, the world must be a certain way. Thus, the transcendental realist asserts, that the world is structured and differentiated can be established by philosophical argument; though the particular structures it contains and the ways in which it is differentiated are matters for substantive scientific investigation. (Bhaskar, 1997, p. 29)

How does the world structure and differentiate according to the transcendental realist and how significant is it for the methodology of social sciences? First, Bhaskar focused on the meaning of the laboratory. Scientific laws are often observed only in laboratories. Nevertheless, the laws discovered in laboratories are applicable to explain phenomena outside these laboratories, where the laws cannot be observed. Most studies agree with this fact. Then, could this description be rewritten as follows: scientific laws could occur or exist often only in laboratories, but the laws occurring or existing only in these laboratories are applicable to explain phenomena outside the laboratory, where the laws do not occur or exist. If the reality of the world is only a one-tier structure – that is, all existence in this world should

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have corresponding experience with equal significance – then the meaning of the former description should be the latter description. This is contrary to our understanding of the meaning of natural laws. What is wrong? Let us distinguish between scientific laws and the actual event regularities caused by scientific laws. Then, the description of causal laws and their application above can be rewritten as follows: Actual event regularities caused by scientific laws could occur or exist often only in laboratories. Nevertheless, the laws discovered in laboratories are applicable to explaining phenomena outside the laboratory, where actual event regularities do not occur or exist. This redescription would be acceptable. Therefore, actual event regularities are not the cause of phenomena or the true object of scientific research, although they could be the cause of our experience. Experience, consequently, could be the cause of our ideas or an understanding of the world. Bhaskar proposed three ontological domains: real, actual, and empirical (Bhaskar, 1997, p. 56). The real domain is populated by three distinct categories: mechanisms (scientific laws), events, and experiences. The actual domain contains two categories: events and experiences. The empirical domain consists of only one category: experiences. Mechanisms (scientific laws) are the cause of events in the actual domain, but not the events themselves. Therefore, they exist only in the real domain, and this is a reality aimed at scientific research. Again, this ontological distinction seems mystic because we can perceive only events and experience in the actual domain directly. Epistemological questions may come up again: How can we know the mechanisms that supposed to exist only in the real domain? Then, consider another question: How can we know the events that are not in the empirical domain, as all we could directly know is in the empirical domain? When Hume thought that our ideas could be grounded in corresponding impressions, it was presupposed that impressions were caused by the external world. When Kant admitted that the external world does exist, but warned of the limit of representations, it was also presupposed that these representations are caused by the external world. They simply assumed a two-tier ontological distinction in their epistemological critique. Bhaskar assumed a three-tier ontological distinction, because the two-tier distinction could not make sense of scientific activity. Furthermore, the nature of the laboratory must be considered. There is a reason why positivists have mistaken event regularities for the very object of scientific research. Event regularities that corroborate scientific mechanisms or laws typically occur only in laboratories. However, again, why? Laboratories are designed to ensure the occurrence of these regularities by fulfilling experimental conditions. In the case of a hydrogen explosion, as mentioned previously, my striking match does not necessarily cause an explosion without fulfilling conditions, such as the type and density of gases around me. If the place is not isolated and shielded enough, a sudden shower may damp the match only before striking it. A laboratory must be a system isolated from outside interventions and close to the alterations of conditions that hamper the occurrence of regularities. ‘Uniformity in the course of nature’ (Mill, 1843, p. 376) could be controlled and artificially made in the laboratory, as it were. Systems that ensure event regularities are called closed systems (Bhaskar, 1997,

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p. 33). Therefore, event regularities are tied to specific closed systems and easily disappear outside the closed systems, although ‘universal laws’ or scientific mechanisms should be valid and exist anytime and anywhere. If an event regularity is found outside the laboratory, then it means a closed system is naturally occurring. The regularity itself is not a scientific law. For example, I mentioned that a regularity ‘the sun will rise to-morrow’ from Russell’s argument in the previous section. Clearly, this regularity is neither a scientific law nor a type of causality that scientists seek to explain natural phenomena. Conversely, the Earth’s rotation and its relation to the sun are considered the cause or mechanism to explain the regularity. Event regularity itself is complex. I wrote, ‘unless the sun, the earth’s rotation, and their positioning are not broken, the sun is reasonably expected to rise tomorrow’. If any one of these factors was changed or disappeared, the system would become open, and the regularity would disappear at any time. As celestial bodies moved in a natural closed system, event regularities were found even by the people of ancient civilisations without having science. Only after the laboratory was invented by scientists did event regularities begin to be produced artificially to pursue the mechanisms. Positivist social scientists often seek event regularities from their data by using statistics. They are only searching for spontaneously occurring closed systems in the social realm and not identical to the mechanisms governing social events in the open world, although the task of social scientists is to find these mechanisms. Thus far, I have explained why and how positivists’ search for event regularities and why the meaning of the found regularities vary from the practice of natural sciences. Let me then explain how the reality defined by causal powers has its powers and properties and how the world is structured and differentiated by entities that have causal powers. The keyword is emergent (Bhaskar, 1997, p. 113), which was coined by Lewes (1874). Now we have various strains of this thought, from mystic to almost a matter of course, although the idea itself had already existed in Mill’s System of Logic. [The] difference between the case in which the joint effect of causes is the sum of their separate effects, and the case in which it is heterogeneous to them; between laws which work together without alteration, and laws which, when called upon to work together, cease and give place to others; is one of the fundamental distinctions in nature. (Mill, 1843, pp. 429–430)

For example, the power (properties) of water is not the sum of the power (properties) of hydrogen and oxygen. Water has the power to extinguish a fire. However, if hydrogen and/or oxygen are placed in a fire, the effect would be significantly different. This is a matter of course, although it is correctly an example of emergent causal power. The power of water is emergent from hydrogen, oxygen, and the chemical bonds between them. Thus, these structured and differentiated entities are not limited to specific beings in the world. Except for the ultimate inseparable basic components of the world, all things have their components inside and structured by them to have powers, which cannot be reduced to the sum of the powers of their separate components.

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If the question is how life is emergent from physical and chemical substances, or how our consciousness is emergent from the physiological construction of our brain, the answer may be controversial and criticised as mystic. Our ignorance and the limitations of knowledge become so explicit in these arguments that anyone would notice the epistemological aspect of the argument. However, the case of water also has the same problem as the controversial cases. Even if we know the chemical construction of water from hydrogen and oxygen, we cannot explain away and predict all possible properties of water, at least at the moment. Alternatively, we may not know the truth of the emergence of water. Some may think that the idea of emergence is epistemological and has something to do with our ignorance or limit of knowledge. I argue that emergence is an ontological category. Even if we do not know the truth of an emergence, ‘one of the fundamental distinctions in nature’ is ontologically valid unless a fire is extinguished by, for example, only a mix of hydrogen and oxygen. The idea of emergence reveals the multiplicity of realities. When water exists, hydrogen and oxygen also exist. Hydrogen and oxygen do not disappear even when they are chemically combined. However, the true reality of water is not simply the presence of hydrogen and oxygen. This finding is clear in terms of causality. As Mill argued, the sum of the separate causes of hydrogen and oxygen has no effect on the power of the water. Water possesses causal power on its own right. Therefore, water is also real and constitutes a reality that is distinct from the separation of hydrogen and oxygen. The same logic applies to the components of water, oxygen, and hydrogen. Hydrogen comprises protons and electrons. Oxygen comprises protons, neutrons, and electrons. However, the powers of both atoms are not the sum of the powers of their respective components. Therefore, hydrogen, protons, and electrons are distinct and realistic. Modern physics teaches us that decomposition should not stop at this level. Consequently, a water particle can be a component of a living cell. The same logic is applicable to living cells and their components, including water. A mixture of water and other chemical substances contained in a cell cannot produce a new cell by cell division, unless they are organised as living cells. A cell is real in its own right, and the water and other components of a cell are real. Furthermore, a cell may be a component of the organ of a living being. Again, the organ of a living being is not only a lump of living cells. Then again, a living being may constitute an ecosystem or a community if the being is a human. Therefore, reality does not have a single-tier structure. We take up a level of reality from multiple realities as circumstances demand. An academic discipline is assigned to a level of reality based on its ontological distinction from other disciplines, although these ontological distinctions are seldom elaborated explicitly. This is an ontological picture in which sciences and disciplines are situated (Bhaskar, 1997, p. 169). Critical realism, founded by Roy Bhaskar, started on these basic ideas as a criticism of positivism. Overall, positivism does not properly reflect actual scientists’ practices, and ontology scientists presuppose it implicitly. Although critical realism has several turns in its development, the first turn, mainly presented by Bhaskar

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(1997), addressed the nature of reality by reflecting on the established practices of modern science.

1.4

Social Reality and Ontology

In the previous section, the reference point of arguments was the natural sciences, and examples were natural phenomena. Readers may have been frustrated by this handling because this book was written for social sciences. I did so because the problems about reality in the social sciences and economics specifically, I believe, mostly lie in the positivist misunderstanding that the general aim of natural sciences is to discover event regularities or functional relations rather than causality. The influence of this misunderstanding is deeply ingrained in academia. The examples I raised are falsifiers of this misunderstanding and are useful for the criticism of positivism, although they would not prove whether positivism is fit for social sciences. Practically, the choice of examples is crucial for both persuasion and falsification. Lakatos (1978) considered only astronomical phenomena when he praised the success of the stunning predictions of a progressive research programme, while he cited only historical social phenomena as examples of failed prediction when he denounced the degenerating one. If Bhaskar’s distinction between closed and open is correct, Lakatos praised a research programme fit for closed systems and denounced one dealing with open systems. Therefore, his argument may be persuasive, but his assessment may be meaningless. Until Popper’s falsificationism and instrumentalism, the focus of science philosophy was epistemology. Bhaskar may not solve the problems posed by epistemology squarely. However, the insight he gave us was brought about by articulating ontology, which had been implicit in empiricist tradition. Once ontology is revived on our new stage of learning, those who cling to positivism in the social sciences may begin to argue that the social realm is a structure that reproduces multiple closed systems in an open system on a progressive scale. Therefore, current positivist methodology is quite appropriate for predicting social events in closed systems. Others may begin to hypothesise that, in the social realm, it is unrealistic ideas that have formed various closed systems as pillars of a society such as religious institutions. Therefore, event regularities based on unrealistic ideas are sufficient, for example, to explain the phenomena in these systems. These imaginary arguments may defend current practices; however, they must be radically different from and even cross over current practices. The word ontology may sound a bit arcane and musty, but what Bhaskar’s argument opens is not the revival of old philosophy. Thinking of the ontology of a subject matter does not necessarily transcend the limit of our knowledge, but goes beyond the current practice of a discipline. As methodology often delineates the limits of an academic subject, questioning the methodology is not a normal task within a discipline. Only ontological arguments can achieve

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this. If a discipline is in a stalemate in terms of understanding reality, such ontological transcendence of a discipline is required. Therefore, if the reality dealt with by social science is questioned, social ontology is the answer. Currently, no widely accepted definitive social ontology for social sciences has been established. However, one feature in the social realm that is radically different from the objects of the natural sciences should be noted: the power of a social reality does not solely come from its inner physical structure. Here is the raison d’être of the social sciences. For example, the power of money (able to buy a commodity and repay debt) does not solely come from the powers of its materials, such as gold, paper, or electronic records. In the previous section, I explained emergent causal powers in the case of water. The reality of water emerges solely from hydrogen and oxygen and the chemical bonds between them. Asserting that all of these are real is never counterintuitive, although articulating how so may not be an easy task. The reality of money, if it cannot be reduced solely to the reality of its physical materials, must be argued to be radically different from the case of water. The reality of the subject matter of social sciences has been elusive since the beginning. Recently, this problem has been addressed squarely. Searle (2009) argued that these powers come from deontology carried by status functions that are created by speech act Declarations. A critical realist sociologist, Elder-Vass (2010), explained that power emerges from social structures. Lawson (2019, 2022) proposed social positioning theory; that is, power comes from the position of an occupant (including a physical object and artefact) in a community and ‘all forms of social organisation depend on processes of social positioning’ (Lawson, 2022, p. 1). This chapter, or even this book in general, was written to change the orientation of the current social sciences. Therefore, I would like to end my chapter by presenting a paradoxical framing of social reality, rather than by summarising the solutions proposed thus far. Social reality is created by people’s recognition of collective intentionality. Without any recognition of the relevant state of affairs in a society, no social reality could exist. If humankind suddenly suffered a total loss of memory, all social reality would disappear simultaneously. However, what recognition do they have? Do they already know about the reality? If so, social scientists do not have any jobs at all. I am not saying that people cannot know things in themselves, that is, the ultimate limit of our knowledge. Regarding social matters, owing to its nature, nothing is hidden from us; what I meant is that someone knows someone’s deed or his own deed. What people can do is what they can do. Social reality cannot begin to exist and continues to exist outside the conduct of people. Anything happening in society could potentially be known to us. Still, people could miss the causality of social reality even when they have a chance to see everything happening in society and may believe something unreal. An extreme example is the reality of a pope. The Pope is considered infallible. If reality is defined by its causal powers, the Pope should have the power (property). It is unrealistic for a human to be infallible. However, a human being could be a real pope because he has the power of infallibility. Therefore, the social reality of the pope is unreal but exists because the reality is unreal. Is this a sophistry?

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Searle (2009) argued that social reality is created by Declarations and ‘[t]hey change the world by declaring that a state of affairs exists and thus bringing that state of affairs into existence’ (Searle, 2009, p. 12). A person can fill a position in an organisation or community through collective acceptance of the people. However, even if they admit that the pope has such power, human beings cannot have this power. Is this example an exception? It may be misleading to say that declarations ‘change reality so that it will match the content of the speech act’ (Searle, 2009, p. 12). Could function as a social reality brought about by the declaration be unrealistic? People understand the propositional meaning of social reality. However, they do not need to confirm the truth of the propositional content for its creation, and the content itself has no necessary causality with the actual powers of social reality. Social reality is literally a product of imagination that does not exist at the moment of its creation. The propositional content of reality can even be a sheer illusion. If people must know whether social reality exists at the moment of creation, no social reality can be accepted as real. For example, before the creation of money, there was no such thing as money. Therefore, the first money could not be accepted if people needed to know whether money had existed in advance. Therefore, social reality can easily disguise the true secrets of creation and causality. Social perceptions of social reality can be unreal anytime. Social sciences reveal the whole truth of the causality of social reality to emancipate people from the unnecessary fetter of civilisation, and social ontology is the foundation for these practices.

1.5

Conclusion

An indubitable purpose of social sciences is to educate us the reality of the social world, whether the knowledge attained is used for the control of reality or the emancipation of people from suppressing illusions. Nevertheless, whether the idea of social reality is explicitly articulated in the current social sciences is questionable. The reality of economic theories, for example, has long been questioned. Although the problem may be solved by instrumentalism, the concern about reality has repeatedly surfaced, even amongst the established practitioners of the discipline. Lawson (1997) focused on the use of mathematical models in economics and argued that the root of the problem lies in economists’ blind pursuit of event regularities or closed systems. Positivism placed the pursuit of event regularities as laws at the centre of their scientific methodology. Although Comte (1830) gave the name positive philosophy, the formulation of event regularities in the place of causality goes back to Hume (1978). The problem arising from Hume’s formulation of causality has long been thought to be that of induction and grappled with by successive philosophers, from Kant (1889, 1913) to Russell (1912a) and Popper (1968, 2002). However, Bhaskar (1997) questioned the status of event regularities in this world given the success of modern science. He argued that event regularities hold only in

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closed systems and that mechanisms, which are universal and have been aimed at by modern science, are distinct from event regularities. He restored the meaning of real as having causal powers and started a philosophical movement critical realism, according to which positivism is nothing but a misunderstanding of actual scientific practices. If the methodology of positivist social science is thought to be justified by the practice of natural sciences, this thought is only an illusion. Moreover, if reality is defined by causality, it is natural that reality would not be grasped by pursuing precarious event regularities in place of causality. The work of Bhaskar (1997), brought about by a transcendental argument concerning natural science, is a preparatory for social sciences, as he moved to the Possibility of Naturalism (Bhaskar, 1998) primed for human sciences. However, the novelty of his argument is the articulation of an implicit ontology. By making explicit the ontology implicit in the positivist tradition reflecting on modern science, he made it clear that the problem of induction has nothing to do with actual practices of science. However, social scientists have not made explicit the ontology of their disciplines and subject matter. Lawson (1997) performed this for the first time in economics. If reality in the social sciences is at issue, social ontology must be examined at first.

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Popper, K. (2002). Conjectures and refutations. Routledge. Russell, B. (1912a). The problems of philosophy. Williams and Norgate. Russell, B. (1912b). On the notion of cause. Proceedings of the Aristotelian Society New Series, 13(1912–1913), 1–26. Searle, J. R. (2009). Making the social world. Oxford University Press.

Chapter 2

Realities and Ideologies in Social Sciences Takashi Suzuki

Abstract In this chapter, we discuss the epistemological meaning of realities for economists and social scientists in relation to that of ideologies. We carefully examine Adam Smith’s essay “The History of Astronomy” and find that Smith understood the essence of Newton’s scientific discovery as a replacement of ideologies, although of course without using that term. However, we find that in his theory of labor value in “The Wealth of Nations,” Smith himself was a slave to the ideology identified in his “History of Astronomy.” We propose three theses from these facts: (a) we always perceive reality through our own ideology; (b) one cannot perceive one’s own ideology; and (c) the real change brought about by an epistemological breakthrough is not that of ideologies, but of ourselves.

2.1 2.1.1

Introduction Realities, Realism, and Ideologies

In this essay, we discuss what the concept of realities means for economists and social scientists in relation to the concept of ideologies. Our main purpose is to criticize a doctrine of realism that insists that individuals conceive the actual world successfully when they capture realities as such. We will achieve this by showing that we cannot escape from our own ideologies whenever we examine any phenomena in the world, and hence, we will never be able to identify the “realities as such.” It is well known that the idea of ideologies commenced with Marx and Engels (1845–1846) and was expanded and deepened by Althusser (1965); see also Althusser et al. (1965) and Althusser (1970). According to Althusser, one always lives in one’s own ideology, naturally and unconsciously. Ideologies prevail in a society as, so to speak, an unspoken consensus, common sense, or even as truth. They exist like the atmosphere on the Earth, in that they are necessary for people and T. Suzuki (✉) Department of Economics, MeijiGakuin University, Minato-ku, Tokyo, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_2

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place them under tremendously heavy pressure, as indicated by their measurement, but are utterly unrecognized by them in everyday life (Althusser, 1965, p. 144). Althusser proposed the following three Marxian theses on ideologies: (1) Every ideology must be regarded as a real whole, internally unified by its own problematic, so that it is impossible to extract one element without altering its meaning. (2) The meaning of this whole, of a particular ideology (in this case an individual’s thought), depends not on its relation to a truth other than itself, but on its relation to the existing ideological field and on the social problems and social structure that sustain the ideology and are reflected in it; the sense of the development of a particular ideology depends not on the relation of this development to its origins or its end, considered as its truth, but to the relation found within this development between the mutations of the particular ideology and the mutations in the ideological field and the social problems and relations that sustain it. (3) Therefore, the developmental motor principle of a particular ideology cannot be found within ideology itself, but outside it, in what underlies (l’en-deçà de) the particular ideology: its author as a concrete individual and the actual history reflected in this individual development according to the complex ties between the individual and this history (Althusser, 1965, pp. 62–3, italics by Althusser). In the following, we essentially endorse, but also supplement and revise these theses to obtain lessons for realities, ideologies, and their relationships in economics and the social sciences.

2.1.2

Organization of the Article

Section 2.2 introduces the scientific epistemology of Althusser, in particular, his idea of Generalities I, II, and III.1 According to Althusser, scientific investigation is defined as a process that works on ideologies (Generality I) and transforms them into scientific concepts (Generality III) by means of technical supporting ideas (Generality II). The point of these definitions is that the scientific investigation is a theoretical procedure that works not on realities, but on ideologies, and the entire process involves the theoretical practice of a researcher starting not from concrete facts or actualities, but from (and ending at) ideas or concepts. We confirm Althusser’s theses by carefully examining a celebrated essay by Adam Smith, “The History of Astronomy” (in Smith, 1795, pp. 33–105), as we observe that in this essay, Smith clearly recognized the essence of scientific discovery as a replacement of ideologies, but of course, without using the word “ideologies.” In Sect. 2.3, we study the labor theory of value in Smith’s “The Wealth of Nations” (Smith, 1776a,b) and find our next fact. On the one hand, Smith understood well that 1

We denote these terms in italics throughout.

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Newton’s work was achieved by sweeping away the prevalent ideologies at that time, but, on the other hand, he himself was a slave to a similar ideology in his value theory, which was a fundamental concept of his economic theory. Section 2.4 offers concluding remarks.

2.2 2.2.1

Epistemology of “The History of Astronomy” From the Ancients to Ptolemy

In this section, we discuss the relationship between theoretical practice and ideologies observed in “The History of Astronomy” by applying the epistemological schema of Althusser. According to Althusser, scientific explorations denote theoretical practices, which always work on some ideas (ideologies) and transform them into scientific concepts. In particular, fields of study that remain in a scientifically premature stage have started from ideologies; in other words, they start from Generality I, and if they succeed, the resulting scientific concepts are called Generality III. In this way, Generality I is distinguished from Generality III sharply and discontinuously, and the transition from Generality I into Generality III is called the epistemological break, a philosophical concept borrowed from Bachelard (1949). This first generality (which I shall call Generality I) constitutes the raw material that the science’s theoretical practice will transform into specified “concepts,” that is, into that other “concrete” generality (which I shall call Generality III) which is a knowledge. But what, then, is Generality I, that is, the raw material on which the labor of science is expended? Contrary to the ideological illusions–illusions which are not “naive,” not mere “aberrations,” but necessary and well founded as ideologies–of empiricism or sensualism, a science never works on an existence whose essence is pure immediacy and singularity (“sensations” or “individuals”); it always works on something “general,” even if this has the form of a “fact” (Althusser, 1965, pp. 183–84).

The means used for this theoretical practice are also the ideas or concepts, called Generality II, which are constituted by the corpus of concepts whose more or less contradictory unity constitutes the “theory” of the science at the (historical) moment under consideration, the “theory” that defines the field in which all the problems of science must necessarily be posed (that is, where the “difficulties” met by the science in its object, in the confrontation of its “facts” and its “theory,” of its previous “knowledges” and its “theory,” or of its “theory” and its new knowledges, will be posed in the form of a problem by and in this field) (Althusser, 1965, pp. 184–85).

We accept this schema for the moment and examine “The History of Astronomy” from this perspective. Smith’s description of the history of scientific theories of the solar system, which begins with the Ancients (the Italian school prior to the ancient Greek school), and his observations of how one theory has been replaced by another until Newton’s theory is finally reached are at least consistent with and can be understood through the schema. The fundamental problem throughout the history

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that Smith considered was to explain the reason why some stars, called the planets, behave so irregularly compared with the Sun, Moon, and other fixed stars. The stars, when more attentively surveyed, were some of them observed to be less constant and uniform in their motions than the rest, and to change their situations with regard to the other heavenly bodies; moving generally eastwards, yet appearing sometimes to stand still, and sometimes even to move westwards. These, to the number of five, were distinguished by the name of Planets, or wandering Stars, and marked with the particular appellations of Saturn, Jupiter, Mars, Venus, and Mercury. As, like the Sun and Moon, they seem to accompany the motion of the fixed stars from east to west, but at the same time, to have a motion of their own, which is generally from west to east; they were, each of them, as well as those two great lamps of heaven, apprehended to be attached to the inside of a solid concave and transparent sphere, which had a revolution of its own, that was almost directly contrary to the revolution of the outer heaven, but which, at the same time, was hurried along by the superior violence and rapidity of this last (Smith, 1795, pp. 53–5).

This was the first model devised by the Italian school before Aristotle, Eudoxus, and Callippus. It should be emphasized that this naive theory set the basic frame for the subsequent investigations. Smith praised it generously: Though rude and inartificial, it is capable of connecting together, in the imagination, the grandest and the most seemingly disjointed appearances in the heavens (Smith, 1795, pp. 55–6).

Sooner or later, however, more accurate measurements of the movements of planets made it apparent that this primordial model assigning one sphere for each planet was too simple to represent the celestial system, and Eudoxus gave four spheres to each of them to remedy the deficiency. Then, the number of spheres in his theory became 27, but even this was not sufficient, as Smith recounted: Callippus, though somewhat younger, the contemporary of Eudoxus, found that even this number was not enough to connect together the vast variety of movements which he discovered in those bodies, and therefore increased it to thirty-four. Aristotle, upon a yet more attentive observation, found that even all these Spheres would not be sufficient, and therefore added twenty-two more, which increased their number to fifty-six. Later observers discovered still new motions, and new inequalities, in the heavens. New Spheres were therefore still to be added to the system, and some of them to be placed even above that of the Fixed Stars. So that in the sixteenth century, when Fracostorio, smit[ten] with the eloquence of Plato and Aristotle, and with the regularity and harmony of their system, in itself perfectly beautiful, though it corresponds but inaccurately with the phenomena, endeavored to revive this ancient Astronomy, which had long given place to that of Ptolemy and Hipparchus, he found it necessary to multiply the number of Celestial Spheres to seventy-two, neither were all these enough. This system had now become as intricate and complex as those appearances themselves, which it had been invented to render uniform and coherent (Smith, 1795, p. 59).

2.2.2

Copernicus

As the difficulties of the theory were not overcome by increasing the number of the concentric spheres, Smith recounted that Apollonius invented a new system of

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eccentric spheres and epicycles. These ideas were further explored by Hipparchus and completed by Ptolemy. We do not examine their theories in depth here, but it is well known that the astronomy of Ptolemy was studied by the Arabian scholars after the collapse of the Roman Empire. During the Middle Ages, European scholars translated Ptolemy and Aristotle into Latin and continued to study them. However, even Ptolemy’s theory could not provide a completely exact and coherent explanation that was sufficiently simple. Then, at last, Copernicus appeared in Smith’s Astronomy. Smith noted a historical as well as a theoretical motivation for Copernicus’s ideas. What most of all dissatisfied him was the motion of the Equalizing Circle, which, by representing the revolutions of the Celestial Spheres, as equable only, when surveyed from a point that was different from their centers, introduced a real inequality into their motions; . . .he began to consider, therefore, whether, by supposing the heavenly bodies to be arranged in a different order from that in which Aristotle and Hipparchus had placed them, this so much sought for the uniformity might not be bestowed upon their motions. To discover this arrangement, he examined all the obscure traditions delivered down to us, concerning every other hypothesis which the ancients had invented, for the same purpose. He found, in Plutarch, that some old Pythagoreans had represented the earth as revolving in the center of the universe, like a wheel round its own axis; and that others, of the same sect, had removed it from the center, and represented it as revolving in the Ecliptic like a star round the central fire. By this central fire, he supposed they meant the Sun; and though in this he was very widely mistaken, it was, it seems, upon this interpretation, that he began to consider how such an hypothesis might be made to correspond to the appearances (Smith, 1795, pp. 71–2).

The development of astronomy can be viewed from the perspective of Althusser’s schema, in that Hipparchus, Ptolemy, and others before Copernicus worked on the models inherited from their successors, corresponding to Generality I, using increasingly accurate data, corresponding to Generality II, and produced their own models, corresponding to Generality III. Note that even the “raw” data are not the reality or the actuality as such, but the corpus of observations from a systematic perspective, and hence they belong to the category of Generality II. Copernicus and his successors did not examine or study the actual motions of the “heavenly bodies.” The data of the actual motions were simply collected, and they did not mean anything without their theories. Their insights were obtained not from reality, but from abstract models representing systems of concepts. We could say, in hindsight, that the reason for Copernicus’s triumphant success was that he gave priority to his own aesthetic sense for naturalness and simplicity, supported by the ancient Greek philosophers, which led him toward a drastic change of the order of the celestial bodies compared with the established outlook. In this sense, the idea of the old Pythagoreans might have played the role of Generality II (despite the incorrect interpretation!) in Copernicus’s theory. Interestingly, some astronomers continued to support Ptolemy over Copernicus even after it was proved that the latter’s theory was more exact and agreed better with the data than that of the former. Eventually, most scholars did change their minds and accept Copernicus’s theory. It seemed it was natural for them to choose a theory that was contrary to the naive appearances of nature but was simpler and more

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aesthetically appealing when it was equivalent to its opposing theories in explaining phenomena.2 However, according to Smith, the ideologies of the philosophers were stronger than those of the scientists. Moreover, several astronomers continued to reject Copernicus to the very end: It [Copernicus’s theory] was adopted, however, nor can this be wondered at, by astronomers only. The learned in all other sciences, continued to regard it with the same contempt as the vulgar. Even astronomers were divided about its merit; and many of them rejected a doctrine, which not only contradicted the established system of Natural Philosophy, but which, considered astronomically only, seemed to labor under several difficulties (Smith, 1795, p. 77).

We can understand their single-minded objection through Althusser’s thesis (1): Every ideology must be regarded as a real whole, internally unified by its own problematic, so that it is impossible to extract one element without altering its meaning.

The “problematic” of those opposed to Copernicus was unified by the dogmata of Christianity and Aristotle’s philosophy, which were the common beliefs in seventeenth-century Europe. However, they did not assert their own opinions and/or reject the new idea without offering any reasonable grounds. The reasons for their objection were difficult to explain in a sufficiently satisfying manner, even by the followers of Copernicus. As Smith wrote: They [opponents of Copernicus] represented, that the circumference of the Earth had been computed to be above twenty-three thousand miles [36,800 km]: if the Earth, therefore was supposed to revolve every day round its axis, every point on it near the equator would pass over twenty-three thousand miles in a day; and consequently, near a thousand miles in an hour, and about sixteen miles [25.6 km] in a minute; a motion more rapid than that of a cannon ball, or even than the swifter progress of sound. The rapidity of its periodical revolution was yet more violent than that of its diurnal rotation. How, therefore, could the imagination ever conceive so ponderous a body to be naturally endowed with so dreadful a movement? (Smith, 1795, p. 78)

Copernicus’s supporters insisted in vain that much more rapid motion had been ascribed to the sphere of the fixed stars by Aristotle and Hipparchus, for instance. As Smith recounted, the opponents responded that the Earth and the other celestial bodies were completely different objects and could not be compared directly: The systems of Aristotle and Hipparchus supposed, indeed, the diurnal motion of the heavenly bodies to be infinitely more rapid than even that dreadful movement which Copernicus bestowed upon the Earth. But they supposed, at the same time, that those bodies were objects of a quite different species, from any we are acquainted with, near the surface of the Earth, and to which, therefore, it was less difficult to conceive that any sort of motion might be natural (Smith, 1795, p. 79).

This ideology, namely that the earth and the celestial sphere are distinctly separated and different regions

2 The subtle relations between a “paradigm” and matching with the data have been thoroughly discussed by the modern philosophers of science, e.g., Kuhn (1970).

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is exactly what required conquering by Copernicus and eventually by Newton. It goes without saying that Newton’s theory is based on the idea that the gravitational force is universal, working on objects of the Earth and the heavens equally. We emphasize Smith’s words in the quotations above, which indicate his clear recognition that the essential point of the works of Copernicus and Newton from a philosophical perspective was a change of ideologies, even though he did not use this term. As a result of Smith’s insights, we can conceive that the real difficulty for those who opposed Copernicus was clearly understanding the ideological nature of this dichotomy between the heavens and the Earth, and its influence on their thinking. In the following, we will explain this point in detail, but first, we corroborate that the dispute can be understood through Althusser’s thesis (2) referred to in Sect. 2.1.1. Evidently, it was possible for the ideology that separated the Earth and the heavens to prevail in a society where the Church occupied a dominant central place. The transition between the ideologies corresponded to the structural change in Western societies toward secularization and industrialization. The shift from the geocentric theory to Copernicus’s heliocentric theory should not be considered simply a change of coordinate systems within an isotropic and homogeneous universe. What really occurred was an epistemological break or a shift of the problematic in the sense of Althusser. This theoretical revolution was accomplished essentially by an individual, Copernicus, which is consistent with Althusser’s thesis (3) (see Sect. 2.1.1).

2.2.3

Newton

Smith described how Galileo discovered the satellites of Jupiter using his handmade telescope; this proved that satellites were not peculiar to the Earth, but ordinary objects of the universe, and eliminated an aesthetic defect of Copernicus’s model. Following this description, Smith gave a detailed exposition of Kepler’s proposed three laws of celestial motion, including that the orbit of the planets is not circular, as Copernicus had supposed, but elliptical, with the Sun as one of its foci (Smith, 1795, pp. 86–87). Then, as Smith stated: Nothing now embarrassed the system of Copernicus, but the difficulty which the imagination felt in conceiving bodies so immensely ponderous as the Earth, and the other Planets, revolving round the Sun with such incredible rapidity. It was in vain that Copernicus pretended, that, notwithstanding the prejudices of the sense, this circular motion might be as natural to the Planets, as it is to a stone to fall to the ground (Smith, 1795, p. 91).

In hindsight, we know that Copernicus’s explanation is correct, but at the time, it was merely a conjecture without any firm grounds, as the complete theory of gravity did not yet exist. Kepler attempted to fill this gulf for the imagination between the enormous inertia and the tremendous speed of the planets, as Smith explained: It was in vain that Kepler, in order to assist the fancy in connecting together this natural inertness with their astonishing velocities, talked of some vital and immaterial virtue, which

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T. Suzuki was shed by the Sun into the surrounding spaces, which was whirled about with his revolution round his own axis, and which, taking hold of the Planets, forced them, in spite of their ponderousness and strong propensity to rest, thus to whirl about the center of the system (Smith, 1795, p. 91).

Descartes was not satisfied with this “explanation” and presented his own doctrine: According to that ingenious and fanciful philosopher, the whole of infinite space was full of matter, for with him matter and extension were the same, and consequently there could be no void. This immensity of matter, he supposed, to be divided into an infinite number of very small cubes; all of which, being whirled about upon their own centers, necessarily gave occasion to the production of two different elements. [. . .] But as there was no void, no one part of matter could be moved without thrusting some other out of its place, nor that without thrusting some other, and so on. To avoid, therefore, an infinite progress, he supposed, that the matter which any body pushed before it, rolled immediately backwards, to supply the place of that matter which flowed in behind it; [. . .] and the law of motion being so adjusted as always to preserve the same quantity of motion in the universe, those velocities either continued for ever, or by their dissolution give birth to others of the same kind. There was, thus, at all times, an infinite number of greater and smaller velocities, of circular streams, revolving in the universe (Smith, 1795, pp. 92–3).

It is beyond the scope of this article to scrutinize these “theories” of the universe because we can easily point out the essence of the failures of Kepler and Descartes, given that we have learned from Newton (and Einstein) that gravity or gravitational force is an interaction between massive bodies, or a concept that represents a relation between objects. Kepler and Descartes stipulated gravity not as a relation, but as a substance, such as a “vital and immaterial virtue” or some sort of matter, exemplified by Descartes’s description of “very small cubes.” They intended to provide some image of gravity, but Newtonian theory tells us that such images cannot help in understanding gravity or any forces in general. In any case, Newton finally solved the problem and settled the ideological chaos by establishing a complete and quantitative theory of gravity. Smith portrayed it clearly and concisely: Experience shews us, what is the power of gravity near the surface of the Earth. That is such as to make a body fall, in the first second of its descent, through about fifteen Parisian feet [490 cm]. The moon is about sixty semi-diameters of the Earth distant from its surface. If gravity, therefore, was supposed to diminish, as the squares of the distance increase, a body, at the Moon, would fall towards the Earth in a minute; that is, in sixty seconds, through the same space, which it falls near its surface in one second.3 However, the arch which the Moon

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An analytical deduction goes as follows (Newton, 1642 presented his theory geometrically). The gravitational acceleration g on the surface of the earth is given by the law of universal gravity as g = GM∕ R2 = 980 cm=sec2 , where G is the gravitational constant, M is the mass of the earth, and R is its semi-diameter. A body with the mass m falls freely on the earth for t seconds by the distance 2 xðtÞ, which is given by the law of motion as mg = m dtd 2 xðtÞ  m€ xðtÞ. Given the initial condition _ = 0, we integrate it and obtain xðtÞ _ = gt, and we integrate this once more, given xð0Þ = 0, and xð0Þ obtain xðtÞ = ð1∕2Þgt2 . Hence, the body falls after 1 second by xð1Þ = ð1∕2Þg = 490 cm. Noting that “the Moon is about sixty semi-diameters of the Earth distant from its surface,” we can set the gravitational acceleration on the surface of the Moon as 60 - 2 g. Then, a similar computation gives the solution to the free-falling problem on the Moon by xðtÞ = ð1∕2Þ60 - 2 gt 2 . Inserting t = 60 ( = 1 minute), we obtain xð60Þ = ð1∕2Þ60 - 2 g602 = ð1∕2Þg = 490 cm.

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describes in a minute, falls, by observation, about fifteen Parisian feet below the tangent drawn at the beginning of it. So far, therefore, the Moon may be conceived as constantly falling towards the Earth (Smith, 1795, pp. 98–9).

Newton did not ask “what is gravity?”; rather, he looked through its universal and relational nature working on massive bodies and discovered the exact formula, stating that it was proportional to the product of their masses and inversely proportional to the square of their distance. As is well known, he succeeded in deducing Kepler’s laws from this formula and his own three laws of mechanics (the theory of Newtonian mechanics). At last, the ideology that perceived the Earth and the heavens as different regions, obeying distinct and separate laws, was destroyed, and the modern concept of the solar system was established. From the perspective of Althusser’s schema, Newton’s theory was a Generality III, produced from Copernicus’s theory as Generality I, after applying the law of universal gravity, the theory of mechanics, and infinitesimal calculus, which represented Generality II. Smith concluded his essay with the highest praise for Newton: Such is the system of Sir Isaac Newton, a system whose parts are all more strictly connected together, than those of any other philosophical hypothesis. . . .Can we wonder then, that it should have gained the general and complete approbation of mankind, and that it should now be considered, not as an attempt to connect in the imagination the phenomena of Heavens, but as the greatest discovery that ever was made by man, the discovery of an immense chain of the most important and sublime truths, all closely connected together, by one capital fact, of the reality of which we have daily experience (Smith, 1795, pp. 104–105).

The second thesis of Althusser (Sect. 2.1.1) emphasizes a close connection between the ideologies and structures of the societies supporting them. As noted, it is consistent with what happened in history, namely that the new cosmological ideology opened up by Newton set the pace for changing the social structures in the Western world from those governed by the Church to the industrial and democratic societies in which we now live.

2.3 2.3.1

Ideology in the Theory of Labor Value Exchange Value and Its Problems

In (one of) his masterpiece(s), “The Wealth of Nations,” Smith defined two types of values based on the well-known paradox of values that influenced the classical economists, including Ricardo (1817), Mill (1848), and Marx (1867), until the neoclassical economists appeared on the scene: The word VALUE, it is to be observel [sic], has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called “value in use”; the other, “value in exchange.” The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it

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T. Suzuki will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it (Smith, 1776a, pp. 131–32).

Because economists should consider the price value of commodities determined by markets, it is evident that the value in exchange is more important than the value in use. Smith admitted this and postulated his fundamental problems, inquiring as to the true nature of the value in exchange: First, what is the real measure of this exchangeable value; or, wherein consists the real price of all commodities. Second, what are the different parts of which this real price is composed or made up (Smith, 1776a, p. 132).

The first question asks what is the real standard of the exchange value that is considered to be the “true” value in exchange but is not necessarily equal to the actual market price. The second question asks of what is this true value composed. Theories of modern economics tell us that there is no such “true” value of exchange. From the modern perspective, such questions were posed inappropriately or even incorrectly because the only meaningful concept of the market value is an equilibrium price constructed in a market model based on economic theory. In the development of economics after Smith, we have learned that the concept of market value represents something relational rather than substantial. Hence, it cannot be represented by a specific commodity such as labor. As a founder of economics, Smith did not recognize this, and he declared, as a first step, that human labor was the real measure of the exchange value: The value of any commodity . . .to the person who possess it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labor which it enables him to purchase or command. Labor, therefore is the real measure of the exchangeable value of all commodities (Smith, 1776a, p. 133).

This does not explain anything because we can replace “labor” in the above quotation with any other commodity. Moreover, a further question that arises is: How one can measure the value of labor itself if it is the true measure of value? This ad hoc definition of the exchange values breaks down immediately. As Smith commented: But though labor be the real measure of exchangeable value of all commodities, it is not that by which their value is commonly estimated. It is often difficult to ascertain the proportion between two different quantities of labor. . . .Every commodity, besides, is more frequently exchanged for, and thereby compared with, other commodities than with labor. It is more natural, therefore, to estimate its exchangeable value by the quantity of some other commodity than by that of the labor which it can purchase (Smith, 1776a, p. 134).

Then, Smith returned to money as a real measure of exchange value (Smith, 1776a, p. 135). He continued as follows: [A] commodity which is itself continually varying in its own value, can never be an accurate measure of the value of other commodities. Equal quantities of labor, at all times and places, may be said to be of equal value to the laborer. In his ordinary state of health, strength, and spirits; in the ordinary degree of his skill and dexterity, he must always lay down the same

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portion of his ease, his liberty, and his happiness. The price which he pays must always be the same, whatever may be the quantity of goods which he receives in return for it (Smith, 1776a, p. 136).

Smith continued to maintain his definition of exchange value and claimed that it must be measured by labor rather than by the other commodities, but he took his point in advance. The question was: Why are the values of labor invariant, but those of commodities changeable? In his statements, Smith did not explain this logic, but insisted that it was so. Moreover, he made this claim under the very ambiguous condition of the “laborer’s ordinary state of health, strength, and spirits.” How can the “ordinary state” be estimated? Smith’s rich and wide knowledge of his actual society (Scotland) forced him to ask further questions. He obstinately maintained that labor was the true measure of value, but as the above quotations reveal, he admitted that the exchange values of many commodities, as well as wages, profits, and rents, were ordinarily represented by money. He also admitted that: The discovery of the abundant mines of America reduced, in the sixteenth century, the value of gold and silver in Europe to about a third of what it had been before. As it cost less labor to bring those metals from the mine to the market, so when they were brought thither they could purchase or command less labor (Smith, 1776a, p. 135).

Smith attributed the source of the diminishing value of gold and silver to a reduction in the quantity of labor required to bring the metals from mines to markets, given that the value of labor was invariant. Therefore, according to his logic, the value of commodities, such as rents, which required long-term contracts, should be more appropriately represented by corn: The rents which have been reserved in corn have preserved their value much better than those which have been reserved in money, even where the denomination of the coin has not been altered (Smith, 1776a, p. 137).

Smith recognized that corn should be considered to be a measure of the exchange value according to his acute observations of empirical facts. However, in the light of modern economic theory, it is obvious that any commodity can serve as a measure of the market value or a numeraire. Lacking this knowledge, Smith fell into a swamp of confusion: Though the real value of a corn rent, it is to be observed, however, varies much less from century to century than that of a money rent, it varies much more from year to year (Smith, 1776a, p. 139).

What Smith was concerned with here was that the values of commodities are affected by events that occur outside markets, such as the discovery of new mines or a seasonal change producing a change in the output of corn. Therefore, to claim that labor is the only commodity that is invariant in its value, one must prove that it is unaffected by such events. However, it seems impossible for Smith to prove this because he certainly stated at the very beginning of Chapter 1 of “The Wealth of Nations” that labor productivity is affected by the division of labor, which evidently takes place outside markets:

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T. Suzuki The great improvement in the productive powers of labor, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, or applied, seem to have been the effects of the division of labor (Smith, 1776a, p. 109).

If this statement was consistent with the invariance of the exchange value of labor, the “labor value” must be indifferent to “the skill, dexterity, and judgment” of the laborers. If this is the case, what is the exchange value of labor at all? How can we understand such a mysterious “value” that has nothing to do with those relevant qualities?

2.3.2

The Ideological Character of Labor Value

From the modern perspective, the issue with which Smith grappled is easily explained: the increase of supply caused by the discovery of new mines or a bumper corn crop leads to a decrease in the price of gold/silver or corn, respectively. Because price is the only meaningful concept of market value in modern economic theory, this is all that we can state. Conversely, Smith claimed that the increase in supply brought about a decrease of the exchange value in his own sense. If this was true for gold/silver or corn, why did Smith not claim that the increase in the supply of labor power caused by economic developments decreased the exchange value of labor? His thesis of the invariant value of labor appears increasingly doubtful. Finally, Smith made an arbitrary decision, as follows: Labor, therefore, it appears evidently, is the only universal, as well as the only accurate measure of value, or the only standard by which we can compare the values of different commodities at all times, and at all places. We cannot estimate, it is allowed, the real value of different commodities from century to century by the quantities of silver which were given for them. We cannot estimate it from year to year by the quantities of corn. By the quantities of labor we can, with the greatest accuracy, estimate it both from century to century and from year to year. From century to century, corn is a better measure than silver, because, from century to century, equal quantities of corn will command the same quantity of labor more nearly than equal quantities of silver. From year to year, on the contrary, silver is a better measure than corn, because equal quantities of it will more nearly command the same quantity of labor (Smith, 1776a, pp. 139–140).

This conclusion inevitably followed from his definitions of the value in use and that in exchange, and his thesis of the invariant labor value as a measure. The value in exchange connected intrinsically with the value in use, and they were the proper and unseparated qualities of each commodity. Smith gave a concrete image to these qualities using labor, which also represented their quantitative nature as a measure. For him, the value of labor must have been invariant in its true measure, and consequently, he insisted arbitrarily that the labor value remained unchanged no matter what happened outside or inside markets, even though the values of gold/ silver or corn might change according to the increase or decrease in their supply. Note that the concept of labor value is an idea that gave (a sort of) substance to value in Smith’s own sense. The modern (neoclassical) theory of value tells us that

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the concept of market value is essentially of relational rather than substantial character. The idea of exchangeable value is analogous in nature to the ideas of Kepler and Descartes, who tried to capture the work of gravity using concrete images conveyed by a “vital and immaterial virtue” or “very small cubes.” All of these ideas come from an ideology that may be called the ideology of empiricism or sensualism. As related above, this ideology attempted to capture any concepts that are essentially relational in nature by giving them concrete images; imagining value as labor, or gravity as the work of cubes, for instance. In doing this, Smith and others aimed to understand the “concept as such.” Conversely, the marginal utility theory of neoclassical economics argued that market values (equilibrium prices) have no substance in themselves. Instead, they are decided by everything in the market. The market equilibrium price (vector) will change through an increase or decrease of supply and/or demand when the utility functions or the income distributions of consumers or the technologies of the firms change. The market value is simply a measure of exchange or a numeraire determined by the relationship between commodities, consumers, and producers, nothing more. The neoclassical theory defined the concept of values in this manner and at the same time established the definitive concept of markets. What is a market? The answer of neoclassical theory is that a market consists of three kinds of objects— commodities, consumers, and producers—which are assumed to satisfy certain standard conditions (as discussed in economic textbooks). Thus, the modern scientific theory of markets appeared on the scene. Again, we can understand this whole story using Althusser’s schema, with the labor value theory as Generality I, the concepts and techniques of real value functions and differential calculus as Generality II, and finally, the neoclassical theory of markets and equilibria as Generality III.

2.4 2.4.1

Conclusion: Realities and Ideologies in Social Sciences The Inescapable Character of Ideologies

“The History of Astronomy” related the discovery of Copernicus as a true epistemological break; it cut off or separated his achievement from the works prior to him. As described in Sect. 2.2, it was produced as a Generality III from Ptolemy’s astronomy, a Generality I, and an idea of the ancient Pythagoreans as a Generality II. However, we cannot regard it as representing the reality of the universe because a further breakthrough awaited the discoveries of Newton. Nowadays, we know that even Newton’s theory of gravity remained trapped by an ideology of “absolute time (and space).” This ideology can be seen in the transcendental aesthetic of Kant, when he stated that “(1) space is not an empirical concept which has been derived from outer experiences, and (2) time is not an empirical concept that has been derived from any experience (Kant, 1781, pp. 62–7).” According to Kant, space and time are not what exist in physical reality, but what constitute the form of our recognition. We

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call this view ideological because we have learned from the theory of general relativity that space–time is represented by a four-dimensional Riemannian manifold with a metric tensor field gμν , and the metric tensor also plays the role of the gravitational potential. This interpretation cannot be rejected because in the Newtonian approximation of weak, static, and symmetric gravitational fields, the tensor p component g00 (precisely speaking, g00 - 1) corresponds to the Newtonian potential (Dirac, 1975, p. 28). Therefore, we are forced to conclude that space–time is nothing but an object in physical reality and the source of gravity.4 These facts tell us that an “ideology regarded as a real whole, internally unified by its own problematic” in the first thesis of Althusser cannot be swept away at once. Hence, we must revise Althusser’s thesis (1) as follows: (a) An ideology regarded as a real whole, as well as its unifying problematic, is transformed and reorganized by an epistemological break, but no ideology disappears completely as a result of one break. Therefore, ideologies exist in any period. It follows, first, that we are always looking at reality through our own ideology. Epistemological breaks are expected to identify those ideologies and allow us to come closer to reality. We emphasize that we can “just expect” this. However, it is also true that once a break has occurred and a new recognition has been obtained, we cannot return to the old ideological ideas. The second point that thesis (a) implies is that “reality as such” would not manifest itself in any theories. “Reality” means something that is expected at the end of explorations. Again, we emphasize that we just expect it; we do not know if an “end of explorations” exists, perhaps it does not. In any case, realism that claims that one should recognize the reality as such (at any specific moment) is itself an ideology. Next, the ideologies never manifest themselves in any theories. They are identified in hindsight from the perspective posterior to an epistemological break. Neither the realities nor the ideologies themselves are objects of any theories, and they do not have any definite status in epistemology.

2.4.2

The Invisible Character of Ideologies

As stated at the end of the last section, the attitude of Smith and the classical economists, including Marx, in trying to understand the concept of value with the help of a concrete object such as labor, is analogous to that of Kepler and Descartes, who tried to capture gravity using concrete images of a “vital and immaterial virtue” or “very small cubes.” However, the descriptions of “The History of Astronomy” indicate that Smith should have been very familiar with the ideological nature of Kepler’s and Descartes’s ideas, as he appreciated the essence of Newton’s theory on

4 Furthermore, it is widely known that Einstein himself took an ideological attitude against the probabilistic nature of quantum mechanics; see Heisenberg (1969).

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the universal character of the gravitational interactions. On one hand, Smith offered profound insights into scientific epistemology in “The History of Astronomy,” but, on the other, he fell into the same sort of ideological trap. This fact provides a valuable lesson, which we postulate as a thesis: (b) One cannot perceive one’s own ideology. When one sees an ideology, it is necessarily the ideology of others. Nevertheless, Smith appreciated the ideological discussions of Kepler and Descartes and gave detailed expositions of them (of which we have quoted just a part). This is an interesting point, but why did he do so? As a founder of classical economics, he was quite familiar with the difficulties that needed to be overcome in the course of establishing a new science. The most difficult task is to clarify the situations dominated by ideologies and sweep them away. Smith himself identified the ideology of mercantilism, which judged the wealth of a nation according to the quantity of money it owned, in the same way as the degree of a person’s wealth was determined by the quantity of his/her money. This ideology was based on a naive comparison between a nation’s wealth and that of an individual: To grow rich is to get money; and wealth and money, in short, are, in common language, considered as in every respect synonymous. A rich country, in the same manner as a rich man, is supposed to be a country abounding in money; and to heap up gold and silver in any country is supposed to be the readiest way to enrich it (Smith, 1776b, p. 6).

Smith was not simply interested in the success of Newton. He was very careful in examining the transition from the ideologies of Kepler and Descartes to the theory of Newton. We suppose that he found, in the history of astronomy, similar experiences to those of his own work in economics, and he confirmed the meaning of it. By virtue of Smith’s observations of astronomy and economics, we can claim with certainty that establishing new sciences or developing them substantially is nothing but executing an epistemological break in the literal sense, and means freeing people (including oneself) of their ideologies.

2.4.3

The Meaning of an Epistemological Break

The discussions so far have made clear the meaning of the third thesis of Althusser, which stated that “the developmental motor principle of a particular ideology cannot be found within ideology itself but outside it: its author as a concrete individual (Althusser, 1965, pp. 62–3).” We can say that the real change brought by an epistemological break is not that of ideologies, but of ourselves. We reconstruct ourselves and become, so to speak, “another person” on the epistemological dimension compared with before the break. Then, we supplement Althusser’s thesis (3) as follows: (c) One achieves an epistemological break (if any) by transforming oneself epistemologically.

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We study economics and the other (social) sciences to train and revise our own reason. Finally, we finish this article by offering some concluding remarks on the epistemological status of our three theses. They all make some statements on the reality of theoretical practices, namely they state that “what we really do in theoretical practices is such and such things.” According to our thesis (b), however, even if all those statements are ideological, we cannot see it. We cannot even deny the possibility that all of them are ideological illusions. We have assumed that reality is what we expect at the end of our explorations. As stated above, we never know whether this is true; rather, we just expect it. Althusser’s schema shows only the process of scientific developments; it does not tell us anything about their end. Nevertheless, we would never be able to abandon these theses because they express the meaning of our own existence as scientists or researchers searching for the truth of realities. Acknowledgment I am grateful for helpful comments of Prof. K. Urai. Any remaining shortcomings are of course my own.

References Althusser, L. (1965). Pour marx. La Découverte/Maspero (Page citations in the text are based on the English-translated version by Brewster, B. (2005). For marx. London and New York: Verso). Althusser, L. (1970). Idéologie et appareils idéologiques d’Éat (Notes pour une recherche). La Pensée, 151, 3–38. Althusser, L., Rancière, J., & Macherey, P. (1965). Lire le Capital. La Découverte/Maspero (English translation by B. Brewster, Reading capital. Verso, 2009). Bachelard, G. (1949). Le Rationalisme Appliqué. Presses Universitaires de France. Dirac, P. (1975). General theory of relativity. Wiley. Heisenberg, W. (1969). Der Teil und das Ganze. Piper (English translation: Physics and beyond: Encounters and conversations, Harper Collins College Div, online). Kant, I. (1781). Kritik der Reinen Vernunft. Johann Friedrich Hartknoch (Page citations are based on the English-translated version by Weigelt, M. (2007). Critique of pure reason. London and New York: Penguin Classics). Kuhn, T. (1970). The structure of scientific revolutions. University of Chicago Press. Marx, K. (1867). Das Kapital. Kritik der politischen Ökonomie, ernster Band. Verlag von Otto Meissner (Also see the English-translated version by Fowkes, B. (1990). Capital: Critique of political economy, (Vol. 1). London and New York: Penguin Classics). Marx, K., & Engels, F. (1845–1846). Die deutsche ideologie. (Also see the English-translated edition by T. Carver & D. Blank (2014). German ideologie. New York: Palgrave Macmillan). Mill, J. (1848). Principles of political economy. (Currently published by Oxford University Press, edited by J. Riley (1994)). Newton, I. (1642). The principia: Mathematical principles of natural philosophy. (Currently published by Prometheus Books, translated and edited by A. Motte (1995)). Ricardo, D. (1817). On the principles of political economy and taxation. (Currently published by Cosimo Inc. (2006)).

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Smith, A. (1776a). An inquiry into the nature and causes of the wealth of nations (Vol. 1). Strahan, W., & Cadell, T. (Page citations in the text are based on The wealth of nations, Books I – III, Penguin Classics, edited by A. Skinner, London (1999)). Smith, A. (1776b). An Inquiry into the Nature and Causes of the Wealth of Nations, Volume 2. W. Strahan and T. Cadell (Page citations in the text are based on The Wealth of Nations, Books IV–V, Penguin Classics, edited by A. Skinner, London (1999)). Smith, A. (1795). Essays on philosophical subjects. Printed for T. Cadell & W. Davies (Page citations in the text are based on the edition by W. P. D. Wightman & J. C. Bryce (1982). Liberty Fund, Indiana).

Chapter 3

Between Probability and Animal Spirits: Reading Keynes Naomiki Morinaga

Abstract What does macro mean in macroeconomics? This is a philosophical question that cannot be answered within the discipline of economics. The young Keynes’s work, A Treatise on Probability, was a theoretical and historical study of probability and induction that curiously ignored the creative imagination as well as his mentor, Whitehead. After exploring the monetary economy, he published a book that would establish macroeconomics: The General Theory of Employment, Interest and Money. While emphasizing the role of entrepreneurship, or animal spirits, in economic activities, the author had to admit that it is often suppressed by the market. What is the primary force that determines market trends? It seems to be a ‘general will’ of the economy and politics in society. The eighteenth-century philosopher Rousseau used this concept to ask who should be the subject in charge of the will of society. With the rise of nation-states, national sovereignty was taken for granted, and few thinkers dared to ask what the general will was. Yet the difficulty of identifying the social will is rooted in this question. Who or what moves society? This article re-reads Keynes and probes the relevance of the “Jean-Jacques Rousseau problem” in today’s world.

3.1

Absence of Creative Imagination in A Treatise on Probability

In the preface to A Treatise on Probability (written May 1, 1920), Keynes stated that he had been intimately influenced by the Cambridge scholars: W. E. Johnson, G. E. Moore, and Bertrand Russell.1 They carried on the tradition of Locke, Berkeley, Hume, Mill, and Sidgwick in asking “What is the matter of fact?” Fact of this kind is, in a word, reality. For there is no such thing as a non-existent fact. In this sense, the pursuit of fact would be considered a branch of science by the aforementioned 1

Keynes (1921/2013a, XXV).

N. Morinaga (✉) Utsunomiya University, Utsunomiya, Tochigi, Japan © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_3

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Cambridge school, whereas the creative imagination, so long as it is expressed in prose, would not be welcome in the Reich der Vernunft.2 The original version of this Treatise was a thesis submitted to (and rejected by) his Cambridge advisor, Alfred North Whitehead, whose name was not listed above or otherwise acknowledged.3 Inheriting the Cambridge tradition, Whitehead also pursued the question of reality; moreover, he often stressed the importance of the creative imagination. In this preface, not only his name but also the question of imagination is expunged. Keynes’s silence is full of meaning. Indeed, if we accept an imaginary fictional world without question, everything imaginable will come true there, and the concept of reality or probability will be almost useless. But if we fail to properly evaluate the significance of imagination, we risk evaporating an essential part of human thinking. In the early twentieth century, Keynes greatly contributed, as we all know, to a reappraisal of Hume. This eighteenth-century skeptic was not only a philosopher who doubted every reality but also, like his contemporary Rousseau, a profound thinker of the imagination. What are we willing to bet on the future in a world without creative imagination? In that case, the probability calculation itself would have no meaning. In his book, Keynes begins with the following premise. In metaphysics, science, and action, we make arguments that become the basis of rational beliefs, but these can never be conclusive.4 Whether a proposition is true or false, our circumstances certainly affect knowledge in various ways. If this were the case, there should be different degrees of rational belief from which judgments of certainty and probability would be made. Thus, it is necessary to clarify the knowledge itself involved in the proposition on our part; to that extent, the probability would be considered subjective, although it is not something “subject to human caprice.”5 Even if our knowledge is limited, we should objectively determine what is certain or probable in a given situation, regardless of our opinions. Probability theory deals with the degree of belief that we can reasonably hold under certain circumstances. This would not be unique to each individual. Keynes refused to use the term ‘event’ in his probability theory. He argued that we should not discuss the occurrence or probability of events but the truth and probability of propositions. This is a fundamental idea that sets the fate of his theory. And yet Keynes’s explanation here is inarticulate. He was trying to say that mere events are purely indeterminate; it is impossible or even irrational to consider their probability. In his note, Keynes cited Frédéric Ancillon as the first researcher to recognize this problem. In Doutes sur les bases du calcul des probabilités (1794), this pioneer made a brief statement: “To say that an event is probable to occur in the

2

Morinaga (2021). This paper is a continuation of my article in Japanese. There are some overlaps. For a detailed analysis of Whitehead’s assessment of Keynes’s thesis, see Ito (1999), an excellent study of the philosophical aspects of Keynes. 4 Keynes (1921/2013a, p. 3). 5 Keynes (1921/2013a, p. 4). 3

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past, present, or future is to say that a proposition is probable.”6 Whether an event happens in the past, present, or future is not a matter of probability theory. A proposition is nothing but probabilistic and can be formulated by limiting time and place; it takes knowledge as given. Let’s take earthquake prediction as an example. In some cases, we might be able to verify the truth of the proposition: “A major earthquake will probably strike western Japan in a few decades,” and its probability could be calculated. It is not enough to mumble that “an earthquake is likely to occur.” A future event can be made an object of probability calculation through propositionalization. Once converted into a proposition, it can be recognized as knowledge and treated theoretically. Keynes repeatedly attacks the past savants for missing this key factor. From this rich book, I would like to mention another interesting example. We presume that Darwin’s theory of natural selection is probable or plausible; there is a real and objective relationship between the evidence presented by Darwin and his conclusions of evolutionary theory. This would not be a subjective belief. Keynes thinks as follows. On the one hand, there is a set of propositions that we call evidence and that we consider to be well known; on the other hand, there is another set that we call conclusion and that is grounded in the former. Depending on the first set, we either give more or less weight to the second set. This is not a simple relationship between evidence and conclusion. Evidence is just a proposition, and so is a conclusion. Knowledge implies such a propositional relationship, which allows for degree. In his view, there should be some logical connection between them that can be precisely discerned. All that is required is to “emphasize the existence of a logical relation between two sets of propositions.”7 For Keynes, evidence and conclusion are based not on substantive grounds but on a relationship between propositions. He proposed to evaluate the truth of a set of probability propositions by superposing them, rather than simply assuming reality. This is perhaps the most remarkable idea in his book: Truth lies in the relation or superposition of probability propositions. Its weight may be heavy or light; it may be close to the truth itself or far from it. There are differences in the density of truth in reality. This is not necessarily a matter of pure logic. Then what is truth? Is truth itself real? That is the real question. In many cases, society judges the truth; it takes as true those facts that are convenient for itself. The young Keynes would not accept this view; he would insist that it should be the mission of science and scholarship, not of society, to justify the truth. He occasionally mentioned that probability allows for degree, without explaining what it is. If the truth could be probabilistic, then it should be regarded as permitting the degrees. In examining these, we must take into account human behavior in society. For there can be no truth that has nothing to do with human beings. In this

Keynes (1921/2013a, p. 5). “Dire qu’un fait passé, présent ou à venir est probable, c’est dire qu’une proposition est probable.” 7 Keynes (1921/2013a, p. 9). 6

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regard, the calculation of probability does not fit into a logical system.8 Perhaps realizing its fatal flaw, he abandoned this laborious work and never tackled it again. In my view, the above logical relation is a probability relation, thus Keynes should have entitled his book Probability and Proposition. By giving it the general title A Treatise on Probability, he has introduced trivial and irrelevant topics and confused the theoretical discussion. This must have frustrated his advisor, Whitehead. In the form of probability theory, Keynes effectively raised the question of the certainty of knowledge; in search of its foundation, he explored the philosophical base of a society. How are knowledge and society related? This is the question that Whitehead, rather than Russell or Moore, would continue to ask without rest. Instead of the old concept of the subject, this philosopher used the term ‘actual entities’ and described their creation and annihilation as events, a probabilistic process akin to quantum theory. The first occurrence in the process of events is the relationship in which actual entities emerge as nexus and create their societies. In this way, he has proposed a philosophically coherent approach that treats the subject as a process, most notably in Process and Reality.9 If the certainty or probability of a proposition depends on the amount of knowledge, then we should first define what knowledge is. Keynes says that there are two types of knowledge: direct and indirect. The former is what is known directly from our rational belief, and the latter is what is known indirectly through argument.10 We have direct acquaintance through our experience or our sensations; we have ideas or meanings through our understanding of them; we perceive facts, characteristics, relations of sense-data, or meanings. Experience, understanding, and perception are the three forms of direct acquaintance. But then a few lines later, these three words are rephrased as sensations, meanings, and perceptions, without any explanation. According to this student, these direct acquaintances seem to be easily distinguished from propositions. I have to say that this is an extremely confusing assertion, defined in passing and not substantiated. No wonder the chief examiner, Whitehead, disputed it. Let’s follow Keynes’s argument for a while. The ‘argument’ here means that we perceive the probability relation between the proposition we want to know about and another one. We perceive not so much the proposition itself as the secondary propositions related to it. The proposition that contains no argument about the probability relation is the primary proposition, while the proposition that affirms

8

Fisher (1956, pp. 51–52). This founder of modern statistics conjectures the reason for the convoluted line of argument in Keynes’s probability theory. Keynes uses the term probability exclusively for the truth of a proposition. The occurrence of an event matters insofar as its probability coincides with such a truth. What he sees as the basis for his theory is a kind of probability that, when increased infinitely, reaches 0 or 1: in the end, a statement without indeterminacy. Simply put, it’s not real. 9 Whitehead (1929/1978, p. 18). His definition is as follows: “‘Actual entities’― also termed ‘actual occasions’―are the final real thing of which the world is made up.” 10 Keynes (1921/2013a, p. 12).

