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Summary: Economics does not reflect enough on its place among other spheres of life. We discuss the meaning and mandate of economics, its interwovenness with other spheres, and a mindset of isolation that should be embeddedness among them.
Has economics has become rather isolated? We are not talking about what are called isolated economies, in which an economy has few links with other economies, but about the very field or sphere of life that is economics. Economics as a whole has too few, and sometimes no, links with other fields or spheres of life. Karl Polanyi [1944,2001] argued that though economics is in fact embedded within society, it has become "dis-embedded" such that it dominates all other societal spheres. Among some who use economics, such as politicians and pundits, economics is often unduly elevated in importance and even idolized. Among some economists, including academics, there is often arrogance and/or reductionism. Especially in affluent cultures, we have mindset that tends to over-elevate economics.
This is unhealthy for both the world and economics itself. It infiltrates both theory and practice of economics. Instead, we suggest, economics should embrace other spheres, be interwoven with them, integrated with them; we need a change of mindset to see and act on this.
This chapter discusses the meaning, mandate and mindset of economics. Meaning: Why should humanity bother with economics? Mandate: What should economics aim to achieve that cannot be achieved by other spheres of life? Mindset: What types of unbalanced beliefs, aspirations and expectations do we hold about economics, especially in relation to other spheres, and what attitude should we take? Before addressing those three, let us focus on economics as a field of study and practice, as a sphere of human life, and how others have seen it.
Summary: What is economics rather than e.g. social science/practice, technology or policy? What Good can it bring? What is wrong and right in how we treat it? These are questions about meaning, mandate and mindset.
See the Note on use of word "economics" for what we mean by economics as a science, practice, field, discipline or sphere.
Summary: Conventional definiitions of economic are insufficient; what insight may we glean from them? We propose another.
"Economics is the study of the economy" [Goodwin 2023] is not very useful: what is "the economy"? It is, she says, "a system of social organization" - but so are government or church. She then identifies four "principal types of economic activity ... production, distribution .. consumption ... maintaining resources" - better, but what are these? We need something more precise.
Here are four main definitions of the field of economics, which express different overarching perspectives:
Though there may be other definitions, we will discuss these as exemplars of how we proceed.
That these definitions are all by reflective thinkers immersed in the field and yet aware of other spheres of life, implies that they deserve to be taken seriously. Interestingly, money and economic growth feature in none of these.
Even so, there are problems and flaws in them. Most who practise or reflect on economics, including recent authors, take definitions like these as their starting point. This Rethink starts elsewhere.
Take Robbins' definition, for example, which is probably the most often-quoted one these days. It has several flaws [https://www.toppr.com/ask/question/discuss-prof-robbins-definition-of-economics-and-what-are-its-drawbacks/]:
Not all of these are solved by Samuelson's composite definition, which can itself exhibit some of these flaws.
Marshall's "means to ends" and relating economics to "the ordinary business of life" is helpful, insofar as it overcomes the isolation of economics, discussed later. But Marshall does not discuss which ends are valid. Some ends bring harm, such as climate change, biodiversity loss, obesity and addiction.
Such flaws arise not from theory or rationality within the field but at a deeper level. As Thomas Kuhn and others have pointed out, theory is developed according to what Kuhn [1970] called a paradigm. Though Kuhn used the word too loosely [===], most of his use may be summed up by saying a paradigm consists of what we (theorists, practitioners) deem meaningful in relation to the field [Basden & Joneidy 2019].
At a deeper level, and arguably at the root of the flaws (we do not argue that here) lie a number of questions about meaningfulness of the concepts that are important to economics, which inhabit the definitions, including Samuelson's. What is wealth, and why is it so important? What is scarcity? What are goods and services, and on what grounds may we judge them, and how they are produced? On what basis should we distribute them? What are society's real needs, and are there some 'needs' that should not be tolerated? Without answering those questions, we have no basis within economics for caring for the planet and the ecosphere, and perhaps not even to overcome poverty, overwork, or any of the other problems caused by economic activity. Since it is such problems that recent thinkers call for economics to embrace or recognise, we need a way to answer them.
The question, "What is economics all about?" concerns the place in the world that economics occupies, both its theory and its practice, the contribution that it does and it could make, as a science, a discipline and a day-to-day activity, especially in the form of that entity we call The Economy. It is about what the field of economics presupposes as meaningful and important in both practice and theory, and thus what makes each of its above components meaningful. [Note: Meaning]
Summary: Most discussions of economics implicitly presuppose some kind of Multi-aspectual Overall Good aim for economics. We make this explicit.
Most of the definitions of economics presuppose some notion of the Good. For example, Marshall speaks of "ends" towards which economics is a means, but he gives us no basis on which to determine which ends are to be served. As discussed in Chapter 3, many such notions are either vague or over-specific, so this Rethink introduces the idea of Multi-aspectual Overall Good.
This is a state in which all of reality is working well together, in all possible aspects, both human and non-human alike, and includes not just the goods and services that economic activity can provide but something much wider and richer: the entire Creation is Good (readers who dislike God-talk may replace "Creation" by "Reality"). Multi-aspectual Good is multi-aspectual, and a result of and aim of good functioning in all aspects. Keep this in mind throughout the following discussion. It is the constitution of Multi-aspectual Good that gives economics its meaningfulness and the aim of contribution to Multi-aspectual Good that gives economics its mandate. The mindset of and within economics is to what extent it seeks to do that and is self-aware of it.
Summary: Economics: so what? The meaning of economics is given by the economic aspect of reality closely linked with all other aspects, omitting none. With the help of Dooyeweerd, but going further, e discuss what unique, kernel meaning the economic aspect offers.
"Now, of my threescore years and ten,
twenty will not come again.
And take from seventy springs a score,
It only leaves me fifty more.
And since to look at things in bloom
Fifty springs are little room,
About the woodlands I will go
To see the cherry hung with snow."
[A Shropshire Lad, A.E. Housman]
What does economics mean - not only as a word but as a phenomenon and reality in life? Why is it important? What would we (and all Creation) miss if economics was not possible, nor we could live economically? To gain a clear grasp of the meaning of economics sets all our other discussions on a foundation. It has usually been presupposed, seldom questioned, seldom discussed, and often mistaken.
The meaning of economics does not lie only in 'the economy', but far beyond it; in fact, the economy itself has no meaning except in fulfilment of the meaning of economics. Something of the meaning of economics may be felt in the above stanza. We chose this verse because it very clearly expresses economic awareness in everyday experience - both the limits of the resources of years of his life and that Good which involves the exquisite aesthetic pleasure of seeing the flowering into life of a British Spring which this resource allows. Also, because it is independent of money and payment, it lets us stand back from some conventional presuppositions that have shaped economics. It is beyond these, deeper than these.
Is it not curious that what producers generate is called "goods" and "services"? Both are resource but they gain their value and meaningfulness from the ethical aspect, of self-giving love. While the juridical aspect may be a zero-sum activity of retribution, the ethical aspect enables us to forgive and repay good for evil, bringing what might be called "extra Good" into the world. The entire idea of Multi-aspectual Good comes from this and recognition that there are many kinds, and it can provide the mandate of economics, as we discuss below. Keep this in mind as you read the subsections following.
Goodwin [2023] is one of few that attempts to discuss this question ("What is (or should be) the purpose of an economy?") - and laudably recognises the normative as well descriptive nature of that question.
Summary: The meaning of economics as such is is what the economic aspect makes meaningful without reference to other aspects. Kernel meaning includes Good, norms, operations and links with other meanings.
When we ask "What is the meaning of economics (or anything else)?" we are asking what it contributes to the whole that other spheres do not. We are asking what the kernel meaning of the economic aspect is.
Kernel meanings cannot be reduced to meaningfulness of other aspects, cannot be expressed in them. So they are difficult to define, and any understanding of them is ultimately intuitive rather than theoretical or definable. When Milton Friedman said
"The purpose of business is business"
he was perhaps exhibiting this fundamental inability to express a kernel in terms of others. (Business is the social institution most tied up with economics.)
