This is one of a number of pages that help us rethink economics, as part of Christian Thinking in Economics.

Multi-aspectual Economics

Treating economic activity as multi-aspectual human functioning offers a different approach, which might address some of the problems of contemporary economic theory and practice. For example, it very naturally incorporates biodiversity and other environmental responsibility into economics without any special tweaking of theory. It can make economics sensitive to ethical and justice issues too.

This page contains examples of how various issues in economics might be seen in a multi-aspectual manner. It is the writings on economics of someone who is not an economist.

CURRENCY

Currency began as economic objects like pieces of silver or gold, or cowrie shells. Here I look at the realities of gold and coins in aspectual terms, identifying the many aspects that are involved. Several benefits arise from such aspectual analysis. (a) We gain a wider perspective, in which the economic aspect is only one among many and depends on the others in order to function properly. (b) We separate out issues clearly so as to understand better. (c) We can see more clearly where things might go wrong, so that we can more precisely target remedial action. (d) We can impart (e.g. teach) better understanding. (e) We can more effectively target economics research, especially on how the economic aspect relates to other aspects.

Coins

Gold has been used as currency for thousands of years. In the early days, several physical things were used as currency - shells, silver, gold, etc. These things were chosen because they were hard to obtain (rare), and probably also because they had some beauty in them. We can immediately see four kinds of aspectual functioning there:

Economic functioning in assigning value to economic objects as currency;
Economic functioning in the limited supply of the objects so used;
lingual functioning in that the objects symbolised economic value (economic is target aspect of the lingual, and sometimes the value was stamped on the coin, such as the electrum coins of 500 BC found in the Ephesus temple of Artemis);
social functioning in that the symbolised value was agreed;
physical functioning in material of the physical objects as being robust and not curruptible;
Possibly aesthetic functioning insofar as beauty was a factor.

As is widely known, because gold had currency value, gold was scraped off the edge of coins and then sold. This involved all the above except the lingual, in that the gold so sold was a mere high-price commodity rather than carrying symbolic value. At the time, the symbolic and commodity values of gold were similar. However, another aspectual functioning came to the fore:

juridical functioning (dysfunctioning) in stealing or cheating;
ethical dysfunctioning, usually, in that this was for one's own advantage regardless of the harm to others.

There was actually juridical functioning in the original use of those objects too, which had been hidden because taken for granted:

juridical functioning in owning or at least having rightful title to the objects for a time.

Two things happened to coins (in different periods). Coins were given knurled edges. Coins had the image of Caesar stamped on them, to show under what authority there were issues.

psychical and analytical functioning of seeing and checking the edges of coins;
lingual functioning with juridical target in stamping authority on them.

Bank Notes and Online Currency

When bank notes were introduced they were originally promises to "pay the bearer on demand the sum of ..." their stated value in gold. This retains the aspectual functioning involved in using coins - social, ethical and pistic functioning - and most of the functions of coinage - economic, lingual, social agreement, juridical authority - but it removes, or at least reduces, the physical functioning of the physical objects being robust and not curruptible.

Bank notes must be robust to last longer, but not in the way that gold or cowrie shells must be. However, another aspect becomes important in the generation of bank notes:

formative aspect of design, to make it hard for the notes to be counterfeited.

It is this that makes them suitable to be used as currency, in its economic functioning in the limited supply of the objects used as currency.

The lingual aspect became proporionally more important than the physical, which opened the door to lingual functioning without direct dependence on the physical, in keeping currency online. When I have 100 UKP today, this is usually in my bank account, not in coins or notes. The aspects in which online currency functions are similar to those above, but slightly different, and with some missing:

Economic functioning in value to amounts recorded in computers;
Economic functioning in the limited supply of these amounts;
lingual functioning in that numbers stored in computers represent amounts of value (wealth) a person 'owns';
social functioning in that the symbolised value was agreed;
juridical functioning of ownership or title;
juridical functioning in the authority of the bank, ultimately backed by the national bank, whose authority derives from the parliament or other ruler.

Use of Currency

That is not all, however, as becomes clear when we look at the use of currency (coins, bank notes). Coins were, and still are, used for exchange, to procure goods (including services). When we give coins or currency for some goods, we can see the following aspects in play:

social functioning in agreeing the value of the good and of the coins;
social functioning in relating to the other person;
ethical functioning in trusting the other person and the value of the coins and currency (trust involves willingness to be taken advantage of rather than self-protection, and, in both economy and society, this is like water for plants);
pistic functioning in believing the value.

