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Summary: Economics does not have a strong enough understanding of the functioning and repercussions of economic activity, especially not of hidden attitudes and mindset. Dooyeweerd's ideas offer a practical understanding of this.
Status of chapter: + topics largely complete; + argument largely complete; - in need of critique; - some ancillary pieces to be written; - some references needed; - needs shortening; - needs styling; - needs proof-read.
What is it that generates value and contributes to Multi-aspectual Good? Is it not our functioning, our behaviour, our activity? How do 'externalities' occur? How may we understand economic activity in a way that integrates economic activity with all other kinds? We need to understand economic activity as part of everyday experience, and indeed the whole of Creation's functioning.
To Adam Smith our economic activity is production (by butcher or baker) of goods, selling them to people, with "self-love" as the basic motivation. Altruism and begging also happens but is seen as anti-normative by him in economics. There is also lending, borrowing and accumulation of capital. To Marx, economic activity is understood as greed and self-protection by those who own the means of production. There is also behaviour of markets and of whole national economies, which are often understood in terms of mathematical equations, implying a basic presupposition of following mathematical laws.
This, as most economists and recent thinkers say, is too simple and fails to describe let alone predict actual, real-life economic behaviour. So a plethora of other factors are brought in, one by one, especially in Bahavioral Economics, but the picture remains fragmented.
We begin with the idea of human functioning (potentially) contributing to Multi-aspectual Good, to Value. Yet human functioning is as varied as is value. Just as value may be understood via Dooyeweerd's aspects, so may functioning, and Dooyeweerd allows us to go further than just categorising kinds of activity. He offers us a robust idea of what functioning and its repercussions are. This chapter discusses this.
Summary: The range of theories about how we behave in economic activity is wide, though not wide enough, and rather fragmented. We suggest how Dooyeweerd offers a fuller and more integrated picture.
[This section needs a bit of sorting out, e.g. how does process economics fit with behavioral?]
For example, equalibrium economics presupposes mathematical measures of supply as fully explanation for economic activity over time. That it seldom works as expected is because of functioning in other aspects. If we investigate reasons why suppliers supply and demanders demand, we find many such things as illustrated in Table t6-1.1.
Table t6-1.1 Some (dysfunctional) example reasons in each aspect that motivate supply and demand.
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Summary: Behavioral Economics offers some understanding on how other aspects impact economic activity, but it is fragmented and patchy in its coverage.
Much extant theory that is relevant to the issue of functioning comes from Behavioral Economics, which draws on findings and methods of the behavioural sciences.
One of the best-known ideas about economic functioning is that of the Rational Economic Actor - who decides a purchase according to whether they will benefit or not, and solely on those grounds. Though this has been severely criticised in the field of economics, for example by =====refs+whatfor, it still sticks in the mind of many politicians, business managers, marketers, media pundits or financiers, and they call on the idea to justify their decisions. The idea has enormous impact on everyday economic activity.
The main aspects that make the idea of Rational Economic Actor meaningful are the economic aspect (because it is to do with value), the analytical aspect (identifying, and deciding between, alternatives) and the ethical aspect (the self-interest on the basis of which the alternatives are compared. Other aspects involved include the social (agreement and exchange) and the quantitative (in comparing). While its functioning in the economic and analytical aspects are reasonable, and the idea yielded insights therein, its functioning in the ethical aspect is dysfunction, and this leads to harm. Since the ethical aspect has an important retrocipatory effect on the functioning in other aspects, one can argue that the dysfunction therein is more important than the valid functionings in the other aspects. This explains why the idea of rational economic actor brings harm and undermines economic activity and is counterproductive.
Going beyond the idea of rational economic actor, many thinkers in Behavioral Economics recognise other aspects and their impact on economic functioning. John Maurice Clark [Economics and Modern Psychology, 1918] argued that economics needs to take human nature into account, especially desires (pistic aspect) and how environmental factors equip and enable economic activity (mainly psychical aspect). Jeremy Bentham emphasised utility (formative aspect). Inter-temporal consumption and discounted utility theories may be seen as willing sacrifice for future benefit, which is an ethical analogy in the economic aspect. It has been challenged by the Allais Paradox, which is mainly concerned with beliefs and stances (pistic, ethical aspects). Input from cognitive psychology, in which the analytical aspect of conceptualization and the formative aspect of structures therein are important, brought insights into decision-making [Simon; Kahneman & Tnersky]. Kahnmenan's Prospect Theory is about things like greed (dysfunction in ethical aspect) and fear of loss (pistic, juridical and psychical aspects), and the way in which problems are presented to economic actors (lingual aspect).
Nudge theory [Thaler & Sunstein 2008], by which people's behaviour is changed, brings in messaging (lingual aspect), spatial arrangements (spatial aspect) and immediate awareness (psychical aspect) - but this gives it a short-term focus. It has been criticised for threatening dignity, being "paternalistic" and being used for political purposes but Sunstein countered by arguing that some form of paternalism cannot be avoided. We might see these factors as pistic functioning and neither right nor wrong in themselves (whatever derogatory label they are given), and that the real problem is whether nudging is with respect and genuine self-giving love for all or, too common in politics today, disregard and self-seeking motives (the ethical aspect).
Summary: Behavioral Economics brings in other aspects, it currently has several limitations, and we suggest how they might be tackled.
1. Though Behavioral Economics recognises more aspects than does Rational Economic Actor, it offers a rather fragmented picture. Each author focuses on a different behavioral effect, meaningful in only one or two aspects, and sometimes not even a full account of their favoured aspect, and it is difficult to obtain a broader picture that can embrace all of them. In his exploration of inter-aspect relationships like dependency, Dooyeweerd's aspects provides a real basis for embracing or integrating them all.
2. Some aspects are under-played or even ignored; the aesthetic and biotic are missing in the above, and other aspects are only dimly recognised. Though these might become recognised some time in the future, is it not preferable to include them from the start? Giving attention to Dooyeweerd's full suite of aspects can stimulate discussion of such missing aspects.
3. Behavioral Economics and Rational Economic Actor seldom take unpaid (household) economic activity into sufficient account, even though it too exhibits multiple aspects including an economic aspect. Dooyeweerd's suite of aspects applies to that equally.
4. Most of the above is confined to short-term behavioural issues, and to microeconomics. Any extension to macroeconomics is merely an extrapolation of the behaviours of individuals, which does not do justice to structural issues. We take the longer-term repercussions into account as well. The later aspects in Dooyeweerd's suite operate over the longer term and are aspects of structures in society.
5. RAE and Behavioral Economics are currently mainly about the functioning of purchasers. For a full picture of contribution to Multi-aspectual Good, however, we need to understand also the functioning of producers, or labour and of their manager, and of how people use purchases in their functioning. Theories and principles of Process Economy, is one concerned with production, cast in terms of production activities like the extraction of raw materials, production of goods and services, resource management, distribution of products, and consumption of products, but is usually even more narrowly focused, often on manufacturing, and has entities (products) at its core, rather than contribution to Multi-aspectual Good or Harm from those products and their production.
===== Add in other theories here.
Summary: Macroeconomics can be understood within the same framework as microeconomics, by recognising that whole economies also function in all aspects.
Most of the above refers to the functioning of individual economic actors (people, households, firms, etc.), which is a concern of microeconomics; there is also macroeconomics functioning of 'The Economy' of a nation as a whole, and of monetary and fiscal policy-making by governments. Macroeconomic activities include economic growth, unemployment, national imports and exports, currency exchange rates, inflation, etc.
Macroeconomists want to understand by what laws do such things operate> How should governments control the activities? What is good and what is to be avoided in these activities? How does macroeconomic functioning affect that of individuals, households and companies? In the main, quantitative descriptions and models are used but they often fail. For example, few predicted the 2008 economic collapse. Some argue that this was because of perspectives of what is meaningful in functioning at a macroeconomic level, are narrowed to the economic and quantitative aspects. As with microeconomics, however, macroeconomic functioning is not yet adequately understood.
Increasingly, economists and others want to bring micro and macroeconomics together. Lucas, for example, suggests that macroeconomics can be understood via its "microfoundations", which usefully recognises functioning in other aspects, but more is needed. The first is, the question "On what basis can we hope to achieve integration?" The answer in this Rethink of Economics, is that the aspects meaningful to macroeconomic functioning are the very same as those in microeconomics functioning.
Some have suggested that there are levels other than micro and macro, such as the difference between individuals, households and companies, and between national and global economics [SNA 2025 exercise]. Where does each fit? Each level may perhaps be understood as having different aspects that are most meaningful.
These possibilities are now discussed.
Summary: If we understand economic activity as multi-aspectual functioning led by the economic aspect, then we discover a systematic, integrative treatment that is able to embrace most extant theories, and also recognise unpaid activity.
We address these challenges by understanding economic activity as multi-aspectual functioning, in which the economic aspect is primary and there is some secondary aspect that makes each issue meaningful. For example a major difference between macroeconomcs and microeconomics lies in which aspects are secondary.
That brief account shows clearly how economics thinkers have been recognising a number of aspects of human economic activity, and they are summarised in Table ===.
--- Table
Summary: Here we see examples of how all aspects are meaningful in any human activity, at any level, and how functioning in the economic aspect engages with that in others.