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the existence of the probability relation in it is the secondary proposition.11 If we agree with Keynes, rational beliefs are concerned exclusively with this secondary one. Every piece of knowledge has some direct component, and logic is not made like a machine. All we can do is “arrange the reasoning that the logical relations, which have to be perceived directly, are made explicit and are of a simple kind.”12 Elsewhere, he stated. The object of a logical system of probability is to enable us to know the relations, which cannot be easily perceived, by means of other relations which we can recognise more distinctly—to convert, in fact, vague knowledge into more distinct knowledge.13

From vague knowledge to more distinct knowledge. Keynes seems to think that knowledge is ambiguous and relative to the individual, thus allowing for degree. Knowledge of one’s own being or feelings is relative insofar as it is derived from personal experience. Even the knowledge of logic, as it belongs to the structure of the human mind and body, may be considered different for each person. If we all have such personal knowledge (Michael Polanyi), the probability we assign to rational belief would be relative to the individual: in a word, subjective. It may indeed be beyond our capacity, no matter how hard we try, to recognize and calculate probability relations. But he insists that objective probability calculations are possible if we follow certain procedures. To my regret, his argument here is hardly convincing. He insists that probability judgments cannot be based on “lively imaginations” but should be built on logical reasoning. And he goes on to say. (...) we believe that there may be present some element of objective validity, transcending the psychological impulsion with which primarily we are presented. So also in the case of probability we may believe that our judgments can penetrate into the real world, even though their credentials are subjective.14 (emphasis by the quoter)

Our judgments of probability can penetrate into the real world! This is Keynes’s rational belief, or rather ‘Animal Faith’ in Santayana’s terminology.15 No matter how much subjectivity is shaken out of mind and body, something like that residue would enter the process of calculating probability; to that extent, it has an undeniable significance. We should not readily surrender subjectivity to probability. In a footnote to A Treatise, Keynes has shifted and developed this elusive subjectivity into a matter of style. In his view, the strict style of Russell’s (and of course, Whitehead’s) Principia Mathematica is contrasted with Hume’s beautiful writing; Moore’s Principia Ethica is cited as an intermediary style. Meanwhile, some authors are too rigorous in their style and are prone to mere pedantry. He criticizes: “They lose the reader’s attention, and the repetitious complication of their phrases eludes his comprehension, without their really attaining, to compensate, a

11

Keynes (1921/2013a, p. 11). Keynes (1921/2013a, p. 15). 13 Keynes (1921/2013a, p. 57). 14 Keynes (1921/2013a, p. 56). 15 See Santayana (1923). 12

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complete precision.”16 Who does he have in mind with this harsh criticism? He may feel that he knows the reader well. It may be partly true that such a reader-conscious style makes his writings relatively accessible to the general reader. This young man had an insatiable interest in real society. Whatever his advisor’s true intentions, the rejection of the thesis forced him into involuntary unemployment; from now on, he would have to deal with the real economy.17

3.2

Probability and General Will

Here, I would like to look at the historical background of the relationship between the concept of probability and the real world. After the Industrial Revolution, modern societies, chiefly Great Britain, have seen the remarkable development of capitalism, driven by speculation and betting. According to Keynes, investing in a new business, industry, factory, mine, railroad, or farm is almost a one-or-many gamble.18 The ambition of speculators to make a killing on each bet has pushed forward not only the financial economy but also the real economy as well. This is radically different from traditional societies, which avoid risky bets and prefer to repeat the past with as few changes as necessary. In the former view, betting is inseparable from probability. The idea of probability for making predictions has been essential for modern economics, which attempts to manage society through statistics. Take an example from Laplace’s classic masterpiece: Essai Philosophique sur les Probabilités. How many people can be saved by smallpox vaccination? Without the means to calculate this probability, a given community might not have survived. He addressed d’Alembert’s criticism of Bernoulli and commented: “The benefits of vaccination for the government are a burden for the fathers who have their children vaccinated. For, the dearest one in the world may die because of him.”19 Although some fathers are rightly worried that the vaccine itself may endanger their children’s lives, society would not take their fears into account. The target of probability calculation is society, not an individual; its task is simply to calculate how effective vaccination is for society. Laplace believed in the realization of the modern ideal: Progress in vaccine technology would solve the problems of poor fathers and save society. The Corona disaster, as we now know, has shown that such optimism is not warranted. Vaccine skepticism is not going away, and there is even some reason for 16

Keynes (1921/2013a, p. 20). Although he was the last and only student to attend Whitehead’s Cambridge lectures to the end, Keynes eventually sided with Russell’s theory of the logical atom; he may have thought that Whitehead was unlikely to win in the short run. While his true reason is not known in detail, the master left Cambridge, and a group led by Russell would take over the leadership of British philosophy. 18 Keynes (1936/2013b, pp. 149–150). 19 Laplace (1814, p. 68). 17

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it. The conflict between the interests of society and those of the individual will never be resolved. We will not be enlightened by modern science.20 Social decisions should not be left to statistics or probability calculations alone. The scientific community guarantees the efficacy of vaccines, and politicians make the final decision, in which economic considerations play an important role. Nevertheless, people will not always accept this choice. In any case, epidemics, disasters, depressions, and wars are inevitable. Who then decides the social will, and who should it be? What and how should it be? In an authoritarian state, the locus of power appears simple; a dictator makes all of the decisions, and the effects are touted as immediate. In a democratic state, the decision-making process is enormously complex; different agendas and political wills operate at the macro and micro levels. If they are to be integrated, some groups must be disadvantaged by the decision reached. How should they be included in society? In the eighteenth century, Jean-Jacques Rousseau studied alternative electoral systems as a means of reflecting the will of the people in national politics, not only in Du Contrat Social (1762) but also in Projet de constitution pour la Corse (1765), Considérations sur le gouvernement de Pologne (1771), etc. He aimed to improve national politics by reforming the political system. However, elections are not held frequently and do not faithfully express public opinion. Where is the people’s will? To find out remains a challenge for every statesman, like in the days of Machiavelli. In our time, various research institutes and university organizations are constantly tracking the currents of public opinion; newspapers and the press may be of some help. Still, it is difficult to understand what people really want. In any event, politics alone will not be enough to govern a society; instead, economics often guides it, and at times determines our future. Nowadays, the financial economy manages not only the flow of stocks but also modern society itself. In principle, the market should not be manipulated by any person or group, but should represent as much as possible the tacit consensus of the participants in the stock game. It appears to move on its own, involving the ‘volonté générale’ (the general will) of the people, to recall Rousseau’s concept. If this is true, looking at stock price trends or price fluctuations should be the quickest way to clarify people’s will. Probability theory is one of the most effective methods for this purpose. In the first place, what is the will? In the time of the Greek gods, the word itself did not exist. That is why the singularity of Socrates, who chose death by his own will, stood out. Later in Christian Europe, Augustine and Thomas Aquinas came to discuss the divine will. Christian theology has faced serious difficulties since its inception. On the Day of Judgment, God will decide who should be saved and who should not. Alas, such a will has never been revealed on earth to everyone’s satisfaction. First of all, Jesus was crucified after being forsaken by the Lord.

20 Corona vaccine is effective in most of the world’s population, and the side effects may be generally or macroscopically negligible. But I do not know if that is safe for me or my loved ones. In calculating probabilities, society must inevitably exclude the fate of each individual; in some cases, an individual would be crushed by his society.

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God’s will is ambiguous and arbitrary; his judgment appears to be no more than political. In this respect, Christianity is a political religion, but politics cannot save us. Then, paradoxically, the commandments must be vital, and theology cannot but ask in vain: Where is the true will of God? In the seventeenth century, Descartes emerged as the initiator of the modern self and articulated free will most powerfully and clearly as his philosophical concept. In the face of a changeable reality, we have to judge, choose, and decide what course to take; this is where free will shines forth for the first time. Avoiding the theological debates of the Middle Ages, he proposed a mind-body dualism based on the scientific knowledge of his day and strove to secure the realm of human spiritual freedom. After the advent of the Cartesian cogito, the equation of the human will with the divine will was no longer tenable; the separation between the particular will and the general will was painfully conscious. The will of God appeared occasionally in miraculous revelations; it had ceased to be a matter of necessity and had become, almost, a matter of probability. It is no accident that the philosophers of the seventeenth century were mathematicians; it had to do with a crisis of faith. The transcendent will of God came to be seen as an object of probability calculation. Consequently, great mathematicians such as Pascal and Leibniz would pave the way for the modern history of probability theory and philosophy. By the eighteenth century, the ideological and political situation in Western Europe had become disturbing and, in some respects, probabilistic. Rousseau appeared in this transitional period and struggled in his political theory to reconcile the will of the individual with that of society: in short, the micro and the macro. He demythologized Malebranche’s occasionalism by transforming its doctrine into a theory of social decision-making, that is, the theory of volonté générale.21 Christian theology, as represented by Augustine, regarded mankind as part of God’s body. This trend was continued by Pascal and, in particular, by Nicolas de Malebranche (1638–1715). An Oratorian monk and a devout Christian, he was also an accomplished scientist and a profound philosopher, having a close relationship with Leibniz and a series of controversies with Antoine Arnauld. Malebranche had been fascinated by Cartesian philosophy since his youth and endeavored to improve it. Accepting its principles as undeniable, he disagreed with the famous claim of Descartes that the pineal gland in the brain was the meeting point of mind and body. Malebranche applied this dualism more rigorously. In his theory, the two are once separated and then united in the general will of God. Put another way, God’s general will and man’s particular will are once disunited and then reunited in faith. For example, if I want to move my arm, my arm moves.22 This particular will that is then invoked is a mere occasion. All causes originate from God’s will, and animal spirits

21

The following description is based on the seminal work of Riley (1986). Malebranche (1674/1979, p. 160). “In the same way, as soon as the soul wants the arm to be moved, the arm is moved, although it does not necessarily know what to do to move it. And as soon as the animal spirits are agitated, the soul is affected, although it does not necessarily know if there are animal spirits in its body.” 22

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are the mediators of this process; there, the general will is at work before causality. This is the basis of his theory. Descartes carefully limited the imagination to mathematical and physical thinking, whereas Malebranche removed its limits and expanded its role. He begins with this premise. The human body is made up of nerve fibers that transmit tremors to the brain. These tremors, imprinted on it, form an image of the object and become a memory. The ‘occasional cause’ is what triggers the initial vibration. This cognitive process is guided by the senses and the imagination. Originally air-like in nature, animal spirits are also transmitted through the blood to all parts of the body. The more indelible and distinct the traces it leaves in the brain, the more clearly and vividly we can imagine the object. These traces will be the basis of the intellect. The senses and the imagination are affected by occasional causes and are extremely unstable. Accordingly, we need faith to keep our mind and body together, to see everything in God, and to think and act. This approach was radically different from the rationalism or conceptualism of Spinoza, Leibniz, and Kant, and it had a decisive effect on Rousseau. Searching extensively for the origin of laws, Montesquieu was philosophically influenced by occasionalism and found its political consequences. For him, the law itself should be the link between the general and the particular will. And for eighteenth-century Enlightenment thinkers, like Diderot, it was the reason. The German philosopher Kant systematized the will-reason theory in Kritik der praktischen Vernunft. Unlike them, Rousseau’s last word is neither law nor reason but the general will. He assimilated Malebranche and Montesquieu and incorporated them in his legal system.23 His theory of the general will reclaims law from the state and faith from the Church and transfers their subject from God to the citizen. If the will of God, delegated to society, is translated into the Commandments or the law, Rousseau wanted to distribute it to each citizen. From God to the citizen. This is the process of the Enlightenment in modern Western society. New citizens would build a brand new society. Rousseau marked the beginning of new ideals and ethics. Ideals alone are not politically effective; rather, they have unexpectedly led to numerous tragedies. In the French Revolution, Robespierre, a fervent Rousseauist, brought nothing but the destruction of traditional society. Marx’s theory of class struggle appealed to the idea of an eternal communist revolution, which never abolished or surpassed the states; in reality, the citizen’s freedom and life were sacrificed as never before in communist countries. The problem of state repression of civil liberties or the conflict between the general and the particular cannot be resolved. The real question to be asked is not the economy of desire but the will of the individual, the nation, and ultimately the human race. What do we, as human beings, truly wish for? Was not Rousseau, in the eighteenth century, the only one who seriously confronted this question? Then, with the rise of the nation-states, the

23 For a discussion of the differences between Rousseau and his contemporaries, including his view of natural law, see the following excellent book: Derathé (1992).

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question was out of sight for a long time. Now, it has returned likely as a zombie. We face the very same “Jean-Jacques Rousseau problem” (Cassirer).

3.3

The Consequences of Nietzsche’s Will to Power

Will is social, not necessarily personal. Most of what we believe to be ours is, in effect, socialized. Yet modern thinkers have regarded the general will as a mere unity or sum of people’s wills; few asked again, “What is the will?”. They assumed that each individual had a will that was rational or should be. In the early twentieth century, there was a movement to revisit the traditional concept of the will. It was strongly influenced by Nietzsche’s will to power, Freud’s unconscious, and Marx’s economic determinism, among other concepts. Here is a brief overview of the relationship between will and non-will in contemporary European thought. At the beginning of the twentieth century, Henri Bergson proposed the theory of élan vital in L’Évolution créatrice (Bergson, 1907/1984), which praises the will of life as something that moves us forward; at the same time, he did not neglect to emphasize the contingency in the occurrence of events. In a more fundamental dimension, he paid attention to the unconscious that manipulates the human will, along with Freud in his time. Bergson, however, believed that the future is uncertain and unexpected, hence free and open. In those days, entrepreneurship flourished like never before. The philosophy of life was widely acclaimed, Bergson’s élan vital inspired people all around the world, and the Nobel Prize-winning philosopher became a public figure. Keynes began by studying philosophy and never lost interest in it. When he used the term ‘animal spirits’ to explain the value of entrepreneurship, he probably had something like élan vital in mind. Under the great impact of Nietzsche and partly that of Bergson, Georges Bataille paradoxically preached Volonté de chance (Will to chance), especially in Sur Nietzsche (1945). I believe that in the history of philosophy, their ideas can be traced back through Rousseau and then to Malebranche’s Occasionalism. Among them, Bataille is notable for his view of existence as ‘jeu’: a French word for both play and bet, and he took full advantage of this ambiguity. One must overcome and transcend human will and intellect in order to reach the Supreme Being: in his terms Souveraineté. For him, such a desperate attempt is both a play and a bet. You must bet without betting; you must will without willing. Life is a kind of play of being and betting: In short, being is betting. He prefers to say it this way: “Where the force and tension of the will fail, the chance laughs.”24 When the chance laughs, the power of will crumbles and the bet of existence opens. Such existential bets can never be calculated! Based on this view, Bataille showed in La limite de l'utile that all economic phenomena on earth are driven by ‘jeu.’ In the article L’économie à la mesure de l’univers (1946), he expressed the universe, in which energy flows, as a 24

See Bataille (1945/1992, p. 125). “Où échuent la force et la tension de la volonté, la chance rit.”

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vast economic process. In La Part maudite (1949), he used the tools of economic anthropology to explain the same vision for a wider public. Here, we should summon the name of Heidegger after Bataille. In the first part of Nietzsche’s lectures given from 1936 to 1940, he said: “To understand being by its basic character as the will is not a view of individual thinkers, but a necessity of the history of existence, on which they find grounds.”25 By centering Nietzsche’s idea of will in the history of Being, Heidegger intended to radically question and, if possible, destroy conventional concepts of will and subjectivity. In these lectures, he stopped discussing the problem of the will halfway through and jumped to the tale of eternal return. Thus, for Heidegger, the human will loses its destination on this planet. In my opinion, we should not assume that the will is originally embedded in the individual nor should we attribute it to the history of Being, much less to that of the German nation. Everybody feels it in himself or herself: That is where we should start. Let’s look at a common example. When we get out of bed and stand up in the morning, we all feel some will in our body or in the morning air. In any event, we must get to work and participate in social activities! Heidegger overlooked how the will comes from society. He seems to think that Nietzsche’s will to power is directly united with the idea of eternal return and is not mediated by society. And it is even normal as a philosophical interpretation. Such theoretical consistency, though, cannot explain why Nietzsche sought to combine his doctrine with the popular natural sciences and psychology. Like Schopenhauer and Simmel, Nietzsche recognized that the will can be properly understood in a social context and that it is inherently commonplace. There is a tendency among twentieth-century philosophers to deify Nietzsche. In post-war France, Deleuze had begun by studying Bergson and also opened up new horizons for the interpretation of Nietzsche; he combined the will to power and the eternal return in a close and coherent way. For him, the will to power does not aim at power as a goal or representation but is itself a synthesis of forces, their crystallization, so to speak. Power (or rather, force) is manifold and diverse in nature, and when it is expressed and manifested, it cannot but be divided into superior and inferior: the power to dominate and the power to be dominated. The former is active and the latter is reactive, but the two are intricately and variously interrelated. Power is combined with other power, and in this aspect, it is called will, which is the differential element of forces. There is a difference in the origin of this relationship, and the difference and the origin are at the same root, from which a hierarchical order grows. When the will itself is power, it never desires power; power, in the will, does not desire what is outside of itself. On the contrary, the will to power creates and gives us the meaning and value of life. The embodiment of the will to power is the superhuman who lives in eternal return.

Heidegger (1961/1989, p. 46). “Das Seiende nach seinem Grundcharakter als Willen begriffen, ist keine Ansicht von einzelnen Denkern, sondern eine Notwendigkeit der Geschichite des Daseins, das sie begründen.” 25

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Deleuze’s interpretation of Nietzsche is coherent and exhaustive. Nevertheless, we should ask why we cannot be superhuman. Throughout our history, reactionary forces seem to have triumphed overwhelmingly. As Deleuze himself admits, it is not an accident in history but the principle and meaning of universal history: “Man is essentially reactive.”26 This is, in a sense, what Whitehead would call the ‘stubborn fact’ about which we should think. After that, Deleuze (and Guattari) devoted himself to the analysis of desire (or rather, its liberation) and never took up the will as a subject. Seemingly, he was not conscious that there should be a union or re-union based on the will of the people at the beginning of society. It is not surprising that he, a modern French philosopher, did not feel the need to discuss the “Jean-Jacques Rousseau problem” anew.

3.4

From Will to Desire

Will is ideal and desire is real. The former seeks the transcendent, which is distant and almost unattainable, while the latter claims the realistic, which is closer and more accessible. Will demands initiative in the decision of social relations and therefore responsibility; behind it lies social consciousness. Desire is something that passes between people or their bodies; it takes no choice and no responsibility. Apparently, will comes from within, and desire is inspired by the desire of others. Since the mid-twentieth century, people’s attention has gradually shifted from the will of the State to the desire of the citizen. This shift coincides with the full-fledged arrival of mass consumer society, in which the desire was to be liberated, never repressed. Will was replaced by Desire. This is in line with the progress of the global economy. From national will to civic desire. It may reflect the fact that the national will led to disastrous consequences in two world wars.27 We cannot deny that people’s desire or greed moves the economy, but politics should be guided by the people’s will or public justice. Put another way, the economy is run by what people desire, but politics is governed by what the state wants. The state does not every time follow economic principles; in fact, it sometimes crushes the economy of desire and vice versa. The conflict between the economy and politics, between the people and the state is insurmountable. These days, we are fighting each other everywhere. If the world is to become one, the question will inevitably arise: What is the general will of humanity as a whole? Power, will, and desire. . . All these presuppose reality. In principle, European philosophers search for true being or existence but never for nothingness. They strive for creation, but not for annihilation. While opposing the German Idealist

26

Deleuze (1962/2012, p. 161). ‘Will’ was even a buzzword in the fascist States. On Hitler’s orders, Leni Riefenstahl made the documentary Triumph des Willens (1934), which was shot during the Nazi’s Sixth National Party Congress in the same year. 27

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movement, Schopenhauer wrote Die Welt als Wille und Vorstellung.28 Inspired by Buddhism, he doubted the reality of this world itself and preached that the will would eventually cease to exist and everything would return to nothing. His claim violates the taboo of European philosophy, which implicitly assumes existence, and thus the true value of his philosophy is still rarely taken seriously. As is well known, it was not Buddhism alone that explored nothingness; there were indeed thinkers in the history of European thought who recognized the problem. In recent years, after Schopenhauer, philosophers like Heidegger and Sartre have referred to it. Yet they described it from the standpoint of existence, never intending to grasp or embrace nothingness itself. Their primary concern was existence, not nothingness. Nothing remained a stumbling block for ontological thought. All of the above European thinkers taught the indeterminacy of the future, although none of them had the idea of describing it in probabilistic or statistical terms. They intended to propose a new theory of subjectivity (or non-subjectivity); hence, their theory could not have addressed society, much less the economy. Their thinking tacitly presupposed the modern individual and never again questioned the general will or social contract that preceded it. One exception is Whitehead, who has probabilistic ideas; for he shared with Keynes an interest in probability theory and was aware of the emergence of quantum theory during his lifetime. Closely related, in Process and Reality he never used the term ‘will’ nor ‘desire,’ employing ‘appetition’ and ‘urge’ with unique meanings. In contrast, Bergson often characterized the élan vital as if it were the will of life. The discussion on probability did not begin recently nor was it limited to AngloAmerican philosophy.29 Nowadays, economics and philosophy, or Anglo-American and European philosophy, seem to be separate from each other, with little interaction and following different topics. As a matter of fact, these philosophical schools, including economics, are deeply connected with the issue of probability and will. The origin of this situation can be found in a question of ‘general will’ proposed by Rousseau in the eighteenth century: What binds society together and what it should be? In Du Contrat Social (1762), Rousseau stated succinctly but enigmatically as follows: “Each one of us puts his person and all his power in common under the supreme direction of the general will; and we receive in one body each member as an indivisible part of the whole.”30 The individual will is what each person receives back after giving to the general will; it is already a socialized will and self and never natural. Ernst Cassirer had given it the name “Das Problem Jean-Jacques Rousseau” and added a precise interpretation:

He often uses ‘Vorstellung’ as an image or representation and ‘Wille’ as a desire or emotion. The shifting of meaning or blurring of these terms accounts for the apparent ambiguity of his logic. 29 See the following voluminous study: James Franklin (2001). 30 Rousseau (1762/1959, p. 361). “Chacun de nous met en commun sa personne et toute sa puissance sous la suprême direction de la volonté générale; et nous recevons en corps chaque membre comme partie indivisible du tout.” 28

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N. Morinaga The bond connecting man with the community is “natural”―but it belongs to his rational, not his physical, nature. It is reason which ties this bond and which, out of its own character, determines the nature of this bond. Thus even Rousseau considers man a political being―provided that man’s nature be equated with his destiny―but not a political animal, not a zoon politikon. The biological justification of society is given up and is replaced by a purely ideal, an ethical justification.31

The bond that binds us to society has been once unbound and rebonded again. In the Freudian sense, we, modern man, have been castrated or sublimated. There is a purely ideal and ethical justification by which society is ordered and organized; it is neither natural nor animal but inherent in human beings.32 The social contract confirms this justification and makes the human a social being. It is the general will that intervenes in this contract; it is not the sum of individual wills but its generator, so to speak, the source and motor of every social relationship. The trouble today is that money and economy have taken over the social bond. Hannah Arendt noted that at the core of the modern upheaval was what might be called the liquefaction of history, in which history was transformed into a process. Political theorists since the seventeenth century have been confronted with an unheard-of process of growing wealth, property, and acquisition. In trying to explain it, they found the concept of ‘process,’ which by its very definition has the character of endlessness; thus, they came to equate it with the infinite fertility of nature and life. History was no longer a series of events, but a coherent and organic process.33 With the development of modern society, the labor process became socialized; the individual man was replaced by society or collective mankind, which came to be regarded as a socialized subject. At this period, the philosophy of life emerged, proclaiming that the life process, not labor, was the creator of value. Arendt denounced Nietzsche and Bergson (and Marx) by name as advocates of this philosophy.34 Needless to say, it was inevitable in human history that civilization should be transmuted into process or liquidity; this was not the responsibility of any particular philosopher. Although she severely criticized those of earlier thinkers from a political philosophical perspective, the real question would have been about the liquefied process of the modern economy. * People move for work, for money, and for freedom. Some move for God, others for knowledge. The more they move, the more fluid society becomes. Focusing on the masses, they seem to be driven by money and desire. Modern economics is based on this vision, and most of the knowledge today has come to see people in motion. In this light, was not Keynes the first and only philosopher to approach the new 31

Cassirer (1932/1954, p. 126). Boyer (2014) notes that in Rousseau, the de-naturalization of humanity, or the transformation of man into a citizen, appears as a “miracle” or pure ideal (p. 279). Probably Hobbes would have said the same thing. First of all, Rousseau himself saw this civic transsubstantiation as an ideal; it was a program to be achieved through education. As history has shown, his idea has driven the modernity. 33 Arendt (1958/2018, p. 105). 34 Arendt (1958/2018, p. 117). 32

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economic world? In A Treatise on Money (1930), he began by asking what money is and defined the essential concept in the theory of money as ‘money-of-account,’ which we can call the ‘logical atom’ (Russell) in his theory.35 We use the money to buy and sell things. If the price is low enough, we can pay with cash or card. When the price is high, we contract for deferred payment and take on the debt. In a transaction, whatever it is, we are all the time counting and valuing an object in front of us with money. This is the basic role of the money-of-account. Cash payment is an immediate debt liquidation where time plays no role. Debt, in Keynes’s terms, is enforced in relation to something other than itself.36 In this broad sense, no one in the world would be debt-free. We go into debt when we buy a house or a car, apart from the necessities of life. In addition, we may borrow money to plan for the future or simply to look good or to splurge. Either way, debt carries interest. Money is the price of debt; in other words, it is the embodiment and symbol of the time of debt. One of the founding fathers of the United States told young men, “Remember that time is money.” In truth, time produces interest diligently and without a break. In this sense, time is interest. The high-interest rates of the time are suddenly realized when you get older, and by then your debt has grown and ballooned. Modern citizens are born in hospitals, raised by their parents, and educated in schools. This means that we are indebted to our parents and society. Debt payments last a lifetime, and you are not always able to pay them off. Money bears interest. We may have an interest rate for any durable commodity. But practically, it is the money rate of interest that is most important.37 For it is difficult to mint money quickly that does not wear out over time.38 The masses tend to think that it is better to save money without spending it as long as it earns some interest; they do not seek to invest but to store money for later use. In a way, they anticipate future wealth by delaying consumption in the present time. Saving is the desire for wealth itself. Wealth is the desire for the potential to consume whatever and whenever we want. For Keynes, it is a ‘fallacy’ of the masses to believe that the owner of wealth desires capital itself; what he really wants is its expected return.39 To save his wealth, he must take someone else’s wealth; now, in turn, he would be deprived of his own by others. In this transfer, instead of creating new wealth, he would be preventing its creation. For my part, this is not simply a fallacy or a misunderstanding; it must have something to do with the fetishism of money itself. We may be seeking what primitive and uncivilized people have sought in money. Keynes himself suggested that the origins of money are immemorial: “Its origins are lost in the mists of a time when the glacial ice was melting...”40 He believed that in

35

Keynes (1930/2012, p. 3). Keynes (1930/2012, p. 6). “(. . .) it is of the essence of a debt to be enforceable in terms of something other than itself.” 37 Keynes (1936/2013b, pp. 223–224). 38 Keynes (1936/2013b, p. 230). 39 Keynes (1936/2013b, p. 212). 40 Keynes (1936/2013b, p. 12). 36

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modern times the age of money fetishism was almost over. I suspect, however, that money has much older origins than he imagined. If money is a symbol of debt, we are still paying it, are we not? Once the debt is paid, the guilt vanishes and the money must end its role. Occasionally and unfortunately, we may not be able to pay it back. Those who are saddled with debt are blamed for their lack of foresight, and they may even agree. Yet the future is unpredictable, all prospects are inadequate, and anyone can fall into financial ruin. The question is not the fault or fate of the individual, but rather the totality of the situation in which he finds himself. We naively think of money as a contract or power of attorney for a secure future; in the event of depression, incredibly, it becomes almost a blank slate. The monetary economy seems to stabilize social relations, which is true in a sense, but money is actually a fetter and in some cases can plunge us into the abyss like prisoners on a chain. Above is the debt at the individual level. Similarly, the nations are indebted to each other and are inseparably bound together. If society is the bond of individuals, and the state is that of societies, then all people are united by their debt to all people. The symbol of this unity is money. Under the managed currency system, the value of money is uncertain and unstable. Convinced that a return to the gold standard was no longer possible, Keynes proposed that this instability should be managed by human reason, albeit with its limitations. The complexity of markets culminates in investing. What was relatively stable in face-to-face trading becomes extremely unstable in faceless stock markets. Money both connects and disconnects us. This movement of connect/disconnect takes place on a global scale as if in a convulsion. There you find yourself naked and directly joined to the one world.

3.5

Economy as a Substitute for War

If the eighteenth century was the age of philosophy, the nineteenth and twentieth centuries were that of revolution and war. The development of stock markets is tightly connected with the currents of modern world history.41 As is well known,

41

No one would deny that the economy, not philosophy, drives the world today and that the financial and stock markets are at the heart of it. Yet very few studies have outlined their history. Preaching the need for a mature “equity culture”, B. M. Smith begins his remarkable book (2003) as follows: “To make money from money is a sin. Or so it was widely believed for centuries.” (p. 9). There was no rigorous academic study of the stock market until Louis Bachelier published his work The Theory of Speculation in 1900. He was the first to use mathematical techniques to explain that the stock market is efficient, saying that “the price considered most likely by the market is the true current price.” His approach to analyzing stock price fluctuations is similar to the formula used by physicists to describe the random collisions of molecules in space. Mark Smith credits him as a pioneer in probability theory: “Bachelier concluded that stock price movements were essentially unpredictable, and often could not be explained even after the fact.” (p. 98). During his lifetime, Bachelier never received the recognition he deserved. Banks began turning to more liquid rather than long-term investments. Insurance companies increased their investments in publicly traded

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stocks are significant investments made by accumulating small sums of money in the form of securities. Their origin is believed to be the bonds issued by the Italian citystates to raise funds for war expenditures. The world’s first stock exchange was started in Antwerp in 1531, followed by the Netherlands, France, Germany, and England, among other nation-states. In 1553, wool merchants in London organized the first English limited partnership to finance trade with Russia and issued the world’s first stock shares. In 1602, the United East India Company was founded in the Netherlands and began using shares to finance trade in the East, which needed large amounts of capital. This method spread to other parts of Europe. In 1694, the Central Bank of England was established to finance the war against the French colonies. This accomplished the financial revolution and prepared the way for the Industrial Revolution from roughly 1760. Backed by the state and parliament, the Central Bank was highly credible, whereas the French economy, ruled by the warlike king, lagged far behind. During Rousseau’s lifetime, the defects of the monarchy were about to be exposed. In the eighteenth-century France, capitalism was undeveloped; under the monarchy, banks and stock markets were not well developed. This lag is generally considered a factor in the French Revolution.42 Competing with the Netherlands for world supremacy, Great Britain engaged successively in the Seven Years’ War (1754–63), the American Revolutionary War (1775–83), and the Napoleonic Wars (1799–1815). As a hegemonic project, this nation financed these wars with big money through many government bonds, which were also used to expand colonies: namely, railroads and canals were constructed; mines and plantations were built to exploit resources. In 1817, the stock exchange was opened in New York City. The Civil War (1861–65) and the western frontier projects prompted large issues of government bonds and stocks, which energized the securities market. The aftermath of World War I shifted the world’s financial center from Europe to the United States. After World War II, the United States (and to some extent the Soviet Union) came to dominate the world economically and politically. All kinds of financial products were invented on Wall Street, and the financial economy began to run the entire world. This eventually led to the collapse culminating in the 2008 financial crisis.

securities. By 1913, international financial markets had reached their peak, and capital moved freely across international borders. “The globalization of the early twentieth century fostered an optimistic belief that growing interdependency among nations would reduce, and eventually eliminate, the possibility of war, leading to a permanent era of peace and prosperity.” (p. 103). And then World War I breaks out. 42 See the brilliant work of McNeill (1982). In Great Britain, there was a nationwide commercial network, stimulated by British naval contracting and sustained by the Bank of England’s credit. In France, such a network had not been established, and the government, as in Great Britain, was running up against the limits of its fiscal resources. “The costs of the American war put what proved to be an unmanageable strain upon existing forms of government credit and tax income. The effort to meet the resulting financial shortfall led, as is well known, to the summoning of the Estates General in May 1789 and to the outbreak of the French Revolution.” (p. 184).

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As the above shows, the stock market began with a war, evolved with the expansion of a war, and became dominated by the victorious countries. Like other forms of gambling, stock investing is a system in which the house always wins; ready to fight each other, the players dare to pay a high fee to the casino. It is not a fair game but a war for global hegemony. Not only in the economy but in today’s world, life as it is, WAR. Without exaggeration, I would like to say that the history of the modern economy is that of the war economy. War is the biggest and worst gamble where the nation itself is placed at stake, and the economy is an extension of war. Roger Caillois describes the total war of our time: It is nothing less than a ruinous ‘fête,’ in which the whole of humanity will be involved in the end.43 Stock prices should not be determined by chance, just as wars are not won or lost by luck. Stocks are not games of dice, roulette, or pachinko, where a random roll is awaited; nor are they ruled by the hand of God or His transcendental will. Most likely, God would not roll the dice, as Einstein once said. If stock prices are affected by certain market trends or probabilities, they are neither subjective nor mystical but should be expected to follow objective laws that make them predictable. How can we read these probabilities and predict the future? There must be a method! In my opinion, that was Keynes’s original intuition. Marx, by the way, was not blessed with such inspiration, since he had no dealings with the stock market. As Keynes says, we all follow the convention in everyday life, assuming that the status quo will continue as it is forever.44 This is rational behavior as long as there is an organized capital market. Catastrophic incidents do not seem to occur, and some ups and downs would be overcome by our efforts. Nevertheless, catastrophes break out. Depressions bring capitalism into bankruptcy, where a handful of shrewd people can make a lot of money in some way or another. This is characteristic of stock market speculation. People flock around the market, shouting: “I’m the one!”.45 In reality, no one can foresee the future in the long run, let alone 5 or 10 years from now. Even if some investors tried to do this, their opinions and actions would not impact the market.46 On the contrary, modern markets even call for uncertainty and instability, in a word, liquidity, and by no means need long-term expectations. You may recall Nietzsche’s words: “We love not knowing what will happen in the future.” It is both hope and despair for us.

43

Roger Caillois stated that modern war resembles a fête and causes a climax of excitement similar to it; the “absolute war” (guerre absolue) is violent and frightens humans as well as fascinates them. See Caillois (1963/2012). “L’État s’affirme et se justifie, s’exalte et se renforce en affrontant une autre totalité. C’est pourquoi la guerre ressemble à la fête, constitue un égal paroxyme, apparaît à son exemple comme un absolu et suscite à la fin, avec le même vertige, la même mythologie.” (p. 243). 44 Keynes (1936/2013b, p. 152). 45 Reading Kindleberger’s famous book Manias, Panics and Crashes (1978/2011), you may suspect that there is nothing but deceit, fraud, and injustice in the market. We expect it to be rational, but States and central banks are affected by the irrationality of human desire or unconsciousness, so they do not always act rationally. See also Kindleberger (1984/2007). 46 Keynes (1936/2013b, pp. 149–150).

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The trouble is that more than a few people hold deep beliefs or superstitions about market experts, who have superior judgment and knowledge and strive to make long-term predictions about the likely return of an investment, thereby helping to stabilize the market and society. . . Keynes asserts that they have no such ability. They do not care what an investment is truly worth, and at best observe how the market values it under the pressure of mass psychology in a few months or a year. No competent expert in our society can take charge of long-term expectations.

3.6

Keynes’s Beauty Contest

As a matter of fact, the investment market is a game or “battle of wits” in which professionals play among themselves, such as Snap, Old Maid, and Musical Chairs... To this list, Keynes adds his famous metaphor of the beauty contest.47 This is the voting behavior of the competitors who judge the beauties, where they compete with each other in their judgment. On one page of a newspaper are a 100 black-and-white photographs of women. Naturally, their images are neither clear nor explicit. From these, the contestants have to choose the six prettiest faces. The winner is the one whose choices come closest to the average preference of all voters. Truth be told, there is no such thing as average opinion; it exists in their “fancy,” to use Keynes’s word.48 Thus, we have to imagine and anticipate it. The ability to visualize a pretty face that everyone likes, in a word, imagination, is different for each person. It is not enough to imagine your preference to win the competition; you have to do it in the third degree, from a third-party perspective that is beyond your own standard of judgment. There might be someone with a fourth level of insight that is even higher than the third. One after another, talented people with higher levels of imagination will appear and practice it at higher and higher levels... To be honest, winning such a competition is not easy for an ordinary person, and the same is true for professional investors. What is needed here is the capability to imagine and judge the average sense of beauty, not an aesthetic eye to find absolute beauty. Blurred newspaper photos do not help discern their looks, and the criteria for judgment vary from person to person. That said, beauty contests and various auditions play an important role in show business. If a connoisseur could select a few candidates properly, he could manage their debut and promote them to the public as new stars. The phrase “the most beautiful woman in the world” has no meaning; the masses, easily manipulated by the media, admire popular stars or celebrities. We have seen that even the President of the United States is subject to popularity; sometimes he must stand naked. At first glance, it may seem far-fetched for Keynes to use a beauty contest as a metaphor for the stock market. In his view, both are driven by mass psychology; in

47 48

Keynes (1936/2013b, p. 155). Keynes (1936/2013b, p. 156).

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each case, the unconscious of the masses controls the outcome. As we have noted, in his probability theory, Keynes had the idea of determining the truth value by superposing two probability propositions. In this light, the true meaning of his metaphor would be to measure the degree of probability by the superposition of six chosen by newspaper readers and six selected by newspaper side or event organizers. And yet this metaphor is ambiguous: Who makes the final decision on the results of the contest, the readers or the newspaper? After the former have voted for 6 women out of 100, the latter is bound to participate; reporters, journalists, critics, pundits, people from the entertainment industry, and so on are called together to sit on the jury. It is a statistical matter for the masses to choose their favorite six, but it is a business matter for the professionals to guess who will be chosen. It is almost impossible for anyone to predict all six names perfectly. In some cases, none of them may be able to pick even one of the six correctly. To avoid such an awkward situation, the organizers should prepare six women beforehand. Conversely, if too many correct answers are crowded, they would have no choice but to draw lots. In professional investment, it is the implicit consensus of the general investors that decides the stock price and the success or failure of an investment; the institutional investors and the government are more or less involved in forming such a consensus. In both cases, we are fighting against the unconscious of the masses or the popularity that moves them. Suppose a small entertainment agency ventures to market a beautiful young actress. This attempt will most likely end in failure. No matter how fascinating she acts or sings, no matter how true it is, not everyone will agree at all times. Worth and talent do not equal popularity; beauty means nothing in the entertainment industry without people’s cheers and applause. There are so many pretty girls in the world that it is impossible to decide who is the most beautiful and talented. Yet, what if a small company never stops trying? This is, in a manner of speaking, Keynes’s next question. If there is a skilled and seasoned investor who continues to invest based on his best and most realistic long-term expectations, not distracted by investment games. Can he make a lot of money in the long run? In Keynes’s answer, there may be such “serious-minded individuals,” but they would not make much money. In the stock market, many investors, as experts in mass psychology, usually observe how the crowd behaves in the short term.49 Those who dare to bet on long-term expectations have to work harder than other short-term investors. They are exposed to risks and are more likely to make serious mistakes. As a practical matter, there is no basis for any expectation; we never know what will happen in the future. The stock market is a race against time and credit. No matter how competent an expert you are, you cannot go against short-term market movements. In the end, success depends on extraordinary intelligence or financial strength. You would have to go through many vicissitudes to get good returns, preparing considerable capital in advance to ensure your immediate safety. If you run into debt for failing to do that, you’re out of luck.

49

Keynes (1936/2013b, p. 156).

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Keynes’s realistic thinking seems to be coupled with the abstract one in A Treatise on Probability. Insofar as reality is probabilistic, inference should be based on induction from experience. Our reasoning comes primarily from experience and its empirical arguments produce two types of generalizations. The first is ‘universal induction,’ which asserts invariable relations. It claims its universality in the process of generalizing; even a single exception would overturn it. This is a special kind of reasoning in the exact sciences. Most generalizations belong to the second one, which is called ‘inductive correlation.’ Take Keynes’s example: If, for instance, we base upon the data, that this and that and those swans are white, the conclusion that all swans are white, we are endeavoring to establish a universal induction. But if we base upon the data, that this and that and those swans are white and that swan is black, the conclusion that most swans are white, or that the probability of a swan’s being white is such and such, then we are establishing an inductive correlation.50

If we look at swans A, B, and C and conclude “all swans are white,” this is a universal induction. In contrast, if swans A and B are white and there is also a black swan C, causing us to infer “most swans are white” and to calculate the probability of the white swan, this is an inductive correlation. In the latter case, the conclusion to be drawn is probable, not definitive. Such an inference is common and has been taken for granted by many researchers. In Keynes’s view, they have failed to recognize the critical point that the validity of the inductive inference is effectively based on the existence of the probability relation and never on the mere facts: An inductive argument affirms, not that a certain matter of fact is so, but that relative to certain evidence there is a probability in its favour. The validity of the induction, relative to the original evidence, is not upset, therefore, if, as a fact, the truth turns out to be otherwise.51

Continuing with the swan example, although one or two black swans may be mixed in with the flock, the inductive statement “white swans are white” itself should not be overthrown. In most cases, the swan is white, and this fact can even be demonstrated biologically or zoologically. Keynes was not merely seeking the ‘fact’ with probability theory but inductively exploring the general laws of probabilistic conditions that make it possible. Not to mention his name, and not limited to economics, it is fair to say that every system of knowledge or civilization has been built on inductive inference. Lest we forget, though, there is always a black swan or two lurking in our world. The most important thing is the capacity to imagine that a black swan could land in front of us. If calling this ‘creative imagination’ is too much, I would at least like to term it inductive imagination.52 Let me illustrate this by adopting Keynes’s example from The General Theory. Suppose some production company held a beauty contest based on the belief that all beautiful women should be popular, and all of the six chosen have truly gained 50

Keynes (1921/2013a, pp. 244–245). Keynes (1921/2013a, p. 245). 52 This is directly relevant to the problem of imagination in Kant. I would like to ask: Would Kant accept that the imagination can be fancy, or rather can only be so? Can the productive imagination (produktive einbildungskraft) be creative? Can it be free of probability and animal spirits? 51

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popularity in show business. If this led to the conviction that “all beauties are for sale,” then someone among the producers might surrender his judgment to the logic of universal induction. In practice, such lucky cases are few and far between; therefore, he would have to confess that his discernment is probabilistic and not definitive, and that the seventh girl may end up being unknown to the public. In that case, he retracts his previous statement and establishes an inductive correlation: “Most beauties are for sale.” And his judgment would not always be wrong. As a veteran producer, you would believe in your aesthetic sense and the industry’s shared sense of beauty, and such an attitude may even be logical and reasonable. Yet whether people like it or not is a whole other question; you had better find an equation that connects the value of beauty with the taste of the masses. In any way, you cannot help but continue your business with such beliefs. The same is true for a skilled stockbroker. He believes that he has the ability to judge which stocks to buy or sell: Hence, his devotion to his trade. When asked about the reasons for his choices, he can give you as many answers as he likes; sadly, the ups and downs of the stock price will not go as he anticipates. The beauty contest works when a certain environment at a certain time sets a standard for beauty and when a certain percentage of the public supports this standard. In reality, there is no such thing as absolute beauty or constant popularity. If this fact comes to mind, the president may close down the entertainment agency; private investors, realizing that they rarely make money, may refrain from big deals. Yet the fact remains that the president has a compelling eye for show business and that professional investors have a unique view of the market. The accumulation of knowledge through inductive thinking has a certain significance. Experience must count for something. The standard for today’s show business is set by the entertainment industry and the media. While representing the will of the masses, the industry consensus invents the ideal image of the beautiful woman. In most cases, its power relations determine each entertainment agency’s future. The struggle for hegemony is repeated within the groups, where beauty, truth, and even goodness are not taken into account. The essential question of why we seek beauty is left unanswered and thrown aside as useless. Nevertheless, there must be a reason for the tastes and choices of the masses to influence the social selection process, and it is hard to say that this process is entirely independent of the inductive knowledge of people. No matter how skillfully one tries to forge an idol or a star, there seems to be a limit to what one can do. It is also undeniable that the dictatorship of giant capital is now advancing not only in the entertainment or cultural industries but also in the economic market as a whole; we are forced to want things we do not really want. The way to resist this process is to ask a more fundamental question: Should we live after popularity and images or pursue our inner animal spirits or élan vital? Should we live in a socially shared and acceptable ego, or seek or create a true inner life?

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3.7

59

Fear the Animal Spirits

Let us return to the context of The General Theory. Long-term investors are most likely to serve the public interest and contribute to social stability. And yet Keynes points out, they are the ones who are most often criticized. Those who do not follow the market trends are considered “eccentric, unconventional and rash” in the eyes of ordinary people in the same business.53 If their investments are successful, it reinforces the prejudice against daredevils; if they fail, the poor challengers are ridiculed and scorned. Keynes admits, “Worldly wisdom teaches that it is better for the reputation to fail conventionally than to succeed unconventionally.”54 In a sense, the financial economy has the aspect of a game for securing one’s reputation or authority; it is crucial not to stray too far from the crowd. In the end, the most important thing is to stay in the winner’s circle and keep one’s dignity. On the other hand, Keynes believes that we modern humans cannot be selfsufficient in such circles. We are all swayed by “spontaneous optimism” rather than mathematical expectations.55 Pushed by activity rather than inactivity, we dare to dive into some enterprise without immediate results. Such impulses come from “our innate urge to activity,” i.e., animal spirits.56 At first sight, we appear to be making rational choices and calculations. Once we look back at our motives, we find that we were led by “whim or sentiment or chance” or, in my term, ‘popularity.’ Do animal spirits really come from within? Or do they penetrate us from the outside? When we want to do something, the will is mostly infused from society; we easily confuse our own will with the social will and thus unconsciously surrender the will to society. It is difficult to know whether the choice is one’s own or that of society. The reality is that when society moves, we move, and when we move, society moves. People are unstable and unreliable, and so is society. There is no such thing as the Invisible hand of God that Adam Smith and other classical economists took for granted. If this were true, what should we rely on? As Hume argued, this could be the role of ‘convention’ that has dominated society at all times. If our modern society is to be as stable and sustainable as the traditional one, conventions must be followed. To the extent that markets are embedded in society, conventions should be observed there as well. In order to stabilize the market, we should form and adhere to the longterm expectation that judges the significance of the investment and properly evaluates it by referring to market customs. But in a capitalist financial economy, the market is structured to focus exclusively on liquidity and not on much else except short-term investment. There seems to be no way to suppress its instability. In the General Theory, Keynes made an abrupt reference to animal spirits instead of further pursuing his monetary theory. In my view, there are two sides to animal spirits. The most visible are those who make reckless short-term bets; they may get 53

Keynes (1936/2013b, p. 157). Keynes (1936/2013b, p. 158). 55 Keynes (1936/2013b, p. 161). 56 Keynes (1936/2013b, p. 163). 54

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lucky and succeed once in a while, but more often self-destruct. The other side is more important: Animal spirits provide the courage to bet on long-term investments against all odds. There must be some serious-minded people who sincerely trust the value of their investments; they will only buy stocks that are worth buying. They are the salt of the earth. Once they are gone, and only those who bet with one shot are left. . . The market should become chaotic. Here is a simple love story to consider. In choosing your beloved, you should follow animal spirits rather than mathematical expectations; those who make such superficial preferences are more likely to fail in the end. Whoever you love need not even be beautiful. The real world is not a beauty contest but an open market, so to speak, where people choose and are chosen; we are chosen as we choose. Akerlof and Shiller recommend incorporating animal spirits into macroeconomic theory to learn how the economy really works.57 They invoke the stories that people keep in their minds to compensate for the lack of modern economics.58 I suspect, however, that animal spirits are far more insane. Taking Toyota’s founding as an example, the authors confide that its entrepreneurial spirit seems to be “pathological overconfidence.”59 In fact, animal spirits have no story with a happy ending; theirs is something that eats up such a well-made story, an almost religious passion, a fearless ambition, and a burning bloodlust. Perhaps philosophy alone can glimpse and grasp how it works, appealing to the frame of reason and knowledge. At the source of animal spirits is animal faith, and at the core of our human minds is animal nature. That was Whitehead’s claim, not only Freud’s and Bergson’s. We can even add the name of Hayek, who stressed the importance of spontaneous order and attacked constructivist rationalism as an illusion.60 The controversy between Hayek and Keynes lies in the incompatibility of the latter’s probabilistic rationalism, as I like to call it, with the former’s stubborn faith: There is something in human nature that transcends reason. This is not an untouched nature but one that has been regained and reconstructed in human culture, as Rousseau was keenly conscious. In this sense, paradoxically, it is precisely the wild thought that is truly human. Once again, a beauty contest is not a competition over true beauty. Beauty is something that people recognize as such, share as an ideal, and institutionalize socially: in short, an institution in culture. Partly because of cultural tradition since Rousseau, we have sought sublime beauty in nature outside of society. Likewise, we are inclined to find natural beauty in women, mostly in their appearance, in their faces and bodies: briefly, in their images. The beauty contest is a struggle over the images of ideal female beauty that have already been created or are to be created in the social unconscious. It is nothing but a social struggle; the winner and her cronies are promised money and social prestige.

57

Akerlof and Shiller (2009, p. 168). This book is useful in correcting a bias among economists, but it does little to answer our concern: The significance of animal spirits in Keynes’s writings. 58 Akerlof and Shiller (2009, p. 173). 59 Akerlof and Shiller (2009, p. 137). 60 For the best summary of the relationship between these two economists, see Matsubara (2011).

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In my eyes, such competitions for reputation seem to be rampant everywhere, without asking what the true value is. There may even be a philosopher contest. Suppose you have a list of 100 philosophers in front of you, and you must choose six of them who are worth learning from. If your predictions come true, you will be rewarded by the publisher. As a specialist, I make a preference based on long-term expectations and choose the following six: Plato, Aristotle, Montaigne, Rousseau, Bergson, and Whitehead. If you are looking for a short-term investment, you could instead pick some up-and-coming young philosophers and get a modest reward. The odds are against me; I don’t think I stand a chance of winning. That said, if all people made such preferences, society would be dominated by some groups who despise the accumulation of past knowledge in the human and social sciences, not only in philosophy. It would be nothing more than a society without a future, dependent solely on short-term expectations. Keynes himself was well aware of this danger; hence, he warned so kindly of the need for intervention by the state or authority. Meanwhile, this economist was himself an astute investor and even enjoyed betting on the market. Therein lies Keynes’s irresistible ambivalence and double-sidedness, which makes him worth re-reading even now. His analysis is still relevant. To tell the truth, like the countless beautiful women, there are philosophers everywhere. If we include Buddha, Jesus, Muhammad, or even Keynes himself in the list, the number would be well over 100. It makes no sense to choose six philosophers, much less to worship one as guru, since it does not deepen our understanding of the real world or our existence but rather the opposite. Moreover, we have many opportunities to learn not only from philosophers, scholars, and their books but also from our friends, students, and ordinary people. Furthermore, we learn from the internet, television, and even newspapers. The list goes on and on. Even if you are a wild and lonely animal spirit, you have no choice but to enter this silly competition in the modern world. In this case, you must find the intuition that gives insight into what society is looking for. This is the ability to conceive the images that society needs. It would be better for you to start with the established images of beauty. Nevertheless, the unknown beauty may appear: Beauty as no one has ever seen it before. If you want to imagine and capture this, you need the skill to search for it inductively from the present and the past, and to envisage the idea of beauty and its possible expansion. This is the capability to grasp and hold the unknown in advance with a lively imagination, before it turns into reality. This capacity, which Whitehead called ‘prehension,’ is the source from which creative imagination springs and grows. So far, we have mainly discussed Beauty, using Keynes’s metaphor; it has also been a search for investment secrets. What is implicit in his theory is, in fact, the creative imagination that vividly anticipates an unknown future. And yet his animal spirits lack such creativity, since he himself had dismissed it at the very outset of A Treatise. Without imagination, one cannot prepare for the future or even win in stocks. In the original condition, animal spirits should be supported by it, and vice versa. Creative imagination appears to be fancy and irrational, yet it has a wide scope and opens into every human life. Indeed, we tend to imagine and worry about things we do not need; imagination may be a disease inherent in the human species. But it is

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what shapes our inner life and its glory. Deciding how much to imagine and where to stop is not a matter of rationality or certainty but rather a matter of experience and probability. We must leap with animal spirits when probability calculation runs out and imagination ends. The young Keynes simplified the problem by reducing the probability to something logical and calculable. This made his probability theory incoherent and the arguments of his later The general theory unnecessarily complex. Between probability and animal spirits, a fertile field of imagination unfolds freely and fancifully. Keynes had no theoretical means of accessing this land; or rather, he himself blocked the way.

3.8

Seeking Order in the Unstable

Katsuhito Iwai, a Japanese economist, has repeatedly discussed the significance of the beauty contest metaphor in Keynes’s theory: The more rationally each newspaperman votes, the more the beauty he selects will deviate, like an infinite series, from the ultimate Idea of beauty and from his subjective judgment of beauty. (. . .) There is nothing but beauty, valued solely by its interchangeability with the prize money the voters are chasing. Beauty is divorced from the Idea to be evoked, and also from the subject that should give it meaning; it is ultimately ruled by purely social laws of value: Only what people consider beautiful is beautiful. ‘Beauty’ circulates in the world precisely as a symbol.61

In a recent interview, he simplified and distorted the story, reducing it to a tale of choosing ‘one’ beauty out of 60: “There is no objective or subjective basis for the beauty chosen by Keynes’s beauty contest. The status of beauty, being changeable from day to day, is nothing more than unstable.”62 In my opinion, Iwai, like other researchers, sees this metaphor naively as a way to illustrate market instability. Yet the choice of ‘one (and only),’ whatever it may be, is absolute; this could ruin Keynes’s conceit. There is no such person as a ‘kamikaze investor’ who puts all of his money into a single company. In a beauty contest, the judges pick 6 out of 100; this is not an absolute choice but allows for degrees, hence it is probabilistic. Keynes must have found this point of view through probability theory. When choosing six winning beauties, or similarly six promising companies, the judgment is not rational but probabilistic. No matter how much we may ponder the other competitors or speculators, there are no reliable criteria for making a decision. As Iwai points out, the judgment of beauty is neither ideal, objective, nor subjective; it is not rational and coherent but follows social and highly unstable value laws. Judgments in a given social context are changeable and rapidly shifting. Decisions cannot be certain and absolute, merely uncertain and probable. Despite this, they can never be baseless. Rather, we should ask: What is the socialized law of value? The

61 62

Iwai (2000/2009, pp. 185–186). Maruyama (2020, pp. 94–95).

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way to think about it is induction and imagination, which should guide our thoughts and beliefs. And the final decision is nothing more than a throw of the dice or a leap of animal spirits. The will of the masses is so beyond our understanding that it cannot be properly read, and yet such a general will determines our survival in the markets. There are too many factors that we cannot decide except with probabilities or animal leaps. It is not that there is no basis for trust. Too many! This is a crucial problem for our civilization. What we need now is a methodology to find certain rules or laws in an unstable and complex reality. If you accept that beauty is what the public recognizes as such, then the result of a beauty contest may be groundless and subject to chance. However, if we consider that future stars often emerge from it, we should admit that a certain rationality rules the public’s preferences. The masses like beauty. In a certain time and place, there is a certain standard of beauty; we could even say that beauty contests create it. In any case, there should be some connection between the idea of beauty and the unconscious of the masses. This is similar to the way that the stock market and the financial economy have some linkage with the real economy. If you neglect this fact, you can hardly make a long-term profit in stocks, except for one lucky shot. And good luck doesn’t last long. The above is just an argument within Keynes’s metaphor. If you had a daughter, would you want her to enter such an unreliable contest unless she had some special gifts? Parents know that their daughter is more beautiful than anyone else, as do those who love her. They know that she is worthy of love and should be loved. Here, the concept of beauty is vain and empty. In the presence of a beloved, the idea or ideal image of beauty is worthless. We love her (or him) in our present and past interactions. There is no history of superficial images but an inscription of the absoluteness of a relationship with a real personality: We are in the absolute mutual commitment that this bond imposes on us.63 Beauty may be for sale, but love is not. Look back on your romances. They may have been nothing more than a series of misunderstandings; most of them ended in disappointment for both lovers. Even if you are convinced in your heart that this one was fatal and cannot and will not be repeated, you may still want to make the same mistake over and over again. This is what we should rightly call animal faith, which may have something in common with Nietzsche’s idea of eternal return. Our world is largely built on such beliefs, and this is a problem that goes to the core of religion and is not easy to overcome. Modernization will never be completely realized, and what Freud called the Repressed, the never-enlightened, will return. We will be punished for our amnesia. Macroeconomics studies general aspects of the economy, which has long since expanded from national to global scales. If there is something that drives the global economy, we can call it the general will, which cannot be simply understood and expressed theoretically or mathematically; in fact, it is repeatedly created and re-created by animal spirits and lively imagination. The eminent economic historian Kindleberger showed the utility and limitations of rational expectations:

63

I adopt the concept of the Japanese thinker Takaaki Yoshimoto with a slight twist.

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N. Morinaga Rationality is an a priori assumption about the way the world should work rather than a description of the way the world has actually worked. The assumption that investors are rational in the long run is a useful hypothesis because it illuminates understanding of changes in prices in different markets; in the terminology of Karl Popper, it is a ‘pregnant’ hypothesis. Hence it is useful to assume that investors are rational in the long run and to analyze economic issues on the basis of this assumption.64

We often use the word ‘rationality’ without fully appreciating its meaning. It is not merely a description of the various judgments that have formed the world in the past; it is even an a priori notion that has made these judgments possible and from which a different future should emerge. From another perspective, rationality is a hypothesis that conceives and anticipates the future by means of induction. This hypothesis helps us to analyze economic phenomena and thus allows us to imagine and envisage the future world. In this regard, the rational expectation may be comparable to Peirce’s ‘abduction.’ Yet it will not be truly effective as long as this thinking is a mere extension of rational reasoning and not a leap that makes full use of the imagination. The rational mind must embrace the irrational within its own reach. On the edge of chaos, where the rational and the irrational jostle against each other for space, the creative imagination takes a chance to spark.

3.9

Conclusion

Un coup de dés jamais n’abolira le hasard. — Stéphane Mallarmé

The ‘macro’ of macroeconomics may go beyond human economic phenomena, or humanism, to a cosmic economy in Bataille’s sense, which is something that cannot be captured by the established concepts of economics. With the extreme progress of natural science and AI, we are coming into contact with the thought of nature itself and, by extension, the universe. We are now being pushed around by animal spirits (or élan vital) that transcend human concerns. The existing macro framework is already too narrow. In recent years, the market seems to have become a collection and distribution center where an infinite number of information is traded; it is evolving into an information network, metaphorically a brain, in which different wills are at work. Even before the national will and the people’s will, multiple wills are constantly communicating together at a more microscopic level. Numerous neurotransmitters are released and exchanged between tiny neurons and synapses; millions of electron pulses are emitted to make decisions at diverse locations. There, money and the market intervene as a kind of nexus. We, modern citizens, live in a fictional world rather than a real one; we enjoy a fantasy rather than a real story; we are touched by virtual images rather than by

64

Kindleberger and Robert (1978/2011, pp. 40–41).

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tangible things. Even the economy is becoming more imaginary than real. In order to survive in this world, we must, in a way, reverse the imagination and use it methodologically to explore a world before images, in which myriads of signs move and twinkle everywhere like the stars in unknown constellations. Intuition without image could reach it and reveal to us real life. Whether it is a stock investment, a beauty contest, or a philosopher’s poll, social activities in contemporary mass society are widely manipulated by numbers and probabilities. A certain frame of reference seems to be set and imposed. The list of preferences for each individual is databased, predetermined, and handed down by society. Numbers and statistics take over as authority, and the social sciences follow as a bodyguard; none of them knows where they are heading. Our society is now turning into an artificially limited and closed one, while cracks are spreading all over its surface. To create a truly open society, its stubborn shells must be shattered. In my view, Keynes deeply understood that macro-representations are re-created and never given; therefore, he characterized the economy and society as essentially unstable. In contrast, some of today’s economists remind us of old Platonists who believed in the existence of Idea; they take macro-stability as given and try to prove its reality by devising and elaborating cryptic mathematical models without limit. And yet the real economy moves. The hand of God never stops rolling the dice. Stéphane Mallarmé, the nineteenth-century French Symbolist poet, paradoxically and esoterically declared, “The roll of the dice will never abolish the chance.” Anyone can roll the dice, but you cannot always get what you want. Chance comes and goes in our hands, but no one can control it. Even when numbers and statistics seem to determine everything, the tumbling dice keep on rolling but never come out the way we humans want them to.

References Akerlof, A., & Shiller, R. J. (2009). Animal spirits: How human psychology drives the economy, and why it matters for global capitalism. Princeton University Press. Arendt, H. (2018). The human condition (2nd ed.). The University of Chicago Press. (Original work published 1958) Bataille, G. (1992). Sur Nietzsche. In Œuvres Complètes VI. Gallimard. (Original work published 1945) Bergson, H. (1984). L’ Évolution créatrice. In Œuvres. Presses Universitaires de France. (Original work published 1907) Boyer, A. (2014). Chose promise: Étude sur la promesse, à partir de Hobbes et de quelques autres. Presses Universitaires de France. Caillois, R. (2012). Bellone ou la pente de la guerre. Flammarion. (Original work published 1963) Cassirer, E. (1954). The question of Jean-Jacques Rousseau (G. Peter, Trans.). Columbia University Press. (Original work published 1932) Deleuze, G. (2012). Nietzsche et la philosophie. Presses Universitaires de France. (Original work published 1962) Derathé, R. (1992). Jean-Jacques Rousseau et la science politique de son temps. J.Vrin. Fisher, R. A. (1956). Statistical methods and scientific inference. Oliver and Boyd.

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Franklin, J. (2001). The science of conjecture: Evidence and probability before Pascal. The Johns Hopkins University Press. Heidegger, M. (1989). Nietzsche I. Neske. (Original work published 1961) Ito, K. (1999). Keynes no Tetsugaku (the philosophy of Keynes) [in Japanese]. Iwanami-Shoten. Iwai, K. (2009). Nijuiiseiki no Shihonshugiron (Theory of capitalism in the 21st century) [in Japanese]. Chikuma-Shobo. (Original work published 2000) Keynes J. M. (2012). A treatise on money I. In The collected writings of John Maynard Keynes V. Cambridge University Press. (Original work published 1930) Keynes, J. M. (2013a). A treatise on probability. In The collected writings of John Maynard Keynes VIII. Cambridge University Press. (Original work published 1921) Keynes J. M. (2013b). The general theory of employment, interest and money. In The collected writings of John Maynard Keynes VII. Cambridge University Press. (Original work published 1936) Kindleberger, C. P. (2007). A financial history of Western Europe. Routledge. (Original work published 1984) Kindleberger, C. P. & Robert, Z. A. (2011). Manias, panics and crashes: A history of financial crises (6th ed.). Palgrave Macmillan. (Original work published 1978) Laplace, P. S. (1814). Essai Philosophique sur les Probabilités. Courcier. Malebranche, N. (1979). De la recherche de la vérité. In Œuvres I. Gallimard. (Original work published 1674) Maruyama, S. & NHK “Capitalism of Desire” Production Team. (2020). Iwai Katsuhito “Yokubō no Kaheiron” wo kataru (Iwai Katsuhito talks about “Monetary theory of desire”) [in Japanese]. Toyo Keizai INC. Matsubara, R. (2011). Keynes to Hayek: Kahei to Sijou he no Toi (Keynes and Hayek: Questions about money and markets) [in Japanese]. Kodansha. McNeill, W. H. (1982). The pursuit of power: Technology, armed force, and, society since A. D.1000. University of Chicago Press. Morinaga, N. (2021). Absence of Whitehead in Keynes’s theory of probability [in Japanese]. Process Studies, 21, 125–141. https://www.jstage.jst.go.jp/article/processthought/21/0/21_125/_ article/-char/ja Riley, P. (1986). The general will before Rousseau: The transformation of the divine into the civic. Princeton University Press. Rousseau, J.-J. (1959). Du Contrat Social. In Œuvres complètes III. Gallimard. (Original work published 1762) Santayana, G. (1923). Scepticism and animal faith: Introduction to a system of philosophy. Charles Scribner’s Sons. Smith, B. M. (2003). A history of the global stock market: From ancient Rome to Silicon Valley. The University of Chicago Press. Whitehead, A. N. (1978). Process and reality. The Free Press. (Original work published 1929)

Chapter 4

“Fallacy of Misplaced Concreteness” and the Reality for the Sciences Yasuto Murata

Abstract As a hint for considering what reality means for our acts, knowledge and cognition which include sciences, I would like to examine Alfred North Whitehead’s critique of modern sciences; in particular, his concept of the “fallacy of misplaced concreteness.” I will investigate the significance of the concept of the “fallacy” in his late philosophy on three layers. The first layer of the meaning of this concept consists of instrumental utility for scientific criticism or ethics and norms for scientists. In this layer, the concept alerts us to beware that sciences are prone to the “fallacy.” Its second layer lies in its important role in Whitehead’s later philosophy. Initially, he tries to construct an adequate system of science and philosophy that would not fall prey to this fallacy. However, realizing the inevitability of this fallacy and its serious implications, he deepens his insight into our own existence and the nature of the actual world; that is, we cannot perceive, act, and engage in creative activity without misplacing concreteness. Thus, he suggests the third layer of the meaning of this concept, which implies that our own perceptions, actions, and experiences arise in the midst of this fallacy.

4.1

Introduction

What does Realism for the Social Sciences (RFSS) mean? Here, I provide hints to explore the answers to this question. I am a contemporary philosophy scholar. Although I have little experience in social science research, I have been dealing with contemporary philosophy based on the philosophy of science, which critically discusses science, including its branches of social sciences. My research subject has primarily been the philosophy of Alfred North Whitehead (1861–1947). Therefore, in this chapter, I consider what realism means for the sciences and philosophies, including the social sciences, by reading his philosophy.

Y. Murata (✉) Nagoya Ryujo Women’s University, Nagoya, Aichi, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_4

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I will be discussing the metaphysical cosmology Whitehead constructed after coming to the United States at the later stage of his career, which he called the “philosophy of organism.” The most fascinating aspects of his ebullient philosophy are its conception of an all-encompassing logical system of philosophy based on criticism of sciences that explores the foundations of sciences and philosophies, and his sympathetic compassion for the Bergsonian question of where we come from, what we are, and where we are going, in which the religious, aesthetic, and literary/ poetic depths of human experience are expressed. With unifying mathematical, logical, and physical research and existentialistic and naturalistic aspects of human experience, he tries to construct a grand metaphysical cosmological system based on the key concept of “process.” That is, his philosophy is characterized by speculation that includes both existential questions and social scientific questions to examine what our existence is in our civilized society and what the civilized society is in relation to nature and the universe. Reality in the social sciences is perhaps best demonstrated by the dynamic speculation that oscillates between the social whole and individual existence. Whitehead’s late philosophy is typical of this speculation. In the following sections, we will review the formation and development of Whitehead’s philosophical thinking in his later period, beginning from the same insights and problematics as modern sciences but developing on the basis of severe criticism of the sciences, using the key phrase “the fallacy of misplaced concreteness.”

4.2 4.2.1

Changes in the Concept of the “Fallacy of Misplaced Concreteness” Overview of the Formation and Evolution of Whitehead’s Speculations

Late Whiteheadian philosophy consists of a trilogy of works, Science and the Modern World (1925), Process and Reality (1929), and Adventures of Ideas (1933). The Function of Reason (1929) and other small pieces are also important in this field. The characteristic feature of his philosophy is said to be “metaphysical cosmology.” Examining the process of the formation and development of his thoughts that appeared in these works, his philosophical career can be marked by three periods: (1) preparation of a tentative composition of a new metaphysical cosmology based on philosophy of science and criticism of modern science (especially in Science and the Modern World), (2) a trial of metaphysical cosmology that is not only a criticism of modern sciences but also a discussion of cognition and existence as a whole (especially in Process and Reality), and (3) an application of the systematic scheme of metaphysical cosmology to social philosophy or theories of civilization (especially in Adventures of Ideas). The starting point and conclusion of Whitehead’s speculative thinking during these periods, as summarized in the title

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of his main book, Process and Reality, is that “the reality is the process” (Whitehead, 1925/1967, p. 72) and not a static situation, such as the immovable essences behind phenomena or the eternal and immortal truths disclosed at the end of scientific and philosophical quests. Yes, reality is a process. He considered that reality as a process is the totality of dynamically flowing things and events or the mass of individual concrete activities. In other words, reality is both the totality of the whole and the individuality of the many; it is an activity that oscillates between one and many to create something novel. Whitehead states that: “The many become one, and are increased by one” (Whitehead, 1929/1978, p. 21) or “that the actual world is a process, and that the process is the becoming of actual entities” (Whitehead, 1929/ 1978, p. 22). If reality is understood as a dynamic and creative process, then the specialized disciplines of the natural and social sciences, which concentrate on precision and methodological rigor, require great care and wide-ranging insights to avoid losing sight of dynamic reality because they tend to stand on a limited and narrow viewpoint in their attempt to reveal the truth by discarding the vagueness of various interminable activities. Thus, we immediately think that we must be sufficiently careful not to fall into what Whitehead calls the “fallacy of misplaced concreteness.” Whitehead also initially attempted to establish a new philosophy for the sciences and philosophies that easily fell into such a fallacy, one that avoided this fallacy and elucidated reality as a fluid, creative process in the actual world and not an immutable, universal essence behind such phenomena. However, in the course of this attempt, he probably realized that the concept of “fallacy of misplaced concreteness” is much more deeply and seriously problematic. My argument is that through his criticism of the rigorous methodology and narrow vision of modern sciences and philosophies, which tend to fall prey to the “fallacy,” he shows that this concerning problem is not limited to scientific or philosophical ways of recognition alone, but also the question of what reality means for human existence and cognition including sciences and philosophies. He hunted for a clue by inquiring into what reality was to all beings dwelling in this world. The itinerary of Whitehead’s thinking on the concept of “fallacy of misplaced concreteness” can be roughly summarized as follows: although he initially appeared to have raised the “fallacy” as an alert to remind scientists of their tendency to lose sight of concreteness, both as an urge for them to return to the concrete reality of the world in which human beings dwell and as a declaration that he himself tries to construe a new framework for thinking while avoiding this fallacy (in Science and the Modern World). He soon came to suspect that human cognition and action, including modern sciences and philosophies, are not only prone to this fallacy but are inevitably caught up in it. He asked himself the question of what the process of human cognition and action is, and whose method the more we are precise, the more we commit the “fallacy” (from Science and the Modern World to Process and Reality). In his major works, which sought to elucidate the nature of the world process, including the processes of human cognition and action, he presented a tentative answer as a comprehensive metaphysical system that embraces epistemology, ontology, and theology. He came to the insight that no amount of careful and

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complete contemplation or reasoning could avoid this fallacy and that this fallacy might be a certain human manifestation of more active and positive dynamism in the actual world (in Process and Reality). His point was that the function of reason was not only to correctly deduce reality into a coherent, clear, and distinctive logic or to find ways to live well in this world but also to creatively invoke the art of life to revitalize this world, creating new valuable facts (in Process and Reality and The Function of Reason). The “fallacy of misplaced concreteness” can be summarized as the concept that led him down this path of thought. This concept, presented in its first statements in Science and the Modern World, had its significance through a critique of the modern scientific perspective: whereas in Process and Reality, it went beyond being a tool for scientific criticisms to becoming one of the key concepts leading the systematization of the late Whiteheadian metaphysics called the “philosophy of organism.”

