IX
IT WAS THE GERMAN PHILOSOPHER Georg Wilhelm Friedrich Hegel, with his version of the concept of civil society (bürgerliche Gesellschaft), who first conceived of a theoretical and practical bridge between the state and the market and, by extension, between justice and expediency. In narrow terms, Hegel’s version of the concept of civil society was something like a synonym for the division of labour. As with the division of labour, it was made up of all those occupations and activities involved in the production, distribution, sale, and consumption of the many different agricultural and manufactured commodities available in a commercial society. But there was also a significant difference between the idea of the division of labour and Hegel’s concept of civil society. This difference was that Hegel’s concept housed both the many different occupations and activities involved in the division of labour, and many of the different organisations and institutions involved in the system of government. Although the English translation of Hegel’s term bürgerliche Gesellschaft is usually given as “civil society,” the French translation, société bourgeoise (bourgeois society), captures the meaning of the term more clearly because it refers more fully to its urban, corporate, and estate- or guild-based institutional and occupational content. With Hegel, the concept of civil society came to include the worlds of municipal government and the professions as well as property, industry, and trade. It could therefore include the figure of the administrator, the fonctionnaire or Beamte, and, because it did, it could also contain a third term, the administration, as a theoretical and practical bridge between the market and the state.
It is easy to underestimate the significance of the concept of administration in either modern political societies or modern political thought.1 Hegel, notoriously, called the administration a “universal estate.” It was, he wrote in his Philosophy of Right of 1821, part of the state and the system of estates that it housed.
It was, however, a special type of estate because, unlike the various other estates, the administrative estate was funded by the state itself out of the tax revenue supplied by civil society. In this sense, the administration was part of both civil society and the state. Unlike the other components of civil society, however, its resources were supplied by something other than itself. While those involved in agriculture, industry, trade, or the professions relied on their own resources to be able to survive and prosper, the administration had no resources of its own. This in turn meant that the relationship between the state and its administration was based, in the last instance, on finance, and that credit was a key component of the relationship between the state and its administration because the state itself was obliged to fund the costs of its administrative system and to manage the flows of income and expenditure running across its office-based bureaucracy.
FIGURE 6. Georg Wilhelm Friedrich Hegel, Naturrecht und Staatswissenschaft im Grundrisse (1821)
Hegel was very familiar with the work of Adam Smith, but it is well known too that he was also fascinated by the thought of the eighteenth-century Scottish political economist Sir James Steuart and, in particular, by Steuart’s unusually positive evaluation of public debt.2 Hegel’s treatment of the state bureaucracy or universal estate was, on the financial side, a development of the logic of Steuart’s theory of public debt as a key component of a state. “The universal estate,” Hegel explained, “has the universal interests of society as its business. It must therefore be exempted from work for the direct satisfaction of its needs, either by having private resources, or by receiving an indemnity from the state which calls upon its services, so that the private interest is satisfied by working for the universal.”3 This conflation of the private interest with the universal interest gave the administration its particular character. It was, Hegel added later, “integral to the definition of the universal estate—or more precisely, the estate which devotes itself to the service of the government—that the universal is the end of its essential activity.”4 It is important here to see what Hegel meant. What he did not mean was that the universal estate was an equivalent of Plato’s guardians or China’s mandarins. This was because Hegel’s universal estate did not have to be equipped with a personal quality like knowledge, wisdom, or judgement, as was the case with a mandarin or guardian. It could, instead, rely on money, either to buy in services or to pay for the provision of public goods, and, equally importantly, could also rely on the law for providing a framework of rules to guide public and private life. Both, Hegel emphasised, had an intrinsically universal quality that obviated the need for any equivalent personal, or subjective, quality. “It is implicit in the organic unity of the powers of the state itself,” he wrote, “that one and the same spirit decrees the universal and brings it to determinate actuality in implementing it.”