Taking the understanding of human activity set out in Chapter 3, activity in any sphere is enabled, encouraged, strengthened, promoted, etc. by nearly every aspect, for example:
We need to understand functioning in general, then specifically economic activity as a chosen viewpoint, then the things that function, then the conventional distinction between labour and use and the functioning of the specialised economy, then unpaid economic activity, then macroeconomic functioning.
Summary: Purchase and selling of goods, though primarily economic, is also inescapably multi-aspectual in nature.
Economics 101 tells us that in a purchase one person gives money to another (the seller) in exchange for good or services, and that many of these exchanges together constitute a market. But that is an explanation from the perspective of the economic aspect alone. But purchasing something is never as simple as that. In fact, purchase (and selling) is multi-aspectual functioning, in which every aspect plays an essential, not optional, part.
The exchange is a contract, a juridical functioning, in which the value each gives the other is appropriate and just. If not, then one party can sue the other. The terms of the contract must, in Western cultures at least, be clear, with a sharp boundary between what is just and what is unjust (analytical aspect) and is often expressed in language (lingual aspect). There is agreement over the exchange (social aspect). There are grounds for redress in case of faulty goods (juridical aspect). In practice, since boundaries and language are usually a little fuzzy, and grounds for redress are often unclear, there is usually some leeway, the amount determined by our meanness or generosity (functioning in the ethical aspect). When money is used, its value is socially agreed (social aspect) and must be in harmony with the market (aesthetic aspect). These aspects are in addition to, and depend foundationally on, the earlier aspects. All this is not an add-on to the exchange, but inherent in it.
All economic activity is multi-aspectual functioning, and cannot be understood otherwise (so Economics 101 should teach about all aspects, referring students to their real-life experience, which exhibits all aspects).
Summary: The multi-aspectual view is relevant at all levels of the economy.
What is the difference between micro and macroeconomics? One is that microeconomics looks at the functioning of real subjects like people or households, to which things like will or choice or attitude may be meaningfully attributed; macroeconomics looks at the functioning of reified subjects, such as "the economy" which cannot be said to have a will or attitude (except maybe metaphorically). This makes much macroeconomics too machine-like, for which levers are tweaked in order hopefully to affect its 'behaviour'. Lucas' microfoundations idea tries to free macroeconomics from that somewhat, but is not adequately developed.
We might be able to understand better using the idea of aspectual functioning. Functioning at the macroeconomic level is not that of some reified entity like inflation rate or GDP but is that of human beings who make decisions on which levers to pull and how far, along with myriads of human beings that contribute economic activity that these reified things measure. Whereas this would seem too complex, Dooyeweerd offers a valid way to get our minds around them, in the later aspects, especially the social aspect of agreeing, and the final three.
The aspects are ways in which every activity is meaningful - including the economic aspect - and they function together, simultaneously. Chapter 3 gives an example of multi-aspectual functioning of individuals, in which economic functioning is part with all others. Likewise, households, companies, nations and even humanity as a whole likewise function in all aspects simultaneously. Here are a just a few examples:
At all these levels, we have multi-aspectual functioning, with the economic functioning embedded among all others, neither more nor less important than any others. This echoes the theme of embedding economics in Chapter 4, and thinking in terms of multi-aspectual functioning, rather than entities, is one way of assisting==== this. Our view should never be reductionist, as when for example we consider only economic functioning. For example, governments make economic decisions not solely on economic and quantitative grounds by involving multiple aspects, at least the following:
Thus, in multi-aspectual functioning we have a integrative conceptual framework that can enable us to bring all levels of economics together - micro, macro, global and others. By recognising social and societal functioning as well as individual and pre-human in one conceptual framework, which Dooyeweerd offers, it might be possible to integrate micro, macro and all other levels; we discuss this more in Chapter 8.
This idea, however, requires research to develop it and then test and refine it.
Summary: Functioning in the economic aspect depends on both earlier and later aspects.
Our economic functioning depends on that of other aspects. It depends foundationally on earlier aspects, as for example economic exchange depends on social functioning of agreeing value, which itself depends on lingual functioning both of coming to agreement, and also the use of money as a symbol of value, and so on. It also is influenced by our functioning in later aspects ("retrocipation"), both societally and individually. Economic functioning is impacted by the sense of what is right (juridical aspect) by the attitudes and mindsets (ethical, pistic aspects) of people in the company, especially those at the top. It is impacted also by societal juridical functioning in laws of the land, and its pervading attitude and prevailing beliefs, aspirations, etc.
Example: In the UK, the train companies relied on the goodwill of drivers to work on their days off; when this goodwill was withdrawn in 2022 (for various reasons not discussed here but not unlinked to mindset-attitude of the management) the companies had no Plan B and UK rail services were completely disrupted.
Our economic functioning has repercussions, a kind of causality (in fact, an analogy of causality). This can enrich our understanding of what economists call "externalities". In its narrower meaning, "externalities" refers to (often harmful) impacts on economic activity that are not understood via the economic aspect but only via other aspects; in its wider meaning, it can refer to its reverse, i.e. any indirect repercussion of economic activity on other spheres of life. Either way, it is bringing other aspects into the centre of economics theory and practice that makes them possible. This is shown in Figure f6-externalities.
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Figure f6-externalities. Economic functioning and externalities: (a) repercussions of economic functioning in other aspects; (b) impact of functioning in other aspect on economic activity.
Sometimes the effect of economic activity is direct (e.g. industrial injuries), sometimes indirect (e.g. fertilizer production generating greenhouse gas, leading to climate change), some is short term, some is long term (e.g. climate change, attitudes in society), some is known about (e.g. c;imate change), some is hidden or unknown (e.g. society becoming more selfish or intolerant) or at least unexpected. Some of impact is from production or supply (e.g. chemical spills), some, by changes in behaviour, often brought about by marketing (e.g. smoking, leading to lung cancer), some, by subtle shifts in society's attitudes, mindset, aspirations and expectations (e.g. increased selfishness from use of social media). A very complex picture! Repercussions of post-social aspectual functioning like the economic can become widespread; for example government most policy-making affects more than do most individual decisions. They also tend to take longer to materialize fully; pistic repercussions in society can take a century to fully mature; for instance, did the collapse of the belief-system that is Communism.
Note that repercussions of functioning are not zero-sum. It is false to assume that if you benefit then I lose out - a falsehood that is exacerbated, perhaps, by monetization. In most functioning, if one party benefits the other can too, sometimes the same aspect but often with repercussions in a different aspect. When a resource moves from source to recipient, though the recipient gains the opportunity to contribute to Multi-aspectual Good in the aspect in which the resource is meaningful, the source gains likewise in perhaps in a different asepct (as long as the exchange is just). When the resource-movement is gift, then this contributes to Multi-aspectual Good in the ethical aspect as well as any other.
===== here a table or list of kinds of functioning. Depletion of non-renewable resources is meaningful in the economic aspect. ===== tbw
Summary: Societal systems or structures impact economic activity for good or ill. They are not only juridical structures of government but also ethical and pistic structures. The aspectual perspective reveals their links with individual agency.
Many today emphasise the role of societal systems or structures in leading to damage and see "system change" as the solution. Others counter with the freedom of the market to bring solutions. Both are wrong in ruling out the other; both bring some insight, as for example Mazzucato argues and commonsense tells us. Giddens' classic Structuration Theory tried to integrate societal structure with individual agency, but still the dichotomous war goes on. Dooyeweerd can offer a deeper understanding of this than even Giddens can.
A circular relationship exists between societal structures and individual agency, which has been encapsulated in Anthony Giddens' classic Structuration Theory [Note: Giddens' Structuration Theory]. Societal structure (laws, policies, taxes) enables, constrains and channels individual agency, while agency changes societal structure (e.g. by lobbying or electing governments that make the laws). Giddens discusses three kinds of structure, structures of norms, power and meaning, and these align closely with Dooyeweerd's juridical, ethical and pistic aspects, which is interesting since Giddens knew nothing about Dooyeweerd.
The effect of societal structures may be understood as the retrocipatory impact of later aspects on the functioning of the earlier aspects - which is the other side of the coin of foundational dependency of an aspect on an earlier ones. Whereas retrocipatory impact occurs in (almost) all aspects (for example, our style of writing (lingual functioning) is impacted by its social functioning (social purpose), economic functioning (parsimony of writing), juridical functioning (truth-telling or deceiving), etc.), the final three aspects seem to take on a special role of constituting societal structures [Note: Societal Aspects]. They retrocipatorily impact all our behaviour, including economic activity.
Functioning in the juridical aspect, not only do we do individual acts of justice or injustice, appropriateness or inappropriateness, but we live by rules (laws, policies, even social norms) that express what we believe to be right and wrong beyond personal interest, and that we believe apply to all. The rules assume authority ("rulership"). We also function juridically and socially when we legislate such rules. All such rules pertain to certain target aspects (e.g. rules about kinematic traffic flow, biotic and psychical health, economic frugality) and are intended to encourage some behaviour and constrain other, that is meaningful in each aspect. In this way, our juridical functioning is creating juridical societal structures that impact all we do.