4.2.2

The Concept of the Fallacy in Science and the Modern World

Let us take a closer look at the overall development of his later philosophical speculation. In the first half of each chapter of Science and the Modern World, Whitehead discusses the origin and development of conventional natural sciences and critically points out their limitations and problems; the “fallacy of misplaced concreteness” is one of the main critical points discussed. In the latter half of each chapter, Whitehead discusses the conceptions of his forthcoming “philosophy of organism” as a prospective philosophy that overcomes such limitations and problems. The first time this concept of “fallacy” appears in his text is as follows: There is an error; but it is merely the accidental error of mistaking the abstract for the concrete. It is an example of what I will call the ‘Fallacy of Misplaced Concreteness.’ This fallacy is the occasion of great confusion in philosophy. It is not necessary for the intellect to fall into the trap, though in this example there has been a very general tendency to do so. (Whitehead, 1925/1967, p. 51)

Here, we can observe his relatively naïve beliefs and motivations in his quest. In other words, the “fallacy of misplaced concreteness” is an accidental problem that takes the abstract as concrete, a fallacy that sciences and philosophies tend to commit, but which is by no means inevitable but must be avoided. Whitehead came to believe that although sciences should be founded on the findings of previous sciences and philosophies, they must avoid fallacies and not fraudulently purport to be truly correct, clear, and distinctive representations of concrete reality in a clearly limited area. However, at the same time, he realizes that this conviction implies that the fallacy is unavoidable, even if accidental.

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The Significance of the Fallacy in Process and Reality

In short, his final standpoint is that there is no ultimate factual proposition for reality (real facts); in that sense, every statement is false (this is also the original starting point of his thought). It is our perception and language that, as soon as we declare something to be concrete, the statement becomes false, losing its very concreteness; and we dwell in such a universe. Our experiences, perceptions, and descriptions are not dichotomized into concrete and abstract, but are only a spectrum of relative and gradual differences of general abstraction, such as more or less concrete perceptions and statements. In the course of his quest, Whitehead foresaw that the attempt to elucidate concrete modes of reality was, in itself, a grand fake; however, he was optimistic and went on to construct a provisional system to interpret our experience as a logical and general expression. In this sense, his philosophy of organism, which investigates the universe in which cognitive and experiential subjects are born and dwell, is also an attempt to clarify why ultimate concrete facts cannot be described. He argues that both cognition and experience are spatiotemporal continuum activities that include temporal duration and spatial extension. He used the unfamiliar word “prehensions” as a technical term for these epistemological and ontological activities. According to him, every experience or cognition is generated by “prehending” multiple events that occur within that duration and extension, and the generation process inevitably includes selection, discarding, emphasis, symbolic actions, and interpretations to accept these events as the very components of the experience of our cognitive processes. The “theory of prehension,” which includes his arguments on symbolism, proposition, relatedness of organisms and their environments, cognitive and experiential process, and the becoming process of everything, is central to this discussion. Whitehead’s philosophy is said to be a philosophy “toward the concrete (vers le concret)” (Wahl, 1932/2004), but with this concept of “fallacy,” he encourages us to be aware that concreteness is something constantly missed in our experience process. Therefore, he points out that the nature of our knowledge is false as soon as we declare that something is concrete. The tendency to fall into a fallacy and be fake belongs to the nature of our experiences. Misplacing concreteness is inevitable in language and thinking. Owing to the awareness of the limitations of our language and symbolic systems, Whitehead’s metaphysical cosmology is presented as tentative and not final realism in Process and Reality. He reconsidered the misplacing process as a positive feature of our experience and the creative nature of the generation of everything. For him, the misplacement of concreteness in our experience is not a negative problem but the appearance of the creativity of the universe we inhabit. To examine his way of thinking, let us quote the following paragraphs in which the phrase “fallacy of misplaced concreteness” appears in Process and Reality: In its turn every philosophy will suffer a deposition. But the bundle of philosophic systems expresses a variety of general truths about the universe, awaiting coordination and assignment of their various spheres of validity. Such progress in coordination is provided by the

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The problem of this fallacy consists in “neglecting the degree of abstraction,” and not in the abstraction itself. When the sciences ignore their abstraction and aim for a clear and distinctive logical elucidation, the fallacy of misplaced concreteness occurs in their precision and generalization. In other words, a fallacy is the understanding that a simple, clear, and distinctive theory that discards the complexity, particularity, and diversity of concrete things is a true cognition of reality. However, the problem with philosophical statements is that it has a natural tendency to overstate reality, which is neither simple nor limited. In Process and Reality, by examining these initial excesses of philosophy, Whitehead continued his critique of the sciences and extended it to a critique of philosophy to construct his upcoming philosophy. He says: Philosophical thought has made for itself difficulties by dealing exclusively in very abstract notions, such as those of mere awareness, mere private sensation, mere emotion, mere purpose, mere appearance, mere causation. . . . The result is that philosophical discussion is enmeshed in the fallacy of ‘misplaced concreteness.’ In the three notions—actual entity, prehension, nexus—an endeavor has been made to base philosophical thought upon the most concrete elements in our experience. (Whitehead, 1929/1978, p. 18)

Whitehead criticized not only the natural sciences, which hold that the products of abstractions by their methodological elucidations are the simple, clear, and distinctive aspect of the observed nature, but also philosophies, which hold that abstract arguments disclose the so-called true reality as if they were the true reasons, causes, and expected consequences of concrete events. He argued that the effort to construct his own philosophy, which preserves complexity, diversity, relations, and incompleteness, was grounded in concrete phases of experience. His new philosophy, which approaches concreteness, is intended to be inherited from Greek metaphysics. His philosophical speculation starts from classical “theoria,” which is intended to be in a form suitable for the knowledge of natural science since Newton, while correcting the error of assuming that abstract theories of natural science are the true clarification of concreteness. He said: . . .whereas the Scholium is an immensely able statement of details which, although abstract and inadequate as a philosophy, can within certain limits be thoroughly trusted for the deduction of truths at the same level of abstraction as itself. The penalty of its philosophical

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deficiency is that the Scholium conveys no hint of the limits of its own application. The practical effect is that the readers, and almost certainly Newton himself, so construe its meaning as to fall into what I have elsewhere termed the ‘fallacy of misplaced concreteness.’ It is the office of metaphysics to determine the limits of the applicability of such abstract notions. The Scholium betrays its abstractness by affording no hint of that aspect of selfproduction, of generation, of φύσις, of natura naturans, which is so prominent in nature. (Whitehead, 1929/1978, p. 93)

His point is that modern natural sciences, as represented by Newton, depict only lifeless nature, which is an abstraction of the living nature that we directly experience and perceive. The “fallacy of misplaced concreteness” is an assumption made in the natural sciences that true awareness can be gained by mathematically describing the mechanistic motions of this lifeless nature. Therefore, Whitehead conceived his philosophy of organism with a scheme of general ideas that describe the concrete phases of nature alive as they are. However, Whitehead’s grandiose but naïve conception faced major obstacles in Process and Reality. This is evident, for example, in the statement in the introduction to this book, which was written after finishing the whole manuscript based on a series of lectures. There remains the final reflection, how shallow, puny, and imperfect are efforts to sound the depth in the nature of things. In philosophical discussion, the merest hint of dogmatic certainty as to finality of statement is an exhibition of folly. (Whitehead, 1929/1978, p. xiv)

No scientific or philosophical system can express an ultimate elucidation of reality. This insight is even more strongly expressed in the concluding words of one of his last writings, the 1941 Ingersoll Lecture: My point is that the final outlook of Philosophic thought cannot be based upon the exact statements which form the basis of special sciences. The exactness is a fake. (Whitehead, 1947/1968, p. 96)

An investigation of reality through science and philosophies cannot provide the ultimate answer. This does not imply any limitation imposed on particular sciences or philosophies nor is it caused by methodological problems. It is an essential problem inherent in human thought, perception, and experience and is directly related to human existence. We need to reconsider the question of what the reality of knowledge is, not as a problem inherent to specialized sciences or philosophies but as a problem inherent to the perception of something as something in itself. Whitehead does not limit propositions to verbal statements alone but considers them the very situations in which concrete facts are generated as components of the actual world. I understand that Whitehead refers to such propositions as theories, not in the sense of modern scientific theories, but in the sense of ancient contemplation called “theoria.” From this understanding, when we recognize something as it is in itself, the question of what reality is in this recognition is not only a question of what reality is for the subject who recognizes it in this way but also for the very situations being recognized in this way. In short, the question is, “What kind of situation is the establishment of the actual world?”

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In Whitehead’s “theory of prehension,” he shows that the “prehensions” of situations by the prehending subjects are themselves the establishment of the “concrete facts of relatedness” (Whitehead, 1929/1978, p. 22). In other words, recognizing something as such is the establishment of a real situation and the generation of an actual experience. Thinking and knowing are activities through which real situations are generated (Descartes’ cogito and noesis in phenomenology). In contrast, a theory that elucidates its objects through thinking and knowing in a clear and distinctive way cannot be considered a final formulation that discloses real things. If the sciences and philosophies focus only on the precision of general logical forms to make the nature of things clear and distinctive, they cannot reach reality. The pursuit of rigorous logical forms of reality in sciences and philosophies is abstract, and strictly speaking, the conclusions obtained are false. However, the abstraction process is a real activity that occurs in the real world. The products of abstraction in the process of thought and cognition are not concrete true realities. However, if we recognize objects and realize ourselves through such abstractions, then the process of abstraction itself is the establishment of a real situation and the generation of an actual activity. To explain this, we can say that our experiences, perceptions, thoughts, and activities are established by committing the “fallacy of misplaced concreteness,” in which we clarify the actual state of concrete reality by abstracting it, while we miss its concreteness by discarding the vague whole.

4.2.4

Self-Realization as a Misplacement of Concreteness

Whitehead’s attempt to elucidate the relatedness of our experience and the actual world using concepts such as symbolisms, propositions, processes, and prehensions must have led him to the conclusion that the concept of “misplaced concreteness,” which he himself used to criticize natural sciences and modern philosophies, is not only a fallacy to which specialized sciences and philosophies tend to fall, but is also intrinsic to human experience itself and to the realization of all events and things in the actual world. An event through which we arise in the actual world as an occasion of experience is a process of misplaced concreteness. For each of us, realizing ourselves in the actual world is to realize this world in ourselves, which means accepting the actual world by transforming it, discarding some elements and combining new elements to realize new selves and a new world. Whitehead meant this with the above-quoted sentences “That the actual world is a process, and that the process is the becoming of actual entities” (Whitehead, 1929/1978, p. 22) and “The many become one, and are increased by one” (Whitehead, 1929/1978, p. 21). The process through which cognition and understanding are formed is essentially an activity in which many become one and are increased by one. His point is that this process is not only of cognition and understanding but also of generating the existence and occurrence of events. The realization of oneself and the actual world is both an epistemological and an ontological process. He simply states:

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“Self-realization is the ultimate fact of facts. An actuality is self-realizing, and whatever is self-realizing is an actuality” (Whitehead, 1929/1978, p. 222). Although self-realization is an actuality, what is realized in this actuality is no longer the actuality, because self-realization includes a process of abstraction. Here lies the source of the “fallacy”: that is, what is realized in this actual process of selfrealization is in itself no longer actual but its consequence. The dynamism of the integration of many into one and the resulting increase in many by the new one are the actuality of the world and the actuality of thought and experience. According to Whitehead, these realization processes are actualities. Similarly, we can conclude that the inquiries of sciences and philosophies are their self-realization and therefore actualities. Actuality for specialized sciences, including social sciences, is also a process of thinking in which the abstraction of the concretes is tinged with concreteness; their processes are actual, but their results is no longer actualities. The “fallacy” consists in regarding the latter as having the same actuality as the former.

4.3

Three Layers Implied by the Concept of “Fallacy of Misplacing Concreteness”

Based on the above overview of Whitehead’s critique of sciences and philosophies and his efforts to construe the philosophy of organisms, I would like to divide and clarify what I understand as the concept of “fallacy of misplaced concreteness.” I propose that there may be three layers or phases of meaning in Whitehead’s concept of the “fallacy of misplaced concreteness” when attempting to actively use this concept in contemporary scientific and philosophical thought—a superficial understanding, an understanding from a perspective more intrinsic to Whitehead’s philosophy, and a deeper understanding. Superficial understanding is a common interpretation of the concept of selfdiscipline or research ethics among scholars engaged in sciences or philosophies. This is an interpretation that anyone would directly associate with the term “fallacy of misplaced concreteness,” without reference to Whiteheadian philosophy. We refer to this way of understanding as the “first layer” of “understanding this concept.” In contrast, there is a more specialized interpretation of this concept. This is an understanding gained by reading it as a central concept in Whitehead’s criticism of the sciences, from the philosophy of science in his middle period to metaphysics in his later period, in line with the development of his philosophy. I would like to name this way of interpretation that relies on Whitehead’s philosophy of organism the “second layer” in the understanding of this concept. Although the terminology and concepts of philosophy are usually understood in such two ways as everyday verbal understanding and specialized academic one, there is often another layer of understanding of the important concepts of philosophy. It is that thinking toward a specialized understanding that leads us to reach a

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more general, even universal, understanding with a wider range, penetrating the particular and narrowly specialized areas of philosophies and sciences. As far as this method of understanding is concerned, through the above discussion and in line with Whitehead’s philosophy, we reach a general resigned understanding that we can only exist in such a way that we are compelled to commit this “fallacy.” From this perspective, knowledge can only be generated through the abstraction process, and the actual world can only be disclosed through this process. This is what we call the “third layer” of understanding. In the second half of this chapter, we will discuss these three layers.

4.3.1

The First Layer

Even those who know nothing about Whitehead’s philosophy could appreciate the idea that a “fallacy of misplaced concreteness” can occur in the natural and social sciences. They also would think that scientists must be careful in avoiding such a fallacy. They believe that scientists are prone to fallacies when they uncritically regard inferences from theories and observations as the true state of concrete events; therefore, they must be aware of this tendency. The “first layer” for accepting this concept is the more general way through which the “fallacy” is understood, in the sense of a general research ethics for scientists. If we understand this concept by alerting scientists and the public to the “fallacy” that can easily occur in scientific inquiries where highly abstract knowledge is understood to represent the true nature of concrete events, this concept will become very useful and important in today’s society. In other words, we often forget that scientific concepts, their systems, and their descriptions are products of abstraction. We tend to regard abstract theories or theoretical results of the sciences as expressions of concrete reality, assuming that they are the means to recognize the true reality of concrete facts in a clear and distinctive manner. It is an essential ethical task for society as a whole to become conscious of this fallacy in today’s civilized society, where the natural and social sciences and the technologies based on them fundamentally constitute a direct society.

4.3.2

The Second Layer

When we read Whitehead’s writings, this way of understanding the concept helps us understand his arguments in the broadest possible sense. However, a closer reading of his writings reveal that “fallacy of misplaced concreteness,” which he uses as an excellent tool for scientific criticism of philosophies and sciences, is a significant term that symbolizes Whitehead’s entire scientific criticism, that is, in Science and the Modern World and Process and Reality, he begins to formulate and propose his own “philosophy of organism” as a science that overcomes this “fallacy” to which

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modern sciences tend to fall prey. This concept explains why he constructed a magnificent metaphysical cosmology. The “second layer” in the understanding of this concept is to re-understand it from a Whiteheadian standpoint, situating it within his philosophy. The “fallacy of misplaced concreteness,” understood in the sense of the second layer, becomes clear in a more limited sense by tracing Whitehead’s discussion of the reason why the “fallacy,” as generally understood in the sense of the first layer, occurs in the natural sciences and philosophies. In Science and the Modern World, the “fallacy of misplaced concreteness” was considered to be (1) an accidental fallacy, taking the abstract as concrete, (2) a fallacy that sciences and philosophies are prone to commit, but (3) a fallacy that is not inevitable but rather should be avoided. The concept of “philosophy of organism” was proposed in this book to aim at a new system of knowledge for avoiding this fallacy. I believe that the point to be made lies in Whitehead’s doubt about the avoidability of this “accidental” fallacy, which appears in his endeavor to construct a new philosophical system in Process and Reality. The question is whether “misplaced concreteness” is accidental and avoidable for sciences and philosophies. I believe that in the cosmological speculations of his philosophy of organism, the insight that this “fallacy” is an inevitable accompaniment for the realization of knowledge and practice is deepened although its negative implication has been toned down. Rather, the positive insight that this accidental misplacement of the concreteness of what exists really is necessary for knowledge and practice to be creative is the leading insight into his speculation. In a manner of speaking, it is by virtue of misreading reality that our perceptions, thinking, and practices are enacted. At the time, the misplacements are not errors, but outbursts of creativity. My point is that, in the “philosophy of organism” which Whitehead outlined in Science and the Modern World and systematically formulated in Process and Reality, he thoroughly discusses the insight that the accidental event of misplacing concreteness is the very nature of our existential, experiential, and productive activity that creatively generates novelty. Every organism in the actual world, including ourselves, our societies, and the natural world, maintains its own identity and interrelationships with its environment by integrating many elements at each moment. All things and events emphasize a few selected components of the actual world, discarding a vast number of them through the integration of the many into one, which he calls “concrescence.” This discarding, selection and emphasis results in biases, lacks, and distortions in the individual identity achieved through the process of concrescence. The very nature of the “fallacy of misplaced concreteness” in sciences and philosophies is regarding such a deficient or biased accomplishment as the logical expression of the final and ultimate reality. The process of generating such deficiencies, biases, and distortions is also the process of creating something new from the existing. If we consider the sciences and philosophies that pursue generality, applicability, and adequacy as the process of integrating many into one, we can say that after the process of integrating the many into one ends, a vast area containing discarded elements is left behind, and the generated one is distorted and biased; thus, there is

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always something missing or insufficient in such a process of integration. Such methodological constraints, indeterminacies, and indescribable areas arise in sciences and philosophies; however, they reflect the discards, choices, and emphases that continually arise in our perceptions and experiences. Such constrained and inadequate knowledge constitutes the clear and distinctive knowledges of sciences and philosophies. The “fallacy” is to mistake such knowledge for a true and exact recognition of reality. If so, we must consciously acknowledge this fallacy as an inescapable framework of thought and experience for our perception and practice based on modern sciences, shared socially and assumed in both theory and practice. That is, we must be aware that we inevitably use the results of various sciences on the premise of “misplaced concreteness” and accept this misplacement as a premise for our social activities. Not only do science and philosophy commit this fallacy, but every activity of human experience and existence does, which leads to various problems and creatively gives rise to what are novel. What Whitehead suggests is not only that we must be aware that we inevitably use the results of various sciences on the premise of “misplaced concreteness,” but that we must accept this misplacement as a premise for our social activities. Not only sciences and philosophies commit this fallacy, he also suggests that the civilization of human society is driven by the incorporation of this fallacy, not as an error but as a positive factor for creativity. Every activity in human experience and existence commits this fallacy, which not only leads to various types of problems but also to the creative generation of novelties. His thoughts and insights in making the “philosophy of organism” come to suggest the more serious and significant implications of the concept of “fallacy of misplaced concreteness,” which has become a keen tool for scientific criticism. This is the “third layer” of the concept’s multilayered meaning.

4.3.3

The Third Layer

At his starting point of speculation in his later period, Whitehead criticizes modern sciences for their tendency to fall into a “fallacy of misplaced concreteness” in Science and the Modern World. In this book, he envisions a “philosophy of organism” as a metaphysical system that would avoid such a fallacy. However, he eventually suspects that human perception, experience, and theories may have arisen as consequences of abstraction and that their utility and validity may derive from committing this fallacy. The merits of his philosophical speculation lie in his positive thinking that transforms negative motifs into creative opportunities. In his inquiries in Process and Reality, in which he constructs a system of metaphysical cosmology, he plays to this strength, turning his suspicion into certainty about that which gives rise to the occasion of all experiences, including human experience, which is precisely the very process of generating this fallacy. He construed this as a process of creating novelty through integration, involving selection and emphasis. He then constructs his system of metaphysical cosmology by reinterpreting the “fallacy,”

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which human existence continues to fundamentally commit, as one of the concrete characteristics of the world’s actuality to advance creatively into novelty. This is the third layer in the understanding of the “fallacy of misplaced concreteness.” In this aspect, this fallacy has positive significance. In other words, the inevitability of this fallacy in our cognition, theory-building, and experience, including sciences and philosophies, is an essential requirement for creativity. When we intend to capture concreteness through sciences and philosophies, we inevitably extract it from real objects. Whether in everyday experiences or moments of philosophical, aesthetic, or religious insights, we perceive and understand by accepting, selecting, discarding, integrating, emphasizing, abstracting, generalizing, and theorizing the various objects that constitute the content of the experience. In this sense, words in daily conversation are coarse and imprecise, and scientific and philosophical statements claiming to be exact scientific and philosophical statements are false. However, the problem does not lie there but rather in the misunderstanding that abstract theories and their abstracted consequences in the sciences and philosophies express the true reality of concrete things. On some occasions, we have an all-inclusive and integrative experience that provides us insights into the world as a whole and the depths of human existence all at once. On other occasions, we express our holistic experiences through short poetic phrases, aphorisms, religious scriptures, and short pieces. Conversely, we sometimes read a short phrase and gain a deeper perspective on the holistic insights and the various phases of experience. Whitehead begins his speculations by quoting famous aphorisms and poetic phrases that express, in condensed form, the whole experience at key points in his writings. For example, he writes: “That ‘all things flow’ is the first vague generalization which the unsystematized, barely analyzed, intuition of men has produced” (Whitehead, 1929/1978, p. 208). He also expresses his own philosophical speculations in the following phrases: “. . .each actual entity is itself only describable as an organic process. It repeats in microcosm what the universe is in macrocosm” (Whitehead, 1929/1978, p. 215). “All things flow” and the “repetition of the macrocosm in the microcosm” are short phrases condensing our lifelong experiences or our deepest contemplations about the nature of the whole universe. While they are certainly rough and abstract, they represent a condensed form of the concrete phases of our experience. Classical “theoriae” are often described using proverbial expressions of holistic insights. In such cases, abstraction and reduction are symbolic and creative. In this sense, they activate our perceptions and actions and make sense of our experiences. The world of cognition, insights, and experiences, including the sciences and philosophies, contains an infinite range of gradations of abstraction. No one can speak in the daily linguistic or logical formulation of the ultimate concrete reality; that is, we live in the “fallacy,” and conversely our conscious perceptions and experiences are only its concrete examples. Our existential perspective is limited and biased, and the content of our experience is partial and fragmented. However, we live on the limited and biased perspectives as our own direct experience of the actual world. All of us dwell this way in the actual world. In this sense, dwellings in the actual world are the main subject of all social sciences. Daily cognition, specialized

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sciences, and philosophies arise as products of abstractions from biased, individual, and particular perspectives on the flux relatedness of everything. We ourselves arise from this fallacy, living by misreading the reality. Whitehead calls the flux that inevitably accompanies this accidental misreading a “creative advance into novelty of the world” (Whitehead, 1929/1978, p. xiv, 21, 35, 128) and sees the relatedness in the process that causes this misreading as a “concrete fact” (Whitehead, 1929/1978, p. 22) in the actual world. Although he did not explicitly pursue the subject, one of the central themes in his metaphysical cosmology is this fundamental fallacy. He uses dynamic phrases, such as “concrete facts of relatedness” and “creative advance into novelty,” rather than the word “fallacy,” to emphasize in a positive tone the indeterminacy and relativity of knowledge, thinking, and experience, both theoretical and practical, which are realized in the process of converting what is concrete into what is abstract and the latter into the former. Whitehead’s “theory of prehension” in the broadest sense, which includes the theories of environment and organism, symbolism, proposition, and process, discusses the enactment of such knowledge and cognition. The process by which theories and perceptions are formed is the process by which the abstract is generated from concrete, and the process of practice is that by which the abstract is applied to concrete. As quoted above, he said “that the actual world is a process, and that the process is the becoming of actual entities” (Whitehead, 1929/1978, p. 22). However, I would argue that it is the very process by which the “fallacy of misplaced concreteness,” in the third layer sense, is generated. That is, we live in the midst of this fallacy. To commit this fallacy is for us to perceive, act, and live in the actual world. The process of the actual world, which is expressed in the phrase “the many become one, and are increased by one” (Whitehead, 1929/1978, p. 21), is the origin of the “fallacy” itself. The formation of theoretical and practical knowledge, including scientific and philosophical inquiries, is a specific example of the process through which novel elements are generated in the actual world. To lay out this argument, the philosophy of science must clarify and distinguish the logic and insights that philosophical and scientific inquiries are conducted in the process of generating this fallacy. One of the duties of a more general philosophical speculation is to logically demonstrate that we live in a process of generating this fallacy.

4.4

Conclusion

To summarize the above discussion, there are three layers or aspects in the meaning of Whitehead’s concept of “fallacy of misplaced concreteness.” The first layer involves ethical caution regarding the treatment of research subjects in individual sciences. The second is the peculiar meaning inherent in Whiteheadian philosophy—that is, an accidental but fundamental abstraction that defines the framework of human cognition and the mode of experience, including sciences and philosophies. The third aspect refers to the processes of abstraction,

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transformation, and conversion that is inevitably involved in the self-realizations and the experiences of various activities in the actual world. What follows from these three layers is that not only is the fallacy inevitable in the human experience of perceiving and acting, but it is also characteristic of human experience, especially the mission of sciences and philosophies, to turn the inevitable “fallacy” into constructive and creative activities. The “fallacy” presented in its third layer is the fundamental mode of the fact that we dwell in the actual world. Therefore, both social sciences and philosophies, which explore the logical and ethical forms for us to live in this world and to arrange it into our living world, are precisely within this fallacy and study its various consequences as objects of research. Social sciences and philosophy both seek to reveal how this fallacy animates and disrupts events in the real world and the people who live in it. Both investigate how this brings to them about recognition and understanding, moves them toward novelty, and causes their destruction. We must be conscious that this quest arises amid this fallacy. What Whitehead has demonstrated through the conception and construction of his “philosophy of organism” is a provisional science or philosophy that explores the contingent and error-filled mode of the creative world and attempts to express it in a logical system. It is an alternative mode of thinking, a theory of speculation (theoria), which can be applied to practice and poiesis the condensed wisdom of holistic insight and deep contemplation about the concrete phases of experience, rather than a theory, as in modern science, which tends to convince that the product of abstraction is concrete. It is a science that is constantly and critically examined through metaphysical inquiry, and conversely, metaphysics is constantly criticized by science. The process of knowledge, in which fallacies are inescapably woven, can be captured in a single word, “play.” In Whiteheadian terms, it is an individual activity of “adventures of ideas” in which total insights in immediate experiences are generalized by the imagination.

References Wahl, J. A. (2004). Vers le concret: Études d’histoire de la philosophie contemporaine. Librairie Philosophique J. Vrin. (Original work published 1932). Whitehead, A. N. (1967). Science and the modern world. Free Press. (Original work published 1925). Whitehead, A. N. (1968). Essays in science and philosophy. Greenwood Press. (Original work published 1947). Whitehead, A. N. (1978). Process and reality. Corrected edition. Free Press. (Original work published 1929).

Chapter 5

Dynamic Constitution for the Place of Reality to Enclose and Nurture Our Knowing: Realism as a Methodology of Science Yasuto Murata, Ken Shiotani, and Ken Urai

Abstract Under the main theme of this book, “Realism for Social Sciences” (hereafter, RFSS), this chapter deals with the (thoroughly) dynamic aspect of RFSS, which treats academic posture as a fundamental reality. This is also a question of what RFSS actually means and involves its claims for science today and for academic knowledge as it should necessarily be. Specifically, (i) we suggest the possibility of a new or different foundation for today’s philosophy of science, first through its broadest sense of realism, which means, in general, “not looking away from what one does not want to see or unsee.” In addition, (ii) we propose the basis of the so-called predicate-oriented logic as opposed to the subject–object logic as a critique toward grasping dynamics as a transition between states (i.e., from grasping the object/state to grasping the function/action). (iii) Through these means, we would like to offer an integrated perspective on academic knowledge and ethics, especially Kantian practical reason.

5.1

Introduction

Science and civilization are based on reason, which objectifies and controls through the concepts of self-reliance and self-responsibility. And liberalism is a system of commitment to the world at the individual level. Human and human rights are the

Y. Murata Nagoya Ryujo Women’s University, Nagoya, Aichi, Japan e-mail: [email protected] K. Shiotani (✉) Waseda University, Shinjyuku-ku, Tokyo, Japan e-mail: [email protected] K. Urai (✉) Graduate School of Economics, Osaka University, Toyonaka, Osaka, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_5

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subjects of the search to find truth within oneself and one’s rights. And so, after the “modern era” characterized by these concepts and culminating in the twentieth century, an era rooted in the Enlightenment with its endless functional and procedural extensions, there are still many real challenges and problems that we share and face in the world today. These include issues that we were already well aware of in the previous century and that we have been trying to overcome asymptotically in the mutual progress of the modern ego and society, such as international confrontations caused by conflicts of faith and ideology, environmental destruction caused by industrial development, and poverty resulting from discrimination. At the same time, however, these and other issues seem to be facing us today as new and more serious challenges that originated in the characterization of modernity itself or that have been developed by its progress. Wars are being fought endlessly under the guise of democratization, or with some plausible reasoning such as the fight against terrorism or the eradication of inhumane weapons after 9–11. Today, of course, no one would think that such plausible reasoning is irrelevant to the military and the related industrial structures of the parties to the conflict and countries outside of it. If we look at the relationships among science, industry, and politics in the face of recent pandemics, global warming, and the crises that cry for SDGs, the gap between the front side of these ideals and the back side, where many issues remain unresolved, is growing ever wider. Today, the players that strongly influence the real world are the huge interconnections of corporations that are already more extensive than nations, such as Big Tech, which dominates information; the global distribution of energy, food, and pharmaceuticals, which controls the basis of life; and the vast financial market networks, international finance capital, investment banks, and other players that seem to attempt the realization of a future equilibrium by moving assets back and forth, dozens of times faster than the real economy. And for those of us who “dwell in” such a world and at the same time allow such a world to dwell in our minds, it is becoming obvious that a healthy search for the only truly right things to do and similar values is already nothing more than a fantasy. The fact that the actual status of science and technology, and thus of our most important forms of knowledge, is (largely) determined by the composition of society has been recognized as a major problem since the last century, given military-related technologies such as nuclear developments and institutional education that has to respond to the demands of social systems. However, in the last century, it may still have been possible to organize them as a tree-shaped problem that could be integrated by control from above, by the state. What we face today is a rhizomatic engagement between those forces involved in such vertical integration through control and those more open through horizontal links dispersed throughout society, such as global capital and industry. For example, nuclear power is transversely related to various industries involved in the distribution and coordination of energy production, to civilian life as energy consumers, to the military–industrial complex as an econo-political device, to food safety and medicine derived from the natural properties of radioactivity, and so on. And there is also the added power politics of the state and the nation that manage distribution and movement of forces from a

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vertical direction. The issue of 3–11 Fukushima raises the question of knowledge in use in today’s world, through participation in change in such a complex, intertwined, and unlimited/underdetermined society. Nevertheless, today, vast capital flows, anonymous opinions spread on the Internet, logistics requiring complex movements and transactions, and multiple states with different laws and various uncoordinated treaties are all adding to the constitution of society and the world as players other than groups of individual humans. It is undeniable that there can be a very large bricolage of designed controls over the participation (live-in) and use of knowledge in such societies and that such controls have become feasible due to the development of systems such as information technology, and, moreover, that they are moving beyond the grasp of individual reason. Therefore, as a matter of fact, modern individual reason-based knowledge today seems to be almost helpless against the widening gap between rich and poor, the manipulation of parliaments by vast political funds, and hate and division under democracy. Are we not, in the first place, fundamentally wrong and destined to be wrong? But if this is the case, what is academic knowledge for? What we should consider here is to give some shifting or differentiating “room (gap/play)” and a new perspective to the historical and hermeneutical conditions we have assumed that today’s social formations, i.e., science and technology, and corporate civilization have influenced the real and true “attitude and posture” (if any) toward knowledge. Of course, such room (gap/play) must be obtained in exchange for carefully selecting a few assumptions that we have regarded as fundamental, say, “inevitable moments (occasions/ motifs)” for the establishment of the act of thinking. And under such moments (occasions/motifs), the constitution of society and the establishment and maintenance of knowledge (at least at the object level) are interdependent, regulating and insisting upon each other. If this is the case, then it is precisely the relationship and interpenetration between reality and knowledge, which cannot be captured exhaustively, that has emerged as a guiding issue toward a new perspective that cannot be grasped by any single ideal we have taken for granted in the past, progress and advancement in one direction, or clear-cut dualism such as right and wrong or good and evil. Our “knowing” (intelligent) activities may find their significance as an “attitude (posture)” through the inexhaustive outpouring of such guiding questions (rather than directly approaching true knowledge as a consequence), of seeking “better, next questions” and, so to speak, “enclosing and nurturing” the free play of the interpenetration of reality and knowledge. Such an “attitude (posture)” may, needless to say, have no guarantee of being unique, but for us it is something that we can accept, or, apparently, should accept as such, taking it into account under one historically grounded heading of nature. The purpose of this chapter is to develop the details of the argument in question, namely that a truly academic posture (or expertized attitude), i.e., a stance in pursuit of true knowledge, can be established in the above sense.

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In terms of realism for the social sciences (RFSS), there would not necessarily be a need to assume that what gives it its “movement,” at least, is solely based on the establishment of such an academic attitude. However, it is important to clarify the consistency (i.e., the establishment of the place1) of the “control of movement” and the “academic attitude” as an activity of accessing the concrete manifestation of the need, apart from the search for the essence of the need itself. A rigorous discussion of this would probably be scientific methodology in the broadest sense of the word. In other words, the discussion in this chapter is to clarify the significance of RFSS as a methodology of science, i.e., what is the scientific method that comes from RFSS, and at the same time, what is RFSS from the perspective of the scientific method. In the next section, the meaning of “realism” is clarified in discussing the RFSS. Section 5.3 deals with the three layers of “misplaced concreteness.” In addition, several important tools are prepared to advance the discussion in the following sections. In Sect. 5.4, based on the relationship with the conventional philosophy of science and analytic philosophy, the method of “academic knowledge” as a “place” where the reality of knowledge is established is organized as an “attitude (posture).” Section 5.5 deals with the fact that the method of academic knowledge as such a “place” is actually “controlled” through the “use” and “participation” of “theory” by various “attitudes” in “society.” This is also an argument for an “imaginary-focused” and “schematic” grasp of “reason.” Section 5.6 summarizes the significance of RFSS as a methodology of science, especially for today’s society.

5.2

What Is the Meaning Intended by “Realism” Here?

We consider RFSS an attempt to provide a guideline for the future of scientific methodology, i.e., our search for knowledge, through realism. For this purpose, the guiding principle should be to provide the broadest possible framework for the multilayered and integrated collaboration of today’s specialized fields of science.2 Prior to this, it is necessary to clarify how “reality” is to be understood here. “Reality” here does not refer only to what is objectified by knowledge but also to a kind of “stance (attitude/posture)” that is inseparably joined (or fused) with action, including the state in which knowledge itself inhabits the world in relation to what is illuminated through an objectification within the knowledge. For example, the simplest relation between knowledge and what is objectified by knowledge is that of habitual (reflexive) action. In such a case, even though it is quite direct, there may still exist some “gap” (as well as overlap) due to reflexivity. A more complex 1

For example, the concrete linguistic acts (promises, commands, assertions, etc.) that mark the site of the illocutionary force within utterances in speech act theory. 2 Note that today, the collaboration of these scientific disciplines is possible at various levels and scales, through concrete human activities, the dissemination of knowledge as a resource through publishing and information networks, the use and evaluation of knowledge in society and business, and computational processing through AI, etc.

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relationship can be considered as one in which knowledge synthesizes such “gaps” based on a single rule, as with a piece of music and its performance. Such a synthesis also inevitably involves “gaps” and “room (for play)” in the layer of playing. In the most complex relation (between knowledge and its object), we can consider a situation in which knowledge and the object of knowledge are under interpenetration at every possible level and layer, including when the “game” makes its own rules as it progresses (as a language game in Wittgenstein, 1953). In such cases, as a game, the relation is open to “participation” in society, beyond the “gaps” and (pre-expected) “room” for play at various levels and layers. What we are trying to capture as “reality” (in the broadest possible sense) is not the object itself, but the “stance (attitude/posture)” with which knowledge tries to “enclose” an object together with such various levels and layers of “asobi=play (gaps/rooms).” The so-called opposition between idealism and realism can be considered one in which the latter relies on the content of understanding from the objectified mode (including the negative prescription of not being able to stipulate), while the former is oriented toward explicit essentialization that appears to bring certainty by centering in the recursive part of knowledge.3 To avoid such confrontation, there are also methods without subject/object dichotomy (such as the phenomenological stance) original (or primordial) experience, and pre-understanding (pure experience), but it must be said that they often still seem to be attempts that to exhibit state-oriented tendencies that assume objectification in the background or at the meta-level.4 The reality (actuality) that is claimed here with the position of RFSS is not such a “state” but rather an understanding of “stance (posture)” in the direction of movement, action, and force, in a way that traverses separation (confrontation). Movement, action, and force are usually understood as relations between “states.”

3

Here, RFSS attempts to encompass not only the various realism positions stated in contrast to various idealisms, such as materialism against spiritualism, for example, but also the opposition of idealism itself versus realism. Such an integrated tendency can be seen in social ontology (like Searle, 1996), which tries to attribute reality to the use and sharing of language, and in the recent new realism (see Ferraris, 2015, etc.), which tries to ground direct experience in reality and precede scientific cognition and truth. (Also in this book, Ch. 1 deals with social ontology in Cambridge, based on Bhaskar (1997) and Lawson (1997), which is somewhat more deeply rooted in real-world relationships than Searle’s purely linguistic one and more compatible with the discussion in this chapter.) However, RFSS does not attempt to define reality as a linguistic concept, nor does it abandon cognition and truth in favor of reality. Rather, it is an attempt to come to terms with reality through the consequences that are presented to us by the reality of which we are a part. 4 If we speak of realism in the vein of analytic philosophy, then Quine’s equation of the physicalist stance with the phenomenological stance (via mathematical notation) in “On What Exists?” Quine (1953) and Putnam’s transition from metaphysical realism to direct realism (Putnam, 1983, 1995), and so on, may also be taken in the context of the above. Regarding direct experience, Kant (1787) conception of experience and the idea of “Ding an sich,” or Leibniz’s “monad,” can also be recalled. However, these also stem from bringing the “inexhaustibility” of the real to its object-oriented (state-oriented) limit.

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However, the position taken here is an inverted view of such an understanding. Rather, the position here is to provide or partially illuminate reality (actuality) as the “state” being manifested by movement, action, and force, that is, from the “potential” of “being” of the state to the “manifest” of “existence (Dasein)” of the state.5 This very “first-person” aspect, that is the involvement of “Dasein” as I, the “Place” of the existence of the state (of dynamic arrival), is one of the important “moments (motifs/occasions)” of the method of “(academic) knowledge” here. This “movement” from “potential” to “manifest” occurs simultaneously (at the meta-level) in both the beginning and the end states of change, and it must be considered independently of the concept of “time” in the subject–object world domain, where the undetermined future becomes the predetermined past. Time in the subject–object domain is considered to arise as a pure coding of dynamism at the meta-level as a result of the extreme operation of projecting “manifest” from “potential” in the direction of concept (as a tool related to universality or “inevitable moments” in relation to academic knowledge) and then subjecting it to the universal projection plane of the assumption of an all-inclusive state. This objectification gives the impression that “potential” has a specific directing object (the substance of change).6 What we are trying to argue here as the position of the RFSS (toward reality or actuality) is not this viewpoint, but that it (reality) sees its (reality’s) objectification as (to all intents and purposes) through an imaginary-focused/schematic expression of an indefinite quantifying action. Through this, we try to show the “endlessly serious looseness (room/gap)” of this position (to speak of seriousness in relation to conventional grasping of the state), the play of the direction of projective action along concepts, and the indefinite variety of the arrangement of projective planes. Thus, we are trying to give the terms realism and actuality the broadest possible meaning, which does not depend here on differences directly attributable to their (ordinary) object (state) nature but includes consequences and origins that can be related to their potentiality in relation to the focalization of the object. At the very least, it is a meaning that it is common to various realisms (including, in some cases, physicalism, materialism, and even realism in law and international politics) that are opposed to idealisms discussed at various levels today. The idea of objectification as an imaginary-focused (schematic) thing of indefinite quantification action can often be translated as the “inexhaustibility of reality” and “diverse and free (self-reliant academic) development,” especially when considering reality in combination with the pursuit of academic knowledge.7 For example, if we consider axiomatic principles and formalization of theories in mathematics as

Heidegger (1927) “Da(-sein)” may be viewed as having placed the aspect of human existence at the threshold of inquiry in relation to modern individual reason. 6 The (object-oriented) realist position in the “medieval universal controversy” may be close to this. 7 This idea of freedom in the sense of self-reliance as the basis of academic knowledge may be very close to what Inoki (2016), for example, positions as the “freedom to seek knowing itself” as the raison d’etre of universities. 5

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representative of such (quantification) actions in knowledge, Tarski’s “impossibility of truth definition” and Gödel’s lemma, among other works (e.g., Kunen, 1980), are practical examples in mathematics of the indefiniteness of such actions and the various different manifestations they allow. In this way, through the pursuit of academic knowledge, and through the “inexhaustibility of reality” and the “diverse and free development (of the pursuit),” the significance of realism here, in its simplest terms, is that we should not look away from what we cannot see because we do not understand it well, because we do not want to see it, or because it has become too obvious. Rather, we should offer a koan-like question: “Stroke the elephant, you blind people, and in the act of stroking, you will find mutual knowledge and connection.”

5.3

Problems with Modern Science and Knowledge Formation: Three Layers of Misplaced Concreteness

In the previous section, we discussed how we are trying to capture reality as the relationship between knowledge and the object of knowledge, i.e., as the “posture” in which knowledge tries to “enclose” the object. Here, we relate this to Whitehead’s “misplaced concreteness” (Whitehead, 1929) and offer a definition of the “three layers” that are the basic (natural and inescapable/inevitable) tools for thinking about knowledge. If we were to restate Whitehead’s “misplaced concreteness” using our previous expressions, it would be as follows. What knowledge posits in the object world as the object of knowledge is originally an integral part of the very way in which we try to grasp it as the object of knowledge. Nevertheless, if the state as such an object is positioned independently, we lose sight of the reality that we are trying to capture (at least as partial illumination), that is, the actuality that moves from the being of the state as potential for its manifestation. Whitehead, in order to construct his speculative philosophy, positioned this “misplacement” as a very fundamental “fallacy,” but we are trying to position it not as a “fallacy” but rather as a fundamental motif (moment/occasion) for the workings of knowledge, as a creative opening to a new “question” (a natural and inevitable self-transgressive inquiry) at the foundation of methods of academic knowledge.8 We have used the (somewhat mathematical) phrase “objectification through projective operations (directed toward concepts)” to describe the action of directing

8

While Whitehead constructed his speculative philosophy that overcomes these very fallacies, our attempt at realism (RFSS) may be considered a redevelopment of the same theme into the method of science by focusing on the academic knowledge in today’s “history” of science.

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Fig. 5.1 The three layers

knowing toward the object of knowing.9 Continuing with this mathematical phraseology, the definitional and value range expansion of the projection is closely related to the definition of the three layers of “misplaced concreteness.” The first layer is defined by the projection (misplacement) from the original something of the individual things already objectified (with historicity) into the world composed of the objects of the present. The second layer is defined by the projection (misplacement) of the objectified “possible” onto the level of the “means” that provide that possibility. The third layer is defined by the projection (misplacement of the level of knowledge) onto the entire range of conceptualization itself (i.e., the very act of knowledge thinking toward the object). Of course, insofar as academic knowledge takes conceptualization as its means, it must be said that it is natural and useful (and, in this case, also an “inevitable moment”) to posit a particular object that seems to hold the existence of a content that is certain as a precondition for the manifestation and elaboration of the content. ‘‘

objectified thing” ⊂ ‘‘ means” ⊂ ‘‘ all scope”

But if thinking is the movement and action of each “I” that dwells in the world, then such a particular object can only be imaginary-focused and schematic.10 Thus, the three layers lead to a looseness in the way of perceiving the world: play as a room, play in the sense of realizing the schema (as in playing a certain tune or a certain strategic tool), and play as a game in which one plays a role and realizes or modifies a habit or a rule. (See Fig. 5.1.) Thus, the three layers that emerge through the relationship with “I (dwelling in)” and the gaps/play in them are deeply related to the “inexhaustibility” of reality, which we have mentioned several times. And as a gap between knowledge and object of knowledge, the way “I dwell in the world” (and thus “my posture” toward a certain “object”) is thought to be based on the fact that it can only be schematic in the first place. And, as we have repeatedly stated, knowing is integrated with the action that involves a way of perceiving directed toward the object of knowledge, and in that

9

However, the mathematical phraseology in this chapter has been only carefully selected where it is “inescapable/inevitable” as a tool that provides the basic “logical” means common to academic knowledge in today’s historical context. 10 Toward the above, Quine (1953) “Two Dogmas,” Putnam (2002) “Epistemic Value,” and others, which will be discussed in Discussion 3 at the end of this section and in the next section, as well as Tarski’s truth undefinability and Gödel’s complementarity in the mathematical sense (even under “an attitude”) could serve as rigorous illustrations of this.

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sense, “we may be fundamentally wrong in the first place.” Such self-questioning forces us to treat the level of academic knowledge in a schematic manner. The purpose of the following Sects. 5.4 and 5.5 is to clarify how these issues are connected to realism and methods of academic knowledge. This also means how the gaps and play in the first and second layers are played seriously, so to speak, in the third layer. Here, seriousness means to become academically questionable, and we are trying to establish the loosest discipline for this purpose. This is precisely the focus of this chapter on academic knowledge (and its method), which can also be said to be the fundamental nature of the question, “What is academic knowledge?” The gaps and play can be seen as something that is connected to “a seriousness that does not overlook room/schematic looseness,” which leads us to the theme of this chapter, “realism as a method for academic knowledge.” In fact, of the three layers of misplaced concreteness described here, the third layer in particular is a serious “misplacement” (an occasion for a new, self-opening question) of the positive acceptance of the possibility of knowledge itself. From the next section, we clearly position “not overlooking” such “misplacement” as important questioning brought about by realism (as a method of knowledge).11 For this purpose, the three layers are here reorganized as a tool to “enclose” (so to speak) what should be called the reality of knowing, in contrast to conventional scientific methodology (i.e., using it as a guiding tool). Having outlined the three-layer tool for capturing knowledge and its significance for the method of science in this chapter, before closing this section, we would like to briefly open a few points of discussion, including some extended arguments and their relationship to conventional arguments. Discussion 1 (Role of the “three layers” and the significance of “looseness”) Earlier, we mentioned that we are trying to give as much “loose discipline” as possible in considering the “method of academic knowledge” (the “method” for our “knowing”). The three layers of play (room/gap) are not simply a separation of types for organizing what kind of play is taking place at each layer, although of course they can be used in that way. In the three layers, the emphasis is on the multilayered overlapping of how play is perceived at each layer, or the connection between play and the world outside of play in the simultaneous realization of various types of play, and the various self-regressions as play is also a part of that world. Looseness, therefore, means that such play opens up a particular way of value to each object of knowledge. And again, we can say that the fluid engagement between value and value in relation to the outside world reverts to being incorporated in the various occasions of the way of the world by (or in accordance with) the fluidity of the imaginaryfocused/schematic way of perceiving reality. Of course, this discussion should also consider the shifting of the axis of value through its polarity of positive/negative and the relationship between value and value. For reasons of space, we only point out here that positivity increases in terms of direction (not necessarily in terms of consistent integration but in terms of affective and evaluative pressure and intensity, such as the increasing connection of orientation and expectation toward happiness and desirable outcomes). Needless to say, such

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In particular, we position it as a review of the John Lockean premise (borrowing from Taylor, 1989 with regard to Locke) that sees knowledge as an activity as action at an independent atomic point.

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Discussion 2 (Dynamic Existence and “Enclosure”) As mentioned above, the “three layers” and “looseness (as a method)” return to a realism (dynamic existence as experience) that “does not turn away (from the invisible)” and also to seriousness (as dynamic existence in search of truth) as an academic position that “questions thoroughly.” At the same time, however, they are also linked to a “seriousness that does not overlook room and schematic looseness” as the pursuit of “everlasting furtherness” (creativity) as the dynamic existence of play, in which “play becomes play by playing seriously,” so to speak.12 Thus, the ultimate goal of this chapter is to connect the object/meta hierarchy to a “method of method” (as wisdom) that projects it not into an object but into dynamic existence (more topologically and resonantly than spatially). “Enclosure” is spatialization, as the setting of boundary conditions for such a topological/resonant projection (giving it the potential for connection with the non-harmonic/non-resonant). It can be seen as the creation/constitution of a field from the first person (dynamic in the relative meta) to the third person (invariant/universal in the relative object: a port of engagement with the indefinite/unseen other).

Discussion 3 (Relationship with Analytic Philosophy) In analytic philosophy, the problematization of “epistemic value” and the “fact/value dichotomy” in Putnam (2002), in particular (and with the implication that they present a variety of manifestations, such as individual academic practices and sites of intellectual transmission), is closely related to our imaginary-focused/schematic approach, the third layer of “misplacement,” etc., and it can be seen as a bridge from the side of analytic philosophy to our discussion. As for Putnam’s argument, it goes without saying that the issues raised in Quine’s “two dogmas” (Quine, 1953) predate it. On the other hand, Donald Davidson, who claimed a certain absoluteness about each scene of practice while taking Quine’s “conceptual scheme” as the third dogma, points out the possible problem of the plurality of the “conceptual scheme” being grasped as a “state of affairs” (see, Essay 13, “On the Very Idea of a Conceptual Scheme” (1974) in Davidson, 2001). That is, in our “posture,” coupled with the fact that the individual workings of our intellect can be thought of as simple actions (i.e., assuming the uniqueness of “I” as the subject who is currently acting), we can only have one integrated “conceptual scheme” (the frame we are currently using and following). This is an important property of manifested actuality. However, RSFF (and even more so in “social” studies) differs in that it considers the actuality of knowledge as distributed in transversal and rhizomatic relationships, not (only) in extensional relationships of atomized knowledge of different sizes.

Discussion 4 (Reality in Whiteheadian Process Philosophy) It should be clear from what has been said so far that Whitehead’s discussion of the “misplaced concreteness” (through Whitehead, 1927 and Whitehead, 1929) and the concept of reality in his philosophy have a great deal in common with the theme of this chapter. Our discussion focuses on the

This is closely related to “living entirely” in Whitehead (1929) = [PR]. However, as discussed in more detail in Discussion 4 below, what we are rethinking through the three layers of “gap/play” by focusing on the issue of “academic knowledge” (while clarifying the “inevitable moments (motifs/ occasions)” in conceptualization, objectification, and symbolization) is the meaning of subjectivity in “living” and its “responsibility” and “morality.” Our approach is an attempt to provide an even more important perspective on these points through the “method” of “academic knowledge.” 12

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“method” of “academic knowledge” and rethinks the “free” nature (and the “openness”/ existence conditions it brings) of Whitehead’s “superject” in his genetic analysis as the “living” problem of the “ego” or “I.” Through this, we reconsider the problems that are recognized only after the formation of a “subject/superject” such as “I.” Indeed, when the “superject” is at the level of an actual entity, which has no “duration” (i.e., when it is at the level of the Whiteheadian “prehension” of choice, even though it has historicity in the genetic sense), we cannot help but get the impression that the emphasis on the fact that such choices are made “through” the concrescence of the nexus level with “duration” (as an independent self “I”) will always be insufficient. This is because the objectification (material pole, the “efficient causes” of itself) and subjectification (mental pole, the “final cause” of satisfaction) of an actual entity are already fixed and determined through its “range of possible conditions (for prehension).” Under such circumstances, especially in relation to morality through the “justification” of choices made by the subject of “prehension” (Whitehead, 1929 [PR], p. 105), the actual entity fails to fully take on the “sense of guilt” that goes along with an imaginary-focused/schematic grasp of itself and its place in the world. This is also related to the third layer of fallacies. In a situation where everything may be a fallacy, the bearer of a “sense of guilt” for some claim or action is none other than the ever-new “I” that is directly connected to the (arbitrary at its nexus level) occasion (moment/motif) of that claim and has a duration. Morality should not only be spoken of through the “prehension” of the genetic actual entity but also with a “sense of guilt” based on the act or action at the level of the “I” that exists with its time length and satisfaction. “Enclosure” is, so to speak, a “posture (not to turn away from the invisible)” that simultaneously looks forward to “positive conceptual prehension” and “negative prehension,” and it is a nexus that provides such a place. Compared to the situation in which each “actual entity” is “entirely alive” in “empty space,” it may be said as follows: It is a common “posture” for “I (we)” to “live” as a “subject-superject” with “control” (ordering) itself acting as an “appetition” based on the “inevitable occasion (moment/motif)” in the “formation of academic knowledge” and the possibility of adjustment allowed in exchange for its “looseness.”13 Our concept of “enclosure” thus attempts to overcome the insufficient impression of the “subject-superject” in Whitehead (at least for its genetic analysis in 1929 [PR]) by taking as its starting point the “I” (or “we”) that is close to “living (entirely)” (but with the “inevitable occasion” of “academic knowledge” as “desire”).

Discussion 5 (Other Philosophies of Reality as Process, Relationship, and Action) Not limited to Whitehead’s process philosophy mentioned above, the direction of perceiving reality as a process itself is deeply related to, for example, Luhmann (1984) in social systems theory and the relational turn in sociology. It can also be seen in Indian thought, such as that of Ryuju in Mahayana Buddhism, which has long placed relationship (karma) at the root of everything, in Chinese Laozhuang thought as “monism as the identity of contraries,” in Zen, and in the Kyoto School of Philosophy in Japan. In any case, it is necessary at this time to quantify the process and not decompose it into pairs of universal time codes and diverse states if one is to find a point of contact with the RSFF. In Ryuju, “movement” is denied as something that accompanies “coming and going (universal time)”; furthermore, “movement/ method” in RFSS is not “movement” that accompanies “coming and going (universal time)” in that sense. It is, for example, like “Vorlaufen (Running ahead)” in Heidegger (1927)’s Being and Time (in the context of “an attitude” in Sect. 5.4), or “ethics” in Levinas (1974)’s

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In relating the issues of realism and academic knowledge in this chapter to Whitehead’s organic theory of science, I am indebted to Professor Haruo Murata (St. Andrew’s University) and the arguments in his book (Murata, 1990, ch. 6, “Whitehead’s Theory of Order”) for many suggestions.

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Method of Academic Knowledge as an Attitude Toward the Reality of Knowledge: On the “Two Dogmas,” the “Fact/Value Dichotomy,” and Limitations of Today’s Scientific Methodology

To see reality as an imaginary-focused/schematic “posture” is to see it as a rhizomelike relationship between what is involved in centering integration through focal control such as ideology and what is more open through horizontal connections distributed among various functions and situations. This is the meaning of RFSS’s attempt to describe its own “movement” through the study of society. Up to this point, we have been talking about taking reality as a certain posture/attitude. However, we have not specified whose attitude it is. Rather, the singularity of an attitude has been an implicit assumption.14 In social studies, however, multiple realizations and different levels of posture emerge, and the various relations of dynamics and singularity between them emerge across levels and asynchronously, even in a meta-time sense. If we can say that what “has a posture” dwells in the world, then society that dwells in the world as a variety of postures (“das Mannigfaltige” in Kant (1787) or the so-called chaos), and also has the world dwelling in itself in a certain way, is also a “motif (moment/occasion)” of the posture of the world (existence). Remark 1 (Axiomatic Set Theory, Kripke Universe, Category Theory, etc., as an Academic “Posture”) As one such stance (posture), one might imagine, for example, a Kripkean universe (Kripke, 1975) as a fixed-point space with symbolic language at its root, together with a position that allows, mathematically speaking, an axiomatic set theory or a transfinite induction to the extent possible. However, as we see later (footnote 19), it should be noted that this is only one idealistic position that aims at (and only sees) a transfinite composition as a universe. Our position here is concerned with a schematic playable dynamics, so a more desirable “posture” would be a category theory, which has more of a diagrammatic character (under which a set theory corresponds to the topos, allegory, etc.). Here, the inextricability of representing process (which involves meta-simultaneity in “potential” to “manifest”) is necessary, and category theory can be seen as a tool for “enclosing” the “process.” Even if we take set theory as a foundational tool of a “posture,” if we reject, for example, the axiom of the existence of the empty set and move away from the position that constitutes a universe, we can take a position that “does not lose sight” of the same schematic “looseness” as we consider here by basing it on something like the commonality of schemes in a model-theoretic multiverse (e.g., Hamkins, 2012).

However, to focus on “an attitude (posture)” is at the same time to work on other attitudes, and through regressions, on the diversity of the attitude itself. And the

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This corresponds, for example, to the fact that in Whitehead (1929) [PR], the underlying item, the “actual entity,” and its “concrescense” are placed as the unitary nature of the process.

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identity of this focused attitude seems to be less about its own substantive and ontological inner essence and more about the way in which it is adjusted in its own social dwelling that transforms its dwelling in the world. Remark 2 (Quine’s “Two Dogmas” and Our “Posture” and “Adjustment”) The existence of a variety of things that must be acknowledged in exchange for an “inevitable motif (moment),” as in the definition of analyticity in Quine’s “two dogmas” (Quine, 1953, ch.2), or as Putnam called “epistemic value” (Putnam, 2002), is that which is inevitable when arguing for the establishment of academic knowledge from the standpoint of realism. Of course, if the “inevitability” that is being asserted here were not “understood” at the root of the formation of academic knowledge, the very “discussion or dialogue = adjustment” that is being presented here would be unnecessary. (Needless to say, neither Quine, Putnam, nor the authors think so.) As an “empiricist,” Quine’s position of “a more thorough pragmatism” can be taken as exactly such a “dwelling in the world” as well as a “posture” that is focused and “adjusted.” This also correlates with Michael Polanyi’s three moments of concrete awareness: “focal awareness,” “subsidiary awareness,” and “knower,” in which “epistemic value” (which is explicitly objectified) correlates with “focal awareness,” “the variety of existence that must be acknowledged” correlates with “(participation in) subsidiary awareness,” and a focused “posture” correlates with a “knower (knowing person).” Polanyi, however, places emphasis on the site of knowing in the control-executive sense = individual (Cf. Polanyi & Prosch, 1975, Meaning).

One of the primary methods of this adjustment is communication. Remark 3 (Communication) There are several ways to express the notion that “posture” is focused in such a “dwelling” with the existence of communication or its establishment. One way, for example, if we consider the establishment of a dialogue, is to first recognize the establishment of symbolic objects as tools for expressing the message. The establishment of such symbols will probably be agreed upon as almost “inevitable” in the establishment of “academic knowledge.” In the following, however, we consider this “adjustment” more generally as communication, using the term “message” to include even that which precedes language, or even that which precedes the formation of some meaning as a relationship from A to B.

When communication is treated as a projective code (through thinking of it as some kind of transmission with a direction), that is, when the directed relation of communication from A to B is treated in the metaphor of projection as it is in the previous section, the same argument can be made here as in the previous “objectification through projective operations toward the direction of concepts” above. Corresponding to the “objectification” of the previous section is the “message (received in B).” The fact that this is an imaginary-focused/schematic expression can be shown by the variety of interpretations of the message (received in B) and the possibility of creation from the message (e.g., the message can be broadened in its transmission). The device that materializes the imaginary focus of the message (assuming its numerical or symbolic formation and taking into account the possibility of interpretation and creation from the side of A, the sender of the message, as well as the message as a whole) and opens the way for a particular kind of value (as a

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Fig. 5.2 Logical positivism paradigm RFSS methodology diagram

relationship of interpretation between A and B) would be money and language. These are related to the fact that the certainty and truthfulness of content are related to the maintenance of one quasi-open regressive value (such as customs and practices inherited as a result of learning through interaction with others and the use of real language) while engaging with the world.15 Considering that such a phase (relating to the world) exists under the development of philosophy of science and linguistic theory, it may be possible to have “academic knowledge” and “method” with a more fundamental view through the study of “society” rather than by transferring a “pragmatic” position from philosophy and adapting it to the study of “society” (or its “method”). Remark 4 (The Kuhn–Lakatos Position) If we only consider transference from philosophy, we would be in a position to consider a new way of “formation of academic knowledge” through reconstructing “social study” each time the problem of “methodology” is reconsidered. This would be substantially similar to the Lakatos (1978) position (as an extension of Kuhn, 1962) as if, at the level of method and logic, a convention or structure were incorporated so that Popperianism would ultimately become valid for each theory as a paradigm. In that case, what has been “adjusted” under “an attitude,” anyway, is the end of what is stated here. In fact, if we took into account the “differences” illustrated in Fig. 5.2 below, there would already be new implications in terms of the method of academic knowledge. However, our argument is more strongly based on this and looks at the issue of “collective knowledge” in the next section.

If we recall that sociology originally aimed to establish a philosophy of multiple subjects (as in, for example, Durkheim’s Pragmatism and Sociology, Durkheim, 1955), what we are trying to depict here is precisely the process by which this is coordinated with the image of thought by the individual (as an attitude). Remark 5 (Inexhaustibility of Reality) Even under an “attitude,” if we stand on the basis of “the reality that cannot be exhausted,” for example, in general equilibrium dynamics in economic theory (or in the sense of Keynes, 1936 General Theory), such things as uncertainty must be treated as intrinsic in nature. And even under such an attitude, the methodology of “social” studies must be re-examined.16 In other words, even under “an attitude,” the second layer of “gap/play” must always be included (without being exhausted), which is

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This sense of philosophy and philosophical knowledge may resonate with Alain Badiou’s Conditions, Part 1, “Philosophy Itself” (Badiou, 1992). 16 Urai (2010, ch. 9) deals with the issue of the inherent impossibility of value determination in society through “the undefinability of rationality.”

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the significance from the standpoint of RFSS toward conventional scientific methodology. And, going further, the theme that we deal with in the next section, that of depicting “reason” not as an objectified ability, but as a relationship, such as the establishment of communication through messages, as a place where the use of theory is quasi-open and self-reverting, and considering RFSS as such, is indeed the third layer of the significance of RFSS. What does it mean that academic knowledge can be established even among different attitudes with different methods, techniques, and even logic? This is what will be treated in the next section as the issue of how to understand “reason (in the broad sense)” in the imaginaryfocal and schematic sense.

The difference between the traditional philosophy of science and the position here on the “method” of academic knowledge (the term “academic knowledge” has been used here more broadly than the term “science” as the pursuit of knowledge) can be stated quite simply as follows. In the traditional philosophy of science, the transition from naive logical positivism to a view of science that leads to a Kuhn–Lakatosian paradigm theory, there is a unidirectional positioning, from method and logic to the recognition of the object (science = pursuit of truth) (Fig. 5.2). Realism in the RFSS can be viewed as a diagram with a direct (“experience”) action from the lower left “object and society” to the upper right “method and logic” (a request not to look away from the lower left), but such a relationship usually puts the scientific method itself in danger of falling into the worst “anything goes” relativism (like the anarchism of Feyerabend, 1975). This is because when method, logic, cognition, and society all end up with an understanding of reality in the mode of an “objectified state,” the consistency of the self (an attitude) dwelling in the world while at the same time inhabiting the world at the object-recognition level is once again called into question. Remark 6 (Anything Goes and Recursivity as Control and Historical Device) Where we said above that “reality” is made to end up having an understanding “in the mode of an objectified state,” we might rephrase this to say that we consider various combinations like building blocks under fragmented freedom as foundational configurations. What lies beneath the fragmented freedom is the component of realization in each scene of “control” (discussed in the next section), but for it to be “control,” there must be a latent association behind it and a circuit that connects that latent association to its manifestation as actuality. This is shown (inductively) by the historical device of examples such as habit, pattern, and regression. Specifically, we can say that there is a quasi-stable regressive process. If we forget to consider the potential, if not necessarily obvious, connection to quasi-stability ( Charles S. Peirce, 1878 seems to have taken this into account through the way he spoke of truth as an “opinion which is fated to be ultimately agreed to by all who investigate” proposition ), we end up with “anything goes” that “can only be seen where it can be seen.” Behind the word “realism” we find “trying to see what cannot be seen” and “trying to know what is not known,” which are precisely “minimal regression/recursion” as positions of knowledge, and “considering the possibility of potentially connecting to quasi-stability.” In this light, “considering the potential connection to quasi-stability” is a meta-action motif (moment/ occasion) of “the position of knowledge that does not turn away from the invisible,” or perhaps it is almost equivalent to it.

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The answer to this question (already sufficiently answered through Quine’s dogma, Putnam’s epistemic value, and other discussions) will lead the circularity of the above methodological diagram (under logical positivism or paradigm theory) under “an attitude” to an infinitely spiraling form, no matter how far it goes. In the rightmost diagram, no optimistic outlook of progress, development, ascent, or convergence is allowed toward “method/logic (1), (2), (3),. . .”17 The RFSS is a guideline for recognizing this commutative diagram, its situation, and its “spiraling” whole itself (Fig. 5.2 rightmost side) as an important but single moment in the state of academic knowledge, as sound in its entirety, including such “questions” (of consistency). This is also an argument for restating the method of academic knowledge from the level based on “object” (state) to the level based on “action.”18 In the RFSS, the study, science, theory, etc., that are grasped as “an attitude,” that is, a “posture,” have a “width” in terms of their objectified state, which is to say, a schema-like “width.” This “width” is, first of all, the width of the above-mentioned “spiral” (which changes direction and comes and goes), which is grasped a posteriori as a type. It can also be considered an expression of the passive synthesis of the undecided thrownness-like projection of “participation” (in society) at the level of “academic knowledge” (details explained in the next section) and its posterior typification. Furthermore, this is directly related to the fact that we should always take the stance that “we may be fundamentally wrong” (as serious play/game actors).19 Furthermore, “society” is considered a diverse mixture of such “attitudes” through communication, which is discussed in the next section.