In fact, if we take his statement on its own, he was wrong and we are wrong, because, to Dooyeweerd, no aspect kernel is on its own; each relates to all the others, and 'serves' all the others. So Milton's statement would have been better worded as
"The purpose of business is business that brings Good in all other aspects."
What about the two other oft-cited opinions on the purpose of business,
"to increase owner value" and
"to make and keep customers"?
These do slightly bring in other aspects (slightly juridical in "owner", social in "customer") but fail for two reasons. They recognise only one other aspect, and only slightly, rather than all and fully, and they are driven by self-interest, which is the dysfunctional opposite of service ("brings Good in all other ..."). A society in which these three are seen as the primary meaning of business will eventually fail, as well as do considerable harm.
When we ask what an aspectual kernel meaning is, we are asking about four things,
Aquinas and Adam Smith concentrated on operations (production, exchange, distribution and consumption), as has most of economics since then. Dooyeweerd concentrates on the norm (frugality). Few have discussed explicitly the unique Good that the economic aspect makes possible, though most allude to it and presuppose various kinds of Good. And few discuss interaction with other aspects.
We discuss all, starting with a review of the definitions above. Do not expect a precise definition of the meaning of economics; Dooyeweerd warned us that meaningfulness cannot be fully grasped by theoretical or analytical thought, but we can gain some inkling of it; Dooyeweerd himself would involve everyday experience, reflections and philosophical tests together in his discussion of the kernels of aspects.
Summary: Extant definitions and other ideas about economics include a tangle of meanings that need to be separated out.
In the four definitions above, we find the following concepts: nation, wealth, goods & services, export & import, consumption, production, means & ends, availability, needs & requirements, people, satisfaction, human behaviour, end-means relationships, alternative or substitute uses, scarcity, employing resources, distribution and society. Elsewhere we find concepts like value, exchange, money, currency, etc.
Such elements are all meaningful in the economic aspect of course, but they cannot tell us the unique meaning of this aspect even it we 'triangulate' them, because they bring in meaningfulness from other aspects.
("Economic only" assumes the discussion that follows, and the concept does not seem meaningful in any other aspects.) We need to separate out what is uniquely economic in these.
To do this we turn to philosophy that enables us to see economics in its wider meaning-context. Unfortunately many philosophers seem to presuppose the economic aspect rather than explore it; for example Giddens, in his Structuration Theory, includes the formative, lingual, social, juridical, ethical and pistic aspects but presupposes the economic [Note: Structuration Theory].
Aquinas did discuss economics, drawing on Aristotle and Augustine, identifying four main elements of its operation: production, exchange, distribution and consumption, and also some norms for each, such as justice in exchange. But not only does this bring in norms meaningful in other aspects, but it limits economic activity to the market and prevents us ("by definition") from considering environmental issues, unpaid activity and the economic feeling of Housmann's poem. It offers little idea of what unique Good the economic aspect can offer, and only implicitly discusses links with other aspects, such as justice (juridical aspect).
We may seek to understand the unique meaningfulness of economics by positing that there is an economic aspect of reality that is distinct from the others, and examining Dooyeweerd's discussion of this aspect.
Summary: Dooyeweerd argued that the kernel norm of the economic aspect is frugality, but did not discuss the Good this can bring.
Dooyeweerd's main discussion of the economic aspect is led by the question "What does it mean to be economical?" which is a question about the kernel norm of the economic aspect rather than its kernel meaning. In everyday life, to be economical means to be frugal. This is what Dooyeweerd argues:
"Another example of the analogical modal use of a scientific term is supplied by the word 'economy'. Its foundational (non-analogical) scientific meaning is the sparing or frugal mode of administering scarce goods, implying an alternative choice of their destination with regard to the satisfaction of different human needs. The adjectives 'sparing' and 'frugal' do not have the limited sense of the economical term 'saving' (said of money for instance). They are only the correlatives of 'scarce' and refer to our awareness that an excessive or wasteful satisfaction of a particular need at the expense of other more urgent needs is uneconomical1."Economy demands the balancing of needs according to a plan, and the distribution of the scarce means at our disposal according to such a plan. In this fundamental sense the term is used in the science of economics, in which the word economy requires no further modal qualification." [NC, II, 66]
(Some RLDG participants felt the core should be efficiency rather than frugality. However, Dooyeweerd explicitly argues against this a page later [p.67], that efficiency is of the formative aspect because it is governed by the laws of that aspect rather than the economic. [Note: Frugality])
Notice that in this passage, his purpose was not to offer a comprehensive definition, but seems merely to illustrate the process of discussing kernel norms. So we can expect it to be incomplete.
One incompleteness is that the above passage is only about the kernel norm of the economic aspect, namely frugality, not answering the question, "Why is frugality Good? Why is frugality important? What Good does the economic aspect contribute to Creation?"
Part of the answer comes from experience, that when we act with frugality, things go well in the long run; when we do not, what seems like prosperity is transitory and shallow, and also damaging, detracting from rather than contributing to, Multi-aspectual Good. This is seen in the following examples.
Example: When the Spanish discovered an abundance of silver in South America, they thought it would bring prosperity, but the opposite occurred, both in South America, where the indigenous population were enslaved to work the silver mines and in Europe, where the abundance of silver wrecked the economy. What this reveals is something of the aspects of mindset and attitude, discussed below.
Example: When the North Sea was opened up for oil exploration, most was divided between Norway and the UK. Whereas the UK maximized its extraction rate in order to spend it on various projects, Norway treated it frugally, and built up an enormous Sovereign Wealth Fund, which now puts Norway in a much better situation than the UK is, including in economics.
However, we want to go deeper. Dooyeweerd seems to have accepted Robbins' definition of economics without question and without justification, without input from other thinkers in the field as cited earlier. As discussed earlier, Robbins' view is flawed and must be considered incomplete. Sadly, some thinkers [e.g. de la Sienra [===]] use the Robbins part of Dooyeweerd's statement almost as 'holy writ' to mount a defence of neo-classical economics, especially against other Dooyeweerdian thinkers who take a wider view [e.g. Goudzwaard ===]. We take a wider view, though not necessarily that of Goudzwaard. We accept Dooyeweerd's discussion (and even Robbins' definition) as far as it goes but will add more, especially by considering what unique kind of Good the economic aspect makes possible.
Summary: The Good that the economic aspect enables is argued to be sustainability, a notion that is future-oriented and respects the object and its limits.
What Good does the economic aspect enable, which other aspects do not? What is it that the norm of frugality aims to achieve and which obeying it should achieve (if indeed frugality is a valid norm)?
Maybe because of accepting Robbins' view, Dooyeweerd seems to restrict the norm of frugality to being necessary because of scarcity. This implies that the Good that the economic aspect offers is to overcome scarcity. Is that restriction is both necessary and wise? It may be unnecessary because frugality is good even during plenty, for resources that do not seem scarce. Frugality is a good "habit of the heart" to develop, in its guise as self-control, as long as it does not become infected with meanness. (x Christians will know it as part of the fruit of the Holy Spirit.) One reason why people save is to help them maintain some frugality, by removing the temptation to spend on non-essentials. [Note: Saving and Frugality]
To restrict the goodness of frugality to scarcity may be unwise because what seems unlimited at one time proves later to be scarce or limited. For example, earlier generations presumed the Earth on which we live is effectively unlimited in its capacity to offer materials and to absorb pollution, but now we find this is not so. Would it have been wiser for previous generations to have been more sparing in their treatment of it? The presupposition of plenty that they held to is proving very hard to undo.
The definitions earlier speak of satisfying needs; this is what they implicitly presuppose as the Good that economics can bring. There are two problems with those ideas of Good. One is that it is meagre, and does not allow for what most economics has been about since World War II, something above needs. Adam Smith, in the first sentence of his Wealth of Nations, is a little wiser, in allowing for "conveniences of life" as well as the "necessariers". The idea of prosperity also goes beyond both, but it opens the gate to harmful excess and superfluity that destroys people and planet, and which Smith disdains as "trinkets and baubles", (as we will discuss in Chapter 7).
