The Invisible Hand of Power

An Economic Theory of Gate Keeping

Anton N Oleinik

• Publisher: Routledge
• Year: 2015
• Print ISBN: 9780367669096
• eBook ISBN: 9781317317289
• Edition: 1
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

This is an innovative study of the techniques of domination, based on financial markets, judicial systems, academia and international relations, across North America and post-Soviet Russia. Ultimately, Oleinik seeks to provide an alternative to mainstream economic analyses of power.

1 VISIBLE AND INVISIBLE HANDS OF POWER: THEORETICAL PRELIMINARIES

Power is one of those things without which our lives would be unthinkable. Power in its various forms structures our interactions with children at home, students or instructors in classrooms, superiors and subordinates at work, and public servants in government offices. It would be difficult to find any social relationship that is absolutely free of power. Finding situations in which power turns out to be irrelevant involves thinking counterfactually, i.e. pretending that things are different from the way we know they are. It is no coincidence that counterfactual thinking represents an important analytical tool used by scholars studying power.¹

Despite its importance and omnipresence, our knowledge about power is limited, especially when comparing it with progress in generating knowledge about the other determinants of human behaviour. Scientists have managed to decode the complete DNA sequence of a single human being, but they still know little about the mechanics of power and its possible forms. The list of the possible explanations for this relative ignorance includes the contested character of the concept of power and the lack of commonly accepted taxonomies.

Scholars studying power acknowledge the ‘essentially contested’ character of this concept.² This means that many alternative definitions of power coexist and no theoretical criterion is available for settling disputes as to how to define this phenomenon. In this book, I use a definition of power inspired by Max Weber. He connects power to one’s capacity to carry out one’s will: ‘“power” is the probability that one actor within a social relationship will be in a position to carry out his own will despite resistance, regardless of the basis on which this probability rests’.³ I define power as one’s capacity to achieve one’s preferable outcomes regardless of the circumstances, however unfavourable they may be. The eventual material obstacles and resistance on the part of the other people involved do not prevent the power holder from getting what she⁴ wants. In more general terms, power refers to one’s capacity to go one’s own way all the time, to have the upper hand in all relationships, including those with the material environment.

As in the case of the plurality of definitions, taxonomies of power also abound. There is no universally acceptable one, no analogue to the periodic table of the chemical elements in the studies of power, however. As a result, the existing taxonomies serve to address specific issues without covering all possible forms of power.⁵ If disagreements as to how power should be defined undermine building a general theory, the multiplicity of the taxonomies of power complicates empirical studies. Randall Collins shows that the focus on empirical discovery represents a necessary component in the progress of scientific knowledge.⁶ The empirical data on power tend to be scarce. Furthermore, these data refer to discrepant elements that do not form a coherent picture. We know something about some elements of power, but little about power as a whole.

For instance, scholars have collected a significant amount of empirical data on a particular dimension of power, power distance, in various managerial cultures. Power distance refers to ‘the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally’.⁷ This information does not shed light on power outside of the context of corporate governance, however.⁸ Power distance varies across countries, but it also supposedly varies according to the level at which an activity takes place: macro (government), meso (organization) or micro (family). Harry Eckstein developed a theory in this regard, namely the congruency theory: ‘governments will be unstable … if the governmental authority pattern is isolated … from those of other social segments’.⁹ This theory remains largely unverified due to the scarcity of relevant empirical data at the macro and especially micro levels.¹⁰

This book is intended to be a small building block in our fragmented knowledge about power. More specifically, it contributes to unveiling invisible forms of power and discusses the situations in which power takes the least obvious forms. The metaphor of power as an upper, guiding hand can be made more nuanced. The guiding hand either helps individuals to better achieve their private and public interests or, on the contrary, undermines their chances of doing so. The former hand is benevolent; the latter hand is unkind and antagonistic. If individuals are aware of the guidance, they see the hand and understand its effects on their behaviour. They may also be ignorant of the existence of the guiding hand because of its invisible character.

Adam Smith’s famous arguments on the benefits of the self-interested behaviour illustrate the idea of a benevolent invisible hand:¹¹

As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.

In this passage Smith speaks of a particular type of power, the power embedded in the perfectly competitive market. This power is diffused among the parties in market transactions instead of being concentrated in the hands of a single individual, which also explains its low visibility. Nevertheless, the invisible hand of the market involves exercising power because its existence enables the parties in market transactions to better realize their private and public interests. Smith thus argues that this power has a benevolent, helping nature.

Mancur Olson further develops this line of reasoning and claims that the power embedded in monopolistic structures, namely the power of an autocratic government, leads to similar outcomes. His argument refers to the beneficial effects of encompassing interests. When the autocrat’s private interest tends to be broad and encompassing, it essentially coincides with social interest. Olson counterintuitively argues that the autocrat, an apparently powerful individual, is nevertheless subject to an invisible form of power that guides her actions in a benevolent manner:¹²

There is a shift from destructive to constructive use of power — as when Hobbes’s ‘war of all against all’ is replaced by order provided by an autocratic government — is due to another invisible hand. This invisible hand — shall we call it the invisible hand on the left ? — that guides encompassing interests to use the power, at least to some degree, in accord with the social interest, even with serving the public good, was not part of the intention. This second invisible hand is as unfamiliar and perhaps counterintuitive as the first hidden hand was in Adam Smith’s time, but that does not mean it is less important.