Functioning in the ethical aspect, not only do we enact acts of kindness, generosity, sacrifice, or unkindness, meanness, cynicism and selfishness, but we succumb to attitudes that pervades our group, nation, society and culture. They become societal structures, which we might call "ethical structures" or "attitudinal structures", insofar as they spread and channel all we do, say and even think. Not only do ethical structures channel economic, social and other functioning as juridical structures do, but they also affect juridical functioning and even juridical structures, for example towards strictness and unconcern, or towards mercy and generosity (for example, in the cancelling of some debts of so-called developing nations at the Millennium) or even, very rarely, sacrifice (e.g. the Marshall Plan after World War II). Much financial corruption may be laid at the door of self-centred attitudes pervading a nation's culture. Attitude plays a central role in determining whether power is harmful or good.
Functioning in the pistic aspect, we hold certain things to be important, believe in them, expect and assume them, aspire and commit to them, and, in the extreme, worship and idolise them. They can be objects in our lives (my car, my family) or whole aspects or spheres of life such as education, science, politics to which we devote our lives. In intellectual life this is manifest in the dominant paradigms. When these beliefs prevail across a culture or society, the act as pistic societal structures (called "mindset" below), and they affect all we do, say and think, including our juridical functioning and structures and our ethical functioning and structures (attitudes). Which policies and laws are enacted is governed by what policy-makers believe to be important along with the expectations, aspirations and presuppositions that prevail in society. For example, most politicians believe that in the economy self-interest and competition are good, rather than dysfunctional, so make laws to encourage and protect them. There is also formal impact of religion on laws and policies, as in Islamic Finance. Attitudes are impacted in that id we believe that selfishness is good in economics, and we idolise economics (see below) then we have no motivation to try to change it or even question it.
This may explain why Adam Smith's use of the word "self-love" as the sole motivation for economic activity has been so damaging; we discuss this below. ===== we need to set out how it has become damaging, possibly in the Attitude section,a nd refer to that in the Smith section.
However, there is hope. As discussed below, both attitude and mindset (ethical and pistic structures) can by changed, especially by the agency of courgeous persons who believe differently and are willing to sacrifice their own interests for this (individual pistic and ethical functioning).
So, in considering how to steer economic activity (and all human activity) towards Multi-aspectual Good, we need to take account of all kinds of societal structure. Unfortunately the theoretical and professional discourse on such structures has been unbalanced, especially that which is targetted on economics, with most attention devoted to juridical structures and much less to ethical and pistic structures. So the next section is dedicated to understanding them.
Summary: Mindset-attitude constitute a hidden societal structure that determines how we behave in economic activity. Because hidden, their effect is seldom discussed or understood, yet more important than most recognise. They may be understood as a combination of pistic and ethical functioning that retrocipatively impacts functioning in earlier aspects.
Why is economic activity doing so much damage? At root is mindset and attitude. Environmental damage is one of the top casualties of our current economics activity, and Gus Speth once remarked,
"I used to think the top global environmental problems were biodiversity loss, ecosystem collapse and climate change. ... I was wrong. The top environmental problems are selfishness, greed and apathy - and to deal with these, we need a spiritual and cultural transformation ..."
Selfishnness among business people and politicians results in them putting the interests of their companies and nations (or parties) above all regardless of all else, greed in affluent cultures where we already have too much, and apathy towards those less fortunate. All that affects business and government decisions towards environmental and other damage, rather than towards their health. Economics thinkers have said similar [e.g. Trainer ===; ===].
But what are "spiritual and cultural"? How do they operate, especially in economics? Why should we consider them? In order to motivate the transformation, on what basis may we differentiate a good kind of culture or spirituality from a bad kind?
During the 1930s, Keynes naively predicted that by 2030, people would need to work only 15 hours a week, because this would be enough to satisfy their needs [Crafts 2022]. In the UK, Clement Atlee naively believed that, as people became healthier, by the operation of the new National Health Service, it would cost less to run. Both were wrong. One took into account only the economic aspect of people's lives (and even his critics like Pecchi & Piga [2008] explain only in economic concepts), the other the biotic (health). Both ignored mindset and attitude, by which people are greedy and selfish, by which we demand and expect ever-increasing standards of living. Might the EU [2023] be making a similar mistake, for a similar reason, when they blithely state [p.98] "The rising demand for welfare could partly be prevented through a more even distribution of work and income, but also by greater economic security, preventing rather than treating disease, and by improving community and family capacity for social support, care and social participation."? We cannot ignore mindset and attitude.
Here we make them a little more specific by recognising two main aspects in which they are meaningful, the pistic and ethical. Our pistic functioning obviously links with spirituality, and it is the cultures's beliefs, aspirations, expectations, commitments, and what the culture takes for granted; it also includes negatives like despair and rootlessness. A culture also has an attitude, a feeling of either selfishness, self-protection and even meanness, or self-giving, openness and generosity; that is its ethical functioning. However, rather than always adopting clumsy phrases like "pistic/ethical functioning" we call the mindset and attitude, sometimes "mindset-attitude". They include Speth's "selfishness, greed and apathy". (x Christian and other religious and poetic perspectives use the term "heart" for this. [I Samuel 13:14, Matthew 15:19.].)
Mindset about Economics was introduced in Chapter 4 as what society believes and presupposes, including towards economics, especially the dysfunctional reductionism of all values to economic value and idolatry of the economy and economic growth. Here we examine mindset and attitudes within economics, that is, how they impact economic activity (though most of this section helps us understand the mindset and attitude about economics).
Summary: Mindset and attitude are functioning in the pistic and ethical aspects.
We may understand mindset and attitude as functioning in the ethical and pistic aspects. Mindset is our, and society's, beliefs, commitments, aspirations, expecations, presuppositions about what is ultimately meaningful, and it includes these expressed in religious belief and ideological commitments. Attitude is our disposition to others, either self-giving love or selfish self-protection, either generosity or meanness.
For example, our economic functioning may be influenced by (with key phrases italicized):
They apply equally to all levels, individuals, households, companies, nations (governments) and even to whole cultures. In cultures, mindset and attitude constitute part of its structure, but a less-visible part. Whereas laws and societal norms constitute the visible structure, and most discussions about structures (systems) of society are about this, attitudes and mindsets largely operate unseen. Thus mindset and attitude are usually hidden, like leaven in bread, which spreads unseen and is visible only by its results. (x Christians will remember Jesus' warning against "the leaven of the pharisees ...".) It may become visible in the Harm (or Good) that economic activity does, and also in what we include in and exclude from our theories. Their impact is indirect and longer-term in happening and even longer in being recognised and taken seriously.
We may understand this via the Dooyeweerdian idea that functioning in later aspects impacts that of earlier [rp?]. The field of economics is no exception; economic activity is impacted not only by laws and policies but also by the less-visible structures of societal attitude and mindset. Yet this is poorly understood, seldom discussed and needs discussion here. Hiddenness makes assessment of them tricky, and they are not adequately discussed nor understood. Let us understand them in more detail. [===== some of that repeats]
Summary: Attitude can be either self-centred or self-giving, our functioning in the ethical aspect.
Attitude is our disposition toward others and is either selfish, self-centred, self-serving, self-protective and greedy, self-centred and mean on the one hand or, on the other, self-giving, serving the other, and open to correction and criticism, and generous. Attitude and may be understood as our functioning in the ethical aspect. (Christians know this as the meaning of the Greek word agape as distinct from other words translated "love". John 13:1-17.) In a dysfunctional attitude, we want others to serve our own interests and are unconcerned about them, "not bothering to find out if (my) individual acts cause harm and in the aggregate (when lots of people do it) result in tragedy" [CmCC]; in a good attitude, we want to serve others sacrificially and are concerned about them. Economics as a field has for too long been self-centred and expecting other spheres to serve it rather than it serve others and has, until recently, been signally unconcerned about the plight of the ecosphere or planet or of future generations. As many recent thinkers are urging, in many different ways, it is time for economics to become, at its core and throughout its entire theory and practive, self-giving in its attitude to other spheres of life. One expression of this is the Gift Economy. Economics should seeing itself as serving all others, together for Multi-aspectual Good. Other words for attitude include demeanour and disposition.
Attitudes (good or bad ethical functioning) deeply influence our economic choices and direction.
Example: In 2007-8, Northern Rock failed, precipitation the financial crisis. Why? An explanation from the economic aspect is that their collateral was too low. But one question we must ask is why that was so. Northern Rock had chosen a policy of trying to push people into loans that could not be afforded, and their salespeople prioritized their own commission above the interests of their customers. At both levels we see dysfunction in the ethical aspect. Similarly, stockbrokers in training are taught to be just, but out in the field they push people to speculate unwisely, because of self-interest.
Attitude in economic policy and activity is either generous or mean, serving others or self-serving. Had we given everyone who worked hard through the pandemic, often in much personal danger - not just health workers but also train and bus crew, waste operatives, etc. - a generous 'thank you', rather than a mere 1% more for health workers, would Britain be suffering the strikes it is today?
Sometimes the ethical aspect calls us to take risks that make no sense to economics theory and practice. Investing in Good rather than selfish pride brings long-term success. As long as these are taken with wisdom, they have usually proven to be economically beneficial. Statistically, was it not the companies founded, against the grain, on ethicality, which lasted 100 years, rather than those founded on self-interest - Lever Bros, Cadbury, Boots, Guinness, and other companies founded to do good rather than just to make money or their own success? "Quaker Capitalism". See "http://blogs.salford.ac.uk/business-school/thomas-cook-corfu-deaths-reign-lawyers/#more-6643" Thomas Cook Corfu deaths and the reign of lawyers (We need research into that, but it seems to be the case.)
