Concordian Economics, Vol. 1: Tools for Economists and Social Scientists (Springer Studies in Alternative Economics) 3031473191, 9783031473197

Table of contents :
Preface
Acknowledgements
Contents
About the Author
1 Introduction
References
2 Concordian Economics: An Overall View
2.1 A Fundamental Prequel
2.2 A Bit of History
2.3 Once Upon a Time
2.4 The Behavior of the Market; the Methodology of Modern Economics
2.5 We Need a New Paradigm
2.6 We Have a New Paradigm
2.7 The Economic Process
2.8 A Geometric Representation of Economic Dynamics
2.9 How Can Equilibrium Be Restored?
2.10 Horses of Inequality
2.11 Rights Versus Privileges
2.12 The Relative Weight of Concordian Economic Policies
2.13 Who Are the Opponents?
2.14 Serving Four Masters
2.15 Conclusion
References
3 Concordian Economics: Tools to Return Relevance to Economics
3.1 Introduction
3.2 Tools to Control Economic Theory
3.2.1 Existing Tool Kit
3.2.2 New Tools in Economic Theory
3.3 Tools to Control Economic Policy
3.3.1 Existing Tool Kit
3.3.2 Proposed Tools to Control Economic Policy
3.3.3 A Pause
3.4 Tools to Control Economic Practices
3.4.1 Lack of an Existing Tool Kit
3.4.2 New Tools to Control Economic Practices
3.5 Conclusion
References
4 From the Revision of Keynes’ Model to Economics for Physicists and Ecologists
4.1 Part I: A Revision of Keynes’ Model
4.1.1 Introduction
4.2 Section I
4.3 Section II
4.3.1 Introduction
4.4 Section III
4.4.1 Introduction
4.5 Part II: Economics for Physicists and Ecologists
4.5.1 Introduction
4.5.2 Conclusion
References
5 From the Logic of Mainstream Economics to the Logic of Concordian Economics
5.1 Introduction
5.2 The Root of the Problem
5.2.1 The Need for Homogeneous Ideas
5.2.2 Concepts
5.2.3 Theories
5.2.4 Systems
5.2.5 Processes
5.3 Conclusion
References
6 Preparing for Concordian Econometrics
6.1 Introduction
6.2 A Few Simplifying Assumptions
6.3 The Question of Units of Measurement
6.4 The Geometry of Concordian Economics
6.5 A Method for the Transformation of Keynes’ Model
6.6 The Mathematics of Concordian Economics
6.7 A Set of Nonlinear Hypotheses
6.8 Concordian Economics and the Business Cycle
6.9 Concordian Economic Analysis
6.10 Some Concluding Comments
Appendix 1: Symbols, Meanings, and Definitions
Meanings in Concordian Economics and Mainstream Economics
Definitions in Concordian Economics and Mainstream Economics
Appendix 2: The Derivation of the Distribution and Consumption Function in Concordian Economics from Modigliani’s Saving Function
References
7 The Economic Bubble and its Measurement
7.1 Introduction
7.2 Concordian Economics and the Economic Process
7.3 The Geometric Identification of Economic Bubbles
7.4 The Mathematical Measurement of the Economic Bubble
7.5 How Are these Values Determined?
7.6 Better Than Gold
7.7 Conclusions
References
8 The Moral Problem: The Free Rider Problem
8.1 Introduction
8.2 The Free Rider Problem and the Social Sciences
8.3 The Free Rider Problem and Morality
8.4 A Bit of History
8.5 And Yet, and Yet
8.6 The Free Rider Problem and the Community
8.7 The Free Rider Problem and History
References
9 Ethics in Concordian Economics: Economic Justice—The Economics of Morality
9.1 Introduction
9.2 Part I: Ethics in Concordian Economic Theory
9.3 Part II: Ethics in Concordian Economic Policy
9.3.1 A Bit of History
9.3.2 What Has Taken the Place of Economic Justice?
9.3.3 The Content of Economic Justice
9.3.4 Justice and Charity
9.4 Part III: Ethics in Concordian Economic Practices
9.4.1 Lack of an Existing Tool Kit
9.4.2 New Tools to Control Economic Practices
9.4.3 Conclusion
References
10 The Definition of Economic Rights and Their Functions
10.1 Introduction
10.2 New Introduction
10.3 Introduction, Again
10.4 Toward the Definition of Economic Rights
10.5 Basic Economic Needs
10.6 Some Legal Characteristics of Economic Rights
10.6.1 Economic Rights Distinct from Property Rights and Entitlements
10.6.2 The Differentiation Between Private Rights and Public (or Constitutional) Rights
10.6.3 Another Difference Between Property Rights and Economic Rights
10.6.4 The Differentiation Between Rights in Posse and Rights in Esse
10.6.5 Rights and Responsibilities
10.6.6 Corresponding Economic Responsibilities
10.6.7 Theory and Practice
10.7 Economic Rights Within the Theory of Justice
10.7.1 Some Theoretical Perspectives
10.7.2 The Principles of Justice
10.7.3 A Place Within the Theory of Justice
10.8 The Importance of Economic Rights
10.9 Conclusion
Addendum
References
11 From Four Rights to Four Policies
11.1 Four Economic Rights
11.2 Rights Arise from Responsibilities
11.3 A National Discussion
11.4 Concordianism Is the Answer
11.5 National Policies to Recognize Rights and to Enforce Responsibilities
11.6 A Summary of Expected Effects
11.7 Conclusion
Reference
12 Somism: Beyond Individualism and Collectivism
12.1 The Context
12.2 A Prequel
12.3 Two Ways to Climb Out of the Abyss
12.4 Returning to Earth
12.5 The Warring Factions
12.6 How to Get Out of this Vice
12.7 A Rebuttal of Karl Marx’s Positions
12.7.1 First Failure: Overdependence on the Power of Words
12.7.2 Second Failure: Overlooking Social Relationships
12.7.3 Third Failure: Considering Labor as Merchandise
12.8 The Two Extremes
12.9 The Present Social Problem
12.10 What to Do?
12.11 The Fundamental Structure of Somism
12.12 What to Do Next?
12.13 An Important Sidestep
References
13 Concordianism: Beyond Capitalism and Socialism
13.1 Introduction
13.2 The Roots of Concordianism
13.3 The Content of Concordianism
13.4 Concordian Politics
13.4.1 Unity in Diversity
13.4.2 Popular Sovereignty
13.4.3 Democratic Equality
13.4.4 Rule of Law
13.5 Concordian Socio-Economics
13.6 A Bill of Economic Rights and Responsibilities
13.7 Concordian International Relations: Toward a World of Peace and Justice
13.7.1 First Set of Teams
13.7.2 Second Set of Teams
13.7.3 Third Set of Teams
13.7.4 An Urgent Necessity
13.8 Upadaria or Concordia, the New Utopia
13.8.1 Concordian Financing
13.9 Concordian Ontology
13.10 Concordian Spirituality
13.11 Concluding Comments
References
14 From Rational to Relational Economics
14.1 Introduction
14.2 Part I: Relational Logic
14.2.1 Abstract, Again
14.2.2 Introduction (Again)
14.3 The Value of the Equivalence Relation
14.4 Many Systems of Logic
14.4.1 Primordial Logic
14.4.2 Classical Logic
14.4.3 Rational Logic
14.4.4 Dialectic Logic
14.4.5 Eastern Logic
14.5 Propositions and Systems of Thought
14.6 Non-systems of Logic
14.6.1 Conventional Logic
14.6.2 Positive Logic
14.6.3 Deductive or Syllogistic Logic
14.6.4 Inductive Logic
14.6.5 Instrumental Logic
14.6.6 And then There is Economic Logic
14.7 The Issue of Consistency
14.8 The Equivalence in All Systems of Logic
14.9 The Transition Toward Relational Logic
14.10 The Foundation of Relational Logic
14.11 The Principles of Relational Logic
14.11.1 Some Applications of Relational Logic
14.12 A Reader's Guide
14.12.1 On Friedman's Instrumentalism
14.13 On the Equivalence of Systems of Logic
14.14 On Systems of Logic and Economic Theory
14.14.1 On the Comparison of Economic Theories
14.15 The Real Issue
14.16 Preliminary Conclusion
14.17 Part II: Relational Epistemology
14.17.1 Abstract
14.18 A Recurring Pattern of Crisis and Solutions
14.19 The Facts
14.20 Two General Questions
14.21 What Happened 40,000 Years Ago?
14.21.1 The Solution
14.22 What Happened 2500 Years Ago?
14.22.1 The Second Crisis
14.22.2 Three (Temporary) Solutions to the Second Crisis of Information
14.23 The Key Problem
14.24 What Happened 500 Years Ago?
14.24.1 Descartes Appeared
14.25 The Crisis About the Categories
14.26 The Current Crisis
14.26.1 The Kuhn/Feyerabend Attack
14.27 The Crisis Regarding Individual Words: The Need for Three Concepts
14.28 The Crisis Regarding Individual Propositions
14.29 The Depth of the Current Crisis
14.30 A Turning Point
14.31 The Grand Divergence
14.32 Relational Epistemology
14.33 New/Old Synthesizers of Knowledge
14.33.1 Ideas—And the Crisis of Abstract Ideas
14.33.2 Concepts
14.33.3 Theories
14.33.4 Systems
14.33.5 Processes
14.34 From Dialectic Ideas to Ideals
14.35 Part III: A Brief Note on Rationalism, Relationism, and Relationalism
14.35.1 Abstract
14.36 A General Question
14.37 On Rationalism
14.37.1 The Present Status of Rationalism
14.37.2 The Abstract Theorizing of Rationalism
14.38 On Relationism
14.39 On Relationalism
References
Conclusion: Almost as an Introduction
Index

Citation preview

Springer Studies in Alternative Economics

Carmine Gorga

Concordian Economics, Vol. 1 Tools for Economists and Social Scientists

Springer Studies in Alternative Economics

This book series offers an outlet for cutting-edge research in alternative, heterodox and pluralist economics. It features scholarly studies on various schools of thought beyond the neo-classical orthodoxy, including Austrian, Post Keynesian, Sraffian, Marxian, Georgist, Institutional-evolutionary, as well as feminist, radical, social, green, and ecological economics. It aims to promote pluralism of economic ideas, methodological approaches, and topics. The series also welcomes works that seek to develop alternative visions of the economy, economic structures and new approaches that aim to serve society, for example by embedding the economy within the ecosystem, or to enrich economic thought by advancing diversity, gender, race, and social equality. All titles in this series are peer-reviewed.

Carmine Gorga

Concordian Economics, Vol. 1 Tools for Economists and Social Scientists

Carmine Gorga The Somist Institute Gloucester, MA, USA

ISSN 2731-5908 ISSN 2731-5916 (electronic) Springer Studies in Alternative Economics ISBN 978-3-031-47319-7 ISBN 978-3-031-47320-3 (eBook) https://doi.org/10.1007/978-3-031-47320-3 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Paper in this product is recyclable.

To Joan Mohr Gorga Moona Mia Cara Cara1 My wife My foundation

1

The Reader will discover that, for reasons evident and many less evident, “My” Moona is the true economist in the family.