All three fail for another reason: they are all multi-aspectual. Needs, conveniences and prosperity gain their meaning, not primarily from the economic aspect as such but only by reference to other aspects: biotic, psychological and social needs, formative and aesthetic conveniences, and so on.
If we try to limit these to the economic aspect, prosperity is in danger of being reduced to hoards of money, even though the hoarder is miserable, ill and lacks meaning in life: is that what we really want to call "prosperity"? What we usually mean by "prosperity" is a combination of the Good offered by every aspect - which may be synonymous with wellbeing, flourishing, Shalom, Salaam, etc. (c.f. the section on Multi-aspectual Good).
What enables needs to be satisfied or prosperity to increase is resource, and much of 'the economy' is dedicated to producing and consuming resource (goods, services). At first sight, that also helps us little because resource is likewise multi-aspectual. Indeed, resource, as something that we use to function, is little different from (prior) objects of our functioning: food in biotic functioning, components in formative functioning, springs in Housmann's aesthetic functioning. The following table lists some example things as understood from their qualifying aspect and as resource.
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However, when seen through the lens of the economic aspect, each is treated as resource. The health or otherwise of food is irrelevant, as is the aesthetic enjoyment of springs. Resource implies some limits on these objects, and that each has some value. This gives some dignity to objects. Because of their value, they must be respected. They have value.
To economics, the value is related to limits, the more limited, the more valuable economically, and thus the more careful or frugal the economic aspect tells us to be. The objects are not there just to be squandered; respect for them takes the form of frugality.
However, their value, in other aspects, is not so rigidly related to limits; the biotic value of food is to keep an organism alive whether the food is plentiful or scarce. The aesthetic value of Housman's springs is their beauty and freshness and excitement, whether there are 70 or 7 left to him. However, his awareness of limited numbers still available might make him more careful to ensure that he enjoys them and does not take them for granted, thus there is some frugality norm there. The aesthetic aspect depends foundationally on the economic (it is post-economic) and thus frugality is incorporated into it in some way that is not true of the biotic aspect (which is pre-economic).
Understanding this can help identifying the kernel meaning of the economic aspect more precisely.
It may be (and this is a philosophical point that Dooyeweerd does not seem to discuss) that the economic aspect is the first aspect that gives consideration to objects as something to respect and not just use in subject-functioning.
Nearly all objects are limited in their availability and if we are not frugal (sparing, careful) in our use of them, they might become non-available, so the Good that comes from functioning with them is prevented. Even renewable resources might become non-available because time is required for them to renew. But if we are frugal they are available for longer. "Economic" therefore seems to combine the idea of object with the norm of ensuring its continued availability. This can be expressed in the word "sustainability".
Sustainability is a future-oriented concept. This might make the economic aspect more future-oriented than other aspects seem to be. For example our functioning in the formative aspect, of achieving ends, is quite ready to sacrifice the future in order to fulfil its norm (c.f. short-term, goal-driven decisions in both business and government). The very idea of Multi-aspectual Good implies some future Good to which we must reference all our activity. (x Responsibility for the future is strong in Christian and Jewish perspectives.) (That they do not adequately refer to the future is another limitation of the definitions above and also Dooyeweerd's treatment of the economic aspect.)
So we take the meaning-kernel of the economic aspect to include:
This gives a reason why the kernel norm of the economic aspect is frugality, as a responsibility for the future. Since the future is unknown, frugality is a virtue that should be exercised even during apparent plenty. Following this can then lead to prosperity that is sustainable, and available to all, in a way that wastefulness does not.
Take Adam Smith's example of the baker selling bread (to a customer). Not only do they exchange value (bread for something, e.g. money), but, in doing so, each takes account of how much they already have (limits), what Good it will do (value) and how long their stocks will last (sustainability). Thus a truer picture of the apparently simple economic operation involves these components of the kernel meaning of the economic aspect.
The idea of sustainability and frugality challenges both capitalist and socialist economics, because both seem to lack an intrinsic respect for the future (though they might bolt it on), and both emphasise the subject (businesses, governments, owners, workers) rather than the objects. Might his be why many recent thinkers, especially in environmental economics, believe they do not really fit along the capitalist-socialist spectrum? Dooyeweerd used the metaphor of reality "avenging itself" on our stubborn stupidness [Note: Reality's Revenge]. Might these environmental movements be seen as something more fundamental than merely subjective human responses to undesirable contexts, as the economic aspect's concern for the future reasserting itself? Might it be the economic aspect itself that is now calling us back to our responsibility for the future and for the objects (resources) that we have presumed we can squander? Might it be calling us back to ideas of thankfulness and care rather than self-interest and greed?
We can now see several flaws in Adam Smith's view of economics. Norman [2018, 186] sees Smith's genius "to have set out the field of political economy with markets at its centre". This omits frugality, respect for the objects that are being exchanged, and sustainability, and makes the mechanism by which these norms are supposed to be achieved the very norm itself.
Summary: The full meaning of economics involves the meaningfulness of all other aspects, in three ways.
There is more in economic transaction even beyond that fuller understanding: other aspects. Marshall saw economics as a means to ends, not an end in itself. Why does the customer buy the bread from that baker? It might be because of things like its fragrance, texture, nutritional value, whether the children will eat that bread, and so on. These are reasons not meaningful in the economic aspect, but in other aspects. Even the money given in exchange is not as neutral as supposed: "I'd rather have Fred's money than Joe's" indicates perhaps a difference in trustworthiness. Again, an aspect other than the economic plays its part. We have crossed a line, from what Dooyeweerd called the closed view of the aspect to an opened view, in which it is recognised that other aspects contribute to the meaningfulness of economics.
Early thinkers - (was it Keynes?) - short-sightedly supposed that, once everyone had 'enough', economic growth would no longer be needed and the economy would become stable, and were surprised when it did not happen. Why did they believe that? Because they developed their theory solely through the lens of the economic aspect, ignoring other aspects? Why did the economy continue to grow in affluent cultures? Subsequent thinkers [refs ===] suggest that people are "addicted to growth", which is usually viewed through the lens of the psychical aspect. Maybe we can provide more insight by taking all aspects into account.
Philosophically, nothing can have meaning in itself. Meaning always refers beyond; that is the very nature of meaning [NC,I, 4]. So the kernel meaning of the economic aspect inherently involves and links with the kernel meanings of other aspects, and we need to take account of those for a full understanding and wise practice. Even uniquely economic notions like frugality, limits, sustainability involve other aspects. They do so in three ways:
All three are part of the meaningfulness of economics, and it is because of these inter-aspect relationships that the elements in the earlier definitions are still relevant even though they are meaningful in other aspects.
Inter-aspect dependency includes the motivation for undertaking economic activity. In suggesting that the motivation for selling and buying bread must be "self-love" rather than benevolence, Adam Smith seemed to be bringing in another aspect, the ethical aspect, though in dysfunctional form. Does the meaningfulness of economics necessarily include ethical dysfunction? No! Either Smith was wrong or, as we discuss in §6-4. Some Comments on Adam Smith, it may be that Smith meant something else by this.
The second, and sometimes the first, are often referred to as externalities, which are effects that cannot be explained by concepts meaningful in the economic aspect alone but occur because of other aspects [Note: Extenalities]. For example, the idea of "imperfect competition" involves externalities that make competition depart from what pure economic theory would predict. Ignoring externalities exerts pressure in the wrong direction, allowing, excusing and encouraging harmful activities that, by rights, should be discouraged. The idea of externalities is welcome in that it does actually acknowledge other aspects, but it does so anonymously and amorphously, and usually expressed in terms meaningful in the economic aspect such as costs. We go one step further, with the ability to differentiate kinds of externalities and study and talk about them. See §5-5.1 Valuing Externalities.