In our view, Adam Smith did us a great disservice, both in economics and in life as a whole, when he argued that it is "self-love" that drives economics. What Smith actually meant is discussed elsewhere, but it was at least an unwise statement, because it was then taken up with glee by many as justification for their selfishness, and then bloated with Nietzsche's idea of self-promotion (see later).
It also set up a mindset, a belief that became a societal presupposition that excused dysfunction in the ethical aspect: self-serving, selfishness and self-protection in all areas of economics, such as prioritising business competitiveness over its goodness. Attitude and mindset work together.
Summary: Mindset is largely our functioning in the pistic aspect, our identity and what we believe to be most meaningful.
Mindset is about what we most fundamentally or ultimately believe about ourselves and about reality, what we find most important, fundamentally meaningful, what we are committed to, and, resulting from these, our
These can be at any level: individual, household, compeny, nation or even the whole of humanity. To put flesh on bones, let us consider some examples of expectations of the individual in affluent cultures like the UK:
Example of expectations of individuals: enjoyable food every time we eat; that we need use only 8% of our income on food; Netflix subscriptions; 'going out' several times a week; new phone every year; new cars every two years; open roads with no congestion and plenty of parking everywhere we go; flying abroad several times a year; nice house; job that 'suits me'; things will always get better, never worse.
That these expectations are pistic functioning is shown by people getting angry when such expectations are not met. See how many and varied these expectations are; our expectations are not a peripheral matter; almost the entire economy depends on them. They do enormous harm and yet most of them are non-essential - as we discuss in Chapter 7.
Now readers might undertake a similar exercise for affluent cultures and elsewhere, for companies and nations not just individuals, and then with aspirations and assumptions. For example, what about groupthink at the organisational level?
Our pistic function is also about humility versus hubris, what we worship, what we would give our lives for, what we give our lives to.
In Dooyeweerdian terms, mindset refers to our functioning in the pistic aspect. In the Judeo-Christian-Islamic religion, we are called to worship the One True God, but in reality for many Jews, Christians and Muslims that is rather superficial, and their real orientation is towards ourselves, towards wealth, prosperity, convenience, reputation, etc. or towards technology, etc. - all idols, as set out below. Other words include: orientation, mentality, worldview, prevailing opinion.
Tyranny of the prevailing opinion affects most of us, and if that opinion is somehow harmful, we need to escape it. This is where courageous people come in.
Summary: Mindset and attitude usually reinforce each other for good or ill.
As the two final aspects, the two aspects of mindset and attitude, the pistic and ethical, retrocipatively impact our functioning in all other aspects, including the economic. They emerge obliquely in things like hidden agendas. Mindset and attitude often mutually reinforce each other, either towards Good (commitment and selflessness) or Harm (self-worship and self-centred). Mindset influences attitude, in that the motivation to deliberately take a self-giving rather than selfish attitude is our pistic functioning, our beliefs about whether selfishness is acceptable or not.
What Adam Smith, in arguing that it is "self-love" that drives economics, was to set up a mindset, a belief that became a societal presupposition, that excused dysfunction in the ethical aspect: self-serving, selfishness and self-protection in all areas of economics.
Mindset-attitude is found, not only in individuals, but in companies and societies, both nationally and globally, in which it is sometimes called the "culture". In the latter, it consists of prevailing beliefs and pervading attitude of selfishness or self-giving. In both companies and nations, the pervading attitude often echoes that of their leaders ("down from the top").
(One reason we use the term "affluent" of nations or cultures, rather than, for example, "developed" or "rich", is because we want to emphasise these two aspects rather than the formative or economic aspects which make the latter terms meaningful. The aspirations and attitudes of elites of so-called LDNs often follow those that prevail in the affluent nations.)
Mindset-attitude is both individual and communal, societal, cultural. The mindset-attitude of individuals mostly, usually reflects that which prevails in the cultures in which they live, whether in society or organisation. However, the individual still has some freedom, so courageous individuals can, and sometimes do, resist the prevailing mindset-attitude. This, as we discuss later, gives a basis for hope, but it is challenging because a change of mindset especially requires not merely information, education or incentives, but a deep change of heart, which is sometimes called "repentance".
Often, when we refer to "culture" (as in "toxic culture") most is about ethical and pistic functioning, deeply affecting all else. Mindset and attitude can explain why many governments refuse to take climate and environmental responsibility seriously: idolatries, hidden agendas, selfishness and competitiveness.
Lifestyle is an outworking and expression of the combination of attitude and mindset. That is the importance of mindset-attitude when trying to understand economic activity - and hence it will crop up throughout this Rethink. We do so here by means of Dooyeweerd's idea inter-aspect retrocipation from the ethical and pistic to other aspects. The following list gives examples of how our pistic and ethical functioning affects our functioning in all other aspects.
Because the pistic and ethical are post-social aspects, mindset and attitude tend to spread throughout a community or society, whether for good or for ill.
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Example of Repentance
When it is shown that a sector of the economy or a business sector does much harm, repentance is when it plans to shrink itself rather than defend itself and maintain its present size and power. And when it takes the charge seriously rather than resisting. Repentance can go on at all levels: individual, household, firm, sector, national and even global.
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We in affluent cultures, and those who aspire to this affluence, should ask ourselves how few of those are true of us and of the institutions that lead our cultures (businesses, media and government especially). Not least because of our huge ecological footprint nor least because of the multi-faceted misery our affluence bestows on us, we need to change our mindset-attitude. But how?
Summary: How can we change problematic mindsets or attitudes? Pistic and ethical problem requires pistic and ethical solution.
A dysfunctional mindset or attitude (pistic, ethical functioning) needs to be changed. But how? And how fast enough in this period of climate emergency?
Information, argument, education (advocated e.g. by Trainer), economic incentives, law, comedy, behaviour change, have all been tried but usually either do not work or work only partially and incrementally, and too slowly. We cannot even legislate to change mindset or attitude. This is because, as mentioned in Chapter 3, they are changes in aspectual functioning on which ethical and pistic functioning depend foundationally (lingual, analytical, lingual, economic, juridical, aesthetic, psychical respectively). Moreover, they sometimes have harmful side effects: for example laws involves compulsion, which generates reaction, education and information can become brainwashing and/or a Cancel Culture (as Trainer recognises), comedy too often degenerates into sneering and marginalisation. (Comedy can sometimes be effective, when it surreptitiously introduces a different mindset.)
What we have is a pistic-ethical problem that is in need of a pistic-ethical solution. These attempts, which target other aspects, are necessary but without change in mindset and attitude - change in the hidden pistic and ethical functionings of the heart - they remain ultimately ineffective.
Though deep-seated, we do have some control over our own mindset and attitude within ourselves - we 'decide' to take one attitude or another and 'decide' what to believe and commit to. This is so even in the face of psychological handicaps or social or cultural pressure. (x Jews and Christians may remember Joshua's courage in "As for me and my household, we will serve Yahweh".) It is part of the insight offered by Jewish and Christian perspectives that not only is this necessary, but it is possible; they usually call such changes "repentance" or "conversion" (see Chapter 3) and some secular thinkers today are adopting these ideas. Such changes, and the courage and perseverance needed to sustain them, are pistic functioning, of which we are capable as human beings. Indeed, it has been through the action of some courageous individuals who have gone against accepted mindset or attitudes, often at great cost to themselves, through whom much change in society has occured, including in economics. And such people set an example that others follow because what they advocate is felt deep in the human heart to be 'right'.
Such pistic changes in individuals are instantaneous, so they answer the "fast enough" above (though they might occur after a long process that leads up to them). Once pistic and ethical action is taken, then action in the other aspects, such as education or changes in law, becomes much more effective, not least because of the retrocipatory impact of our wholesome ethical and pistic functioning on it. Indeed, such earlier-aspect action will be needed to complete the change.
Religions have a wealth of expertise on this on which it could be wise to draw. This has been discussed in Chapter 3: Most religions offer a normative direction that compels us. Judaism offers the insight that human beings are sinful and can repent, which is a choice to change mindset and true repentance is instantaneous. Christianity offers the positive hope that once we truly repent God not only forgives but enters us, changes our wills from the inside without coercion, and enters our situation to make changes that would not otherwise be possible. History shows that this can indeed change society's mindset and attitude in a surprisingly short time, in that, while repentance operates at an individual level, there have been instances of widespread repentance (often known by Christians as "revivals"), which have freed people of their previous aspirations, expectations, assumptions, and even changed their identity, so that the very way society operated changed, and various problems just disappeared.
Bringing in religion can carry its own dangers, of religious or ideological enforcement, virtue policing, etc. We already have that in societies ruled by religion or ideology, such as Iran or China, and even, ironically, in Progressive cultures of the USA, Europe, UK, etc. (where it could be argued that Progressivism is their prevailing ideology and presupposition). The solution to or prevention of that problem is likely to be, not to bar religion from entry into the debate, but to look at the heart attitude and mindset at the root of those dysfunctional cases.