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Even with such an outlook, it may still be possible to get a bird’s-eye view of consistency under “an attitude” by means of a linguistic fixed-point treatment that focuses (imaginary) on the inclusion of “undecidable propositions,” such as the formal Kripkean universe. Such a set-theoretic perspective is sufficient to arouse the desire to place axiomatic set theory or mathematics in the position of universal academic logic. However, it seems unlikely that at least the ZF axiomatic system, or for that matter even the level of transfinite induction up to the first ε-number (see, e.g., Takeuti, 1987), which can show the completeness of the first-order predicate logic, can defend itself against a much simpler question: “But are we not fundamentally wrong in the first place?” And in fact ZF “proves” that “no such defense is possible.” The set-theoretic outlook, while it may be able to view the extremes of the discipline and its methods that we face in reality, as if an ideal, cannot, on the basis of that view, answer the very simple question, “Are we not fundamentally wrong in the first place?” 18 The same is suggested for the formation of language and formation of value (using money) through “society” (as mentioned earlier in connection with the interpretation of “message” in “communication”). 19 In Heideggerian terms, this can be called a concern (Sorge) for existence (Heidegger, 1927).

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On Dynamic Constitution for the Place of Reality: Beyond Scientific Methodology Toward an RFSS Protocol Based on Social Participation, Theory Use, Dialogue, and Control

In the previous section, we extended the “method of science” to “enclose” (so to speak) the “reality of academic knowledge” as “attitude seeking knowledge” through the three layers of “recognition” directed toward “society (object)” and its “method and logic.”20 Conventional scientific methodology was positioned in such a diagram as a one way, “from above” position; its extension by the RFSS position was seen as a two-way, spiraling breadth in such an “enclosure” as “an attitude.” In this section, we consider what should be more generally called “a collective posture” in search of knowledge (through society). This is the basic position of the RFSS, which is connected to “practical reason” (in the broadest sense of the term), which is regarded as a “place that constitutes the reality of knowledge” in the schematic sense. In such a context, instead of the word “method” or “logic” (in the broad sense), it is more appropriate to use the word “movement” (in the sense that it expresses, to all intents and purposes, an escape from object/state grasping) (Fig. 5.3). (As mentioned in Discussion 5 of Sect. 5.3, this term “movement” is not used in conjunction with “coming and going” (universal time) but from a very different, meta-position.) How “an attitude” is established (through society) in the previous section is actually open to “communication.” And if communication is taken as an operation of conceptual projection through messages as before, the establishment of “an attitude” must be recognized as being deeply involved in the “establishment of signs and symbols (what it means that language is understood)” or “establishment of value (what it means that markets and money are established)” in society as well. This suggests that through the overlapping “dwelling in” of “I” and “society,” such “questions” are also open to reconfiguration based on “relations” (rethinking the This is why the word “reality” is written in the center of the rightmost diagram in Fig. 5.2. The “reality of academic knowledge” is treated as a “process” in the RFSS as something that is “enclosed” through “attitudes seeking academic knowledge,” and the “place where knowledge is established” in the RFSS is defined below as the “place” where such “diversity of attitudes” is established. In Discussion 4 of Sect. 5.3, “enclosure” was described as “posture,” but to be more precise here, it is not a posture as merely “an attitude.” It is a “place” (a posture, in some cases collective) that allows (as loosely as possible) a variety of “attitudes” of the members of “society” through the focalization of “academic knowledge” (with its inevitable “conceptualization” motif). Or, it is a “place” (in Whitehead’s words, a “cosmic epoch” [1929 PR, p. 91] that looks to the inexhaustibility of “control and its outside” (the possibility that it may be fundamentally wrong) as the responsibility or guilt of “I” “living” (academically, through knowledge). Note also that this is not an “enclosure” that is independently posited in advance. It is a “place” that allows a wide variety of postures as a triadic scheme by being “enclosed” by the “potential extension of the actual path” and the “potential development of the process expressed in the surrounding triad.” The image is similar to Lacan’s “signifiant/sign/that which signifies” circling around the hole of “le reél/reality/ that which is real” (see, e.g., Lacan, 1959, Seminar IX, p. 121, “the fashioning of the signifier and the introduction of a gap or a hole in the real is identical”). 20

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Fig. 5.3 Diagram for the place of reality

question of description and recognition), no matter how thoroughly. Thus, there remains the possibility of reconstructing (or at least pursuing alternatives to) the scientific theory of “society” today from the “language or value level” through, for example, the theory of categories, topos, and allegories (see, e.g., Freyd & Scedrov, 1990) as a mathematical tool. Of course, we can only suggest these possibilities here.21 However, in this section, which regards the “place where knowledge is established” as a “collective posture,” that which influences the transition from “society (object)” to “movement (method and logic)” through communication is no longer limited to the experience of “an attitude.” From the bottom left of the diagram to the top, where influence is exerted on the “movement” through communication (language, exchange, etc.) in “society” (where the movement is rooted in them), we add the keyword “dialogue” in addition to the “experience” mentioned above. As for “experience,” a more verbal (dialogic and preferably collective) keyword might be appropriate here, something like a (new) “question” (which comes from not missing what is “unseen”). Needless to say, “dialogue” here does not mean agreement on the content of the outcome but includes the possibility of “coordination” in the sense of continuation, respect for each other’s potential, and the sharing of additional new “questions.” And from the lower right to the lower left of the diagram, from “cognition” to “society,” “use” (of theories, etc.) becomes the new keyword. Here, “use” does not simply mean to be “experimented” academically, but rather it is important to be understood as “actually used” through the understanding of the meaning of the study, through the practice of each individual in the living world, and through the policies of various social systems. Another new keyword here is the consideration of “participation” in society through the in-dwelling of multiple individuals (and attitudes). In this case, “individuals” refer to an extremely wide and diverse range of types, roles, and mutual arrangements. For example, it includes not only groups characterized by coexistence, such as human society, but also individuals and society, cultural items that influence the thoughts and feelings of individuals through 21

In some of the chapters in Part II of this book concerning the reality of economics (especially Chaps. 8 and 9), the reality of economics is always positioned as “forces from below,” open to wholeness, and the “enclosure” in this chapter is conscious.

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information links, supply systems of goods and nutrition necessary for the biological aspects on which activities are based, and specific functional ecosystems that influence niche coordination of activity areas. Through these observations, the existence of “control” or what should be called “management” in its broadest sense, directed from the top to the bottom right of the diagram (from “movement” to “recognition”), deepens the earlier diagram of “methods of study” (spiral diagram in “an attitude”) into this one of “the place where the reality of knowledge is established” or “collective attitude” (spiral diagram on the right in Fig. 5.3). This “control/management” is precisely where the “method” is applied toward “cognition” when it is described as the “method of science.” It is the very “inevitable motif” that has been repeatedly emphasized in the enclosure of the “reality of academic knowledge,” a requirement that should be “as loose as possible” (which may be summarized as a minimum of necessary logical consistency and a minimum of “inductivity,” as it were). And that requirement also stems from the consistency between being a “place” of coordination that leads to participation and dialogue among as many different attitudes as possible, and being (and can only be) imaginary-focused and schematic. Even so, we cannot escape from the “historicity” of language in conceptualization, the role of symbols and figures, friction from indwelling, and so on. As long as the “state/object” is the basis, “academic knowledge” must lose its “self-reliance” at some point. In order for knowledge to be self-reliant, each “I” must be involved in its own “living.” In other words, “not looking away from what is not seen,” or “I” “play/game seriously,” is not merely “my” “principle/attitude” but can be positioned as “the most moderate condition” for the establishment of academic knowledge. This is the significance of RFSS to “scientific methodology.” The “place where the reality of knowledge is established” is a way of being within the width of the above-mentioned “spiral” structure (historically temporary and inevitably regarded as “serious play/game”), which can be typified as such a collective attitude (for each individual, it is only an attitude).22 Here, the “seriousness” of being a serious play/game is of crucial significance, as noted above. This seriousness comes through realism that “does not turn away from the unseen,” but what supports it is not reduced here (i.e., under the focalization of the pursuit of academic knowledge) to the level of mere principle=ism but rather to the level of “guilt” (through the “unseen”) of “I” living through academic knowledge. This sense of guilt is the cause of the need for “I” to play/game “seriously” in “living with knowledge,” and at the same time, it is the result of the fact that even if one is serious, it is only “game/play.” In other words, the “pursuit of knowledge” is strictly related “For each individual, it is only an attitude” means that even if such a collective attitude results from a common understanding through communication (e.g., language), it is only an attitude under a kind of individual language before a strict “relational understanding” of the “establishment of the language” and “common understanding” is established. If we consider, for example, Quine’s indeterminacy of translation (Quine, 1960) and Putnam’s downward Löwenheim–Skolem theorem (Putnam, 1983, p. 3), it is possible that such a collective attitude, even after it is established linguistically, can only be called a variety of attitudes of various individuals. 22

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to “ethics” in this sense. And the “self-reliance” of “academic knowledge” is established together with (or strictly speaking, only through) such a sense of “guilt” and “ethics” of the “I.” “Reason” is usually understood as the ultimate limit (ultimate control) of “control and management” of “movement” in such a “place.” However, in light of the above, it should be said that the understanding of “reason” in the form of ability (i.e., as ultimate, supervisory control from above) is based on reason as the result of “objectification” through conceptual projective operations. Instead, we can now see reason as a collective attitude, that is, a historical, only local, schematic one that refers to the coming and going width of the “spiral” (“posture” as such), without any expectation of development in one direction, or even convergence to the extreme.23 Since the expression of “reason” is imaginary-focused and scheme-like, we can think of it as if it were, like the earlier “interpretation of the message,” a “state” in which the theory, truth, and other valuables “used” return to themselves in a quasiopen way through their relation to the outer world through play/game. Of course, if we go that far (i.e., only survey/idealize it as a “state”), we might rationalize, for example, “the world of reason” as the ultimate form of Hayek’s (e.g., Hayek, 1973) market (forces from below, the spontaneous order) as the result of objectification through “conceptual projective operations.” In other words, we have a system of relations that encodes “universality and all time” as a financial market set up across time, a system controlled by “super” overarching information.24 However, here, 23 In this infinite spiral structure, there are two positions: the set-theoretic position, in which the infinite spiral structure is viewed as a relationship but is ultimately a state as its ultimate limit somewhere and is then overlooked and idealized; and the relational position, in which the structure is not idealized but is instead relationalized to the fullest extent. The position that seeks to make it relational to any extent is “category theory” in mathematics and “relational turn” in sociology, and it is the stance of realism in RFSS that we are advocating here. In the case of Mahayana Buddhism, it may be said to correspond to the position of “emptiness,” “non-selfhood” (not having a nature), and the view that all things are ultimately “karma” (relationship) (Nāgārjuna, “Mādhyamaka Kārikā”). And here, we also have issues such as the position of Kantian “practical reason” in the “place of (absolute) nothingness” (Hanaoka, 2021), the fundamental nature of “questioning” (Haruo Murata), or the “logic of the place (of nothingness)” as “de-ontology” (Tanaka, 2016), which gives an important suggestion to the theme of this chapter. 24 The situation in which we have to consider the totality of information consisting of all possible information and/or the totality of states consisting of all states is also dangerous from a set-theoretic perspective. However, from an incomplete perspective, Hayek’s view of markets and spontaneous order is an attempt to express the “reality of economics” itself, the “forces from below.” If the concept of “market” is constantly refocused and schematized, with new forms of self-transgressive cleavage, we might expect something similar to the discussion we have in this section (see Footnote 21). However, this “from below” in Hayek is equivalent to the usual sound meta-level empiricism about science if merely in the sense that progress at the meta-level of real research is always partial and never ultimate in reality. The reconciliation of contradictory demands in the dualism of “theory content” and “theory work” by separation conceals (at least as much as conventional scientific methodology up to Popperianism does) that in “practical control” object knowledge and practical participation are inseparable. Room, gap, and play are not such a dualistic separation but a serious joining and practical unification, and the very joining that leads to indeterminacy.

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from the standpoint of realism (not a vision or ideal),25 when we assume that the direction from “motion/action” to “state,” that is, the local “width” of spiral traffic, is what precedes, then the indefiniteness of the movement from “potential” to “manifest” erodes the stability of this regression from within, and the arrival of the new becomes “always” possible.26 This is where part of the “inexhaustibility” of reality appears, and this is something that academic knowledge should always take into consideration (not overlook). It is desirable for the pursuit of knowledge (through which “I” “live”) to always think about the experience rooted in the place and ground where it is nurtured in its growth (i.e., a way of realism that does not overlook the fact that it is “not visible to the self”).27 Therefore, the “constitution of the field for the reality of knowledge” means that the function (control and management) of such “reason” in the broad sense as its “movement” should be soundly rooted in the coordination through dialogue and experience based on use and participation, directed from “cognition” to “society.” In particular, if we emphasize the concrete activities in the real world, it comes down to the importance of (1) “dialogue” and (2) “I” (we) “freely and self-reliantly” (i.e., with a sense of “guilt” as an ethics) “question” to any extent and thoroughly.

5.6

Conclusion and Further Discussions: Realism and Its Significance as a Position of Knowledge that “Does Not Turn Away from the Unseen”

Science and the philosophy of science since the twentieth century may have succeeded in accumulating knowledge in various specialized fields, as well as in the “method” of science, while also subdividing the discipline into various specialties under (narrowly defined) “theoretical reason.” At the same time, however, it seems that we are in a situation where we have lost any clear guideline (that which controls narrowly defined theoretical reason from above) at the level of the “method of science,” or the “method of method,” so to speak. Perhaps this is deeply related to what Kant (1788) called “practical reason,” what Kitaro Nishida called a “religious

25 And not just as a standpoint, but also through a demand for a sense of “guilt” (i.e., “ethics”) that is equivalent to “self-reliance” for the “establishment” of academic knowledge, since otherwise it would not be a “serious play/game.” 26 Polanyi negatively describes subsidiary awareness as losing its identity and becoming something else when it is focused (see Polanyi & Prosch, 1975, ch. 2, p. 38, “. . .for the knower the subsidiaries have a meaning which fills the center of his focal attention”). In Hayek’s example, this might be the indefiniteness of actual (at the site of exchange) liquidity (discrepancy between economics value and accounting price) in the flow of funds, etc. 27 Again, to put it in Polanyi’s terms, academic knowledge is “focal awareness” under focalization and thematization, and only with “subsidiary awareness” as knowledge can it become knowledge that can withstand reality and practice (see Polanyi & Prosch, 1975, ch. 2, p. 44, “All knowing is personal knowing—participation through indwelling”).

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worldview” that should be placed at the foundation of scholarship,28 or what Whitehead called speculative philosophy in an attempt to regain its totality.29 RFSS is an attempt to provide guidance here by means of “realism” (pointing out the inadequacy of seeing only what one wants to see). And by doing so, it attempts to provide (1) a realistically legitimate critique of conventional scientific methodology in the sense of “a critique of seeing only what one wants to see,” (2) a “free” (selfreliant) methodology that does not fall into “anything goes” (as serious play), and (3) an ethics with a sense of “guilt” where there is an “I” as well as an “other.” As further discussion, we add the following arguments (Sects. 5.6.1–5.6.4) to the summary above.

5.6.1

Non-subject-oriented Logic, or “The Logic of the Place of Nothingness”

In speaking of the “legitimate treatment of the unseen,” we are shifting a fundamental part of our “logic” to a relational view of reality (i.e., to put “act or effect” before “state or purpose”). This can be seen as corresponding to what is called “predicate rather than subject oriented logic” or “Logic of the Place of Nothingness” (Nishida: see Dilworth, 1987, etc.). What we have tried to express somewhat vaguely (imaginary-focused per se) in the previous sections, e.g., category-theoretical or imaginary-focused or schematic, is an advocacy of using logic in the above sense, i.e., of not necessarily grasping logic as self-limiting, as is usually the case, or in other words, of not necessarily using it as “subject-oriented” while maintaining the minimal role it plays. Furthermore, to “use logic in a subject-oriented manner” is to be trapped in the “misplaced concreteness” at all levels of the assignable “subject.” In this way, liberation from “misplaced concreteness” and liberation from “subject-oriented logic” are linked.30 See Nishida (1990) and his final paper, translated and introduced in Dilworth (1987). Under such a lost situation, it is “industry” that today provides what amounts to a guideline to “science” (through scientific technology). Haruo Murata (professor emeritus at St. Andrew’s University) has captured this in the term “corporate civilization,” within his theme of “civilization and management” (Murata, 2017, 2023). 30 To use logic in a “subject-oriented” way means to apply a substantive connotation of the subject (which posits itself in itself) to logic, which is always subject to the actualization (objectification) of a single “The Logic,” a subject-specific logical relationship (often an object/meta relationship), or a tendency or danger of such an actualization. In contrast, “predicate-oriented” logic, or the logic of the “place of nothingness,” is a “place” that is always open to generality as a form of predication. It is a place that is not viewed from “outside the screen” of “objectification” through the operation of conceptual projection but as the same place as the axis of projection itself, as the very aspect of existence of “coexistence” through the association of various positions within the axis of projection. As a result, if we were to set up an “ideal screen” (at infinity) as an “image” of place, it could be interpreted as encompassing the use of subject-oriented logic (as an extreme identification of object/ meta relations). As such, here we view predicate-oriented logic. This is also the essence of what we 28 29

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In this light, Whitehead’s speculative philosophy appears to be an attempt to liberate logic and redirect it toward its original form, with greater freedom and soundness.

5.6.2

Minimal Inductivity at the Level of Method of Methods

Nevertheless, in linking such “freedom” (or self-reliant independence) with Whitehead’s philosophy, it is necessary to sort out its relationship to “historicity.” For, in Whitehead’s philosophy, experience or creation is attributed to the “concrescence” and “prehension” of an “actual entity,” and when the problem of “living” by the “I” that we have been discussing is contrasted with the problem of “living” by the actual entity, the handling of the historicity of such an actual entity becomes the key to this comparison. In the “historicity” at the level of “I” in this chapter, “legitimate expansion” as an “inevitable moment (motif)” toward the establishment of “academic knowledge” is included. In other words, in the “totality” of conventional history, conventional civilization, conventional knowledge, and conventional science, and in the “place” opened to the “incompleteness of that totality,” a “minimal inductive nature of the layer of the method of methods” (one-time regressivity that traverses itself for its own improvement) is built in. As such, the fundamental nature of “questioning” (the self’s questioning of its own cleavage) is one of them, as well as the fundamental nature of history, today’s ethics (based on “my” “dwelling” in the world), the body, and the relationship to the other. The discussion here is based on the posture of this “I” who “studies” (as it should be and as it must be), including its relation to others. On the other hand, there seems to be a difference between the actual entity in Whitehead and the “given/data” for it and our positioning of history based on the “I” mentioned above. In our case, in the particularly important relationship between historicity and logic, it is the “(legitimate) extension” that has been the true nature of the relationship. Our “enclosure” is a general term for such a “posture.” And it is an attempt to temporarily accept “minimal logic and recursion” as an inevitable occasion of “academic knowledge” while still considering the fact that “it may be fundamentally wrong” in the “legitimacy” of the “legitimate extension.”31 Based on this kind of “thrownness” toward “non-legitimacy,” we continue this discussion below.

tried to describe in RFSS by calling it the “method of methods” of academic knowledge or “minimal inductivity.” 31 Such a positioning of our “posture (stance)” to the philosophy of organism may be close to the positioning of new deployment possibilities of cybernetics that Hui (2019, Recursivity and Contingency) has tried to propose. In our case, “recursivity” is the “inevitable” primordial “unit of control” in the “enclosure” (i.e., appropriation) by the “I” on the issue of the formation and selfreliance of academic knowledge. Under this, we can say that we are explicitly trying to grasp the irreplaceability that has been precipitated out of the historical process (which we cannot help but consider as something other than what it was).

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Superjectivity and Thrownness in “I”

Compared to Whitehead’s case, in surveying the “I” in this way, while comprehending the “history” as the foundation of the “I” from the standpoint of the mental pole of the actual entity, our case entails the limitations of the “I” (“self” nature of the “I”), i.e., the various rules that govern oneself as not merely the given data but as “inevitable motifs.” Therefore, “self-reliance” in this case is not inevitable (even if it can be felt) from the viewpoint of an ideal situation such as the mental pole in the actual entity. Consequently, the only way for “I” to counter the abovementioned “non-legitimacy” is to choose a “subject-superject” nature, a “thrownness” toward the relation with others or modern science, etc., in “I,” and to be “thrown in” there. This is something we have to accept in exchange for a limitation in the sense of “enclosure” (being forced to accept what may be temporarily non-legitimate), but it is also the independence, autonomy, self-reliance, and freedom that “academic knowledge” acquires.32 Needless to say, this is not a question of whether there is such “free will” in the ultimate sense (which in Whitehead’s view corresponds to the ultimate corpuscular society [1929 PR, p. 105] that characterizes life or living).33 It is a question of the difference in meaning at the level of “I” that I “dwell in” the world as a practical matter (in Whitehead’s view, the difference is at the nexus level of “I”).34

5.6.4

On “Creative Experiences”

In light of our discussion thus far, we would like to conclude with a thought about “creative experiences.”35 In terms of experience, the emphasis here is on the meaning at the level of thought of the “I” (which, while taking into consideration Whitehead’s prehension at the level of the actual entity, is still close to the general In the space (place) where the nexus “I” is established as a “persona” with a “duration” (in Whiteheadian terms), “I” implies choosing a way of being with the thrownness in that space (place) where “I” “may be fundamentally wrong.” 33 Our position of linking the moment (motif/occasion) of “academic knowledge” and the issue of “I” independently of the question of “free will” will inevitably provide a link to “I” (as various modes of “grasping”) for the speculative materialism of, for example, Quentin Meillassoux (2006). 34 To mention this “I” together with the earlier metaphor of the “place” of the “screen” that “projects,” this means that the “I” is always considered without abandoning its “subject-oriented/ existential” aspect. And it is not in the “place as image” referred to earlier but with the projective axis, which brings about a disconnection by the insertion of each screen “in situ,” thus bringing about an “open cleavage” that is not visible (collapsed) on the ideal screen. The device of coexistence through the connection of various (screen) positions that encompass such “open cleavages” is what we call here “history.” 35 The use of the term “Creative Experiences” here is based on the name of the forum “Integral Philosophy of Creative Experiences,” which is led by Yutaka Tanaka (Professor Emeritus, Sophia University). 32

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everyday concept). In terms of creation, “living” (in Whitehead’s case, two categories of Conceptual Valuation and Reversion) is integrated into the problem of “selfcreation” at the level of “I,” i.e., the “personality.” This emphasizes the “creation of original newness (especially in the category of Conceptual Reversion),” that is, the “existential” interpretation of “being alive” (including Whitehead’s meaning). In particular, the significance of this existential interpretation of the pursuit of “academic knowledge” is the main theme of this chapter. Let us reconsider this as the significance of “creative experiences.” The “(conceptual) enclosure” of the pursuit of “academic knowledge” is a “Transformation through the Category of Conceptual Valuation based on the (limitation of) enclosure ( = inevitable moments/motifs)” by “academic knowledge.” The width of the spiral of “enclosure” is a dynamic “place” that brings about a “self-transgressive cleavage” as well as a self-reliant nature (Category of Conceptual Reversion) of “academic knowledge” that is secured in exchange for thrownness. In other words, as a matter of “my” “living” (through serious play), “academic knowledge” for “me” can be recovered (as an inevitable “thrown in” with “throwing” accompanied by “me” only). The discussion in this chapter focuses on the issue of “academic knowledge,” and “creative experience” is not limited to “academic knowledge.” However, the issue of “academic knowledge” is deeply related to the occasion that is almost inevitable for being creative in today’s world (a civilization based on science and technology). In fact, “knowledge” is engaged in the work of conceptualizing various things in ordinary thinking. In this chapter, we call the activity of knowledge surrounding this work “enclosure” and assign to it schematicity, a position as a method of methods, and minimal inductivity. Furthermore, we consider it a comprehensive posture, a throwing posture as inevitable thrownness in the “I” (“thrown in,” which brings about the throw as my posture). This is, so to speak, a “control” of the activity of “knowledge” and a restriction on it, but this restriction is at the same time a condition for ensuring the “self-reliance” and independence of “academic knowledge.” This condition is inevitable (for the establishment of academic knowledge), and as long as it is given as a minimum, it is a positive one in the sense that it allows academic knowledge to be established in a self-reliant and independent manner. But not only that, it is also (for the first time) positive toward “creativity,” which encompasses “academic knowledge.” This is because even if we were to take into account “prehension” at the level of individual “I” duration, or even if we were to simply consider the limitation that it ignores “negative prehension,” the recognition of non-legitimacy associated with these matters is still far from being sufficiently recognized from our present standpoint (rooted in realism). Here, “academic knowledge” presupposes a sociality that inevitably includes reason, symbols, language, and communication, as well as the indwelling and participation of “I” in this sociality. Non-legitimacy here is at that level, and the issue is the “inevitable thrownness with throwing” of the “I,” that is, the “play” and creativity that arise from it. We are “fatally” blinded by “seeing only what we want to see.” In corporate civilization, it is only natural that every profit-seeking entity will seek to take advantage of this. In today’s world, we cannot possibly commit 100% of our

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principles of action to the pursuit of “satisfaction” at the level of “I” as long as we are truly rational and grounded in realism. But “academic knowledge,” grounded in realism, can reveal for itself (in a self-reliant way) the truly serious issues and the serious significance of free play and creation in general through an “enclosure” as the “comprehensive posture” given in this chapter. Through this, we can liberate “academic knowledge” (from all other domination). And only through this, we believe, can “I” also liberate “life” (toward serious and earnest play and creation).36 Acknowledgements We express our gratitude to Professor Yutaka Tanaka, Professor Emeritus at Sophia University, for his extensive teachings on realism and process philosophy, Platonic “dialogue,” logic of the “place,” and “creative experience.” We are also thankful to Professor Haruo Murata, Professor Emeritus at St. Andrew’s University, for his valuable suggestions on Whitehead’s organic theory of “science,” corporate civilization, and the fundamental nature of “questioning.” Furthermore, we owe a great deal to Professor Eiko Hanaoka, Professor Emeritus at Osaka Prefecture University, for her writings and insightful comments on relating the dynamic “place” in this paper to Kantian practical reason. The initial draft of this paper was created through fruitful discussions at the Osaka University Methodology Study Group during the winter of 2021 and spring of 2022. We would like to express our heartfelt appreciation to all the participants. Although we cannot mention everyone by name, we would like to particularly acknowledge the contributions of Professor Kota Fukui (Osaka University), who played a vital role in developing the ideas in this study, including the “construction of place” and the “spiral” in “enclosure,” and Professor Hiromi Murakami (Kyoto City University of Arts), who provided detailed feedback and criticism from the beginning to the completion of this research. (This work was supported by JSPS KAKENHI Grant Number JP20H03912.)

References Badiou, A. (1992). Conditions. Editions du Seuil (English Translation: Conditions, by Steven Corcoran, Continuum Publishing, New York (2008)). Bhaskar, R. (1997). A realist theory of science. Verso Books. Davidson, D. (2001). Inquiries into truth and interpretation (2nd Ed.). Clarendon Press. Dilworth, D. A. (1987). Nishida kitaro last writings: Nothingness and the religious worldview. University of Hawaii Press. Durkheim, E. (1955). Pragmatisme et sociologie. Cours inédit prononcé à La Sorbonne en 1913–1914 et restitué par Armand Cuvillier d’aprˆˆc3ˆˆa8s, J. Vrin (English Translation: Pragmatism and sociology, 1983, by J. C. Whitehouse, Cambridge University Press, New York). Ferraris, M. (2015). New realism: A short introduction. In Speculations, VI. F. Gironi (Ed.) (pp. 141–164). Punctum Books.

36 Ultimately, what lies behind this is the difference between the “constraints” of each material in a positive constitution based on materials and what is internal to them and the complication and diversification of connections that occur when the structures created by these various “constraints” enter into new external relationships. The former seeks universality in accordance with the inner essence seen, whereas the latter brings a richness of “knowledge,” a possibility of development that can be specific and therefore practical. True academic knowledge must be able to give this a proper classification as the “inevitable” necessity of “play” (or the “inevitable ‘thrown in’ with throwing” accompanied by “I”).

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15, 77–104 (Published in Japanese, Creativity of Absolute Nothingness and Contradictory Self-Identity — From Nishida’s Philosophy to Historical Process Theology). Taylor, C. (1989). Sources of the self: The making of the modern identity. Harvard University Press. Urai, K. (2010). Fixed points and economic equilibria. Series of Mathematical Economics and Game Theory (Vol. 5). World Scientific Publishing Company. Whitehead, A. N. (1927). Science and the modern world. Cambridge University Press (Lowell Lectures 1925, First English Edition 1926, New Impression 1927, Reprinted 1928, 1929). Whitehead, A. N. (1929). Process and reality Corrected edn. The Free Press (Gifford lectures 192728, The Free Press 1978, originally published in 1929). Wittgenstein, L. (1953). Philosophische untersuchungen. Blackwell.

Part II

Reality and Realism for Various Fields of Social Sciences

Chapter 6

The Design of Democracy from a Market Point of View Ryo-Ichi Nagahisa

Abstract Just as the market can successfully solve the resource allocation problem using the idea of information reduction, we consider how democracy can have the same information-reduction function as the market in solving problems in the political realm. From an information point of view, we revisit several theories and practices in the study of social choice; the axiomatization of the Walras rule using local independence, the Condorcet jury theorem, majority voting with single-peaked preferences, reducing the number of agendas in Arrow’s social welfare functions, and the practice of implementing school choice, an attempt at market design. This clarifies the importance of reducing information in the democratic debate.

6.1

Introduction

The readers may associate the title with “economics imperialism,” assuming something like the effect of logrolling or policies based on a cost-benefit analysis. However, this study has nothing to do with that kind of matter. We seek the counterpart of the “invisible hand” of market competition in the political process. The invisible hand, a metaphor for the price mechanism, adjusts supply and demand and reaches an optimal state automatically. This laissez-faire doctrine of Adam Smith is now sublimated to the fundamental theorem of welfare economics, the most significant result in modern economics, asserting that perfect competition can attain Pareto optimal allocations. The key to the success of the market mechanism lies in the economization of information. In market transactions, relative prices contain all the information traders need, equaling the marginal rates of substitutions (MRS) in equilibria. The marginal rate between two goods is the exchange ratio at which sellers and buyers are willing to trade them. What the sellers and buyers must know is only their MRS. The market mechanism drives with only each trader’s MRS, achieving the Pareto optimal R.-I. Nagahisa (✉) Kansai University, Suita, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_6

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allocations. No one needs to think about the future of society, let alone the wellbeing of others. By contrast, people seem to require more virtues and qualifications for political participation. As occasionally said, they must deliberate on the common good, acquire practical judgment, share in self-government, and care for the community and its fate, as if the people participated in the democratic politics of ancient Greece.1 However, from an information perspective, this style of political participation requires more information than market transactions, which is an overload for many. This study considers a method of reducing such information load in democracy. First, we revisit some results of social choice theory; the axiomatization of the Walras rule using local independence, the jury theorem, majority voting with single-peaked preferences, and the implication of reducing the number of agendas in the context of Arrow’s impossibility theorem. At first glance, these seem unconnected. However, from an informational point of view, we point out that they share the same message, suggesting methods to compress relevant information concerning political and economic problems, reduce complexities, and facilitate people’s choices and decisions. Next, we examine the practice of school choice in Boston in 2005, a real-world example of a successful case of market design. We demonstrate that the success is due to reducing information in democratic decision-making. We point out that the market design deals with the resource allocation problems of merit goods. The merit goods, introduced by Musgrave (1959), are judged supplying by markets alone as undesirable for ethical and other reasons. Medical care and education represent typical examples. We argue that the implementation of market design owes to a tacit agreement among social members that those merit goods, initially not assigned by markets, allow handling in the market. Not sure when and where they agreed with it, but it does exist. The remainder of this chapter is organized as follows. Sections 6.2–6.5 revisit a few theoretical results on social choice. Section 6.6 reviews the practice of schoolchoice problems in Boston. We discuss their implications in democratic debates in Sect. 6.7, concluding in Sect. 6.8. The appendix provides an additional commentary on a few technical issues.

6.2

The Axiomatization of the Walras Rule with Local Independence

We consider a pure exchange economy with a finite number of agents and goods. Each agent owns an initial endowment of goods, exchanging them according to the market rules. Under the given prices, they sell what they do not need and buy what

1 Aristotle (1946) identified politics with education in modern times. He believed that participation in politics was the only way to make a human a human. Refer also to Sandel (2009) for details.

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they want with the money. The transactions are complete if supply and demand are equal for all goods. Otherwise, prices are revised. For example, if the agents want to sell more (less) apples than they want to buy, apples go down (go up) in price. The trading of all goods, not just apples, will be canceled and restarted from the beginning at the new price. Agents redo their choices at the revised prices. Subsequently, the market compares supply and demand for every good. The process continues until demand and supply are equal for all goods. The transaction completes when the process terminates. The resource allocations attained through this procedure are called Walrasian allocations. The above description of market transactions is typical in microeconomics textbooks. Nagahisa and Suh (1995) interpreted market transactions as a social choice rule, the counterpart to Arrow’s (1963) social welfare function.2 The assumptions are standard: each agent has strictly monotonic, convex, and smooth preferences with a type of interiority condition defined on the same consumption set, the non-negative orthant of the Euclidean space, and the initial endowments remain unchanged. A social choice rule is a mapping that associates a nonempty set of feasible allocations with each profile. The Walras rule is one of the rules that associates the set of Walrasian allocations with each profile. Although countless rules are logically possible, only the Walras rule satisfies the three normative requirements below. • Pareto optimality (PO): The rule selects the Pareto optimal allocations. • Individual rationality (IR): It does not make each agent worse off than he is with the initial endowment. • Local Independence (LI): The rule uses only local information of agents’ preferences represented by the marginal rates of substitution (MRS). If each agent’s MRS at a feasible allocation is equal across two profiles, then whether the rule selects it or not must be the same for the two profiles. MRS is information about individual preferences, but not the entirety of that. It is the exchange ratio of goods at which they agree to trade. Entering large amounts of information beyond the MRS overloads resource allocation issues. Not to mention inputting more non-welfare characteristics, such as agents’ personalities and others. The market is an institutional device reducing information load in solving economic problems. The axiomatization of the Walras rule, Nagahisa and Suh (1995), shows that, in addition to this, if we wish to attain good performance (PO) with incentive conditions for participation (IR), we have no other way but to support the market transactions. Here is a question: In politics, is it possible to reduce the amount of information input as much as the markets do in the economic realm? At first glance, nothing that plays the same role as the market in the economy seems to exist in politics. However,

Refer also to Nagahisa (1991) for the first study addressing the axiomatic characterization of the Walras rule.

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in the sequential subsections, we demonstrate that the study of social choice and welfare economics suggests its possibility and importance.

6.3

The Jury Theorem

The Condorcet jury theorem, the jury theorem hereafter, shows the accuracy of the group average and majority rule judgments of Condorcet’s (1785) work.3 Consider group members answering the same two-option question, one false and one true. The simplest version of this theorem requires three assumptions below. • Each member can answer correctly with the probability of exceeding 50%. • That probability is equal across all members. • All states are stochastically independent; each member answers uninfluenced by other members’ answers. Under these assumptions, the jury theorem claims that as the group size becomes more extensive, the probability that the majority vote will make the correct decision increases to nearly 100%. The appendix shows that three-person majority voting makes a better decision than one-person voting. How fast 100% reaches depends on the probability of each voter answering correctly: the more correctly answering, the faster. The theorem still holds if some members are not more than 50% likely to be correct, and does if some members answer, influenced by others. The jury theorem is a more specific version of the law of large numbers, which states that as the sample size grows, its mean gets closer to the population mean, the average of the whole population. We illustrate the jury theorem by using this law. Let t be the probability of answering correctly, 0.5 < t < 1. In the case of a few members, the majority decision occasionally fails. Suppose there are five members. It is likely to happen that only two of the members answer correctly. Then, the majority decision is incorrect. However, as the group size increases, the probability of more than half members answering correctly is close to 100%. Thus, the majority vote can make the right decision by almost 100%. Because of the law of large numbers, the mean of the sample approaches t. List and Goodin (2001) generalize the jury theorem with more than two options. Assuming that each member is more likely to vote for the best option than any other option, the probability of the best option winning plurality increases with the size of the group. The jury theorem suggests that deliberation, regarded as an indispensable part of democracy, does not necessarily make correct decisions. If members communicate with each other and seek additional information, the polarization effect would occasionally prevail, which traps the members into a spiral of self-affirmative

3

The study of the jury theorem begins with Black’s (1958) reassessment. Refer to Boland (1989), Ladha (1992), Fey (2003), and Nitzan (2010) for the modern treatment of the theorem. Sunstein and Hestie (2015) provide a commentary for the general public.

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discussions that make the majority decision even more biased, compared with the case of judging independently. The polarization effect causes t to decrease below 0.5. Consequently, the converse of the jury theorem holds. The probability that the majority voting makes a correct decision decreases toward 0% as the group size expands. Throwing a die ensures that the probability of answering the correct decision is not less than 0.5. Thus, when it falls below 0.5, there might be specific reasons for this. These occur in most cases when trapped by prejudice, with poor information processing, incompetence, or hard questions requiring specialized knowledge. Then, deliberation before the majority vote is useless; on the contrary, it will worsen things. In contrast, empirical studies report that the law of large numbers works well for problems of guessing the number of beans in a jar or estimating the weight of a prize ox; the average of the answers is very close to the correct value. These problems are structurally simple and do not require deliberation. Thus, each member is not concerned about whether his vote is decisive and votes without being influenced by another member’s vote. The probability of each member being correct is mutually unrelated, and polarization rarely occurs. The above considerations lead to the following conclusions. For the majority vote to work correctly, the issue to be addressed must be simplified without deliberation so that everyone can make their own decisions. However, this conclusion raises a new question. If so, what is the role of deliberative debate? We will discuss the details in the sequential sections but only mention the following points: For democratic solutions to public problems, deliberation follows the two steps below. The first step determines whether the problem should be solved based only on people’s preferences or whether these alone are insufficient and should be solved using more objective criteria and non-welfare information. Various solutions are possible, depending on the combination ratio of preference and non-welfare information. At one extreme are problems based only on individual preferences, such as deciding where to go for the next party. It is sufficient to vote based on the participants’ opinions, although the problem of how to aggregate those opinions (the social choice problem) remains. At the other extreme is the problem of making decisions based solely on non-welfare information. Jury trials represent a typical example of this case. The jury cannot judge by their preference. Voting based on feelings of wanting or not wanting to convict the defendant of the guilty is not permitted. Fact judgments only. No value judgments are necessary. Of course, jury trials skep this step, as it is already solved. There are problems to be solved by combining both preference and non-welfare information. An example is infection control. Economic activity and infection control are incompatible. We must consider the extent to which we can meet the needs of people who want to promote economic activities (preference information) while using scientific knowledge of infection control (non-welfare information). The second step determines what to use for preference information and what to use for non-welfare information. Each voter polls according to their preferences. As

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Table 6.1 This configuration of preferences causes the voting paradox

Voter 1 Voter 2 Voter 3

x y z

y z x

z x y

Table 6.2 A single-peaked preferences

Voter 1 Voter 2 Voter 3

y x z

x y x

z z y

discussed in Sect. 6.2, the market mechanism does not use all the information contained in preferences but only a small amount of preference information, the marginal rate of substitution. Deliberation is the counterpart of the market mechanism, playing the same role in political issues as market transactions. Through the debate, voters realize an axis of the points at issue, which List (2002) calls the “structuring dimension.” This dimension causes individuals to prefer various opinions on that axis, from approval to disagreement. We will see the details in the following subsections.

6.4

Single-Peaked Preferences and Meta-Agreement

It is a natural assumption that a person does not have cyclic preference. If one prefers x to y and y to z, he usually prefers x to z, not z to x. However, the social preference induced by the majority vote is not necessarily so. Suppose there are three voters. Voter 1 prefers x to y and y to z, Voter 2 prefers y to z and z to x, and Voter 3 prefers z to x and x to y. See Table 6.1, which places the alternatives from left to right, following each voter’s preference. Suppose that in every head-to-head election, voters poll according to their preferences. Consider x and y. Voters 1 and 3 vote for x, whereas Voter 2 votes for y. Consequently, x wins, interpreted as x being more socially desirable than y. Next, consider a vote between y and z. Voters 1 and 2 vote for y, whereas Voter 3 votes for z. Consequently, y wins, interpreted as y being more socially desirable than z. Finally, consider a vote between z and x. Voters 2 and 3 vote for z, whereas Voter 1 votes for x. Consequently, z wins, interpreted as z being more socially desirable than x. Thus, this social preference has a cycle. This fallacy of majority voting, called Condorcet’s (1785) voting paradox, the voting paradox hereafter, shows that the majority decision is not always practical, falling into undecidable situations in social decisions. The idea of single-peaked preferences resolves this paradox. See Table 6.2, which illustrates the preferences that differ from those in Table 6.1. Let us line up the three alternatives on an axis, with y on the left, x on the middle, and z on the right. See Table 6.3, an illustration of the preferences in Table 6.2 using this axis. Voter 1 prefers y the most; hence, it has three scores. Because x is second

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Table 6.3 An image of single-peakedness Voter 1 ● ● ● y

Voter 2

● ● x

● z

● ● y

Voter 3 ● ● ● x

● z

● y

● ● x

● ● ● z

Each voter’s preference shapes a mountain with a single peak

only to y, it obtains two scores. Because z is the least preferred, it gets only one score. The scores pile up on each alternative, and a mountain with a single peak y forms. Similarly, the preference of Voter 2 shapes a mountain with a single peak, x. The same is for Voter 3: a mountain with a single peak z. We say that preferences are single-peaked if they all form mountains with single peaks on an identical axis. Those in Table 6.3 satisfy single-peakedness if we line up alternatives by y, x, and z from left to right. In contrast, those in Table 6.1 are not single-peaked as there exists no axis on which every voter’s preference forms a mountain with a single peak. Note that no matter what axis we select, one of the three alternatives must place in the middle, and someone prefers it the least. Thus, his preference shapes a mountain with two peaks. Single-peakedness requires the existence of an axis arranging alternatives such that each voter has the most preferred one and prefers less and less for other options as they move away from it in either direction. If such an axis exists, we say that preferences are single-peaked.4 If preferences are single-peaked, the best alternative of the median voter wins in the majority vote. The definition of the median voter is as follows: Take an order of alternatives arbitrarily. According to that order, we arrange voters in an order in which their best options situate. The voter placed in the center of that order is called the median voter.5 In Table 6.3, the voters line up according to Voter 1, Voter 2, and Voter 3. Thus, Voter 2 is the median voter, and his best alternative is x, which wins the vote. Refer to the appendix, which shows three voters and three alternatives case. This result holds for any number of alternatives and voters.6 A typical criticism of this resolution is that it violates freedom of expression, a fundamental right to participate in politics. If the voters’ preferences are those in Table 6.1, at least one of the three is obliged to withdraw their preferences in the 4

Note that single-peakedness becomes non-vacuous only when we apply the condition to several individuals’ cases. In the case of a single individual, it holds vacuously, arranging the options according to the preference. 5 Here, we assume that the number of voters is odd. Note also that who becomes the median voter depends on the order of the alternatives. 6 Refer to Black (1958) and Sen (1970) for the general case. Black (1948) showed the resolution of the voting paradox with the idea of single-peaked preferences.

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gun

x

x

y

z z

butter Fig. 6.1 The indifference curve passes through x*, y, and z*. Thus, it cannot satisfy convexity of preference, a standard assumption of consumer theory

majority vote. Forcing the withdrawal of preferences violates the freedom to express one’s ideas. Changing the options to be voted on while keeping the individual preferences unchanged avoids this criticism. See Fig. 6.1, which illustrates a country’s production possibility curve, “gun,” representing military spending, on the vertical axis and “butter,” representing civilian spending, on the horizontal axis. Because of the limited resources, society cannot produce guns and butter as much as they like. Only the inside area of the production possibility curve indicates possible combinations of guns and butter the society can produce. Any combination of the outside cannot attain because of the lack of resources. Assuming diminishing returns, a standard assumption of production, the curve bows outward. The country must decide on its military and civilian spending through elections. Each citizen has a preference concerning the combination of gun and butter. These preferences, defined on the entire set of combinations, are not single-peaked, as every citizen prefers more to less, and hence with no bliss point. However, we can make this if three points are on the production possibility curve. Let us demonstrate this for the three voter cases. Take three points, x, y, and z, on the curve in Fig. 6.1. To simplify the discussion, we assume that no voters have an indifferent preference for the three. As indifference curves bow inward strictly because of a standard assumption in consumer theory, no voter prefers y the least. We show this in

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Fig. 6.1. Take two segments (dotted lines in the figure), one connecting x and the origin and the other connecting z and the origin. Suppose, on the contrary, that a voter prefers y the least of the three. Then there exists a point, denoted x* in the figure, on the segment connecting x and the origin, which is indifferent to y for the voter. Similarly, we have a point, denoted z* in the figure, on the segment connecting z and the origin, which is indifferent to y for the voter. Thus, the voter’s indifference curve passing through y must pass through x* and z*. Consequently, that curve bows inward and contradicts the convexity of preference.7 Thus, placing y on the middle makes these preferences single-peaked. As far as the three points are on the curve, we can find an ordering of those points that makes preferences single-peaked. Note also that single-peakedness depends on the shape of the production possibility curve. It does not hold if the curve bows inward. However, this case never happens as long as the constant or decreasing returns in production prevail. Choosing the options to be voted on is crucial to avoid the voting paradox. See Fig. 6.2. Suppose that w, y, and z are options for the vote. Despite the infeasibility of attaining w because of the limited resources available, we often see in elections that parties make campaign pledges like that, promising the achievement of high civilian and military spending. This case invites the voting paradox, as illustrated in Fig. 6.2. In the case of a single political issue, we can express preferences on a single dimension with a left-right political spectrum. Expenditure by a town on maintaining parks is an example. Each voter has a most favorable spending level, and the farther away from that most preferred, the less they like. The preferences are single-peaked on the dimension. However, we often face making choices in the multidimensional set of options, like the “gun and butter” example we presented. Political candidates must clarify their stand concerning a wide range of social and political problems such as child care, unemployment, defense, and crime, which are unconnected in most cases. In this case, not proposing issues to be voted on correctly results in the undecidability of the majority vote.8 How to select the options to be voted on, a new question ignored for a long time in the study of social choice, is closely related to the “meta-agreement” proposed by List (2002). Meta-agreement is an agreement about a dimension on which political agendas can line up, not they agree about the preference over them. List argues that meta-agreement makes preferences single-peaked. According to List’s terms, specifying alternatives to vote on requires conceptualizing the dimensions of the issues behind the choices. Let us illustrate this using the example of guns and butter. Through democratic deliberation, people come to realize the following:

7

Note that continuity and monotonicity of preference, standard assumptions in consumer theory, are used implicitly in the proof. 8 Refer to Kramer (1973) and Plott (1967) for more details on the revival of the voting paradox with the multidimensional case.

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w

y

Voter 1 z Voter 2 Voter 3 butter

Fig. 6.2 The dotted, solid, and dashed curve represents Voter 1’s, Voter 2’s, and Voter 3’s indifference curve, respectively. All pass through y. Voter 1 prefers z the least, Voter 2 does y the least, whereas Voter 3 likes w the least. Thus, no arranging of the three alternatives making the preferences single-peaked exists

• Constraints on available resources. • No waste in the use of resources. • A trade-off between civilian and military use: If we make more of one, we have to make less of the other. With these three considerations, people agree that the social choice problem should lie on the production possibility curve. There remain differences of opinion as to the best alternative on the production possibility curve. However, there is a consensus, a meta-agreement that they vote on agendas that lie on the curve.9 Singlepeaked preferences hold via meta-agreement. In reality, things do not always go well like this. As mentioned before, the political campaigns promising high welfare and armaments distract people from the fact that the resource available is limited. As a result, meta-agreement will not hold, and preferences are not single-peaked. Thus, the content of deliberative democracy is the key.

9

The definition of meta-agreement requires more; lining up alternatives on a structured dimension on which people have single-peaked preferences. Refer to List (2002) for details.

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Using the database from Deliberative Polls, List et al. (2013) find that deliberation makes issues clear and people’s preferences single-peaked. For example, suppose we are discussing using coal, natural gas, or wind power as raw materials for power generation. There are three choices, but just symbols with no meaning at first. However, people grasp meaning through deliberative discussion. For example, coal is cheap but burdens the environment. Natural gas is slightly expensive but good for the environment. Wind power is expensive; however, it is best for the environment. People have come to understand that the crux of the problem is a tradeoff between price and the environment. The alternatives line up in order of lower price (in descending order of environmental load): coal comes first, natural gas second, and wind power last. This axis makes people’s preferences single-peaked. Those who support coal choose the principle that values price, and those who support wind power prioritize the environment. And those who support natural gas choose this compromise. There is no agreement on the best power generation. However, they agree that “the issue is which one should give priority in the tradeoff between price and environment.” Deliberation establishes meta-agreement, and the voting paradox never occurs.

6.5

The Number of Alternatives

A social welfare function, introduced by Arrow (1963), determines social preferences, collecting individual preferences, following the five conditions below. Alternatives x and y are arbitrary, in the third and subsequent conditions. • Universal Domain (UD): The domain consists of all configurations of voters’ rational (complete and transitive) preferences. • Collective Rationality (CR): The social preference is rational. • Binary Independence (BI): The social preference between x and y must be determined only by the voters’ preferences between x and y. • Pareto Unanimity (PU): If every voter prefers x to y, then x is more socially desirable than y. • Nondictatorship (ND): The social welfare function must not allow the existence of a dictator, where a voter is a dictator if x becomes more socially desirable than y whenever he prefers x to y. No remark is necessary for CR, PU, and ND, as the meanings are obvious. UD implies that voters can express any rational preference, regardless of what (rational) preferences others have. Thus, this condition reflects the idea of freedom of speech. BI is the same type of condition as the local independence described in Sect. 6.2. It requires we determine the social preference between x and y with the input of a minimum amount of information. The individual evaluations concerning the third alternative must not influence that decision.

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Despite each reflecting a minimal requirement of democratic decision-making, Arrow proved that there exists no social welfare function satisfying all. This result, now called Arrow’s impossibility theorem, created many related studies. Majority voting is a social welfare function, declaring x is more socially desirable than y if more voters prefer x to y than voters who prefer y to x. If equal, it declares x is as socially desirable as y. When interpreted in the context of Arrow’s impossibility theorem, majority voting lacks CR, despite the satisfaction of all other conditions. CR requires that if x is more socially desirable than y, and y is more socially desirable than z, then x must be more socially desirable than z. However, the voting paradox illustrates this violation. The device of single-peaked preferences makes the majority vote satisfy CR in exchange for abandoning UD. In the previous subsection, we argued that this transaction makes sense. Arrow’s impossibility theorem does not hold if there are only two alternatives.10 In this case, the voting paradox never occurs, and the majority voting rule is a desirable social welfare function satisfying all conditions. Restricting the number of options to be voted on into two, having paid little attention to so far in the literature, seems to be a good strategy for democratic decision-making, avoiding Arrow’s dilemma. We show an example. Let x, y, and z be alternatives. If x and y are very similar from various viewpoints, excluding one is deemed legitimate. By considering the selection method of voting options in terms of types and numbers, majority voting, discarded earlier in the study of social choice, would be reassessed.

6.6

School Choice

Since the introduction of the Boston student assignment mechanism in 1999, which allows parents to choose the school that their child will attend, Boston Public Schools (BPS) have suffered complaints from students and their parents. One of the main problems is that they are obliged to take strategic behavior when revealing their preferences for schools. This system assigns students based on their preferences for schools. Of course, many students apply for popular schools, so it may not always be what they want. For example, suppose that your favorite (School A) has many applicants and is unlikely to enroll and that you can attend the second preferred school (School B) because of not so many applicants. Then, you will feel the temptation to submit that School B is the first place and School A the second. Many applicants made the such false telling of preference. Moreover, the BPS officially admitted this, encouraging applicants to take such strategic actions, which placed a psychological burden on many students, not enabling them to enroll in the schools they desired.11

10 11

Refer to Arrow (1963) for details. Refer to Abdulkadiroğlu et al. (2005) for further details on the circumstances around this.

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If agents cannot benefit from lying, we say this mechanism satisfies strategy proofness. The Boston student assignment mechanism violates this property. The BPS reformed the conventional method in 2005 and adopted a new one, called the deferred acceptance mechanism, the DA mechanism hereafter, advocated by Abdulkadiroğlu and Sönmez (2003). The DA mechanism is a modified version of the original proposed by Gale and Shapley (1962) for college admission problems. A difference is that in college admission, schools have preferences for students, but not in school choice. However, in school choice, schools have priorities over students prescribed by officials, such as the priority of students with siblings and in the walk zone over other students, interpreted as preferences. This mechanism goes on with the steps below. Step 1. Students apply to the school of their choice. Schools select applicants up to their maximum capacity. However, this acceptance is tentative and not the final decision. Step 2. Students who have not received acceptance will apply for new schools. However, they cannot apply to the school they got rejected. Schools compare new applicants with those given tentative admissions and reselect applicants. The process ends when all applicants have received tentative acceptance from any school. At this point, tentative becomes official, and all applicants enroll in schools. The DA mechanism satisfies strategy proofness. It is advantageous to apply earlier to the school you like. Applicants reported their preferences for the schools, and strategic behaviors were almost extinct. In addition, this mechanism meets the condition of no justified envy. Suppose you prefer School B to School A. However, you received acceptance from School A, not School B. If School B has a vacancy or accepts your friend even though B prioritizes you over your friend, you will resent the choice. Your feelings have valid claims: justified envy. Matching with no justified envy is desirable, and the DA mechanism ensures this. Abdulkadiroğlu and Sönmez (2003) proposed another mechanism, called the top trading cycle mechanism, the TTC mechanism hereafter, which proceeds as follows. Step 1. Each student chooses their favorite school, and each school chooses their favorite student. By noting that the number of students and schools is finite, at least one cycle exists, such as the one below. i1 → s1 → i2 → s2 → i3 → s3 → ⋯ → ik → sk → i1 Here, student i1 chooses school s1, s1 chooses student i2,...., student ik chooses school sk, and sk chooses student i1. No overlapping exists in the cycle. Schools accept students according to the arrows: s1 accepts i1,..., s2 accepts i2,. . ., and sk accepts ik.

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Step 2. The matching in Step 1 repeats for students with no acceptance and schools with vacancies. The process continues until all the students receive acceptance. The TCC mechanism is a variant of what Abdulkadiroğlu and Sönmez (1999) proposed in a model of house allocation with existing tenants, where houses are mere objects to be chosen by tenants, not having preferences over those tenants.12 As well as the DA mechanism, the TTC mechanism satisfies strategy proofness. Instead of violating the condition of no justified envy, it achieves the Pareto efficient matching for all cases, which the DA mechanism cannot. Both mechanisms are strategy-proof, so which one to be selected depends on whether the policymaker prioritizes the condition of no justified envy or Pareto efficiency. The BPS valued the former and adopted the DA mechanism, whereas schools in Columbus made the opposite decision and adopted the TTC mechanism. However, other district-specific conditions, priority clauses such as sibling or walk zones, also seem to have influenced the selection.13 We provide a brief comment on strategy proofness. “A mechanism satisfies strategy-proofness” is a fact. However, “Students understand that fact” is another story. No matter how much we persuade not to worry about the strategic aspect, applicants may not believe it and take strategic actions. Such concerns are unnecessary with either mechanism. In the DA mechanism, it is advantageous for students to express their preferences honestly as long as they are tentatively accepted. In the TTC mechanism, if a student points to the second or lower school, he (or she) must enroll in that school when a cycle including oneself forms, which is disadvantageous. Students can guess this easily. Today, we regard resolving the school choice problem in BPS as a vivid success story in market design. In the next section, we take a closer look at this success from the standpoint of our study, that is, from an information reduction point of view in democracy.

6.7

Presence or Absence of Social Consent to Freedom of Choice

The market mechanism is responsible for assigning private goods, whereas we determine the public provision based on the majority voting result. By contrast, the goods dealt with in market design are called merit goods, introduced by Musgrave (1959), which are goods that governments view as essential for all.

The origin of that mechanism traces back further, reaching Gale’s “top trading cycles mechanism” described in Shapley and Scarf (1974). 13 Refer to Abulkadiruğlu and Sönmez (2003) for details. 12

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Although these are providable through market transactions, it is judged as undesirable from a social or ethical point of view that we leave all provisions to the markets. Education, the object of school choice, is a typical example of merit goods. Health care also represents merit goods. If we leave everything of education and health care up to market transactions, the poor cannot enjoy a minimum standard of living. The question arises as to why educational services, a type of merit goods, which should not be supplied solely by the market, can now be supplied by the DA mechanism that imitates the market. The success of BPS lies in an obedient acceptance of the proposal by experts. However, more fundamentally, it is due to a social agreement that students should have the right to choose their schools, achieved around 1999, the year of the introduction of the free choice system, which led to the adoption of the DA mechanism. The United States, a country with long traditions of libertarianism, may take it for granted that students choose schools of their will. However, what would happen if the same proposal were present in Japan, a country tending to place equality and cooperation over liberty? An objection likely arises, asserting that competition between schools creates both popular and unpopular schools, leading to disparities. No matter how much experts stress the advantage of this method from the strategy-proof point of view, citizens would not be able to appreciate the value because they did not struggle with that problem as citizens in Boston did. Preceding which of the school choice mechanisms is desirable, whether or not to leave school choice to the individual’s freedom would emerge as a political agenda. It will be difficult for agencies to collect public opinion on this issue and lead to the correct decisions. The problem has too numerous aspects to consider. The success of the BPS school choice is due to a two-step discussion. The first step was identifying the disputed points. The BPS pinned down the disputed point as the question of whether or not we leave the school choice to the children’s freedom. Discussions in this dimension might not have been aware, as the spirit of libertarianism has been rooted in America, as mentioned above. Thus, they would have skipped this step. Despite this unexplicitness, this step certainly exists. The debate would have been confused if pulled by various related matters, such as disparities in competition between schools and the risk of segregation due to racial discrimination peculiar to the United States. After many twists and turns, the BPS steered the discussion in the correct direction. Of course, merit goods vary across countries. We Japanese adopt a universal health insurance system in which medical care is equally provided to all and treated as merit goods. However, in the United States, the installation of this system is criticized as a socialist policy, which would be evidence that they regard medical care as a private good.14 Which is correct does not matter here. In the case of merit goods, the success of the market design depends on the first step.

14

Even in the United States, there are concerns about entrusting every supply of merit goods to the markets. Sandel’s (2012) criticism of free-market transactions from the political philosophy view can be read as such, despite no remarks on merit goods.

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The first step must also have existed in the case of private and public goods, although it passed without awareness in history. The idea of leaving the allocation of goods to the free choice of individuals is not very old. There are also times and societies in which custom and divine power allocate goods among people. The concept of public goods does not appear in Adam Smith’s Wealth of Nations, the oldest economic book. At some point in history, we had accepted the idea of allocating private and public goods based on the free will of individuals. Perhaps, it is somewhere in an era in which the claim of individual freedom and rights had a lot of influence. The expansion of individual rights has formed an axis over which society has made the pros and cons arguments fight. Because of this axis, issues became simplified, and collective decision-making became possible. After achieving the social agreement that we leave allocations to the free choices of individuals in the first step, the second step begins. As stated in the previous sections, the matter at this step is what information suffices for each resource allocation problem. MRS (Sect. 6.2), single-peaked preferences via meta-agreement (Sect. 6.4), and reducing the number of alternatives (Sect. 6.5) are the answers, and truth-telling of preferences are also the answers for the case of school choice (Sect. 6.6). Regarding the jury theorem (Sect. 6.3), each jury uses objective judgments instead of preferences. Note that these judgments are also informationally economized. Independence from others’ opinions, a crucial assumption of the jury theorem, implies that each must not gather those opinions. As for the school choice problem in Boston, the decision at the second step that the only information needed is the children’s preferences for schools directly led to the unanimous approval of the DA mechanism, the satisfactory resolution. Strategic behaviors were rampant, and people were desperate for measures against them. Therefore, the DA mechanism got unanimous acceptance. It is the same as a teacher showing the correct answer to students who have suffered from the test. Despite the elusiveness of the first step, we must distinguish it from the second. As seen in the allocation problems of private and public goods, this step would pass away without awareness in most cases. However, as for merit goods such as school choice, it does not. Coping with both simultaneously is not a good strategy, failing to form the axis in the debate. In the second step, we should not discuss based only on preferences. We must classify agendas into what we can cope with based only on fact judgments and otherwise. Jury trials represent the case of being able to do so. For such cases, the agreement to decide on by criteria other than preference would reach. If we decide it is impossible, we invoke value judgments. Thus, the possibility of decisions by vote emerges. However, what is important here is that we determine the axis of the issue over which we discuss matters. The majority voting with single-peaked preferences represents this aspect. Those preferences reduce to ones on this axis, ranging from total approval to total disagreement, though logically defined over everything in the world.

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Conclusion

Deliberative democracy must design institutional conditions. Starting from the analogy of the market mechanism, we have explained this using a wide range of discussions of social choice from the jury theorem to school choice. This study does not deny the importance of publicness, which many political philosophers stress. As Sandel (2009) and Arendt (1958) asserted, publicness requires independent political involvement by individual citizens, the bearers of deliberative democracy. The institutional analysis based on the study of social choice serves to make their proactive activities in democracy possible. Acknowledgements We thank Prof. Toyotaka Sakai (Keio University) for his introduction to the related literature. We also thank Editage (www.editage.com) for English language editing.

Appendix • If t > 0.5, then the probability of the three-person majority vote making a correct decision is higher than that of one person. Proof The probability that the majority vote makes the correct decision is t 3 þ 3t 2 ð1 - t Þ: Here, t3 and 3t2(1-t) correspond to the probability that all voters make the correct decision and that of two of them. The computation below completes the proof. t 3 þ 3t 2 ð1 - t Þ - t = - t ð2t - 1Þðt - 1Þ > 0: • Consider three voters and three alternatives. If preferences are single-peaked, then the best alternative of the median voter wins the majority vote. Proof Let x, y, and z be alternatives. Without loss of generality, we assume that placing x to the left, y in the middle, and z to the right makes the preferences singlepeaked. If two voters share the same peak, either becomes the median voter, and the alternative with that peak wins, which completes the proof. Thus, we assume that different voters have different peaks. Without loss of generality, Voter 1, 2, and 3 have x, y, and z as their peak. The two cases below occur depending on which of x or z is ranked second by Voter 2:

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Voter 1 ● ● ● x

Voter 2

● ● y

● z

● ● x

Voter 3 ● ● ● y

● z

● x

● ● y

● ● ● z

● ● y

● ● ● z

or Voter 1 ● ● ● x

Voter 2

● ● y

● z

● x

Voter 3 ● ● ● y

● ● z

● x

In either case, Voter 2 is the median voter, and y wins, completing the proof.

References Abdulkadiroğlu, A., Parag, A. P., Roth, A. E., & Sönmez, T. (2005). The Boston public school match. The American Economic Review, 95(2), 368–371. Abdulkadiroğlu, A., & Sönmez, T. (1999). House allocation with existing tenants. Journal of Economic Theory, 88(2), 233–260. Abdulkadiroğlu, A., & Sönmez, T. (2003). School choice: A mechanism design approach. American Economic Review, 93(3), 729–747. Arendt, H. (1958). The human condition. University of Chicago Press. Aristotle. (1946). The politics of Aristotle (E. Barker, Ed. and Trans.). Clarendon Press. Arrow, K. J. (1963). Social choice and individual values (2nd ed.). Wiley. Black, D. (1948). On the rationale of group decision making. Journal of Political Economy, 56(1), 23–34. Black, D. (1958). The theory of committees and elections. Cambridge University Press. Boland, P. J. (1989). Majority systems and the Condorcet jury theorem. The Statistician, 38(3), 181–189. de Condorcet, M. J. A. (1785). Essai sur l’application de l’analyse à la probabilité des décisions rendues à la pluralité des voix. L’Imprimerie royale. Fey, M. (2003). A note on the Condorcet jury theorem with supermajority rules. Social Choice and Welfare, 20(1), 27–32. Gale, D., & Shapley, L. S. (1962). College admissions and the stability of marriage. American Mathematical Monthly, 69(1), 9–15. Kramer, G. H. (1973). On a class of equilibrium conditions for majority rule. Econometrica, 41(2), 285–297. Ladha, K. K. (1992). The Condorcet jury theorem, free speech, and correlated votes. American Journal of Political Science, 36(3), 617–634.

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List, C. (2002). Two concepts of agreement. The Good Society, 11(1), 72–79. List, C., & Goodin, R. E. (2001). Epistemic democracy: Generalizing the Condorcet jury theorem. The Journal of Political Philosophy, 9(3), 277–306. List, C., Luskin, L. C., Fishkin, J. S., & McLean, I. (2013). Deliberation, single-peakedness, and the possibility of meaningful democracy: Evidence from deliberative polls. Journal of Politics, 75(1), 80–95. Musgrave, R. A. (1959). The theory of public finance: A study in public economy. McGraw-Hill. Nagahisa, R. I. (1991). A local independence condition for characterization of Walrasian allocations rule. Journal of Economic Theory, 54(1), 106–123. Nagahisa, R. I., & Suh, S. C. (1995). A characterization of the Walras rule. Social Choice and Welfare, 12, 335–352. Reprinted in: D. A. Walker (Ed.). (2001). The legacy of Léon Walras Vol.2: Intellectual legacies in modern economics 7 (pp. 571–588). Edward Elgar Publishing. Nitzan, S. (2010). Collective preferences and choice. Cambridge University Press. Plott, C. R. (1967). A notion of equilibrium and it’s possibility under majority rule. American Economic Review, 57(4), 787–806. Sandel, M. J. (2009). Justice: What’s the right thing to do? Farrar, Straus and Giroux. Sandel, M. J. (2012). What money can’t buy: The moral limits of markets. Farrar, Straus and Giroux. Sen, A. K. (1970). Collective choice and social welfare. Holden-Day. Shapley, L., & Scarf, H. (1974). On cores and indivisibility. Journal of Mathematical Economics, 1(1), 23–37. Sunstein, C. R., & Hestie, R. (2015). Wiser: Getting beyond groupthink to make groups smarter. Harvard Business Review Press.

Chapter 7

Reality of Money and Credit: The General Equilibrium Approach Hiromi Murakami

Abstract In this chapter, we clarify the significance and the problems of money and credit from the general equilibrium viewpoint. In the sense that money achieves the exchange of commodities for paper that is worthless in itself, the nature of credit appears in the form of outside money, and the overlapping generations (consumption loans) model is the most fundamental framework to introduce such money into a static economic model. In the first half, we discuss the role of money and the variability or the indeterminacy of monetary equilibrium in pure exchange economies. In the second half, we discuss money in more general settings, including production and capital accumulation, using the multi-sectoral von Neumann growth model. It describes an economy as an input–output process sequence and gives a unified and general perspective for money and credit.