Preface

There is not one serious economist who is not berating the shortcomings of modern economics. There are not many conscientious economists—followed by a slew of nonprofessional economists—who are not searching for solutions to the shortcomings of modern economics. Trouble is that solutions there are aplenty. And here I come with another solution: Concordian economics—in two volumes, one devoted to an explanation of the “Tools” of Concordian economics; the other devoted to an integrated set of “Applications” that are designed to gradually resolve the major problems that beset our world today, from abject poverty to downtown congestion to peace and justice in the world. These are the normal maladies of our modern life; then there are the abnormal ones: serial killings, mass massacres, genocides—which will not be mentioned again. Neither will we constantly emphasize that, as Angus Hervey via TedTalks recommends to stress, there are also good news in the world. Why do I even dare to present this new paradigm, that I like to call Concordian economics? The detailed reasons will become evident as we go along. The key one is that Time has allowed me to explore the long reason, the broad reason. A bit cryptically, perhaps, I will say that I am transforming Rational economics into Relational economics. In the process, I am embedding economics into the reality of our social, legal, political, and cultural world. The “world” cannot but be affected by this intrusion. One result will be highlighted here: both Capitalism and Socialism are sublimated into Concordianism. Gloucester, MA, USA September 2023

Carmine Gorga

vii

Acknowledgements

A book like this conceived and brought to life in the course of many years is due to many influencers. I hope not to miss too many of them. The framework is uniquely due to 27 years of exhaustive probing by Franco Modigliani and by Meyer L. Burstein for 23 years. This work was set on its way by a powerful suggestion by my dissertation adviser, Vittorio de Caprariis and by Francesco Compagna. Earlier still I received much clarity of mind through the teaching of Rosalia Scarlata. Robert A. Mundell, Mitchell S. Lurio, and Norman G. Kurland have been great teachers. Much encouragement was provided by Alan Reynolds, Raymond G. Torto, and John K. Skank. Otto Eckstein, Frank L. Cooper, Steve H. Hanke, and Harry G. Johnson were the first economists to confirm that the revised Keynes’ model was consistent. Helpful comments, suggestions, and recommendations were tendered by Michael E. Brady, William J. Baumol, Stephen Thornton, Michele Boldrin, Jeroen C. J. M. van den Bergh, Kevin P. Gallagher, William J. Toth, William R. Collier, Jr., Damon Cummings, Veljko Milutinovic, and John Opuda-Asibo. Selective portions of this analysis have been endorsed by John K. Galbraith, Buckminster Fuller, Mark Perlman, Roger H. Gordon, Francesco Forte, Augusto Graziani, Alberto Tarchiani, Aldo Garosci, Giorgio Spini, Gerald Alonzo Smith, Charles T. Wood, Norman A. Bailey, Rosanna Marini, Gordon Richards, Rudy Oswald, Steve Kurtz, Ernest Kahn, Louis J. Ronsivalli, Howard Zinn, Robert F. Drinan, Thomas J. Marti, Cassian J. Yuhaus, James E. Hug, Richard John Neuhaus, John J. Neuhauser, Irving Kristol, Michael J. Naughton, Robert G. Kennedy, John C. Rao, Stefano Zamagni, and Laurence J. Kotlikoff among others. Thanks for editorial assistance go to Janis D. Stelluto, Ralph Cole Waddey, Anne Jones, and Jonathan F. Gorga. Joan M. Gorga has forever been my in-house editor, counselor, and fellow traveler. The Reader will also discover that David S. Wise, apart from editing most of my work, has performed a peculiar role: at key moments, he has bought to my attention literature that was fundamental to the development of this work. Special thanks go to Peter J. Bearse, for his invaluable editorial assistance, deep insights, and clarification of the figures by suggesting the transformation of short lines into directional arrows. My work has also greatly benefited from the patient review and exhaustive suggestions by a number of anonymous referees. ix

x

Acknowledgements

Special thanks are owed to the editors of the following websites, who have given generous hospitality to much work of this writer: • EconCurrents and EconIntersect, under the editorship of Dr. John B. Lounsbury, an econometrician. EconIntersect is among the 100 Top Websites for Enlightened Economists. • TalkMarkets, under the editorship of Boaz Berkowitz, the Founder and CEO of TalkMarkets with a brilliant career in financial affairs. • Mother Pelican: a Journal of Solidarity and Sustainability, under the editorship of Luis T. Gutierrez, Ph.D. in Industrial and Systems Engineering. • OpEdNews (OEN) under the editorship of Rob Kall, the author of The BottomUp Revolution: Mastering the Emerging World of Connectivity (2019). OEN is a technorati top 100 site. • Social Science Research Network (SSRN) has given hospitality to much of my work. My SSRN All-Time Author Citations ranking is 21,224. One published paper deposited on this platform recently made its Top Ten List. • ResearchGate, a professional network for scientists and researchers. On this platform, at last reading, I have received 10,440 reads and scored a Research Interest of 92.1, which is higher than 64% of ResearchGate members. • Google Scholar is keeping track of most of my work. And Academia.edu, in addition to hosting much of my work, has published a couple of my articles. John Lounsbury deserves many thanks for the extra care of inserting appropriate pictures in my publications, some of which are being used here. To the editors of my journal articles, their anonymous reviewers, and editors of my published books, enormous heartfelt thanks.

Contents

1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 12

2

Concordian Economics: An Overall View . . . . . . . . . . . . . . . . . . . . . . . . 2.1 A Fundamental Prequel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 A Bit of History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Once Upon a Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 The Behavior of the Market; the Methodology of Modern Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 We Need a New Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 We Have a New Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 The Economic Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 A Geometric Representation of Economic Dynamics . . . . . . . . . 2.9 How Can Equilibrium Be Restored? . . . . . . . . . . . . . . . . . . . . . . . 2.10 Horses of Inequality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11 Rights Versus Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12 The Relative Weight of Concordian Economic Policies . . . . . . . 2.13 Who Are the Opponents? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14 Serving Four Masters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.15 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15 16 16 16

3

Concordian Economics: Tools to Return Relevance to Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Tools to Control Economic Theory . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1 Existing Tool Kit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2 New Tools in Economic Theory . . . . . . . . . . . . . . . . . . 3.3 Tools to Control Economic Policy . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.1 Existing Tool Kit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.2 Proposed Tools to Control Economic Policy . . . . . . . . 3.3.3 A Pause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17 19 19 20 22 22 23 24 24 25 25 29 31 33 33 34 35 36 40 40 41 43 xi

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Contents

3.4

4

5

6

Tools to Control Economic Practices . . . . . . . . . . . . . . . . . . . . . . . 3.4.1 Lack of an Existing Tool Kit . . . . . . . . . . . . . . . . . . . . . 3.4.2 New Tools to Control Economic Practices . . . . . . . . . . 3.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43 43 45 50 51

From the Revision of Keynes’ Model to Economics for Physicists and Ecologists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Part I: A Revision of Keynes’ Model . . . . . . . . . . . . . . . . . . . . . . . 4.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Section I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Section II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Section III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 Part II: Economics for Physicists and Ecologists . . . . . . . . . . . . . 4.5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5.2 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53 53 53 54 59 59 64 64 66 66 70 70

From the Logic of Mainstream Economics to the Logic of Concordian Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 The Root of the Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 The Need for Homogeneous Ideas . . . . . . . . . . . . . . . . 5.2.2 Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.3 Theories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.4 Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.5 Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73 73 74 75 76 77 78 81 82 83

Preparing for Concordian Econometrics . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 A Few Simplifying Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 The Question of Units of Measurement . . . . . . . . . . . . . . . . . . . . . 6.4 The Geometry of Concordian Economics . . . . . . . . . . . . . . . . . . . 6.5 A Method for the Transformation of Keynes’ Model . . . . . . . . . . 6.6 The Mathematics of Concordian Economics . . . . . . . . . . . . . . . . 6.7 A Set of Nonlinear Hypotheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 Concordian Economics and the Business Cycle . . . . . . . . . . . . . . 6.9 Concordian Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . .

85 85 86 87 88 92 93 95 98 99

Contents

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6.10 Some Concluding Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix 1: Symbols, Meanings, and Definitions . . . . . . . . . . . . . . . . . . . Meanings in Concordian Economics and Mainstream Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Definitions in Concordian Economics and Mainstream Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix 2: The Derivation of the Distribution and Consumption Function in Concordian Economics from Modigliani’s Saving Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100 100

7

The Economic Bubble and its Measurement . . . . . . . . . . . . . . . . . . . . . 7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Concordian Economics and the Economic Process . . . . . . . . . . . 7.3 The Geometric Identification of Economic Bubbles . . . . . . . . . . 7.4 The Mathematical Measurement of the Economic Bubble . . . . . 7.5 How Are these Values Determined? . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Better Than Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

105 105 105 106 107 109 109 110 111

8

The Moral Problem: The Free Rider Problem . . . . . . . . . . . . . . . . . . . . 8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 The Free Rider Problem and the Social Sciences . . . . . . . . . . . . . 8.3 The Free Rider Problem and Morality . . . . . . . . . . . . . . . . . . . . . . 8.4 A Bit of History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 And Yet, and Yet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 The Free Rider Problem and the Community . . . . . . . . . . . . . . . . 8.7 The Free Rider Problem and History . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

113 113 115 117 117 118 119 120 123

9

Ethics in Concordian Economics: Economic Justice—The Economics of Morality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Part I: Ethics in Concordian Economic Theory . . . . . . . . . . . . . . 9.3 Part II: Ethics in Concordian Economic Policy . . . . . . . . . . . . . . . 9.3.1 A Bit of History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.2 What Has Taken the Place of Economic Justice? . . . . 9.3.3 The Content of Economic Justice . . . . . . . . . . . . . . . . . 9.3.4 Justice and Charity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4 Part III: Ethics in Concordian Economic Practices . . . . . . . . . . . 9.4.1 Lack of an Existing Tool Kit . . . . . . . . . . . . . . . . . . . . . 9.4.2 New Tools to Control Economic Practices . . . . . . . . . . 9.4.3 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

125 125 126 129 129 129 130 132 133 133 134 139 141

100 101

102 103

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Contents

10 The Definition of Economic Rights and Their Functions . . . . . . . . . . 10.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 New Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 Introduction, Again . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 Toward the Definition of Economic Rights . . . . . . . . . . . . . . . . . . 10.5 Basic Economic Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.6 Some Legal Characteristics of Economic Rights . . . . . . . . . . . . . 10.6.1 Economic Rights Distinct from Property Rights and Entitlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.6.2 The Differentiation Between Private Rights and Public (or Constitutional) Rights . . . . . . . . . . . . . . 10.6.3 Another Difference Between Property Rights and Economic Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.6.4 The Differentiation Between Rights in Posse and Rights in Esse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.6.5 Rights and Responsibilities . . . . . . . . . . . . . . . . . . . . . . 10.6.6 Corresponding Economic Responsibilities . . . . . . . . . . 10.6.7 Theory and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7 Economic Rights Within the Theory of Justice . . . . . . . . . . . . . . . 10.7.1 Some Theoretical Perspectives . . . . . . . . . . . . . . . . . . . . 10.7.2 The Principles of Justice . . . . . . . . . . . . . . . . . . . . . . . . . 10.7.3 A Place Within the Theory of Justice . . . . . . . . . . . . . . 10.8 The Importance of Economic Rights . . . . . . . . . . . . . . . . . . . . . . . 10.9 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Addendum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

143 143 144 145 146 146 147

11 From Four Rights to Four Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Four Economic Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Rights Arise from Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . 11.3 A National Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4 Concordianism Is the Answer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 National Policies to Recognize Rights and to Enforce Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 A Summary of Expected Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

159 159 160 160 161

12 Somism: Beyond Individualism and Collectivism . . . . . . . . . . . . . . . . . 12.1 The Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 A Prequel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3 Two Ways to Climb Out of the Abyss . . . . . . . . . . . . . . . . . . . . . . 12.4 Returning to Earth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5 The Warring Factions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.6 How to Get Out of this Vice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.7 A Rebuttal of Karl Marx’s Positions . . . . . . . . . . . . . . . . . . . . . . .

167 167 167 168 169 169 170 170

148 149 149 150 150 151 152 153 153 154 154 156 156 157 157

161 165 165 165

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12.7.1

First Failure: Overdependence on the Power of Words . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.7.2 Second Failure: Overlooking Social Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.7.3 Third Failure: Considering Labor as Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8 The Two Extremes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9 The Present Social Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.10 What to Do? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.11 The Fundamental Structure of Somism . . . . . . . . . . . . . . . . . . . . . 12.12 What to Do Next? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.13 An Important Sidestep . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

171 171 172 172 172 173 174 175 176 177

13 Concordianism: Beyond Capitalism and Socialism . . . . . . . . . . . . . . . 13.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2 The Roots of Concordianism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3 The Content of Concordianism . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4 Concordian Politics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4.1 Unity in Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4.2 Popular Sovereignty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4.3 Democratic Equality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4.4 Rule of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.5 Concordian Socio-Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6 A Bill of Economic Rights and Responsibilities . . . . . . . . . . . . . 13.7 Concordian International Relations: Toward a World of Peace and Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7.1 First Set of Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7.2 Second Set of Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7.3 Third Set of Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7.4 An Urgent Necessity . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8 Upadaria or Concordia, the New Utopia . . . . . . . . . . . . . . . . . . . . 13.8.1 Concordian Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9 Concordian Ontology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10 Concordian Spirituality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.11 Concluding Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

179 179 180 180 181 181 182 182 183 183 184

14 From Rational to Relational Economics . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2 Part I: Relational Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2.1 Abstract, Again . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2.2 Introduction (Again) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3 The Value of the Equivalence Relation . . . . . . . . . . . . . . . . . . . . . 14.4 Many Systems of Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.4.1 Primordial Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

197 197 198 198 199 200 201 202

184 185 185 187 187 188 188 190 191 193 194

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14.5 14.6

14.7 14.8 14.9 14.10 14.11 14.12 14.13 14.14 14.15 14.16 14.17 14.18 14.19 14.20 14.21 14.22