(x To a Christian perspective, it is through Jesus that full self-giving love, agape, was revealed, and good pistic functioning involves being oriented in our hearts towards the True God, revealed through the Bible. Hence a Christian perspective can provide important insights for understanding and dealing with attitudes. )
Summary: A multi-aspectual understanding can throw fresh light on Adam Smith, especially his famous ideas of self-love and invisible hand.
Adam Smith, called The Father of Modern Economics, was a pioneer in trying to understand the economic aspect and how it operates, and his attempt is set out in his The Wealth of Nations. Nevertheless, his ideas have been severely criticised, not least because the kind of economics that emerged from his ideas has done a lot of harm. Some get defensive about Adam Smith. This is especially true of two phrases that he used, "self-love" and "invisible hand".
It is easy to overlook the insights he brings. He was a pioneer, finding new paths through thickets of complexity. If his paths wandered a bit, or even if he missed some paths, we cannot blame him; it is for us to straighten or discover those. Here we briefly indicate how an Dooyeweerdian perspective, as outlined in Chapter 3, might help us find the insights and yet clearly understand what is flawed, in Smith's seminal ideas, and what might be done about it. We look at a couple of extant criticisms of Smithian economics, and then reconceive his famous ideas of self-love and invisible hand, then offer our own critique.
Our discussion of Smith here must necessarily be brief and indicative.
Summary: Smith's ideas have been criticised from both within and outwith economics, and worldview (mindset) lies at the root of both critiques.
Many are the criticisms of Adam Smith, often arising from what Norman [2018] calls five myths (that Smith changed, advocated self-interest, was pro-rich, was anti-government, and was first and foremost an economist). We try to understand his independently of these myths.
We consider just two different ones from two perspectives, as examples. One illustrates critique from within economics itself, in that it argues that Smithian economics leads to economic dysfunction. The other is from outside, from philosophy, placing Smith' ideas in wider context.
Veblen [2012], cited by Zhang [2022] argued that Smith's ideas lead to wasteful production, the "selfish propensity for preservation, domination and coercion". Zhang [2022] extends Veblen's discussion from the consumption to the production side of the economy. He defines "wasteful production" as conspicuous goods (tourism and the private motor vehicle as examples), conspicuous profession ("misallocation of talent") and information overproduction ("shallow and fragmented information to divert the attention" from the important, deeper issues). Pointing out that this waste cannot be explained by market imperfections, government interference or transaction costs, he discusses worldviews that lie at the root (which he also calls "quasi-religion"). He sees this as a clash to two worldviews, Nietzschean secularism against "ascetic Protestantism". Beliefs inspired by Nietzsche about self-promotion and self-will have led to a cruel, destructive neoliberalism, and wasteful production comes from this. That is as far as he goes, because he ends with a call to take wasteful production seriously. We will do so in Chapter 7 in what we call Useless economic activity. But what is interesting is his recognition of the retrocipatory impact of the pistic and ethical aspect, especially its "quasi-religious" manifestation mixed with self-promotion.
From a Scholastic perspective, Mueller [===] places nearly all the blame for the problems of modern economics onto Smith. Whereas Scholastic Economics, from Aquinas, Augustine and Aristotle, had four concerns, which goods we produce, justice in exchange, to whom goods are distributed, and which goods people prefer to consume (utility), Smith, he claims, focused on only two and ignored the last two and moreover reduced the theory of production to labour. Neoclassical economics recognised some of this error and restored the theory of utility, but not the others. "In trying to reduce human behavior to exchanges, modern economists have forgotten how these essential motivations are expressed which is as personal or collective gifts (and their opposite, crimes)."
In both critiques, the problems with Smithian economics are rooted in worldviews (mindsets), what its adherents believe to be meaningful, important or normative. This is what Dooyeweerd argued lies at the root of all theory and which can make theories ultimately untenable: presuppositions of origin of meaningfulness, which he called religious ground-motives. The theory is untenable because it ultimately undermines understanding of both its own field and of wider reality by omitting important spheres of meaningfulness (aspects).
Nevertheless, and having recognised this, we can ask what valid insight might have been offered, which at least at the back of the original thinker's mind, often hidden by words and arguments set down and the context of their times. So we now re-examine Smith's famous twin ideas of self-love and invisible hand, using a Dooyeweerdian approach to do so.
German scholars debated "Das Adam Smith Problem", of whether Smith's Moral Sentiments and Wealth of Nations contradict each other. As Norman 2018 and Sagar [2022] do, we take Smith's two great works to be harmonious not contradictory. Whereas Rousseau was just against markets, Sagar [p.4-5] believes, Smith was much more nuanced, in recognising both the innate validity of markets and locating their problems in "the human condition"; whereas Rousseau argued from a philosophical position, Smith tried to critically respect real-life. Smith resonates closely with Dooyeweerd's very similar approach, so we may expect some benefit from adopting it to understand Smith. For example, we may see markets as possibly an innate working of the economic aspect, with other aspects being important too.
Summary: What Smith meant by "self-love" might differ radically from the excusing of selfishness that most take it to mean.
In his The Wealth of Nations, Smith wrote:
"In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages." [our emphasis]
This is the only time he uses "self-love" (though he sometimes wrote of "own advantage" etc.). Yet, since then, most mainstream economics have (gleefully?) interpreted "self-love" as an excuse for selfishness and self-protection (dysfunction in the ethical aspect) to reign in economics, especially in the guise of the Rational Economic Actor, with disastrous and very harmful results (discussed below), and when bloated with Nietzsche's norm of self-promotion. It is indeed unfortunate that he used that phrase, which gave rise to Norman's 2nd Myth.
But is that what Smith really meant? Did he really intend the rampant selfishness that pervades economies today, with their damaging "wasteful production"? Not at all! Throughout his writings we find a deep antipathy to and disdain for the selfishness of the rich and aristocratic who spend their lives in "luxury and caprice" with a surfeit of "baubles and trinkets" and for the "proud and unfeeling landlord" [Moral Sentiments], and "glittering baubles", "negligent master or careless overseer" [Wealth of Nations].
Let us put ourselves in his shoes. What he saw around him was ordinary people engaging in buying and selling, with some reason for doing so, and wanted to work out what motivated their doing so in a way that is meaningful economically. He realised that benevolence of the wealthy was not a good foundation for a healthy economy that would benefit everyone, and, in his concern to maintain "sympathy" and to avoid repetitive work among labourerers that leads to "torpor of the mind" [Smith, Moral Sentiments, 461], maybe intuited that it was meaningful in what we call a different aspect, the ethical. Of course motivation as such is pistic functioning, but its target lies in any aspect: what is the economic motivation for making and selling bread, and buying rather than making one's own bread?
It has to do with resources (bread and what it is exchanged for), and the exchange of resources should benefit both parties when they employ the resource. This is a tiny part of what we call Multi-aspectual Good: recompense for the labour of the baker and sustenance for the customer. That is a Good that the economic aspect makes possible. When he wrote "self-love" etc., was Smith, at the back of his mind, really trying to identify the meaningfulness and laws of the economic aspect without reference to other aspects?
His understanding, however, was only partial. What Adam Smith saw was the transactions and not the bigger picture of Multi-aspectual Good. In Wealth of Nations, though he treats frugality as a virtue, he says nothing about efficiency and of course he was unaware of ecological or planetary limitations. So it is not surprising if he missed the mark with the meaning-kernel of the economic aspect.
Was he likewise, in Moral Sentiments, trying to understand the meaningfulness and laws of the ethical aspect? ("the purpose of The Theory of Moral Sentiments is in part to set out an understanding of these phenomena in potentially lawlike terms" [Norman 2018, 181]).
If so, Smith might be considered to have prefigured Dooyeweerd's idea of aspects: two distinct aspects, each with their different kernel meanings and laws, but Smith lacked the philosophical basis that Dooyeweerd had. Nevertheless, Smith and Dooyeweerd emerged from the same religious root, a type of Calvinism touched with Celtic Christianity that respected the Creation and its diversity of meaning [Basden ===]. He was interested in at least both those two aspects - overcoming Norman's fifth myth.
The difference between "self-love" and the selfishness he scorned is meaningful in the ethical aspect, not the economic. The difference between ethical valid functioning and dysfunction is present in the economic aspect only as an anlogical echo and cannot be clearly seen when viewing reality solely from the economic aspect. To turn this hope for mutual blessing into selfishness at the heart of economics is a problem, not of economics itself, but of attitude and mindset, both among economists and among politicians, pundits and public who use economics, as we discuss in Chapter 4.
However, Adam Smith is not entirely guiltless of this himself. Though he uses "self-love" only twice, he often uses "self-interest", "own advantage" etc. with similar import. Whilst condemning these in the idle rich, he excuses them in those who labour, not realising perhaps that a time would come when those who labour would themselves be the idle rich with "baubles and trinkets" - most of us who populate affluent nations today - and the excusing of our "self-interest" would be destroying the Earth.
Moreover, a narrowness in his thinking, as discussed below, rather contaminates his attempt to understand the workings of the economic aspect.
Summary: Might Smith's idea of invisible hand refer to the fundamental laws of the economic aspect itself, in coherence with other aspects?
