Economic essentials

ECONOMIC ESSENTIALS

Economics is a profession and not a science.

As a profession, it emerged to deal with the effective management of private property units, credit and interest, which are all processed and accounted in monetary units; the use of math or physics for these purposes does not make it a science, but the quantitative task of maximizing and accounting private wealth (assets) can be better managed by the application of such tools. Accordingly, firms in the financial market of managing private wealth do use these models.

The award of ‘Nobel Memorial Prizes’ in economics, since 1969, does also not make it a science, but has contributed a lot to economic policy consulting for governance; public economics does not play an important role, but the focus has changed from de-regulative monetarist theory towards institutional frameworks of private wealth. After the transition experiences in former communist countries, since 1989, it has become clear that free capitalist markets cannot work without regulatory institutions.

The various schools are a reflection of the given political spectrum (from left to right in the chart), but canonized mainstream economics is perfectly characterized by the methodical means of private wealth management, including its legal protection code. Concerning the maintenance of the social order, even neo-classical theory is aware of a minimal optimum in the distribution of living chances.

A transition from a profession to a science will require a systems approach (4th order cybernetics) which can link the interplay of private and public economic interests, with cyclical economic motion (waves/frequencies and lengths) as its core research field (quality, quantity and distribution of economic events; via helix or spiral modeling and triangles); in this respect, the study of economic history and thought will be as important as the mathematical biophysics of socio-economic systems which can be translated into geometry (circles into triangles).

The role of energy and money as access to energy is completely ignored in almost all economic theory; this is due to the professional accounting tradition to classify the transaction of existing goods between firms and households in payment balances. Another blind spot is the crucial role of unpaid labor to maintain an economic system, e.g. the role of family and friendship relations for economic stability. As a result, research into sustainability solutions is almost absent as rational and ethical reasoning in the finite categories of space, time, energy (money) for the production and reproduction of social organization; on the contrary, infinite calculations dominate over assumptions about finite resources.

The matrix of private wealth accumulation, which eventually emerged in Sumerian temples for scriptural accounting, will have to be rotated into a 3-4D model of the human economy. In addition, the veil on the function of money and banking will have to be lifted, including its structural impact on energy resources (nature). While we can built on a solid professional fundament of accounting in 1-2D (1=tables; 2=charts), it is now time to add the ‘scientific infrastructure’ via 3-4D models, i.e. world economic science/sustainability economics/social science economics.

Every human economy is based on information, e.g. where is the best hunting ground, what is the best investment, where to find a good apartment? However, this should not feed the illusion that information is every-thing; the economic role of information can only be understood by the intense use of production factors (land, labor, capital) and its returns (rent, wages, interest); there is a dialectical (non-linear) interplay of tangible and intangible factors at work. The root cause of the global economic crisis is exactly this false understanding of the financial role of information and technology which has ‘created’ the money illusion of ‘the new economy’.

The following books deviate from mainstream economics and are recommended for reading and mental training:

Demand for goods is not demand for labor, a very important insight into the tech-know-logical market process of the monetary production economy; the danger of the ‘capitalist planned economy’ and ‘politbureau command policy’ via central monetary agency has been recognized; of course, the envisioned ‘gold standard’ is no economic solution for the modern world.

Concerning alternative monetary economics, the following publication is outstanding:

There are enough alternative models at hand, but economic canonization follows the private wealth-credit-interest-path; it is like an anthropological summary of the past 5000 years and works like a religious dogma.

The scientific advancement of economic cognition is a matter of psycho-mental pattern recognition in human economic activity; in addition, since the last 100 years, management has evolved as a global discipline and universal function; for this reason, it is essential to deeper understand how knowledge is converted into value via human economic behavior.