The Gold Standard

What gives currency its value? That is a major topic of Mark Carney's 2021 book, Value(s). One attempt that he discusses is the gold standard. He offers the following explanation of why the gold standard worked at first, and why it subsequently failed. In this, we can see the following aspects:


Carney's text	Aspect(s) that make it meaningful
[p.70] There were three factors in particular that reinforced the effectiveness of the system in its early years.
First, the UK's position as the financial and commercial hegemon created large, self-reinforcing synergies.	[Hegemon is largely social aspect with a bit of formative power]
The UK was the main [p.71] exporter of capital goods (that is, machinery),	[Exonomic, kinematic]
it provided much of the financial capital to fund those imports	[Economic with quantitative]
by the emerging economies of the day (from Argentina through to Canada)	[Emerging economies function in the social and economic aspect]
and it bought much of their produce.	[Economic functioning]
In essense, the UK economy and financial system were oriented to recycle gold back into the global economy for productive investment.	[Recycling is economic functgioning; productiveness is economic-formative]
Secondly, with banking systems relatively underdeveloped,	[development here is social-formative functioning]
central banks initially faced relatively few conflicts between the requirements of external and internal stability.	[aesthetic harmony between the two; stability also has an aesthetic aspect.]
Third, the system was backed by a strong consensus of those active in politics.	[Consensus is social functioning; "active in politics" probably refers to not just policy-making, but leading opinion and vision-setting, which is pistic functioning]
The cornerstone of the gold standard was the priority that governments attached to stability and maintaining convertibility.	[Attaching priority to something is a commitment, hence pistic functioning]
Initially, there was no doubt that those countries at the centre of the system would 'do whatever it takes' to keep the system stable (does that sound familiar?).	[Doing "whatever it takes" would initially be willingness to sacrifice, hence of the ethical aspect, but I get a sense here that there is some cynicism about that, so it is probably its negative, i.e. self-interest]
With the right to vote limited and labour poorly organised (recall the class struggle), workers who suffered the most from the measures [that were] needed to defend currencies were poorly positioned to influence those policies.	[juridical aspect of injustice]
As a consequence, central banks could raise interest rates to encourage gold inflows and exert downward pressures on prices and wages that would eventually restore competitiveness and external balance.	[Doing something to achieve a given purpose if functioning in the formative aspect. The purpose itself (the target aspect) is mainly economic, but partly quantitative and a little ethical dysfunction in being selfish.]
It helped that wages and prices were relatively flexible, meaning that the required reductions in domestic spending could be delivered primarily through falls in domestic prices and costs rather than increases in unemployment.	["Could be delivered" is formative functioning, but that is not the main meaningfulness of this sentence. The whole sentence seems to describe a mechanism that is meaningful in the economic aspect.]
Pressures on the system built up because all of these factors changed. ...
[p.72] ... the self-equilibrating nature of the systems became less evident ... more frequent tensions between the requirements of external balance ... and internal balance ...	[aesthetic functioning in balance. Self-equilibrium is economic functioning that antecipates the aesthetic, without being itself aesthetic.]
[p.73] Survival of the system increasingly depended on cooperation rather than on Hume's automatic adjustment mechanisms.	[Cooperation is social functioning. Hume tried to explain adjustment in purely economic terms - though his "invisible hand" might be seen as an allusion to other aspects that make no sense in economic terms.]
A single-minded focus on convertibility to the exclusion of the impacts on the domestic economy, particularly on wages and employment, became increasingly untenable.	[Wages and employment etc. here are juridical issues, or doing injustice. The "single-minded focus ... to exclusion of ..." is pistic commitment, which idolises the economic aspect and completely overlooks the juridical aspect.
[p.73] ... it created a climate in which governments could value currency and exchange rate stability above all else.	[pistic functioning in valuing something "above all else". The "climate" in which this was possible for governments, is a societal pistic structure, namely prevailing beliefs that go unquestioned.]
[p.73] The gold standard would ultimately fail because its values were not consistent with those of society.	[Holding of values is part of pistic functioning: commitment to what is deemed ultimately meaningful and good. "those of society" is the pistic climate. "Consistent with" is aesthetic functioning.]
It prioritised international ... over domestic ... external stability conflicted with domestic financial prudence ... burden falling ever more heavily on employment.	[These indicate the aspectual targets of the pistic prioritisation. Stability is aesthetic. Prudence is economic and inappropriate burden is juridical. Those two aspects were overlooked.
The system finally broke down with the First World War.	[It often takes a disaster to bring about a change in pistic functioning, especially where idolisation of one aspect and overlooking of others, has been involved. Mere reason or incentives seldom impact pistic functioning.]
[p.76] This in turn requires public understanding, which is built through transparency with accountability, and it requires consent which is grounded in solidarity, including a fair sharing of the burdens of adjustments.	[Public understanding is lingual and pistic (belief). Transparency is lingual functioning. Accountability and fair sharing are juridical functioning. Consent and solidarity are social functionings.]
[p.76] The history of the gold standard teaches that the values underpinning the value of money extend well beyond trust to include transparency, accountability, solidarity and reslience. [Carney's summary-conclusion of the chapter]	[Multiple aspects here. Trust is ethical with pistic. Transparency is lingual. Accountability is juridical. Solidarity is social. Resilience is formative (with physical analogy).

