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Eclecticism in Economic Theory is Just another Name for State Intervention: The Case of Virgil Madgearu

Eclecticism in Economic Theory is Just another Name for State Intervention: The Case of Virgil Madgearu

Romanian economic historiography on Virgil N. Madgearu (1887-1940), economist and ideologue of the National Peasants’ Party, lacks of a coherent perspective on the ideas and theories underlying the great historical scene, despite its insights and factual information.

The present study pays tribute to a classical liberal interpretation of economic history and economic ideas. It reconstructs the portrait of Madgearu, under the banner of “what would a classical liberal economist would have to say about him?” Was he closer to a laissez-faire approach, as understood by the French and British schools of thought, or to various other schools who support state intervention? 

Agriculture vs. capitalism 

There are three major ideas that shaped the personality and convictions of Madgearu: historicism, “poporanism” (a sort of populism, with the same root Latin word) and Marxism. We argue that historicism, German-blend (second generation), was the catalyst for Madgearu’s conviction for creating an autonomous, schismatic, agricultural pseudo-science. Agriculture production, according to Madgearu, is fundamentally opposed to capitalist production, as agricultural production is governed by other laws than those of general economic theory (productivity, wages, profit etc.). As economist Costin Murgescu shows, Madgearu was convinced that he „would create a ‘special scientific system of national-economy with the purpose of studying a non-wage national economy’”. This new, special type of science would drive what was known in public policy as peasantism. Peasantism is based not only on economic theories, but also on social and philosophical theories. Basically, peasantism is the most pragmatic form of populism (poporanism). Based on the Rrussian narodnicism (from the Russian word for “people”), populist philosophy advances a romantic perspective on the peasants and the village, as the place of virtues (“kultur”) in opposition with the city, the place of passions and decadence (“zivilization”). 

From populism to statism 

In practical terms, populism leads to state intervention to preserve customs and traditions against the tide of industrialization and capitalism, which supposedly leads to the extinction of these. Protection of the small producer against foreign competition thus becomes an imperative. From a political point of view, the peasantist state will guarantee that the voice of the peasant class is heard. The values of the peasants and independent farmers will be given a political shape. Madgearu believed in this type of state and societal organization, although, ironically, he was not descended from a peasant family. Gheorghe Zane described the peasantist state as “a new type of state” which is supposed to be in between capitalism and communism. But, as the paper shows, the economics of peasantism or of the peasantist state does not present any novelty. It is the same “middle of the road policy” which Ludwig von Mises warned since 1929 had a propensity towards socialism. Ironically, the interwar period – the age of peasantist experiments – was immediately followed by the almost fifty years of soviet-style socialist economy and modes of organization. 

Few residuals of Marxism 

Coming back to the question of Madgearu’s Marxist legacy, it is interesting to observe his friendly, uncritical attitude towards a few Marxist ideas. First is the class struggle theory, necessarily implied in the peasantist doctrine, where the peasants, as a class, must be protected against the bourgeoisie and the capitalists. Madgearu even tried to save Marxian interpretation of the class struggle, pointing that the struggle should not be necessarily a violent one. Second is the “inherent conflict” between capital and labor, on which Madgearu argues that “nobody questions the State’s right to regulate it”; the labor theory of value, as a complementary problem, is also present in his thought in statements such as “the capitalist class accumulates wealth by the surplus value of labor”.

Concluding, perhaps the most important thing that a review of Madgearu’s economic thought should achieve is to underline the implications of Madgearu’s eclectic (relativist?) theoretical views in economics, where we could agree with Mises that “he who undertakes to recommend a third social order of regulated private property must flatly deny the possibility of scientific knowledge in the field of economics”. 

Acknowledgments: The present synthesis is a preview of an in-progress study which will be published by the New Europe College (NEC). The author – former fellow of the institute – would like to thank the institute, its staff and fellows for making possible an intellectual playfield where the ideas of this study could be spread and receive very useful comments and criticism.

 

References:

Madgearu, Virgil, “Doctrina Țărănistă”, 1923 în Doctrinele Partidelor Politice, Editura Garamond, 1996

Madgearu, Virgil, Ocrotirea muncitorilor în România, Institutul de Editură și Arte Grafice “Flacăra”, București, 1915a

Mises, Ludwig von, A Critique of Interventionism, Ludwig von Mises Institute, Auburn, Alabama, 2011 (first published in 1929 as s Kritik des Interventionismus)

Murgescu, Costin, Mersul ideilor economice la români, Editura Enciclopedică, București, 1987

Ornea, Zigu, Poporanismul, Editura Minerva, București, 1972

Scurtu, Ioan, Istoria Partidului Național Țărănesc, Editura Enciclopedică, București, 1994

 
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OEconomica No. 1, 2016