7.1

Introduction

In Mesopotamia, where ancient city states were established along the Tigris–Euphrates, there was a Sumerian civilization (circa 3500 B.C.) known for its extremely rich wheat harvest from its fertile soil. The Sumerians used cuneiform, mankind’s first writing system, to store their surplus products, or perhaps to trade with them, an example of a fundamental economic task of measuring value. The fact that exchange and trade took place in the course of human history along with the invention of letters, or rather, in a way that encouraged them, should be remembered by all. Real economic activity becomes possible only when a standard of value is established, i.e., when value can be measured. In this sense, the establishment of money is an inevitable occasion. Economic theory is based on the premise of markets, and it is complicated to discuss how they are created. In this sense, it is difficult to discuss the question of how money is created, although various studies have been conducted from the perspective the role money plays in the functioning of H. Murakami (✉) Faculty of Fine Arts, Kyoto City University of Arts, Kyoto, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_7

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the market mechanism. In this chapter, we examine the treatment of money in the general equilibrium theory, which considers society as a whole. General equilibrium theory, which originated with Walras (1874), is the backbone of modern economics. Partial equilibrium theory focuses on the market for a single commodity, such as the automobile market or the labor market, and examines its supply and demand. In contrast, general equilibrium theory considers a situation in which the demand for and the supply of each commodity in society are equal at the same time. Such a state in which supply and demand for each commodity are equal is called a general equilibrium. In other words, the general equilibrium theory grasps society as a whole in the form of the entire market and provides a window from which to discuss the state of society. As problems with which general equilibrium theory should cope, Walras gave a step-by-step classification in the order of exchange, production, capital formation and credit, and money. Monetary general equilibrium theory is the final stage in the development of general equilibrium theory, and various approaches to it have been attempted. The functions of money are usually classified into three categories: a unit of account, a medium of exchange, and a store of value. Keynes pointed out at the beginning of A Treatise on Money that the most important role of money is as an account. He argued that if we regard money as a mere medium of exchange, we have scarcely emerged from the barter stage (Keynes, 1930).1 For commodities to be exchanged, first, the unit of account must be clarified, and once that is determined, the agreement of the transaction or the electronic points issued by companies can also function exactly the same way as money as a medium of exchange. And the store of value is nothing other than the function of a medium of exchange between the present and future markets. The value of money is supported as credit from the government (issuing authority) or the trust in the continuance of the market in which it circulates. This credit allows money to be accepted as a unit of measurement. When analyzing the standard model of the Arrow–Debreu economy, the value of each commodity or price is discussed in various ways, but money itself, which functions as a unit of measurement, does not appear. In other words, in the Arrow–Debreu economy, the existence of money and money-issuing entities are implicit premises, as are the assumptions of the rules of the market itself. Let us introduce two economic models to investigate how such money appears and its nature.

1

As represented by Kiyotaki & Wright (1989), the search theory focuses on the medium of exchange aspect and describes money as a transaction cost (Hahn, 1971). Money is an intermediate tool that has no effect on the final allocation of resources. However, we believe that a critical aspect of money is that it influences resource allocation.

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Money in Consumption Loans Model

Credit money, which is neither commodity money nor convertible to gold or silver, is handled as outside money that can be treated as an exogenous asset. Specifically, in an economic model, it takes the form of “an exchange of a commodity for a fiat money that does not itself bring about an improvement in an agent’s utility.” This point was clarified in the overlapping generations (consumption loans) model proposed by Samuelson (1958). The most significant feature of the overlapping generations model is that the first fundamental theorem of welfare economics does not hold, i.e., a competitive equilibrium is not necessarily Pareto optimal. In this model, Samuelson proposed that money might function as a kind of social contract and lead to Pareto improvement, i.e., the restoration of a market mechanism. Shell (1971) found that the characteristic result of the failure of the first fundamental theorem in the overlapping generations model was caused by a double infinities structure in which both the number of agents and the number of goods diverge. Thereafter, it became clear that an important problem existed in the treatment of infinity in economic theory, which cannot be solved by such arguments as finitization using the discount rate or approximation by aggregation. To avoid a complex discussion and to describe the essence of the problem, we consider the role of money in a two-period, one-good model.2

7.2.1

Role of Money

The present time period is Period 0, followed by Period 1, Period 2, and so on into an infinite future. We assume that all individuals live through two periods, young and old: Generation 0 lives through Periods 0 and 1, Generation 1 lives through Periods 1 and 2, and Generation 2 lives through Periods 2 and 3, . . ., and so on. For simplicity, each generation is assumed to consist of one individual who has two units of food when young, but zero units when old. In this economy, food is perishable and cannot be stored. Hence, under this initial resource allocation situation, the young have an extremely abundant food supply, although the old have nothing and are needy (Fig. 7.1). Note that in each period, there are two units of total food in the economy. If the young can give one unit of food to the old (the previous generation), and in return, when they become the old, they can receive one unit from the young (the next generation), then everyone can stably consume one unit of food in their young and old periods. This is a very desirable situation. What kind of transactions should be conducted in the market to achieve such desirable allocation? In the market, allocations are accomplished through the exchange of equivalent value goods. Here, there is only one good, food, and its 2 Even in general equilibrium theory, a two-period model is sufficient to treat this problem. Shell (1971) and many other papers use such simple settings.

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Fig. 7.1 Initial resource allocation

value is equal throughout all periods. As a conclusion, a desirable allocation can never be achieved through market transactions. Note that since Generation 0 receives one unit of food in the old period without giving up anything in return, it cannot participate in the exchanges of food between the young and the old. If we eliminate Generation 0 and start from Generation 1, the problem will not be solved. In fact, in an economy where Generation 0 does not exist, Generation 1 has no trading partner in the young period. This argument can be repeated forever, and in the end, the market can only achieve a guarantee that an initial allocation in which no one has exchanged anything. Although the desired allocation is clearly feasible in this economy, there are no means to realize it in the market mechanism. No matter how we specify preferences or prices in this economy, the above argument cannot be overturned. As seen in this example, in an overlapping generations model, the market may fail to achieve an optimal allocation—a competitive equilibrium is not necessarily Pareto optimal. In this situation where the market fails to function effectively, a drastic solution to the problem is money. Suppose that the government issues a piece of paper on which “the value of one unit of food” is written and hands it to Generation 0 at Period 0. This is merely a piece of paper. What would happen if people believed that this piece of paper could be exchanged for one unit of food? Generation 0 (the old) at Period 1 hands this piece of paper to Generation 1 (the young) at the same period to exchange it for one unit of food. Generation 1 carries over the piece of paper to the next period (Period 2), where Generation 2 (the young) exchanges it for one unit of food. In the same way in all subsequent periods, exchanges are established between one unit of food from the young and a piece of paper from the old. The market can escape from the initial allocation and forge a desirable allocation (Fig. 7.2). Samuelson clearly defined the role of money as such a piece of paper (fiat money), showing that its most important nature is the belief that it is money. It just needs to be credit without intrinsically being a valuable commodity. If the exchange between a piece of paper and food ends in finite periods, that is, if individuals act in anticipation of the end of society, then fiat money cannot have positive value. The

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Fig. 7.2 Restoration of market function by money

individual living in the final period will not benefit from receiving the piece of paper, and retroactively, the money will never have any value from the beginning. In other words, money only has value when we believe society will continue into the future. Samuelson claims that such money is the “Hobbes–Rousseau social contract.” If we consider money a medium of exchange, we give the impression that it is not essential, but merely a tool used in transactions. However, this is incorrect in the sense that even if it is only an intermediate tool (that does not ultimately remain with us), it may have the power to essentially change society to improve resource allocation. From the construction of pyramids in ancient times to the building of temples and churches in the middle ages, and to the New Deal policies in recent years, monetary transfers through public works projects have been implemented as important policy. If such provisions are interpreted as a free distribution of money to the above Generation 0, perhaps such a money supply can substantially improve society. The overlapping generations model indicates that an optimal allocation can be realized only when government finances are in deficit. In other words, a budget deficit itself is not wrong. It does not necessarily have to be balanced; what is important is whether the deficit actually creates benefits in society.

7.2.2

Various Monetary Equilibrium Paths

If there is a deviation from desirable allocation, such as the consumption of one unit of food in both the young and old periods, what resource allocation will society eventually choose? Gale (1973) focused on this perspective. Taking that result as a guide, consider the variety of monetary equilibria. Let us draw a utility maximization diagram of desirable allocation, with food in the young period as the first good (horizontal axis) and food in the old period as the second good (vertical axis). See Fig. 7.3.

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Fig. 7.3 Utility maximization under the desirable allocation

Fig. 7.4 Price of food in old period increased from 1 to 1.25

Fig. 7.5 Price of food in old period further increased

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Fig. 7.6 Offer curve

Consider a situation where the price of food in the old period increases over food in the young period. Suppose, for example, that inflation occurs and the price of the second good (food in the old period) increases from 1 to 1:25 (Fig. 7.4). Suppose that the price of food in the old period becomes even higher. For example, the price of the second good increases to 1:6 (Fig. 7.5). Since food consumption in the old period decreases with price changes, the utility maximization point shifts from a desirable allocation ð1, 1Þ to an initial endowment allocation ð2, 0Þ. The curve drawn by plotting this shifting utility maximization point is called an offer curve (the red curve in Fig. 7.6). ~ Suppose that for some reason, there is a deviation from desirable allocation C achieved by the introduction of money to allocation C 0 . In such a case, if both the feasibility condition for each period (represented by the 45-degree line) and the utility maximization condition for each individual (represented by the offer curve) are satisfied, we can always find a convergent path to initial allocation ω. Gale (1973) showed that regardless what deviations occur from the allocation on the offer curve, it is always possible to find a path that converges to the initial endowment allocation. Figure 7.7 summarizes the situation in the above series of figures into a diagram of the overlapping generations model. The situation indicated by Gale’s convergent path is only one possible prospect under the perfect foresight setting. However, note that the function of a market mechanism, such as the feasibility condition or the utility maximization condition, only provides a path to the undesirable state (initial endowment allocation) without a path back to a desirable allocation. Gale’s convergent path can be interpreted as a situation in which the relative value of money is falling as the prices of goods rise. To achieve a desirable state, we must restore its relative value, i.e., to suppress the rise in prices. Since this restoration cannot be achieved spontaneously, market intervention is required. The following actions can be taken by the (money-issuing) government to recover the relative value of money: (i) issuing additional money to compensate for its decline in value and

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Fig. 7.7 Gale’s convergent path

(ii) convincing individuals that there will be no inflation in the coming period. Issuing additional money is easy. However, how do we convince people that inflation will not occur in the next period? There is also the question whether the additional issuance of money will affect prices. Increasing the amount of money to decrease credit or decreasing it to increase credit is not simple; it might be necessary to increase the amount of money while simultaneously restoring that credit. The result of Gale’s convergent path shows that, if no actions are taken, the value of money tends to be lost as prices rise, and a desirable allocation tends to be spoiled: the non-monetary equilibrium under the balanced budget. In other words, a monetary equilibrium that creates a desirable allocation needs to be maintained through our efforts (including the government’s fiscal policy).

7.2.3

Indeterminacy

In the overlapping generations model, time (the persistence of the economy) is the essential factor requiring the existence of money. A model of an economy with satiation treats a very similar problem under static settings. Dividend equilibrium or an equilibrium with slack, defined by Aumann and Drèze (1986), is one of the most general competitive equilibrium concepts for markets, including satiated individuals. For an economy with satiation, some agents have a surplus of goods, and the surplus cannot be utilized under a market mechanism that exchanges equivalent value goods. In other words, a competitive equilibrium might fail to exist. However, by introducing money to insatiated agents, the surplus becomes tradable and the welfare of society improves. Monetary transfer plays an important role in restoring an equilibrium state as in overlapping generations economies. This model indicates that when there is an upper limit on agent’s satisfaction and those who have reached the limit have vast resources, the introduction of money

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achieves a desirable redistribution. Note, however, that multiple answers are available to the following question: to whom should money be given? As long as the recipient is not satiated, the allocation will be improved regardless to whom the money is transferred. In other words, there can be more than one monetary equilibrium. For the overlapping generations model, a similar (or more serious) problem arises in the question whether a monetary equilibrium exists. Monetary equilibria in overlapping generations models were scrutinized in the 1970s and 1980s, although the results were unsatisfactory. Even though Samuelson (1958) emphasized the role of fiat money as a certain kind of social contract, its existence may not necessarily cause Pareto improvements, assure the existence of monetary equilibria, or guarantee the existence of Pareto-optimal monetary equilibria (see, for example, Shell, 1971; Hayashi, 1976; Okuno & Zilcha, 1980, 1981 and 1982). It is also known that the optimal monetary equilibrium (if it exists) is unstable from the core-theoretic (cooperative game-theoretic) viewpoint (see Esteban, 1986) as well as the viewpoint of an equilibrium dynamic for stationary economies (Sect. 7.2.2). That is, even though a monetary equilibrium may exist, and monetary transfer may cause Pareto improvements in the allocation, they cannot be definitively stated. Moreover, if we consider the problem of uncertainty, general conclusions are even more difficult to obtain. A monetary equilibrium depends on what value money has. Many monetary equilibria or paths can exist infinitely, including the continuum case, and the existence itself has degrees of freedom or indefiniteness. Money is like a buffer in society, and a monetary equilibrium is what we must grasp to improve society, such as that described in the desirable allocation of the overlapping generations model.

7.3

Money in More General Economic Dynamics

Money by itself does not improve the utilities of individuals. Money only has value when it is exchanged for something; it becomes effective only when it is circulated in a market. In the overlapping generations model, money has value because the economy does not end in finite periods and market transactions continue. In other words, time is a key factor in the question of what money is. Now we discuss money in more general settings, including production and capital accumulation, using the multi-sectoral von Neumann growth model.

7.3.1

Von Neumann Model

The von Neumann model (von Neumann, 1937) describes an economy as an iterative process of input and output through multi-sectors and analyzes the interdependent structure of each sector. In relation to recent macroeconomic dynamics, the von Neumann framework resembles a special kind of multi-sectoral

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endogenous growth models with an assumption on input–output necessary time lags. The multi-sectoral growth model deals with steady-state equilibrium under an economic growth, and in contrast to the one-sector model, it has the advantage of allowing analysis that takes into account the price fluctuations of capital goods. The multi-sectoral growth model focuses on a balanced growth path, in which each sector grows at the same rate, and discusses its characteristics and stability. Several growth paths depend on the sectoral composition or other internal factors, and which of these paths to choose is the endogenous growth problem. The von Neumann model has an interesting interpretation dubbed by Michio Morishima as the von Neumann revolution (Morishima, 1969). We usually believe that capital is stock at some point. However, in this model, capital is considered intermediate capital goods at various stages of wear and tear, i.e., flow in production processes. By treating all stock as intermediate products or capital goods (as if tradable like flow), the von Neumann model enables us to select the stages of stock based on the intensity of its use. Since a time lag always exists between input and output, the von Neumann model is dynamic in nature. At the same time, it is suitable for establishing a connection with static general equilibrium analyses, because it concentrates on the existence of a balanced growth path. In addition, as multisectoral growth models, we can clarify the correspondence to neoclassical dynamic macroeconomic models (for instance, see the turnpike theory in Morishima, 1969). (Remark) The von Neumann model is a multi-sectoral growth model that shares a common characteristic with an endogenous growth model in the sense of an endogenous determination of growth rate.3 We summarize their characteristics as follows: [1] Von Neumann Model: There are no regulations about preferences, and all goods are reproducible. In terms of the input of reproducible goods, the technologies are homogeneous of degree one. [2] Endogenous Growth Model: There are several regulations about preferences. In terms of the input of reproducible goods, the production functions are homogeneous of degree k where k≥1. (represented by Lucas, 1988 and Romer, 1986). [3] Optimal Endogenous Growth Model: There are several regulations about preferences (and no external effect or imperfect competition exists). In terms of the input of reproducible goods, the production functions are homogeneous of degree one (represented by Uzawa, 1965 and Caballé & Santos, 1993). Generally speaking, equilibria are defined without referring to preferences in the von Neumann model. On the one hand, equilibria are defined with reference to preferences in (optimal) endogenous growth models. Except for this point, the von Neumann model is formally equivalent to the optimal endogenous growth models.

3

The proposition, a growth rate is an endogenous variable, assumes the existence of balanced growth paths. In endogenous growth models, to establish balanced growths, preferences, technologies, and endowments have to satisfy various conditions. Such conditions are very restrictive and compatible preferences and technologies are limited. See, e.g., Benhabib & Perli (1994), Caballé & Santos (1993), Benhabib & Rustichini (1994), and Farmer & Lahiri (2005).

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Fig. 7.8 ι is nominal interest rate. xðtÞ 2 Rmþ1 is intensity of production and pðtÞ 2 Rnþ1 is price level in period t

The von Neumann multi-sectoral growth model does not usually mention consumers. Although the lack of references to preferences suggests a defect of the von Neumann model, this is not true. For example, if we link utility with each production process like goods, we can address the equilibria that reflect industry-classified utilities, such as the utilities of farmers, architects, etc. By using this model with an overlapping generations interpretation, we expect to obtain a more advanced framework that approaches the dynamics of money. Here, we briefly present the model and the results of Urai et al. (2019), which introduced money and price levels into the von Neumann input–output model under the most general setting of Kemeny et al. (1956). See Fig. 7.8. In this model, it is assumed that the elementary time interval is appropriately taken to be small to identify the length with a commonly chosen unit that is required for all processes, including simple sales and purchasement transactions as well as production and consumption. The idea was first given in Morishima (1977, chapter 13) such that the elementary time interval equals to the money circulation velocity. We add the government (bank) process as money-issuing entity. Moreover, we distinguish between nominal and real interest rates by introducing the expected inflation (deflation) rate and show that the concept of balanced growth is appropriately extended as the monetary balanced growth with a constant expected inflation or deflation rate. That is, the problem of the proportionality between the increases in the quantity of money and in the price level (money neutrality) is represented as a monetary balanced growth path under the general equilibrium of production where money circulation velocity is the basic time unit of the model. The implication of this result is clarified when we assume a shrinking economy in which the real interest rate is negative, i.e., negative growth. Consider the restriction that the nominal interest rate be non-negative in a shrinking economy. In this case, steady-state equilibrium will be maintained by a decline in the value of money, i.e.,

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an increase in the price level (inflation). In other words, in an economy with negative growth, maintaining an appropriate inflation rate (i.e., increasing the amount of money issued) can be expected to sustain the equilibrium state.4

7.3.2

Keynes, Hayek, and Sraffa

As we know, the von Neumann growth model and the model of Sraffa (1960), Production of Commodities by Means of Commodities, share several points. Here we discuss the relationship between stationary equilibria and interest rates through the theories of Keynes, Hayek, and Sraffa. Concerning the Sraffa–Hayek debate on the natural rate of interest (see Sraffa, 1932a,b and Hayek, 1932), Hishiyama (1990, pp. 212-213) pointed out that the targets of Sraffa’s criticism are not only Hayek (1931) and Wicksell (1898), on which Hayek’s theory is based, but also Keynes’s A Treatise on Money, which extends the idea of Wicksell (see Keynes, 1930, chapter 13). Negishi (2000) summarized Sraffa’s idea as follows: the rate of profit is adjusted to the exogenously given monetary rate of interest through the adjustments of commodity rates of interest in forward markets. Based on the description of Keynes (1930, chapter 13), restrictive assumptions exist about the classification between capital and consumption goods underlying the Wicksellian idea. For example, in the cumulative process, a climb in prices occurs only in consumption goods. However, this argument is insufficient from the viewpoint of a general equilibrium. Such a rise in prices occurs in both consumption and capital goods. It may change the profit/loss of each process. Through the price of intermediate goods, it may affect the value of money as a store of value. The liquidity preference is also avoided. In addition, as Sraffa argued, there are multiple commodity rates of interest or natural rates of interest (or, in the von Neumann model, multiple stationary equilibria), which vary depending on whether liquidity preference is included in the model. The Wicksell–Hayek assumption about a natural rate of interest in a pure non-monetary economy itself seems meaningless. Rather, money and liquidity preferences guide the state of our economy to one such multiple equilibria. After incorporating Saffa’s indication, Keynes focused on liquidity preference in Keynes (1936). Although Sraffa insisted that interest rates are exogenous, as argued by Hishiyama (1993, pp.116-118), the policy change suggests that Keynes adopted Sraffa’s indication.

4 This model, which isolates the credit sector as a government-banking process, is suitable for contrasting the real sector with the credit sector. For example, by analyzing and developing the credit sector in more detail, an economic situation can be described in which only financial assets increase with leverage.

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An important attempt to incorporate these Keynesian issues of economic dynamics is the temporary general equilibrium theory represented by Grandmont (1977). In temporary equilibrium models, economic agents predict the states of future markets by considering past prices and make their decisions about the present market. This method approaches the problems of credit through the concept of expectation. In the framework of temporary equilibrium theory, we can address the problems raised by Keynes, such as the liquidity trap (see Grandmont & Laroque, 1976a, b). Our model in Sect. 7.3.1 deals with a situation where the means of settlement is only the bank (government) money. But by introducing such Keynesian economic concepts as liquidity preference, the model can be extended to distinguish between government and banks, or currency and bank deposits. By assuming various roles for the government, such as fiscal or monetary policy, we can analyze the effects of these policies. It is also necessary to further enhance the model setting for such important dynamic problems as expectations, uncertainty, and quantity adjustment, which have been examined in studies of temporary general equilibrium theory.

7.4

Conclusion

As seen in both overlapping generations economies and economies with satiation, money plays a definitive role in the question of how to lead society to an optimal state. As seen in the seigniorage of overlapping generations economies and the surplus of economies with satiation, the problem can also be reworded as a question of who first obtains the surplus concession (that is, something that no one else will lose if someone else receives it). Such quarrying of surplus concessions might be the essence of the dynamics of economies. In the overlapping generations model, it is the initial old (Generation 0), and in Keynesian economics, it is entrepreneurs, for New Deal policies, it is hired workers, and in Marxist economics, capital itself is positioned to receive such surplus as extended reproduction (i.e., exploitation of workers). For the von Neumann–Morishima growth model or the temporary general equilibrium model, various interpretations are possible.5 In Sect. 7.3, we described a von Neumann multi-sectoral growth model with money and price level based on overlapping generations economies. The monetary balanced growth path represented in this model can be interpreted as a situation in which, as long as money is issued and traded with proper information, it does not lose its credibility and only performs its redistributive function. Contrary to taxation, which intervenes directly in individual income, redistribution through monetary transfer provides the most gradual adjustment for resource allocation. Although

5 The transversality condition (Maranvaux condition: consuming goods before death) in macroeconomic growth models is a necessary and sufficient condition to avoid such a surplus. That is, such an arrangement ensures that economic dynamics do not expand outside the framework of static analysis.

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Keynes and Sraffa favored monetary inducements, Hayek rejected such interventions, and Gale’s convergent path problem argued that such adjustments may always be necessary. The reality of money is not in money itself, as the word credit implies. It is in society and in our relationships, and the economic model is undoubtedly one of the most powerful tools for revealing this. Money can produce desirable situations; it can also lead to disastrous ones. Our discussion of monetary policy should be based on economic models that describe society as a whole. Acknowledgements I express gratitude to Professor Ken Urai (Osaka University). Without his generous encouragement and insightful advice, I could not have completed this article. I also appreciate the invaluable comments of Professor Tadashi Shigoka (Kyoto University) on many topics of macroeconomic dynamics. I also acknowledge the support and feedback from the participants of the monthly methodology seminars at Osaka University (sponsored by the sub-committee of the Japanese Society for Mathematical Economics, JSME). This work was supported by JSPS KAKENHI Grant Numbers JP20K13461 and JP20H03912.

References Aumann, R. J., & Drèze, J. H. (1986). Values of markets with satiation or fixed prices. Econometrica, 53, 1271–1318. Benhabib, J., & Perli, R. (1994). Uniqueness and indeterminacy: On the dynamics of endogenous growth. Journal of Economic Theory, 63, 113–142. Benhabib, J., & Rustichini, A. (1994). Introduction to the symposium on growth, fluctuations, and sunspots: Confronting the data. Journal of Economic Theory, 63, 1–18. Caballé, J., & Santos, M. (1993). On endogenous growth with physical and human capital. Journal of Political Economy, 101, 1042–1067. Esteban, J. (1986). A characterization of core in overlapping-generations economies. Journal of Economic Theory, 39, 439–456. Farmer, R. E., & Lahiri, A. (2005). Recursive preferences and balanced growth. Journal of Economic Theory, 125, 61–77. Gale, D. (1973). Pure exchange equilibrium of dynamic economic models. Journal of Economic Theory, 6, 12–36. Grandmont, J.-M. (1977). Temporary general equilibrium theory. Econometrica, 45(3), 535–572. Grandmont, J.-M., & Laroque, G. (1976a). The liquidity trap. Econometrica, 44(1), 129–135. Grandmont, J.-M., & Laroque, G. (1976b). On temporary Keynesian equilibria. The Review of Economic Studies, 43(1), 53–67. Hahn, F. H. (1971). Equilibrium with transaction costs. Econometrica, 39, 417–439. Hayashi, T. (1976). Monetary equilibrium in two classes of stationary economies. Review of Economic Studies, 43, 269–284. Hayek, F. A. (1931). Prices and production. Routledge. Hayek, F. A. (1932). Money and capital: A reply. The Economic Journal, 42, 237–249. Hishiyama, I. (1990). Quesnay kara Sraffa he: Wasure-enu Keizaigakusha-tachi. The University of Nagoya Press. (Published in Japanese, From Quesnay to Sraffa: Memorable Economists). Hishiyama, I. (1993). Sraffa Keizaigaku no Gendaiteki Hyouka. Kyoto University Press. (Published in Japanese, Modern Evaluation of Sraffa Economics). Kemeny, J. G., Morgenstern, O., & Thompson, G. L. (1956). A generalization of the von Neumann model of an expanding economy. Econometrica, 24, 115–135. Keynes, J. M. (1930). A treatise on money 1 The pure theory of money. Macmillan.

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Keynes, J. M. (1936). The general theory of employment, interest and money. Macmillan. Kiyotaki, N., & Wright, R. (1989). On money as a medium of exchange. Journal of Political Economy, 97, 927–954. Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22, 3–42. Morishima, M. (1969). Theory of economic growth. Clarendon Press. Morishima, M. (1977). Walras’ economics: A pure theory of capital and money. Cambridge University Press. Negishi, T. (2000). Economic thought from Smith to Keynes: The collected essays of takashi Negishi, Volume III. Edward Elgar Publishing. Okuno, M., & Zilcha, I. (1980). On the efficiency of a competitive equilibrium in infinite horizon monetary economies. Review of Economic Studies, 47, 797–807. Okuno, M., & Zilcha, I. (1981). A proof of the existence of competitive equilibrium in a generation overlapping exchange economy. International Economic Review, 22, 239–252. Okuno, M. & Zilcha, I. (1982). Approximately monetary equilibria in overlapping generations economy. European Economic Review, 19, 213–228. Romer, P. M. (1986). Increasing returns and long run growth. Journal of Political Economy, 94, 1002–1037. Samuelson, P. A. (1958). An exact consumption loans model of interest with or without social contrivance of money. Journal of Political Economy, 66(6), 467–482. Shell, K. (1971). Notes on the economies of infinity. Journal of Political Economy, 79, 1002–1011. Sraffa, P. (1932a). Dr. Hayek on money and capital. The Economic Journal, 42, 42–53. Sraffa, P. (1932b). Money and capital: A Rejoinder. The Economic Journal, 42, 249–251. Sraffa, P. (1960). Production of commodities by means of commodities: Prelude to a Critique of economic theory. Cambridge University Press. Urai, K., Kageyama, S., & Murakami, H. (2019). Reconsideration of von Neumann-Morishima multi-sectoral growth model for monetary steady state existence problem. Osaka Economic Papers, 69(1), 1–10. Uzawa, H. (1965). Optimum technical change in an aggregative model of economic growth. International Economic Review, 6, 18–31. Walras, L. (1874). Eléments d’économie politique pure. Corbaz. (English translation by W. Jaffé, Elements of pure economics. George Allen and Unwin, 1956). Wicksell, K. (1898). Geldzins und Güterpreise. Eine Studie über die den Tauschwert des Geldes bestimmenden Ursachen. Gustav Fischer Verlag. (English translation by R.F. Kahn, Interest and prices, a study of the causes regulating the value of money. Macmillan, 1936). von Neumann, J. (1937). Über ein ökonomisches Gleichungssystem und eine Verallgemeinerung des Brower’schen Fixpunktsatzes. Ergebnisse eines mathematischen Kolloquiums, viii (English translation, A Model of General Economic Equilibrium, Review of Economic Studies, xiii, 1–9, 1945-1946).

Chapter 8

Reality of Public Goods and Public Finances from the General Equilibrium Analysis, with a Case Study in Public Health During the COVID-19 Pandemic Daisuke Kobayashi, Hiromi Murakami, and Ken Urai

Abstract In economic theory, the treatment of markets, money, and the state or the government (the use of power from above) has a special meaning that relates to the reality of the theory. In this chapter, we consider the economy, including public goods and state finances (money issuance), from the standpoint of general equilibrium theory (understanding the entire world through markets). In particular, in the case of health care, where public goods are characterized as merit goods, Lindahl’s general equilibrium (a description through hypothetical market transactions), which is usually difficult to comprehend, becomes important for describing at least the ideal state of the economy. In addition, by treating the government as the issuer of money, the integrated view of the problem of government and public goods as a market and a monetary problem leads to recommendations for government policy that are quite different from those usually known: the pros and cons of balanced budgets, the division of the roles and the standards of behavior between public and private firms, and the way public goods related to production should be paid for emerge in ways not previously understood. In addition to this theoretical background, this chapter discusses specific cases and problems that arose from the COVID-19 pandemic, especially in Japan.

D. Kobayashi (✉) Department of Community Medical Support, Toyama University Hospital, Toyama, Japan e-mail: [email protected] H. Murakami Faculty of Fine Arts, Kyoto City University of Arts, Kyoto, Japan e-mail: [email protected] K. Urai Graduate School of Economics, Osaka University, Toyonaka, Osaka, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_8

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Introduction

General equilibrium theory forms one of the main currents in modern economic theory, which attempts to grasp the whole society through the traditional invisible hand idea (or a market game as a force from below) of Adam Smith (1776). 1 The concept antipodal to this invisible hand is the state. Therefore, the state is uniquely positioned in the theory as a provider of public goods (fiscal policy), a representative example of market failure, or as the bearer of quantity adjustment (monetary policy) of money, a unit of measurement, and the medium of the market. In other words, the state, as the entity that “uses” (economic) theory, is in a crucial position when discussing the reality of the theory. Insofar as the relationship among markets, money, and the state resembles a kind of stance or posture (as a basic framework) in the theory, a unit of measurement, and a subject in the “use” and the “participation” (of the theory), the fact that the model (in Walras (1874)’s terms, monetary general equilibrium) remains incomplete (unfinished) may be a sign that mainstream economic theory is sufficiently sound. However, this does not mean that we can treat the unfinished as if it were unspeakable. This is because theory is always “used,” and not speaking about wholeness through its “use” and “participation” is, after all, nothing more than not seeing; we cannot escape the responsibility of its “use.” This is the fate of social science and all of the sciences that “participate” in society. Such incompleteness, together with its mainstream stance (posture), should always be questioned anew, which is another important academic stance (Chap. 5) in the RFSS theme of this book. The perspective on public goods and state finances (with money issuance) that this chapter seeks to provide in the form of a general equilibrium theory (the market’s grasp of the whole world) is presented here as such. Among market failures, Lindahl’s (general) equilibrium, which uses the concept of individual prices, is an attempt to attribute the allocation of resources to exchange through a (hypothetical) market in dealing with public goods, which are a representative example of externalities for markets.2 Particularly in the issue of medical care, the interpretation of the Lindahl general equilibrium (a hypothetical market), which is usually difficult to grasp, becomes natural (at least in terms of its ideal situation) because public goods are characterized as merit goods. The model treated in this chapter (the Lindahl general equilibrium model) and its conclusions have been formulated in a mathematically rigorous form (as the fundamental theorems of welfare economics for general equilibrium models with public

1 Today, however, such classical main currents seem mired in a serious situation in terms of whether they can protect the order of self-reliance or independence as an academic discipline from today’s huge industrial or corporate civilization (c.f., Chap. 5). 2 The Lindahl equilibrium (Lindahl 1919) is, on the one hand, an idea that simply tries to make the cost burden of public goods proportional to the benefits received by their beneficiaries. On the other hand, it can be seen as an extension of market possibilities by considering (hypothetical) markets in which such costs are regarded as individual prices.

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goods) in another paper by the authors, Urai et al. (2022). We now turn to our results and clarify their significance in terms of the pursuit of reality in general equilibrium theory, one mainstream of modern economic theory. For this purpose, three of the most important features of the general equilibrium model are listed. The first feature is that it treats the state as the supplier of public goods (market failure) as well as the issuer of money.3 Second, it deals with the supply of public goods by classifying them into public and private firms.4 Third, it includes the case where profit exists (that can be negative for public firms).5 Together, these features of the model raise a number of key issues that will be addressed later in this chapter as examples and provide guidance toward the production of public goods in a very general way. In fact, if the issue of the state and public goods is viewed under a generality (a holistic understanding of general equilibrium theory and state finances) that includes the issues of markets, money, and state finances, as dealt with in this chapter, it is possible to make policy recommendations that are quite different from those usually known. For example, there is no basis for a commitment to a balanced budget. 6 The division of roles between public and private firms, the need for a code of conduct for public firms, 7 and the difficulty of determining cost-sharing for public goods that affect the production of private enterprises,8 etc., emerge as problems not captured by the traditional model. Based on the above theoretical background, this paper further discusses specific cases related to the COVID-19 pandemic in Japan and their problems. Through case studies, we grasped all of the problems pointed out from the above theoretical content, especially through concrete examples of public health care today and concrete proposals for improvements; what is considered here does not stop at such economics content. Rather, it is the question of why such economics problems arise and why the theory here is able to recover them, i.e., the public and fiscal

3

As basic references to the Lindahl general equilibrium, below we often refer to Foley (1970), Milleron (1972) and Mas-Colell and Silvestre (1989). Fiat money and state finances are not considered in these references. 4 Although multi-firms are considered in Milleron (1972), those studies in Footnote 3 do not guarantee generality required for our discussion, e.g., profit is not taken into account. Foley (1970) and Mas-Colell and Silvestre (1989) deal only with aggregated overall technology. 5 This is taken into account in Mas-Colell and Silvestre (1989), where public and private firms are not separated and the equilibrium is treated in terms of cost-sharing to consumers under aggregated technology. However, this does not allow us to clarify what the difference and the coexistence of public and private (profit-seeking) firms actually bring about, and what criteria of behavior (toward optimality) are raised there. 6 In addition, under satiation, huge savings can accumulate independently of the real economy. In this sense, inflation through government money issuance is not essential. Such inflation is essentially caused by a shortage of what is needed at the moment and not by the total amount of money issued. 7 In particular, there are different conditions from profit maximization, as expressed in the Maximality Condition with regard to public firms. 8 The potential loss of fairness is due to the mis-allocation of costs in the Lindahl equilibrium sense.

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(monetary) reality that the theory’s stance (or posture) of general equilibrium attempts to bring to light. What is shown through case studies is that the general equilibrium meaning of the designation of merit goods as the direct implementation of forces from above that are directed at the concept of commodities, which are the units of information transmission in the economic reality of markets (forces from below), can diverge completely from partial equilibrium speculation in a system with a narrow perspective that does not consider the whole. The problem of the negative certification of PCR tests in the private sector (the system that supplies public goods for testing has become a “license/passport,” free of signaling costs) and the problem of the subsidized use of corona beds in public hospitals, which is directly related to the code of conduct of public companies, are all caused by decision-making actors in government or public firms that have lost sight of the totality (misplacing the system upon which they depend). In theory and its application, the fallacy of misplaced concreteness (Whitehead 1929) is always unavoidable. This is due to the fact that concreteness, which should be placed in its operative (dynamic) place toward what is becoming, is placed in its object (static) place. The problem here seems classifiable (in economics terms, as a very general adverse selection problem) as a misplacement concerning the system on which one depends, which is the most prominent, if not the most typical and simplest form of the fallacy, when considering society. In Sect. 8.2, we first briefly outline the framework of the Lindahl general equilibrium. Section 8.3 uses a simple example to explain how the optimal situation given by such a Lindahl general equilibrium can have different policy implications from usual partial equilibrium findings. (The examples often assume that output exceeds everyone’s satiation level, which is rather applicable when it comes to health care issues.) In Sect. 8.4, we use specific examples from the COVID-19 pandemic to see how various policy agendas are linked to the (different) maximizing behaviors of individual actors in the real world. These can be broadly summarized as the problem of optimality in which a policy (system) designed from a partial equilibrium (static, object-oriented) perspective is lost through the lack of a general equilibrium (dynamic, relational) perspective.9

8.2

Lindahl General Equilibrium Model

In this section, we present a simple sketch for general equilibrium theory and Lindahl general equilibrium. 9

This perspective on the relations of the whole is treated in this chapter as a problem of public decision-making and the subject of government, although treating government as a subject (in the form of a public corporation) in this way is not a standard approach in general equilibrium theory, although it is sometimes done in the case of regulatory problems in an economy with non-convex production technology. Note that this is also one significant feature of the model here.

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General equilibrium theory is an attempt to understand the relationship between demand and supply of all commodities and their value in society as equilibrium variables that are determined simultaneously. Let I and J be index sets of consumers and producers, respectively. Individual demand and supply are represented by vectors in the commodity space, RK[L , where K is the index set of public goods, L is the index set of private goods, and RK[L is the ♯K þ ♯L (the number of public goods þ the number of private goods) dimensional X Euclidean space. A point in the commodity space is written in the form like ðx; yÞ 2 RK[L , where x 2 RK and y 2 RL are vectors representing the amounts of public and private goods, respectively. To describe the Lindahl (individual) price setting, we add for each agent in I or J, the individual input commodity space, RKþ , in order to set individual prices for public goods as inputs, so each consumption or production action will be denoted by a triplet, ðx - , xþ ; yÞ 2 RKþ × RKþ × RL , where x - denote public good inputs, xþ denote public good outputs, and y denote private good inputs as well as outputs. For simplicity, we consider in the following that consumers do not supply any public goods. 10 A consumer i 2 I is denoted by ð≿i , ωi Þ, where ≿i is a preference on of i that can be represented by a continuous utility consumption set X i = RK[L þ function, ui : X i → Rþ , and ωi is an element of f0g × RL ⊂ RK[L . In the Lindahl general equilibrium model, the treatment of firm technology takes a special form, even though it is based on the usual general equilibrium theory. In particular, while emphasizing the possibility of a (hypothetical) market, the problems of non-rivalness and non-excludability are recast as equal input problems for hypothetical individual goods (i.e., embedding them in a hypothetical commodity space). Before going into the details of this firm technology, let us first summarize what is necessary for its application to the medical problem at issue in Sect. 8.4. Remark (Application to Medical Problems) In Sect. 8.4 of this chapter, examples of medical problems will be dealt with. The following is a summary of the issues and their relationship to the model in question: • The issue of beds in public hospitals is related to the issue of the standard of activity of public firms, i.e., condition (ii) of the definition of Lindahl general equilibrium (see Sect. 8.2.2). • Section 8.4 considers the supply of a system as a public good, i.e., the provision of vaccine opportunities, PCR tests, and hospital beds in case of illness, directed to the entire population, as specific examples. Based on these, what Sect. 8.4 identifies as problems can be summarized in three main areas:

10

It is not difficult, however, to consider the cases that a consumer has non-zero initial endowments of public goods, since we can deal with the vector of such initial endowments as a special kind of technology discussed below.

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(α)

The misuse of prepared vaccines as passports for travel discounts, etc. (regardless of their effectiveness) The wrong use of the provision of hospital beds in public hospitals for profit based on subsidies The problem of PCR tests being used as a form of negative proof, which is not their original purpose

(β) (γ)

Below, we continue with the description of the firms (technologies) and their embedding in the hypothetical commodity space and then to the definition of equilibrium. Hereafter, public firms will be referred to as firms 0 and will be distinguished from private firms by the name j 2 J.

8.2.1

Firms and Technologies

Technologies are subsets of RKþ × RKþ × RL , where ðx - , xþ ; yÞ 2 RKþ × RKþ × RL means that x - is an input vector of public goods, xþ is an output vector of public goods, and y is a net production vector of private goods. Technologies of private firms ðY j Þj2J and public firm Y 0 satisfy: (1-1) (1-2)

For each j 2 J, technology Y j is a closed subset of RKþ × RKþ × RL having 0 as its element. Technology Y 0 is a non-empty closed (possibly non-convex) subset of RKþ × RKþ × RL .

In the following, the public good situation described above will be considered not as a public good but as an individual commodity sold to each agent, and the method of reducing it to the usual general equilibrium problem in a hypothetical market allowing individual prices will be explained below. In (1-1) and (1-2), the description is almost identical to the standard firm technology description, except for the first RKþ entry for each producer’s public good input. The assumptions would also be quite standard and understandable. (However, we consider the public firm in a way that takes into account, among other things, even nonconvexity.) In order to treat this special dimension of technology related to public good inputs as an ordinary general equilibrium problem, Urai et al. (2022) used Milleron (1972) method to develop the following hypothetical commodity space and “embedding” production and consumption activities into it. I

J

ðRK Þ × ðRK Þ × ðRK Þ × RL : I

ð8:1Þ

The first entry ðRK Þ represents taking the product of the space RK by the number of consumers (the number of elements in I ). This relates to the fact that all public goods as demanded by consumers are considered as separate goods for each

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consumer. The demand by consumers is described by a positive value (following the usual general equilibrium model convention). Each consumer’s demand for a private good is described (as usual) in the last entry RL . The next entry ðRK Þ and the next J entry ðRK Þ represent the entries for the public good input of the public firm and the public good input of the private firm, respectively, and the input is described by a negative value (as usual in general equilibrium models). The inputs (negative) and outputs (positive) of private goods for both public and private firms are described in RL in an offsetting form (as usual). Missing from the above explanation is how and where the output of public goods by public and private firms is represented. Herein lies the key to the meaning of embedding in Milleron (1972) and why Lindahl general equilibrium can be viewed as an ordinary general equilibrium model. (Gist: Public Good Production Technology in Hypothetical Commodity Space) The public good output of public and private firms, which is an element of RKþ , is treated as if an I

equal number of outputs (positive values) took place at once over all entries ðRKþ Þ × J ðRKþ Þ × ðRKþ Þ

for the public good.

In other words, this transforms the problem of non-excludability (equal quantity consumption) of public goods into a mere technical constraint problem of technically, there is no other way but to produce the same quantity. For example, the action is denoted as the following point in (production plan) ðxj- , xþ j ; yj Þ 2 Y j I J ðRK Þ × ðRK Þ × ðRK Þ . þ þ þ þ þ þ - þ xþ j , . . ., xj , xj , xj , . . ., xj , xj - xj , xj , . . ., xj , yj ,

ð8:2Þ

K where xþ j - xj is the j-th entry of coordinates in ðR Þ . Thus, by reducing public goods production to the usual general equilibrium theoretical description of inputs, output, and supply–demand equilibrium (but in a hypothetical market setting where both consumers and firms are given individual input prices), the general equilibrium under Lindahl prices, defined below, can be regarded as the normal general equilibrium in the hypothetical commodity space. 11 J

8.2.2

Equilibrium Relative to a Lindahl Price System with Income Transfers

We define the set of all technically possible production plans in the economy, Y , as the following set:

11

To be precise, one point should be added: the concept of equilibrium under the Lindahl price, described below, incorporates the government’s sense of purpose through the optimal activity criterion for the public firm.

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xþ j ,y=

Y = fðx; yÞ j x = j2J[f0g

yj , ðx, xþ j ; yj Þ 2 Y j for all j 2 J [ f0gg: j2J[f0g

ð8:3Þ For firms, we also assume that there is a list of shareholding rates, ððθij Þj2J Þi2I . For an economy E = ð≿i , ωi Þi2I , Y 0 , ðY j Þj2J , ððθij Þj2J Þi2I , if consumption allocation ððx; zi Þ 2 RK[L þ Þi2I satisfies zi = i2I

ωi þ y for some ðx; yÞ 2 Y, i2I

ð8:4Þ

we say that ðx; zi Þi2I is feasible under ðx; yÞ 2 Y. The list of price vectors, ðp*K , p*L Þ 2 RK[L , input price vectors for consumers, i * ðpI 2 RK Þi2I , producers, ðpjJ * 2 RK Þj2J , and public firm, p0* 2 RK , such that p*K = p0* þ i2I piI * þ j2J pjJ * , income transfers to consumers, ðd *i Þi2I 2 RI , and feasible consumption allocation, ðx* ; z*i Þi2I under ðx* ; y* Þ 2 Y with * * * *þ * * *þ * y = j2J[f0g yj , where ðx , x0 ; y0 Þ 2 Y 0 and ðx , xj ; yj Þ 2 Y j for each j 2 J, is called an equilibrium relative to the Lindahl price system for with income transfers, ðp*K , p*L , ðpiI * Þi2I , ðpjJ * Þj2J , p0* , ðd *i Þi2I Þ, E = ð≿i , ωi Þi2I , Y 0 , ðY j Þj2J , ððθij Þj2J Þ

i2I

, if the following conditions are satisfied:

j * * * * * (i) Profit Maximization for Private Firms: p*K . x*þ j - pJ . x þ pL . y j > pK . =

j * * - þ xþ j - pJ . xj þ pL . yj for all ðxj , xj ; yj Þ 2 Y j for each j 2 J. We denote by π *j the profit of firm j (the value of the left-hand side of this inequality) for each j 2 J. 0* * * * (ii) Profit Maximality for the Public Firm: p*K . x*þ 0 - p . x þ pL . y 0 > 0* * - þ - þ p*K . xþ 0 - p . x0 þ pL . y0 for all ðx0 , x0 ; y0 Þ 2 Y 0 such that ðx0 , x0 ; y0 Þ is associated with an allocation that is Pareto superior to the status quo allocation. 12 We denote by π *0 the profit of the public firm (the value of the left-hand side of this inequality). (iii) Expenditure Minimization for Consumers: For each i 2 I, ðx* ; z*i Þ satisfies piI * . x* þ p*L . z*i ≦p*L . ωi þ j2J θij π *j þ d*i and for all ðx; zi Þ such that ðx; zi Þ≿i ðx* ; z*i Þ, we have p*L . ωi þ j2J θij π *j þ d*i ≦piI * . x þ p*L . zi .

12 The condition is equivalent to the ordinary profit maximization if Y 0 is convex. For example, suppose that the necessary condition for the Pareto optimum is to have at least the same number of available beds as at present. In such a case, condition (ii) for a public hospital can be interpreted as a condition that it does not matter if it has a deficit as long as its management is efficient to the point that no matter how the hospital manages to secure the same or more available beds, its profit margin will remain below the current level.

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The expenditure minimization implies the following utility maximization if the minimum wealth condition is satisfied (Debreu (1959); p. 69, (1)). (iv) Utility Maximization for Consumers: For each i 2 I, ðx* ; z*i Þ is the ≿i-greatest element of fðx; zi Þ 2 RK[L j piI * . x þ p*L . zi ≦p*L . ωi þ d*i g: If conditions (i), (ii), and (iv) instead of (iii) are satisfied, the same list of prices and feasible allocations for E is called a Lindahl equilibrium. Note that in condition (iii), since ðx* ; z*i Þ≿i ðx* ; z*i Þ is always satisfied, we have θij π *j þ d*i ,

piI * . x* þ p*L . z*i = p*L . ωi þ j2J

ð8:5Þ

for each i for every (minimum expenditure) equilibrium state (relative to the Lindahl price system).

8.2.3

Fundamental Welfare Theorems for Lindahl Equilibria

As mentioned earlier, the issue of equal consumption is treated here as a technology in a hypothetical commodity space. In other words, the medical public good must be supplied to all citizens (in Japan, Article 25 of the Constitution) is here replaced by the only way is to supply all citizens technologically. Theorem 1 (The First Fundamental Theorem) A Lindahl equilibrium allocation, ðx* ; z*i Þi2I , with the equilibrium Lindahl price vectors and income transfers ðp*K , p*L , ðpiI * Þi2I , ðpjJ * Þj2J , p0* , ðd*i Þi2I Þ , is Pareto optimal if there are no satiated agents. Theorem 2 (The Second Fundamental Theorem) Every Pareto optimal allocafor tion, ðx* ; z*i Þi2I , feasible under ðx* ; y* Þ 2 Y with y* = y*0 þ j2J y*j

E = ðð≿i , ωi Þi2I , Y 0 , ðY j Þj2J , ððθij Þj2J Þi2I Þ , where each Y j , j 2 J , is convex and there exists at least one i ′ such that ðx* ; zi ′ Þ is not satiated, is an equilibrium relative to a list of Lindahl price vectors and income transfers ðp*K , p*L , ðpiI * Þi2I , ðpjJ * Þj2J , p0* , ðd *i Þi2I Þ.

8.3

Examples

In this section, we treat several special situations that can be treated through an equilibrium relative to the Lindahl price system with income transfers. Our approach is unique in the sense that by considering public firm, we can treat simultaneously the problem of the fiscal balance and the optimal supply problem of public goods.

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(− 1, 1)

(− 1, 1) +

1

−1 0

9

1

Fig. 8.1 Y 0 = fð0, 0Þ, ð - 1, 1Þg and ð - 1, 1Þ þ Y 1

The first example shows that a unique Pareto optimal allocation is supported by an equilibrium relative to a Lindahl price system with a non-zero financial deficit. To support this situation, one of two interpretations would be required: either taxing the capitalists or achieving dividend equilibrium with an acceptable budget deficit in a situation where the capitalists are satiate. Here we basically take the later interpretation instead of taxation. This is the only solution for a government state capable of issuing money when taxation directed at the capitalist is, for whatever reason, impractical. Example 1 Suppose that two commodities, a public good (commodity 1) and a private good (commodity 2), exist. The public good is assumed to have both the non-excludability and non-rivalness. Consider a public firm and a private firm and two consumers (a worker and a capitalist). The worker (iw ) has one unit of private good (identified with one unit of labor) as the initial endowment. The capitalist (ic ) owns the private firm (technology Y 1 ⊂ R2 ) and having no initial endowment. Government possesses the public firm technology Y 0 ⊂ R2 . Each consumer has consumption set R2þ with utility function such that uðx1 , x2 Þ = minfx2 , 8g. (That is, each consumer has a satiated preference and does not obtain positive utility from the public good.) Furthermore, suppose that Y 0 = fð0, 0Þ, ð - 1, 1Þg and p p 10 Y 1 = fðy1 , y2 Þj y2 = 10 10 - y1 - 1, 0≦y1 ≦10g. In other words, Y 0 is a technology that transforms one unit of private good into one unit of public good (or does nothing), and Y 1 is a well-behaved technology that transforms one unit of public good into 10 units of private good (Fig. 8.1). In Example 1, it is clear that the production of the public good must take place for Pareto optimality. Furthermore, for the competitive private firm, only p = ðp1 , p2 Þ = ð1, 0Þ is the price (with norm 1) to support production behavior that produces 10 units of private good with one unit of public good input, while satisfying the profit-maximization condition. It follows that if we do not use any income-transfer policy, the unique competitive (Lindahl) equilibrium, where dividends diw = 0 for worker and dic = 10 for capitalist (the profit of private firm), is the

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allocation, xiw = ð1, 1Þ for worker and xic = ð9, 1Þ for capitalist. 13 The allocation is not Pareto optimal involving a government budget deficit - 1 = p . ð - 1, 1Þ, even though the result is better than a situation where no production occurs. If we allow the government to further increase its budget deficit and allow a positive dividend (fiat money issuance) diw = 1 to worker, we obtain a Pareto optimal (dividend) competitive equilibrium allocation, xiw = ð2, 1Þ and xic = ð8, 1Þ, with a government budget deficit of - 2. For such a Lindahl general equilibrium with dividends, the satiation of preference of capitalist or, from a dynamic perspective, savings (especially under the overlapping generations framework) is essential.14 The savings of capitalist is equal to the government budget deficit for both cases. Such a government deficit can be viewed as a loan from the private sector, i.e., credit given to the state from the private sector. In fact, the private sector’s faith in the value of its savings is precisely the same as its faith in the state, money, and the market system. Can we really say that such a government deficit is a bad thing and must be eliminated? Moreover, it is only with such a government deficit (unless we assume a lump-sum tax from the private firm) that a Pareto optimal allocation of resources can be realized. For Example 1 in a static framework, now we add a discussion on dynamic considerations. As mentioned above, the budgetary surplus of a preference-saturated agent in Example 1 can be considered as savings, i.e., a loan to the government, but at the same time, it must be the final or eternal savings (undistributed profit) under Walras’ law. If we allow for undistributed profits, directly to the firms, it is not difficult to consider such eternal savings (linked to government budget deficits) in a dynamic framework (think, for example, firms’ eternally undistributed internal deposits). 15 In Example 2, however, we present a dynamic framework in which similar matters arise without having to consider things like undistributed profits. Under the overlapping generations (consumption loan) framework, the problem can be represented by the seigniorage in Samuelson-type savings economies. In the following, we will restate it as a model including production, closer to Example 1. Example 2 Let us consider a two-period overlapping generations (OLG) economy such that for each period t = 1, 2, . . ., there are two commodities (a public good and a private good) and an agent t who lives in periods t and t þ 1 and has a well-behaved technology Y t that can produce 2 units of private good from one unit of public good in period t under supporting price ð1, 0Þ in action ðprivate; publicÞ = ð2, - 1Þ. Suppose that public firm technology Y 0 is such that by using one unit of private good in period 1, it can provide one unit of public good for each period t = 1, 2, . . . (or does nothing). There exists a special agent (initial old) who lives only in period

13 Note that the price of public good is 0 and the preferences are satiated, so uð9, 1Þ = uð8, 1Þ maximizes the utility of capitalist. 14 See (Example 2). 15 Here, we note that the coexistence of undistributed profits with optimality is an interesting feature of the problem concerned when contrasted with the transversality condition in optimal programming theorems for production with discount factors.

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(− 1, 1)

−1 0

(− 1, 1) +

1

Private Good

Fig. 8.2 Y 0 = fð0, 0Þ, ð - 1, 1Þg and ð - 1, 1Þ þ Y t

1 having one unit of private good as his/her initial endowment with utility function uðxÞ = x, where x is the amount of private good. Moreover, suppose that each agent t has no initial endowment and has a utility function depending only on the amounts of private goods in R2þ as uðxy , xo Þ = xy þ xo , where superscripts denote young = y or old = o period for private goods (Fig. 8.2). In this case, we also have a trivial (unique) public firm action that is Pareto optimal, using one unit of private good in period 1, and provide 1 unit of public good for every period. If otherwise, we have ð1Þ, ð0, 0Þ, ð0, 0Þ, . . ., as the only feasible allocation. As long as the public firm chooses the action, we have a (unique) Pareto optimal (Lindahl) general equilibrium allocation, ð1Þ, ð1, 1Þ, ð1, 1Þ, . . ., under price system, ð0, 0, . . .Þ for public goods and ð1, 1, . . .Þ for private goods with dividend 0 for initial old and d t = 2 for each t = 1, 2, . . . that is equal to the profit for technology Y t under price ðprivate; publicÞ = ð1, 0Þ. For this Lindahl general equilibrium, the profit of public firm is - 1 = ð - 1Þ . 1 þ 1 . 0 þ 1 . 0 þ ⋯ , so that the unique Pareto optimal allocation can only be achieved with an inevitable government budget deficit. In Example 2, technologies and productions do not bring about arguments on investments and capital accumulation. Now, we further extend the previous OLG example by identifying public goods as the social capital and incorporating the economic growth. Example 3 Consider a two-period OLG economy such that for each period t = 1, 2, . . ., there are two commodities (a public good and a private good) and an agent t who lives in periods t and t þ 1 and has a well-behaved production technology Y t that can produce 3 units of private good from one unit of public good in period t under supporting price ð1, 0Þ at action ðprivate; publicÞ = ð3, - 1Þ. Moreover, assume that each agent t = 1, 2, . . . also has an investment technology Y It that can transform one unit of private good in period t into the same amount of it in period t þ 1. Suppose that for each t = 1, 2, . . ., public firm technology Y 0,t is such that by using one unit of private good in period t, it can provide one unit of public good in period t (or does nothing). A special agent 0 (initial old) exists who lives only in period 1 having one unit of private good as his/her initial endowment with

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Public Good

(− 1, 1)

(− 1, 1) +

−1 0

Private Good

2

Fig. 8.3 Y 0,t = fð0, 0Þ, ð - 1, 1Þg and ð - 1, 1Þ þ Y t

0,1

Govt.

0,3

1

=0 =1

0,2

1

0

=2

=

0

1 2

0

2

0

0

0

Fig. 8.4 OLG settings for Example 3

utility function uðxÞ = minfx, 1g, where x is the amount of private good. Each agent t = 1, 2, . . . has no initial endowment and has a utility function depending only on the amounts of private goods in R2þ as uðxy , xo Þ = minfðxy Þ0:5 ðxo Þ0:5 , 1g, where superscripts denote young = y or old = o period for private goods. See Figs. 8.3 and 8.4. The settings in Example 3 are essentially the same with those in Example 2 except for the existence of satiated preferences (as in Example 1) and the possibility of savings and capital accumulation. Again, we can easily check that there is a unique Pareto optimal allocation ð1Þ, ð1, 1Þ, ð1, 1Þ, ð1, 1Þ, . . . of private goods that is feasible only by using all technologies and resources to the limit, i.e., by using the initial endowment of private good of the initial old, choose ð - 1, 1Þ 2 Y 0 , t, ð3, - 1Þ 2 Y t , and ð - 1, 1Þ 2 Y It for all t = 1, 2, 3, . . ., with supporting Lindahl price ð0, 0, 0, . . .Þ of public goods and ð1, 1, 1, . . .Þ of private goods. Dividends are also determined uniquely as d0 = 0 for initial old, and dt = 3 for t = 1, 2, . . ., which is equal to the private firm profit. Then, the unique Pareto optimal allocation becomes a Lindahl general equilibrium with non-negative transfers.

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In this equilibrium, the government deficit in producing public goods amount of monetary transfer is together with the first period d0 ð - 2Þþð - 1Þþð - 1Þþ⋯ = - 1, and the total amount of savings of consumers is 1 þ 1 þ 1 þ ⋯ = þ 1. That is, the unique Pareto optimal ð1Þ, ð1, 1Þ, ð1, 1Þ, . . ., is supported only by an infinite total amount of government deficits (the issuance of money) that is corresponding to an infinite amount of total savings in the private sector (private firms or consumers). Note also that under the unique equilibrium path, no inflation occurs. In other words, inflation never occurs as long as capital goods (in this model, investment in social capital through Y It , t = 1, 2, . . .) are more attractive than consumption goods.

8.4 8.4.1

COVID-19 Case Studies in the Field of Medical Care in Japan Health Care and Public Goods in Japan

Medical care in Japan is characterized by universal coverage and free access. Its system allows all citizens to receive identical medical services at low cost anywhere in the country. In addition, it has both public and private medical institutions, and although they of course have different sizes and roles, the services they provide are based on the premise that there is no significant difference in the quality of treatment or price for the same treatment for the same disease. This is based on social security as the state’s responsibility for the right to exist under Article 25 of the Japanese Constitution. However, social security in Japan is not fully publicly funded, as in the United Kingdom, for example; it is partially self-financed, so it is desirable to discuss it as a merit good: a private good that is systematically treated like a public good. Of course, public health and immunization are considered public goods in the usual and natural sense. Public health, preventive medicine, and the containment of infection are public goods that people inherently desire. However, such medical issues as the prevention of colds, the mandatory wearing of masks, and PCR testing, which are value goods in the above sense, are sometimes enacted as substitutes without sufficient examination of the question whether disseminating them as public goods is actually meaningful. Unfortunately, the loss caused by this difference has not been fully addressed, and to accurately grasp this point, a proper picture of the original first best condition must be drawn. In fact, the government’s responses and people’s movements during the COVID-19 pandemic have shown that, in many places, what were theoretically just substitutes for public goods have been “misplaced” as public goods that should really be provided, resulting in a provision of public goods that are not what the people want. Not only did this lower people’s welfare because it was not well known to the public; it also caused a situation that could have fueled the collapse of public health care, which should have been maintained in the first place.

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8.4.2

Problems with PCR Test and Definition of Infection

8.4.2.1

Basic Prerequisites for Infection and PCR Test

163

In the first place, an infectious disease is caused by pathogens entering the body. Infectious diseases are diagnosed only when particular symptoms are observed, and therefore, simply having a pathogen invade the body is insufficient evidence for diagnosing an infectious disease. In other words, the diagnosis of infectious diseases is made by inferring from the symptoms of a patient with symptoms and identifying the pathogen by testing to confirm infection by some pathogen. Now, for COVID-19, a PCR test detected the pathogenic virus by amplifying the target DNA in the specimen and identifying it. In other words, the PCR test is positive because the novel coronavirus is detected in the specimen, which suggests that the virus was attached to the specimen, and so the specimen cannot be said to be infected based on the above definition. Since the sensitivity of PCR tests is approximately 70%, roughly 30% of false negatives might actually be positive. Conversely, their specificity is said to be about 95 - 99%, and false positives (1 - 5%) are judged positive when they should be negative. For example, if we have 100 specimens, some of which contain pathogens and some that do not, 70 specimens that actually contain pathogens will be judged positive and 30 will be judged negative in the PCR test, and 5 of the specimens that do not contain pathogens will be judged positive and 95 will be judged negative. Therefore, the positive predictive value is 70∕ ð70 þ 5Þ = 93:3%, and the negative predictive value is 95∕ ð30 þ 95Þ = 76%, which means that the confidence level for a positive result is relatively high, although it is low for a negative result. Therefore, while it is good to identify positives, there is a reasonable chance of missing some. As for negative tests, they do not guarantee actual negativity.

8.4.2.2

Cases in Japan (1): Classification of Designated Infectious Diseases

Under conventional Japanese medical practice, patients with symptoms would be tested for COVID-19, and if they tested positive, they would be diagnosed with the disease and hospitalized. However, at the beginning of the pandemic, the pathogen was new, and its infectivity, fatality rate, and severity were unknown. Therefore, the disease was categorized as a designated infectious disease, and to prevent a pandemic, all persons with detected pathogens were hospitalized in isolation, regardless of whether they had any symptoms. PCR tests were given to those who had close contacts, regardless of whether they had any symptoms. Note that this information, which qualifies as a designated infectious disease, is itself a public good that has been created. If this classification is wrong in the first place, then no proper first best conclusion can be reached. Furthermore, this step has not merely lowered people’s welfare; it has become a problem that will lead to a

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breakdown in the original public health care delivery system itself, as described below. In Japan, designated infectious disease hospitals were established as special medical institutions for treating such patients who are considered too dangerous to be treated in general hospitals, and other than tuberculosis-designated medical institutions, they are responsible for treating Class I (e.g., Ebola), Class II (e.g., tuberculosis), and new infectious diseases. However, it was assumed that these infectious diseases are mainly spread from overseas (returnees) and are rare with a high fatality rate, and therefore only four designated medical institutions in Japan are capable of treating new infectious diseases, with a total of only 10 beds. Only 407 hospitals with a total of 1,878 beds have been designated as Class I and Class II infectious disease facilities, which also deal with Class I and Class II infectious diseases. Therefore, during the COVID-19 pandemic, all positive patients, including many asymptomatic ones, were hospitalized in principle, resulting in a large overuse of these beds, and many positive patients were also admitted to general hospitals that were not originally designed to accept infectious disease patients. Naturally, these hospitals did not have negative pressure rooms, and the buildings themselves were not designed for infection control zoning. Other factors have made it impossible to take full measures against infectious diseases. Normally, general wards are staffed with one nurse for every seven or ten inpatients. But in the case of COVID-19, one nurse was needed for every four inpatients, according to the Japan Nurses Association and other organizations. In other words, many general hospitals borrowed doctors, nurses, and other medical resources from other wards. In this situation, the original medical care was restricted to respond to COVID-19, and as a result of restricting general medical care, which was practically being treated as a public good, prioritizing COVID-19, resources for general medical care were reduced, creating a situation that could have led to the collapse of medical care.

8.4.2.3

Cases in Japan (2): PCR Test

Furthermore, on a daily basis, the mass media described PCR-positive persons as infected, and this attitude created a mentality in the general public where positivity = infection. Furthermore, since such measures were taken as hospitalization in principle for those who tested positive and home quarantines for those who had close contacts, people developed a sense that testing positive or having close contacts would disturb society (school, work, etc.) and that this was a bad thing. To maintain their daily lives, people began to demand a negative result from a PCR test as a “license/passport” to say that they were not infected. As explained earlier, a negative result does not prove that a person is pathogen-free, but it has been “misplaced” as a “license/passport” that guarantees a negative result = no infection. This idea can be summarized as where the mass media, another organization capable of supplying artificial public goods, excessively (and in a certain direction) facilitated the role of medical institutions in diagnosing infectious diseases. This role should have been fulfilled by medical institutions, along with the public good of

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being labeled as a designated infectious disease. In addition, the government, medical organizations, and mass media should have anticipated that such a “misplacement” would occur, although it was the general public who made that mistake. However, no action was taken to deal with such misplacements. Furthermore, while the national and local governments called for unnecessary and hasty restrictions on activities, they also demanded that PCR tests be negative in cases of unavoidable travel, etc. Therefore, this “license/passport” was treated as another public good, as an endorsement of the state. This public good has no original scientific basis and is not a public benefit that should be provided. In fact, the provision of such a government-approved public good with no scientific distorted the resource allocation described below. PCR tests have been used mainly by public health centers as an administrative tool to flush out positive cases. Hospitals have also conducted them prior to hospitalization or surgery to flush out positive cases and funnel them to COVID-19 wards or postpone surgery to prevent the spread of infection among hospitalized patients and medical personnel in general medical care. However, as mentioned earlier, as the demand increased for a “license/passport” to prove a negative result as an endorsement, private companies entered the market as suppliers, and private PCR testing expanded. However, since people who took this private PCR test wanted a negative result, the negative result rate was lower than the positive result rate, and so people wanted a lower positive result rate than the positive result rate. This led to a flood of inferior “license/passport” throughout the country. Because of the high demand and the lure of profits, the private sector quickly increased the supply, resulting in a proliferation of private tests, large purchases of testing equipment and reagents, and a captive population of laboratory technicians. As a result, even if public health centers and medical institutions, which are designed to flush out positives, wanted to increase the number of tests, they were unable to do so because of the difficulty obtaining resources (especially for public institutions, where decision-making takes a long time). This situation also impacted general medical care. The entirety of COVID-19 pandemic control was bungled through a misunderstanding, and the situation, which functioned in a self-destructive manner in society, could have fueled the collapse of medical care.

8.4.3

Vaccinations in Japan

A similar mistake occurred in the vaccination context. The COVID-19 vaccine was initially positioned to prevent severe disease. Therefore, vaccinations were given to the elderly and those with underlying diseases and at high risk of serious illnesses. Younger people who were mostly asymptomatic or did not suffer from serious illnesses received vaccinations later. However, at the same time, the national and local governments determined that vaccinations or a negative PCR test result were conditions for benefiting from travel promotion campaigns. Therefore, vaccinations (the prescribed number of times) became an acceptable condition as well as a negative PCR result. Vaccines were not supposed to prevent infections. However,

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equating vaccinations with negative PCR tests created the perception that they are non-infectious and have been mistakenly seen as infection prevention. In other words, without any scientific basis the proof of vaccination provided a “license/ passport”: a public property endorsed by the state. Vaccines are generally approved after years of clinical trials and the determination that their advantages outweigh their disadvantages from a public health standpoint, including continued efficacy. However, the COVID-19 vaccine, in the form of an emergency-use permit, is now placed in the same category as vaccines that have been subjected to the conventional clinical trial process, since taking urgent action was deemed necessary, based on the initial public goods judgment that began with the recognition of the COVID-19 pandemic as a designated infectious disease. This situation also leaves open the danger of even more serious deterioration of people’s health and welfare by granting a fictitious public goods status to the name of a vaccine as a technology with a new mechanism in the name of mRNA.

