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The Economic Aspect
The Economic Aspect
- "Frugality" (Dooyeweerd's rendering)
- "Managing limited resources frugally. Introduces Sustainable
Š 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)
- 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
Šdevelopment of these themes and kernel issues involves society. There is a
Špersonal element (such as an individual's management of resources available
Što them), but much of this aspect can only be understood in terms of
Šsociety. For example, exchange implies other people.
- Modern economics seems to have been reduced to finance. To see
Šthe difference, compare "Maximizing profits" with "Keeping within
Šbudget". Both are to do with money. But when maximizing profits the
Šemphasis is on a figure - reducing economics to the quantitative aspect.
- However, "Protecting my budget" by externalising costs, so that
Šthe costs are borne by the other person's / department's budget or even by
Šthe 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
Šscarcity of course does have a part to play in determining worth.
Še.g. antiques. But worth of a thing is worth of the thing to me,
Šthat is the worth I assign to it. Is it symbolic, then? Not
Šprimarily, since in assigning worth to a thing we are not primarily
Š(deliberately) communicating. Rather, the worth to me is determined
Šby what I see myself as (Credal, q.v.). The assumption that worth is
Šfundamentally economic (or rather financial, Quantitative), has
Šproved something of a conundrum. The more recent assignment of worth
Što 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.
<õa href= "#dls2001"õ>De la Sienra [2001] discusses the modal laws of the
Šeconomic aspect in detail to present a <õa href= "#ret"õ>reformational
Šeconomic theory. In <õa href= "#dls1998"õ>[1998] he discusses how
ŠDooyeweerd fulfils the requirements of a neoclassical economic theory, but
Šof a widened version, contesting Goudzwaard's rejection of NET.
We can perhaps see that the economic aspect cannot be absolute, but
Šrequires the proper functioning in later aspects if its own functioning is
Što operate correctly, if we consider the case of rebuilding the economy of
Ša devastated country.
If, in that country, there is injustice such that the rich will cream off
Šthe money that pours in, then the whole economy will falter. If that
Šcountry is denied proper prices for its exports then it its economy will be
Šincreasingly centred on producing drugs etc. Even if we argue that an
Šeconomy based on drugs, or one that involves only the rich, can be a sound
Šeconomy, we find that argument is thin. Because it is not sustainable,
Ševen if its financial mechanisms seem to be working for a short time. We
Šcan see that a sound economy requires at least a sound functioning in the
Šjuridical aspect.
We can see that it also requires sound functioning in other aspects. But I
Šhave chosen a later aspect here because earlier aspects might be involved
Šmerely in a dependency manner whereas
Šnon-absoluteness goes beyond this to require all aspects.
It will be noticed that we have taken the conventional view of 'economy',
Šas to do with finance, which, we argue elsewhere, is not the kernel of the
Šeconomic aspect. This is not invalid in this instance since finance is
Šindeed part of economy and we are not talking about mere quantitative
Šmeasures like 'maximizing profits' here.
- Economics
- Management sciences
- Business science (but this has <õa href="social.html"õ>social
Š overtones)
- Finance (but this has <õa href="quantitative.html"õ>quantitative
Š overtones)
- Accountancy (
ÉDooyeweerdian Economic Theory¿
<õa href= "#dls2001"õ>De la Sienra [2001] discusses the modal laws of the
Šeconomic aspect in detail to present a reformational economic theory. He
Šmakes some useful suggestions about how the financial system should be
Šstructured.
Unfortunately, his theory is more a theory of monetary systems than
Šof economics. It seems fixated on price mechanisms and finance, and not on
Šthe wider concerns of the economic aspect, namely careful management of
Šscarce resources. It rests on an assumption that there is no gap between
Šthe 'real sphere' of the economy and the 'financial sphere' - but there is
Ša huge gap: only 5% of international transactions are of the 'real' economy
Šof purchasing goods and services. Moreover, his theory assumes the
Šcentrality of economic decision-makers and the economic entity, and seems
Što say little about the societal dimension of economics.
Should not a full Dooyeweerdian economic theory be centred on finance
Šand money so much?
- 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?
- 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
ŠStravinsky said "The more constraints one imposes, the more one frees one's
Šself of the chains that shackle the spirit ... the arbitrariness of the
Šconstraint serves only to obtain precision of execution." [éPoetics of
ŠMusicé].
- If the kernel of the economic aspect is frugality rather than
Šmaximization or optimization, then protecting from extinction is a major
Šnorm. Extinction (e.g. of species) means the utter destruction of what
Šmight be seen, from the economic aspect, as a resource, such that it can
Šnever be recovered. But, some might ask: what if the species or resource
Šis of no value to us? There are at least three answers to this that are
Šcommensurate with Dooyeweerd's thinking:
- One day it might be of value in ways we cannot now perceive, and maybe
Što future generations.
- When thinking of the natural world and species, God, who created it,
Švalues it for itself; see Job 39, Hebrews 1:2, the last verse of Jonah, and
Šwhere Jesus told his disciples that even though sparrows were so cheap in
Šthe market, "not one of them falls to the ground without my Father's
Šconsent".