It may at first seem remarkable that the state requires no direct services from the numerous skills, possessions, activities and talents [of its citizens] and from the infinitely varied living resources which these embody and which are at the same time associated with the disposition [of those who possess them], but lays claim only to the one resource which assumes the shape of money.… But money is not in fact one particular resource among others; on the contrary it is the universal aspect of all of them, in so far as they express themselves in an external existence in which they can be apprehended as things. Only at this extreme point of externality is it possible to determine services quantitatively and so in a just and equitable manner.5
The same quality belonged to the law, a subject that Hegel discussed alongside the subject of money in the same lemma. It was universal because it was rational, and this rationality meant, almost by definition, that a law was something less than a pure command (like “Thou shalt not kill”), but also something more than a purely factual description because it could also entail a permission or prohibition.6 Its relationship to a state meant that the law was also more general than a command but was still less particular than a fact. Together, the combination of money and the law added up to both a fiscal state and a Rechtsstaat.
Civil society generated wealth, but civil society could also generate conflict. Conflict called for states, laws, and government. But states, laws, and government called for taxing and spending as well as regulating and ruling. Hegel’s insight was to see that the position of the universal estate lying somewhere between the organisations and institutions of civil society and the organisations and institutions of the state meant that credit would be built into the evolving relationship between the regulating and ruling parts and the taxing and spending parts of the whole system. Since the universal estate had no resources of its own, leads and lags of income and expenditure would be entrenched within the whole administrative system, with the result that these credit-based leads and lags would mean that the state depended on civil society for its resources as strongly and deeply as civil society depended on the state for its security. The result, for the whole system, would be an embryonic capacity to measure, calculate, and project the allocation and distribution of resources within both civil society and the state and, because of the interrelationship of credit, interest rates, and the availability of capital, a further embryonic capacity for government to have a real economic policy. By identifying a third, administrative, term lying between the state and the market, Hegel began to identify the real dimensions of what was involved in creating a framework for thinking about politics in commercial society. Administration could be combined with public accountancy and public accountability, but it also gave rise to the problematic subject of administrative law, which was neither quite private nor quite public and, because of this, supplied many opportunities for the development of something analogous to the English Common Law with its emphasis on cases, precedents, and judicial interpretation.
The framework that Hegel began to establish also relied on two of the more obvious features of the division of labour, namely, its specialisation and differentiation. These features of the division of labour could be transferred readily to the idea of the separation of powers because specialisation and differentiation could be built as easily and cumulatively into an administration as into many other types of commercial, financial, or industrial organisation. On this basis, the old distinctions separating the legislative, executive, and judicial powers could be reinforced or modified by a potentially endless array of variations on the many different components of function, timing, content, or accountability built into all three powers. In itself, the old idea of the separation of powers was largely vertical with, at least analytically, clear lines of division separating the legislative, executive, and judicial powers. With the addition of Hegel’s concept of an administration, the separation of powers could also be horizontal, with different powers exercised variously at, for example, municipal, district, regional, provincial, national, or federal levels. Finally, of course, the two types of separation of powers could be combined, with a vertical separation of powers applying as much at a municipal as at a federal level, but with some powers, like the power to print money or have a foreign policy, separated horizontally rather than vertically. The resulting proliferation of specialised administrative units and agencies would then have the further effect of broadening and deepening the interlocking system of leads and lags binding the state to civil society. On Hegel’s terms, public debt and public administration were two sides of the same coin.
The fiscal and financial sides of the type of administrative system that, on Hegel’s terms, could straddle the boundary separating civil society from the state had the further effect of creating an environment that was genuinely compatible with party politics. Usually, the growth of party politics has been taken to involve the adoption of procedures and practices that were first established in Britain in the seventeenth and eighteenth centuries because they were generated by the overlapping distinctions between Whigs and Tories, court and country, or government and opposition. But party politics existed in many other eighteenth-century European states, from the Swedish Hats and the Caps, to the various négatifs, natifs, and représentants of eighteenth-century Geneva and the Orangists and anti-Orangists of the United Provinces of the Netherlands. Clearly, all these versions of party politics called for the existence of what in the eighteenth century was often called a free state, usually because it housed a mixed or balanced system of government, with some measure of elected representation, religious latitude, a broadly free press, and a functioning legal system. But it also called for something more.
