Capital and Time
For a New Critique of Neoliberal Reason
Martijn Konings


Chapter 1

Foundationalism and Self-Referentiality

Money is nothing but a symbol, a fictitious stand-in for something else that is yet to arrive. After all, taken by itself, money is useless; people would have no reason to hold pieces of paper or even purely notional electronic accounting entries unless they felt that those signs referred beyond themselves and stood for something else. But it turns out to be extremely difficult to specify the objective ground of money: every attempt to indicate the foundational value of which money is imagined to be the symbolic expression refers us to other symbolic operations. And yet this inability to arrive at a substance underlying the value of money does not in any way undermine our sense that it is fully real. Even though we cannot define money beyond its fictitious and promissory character, this does not erode our sense that it represents entirely real value—indeed, is value. Money certainly can and does refer beyond its current self but always relates to its environment in terms of the potential for monetization that the environment holds. Monetary signs, then, are self-referential, capable of becoming the facts they symbolize (Deutschmann 2015: 382). We can and should study how this works, but any attempt to define value outside this paradoxical self-referential loop is bound to entail a moment of arbitrariness, a decision that reflects primarily our own reluctance to follow the self-referential movement of financial value.

Whereas orthodox economic theory unreflexively reproduces the paradoxical self-referentiality of monetary value, heterodox and critical theories insist on a clear distinction between real and fictitious money and so turn a blind eye to our intuitive certainty that money works as self-referential value. Seen from a heterodox angle, to emphasize the self-referentiality of monetary value would be to commit the fallacy of economism—that is, to assume that the economy is a self-sufficient entity, an autonomous, self-expanding system that requires no external supports or inputs. What makes an analysis economistic, in this perspective, is the inability to recognize that financial structures are not self-founding or self-regulating but require external foundations. Although there are many differences among the interdisciplinary social science fields studying economic life, the critique of economic determinism is central to how they have come to understand themselves. The critique of economism has been closely allied with the critique of speculation, which is understood as driven by an irrational belief in self-referentiality. Speculative practices, it is argued, are problematic because they fail to observe the importance of foundational values and do not properly distinguish between irrational and sound forms of value, between fiction and fact.

It is important to get a clear perspective on the reasoning here: the critique of self-referentiality is premised on an ontological foundationalism. Of course, it is widely and casually assumed that the critique of self-referentiality is concomitant precisely with a rejection of foundationalism—the one is imagined to imply the other, and both arguments tend be rolled into a critique of economism. But there is considerable conceptual sloppiness at work here, which serves to obscure the fact that the critique of speculation is in fact premised on a notion of real value. What is so remarkable about the present state of heterodox thinking about economic life is that the critique of speculation as a divergence from foundations has become closely allied with the critique of economic essentialism, with little registration of the deep tension between the two.

This book argues that it is precisely the inability to think self-referentiality properly that binds the heterodox critique to foundationalism; viewing self-referentiality through a non-essentialist lens obviates the need to locate phenomena in external grounds or substances. To this end, the book pursues the lead of Luhmann’s understanding of self-reference. For Luhmann, it makes little sense to doubt that there exist self-referential, self-regulating systems, entities oriented to reproducing themselves into the future. To talk meaningfully about biological, human, or social life is to assume that such systems exist. Luhmann does not take self-referentiality as a positive property of systems or as an inherent power (the kind of essentializing conception that is the target of the critique of economism); it does not entail the literal closure of a system (whether a fully effective cognitive framing or a system’s material ability to dispense with its environment) but only and ever an operational closure (Borch 2011: 23–24), which occurs when an assemblage of elements becomes organically oriented to reproducing itself (or in the language of Foucault [2007 (1978)], when it comes to be characterized by a “security dispositif ” [cf. Luhmann 1995: 312]). For Luhmann, an emphasis on self-referentiality is the only way to do something useful with the idea of postfoundational theory, a theory appropriate to a society that is able to understand itself in terms of risk, and its institutions as contingent constructions. Whereas a Kantian problematic forever revolves around the external conditions that make particular phenomena and our knowledge of them possible, Luhmann’s work is concerned precisely with obviating such modernized metaphysics and instead seeks to understand how systems endogenously generate their conditions of possibility. To view life through the lens of self-referentiality, then, is a way of framing the paradoxical phenomenon of determinate things coming into being in a world that has no external mover.

To draw on Luhmann to formulate a critical perspective is hardly an obvious move. In the English-speaking academic world, Luhmann was for a long time known primarily through his debate with Habermas (Habermas and Luhmann 1971), leaving the impression of being a conservative defender of system integration and having little interest in the quest of Frankfurt School critical theory to spot openings for political reform and change. The considerations offered here follow Moeller’s (2012) suggestion that it is worth uncovering a “radical Luhmann,” who does not so much retreat from critique but rather provides us with new critical resources. For Frankfurt School critical theory since its reconstruction by Habermas (1981), critique has had a strongly external character; normative judgments and moral commitments are seen as rooted in discursive practices that enjoy a degree of separation from the material pressures imposed and instrumental reason fostered by the economic sphere. For Luhmann, normativity never has such independence; it is only meaningfully thought about with reference to the functional requirements of system reproduction. From a Luhmannian perspective, Habermasian discourse ethics is little more than dressing up moralistic idealism as critical insight (Rasch 2002: 10). Especially when it comes to the subject of this book, this is hardly an unfair assessment. In the work of contemporary Frankfurt School representatives, a growing emphasis on communitarian or civic-liberal principles of interaction is accompanied by a steadily declining ability to offer penetrating readings of the capitalist economic structures whose oppressive operation and colonizing dynamics are taken to require the need for critical interventions in the first place. The tendency of key figures in the recent generation of Frankfurt School critical theory to align themselves with Polanyi’s work and embrace the notion of the double movement (or some variation thereof) is therefore hardly coincidental but rather represents the logical endpoint of a particular way of thinking (e.g., Fraser 2013; Honneth 2014).1