14.23 14.24 14.25 14.26 14.27 14.28

14.4.2 Classical Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.4.3 Rational Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.4.4 Dialectic Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.4.5 Eastern Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Propositions and Systems of Thought . . . . . . . . . . . . . . . . . . . . . . Non-systems of Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6.1 Conventional Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6.2 Positive Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6.3 Deductive or Syllogistic Logic . . . . . . . . . . . . . . . . . . . . 14.6.4 Inductive Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6.5 Instrumental Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6.6 And then There is Economic Logic . . . . . . . . . . . . . . . . The Issue of Consistency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Equivalence in All Systems of Logic . . . . . . . . . . . . . . . . . . . The Transition Toward Relational Logic . . . . . . . . . . . . . . . . . . . . The Foundation of Relational Logic . . . . . . . . . . . . . . . . . . . . . . . . The Principles of Relational Logic . . . . . . . . . . . . . . . . . . . . . . . . . 14.11.1 Some Applications of Relational Logic . . . . . . . . . . . . A Reader’s Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.12.1 On Friedman’s Instrumentalism . . . . . . . . . . . . . . . . . . . On the Equivalence of Systems of Logic . . . . . . . . . . . . . . . . . . . . On Systems of Logic and Economic Theory . . . . . . . . . . . . . . . . . 14.14.1 On the Comparison of Economic Theories . . . . . . . . . The Real Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preliminary Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part II: Relational Epistemology . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.17.1 Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A Recurring Pattern of Crisis and Solutions . . . . . . . . . . . . . . . . . The Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Two General Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What Happened 40,000 Years Ago? . . . . . . . . . . . . . . . . . . . . . . . . 14.21.1 The Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What Happened 2500 Years Ago? . . . . . . . . . . . . . . . . . . . . . . . . . 14.22.1 The Second Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.22.2 Three (Temporary) Solutions to the Second Crisis of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Key Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What Happened 500 Years Ago? . . . . . . . . . . . . . . . . . . . . . . . . . . 14.24.1 Descartes Appeared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Crisis About the Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . The Current Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.26.1 The Kuhn/Feyerabend Attack . . . . . . . . . . . . . . . . . . . . The Crisis Regarding Individual Words: The Need for Three Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Crisis Regarding Individual Propositions . . . . . . . . . . . . . . . .

206 209 211 212 214 214 214 215 216 216 217 217 218 219 220 221 222 222 223 223 224 224 224 225 225 225 226 226 227 227 228 228 229 230 230 231 232 233 233 234 235 235 236

Contents

14.29 14.30 14.31 14.32 14.33

The Depth of the Current Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . A Turning Point . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Grand Divergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Relational Epistemology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New/Old Synthesizers of Knowledge . . . . . . . . . . . . . . . . . . . . . . . 14.33.1 Ideas—And the Crisis of Abstract Ideas . . . . . . . . . . . . 14.33.2 Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.33.3 Theories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.33.4 Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.33.5 Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.34 From Dialectic Ideas to Ideals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.35 Part III: A Brief Note on Rationalism, Relationism, and Relationalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.35.1 Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.36 A General Question . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.37 On Rationalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.37.1 The Present Status of Rationalism . . . . . . . . . . . . . . . . . 14.37.2 The Abstract Theorizing of Rationalism . . . . . . . . . . . 14.38 On Relationism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.39 On Relationalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xvii

236 237 237 237 238 238 239 240 241 244 245 246 246 247 247 247 250 251 252 254

Conclusion: Almost as an Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263

About the Author

Carmine Gorga is president of The Somist Institute and a Fulbright Scholar. He is the founder of Concordian economics. The Federal Reserve System has graciously suggested that his proposal for the creation of a new monetary system ought to be presented to state and federal representatives. He has been described as an economist for the modern world. During fifty years of research and publication, 27 of them powerfully assisted by Prof. Franco Modigliani, a Nobel Laureate in economics at MIT, and for 23 years by Prof. M. L. Burstein, Dr. Gorga has developed a new system of thought in which everything is logically and harmoniously related to everything else. This is a system that allows us to pass from Rationalism to Relationalism. Concordian economics sits at the core of Relationalism. He holds a Ph.D. in Political Science from the University of Naples and an M.A. in International Relations from the John Hopkins School of Advanced International Studies (SAIS) in Washington, DC. The University of Naples is the university of Thomas Aquinas and Benedetto Croce, the first University to establish a separate chair for economics (separate from the moral sciences). He is a naturalized American citizen. Born in the Deep South of Southern Italy under Mussolini, he is trying all that he can not to die under an autocrat. He was born in the year of the Lord, as they used to say, 1935. That was in the midst of the Great Depression, which was soon followed by World War II—when the hoarding of basic foodstuff went rampant. The smell of burned flesh is still in his nostrils; and the pains of hunger too widespread to discuss. Clearly, he has deep reasons to be a practicing economist and a pacifist. Three mottos best exemplify his life: 1. I do not wish my life on my worst enemy; I do wish it, though, on my best friend. 2. Thank God for the critics; they might save years of error. 3. If you like what you read, tell your friends; if you do not like what you read, tell me—but tell me why.

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Chapter 1

Introduction

Abstract Concordian economics is a new paradigm. It integrates economic theory, policy, and practice. It takes the lead from Keynes’ (1937) 1937 QJE recommendation to give a hard look at the “forms” of his thought. Doing so, after a summer of intense intellectual struggle with the General Theory in 1965, I reintroduced Hoarding in the economic discourse, and everything changed—in mainstream economics.

What is mainstream economic theory? It might be well to let Professor Mankiw (2023) give the answer. By admiringly naming the names of all the famous economists of the last three centuries, he leaves the impression that the economics profession suffers from a cult of personality. He then reports the opinion of another famous economist, Charles Wheelan, who maintains that mainstream economics “presents us with a powerful, and not necessarily complex, set of analytical tools that can be used to look back and explain why events unfolded the way they did; to look around and make sense of the world; and to look forward so that we can anticipate the effects of major policy changes.” I will let the Reader be the judge of the validity of this claim. Perhaps, more technically appropriate is this summary evaluation of mainstream economics: “Textbooks and field journals dedicated to macro development do not yet exist” Buera et al. (2023). This evaluation would be incomprehensible, if we did not remember Piketty’s (2014) peremptory assertion: “There is no such thing as an economic science”. More appropriate perhaps is the elegant presentation by Samuelson (1974): “…economics remains an art rather than a science.” This book is written primarily for economists. To clarify my position, I will adopt an expression dear to Luis D. Brandeis and other members of the Progressive Movement of the last century in the United States: It is economists who most need the new paradigm offered by Concordian economics. But the book is at the same time addressed with equanimity to members of other social sciences whose work is hampered by today’s performance of mainstream economics. In due time, historian, sociologists, political scientists, philosophers, and moralists will explain a thing or two to economists.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Gorga, Concordian Economics, Vol. 1, Springer Studies in Alternative Economics, https://doi.org/10.1007/978-3-031-47320-3_1

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1 Introduction

In the meantime, not only are economists the best equipped professionals to understand Concordian economics; they are the best equipped professionals to immediately use Concordian economics. Three simple cases. We will discover that the Amish pay cash and receive about 40% rebates on their purchases. Can a monograph be developed by accounting for a transplantation of these practices into the whole economy? Two. What are the effects of a return of the family fishing industry to the United States by dismantling the arbitrary regulations that have been imposed upon it during the last forty years? Three. What are the effects of dismantling the big box stores and allowing their fish departments and meat departments and bakeries to return to the vacant stores in the downtown of our cities and towns? There is no need to wait for a conversion of all economists to Concordian economics. That is Concordian economics in action. A more complex case. Concordian monetary policy suggests that public money should not be invested in financial ventures or ventures involved in the hoarding of real wealth. What would be the effects of such practices upon the real economy? And what would happen to the real economy if public money were lent out, not at any interest rate whatsoever, but at the administrative cost of managing the loan? More generally, an exciting prospect is offered to modern economists of any persuasion. They have to put themselves in the frame of mind of their predecessors of the late 1930s and 1940s who recreated the science of economics almost from scratch. Presumably, we have learned much. We will avoid the pitfalls into which early Keynesians fell. Econometrics yes, but Concordian econometrics. Economics, it has been authoritatively said, is what economists do. What is that they do? They learn and design economic theories. They also study money; only money, not real wealth—even though they have no definition of money. Nor can they have any such a definition, because they attempt to keep their discipline a “pure” science. And money is primarily a social, legal, and political institution. They study the functions of money. So, what do economists do? What is their praxis? They see a Mercedes. They note in their ledgers: $40,000. Where is the car? The car disappears. No one cares where does the car come from; no one cares where does it go. This is a major reason why ecologists and physicists recoil. They see that economists have no interest, no concern for the realities of the world. This a major reason there is so little hope to save us from ecological disaster. Worse still. Very hard to believe, but modern theoretical economists have mathematical theories aplenty at their disposal, but no economic theory. They use the tools of supply and demand. Yet these tools do not an economic theory form. In fact, it is widely acknowledged that economists face a “black box.” Manipulating the tools of supply and demand, they choose what goes in their analysis, but when the numbers come out of the box economists do not know whether the trend is upward, steady, or downward. President Truman, with good reason, pleaded: “Give me a one-handed economist. All my economists say, ‘on the one hand . . .’, then ‘but on the other . . .’”

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A black box is not a theory. And neither do the tools of supply and demand constitute a theory. One of the major functions of any theory is to grant us as much certitude as possible. What do the tools of supply and demand offer? The variegated expressions used by economists betray the reality that they have lost control of economics—and the insiders know it. See, at a minimum, Greenspan (2010); Krugman (2014); Syll (2017). Given this understanding of mainstream economics, the Reader cannot expect much of an engagement in this book with modern monetary and fiscal theories or policies. Without Concordian economic policies in action, the Government is forced to intervene in economic affairs. While at times alleviating horrible conditions of poverty and unemployment and high prices, the Government will never be able to overcome underlying trends. Mostly, the Government will generally do too little; rarely it will do too much. Inflation will then take over the reins of the economic system. But poverty will be abundant, employment, and money will remain scarce. Government is unable to affect these permanent scars in our society. What is Concordian economics? Concordian economics fills the black hole that exists at the core of mainstream economics with the study of the economic process. The economic process is the study of Production, Distribution, and Consumption of wealth: production of real wealth, distribution of ownership rights over wealth as wealth is being produced, consumption—or expenditure—of monetary wealth to purchase other wealth. This tripartite division performs many functions. At the most elementary moment, it separates real wealth from monetary wealth and then joins these two parts together through the understanding of the legal economy. As one of the fundamental applications of this tripartite division we will be able to define money as the legal representation of real wealth. Concordian economics sets all the elements of the economic system in relation with each other through the study of the economic process. The economic process was fully analyzed in a previous book, now in its third edition: Gorga (2002, 2009, 2016). The economics profession has not yet analyzed this book. Readers who are not interested in the transition from mainstream economics to Concordian economics may do well to skip the first two parts of that book. They are too slow, too technical, too tedious. The rest of the book is for all who want to understand the economic process in depth. The present two-books set benefits from the fruits of that labor. We will concentrate on the core of the economic process, and we will place that core in relationship with a great many aspects of Concordian economic theory as well as many aspects of daily life. In the process, our understanding of that core grows upward, laterally, inwardly. The result is not a linear construction, but a spheric construction in which everything is always in relation with everything else. Unlike linear constructions, the Reader can enter the sphere at any point. How did I get there? Having been born in the deep south of Southern Italy, a region plagued with unemployment and underdevelopment, my key interest was to understand Investment. Having studied economics under Professor Robert A. Mundell, (eventually) a

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Nobel Laureate in economics, among others, I learned to see that such an apparently innocuous statement as “saving is equal to investment” contains not only tremendous practical implications; it also stands at the very foundation of the entire structure of modern economics. Once I got The General Theory (1936) in my hands, I devoured it. During the summer of 1965, I followed Keynes page after page of rather abstruse economic reasoning; I was continuously grasping air. There was nothing concrete there. Once I reached page 328, this is what I read: A “view” which considers that saving is not equal to investment is “more usually supported by arguments which have no foundation at all apart from confusion of mind.” I took that to be offensive language, inappropriate to a scientific text. The statement was giving me, not an explanation, but a dogma. Always the perfect scholar, however, Keynes, implicitly confirming the hypothetical nature of his system of thought, continued his sentence by stating: “It flows, in some cases, from the belief that in a boom investment tends to outrun saving. This implies that saving and investment can be unequal, and has, therefore, no meaning until these terms have been defined in some special sense.” This is the opening that set me free onto a voyage toward new horizons. I went back to the beginning of the book, I examined every page carefully, and discovered that not one of the terms used by Keynes, and consequently by all modern economists, respects the Principle of Identity. Terms do not have one and only one non-contradictory meaning. Actually, I eventually discovered, as calculated by an economics professor at Yale, that Saving—and necessarily Investment—logically assumes 100,000 meanings. What clarity can there ever be in modern economics? Through a long mathematical and logical chain of reasoning, Gorga (2002, pp. 3– 137), to make it respect the Principle of Identity I defined Saving as all wealth that at the moment of observation stands in a non-productive state. For a large number of reasons, I eventually abandoned even the word Saving; I changed it to Hoarding. In Concordian economics, Investment automatically assumes the meaning of productive wealth. And Consumption assumes the meaning of all expenditure of monetary wealth to acquire real wealth (or financial assets of a different nature and risk factor)—not simply expenditure to purchase consumer goods as in mainstream economics. Is not an expenditure to buy a tractor an expenditure also? Eventually, I gathered all these elements together. The economic process resulted as an integration of (1) real wealth, recognized as the Production Process, with (2) monetary wealth, acknowledged as the Consumption Process, namely the expenditure of monetary assets to acquire other assets. The two realms were not only integrated into each other but were also held together by (3) the legal wealth (specifically, ownership rights) created during the Distribution Process, namely the distribution of (the economic values of) ownership rights over real and monetary wealth, while real and monetary wealth are being created—not at any unspecified and unspecifiable moment in the future as it is still assumed in mainstream economics. With the help of a brilliant suggestion by my wife, Joan, these entities can now not only be described but measured as soon as the data are collected in accordance with the categories of thought of Concordian economics.

