The Flaw of Our Economics is Ontological

3 04 2011

All modern theories of economy are based on the idea that the person is completely a self-contained, isolated individual. This concept of the self comes out of the Enlightenment philosophy of the West (esp. Descarte, Hobbes and Locke). It has led to the prominent axioms of our understanding of economy today: individualism, competition, a monoculture globalization.
If you change this self concept, you will change the economy, as Herman Daly succinctly explains in the article clipped here. Rather than identify oneself as an unconnected “atom,” identify oneself as constituted in one’s relationships. Even as a business person, I am who I am in my relations to fellow workers, suppliers, customers, investors, and not only in my non commercial relations such as family, friends, neighbors, etc.
Such an “ontological” distinction (i.e. as to what is this thing called “my self?”) has huge implications for economics. Am I a discrete entity, or more of a localized field of consciousness?
Many people who are familiar with transpersonal psychology are aware of this concept of self. But it has not even begun to percolate in the economics profession. I am an economist who also has been trained in group dream interpretation. In this process, one feels the “social field of the self” very directly. I’m trying to map this into economic theory and action.

Amplify’d from

Homo Economicus Versus Person-in-Community

by Herman Daly

The problem with Homo economicus (the abstract picture of a human being on which economic theory is based) is that she is an atomistic individual connected to other people and things only by external relations. John Cobb and I (For the Common Good) proposed instead the concept of “person-in-community” whose very identity is constituted by internal relations to others in the community. I can only define myself by reference to these relations in community. Who am I? I am son of…, husband of…, father of…, friend of…, citizen of…, member of…, etc. Shorn of all these relations there is not much left of “me”. I am defined by these relations, and therefore they are internal to my identity as a self-conscious, willing being, not just external connections between some abstract, atomistic, independent “me” and other people, places, or things. Similarly, my relation to the environment is not just external, the economist’s term “externalities” notwithstanding. I am literally constituted by what I take in from the environment. My connection to air is not just external, it is an internal relation manifested in my lungs — I am an air-breather, just as I am the brother of…. This is an ontological statement about how the world is, how people are, not a wish about how they should be. The customary vision of Homo economicus is a wish about how people would have to be for neoclassical economics to work! Homo economicus is a misleading picture of people, consequently neoclassical economics is a misleading theory, and policy based on it has been badly misled.



How Much $ from Artificial Scarcity?

2 04 2011

The leading ecological economist, Herman Daly, out of University of Maryland, lays out the basic four types of goods and services. Intuitively we know that a knowledge economy with things like open access software and “free-mium” cloud computing services need not be an expensive world to live in. Given Daly’s taxonomy below, I wonder how much income today is derived through artificial scarcity (the upper right quadrant). And I wonder what the proportions of national or world GDP in all four quadrants will look like 20 years hence.

How Can Economists be so Wrong?

28 03 2011

You would think that economists would be sensitive to the incentives and biases that condition their statements about the world. After all, economics is the “science” of incentives and human motivation. But the financial meltdown of 2008, the past 30 years of bubble-economics and the gutting of the American economy has shown that most professional economists lost their ability to have balanced perspective on the economy.
The problem is the scope of economic science, as defined by the neoclassical agenda. It does not recognize “the observer,” nor interpretation/hermeneutics, nor “depth psychology.” Mainstream economics has the mistaken notion that it is an objective, empirical science. It is not.
Links on disclosure rules and professional ethics for economists:
A psychological profile of Alan Greenspan
See the film INSID

Social Media to Brick&Mortar Billboards

26 03 2011

The website, Epic Step, lets activists collect money to put up billboards about issues they want to educate the public about. That’s a cool idea.

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State Banks: Good for Ordinary Citizens

8 03 2011

This is a good re-cap by attorney and financial writer Ellen Brown in this month’s Yes Magazine about why creating State banks is good economics. Like the Bank of North Dakota, which has been operating successfully for over 90 years, they put banking and investment in the hands of locals and regions. They take away the power of the centralized, Wall Street banks. Our system is even more centralized than before the crash of 2008; there is less democratic control of business because of it; and the national economy is more at risk to another collapse. Support your State’s bank initiative. I am.

It’s inequality stupid!

26 02 2011

Here are ten charts that summarize what’s wrong in America today.

Is there “Wealth Discrimination” like there is Sex Discrimination?

18 02 2011

Why are so many people “pro-capital” and “anti-labor?” It is especially strange when these very same people would be better served to being pro labor and anti capital. The protests in Wisconsin by state employees, who the governor there wants to cut, underscores this widespread American bias.

Marjorie Kelly in her book, The Divine Right of Capital, says this bias is built right into the language of corporate income statements. She notes how wages and salaries are considered “costs” when this is purely an arbitrary bias. Kelly proposes a simple, profound and yet radical change to the “language” of the corporate income statement.

Instead of defining profits as:

Profits = Revenue – Cost,

where Cost = Employee Wages & Salaries + Cost of Materials

Kelly suggests that the identity should read as follows:

Profits + Employee Wages & Salaries = Revenues – Cost of Materials

The thinking here is that a company should divvy up between workers and owners of the company what is left of total sales after the materials of production are paid for.

Kelly makes a good comparison between sex discrimination and wealth discrimination. Wealth discrimination is the prejudice particularly held by Americans in favor of wealth and giving more prestige to wealth than is legitimate as in the financial statements of corporations or in tax codes of governments.

Kelly says:

“We have yet to see that capitalism suffers not from countless social problems but from one problem: the power of wealth. It will benefit us to come to agreement on this, just as feminism benefited from agreement about the power of men. It would not have been enough to see poor funding for girls’ athletics as one problem, unequal wages for women as a separate problem, and harassment in the workplace as still a different problem. These battles became one when their common source in sex discrimination was recognized. Yet today we chase after corporate pollution as one problem, low wages as another problem, and corporate welfare as still a third problem. They’re all manifestations of wealth discrimination – the insistence that more wealth for the wealthy is the single greatest need. When we recognize this core issue, our separate battles will become one. And that battle will gain momentum.”

Kelly goes onto say that as in the case of sex discrimination where it is NOT about vilifying men, in wealth discrimination, it is not about vilifying the wealthy or the desire to be wealthy.

“We fool ourselves if we think we can find the enemy somewhere…The problem is in our internal maps and rethinking these can require some vilification of outmoded views. But we must remember that we’re vilifying the value system of wealth discrimination – not the wealthy themselves.”

“The point is not to do away with wealth but to change the system design that gives illegitimate power to wealth – just as in the fight against sexism, the point was not to do away with men but to change the system that gave illegitimate power to men.”

A conscious economics is being very careful about how we create our world with language (amplifying other thinkers such as Fernando Flores, John Searle and Elinor Ostrom). Language makes all the difference. Kelly emphasizes this point as well.

“The most powerful language a corporation uses is the language of financial statements. Here we find not rhetoric but power that determines income. …We might begin to see corporate activity in a different light with an Employee Income Statement [rather than a shareholder income statement].”