Likewise, may we see Smith's idea of "an invisible hand" as the laws of the economic aspect, the way the Creation operates in its economic aspect in coherence with all other aspects? In his Theory of Moral Sentiments, Smith writes,
"The proud and unfeeling landlord views his extensive fields, and without a thought for the wants of his brethren, in imagination consumes himself the whole harvest ... [Yet] the capacity of his stomach bears no proportion to the immensity of his desires ... the rest he will be obliged to distribute among those, who prepare, in the nicest manner, that little which he himself makes use of, among those who fit up the palace in which this little is to be consumed, among those who provide and keep in order all the different baubles and trinkets which are employed in the economy of greatness; all of whom thus derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or his justice ... The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, ... they divide with the poor the produce of all their improvements ... They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition."
That is, when we operate properly economically (which current economics does not!) this will open ways towards justice, love and other Good things. (x To Christians, "Providence" is the One Who designed the operation of the economic aspect, and all the other aspects, and designed them in Love to harmonise and yield something beautiful, wonderful and Good together, and actually may not be wholly to blame for unequal division!)
In The Wealth of Nations, Smith wrote,
"... he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention [namely the general good]."
In both, Adam Smith is making the point that, despite the selfishness of the wealthy, the poor can benefit because of the way the economic aspect operates (i.e. its fundamental laws) and not wholly reliant on benevolence of individuals or government. He wanted to find and propose that an answer to the societal evil of the selfishness of the wealthy may be found, not just in benevolence and charity, which were too subjective and unreliable====, but in the laws of the economic aspect.
Dooyeweerd argued that, even though the laws of each aspect are irreducibly distinct from those of others, they contain analogical echoes of those others so that, in its right operation, it will tend to support their operation. (Note the word "right".) So the economic aspect contains, in its fundamental laws, something that tends towards some measure of justice for the poor.
If Smith and Dooyeweerd are correct, this is glorious!
HOWEVER, economics has seldom worked like that. Too many have taken Smith's argument to excuse their own affluent,,unconcerned lifestyles, relying unquestioningly and hypocritically on "the market" to sort out the problems that do not concern them, and, in academic theory, to support the discredited Trickle-Down Theory. This is a travesty of what Smith (x and the Creator x) intended. In our view, that is not just a matter of economics theory and practice, but is revealed as a matter of mindset and attitude, and it will be condemned as such more harshly.
Summary: Three fundamental errors in Smith's thinking are revealed by recognising the importance of belief and diversity of meaning. Turning away from them lets us hear more clearly what Smith was really getting at.
Our own comments on Adam Smith, from a Dooyeweerdian perspective, consists of three fundamental critiques and an application to today.
1. Smith was a child of the Enlightenment, the belief-movement that rightly drew attention to logical thinking but wrongly elevated and idolised it. That movement wanted especially to remove ethics/morals and beliefs from human thinking (maybe understandably so, because those had oppressively dominated thinking during the previous Scholastic centuries, Dooyeweerd's Nature-Grace Ground-motive). So it is no surprise if Smith also wanted to at least move such considerations aside while he cleared his path of economics - even though it is clear that he still valued them. Smith was also concerned with liberty, one pole of the yet-young Nature-Freedom ground-motive. Though perhaps over-influenced by his friend David Hume, Smith was not entirely enslaved to either ground-motive.
2. Reductionism. In trying to clearly differentiate the workings (laws) of the economic aspect from those of the juridical and ethical aspects in particular, he sometimes went too far and ended up trying to reduce them to economics. He argued or at least implied strongly that we may rely of the workings of the economic aspect to ensure justice and some measure of Good. What he should have done (in Dooyeweerdian retrospect!) is to have brought these aspects back in and discussed their relationships with the economic aspect, as we have done above. (He did occasionally do some of this, but allusively more than explicitly.)
Not only this, but he explicitly limits his aim in Wealth of Nations to "explain in what has consisted the revenue" first of the "great body of people" and of the sovereign. He sees only money, and deliberately ignores the important economic activity of the household, especially food-growing, food-preparation and care. That he wanted to move away from land having value, to labour, is no excuse for completely ignoring the labour linked with food.
3. Exchange. In trying to work out what was uniquely economic, he fixed on exchange rather than on resource limitations and frugality, as Dooyeweerd argued is the kernel norm of the economic aspect. Exchange is actually social rather than economic in its fundamental meaningfulness. As Dooyeweerd argues, the kernel meaningfulness and norm of the economic aspect is limits and frugality. Smith's mistake is perhaps excusable, given the pioneering nature of his thinking. Indeed the themes of resource limits does inform his arguments about the invisible hand: even the wealthy are limited in ways they cannot ultimately control nor escape.
4. Relevance to today. Most affluent economies today are no longer full of bakers and butchers, and while value-exchange is still a fundamental operation, it has changed almost beyond recognition, in its automation and in the kinds of goods exchanged (especially financial products). One idea remains, however: Smith's distinction between the valid, misnamed "self-love" of the baker and the selfishness of the wasteful wealthy. As mentioned above, in the affluent economies of today, have we not become more like the wealthy, like the "proud and unfeeling landlord", than the baker and butcher? Is not our world much more filled with artistes, wannabe musicians, influencers, designers, car-washers, dog-walkers, media pundits, and the like, than ever before? (Chapter 7 calls these "non-essentials".) If people in the UK, for instance, expect to spend only one third of their income on essentials (8% on food, 25% on housing) what do we spend the remaining 67% on but "baubles and trinkets" (as Adam Smith called them), many of which are procured for us by oppression and injustice, and by climate and environmental irresponsibility, that we excuse? Does this imply that Adam Smiths ideas no longer apply to our affluent economies or, to put it more strikingly, we are no longer worthy of Adam Smith, even with his errors?
A pioneer like Smith might be excused errors, yet Post-Smithian economics did not attempt to correct them. Instead, and even going further than Smith did in these very errors, Post-Smithian economics set off in a wrong direction, and has stubbornly continued that way ever since, leading us into disaster both for economics and for planet, health and society. The fault is not totally Adam Smith's; it is our own. Should not we in the affluent cultures that are destroying the Earth, urgently repent, change our attitude and mindset, and seek paths to where the economic aspect would truly lead us, no longer shackled by the Enlightenment, rejecting reductionism and focusing more on the true kernel of the economic aspect, limits rather than exchange?
Summary: This section demonstrates how the above understanding can help us rethink concepts, practices, paradoxes and problems in economics.
Here we will work through some examples of theories, concepts and paradoxes using the above understanding to reveal fresh insight. They show that, while each can be explained through the lens of the economic aspect (as economic theory attempts to do), a full understanding, which is needed for real-world economics, requires understanding other aspects too. In order to demonstrate how the above may be employed in rethinking, we will consider a concept, poverty,
Summary: We redefine poverty to recognise all its aspects, not just numerical amounts of money. Similarly inquality. This will both enrich theory and make policy more successful.
The standard measure for poverty was "income less than $1 per day", and it is often used as yardstick by those who want justice for the poor. However, it is often a rather impoverished concept, a double narrowing of the juridical idea of justice to quantitative measures and to mere economic considerations (the problems of which have been discussed in Chapter 4). Inequality is likewise, with measures like the Genie and the 10-90 Coefficients.
Is not real poverty much more that that! Poverty is meaningful in every aspect, in fact.
All aspects interact and reinforce each other. Poverty cannot be overcome merely by economic means of higher wages, lower prices or redistribution of wealth alone. These do play some part, often temporary, but to work properly all the other aspects of poverty need to be given due respect and brought into the poverty discourse and policy planning.
Some conventional economic theory (of both left and right) focuses on quantitative measures of resource (e.g. "less than $1 per day" or "less than the living wage"). While some conventional ideas do recognise some of these aspects, they often treat them as caused by poverty rather than aspects of it, so believe that overcoming monetary poverty will solve these problems too. But it ("throwing money at them") does not and will not [ref needed===] [Note: Rightwing]. Instead, we need to understand the dynamics of the relationships among all aspects of poverty. For this, we need to take into account both what is the kernel meaning of each aspect and various inter-aspects relationships, especially the retrocipatory impact of the later aspects, exacerbating the earlier.
More recent thinkers recognise the importance of the biotic and physical aspects in poverty (ill health, low biodiversity and ecosystem, and climate change to more frequent and severe droughts and floods). The causality is in both directions: these cause or exacerbate poverty, especially in fragile nations, and poverty exacerbates these. Example: people cut down the few remaining trees for firewood and lose all the beneficial animals, insects, and also soil-stabilizing trees and other plants. Many are now realising that replanting trees etc. is important to address poverty as well as climate.
And what is really wrong about inequality? After all, a mere quantitative difference does not tell us which person or group is happier and more fulfilled than another. What is wrong with inequality is meaningful primarily in the juridical aspect: an injustice. Just as we advocate taking a multi-aspectual approach to poverty, so with inequality. Piketty's [2014] famous idea that inequality is an inevitable result of capitalism, because return on capital will usually exceed returns from labour unless the state intervenes, actually moves in a multi-aspectual direction. he includes not just quantitative-economic factors, but also monetary injustice (juridical aspect), threat to democratic order (social, juridical) and technology (formative aspect), and even his 'r' or rate of return on capital includes multiple things, each of which is at least flavoured with various aspects. Later, he argued that ideology (pistic aspect) is also important. As some of his critics have indicated, his ideas need to incorporate yet other aspects, or fill out ones that he treats thinly (such as those of education and skills [Topel & Murphy 2015]).