- Each aspect contains echoes of the others. The kernal of the ethical aspect is self-giving. The attitude portrayed
Šby the above statement is the opposite of that, and thus anti-normative.
ŠCare for a resource for its own sake, and without reference to our own
Šneeds, desires, convenience, is an echo of the ethical aspect.
- Grinding poverty. When people do not have reasonable resources - but
Šnotice the word 'reasonable', which is <õa href=
Š"juridical.html"õ>juridical in nature, so poverty is partly a juridical
Ševil.
- 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
Šfundamental Good within economics. Competition, it says, is essential for
Šstimulating technical progress and engendering choice because otherwise we
Šget lazy or form cabals. But a Dooyeweerdian understanding of economics
Šwould question that. Competition has in practice led to lack of real
Šchoice by closing down the smaller and more creative suppliers.
ŠCompetition has stifled technical progress. The kernel of the economics
Šaspect is frugality, which is very seldom helped by competition over the
Šlonger term; indeed in practice it has been seriously hindered by
Šcompetition. Also, it is a falsity that competition is the sole motivator
Što technical progress or choice; in life there are several other
Šmotivators, such as altruism, vision and even fascination with technical
Šthings. Competition in economics is the opposite of the ethical good of self-giving because it is deeply
Šdirected by pitting oneself against the other even to the point of killing
Šthem off. It would seem that the only aspect where competition is part of
Šthe kernel meaning of an aspect is the biotic.
Ronald Coase, in éThe Nature of the Firmé (1937), tried to explain why
Šeconomic activity was organized within firms (as opposed, for example, to
Šbeing all in a single huge market). His views are now again attracting
Šinterest (e.g. Madhok A, 2002, Strategic Management Journal, â23â) and
Šare centred on the notion of limited resources (usually expressed by
Šmoney). In this way, his approach is commensurable with Dooyeweerd's view
Šthat the kernel is frugality of limited resources, and he is, as Dooyeweerd
Šhoped, trying to delineate the kernel of economics from within. Coase's
Šview is contained in two questions:
- Why is an activity organized within firms rather than purchased
Šthrough the market?
- Why is a particular activity organized within a particular firm(s) and
Šnot any other?
Part of his answer is that firms are coordinated through authority
Šrelations while markets are coordinated through price mechanisms. This
Šspeaks of the dependence of the economic on the
Šsocial aspect.
ÇThe Aspect Among Others¿
You are in business. If you set your prices lower, you not only compete,
Šbut you do something else too: you set a precedent that affects people's
Šexpectations. They begin to believe, even if only slightly, that lower
Šprices is something that 'should' occur. This is <õa
Šhref="pistic.html"õ>pistic mode of functioning. Even if you don't set
Šthat precedent, there is a <õa href="social.html"õ>social aspect here, in
Šthat you hope that not just a few people individually will buy your
Šproduct, but that customers will move as a group towards your product.
ŠThere is a <õa href="juridical.html"õ>juridical aspect, in that if the
Šprice reduction should never be at the cost of someone else's basic needs.
ŠThis is just one wee example of how all our economic functioning involves
Ševery other aspects, and in different ways. Read on ...
- There is a element of creativity here,
an element of deliberate planning.
- For true 'economic' activity, we need social
Šinteraction 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.
- '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.
(See above).
- 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.
Some see economics as supply and demand, production and consumption,
stimulation of markets, etc. - as process economics.
Does harm come of this, and why?
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.
An example is fish (U.K. BBC Radio 4, 19.20 pm). Fish stocks
are severely depleted, yet fish
consumption worldwide is growing around 5% p.a. Why growing?
Because we (in the West) are encouraged to buy and eat ever more
fish-related products - fish fingers, fish and chips, cat food,
and whatever. Marketing and advertising is a major player in this.
And marketing is based on the process view of economics, rather
than the frugality view.
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
ŠManagement, 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.
ÇReferences¿
De la Sienra, AG. (1998) The modal laws of economics. Phil. Ref.
Š63(2), 182-205.
De la Sienra, AG. (2001) Reformational economic theory. Phil. Ref.
Š66(1), 70-83.
Back to Index of Aspects.
This is part of The Dooyeweerd Pages, which
Šexplain, 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
Šconditions.
Number of visitors to these pages: ![Counter](Š"http://www.personal.u)
. Written on the Amiga with Protext.
Created: by 19 March 1997.
Last updated: 30 August 1998 rearranged and tidied. 21 February 1999
Šslight change to a link. 7 February 2001 copyright, email. 21 January 2002
Šnon-abs added. 14 March 2002 better kernel. 1 April 2002 occam's rzr. 8
ŠJune 2002 Coase. 11 September 2002 constraints as echoing juridical. 14
ŠSeptember 2002 Note after themes about being post-social. 20 December 2002
Šadded about the shalom of the economic aspect i.t.of protection from
Šextinction. 7 November 2003 Stravinsky quote. 12 March 2004 competition as
Ša harm. 24 August 2005 .nav,.end. 4 September 2007 externalising costs
Šanti-ethical. 5 January 2008 poverty. 23 June 2010 eg of masp in bz. 22
ŠSeptember 2010 Dooyeweerd's and Basden's kernel. 8 December 2010 added
Š.html. 4 February 2011 ref, De la Sienra.