8.4.4

Subsidies for Securing Hospital Beds (Functional Differentiation of Hospitals)

The above problems cannot be overlooked in the provision of public goods as merit goods in terms of state response, designated infectious diseases, PCR testing, vaccination, etc., not to mention the impact on such merit goods as securing hospital beds. The fact that various subsidies were allocated to medical institutions in relation to COVID-19 is not well known by the general public. From the standpoint of public health, subsidies are naturally necessary for acceptance systems and purchasing testing equipment by securing hospital beds as public goods. This is an important role of public medical institutions. However, due to the urgency of the situation, for a certain period of time, subsidies were given to all medical institutions without distinguishing between public and private institutions or the appropriate use and effectiveness of subsidies, in part because of the direct implication of sharing the role with the private sector. In particular, subsidies paid as compensation for vacant beds in support of securing beds were meant to compensate for the medical revenue that could have been obtained through general practice by keeping beds open for COVID-19 patients. However, this idea should have been implemented for private medical institutions without compensating for the deficits of public medical institutions. For example, for hospital medical institutions that normally provide high-level medical care with high turnover, some felt that such expenditures were small amount of money, because in addition to the amount of medical fees (that would have been obtained through general medical care) from securing beds, many medical resources (doctors, nurses, etc.) were removed from hospitals other than beds. On the other hand, some public medical institutions that usually have vacant beds obtained a large amount of subsidies by securing beds that were originally vacant. In addition,

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because their medical functions were not very high to begin with, other medical institutions did not actually accept COVID-19 patients, even though they claimed to have available beds or only accepted patients of low severity that required few medical resources. Perhaps due in part to these factors, according to data released by the Ministry of Finance’s Fiscal System Subcommittee of the Fiscal System Council, the financial results of public hospitals in FY2020 showed especially rapid improvement and large surpluses. It is still necessary to verify whether the subsidy amount and construction were appropriate from a cost-effectiveness standpoint. As the theorem of this chapter argues, a deficit in itself is not a bad thing, and it is a mistake to request a profit-maximization factor for both public and private medical institutions. This section discussed the current problems in Japan’s management of public and private medical institutions and state policies in light of the equilibrium concept that optimizes the supply of public goods for public and private enterprises: the subject of this chapter. One feature of the paper is that it is based on scientific evidence, which is compared to the issue of technology, and various judgments were made. One point we stress is that in some cases, “people’s happiness does not have to be based on scientific evidence.” If we deploy the welfare criterion that “happiness is possible even if one is deceived,” perhaps the “license/passport” or endorsement developed here has other values. However, we did not adopt such a position in this chapter.

8.5

Conclusion

In an economy that includes multiple private and public firms, it is difficult to clearly argue that an optimal state takes into account the issue of public goods as merit goods as well as matters of money and state finances. However, an ideal situation can be defined as a Lindahl equilibrium that includes a supply of public goods as merit goods and state finances by providing clear criteria for judging the social structure, including technology. Under such a situation, we must also correct the idea that it is simply necessary to improve the deficit when considering the issue of public health care. At the same time, this clearly does not mean that no constraints exist on costs. In other words, we can make explicit the fundamental (interdependent) relationship among markets, public goods, and state finances. Acknowledgements We appreciate the helpful comments from the participants of the monthly methodology seminars at Osaka University (sponsored by the subcommittee of the Japanese Society for Mathematical Economics, JSME). This work was supported by JSPS KAKENHI Grant Numbers JP20K13461 and JP20H03912.

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References Debreu, G. (1959). Theory of value. Yale University Press. Foley, D. K. (1970). Lindahl’s solution and the core of an economy with public goods. Econometrica, 38(1), 66–72. Lindahl, E. (1919). Positive Losung, Die Gerechtigkeit der Besteurung. (English Translation, Just taxation: A positive solution. In Musgrave & Peacock, Classics in the theory of public finance, 1958, Macmillan) Mas-Colell, A., & Silvestre, J. (1989). Cost share equilibria: A Lindahlian approach. Journal of Economic Theory, 47, 239–256. Milleron, J.-C. (1972). Theory of value with public goods: A survey article. Journal of Economic Theory, 5, 419–477. Smith, A. (1776). The wealth of nations. W. Strahan and T. Cadell. Urai, K., Murakami, H., & Kobayashi, D. (2022). The State Finance and Public Goods from the General Equilibrium Viewpoint: Fundamental Welfare Theorems for Lindahlian General Equilibrium with Money. Mimeo Walras, L. (1874). Eléments d’économie politique pure. Corbaz (English translation by W. Jaffé, Elements of pure economics. George Allen and Unwin, 1956) Whitehead, A. N. (1929). Process and reality. (Gifford lectures, 1927–28; Corrected edn., The Free Press, 1978; originally published in 1929)

Chapter 9

Memento Mori in Medicine and the Universality of Forces from Below: On the Reality of Markets Daiichi Morii, Hiromi Murakami, and Ken Urai

Abstract The first purpose of this chapter is to characterize the market, one of the central concepts in economic theory, more generally as the universality of the forces working from below. In economics, the concept of the market is used as an “inevitable” tool as a framework for thinking about this field, so we could increase the “permissible” possibility of “using” the theory by presenting a more general way of understanding its essence. The chapter’s second purpose is to apply such forces from below as reality in economics to the specific problem of memento mori (not to turn away from death) in medicine. Through these ideas, we would like to capture the constitution for the “place” of reality in RFSS (Chap. 5) that always generates new questions from the reality of death, and thus life, to the reality of knowledge.

9.1

Introduction

The reason why the relationship between medicine and economics is important is that they share a common challenge that cannot be met only from the perspective of modern science, which observes objects prospectively. The commonality is that they must be dealt with as a whole, including the technical and practical aspects of their application to the real world. The most representative example of this is the issue of memento mori (not turning away from death) in medicine, which is the subject of this paper. The first purpose of this chapter is to characterize the market, one of the central concepts in economics, more generally as the universality of the forces D. Morii (✉) Japan Medical Association Research Institute, Tokyo, Japan e-mail: [email protected] H. Murakami Faculty of Fine Arts, Kyoto City University of Arts, Kyoto, Japan e-mail: [email protected] K. Urai Graduate School of Economics, Osaka University, Toyonaka, Osaka, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_9

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working from below. In economics, the concept of the market is used as an “inevitable” tool (or moment, Chap. 5) as a framework for thinking about this field. Here, we take its characterization, first of all, as being decentralized in general (as often used in axiomatic characterizations in theories). In addition, we would like to see the workings of the market (exchange) as the overall harmony (order in the loosest sense) resulting from the coordination of such decentralized forces through some form of communication (e.g., through language and symbols), and the universality of this series of processes.1 This generalization of the nature of the market also increases its “permissible” potential in the “use” of economic theory. Whereas the traditional critique of economics has basically been conducted through a negative view of the market concept, here we take the direction of generalizing the theory through universalizing the concept of the market. This is, in fact, what economic theory has done until today, rather as a practice.2 The second purpose of this chapter is to apply such a universalized and generalized concept of the market, that is, the concept of leaving it to the market (which in this chapter is called the generalized second fundamental theorem of welfare economics), to the problems in medical care (in particular the problem of memento mori in medical care). This poses questions and guidelines, first of all for medicine, as to what are the problems that must be entrusted to forces from below and what it means to entrust them properly. Not only that, but through this, we gain a “constitution for the place” (the basic stance of the RFSS) that constantly creates new questions directed from the reality of death and thus of life to the reality of knowledge. And this leads to a scientific method rooted in realism, in medicine as well as in economics, which is more soundly based on the reality of our individual death (and thus of our life). We begin in Sect. 9.2 with a theoretical reflection on our first objective, the characterization of markets through the universality of forces from below. In Sect. 9.3, we move on to our second objective, the issues of memento mori in medical care, starting with the issue of classifying senility in cause-of-death data. In Sect. 9.4,

This is also a reconsideration of Adam Smith’s “invisible hand” (Smith 1776) and Hayek’s “spontaneous order” (Hayek 1973). In other words, it is a rethinking of equilibrium or order in the loosest sense of order and its universality, through communication and its consequences. 2 The particular emphasis here on the term universality is due to the emphasis on the relational aspect of the concept of the market, and the further goal of giving it meaning as a categorical analogy, a certain “width of (schematic) stance.” Mathematically speaking, this means the content described through universal mapping properties, representable functors, or, more simply, axiomatic characterizations (not elemental reductionist ones). There are two broad ways of describing the world: One is to build inductively from the obvious (from below, externally), and the other is to look at the whole from the head (from above, internally). For example, trying to grasp the whole with the concept of set is an example of the latter. While it is “inevitable” that we eventually use some such superordinate (set-like) concept as the basis for logic, more generally, there can be a more relaxed way of doing this. Things such as category theory, universal mapping properties, expressible functions, or axiomatic characterizations, referred to above, are one way of “enclosing” (capturing) the whole, so to speak, at a pre-logical level (turning it into something like an 2 symbol). 1

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these discussions are followed by a concluding discussion from the perspective of market reality. In the remainder of this introduction, I would like to provide some historical and theoretical background in advance of the above series of discussions, as well as Remarks on what might be suggested (especially from economic theory) for various discussions to follow the conclusion of the final section.

9.1.1

Universality of Forces from Below in Economic Theory

The universality of the forces from below (market universality) in economics may first be given as information efficiency (through price messages), as Hayek (1949, ch. II, “Economics and Knowledge”) saw it. If we generalize and restate this in social systems theory terms, we might say that it is an example of Luhmann’s “reduction of complexity” in communication (Luhmann 1984). When this concept of the forces from below is redefined as decentralization (populism, democracy, etc.), there seem to be two ways to describe it: good and bad. Good decentralization (populism/democracy) means that in establishing a whole system, the individual movements and functions are used to the fullest extent toward that order. Bad decentralization (populism/democracy), on the other hand, means that under its control, through its dependence on individual functions, it undermines that order. What is important is the matter of control toward that order. However, it is difficult to define what this order is. Assuming that a decentralization is structured as an opposition between the individual and the whole, in essence, the problem boils down to the question of how to control (top-down determination of goodness) the situation of decentralization in a good direction (from the perspective of the party seeking to control it as a whole system).3 Hence, the term order is used here in its widest possible sense (at the “inevitable motif/moment” level). It is used only in that sense of not destroying itself, obviously. For example, it is to that extent (survival conditions) that even the the least advantaged will survive in the Rawlsian sense (Rawls 1971). Now, we are trying to capture society as a whole system with order (in the weakest possible sense). And within that, we think of a market as a mechanism that is decentralized to its members and leads to some outcome (e.g., equilibrium) through communication (e.g., exchange). Needless to say, under such an assumption, we must always presume a self-referential situation of society that includes ourselves as members. And as long as we take such introspection into account, total

3

This is where the framework here differs fundamentally from Hayek’s usage of the term and perspective, which forms the issue of freedom into anything goes (as long as it is market-like). We are trying to treat the problem of control by (for example) governments that “use” the theory as a problem of subjects who cannot control the whole as they wish, or as a problem of “misplaced concreteness” of the “third layer” (Chap. 5) in the RFSS sense. Therefore, the content of this chapter is a concrete example of the development of the academic method and movement of RFSS described in Chap. 5 of this book.

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systems are always destined to incur incompleteness as systems, as Urai (2010, ch. 9) has already dealt with, for example, through Tarski’s undefinability of truth (e.g., Kunen (1980)). Moreover, this incompleteness is particularly imperfect with regard to individual decision-making, which is essential to the market.4 The conditions for this argument are very simple, even from the RFSS point of view, and they are based on the “establishment of a predicative relationship” between the individual and the society that includes the individual as a member and introspection as a “minimal recursiveness.” This reflects exactly the following situation: When each individual becomes a “participant” in the whole system as a subject of many “attitudes,” and when this system is rooted in the realism of introspection, “an attitude” as a system inevitably has a “self-transgressive cleavage” (Chap. 5). By analogy with the market, the structure of the market should include the creation and extinction of the commodity structure, the creation and extinction of the firm structure, and (considering the formation of subject expectations, etc.) the formation (creation and extinction) of all kinds of individual agents. (Memento mori, in this sense, can be called a selftransgressive cleavage in the formation of the individual subject. While it is important, it would be categorized as almost the same kind of problem as the abovementioned transversal cleavage of self-regarding agents’ rationality.) Here we focus on adverse selection in the general sense through information asymmetry as a cleavage in the commodity structure. This cleavage (being beyond rationality) cannot normally be considered a “final cause (mental pole)” (it collapses the market in the sense of Akerlof (1970)’s lemon market). However, it is possible to think of it as an “efficient cause (physical pole)” (as a thrownness in the face of what is beyond rationality). In fact, there exist general equilibrium models that endogenize the structure of the market, such as the commodity structure or the firm structure (see Urai et al. (2017, 2020), etc.). If, through some such device, a “comprehensive posture” (or “enclosure” Chap. 5) is provided that allows for many attitudes (it is a place constituted from some “inevitable moments/motifs,” Chap. 5), then there is a way to seek knowledge (with those moments/motifs as a guarantee of goodness). Here, we are trying to place the inevitable moment in the establishment of academic knowledge (RFSS) directed toward knowledge and the “comprehensive posture” of the market (in the broadest sense) that expresses the reality of a decentralized world. And we are trying to take further clues as to the minimum order (e.g., survival condition for all) or ameliorability (minimum recursive and inductive position) under it. In other words, we are trying to give a guideline toward academic knowledge rooted in the moment/motif of decentralization, the informational efficiency and goodness of the market in the usual welfare-economics sense

4

To be precise, in Urai (2010, ch. 9), Tarski’s undefinability is restated as the undefinability of the definition of rationality or social values (like prices) for individuals in standard social economic mathematical models. This problem is equivalent to Haruo Murata’s “system incompleteness” (Murata 2016) or, in RFSS terms (Chap. 5), “inexhaustibility of reality.”

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(where this stance is based on such historical control), and the minimal recursive/ inductive nature of improvement. Remark 1 (Thrownness as a Price Taker/Final Cause and Efficient Cause/Regulation of Information) It is necessary to avoid directly causing the adverse selection (in the general sense) mentioned above in order to establish goodness in communication, such as normal information reduction or the basic theorem of welfare economics. For this purpose, strategy proofness (or lack of strategy itself) from the standpoint of the individual in communication is important. In economics, the absence of market power or perfect competition (price taker) is used as a substitute for this. In other words, for adverse selection (in the most general sense), we need a “comprehensive posture” to control it as an “efficient cause” for the members of society, not as a “final cause” for them (as in the case of “inevitable moments/motifs” in Chap. 5). The role of politics and institutional design is to establish such a “comprehensive posture,” and a self-reliant and independent society is one in which such a “comprehensive posture” is established as an “inevitable motif.” On the other hand, at least in a finite (person/duration) economy, the price taker also corresponds (seemingly) to the abandonment of rationality (before it reaches its limits). If we restate this in application to general problems, including the memento mori problem, does this mean unconditional trust (no doubt) in science, academia, or general intelligence? If so, then of course it is to be criticized as not (fully) seeing what should be seen from a realistic point of view. However, this can also be positioned as an attempt at a kind of thrownness subjection, when there is something that is unknowable no matter how far you go. It is possible to establish a position that accepts the possibility of improvement in the future (as an efficient cause) for the time being, believing in the possibility of improvement in the future, or at least to take a “comprehensive posture” and “enclose” the market as a phronesis of practice, so to speak. Therefore, from the standpoint of supporting forces from below, the problem is not such thrownness, but the lack of information that should be shared through communication (regulation of information from above). We can thus conclude that the biggest problem in a stance based on forces from below and realism is the lack of information that should be shared through communication (regulation and control of information from above).

When we speak of the universality of the market mechanism in terms of market forces = forces from below, we should first consider Adam Smith (the invisible hand), Marx (the substructure), agrarianism as opposed to mercantilism, Hayek as opposed to Keynes, and small government as opposed to big government. In addition, in today’s pure economic theory, axiomatic characterizations of market mechanisms include such works as Hurwicz (1960) on information efficiency, Nagahisa (1991) on social choice theory, and Sonnenschein (1974) and Murakami and Urai (2019), etc., on universal mapping properties. More broadly, these works are closely related to basic themes in economic theory, such as the first and second fundamental theorems of welfare economics, the Edgeworth conjecture, and core equivalence. In this chapter, we treat them particularly in the context of the second fundamental theorem of welfare economics, as presented in the next section. (This is also a simplification of the treatment by Sonnenschein and Murakami-Urai, who brought the market mechanism into the universal mapping problem by relating it to core convergence as a representative problem.)

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Remark 2 The theme of this paper is also how to rethink Hayek’s “spontaneous order” from the perspective of realism (RFSS) again (in light of economic theory). In this sense, the essence of the second fundamental theorem is that the state, in its governance, embodies “order” in the form of “credit” and, except for its role in the distribution of income, should leave the rest to non-design markets (i.e., forces from below, or in other words, the matching condition of the marginal rate of substitution as described below). In this view, it is always meaningful to pursue improvement potential through the existence of information that can be shared (LID condition in Nagahisa (1991), etc.) and through readiness for such communication. In other words, a “comprehensive posture” that allows for the positioning of lack of communication as a sufficient condition for improvement potential is the true meaning of the market enclosure of not designing at the method of method level (as opposed to designing of method). And the fact that allocation can be improved as long as the marginal rate of substitution does not match is the most important teaching of the Second Fundamental Theorem, which states that the role of government should be limited to income transfers and the rest can be left to the market. The issue of death is the breakdown of such marginal substitution conditions for the individual (one may pay any price to avoid death) and the breakdown of superficial, easy, rational choices for the individual. The significance of memento mori is that it is the individual’s return to wisdom in the sense of realism rooted in the earth, beyond such easy rationality. This, in turn, will lead to a return to a stance of wisdom that includes not only what can be seen but also what cannot be seen, a stance that must be the basis of the scientific method, even from the standpoint of technology or science. If the market is a “comprehensive posture” as described above, then individual rationality will induce, through the market, the desired form of technology. This is the connection between the RFSS position, the reality of death, and the reality of the market (forces from below).5

9.2

Models for the Universality of Markets

The models and discussions in this section form an attempt to clarify the basic stance of how the providers of medical care should use “forces from below” (market mechanism: decentralized forces from below decide what the world should be like) as opposed to the “perspective from above” (design from above determines what the world should be like) that they often tend to fall into (in their supreme mission to cure diseases and protect lives). First, one of the basic principles of economics, the second fundamental theorem of welfare economics (e.g., Debreu (1959, ch. 6)), can be written in a less formal and more convenient form for use here: (Second Fundamental Theorem of Welfare Economics) Toward the room for improvement that we should aim for, if the initial asset transfer is done properly, the rest can be resolved through the market.

5

One might think that the stance of always acknowledging that there are things we do not see is an idea that collapses all inductive reasoning, since all data is somehow world (context)-dependent. But this stance does not deny that inductive reasoning is something that deepens a particular theory in one direction. It merely asserts that it does not provide some special, absolute criterion, some “unit of action” that is common to all theories. It only argues that a scientific position based on inductive reasoning should be given its own weight in such careful positioning (and it should be reasserted that this is rather the scientific position).

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When considering through the market based on this principle, it seems that there is already an initial problem in that the process of government approval, which is seen in the determination of drug prices in countries with public insurance, and the determination of treatment policy, as a medical technology decision based solely on the judgment of the medical care provider, do not include opportunities for consumer preferences and choices. As we saw in the previous chapter (Chap. 8), medical care should be treated as a public good (merit good) through the hypothetical market of the Lindahl equilibrium. Specifically in the government approval part, we must assume that what represents consumers’ preferences and choices is hidden. It was precisely in this sense that Chap. 8 dealt with the second fundamental theorem of welfare economics, including health care. However, an even more important preliminary matter should be mentioned here. If there is a shortage of sufficient medical care to satisfy everyone, then “through the market” (without taking into account government redistribution of income) is a substitution of a serious (power from above) problem of triage of life for the irresponsible (power from below) means of “solving it with money.” What we are attempting in the following is by no means such an argument. (Discussion 1: Triage of Life, Interpersonal Welfare Comparison, and Monetary Walrasian Allocation) If we look at the problem of applications to medical care as a social choice problem of interpersonal welfare comparison (Murakami and Nagahisa 2021), first of all, interpersonal utility comparison itself is a form of triage or sorting of lives. Therefore, in order to prevent this from becoming a triage of lives, the problem of “no one is left behind” (Lexicographic Minimum axiom) as a Rawlsian index and the Walrasian allocation that supports it (equal income Walrasian under price indexation) are deeply related to this paper. In this case, equal income could be paired with minimum essential health care costs (or as a survival condition). As for “no one is left behind,” it is possible to characterize it as a monetary Walrasian allocation (Murakami and Urai 2019) with message mechanism and monotonicity. Furthermore, the problem of the existence of a monetary Walrasian equilibrium (Urai et al. 2022) that supports such an allocation (e.g., under a basic income that satisfies survival conditions) is also deeply related to the discussion in this paper.

The model in this chapter leaves disregards any discussion of triage. That is, it assumes that, at least with the technology and resources of society as a whole, it is possible to provide medical care that satisfies all of society’s members (or is based on a target standard, such as a minimum human survival requirement). In economic theory, this is the case when there is a state of satiation for a given commodity.6 As a model, let us briefly consider the following: 6

In the expression used in the previous section, such issues may be the efficient causes (in the physical pole) but not the final causes (in the mental pole). Furthermore, to use the expression for memento mori in the next section, the dividing line that gives up the life-saving endeavor is a final cause in the mental pole if it is caused by a “power from above,” and in such a case, the medical resources will not be enough to satisfy even a single individual. If the essence of the market is “forces from below,” and if it is a “comprehensive posture” that can always incorporate new efficient causes of self-transgressive cleavages through the thrownness of its members, then medicine should gracefully leave the above-mentioned line-drawing problem to the forces from below. The meaning of memento mori is that we should not fear death to no end, but rather, by

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(Model) Consider a pure exchange general equilibrium model in which every agent has a satiation point and the survival condition for some agents is not necessarily satisfied under initial holdings. Suppose further that there exists a subset of agents, and that the initial holdings of that subset allow everyone in the economy to survive when, after all of the satiation levels of the members of that subset are satisfied, the entire remainder of the initial holdings are distributed outward from that subset (the economy-wide survival condition is established). This situation implies that even without the negative income transfer of taxes, an equilibrium in which everyone survives can be established with only positive income transfers from money issuance. (A similar general equilibrium of production, or even a social choice problem, could also be considered.)

In the above type of model, the existence of a monetary equilibrium (a general equilibrium in which the value of money is not zero) is approximately guaranteed by giving all agents an initial non-zero monetary endowment as appropriate. If the economy is such, then the government can adjust income solely through the issuance of money (without any question of a budget deficit). The second fundamental theorem of welfare economics, i.e., the market equilibrium realization of an arbitrary optimal state, is possible only through government money issuance (as a dividend equilibrium) to a certain extent.7 What we are trying to see in this model is that the optimal state of resource allocation is decentralized as a (monetary) market equilibrium in which the money supply is adjusted accordingly to meet everyone’s survival conditions through the continuation of the amount of savings of the wealthy who are satiated, i.e., government debt. Let us restate the second fundamental theorem of welfare economics in a more general form (from the way it is stated through prices and income, as an example directed at commoditized things): (Generalized Second Welfare Theorem) Any improvement we can aim for should always be left to decentralized forces from below (universal property).

In order to establish this generalized claim, it is necessary to examine, review, adjust, and reinterpret what has been “enclosed” as a rigorous mathematical theorem in economic theory, including its premises, various definitions, and proofs. However, considering that the argument is the very essence of economics as an

looking at death properly without looking away from it, each individual will regain his or her individuality and society as a whole will be restored to its richness. Science, medicine, and the individual must not only look at what they want to see but must also not look away from what they cannot see, for this is what it means to be truly alive. 7 See Mas-Colell (1992) for the existence of a market equilibrium with satiation, and Murakami and Urai (2017, 2019) for core convergence and an axiomatic characterization of monetary equilibrium. One can also dynamize such a state of affairs using an overlapping generations model (Urai et al. 2022). In that case, the essence remains the same, although a somewhat more cautious discussion of money issuance is necessary with respect to being directed toward an uncertain future. A more rigorous von Neumann-type model (Urai et al. 2019) that includes even bank credit creation could describe a similar structure. Based on such a monetary general equilibrium model, it is clear that the accumulation of budget deficits through the issuance of government bonds should be discussed in terms of the balance with private-sector credit, including financial derivatives, and not in terms of the balance of national finances.

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expression of its underlying “posture” (based on the workings of the market), it would be useful to list, in a contrastive way, some conditions corresponding to those necessary for the original theorem to hold as the necessary conditions for the theorem to hold here. The following is a (not entirely exhaustive) list of necessary conditions (only the last (5) is about the very thing it seeks) directed from the “posture” of economic theory to the analogy of its fundamental theorem, as an alternative to the proof of the above extended proposition. (1) Behind the term decentralized here is the expectation that it is a system that tries to pump out as much diverse information as possible. In economics, this corresponds to a precise universal sharing of mathematicized information, such as differences in individual marginal rates of substitution. (2) At the same time, there is realism involved (which cannot be expected from a system from above) in the sense of “not turning away from what is not seen.” Of course, this is a reference to “what is not seen (depending on the theory),” but on the other hand, in economics, it can be said that it is legitimate to be a price taker (Remark 1) precisely because it is so (i.e., because of what is not seen). In other words, realism is also concerned with the legitimacy of theory itself, which is based on thrownness at the layer of cognition (the second layer of misplacement, Chap. 5). (3) The concept of market in economics is used here as a very broad “comprehensive posture” that refers to information (efficient universality) as represented by price and the communication made possible through it. (4) The fact that all agents are price takers (perfect competition) in economics corresponds here to thrownness in the cognitive phase of looking at theory and accepting (for a time) the self-cleavage in theory as a new efficient cause from the standpoint of academic knowledge. Based on the specific process of communication leading to improvement, this corresponds to free (taboo-free) discussion and its acceptance. To return to economics, this naturally corresponds to free transactions, but since we clearly added without taboos, this condition is also a strict requirement (rule) here as a demand from realism, which “does not turn away from what it cannot see.” In other words, in economics, it also corresponds to a number of efficient causes in developing the theory, such as the requirement (and conditions for it) of the absence of incentives to lie strategically (e.g., non-convexity, information asymmetry). (5) The universality of the market mechanism (the desire for such universality) in economics is deeply related to thrownness, which is a phase one step higher than the previous one, and this means consistency between “my” way of “living” and academic knowledge (thrownness for that purpose). The thrownness here is about the ultimate phase (Chap. 5, the “third layer of misplacement”) of “maybe we are fundamentally wrong.” In the process of communication leading to improvement, it is connected to the demand for “continued dialogue” and concerns the “new creation” that comes after the “self-crossing cleavage” of the theory. In economics, this corresponds to the “creation” of a new theory itself,

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such as the endogenization of externalities and the development of new markets. The “creation” of a theory is inevitably accompanied by “history,” as long as it is under the perspective of realism, which “still cannot be exhausted,” it coexists (as an inherently inseparable thing) with a sense of “guilt,” responsibility, and ethics. It is precisely here that the self-reliance of true freedom as academic knowledge with its ultimate attitude of always accepting new incompleteness (i.e., respect for a “comprehensive posture” as academic knowledge that emphasizes minimal induction and recursion in Chap. 5) becomes a limiting condition for improvement (while also being involved in the essence of improvement). The “creativity” of academic knowledge is with this ultimate self-reliance that accompanies the ultimate thrownness (in academic knowledge) as described above. When we lose this ultimate self-reliance, we lose reality because we “see only what we want to see” (the action is controlled by the final cause of the mental pole). Conversely, if action is governed by the efficient cause of the physical pole, then “anything goes” and academic knowledge itself will be lost. These may be viewed as prerequisites for the establishment of academic knowledge (elements that must be in place to establish the reality of knowledge). This will be dealt with again in the final section of the summary. The basic “posture” of economics is to trust in the forces of decentralized markets “from below” (a kind of ultimate thrownness), rather than in how to guide this society, at least from a design perspective “from above.” It is the reality that underlies what Adam Smith called the “invisible hand” and Hayek termed the “spontaneous order.”

9.3 9.3.1

Death Realism: Rosui Memento Mori and Medicine

A paraphrase of memento mori in the context of medicine would be “Don’t forget the physiological absoluteness that ‘Death cannot be avoided.”’ However, the reason it is unavoidable has not yet been properly explained in medicine. Even among those who claim to have explained it, the explanations are fragmentary, and for most members of society, it is just “one slightly difficult story.” It is not realistic to convince people of the mechanisms of death that have occurred to date around them or of their own death. That, too, is an “incomprehensible story” for doctors, whom society (the state) has given the authority and responsibility to “pronounce death”; it amounts to almost useless knowledge that is disregarded on the scene when actually pronouncing death. In that sense, the “absoluteness” of the fact that “Death is inevitable” has not wavered, despite the fact that the reason people die has never been agreed upon as more than a myth or a story, at least in modern times. It is not easy to speak of prehistoric times, but from ancient Roman times to the present day, people have lived with the “absoluteness of the fact that death is inevitable,” and

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in light of the value since the beginning of modern times, myths and stories can even be thought of as a way for people to fill in the gaps due to the absoluteness of the inevitability of death. Medical science has simply added, for the time being, that this absoluteness is “something that can be explained someday as a physiological phenomenon.” Death cannot be forgotten, even without a reminder to remain aware of it. Therefore, memento mori is the basic condition that fundamentally defines all societies. The study of medicine has developed by demonstrating resistance to this fundamental condition. Therefore, at first glance, it seems self-contradictory for a practitioner of medicine to reinforce memento mori. However, in truth, since medicine is inseparable from the art of dealing with the reality of medicine, doctors know (as opposed to “not forgetting”) about the reality that death is inevitable. Medicine (medical care) often acknowledges its limitations with the reservation “in current medicine (medical care).” In particular, it is a common practice in Japan to start with the stance of resisting the physiological absoluteness of death and then bring up the inevitability of death after all efforts have been exhausted. However, it is difficult to deny that there are cultural differences in the extent to which death is incorporated at a stage where death is not imminent. Advance care planning (ACP) is ultimately heading toward death, but there may be differences in the extent to which it is planned at an “advance” time, whether it is limited by the terminal phase or whether it is an attempt to consider the individual life more comprehensively. The difference in perception seems to depend heavily on the society to which each person belongs, rather than on the individual. Ultimately, the difference regarding the attitude of no longer resisting death and the effort to avoid death for the time being (i.e., medicine in the traditional sense) lies between trying to think in parallel (parallelism) and trying to relatively clearly distinguish the scenes that should be emphasized (dichotomy). However, despite such differences between parallelism and dichotomy, they actually become continuous, and the tendency takes a different direction. Moreover, even if there is such a difference in tendency, the end result is that medical efforts are two sides of the same coin, with a resignation called memento mori. It should be noted that some medical practitioners have almost instinctively rejected the adage “Do not forget death.” Additionally, more than a few citizens believe that medical practitioners who show such a rejection are ideal models of their profession. Certainly, when we meet these medical practitioners and citizens, it seems as if they have forgotten that “Death is inevitable.” In fact, they have not. They show such a response because they are wary of the avoidance of even easy-toobtain medical services and the overemphasis of the notion that it “should simply happen naturally” (that is, the role of medicine is unduly underestimated) in the name of memento mori. That said, this problem is not so simple. Indeed, the dividing line regarding where to give up medicine (as a life-saving endeavor) and where to accept the inevitability

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of death as our own existential problem8 is something that cannot be solved uniformly through social consensus (from above or below). In particular, in a dichotomized society like Japan, where the two principles of life-saving and terminal care are relatively clearly separated, this question of delineation nearly recaptures the various attempts to explore the relationship between death and medical care. As long as there are no objective indicators to indicate the standard for changing gears in the brain, such as “Memento mori from now on,” each person can individually make decisions (except in cases where health care provision is a governmental charity). However, individual decisions are not entirely context-independent; rather, they are made within a specific framework that is constant over time but variable in the long run in terms of cultural, economic, and institutional constraints. To illustrate this, we can focus on the social units and processes in which an individual has decided to accept death. For example, in Japan, in the past, it was stated that “Human death includes the deathbed, the funeral, the cemetery, the 49th day, the first death anniversary, and so on.”9 Hence, death has been accepted and dealt with within social protocols, rather than simply having the individual die as a single organism and saying that is the end. It is thought that support for these rituals lies in the various groups to which the deceased individuals belong, such as the family and the neighborhood, village, or community. However, in Japan today, the basic social structure has greatly changed. Notably, there has been a significant increase in the number of single-person households, especially the number of elderly people living alone. According to the latest Comprehensive Survey of Living Conditions,10 19.6% of the elderly people aged 65 or older live alone. Compared to 10.1% in 1986, this ratio has nearly doubled over the past thirty years. In response to such changes in the social structure, it goes without saying that the process after the “deathbed” (to use Watsuji’s terminology) must have changed as a result.11 Although there are no official statistics reflecting cases in which an individual who had been involved in social activities until relatively shortly before their death died alone and their death was mechanically handled by an administrative agency, it is probably a characteristic event in the modern age. Its impact will naturally extend to the process before the “deathbed,” and in a dichotomous society, the focus will be on the issue of delineating between proactive life-saving and the withdrawal of such efforts.

8 This corresponds to the position of academic knowledge in the RFSS as something that can only be established in exchange for participation in society and not turning away from the limitation of academic knowledge per se. 9 Watsuji (1965, Vol. 1, p. 233). 10 MHLW (2019). 11 However, Japan is currently the world’s most expensive country in terms of funeral expenses. According to SunLife (2020), the average actual cost of a funeral and its share of the average income are both higher in Japan than in any other country in the world, and Japan is regarded as “the most expensive country in the world in which to die.” This can be attributed to two factors: the fact that the Japanese attach great importance to the funeral process and the unparalleled level of commercialization of the funerary sector.

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However, there is no answer to this delineation problem. Methods of delineation vary, to say the least. One thing to emphasize here is that in most cases, “delineation” happens somewhere. In other words, it is rare for patients and medical practitioners to only pursue biological life and forget death. Of course, although there are differences depending on the circumstances under which the patient was driven to death and various factors such as the patient’s age, generally, in most cases in which the decline of the body progresses due to aging and progress toward death appears to be gradual, it is quite rare that death is delayed for several weeks to months through organ replacement therapy, such as the installation of an artificial cardiopulmonary device. Another point is that it is necessary to carefully consider the subject of delineation and who is drawing the line. That is, despite the fact that patients face their own death, in many cases, the decision is not made solely by the individual patient: It involves not only family members (if any) who are directly connected to the patient but also the medical practitioners who are generally strangers to the patient. The relationship between the medical practitioners and the patient has also changed with the times. Here, however, we only say that “delineation” is a joint decision-making process between the patient and the medical practitioner. Additionally, we assume that there will be trends for each society at each period in time regarding whether it is the patients or the medical practitioners who exert a stronger influence and exercise decision-making power regarding each specific decision.12

9.3.2

Social Reality of Death and the Market

It seems that the way people face their own death and the kind of medical care they want at that time are decided in a spontaneous order. There are no uniform patterns across the wide variety of modes of death and in the various relationships between death and end-of-life medical care. When making decisions pertaining to such a situation, it can be assumed that the individual patient, as well as those around them, almost always pursues the “most desirable” form, sparing no sincere and single-minded scrutiny. In particular, patients may wish to “die in their own way,” that is, in such a way that mirrors the value of their life as a whole, regardless of whether their decisions are reasonable according to objective indicators. Seen in this way, if the relationship between death and related medical care (terminal care) changes with the times, then such change demonstrates the reality of death. The answer to the taboo adage “Never forget death” is not simply whether For example, there is criticism of paternalism that states, “In the past, the true disease name was not known, and the patient was not even given the opportunity to engage in ‘joint decision making.”’ However, if we think of paternalism as a case in which the “patient” component in joint decision-making is extremely small, paternalism can also be continuously captured within the framework of joint decision-making.

12

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one has forgotten. The question of what kind of death one wishes to have will be treated as an existential problem of the individual within the framework of their society and their era. What should be noted here is that the individual narrative and anecdotal manner of death are by no means an end result with the intention of representing that era or society. Nevertheless, the answer is that it is an expression of the reality of society and simultaneously an analogy of the “market” in that it reflects the values, social structure, and even economic conditions of society as a result. Furthermore, it can be said that the answer to memento mori has formed and crystallized the core issues of RFSS in the most realistic way possible, as the science of medicine and its limitations have now been expressed to society. However, this delineation cannot be easily grasped as objective data. Consider the common case of an individual witnessing the death of their grandparents as a child, and then, later, as an adult, more actively facing the death of their parents and themselves. Over the course of such events, it is not uncommon to experience transitions in medical care that are akin to jumping across the stages of each era and in so doing realize changes in the delineation between life-saving medical care and its withdrawal. However, it is almost impossible to objectively understand how it has changed as a societal tendency, beyond personal experience. This is because there is no statistical evidence that can be trusted over time as to the proportion of citizens that have exhibited a certain delineation pattern. However, it is possible to find alternative indicators. One possibility is the “cause of death.” As will be explained later, even in Japan, birth and death statistics for all citizens have existed as vital population statistics since the end of the nineteenth century. Among them, the list of causes of death has been the subject of extensive efforts for uniform international operations. Rosui (senility) is among the causes of death. It corresponds to “senility” in English and débilité sénile in French.13 Rosui is essentially distinct from other common causes of death, such as intestinal tuberculosis or cerebral hemorrhage. A medical diagnosis can be made with explanatory pathological findings (or by estimating it from other indirect findings), but rosui cannot be pathologically explained. Therefore, rosui can only be diagnosed as a cause of death. Moreover, rosui cannot be treated. The practice when diagnosing death is to name rosui when the cause of death cannot be explained by other conditions and when it occurs in the elderly.14 Aggressive attempts to define rosui have only yielded “biological dysfunction caused by aging.” In the vast majority of deaths that do not correspond to rosui, chronic diseases are present, such as diabetes mellitus and hypertension, accumulation of tissue, cellular, and DNA lesions, or direct diseases are present, such as cancers and myocardial infarction, between the causes of aging and the result of

13 The first vital population statistics in Japan in 1899, the Vital Statistics of Population of the Empire of Japan (CSB 1899), were written in French as well as in Japanese. 14 According to MHLW (2022a), “The term ‘senility’ as the cause of death is used only in cases of so-called natural death in which there are no other causes of death that should be stated in the elderly.”

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biological dysfunction. In other words, if a direct disease can be treated, the threat of death can be averted for the time being. However, there are deaths that are absolutely impossible to explain by linking the intermediate cascades between aging and biological dysfunction. Even if the causal relationship of accumulation of damage to tissues, cells, and DNA due to aging can be presumed, it can be happen that the cascade from there on remains unknown, and the patient’s heart stops, their breathing stops, and all other organ functions are irreversibly disabled, and there are no further steps to take. In these cases, the only cause is aging, and of course, aging cannot be treated. In such cases, the cause of death is determined to be rosui. In that sense, rosui as the cause of death is ultimately a deductive concept. It is evident, then, that the rosui concept reflects the medical limitations of explaining death in the context of the real world. We cannot forget the existence of death, and death cannot be fully explained in medical science; on the other hand, because the populace forms the foundation of the state, the modern nation state cannot help but monitor population changes in order to manage membership and welfare. For that reason, who died, as well when, where, and for what reason, will continue to be recorded. It can be said that rosui was devised as a convenient concept to compensate for the limitations of medically explaining death and the demand for national treatment of death in modern times. In that sense, it can be said that, with the rosui label, medical science has finally replaced the myths and stories that explained death before. However, beyond the significance of such a request of the modern nation state, humans are creatures who seek an explanation for death. Therefore, there is also an aspect that answers memento mori as follows: what kinds of death do people try to have for themselves?

9.3.3

Establishing a Statistical Rosui Category

Demographic statistics (especially vital population statistics) are statistical data that can only be collected using the administrative powers of the state. In 1899, Japan compiled the Vital Statistics of the Population of the Empire of Japan, the first legally based official vital population statistics (published in 1902).15 The cause of death has always been accounted for in the Vital Statistics of the Population of the Empire of Japan and in the Vital Statistics of Population16 that took over from 1932. With the exception of 1944–1946, the final years of World War II and its immediate aftermath, data on the causes of death have been accumulated for all Japanese citizens. Internationally, in 1900, based on the previously established Bertillon Classification,17 the International Statistical Institute (ISI) created a new classification, the

15

CSB (1899). CSB (1932). 17 Bertillon (1912). 16

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International List of Causes of Death—Revision 1 (ILCD-1), which has been used in many countries since then.18 Japan’s cause of death statistics has largely adhered to this classification since the first cause of death statistics was compiled in 1899 (and published in 1902), and since then, the statistics have been compiled in accordance with the ISI and ILCD of the League of Nations, which integrated and took over from the ISI until the end of World War II; thereafter, the World Health Organization (WHO), a United Nations health organization, took over revision of the ILCD.19 Table 9.1 shows such international classifications and their application periods in Japan, based on government documents20 and according to the WHO21 and other information sources.22 Thus, although cause of death statistics has been collected according to public and international standards, one of the characteristics of these statistics is the ambiguity of the data. Causes of death are tabulated based on the death certificates that physicians prepare, but most death certificates are written without support from postmortem anatomy. Therefore, the scientific, medical, and pathological diagnostic accuracy of the description itself is not necessarily guaranteed. Consequently, concerns and accusations could be raised, such as “Did the physician write this imaginatively?” and “There is no way to determine the cause of death of someone who dies at home.”

9.3.4

Changes in Causes of Death in Post-war Japan

Figure 9.1 shows changes in the major causes of death in Japan after World War II (per 100,000 people). Though tuberculosis was the most common disease immediately after the end of the war, cerebrovascular diseases were the most common from the 1950s to the 1970s. On the other hand, the incidence of malignant neoplasm and heart disease as causes of death has consistently increased since the end of World War II, and since the 1980s, these have been the leading and second leading causes of death in Japan, respectively. Heart diseases appear to have declined temporarily in 1994. This is because, ahead of the switch to ICD-10 in 1995, the government instructed doctors “not to write down ‘heart failure, respiratory failure, etc.’ as the terminal state of the disease in the ‘cause of death’ column.”23 Additionally, the spikes observed with respect to the 1995 and 2011 “accidents” are the effects of the Great Hanshin-Awaji Earthquake and the Great East Japan Earthquake, respectively.

18

Israel (1978). MHW (1990). 20 See MHW (1990), MHLW (2013), and MHLW (2022b). 21 WHO (2021). 22 Alharbi et al. (2021). 23 MHLW (1995). 19

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Table 9.1 Transition of causes of death classification Competent authority

ILCD-1 ILCD-2 ILCD-3 ILCD-4 ILCD-5

Evolution of the International Classification of Diseases 1990 1909 1920 1929 1938

International ISI ISI ISI ISI LON

ICD-6

1948

WHO

ICD-7

1955

WHO

ICD-8

1965

WHO

ICD-9

1975

WHO

ICD-10

1989

WHO

ICD-11

2019

WHO

Japan Cabinet Statistics Bureau Cabinet Statistics Bureau Cabinet Statistics Bureau Cabinet Statistics Bureau Statistics and Information Department, Prevention Bureau, Ministry of Health and Welfare Statistical Survey Department, Ministry of Health and Welfare Statistical Survey Department, Ministry of Health and Welfare Statistical Survey Department, Ministry of Health and Welfare Statistical Survey Department, Ministry of Health and Welfare Statistics and Information Department, Ministry of Health and Welfare (Ministry of Health Labor, and Welfare) Vital, Health and Social Statistics Office, Director General for Statistics and Information Policy, Ministry of Health Labor, and Welfare

Application period in Japan 1889–1908 1909–1922 1923–1932 1933–1943 1946–1949

1950–1957 1958–1967 1968–1978 1979–1994 1995–2021

2022–

ISI, International Statistical Institute; WHO, World Health Organization; LON: League of Nations

The incidence of senility (rosui) continued to decline until around 2000 but rose again in the 2000s and became the third leading cause of death in 2018. However, senility (rosui) originally ranked third until the mid-1950s, accounting for 9.7% of all deaths in 1957. This proportion is more significant than today’s figures, given that the elderly population during the period of interest was smaller than that in later eras. Age adjustment is needed to assess this. Figure 9.2 is based on age-adjusted figures from the 1985 population model. Figure 9.2 shows that the mortality rate has decreased for all diseases. Only malignant neoplasm in men showed a slightly different tendency,24 but it has been decreasing since the late 1990s. This possibly reflects the development of medicine and medical systems. Among these, the change trend observable for senility is characteristic. The downward trend until the 2000s is similar to that of other diseases, but senility has

24

Among men, deaths attributed to lung cancer continued to rise until 1997 (MHLW, 2018).

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Fig. 9.1 Major causes of death among Japanese between 1947 and 2019 (per 100,000 people)

since reversed to an upward trend. Although this reversal to an increasing trend has slowed somewhat compared to before the age adjustment, an increase in senility has been observed since the mid-2000s. This indicates that the reversal regarding senility that is observable in Fig. 9.1 cannot be explained solely by population aging. Figure 9.3 shows changes in senility after age adjustment, focusing exclusively on the forty years from 1980. From this, it can be more clearly seen that there is an inflection point in the 2000s. For men, the value was the lowest at 5.4 in 2004, but it doubled within fifteen years, reaching 12.7 in 2019. Similarly, the figures for women are 6.5 in 2004 and 16.3 in 2019. Next, we examine change trends in the location of death among Japanese people, as shown in Fig. 9.4. In the 1950s, most Japanese people died at home, but thereafter, home deaths declined until around 2000. On the other hand, hospital deaths25 increased quite consistently. The incidence of both home and hospital deaths then reversed in the late 1970s. However, the number of home deaths, which had been declining, has risen again since reaching its lowest level in 2004. Additionally, since the categories of “nursing care health facilities for the elderly” and “nursing homes” were added to the statistics in 1989 and 1995 respectively, they are plotted together

25 The total number of deaths in hospitals, clinics, and midwifery centers is summed in the category “medical facilities.”

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Fig. 9.2 Age-adjusted trends in the major causes of death among Japanese from 1947 to 2019 (per 100,000 people). (a) Men. (b) Women

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Fig. 9.3 Age-adjusted change in the incidence of rosui (senility) from 1980 to 2019

in Fig. 9.4 as “nursing home.” The number of nursing home deaths has increased sharply, particularly since the late 2000s, and proportionally, the category is closing in on home deaths. It is believed that this change regarding the location of death is one of the factors that greatly changed the reality of death for the Japanese after World War II. As previously mentioned, Tetsuro Watsuji (1889–1960) wrote that in a society where most Japanese died at home while being taken care of by their family, “Human death include[d] deathbeds, funerals, cemeteries, the 49th day, the first anniversary [of the death], and so on.” The most important change that is thought to have occurred as the location of death shifts from home to hospital is death shielding. In an era when people often died at home, and death was accepted through various social protocols, for those just living their daily life, death was something that must have come into their view whether they like it or not. However, as death became a third-person event in a formal setting such as a hospital, people with a personal and private connection with the patient while they were alive, such as family, friends, and neighbors, were excluded instead. When a person dies in a hospital, they are enclosed in a place that is cut off from their previous life and kept away from those who supported them in their previous

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Fig. 9.4 Change regarding the location of death from 1951 to 2019

life.26 Then, one day, the news of the person’s death is brought to the group to which the deceased originally belonged, and from there, the post-“deathbed” process abruptly begins. Looking at Fig. 9.4, even in Watsuji’s late years, although the early signs of an unusual event could be seen at the place of his death, it might have been difficult to experience a clear change. After Watsuji’s death, from the 1960s to the 1970s, this change would have finally become apparent, and it must have been very confusing for the Japanese people.

9.3.5

The Medicalization of Society and of Death

Figure 9.5 shows change in the number of hospital beds per 100,000 population after World War II. During the post-war reconstruction period spanning the end of the war to the early 1970s, the number of hospital beds increased. Although the increasing trend 26

The phenomenon of hospital death replacing home death was seen in almost all developed countries in the latter half of the twentieth century, and it is conceivable that the problem of the “shielding of death” that it causes was also the same. Report of the Lancet Commission on the value of death (Sallnow et al. 2022), “Dying people are whisked away to hospitals or hospices, and whereas two generations ago, most children would have seen a dead body, people may now be in their 40s or 50s without ever having seen a dead person.”

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Fig. 9.5 Number of hospital beds from 1947 to 2019 (per 100,000 people)

stagnated until the early 1980s, the number of hospital beds began rising again in the late 1980s and peaked in 1991. The year 1991 was when home visit nursing care stations for the elderly were established under the revised Health and Medical Services Act and that time was also on the brink of the “from hospital beds to home care” trend. What does the increase in the number of hospital beds, which lasted about forty years after the end of World War II, show? It is possible that it has demonstrated “the medicalization of the post-war society.” In this period, hardware improvements, such as more hospital beds, progressed, and simultaneously with the securing of access to medical care through universal health insurance, medicine as an academic discipline also developed dramatically. In doing so, society itself was medicalized, and in that era, people lived as members of a medicalized society. The medicalization of society seems to have progressed even further even after the 1980s, when certain restrictions on government medical benefits began to be imposed. In the midst of such changes, the incidence of rosui as a cause of death decreased. Figure 9.6 shows change in the number of hospital beds per capita overlaid with per capita change in rosui. Until around 1990, the incidence of rosui decreased as the number of hospital beds increased. As the medicalization of society, symbolized by the increase in the number of hospital beds, progressed, death is also thought to have

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Fig. 9.6 Change in the number of hospital beds (per 100,000 people) and age-adjusted rosui (per 100,000 people) from 1947 to 2019

been medicalized.27 In other words, it can be said that medicine has reaped the conflicting realms of death and medicine previously left to the ambiguity of rosui. Interestingly, shortly after the decline in the number of hospital beds as of the 1990s, the incidence of rosui rose again in the mid-2000s, roughly in sync with the introduction of long-term care insurance. The development of medicine continued at an accelerated pace during this period, and the medicalization of society did not recede. By at least the 2000s, access to medical care had obviously been secured, and various medical technologies appeared, in addition to the changes in the number of hospital beds, as well the emergence of an information-oriented society in which information could be instantly disseminated throughout society. Hence, the resurgence of rosui since the 2000s can be explained by factors other than the medicalization and de-medicalization of society. The direct contrast to the “medicalization of society” is the “de-medicalization of death itself.” The 2000s marked the beginning of policy efforts to reduce the role of medical care in the context of death, as symbolized by the separation of medical care and nursing care. This was partially based on the government’s desire to reduce the financial burden of medical care. However, it is possible that there were other motives. Temporally, the immediately preceding 2000s and 1990s were eras in which the debate on how much medical intervention is desirable in the terminal

27

Komatsu (1996).

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Fig. 9.7 Change in the incidence of rosui (senility) by location of death from 1956 to 2019 (per 100,000 people)

phase came to the fore.28, 29 When the number of hospital beds peaked in 1991, and the incidence of rosui bottomed out in 2000 (age-unadjusted), death may have been overly medicalized. Those who saw off their parents’ generation in the era advancing toward the extremes of the medicalization of death may have begun to think about their own fate after some time, and consequently, they probably came to desire something different for themselves. Finally, the relationship between the location of death and rosui is considered. Figure 9.7 shows change in the incidence of rosui for each location of death. In the 1950s and 1960s, rosui was seen in home deaths. As rosui as a whole continued to decline, rosui in hospitals gradually began to be observed in the late 1970s and 1980s. In the early 2000s, the number of home and hospital deaths attributed to rosui intersected. This is a little less than thirty years later, compared to the 1970s when homes and hospitals were the main locations of all deaths. This indicates two things: that rosui has traditionally been associated with home death in particular and that the incidence of rosui has increased, even in hospitals. Additionally, although the incidence of home-death rosui rose again after a few years since the mid-2000s, when overall rosui rebounded, its incidence has not increased significantly compared

28

Ota (2013). Byoinde Shinutoiukoto (Death in the Hospital) Yamazaki (1990) was published in 1990 and made into a movie in 1993. 29

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to other locations. In contrast, the incidence of rosui deaths in nursing homes has risen dramatically since around 2010, and since 2017, nursing home deaths have accounted for the largest proportion of overall rosui deaths. These data indicate that rosui is not just a home-death phenomenon; that is, this cause of death is not given “simply because they [the deceased] cannot be adequately tested.” Rather, an era in which rosui can be actively chosen as the means of death has arrived. In the twentyfirst century, the medicalization of death and the development of medicine lost their relationships of parallelism. According to Ivan Illich (1926–2002), the medicalization of death has gradually progressed since the Middle Ages.30 It is said that Francis Bacon (1561–1626) was the first to describe medicine as having the practical benefit of extending people’s lives, but medicine itself was underdeveloped in the Middle Ages, and systematized medical services were rarely provided to the general public. Therefore, it was true that “The rich are the only ones who could expect that doctors would delay death.”31 The birth and progress of the medicalization of death, as Illich has described it, indicates that access to medical care for the general public gradually improved in the midst of the slow development of medicine itself, the formation of nation states with the subsequent maturation of civil society, and the consequent changes in political and economic systems from the Middle Ages to the modern age. In that sense, Illich’s “medicalization of death” could simply be described as the development and maintenance of medicine and medical care. Accordingly, in the twentieth century, the medicalization of death made rapid progress, since it was fully linked to the development of medicine and of the medical system and the corresponding system of medical benefits. However, the resurgence of rosui as a cause of death from 2000 points to the “demedicalization of death” as medicine continued to evolve. Even in the twentyfirst century, epoch-making new drugs emerge annually, and medical devices continue to improve. For example, some surgeries that humans have traditionally performed are now performed by robots by virtue of the machines having overcome the limitations of “having five fingers on a human hand.” Moreover, robots can be remotely operated using communication technology. In fact, as shown in Fig. 9.2, mortality rates for nearly all diseases have been declining. It is clear, then, that medical science is still developing at an accelerating pace. In this context, rosui is increasing. To see this as a mere consequence of institutional induction is a superficial understanding of the situation. For we know that the “value of death”32 is being reevaluated, with tangible and intangible manifestations of people’s desire to die an “unmedicalized death.”33 No, in fact, each dying person 30

Illich (1975). See Illich (1975, p. 850). 32 Sallnow et al. (2022). “Death also reminds us of our fragility and sameness: We all die. Caring for the dying is a gift, as some philosophers and many carers, both lay and professional, have recognized. Much of the value of death is no longer recognized in the modern world, but rediscovering this value can help care at the end of life and enhance living.” 33 If we were to rephrase this from the RFSS perspective, we would call it an “inexhaustible” reality of death. 31

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has not always been consciously aware of even this. Rather, the “de-medicalization of death in the highly medicalized society” of the twentyfirst century was not designed in and of itself, nor did anyone anticipate its arrival. In that sense, it was the result of a “force from below” that never allowed for poor design. Death and life are not external objects for all of us, including all of us who are, for example, bearers or researchers of medicine or medical care. We live our own irreplaceable lives and die our own deaths. We will never be able to objectively understand the totality of what cannot be objectified, but above all, medicine, as a discipline, must be rooted in “realism,” not in turning away from it. This is as it should be. Even if the “hope” or “expectation” that medicine (the science) will reveal the whole picture of death (and therefore of life) is in itself a sound attitude of the discipline, we cannot forget that this expected state will never actually be reached. It is a fiction, and if we take this fiction seriously, we will fall into the simple idealism of “seeing only what we want to see.” We then instantly lose the reality of our own irreplaceable death and life. Fiction must be dismissed as fiction, and as a science, academic knowledge must be rooted in experience and reality. This means not turning away from what we do not want to see, what we cannot unsee, what we cannot exhaust, and what we can only define deductively through its edges. To restate this more properly as a methodology of academic inquiry, it is a renunciation of infallibility, a humble stance that says, “We may be fundamentally wrong.” Only when academic knowledge is grounded in such realism can we reconcile our own mortality and life in our academic knowledge. In this sense, we must not let go of our own death and life, which in turn means that we must not let go of our own desire for and true pursuit of academic knowledge, even from the standpoint of academia.

9.4 9.4.1

Conclusion from the RFSS Perspective Memento Mori and Forces from Below

Even if all easy designs fail, we must “enclose” them with the tools of science. What does such a “posture” look like? If we define natural death (or, on the other hand, withdrawal from the goal of saving lives, which limits the situations and modes of applying medicine and medical treatment) as a “force (design) from above” in the intellectual system of medicine and the technology of medical treatment, then natural death will often amount to an unavoidable triage of lives. As long as this is considered unacceptable, the only way to determine the cause of rosui death is through consensus and communication within society, including the patient and those around him/her, who accept it, or in other words, through participation in the mechanism of “forces from below” (market in the broadest sense of the word).34

The term “market” here is a synonym for non-designed and does not refer to a “designed market” with a purpose. As such, it should be called a triage as well as a force from above. What is important

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The implications of memento mori for medicine are how the many sectors of science and technology should work together and harmonize through the ideas of medical expectations, medical limitations, life-saving medicine, and natural death. One conclusion here is that such naturalness must be characterized by a market (in the broadest sense of the term), a force from below. In other words, the medicalization of death highlights the existence of an area that cannot be medicalized in any way, and it also leads to the necessity of “forces (market) from below” in medicine (with the actual state of medicine itself as a member of it). Therefore, when medicine takes on the cause of death of rosui, it also takes on the generalized second welfare theorem and the conditions for its establishment, such as the sharing of accurate information, discussion without taboos, continued dialogue, and academic thrownness. In particular, it means taking on the totality of the dialogue with the patient and family, the true hope, the free discussion with symmetry of information, and the different choices for each person of the way of life (way of death) that is formed in such a process, including the opening (cleavage) of oneself through participation (in the necessity of not turning away from what is not seen). Needless to say, this (taking on the wholeness, including the cleavage of the self) is realism, and it is also the fundamental question of the RFSS as to how the science of medicine and the technology of medicine should have true meaning in relation to society.

9.4.2

Medicine, Health Economics, and Forces from Below

Let us rephrase “forces from below” further in the context of “taking on the whole.” First, it is a “posture” in which the forces “for improvement toward the optimum” are always open to new wholeness in “room for improvement” through renewed selfopenings, while decentralized information aggregation and sharing achieve the reduction of complexity. And, of course, it is the posture of thrownness to surrender to such forces (as well as to take on their totality). This posture can be said to point out once again the importance of the general viewpoint in each science (in the sense of the general equilibrium theory in economics). For example, in public health, the importance of both controlling infectious diseases and maintaining economic activity does not simply mean that both are important. Rather, it is a matter of simultaneous determination in a (inexhaustible) totality. Such a general perspective is one of the attitudes that should be held in all scientific fields, and it is a consideration of the totality of a particular knowledge, including what cannot be known in that knowledge. Such consideration teaches, at least to some extent, the foolishness of is not the design of individual mechanisms but “control” over the totality of various practices and mechanisms that exist historically and institutionally. In economic issues, the use of a theory by the government, such as whether MMT is a risky experiment, likewise involves its design. If we look at it as a second welfare problem, one conclusion (from the standpoint of faith in market forces) is that the policy (use of theory) should be left for evaluation through the value of money under the natural “control” (forces from below) of the established market.

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not considering other things (e.g., being preoccupied with zero risk) based on a particular knowledge. (Conversely, a particular knowledge is always certainly a lie insofar as the truth of a proposition is understood as taking on wholeness.) Therefore, the importance of forces from below is rephrased as the importance of room (or play in the most serious sense of the word) for consideration of wholeness, including society. A market in this sense is also a place where the unknowable is properly classified as unknowable and the invisible is properly seen as invisible. The development of such a place is probably not the introduction of a designed from above market but rather, in the general setting of this paper, the opposite situation. Actually, if we assume that today’s corporate civilization is manipulated by the designs of big capital, then we should expect a non-design market as a manifestation of forces from below. We are mortal. We cannot expect designist idealism, which “sees only what it wants to see and what it can see,” to ultimately give us a sufficient choice. Rather, it will either be dominated by commercial values and motives (while somehow denying triage) and will force us to make a uniform choice of death (without the necessary information for the consumer to know whether it is painful or not) or else literally force us to triage our lives. Commerce seeks to profit unfairly (from a purely economic standpoint) by “letting you see only what you want to see and what you can see.” The purely academic mind is required to “look away from what is not seen.” Medicine as an academic discipline has no choice but to confront this eternally unattainable goal: It is only a scientific position, and medical care is in the field of its practice. As long as triage is not acceptable, only the market (as forces from below) can provide a solution to this problem. But for it to work, we (each and every one of us) must first maintain the sense of realism at our core. Only by “not looking away from what is not seen,” and by making it (the unseen) not a final cause (of the mental pole) but only an efficient cause (of the physical pole), can academic knowledge legitimately fulfill its role in society. Only then can public health and health economics serve as scientific guidelines and references to the public and to the field of medicine and health care, informing us what and how much to give up. 35

9.4.3

From the Reality of Death to the Reality of Social Science and Knowledge

Death is often thought of as one of the most personal of all things, something special to each individual person. In fact, it is the starting point of religion through

35 When the market, as forces from below, can be involved in the solution of a problem but is unable to do so, and when what surfaces is the phenomenon of senility on the death certificate as rosui, which cannot even be properly defined, then we can say that this is an adverse selection (in the general sense) by the field of medicine toward the arrival of a market.

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loneliness, isolation, and fear. However, when we think about death, the very act of “thinking” itself is inseparable from society. In other words, first of all, it means to think in terms of words and logic, and also to think by looking at the death of other people, animals, and plants. Thinking about death itself is a very humankind (worldly) act. Therefore, “thinking about death” is practically synonymous with “thinking about death in society,” and it is also the same as thinking about how to live in society. The more seriously and properly we face it and think about it, the more this will be so. We have written so far from the starting point of such a position, which is that the fundamental idea of economics is that various things can be most efficiently informed and optimized if left to the market. However, we would like to consider here, conversely, introducing the concept of death to economics. Let us add the word real to these words “information” or “optimal.” Let us add to these words the meaning of “real (or reality),” not as a kind of ideal given by definition from above but as something that is rooted in the experience of a new “I” and that cannot be exhausted. Then, it becomes clear that “thinking about death” is still extremely important for economics. This is because death is an indispensable concept for our consideration of real happiness, and without this concept, we do not even know what happiness is, and as long as we do not know what real happiness is, utility maximization and optimization are impossible. If we further examine the above discussion, it seems that there may be a progression from death (memento mori) toward RFSS as a methodology of academic knowledge. For example, there may always be fields of study (methods) that cannot be established (at any given time) because something real is ultimately unknowable (unattainable), such as real happiness or real life. But as a matter of fact, with that, academic knowledge may be explored in the real sense (i.e., the reality of academic inquiry may be established with that alone). In other words, academic inquiry is not a pursuit that must know about something but rather a tool that must be used to think about something real to any extent possible. What does real life mean, what does real happiness mean, and so on? On the other hand, if we fall into the stance of asking how we should define death, happiness, health, etc., in order to establish a certain discipline, then we (the academics), no matter how high our level, will fall into committing Whitehead’s misplacement of concreteness fallacy. Here, it seems to us, are the questions and “moments (occasions)” that today’s academia must tackle to reclaim its rightful place in the world. And again, to return to the market, “the market (forces from below)” is a “posture” toward such moments (occasions). Acknowledgements We would like to thank the Japan Society for Process Studies, the Methodology Section of the Japanese Society for Mathematical Economics (JSME), and the participants of the Osaka University Monthly Methodology Workshop for providing us with the opportunity to present earlier drafts of this paper. This research was supported by JSPS KAKENHI Grant Numbers JP20K13461 and JP20H03912.

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Chapter 10

Politics, Human Agency, and Reality: Rethinking Arendt’s Concept of ‘the Social’ Tsuyako Katsuragi

Abstract This chapter has two aims: the first is to discuss the importance and inconsistencies in the concept of ‘the social’ by Arendt in The Human Condition. In an attempt to clarify and enrich the argument about this concept, I propose that the dominance of ‘the social’ is due to the fact that the market appeared as a completely new public realm in the modern age. The focus is on the mechanism of selftranscendence. I compare the market and polis as a model of self-transcendence and examine its operation for collective coordination. The second aim is to draw implications for power and social reality from these arguments.

10.1

Introduction

After the collapse of the former Soviet Union, the so-called free world claimed victory and regarded its system as the model for the rest of the world. This means that the combination of a free-market economy and representative democracy is the best social and institutional form. However, we are currently witnessing a crisis of democracy in the Western world, where people have a free-market system and have established parliamentary democracies. The emergence of Donald Trump in the United States, populist movements, and authoritarian leadership in Europe may be read as prominent examples of this trend. Concerning these issues, Brown (2015) argues that neoliberal educational reform has caused significant damage to democracy in the United States. Zuboff (2019), on the other hand, points out the negative effect of ‘surveillance capitalism’ on the democratic system. These studies are important and valuable. My purpose, however, is not to join this discussion. I would rather treat this problem as a long-term trend of modernity. We already have the classical work of Tocqueville (2003), which investigates the character of American democracy. He points out that public opinion tends to play

T. Katsuragi (✉) Independent Scholar, Kyoto, Japan © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_10

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a despotic role in an equal society like America. Fromm (1994, 2010) argues that people in the modern age who are liberated from the traditional relations of the pre-modern community cannot handle freedom and loneliness, and consequently, they depend on authoritarian leadership or adapt themselves to extreme conformism. I would also like to treat this theme as a problem of modernity, but from a slightly different angle. Here, I would like to discuss Arendt’s concept of ‘the social’ from The Human Condition. In her view, ‘the social’ is a modern phenomenon that excludes the possibility of political action. However, what is ‘the social’ exactly? This is the main topic that I will focus on here. In Sect. 10.2, I provide a brief summary of The Human Condition and discuss the importance of ‘the social’ and its inconsistencies. In Sect. 10.3, to resolve these puzzles, I will propose a new interpretation that the origin of ‘the social’ is the emergence of the market as the new public realm. The focus is on the mechanism of self-transcendence. Here, the mechanism of self-transcendence is explained in the market and in the polis. In Sect. 10.4, the interaction between agents in the market and polis is described. The aim of Sect. 10.5 is to draw some implications for power and social reality. Some concluding remarks are included in Sect. 10.6.