That addition was supplied by Hegel’s three-sided distinction partitioning civil society, the state, and the administrative system. Together, the three parts of Hegel’s system help to explain why British party politics could have turned into a more durable and stable party system earlier and more continuously than this transformation occurred in other European states. The addition of an administrative dimension helped, in the first place, to underline the importance of superimposing a fiscal and financial framework upon the relationship between local politics and national politics. The framework meant that the politics of the distribution and redistribution of individual and collective resources had a real public presence. It also, in the second place, highlighted the way that the many administrative units and electoral constituencies built into the interrelationship of civil society, the administration, and the state enabled parties and policies to be tried and tested in several different public settings before a decisive election occurred. This meant that the politics of public opinion could have the same public presence as the politics of distribution. Over the years, the politics of distribution and the politics of public opinion have become the driving force of electoral politics. The combination of administration, taxation, and public debt that Hegel identified helps to explain why it did.
Hegel’s three-sided distinction of civil society, the state, and the administration was a development of a number of earlier examinations of political society and the division of labour made in the second half of the eighteenth century by Montesquieu, Rousseau, and Sieyès. The thought of the three individuals involved a substantial measure of continuity, which ensured that the content of their respective publications amounted to a real conceptual sequence. The sequence began with Montesquieu’s concept of monarchy as a system of government in which, as he put it, one person ruled in conjunction with a number of subordinate, dependent, and intermediate powers, of which, he added, the most natural was a nobility. The most unusual feature of this combination of a royal sovereign and a number of subordinate, dependent, and intermediate powers was the division that it housed between a commercial and a noncommercial sector. The members of the nobility could own large amounts of property but were not allowed to trade. This meant that they would have to rely on intermediaries either to sell the products of their estates or to supply them with the goods that they needed both for future cycles of agricultural production and for their own consumption. Credit would, therefore, be built into the relationship between the commercial and noncommercial sectors, and, as Montesquieu explained, this would have a deep-seated effect on both the division of labour and the structure and composition of domestic and foreign trade. It meant that the French economy could be internationally competitive but would not have to compete solely, or even mainly, on price.
This competitive capacity applied as much to agriculture as it did to industry because its basis was a combination of product differentiation and technical innovation. Both, Montesquieu showed, were the effects of the relatively high levels of interest rates generated by the demand for credit produced by the initial division of the economy into commercial and noncommercial sectors. High levels of interest rates called for higher levels of profits, which in turn could be secured through a reliance either on market segmentation or on product cycles or intermittent combinations of the two. Market segmentation could involve specialisation in certain products or selling to certain regions or favouring certain customers or, again, intermittent combinations of them all. Product cycles could be generated by small changes in design, materials, or processes and the opportunities that they presented to producers to charge high prices at the start of the cycle and low prices at the end of the cycle by dumping surplus stock to raise cash flow. In this type of economy, cognac, Camembert, champagne, or calvados mattered as much as articles de Paris, Lyonnais silks, or even denims from Nîmes. Montesquieu outlined its culture and structure carefully but epigrammatically and even went so far as to explain why the existence of some sixty thousand venal offices also favoured its stability and prosperity. Money made in trade could, two generations later, be translated into the status of nobility simply by means of acquiring an office. Here too the division between commercial and noncommercial sectors had a beneficial effect. It made the French nobility unusually open and, at the same time, relatively independent of centralised royal patronage and power. It also made it possible to see how trade, industry, and the division of labour could be combined with property, nobility, and authority. In the light of Montesquieu’s concept of monarchy, the state could coexist with the market because, while both were clearly separate from one another, they were also clearly connected in a fundamentally symbiotic way. As was literally the case with symbiosis, they would live and die together.