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A most important note. Concordian economics is work in process that can be brought forward when data are collected in accordance with its categories of thought. With this task fully undertaken, Concordian economic analysis becomes much more complex than both the mainstream and the Austrian analysis (as the two major schools of contemporary economic thought; there are many other schools), first, because categories of wealth are more precisely defined and will eventually be taken into account from the point of view of supply as well as demand, and, second, because once stocks are seen in action they transform themselves into flows of values that interact among themselves to produce, over time, economic growth and business cycles. The analysis will eventually be further refined by reflecting upon the fact that economic categories (not necessarily markets) behave differently at different stages of the business cycle and that such stages often overlap. Finally, all these analyses will have to be integrated into one comprehensive understanding of the economic system as a whole in which all agents, with their property, are not presented as lifeless lists but are put in functional relations with each other. Theoretically and practically, economic operators will all live under the aegis of Concordian economics—and will become Concordians. What is the import of Concordian economics? Among the many outcomes, these undoubtedly are the outstanding ones. Long-term, those who appreciate the subtlety of the line of thought consistently followed from the genius of Confucius or the genius of Orwell will take pleasant note of the clarity of expression used by Concordian economics. Remember, those who want to corrupt society corrupt the language first. Remember, “alternative facts.” In Concordian economics, the language of the experts is canceled and Concordian economics uses words with the same meaning as in the common language. The next most important outcome of Concordian economics is this. The understanding of the economic process automatically restores economic justice to its proper place at the core of the economics science. And economic justice does not remain at some elevated standing in economic theory, but it is fully integrated into the practice of economics through the discovery of four economic rights and responsibilities to be exercised over each one of the four (modern) factors of production: land, labor, monetary capital, and physical capital. Ultimately, economic justice is not observed as an elevated intellectual phenomenon, but as a concrete expression of morality. Consequently, the economic process observed from theory to practice automatically restores the Aristotelian conception of free men and women in the social context. It is such men and women who, exercising their natural and universal economic rights and responsibilities, will eventually call for policies that transform our current world of strident discord into a social and political world of concord. Rather than either discordant Capitalism or Socialism, social men and women (Somists) shall be clamoring for the implementation of Concordianism, namely the implementation of policies derived from the strength of economic rights and responsibilities. A huge discussion that cannot be properly held here concerns the cultural strata in which the Aristotelian and Aquinian world operated: there was a common understanding that virtue ethics controlled the world. People were imbued with morality,

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hence they were free. Freedom was moral freedom, not political freedom. That was the intellectual environment in which political and economic freedom was sought after. Concordian economics is part of an ongoing program of research and publication. During the last fifty to sixty years in which I have published eight books, one translated into eight foreign languages, mostly unawares I have discovered that the integrative processes of Concordian economics are corroborated through the transformation of our prevalent modes of thinking and expression from Rationalism to Relationalism, see Gorga (2021). From the atomism and disintegration of the modern world, we gradually observe how, through Relationalism, everything exists in organic relationship with everything else. This is an overall understanding of life through which things, rather than remaining as isolated atoms—potentially creating a world of discord—are systematically and harmoniously brought in relation with each other. Concordian economics is at the core of Relationalism. And we will find that Economic Justice is at the core of Concordian economics. Economic Justice is an ancient structure that has a powerful new beginning in Concordian economics. It was obliterated by John Locke, who concentrated his—and our—attention on a similar looking but profoundly different proposition, the justice of property rights. A warning. Through the mysteries in which thought proceeds, we must realize that the temporary (!) loss of the doctrine of economic justice was not a total loss. In the first two thousand years of its life, economic justice was put in practice by gentlemen’s agreements. They could easily be broken. The program of economic justice of the future is rooted in economic rights and responsibilities. There will be responsibility in the enforcement of economic justice. It all revolves around the conception of Hoarding. Its expulsion from economic analysis was operated by Adam Smith; its reintroduction in the economic discourse has been designed through Concordian economics. Hoarding is the pivot of history. Jesus of the Parable of the Talents sternly recommended to guard against Hoarding. Jesus sent the Hoarder straight to Hell: no Trial, no Appeal. Is it for this unwelcomed recommendation that Jesus still hangs on the cross? Jesus of the future is likely to tell us how to guard against the dangers of Hoarding—for the benefit of everyone. Even the strong and the powerful. There is much truly hard intellectual work behind the reintroduction of Hoarding in the economic discourse. Concordian economics evolves from that seed. Technically, all Concordian economics stems from the transformation of the relationship of equality between Saving and Investment (S = I) into a relationship of complementarity between Hoarding and Investment. The long, detailed logico-mathematical analysis can be found at pages 3–137 of The Economic Process. The following graph titled “Effects of Hoarding” clarifies the new relationship (Fig. 1.1). More Hoarding, less investment; thus, less growth. More Hoarding, more inflation because money spent to buy goods that are horded remains in circulation—while there is no corresponding growth. More Hoarding by the few, more poverty by the many. After that, most of the work is mostly intuitive. We shall see that through a few easy steps we will build the equivalence of Production (of real wealth), Distribution (of the value of ownership rights over wealth thus created), and Consumption (or

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Fig. 1.1 Effects of Hoarding

Fig. 1.2 The economic process

expenditure of monetary wealth to acquire real wealth). Again, an image might be helpful (Fig. 1.2). A third image covers most of the territory in which our discussion is held (Fig. 1.3). The correspondence between the economic process (economic theory) and economic justice (economic policy) is like the relation between a person and her shadow. The task of Economic Justice, a project initiated by Aristotle and powerfully carried forward by Thomas Aquinas and the Doctors of Salamanca, is to infuse morality into economics. As a chapter titled “The Free Rider Problem” makes clear, economics without morality is powerless; consequently, to control the presumed

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Fig. 1.3 Economic justice

(we shall discover the full irony!) immoral actions of some economic operators, economists are left with no alternative but to call on the force of the Fascist or Communist State. In the process, traditional communities like Gloucester, MA, are being eviscerated. One small example of this reality is happening under our very eyes. During the old Feast of San Joseph, the houses of fishermen were adorned with altars filled with overflowing goodies: flowers, breads, cookies, pasta. There were open houses. Everyone was invited to come in. No more. This bounty disappeared during the last Feast of San Joseph. These are the fruits of expunging morality from the social sciences, as Adam Smith dictated; these are the fruits of keeping economics a “pure” science. No one is benefiting from this disarray. Through Concordian economics morality re-enters economics at the stage of theory, policy, and practice. 1. The action of Distribution of ownership of the economic values of the wealth being produced is not an afterthought, but an automatic and immediate action through the power of economic Rights and Responsibilities; 2. These Rights and Responsibilities have another major function; they are not designed to be left on bookshelves, but are destined to invite the implementation of specific fiscal, monetary, labor, and industrial policies: 3. It is not wishful thinking, but the power of economic Rights and Responsibilities that controls access to the factors of production and hence the distribution of the values of the wealth created. Today, one enters the economic process, not on the basis of firm economic Rights and Responsibilities, but thanks to unstable privileges.

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We hear all around of the “Death of Community.” Many of the economic practices exercised today raise a continuous concern about the death of community. An entire book ought to be devoted to this topic, and it might. Here lets us give the essence of this topic. The death of community is not an empty rhetorical expression. Curled up in it there is much ugly and painful reality: loneliness and isolation for way too many human beings are some of the most strident results. Ezra Klein (2023) reports: “From 1990 to 2021, the number of Americans who said they have five or more close friends fell by 25 percentage points. Young adults report being even lonelier than the elderly. America is, by any historical standard, unimaginably rich and powerful, and yet we’ve lost what matters most: community and connection.” Ezra Klein numbers come from a study recently released by Dr. Vivek Murthy, the U.S. surgeon general. The report is called “Our Epidemic of Loneliness and Isolation.” See also, e.g., Rinderknecht et al. (2023). While Secretary Clinton (2023) has provided a comprehensive analysis of the political aspects of loneliness, one linkage is possible here: Are school massacres nourished in the death of community? Concordian economics will, nearly automatically, take care of this modern plague. Ferrini (2002), the first poet laureate of my beloved city, Gloucester, MA, reviewed for the local paper my fundamental book The Economic Process and wrote that Concordian economics “has the answers to universal poverty and the anxieties of the affluent.” Precisely. Apart from glowing reviews, the book was panned in two influential journals. One reviewer—Davidson (2003)—based his position on two statements, one (I = S) that does not exist in the General Theory and the other (I = H) that does not exist in the Economic Process. The second reviewer—Broski (2003)—was dissatisfied with the title of the book; the book should have been titled “The Cost of Hoarding.” And, since he did not find any Hoarding in society (!), he attributed no value to the book. All reviews obtained thus far can be found at https://www.new-economic-atlas.com/ p/review-of-ep.html. Most evaluations of my overall work can be found at https:// www.new-economic-atlas.com/p/evaluations.html. Some anonymous reviewers deserve to be especially singled out. Annotating the Economic Process—for the second time—in the December 2017 issue (p. 1642) of the Journal of Economic Literature, a reviewer states: "Expanded third edition presents the transformation of economic theory into Concordian economics, shifting the understanding of the economic system from a mechanical, Newtonian entity to a more dynamic, relational process.” Precisely. Reviewing one of my latest papers titled “Concordian economics—An Integration of Theory, Policy, and Practice,” Professor Lawrence F. Katz of Harvard on March 24, 2019, wrote: “I have read over your paper with interest. You present some intriguing ideas and make the case for Concordian economics. But I must conclude that your engaging paper is not a good fit for the QJE” (italics added). Professor Franco Modigliani, a University Professor at MIT and a Nobel Laureate in economics, guided my research for 27 years. Professor Meyer L. Burstein helped this project for 23 years. Correspondence with Professor Modigliani occupies four

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folders now archived at Duke University in the David M. Rubenstein Rare Book & Manuscript Library. It generally takes centuries to develop a new paradigm; and a few more centuries to have the paradigm accepted. Thanks to the Internet and Social Media, the tempi concerning the discovery of Concordian economics might henceforth be shortened. A Reader might be pleased to know that, to cite one case, some of my work deposited at ResearchGate has gradually received 10,216 reads and that my Research Interest Score of 90.2 is higher than 64% of ResearchGate members. A communication from Academia.edu reported that much of my work is cited in a variety of disciplines all over the world: see, www.academia.edu/mentions?featured=84633567576&hc= false. Friends of Concordian economics (FoCe) [nice Italian word] you are isolated, but not alone. I wish I had the wherewithal to put you all in touch with each other. In the meantime, thanks for your moral support. I need it. The rest of the book is organized along these lines. The next chapter presents an overall view of Concordian economics. The third chapter offers tools that, if wisely used, will return relevance to the field of economic studies. The fourth chapter presents “The Revision of Keynes’ Model,” a paper ([1974] 2023). which was written in 1974, it was submitted to AER, was rejected, and left in a desk drawer.1 Once it was declared “brilliant” by Professor John C. Médaille, a professor of economics and theology at the University of Dallas, I placed it on deposit at SSRN. It has been published in EconCurrents (2023). The chapter is expanded to emphasize that, while economists study only money, physicists and ecologists study only real things (Gorga 2008). Concordian economics is an invitation to study real things and money bound together by the legal institution of ownership rights. Property, as we know, was banned from polite discourse by our beloved Jefferson. He had a choice to make: either to erase the word “property” from our discourse or forget about the union of the colonies. In the Declaration of Independence from England, as a substitute for property, he chose the “pursuit of happiness.” This chapter emphasizes that if we keep the world of economics separate from the world of physical things, we are happily going to fall into an ecological abyss; and if we keep the world of economics separate from the world of legal affairs, we are happily going to fall into a world of moral and social morass. The book then presents three steps in the development of Concordian economics: Step 1, taken in Chap. 5, offers an in-depth view of the logic of mainstream economics versus the logic of Concordian economics. The chapter points out that while the logic of mainstream economics is the logic of balancing contradictions, the logic of Concordian economics faithfully respects fundamental principles of logic and adheres strictly to commonly known rules of epistemology. Step 2, taken in Chap. 6, offers a fairly detailed view of the math and the geometry of Concordian economics. Having solved with a brilliant suggestion by my wife, Joan, 1

Quite a few technical, rejected papers are in my desk drawers; they explain the gradual evolution of Concordian economics.