10.2

The Human Condition and Arendt’s Confusing Concept of ‘the Social’

In her book, The Human Condition, Arendt mentions ‘the rise of the social’. Yet, she does not give a clear definition of ‘the social’. For the moment, it is enough to mention one phrase where she says, ‘the emergence of the social realm, which is neither private nor public, strictly speaking, is a relatively new phenomenon whose origin coincided with the emergence of the modern age and which found its political form in the nation state’ (Arendt, 1998, p. 28). She uses the word ‘society’ to designate this modern phenomenon, ‘the collective of families economically into the facsimile of one super-human family is what we call “society”’ (Arendt, 1998, p. 29). Why is ‘the social’, which has emerged in the modern age, important? Because it ‘has not only blurred the old borderline between private and political, it has also changed almost beyond recognition the meaning of the two terms and their significance for the life of the individual and the citizen’ (Arendt, 1998, p. 38). But how so? Let me explain briefly. According to Arendt, who sees the polis of ancient Greece as the prototype in her analysis, the political realm is the place of action amongst equal members of a community. With his acts and speech, a man demonstrates his uniqueness and excellence, which guarantees the unity and persistence of the polis. On the other hand, the private realm is oikia, the households where women and slaves work to deliver life’s necessities. Consequently, the public realm or the realm of appearance

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is kept only for the citizens of the polis who are free from necessity, while women and slaves are deprived of this freedom, confined within the domestic space. In Arendt’s account, the difference between these two realms disappeared after being eroded away by ‘the social’. In the polis, ‘the public realm, in other words, was reserved for individuality; it was the only place where men could show who they really and inexchangeably were’ (Arendt, 1998, p. 41). As the social realm has conquered the public realm, however, behaviour has replaced these actions of individuals and ‘normalised’ its members. Without a public realm like a polis, we modern people have stopped acting in the Arendtian sense, except for scientists who act in nature.1 Another consequence of the rise of society is that modern privacy, enriched due to the development of individualism, was discovered ‘as the opposite not of the political sphere but of the social’ (Arendt, 1998, p. 38). Arendt argues that Rousseau ‘arrived at his discovery through a rebellion not against the oppression of the state but against society’s unbearable perversion of the human heart, its intrusion upon an innermost region in man which until then had needed no special protection’ (Arendt, 1998, p. 39). This reaction by Rousseau and the Romanticists was directed ‘against the levelling demands of the social, against what we would call today the conformism inherent in every society’ (Arendt, 1998, p. 39). We now understand that in Arendt’s framework, the emergence of ‘the social’ has a damaging effect not only on the political realm (in the ancient sense), which guarantees common ground and individuality for its members, but also on modern privacy, whose role is to provide a safe place for the inner existence of human beings. ‘The social’, it seems, is a threat to both the private and public realms. Yet, it is highly unclear what ‘social’ means, and there are many questions and inconsistencies regarding this concept.2 Here, I will address just three questions concerning this issue. First, Arendt consistently argues that ‘the social’ was born as a kind of enlarged household. To her, there was always one despotic ruler who represented one interest and one opinion of the members of the household. And in the case of ‘the society’, ‘where the natural strength of one common interest and one unanimous opinion is tremendously enforced by sheer number, actual rule exerted by one man, representing the common interest and the right opinion, could eventually be dispensed with’. However, Arendt does not explain why and how this despot disappears. She continues, ‘it is true that one-man, monarchical rule, which the ancients stated to be the organizational device of the household, is transformed in society—as we know it today, when the peak of the social order is no longer formed by the royal household of an absolute ruler—into a kind of no-man rule’ (Arendt, 1998, p. 40). However, she does not explain what causes this transformation. Second, according to Arendt, a society with this kind of no-man rule has another origin in addition to the

1

Arendt seems to imply the new dangers of this converted action by scientists and its ability to start something new in the natural realm. This danger, although it may be important when technology like genetic engineering poses a great hope and threat to us, is not my focus in this paper. 2 For a detailed discussion of Arendt’s concept of ‘the social’, see Pitkin (1998).

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household – that is, ‘the salons of high society’ (Arendt, 1998, p. 41). Yet, it seems that a household in which the members are driven by their biological needs is completely different from the salons of high society in which vanity prevails, as Rousseau critically observed. So, how do these two elements connect3? Is the salon of high society private or public in Arendt’s terms? Again, she did not provide clear answers. Third, there is an inconsistency regarding the character of labour. Arendt basically considers labour as an activity necessary to sustain life, but because of the rise of society, labour becomes a public performance intended to achieve excellence: ‘We have become excellent in the laboring we perform in public’ (Arendt, 1998 p. 49). Does this mean that we have two different kinds of labour? These inconsistencies are confusing and make it difficult to understand the entire argument. To resolve them, or at least to make them understandable, I would like to propose that the origin of ‘the social’ is the emergence of the market as a completely new public realm in the modern age.

10.3

Market and Polis as the Public Realm: Self-Transcendence and Collective Coordination

Let us recall that, to Arendt, economics means dealing with the problems of labour, consumption, life processes, and biological needs. In this view, it is difficult to consider the market as a public realm. Obviously, the market is a place where people sell what they produce and buy what they need. In a sense, it has always existed for life’s necessities. What one should notice, however, is that the market system in the modern era is not the same as before. What happened in the modern age is that the problem of life’s necessities, which had been dealt with through custom or despotic order for a long time, was solved by the market system, where ‘free individuals’ interact with each other in pursuit of their self-interest.4 If the modern market is no longer the private realm or a domain restricted by custom and/or a despotic ruler, in what sense can we consider the market the public realm? How do we understand collective action, if that is possible, in the market? To answer these questions, I begin the next section by exploring some similarities between the market and the polis, following and complementing Arendt’s argument about the public realm.

3

A similar question was addressed by Pitkin (1998). Foucault captured this significant change in Western history in terms of subject and power and argued that in the middle of the eighteenth century the market became ‘a site of truth’ and constituted ‘a site of veridiction’ (Foucault, 2008, pp. 31–32). 4

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Some Similarities Between the Polis and Market

First, let me restate that in Arendt’s framework, the appearance in front of other people is an important element for the public realm. In appearance, men are able to demonstrate their uniqueness and individuality: ‘It was the only place where men could show who they really and inexchangeably were’ (Arendt, 1998, p. 41). According to her, the public realm means ‘that everything that appears in public can be seen and heard by everybody and has the widest possible publicity. For us, appearance—something that is being seen and heard by others as well as by ourselves—constitutes reality’ (Arendt, 1998, p. 50). In the exchange market, too, individuals can show their excellence and receive appreciation in appearance. In this case, though, this happens through one’s products, not through their speech and deeds. Actually, Arendt herself admits, to some extent, the role of the exchange market as the public realm. Arendt briefly mentions the exchange market, not in the labour section, but in the work section. Unlike the animal loborans, whose social life is worldless and herdlike, and who therefore is incapable of building or inhabiting a public, worldly realm, homo faber is fully capable of having a public realm of his own, even though it may not be a political realm, properly speaking. His public realm is the exchange market, where he can show his products of his hand and receive the esteem which is due him. (Arendt, 1998 p. 160)

In her conceptual triology of labour, work, and action, work corresponds to worldliness. This means that work provides things in material form and becomes a conditioning force to human beings. This material world can convey the common history of the community. In her framework, this realm of workmanship, along with the exchange market, becomes irrelevant in the modern world, where this common world is transformed into private property. As a result, she does not further develop the public character of the exchange market. Yet, we see that Arendt herself does appear to have been aware of it. The second similarity is that the participants in both the polis and market are equal; that is, there is neither a predetermined hierarchy nor a dictatorship. We may call these equal participants free citizens and homo economicus, respectively. If there is asymmetry in terms of power, it might be the result of the action; that is, the speech in the polis and the exchange in the market. While the polis is about conflict and its peaceful resolution through persuasion, the market requires competition and adjustment. In both cases, we see furious rivalry amongst participants seeking the prize; that is, glory and honour to a free citizen and self-interest to homo economicus. (I will explain the interaction between participants in each case in more detail in the next section.) Arendt describes the polis as a place of agony, but the modern market is a place of fierce competition. This implies a power struggle.5

5

This view of the market is quite different from Walrasian general equilibrium theory where individuals behave only according to their own preferences for goods and are not influenced by other individuals. For a further discussion, see Orléan (2014, chapter 2).

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The most important aspect of the public realm, however, is probably its capacity to make collective social coordination possible. In the case of the market, this is possible because prices act as a signal to the participants. Prices as a signal for their activities appear to the individual participants as the exteriority which is given to them prior to their decision; however, in reality, it is the result of each person’s action. This particular mechanism, which cannot be reduced to either individualism or holism, is called the mechanism of self-transcendence by Dupuy (2014). The idea of self-transcendence is complicated, so I will discuss it later. For now, note only that in the polis, the mutual promise appears as exteriority, and because of it, participants can reduce future uncertainty and make collective action possible. Here, I will summarise the similarities between the polis and market, as follows: (1) they are places of appearance (presence of others), (2) all participants are equals in principle, and (3) they have the mechanism of self-transcendence that makes collective coordination possible. Now, the questions are as follows: What is selftranscendence and how does it work? How do we understand the collective coordination in the market, which has been analysed in mainstream economics through the lens of methodological individualism? In what follows, I attempt to answer these questions.

10.3.2

The Self-Transcendence of the Market: Prices

I will draw on Dupuy’s argument to explain the collective coordination of the market. He claims that if a group of people can form a community, they can succeed in inventing the mechanism of self-transcendence (self-exteriorisation). According to him, the idea of self-transcendence has never been properly worked out, and its properties have never been systematically investigated, which is why there has always been a methodological division between individualism and holism. He argues that the model of self-transcendence does not belong to either one, ‘since it joins the individual level with the collective level, and vice versa’ (Dupuy, 2014, p. 62). It is described as an ‘endogenous fixed point’ (p. 154). He argues that the concept of self-transcendence is important in social science in general, but in particular, this ‘concept—even if it is not part of the usual repertoire of economists—is indispensable to an understanding of how market mechanisms operate’ (Dupuy, 2014, p. 21). He argues the following: The notion of an invisible hand alone is not enough: a market is able to be self-organizing because it undergoes a process of self-transcendence by projecting itself outside of itself. This exteriority assumes the form of something that each agent takes to be fixed and independent of what he thinks or does, although in fact it results from the synergistic interaction of his own behavior with that of others. The system of prices is the most obvious example, but there is another, much more subtle one, which we are accustomed to call the future. The market is pulled forward by an idea of what has not yet happened that it projects in front of itself, like a mountain climber who ascends a smooth, ice-covered slope by throwing his pick ahead of him and pulling himself up to a new height. This image nonetheless lacks an essential element, in which the paradox of the self-transcendence of

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the future resides. Times to come cannot be said to resemble the face of the mountain since, by definition, they have no present existence. And yet the market acts as though it were able to give a kind of reality to what does not yet exist. For the ice-covered face of a mountain we must therefore substitute the image of Baron Münchausen, who claimed to have pulled himself out of a swamp by his own hair. (Dupuy, 2014, pp. 21–22)

Dupuy begins his argument about self-transcendence in the market by criticising the metaphysical hypothesis of the neoclassical theory of the market. Neoclassical theorists believe that ‘agents have no significant influence over prices in order to justify regarding prices as fixed in advance of actual market transactions—which is to say, as counterfactually independent of the agent’s decision’ (Dupuy, 2014, p. 27). He denies this neoclassical argument by claiming that prices are regarded as fixed because agents regard these variables as fixed as a matter of convention. Therefore, it is possible for agents to know that they have causal power over them and, at the same time, to take them to be a given without contradiction. Dupuy explains why they would do such a thing: They can coordinate their actions only if they find a way to avoid being trapped in the potentially infinite regress to which they are otherwise condemned by their need to know how much others know of what they know, how much others know of what they know of what others know of what they know, and so on without end. The countervailing need to put a halt to the reflexive action of specularity leads to a shared interest in holding a certain set of variables constant. (Dupuy, 2014, p. 27)

What we learn from Dupuy’s argument of self-transcendence is that the market is not a part of the natural order of things but rather a social (collective) institution6 involving certain relations amongst people, and its aim is to resolve potentially infinite speculation amongst people; in other words, to make social coordination possible.

10.3.3

The Self-Transcendence of the Polis: Promises

Although Arendt does not use the word ‘exteriority’, she appears to recognise the importance of this endogenous fixed point in collective coordination amongst equals. She mentions ‘the power of mutual promise’, which is important in order to ‘at least partially dispel’ (Arendt, 1998, p. 244) the unpredictability of human affairs. Sovereignty in the Arendtian sense, which is quite different from that of Rousseau,7 can be achieved by creating a fixed point – that is, a mutual promise. Sovereignty, which is always spurious if claimed by an isolated entity, be it the individual entity of the person or the collective entity of the nation, assumes, in the case of many men mutually bound by promises, a certain limited reality. The sovereignty resides in the resulting limited independence from the incalculability of the future, and its limits are the

6

This conception of the market as an institution is in line with the tradition of heterodox economics. For a broader discussion, see Hodgson (1988). 7 For Arendt’s critique of Rousseau, see Arendt (2006, chapter 4).

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same as those inherent in the faculty itself of making and keeping promises. The sovereignty of a body of people bound and kept together, not by an identical will which somehow magically inspires them all, but by an agreed purpose for which alone the promises are valid and binding, shows itself quite clearly in its unquestioned superiority over those who are completely free, unbound by any promises, and unkept by any purpose. This superiority derives from the capacity to dispose of the future as though it were the present, that is, the enormous and truly miraculous enlargement of the very dimension in which power can be effective. (Arendt, 1998, p. 245)

Promises amongst equal citizens, such as prices in the market, with the capacity to treat the future as a fixed point, can play the role of exteriority. This makes collective coordination possible and gives them a new and enlarged possibility which would not otherwise exist. However, unlike market prices, promises require words and constitutive moments to make self-transcendence possible. This power of promises in Arendt’s framework is similar to the deontic power described by Searle (2009) in his analysis of social reality. Searle attempts to explain this power by pointing out the special character of language (Searle, 2009). According to Searle, the function of language is not only to express beliefs and feelings but also to make public commitments. Declaration (in the public), with this special character of language, gives us desire-independent reasons for action. This creates deontic power. Political reality is constituted by this deontic power, where language can play a crucial role. This deontic power is possible and meaningful only when human beings feel themselves to be free agents, in Searle’s words, having ‘the consciousness of deciding and acting in the gap’ (Searle, 2009, p. 143). Desire-independent reasons for action cannot be reduced to self-interest or the inclination of the individual, although political leaders sometimes act out of selfinterest. This means, in Searle’s framework, that the systems of rational motivation differ between economic and political systems. He emphasises that the essence of political power is deontic power, although there are confused theories that try to treat political relations as having the same logical structure as economic relations (Searle, 2009, p. 142, 169). Searle’s argument regarding political power resonates with Arendt’s critique of Rousseau. Obviously, in the quotation above, she criticises Rousseau, for whom the source of sovereignty is the singularity of ‘Volonté générale’. Seale holds that our desires, beliefs, or intensions alone cannot create this power because none of these requires a public undertaking through language. Following his discussion, we can say that the social contract is not about the general will which each member has in common, but about their commitment to the state of affairs in the world. To sum up, the model of self-transcendence enables agents to do things they could not otherwise do, but in so doing, it constrains them to ensure they interact in a coordinated way. In the following, I describe how agents interact with each other in this process.

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Interactions Between Agents Market and Mimetic Desire

Let us recall that the self-transcendence of the market does not involve the words and speech of citizens. Prices are accepted as a given, but in reality, agents jointly serve to create these fixed points. What motivates these agents? What kind of character do they have? In mainstream economics (Walrasian assumptions), the agents in the market have no interest in what others think or do, but just pay attention to use-values (utilities) that goods can bring to them. In other words, neither rivalry nor envy exists between them. According to Orléan (2014), this worldview without conflicts is possible only if we make the assumption from general equilibrium theory that commodities are sought for their utility alone. The chief purpose of this model is to devise a utilitarian relationship to objects that will create the structural conditions for agreement among rational consumers, which is to say persons having needs to be satisfied and nothing else. . .The fact of the matter, however, is that the relationship to commodities cannot be reduced to utility alone. Utility is no more an obvious, exogenously determined fact of the world than the market is an encounter between a set of settled preferences disguised as human beings. Utility and preferences, in other words, must be thought of as forming a particular regime of market transactions rather than constituting the natural form of such transactions. They are social constructions that, taken together, have the function of preserving and protecting the state of market isolation by blocking the emergence of mimetic rivalries. (Orléan, 2014, p. 87)

As Orléan points out,8 this particular conception of human motivation, according to which individual agents know what they want in any situation, contrasts sharply with René Girard’s mimetic hypothesis. Girard (2016) argues that mimetic desire is violent and dangerous, but is also indispensable to culture. ‘No one can do without a highly developed mimetic capacity in acquiring cultural attitudes’ (Girard, 2016, p. 277). In his analysis of desire, there are three parties involved: subject, object, and mediator. The subject is aroused by the existence of the mediator and not the object itself. Girard distinguishes desire from needs and wants (besoin and appétit), which are produced without a mediator. In his framework, people become socialised by mimicking the desires of socially superior people, and in so doing, social desire is built in subjects through mediators. Therefore, the more desire people have, the more socialised they become. Girard denies the autonomy of individual desire, and according to him, this is particularly true in a market-driven society like ours (Girard, 2016, pp. 272–277). Long ago, in The Theory of Moral Sentiment, Adam Smith rightly observed that the desire for recognition by others has been a strong motivation for homo

8

Orléan (2014) applies this mimetic hypothesis not only to the analysis of commodity markets but also to the emergence of money. Orléan’s work is particularly important in the sense that it offers an insightful account of the existence of money, which orthodox economic theory has failed to explain.

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economicus in the course of economic development. In pursuing wealth, people are driven by the desire for recognition and prestige, not by biological necessity. For what purpose is all the toil and bustle of this world? What is the avarice and ambition, of the pursue of wealth, of power, and preheminence? Is it to supply the necessities of nature? The wages of the meanest labourer can supply them. We see that they afford him food and clothing, the comfort of house, and of family. If we examine his economy with rigor, we should find that he spends a great part of them upon conveniencies, which may be regarded as superfluities, and that, upon extraordinary occasions, he can give something even to vanity and distinction. . . From whence, then, arises that emulation which runs through all the different ranks of men, and what are the advantages which we propose by that great purpose of human life which we call bettering our condition? To be observed, to be attended to, to be taken notice of our sympathy, complacency, and approbation are all the advantages which we can propose to derive from it. It is the vanity, not the ease, or the pleasure, which interests us. (Smith, 2009, pp. 62–63)

What is important here for the present augment is that, first and counterintuitively, Smith’s so-called self-interest is not formed independently on the basis of each person’s needs and wants, but is actually a social phenomenon constituted by the process of interaction between people. As noted above, however, this interaction is essentially different from action in the Arendtien sense because it does not involve revealing uniqueness and individuality. It is the process of a mimetic mechanism. The subject needs other people’s desire for their existence. Second, as Hirschman (2013) argues, Smith’s self-interest has no limit because it is not based on individual bodily needs but on approval from other people. And here comes the point where a fundamental distinction by Rousseau disappears – that is, a ‘distinction between amour de soi, which aims at the satisfaction of our “real needs” through the acquisition of a finite amount of goods, and amour propre, which is keyed to approval and admiration from our fellow men and which by definition has no limit’ (Hirschman, 2013, p. 109). The concept of economic interest, which originally had its roots in bodily needs, now becomes a social need. As we have seen, mimetic agents need other people’s attention and desire to construct themselves. Their dynamics generate an unforeseen trajectory, but at the same time they are easy to manipulate and mobilise because they just accept reality as a given.

10.4.2

Polis and Parrhesia

While mimetic agents interact in the market, distinctive individuals are supposed to interact with speech and actions in the polis. According to Arendt (1998), speech and action in the space of appearance were central to Athenian democracy and had the capacity to reveal the reality of the community as well as the uniqueness and individuality of the actor. So, how does the potentiality of individual actions come about? Unfortunately, Arendt did not develop this much further. In this respect, Foucault’s research on parrhesia gives us a useful insight. The original meaning of the Greek word parrhesia is to ‘say everything’, but in fact, it is

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translated as free-spokenness (franc-parler) (Foucault, 2010, p. 43). West says it is ‘frank and fearless speech’ and calls it the ‘life blood of any democracy’ (West, 2004, p. 209). Parrhesia has a broad meaning,9 but here, I focus on democratic parrhesia for its relevance to my argument. In order to explain the concept of parrhesia, Foucault demonstrated the difference between parrhesia and a performative utterance (Foucault, 2010, pp. 62–69). First, while a performative utterance just produces a codified effect, parrhesia opens up an unspecified risk. In the case of a performative utterance, the subject who states the truth does not take any risk because they follow the general code and institutional setting, and enunciation leads to a completely determined event. Parrhesia, on the contrary, creates a fracture, possibility, or undefined eventuality. Second, in a performative utterance, the subject’s status is important, and it does not matter whether or not they really think that it is true. In parrhesia, on the other hand, not only is this indifference impossible, but the subject also says that they really think it is true and bind themselves to the act of stating it and its consequences. Parrhesia is, therefore, not only the statement of truth, as in a performative utterance, but also the parrhesiastic pact of the subject with themselves. The third difference is that whereas a performative utterance follows an institutional game in which the status of the subject who speaks and the situation in which they are situated determine what they can and must say, parrhesia means that there is freedom to say the truth, freedom to act, and freedom to accept the consequences. As Foucault put it, ‘it is not the subject’s social, institutional status that we find at the heart of parrēsia; it is his courage’ (Foucault, 2010, p. 66). Here, Foucault’s analysis of parrhesia is significant because it enables us to see that there must be two dimensions for a functioning democracy: the problem of politeia and the problem of dunasteia. The problem of politeia deals with the constitution, status of citizens, their rights, and so on. The problem of dunasteia deals with the political game through which power is actually exercised in a democracy. In the Athenian democracy, this game was exercised through true discourse. He also points out that the problem of dunasteia is ‘the problem of the nature of the political man himself, of his own character, his qualities, his relationship to himself and to others, of his moral conduct, his ethos’ (Foucault, 2010, p. 158). Although he does not mention Arendt’s work, this problem of dunasteia is closely related to the power of action and speech that Arendt emphasises. It is different from the deontic power by Searle (2009) that is created via declaration, which is a speech act (this means that parrhesia is not needed for effectuation). The concept of Searle’s deontic power as the base of democracy cannot capture this dimension of dunasteia, the importance of parrhesia, and the role of the individual (the character who plays this political game) in democracy. This power, which Arendt calls dynamis (Arendt, 1998, p. 205), comes only from the effect of speech

9

For a broader discussion of parrhesia, see Foucault (2011, 2019).

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and the uniqueness of individuals in the public realm. Similarly, Foucault argues that the notion of parrhesia serves as the hinge between politeia and dunasteia: The place of parrēsia is defined and guaranteed by the politeia; but parrēsia, the truth-telling of the political man, is what ensures the appropriate game of politics. The importance of parrēsia, it seems to me, is found in this meeting point. At any rate, it seems to me that we find here the root of a problematic of a society’s immanent power relations which, unlike the juridical-institutional system of that society, ensure that it is actually governed. The problems of governmentality in their specificity, in their complex relation to but also independent from politeia, appear and are formulated for the first time around this notion of parrēsia and the exercise of power through true discourse. (Foucault, 2010, p. 159)

What is important in his argument is that a properly functioning democracy needs this dimension of dynamics, and without it, the system of democracy can become just an empty shell. More importantly, democracy presupposes a particular subject, a parrhesiast. This mode of action, parrhesia, enables ‘the beginner and leader, a primus inter pares’ (Arendt, 1998, p. 189), who is dependent on others for help, to initiate the game of power amongst equals. As we saw, both the polis and market have a mechanism of self-transcendence which is indispensable to the public realm, and the particular mode of interaction between agents occurs there. Now, let me go back to my proposition from Sect. 10.2: the origin of ‘the social’ is not the enlargement of private households but the emergence of the market as a completely new public realm. By introducing this proposition into the argument, the three inconsistencies and questions that I mentioned earlier can be appropriately dealt with. First, it is reasonable to say that ‘the social’ is ruled by no one, because the market, as the public realm, is auto-regulated through the internal production of exteriority. This fixed point is constituted by the prices which agents take to be a given, but in reality, it is the result of their behaviour. Second, there is no inconsistency if the salon in high society is another origin of ‘the social’, since the main driving forces in the market are vanity and mimetic desire, and they are common features in social occasions like salons. Lastly, regarding the character of labour, if the market is regarded as the public realm, it is natural for individuals to show their superiority in search of appreciation. Labour in the modern age is more than a means of sustaining life. Arendt (1998) rightly argues that ‘the social’ has a damaging effect on the public and private realms. Yet, the biggest problem with Arendt’s argument on ‘the social’, I think, is that she treats this problem in terms of the conflict between two different activities –that is, labour and action. She repeatedly argues that labour, no matter how dominant it becomes, cannot have the capacity for action. However, if this is the case, the role of action remains intact and there is no danger of it disappearing. To Arendt, economics always means dealing with production, consumption, life processes, and biological needs. This schema, I suspect, is necessary for Arendt to highlight the peculiar characteristics of action for freedom and human agency and to criticise the ideas of Marx, which tend to ignore the importance of this kind of public action. However, this tendency of Arendt led to the neglect of the important character of the market as a completely new public realm which emerged in the modern age. The market involves a mechanism of self-transcendence, yet it does not

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require action in the Arendtian sense. Arendt fails to detect the operation of this mechanism and, consequently, fails to capture the political implications of ‘the social’. The real problem is not the conflict between labour and action, but the conflict between two different kinds of self-transcendence: market and democracy.

10.5

Social Reality: Potency, Possibility, and Power

So far, I have discussed several problems concerning ‘the social’ by Arendt, and in so doing I mentioned ‘reality’ without explicitly defining its meaning. To Arendt, obviously, ‘reality’ is an important concept because it offers a conditioning force to human beings and is also related to power. Let us recall that, according to her, in the manner of speech and action, power in the Arendtian sense is actualised and an individual can ‘disclose realities’ and ‘create new realities’ (Arendt, 1998, p. 200). How can we conceptualise this reality which is given as a conditioning force to us but at the same time can be disclosed and created by us? What implications, if any, can we draw for social reality and power from our argument? Here, I draw on Berardi (2019), following his theoretical framework which regards the social world as being composed of three different dimensions. He proposes ‘the process of becoming other’ with the aim of making us see ‘futurability’. According to him, possibility is ‘a content inscribed in the present constitution of the world (that is, the immanence of possibilities). Possibility is not one; it is always plural: the possibilities inscribed in the present composition of the world are not infinite, but many’. Potency is ‘the subjective energy that deploys possibilities and actualises them. Potency is the energy that transforms the possibilities into actualities’. Power is ‘the selection (and the exclusions) that are implied in the structure of the present as a prescription: power is the selection and enforcement of one possibility among many, and simultaneously it is the exclusion (and invisibilization) of many other possibilities’ (Berardi, 2019, pp. 1–2). In this framework, power is sustained by potency through the invisibilisation of many other possibilities. As long as this condition continues, no changes occur. When potency becomes intentional subjectivity, however, actualisation of possibility can occur, and as a result, new power and realities appear. This framework of social reality can be applied to our argument of selftranscendence in the previous sections. The mechanism of self-transcendence, like power, can produce a fixed point (exteriority) in a community. It orients the future of people and automates their behaviour through the exclusion of many other possibilities. As Berardi put it, ‘Power can be defined as a form of engendered determinism’ (Berardi, 2019, p. 12). Borrowing the concepts of Berardi, let me reinterpret my argument about polis and democracy. In speech and action, a parrhesiast, as an intentional subjectivity, inserts their subjective energy that actualises the possibility. This is possible because good parrhesia introduces the differentiation of true discourse and, as a result, through the exercise of ascendancy, they can properly direct the other members of

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the city. The system of democracy, if it works properly with the dimension of dynamis, has the capacity to promote and guarantee a channel in which potency as subjective power can actualise the possibility, and consequently, a new reality emerges.10 By politics, Arendt (1998) refers to the process where one can begin a new thing in human affairs, and these possibilities can be activated by distinguished individuals through truth-telling. When she says that speech and action disclose ‘realities’, it means that parrhesia can disclose power as a exteriority which enables us to coordinate with each other but simultaneously prohibits us from seeing possibilities. And when she says that words and deeds establish relations and create a new reality, it means that the parrhesiast persuades other members of the community, they renew the exteriority, and consequently, new realities can emerge. Human beings are always conditioned creatures, but at the same time, with individual and collective action, we can be condition-transcending agents as well. In this sense, democracy is a political institution which controls the fundamental uncertainty of human affairs and simultaneously makes it possible to create history on our own and make the concept of responsibility meaningful. On the other hand, the self-transcendence of the market relies heavily on the character of mimetic agents who take the ‘reality’ as a given. They automatically take the price as a given to make a future decision because they need to acquire a collective image according to which they can continue the exchange. The market, thanks to the price mechanism, can make the automation of individual and collective action possible without words, persuasion, and promises. Expressing an individual judgement and a unique point of view, although rare, is fundamentally unimportant. The more uncertain the situation becomes, the more likely agents are to adopt a mimetic strategy; that is, they follow what other people think and do. Unlike parrhesiastic agents, mimetic agents can do so without intentional subjectivity since the self-transcendence of the market does not require prior coordination or consultation amongst agents. As a result, there is no constitutive moment such as a promise or contract by members of a community. Disturbing events such as boom and bust, hyper-inflation, and credit crunch emerge like natural disasters to the eyes of agents, but they are actually the result of their own behaviour. The character of power in the market is quite different from that of the social contract type. In Unger’s (1997) terms, a negative capability is highly unlikely.11 We are now able to appreciate the implications of these arguments for social reality and power. In social reality, we have two kinds of power: power as exteriority and power as subjective potency. Power as exteriority is above and beyond individuals but is supported by the subjective potency of these individuals. They are closely related and need each other, yet they are never identical, working in different ways in

10

Berardi himself, however, does not believe in the possibility of transformation through political channels, at least in Europe today. See Berardi (2019, pp. 41–44). 11 On the concept of negative capability, see Unger (1997). Unger proposes this notion to mean the human capacity to transcend a given reality by negating it in thought and deed.

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different dimensions. The social world is open, for there is the ‘agonism’ between power relations and the intransitivity of freedom (Foucault, 2002, p. 343). The analysis of this ‘agonism’ is, according to Foucault, a political task. This specific nature of social reality, it seems to me, distinguishes social science from natural science, which lacks this duality of power. This implies that the political task is inherent in all social studies.12

10.6

Concluding Remarks

As we have seen, Arendt’s (1998) argument regarding ‘the social’ is full of inconsistencies and difficulties. To be sure, my brief and insufficient attempt here hardly solves all of the problems. Nonetheless, it still has some relevance today. As Arendt pointed out, the important character of the modern age is the emancipation of labour and the emergence of ‘the social’, which changed the meaning of the public and private realms. The market, which appeared in the modern age as a completely new public realm, succeeded in establishing the social institution as a model of selftranscendence. As the market now dominates the public realm, democracy plays a secondary role. Even if democracy exists as a formal system, like periodic free elections, a multi-party system, and majority rule, it becomes a ‘lost treasure’13 when the dimension of dynamis, or the potentiality of parrhesia, disappears. Tocquevill put it as follows: It will be useless to call upon those very citizens, who have become so dependent upon central government, to choose from time to time the representative of this government; this very important but brief and rare exercise of their free choice will not prevent their gradual loss of the faculty of autonomous thought, feeling, and action so that they will slowly fall below the level of humanity. (Tocqueville, 2003, p. 808)

Without an autonomous individual as parrhesiast, we will lose the dynamics of democracy – that is, the capacity for action which Arendt values so highly. It should be noted, moreover, that ‘the social’ is also a threat to the private realm, although this point is raised less often by commentators, and Arendt herself did not develop it much. To Arendt, freedom refers to political freedom and collective action in the public realm. In other words, freedom is achieved in public life, not in the subjective private life. This was the crux of her analysis. Nonetheless, the character of agents as subjective potency, or the inner existence which resides in the private realm, plays a vital role in the success of political change in a community. Under the mimetic hypothesis, the needs and wants of unique individuals tend to be replaced by mimetic desire, which leads to conformism and behaviourism. The selftranscendence of the market, through the price mechanism, presupposes a certain

12 For a detailed discussion of the relationship between social sciences and politics, see Mills (2000, chapter 10). 13 For a broader discussion of lost treasure, see Arendt (2006, pp. 3–15).

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social relation, and it has an impersonal power over all of us in the public realm as well as in the private realm. Examining and understanding the subjective realm is equally important for the autonomy of individuals and a vibrant democracy. Subjectivity and objectivity are interconnected in the social world. Understanding this entanglement is difficult and complicated. Still, it constitutes an important task for social sciences, since better understanding of our subjective realm as well as our outside world is a vital step towards the autonomy of individuals, extended political freedom, and human flourishing in general.

References Arendt, H. (1998). The human condition (2nd ed.). University of Chicago Press. Arendt, H. (2006). Between past and future. Penguin. Berardi, F. (2019). Futurability: The age of impotence and the horizon of possibility. Verso. Brown, W. (2015). Undoing the demos: Neoliberalism’s stealth revolution. Zone Books. Dupuy, J. P. (2014). Economy and the future (M. B. DeBevoise, Trans.). Michigan State University Press. Foucault, M. (2002). Power (R. Hurley and others, Trans. & J. D. Faubion, Ed.). Penguin. Foucault, M. (2008). The birth of biopolitics: Lectures at the Collège de France, 1978–1979 (G. Burchell, Trans.). Palgrave Macmillan. Foucault, M. (2010). The government of self and others: Lectures at the Collège de France, 1982–1983 (G. Burchell, Trans.). Palgrave Macmillan. Foucault, M. (2011). The courage of truth: Lectures at the Collège de France, 1983–1984 (G. Burchell, Trans.). Palgrave Macmillan. Foucault, M. (2019). Discourse and truth and Parrēsia (H.-P. Fruchaud & D. Lorenzini, Eds.). The University of Chicago Press. Fromm, E. H. (1994). Escape from freedom. Holt. Fromm, E. H. (2010). On disobedience. HarperCollins. Girard, R. (2016). Things hidden since the foundation of the world (S. Bann & M. Metteer, Trans.). Bloomsbury Academic. Hirschman, A. O. (2013). The passion and the interest: Political arguments for capitalism before its triumph. Princeton University Press. Hodgson, G. M. (1988). Economics and institutions. Polity Press. Mills, C. W. (2000). The sociological imagination. Oxford University Press. Orléan, A. (2014). The empire of value: A new foundation for economics (M. B. DeBevoise Trans.). The MIT Press. Pitkin, H. F. (1998). The attack of the blob: Hanna Arendt’s concept of the social. University of Chicago Press. Searle, J. R. (2009). Making the social world: The structure of human civilization. Oxford University Press. Smith, A. (2009). The theory of moral sentiment (R. P. Hanley, Ed.). Penguin. Tocqueville, A. (2003). Democracy in America (G. E. Bevan, Trans.). Penguin. Unger, P. M. (1997). Politics: The central text (Z. Cui, Ed.). Verso. West, C. (2004). Democracy matters: Winning the fight against imperialism. Penguin. Zuboff, S. (2019). The age of surveillance capitalism: The fight for human future at the new frontier of power. Public Affairs.

Chapter 11

Thinking About ‘Community’ in Everyday Life Yasuko Imoto

Abstract In this chapter, first, the author explores the anthropological meaning of reality and describes the importance of actuality as grasped through actual involvement in the field. To identify this phase of actuality, Lévi-Strauss’s simple ‘levels of authenticity’ criterion is then introduced to clarify the conditions of ‘everyday life’. To capture community in terms of people’s relationships in real ‘everyday life’ situations, two forms of interaction in a village on the island of Sardinia are discussed: invocation and mediation. The reason for focusing on these localised acts is that both have passivity as a starting point, and both impose a certain frame (form) on the empirical relationship between two persons. Consequently, the argument focuses on extracting the forms of personal, face-to-face bilateral relations in the two actions. The chapter does not discuss community as a reflection of factual relationships or the cultural particularities of the agro-pastoral livelihood in Sardinia; rather, it is a logic of context (locality) created by bilateral relations, which differs from universal concepts that are constructed ‘impersonally’ by discarding personhood as well as materialisation, which assumes the reality of objective ‘essentiality’.

11.1

Introduction: Reality According to Anthropology

Japanese psychiatrist Bin Kimura described the dual aspect of reality, namely reality and actuality.1 Tracing its Latin etymology, reality (res) means ‘things, stuff’, and actuality derives from actio (formed from the past participle of ago, meaning ‘to do, act’) meaning ‘act, action’. In other words, although both refer to reality, the term ‘reality’ is used to refer to the existence of things that comprise reality in the eyes of

1 Japanese anthropologist Makoto Oda (2014) points out that Kimura’s distinction between reality and actuality makes it clear that “singularity” cannot be manifested without interaction (action).

Y. Imoto (✉) Graduate School of Humanities, Osaka University, Toyonaka, Osaka, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_11

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someone who perceives and confirms it, whereas actuality refers to undertaking action directed towards reality.2 Kimura points out the depersonalisation patient’s perception of reality using this conceptual distinction.3 He explains that though patients maintain a cognitive sense of reality, they perceive a loss of a sense of reality or actuality that can only be felt through interaction with the world through the performance of action, in other words, actuality or the separation of reality and actuality as ‘real’.4 Furthermore, this actuality, in terms of the temporal phase, is ‘an active reality that is going on uninterruptedly at the very moment of reality, a reality that cannot be captured by objective recognition and which the person involved has no choice but to deal with by his or her own active action’.5 This means that there are phases of reality in which ‘singularity’ (being incomparable or irreplaceable) is manifested that can only be grasped through the practical certainty of actual involvement, which is distinguished as an actuality linked to a sense of reality. The complementary concept of ‘reality’ and ‘actuality’ elaborated by Kimura is also important for anthropology, which uses fieldwork as its method. This is because the field is a real ‘place of life’ where the researcher participates in (or rather, is caught up in) the rhythm of various people’s voices and behaviours. For example, what caught the author’s attention in in the Sardinian village, her field, was the behaviour of individuals functionally operating a bundle of thoroughly face-to-face role relations. In these areas, people not only exchange necessary goods and information with each other but also engage in a variety of ‘social interaction’, assistance, and cooperation in everyday life, showing flexible relationships according to their daily needs. To consider the community in such concrete situations, the phase of actuality is important. The following question Abu-Lughod posed to anthropology urges us to pay attention to ‘what they––the very people we meet in the field––are doing’ and move towards actuality. Regarding communities, anthropologists commonly generalise by saying that they are characterised by certain institutions, rules, or ways of doing things. For example, we can and often do say things like ‘The Bongo-Bongo are polygynous’. However, one can refuse to generalise in this way and instead ask how a particular set of individuals––for instance, a man and his three wives in a Bedouin community in Egypt whom I have known for a decade––live the ‘institution’ that we call polygyny.6

This research attempted to extract from the ‘everyday life’ the community, which is based on direct, face-to-face relations that do not discard personhood. The

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Kimura (2000, p. 13). Kimura (2000, pp. 14–15). According to Kimura, a depersonalisation patient ‘has lost the capacity to sense reality as actual but is acutely aware of the loss of this sense’. In other words, there is a discrepancy between reality and actuality. He pointed out that this discrepancy occurs at the interface between reality and actuality. 4 Kimura (2000, pp. 14–17). 5 Kimura (1994, p. 29). 6 Abu-Lughod (1991, p. 153). 3

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‘everyday life’ criterion was indicated by Lévi-Strauss’s simple distinction: the ‘criterion of authenticity’. Thus, it will be different from the debate over ‘impersonally’ constructed discourses and concepts of community in which personhood is banished, as well as from a substantive grasp of community that assumes the existence of an objective ‘essence’. Taking a microscopic approach, the author aimed to show the logic of a community created by bilateral relations that emerge in a concrete situation involving the two forms of interaction, namely invocation and mediation. Invocation and mediation as concrete behavioural involvement constitute the focal point, not because they represent what is unique to Sardinia (its particularity) but because both forms of interaction start with passivity. The context such passivity creates is manifested in everyday practice.

11.2

The Criterion of Authenticity

Lévi-Strauss described that perhaps anthropology’s most important contribution to social science in the future will be judged on the way it derives fundamental distinctions between social modalities by means of the ‘criterion of authenticity’.7 This ‘criterion of authenticity’ relates to the ‘scale’ (or unit) of society that the fieldwork method has dealt with, but it does not simply mean defining villages (communities) where the residents know each other and cities (societies) by their essence. ‘Fifty thousand people do not constitute a society in the same way that five hundred do’,8 and the difference in scale also makes a difference in the communication mode. It is an extremely simple distinction. It is fair to say that this is a basic distinction between ‘genuine society’, which is a small-scale society in which it is easy to find direct, face-to-face contact between concrete people, and ‘inauthentic (fictive) society’, which is a large-scale society consisting of indirect communication that emerged later. Lévi-Strauss describes as follows: Our relations with one another are now only occasionally and fragmentarily based upon global experience, the concrete ‘apprehension’ of one person by another. They are largely the result of a process of indirect reconstruction, through written documents. We are no longer linked to our past by an oral tradition which implies direct contact with others (storytellers, priests, wise men, or elders), but by books amassed in libraries, books from which we endeavour––with extreme difficulty––to form a picture of their authors, with the immense majority of our contemporaries by all kinds of intermediaries––written documents or administrative machinery––which undoubtedly, vastly extend our contacts but at the same time make those contacts somewhat ‘inauthentic’.9

What Lévi-Strauss refers to as the ‘character of the fiction’ is an indirect aspect of media-mediated communication (e.g. currencies, law, or administrative

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Lévi-Strauss (1963, 2013). Lévi-Strauss (2013, p. 28). 9 Lévi-Strauss (1963, p. 366). 8

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organisations) that confers generality. Unlike the way in which ‘one person is understood concretely by another’, the way in which the relations arising from the complexity of concrete human associations are reduced and reconstituted into something comparable through a generalised medium ‘confers the character of fiction’, according to Lévi-Strauss. However, in contemporary society, where the ‘character of fiction’ permeates every corner of the world, direct and face-to-face contacts and ties seem to be nothing more than a legacy of communication for people living in a closed world, an isolated village. Some may question the point of going to the trouble of introducing the ‘criterion of authenticity’ distinction. It is true that, today, everyone lives in an ‘inauthentic society’, but this does not necessarily mean that aspects of communication are adapted to the ‘character of fiction’ and that the ‘authentic side’ is made into peculiarity within it. Lévi-Strauss has pointed out that the relations of ‘authentic society’ are retained in modern society, albeit in different forms, as follows: Modern societies are, of course, not completely ‘inauthentic’. On the contrary, if we carefully consider the points on which anthropological investigations have been brought to bear, we note that in its increasingly intensive study of modem societies, anthropology has endeavoured to identify levels of authenticity within them. When the ethnologist studies a village, an enterprise, or the neighbourhood of a large town, his task is facilitated by the fact that almost everyone knows everyone else.10

Furthermore he commented as follows on that key distinction between two modalities of social existence: A way of life perceived primarily as traditional and archaic, which is that of authentic societies; and forms of more recent appearance, from which the first type is not absent but in which imperfectly or incompletely authentic groups emerge as islands strewn across the surface of a vaster entity, itself marked by inauthenticity.11

Japanese anthropologist Makoto Oda, who focused on the ‘criterion of authenticity’ from early on, has pointed out that it is in real life where the ‘authentic aspect’ of ‘false’ communication is ‘joined, superimposed and alternated12 while retaining its differences’ and where the ‘technique’ of living these two aspects doubly becomes visible. What enables the transformation of that ‘character of fiction’ are direct relations in which people ‘grasp the action of others, wholly, personally and concretely’, the dimension where their ‘other-oriented self’ manifests, which means that such a concrete dimension of personhood is retained only in the field of life.

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Lévi-Strauss (1963, p. 367). Lévi-Strauss (2013, p. 29). 12 Oda (2011, p. 269). As a consequence of Lévi-Strauss’s perspective of the ‘criterion of authenticity’, Oda (2009) presented the ‘dual societies’ perspective, which states that ‘After modernization, people have lived in two different societies, an authentic society and an inauthentic society’. He further stated that if the everyday practices responding to neoliberalism and globalism are reviewed from this perspective, it becomes clear that they are carried out in authentic society, such as non-identical repetition and maintain the boundary between ‘authentic society’ and ‘inauthentic society’, creating dual societies. 11

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What is important about the ‘criterion of authenticity’ is that the distinction is not based on the presence or absence of generalised media such as currencies or law. ‘Inauthentic’ does not mean fiction, and ‘authentic’ does not mean substance. The two communication modes are spatially bounded and not located in the process of social development from one to the other (history). Otherwise, anthropologists would not have to be so mindful of identifying the ‘criterion of authenticity’ in contemporary society. The reason for introducing the ‘criterion of authenticity’ distinction in this chapter is to clarify where the level of ‘everyday life’ in the place of living is to be found. In other words, the term ‘everyday life’ is used in this article to refer to the relationship dimension (aspect of actuality) in which ‘one person is concretely understood by another’ in a broad sense, a place where direct, face-to-face relationships are created and built upon and a place where there is room to use the resultant relationships according to the needs of life. The ‘criterion of authenticity’ distinction has been introduced because when we use a method of recognising a single person’s complexity as a bundle of comparable attributes such as role, occupation, or generation or of making an inevitable and direct linkage between ‘behaviour’ and ‘narrative’ and its bearer’s attributes, the place of life where the relationships and behaviour of single beings, ‘authentic aspects’, are manifested, is completely left out. In Oda’s words, this is because ‘A divided and purified concept may be able to grasp a fixed reality (or, more precisely, a fixed reality is created by a divided and purified concept), but not an actuality’.13 Anderson, in his Imagined Communities, describes the ‘imagining’ of modern nations and earlier communities as follows: ‘Communities are to be distinguished, not by their falsity/genuineness, but by the style in which they are imagined’.14 Any community, not just the modern nation, is imagined, but if we review the inclusion of newly emerging nation formation into an imagined style in terms of ‘levels of authenticity’, it is possible to think about forms of practice that recreate the place of life.

11.3 11.3.1

Being in Relation with: Who Are You? Voices Heard in Ordinary Outdoor Life

Regarding what Lévi-Strauss meant by ‘one person being wholly, personally and concretely understood by another person’, Oda has argued that this refers to the

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Oda (2014, p. 7). Anderson (2006, p. 6). The style in which villagers engaged in face-to-face contact imagine is described as follows: ‘Javanese villagers have always known that they are connected to people they have never seen, but these ties were once imagined particularistically––as indefinitely stretchable nets of kinship and clientship’. 14

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‘singularity’ (being that ‘consists independently of such comparable attributes15 as even indistinguishable twins are each an irreplaceable and unique entity’. In other words, ‘singleness’ is not a dimension of qualitatively divided horizontal or vertical social relations such as ‘kin’, ‘neighbour’, ‘friend’ or ‘patron-client’, or of the subject operating the bundle nor of attributes or roles defined in difference or comparison with others; rather, it is a solitary existence that is captured in a oneto-one personal ‘social interaction’. As Oda also pointed out, it is only when the other party initiates an ‘interaction’ that the receiving party becomes ‘sole’. The current paper will trace the relationships comprising ‘social interaction’ between such ‘single beings’ using the ‘outdoor’ movements of the inhabitants of Village B in Sardinia, where the author conducted her fieldwork.16 The specific act focused on here is invocation, which is thoroughly impersonal. This is because it is an actual form of involvement that is routinely seen outdoors. The term ‘outdoors’ is used to encompass not only the functional aspects of the inhabitants’ social spaces, such as squares, alleys, markets, and bars, but also the places where everyone gathers and meets, regardless of their purpose; for example, the small square in front of the church after mass, the market at the centre of the village, shopfronts, doorways of houses, and benches are places where people can meet not only acquaintances but also any kind of person and where a circle of chatter naturally forms. The outdoors are a space where anyone can come in and out and meet people and where people can naturally gather. When you move around the outdoors in the field, you can hear a great variety of voices related to invocation. It is not uncommon to see residents passing through the streets addressing others by name, title, or kinship relation, such as ‘Ciao, Maria’, ‘Bon Giorno, dottore’, or ‘Zia Chicchina’. Reactions vary, from those who stop to exchange a few words in response to the voice, to those who talk for a while, to those who simply nod and hurry onwards. To an outsider like the author, the residents’ behaviour towards their acquaintances outside the house seemed somewhat strange because it had nothing to do with the purpose or function of the greeting.17 The repetition of everyday invocations in the open air is more meaningful in terms of the act of invocation itself than the content of the utterance. This is because a ‘place’ is established in which sole beings face each other in a situation where they

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Oda (2014, p. 4). The author has researched several village festivals held in honour of saints, and this paper is based on the records kept by the comitato of the festival in Village B in which she participated. The stay was 2 weeks in duration, beginning on 6 September 2001. 17 Japanese anthropologist Taeko Udagawa (2004) described the greetings and giro frequently made outdoors in Town R near Roma with reference to the dimension of specific behaviour, which is divorced from its purpose or function, as follows: ‘The first thing we notice is that they are not always outdoors with someone or in conversation. They usually pass by those they meet and exchange greetings, and often just exchange looks without uttering a word at the time. Even when standing next to someone, once they have greeted each other, they remain silent and watch people pass by without talking to each other. They also never stay in one place outdoors, moving to another after a while or walking from place to place’ (p. 351). 16

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are ‘invoked’ (‘given’) by each other. The nature of the relationship is different from the dimension involving perceptions and judgements about the other party. This is because there is no other who can respond to an invocation such as ‘Maria’, ‘Dottore’, or ‘Chicchina’ apart from those who are addressed, and through such invocations, a ‘place’ is created in which the addressee also becomes a sole being. It is a ‘place’ where involvement through action makes sense. Unlike information, which is preceded by the active nature of transmission, communication cannot begin without this passivity. Outdoors, the voices of invocation are heard here and there, and the many circles of chatter amongst the residents indicate a state of being faceto-face with someone outdoors, a ‘place’ (context) where the ‘face-to-face self’ manifests.

11.3.2

A Net Woven with ‘Short Branches’

Let us turn to the comitato of the saint’s festival as one of the places where the relationships between sole beings are manifested. This comitato is formed for each festival and is a fixed, ad hoc gathering, as its members change every year. The members do not necessarily have direct contact with each other but are linked through each member’s ‘short branches’, that is, bilateral connections, and the residents cooperate in various ways, from preparation to implementation, led by the ‘chairperson’. Above all, the ‘chairperson’ must use his or her ‘short branches’ to gather the members of the comitato, assign tasks and supervise their execution, and ensure that the saint’s festival goes off without a hitch each time. The comitato of the saint’s festival, of which the author was a member, comprised all women in their 20s to 50s living in the same neighbourhood.18 As the author became a comitato member and began to frequent the gatherings, it became clear that each of the members had different relationships. A woman called Portola, the ‘chairperson’, was connected to member A through friendship, to member B as a figlioccia, to member C as a cousin, and to member D as a neighbour, based on face-to-face relationships in a net of multiple short lines (Fig. 11.1).19 The ‘chairperson’ has many ‘short branches’ (connections) and may be recognised for the extent of his/her contacts and competence, but the number of ‘short branches’ does not act as a source of power. In other words, the relationships between sole beings are not likely to move towards the formation of a strong ‘apex’ unless there is something that precipitates prioritisation of a large number of ‘short branches’. In fact, while the author was helping to prepare for the festival in a large

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There were 14 members of the comitato in which the author was allowed to participate. The author mainly helped prepare the meals served during the festival (14–16 September). Various performers are invited to the festival, including groups of traditional dancers and tenores from neighbouring villages, and a meal is served after the performance. 19 Figures 11.1 and 11.2 refer to Ingold’s (2011) ‘meshwork’ concept.

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Fig. 11.1 Comitato included ‘stranger’

garage, the members frequently made ‘invocations’ to each other, and various bilateral relationships were gathered. Members do not necessarily know each other, and some members do not socialise with some, but they can be linked to other members, including the ‘chairperson’, through one of the members. These bilateral ‘short branches’ create a context in which strangers, such as the author, who they do not know or have a lasting relationship with, are treated as temporary members if they have some contact with one of the members (Fig. 11.1). In fact, if the ‘chairperson’ introduces a member to another member as ‘an acquaintance of D’ or ‘a guest at D’s’, that person is considered a ‘guest’ connected to one of D’s ‘short branches’. The author was related through such ad hoc relationships that could be severed at any time. In other words, temporary ‘conversion’ to an acceptable status did not change the fact that the author was a stranger (i.e. the distinction of stranger is retained). The same principle seems applicable to shearing sheep or temporarily helping with farm work; the author, who was outside the circle of routine exchange, was like a guest who was given a temporary ‘seat’ at the ‘work together, eat together’ table. The guest who is ‘with’ the place is always fixed on the side of the receiver, so the author remained a stranger but mixed in with the others. These ‘short branches’ were flexibly related according to the specific situation, so that the joints could be unravelled for even the slightest occasion (e.g. a chat about a member’s character review). However, because of the personal relationship between the concerned parties, the situation was repaired before long, so that the whole ‘place’ of the comitato gathering was maintained. Hence, the gathering of the executive committee was driven by the expansion and contraction of the relationship between the two persons, with the ‘short branch’ as the basic unit. This shows that ‘short branch’ relationships with other members, which could be severed, are constantly being sewn together to create a ‘place’. As mentioned earlier, each member has a number of ‘short branch’ connections. Members’ ‘short branches’ are discoverable to some extent through their outdoors social interaction, but there remains an ‘uncertain state’ in the relationship between the two persons as to who

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Fig. 11.2 Being vis-a-vis ‘in relation with X’

these branches connect to and how they work. It is not always the case that they see each other as a single, integrated unit with clear boundaries (Fig. 11.2). This is because it is constantly assumed that they are ‘connected with someone’ one does not know, and every one of them has a ‘rough’ understanding of others’ relationships (Fig. 11.2). It can be described as a relationship in which the ‘uncertain state’ of everyone being ‘related to someone else’ is always built in, a relationship in which there is room for everyone to be related to everyone else. Such an ‘uncertain state’, if taken in functionalist terms, would be a plurality of roles and performances depending on the situation, such as ‘partible’ individuals who can be divided according to their relationships with others and individuals who change masks. It is prefaced with the manipulation of individual relationships as to which roles are played and how. This must also be the reality of individuals with multiple ‘short branches’. However, it is also possible to envisage a reality that is grasped independently of the categories of role and performance and the dimensions of representation. The example of Village B suggests the loneliness of the ‘other’ in front of the ‘self’, the ‘self’ that appears each time to the recipient of an invocation, and the ‘face-to-face self’ that is only manifested in the phase of actuality. This difference in terms of starting point – from oneself or from the person in front of oneself – would be decisive for a relational image of the individual. The ‘criterion of authenticity’ is a fundamental and structural distinction in bilateral relations. Thus far, we have looked at what the inhabitants of Village B in Sardinia do outdoors along the dimensions of specific invocations. Let us briefly summarise. First, it has been noted that the outdoor invocation does not demand anything in particular from the other party, but when people happen to see each other or pass by, they create a relationship between sole beings through the distinctive face-to-face nature of the situation. Next, we looked at the comitato, the executive committee of the saint’s festival, which comprises residents engaged in various social interactions, and we saw how flexible gatherings are established in a web of relationships amongst those with ‘short branches’. This means of bilateral relations may be the result of prioritising informal relations that are immediate to the situation. It may also be interpreted as the villagers being routinely oriented towards rational behaviour in

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terms of skilfully manipulated short-term business relationships based on personal interests. However, the residents do not necessarily go outdoors solely to pursue clear objectives or results; they are constantly moving in the outdoor space in order to meet people. In invocation, too, although there is no particular purpose, the emphasis is placed on a one-to-one, person-to-person relationship with the other party. In gatherings with a clear purpose, such as the comitato, too, members always appear in relation to each other, so that the whole comitato is driven by the linkage between very personal relationships and the division of roles amongst the members. Therefore, the author would like to consider the reality of the community solely from the perspective of the place where the bilateral relations of the ‘uncertain state’ are developed. The relationships amongst ‘uncertain states’ cannot be expected to be sustained or stabilised without symbolic manipulation (spiritual union) through the church, as in the godparent–godchild relationship. The godparent is obliged to be another protector, separate from the parent, and is strongly connected to that parent through the godchild. The godparent–godchild relationship is mediated by a ‘third person’, a spiritual being in another dimension, and is therefore stamped with duty and surrogacy. The residents sustain their ‘short branch’ relationships by creating various social contacts. One such example is the outdoor greeting while chatting in Village B as seen earlier. Additionally, the practice of actual involvement in the form of, for example, frequent visits to each other’s homes, exchanging homemade items, and helping out, induces the emergence of a relationship, and regardless of the concrete form, the act of interaction has the formality of an exchange of acts, of responding with the same act, of responding to the interaction already received from the other party. However, in the godparent–godchild relationship described above, the godparent is always the giver in relation to the godchild, whereas the godchild is only required to behave respectfully towards the godparent. This is a distinctly different form of bilateral relationship, in that it sets up an impersonal ‘higher being’ that separates and links the two parties to the giver and the receiver. Village B has demonstrated the creation of a ‘place’ for direct, one-to-one, person-to-person relationships in a space where people meet and are together. It is a reality of the community that does not appear in the process through which ‘our’ essence and constructedness, publicly demonstrated through some representation or discourse and allowing us to share semantic content with others, is determined. The community contemplated by the way of life in Village B is not one in which all people are united on the basis of identity; rather, it is a state of interaction between the web created by the ‘short branches’ of two persons in a relationship in which the ‘uncertain state’ is embedded and social relations. In other words, it means that they allow, and even demand, a thorough ‘social interaction’ of personhood and face-tofaceness to enter into relationships defined by roles and functions. The process of coordination control, such as non-identical repetition, that operates in the phases of connection and interruption of these ‘short branches’ with respect to the face-to-face self is the reality of community.

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11.4 11.4.1

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The Third Person Mediator: Sos Omines Persons Requested to Guide in a Certain Orientation: Sos Omines

The anthropologist Sassu observed that although equal retaliation appears to be the priority in the villages in central Sardinia, there are, in fact, peaceful solutions to specific conflict situations, as follows: It would be wrong, in fact, to believe that in the communities of central Sardinia, the system of ‘vendetta’ was absolutely ‘privileged’ over the peaceful ones, whereas it is true that every system is marked by a criterion of adaptation in relation to the time and circumstances of each specific conflict situation.20

It is true that Sardinia, the area known as the Barbagia region in particular, has been objectified as a ‘lawless zone’, where ‘vendetta’ as a form of equal retaliation and acts of ‘barbarism’ called banditismo are rampant, as well as a place of ‘discovery’ or understanding of ‘radical alterity’. In light of such a history, Sassu argued that, rather than interpreting the solution as either ‘violent’ or ‘peaceful’ on the basis of the social order, or law, away from the specific contest of conflict, one should pay more attention to the relationship between the specific conflict situation in the society concerned and the resolution method. There are fragmentary references to some of the practices of ‘peaceful’ resolution in Sardinia, but there is little ethnographic material.21 Though this chapter has spent a long time on preliminary discussion, we will now discuss a form of private mediation of disputes between two persons by the ‘third person’ called sos omines. We will focus on the presence of sos omines because they are the ‘third person’ who are allowed or even required to intervene. The role of sos omines does not exist prior to the mediation relationship; the presence of sos omines is directly requested by individuals and demanded by the specific situation in which a turning point occurs in two actors’ relationship. In other words, sos omines, who are inseparable from the specific context, can only be a fair ‘third person’ to the actors if its singularity (being a who’s who in the village) is not lost when ‘that overarching experience, that one person is concretely and personally understood by one other person’. Hence, sos omines are considered to act like a concrete middle term (not an intermediate concept) mediating a two-party relationship. The author’s aim in this regard is to extract the logic of such customary acts of mediation. Who, then, are sos omines? According to the legal sociologist Masia, omines is closer in meaning to vir than to homo in Latin and refers to ‘a certain kind of men’.22

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Sassu (2009, p. 73). Translated by the author. Pigliaru (1975), Pinna (2003), and Pira (1967) all made passing references to this. Sassu (2009) conducted a legal anthropological study on the mediation of disputes called rasgioni in a stazzi in Gallura. Ferrari (1982) conducted a field study from a legal sociological perspective. 22 Masia (1982, p. 86). 21

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To whom does this impersonal appellation of ‘certain kind of men’ refer and in what phases do they appear? With reference to Masia’s study of sos omines in a village in the Barbagia region of Sardinia,23 let us begin with an overview of ‘certain kind of men’. Once again, who are sos omines? According to Masia, they are ‘villagers’ with experience living in the village who are equipped with skills and well-versed in a wide range of village customs and norms; they are impartial when resolving conflicts and do this not by emotion but by reason.24 A person considered ‘suitable’ for the role of sos omines, that is, suitable for mediation, does not necessarily have to be an influential person in the village in terms of political power or financial resources nor do they have to be in a position that requires professional knowledge or specialised skill. Since no one becomes sos omines unless the parties involved ask them to assume the role, a person who is neither a professional of some kind nor part of a family business but rather someone who lives with the concerned parties in the village becomes a temporary ‘village mediator’ if entrusted with mediation. At what point, then, do sos omines appear or become required? Masia listed the main types of disputes entrusted to sos omines as follows: division of property, livestock encroachment into vineyards and vegetable gardens, accidental or deliberate livestock encroachment into tancas, contracts concerning livestock farming, and compensation for labour or skills rendered.25 All of these are routine disputes where arrangements and commitments involving the two persons are broken, resulting in a situation where either person’s ‘share received’ is unjust. In such cases, the person entrusted by both sides to mediate is classifiable ed. as sos omines. In other words, he/she is the person asked to address a situation in which there is a temporary crack in the relationship maintained by the two persons regarding what they owe each other (Fig. 11.3). Specific forms of arrangements or commitments include contracts (often undocumented), promises, and practices within villages or specific groups. The appearance of sos omines is therefore inseparable from the breakdown of the concrete context that gives rise to a potential ‘crisis’ (‘turning to other states’) in the bilateral relationship.

11.4.2

The Mediation Process: What Sos Omines Do

Nuoro lawyer G. Pinna described sos omines’ mediation as the simplest amongst the Sardinian shepherds but strictly distinguished it from equally private (i.e. lacking legal procedures) s’abbonamentu,26 that is, negotiations (‘compromise’, ‘deal’, 23

Masia (1982, 2017). Masia (1982, 2017). 25 Masia (1982, 2017). 26 Pinna (2003, pp. 120–121). 24

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Fig. 11.3 Emergence of ‘sos omines’

‘settlement’, ‘reconciliation’) between parties in cases of stolen or damaged livestock. According to Pinna, shepherds choose private ‘negotiations’ to avoid litigation and retaliation in cases of being caught red-handed stealing or harming livestock.27 In fact, if a dispute between shepherds over livestock triggers a chain of events (a cycle of reciprocity), such as equal retaliation, people related to each of the parties involved (i.e. relatives, friends, etc.) will become sequentially involved. Private mediation that avoids such a situation is called s’abbonamentu (reparation). S’abbonamentu refers to entrusting the negotiation of compensation for already determined ‘losses’ to a person connected to the parties concerned. It can also be described as negotiation that does not unilaterally (deliberately) separate the damage from the ‘inflicted’/‘given’ situation but demands certain actions (compensation) for the actual damage. If private mediation depends on such a concrete context, then a different logic, other than ‘reparations’, is at work regarding the sos omines. What, then, do sos omines do? First, let us summarise the mediation process, drawing on Masia’s research. It starts when two persons enter into a dispute over a loss because something has happened that violated an arrangement or commitment they were supposed to keep with each other. If both sides choose mediation by the villagers as a means of resolving the dispute, a person directly commissioned by both sides to mediate will appear in the role of sos omines. Sos omines entrusted with the task of mediation gather both parties in their home (or outside their place of residence) and first listen carefully to what each has to say. Next, after scrutinising

27

Pinna (2003, p. 12).

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both sides’ claims and the relevant village practices, a final ‘judgement’ is made and communicated orally to the parties. If the sos omines find that the arrangement that existed between the two parties prior to the conflict-inducing incident was not honoured, the party that broke the arrangement is obliged to ‘make up’ for the actual losses. For example, if a masonry wall serving as a land boundary was damaged, it must be repaired.28 Sos omines’ mediation is a process through which both parties accept their role in the disputed matter, and the ‘discrepancies’ in the situation are acknowledged, resulting in the actor at fault per the original arrangement/commitment compensating for the loss, thereby returning the relationship between the two to the ‘state that should be’ (i.e. with no excess or loss). The ‘state that should be’ entails ‘fairly’ observing what both parties ‘owe’. Sos omines’ behaviour readjusts the ‘unfair situation’ that has arisen between the two parties through ‘making up’ and restoring ‘fairness’ to both parties. The fact that Masia’s interview subjects who experienced sos omines did not speak in detail about individual ‘cases’ but rather only spoke broadly, that is, indicating that there were disputes, the process of mediation and ‘judgement’ is thought to be related to the fact that the mediation entrusted to sos omines can be called a transition to the ‘state that should be’.29 Details were withheld not because the nature of the disputes was personal but because the situation between each pair of parties was coordinated, rendering it impossible to be specific about the state of the dispute. Furthermore, there was no point of reference equivalent to ‘precedent’ because the pertinent questions were not about an all-encompassing standard such as customary norms but rather about the state of affairs in which the two parties were owed their full share (i.e. ‘the state that should be’). What is interesting about the examples of private mediation involving sos omines is that they depart from a one-party orientation, such as the ruler, and show evidence of orientation towards integration. What sos omines do as ‘third person’ is already incorporated into the internal relationship; that is, they guide both parties back to a ‘state with no excess or loss’ in various situations where ‘excess and loss’ have occurred, thus providing temporary course correction. Therefore, the stability of the bilateral relationship (no misalignment) is not guaranteed, and the instability of the ‘state that should be’ is not eliminated.

11.4.3 ‘Guided’ Mediator as an Autonomy Homeostatic Process In bilateral relationships with an embedded ‘uncertain state’ in Village B, as referenced in the previous section, the symbolic manipulation (ritualisation) of bringing in an external transcendent force (in this case, God) creates a reality in 28 29

Masia (1982, p. 89). Masia (2017, p. 185).

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which the godparent–godchild relationship seems strong and sustainable. This is because the resolution of the ‘uncertain state’ is that there can be no other partner than the one God to whom the two persons can be bound together. In such a dualistic composition in which oneness or identity or totality is assumed, ‘third person = medium’ is seen as an intermediate concept. What about mediation by sos omines, the ‘third person’? In the sense of a ‘third person’ mediating between two parties, sos omines are neither transcendental nor official but can be interpreted as indicating ‘impersonal-personal mediator’’. Can ‘mediation’, then, be defined by an overall hierarchical structure? Sos omines do not exist unless two parties choose private mediation. Moreover, the process is regulated by norms such as precedence. Sos omines can only be described as persons who happened to be entrusted with mediation by the parties involved as a result of an accidental, everyday dispute where nothing is definite. Sos omines may be beings that indicate some gap (excess or deficiency) in the ‘state that should be’ between the two persons, but there is a decisive qualitative difference from a transcendent being, outside the specific context. Sos omines’ ‘mediation’ must be distinguished from the intermediate concept in the dualistic composition, which moves towards integration into the ‘one’ or the ‘totality’. Sos omines’ behaviour does not have the general effect of disrupting order or forming a new order. As already mentioned, they are not assigned a technically organised role for the purpose of the preservation of the village’s normative identity; they happen to be entrusted with mediation, and thus, they emerge from personal connections and are required to behave impersonally (in keeping with their description as ‘certain kind of men’). Therefore, separated from the specific situation where two parties directly confront each other, sos omines’ behaviour makes no sense. Sos omines appear at the ‘criterion of authenticity’ as the embodiment of an incompatible but indivisible state of affairs, that is, as a kind of ‘anonymous and at the same time personalized’ mediator. The very fact that these concrete mediator re-generate (guide in a certain orientation) contexts, such as non-identical repetition and a process of ‘adjusting and regulating’ the unstable state, is the reality of the community.