Rousseau’s approach to the subject of markets and the state was both more like and more unlike Montesquieu’s than is often assumed. As has been indicated, he rejected Montesquieu’s assertion that only a republic needed to have virtue as its underlying motivating principle because, he maintained, sovereign power was a fundamental attribute of every political society and could, consequently, be used or abused under a broader range of conditions than those associated solely with democracies or aristocracies. But he also followed Montesquieu’s concept of a two-sector society, with a commercial and a noncommercial sector that were distinct from one another but were still joined sufficiently tightly to require jointly what was needed for their common survival. In Rousseau’s case, however, the difference between the two sectors was not supplied by a distinction between the nobility and the rest of society but was instead an effect of the elaborate system of election that, he argued, was required to produce the type of government that he called an “elected aristocracy.” Rousseau called this electoral system a system of graduated or gradated promotion. In place of a noncommercial nobility and a commercial society, the idea of gradated promotion relied on election rather than inheritance to generate something like the same type of dual system to be found in Montesquieu’s concept of monarchy. In this case, as was really the case in Rousseau’s native city of Geneva, the two sides of the system were formed by trade and industry on the one side and by election and administration on the other. The idea underlying this variation on Montesquieu’s system was that of an electorally generated filtering system, with every citizen electing the membership of the lowest level of political representation, such as a municipality or district, and with the members of these elected units then forming further levels of electors and elected to produce an elected aristocracy whose membership had climbed up the institutional hierarchy over several rounds of election and after a prolonged period of public scrutiny.
Rousseau described the system most fully in his Considerations on the Government of Poland, which was published for the first time in 1781 three years after his death. As several of his early readers noticed, there was a substantial measure of continuity between the plan that he set out there and those that began to be published by Condorcet and Pierre Samuel Dupont de Nemours in the decade after Rousseau’s death. Both were closely associated with the reform agenda of the French controller general of finances Anne Robert Jacques Turgot during his brief period in office from 1774 to 1776, and both also indicated the similarities between Rousseau’s idea of gradated promotion and Turgot’s plan to replace the old French system of estate-based representation by a system of local, regional, and national representation that, like Rousseau’s, was designed to produce a noncommercial political and administrative sector from a fully functioning commercial society. This was the system that came to be called the “representative system” by its most famous advocate, Emmanuel-Joseph Sieyès.
“All the work undertaken in society,” Sieyès wrote, “is representative.”7 As with Montesquieu and Rousseau, this entailed a dual system. Sieyès’s own variation on this idea entailed the creation of a pyramid-shaped system of political representation, with a democratic base, a monarchical or presidential apex, and three intermediate levels of political representation lying between them. Political representation would work by way of the system of gradated promotion, where eligibility for election to a higher office would depend on one’s having successfully discharged the duties of a lower office. Everyone, however rich or well-connected they might be, would have to start at the bottom and work their way, step-by-step, up to the top. The system would also produce a nonpolitical, meritocratic elite that, like Montesquieu’s idea of a nobility, would not be involved in trade but, unlike Montesquieu’s nobility, would not be hereditary. The whole system would amount to what Sieyès called a ré-publique (or what we might call a modern, representative republic), as against either a ré-privé (absolute government) or a ré-total (Jacobin republicanism).
Sieyès repeatedly referred to the years around 1770 as the time when he began to formulate his system. “Work (travail) favours liberty only in becoming representative,” he wrote in an undated note.
What seems to have been most applauded in France in Smith’s work [the Wealth of Nations] is its first chapter on the division of labour. Yet there is nothing in his ideas that was not common among all those of my fellow citizens who took an interest in economic matters.… As for myself, I had gone further than Smith as from 1770. I saw not only that the division of labour in the same trade, namely, under the same higher level of management, was the surest way to reduce the costs and increase the quantity of products, I also envisaged the distribution of the great occupations or trades as the true principle of the social state.… Multiply the means, or the power, to satisfy our needs; enjoy more, but work less (jouir plus, travailler moins), this is what defines the natural increase of liberty in the social state. Thus, the progress of liberty follows naturally from the establishment of representative work.8
He made the point in print in the pamphlet entitled Views of the Executive Means Available to the Representatives of the Third Estate that he published in the autumn of 1788. “The more a society progresses in the arts of trade and production,” he wrote there, “the more apparent it becomes that the work connected to public functions should, like private employments, be carried out less expensively and more efficiently by men who make it their exclusive occupation. This truth is well known.”9 Later, in a note probably written in 1815, he again referred back to the period around 1770 as the time when the idea had taken shape. Here, the remark addressed not so much the representative character of the division of labour itself as the related idea that all labour could be taken to be productive, which was why, he wrote, the word onéologie was actually a more comprehensive, but far too obscure, name for political economy. The neologism, derived from the Greek words oneō and logos, was deliberately ambiguous and could mean both the science of profiting, acquiring, or benefiting and that of gratifying, delighting, or enjoying. To Sieyès, it was a word that filled a real theoretical and conceptual gap.