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the excruciating problem of measurement of real wealth, a problem that has plagued economics at its very roots, the chapter points out that Concordian economics is ready to be transformed into Concordian econometrics as soon as data are collected in accordance with the categories of thought defined by Concordian economics. Will we reconstruct the ardor of economists of the late 1930s and 1940s? Step 3 in Chap. 7 briskly defines the economic bubble, the bubble of the system as a whole, and distinguishes it from the many individual “commodity bubbles” that are not well defined nor well measured with the tools of mainstream economics. The actual measurement of the economic bubble will occur when data are collected in accordance with the categories of thought of Concordian economics. There is much work to be done—and redone. Chapter 8 identifies some of the poor decisions that are taken by our professional leadership in social, economic, and political affairs, because of the absence of the guidance that only the wisdom of morality can offer. The “free rider problem” is rather complex but quite revealing of the “modern” state of affairs in too many social, economic, and political relations. Chapter 9 points out that morality enters forcefully the sphere of Concordian economics at three levels: theory, policy, and practice. The resulting Theory of Economic Justice is revealed to be the mirror image of the Theory of the Economic Process. One cannot possibly be separated from the other. Indeed, this inextricable relationship is brought down to earth by a set of economic rights and responsibilities. Chapter 10 proves that Concordian morality is not an abstraction; rather, it is practically guided by a set of four specific economic rights and responsibilities— one for each modern factor of production: land, labor, financial capital, and physical capital. With rights taking the place of privileges, we will move toward an age of much equanimity and stability. In Chap. 11, we learn that one of the functions of these rights is to guide us toward the creation of four economic policies, again one for each specific modern factor of production: fiscal policies, labor policies, monetary policies, and industrial policies. Needless to say, such policies rooted as they are in deep economic as well as deep moral tenets are destined to create justice and peace on earth. Justice and peace for all—with no one paying a cent for it. With fair distribution of value of ownership rights, there is no need for the redistribution of wealth. Social peace, if it ever existed, will be returned to earth. Chapter 12 offers an outline of the expected social changes that will gradually but automatically be brought about through the application of Concordian economics; basically, rather than showing one’s preference for Individualism or Collectivism, men and women will be operating a synthesis of the two, a synthesis that following Aristotelian aspirations I like to define as the integration of Men and Women in the Social Context (Somists). Consequently, people might even—eventually—no longer identify themselves as Men and Women, but as Somists. The most ardent wish of people who want to destroy the supremacy of men over women will then indeed be realized. God is neither Man nor Woman, but (perhaps) a Somist. And most certainly He/She/It is a Concordian. Chapter 13 does the same for the field of politics and political science. Here, rather

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than Capitalism or Socialism/Communism, we will be living through the expected realization of Concordianism. Concordianism is the full application of Concordian economics in our lives. Chapter 14, the last chapter of the book shows how Rational (linear) economics is transformed into Relational (spherical) economics. The chapter pinpoints how a new methodology, the Relational Method of Analysis, technically makes it possible for Rational economics to be transformed into Relational economics; the analysis is then enlarged to show how the core of Concordian economics becomes the motor of the overall transformation of Rationalism into Relationalism. We shall thus see how Concordian economics occupies a central place in an epochal change in our modes of thinking and expressions concerning the transformation of Rationalism into Relationalism. It is not only economics that is affected by this new methodology, but most mental disciplines as well. Segments of this transformation have been examined in a series of papers, some published in peer-reviewed journals. What is the purpose of this long detour? Is it an inefficient use of our time? No. The chapter goes to the very core of the understanding of modern economic analysis. Economists do not know what they are doing. They are completely dominated, perhaps more than any other specialist today, by the Spirit of the Time, the Spirit of Rationalism—a spirit that does not allow them to admit any mistake. They are “rational,” how can they make any mistake? A new world will open up to their view once they understand the deep intricacies of their thought processes. We and they will then become deeply appreciative of their efforts.

References Broski, Mark. 2003. Review of “the economic process: an instantaneous non-Newtonian picture. Carmine Gorga.” Journal of Markets and Morality 6 (1): 297–298. Buera, Francisco J., Joseph P. Kaboski, and Robert M. Townsend. 2023. From micro to macro development. Journal of Economic Literature 61 (6): 471–503. Clinton, Hillary Rodham. 2023. The weaponization of loneliness: To defend America against those who would exploit our social disconnection, we need to rebuild our communities. The Atlantic, August 7. Available at https://www.theatlantic.com/ideas/archive/2023/08/hillary-cli nton-essay-loneliness-epidemic/674921/ Accessed 19 Sep 2023. Davidson, Paul. 2003. A review of the economic process: An instantaneous non-Newtonian picture. In Journal of Economic Literature, eds. Carmine Gorga, 1284–1285. Lanham: University Press of America Ferrini, Vincent. 2002. Gorga worthy of note. Gloucester Daily Times 11, A6 Gorga, Carmine. 2008. Economics for Physicists and Ecologists. Transactions on Advanced Research 4 (1): 6–9. Gorga, Carmine. 2002, 2009, 2016. The Economic Process: An Instantaneous Non-Newtonian Picture. Lanham: University Press of America: 2002 hard copy, 2009 expanded (through Appendices) soft copy; expanded third edition by The Somist Institute, 2016. Gorga, Carmine. 2021. From rationalism to relationalism. Academia Letters. https://www.academia. edu/49593701/From_Rationalism_to_Relationalism. Accessed 25 July 2023.

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Gorga, Carmine. [1974] 2023. A revision of Keynes’ model: The roots of Concordian economics. EconCurrents. https://econcurrents.com/2023/06/18/arevision-of-keynes-modelthe-roots-of-concordian-economics/. Accessed 25 July 2023. Greenspan, Alan. 2010. Quoted in Chen, Sewell. 2010. Greenspan calls for repeal of all the bush tax cuts. The New York Times. https://www.nytimes.com/2010/08/07/business/economy/07gree nspan.html. Accessed 25 July 2023. Keynes, J. Maynard. 1936. The general theory of employment, interest, and money. New York, NY: Harcourt. Keynes, J. Maynard. 1937. The general theory of employment. Quarterly Journal of Economics 51 (2): 209–223. Klein, Ezra. 2023. America is dangerously Loney. Ezra Klein on ‘Her.’ New York Times, p. SR 5. Krugman, Paul. 2014. What have we learned since 2008? New York Times. https://archive.nytimes. com/krugman.blogs.nytimes.com/2016/02/14/whathave-we-learned-since-2008/. Accessed 25 July 2023. Mankiw, N. Gregory. 2023. Five Best: Economics Primers. Wall Street Journal 2: C008. Piketty, Thomas. 2014. www.youtube.com/watch?v=j62dLzzAzww. Accessed 25 July 2023. Rinderknecht, R. Gordon et al. 2023. Understanding the Growth of Solitary Leisure in the U.S., 1965–2018. In MPIDR Working Paper WP 2023–025 l May 2023. Samuelson, Paul A. 1974. Lessons from the Current Economic Expansion. American Economic Review Proceedings 64 (2): 77. Syll, Larsen. P. 2017. Keynes’ devastating critique of econometrics. Statistics and Econometrics. wordpress.com. Accessed 25 July 2023.

Chapter 2

Concordian Economics: An Overall View

Einstein said, “We cannot solve our problems with the same thinking we used when we created them.” Buckminster Fuller said, “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” At Proverbs 29:18 it is written: “Where there is no vision, the people perish.”

Abstract Concordian economics is an integration of theory, policy, and practice. The theory integrates: • Production of real goods and services; • Distribution of ownership rights over goods as well as money; • Consumption or expenditure of financial assets to acquire real goods and services—or financial assets of a different nature and risk factor. The policy integrates: • The right to participate in the economic process (participative justice); • The right to a fair share of what one produces (distributive justice); • The right to receive an equivalent value of what one gives (commutative justice). The practice integrates: • Four economic rights and responsibilities in relation to • Four modern factors of production.

Adapted from Gorga (2022).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Gorga, Concordian Economics, Vol. 1, Springer Studies in Alternative Economics, https://doi.org/10.1007/978-3-031-47320-3_2

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2.1 A Fundamental Prequel Mainstream economics is snarled in logical contradictions. Deep acquaintance with all the issues should lead the Reader to conclude that this condition of mainstream economics is not due to the fault of any economist. The enemy is not mainstream economics; the enemy is Rationalism. We shall find that, naturally unawares, the mind of mainstream economists is controlled by all the deficiencies of Rationalism—the Spirit of our age. John Cassidy (2011) put these complex issues quite succinctly: “Rational Irrationality. Where is the New Keynes?”

2.2 A Bit of History Concordian economics was born in 1965, when, after a summer of intense intellectual struggle with the General Theory, the writer defined Saving (later substituted with the word Hoarding) as all non-productive wealth; he inserted the new term into Keynes’ model of the economic system, the model was shattered, and he found himself in a totally different cultural universe, see Gorga (2002, 2009, 2016). This world was eventually defined as Concordian economics. The procedure is reproducible. We all obtain the same result.

2.3 Once Upon a Time Once upon a time economics was not a science; it was a practice. It was controlled by the principles of economic justice, principles that were enunciated by Aristotle and endorsed by Saint Thomas Aquinas. These principles remained undisputed for about two thousand years. At that time, from Moses, through Jesus of the Parable of the Talents, to the Doctors of the Church, everyone knew what Hoarding was. No more. John Locke destroyed the doctrine of economic justice by focusing his attention— and ours—on a similar looking but completely different proposition, the justice of property rights. And then Adam Smith came along. Though clever prestidigitation he made Hoarding disappear. Thus he gave us the modern “science” of economics. He said that all wealth that is not consumed is added to Investment (capital of old). There was no more room for Hoarding. What could be more evident than this? Extended analysis reveals that the world of modern economics is totally devoid of logic and deficient in practice. Only some professional economists still believe in “their” science; and this number is dwindling due to internal critical analysis; see, e.g., Greenspan (2010); Krugman (2014); Syll (2017) (Illustration 2.1).

2.4 The Behavior of the Market; the Methodology of Modern Economics

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Illustration 2.1 Adam Smith (1723–1790) Wikipedia

Today, without batting an eyelash, it is stated that “economics is what economists do.” Trouble is economists do not seem able to agree on what it is that they do. A majority of them seem to be convinced that the science of economics is the study of the Market. Let us see.

2.4 The Behavior of the Market; the Methodology of Modern Economics Why do most mainstream economists—with econometricians at the head of the parade—believe, as Adam Smith did, that the Market is ruled by an invisible hand leading us gently to a condition of equilibrium and well-being? The reason is that for most economists, as they openly admit, economics is a “black box.” A black box is not a theory. And neither do the tools of demand and supply form a theory. One of the major functions of any theory is to grant us as much certitude as possible. What do the tools of demand and supply offer? MANIPULATING the laws of demand (D) and supply (S), economists develop ideas of what should go in their analysis (the black box) and observe what comes out; viz (Fig. 2.1).