11.5

Conclusion: Anthropology as a Humanistic Social Science

What distinguishes anthropology from other humanities and from sociology, according to Lévi-Strauss, is not its research themes, nor is it the subjects of study, but rather ‘a certain peculiar way of perceiving the world, or a certain peculiar way of posing problems’ (Lévi-Strauss, 1963, p. 342). This is due to the fact that, for anthropology, the search for objectivity does not take place outside of engagement with people, who always appear with an overwhelming presence. In the words of Geertz, ‘The locus of study is not the object of study. Anthropologists don’t study

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villages (tribes, towns, neighbourhoods . . .); they study in villages’.30 It could be argued that it is not quite ‘about the villages’ so much as ‘what they do in the villages’ that makes the locus of study a sufficient place for thought. This chapter has attempted to consider community reality from the perspective of ‘everyday life’ and ‘living’. Where, then, do we look for a microscopic view of seemingly trivial and bypassed everyday life? The answer is Lévi-Strauss’s ‘criterion of authenticity’, the relationship dimension in which ‘the whole broadly one person is concretely understood by one other’. This distinction provides a direction for capturing the miscellaneous ‘everyday’ and ‘living’. In this research, the daily invocations and mediation of the inhabitants of a Sardinian village were chosen as a concrete site for such thinking. It can be rephrased as a local ‘field’ (context) in which interaction amongst single beings takes place. It is a phase that differs from the harmonic and holistic view of various social relations, as well as from the characteristics grasped in distinction from civil society, such as shared norms or the identity of the subject in its complete disappearance. The switchable links between two parties (between single beings), which are connected and disconnected, and the mediation sos omines provide, which removes disturbing effects, correct misalignments, and restores ‘the state that should be’ between two parties, can be understood as a kind of coordination-regulator behaviour. The basic unit is the relationship between these two parties (between single beings) and the free transformation of the relationship within or between units, as necessary, ‘regulates and controls’ the ‘place’, which is the actuality of the community. In the contemporary world, individual micro-situations are directly linked to macro phenomena, for example, pandemics and the social and economic changes that accompany them. It is in the concrete places of life that the action is received at the forefront, and it is also in the places of life that people respond to interaction. We cannot ignore the behaviour found in concrete and microscopic situations. However, if we enclose any behaviour connected to the requirements of life as a ‘practice of resistance’ and turn it into a narrative that ‘heteronises’ or ‘romanticises’, it becomes a reality created only by manipulable relations. There is no ‘reality = actuality’ of a ‘place’ (context) in which nothing is definite, in which local connections and chance situations work and are worked upon each other. The meaning of anthropology’s ‘personhood’ retention lies in its exploration of local and relational generation, a theory that does not discard actuality, in the field.

References Abu-Lughod, L. (1991). Writing against culture. In R. G. Fox (Ed.), Recapturing anthropology: Working in the present (pp. 137–167). American Research Press. Anderson, B. (2006). Imagined communities: Reflections on the origin and spread of nationalism (Rev. ed.). Verso.

30

Geertz (1973, p. 22).

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Ferrari, V. (1982). Diritto e Dispute: Osservazioni Empiriche in una piccola comunità. Sociologia del diritto, 10(1), 24–76. Geertz, C. (1973). Thick description: Toward an interpretive theory of culture. In The interpretation of cultures; selected essays (pp. 3–30). Basic Books. Ingold, T. (2011). Point, line, counterpoint from environment to fluid space. In Being alive: Essays on movement, knowledge and description (pp. 77–88). Routledge. Kimura, B. (1994). Kokoro no byouri o kangaeru (Considering the pathology of the mind) [in Japanese]. Iwanamishoten. Kimura, B. (2000). Guzensei no seishinbyouri (Psychopathology of coincidence) [in Japanese]. Iwanamishoten. Lévi-Strauss, C. (1963). The place of anthropology in the social sciences and problems raised in teaching it. In Structural anthropology (C. Jacobson & B.G. Schoepf, Trans.) (pp. 346–381). Basic Books. Lévi-Strauss, C. (2013). Anthropology confronts the problems of the modern world (J. M. Todd, Trans.). Belknap press of Harvard University Press. Masia, M. (1982). “Sos omines”: Osservazioni sulla pratica degli arbitrati nella Sardegna interna. Sociologia del diritto, 10(1), 77–97. Masia, M. (2017). La Mediazione: Osservazioni Socio-Giuridiche. In C. Pila (Ed.), Quaderni di Concilazioni, 4 (pp. 169–192). Edizioni AV. Oda, M. (2009). “Nijyushakai” to iu shiten to neoliberalism: Seizon no tameno nichijyouteki jissen (The perspective of dual societies versus neoliberalism) [in Japanese]. Japanese Journal of Cultural Anthropology, 74(2), 272–292. Oda, M. (2011). Kōzō de system o kainarasu to iu koto (Domesticating system with structure) (in Japanese). In A. Deguchi (Ed.), Dokkai Lévi-Strauss (Reading Lévi-Strauss) (pp. 263–279). Seikyusha. Oda, M. (2014). Actual Jinruigaku Sengen!: Taishousei no kaifuku no tameni (Manifesto of the actual anthropology: Toward he restoration of symmetry) [in Japanese]. Annual Report of Social Anthropology, 40, 1–29. Pigliaru, A. (1975). Il banditismo in Sardegna: La vendetta barbaricina come ordinamento giuridico. Giuffrè Editore. Pinna, G. (2003). Il pastore sardo e la giustizia : Taccuino d’un penalista sardo. Ilisso. Pira, M. (1967). La rivolta dell’oggetto. In Antropologia della Sardegna. Giuffrè Editore. Sassu, S. (2009). La rasgioni in Gallura: La risoluzione dei conflitti nella cultura degli Stazzi. Armando Editore. Udagawa, T. (2004). Hiroba wa seiji ni kawareruka: Italia no kogaiseikatsu saiko (Can the Piazza substitute for the politics?: Rethinking of the outdoor life in Italy) [in Japanese]. Senri Ethnological Reports, 28(3), 329–375.

Chapter 12

An Essay on the Realism of Management Theory: The Actuality of Management Phenomena and the Reality of Management Theory Izumi Mitsui

Abstract The purpose of this chapter is to explore the ‘realism’ that exists between the phenomenon of management and the ‘management theory’ or ‘conceptual schemes’ that try to capture it from a certain perspective. Here, we refer to “reality within phenomena” as “actuality,” and the kind of virtual reality that researchers perceive through “theories” and “conceptual frameworks” as “reality.” To explore the relationship between actuality and reality is main theme. When considering this theme, we follow two steps. At the first step, consider the relationship between the observer (for example, a researcher) and the business phenomenon that is its object. At the second step, after taking up and characterizing two representative positions in the history of American management theory, namely, the “clinical method” and the “scientific method,” shows these two positions are incorporated into the practice of management. We also point out that these two positions exist simultaneously. By these discussions, we would like to consider the relationship between “realism” and “methodology” in management study.

12.1

Introduction: Purpose of This Chapter

This chapter is intended to explore the “realism” that exists between the phenomenon of “management” and the “management theory” or “conceptual scheme” that attempts to capture it from a certain perspective. We would like to explore the relationship between “actuality,” which refers to the reality (certainty) in the “phenomenon,” and “reality,” which refers to a kind of virtual reality that researchers “cut out” (recognize) in their “theories” and “conceptual schemes.” At the beginning, we will give an explanation of main five “phenomena” of “management”. The first is the phenomenon of “management” or

I. Mitsui (✉) Sonoda Women’s University, Amagasaki, Hyogo, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_12

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“administration,” which is described by the everyday term “PDCA cycle.” This refers to the flow of “Plan-Do―Check―Act (improvement),” and feedback to the plan. Specifically, it refers to a series of cycles of “setting objectives,” “planning―organizing―adjusting―evaluating―improving” and then moving on to the next cycle of setting objectives. This is sometimes called the “management process.” The second is that the terms “management” or “administration” refer to the “control” of human “collaboration” toward the achievement of some objective—in other words, to place individuals in an “organizational structure” based on meansends relationships and job linkages and to combine individual actions toward an objective through “authority–responsibility, order–response” relationships, etc. or to create an “organizational structure” that allows individuals to work in harmony with each other to achieve their desired goals. Activities to elicit contributions by providing incentives (money, status, environment, ideals, human relations) are also included in this phenomenon. The third is acquisition of the necessary management resources (people, goods, money, information, etc.) and efficiently combining and allocating them to achieve certain results to accomplish the above. The fourth phenomenon refers to “rational decision-making” to formulate “strategies” and “tactics” to effectively carry out the above series of actions and to link them to implementation. The fifth phenomenon may refer to social institutions and values, such as corporate social responsibility and business ethics, to support the legitimacy of these actions. Furthermore, the various problems related to the above are included and considered as the “reality (actuality)” of management. These are phenomena that generally occur within a “company” or “business organization.” Many of the problems of modern society are related to such management phenomena.

12.2

Who Is the Subject of “Management”? Where Does It Arise?

Modern society is referred to as “corporate society” or “organizational society.” This means that many functions in our lives are carried out by corporations and public institutions and that we are connected to these organizations by taking on the roles of “consumer,” “producer,” “worker,” “taxpayer,” and so on. For these organizations to function, both “management” and “administration” are indispensable. Therefore, it is impossible to think of management as being separate from our lives. In other words, the “actuality” of management phenomena is inextricably linked to the “actuality” of our lives. Let us explore this point a little further. Since our lives are deeply connected with management, management is considered to be deeply connected not only with our

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social behavior but also with our individual behavior. It can be said that we “manage ourselves” consciously or unconsciously in all aspects of our daily lives. If so, it is difficult to simply separate management phenomena from us, the “subjects” who create them, and management scholars, the “subjects who observe” them. This is because management scholars can be thought of as people who create the phenomenon of management and are involved in it. In this chapter, we would like to consider the situation of modern society as a state of “excess (or inundation)” of the “reality (actuality)” of management phenomena. We would also like to examine the state of “reality” in terms of management theories and conceptual frameworks to capture such excessive reality. In particular, in this chapter, we would like to examine the history of management theory (history of management thought) in the United States, looking back on its evolution.

12.3

The Subject and Object of “Business Administration” and Their Relationship

Nowadays, “scientific method” of the natural sciences, the researcher (the subject of cognition), and the object of study have been considered as, in a sense, “separated” from each other. Many methodologies in the social sciences are also based on such an assumption. For example, in many studies in business administration, a scientist of management study “objectively” observes the behavior of a company or its managers and analyzes it using certain methods (statistical data, financial analysis, case studies, etc.). However, even in the case of such analyses, it is undeniable that “subjective interpretations” of phenomena rooted in the researcher’s own management practices and organizational experiences may unconsciously enter the analysis. Rather, it is impossible to dispel the “actuality of management phenomena” that has permeated our senses in our modern daily lives, even if the “scientific” method described above is adopted in describing the phenomena in management studies. The management science researcher is both the subject of perception and the subject of action of management phenomena, and it is impossible to separate the two. The above discussion also reflects the academic character of business administration as a “practical science.” The meaning of “practice” here is close to that of “applied science” or “policy science,” which aims to solve specific problems in the field of management. For example, a business administration researcher may take an “economic approach” to the problem of market competition in business development, a “psychological approach” to the problem of motivation of organizational members, or a “juristic approach” when dealing with corporate governance issues, and so on. The object of management is to do problem-solving. In such a problem-solving field, the reality (theory or conceptual framework) for approaching the phenomenon must be partial and fragmented, rather than total, to grasp the management phenomenon. This point explains why “business

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administration does not have a standard theory” compared to economics and other fields. In the problem-solving arena described above, knowledge rooted in clinical practice tends to be more prized than knowledge rooted in scientific theory. Or it could be said that clinically based scientific knowledge is emphasized. Here, one “feels” the actuality of the phenomenon, acts on it, and at the same time “perceives” and depicts it as the reality of the theory. How do the researchers (perceivers) who are engaged in such actions resolve (or recognize) this gap between actuality and reality? Here, we would like to focus on how to think about the “separation and integration between subject and object in the social sciences,” not only in business administration. An early figure in the field of management and political science who grasped this issue was M.P. Follett (1868–1933). She was born in Boston and worked as a social worker on immigration issues, while searching for a form of democracy rooted in concrete life through books such as The New State (Follett, 1918) and Creative Experience (Follett, 1924). At the same time, she interacted widely and deeply with intellectuals, politicians, and practitioners, especially at Harvard University, to deepen her philosophical speculations. Her circle included mathematician A.N. Whitehead. Follett was trying to understand, in terms of “experience,” what lies “between” the perceived actuality of the cognitive subject and the reality of the theory (or concept), as noted above. In this chapter, we will approach this issue by introducing her thought.

12.4

Possibilities of Process Thinking: Follett’s “Creative Experience”1

Follett sought to capture the process of interweaving individual desires, intentions, and experiences in daily life. What she means by “experience” is not a verifying process, but a creating process. She gives the following example. “When we go to a conference, we must compare the idea we bring to it not with the idea we ‘find’ there, but with what is being developed there” (Follett, 1924, p. 133). In other words, she is not comparing her own ideas with the ideas of others, but with the ideas that are “arising in the situation,” including her own. This way of thinking is well illustrated by Follett’s concept of “circular response.” She does not understand interaction between individuals as a linear relationship such as “stimulus-response.” Rather, when individual A acts on individual B, B reacts to A, and A reacts again, A is responding to “B’s action” influenced by his own initial action. Furthermore, as these interactions are repeated, the desires and intentions of A and B are folded together to form a “total situation” that has new value. 1

The content of this section is based on and expands upon the views expressed both in the book by Mitsui (2009) and the article by Mitsui (2021).

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This is the process of “integration,” and when such a total situation is created, A and B will respond to that total situation as well. Follett believes that the total situation at that time is not a fixed “point of arrival (a place where the process stops),” but a “place where the whole and the individual exist simultaneously,” and is a “process that continues.” Furthermore, she believes that in this total situation, “there is no subject-object distinction.” This is because, although individual A (the subject) appears to be reacting to object B, there is “only the totality of the situation,” and the individual’s action within that situation is only “an opportunity” to change the situation, according to Follett. In other words, individual actions are both objective, in the sense that they are already being changed by the whole and subjective, in the sense that they are changing the next total situation. Thus, society for Follett could be considered “a creative process of total situation as a place of simultaneous existence of subject and object.” These characteristics of her ideology are also evident in the way she perceives the subject. She does not regard the individual or society as an “objective object” that is separate from the subject of recognition. She also rejects the method of “testing” events by using “hypotheses.” This is because when we understand an event based on a certain hypothesis and perform some activity based on it, that activity is already added to the process at the time it is performed and becomes an “opportunity” to form the next activity. Therefore, the hypothesis is considered inseparable from the activity. She is not concerned with the object recognized by the hypothesis, but with the “process itself,” that is, how the activity generated from it would develop the next activity and progress to a new social situation. Follett also pays great attention to the function of “concepts.” She does not regard concepts as static frameworks or “conceptual compositions” for grasping facts. Rather, she sees them as something dynamic, through the act of “conceptualiz [ing],” which allows for deeper awareness of the complexities of life and prompts the next action to develop the situation. Furthermore, in recognizing these facts, Follett argues that “conceptualizing” and “perceptualizing” are part of the same activity and that it is important to explain things in the present progressive tense (-ing), as she depicts not “what was” or “what should be,” but “what society would probably be.” This is a true testament to her way of cognition. In the above discussion, we have examined the characteristics of “process thinking,” focusing on Follett’s “Creative Experience.” We believe that her method of recognizing the subject matter is a methodology that bridges the disconnect between practice and theory and the separation between the “actuality of management phenomena” and the “reality of theories and concepts,” as mentioned previously. However, we believe that this way of thinking has faded in the history of management thought since the 1950s, and the gulf between the actuality of phenomena and the reality of theory has deepened and continues to do so today. Next, we would like to trace the transition.

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“Actuality” of Management Phenomena and “Reality” of Theories: Between “Practitioners” and “Scientists”

C.I. Barnard was one of the earliest theorists of business administration to see the problem of the “actuality” of management phenomena and the “reality” of theories as a problem arising between “practitioners” and “scientists.” In his article “Notes on Some Obscure Aspects of Human Relations,” Barnard offers the following interesting discussion on the differences between “practitioners” and “scientists”: Now I suspect that most businessmen, executives, administrators, heads of departments and bureaus, and officials and supervisors generally, would suppose themselves in the class of “actors,” of people who do things, who are “practical”; and that they would put into the class of “abstractors” students, professors, scientists, lecturers, writers. Practical people have a preference for themselves as “men of action” rather than as “thinkers,” provided this does not imply lack of “brains” or intelligence. Nevertheless, the differences between men of affairs and scholars are clearly not that one group deals in abstractions and the other not. The slightest observation of most men of affairs at work reveals that their concrete personal physical activities are at a minimum and that they perpetually deal in abstractions. Moreover, their conversation is not rarely larded with the broadest and wildest generalizations, as a few moments in most conferences or conventions will demonstrate. The difference lies rather in the purposes of abstractions and the extent to which important abstractions lying below the level of consciousness, thought and verbalization, for their respective purposes, are effective. For the man of affairs, the purpose is, in its highest form, truth in concrete action―that events shall conform to a scheme felt to be right. The purpose of the student on the other hand is truth in the highest abstractions―those believed to be significant generalizations. (Wolf & Iino, 1986, pp. 68–69)

Bernard’s observation of the two positions relative to each other, as well as his pragmatist thought regarding the purpose of both, is noteworthy.2 He further states the following: . . . In the first [men of affairs] case what is and what may be are the foci of attention. The past is only significant as knowledge of it may contribute to the directing of action, but not as the origin of what is. In the second [scholars] case, what has been and is are the foci of attention, and the future is significant as an opportunity for more history testing the truth of past generalizations. These differences are even greater than are generally supposed, for they exist not so much in the verbalizations of either group as in the feelings below the level of consciousness which in one case are diffused with a sense of immediacy, the now or never, in the other with sense of timelessness, the yesterday and forever. In one case the sense of reality is things in action whether by design or no; in the other the design by or in which they occur. . . . . . . The essential differences of method lie in what is done with the abstractions with which both groups deal. For the man of affairs exists in a cloud of abstractions which are not really discriminated by any logical process, but by his sense of their bearing upon decision.

What I mean by “pragmatism” here is that Bernard analyzes “truth” in terms of the purpose of people’s actions and the validity of their purposes, rather than in terms of their essence. This is reminiscent of James’s view of truth. In other words, I believe that Bernard’s attitude is that there is no “essential truth” behind either “scientific knowledge” or “clinical knowledge” in a positive sense.

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The student, on the contrary, exists in a cloud of events, which are narrowly discriminated for their bearing upon abstract truth. . . . (Wolf & Iino, 1986, pp. 69–70)

According to Bernard, the following detrimental effects for both practitioners and scientists explain the reason why we dare to discuss the difference between the two. For practitioners, the lack of a sense that they are dealing with abstractions can lead to serious deficiencies in how they deal with abstractions (e.g., in the formation of policies, agreements, etc.). At the same time, it can significantly affect the formation of their conceptual frameworks. Once adopted, such a position is intended to strongly influence people’s actions and perceptions. On the other hand, scientists sometimes tend to forget that abstractions and generalizations are not concrete facts. Thus, Bernard expected that practitioners’ interest in scientific abstractions would ensure a broader sense and a more precise direction of action, and, conversely, scientists’ emphasis on practitioners’ knowledge would enhance their sense of events (Wolf & Iino, 1986, pp. 70–71). All existing scientific knowledge is expressed through language and symbolic systems, which can be roughly classified into two systems, according to Bernard. The first system of knowledge is one that is primarily concerned with one of several factors (physical, biological, social), such as the natural sciences, biological systems, and purely theoretical sociological systems. The second system of knowledge is one that “intersects” with or encompasses two or more factors, such as biochemical systems, engineering systems, other technological systems, psychological systems, economic systems, and social, political, and ethical systems.3 According to Bernard, it is the interconnection of these two knowledge systems that is important: However, it is well to be quite clear as to the significance of a science in its relation to the arts. It is the function of the arts to accomplish concrete ends, effect results, produce situations, that would not come about without the deliberate effort to secure them. These arts must be mastered and applied by those who deal in the concrete and for the future. The function of the sciences, on the other hand, is to explain the phenomena, the events, the situations, of the past. Their aim is not to produce specific events, effects, or situations but explanations which we call knowledge. It has not been the aim of science to be a system of technology; and it could not be such a system. There is required to manipulate the concrete a vast amount of knowledge of a temporary, local, specific character, of no general value or interest, that it is not the function of a science to have or to present and only to explain to the extent that it is generally significant. In the common-sense, every day, practical knowledge necessary to the practice of the arts, there is much that is not susceptible of verbal statement—it is a matter of know-how. It may be called behavioral knowledge. It is necessary to doing things in concrete situations. It is nowhere more indispensable than in the executive arts. It is acquired by persistent habitual experience and is often called intuitive. Nevertheless, the power of the arts and the arts themselves are capable of expansion when there is available scientific knowledge—explanations, concepts. (Barnard, 1938, pp. 290–291)

These two forms of knowledge, which Bernard so acutely captured, can be simply described as “clinical knowledge” and “scientific knowledge.” We believe that the 3

See the last chapter in Barnard (1938) for more information.

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development of management theory as a practical science involves these two forms of knowledge.

12.6

“Clinical Method” and “Scientific Method” in Business Administration: Concerning the “Reality” of Theory (Conceptual Framework)

Looking back at the evolution of American management studies, two major trends can be identified. The first trend involves developing certain patterns and hypotheses “inductively” based on a thorough observation of specific situations. These are elaborated through comparison with existing theories and through experiments and fed back into reality to develop a theory (conceptual framework) that will bring about a solution to the problem in question. In this case, the goal of theory formation is to “solve the problem in question” rather than to complete a logically consistent theory. In contrast, the second trend involves deductively deriving a hypothesis (theoretical model) from an existing established theory when analyzing a certain problem situation or phenomenon. This hypothesis is then “empirically” verified in light of reality. Through such procedures, the “truth” of the theory is determined. This approach is based on the tacit understanding that some kind of “truth” or “essence” exists in phenomena, and the goal of theory formation is to “clarify” or “describe” such “truth.” This position is like logical positivist methodology. In the 1930s, L. J. Henderson and his colleagues at Harvard University led the first school of research methods. Their methods for analyzing relationships, the “clinical method” (Hippocratic method) and the “conceptual scheme,” strongly influenced E. G. Mayo, F. J. Roethlisberger, the “early school of human relations theory,” and the Barnard. The “conceptual scheme” was a strong influence on Mayo and Roethlisberger.4 Roethlisberger describes this method as follows. (1) In having a few simple and clear ideas about the world in which we live. (2) In complicating our ideas, not in a vacuum, but only in reference to things we can observe, see, feel, hear, and touch. Let us not generalize from verbal definitions; let us know in fact what we are talking about. (3) In having a very simple method by means of which we can explore our complex world. We need a tool which will allow us to get the data from which our generalizations are

The basis of this method is the “clinical method” (the Hippocratic method in medicine) advocated by Henderson. Katsuyasu Kato explains it as follows: First, doctors gain “intuitive familiarity” (intuitive familiarity with things) by working continuously, wisely, and responsibly in the hospital room (not in the laboratory or library). Second, from the above perspective, to observe things and events in character, and to select, categorize, and systematize salient and recurring phenomena. Third, to create a correct theory based on the above—a kind of “walking stick” that helps one to walk without elbowing one’s shoulders (Kato, 1996, p. 418). 4

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to be drawn. We need a simple skill to keep us in touch with what is sometimes referred to as “reality.” (4) In being “tough-minded,” i.e. in not letting ourselves be too disappointed because the complex world never quite fulfills our most cherished expectations of it. Let us remember that the concrete phenomena will always elude any set of abstractions that we can make of them. (5) In knowing very clearly the class of phenomena to which our ideas and methods relate. Now, this is merely a way of saying, “Do not use a saw as a hammer.” A saw is a useful tool precisely because it is limited and designed for a certain purpose. Do not criticize the usefulness of a saw because it does not make a good hammer. (Roethlisberger, 1941, p. 8)

Furthermore, Roethlisberger argued that a “conceptual framework” was necessary for the acquisition of any kind of knowledge and that it could only be verified in terms of “convenience” and “usefulness.” In other words, its validity should be determined based on practice rather than on the basis of “true or false,” as in the verification of propositions. The Henderson Group warned that one should not commit the “fallacy of concreteness-placement difference” in explaining facts in a conceptual framework, which is precisely what Whitehead argued. In contrast to business administration as a “clinical body of knowledge,” as described above, H.A. Simon attempted to establish business administration as a “scientific system of statements.” As a student at the University of Chicago in the 1930s, Simon influenced by R. Carnap’s “logical positivist” methodology.5 In his main book, Administrative Behavior (first published in 1947), he states: To determine whether a proposition is correct, it must be compared directly with experience―with the facts―or it must lead by logical reasoning to other propositions that can be compared with experience. But factual propositions cannot be derived from ethical ones by any process of reasoning, nor can ethical propositions be compared directly with the facts―since they assert “ought” rather than facts. Hence, there is no way in which the correctness of ethical propositions can be empirically or rationally tested. (Simon, 1997, p. 56)

In order to modify the traditional “proverb-like management (or administrative) principles” into a “fact-based scientific system,” Simon argued it is necessary to carry out following two tasks: The first task is to develop a vocabulary for description of organization. The second task is to study the “limits of rationality” in order to develop a complete and comprehensive enumeration of the criteria that must be weighed in evaluating a management (or an administrative) organization (Simon, 1997, p. 47). Simon’s goal was to construct a “verifiable and reproducible system of factual propositions,” even if it meant sacrificing reflection on concrete reality. Thus, we believe that the “fallacy of misplacing concreteness,” which the Henderson and

The definition of “logical positivism” varies widely, but here it is defined as “a methodology to analyze a phenomenon by deductively deriving a hypothesis (proposition) from an existing established theory (or inductively from experience), verifying or disproving it in light of reality, and determining the ‘truth or falsehood’ of the theory.” That is, the truth or falsehood of a theory is determined by the success or failure of logical procedures. 5

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others warned against, has overlooked, and the “actuality” of management phenomena and the “reality” of management theory have increasingly diverged.

12.7

Beyond the Disconnect Between “Clinical” and “Scientific”: Quine and Rorty’s Argument

It was W. V. O. Quine who pointed out that the “divisive thinking” described above is the “dogma” we have been trapped in for so long. Quine, a student at Harvard, learned about “conceptual frameworks” from the Henderson and others and “logical positivism” from Carnap. Quine’s “Two Dogmas of Modern Empiricism” identify two beliefs that underpin this dogma. The first is the belief that there is a fundamental division between “analytic truth, that is, truth based on meaning, independent of factual issues,” and “synthetic truth, that is, truth based on facts.” The second is “reductionism,” the belief that any significant statement is equivalent to a logical construct from nominalism that gives direct experience. Quine argued that there is no basis for either of these two dogmas, that the line between metaphysics and natural science is blurred, and that the criteria for choosing a theory depend solely on “pragmatic demands.” He goes on to say: Our standard for appraising basic changes of conceptual scheme must be, not a realistic standard of correspondence to reality, but a pragmatic standard. Concepts are language, and the purpose of concepts and of language is efficacy in communication and in prediction. Such is the ultimate duty of language, science, and philosophy, and it is in relation to that duty that a conceptual scheme has finally to be appraised. (Quine, 1980, p. 79)

He further stated in a dialogue with Yasuhiko Tomita, “The concept of a conceptual scheme is not a tactical concept for me. It just means a general structure that is consistent with one’s theory” (Tomita, 1994, p. 45). This stance contrasts with the earlier idea of a conceptual framework by Roethlisberger et al. In our opinion, Rorty has taken the above perspective even more thoroughly. He defined (or thought) that pragmatism is a philosophy of the individual, not of the society. Then, he points out three characteristics of pragmatism. They are summarized as follows. First, it applies anti-essentialism to ideas such as “truth,” “knowledge,” “language,” and “morality,” and also similar objects of philosophical theorizing. Second, it asserts that there is no epistemological distinction between truth regarding existence and truth regarding being. In other words, pragmatism holds that there is no metaphysical difference between fact and value and no methodological difference between morality and science. Third, our implicit assumptions of “fact and value,” “morality and science,” and so on are in the end, merely “a matter of the rules of language.” Moreover, these rules of language are ultimately like “beliefs” that can only be bounded by “conversation” within a certain “community,” and whether or not they are truths is “something that is created within the community” (Rorty, 1982, pp. 162–166).

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Conclusion

In conclusion, we would like to revisit the “clinical method” and the “scientific method” of management studies discussed earlier. Both methods, which represent different processes for reaching the truth, have become firmly established in their respective communities and are bound by the (Rorty’s) rules of conversation. They are considered cosmologies (worldviews) that have been historically formed and have independent cultural backgrounds. As a result, it is difficult to find common elements that can bridge the gap between them. However, if we look at the “field of management practice,” we can see that these two methods actually exist simultaneously and interact to create a new “belief system.” This is an important aspect to consider when contemplating the nature of the discipline of business administration. We should pay attention to the “creation of belief systems” (creation of value sets) in the field of management, where both clinical and scientific methods can exist simultaneously and the existence of a “worldview” or “cosmology” that lies behind these belief systems. Bernard was aware of these issues. As Bernard pointed out earlier, there is a significant difference in the worldviews of practitioners and scientists. Each group has its own sense of time and space and takes specific actions based on that perspective. Those in practical positions emphasize the clinical method and construct a general theory from their own experience based on participant observation in the field. For them, the ultimate source of determining the validity of a theory is the reality that is supposed to exist in the field of practice. They believe that any general theory abstracted from this reality should reflect this reality of the field of practice in some form. In contrast, those committed to the scientific method rely on objective facts that are unquestionable to everyone, supported by scientific knowledge accumulated through long years of research. By applying the standards of science, they transform real events with diverse values into statements of verifiable factual propositions, which are then tested in light of experience to increase their certainty. There is a strong belief that universal laws and principles should emerge from this process. There is no doubt that these two different positions (or “beliefs,” if you will) have largely shaped management studies up to the present. They have been developed as “practice-oriented” problem-solving management science and “science-oriented” phenomenon-explaining management science, respectively. As these “management studies” embody the values and realities on which the two communities of practitioners and scientists are based, they are thought to have continued to exert a commensurate influence on each other. However, as Bernard (and Follett) expressed, these two perspectives cannot help but be strongly interrelated in real management phenomena. When a “scientific explanation” is offered by a scientist, it affects the cognitive framework of the practitioner, which in turn affects concrete actions. Similarly, efforts to solve practical problems will help to develop scientific knowledge. The two opposing

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methodological positions are simultaneously present and interacting in the field of practice. We believe that the methodological characteristics of business administration lie in the conscious handling of this point. The essence of business administration is to present a narrative of the real world in which clinical knowledge and scientific knowledge can exist simultaneously, based on specific values, beliefs, and philosophies. It is not about taking a position on one of the two methods above but demonstrating the existence of a worldview that allows the simultaneous existence of both. In other words, the legitimacy of this narrative is based on the demands of pragmatism. Further research will be needed to explore this point and search for ways to achieve it.

References Barnard, C. I. (1938). The functions of the executive. Harvard University Press. Follett, M. P. (1918). The new state: Group organization the solution of popular government. Longmans, Green. Follett, M. P. (1924). Creative experience. Longmans, Green. Kato, K. (1996). Bernard to Henderson: The function of the executive no keisei katei (Bernard and Henderson: Formation process of the functions of the executive) [in Japanese]. Bunshindo. Mitsui, I. (2009). Shakai-teki networking ron no genryu: M. P. Follett no shiso (The origin of social networking theory: The thought of M. P. Follett) [in Japanese]. Bunshindo. Mitsui, I. (2021). M. P. Follett no ‘Koshoku’ gainen no kanousei: Covid-19 ikou no aratana shakai no sozo ni mukete (Applicability of the concept of M.P. Follett’s concept of ‘inter-weaving’: Toward the creating process of new society after Covid-19 pandemic) [in Japanese]. Kanto Gakuin Journal of Economics and Management, 282, 34–47. Quine, W. V. O. (1980). From a logical point of view (2nd ed., revised). Harvard University Press. Roethlisberger, F. J. (1941). Management and morale. Harvard University Press. Rorty, R. (1982). Consequences of pragmatism. University of Minnesota Press. Simon, H. A. (1997). Administrative behavior (4th ed.). Free Press. Tomita, Y. (1994). Quine to gendai America tetsugaku (Quine and contemporary American philosophy) [in Japanese]. Gendai Shisosha. Wolf, W. B., & Iino, H. (Eds.). (1986). Philosophy for managers; Selected papers of Chester I. Barnard. Bunshindo Publishing Co.

Chapter 13

Realism, Science, Statistics, and Data Science Yoshiyuki Takeuchi

Abstract The twenty-first century has ushered in an era of big data, in which various types of data are accumulated, analyzed, and used. Despite the current situation in which vast amounts of data are analyzed by data scientists and used by deep-learning AIs for learning, philosophical considerations of data and the methods and techniques to work with data seem limited. In this chapter, we discuss statistics and data science, the science of data, and data handling, from the perspective of realism and reality. Four issues are discussed in this chapter: (1) Relationship between data and realism. (2) Reality of the concept of the average man created and proposed by Adolphe Quetelet. (3) Position of population thinking, which is different from the majority position (typologist) that considers only the concept of “average” important and deviations from the average as mere errors or noise. (4) Science and realism in the Big Data era. It concludes that the understanding of the analytical results obtained by statistics differ depending on whether the analyst takes the position of realism or anti-realism and whether they take the position of a typologist or that of population thinking.

13.1

Introduction

The twenty-first century ushered in an era of big data, in which various types of data are accumulated, analyzed, and used. The spread of the Internet and electronic terminals has flooded the world with enormous amounts of data associated with transactions, such as location information from cell phones, credit card usage information, and POS data from convenience stores. At the same time, the dramatic improvement in the computing power of computer chips (CPUs) has made artificial intelligence more accessible and deep-learning AIs, such as ChatGPT, which can process natural language, have been developed.

Y. Takeuchi (✉) Osaka University, Toyonaka, Osaka, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7_13

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Despite the fact that in current times vast amounts of data are analyzed by data scientists and used by deep-learning AIs for learning, philosophical considerations of data and methods, techniques for working with data provided by Kitchin (2014), Wagner-Pacifici et al. (2015), Frické (2015), and others seem to be limited. In this chapter, we discuss statistics and data science and the science of data and data handling from the two concepts of realism and reality. Before beginning the discussion, I will define realism, reality, and their relationship. Realism is defined as the position in which the world exists without our existence or perception (Chakravartty, 2017). Therefore, we consider Kant’s theory of things-in-themselves to be a form of realism. We think of a collection consisting of human thought constructs as a counterpart to the world. Reality is a concept that expresses the consistency or distance between thought constructs and our perceived experiences. The connection between realism and reality differs depending on the relationship between the world and human thought constructs. Correlationism, from Kant onward, links the world and human thought constructs as being in correspondence. This chapter is organized as follows: First, the relationship between data and realism is discussed in Sect. 13.2. Next, in Sect. 13.3, we discuss the reality of the concept of the average man as created and proposed by Adolphe Quetelet, and in Sect. 13.4, we discuss the position of population thinking, which is different from the majority position (typologist) that considers only the concept of “average” important and deviations from the average as mere errors or noise. In Sect. 13.5, we discuss science and realism in the Big Data era. Finally, Sect. 13.6 provides the summary and conclusions.

13.2

What Is Data?: Data and Realism

In this section, we examine the philosophical position of data as the object of statistical analysis. Let us define data as the representations of things that we perceive and recognize as experiences. First, we examined this from the perspective of realism. In Sect. 13.1, we defined realism as a position that acknowledges the existence of a world without our existence or cognition. In this section, in addition to this realism (Type I realism), we will discuss scientific realism (Type II realism), which is a position that “scientific theories” and “laws,” which are the constructs of our thoughts, are real (or exist) in the world. From the standpoint of Type I realism, data represent the world or a part of the world that exists without our existence or awareness and are positioned as a map of a real object. This idea leads to a view of the data from the standpoint of natural or naïve realism. In contrast, Type II realism positions data as necessary to confirm the existence of scientific theories, laws, or truths, in our experience. In this position, the reality of the external world is not necessarily required but is only real to the extent

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that it depends on the sense data. In this respect, the data view approaches epistemology. Next, we consider data from the perspective of anti-realism. van Fraassen (1980), one of the standard-bearers of anti-realism, advocated constructive empiricism. He considered the purpose of science not to seek truth but to show the empirical adequacy of scientific theories and laws. From this perspective, data are merely used to confirm the empirical adequacy of scientific theories and laws. If this is the case, we need the consistency of scientific theories and laws in the space we experience. Therefore, the reality of the world will not be questioned whether we limit ourselves to the extent that we depend on the sense data. Moreover, the phenomenalist view of data, which limits itself to the perception of perceived phenomena, is included here. Good (1983) classified statistics into two categories: explanatory statistics, which aim at hypothesis formation, and confirmatory statistics, which are concerned with hypothesis testing. Mulaik (1985) positioned the former as a result of the conversion of the realist theory of statistics (the theory of errors) of the first half of the nineteenth century into an empiricist theory of statistics of the early twentieth century. Mulaik pointed out that early empiricist statisticians believed in the existence of things without perceptual experience, whereas Karl Pearson (1857–1936), one of the founders of modern statistics, took the phenomenalist position1 that it was unnecessary to consider existence behind perceived and experienced phenomena. In other words, this is an anti-realist or phenomenalist view of data. However, if confirmatory statistics, which is related to hypothesis testing, is a method that supports scientific realism, then it admits the existence of reality to the extent that it depends on the sense data, which means that it stands on Type II realism.

13.3

Creation of the Reality of the Average Man

In this section, we will examine one of the concepts created by statistics, the “average man (l’homme moyen)” and its reality. In Sect. 13.2, I discussed the shift from the realist theory of statistics to the empiricist theory of statistics. The major impetus for this shift was the creation of the average man concept proposed by Lambert Adolphe Jacques Quetelet (1796–1874) (Quetelet, 1835/1842). Quetelet, who was also an astronomer, proposed that the average represents a typical (invariant) characteristic of a population because the distribution of multiple observations of the same (real) object (error distribution) and the distribution of one-off observations of a characteristic in a homogeneous population have approximately the same shape. Ian Hacking pointed out that this proposal underwent a four-

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step process in Quetelet (1845), which resulted in a shift in meaning from typical characteristics to the true values of population characteristics (Hacking, 1990, pp. 108–109). Here is a shift from the error and realist theory of statistics to the empiricist theory of statistics. Simply put, this alone is insufficient for the concept of the average man to become a reality. Essentialism is an important aspect; it holds that things have essences, reinforces the meaning of the mean as a true value and as a representation of essence. The law in averages is thus understood as a “law” that expresses the essence of things. The comparison between the predictions of the law in averages and our empirical data contributed to the acquisition of the reality of the “law.” In the social sciences, theories and laws represent the ideal type (Ideltypus) proposed by Max Weber (1864–1920), who was interested in logical concepts but not in their correspondence with experience (Weinert, 1996). Therefore, the ideal type was considered more important than the average type. This can be seen from the following statement in Weber’s “Objectivity” in Social Science and Social Policy. Every individual ideal type comprises both generic and ideal-typically constructed conceptual elements. . .But no class or generic concept as such has a typical character, and there is no purely generic average type. . .The goal of ideal-typical concept-construction is always to make clearly explicit not the class or average character but rather the unique individual character of cultural phenomena. (Weber, 1949, pp. 100–101)

However, when one attempts to verify the truth or falsehood of a theory or law of the ideal type through statistical testing based on empirical data, the result is to use the average of the empirical data. This is the reason for the misplaced understanding (misplaced fallacy) that the average is an ideal state. It is important to note that this concept of the average man has gone beyond the meaning of the mere average and has taken on norms or standards as well (Hacking, 1990, Chapter 19). Hacking termed this the Durkheimian style, but it came to have an orientation toward “normality,” as the average came to be understood as defining what was “normal” in a group. The role of the empiricist theory of statistics, beginning with Quetelet’s concept of the average man, seems to have played an extremely important role in the acquisition of the reality of scientific “laws” in homogeneous groups such as biological “species.”

13.4

Is It Just the Average That Matters?

Quetelet, who proposed the concept of the average man, is thought to have been standing on an essentialist view of his time, and the concepts and understanding of averaging images and laws as averages based on this view are certainly useful in modern science. However, when considering group characteristics, can we regard deviations from the mean simply as errors or noise, as in the error theory? Sober (1980) and Morrison (2004) introduced a study by the evolutionary biologist Ernst Mayr (1904–2005) on Typological versus population thinking (Mayr, 1959/1976). He argued against the essentialist attitude of focusing only on

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the mean (average) and regarding deviations from the mean as mere errors or noise and stressed the importance of population thinking, which was introduced into biology by Charles Darwin (1809–1882). Sober (1980) quoted Mayr’s (1976) statement that there are two ways to view the distribution of a population: the typologist and population thinker. The ultimate conclusions of the population thinker and of the typologist are precisely the opposite. For the typologist, the type (eidos) is real and the variation an illusion, while for populationist, the type (average) is an abstraction and only the variation is real. No two ways of looking at nature could be more different. (Mayr, 1976, p. 28)

Population thinking was introduced to the social sciences by Francis Galton (1822–1911), a cousin of Darwin (Xie, 2007). Galton is credited with the concept of the correlation coefficient, and for popularizing the idea of regression toward the mean, Morrison (2004) considers that Galton was a population thinker, while the statisticians of his successor, Karl Pearson, and R. A. Fisher (1890–1962), one of the leaders of confirmatory statistics mentioned in Sect. 13.2, were both typologists holding an essentialist viewpoint. Population thinking is attracting attention in sociology and psychology, which deal with individual human behavior rather than the behavior of representative or typical persons. For example, Xie (2007), who recounts the achievements of the quantitative sociologist Otis Dudley Duncan (1921–1981), positions Duncan as a population thinker who brought population thinking to sociology. He describes Duncan’s contributions and views on statistics. In the social sciences, economics deals with the behavior of representative or typical people, and within it, typological thinking is the mainstream, and deviations from the ideal types (i.e., from the mean) are often considered errors. Economics has the advantage of quantitative analysis; therefore, it tends to focus on typological thinking. However, the subject matter is changing, such as in behavioral economics, which deals with individual human behavior. Therefore, depending on the subject matter to be analyzed, it may be necessary to take a more active stance toward population thinking.

13.5 13.5.1

Science and Realism in the Big Data Era2 How to Perceive Science in the Big Data Era

In this section, we consider how the relationship among data analysis methods, including statistics, science, and realism, evolve in today’s world, where big data has become common.

The content of this section is based on my presentation “Philosophical foundations of big data analysis and data driven science” at DSSV (Data Science, Statistics & Visualisation) 2019 conference and on section 3 of Takeuchi (2021). 2

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Table 13.1 Four paradigms of science Paradigm First Second Third Fourth

Nature Experimental science Theoretical science

Form Empiricism; describing natural phenomena

Computational science Exploratory science

Simulation of complex phenomena

Modelling and generalization

Data-intensive; statistical exploration and data mining

When Prerenaissance Precomputers Pre-big data Now

Note: Table 1 of Kitchin (2014) which is compiled from Hey et al. (2009)

First, let us discuss the definition of big data. According to Gartner’s glossary, a consulting firm in the IT field that is often cited in the literature referring to big data, it is defined as information assets (data) with three high-Vs as follows: Big data is high-volume, high-velocity and/or high-variety information assets that demand cost-effective, innovative forms of information processing that enable enhanced insight, decision making, and process automation.3

In the mid-2000s, IT engineers and journalists began to consider a new way of looking at science. In 2007, Microsoft’s Jim Gray argued in his talk “eScience: a transformed scientific method” that data-intensive science had entered a new paradigm of unconventional “scientific exploration” (Hey et al., 2009). Kitchin (2014) organized the arguments of Gray’s talk as shown in Table 13.1, saying that science in the era of big data has entered the fourth paradigm, the era of “exploratory science,” in which empiricism has been restored. Also, Chris Anderson, then editor-in-chief of WIRED magazine, has gone from statistician G.E.P. Box’s earlier assertion that “All models are wrong, but some are useful” to “All models are wrong, and increasingly you can succeed without them.” Google’s research director Peter Norvig has argued that “Petabytes allow us to say: ‘Correlation is enough.’ We can stop looking for models.” He argued for a shift away from the model-centric approach and essentialism that conventional science has relied on (Anderson, 2008).

13.5.2

Problems Within Exploratory Science

In this subsection, we will discuss the problems that might exist in exploratory science or data-driven science. Conventional science has a style of verifying

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https://www.gartner.com/en/information-technology/glossary/big-data (accessed April 23, 2023).

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deductively derived theories and laws with data. In contrast, exploratory science explores relationships and models from data by induction and abduction. Therefore, the relationships may change as new data are added. In other words, it is a style that allows for fallibility or tentativeness of relationships. However, there are four other problems that are thought to exist in a science that relies excessively on data. First, if data reflect experience, do they exist outside our cognitive framework? In The Grammar of Science (Pearson, 1892, 1900, 1911), Karl Pearson denied thingsin-themselves and argued that the accumulation of sense impressions conditioned by physical states forms constructs and that their projection outside the ego is a phenomenon. In contrast, John Tukey, who proposed Exploratory Data Analysis (EDA) around 1970, which is positioned as the origin of exploratory science, assumes that models can be explored (discovered) from data and does not necessarily deny the idea that data exist outside the cognitive framework (model). Considering the conventional view that data exist within a cognitive framework, EDA is a method for constructive empiricism, as described in Sect. 13.2. This means that it searches for parsimonious models without redundancy. However, if we consider that data exist outside the cognitive framework, EDA is a method of extracting information inherent in the data itself, beyond the analyst’s cognitive framework. The second issue is whether the link between the identification of conditional patterns and establishment of universal laws can be severed. Conventional science involves the search for universal laws—that is, truths. If the link between the identification of conditional patterns and the establishment of universal laws is severed, the purpose of science will change from the search for laws (mechanisms) to the conditional prediction of events. If this is called “science,” it means that engineering-like “science” will accelerate. Third, even when considering the identification of conditional patterns, the problem is that if the state in question changes from moment to moment, it is only a snapshot, no matter how far we go. Quetelet’s law requires a certain amount of physical time repetition, which is an implicit assumption in modern statistics. The fourth issue is whether the “worldview” embedded in a method is a “model.” Mathematical methods such as statistics are often treated as if they are independent of “worldviews” and “models” because of the universal mental image that mathematical formulas have. However, for mathematical methods to be valid, they need to be limited to “worldviews” and “spaces” and cannot be universal. Even if the idea of exploratory science becomes widespread, it needs to be understood in a way that is more conscious of its similarities and differences to conventional sciences.

13.5.3

Science in the Big Data Era and Recent Realism

Of the five issues raised in Sect. 13.5.2, recent discussions on realism, such as Meillassoux’s (2008) speculative realism and Gabriel’s (2015) “new realism,” may

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be helpful for the interpretation and evaluation of the second and third issues. Ferraris (2015) pointed out that these “new realism” movements are reaction to anti-realist hegemony and defined realism as “independence of reality from the knowledge we have of it.” Meillassoux first rejects correlationism and positions it as follows: By ‘correlation’ we mean the idea according to which we only ever have access to the correlation between thinking and being, and never to either term considered apart from the other. We will henceforth call correlationism any current of thought which maintains the unsurpassable character of the correlation so defined. Consequently, it becomes possible to say that every philosophy which disavows naïve realism has become a variant of correlationism. (Meillassoux, 2008, p. 5)

He insisted that to deny correlationism, even though the world exists, it is separated from our empirical world. He also abandoned the traditional thought that there are hidden laws and orders in a thing-in-itself. Instead, he introduced the notion of facticity as follows: Facticity is the ‘un-reason’ (the absence of reason) of given as well as of its invariants. (Meillassoux, 2008, p. 41)

In contrast, Gabriel defines “the existence of things” as “occurring in the field of sense or domain.” He then defined the world as a domain of all domains. The world is a field of senses in which all things occur. His main propositions on ontology are as follows: (1) the world does not exist, (2) there exist an infinite number of fields of sense, and (3) every field of sense is an object. Whatever realism one holds, there is no way for us to reach truth. The only thing that we can secure in the world of experience is reality. In light of this, recent realism can be considered the philosophical foundation of “exploratory science,” the fourth paradigm that does not adopt a truth-based approach.

13.6

Conclusion

The empiricist theory of statistics, initiated by Quetelet, has contributed significantly to the progress of twentieth-century science by joining hands with essentialism. However, as discussed in Sect. 13.4, the understanding of the analytical results obtained by statistics differs greatly depending on whether the analyst takes the position of realism or anti-realism and whether they take the position of a typologist or that of population thinking. In addition, the era of big data has arrived, and data-driven science is being advocated. This can be thought of as a proposal for a “science” different from modern science, which has sought the pursuit of truth. This is a position that recognizes fallibility and can be considered to correspond to constructive empiricism against scientific realism, as described in Sect. 13.2. Furthermore, the purpose of big data analysis must be considered. Certainly, with the vast amount of data in hand, it is now possible to reveal that an observed

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individual, which until now was merely an “outlier,” is an individual belonging to a certain cluster. However, if we consider the distance between the average of the discovered cluster and the observed individuals as an error or noise, then we are standing on a segmented typology, regardless of how far we go. However, from the standpoint of population thinking, which considers a population as a group with variations, a more diverse understanding is possible. It is extremely doubtful that statisticians and data analysts, who are the users of statistics, are aware of the points mentioned above. Viewing them in terms of datadriven science, which allows for fallibility, and a truth-centered view of science could lead to Whitehead’s fallacy of misplacement. It seems to me that this misplacement fallacy can be avoided by being more aware that statistics and data science methods are not neutral from a philosophical standpoint or worldview. Acknowledgements Part of this study is supported by JSPS KAKENHI, Grant Number 19K11859.

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Author Index

A Akerlof, G., 60, 172 Arendt, H., viii, 50, 129, 201–216

B Barnard, C.I., 240–242 Bataille, G.A.M.V., 46, 47, 64 Bergson, H.-L., 46, 47, 49, 50, 60, 61 Bhaskar, R., v, 8–13, 15, 16, 87

C Comte, A., 4, 5, 7, 15

D Davidson, D., 92 Debreu, G., 157, 174 Deleuze, G., 47, 48 Descartes, R., 26, 31–33, 44, 45, 74 Dupuy, J.P., 206, 207 Durkheim, E., 96

E Edgeworth, F.Y., 173

F Feyerabend, P., 97 Fisher, R.A., 40, 251 Foley, D.K., 151

Follett, M.P., 238–239, 245 Foucault, M., 204, 210–212, 215

G Gabriel, M., v, 253, 254 Gale, D., 125, 126, 137, 139, 140, 146 Galton, F., 251 Girard, R., 209 Gödel, K., 89, 90 Grandmont, J.-M., 145

H Hanaoka, E., 102 Hayek, F.A., 60, 102, 103, 144–146, 170, 171, 173, 174, 178 Heidegger, M., 47, 49, 88, 93, 98 Hui, Y., 105 Hume, D., 5–10, 15, 37, 38, 41, 59 Hurwicz, L., 173

I Illich, I., 193 Inoki, T., 88 Iwai, K., 62

K Kant, I. (Kantian), viii, 5, 8–10, 15, 31, 45, 57, 87, 94, 102, 103, 248

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258 Keynes, J.M., viii, 37–65, 96, 134, 144–146, 173 Kimura, B., 217, 218 Kindleberger, C.P., 54, 63, 64 Kripke, S.A., 94 Kuhn, T., 24, 96

L Lacan, J., 99 Lakatos, I., 13, 96 Laozhuang, 93 Lawson, T., v, 4, 14–16, 87 Leibniz, G.W., 44, 45, 87 Levinas, E., 93 Lévi-Strauss, C., ix, 219–221, 231, 232 Lindahl, E.R., 150–161, 167, 175 Löwenheim-Skolem theorem, 101 Luhmann, N., 93, 171

M Malebranche, N. de, 44–46 Marx, K.H., viii, 19, 27, 32, 45, 46, 50, 54, 173, 212 Mas-Colell, A., 151, 176 Masia, M., 227–230 Meillassoux, Q., v, 106, 253, 254 Morishima, M., 142, 143 Murata, H., 67–81, 83–108, 172

N Nietzsche, F.W., 46–48, 50, 54, 63 Nishida, K., 103, 104

O Oda, M., 217, 220–222 Orléan, A., 205, 209

P Pearson, K., 249, 251, 253 Peirce, C.S., 64, 97 Polanyi, M., 41, 95, 103 Popper, K. (Popperianism), 5–7, 13, 15, 64, 96, 102 Putnam, H., 87, 90, 92, 95, 98, 101

Author Index Q Quetelet, A., ix, 248–250, 253, 254 Quine, W.V.O., 87, 90, 92, 95, 98, 101, 244

R Rawls, J., 171 Roethlisberger, F.J., 242–244 Rorty, R., 244, 245 Rousseau, J.-J., 38, 43–46, 48–50, 53, 60, 61, 203, 204, 207, 208, 210 Russell, B., 5–8, 11, 15, 37, 40–42, 51 Ryuju (Nāgārjuna), 93, 102

S Samuelson, P.A., 135–137, 141, 159 Searle, J.R., 14, 15, 87, 208, 211 Simon, H.A., 243 Smith, A., viii, 20–33, 59, 113, 128, 150, 170, 173, 178, 209, 210 Sonnenschein, H., 173 Sraffa, P., 144–146

T Tanaka, Y., ix, 102, 106 Tarski, A., 89, 90, 172 Taylor, C., 91 Tukey, J., 253

U Udagawa, T., 222

V van Fraassen, B.C., 249 von Neumann, J., 141–145

W Walras, L., 114–116, 134, 150, 159 Watsuji, T., 180, 188, 189 Weber, M., 250 Whitehead, A.N., 38, 40–42, 48, 49, 60, 61, 67–81, 89, 92–94, 99, 104–107, 152, 197, 238, 243, 255 Wicksell, K., 144 Wittgenstein, L., 87

Subject Index

For words with too many occurrences, only the first or representative pages of each chapter are listed. A Abduction, 64, 253 Abstract/abstraction/abstracted, 4, 23, 57, 70– 81, 240, 241, 243, 245, 251 Accident/accidental, 44, 48, 70, 77, 80, 184, 228, 231 Actual entity(ies), 40, 69, 72, 74, 79, 80, 93, 94, 105, 106 Actuality, vii–ix, 20, 23, 72, 75, 79, 87–89, 92, 97, 217, 218, 221, 225, 232, 235– 246 Actual world, 19, 69, 70, 73, 74, 76, 77, 79–81 Administration, 236 Adverse selection, 152, 172, 173, 196 Animal spirits, 37–65 Arrow’s impossibility theorem, 114, 124 Attitude/posture, 86, 87 Authenticity, ix, 220, 221 Average man, ix, 248–250

B Balanced growth, 142, 143, 145 Basic income, 175 Beauty contest, 55–58, 60, 62, 63, 65 Belief system, 245 Big data, ix, 247, 248, 251–254 Business administration, 237–238, 240, 242– 246

C Category theory, 94, 102, 170 Causality, 5–9, 11, 13–16, 45

Causal power, 9, 11, 12, 14, 16, 207 Certain/certainty, ix, 6, 7, 9, 31, 33, 38, 40, 41, 54, 57, 58, 62, 63, 65, 70, 72, 73, 78, 87, 90, 92, 94, 96, 141, 164, 166, 170, 176, 182, 190, 197, 207, 215, 218, 227–229, 231, 235–237, 239, 242–244, 253, 255 Clear and distinctive, 70, 72, 74, 76, 78 Clinical knowledge, 240, 241, 246 Closed system, 10, 11, 13, 15, 16 Collective attitude, 101, 102 Collective coordination, 204–208 Comitato, 222–226 Communication, 95, 98–101, 107, 170, 171, 173, 174, 177, 193, 194, 219–221, 223, 244 Community, 12, 14, 15, 42, 43, 50, 114, 180, 202, 205, 206, 210, 213–215, 217–232, 244, 245 Complexity, 4, 52, 72, 114, 171, 195, 220, 239 Conceptualization, 90, 92, 99, 101 Conceptual scheme, ix, 92, 235, 242, 244 Concreteness/misplacement of concreteness, viii, 67–81, 86, 89–94, 104, 152, 171, 197, 243 Constitution/the Japanese Constitution, 83– 108, 157, 162, 170, 211, 213 Constructive empiricism, 249, 253, 254 Consumption loans, 135, 159 Context, 47, 59, 62, 87, 90, 93, 94, 99, 114, 124, 165, 173, 174, 178, 183, 191, 193, 195, 219, 223, 224, 227–229, 232 Copernicus’s theory (of celestial motion), 23, 24, 27 Correlationism, 248, 254

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 K. Urai et al. (eds.), Realism for Social Sciences, Translational Systems Sciences 36, https://doi.org/10.1007/978-981-99-4153-7

259

260 Cosmology/cosmological, 27, 68, 71, 77, 78, 80, 245 COVID-19, viii, 149–167 Creative/creativity, 37–42, 57, 61, 64, 69, 71, 77–81, 89, 92, 107, 178, 239 Creative experience, 106–108, 238, 239 Credit, viii, 52, 53, 56, 133–146, 159, 174, 176, 214, 247 Critical realism, v, vi, viii, 12, 16

D Dasein, 47, 88 Decentralize/decentralization, 171, 172 Deduction, 26, 72 Deliberative democracy, 123, 129 De-medicalization, 191, 194 Desire, 45, 47–52, 54, 93, 98, 162, 177, 192, 194, 208–210, 212, 215, 238 Ding an sich, 87 Dividend equilibrium, 140, 158, 176 Dwell in/dwelling, 69, 71, 79, 81, 84, 90, 94, 95, 97, 99, 105, 106 Dynamic/dynamism, viii, 68–70, 75, 83–108, 141–146, 152, 159, 210, 212, 215, 239

E Efficient cause, 93, 172, 173, 175, 177, 178, 196 Emergence, v, 5, 12, 49, 191, 201–204, 209, 212, 215, 226, 229 Empty space, 93 Enclose, 83–108, 173, 194 Enclosure, 92, 93, 99–101, 105–108, 172, 174 Epistemological break, 21, 25, 32–34 Epistemology, vii, 6, 13, 20–27, 32, 33, 249 Equilibrium price, 31 Essentialism, 250, 252, 254 Ethical propositions, 243 Everyday life, 9, 20, 54, 217–232 Exchange value, 27–30 Existence/existential/existentialistic/ existentialism, v, 3, 5, 9, 15, 21, 34, 39, 41, 46–49, 57, 61, 65, 68, 69, 73, 74, 77–79, 88, 90, 92–95, 98, 101, 104, 106, 107, 119, 123, 134, 140–142, 161, 174– 176, 180, 182, 183, 195, 203, 207, 209, 210, 215, 217, 219, 220, 222, 239, 245, 246, 248, 249, 254 Exploratory science, 252–254

F Factual propositions, 71, 243, 245

Subject Index Fallacy, 51, 67–81, 89, 93, 118, 152, 197, 243, 250, 255 Final cause, 93, 172, 173, 175, 178, 196 Forces from below/forces working from below, viii, 100, 102, 150, 152, 169–197

G Gale’s convergent path, 139, 140, 146 General equilibrium, viii, 7, 96, 133–146, 149– 167, 172, 176, 195, 205, 209 Generality I, ii, iii, 20, 21, 23, 27, 31

H Historicity, 90, 93, 101, 105 Hospital bed, 153, 154, 166–167, 190–192

I Idealism, 87, 88, 194, 196 Ideal type (Ideltypus), 250, 251 Ideologies, viii, 19–34, 84, 94, 239 Imaginary-focused, 86, 88, 90, 92–95, 101, 102, 104 Imagination, viii, 8, 15, 22, 24, 25, 27, 37–42, 45, 55, 57, 61–65, 81 Immediate experiences, 81 Inauthentic, 219–221 Individual rationality (IR), 115, 174 Induction, 6, 15, 16, 57, 58, 63, 64, 94, 98, 178, 193, 253 Inductive/inductivity, 6, 57, 58, 101, 105, 107, 172–174 Inevitable, 89, 90, 105, 108, 170 Inevitable moment/inevitable motif, 85, 88, 90, 92, 95, 101, 105–107, 171–173 Inexhaustibility, 87, 103 Inexhaustibility of reality, 88–90, 96, 172 Input–output, 142, 143 Instrumentalism, 4, 9, 13, 15 Introspect/introspection, 171, 172 Invisible hand, 59, 113, 150, 170, 173, 178, 206

K Karma, 93, 102 Kepler’s three laws (of celestial motion), 25 Knowing, 54, 74, 83–108, 243 Kyoto school, 93

L Labor value, 27–31 Layer, 75–81, 89–94, 96, 97, 99, 171, 177

Subject Index Limits of rationality, 243 Lindahl general equilibrium, 150–157, 159– 161 Liquidity, 50, 54, 59, 103, 144, 145 Local independence (LI), 114–116, 123

M Macroeconomics, 60, 63, 64, 141, 142, 145 Mahayana Buddhism, 93, 102 Management, vi, ix, 101–104, 156, 167, 235– 246 Management phenomenon, 235–246 Management theory, ix, 235–246 Markets, 28, 43, 84, 113, 133, 150, 169, 201, 222, 237 Mediator, 45, 209, 227–231 Medicalization, 189–194 Medieval universal controversy, 88 Memento mori, viii, 169–197 Mental pole, 93, 106, 172, 175, 178 Merit good(s), 114, 126–128, 150, 152, 162, 166, 167, 175 Meta-agreement, 118–123, 128 Metaphysics/metaphysical, v, 5, 7, 38, 68–73, 75, 77, 78, 80, 81, 87, 207, 244 Method/methodological/methodology, vi–viii, 4–9, 13, 15, 16, 43, 53, 54, 63, 69, 72, 73, 76, 78, 83–108, 114, 124, 125, 127, 145, 154, 170, 171, 174, 181, 194, 197, 206, 218, 219, 221, 227, 237, 239–246, 248, 249, 251–253, 255 Mimetic desire, 209–210, 212, 215 Misplaced/misplaced concreteness, viii, 67–81, 86, 89–94, 104, 152, 162, 164, 171, 250 MMT, 195 Monad, 87 Monetary equilibrium, 134, 137–141, 176 Money circulation velocity, 143 Multi-sectors, 141

N Naïve realism, 4, 248, 254 New realism, v–vii, 87, 253, 254 Newton’s theory (of gravity), 21, 25–27, 31, 33 Noesis, 74

O Object, 3–5, 7, 10, 14, 21, 24–27, 31, 32, 39, 41, 44, 45, 51, 74, 79, 81, 85, 87–92, 95, 97–102, 104, 126, 127, 152, 169, 194, 209, 231, 237–239, 244, 248, 249, 254

261 Objectification, 86, 88, 89, 92, 93, 95, 102, 104 Outside money, 135 Overlapping generations model, 135–137, 139– 141, 145, 176

P Pandemic, viii, 84, 149–167, 232 Paradigm (Kuhn), 24, 97 Pareto optimality (PO), 115, 158 Parrhesia, 210–215 Participation, vii, 85, 87, 98, 100, 150 PCR test, 152–154, 162–166 Philosophical/philosophy(ies), 4, 21, 38, 67, 86, 127, 238, 248 Philosophy of organism, 68, 70, 71, 73, 75–78, 81, 105 Philosophy of science, vi, vii, 67, 68, 75, 80, 86, 96, 97, 103 Physical pole, 172, 175, 178, 196 Place of nothingness, 102, 104–105 Place/place of reality, 83–108 Population thinking, 248, 251, 254, 255 Positivism, 4–6, 8–13, 15, 16, 96–98, 243, 244 Posture, 85–87, 89, 90, 92–95, 98–100, 102, 105, 107, 108, 150, 152, 172–175, 177, 178, 194, 195, 197 Practical reason/reason, viii, 4, 9, 10, 22, 23, 34, 40, 42, 45, 50, 52, 58, 60, 70, 77, 83, 85, 86, 97, 99, 102, 103, 107, 139, 158, 169, 178, 183, 221, 228, 241, 250, 254 Practice, 7, 9, 11–13, 15, 16, 20, 21, 34, 55, 58, 77, 78, 80, 81, 92, 100, 103, 114, 163, 166, 170, 173, 179, 182, 195, 196, 219– 221, 226–228, 230, 232, 237–239, 241, 243, 245, 246 Practitioner, 15, 179, 181, 238, 240–242, 245 Pragmatism, 95, 96, 240, 244, 246 Predicate-oriented, vii, 104 Prehend/prehension(s), 61, 71, 72, 74, 80, 93, 105–107 Price taker, 173, 177 Probability, 5, 37–65, 116, 117, 129 Problematic, 20, 24, 25, 32, 68, 212 Process, viii, 8, 14, 20, 34, 40, 41, 43, 45, 47, 49, 50, 57, 58, 68–81, 93–94, 96, 97, 99, 105, 113, 115, 125, 126, 141–144, 166, 170, 175, 177, 180, 181, 189, 195, 204, 206, 208, 210, 213, 214, 219, 221, 226, 228–231, 236, 238–240, 243, 245, 247, 250, 252 Process thinking, 75, 238–239 Projective operation, 89, 95, 102 Ptolemy’s theory (of celestial motion), 23

262 R Realism/reality(ies), 1, 19, 37, 67, 84, 122, 133, 149, 169, 201, 217, 235, 247 Reality (actuality), 87, 88, 236, 237 Recognition, 14, 31, 32, 52, 69, 73, 78, 81, 97, 99–101, 107, 166, 202, 209, 210, 218, 239 Recursive/recursivity, 6, 87, 97, 105, 172, 173 Relatedness, 71, 74, 80 Religion/religious, 13, 44, 60, 63, 68, 79, 103, 196 Riemannian manifold, 32 Room/gap, 85, 87, 88, 90, 91, 102, 164, 174, 195, 196, 221, 225 Rosui, viii, 178–196

S S’abbonamentu, 228, 229 Satiation, 140, 145, 151, 152, 159, 175, 176 Schematic/schema-like, 86, 88, 90–95, 97–99, 101, 102, 104, 107, 170 School choice, 114, 125–129 Scientific epistemology (of Althusser), 20 Scientific knowledge, 8, 9, 44, 117, 238, 240, 241, 245, 246 Scientific realism, 248, 249, 254 Self-reliance, 83, 88, 101–103, 106, 107, 150, 178 Self-transcendence, viii, 202, 204–209, 212– 215 Self-transgressive, 89, 102, 107, 172, 175 Senility, viii, 170, 182, 185, 186, 188, 192, 196 Short branches, 223–226 Single-peaked preferences, 114, 118–124, 128, 129 Social ontology, viii, 3–16, 87 Social reality, 13–15, 181–183, 202, 208, 213– 215 Sos omines, 227–232 Space–time, 32 Speculation/speculative, 42, 54, 68–70, 72, 77– 81, 89, 104–106, 152, 207, 238 Speculative realism, v, 253 Spontaneous order, 60, 102, 170, 174, 178, 181 State-oriented/object-oriented, 87, 88, 152 Steady-state equilibrium, 142, 143 Stock market, 52–56, 63 Strategy-proof, –, 125, 127 Subject, viii, 4, 9, 13, 14, 16, 38, 40, 45, 48, 50, 55, 62, 63, 67, 71, 73, 74, 79, 80, 84, 87, 92, 93, 96, 104, 150, 152, 167, 169, 171,

Subject Index 172, 181, 182, 204, 209–212, 222, 230– 232, 236–239, 251 Superject, 93 Symbolism, 71, 74, 80

T The capacity for action, 212, 215 The condition of no justified envy, 125, 126 The criterion of authenticity, 219–221, 225, 231 The deferred acceptance mechanism (the DA mechanism), 125–128 The Jury theorem, 114, 116–118, 128, 129 The majority vote, 116–121, 124, 126, 128, 129 The median voter, 119, 129, 130 Theoria(e), 72, 73, 79, 81 Theory of general relativity, 32 The third person, 92, 188, 226–231 The top trading cycle mechanism (the TTC mechanism), 125, 126 The voting paradox, 118, 121, 123–124 The Walras rule, 114–116 Three layers, viii, 75–81, 86, 89–94, 99 Thrown in/thrownness, 105–108, 172, 173, 175, 177, 178, 195 Transcendental aesthetic (of Kant), 31 Triage of life, 175, 194, 196 Typology, 255

U Uncertain states, 224, 226, 230, 231 Unit of measurement, 134, 150 Universality, 57, 88, 102, 108, 169–197 Use of theory, 97, 195

V Vaccination, 42, 165–166 von Neumann model, 141–144

W Welfare theorem/fundamental theorem of welfare economics, 157, 176–178, 195 Whitehead’s Theory of Order, 93 Will, 42–52 Worldview, 104, 209, 245, 246, 253, 255

Z Zen, 93