Conclusion on Currency

We can see how our economic activity of various kinds (our functioning in the economic aspect), is intimately interwoven with functioning in other aspects. The usefulness of such an analysis is first to clarify and separate out issues, so that they don't become confused or unhelpfully tied to others. Having done that, we might then begin to understand more clearly the roots of problems.

The gold standard has been used as an example. Mark Carney argues that what gave money is value when based on the gold standard was the same as what gives its value today - the same issues of trust, confidence and consent - which we view as ethical, pistic and social aspects.

With the gold standard, we have come to the borderline between the traditional divide of micro from macro economics - the economics of individuals, households and firms, from the economics of nations. Dooyeweerd's aspects can help there too.

NATIONAL FINANCES

In CHapter 4, Mark Carney discusses the reasons why Magna Carta came about, especially those related to the economy of the day. Apparently, there had been high inflation (est. 20% per annum) [p.81], and the imposition by King John of taxes and new regimes. When the King lost his control of lands in Normandy, he had to return to live in England, and the Barons "did not much like the closer observation of their activities the eyeing of their stockpiles of silver that this proximity entailed" [p.79]. This led to the King being forced to agree the now-famous Magna Carta.

Carney discusses the economic aspect of this process (while acknowledging other aspects) and it is instructive to see how many other aspects he mentions as relating to, and leading to, the economic functioning. He mentions five different things (of which he enumerates only the first three explicitly), and we can see various aspects in play at each:

"First, the king's need to pay for military protection for the Normandy estates created what modern-day macroeconomists would think of as an enormous structural deficit" made worse by "vain attempts to reconquer Normandy" [p79-80]. Here we see pistic dysfunction of hubris as the root cause, both in the arrogance of wanting to rule somewhere, and in the attitude of revenge. In revenge we can detect some juridical reason, but ethical dysfunction of putting self first.
"Second, the monarchical finances had taken a colossal hit" [p.80] when needing to pay a huge ransom for Richard, caught in Germany when returning from the Crusades, on top of having had to pay for the (Crusade) campaign to recover Jerusalem. Here we can detect similar pistic dysfunction, not only of hubris (wanting territory taken), but also in the wrong-headed theology that misdirected commitments to land rather than to Christ.
"Third, the need to raise additional cash for the public finances was made much more problematic by the strain of inflation" [p.80]. This is indeed an economic functioning. Arguably, inflation is economic dysfunction in that face value (which is an economic instrument of resource-management) no longer represented real value - but that is something to discuss.
The fourth links to that. "The preferred way of hedging the risk was to kick the leaseholders off the land and bring it into direct demesne management. This is what the barons themselves had been doing with their own land-holdings. By bringing it into demesne control, instead of receiving a fixed nominal rent, the lord of the manor could take receipt of the real output of the land, which could be consumed, traded or sold for silver at the going spot price. The consequence was that the richer the baron, the more land he had to exploit, and the greater his potential profits. // The effect was to create a massively wealthy elite, now breaking free of the middling ranks of the gentry at one end and of the hard-pressed king (or public sector) at the other." [p.80-1] Here we see ethical dysfunction of self-interest, leading to juridical dysfunction of "abuses of authority" and this led to the inflation.
Fifth, Carney remarks [p.81] "one wonders why it was so problematic for the rents simply to be 'renegotiated' periodically. In part, custom dictated that this was not the done thing." That problem lay in the sheriffs. Here we see socia functioning of custom and the 'done thing'. Whereas Dooyeweerd himself maybe sees that is valid social functioning (his example is lifting one's hat), I wonder whether being constrained by the 'done thing' in allowing social relaations from developing in the way they should, is a social dysfunction.

These aspectual dysfunctions impacted the economic aspect of the nation's life ("the economy"). There will have been other aspects, which Mark Carney's telling of the economic aspect of the Magna Carta story has not revealed. Notice how, even though this is to do with national economics, it is individuals functioning in these aspects, especially the three later aspects of pistic, ethical and juridical, that constitutes macro economic activity. It is not some non-human 'brain' in the nation as such.

Moreover, it is largely dysfunctions in these three later aspects that affected not only the economy but also other areas of life that instigated Magna Carta, such as social relationships and relative status (king v barons), and the harmony (aesthetic aspect) between king, barons, sheriffs and the people.

Conclusion

This example shows that it is the very same aspects that affect the micro-level as the macro-level of the economy, though perhaps with more emphasis on the later aspects in the macro. If this is so (and good research has yet to be carried out), then Dooyeweerd's aspects are likely to offer a basis on which to understand micro and macro economics together. It is likely that the pistic, ethical and juridical aspects will especially evident in macro economics.

First created 13 July 2021 with gold standard. Last updated: 14 July 2021 currency, coinage, bank notes. 16 July 2021 Macro economic and Magna Carta; made aspects bold.