Fig. 2.1 Input and Output

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When analyzed in depth, with this methodology results of any exercise, on the one hand, plausibly lead to growth; on the other hand, they lead to stability; and they lead to decline as well. Economists do not know what happens within the box. (We shall see that Concordian economics has nothing to say against the tools of supply and demand; Concordian economics makes use of these tools to the fullest; the strong objection raised here is against using them as a theory of economics.) If this is the theory, what is the praxis? Economists see a Mercedes going by. They jot down $40,000 in their ledgers. Where does the car go? The car is no longer to be seen. Economists are concerned only with money. Trouble is economists have no definition of money: functions of money, yes; definition, no. Nor can it be otherwise, because, in their faithfulness to the “pure” science of economics they cannot deal with money that is primarily a social, legal, and political institution. But wait. Are there not professional economists who follow crops and car production? Yes, of course. But these are the “practical” economists. The numbers they work with are never coordinated in a coherent sum total for the nation as a whole. They do not know how. Modern economics has no way to measure real wealth. And then there are the “mathematical” economists, especially those who work in the field of Game Theory. Here the applications have multiplied during the last century. To name a few listed in Wikipedia, applications include a wide array of economic phenomena and approaches, such as auctions, bargaining, mergers and acquisitions pricing, fair division, duopolies, oligopolies, social network formation, agent-based computational economics, mechanism design, and voting systems; and across such broad areas as experimental economics, behavioral economics, information economics, industrial organization, and political economy. A question to ask is this. Game Theory operates within the “environment” created by the original Keynes’ Model. Will results be different when Game Theory operates within the environment created by the Concordian economics, a field of study developed on the basis of the Revised Keynes’ Model? Put another way, do most economists look forward to the day a totally new theory comes along? Hardly. They persist in their world of analysis/paralysis. Why the analysis/paralysis? The fundamental reason is that, as we have seen, Saving was substituted for Hoarding by Adam Smith, and, by absorbing Hoarding into Capital/Investment, Hoarding disappeared from the economic discourse. Eventually, Saving became “equal” to Investment. This is the proposition that is at the foundation of all modern economic theory, Keynes (1936, p. 36).

2.6 We Have a New Paradigm

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The trouble is that Saving = Investment is a dogma. Neither Keynes nor any other economist has been able to explain why Saving = Investment.1 And no one ever will because Saving in its incarnation as money deposited in a bank is an Investment: It is the lowest form of investment. Saving vanishes. Many other expressions of Saving are evanescent. Can we save a banana? A clarification, by the way of Stuart Weeks, was put forth by Tolstoy: “The most difficult [and challenging] subjects can be explained to the most slow-witted person, if he/she has not formed any idea of them already. But, the simplest thing cannot be made clear to the most intelligent person—if that person is firmly persuaded that they know already, without a shadow of doubt, what is laid before them.” As usual, persons eager to learn are the salvation.

2.5 We Need a New Paradigm Economics is such that we cannot change a word or two to set things right. Economics is a science. To change what is wrong with it, we need a new paradigm.

2.6 We Have a New Paradigm As a result of fifty years of in-depth analysis, which started with the (re)introduction of Hoarding in economic analysis, the writer has designed a set of tools that allow us to look inside the black box. Professor Franco Modigliani, a Nobel Laureate in economics at MIT, and Professor M. L. Burstein, among many other experts in a variety of disciplines, have assisted this research, respectively for 27 and 23 years (Illustration 2.2). Inside the black box, one finds not an economic theory but the operations of the Economic Process.

1

On p. 328, Keynes (1936) states: A “view” that considers that saving is not equal to investment is “more usually supported by arguments which have no foundation at all apart from confusion of mind.” This is not a scientific explanation; it is a dogma.

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Illustration 2.2 Franco Modigliani (1918–2003) Wikipedia, www.nobelprize. org/

2.7 The Economic Process As pointed out in a book2 , which is now in its third edition, and in numerous papers, some published in peer-reviewed journals, the central understanding of the economic process results from the integration of the Production of real goods and services, the Distribution of ownership rights over real and monetary wealth, and Consumption or expenditure of monetary wealth to acquire real wealth. Even in the sale of a car, we have these three items: car, money, and deed of ownership. This is true theory: It is an accurate description of facts. Logically, these elements are tied together in a relation of equivalence: Production ↔ Distribution ↔ Consumption. Production, Distribution, and Consumption are not simple words. They are concepts. They form processes of their own. These processes are rather extensively treated in Gorga (2002, pp. 159–328). The integration of these processes can be seen at a glance in the following Figs. 2.2 and 2.3; one is the mirror image of the other: one represents economic theory, the other represents economic policy: Figure 2.2 catches the economic process at the moment of the exchange. It indicates that a cycle of the economic process is completed when the entire production of the period is sold. An exchange has occurred between money and goods. For the

2

Carmine Gorga (2002, 2009, third expanded edition in 2016). Apart from rather glowing reviews, two negative reviews, published in influential journals, were based, one, Davidson (2003) on statements that do not exist either in the General Theory (I = S) or in the Economic Process (I = H), the other, Broski (2003) on a displeasure with the title of the book. According to this reviewer, EP should have been titled “The Costs of Hoarding,” and then, since he did not find hoarding in the (2003) daily reality, he dismissed the importance of the book. I wrote a letter to Professor Davidson; no answer. I could not find an address for Professor Broski. All reviews of this book are recorded at https://www.new-economic-atlas.com/p/reviewof-ep. html.

2.7 The Economic Process

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Fig. 2.2 Economic theory—the economic process

Fig. 2.3 Economic policy—economic justice

exchange to take place, both the seller and the buyer, in an ordered society, must be legal owners of the wealth they exchange. Placing Fig. 2.3 next to Fig. 2.2, we realize that this construction of economic justice is nothing new! It is simply a return to the millenarian concern with economic justice, which from Aristotle to the present has been understood as composed of “distributive” justice and “commutative” justice. Concordian economics allows us to put the capstone on this construction: “Participative” justice, see Gorga (2017). The economic process is nothing but the mirror image of the complete description of three essential principles of economic justice. • Participative Justice offers a one-to-one correspondence with the production process; • Distributive Justice is in a one-to-one correspondence with the process of distribution of ownership rights over real and monetary wealth; • Commutative Justice gives us a one-to-one correspondence with the consumption process or the process of expenditure of monetary wealth to acquire real wealth. Economic justice in Concordian economics is not left in the stratosphere of abstraction. Rather, it is made concrete by its absorption of four economic rights and responsibilities. Each right and responsibility is in turn linked to the four factors of (modern) production: land, labor, financial capital (money), and physical capital of

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shovels, bulldozers, and other equipment. Today, one generally looks at this complex economic realty through the envelope of the corporation. As will become clearer in due course, economic justice is fundamentally a moral issue. Economic justice keeps the economic process in equilibrium to the benefit of everyone. Economic injustice keeps the market in disequilibrium to the detriment of everyone. Short-term benefits to the few from injustice are ephemeral. An overview of long-term trends makes these relationships quite clear.

2.8 A Geometric Representation of Economic Dynamics Starting from an equilibrium condition at time zero (0, 0, 0), we can build a geometric representation of economic dynamics of Production, Distribution, and Consumption. These are here represented respectively as values of real wealth (RW), values of distribution of ownership (DO) rights, and values of monetary wealth (MW)—as follows: This figure suggests that, since they are relatively easier to create, the rate of growth of assets composing monetary wealth (MW) is faster than the rate of growth of assets composing the category of real wealth (RW). And then there is the problem of the accelerating pace of concentration of the distribution of ownership (DO) rights into a few hands. This phenomenon, first cut, is here assumed to be constant. Clearly, when monetary wealth is concentrated in a few hands, not enough money will be available to the majority of the population. The necessary equilibrium conditions implied in the P ↔ D ↔ C equivalence for the economic process as a whole, as represented in Fig. 1.3, is broken. The process will not proceed forward organically. Indeed, a bubble is created. The economic bubble is clearly visible in Fig. 2.4. A bubble is a separation of monetary wealth from real wealth and is measured by the area between MW and RW. In Concordian economics these values are kept separate and distinct from each other. Thanks to a brilliant solution by my wife, Joan, we can define—and eventually measure—them respectively as p-values (for values of the production of real wealth), c-values (for values of consumption or expenditure of monetary wealth), and d-values (for values of the legal economy, i.e., distribution of values of ownership rights).

2.9 How Can Equilibrium Be Restored? Let us look at Market Governance—again. Following the dynamics implicit in Figure 2.4, it is possible to see how the Market might not always be ruled by a benign invisible hand. On occasion, the Market, left to the natural inclinations of ordinary human beings, is governed by another dictum by Adam Smith that is also in the Wealth of Nations. This is a less famous observation,

2.10 Horses of Inequality

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Fig. 2.4 The economic process over time

but more pertinent to our situation today: “All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.” If we are not misled by reductionist thinking of minds accustomed to analyzing linear trends—individually—only, we are going to discover not one but four horses of inequality wandering all over the lot and leaving behind, instead of simple geometric patterns, a filigree of incredibly subtle interrelationships. Economics is not and ought not to be treated as an abstract theory. Economics observes, at times, a harsh reality. We must be ready to look at this reality unflinchingly.

2.10 Horses of Inequality Four horses of inequality raise their demanding heads as soon as one looks into the component elements of the Production Process. To produce anything, in a modern economy, one needs control over the four factors of (modern) production: • Land and natural resources; • Labor, in its variegated manifestations of manual labor, intellectual labor, (spiritual?) labor as in entrepreneurial leadership; • Money in the form of financial capital; and, • Tools in the form of physical capital as in plants and equipment. These are the modern factors of production. It is only natural that human beings should attempt to get as much control as they can over each one of these factors. Inequality ensues. Control over the factors of production has never been and never will be distributed equally among all human beings. That is a false, misleading, and dangerous ideal. Within limits, inequality is natural. No two snowflakes are alike. Human beings, as well as specific plots of land, are endowed by our Creator with different measures of qualities and quantities. It is natural that we are going to get unequal results. What we need, and what the world stands for, is equality of opportunity.

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2.11 Rights Versus Privileges Access to the factors of production today is acquired as a privilege and naturally leads to unbridled inequality. The four horses of inequality are these four unbridled privileges: • • • •

Privileged access to land and natural resources; Privileged access to money; Privileged access to the fruits of the labor of others; Privileged access to the wealth of others.

Each one of these privileges—historically rooted mostly in conquest and plunder—has to be turned into a universal right for everyone, if we ever want to build a just and ordered society. We can then forget the past and concentrate on the present and the future. The opportunity is ours. We only need to realize that, while privileges divide, rights unite. Rights unite because they are born out of the exercise of corresponding responsibilities. A Tablet: Four Economic Rights and Responsibilities 1. The right of access to land and natural 1. Pay taxes on land and natural resources that resources are under our control 2. The right of access to financial resources imbued in national credit

2. Repay loans obtained through access to national credit

3. The right of access to the fruits of one’s labor

3. Perform tasks required in the process of wealth creation

4. The right of access to the fruits of one’s property

4. Respect the property of others

No other economic rights or responsibilities seem to be essential. The consistent assumption of these four responsibilities is all that can and ought to be ingrained into government policies—at various levels. These four policies, gradually pursued, will yield all the certainty and economic security that we need, because they foster structural changes that create conditions of economic freedom and justice for all. As an unearned consequence, the need for Hoarding will almost be rooted out of existence. A fringe of misers will always be with us. But when the majority of the population does not copy the miser, the damage will be minuscule.

2.12 The Relative Weight of Concordian Economic Policies Of the four policies, Concordian monetary policy is the most urgent, the most impellent, the most necessary. And it can also be implemented sooner than the others and with more widespread effects than the others. Submitted to the evaluation of the Federal Reserve System, this policy received a gracious nod of approval: “Given

2.14 Serving Four Masters

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your proposal (for creating a new monetary system), I suggest that you contact your state and federal representatives” Durr (2016). Given my scarce resources of time and money, I have been able to follow this directive only fitfully. See attachment on the next page, please.

2.13 Who Are the Opponents? Who are the powerful people who would object to this program of action? Four presumed antagonists are supposed to be: 1. Landowners who do not want to pay their fair share of taxes on the value of their land; 2. Entrepreneurs who do not want to offer full compensation for services received; 3. Central bankers who do not want to serve the public interest; and 4. Business people who want to gobble up the fruit of other people’s effort. Where are they? Apart from their minuscule apparitions, when measured against the billions of entrepreneurs who behave morally, they are four phantoms—but more dangerous for being ingrained in the imagination of people who, blinded by their institutional power, see neither economics nor morality clearly. READ: tax assessors, politicians, and academicians who, unable to speak truth to power, make themselves powerless and paralyze entire nations. The best way to build some back-bone in our ruling classes is to stress that Concordian economics is poised to give a satisfactory answer to a perennial ancient question. It states that the best form of government is the one that governs on the basis of self-imposed (hence democratic) rules of economic justice. In this system, The Government—after much vetting—declares a set of economic rights and responsibilities to be shared by the entire nation and leaves The Market free to execute them. Ideally, the vetting will converge on the creation of the set of economic rights and responsibilities enunciated throughout the work on Concordian economics. Is not this the world that both Individualists and Collectivists are trying to build—but separately from one another?