Example: The theory that there will always be a liquid market is expressed in purely economic terms, but it has failed so often (the Great Depression, the 1987 collapse, the 2008 collapse, etc.). What causes failure of such theory is our functioning in other aspects, especially the pistic and ethical aspects (see Mindset and Attitude below). Economists might explain the failure in terms of the mechanics of economics, such as hedging and computer trading, but why these occur requires explanation from other aspects, such as dysfunction in the ethical and pistic aspects: greed, self-interest, idolatry and reliance on false assumptions, etc., which require the broader view of economic activity.
The following table gives examples of things meaningful to economics of each type in each aspect.
It may be noticed that the dependency on later and earlier aspects differs; this is discussed in §6-2.3 Inter-aspect Dependencies in Economic Activity.
So economics should see itself, and should be seen, not as isolated from other spheres but as embedded among them, interwoven or integrated with them, in both theory of practice. Otherwise, theory and practice will impoverish the full meaningfulness of economics. Incorporating other aspects into our theory and practice gives richer understanding and perhaps more useful predictions and plans. The large language models of artificial intelligence might provide a starting point.
(Adam Smith took for granted that economics is interwoven with other aspects and spheres of life [Norman 2018, 173], even though in his Wealth of Nations he unfortunately withheld discussion of this, setting the course for the isolation of economics.)
Meaningfulness gives economics a mandate, something to aim towards, something that it should achieve within reality as a whole. We discuss this next.
Summary: What should economics aim to do in the world? Seldom is its mandate discussed. The mandate for economics is to help humanity carefully (frugally) manage what it deems resources, so that, as we employ those resources we contribute towards Multi-aspectual Good.
What should economics do? In which direction should it go? How should it be judged? Those are questions about the mandate for or of economics.
Summary: Mandates point to the future, are normative, and apply to both theory and practice.
Mandates are rooted in, and presuppose, meaningfulness, but meaningfulness implies Good, which implies normativity, which is what the word "mandate" connotes: an ought in addition to the being of economics. The being of economics emerges directly from its meaningfulness in all aspects led by the economic and may be described and explained. The mandate, the ought of economics arises from the fundamental laws of each aspect, their innate basic norms, their idea of Good versus Evil or Harm. It goes beyond mere description and explanation to allow guidance and evaluation.
A more normative approach is increasingly being called for, such as in the Economics of Purpose [===], in Mueller [===], and possibly in Mazzucato's [===] Mission Economy, and is implied by most others, in that they address something they see as problematic, and it is the normativity that makes something problematic. Mueller especially reached back beyond Adam Smith for Aquinas' ideas of love of neighbour in economics. And even Smith himself had written about morals. Arguably, ought is already known at least intuitively in practice because normativity is inherent in all practice.
Mandates point towards the future: how we should open up possibilities. So mandate implies responsibility for our actions that will generate that future, and accountability when looking back to the past.
Mandate is very much to do with our functioning in the pistic aspect or mindset, as thinkers and practitioners in economics, and it is primarily in this aspect in which religion, ideology and worldview function. Most include the idea of mandate or 'ought' by reference to the authority of what is considered Divine (in Clouser's [2005] sense). In Christianity and perhaps Judaism, the mandate for economics is tied closely to the nature and structure of Creation, and the possibilities this opens up, and for which humans have responsibility. Those in other religions, ideologies and worldviews still might have different grounds for the mandate they presuppose, even that of economics for economics' sake (the isolated, self-serving view). (As mentioned in Chapter 3, we make no apology for bringing this into our theories because it was Michael Faraday's Christian beliefs that opened his mind to the possibility of magnetism as a force acting at a distance, and more than Christians benefit from magnetism. In this case, the Christan faith of most members of RLDG opens up for exploration and scrutiny the very idea of mandate for economics.
Mandates pervade all we do. The mandate applies to both practice and theory of economics, in which the theory expresses our best understanding of how economics operates to make such a contribution in practice. [Note: Understanding] The mandate both guides economics practice and theory and provides a basic foundation for evaluating both. In the practice of economics, the rules which we follow should point and channel us always towards contributing to, and never reducing, Multi-aspectual Good, and this seeming restriction actually stimulates new ideas for practice (as many restrictions do). All theory-making (academic research) has the responsibility of constructing theories that include reference to Multi-aspectual Good, and not just the narrow interests of economics itself. Theory is important in practice because the shape and content of theories steers practice towards either Good or Harm; therefore all theories should express the mandate. In both theory and practice, following a mandate is useful in opening up fresh avenues of doing, thinking and research because the mandate motivates us to look for them and humans are excellent at finding them (innovation).
Summary: The mandate for economics is to help humanity frugally (carefully) manage what it deems resources that are employed to better contribute towards Multi-aspectual Good, without harm or waste.
To speak of a mandate for economics is unusual, and a google search "What is the mandate of economics?" yields very little. "What is the aim of economics" yields more. To [Samuelson & Nordhaus 1998], the theoretical aim may be "to improve the living conditions of people in their everyday lives," which seems not unlike our idea of Multi-aspectual Good, in actual practice and actual theory, this is soon lost in a jungle of mathematics, money, competition, jobs and finance, because "living conditions" is defined in solely economic terms. The US Federal Reserve has a "dual mandate" of "maximum employment, stable prices and moderate long-term interest rates" but multiple mandates often conflict and so much attention is given to balancing them that other important issues are ignored. Among many who use economics, such as politicians and governments, the undeclared mandate of economics is often to keep growing the economy. The mandate, or main purpose, of business is variously said to be to "increase owner value" or "to make and keep a customer." In most of these, the mandate is limited to "people", and excludes planet or ecosphere (or, religious people might add, God).
Instead, we start from the stance that economics should contribute to Multi-aspectual Good and not Harm, which includes more than people but all Creation (and especially, these days, the environment and climate). That is a general mandate for all spheres of life; the mandate for economics is the specific kind of contribution it can make in conjunction with all others. This derives from the meaningfulness of economics which, as discussed above, is centred on the economic aspect but embraces all others. The mandate for economics therefore involves the normativity of all aspects led by the economic and, therefore, the mandate is to help humanity frugally (carefully) manage what it deems resources that are employed to better contribute towards Multi-aspectual Good, without harm or waste.
(Note the echo of the ethical aspect in "carefully". Note also that minerals, plants, manufactured products, ideas or even human beings can be deemed resources, the problem with the latter lying not in the economic aspect but in the juridical, ethical and pistic, how such 'human resources' are treated.)
All aspects or spheres of life make different contributions to Multi-aspectual Good and, by and large, the contribution of one cannot be made by others, so, if the contribution of any aspect is missing, then Multi-aspectual Good is depleted. If we do not act frugally, much is wasted, especially in business, and opportunities are lost.
The other aspects are important in the mandate for economics in two ways. The first is the reference to multi-aspectual Multi-aspectual Good, which is found in all the sub-mandates of various entities listed below. This points outward from economics, in its responsibility to help all other spheres of life better contribute to the kind of Good they can achieve. The principles and theories, by which we judge each entity should include the impact of economic activity on all these aspects. For example, banks should be judged not only on their financial soundness but also on how they help their customers (and others) to use money wisely and for Good, not Harm; see below.
The second points inward to the aspects of the 'mechanics' of each. For example, for the working of money, the social aspect (agreeing) is impoortant, along with just exchange (juridical), signifying a value (lingual), and harmonising of different kinds of value (the aesthetic aspect), in addition to the economic aspect (resources). Each type of economic entity, such as set out below, will find the other aspects relevant in different ways.