Properly speaking wealth consists of all existing values, but up to the present onéologie deals only with venal, or vendible, values. Ease, well-being, or, in a word, enjoyment (jouissance) are connected to many more goods than those that can be bought and sold, as well as to the large number of those that can be consumed without having been bought or sold at all. This observation alone serves to show that onéologie ought to cover a range that has yet to be noticed. Labour that anyone applies directly, as well as individual, collective, or public enjoyments (jouissances), indicate the immensity of the field of those elements of happiness that have yet to become the object of study. A good social state would combine things in such a way that those moral and physical enjoyments which are not bought or sold would still amount to a very considerable portion of each individual’s well-being. Human industry and action seem to me to be very restricted if they are to be considered solely in terms of their vendible, or venal, products (see the Analytical table of the universality of human enjoyment that I made over forty years ago). The spectacle of a human society, considered in terms of general well-being, looks to me like a very poor thing if the individuals composing it are taken to be no more than a multitude of agents or instruments of vendible production, as if a political association has to be seen as no more than the formation of a great manufactory in which three classes of individuals—idle rentiers, active entrepreneurs, and laborious instruments—wage a silent war over how much of a share of the vendible product they will have. Production and consumption are correlates, even though they are rarely equal. Wealth which is destined to be sold, and even that part which could be sold even if it is not, amount to no more than the smallest proportion of consumption and production within the more general movement. Onéologie has not therefore been given all the extension that it should have as a political science. I spent some time on this point of view and made much progress in 1774 and the following years. It guided me in the project for establishing public festivals that I gave to the Committee on Public Education in 1793 etc. Fata negarunt (Fate ruled otherwise).10
Almost everything involved in human well-being could be incorporated into this comprehensively enlarged notion of political economy and, in addition, could be connected to the equally comprehensive idea of the division of labour as a representative system. If industry was the underlying principle of representation, then the range of activities to which the slogan jouir plus, travailler moins could be applied was virtually limitless. It is likely that this was the broad idea underlying the “Treatise on socialism” (Traité du socialisme) or, more elaborately, a “Treatise on socialism, or on the goal given by man to himself in society and of the means he has to attain it” (Traité du socialisme, ou du but que se propose l’homme en société et des moyens qu’il a d’y parvenir) that Sieyès envisaged but seems never to have written.11
Hegel’s transformation of the idea of the division of labour into the concept of civil society, together with his description of the agonistic but complementary relationship between civil society and the state, had, in short, a largely French conceptual background. Montesquieu made the initial conceptual move with his description of a modern monarchy as a two-sector political system. Rousseau established the electoral character of a similarly divided two-sector system, while Sieyès associated both parts of his version of a two-sector system with the idea of the division of labour. The overlap between Sieyès and Hegel was substantial, but Hegel’s move was to identify the administration as the conceptual and practical keystone of the whole edifice. One part of the administration was tied to civil society, but the other was tied to the state. Hegel gave the concept of administration a fuller and clearer status than it had been given by Montesquieu, Rousseau, and Sieyès. It was both a bridge and a buffer between civil society and the state. And, because it was both, it also had to rely on resources generated by both. Civil society could generate tax revenue, but the state could generate money. As David Ricardo went on to show, this was the combination that lay behind his concept of comparative advantage, the concept that still plays a part in theories of international trade. The basis of the concept was the idea that domestic monetary and financial policy could be used to enable, encourage, or even force different types of economic endowments and resources to grow and develop in reciprocally advantageous ways. Trade, from this perspective, did not have to be a zero-sum game and could, instead, turn into one in which everyone was a winner. Later, something like the same idea was transferred from the theory of international trade to the sphere of domestic politics. Here too, as Lorenz von Stein went on to show, the creation of currency involved in the growth of public debt had the effect of turning borrowing and lending into taxing and spending. On Stein’s terms, only a state had the resources to keep the division of labour at bay. Stein called the outcome “social democracy.” It was the domestic equivalent of Ricardo’s concept of comparative advantage.