2.14 Serving Four Masters You might think that this writer is a lone ranger roaming these vast expanses of economic territory—all alone. Nothing could be farther from the truth. He has consistently been serving four great American Masters of Economics. Forget Keynes… Forget Hayek... For the control of land and natural resources, we all ought to be devoted servants of Henry George. By the way, mirabile dictu, do you know that not one but eight Nobel laureates in economics endorsed Henry George’s prescription to tax the value

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Illustration 2.3 Henry George (1839–1897) Wikipedia. Public Domain

Illustration 2.4 Louis O. Kelso (1913–1991) Intercentar

of the land… while reducing taxes on buildings and, eventually, income? (Illustration 2.3) For the control over the fruits of one’s labor, we all ought to be devoted servants of Louis O. Kelso, the father of the extraordinarily ingenious Employee Stock Ownership Plan (ESOP) and creator of millions of financially independent persons—aka, capitalists (Illustration 2.4). For the control of money, with its relevant inscription into Chap. 1, Section 8 of the US Constitution, we all ought to be devoted servants of Benjamin Franklin. For many consilient reasons, some of which we will consider in greater detail in due course. Benjamin Franklin can properly be classified as the father of modern monetary policy (Illustration 2.5). After showing a relevant paper to the Chair of the Federal Reserve System (the Fed), as can be seen from the attached response I received a nod of approval to my proposal “for the creation of a new monetary system.” Their words.

2.14 Serving Four Masters

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For the control over such basic industrial tools as the corporations (physical capital), we all ought to be devoted servants of Louis D. Brandeis. In his honor I have classified the core of a necessary modern industrial policy as the Brandeis Rule (Illustration 2.6).

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Illustration 2.5 Benjamin Franklin (1706–1790) Wikipedia. Public Domain

Illustration 2.6 Louis Brandeis (1856–1941) Wikipedia, Public Domain

The writer actually did his dissertation at the University of Naples on the political thought of Louis D. Brandeis; this work was awarded a Council of Europe Scholarship; and he entered the academic awards wind tunnel, in which he even caught a Fulbright Scholarship. And then there is Moses (Illustration 2.7). Moses of the four jubilees: the Sabbath (against hoarding time), the seven-year Debt Jubilee; the seven-year crop rotation to give respite to the land to renew her inner powers; and the 7 × 7 (49) year Land Jubilee, when land was returned to the original steward free of charge. That was a comprehensive merciless fight against hoarding, wasn’t it?

2.15 Conclusion

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Illustration 2.7 Moses (1800BC–1400BC) Picture by Author

2.15 Conclusion This is not “my” vision, says I. I do not claim originality. As pointed out above, I am consistently trying to understand and implement the thought of four great American thinkers: Benjamin Franklin, Henry George, Louis D. Brandeis, and Louis O. Kelso. At a deeper level of analysis, this is the vision that unfolds mathematically by inserting Hoarding, namely the core of the Parable of the Talents,3 into the structure of economic theory. Once this root source of Concordian economics became clear to the writer in 2006 (!), analyzing what else Jesus, Moses, and St. Thomas Aquinas thought about economics became an intellectual necessity.4 That is a train of thought, explored mainly on the pages of Mother Pelican, that has led to the conclusion that 3

I am appalled at the number of misguided interpretations of this parable. The economics profession is waking up to the need to analyze many aspects of the relationship between economics and religion. See, Shiya Iyer, “The New Economics of Religion.” Journal of Economic Literature 2016, 54(2): 395–441. Yet, because of ideology and political correctness perhaps, the analysis of the economic content of religions is still missing from academic investigations. See, e.g., Daniel W. Drezner, “The state of macroeconomics is not good.” The Washington Post, September 15, 2016.

4

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there is no such thing as religion without economics and ultimately to a book titled The Centrality of the Resurrection, Gorga (2016). In truth, Concordian economics is on the cusp of serious cultural breakthroughs in a number of ancillary disciplines, from jurisprudence to sociology to political science to theology (!). Confucius and Orwell might say that perhaps the most important long-term contribution of Concordian economics is to bring the language of economics in line with the language of common mortals. Stated more directly, Concordian economics adds clarity and reduces the possibilities of corruption in the daily interface between economics, politics, and culture. True, the econometrics of Concordian economics are still missing; the econometrics will come as soon as official data are collected in accordance with the specific categories of thought of the new paradigm (even though any enterprising soul is free to test the validity of Concordian economics using fictitious numbers). For the time being, this lacuna is not too worrisome. Apart from overwhelming factual evidence about the dangerousness of decisions taken on the basis of econometric models, we ought to remember that Keynes (1939) expressed strong reservations against econometrics. If we ever had any doubt that Keynes knew what he was talking about, the latest developments concerning doubts about the usefulness of econometric studies should put our mind to rest: see, e.g., Greenspan (2010); Krugman (2014); Syll (2017). Perhaps, this is a worthwhile resolution to make. Let us abandon the dangerous misconceptions of mainstream economics. Let us not be cowed by its inappropriate use of mathematics. Let us wholeheartedly plunge into the new/old world of Concordian economics. There is much to recommend it. My latest discovery? Intense contemplation of The Lord’s Prayer reveals that it embraces the totality of Concordian economics: First, to make our daily bread, we need access to all four factors of production (the oven is physical capital); Second, to forgive our debts we need to institutionalize the Mosaic Debt Jubilee, a systematic cancelation of debts every seven years.5 Third, “Thy kingdom come, Thy will be done in earth, as it is in heaven.” To reach this condition requires steady, widespread creation of (economic) justice and peace on earth. Just today, this quotation has crossed my desk: “I am an historian. I am not a believer, but I must confess as a historian that this penniless preacher from Nazareth is irrevocably the very center of history.” Wells, Apologetics (2013).

5

For a faithful application of the Mosaic Debt Jubilee we should follow the practices of the best Credit Unions. We need an institutional change in our financial practices—and a thorough reconsideration of our current consumer credit habits. We need to avoid lending money with terms exceeding seven years. We should have a hard evaluation of mortgages extending over 20, 30, 40 years. We need above all refrain from issuing loans for the purchase of consumer goods and especially loans that have a fairly certain likelihood of default.

References

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References Broski, Mark. 2003. Review of “the economic process: An instantaneous non-Newtonian picture Carmine Gorga.” Journal of Markets and Morality 6 (1): 297–298. Buera, Francisco J., Joseph P. Kaboski, and Robert M. Townsend. 2023. From micro to macro development. Journal of Economic Literature 64 (6): 471–503. Cassidy, John. 2011. “Rational Irrationality,” The New Yorker, October 12. Available at John Cassidy Latest Articles | The New Yorker. Accessed 16 November 2023. Davidson, Paul. 2003. A review of the economic process: An instantaneous non-Newtonian picture. In Journal of Economic Literature, eds. Carmine Gorga, M.D. Lanham, 1284–1285. Oxford: University Press of America. Durr, Jean. Personal communication to Carmine Gorga, September 14, 2016. Public Affairs Office of Board of Governors of the Federal Reserve System. https://1drv.ms/w/s!AgFxYQBpjmMF j06wiz_G_fkJWeWO. Ferrini, Vincent. 2002. Gorga worthy of note. Gloucester Daily Times. 11, A6. Gorga, Carmine. 2008. Economics for physicists and ecologists. Transactions on Advanced Research 4 (1): 6–9. Gorga, Carmine. 2002, 2009, 2016. The Economic Process: An Instantaneous Non-Newtonian Picture. Lanham: University Press of America: 2002 hard copy, 2009 expanded (through Appendices) soft copy; expanded third edition by The Somist Institute, 2016. Gorga, Carmine. 2017. “Return to Economic Justice—From Entitlements to Rights.” Catholic Social Science Review, Volume 22, pp. 203-217. Available at https://www.pdcnet.org/cssr/con tent/cssr_2017_0022_0203_0217 Accessed 16 Nov 2023. Gorga, Carmine. 2021. From rationalism to relationalism. Academia Letters. https://www.academia. edu/49593701/From_Rationalism_to_Relationalism. Accessed 25 July 2023. Gorga, Carmine. [1974] 2023. A revision of Keynes’ model: The roots of Concordian economics. EconCurrents. https://econcurrents.com/2023/06/18/arevision-of-keynes-modelthe-roots-of-concordian-economics/. Accessed 25 July 2023. Greenspan, Alan. 2010. Quoted in Chen, Sewell. 2010. Greenspan calls for repeal of all the bush tax cuts. The New York Times. https://www.nytimes.com/2010/08/07/business/economy/07gree nspan.html. Accessed 25 July 2023. Keynes, J. Maynard. 1936. The General Theory of Employment, Interest, and Money. New York, NY: Harcourt. Keynes, J. Maynard. 1937. The General Theory of Employment. Quarterly Journal of Economics 51 (2): 209–223. Keynes, J. Maynard. 1939. Professor Tinbergen’s Method. The Economic Journal 49 (195): 558– 577. Klein, Ezra. 2023. America is dangerously Loney. Ezra Klein on ‘Her.’ New York Times, p. SR 5. Krugman, Paul. 2014. What have we learned since 2008? New York Times. https://archive.nytimes. com/krugman.blogs.nytimes.com/2016/02/14/whathave-we-learned-since-2008/. Accessed 25 July 2023. Mankiw, N. Gregory. 2023. Five Best: Economics Primers. Wall Street Journal 2: C008. Piketty, Thomas. 2014. www.youtube.com/watch?v=j62dLzzAzww. Accessed 25 July 2023. Rinderknecht, R. Gordon et al. 2023. Understanding the growth of solitary leisure in the U.S., 1965– 2018. MPIDR Working Paper WP 2023–025 l May 2023. https://doi.org/10.4054/MPIDR-WP2023-025. Accessed 25 July 2023. Syll, Larsen. P. 2017. Keynes’ devastating critique of econometrics. Statistics and Econometrics, February 24. Available at Feb | 2017 | LARS P. SYLL (wordpress.com). Accessed 25 July 2023. Wells, H. George. Quoted in Apologetics 315. June 2, 2013. Available at Bottom of Form https:// apologetics315.com/2013/06/h-g-wells-on-the-historicity-of-jesus/ Accessed 16 Nov 2023.

Chapter 3

Concordian Economics: Tools to Return Relevance to Economics

Abstract With the help of planes and solids, this chapter presents an enlargement of the field of observation of economic theory. Through this transformation, the distribution of ownership rights to money and wealth assumes a central position in economic analysis. Thus social relevance is returned to economics. The validity of this operation is confirmed by the return of the millenarian field of economic justice to its traditional function as guidance to economic policy. The chapter then presents four sets of economic rights and responsibilities that offer the potential of translating principles of economic justice into the complexities of the modern world.

3.1 Introduction As problems of human and natural ecology mount up, there is growing in mainstream economics the conception of economics for economics’ sake. The tendency is to see economics as an autonomous discipline isolated from other sciences, and yet dominating all other social sciences. No matter what concerned people within and without the economics profession maintain, the tendency is to neglect those concerns because mainstream economics has an unstoppable inner force of its own that makes it impossible to change course. This chapter assumes that this tendency is due not to the will of any individual economist but to the sheer power of their tools of economic analysis. The action is involuntary. The process is mechanical (cf. PostAutistic Economics Review Journal, from inception onward; currently Real World Economics Review). The process is not without consequences. Economic theory has lost control of itself. Perhaps no one has made the case stronger than Blinder (1999), who has said: “… too much of what young scholars write these days is ‘theoretical drivel, mathematically elegant but not about anything real.’” As a direct consequence, economic theory has become splintered into various schools, which vie for their own preferred policies. Because of the current disarray, monetary policy has largely been left to Adapted from Gorga (2008).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Gorga, Concordian Economics, Vol. 1, Springer Studies in Alternative Economics, https://doi.org/10.1007/978-3-031-47320-3_3

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the bankers; fiscal policy to the politicians; and hardly anyone speaks of labor or land or industrial policy any longer. In a word, by becoming detached from reality, both economic theory and policy risk becoming socially ineffective—which does not mean that economic practices are not causing social consequences of their own. Let us look at one specific example: We study optimal monetary policy in an analytically tractable heterogeneous agent New Keynesian model with rich cross-sectional heterogeneity. Optimal policy differs from a representative agent benchmark because monetary policy can affect consumption inequality, by stabilizing consumption risk arising from both idiosyncratic shocks and unequal exposures to aggregate shocks. The trade-off between consumption inequality, productive efficiency, and price stability is summarized in a simple linear-quadratic problem yielding interpretable target criteria. Stabilizing consumption inequality requires putting some weight on stabilizing the level of output, and correspondingly reducing the weights on the output gap and price level relative to the representative agent benchmark, see Acharya et al. (2023).