We do find echoes of our view of the mandate of economics in both the classic authors and among recent thinkers. For example, Adam Smith's Wealth of Nations, is redolent with normative force, in words and passages like "abundance or scantiness", "miserably poor", "reduced, to the necessity sometimes of directly destroying, and sometimes of abandoning their infants, their old people, and those afflicted with lingering diseases, to perish with hunger, or to be devoured by wild beasts", and so on. He assumes that economics should be guided by such norms and presupposes intuitive agreement on this among his readers. Though not using the word "mandate", he assumes a mandate for economics, which is expressed in the first sentence as supplying "all the necessaries and conveniences of life". As we do, he links the mandate to life, not just money or productivity. His "supplies ... all the necessaries and conveniences of life" is a limited form of our "help humanity frugally (carefully) manage what it deems resources, so that we employ those resources to contribute towards Multi-aspectual Good, without harm or waste." Ours goes beyond supply and beyond the 'necessities' of humans. Most recent economics literature is likewise redolent with implied normativity, as in the assumed norm in Doughnut Economics that the Economy should keep above the social floor and below the ecological ceiling, and occasionally explicit, as in Carney's discussion of Value(s)). Doughnut's Multi-aspectual Good involves the social and ecological; Carney's involves various kinds of value.
Though we find normativity in most such discussionss, the mandate proposed here contrasts with most others, in that it is geared explicitly towards Multi-aspectual Good, not just implicitly, and the idea of Multi-aspectual Good pervades all our discussions here.
Summary: What is the mandate of national economies, economics science, money, banks, etc.?
Within the mandate for economics as a whole, are more specific mandates for various economic actors or activities:, which may be approximately as follows:
Since the household is led by a different aspect, and has a mandate in that aspect, we specify the economic mandate; with the others this is assumed. We may notice that several aspects are important in many of those above such as the social, lingual and juridical for the working of money, as above (see also Chapter 8's more complete discussion of the aspects of money).
Economics science, though explanatory, should always keep Multi-aspectual Good in mind, in all its diversity and coherence. Since most current economics theory does not, it should be redesigned or even replaced. The following chapters suggest ways to achieve this.
Summary: Economic growth is not bad in itself but has become an evil because of selfish attitude and idolatrous mindset. In place of discussing questions of whether economic growth is good o bad, or how much growth to allow, we suggest several principles by which we may understand it.
By many, especially those who use economics, the mandate for economics is presupposed to be economic growth. This is false and harmful, and, as Chapter 2 shows, many are the critics of economic of the idea and the practice of growth, especially among those with environmental concern. But in politics, business and media, both left-wing and right-wing, socialist and capitalist, economic growth is presupposed by many as absolutely necessary and even a dominant aim. Why is that? How do we resolve this without taking sides (indeed should we take sides)?
Though economic growth is a discourse that fills whole books, such as Raworth's Doughnut Economics, in this Rethink it is only one topic among many and hence is discussed only in this section. Why so? We agree that economic growth is deeply problematic in affluent economies, especially when measured by GDP, and a major reason for our environmental crises and other kinds of harm, but we believe the idea of economic growth holds some valid insight that should be taken seriously, and that the root of the problems lie elsewhere (which is also a root of many other problems too). Unless we truly understand aright, the problems caused by growth will not be solved, and those economies that should grow might be prevented from doing so.
Summary: Many criticise economic growth, most presuppose it as good; we allow both views.
Many have discussed the immense harm we see from (adherence to) economic growth, harm to the physical and ecological environment (climate change, biodiversity loss, pollution), to the health and mental health of the population, to relationships, to justice (especially for the rest of the world), to the mindset-attitudes taken by people, and to the very meaningfulness of life [=== refs needed?], some of which are discussed in Chapter 2. Much recent thinking has been motivated by one or other of these harms, seeking to overcome them. Some argue that economic activity itself suffers harm, especially in the longer term, from adherence to economic growth by the affluent.
Goudzwaard's idea of Economy of Enough, or Blossoming Economy likens the economy to a tree, which should grow until it is mature but then it should stop growing and become fruitful. So does Raowrth's Doughnut Economics, in allowing a region between two limits in which economies can grow. The problems it identifies are planetary limits, and wrong ways of thinking inherited from the past. We allow other kinds of root problems too.
Two related movements are growing, advocating Post-Growth [Jackson] and De-Growth [Hickel]. Within these movements many do not take an absolutist line but advocate economic growth among impoverished nations while ceasing or reversing economic growth among affluent nations. The EU [2023] has published a major study on Beyond Growth, looking at the possibilities. Recognising that (unlimited) economic growth does much harm, we need to find a way to have a good life without economic growth, but they also recognise the challenges. For example, maintaining welfare is challenged by ever-increasing demand, ever-increasing cost of welfare services, stagnant funding and political barriers. They recognise the need to "focus on real human needs, as opposed to desires or preferences" and the need for more prevention.
On the other side, some argue that economic growth is good because it has generated much benefit in health and material standard of living, etc.. We acknowledge that also. (The argument that economic growth is needed to pay for solving the problems, we have less sympathy with because most of the problems it itself has caused, and because it arises from false presuppositions.)
So how do we bring together the two seemingly opposed stances? We will employ aspects and seek to understand in which aspects benefit occurs and in which harm occurs - and we will continue the discussion in Chapter 7 especially where we differentiate Harmful and Useless economic activity from Good.
Summary: Economic growth involves all aspects, especially the ethical and pistic and must be understood thus.
What makes economic growth a problem is a combination of mindset-attitude that pervades society, a narrow view of value, a conflation of Harmful with Good economic activity, and a misunderstanding of money and other concepts, all of which occupy us over the next few chapters.
The valid insight in economic growth lies in the assumption that economic activity brings unmitigated Good. Multi-aspectual Good should increase so, insofar as economic activity always and only contributes to Multi-aspectual Good, and never Harm nor Uselessness, then economic growth is a valid aim. The fundamental weakness in that is that much economic activity contributes to Harm and / or is Useless. === [===] sees growing GDP as "a proxy for the fact that, generally, if GDP is going up, that does enable us as a society to do much more than we would have been able to do otherwise. But it does have negative effects as well." Bear that in mind until we discuss it in Chapter 7.
Nearly all politicians in affluent democratic nations compete over "Vote for us; We are the ones to give you highest economic growth!" whether "you" is the nation, its rich or its poor. Criticism of the idea of growth is democratically unsuccessful and also evokes defensive reactions that reinforce politicians' commitment to, worship of, growth. So affluent countries are (willingly) enslaved by the idol of economic growth and will not willingly turn away from it. Though the Pandemic of 2020 showed that there is much Good that comes without economic growth, politicians in affluent countries fell over themselves in the race to resume economic growth, especially of harmful sectors like aviation. (See Idolatry below.)
Through the lens of the economic aspect, economic growth in affluent economies has been speeded up by encouraging everyone to buy non-essentials, encouraging employers to generate unproductive jobs, by monetizing human activity that are better not monetized, and by speculative financialization so their growth is visible (politically useful!) but unhealthy. These four (and more) together, have bloated affluent economies. Had we been content with essentials (broadly defined, somewhat like Raworth's "social floor" but more so), kept jobs productive, prevented undue monetization and financialization, there would still have been economic growth but it would have been truer, better-grounded growth. Chapter 7 addresses this.
The economic aspect alone, however, does not allows us to ask "Why?" for any of the four, because they are answered by reference to other aspects, in particular the two aspects of mindset-attitude below. The four are discussed later, especially concerning Useless economic activity.
We need to take all aspects into account, not just the economic. For example, if market interest rates exceed inflation rates then wealth flows from borrowers to lenders, exacerbating financial inequalities, and risking social disorder. But these are problematic only by reference to the the juridical and social aspects and are too often neglected by those who focus only on the economic aspect. There are three options - to allow this to happen, to instal effective mechanisms (e.g. taxes) to flow wealth from the rich to the poor, or to encourage economic growth. Economic growth acts as a panacea because most people believe they are a little better off each year - and most governments, whether of left or right, choose this, hoping that wealth 'trickles down' or will furnish them with enough tax income.
