The Economic Aspect

Defining the Aspect x

Kernel: x

• "Frugality" (Dooyeweerd's rendering)
• "Managing limited resources frugally. Introduces Sustainable prosperity" (Basden's intuitive rendering)
• Resources
• Having regard to limits
• Carefulness

rather than:

• Finance (which is largely quantitative)
• Production, distribution and consumption (which is more to do with formative power
• Supply of wants
• The worth of a thing (which may be largely symbolic)

Some central themes x

• The Greek root word, 'oikonomou', means 'household'. Economics is, from Dooyeweerd's standpoint, management of the 'household', i.e. a set of limited resources within known boundaries. This leads to a number of other themes.
• Scarcity.
• Conservation.
• Environmental action has frugality as one of its central themes, because it is the ultimate: proper management within the limits of the planet.
• Waste-handling. This is 'economic' in the sense that our capacity to handle waste - of whatever kind - is limited.
• Production and consumption, supply and demand, marketing. These are part of the exciting enterprise that is economics; but only part - yet many elevate them to the whole, and harm comes.

• Occam's Razor.

Note: SInce this aspect is post-social, the full development of these themes and kernel issues involves society. There is a personal element (such as an individual's management of resources available to them), but much of this aspect can only be understood in terms of society. For example, exchange implies other people.

Common Misconceptions x

• Modern economics seems to have been reduced to finance. To see the difference, compare "Maximizing profits" with "Keeping within budget". Both are to do with money. But when maximizing profits the emphasis is on a figure - reducing economics to the quantitative aspect.
  • However, "Protecting my budget" by externalising costs, so that the costs are borne by the other person's / department's budget or even by the environment, is NOT good because it goes against the ethical norm of self-giving.
• How much something is worth is not a matter of economics, though scarcity of course does have a part to play in determining worth. e.g. antiques. But worth of a thing is worth of the thing to me, that is the worth I assign to it. Is it symbolic, then? Not primarily, since in assigning worth to a thing we are not primarily (deliberately) communicating. Rather, the worth to me is determined by what I see myself as (Credal, q.v.). The assumption that worth is fundamentally economic (or rather financial, Quantitative), has proved something of a conundrum. The more recent assignment of worth to interpretation is also misleading.
• Economics is sometimes seen as the science of supply and demand, production and consumption. This is a misconception since it contains no concept of responsible frugality. If Dooyeweerd is right in proposing that frugality the kernel of this aspect then such a conception should lead to harm. See below.

The Aspect Itself

Non-Absoluteness x

If, in that country, there is injustice such that the rich will cream off the money that pours in, then the whole economy will falter. If that country is denied proper prices for its exports then it its economy will be increasingly centred on producing drugs etc. Even if we argue that an economy based on drugs, or one that involves only the rich, can be a sound economy, we find that argument is thin. Because it is not sustainable, even if its financial mechanisms seem to be working for a short time. We can see that a sound economy requires at least a sound functioning in the juridical aspect.

We can see that it also requires sound functioning in other aspects. But I have chosen a later aspect here because earlier aspects might be involved merely in a dependency manner whereas non-absoluteness goes beyond this to require all aspects.

It will be noticed that we have taken the conventional view of 'economy', as to do with finance, which, we argue elsewhere, is not the kernel of the economic aspect. This is not invalid in this instance since finance is indeed part of economy and we are not talking about mere quantitative measures like 'maximizing profits' here.

Special Science and Discipline x

• Economics
• Management sciences
• Business science (but this has social overtones)
• Finance (but this has quantitative overtones)
• Accountancy (

Dooyeweerdian Economic Theory

Unfortunately, his theory is more a theory of monetary systems than of economics. It seems fixated on price mechanisms and finance, and not on the wider concerns of the economic aspect, namely careful management of scarce resources. It rests on an assumption that there is no gap between the 'real sphere' of the economy and the 'financial sphere' - but there is a huge gap: only 5% of international transactions are of the 'real' economy of purchasing goods and services. Moreover, his theory assumes the centrality of economic decision-makers and the economic entity, and seems to say little about the societal dimension of economics.

Should not a full Dooyeweerdian economic theory be centred on finance and money so much?

Institutions x

• Various financial institutions
• Perhaps also local authorities' planning departments, which are responsible for land-use planning? Because land is their main (limited) resource for which they are responsible. But maybe they are more qualified by the juridical aspect?

Shalom x

• Wise, frugal use of limited resources can be exciting and fulfilling, and it forms the basis for aesthetics. (But, too often it is constraining and diminishing.) For example, Igor Stravinsky said "The more constraints one imposes, the more one frees one's self of the chains that shackle the spirit ... the arbitrariness of the constraint serves only to obtain precision of execution." [Poetics of Music].

• If the kernel of the economic aspect is frugality rather than maximization or optimization, then protecting from extinction is a major norm. Extinction (e.g. of species) means the utter destruction of what might be seen, from the economic aspect, as a resource, such that it can never be recovered. But, some might ask: what if the species or resource is of no value to us? There are at least three answers to this that are commensurate with Dooyeweerd's thinking:
  • One day it might be of value in ways we cannot now perceive, and maybe to future generations.
  • When thinking of the natural world and species, God, who created it, values it for itself; see Job 39, Hebrews 1:2, the last verse of Jonah, and where Jesus told his disciples that even though sparrows were so cheap in the market, "not one of them falls to the ground without my Father's consent".
  • Each aspect contains echoes of the others. The kernal of the ethical aspect is self-giving. The attitude portrayed by the above statement is the opposite of that, and thus anti-normative. Care for a resource for its own sake, and without reference to our own needs, desires, convenience, is an echo of the ethical aspect.