One is the ethical aspect, (attitude), which, with pistic functioning, can either make poverty worse and lock people in or help release people and communities from other aspects of poverty [=== ref needed], including the economic. The innate paradox in the ethical aspect, that genuine self-giving benefits the giver, has been found to be true by the UK charity, Christians Against Poverty; they find that when they get debt-ridden people to give away some of their income, their financial position actually improves. Others have remarked on the importance of dignity and meaningfulness (pistic aspect) in countering poverty. But more: because they are post-social aspects, functioning in them tends to spread throughout a community or society, whether good or evil. Generous and trusting attitude that both society and economy, while its dysfunction, of self-centredness, is the root of much that undermines both. Likewise societal morale, dignity, and motivation, and dysfunctions like idolatry and arrogance.
That these two aspects are distinct from the juridical, and come after it, might partly explain why affluent cultures, such as those represented at the G7, though seemingly have less corruption and better rule by law than others, are also those that have contributed most to destroying the Earth, biodiversity, climate and indigenous cultures.
Some right-wing commentators have suggested that many people are poor by their own fault. Though this seems rather harsh and unfeeling, their reasoning needs to be properly considered, especially when a left-wing commentator (on the UK Guardian newspaper) says something similar. Working for years with a poverty charity, she discovered that the children or previous clients were returning a decade later with the same problems; the funding that they had passed to the parents had not solved the problem, the funding having been used not to buy food but to buy expensive fashionable footwear for the children. This needs understanding properly, rather than being fodder for cynicism by some commentators. A good understanding might begin with seeing it as yet another component of the pistic aspect of poverty: aspiration, expectation and the tyranny imposed by the idolatry of fashion, and educating children to withstand that tyranny.
Nevertheless, the economic aspect of poverty is a main one. Poverty is an evil. To more fully understand how its aspects operate, we need an economics that differentiates Harm from Good, as discussed in Chapter 7.
Summary: Production and consumption, labouring that produces goods and services that are then used, are both multi-aspectual functioning that which might contribute to Multi-aspectual Good. Much conventional and even recent thinking either confuses them or focuses on one at the expense of the other.
As mentioned in Chapter 5. the value of both labour and capital is potential rather than actual, indirect rather than direct. It is actualized by human functioning when used to contribute to Multi-aspectual Good.
The purpose of functioning in use can be anything, which is to say meaningful in, and hence led by, any aspect in principle. the purpose of functioning in labour is largely economic, that is, to produce goods and services, which can then resource use. We may interpret the earlier Figure ===== as showing not value but functioning. Functioning in use directly contributes to Multi-aspectual Good (or Harm), while functioning in labour can make two contributions, indirect and direct. The indirect contribution is from the functioning that generates goods and services, the use of which directly contributes, discussed below.
The functioning of the user ("consumer") is multi-aspectual but often the Good is contributes is primarily in one aspect rather than others. Labour is also multi-aspectual functioning, and this is what produces the direct 'value' of labour in figure r5-===, in addition to the indirect value of the goods and services produced. For example, power consumed by labourers producing the goods, directly contributes to climate change emissions (physical aspect), the thrill of problem solving (formative aspect) as part of the labouring process contributes to the Good that is that thrill. Marxist analysis of labour draws attention to some aspects of this, notably the juridical dysfunction of oppression and injustice, but otherwise is impoverished because it fails to recognise other aspects, especially those in which some Good is contributed. Note that in evaluating this direct contribution from labouring, it is not the amount (hours, piecework) of labour that is value, but rather the repercussions of the aspectual functioning that constitutes the labour, such as the ways in which the labour is meaningful and the quality (e.g. skill) or attitude (e.g. carefulness) of the labour. Too seldom does this enter economic equations.
Whereas in Chapter 5 we focused on the value, the Good, that results from labour and capital, here we widen our view in two ways. One is that we recognise that labour and capital can do Harm as well as Good, and may even be Useless, such as in Graeber's Bullshit Jobs and in non-essentials; this is discussed in Chapter 7. The other is that we must take into account simultaneous multi-aspectual functioning, inter-aspect dependencies and impacts, and how functioning in labour, capital and use affect each other.
An example of inter-aspect dependency in labour functioning is when labourers have so much to do (economic aspect) that they do not have sufficient rest (psychical aspect). Another is that management attitude (pistic, ethical aspect) evokes either anger and strikes or pride in good quality work (formative aspect).
An example of impact of user (consumer) functioning on labour functioning is demand. Demand, a functioning in the economic aspect, is affected by the consumer's pistic functioning (belief that they want certain types of goods and commitment to having them) and communication of those demands (lingual functioning). The demands might in turn have been generated by other aspectual functioning, such as the biotic functioning of hunger or the ethical dysfunctioning of greed.
In such ways can we understand demand not as some mechanical, inescapable determiner of economic activity but as multi-aspectual functioning. In reality, demand is flexible because of this. With aspectual functioning, we may even understand resistance to demand if it is seen as evil or harmful (e.g. tobacco, prostitution). Often such evil arises from kindset and attitude, functioning in the pistic and ethical aspects impacting all others.
This offers us a conceptual framework for understanding and discussing demand so we not condemned to either accept or reject current ideas uncritically.
An example of impact of labour (producer) functioning on use (consumer) functioning is high quality working. It generates higher quality products that often last longer (economic aspect), make the use functioning more effective (formative) and more pleasing (aesthetic aspect). (Anticipating Chapter 7, this could be Harmful as well as Good.)
Another example of impact of labour functioning on use functioning is the strike, the withholding of labour, and so the non-generation of goods or services, and hence lessening the contribution to Good. If that is the case then strikes are detrimental - though they might result in more justice for workers and others, a Good in the juridical aspect. However, if the goods or services contribute to Harm then the strike itself might contribute to Multi-aspectual Good. Examples might be chemicals that pollute soil, water or air, or which poison people, social media that encourages deceit and enmity, and media of any kind that makes consumers (users) in affluent cultures yet more selfish and sel-centred - Harm that are meaningful in the biotic, lingual, social and ethical aspects respectively. Reduced availability of goods or services (whether because of strikes or pandemics) might also prove to be a Good thing. Reduced availability of pens (in the pre-computer era) does the lingual Harm of reduced writing but might also force us to think more carefully before we write, a Good in the analytical and formative aspects. Reduced fuel availability, and we might drive less - a major Good in this climate emergency. This is why strikes and other impediments to production are not necessarily evil, in addition to their more obvious possible effect of justice for workers. Thus this model of multi-aspectual functioning can help us recognise and discuss the mix of Good and Harm, rather than merely taking sides and seeking compromises that satisfy few.
Figure r6-lab, by its arrows, depicts some of the above impacts: inter-aspect dependency impact, impact of demans on labour and impact of labour on use.
Supply of labour with appropriate skills is always a major concern. These days, now we wish to insulate British housing stock, for example, to make it more efficient, there is a major shortage of skills to do this. So tackling the climate crisis is slower than it needs to be. The answer is a decade ago: invest in training a decade ahead of when the skills will be needed in wide measure. But governments and corporations seldom take this wise action. Why? Because, in the UK case, climate and environmental responsibility have been low on the agenda (except as lip-service) compared with most other things, such as economic growth. Again, this is a problem of mindset-attitude.
Summary: Unpaid household work is usually ignored in economic calculations, which puts so-called LDNs at a disadvantage. A central focus on human functioning that contributes to Multi-aspectual Good automatically brings unpaid activity into the purview of economics, both theory and practice.
===== still to be rw
In Chapter 5, we mentioned the enormous value of unpaid activity, especially in the household. Since much of the economic activity in so-called Less-Developed Nations, is unpaid, to give them their due, we need to understand unpaid activity. The SNA 2025 exercise has argued the need to bring this value into national accounts, such as GDP.
In their Guidance Note on Household Activity, the SNA lists a number of unpaid household activity, including childcare, adult care, nutrition, transport, household management services, laundry and clothing services, formal volunteering, informal volunteering, shopping, and information services. All these are of value. And there may be more; in Chapter 5 we suggested adding leisure, worship and scrutinizing legislation as examples that are meaningful in aspects not very evident there.
The SNA exercise suggests that one way of doing this is to accord average market price to unpaid activity, but that is a blunt instrument and itself misses much. Instead, these may be understood in terms of their aspectual functioning that contributes to Multi-aspectual Good. Most are multi-aspectual, and hence contribute in many ways, not least in mental health and dignity of the individual (psychical, pistic value), and a careful analysis could identify each functioning that is of value. In most of the above, there is one aspect that most makes them meaningful and gives them value, for example the biotic in nutrition, along with the aesthetic (as set out in Chapter 5). Some, such as child care, there might be no one primary aspect, so a full multi-aspectual analysis is the more important. Some aspectual functionings might be of value in several ways; for example the lingual aspect of childcare (talking with the child) can be of value in both helping the child to learn to talk, and also making them feel valued (which, as readers might have noticed is of course meaningful in the pistic aspect).
In fact, each of the unpaid activities above is more complex - indeed, unpaid activity is often part of everyday life - and the RLDG carried out a fuller aspectual analysis of them, in RLDG response to SNA 2025. Here, as an example, is a fuller comment on Childcare.