Two aspects are particularly important, but usually hidden and seldom discussed, the ethical and pistic aspects, which we call mindset-attitude below, and they operate at all levels. At governmental level, a deep belief (pistic aspect) that prevails globally, which is that the faster the economic growth, the better it is, which exaggerates the valid insight, and competition (ethical dysfunction) among governments to beat each other on this. So governments would take steps to enable and encourage all four. At the individual level too, these operate: the economic rationality of "feeding the family" along with the hidden attitude of self-centred commitment to one's own perceived prosperity and the 20th century assumption that my prosperity should always improve. We find them in businesses, the economic rationality of balancing books along with hidden fear of future and desire to beat rivals in league tables. Indeed, Goudzwaard names economic growth as one of the idols of our time. If we are to address the problem that is economic growth, then we must take proper account of these two aspects that we call mindset-attitude.
Summary: Five principles for a perspective on economic growth.
The mandate of economics is not to pursue economic growth. Nor is it to restrict growth. It is not even centrally concerned with growth, but with contributing to Multi-aspectual Good in the unique way the economic aspect can. We need to learn how to live with and without economic growth. So we tentatively suggest the following principles. (x Christian might remember Paul's claim at knowing how to be abased and how to abound.)
Principle 1. Insofar as it matches growth in Multi-aspectual Good, then economic growth can be good. Sadly, it seldom does among affluent nations today. It could be Good in impoverished nations. In some cultures, such as prevail in so-called LDNs, there may be a need for economic growth in order to properly resource their growth in various other aspects of Multi-aspectual Good. But in the affluent cultures, economic growth should cease and go into reverse, and attention be given to its fruit in all other aspects (c.f. Blossoming Economy [Goudzwaard ===]). Note, however, that it is not GDP that is to be grown in such nations but what might be called The Economy of Multi-aspectual Good - that human functioning that contributes to Multi-aspectual Good in all its aspects.
Principle 2. Economic growth is ancillary to this and possibly not even necessary for it. It may be that increase in Multi-aspectual Good can be obtained without economic growth, as Jackson argues in Prosperity Without Growth, and of course in what is currently unpaid household activity. Increase in Multi-aspectual Good can be obtained by growing other aspects, so the economic system that enables this need not itself grow (though it probably would). As testified for centuries, it is possible for those with few material resources to be happy, friendly, cogent, innovative, wise, just, generous and faithful, among the poor in affluent cultures or even in so-called LDNs. This also means that, in principle, De-growth is a realistic option among affluent cultures, though would need carefully thinking out.
Principle 3. We who are among the leaders and decision-makers of the world cannot make economic growth in the so-caled LDNs an excuse for our own continued economic growth.
Principle 4. Elevation of economic growth is wrong; it is a dysfunction in the pistic aspect (mindset; see below), especially when it becomes one of the "idols of our times~ [Goudzwaard 1984]. This is manifested in our presupposition of its necessity and absolute validity, as the primary aim or beneficiary of all policy, as an unquestioned expectation in affluent nations and as an unquestioned aspiration in so-called LDNs, where this is usually true among their elites and the better-off. This is the root of what has made economic growth an evil in our time and must be resisted.
Principle 5. Self-centred demand for ever more conveniences, pleasures and luxuries for ourselves as individuals, a competitive mindset-attitude among businesses and among nations, usually coupled with unconcern about the damage that adherence to economic growth has done, is dysfunction in the ethical aspect (attitude; see below). Prioritizing economic growth by the already affluent, adds to what has made economic growth an evil in our time.
Principle 6. We should tackle the problems of economic growth, not by arguing whether economic growth is good or bad, nor even how much growth (as in Doughnut Economics, nor even which grow (e.g. Goudzwaard, De-growth), but by:
Principle 7. This might tell us that some already affluent economies must de-grow. If so, we must carefully discuss which sectors must shrink and how to do this. That discussion should have begun already among all people, and certainly among those who advocate De-growth. Sadly, it does not seem to have done so.
On the ground, some of this does happen, but it is often curtailed and hindered by a media that presupposes economic growth and suppresses the discussion that is needed, by policies and measures that companies and governments use in their decision-making, and by extant economics theories that fail to incorporate the above. This is particularly so for measures like GDP (which is discussed later).
The approach to economic growth outlined here might make a contribution to the wider, recent debate, by offering a fresh perspective that is neither for nor against, but provides a basis for systematic understanding and serious discourse. Throughout this Rethink, we will see how these principles work out, occasionally making explicit reference to economic growth, but more often by implicit reference.
Summary: Sadly, economics is often isolated from other spheres of life, both in its theories and its practice, and by both many economists and also by those who use economics. This is society's mindset towards economics; it tends towards reductionism and idolatry, but needs to change to embeddedness.
A mindset prevails in and around economics, that it is the kingpin of all life, and that all economic activity is good, and to be encouraged. Moreover, economics has been elevated in importance, especially by politicians, to the extent that it has become isolated, losing most sense of collaboration with other spheres, responsibility towards them and service to them. Karl Polanyi calls this "dis-embedded" [Note on Polanyi's Embeddedness], and treats this as anti-normative (ini contrast to Hayek, who treats the unfettered market as normative [Note on Hayek]). Dis-embeddedness has sometimes led economics not only to isolation but even to arrogance, expecting other spheres to serve its interests rather than it serving them in pursuit together of Multi-aspectual Good. Economics refuses its mandate and ultimately loses its meaning, since nothing cam find meaningfulness in itself.
At the root of this is our mindset. The mindset, of both society and individuals, towards economics comprises our deep beliefs and presuppositions about it, our expectations of it, our aspirations for it, our commitment to it - the meaningfulness and importance we place on it. In most affluent cultures, we unduly elevate economics in importance, isolate it, reduce all else to economics, and even idolize it. Norman [2018, 188-9], for example observes that
"... but mainstream economics has grown in public stature from having three key features less closely connected to its intrinsic merits. The first is that it is often presented as an autonomous realm of public wisdom and social choice. ... The second is that economics itself is often seen as a putative theory of everything. ... bolstered by a third factor: its forbidding technical demands. ... highly inaccessible to the non-specialist. ... The overall effect of these three features has been to build in a certain presumption in favour of economics over other disciplines."
This adulatory mindset might occur mainly among politicians, business people and media pundits, yet we see very few economists resisting the adulation their field is enjoying. Add to this the belief that prevails of the validity of selfishness in economics, and we have a very harmful situation.
In this section we attempt to understand the characteristics of elevation, reductionism and idolatry. In Chapter 6 we discuss the operation of mindset more deeply, understanding it as functioning in the pistic aspect, coupled with attitude, which is our functioning in the ethical aspect.
In most affluent cultures our mindset towards economics is a dysfunction in the pistic aspect (indicated by the word "unduly").
Example: In the UK for the past few years (to 2023) Avian Flu has decimated many species and populations of wild birds and also has infected 'kept' birds like poultry on farms. The mindset of the poultry industry and government is solely that wild birds are 'problem' that threatens the economics of the poultry industry, and the (self-centred) attitude is to protect the industry alone. That wild birds are fellow victim with the kept birds, which humans have a duty to help, is not recognised by them (except occasionally as an add-on). It, is recognised, however, by the nature charities.
There is a valid form of 'elevation', which is focus on the economic aspect during analytical thinking, as in the science of economics. They form a spectrum, from economics completely integrated with the other spheres of life, through focus, undue elevation, isolation, reductionism, absolutization and idolatry at the other extreme. Elevation becomes isolation and reductionism when when all consideration of other spheres of life is removed. This is depicted in Figure r4-5.1, where items above the line are more associated with economics practice and those below the line, with economics scholarship and theorizing, though they intermingle. (Refer back to our perspective on pre-theoretical and theoretical thinking.
IG "pix/f4-reductionism.gif" -w5.01 -h1 -c -ra
Figure r4-5.1 The spectrum of elevation of economics.
Summary: Economics has been elevated above, isolated from, other spheres of life, especially by those who use it. This is unhealthy and needs to be rectified.