Before exploring Luhmann’s contribution in more detail, we need to appreciate the theoretical context in which his work should be seen as intervening. Systems thinking in the social sciences has always been much more prominently represented through Parsons’s (1951) structural functionalism. The latter provided the methodological framework for the postwar social sciences and rationalized the specific division of labor among them. It viewed society as composed of a number of (sub) systems, each characterized by its own action orientation that could be studied through a specific kind of disciplinary knowledge—“Parsons’ Pact.” To a high degree this framework was organized around the growing importance of the economy in modern society, which had created a particular problem of order. The instrumentally rational, individualized actor was viewed as not organically disposed to the production of social and political order, and was therefore seen to require embedding in cultural and political frameworks of shared norms and values. In the post–World War Two context, the concern with social integration went hand in hand with the idea that any deviations from the values of liberal democracy could be treated as “social problems,” reflecting not deep-seated social tensions but accidental failures of integration.

The transformation of the social sciences over the past decades is of course far more complex than could be accurately described here. Yet for the specific focus of this book, we can characterize the shift fairly precisely as a rejection of totalizing explanations—and in particular any version of economic determinism—and the commitment to a more pluralist perspective that emphasizes the complex and contingent effects of specific institutional, political, and cultural factors.2 This “new pluralism”—which we might call it to distinguish it from earlier forms of pluralism—places great emphasis on the provisional and contingent nature of any overarching order. Although the Parsonian paradigm had always been intensely concerned with the idea that economic action could not in and of itself serve as the basis of a coherent political order, the image of modernization it relied on was nonetheless a highly benevolent one, featuring productive forces of functional specialization that simply needed stabilizing. Whereas Parsonian modernization theory had given Weber an optimistic twist, the new pluralism returned to the tragic Weber, who was preoccupied with the irrationality of economic reason and who saw secular progress and moral decline as going hand in hand. In the new pluralism, the problem isn’t just that external inputs are needed to stabilize economic rationality, but rather that the irrational and expansionary aspects of (in particular financial) markets pose a consistent threat to the possibility of order.

The new pluralism thus positions the logic of the social more squarely in opposition to the logic of the economic, and in this way it has remained caught in the very terms of Parsons’ Pact. As a result, entirely contrary to its stated intentions, its conceptual thrust has always been a rather essentializing one. On the one hand, money and finance come to figure as external forces, driven not by substantive ends and values but by a systemic, self-expansionary logic that is not itself explained except negatively (that is, in terms of the irrationality of financial capital’s speculative impulses). On the other hand, the problematic of ordering becomes centrally organized around the possibility of protecting against such external forces of fragmentation, and we find a much stronger emphasis on the autonomy of institutions, that is, the idea that order is an intentional construction fabricated by distinct actors, ideas, and strategies.

Such tendencies are particularly evident in the growing prominence of Polanyi’s work. At its heart is a critique of the notion that markets can be self-regulating; it is centrally concerned with the tendency of markets to become disembedded from their environment, the unsustainable nature of such trends, and the need to re-embed markets by restoring limits and foundations. This reasoning reflects an elastic model of value, which distinguishes between real and fictitious forms of value and sees the tendency of finance to exceed its natural limits as creating a quantitative imbalance that must sooner or later lead to financial collapse. Polanyian scholars would of course readily reject the suggestion that they rely on a foundationalist understanding of value. But it is crucial to appreciate that this defense is typically premised on a reduction of the problem of foundationalism to the problems with Marxist materialism (in particular the labor theory of value)—and it is telling that much Polanyian scholarship begins by outlining its differences from Marxist materialism, as if that were the only form of essentialism to guard against. For all practical intents and purposes, the Polanyian framework is fully organized around the idea that economic life can work only on the basis of external conditions of possibility. At work here is a Kantian leap, which takes the critique of materialist foundationalism and the rediscovery of contingency as the occasion for a leap into an idealist foundationalism (Cooper and Konings 2015). Furthermore, this idealist foundationalism all too readily relapses into a materialist foundationalism of its own; as much as Polanyian thought is predicated on the rejection of Marxist materialism, its assessments of the stability of social life are profoundly shaped by the contrast between speculative finance and the “real economy,” and by an infatuation with the manufacturing economy of the Fordist era. In the meantime, the expansionary tendencies and systemic properties of the financial system are explained entirely in negative terms, as investors’ inability to recognize foundations and limits and to attribute reality to fictions. While market disembedding is said to be unsustainable in the long run, we find no plausible explanation for why it occurs in the first place. Polanyian thought revolves around a systemic, self-referential moment that it is unable to theorize.


1. We might also note here the intellectual trajectory of Wolfgang Streeck, who spent most of his career as a Keynesian-institutionalist political economist but has in recent years emerged as one of the most visible and outspoken left-wing critics of neoliberal capitalism. Radicalized by the failure of elites to respond appropriately to the financial crisis, he draws in his current work (2014) on both Polanyian theory and Frankfurt School theory (which in earlier years he had found too abstract and formalistic to be of much interest to the analysis of real-world capitalism).

2. For authoritative anthologies in the fields of economic sociology and international political economy, see Granovetter and Swedberg (2011); and Blyth (2009).