Harm x

• Grinding poverty. When people do not have reasonable resources - but notice the word 'reasonable', which is juridical in nature, so poverty is partly a juridical evil.
• Waste, squandering. Often comes from the following.
• Over-stimulation of demand and consumption; see below.
• (Harm also comes from reducing economics to finance.)

• Competition. Capitalist thought assumes that competition is a fundamental Good within economics. Competition, it says, is essential for stimulating technical progress and engendering choice because otherwise we get lazy or form cabals. But a Dooyeweerdian understanding of economics would question that. Competition has in practice led to lack of real choice by closing down the smaller and more creative suppliers. Competition has stifled technical progress. The kernel of the economics aspect is frugality, which is very seldom helped by competition over the longer term; indeed in practice it has been seriously hindered by competition. Also, it is a falsity that competition is the sole motivator to technical progress or choice; in life there are several other motivators, such as altruism, vision and even fascination with technical things. Competition in economics is the opposite of the ethical good of self-giving because it is deeply directed by pitting oneself against the other even to the point of killing them off. It would seem that the only aspect where competition is part of the kernel meaning of an aspect is the biotic.

Contributions from the Field x

Ronald Coase

• Why is an activity organized within firms rather than purchased through the market?
• Why is a particular activity organized within a particular firm(s) and not any other?

Part of his answer is that firms are coordinated through authority relations while markets are coordinated through price mechanisms. This speaks of the dependence of the economic on the social aspect.

The Aspect Among Others

Law-dependencies x

• There is a element of creativity here, an element of deliberate planning.
• For true 'economic' activity, we need social interaction and relations. In particular:
  • For markets, we need social interaction
  • For firms, we need social institutions and, as Coase said, firms are coordinated via authority relations.
• It would seem also that it also requires symbolic attribution of value to things.
• Of course, many use numeric mechanisms as the main ways of doing this, but that is a very limited view; the worth of things goes far beyond their numeric value.

Analogies x

• 'Value' is used in computer science to refer to the contents of an attribute. I think this is essentially quantitative in nature, though I use it also for other types of value, including textual, spatial, boolean (true-false), etc.
• Constraints are law-like. They may be seen as echoes of the juridical aspect in the economic.

Antinomies x

Common Reductions x

• Seeing economics are mainly finance reduces it to the quantitative aspect.
• Seeing economics as to do with production and consumption reduces it to the formative aspect, with strong analogical overtones of the biotic. See below.

Notes x

Economics as Supply and Demand

In process economics, the prime goal is flow, so that stimulation of demand is seen as a Good Thing. Whether or not the demand can be met, and whether or not the demand should be met. Thus, in the early days we found economics gurus saying that the prime task was to change wants into needs, and this idea has so completely penetrated the world view of establishment economics that few question it. But it has had several harmful effects:

• It puts pressure on supply, and leads to rapid depletion of resources.
• It leads to higher degrees of waste by products being produced.
• It tends to make people dissatisfied with what they have, and want, then need, more - a multiplying effect on the above harms beyond those of mere economic growth.
• A pistic factor, it also tends, over some years or decades, to instil in people the idea that they are fundamentally consumers, and this then colours all the rest of their functioning.

Another, ironic, aspect of this mis-perception of economics as process of supply and demand is that small firms can go bankrupt even though they are profitable, simply because of cash-flow problems.

Many now believe that harm has come of all this. One result of this is the growing awareness of green (environmental) issues. As mentioned earlier, frugality is central to the green view. (That is, the true green view, not the libertarian version, nor the anti-human version.)

But today's business managers do not see the problem, or at least not so clearly as to do things differently. Fineman (1997) (in "Constructing the green manager", British Journal of Management, v.8, pp.31-38) says:

"Its soul can remain, however, relatively untouched: environmentalism comes and goes according to 'business priorities'. Until there is a substantive change in the meaning of business, such that commercial and social value is inextricably tied to 'common-wealth' .. it is unlikely that managerial greening will progress beyond the formulaic [the mere lip-service to rules of the organisation]."

Note the phrase, "meaning of business". To Dooyeweerd, meaning was the essential element in all things. In other parts of his framework, he says that the human heart is the functioning centre, and that it is this that must be changed, reflecting, in different terminology, what Fineman has said.

References

De la Sienra, AG. (2001) Reformational economic theory. Phil. Ref. 66(1), 70-83.

This is part of The Dooyeweerd Pages, which explain, explore and discuss Dooyeweerd's interesting philosophy. Questions or comments would be welcome.

Copyright (c) 2004 Andrew Basden. But you may use this material subject to conditions.

Number of visitors to these pages: . Written on the Amiga with Protext.

Created: by 19 March 1997. Last updated: 30 August 1998 rearranged and tidied. 21 February 1999 slight change to a link. 7 February 2001 copyright, email. 21 January 2002 non-abs added. 14 March 2002 better kernel. 1 April 2002 occam's rzr. 8 June 2002 Coase. 11 September 2002 constraints as echoing juridical. 14 September 2002 Note after themes about being post-social. 20 December 2002 added about the shalom of the economic aspect i.t.of protection from extinction. 7 November 2003 Stravinsky quote. 12 March 2004 competition as a harm. 24 August 2005 .nav,.end. 4 September 2007 externalising costs anti-ethical. 5 January 2008 poverty. 23 June 2010 eg of masp in bz. 22 September 2010 Dooyeweerd's and Basden's kernel. 8 December 2010 added .html. 4 February 2011 ref, De la Sienra.