We can see elevation of economics in the following examples:
In fact, the picture is even more complicated, and other spheres of life, other aspects, do have some recognition. For example, though treating the Treasury as the most important department of state, politicians do recognise other spheres as important, such as arms and defence, legal systems, social care, technology, environment, etc. But to allocate resources for these is an uphill struggle, and how much is allotted to each depends not so much on their real importance but on such factors as how strong lobbies are in influencing the ruling politicians, and the strength of lobbies depends largely on how much money is put into them. So, we may take it that the list above has validity.
However, it is dysfunctional mindset-attitude that makes them evil. Undue elevation soon becomes reductionism in scholarship and to idolatry of economics as a whole in life.
Summary: Reductionism is when one aspect is presupposed as able to account for all else, and all other kinds of value are reduced to it.
Since life involves all aspects, the perfect theory that can explain what occurs will include all aspects explicitly. Reductionism is a form of undue elevation that occurs in analytical thinking whether in science or professional life. One aspect of the diverse complexity of reality is presupposed as able to explain all others, and when the kinds of value offered by others are reduced to that of this aspect. Not only are the other aspects ignored but the ignoring becomes self-justifying. Examples of reductionism in economics include:
Friedrich Hayek exhibits a particularly pernicious kind of reductionism. Though his advocacy of unfettered market might suggest reduction to the economic aspect, he actually reduces this to the biotic aspect: dominance of society by a free market is justified because it enables more mouths to be fed, more humans to survive and "Life has no purpose but itself" [Hayek 1988, 132]. How degrading!
We find unfortunate reductionism throughout Adam Smith's Wealth of Nations, even though we know he also acknowledged the interwovenness of economics among other aspects. In this book he hardly mentions morals (which he had written about earlier), and we see him proposing that several societal ills can be overcome purely by free operation of markets. It is shown by episodes in his life, such as that he was "vehemently hostile" to the sensible proposal that physicians should only graduate if they had had experience, because he saw it as "restraint on trade" [Norman 2018, 88].
Reductionism is harmful in both theory and practice. Its impact on theory is to obliterate factors that are important in other aspects, so theories fail when faced with the multi-aspectual complexity if reality. (Some theories include other aspects as anonymous externalities: not quite reductionism but undue elevation.) Reductionism's impact on practice is seen in dismissive attitudes, blind to other important factors during evaluation, decision-making, communication or policy-naking, so that we often must then expend enormous resources of human effort, time and money, on bringing these in later, when the harm becomes apparent. Much conventional economics of both left and right has been reductionist until recently, ignoring the environment and other human aspects, or at least assuming that problems therein can be solved by purely economic means. Do not the diverse challenges of pandemic, war and climate / biodiversity crises show this reductionism to be false?
The argument, ceteris paribus "all other things being equal", so prevalent in economics theory, is a reductionistic assumption, false because other things are usually not equal when we think about the aspects that make them meaningful.
Dooyeweerd uses the more philosophical word "absolutization" for reductionism. In absolutization, we treat an aspect as self-dependent and on which all other aspects depend, and as being its own source of meaning, and the main norm for living. Referring to the example of Hume's absolutization of the psychical aspect [NC, II, 331-2], he argues that absolutization contains a "fundamental error" and ultimately "destroys itself if it is consistently thought out." Even so, it may contain a "kernel of truth" in that every aspect contains echoes of all the others inside itself ("sphere universality").
The opposite of reductionism is holism. It was a concern of early systems thinkers. Boulding [1966], for example, argued against a narrow focus on profit and production for the more holistic Circular Economy, in which waste is recycled back as useful products, so non-renewable resources are less depleted. This was only a small step away from reductionism, however, since it was couched largely in economics concepts like resources, rather than in terms of for example justice or biodiversity.
Recent thinkers have taken a more holistic approach, taking into account justice (e.g. Hartropp) and environmental issues (e.g. Dasgupta [2020]), and these together (e.g. Laurent). Yet even these ideas are tainted with reductionism. Dasgupta tries to reduce biodiversity to a quantitative measure of value amd Laurent defines "justice" in terms of quantitative-economic measures. Raworth and Carney may be more holistic in the range of factors she considers. But most recent thinkers seldom give due regard to the aesthetic aspect, and largely ignore the aspects of mindset-attitude (pistic, ethical). Islamic finance recognises some of the pistic aspect, but mainly seeks mechanisms to fit within Qur'anic teaching, rather than fully considering the relevance of all pistic functioning in economic activity.
Summary: Idolatry treats the favoured thing, aspect or sphere of life as 'divine', with absolute authority over us. Economics is often an idol.
"You cannot serve God and Mammon" - Jesus Christ [Matthew 6:24]
"Mammon" is a Greek word that refers to a system that makes money the most important thing in life, the factor that determines everything else. Its worship is expressed in the idol of many governments, GDP. Mammon can be an idol that we serve, and this is why we cannot serve it and God together.
Many things can be idols, not just Mammon: such as our business, my convenience, our culture's lifestyle, or national pride. Idolatry is when one thing or one aspect is not only elevated but given absolute priority over other things (x including, Christians, Jews and Muslims believe, the True God x). Idolatry is a religious orientation that has harmful impact here and now, as well as spiritually, because it not only distorts our view but bullies us into this.
In Chapter 6 we discuss how idolatry lies at the root of much harm that economic activity does. Here we look at idolatry of economics as such.
In Bob Goudzwaard's [1984] perceptive essay, economics, or rather economic growth, is one of four Idols of Our Times. By analogy with pagan objects of worship he offers an understanding of how it might operate:
"Suppose we consider the worship of a wood, stone or porcelain image, a practice still common in the world today. This worship has several steps. First, people sever something from their immediate environment, refashion it and erect it on its own feet in a special place. Second, they ritually consecrate it and kneel before it, seeing it as a thing which has life in itself. Third, they bring sacrifices and look to the idol for advice and direction. In short, they worship it. Worship brings with it a decrease in their own power; now the god reveals how they should live and act. And fourth, they expect the god to repay their reverence, obedience and sacrifices with health, security, prosperity and happiness. They give the idol permission to demand and receive whatever it desires, even if it includes animal or human life, because they see the idol as their savior, as the one who can make life whole and bring blessing."
Each of those stages may be understood metaphorically, as Krishnan-Harihara & Basden === have argued in a study of e-government. Not only a physical thing, we can idolise any type of thing, idea, cause, or even an aspect. Much economic theory tends, unwittingly perhaps, to idolise the economic aspect.
Goudzwaard's paragraph above might help us understand the idolatry of economics and idolatry within economics.
Idolatry of economics is deeply engrained in society, and this can explains why economic activity as practised today has contributed so much Harm in ill-health, environmental damage, injustice, and to the affluent culture which most people expect or to which they aspire. The idea of idolatry can explain why many governments refuse to take climate and environmental responsibility seriously.
It becomes even worse. As Goudzwaard suggests, technology, national security or promotion, and revolution are also idols - and they with the idol of economic growth reinforce each other.
Summary: Instead of being isolated from other spheres of life, arrogantly seeing itself as superior to them, and ignoring what is meaningful in other aspects, economics should see itself as interwoven with them, embedded among them, with humility.
Yet it need not be this way. Most of the items above have a valid version, for example the possibility of economic functioning does indeed bring blessing, but only when rightly understood and practised in conjunction with all other aspects. Referring to Figure r4-5.1, for example, focus is valid while undue elevation and idolatry is not.
We can begin to understand how economics is interwoven with other spheres; it embraces them and they embrace it. In economics practice, this would help evaluation of and planning for the real experience of economic life, because every other thing we do and are affects our economic life and it affects all else we do and are. Economics theories would explicitly include factors meaningful in other aspects, enriching the notion of externalities. Economics science would try to understand, not only the laws of the economic aspect itself, but how these function in relation to those of other aspects.
In short, there should be humility rather than arrogance or isolation, in our mindset towards economics, both among economists and those who use economics.