"Unpaid childcare captures the time provided by care givers in the direct care of children." Care has the ethical aspect as its primary, but in the case of children there is usually a strong social aspect of relationship and a biotic aspect too when the children are the offspring of the carers. "This can range from helping with homework [lingual, formative] to feeding [biotic, aesthetic], washing [physical, biotic] or dressing children [aesthetic]."We might also add: play [aesthetic], maintain justice [juridical], love [ethical], and affirm their worth [pistic]. These four aspects, especially, help to form the character of the child from an early age and, indirectly, their future potential in economy and society.
It might also be no coincidence that all four are post-economic aspects, so that they impinge on and impact, and should guide and regulate, the economic activity and decisions. Using purely economic rationality and laws on their own (as in SNA 2008) misses the importance of these aspects.
Readers can see from that how aspects can be used to draw out issues that are often hidden or remain tangled together.
Summary: The roots of both the Tragedy of the Commons and the Free-Rider Problem are exposed, leading to ways to address them.
See full discussion
The Issue/Problem:
Current Addressing of the Issue:
Our Approach:
Summary: Some see urbanisation as a major problem and propose ecovillage systems as a solution.
"Both the Mazzucato State-led development solution and the big-corp solution but with the skunk works, or the liberal free-market, the libertarian disruptor, new innovator, the old-companies-die solution, all those models, are all in a sense large scale capitalist models to one degree or another. Even Mazzucato's model is a State-led capitalist model." That was one of the comments from an RLDG participant. Many believe that "large scale" does not work and is part of the problem, and they propose ecovillage systems as a solution.
Trainer [===] proposes localism, villages, things that are very different scale. And it's not a technocratic solution at all. The whole issue of global trade and so on is very much open to questioning and critique. Yet, the question was raised, "What do we do about the millions, not to say billions, of people who live in cities? They cannot go back and live in villages. That was the way they were in China before they were dragged out of poverty by economic development." Thinkers too often just take sides for-and-against.
Instead, we suggest an aspectual framework might help us understand, be challenged, but retain some wisdom. We look at the functioning of both "the city" and "the village" by aspect, and find much commonality between them and much differentiation within each. For example, the social functioning of the village, of the home and household we find throughout real cities, except in much professional life. Much economic and technological functioning we find in cities we find in villages - not least mobile phones. This points us elsewhere for the root of the problem.
Not least among these is our familiar friend, mindset-attitude. Professional life of much of the city is governed by a mindset of the absolute importance of money-making, technology and production, as well as political battles, overlooking the realities of human life. It is amplified by self-centredness and rivalry. In villages we also attitude problems of selfishness and rivalry, and we also find distorted mindsets - though distorted in different directions. Not least, in both, is the arrogant disdain for the other.
More to write here, but that might point us in a fruitful direction for exploration. Do we need research?
Summary: Marshall was bringing in multiple aspects - though not all.
===== tbw
Summary: We are offered fresh insights into standard economics phenomena like investment, innovation, trade and aid, and competition.
Some phenomena discussed in conventional economics may be usefully understood in terms of aspects (see longer discussion). For example:
Summary: Many paradoxes in economics may be resolved by understanding the importance of aspects that have been overlooked or confused.
Here we attempt to resolve various paradoxes in economics with the help of aspects. In most, the paradox is to do with the multi-aspectual functioning that is economic activity, and confusing or ignoring important aspects. Dooyeweerd's famous example is the paradox of Achilles and the tortoise, which arises when the kinematic aspect of movement is ignored, reduced to the spatial aspect of a sequence of positions. Similar reasoning may be applied in economics.
Summary: Jevons' Paradox, that more efficiency sometimes leads to more, not less, total consumption, may be resolved by understanding the aspectual functioning that is going on.
The Problem Addressed: Jevons' Paradox is the counter-intuitive overall increase in the use of a resource, due to improvement in the efficiency of its use or of its production. Jevons studied consumption of coal when the Watt steam engine was hoped to reduce use of Britian's limited stocks of coal because it was more efficient. He found the very opposite, "It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth."
Today, we see something similar, in that, because mobile phones or LED lighting is believed to use relatively little power, many more are purchased than before, and they are left switched on, and overall power consumptton increases. It is very important today, because of the need to greatly reduce energy consumption in affluent cultures.
Through the lens of economics, the unexpected increase in overall consumption is caused by a fall in its price because of increased efficiency of production. Additionally, improved efficiency accelerates economic growth, further increasing the demand.
Problem with Standard Approach: But why does demand increase? It does not always do so ===== see Polimenti book on Jevons
Our Response: Why and when demand increases may be explained by the pistic aspect, of aspiration and expectation, especially when people see their peers purchasing more. Part of the answer also lies in the aesthetic aspect, which encourages the purchase of non-essentials, even when prices do not fall.
So, to understand Jevons' Paradox, we need to take at least those aspects into account, not just the economic.
So far we have largely assumed the functioning to be Good, beneficial, contributing to Multi-aspectual Good, and doing so has revealed some of the potential of this approach. However, much economic activity is Harmful, (Christians may see this in terms of functioning in the sinless. pre-fall and post-consummation, Creation, in which all human functioning is Good, but that humankind now is 'fallen' and does much Harm and evil.) Therefore, we now discuss the difference between Good, Harmful and Useless economic activity.
Note on Societal Aspects. That the juridical, ethical and pistic aspects constitute societal structures may be because they are post-aesthetic and therefore harmony across the whole is meaningful within them; Dooyeweerd, for example, emphasised that for example justice must the same for all. Retrocipatory impact is a Dooyeweerdian explanation for how societal structures (or "systems") tend to enable, constrain and channel our functioning as individuals.
Norman J. 2018. Adam Smith: What He Thought and Why It Matters. Allen Lane, UK.
Sagar P. 2022. Adam Smith Reconsidered: History, Liberty, and the Foundations ofModem Politics. Princeton University Press, USA.
Thaler R, Sunstein C. 2008. Nudge: Improving Decisions about Health, Wealth and Happiness. Penguin Books. See also Sunstein 2014; 2016.
Sunstein C. 2014. Why Nudge: The Politics of Libertarian Paternalism. Yale University Press.
Sunstein C. 2016. The Ethics of Influence: Government in the Age of Behavioral Science. Cambridge University Press.
Veblen T. 2012[1899]. The Theory of the Leisure Class. Dover, Mineola, USA.
Zhang T. 2022. The logic of wasteful production. Journal of Economics, Theology and Religion, 2(2), 51-66.
This page is part of a Reframing/Rethinking of Economics by the RLDG.
Created 28 December 2022 from xnr2. Last updated: 31 December 2023 rw intro. 3 January 2023 fear lose funding. 11 January 2023 figures. 17 January 2023 bit from note. 18 January 2023 innov. 21 January 2023 conseqs. 21 January 2023 Zhang; not zerosum. 28 January 2023 NO bit about capital, labour and exchange. 3 February 2023 productivity. 3 February 2023 attend all asps poverty, bio,phy, l-r. 16 February 2023 6-; worked example of takeover; trade. 18 February 2023 bits from r9-env; labour rw, need invest in training, insulation. 20 February 2023 innovation. 2 March 2023 summary. 4 March 2023 frugality gives prosperity. 8 March 2023 prod,cons. 24 March 2023 destitute widow, poverty from fashion. 6 April 2023 nudge, unpaid. 12 May 2023 int-asp deps in bz, esp. att,mindset. 18 May 2023 functoning. 5 June 2023 new ch smy. 9 June 2023 new intro and slant to und activity r.t. emph. functioning. Began edits. 10 June 2023 edits, rearrangements. 12 June 2023 major: bringing much of Mindset, Attitude from r4-mmm to here, and made trade etc. smaller. 14 June 2023 more. 14 June 2023 inflation. 15 June 2023 mndatt intro. 16 June 2023 smys, macro; shorter on structures. 17 June 2023 upw value to r5. 19 June 2023 some on m+a, chnge m+a; macro; removed Productivity; things to r8; unpaid. 20 June 2023 eg. Tata. 21 June 2023 e.g. expectations; w structures. 22 June 2023 rw structs. 23 June 2023 groupthink; Adam Smith; rid inflation. 26 June 2023 rw, apply Smith; hdgs, smys. 27 June 2023 Sagar for Smith. 28 June 2023 Smith. 30 June 2023 from r4. 3 July 2023 Smith more, Norman. 26 July 2023 keynes wrong. 3 August 2023 negatives of mindset; urban, village here from ch7; externalities. 4 August 2023 externalities more. 16 August 2023 externalities better defn. 18 August 2023 Smith. 23 September 2023 exts a bit. 25 October 2023 equilb ecx, table t6-1.1. 26 October 2023 invis hand incl aspectual coherence; today life. 27 October 2023 a few edits from oldish paper. 30 October 2023 bits. 22 November 2023 paid as contract etc. 6 December 2023 box: reprentance of sector. 12 January 2024 climate, locusts, subabuse re poverty. 25 January 2024 Marshall. 17 February 2024 moved purchase to 6.2.2, and renumbered some. 20 February 2024 Smith: torpor. 26 February 2024 All is resource. 27 February 2024 Ostrom. 28 February 2024 Jevons std form. 1 March 2024 Tragedy of Commons and Free Rider moved to p.html. 6 April 2024 Piketty. 22 April 2024 status; moved Some Ec Phenomena to p.html; stuff moved here from r8, esp re levels, attitude.