The Uses and Abuses of the Household Analogy

One of the most common ideological tropes employed by ‘austerians’ to rationalize the unprecedented defunding of the public sector in order to socialize the recent failures of finance capital has been to equate the state to a household. Like any common household, the argument goes, the state must live within its means. No household can sustain itself by spending more than it earns in revenues; the same, we are told, holds for the state. There is, of course, a kernel of truth to this claim. It is one, however, that ignores the fact that household debt in the Anglo-American world has been increasing at unsustainable levels since the early 1980s – the same period that saw the beginning of the long decline of wages amongst male workers. In the UK, for example, private sector debt tripled relative to GDP between 1987 and 2008 (so much for the inherent efficiency of the private sector). During the same period, household debt rose from 57% to 109% of GDP, comprising one quarter of all debt in the country. In Canada, household debt rose from 66% of after tax household income in 1980 to 150% in 2011. Given the stark reality of household indebtedness it is no wonder that British Prime Minister David Cameron caved in to pressure from retailers and backtracked from urging Britons to pay down their credit card debt. The frugality so lauded by austerians would have had disastrous consquences for economic growth.

This is not a post that seeks to debunk the neo-liberal argument that the state is analogous to a common household. I’ll leave that to the political economists. This post merely seeks to briefly look at the historical evolution of the state-household relationship in Western political thought. As most students of political thought know, the word ‘economy’ derives from the Greek word oikos, meaning household. However, most political philosophers, political theorists and economists have argued that the state is in fact not like a household at all. The first one to make this argument was, of course, Aristotle. In the Politics, Aristotle differentiated between the polis (or state) and the oikos on the basis of the different kinds of human association that constitute those spheres of life. The polis was the realm of politics, in which citizens took turns ruling and being ruled in turn. This necessitated a degree of equality that form the basis of the political relationship. The oikos, in contrast, was constituted by non-political forms of human association:  there was the patriarchal relationship between husband and wife; the paternalistic relationship between father and son; and the despotic relationship between master and slave. Each of these relationships was characterised by a fundamental inequality favouring the adult male head of the household.While many commentators have argued that Aristotle is the first to differentiate between the ‘public’ and the ‘private’ sphere, he does so in a way that represents an inversion of our modern understanding of this relationship:  it is in the public sphere of the state where freedom and equality resides, while the private sphere of the oikos or oikonomia is comprised of relationships of inequality, patriarchy, servitude and domination.

The argument that the state was analogous to a household was articualted most forcefully by the proponents of Royal ‘absolutism’. Theorists like Jean Bodin in sixteenth century France and Robert Filmer in seventheenth century England argued that the ‘commonwealth’ was the patrimony of the absolute ruler. As part of his patrimony, the property of his subjects comprised part of his ‘household’. The ‘economy’, in the sense of the property owned by subjects, was subsumed to the  larger patrimony of the absolute ruler. In this way, the economy was considered to be the household of the ruler writ large.

Theorists like John Locke and Jean-Jacques Rousseau attacked the patrimonial aspects of royal absolutism. In the First Treatise of Government – the one that we don’t make students read – John Locke demolishes Filmer’s absurd argument that the property of all the subjects in the realm form part of the royal household because the king has been granted dominium over all of the earth as a result of being descended from the long line of eldest sons of Adam. In his Treatise on Political Economy, Rousseau distinguishes between ‘political economy’, that is, the form of public government, and ‘domestic’ or ‘private’ economy, refering to the ‘government’ of the household. While Rousseau is willing, like Aristotle, to grant patriarchal and paternal dominium within the household (while significantly denying the legitimacy of the despotic form of rule of the slave by the master) he denies such patrominial dominium in the ‘political economy’. Citing Filmer by name, Rousseau states that ‘the family and the state have nothing in common but their cheifs’ obligation to make each happy,’ and that ‘the same rules of conduct could not apply to both.’

Now, Locke and Rousseau had historically specific targets in mind:  the threat of royal absolutism against private property. Similarly, Aristotle rejected ‘oriental despotism’ in favour of aristocratic self-government. But even more modern theorists have rejected – in different ways – the household analogy. None other than Hayek himself rejected the term ‘economy’ because to him it implied an organization that is oriented around the pursuit of a particular or unitary ‘end’. In Aristotle’s terms, the household served the end of the happiness and self-sufficiency of the family.  Hayek doesn’t like this; he wants a term referring to ‘economic’ activity that emphasizes merely the means involved. A market order cannot work on the basis of the houehold analogy; for it to do so would necessitate some form of planning in order to achieve the ‘unitary end’. As a substitute for ‘economy’, Hayek chooses the Greek term ‘catallaxy’, a term meaning both ‘to exchange’ and ‘to admit to the community’.  In this way, ‘catallaxy’ represents the ‘spontaneous order’ of the exchange between a multitude of individual ‘economies’.

The flippant way in which austerians employ the household analogy to justify austerity and subsume the state to economic forces not only flies in the face of the empirical realities facing households in the economy today, it neglects the conceptual history of the relationship between the economy and the household that complicates their ‘common sense’ narrative.


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