Example: Economics theory embracing an understanding of the workings of the pistic and ethical aspects, i.e. mindset and attitude, would transform, for example, the Tragedy of the Commons and even Adam Smith's understanding of economic transactions, replacing "self-love" by contributing towards Multi-aspectual Good, as discussed above in Meaning and Mandate.
The economic sphere relates to other spheres in three ways. 1. Economic value should express value that is meaningful in other spheres [Carney], discussed in Chapter 5. 2. The functioning of economics affects and is affected by functioning in other spheres, discussed in Chapter 6. 3. How economic generates good and harm in other spheres ("externalities") and they in it, discussed in Chapter 7. Since each sphere is meaningful in certain aspects, all these considerations will be seen in terms of aspects.
In Chapters 6 and 7 we expand this, and discuss how mindset and attitude operate for good or ill, but in a hidden way, and how undue elevation, isolation, reductionism and idolatry may be overcome. We maintain that Adam Smith was misunderstood.
That is the theory. But how do we overcome the combined might of several idols that together prevent this happening? This is a pistic problem, and requires a pistic solution. Faith is a necessary part of the answer. For example, Jewish Law has an antidote to idolatry, the Sabbath.
"Remember the Sabbath day, by keeping it holy. Six days you shall labour and do all your work. But the seventh is a Sabbath to the LORD your God. On it you shall not do any work, neither you, nor your son or daughter, nor your manservant or maidservant, nor your animals, nor the alien within your gates." [Exodus 20:8-10]
Sabbath is a sign against idolatry, that even the economy is subservient to God (and toe Multi-aspectual Good that God intended for Creation). In current economic theory, Sabbath makes no sense, but Sabbath motivates economics to see itself as interwoven with other spheres of life. We will discuss this more in Chapter 6.
Summary: [Probably here we will look at how the science focuses on the economic aspect, as does its practice.]
===== to be written
The discipline or field of economics is concerned with the economic aspect of reality. Its identity is tied up with that aspect and ===== to be written
Summary:
===== to be written =====
# We need to say something about "Economics is to do with values" to lead into the next chapter.
# concl: Many recent thinkers recognise and are motivated by a mindset-attitude of holism, recognising that economics affects and/or is affected by other spheres of life - a more holistic picture that has a wider range of kinds of value.
Meaning as Dooyeweerd intended it, which we will call "meaningfulness", must be distinghuished from: (a) signification-maning: which is the semantics of words; (b) interpretation-meaning, such as deducing from a pile of feathers that there was bird-kill; (c) attribution-meaning: the meaning we attribute to items, such as my grandmother's old vase; (d) life-meaning, the meaning of life or career, etc. These all presuppose human involvement, while meaningfulness does not. Everything is meaningful, whether humans are involved or not. Types (a) to (d) presuppose meaningfulness to make them even possible.
Meaningfulness arises from the Ultimate. The meaningfulness a person find arises from what they believe to be ultimate; that which society holds meaningful arises from what it takes to be ultimate. As Chapter 4 discusses, this, in a hidden way, affects all we do or think in economics and all spheres of life, so it is more important than usually recognised. If we treat something ultimate, and hence an origin of meaningfulness, which is not actually Ultimate, it will eventually let us down, leaving much damage in its train. That is why idolatry is so harmful, not merely a societal choice or fact. (x Christians and others call the Ultimate "God" and meaningfulness arises from all things having been Created.)
Note on Structuration Theory. See Basden [2018, 275-7; 297-9] and especially Giddens' Structuration from a Dooyeweerdian Perspective (which contains excerpts from that book).
Note: Reality's Revenge. Dooyeweerd believed that there is a reality, including the reality of how we think theoretically and philosophically, that we find ourselves unstuck and lost in antinomies and also societal problems if we go against it. See Reality Avenging Itself.
Note on Understanding. Economics science seeks generic understanding of the way Reality operates in its economic aspect (including its future possibilities not yet realized) and expressing this understanding as theories and/or general rules. In other words, it seeks to understand the laws of the economic aspect and how they interact with laws of other aspects. Here, though, the notions of understanding and theories are broadened to beyond formal academic versions to those informal ones found in everyday life, such as heuristics used by managers or householders, but recognise the special place of formal theory.
Samuelson PA, Nordhaus WD. 1998. Economics, NcGraw-Hill, Boston, USA.
Created from Section 4 of xnr2, 2 January 2023. Last updated: 2 January 2023 changed title. 4 January 2023 intro bit. 6 January 2023 bits from r7-ghu. 17 January 2023 Economists understand utility as the main aim of economics. 21 January 2023 ecgr. 23 January 2023 eg of non-embedded. 23 January 2023 asps earlier, later. 25 January 2023 already many recgs need for embeddedness. 26 January 2023 4-1 what is econ. 27 January 2023 Quaker capitalism. 28 January 2023 greed. 30 January 2023 wds 4 att. 1 February 2023 Speth. 3 February 2023 changed name from r4-att to r4-mmm; Multi-aspectual Good explicit. 6 February 2023 scraps. 10 February 2023 prosperity as OG through economics lens. 16 February 2023 4-. 25 February 2023 comedy. 2 March 2023 summary. 10 March 2023 idolatry shapes. 27 March 2023 a summary. 5 April 2023 ess and resource. 7 April 2023 moved Multi-aspectual Good to r3-dyx. 10 April 2023 big edit of Meaning of Economics, began mandate. 11 April 2023 Mandate; mindset-attitude. 12 April 2023 reductionism; rest of mandate. 13 April 2023 many tidying ups; economic growth rw; tidies; headings and summaries - uploaded. 15 April 2023 elevation, redsm, idolatry steps. Clearer on kernel of econ. 17 April 2023 isolation / elevation a separate section; edits. 19 April 2023 dealt with =====. 24 April 2023 Avian flu; heart; EG as idol. 28 April 2023 embedded earlier. 4 May 2023 attd of scientists. 5 May 2023 mammon. 10 May 2023 "draft". 12 May 2023 better on frugality; mindset; hdgs. 15 May 2023 rlg expertise on repentance. 16 May 2023 uploaded as r4-mmm-230516.html. Then rw Meaning. 18 May 2023 aspectual view of factors. 20 May 2023 respect objects clearer; responsibility for future. 26 May 2023 Meaning roots; Norway; summaries with qns; vote with £. 30 May 2023 ign exts cos m-a. 31 May 2023 3 idols. 5 June 2023 new ch smy. 6 June 2023 leaven. 12 June 2023 Moving much of mindset-attitude to r6-fun. 14 June 2023 Intro re isolation, embeddedness; edit mindset, moving stuff to r6-fun, and total rw of mindset section to be only about mindset towards ecx. 16 June 2023 corrns. 20 June 2023 "imperfect comp". 27 June 2023 econ growth rw. 28 June 2023 Smith. 29 June 2023 rw meaning. 30 June 2023 done Meaning; rid identity. 21 July 2023 Norman on Smith. 25 July 2023 Mindset that Ecx Good. 8 August 2023 more on growth. 9 August 2023 interwoven r.t. embedded. 22 September 2023 correct link. 16 October 2023 quote. 25 October 2023 equilibrium ecx, and links. 30 October 2023 idols. 8 November 2023 humility. 9 November 2023 4-1 smy better; word 'econ' to n.html. 22 November 2023 Elevn-Isoln. 30 November 2023 Bz is Bz = kernel. 5 December 2023 2 purposes of business. 28 December 2023 embeddedness. 3 January 2024 Hayek. 25 January 2024 Marshall "ends" as embed yet undefined. 27 January 2024 marshall defn. 30 January 2024 saving-frugality. 3 February 2024 goods,svcs eth asp. 9 February 2024 MAOG. 26 February 2024 Mandate for bz. 18 March 2024 table of resources; rw value, respect of objects. 22 March 2024 econ servant not master. 5 April 2024 not entirely elevated. 22 April 2024 corr link.