This book’s intended contribution to the existing body of knowledge on power refers to its specific focus on the invisible hand, or rather hands, of power. Such emphasis has several rationales. The approach developed in this monograph serves to unveil the presence of power in situations in which an untrained eye does not normally see it. The thesis on the omnipresence and universality of power appears to be confirmed as a result.

The monograph can be read not only out of pure academic interest, however. The knowledge of invisible aspects in the operation of power enables the individual, who is subject to it, to better resist. Smith and Olson discuss benevolent invisible hands. Resistance appears to be superficial in these circumstances. When the individual is subject to antagonistic forms of power, she has the interest and right to resist. ‘The word “dissidence” is exactly suited for these forms of resistance that concern, set their sights on, and have as their objective and adversary power that assumes the task of conducting men in their life and daily existence’.¹³ This book places primary emphasis on antagonistic invisible hands — on the exercise of power in an invisible and adversarial manner.

This first chapter serves as a general introduction to the book. It has four sections. Section 1 provides an overview of various forms of power. Particular attention is devoted to domination as the exercise of power in an adversarial manner. Section 2 differentiates the structural and strategic components of power. The theories of power embedded in structures developed by Karl Marx and Michel Foucault serve as two major reference points. In contrast to Smith’s and Olson’s beliefs in the benevolence of the invisible hands of the market, Marx and Foucault consider the antagonistic invisible hands embedded in economic structures. The concept of a repertoire of techniques for imposing will is introduced in Section 3. Some of them take visible forms; the application of the others usually goes unnoticed. Section 4 contains brief descriptions of the remaining book chapters. It highlights a connecting link between them, a particular invisible technique for imposing will embedded in market structures, namely domination by virtue of a constellation of interests in the market.

1. Power as a Coordination Device and its Forms

The definition of power as one’s capacity to achieve one’s preferable outcomes regardless of the circumstances does not differentiate between two kinds of obstacles that may eventually complicate the realization of the individual’s interests. The skills and know-how necessary to overcome material obstacles differ from the skills required for solving problems in human interactions. Let us compare two situations with a similar outcome, namely, my failure to find some highly specific information on the internet. In the first case, I lack the technical expertise necessary to perform sophisticated searches. In order to solve the problem, I need to learn how to narrow down the search terms. In the second case, I have this expertise, but some agent, a government official, restricts my access to the internet. The required solution is different in this case: I need to get the restrictions removed either by taking legal action against the government official or by voting for someone else at the next elections.

Scholars studying power introduce a distinction between ‘power to’ and ‘power over’ that helps one to better understand the particularities of the two sets of skills.

Explanation in terms of ‘power to’ concentrates on an actor’s ability to achieve a desired result, whereas explanation in terms of ‘power over’ emphasizes an actor’s ability to achieve a submission (compliance) of another actor which, in turn, can bring the desired result.¹⁴

Returning to the example of the internet search, the government official’s restrictions invalidate my power to perform sophisticated searches. Thus, in order to find the information that I am looking for (i.e. to achieve my preferable outcome), I must reassert my power over the government official, thereby making her respect freedom of access to the internet. It follows that ‘power to’ refers to technical skills whereas ‘power over’ involves social skills.

‘Power over’ always exists in the context of social interactions: at least two parties must be involved. ‘Power to’ may or may not have a social dimension. The former happens if the agent gets someone else to produce a desired outcome for her. For instance, if I cannot express myself in Chinese, I can hire a translator to get the job done.

The social dimension of power suggests that power tends to be ubiquitous everywhere there is a need for coordinating individual actions.¹⁵ Power represents a solution to coordination problems.¹⁶ When individual actors disagree as to how to act together, one party may eventually assume power by taking the initiative and guiding the others. Mann speaks of ‘compulsory cooperation’ in this regard.¹⁷ The benevolent guiding hand of power enhances agents’ capacity ‘to act in concert’,¹⁸ to use an apt expression from Hannah Arendt.

By placing emphasis on ‘power to’. one highlights the positive effects of power, the benevolent character of the guiding hand. The concept of ‘power to’ directs our attention to what is achieved, to the manner in which power extends the scope of the possible in human action. Emphasis on ‘power over’, on the other hand, involves mostly negative connotations. Se...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Dedication
• Acknowledgements
• List of Figures and Tables
• 1 Visible and Invisible Hands of Power: Theoretical Preliminaries
• 2 Domination by Virtue of a Constellation of Interests: Benefits of Gate Keeping
• 3 The 2008 Financial Crisis through the Lens of Power Relationships
• 4 Welcome to Russia: Benefits of Obedience
• 5 Access to Justice: The Rule of Lawyers
• 6 An Invisible Dimension of the Visible Hand: Entry Control in Internal Labour Markets
• 7 Quality Control as a Weapon: Gate Keeping in Peer Review
• Works Cited
• Notes
• Index