This chapter offers a set of new tools that is capable of changing this course of action. Through these tools social relevance reveals itself as an integral part of the constitution of economic theory, policy, and practice. To be specified at the outset, the new tools do not reject but incorporate the old tools of analysis. Using planes and solids in space, in addition to points and lines, economic theory automatically encompasses a larger social reality and returns to the fold of socially relevant sciences with authority to suggest desirable policies and practices; cf. Clower (1960: 323). While the proposed tools in economic theory are the result of fifty years of analysis mostly published in Gorga (1982, 2002), desirable policies and practices are distilled from a program of action presented in Gorga (1959, 1964, 1991a, b, 1994, 1999, 2002, 2007), Gorga and Kurland (1987) and Gorga and Weeks (1997). More extensive treatments can be found in the writings of Benjamin Franklin, Henry George, Louis D. Brandeis, and Louis O. Kelso—with their works, necessarily all their works, read in rapid succession and not any of them as a stand-alone effort. Standing alone, these works are open to debilitating objections. Together, they become an impregnable fortress.

3.2 Tools to Control Economic Theory Mainstream economic theory is an impressive intellectual construction with its own internal logic. Its structure is a bastion impervious to any external influence; it has become a mathematical science, and as such it is autonomous of any influence that does not enter into its logical structure. The intellectual apparatus of mainstream economic theory, once deconstructed, revolves around the following tool kit, which we propose to preserve and to build upon.

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3.2.1 Existing Tool Kit As everyone knows, economics is built on the tools of supply and demand. The demand of most everything increases as its price decreases; and the supply of everything increases as its price increases. This is the bare structure of most analyses in economics, from the theory of growth to the theory of money. To appreciate the full force of this method of analysis one needs to realize that the lines of supply and demand represent sets of numbers—in turn derived from functions of two variables, prices and costs—and then one must see those schedules in movement. As they move up or down, right or left, they meet each other at different points on the Cartesian grid and determine a specific equilibrium of prices and quantities offered and accepted of any item of wealth in the market, from bread to gold. This is “practical” economics, economics practiced by the corps who study agricultural crops and industrial output. Theoretical economics studies only money; demand and supply of money and financial assets. The basic characteristics of the economics framework of analysis become evident upon reflection. The focus of attention is on the market exchange; all that goes on before or after the exchange lies outside the purview of the analyst. The mainstream economist qua economist can only analyze, forecast, and report on present or likely future tendencies toward equilibrium of items of wealth that are offered in the market in exchange for other items of wealth, be they currency or pet rocks. The consequences that follow from market exchanges lie mostly outside the purview of this framework of analysis. Is the production of items being exchanged in the market causing physical damage, or moral depravation? Is the distribution of ownership rights over items being exchanged causing a concentration of wealth into too few hands? Is the consumption of items being exchanged causing ecological disaster? These are all familiar questions that are at the heart of the economist’s concern. Yet, they can at best be acknowledged by the economist, but they will unavoidably be dismissed as belonging to other fields of analysis such as politics, ecology, morality, and the law, fields that lie outside the expertise and control of the economist. The analysis becomes more complex daily by the sheer weight of accumulated data; hence equations multiply, econometric applications become more sophisticated, and theorems concerning the characteristics of economic relationships become more and more subtle; indeed, there now seems to be a model for every economic activity— and, lately, for many non-economic activities as well; and if the information is missing or it does not quite fit the case, there is the stand-by option of “as if” assumptions. Impressive as these techniques are, beyond all refinements in the state of the art of mainstream economic analysis, most economists admit to its basic limitations; not only that, but they also admit that economic theory has been in a state of crisis at least since the publication of Keynes’ General Theory in 1936. (What did Keynes say is a question that has plagued the economics profession ever since.) Economists have no choice. They only have the tools of supply and demand to rely upon. And they do yeoman work to determine the effects on the system as a whole of changing prices and cost over time.

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Rather than repeating any one of devastating criticisms against this type of analysis, our time here is better spent going in search of new tools of economic analysis. In the next paragraphs we will see how, rather than destroying this tool kit, we are going to put it to a more appropriate use in the context of Concordian economics. But we do need to emphasize that our dissatisfaction with the tool kit of supply and demand is not an idiosyncratic reaction; rather, it is a wide manifestation. Three of the most recent recognitions of the crisis span the arc from acknowledgment of the limits of mainstream economics (Mankiw 2006) to criticism about the relevance of mainstream economic theory, Manicas (2007) to the belief that economic theory has improved and that it is expected to improve over time (Warsh 2006). As the history of minor and major theoretical revolutions and counterrevolutions proves, economists are ready to try nearly any stop-gap measure to resolve the crisis— provided the proposed measure does not affect the structure of the theory. This position is non-negotiable; and it is not the purpose of this chapter to negotiate it. What is presented for discussion is a far simpler proposition: if we want more comprehensive and more accurate results, we need different tools of analysis. In addition to points and lines, we shall be using planes and solids in space: at first, only rectangles and spheres. The consequences of this transformation are far-reaching. Rather than attempting to create an improved mainstream theory, we shall incorporate its vital and functioning core into a new framework of analysis which, for a number of consilient reasons, this writer likes to call Concordian economics: as we will see below, the new structure-the new paradigm makes room for the perspective of each one of the various schools dominating today’s economic analysis; it opens its doors to inputs from various other intellectual disciplines; and it extends itself in a seamless web to cover economic policies and economic practices.

3.2.2 New Tools in Economic Theory Through laborious logico-mathematical steps (Gorga 2002: 3–158), one obtains a restructure of mainstream economic theory, Gorga (1982) and its gradual transformation into Concordian economics. While the book presents a description of that transformation with its resultant new mathematical models, Gorga (2002: 25, 38, 71, 74–76, 121–125, 129–137, 153–158, 168–170, 264, 303–320), the present chapter reproduces the core of that ground with primary assistance from geometry; thereafter, it extends the analysis to cover economic policy as well as economic practices for implementation of selected economic policies. The key results of Concordian economic analysis are these. In order to eliminate a set of innate logical contradictions at the very foundation of economic analysis, the nexus between saving and investment is broken, and it is replaced by the complementary relation between Investment defined as all productive wealth and Saving defined

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as all non-productive wealth—a term that is better replaced with Hoarding.1 The analysis starts anew on the basis of the proposition that Investment is Income minus Hoarding. Furthermore, since money and financial instruments are not wealth, but only represent wealth, in macro, as distinguished from microeconomics, one cannot add money to real wealth. The two entities have to be kept separate.2 And then the question arises: What is the relationship between the two? From Aristotle to the Doctors of the Church there was no doubt as to the answer to this question. During this long stretch of time, much economic analysis was built on the equivalence of money and goods in the exchange. It was the distinction between the two and their linkage in the relation of equivalence that provided the objective base for the determination of conditions of justice in the exchange of wealth. If we accept this answer, to satisfy well-known requirements of the principle of equivalence, we search for a third element to link monetary and real wealth together and we find it in the set of rules and regulations that in every society governs the distribution of ownership rights over real and monetary wealth—and we do not stray away from pure economic theory, because we are presented with the monetary value of those rights. The diagram, Gorga (2002: 36, 163, 314) incorporates these results; it represents the integration of these values on one plane, in this fashion. In this figure, the values of “production,” namely the values of all real wealth produced over a specified unit of time are assembled into one category of thought that is recognized as aggregate supply. (It is to be noticed that this unit is “pure” because it contains only stocks of real wealth and no monetary wealth. It is also to be noted that in a more complete treatment this value ought to be observed from the point of view of demand as well as supply: thus we will have an analysis of the demand and supply of the production of all real wealth.) We follow the same procedure for the values of monetary wealth, thus firmly separating real wealth from monetary wealth, and we call the result “consumption” or aggregate demand. (Ditto for the treatment of all monetary values, which here are not observed from the point of 1

Every step of the way in Concordian economics, decisions are taken following relentlessly the dictates of fundamental rules of logic. For instance, analysis reveals that since current definitions of saving and investment contain items that are productive (farmed land) and items that are nonproductive (land filled with weeds and rubbish) of further wealth, both saving and investment respect neither the principle of identity nor the principle of non-contradiction and therefore they cannot be equivalent to each other, as they ought to be for their relation of equality to be formally valid see, e.g., Allen (1970: 748). 2 The separation of real wealth from monetary wealth is an integral part of the transformation of Keynes’ model into the series of mathematical models that provide structure to Concordian economics. This is a procedure that, outlined with the help of geometry (Gorga 2002: 32–37), starts with the enlargement of the definition of consumption from expenditure on consumer goods to spending in all its manifestations, ibid. (pp. 139–150), passes through the definition of money, ibid. (p. 222) and the monetary formulation of the Flows Model, ibid. (pp. 309–312), and ends with the establishment of the equivalence of the processes of production, distribution, and consumption, ibid. (pp. 312–319). The description of these three processes and the economic process as a whole form the substance of Concordian economic theory, ibid. (pp. 159–234). The present two volumes cover the space between analysis of original and revised Keynes’ model of the economic system and the theoretical description of the three key component elements of Concordian economics: Production Process of real wealth, Distribution Process of ownership rights over wealth as it is created, and Consumption Process, namely exchange of monetary wealth for real wealth.

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Fig. 3.1 The economic process

view of supply: The question of the quantity of monetary values created lies outside the scope of this presentation.) We finally repeat the procedure for the aggregate values of ownership rights over real and monetary wealth, and we call the result “distribution” of ownership rights. (At this juncture we assume that the values of ownership rights over real wealth are identical to the values over monetary wealth.) In sum, we have enlarged our field of observation from points and lines to planes and interactions among planes; and, rather than leaving the question of the interaction between demand and supply open, cf. Klein (1970: 143), we have continuously specified—and distinguished one from the other—the demand and supply of (a) real goods, (b) monetary instruments, and (c) values of ownership rights over real and monetary wealth. Figure 3.1 reads as follows. When real goods and services pass from producers to consumers, monetary instruments of a corresponding value pass from consumers to producers. Then one cycle of the economic process is completed—and it is accompanied by the silent exchange of values of ownership rights over monetary and real wealth. Both money and goods change hands. The unit of account can be the economy of one person, one nation, or the world. In macroeconomics, the exchange occurs neither between two insignificant commodities, cf. Schumpeter (1936) as in microeconomics nor between any two forms of financial instruments as in the economics of Wall Street. In macroeconomics, fully respecting the laws of supply and demand the total production of real wealth is exchanged for the total availability of financial resources—as in Keynes’ principle of effective demand, see Brady (1996). Finally, in this figure the exchange visibly occurs under a regimen of social and legal relationships: ownership is apportioned at the moment of creation of wealth; and only owners can legally exchange wealth. An effective way to analyze the instantaneous relationships captured by Fig. 3.1 is to reduce it all to the economics of only one person. A person who snaps the apple from a tree, for instance, while respecting as always the rules of supply and demand commits an act of production. This person automatically apportions the ownership of the apple to the self, which means that this person is legally empowered, as it were, to sell the apple to the self. Thereafter, this person is free to eat the apple—or sell it to others. One of the merits of Fig. 3.1 is that it describes the economic process as a whole. Everything is instantaneously related to everything

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else. Thus we run away from the shattered world of the schools and go back to the world of Classical economists who knew that economics is composed of the integration of Production, Distribution, and Consumption of wealth. This integration can be made more specific by a more extensive and updated reading of the terms, along these lines: The Theory of Production—namely a pure and robust production function—is concerned with the production of real goods and services (as might be studied by Supply-Side economists); the Theory of Distribution is concerned with the distribution of the value of ownership rights over real and monetary wealth (as might be studied by Institutionalists); and the Theory of Consumption is concerned with the consumption—or expenditure—of monetary, i.e., financial instruments (as might be studied by Demand-Side economists). In The Economic Process, Gorga (2002, 2009, 2016), the Reader can find mathematical formulations for each one of these processes. Here we are concerned with the process as a whole. Thus, recognizing that Fig. 3.1 is the flat image of a sphere we bring the mathematics and geometry of economics up to the standards that prevail among modern engineers and scientists, see, e.g., Thompson (1986: 36), namely: Synthetic Model of the Economic System as a Whole from Gorga (1991a)

p ∗ = p( p, d, c) d ∗ = f d( p, d, c) c∗ = f c( p, d, c) where p* stands for rate of change in total production d * for rate of change in the values of distribution of ownership rights c* for rate of change in total expenditure. And, most important for our immediate purposes, we can see that the theory of distribution of income and wealth now occupies a central position in economics. All that relates to the distribution of ownership of income and wealth becomes an immediate and integral concern of economic theory—no longer an afterthought or an issue placed at the margins of economic science. Related issues of social relevance of economics can no longer be shunned aside by the economist on the assumption that they are external to economic theory. These are indeed issues that lie at the very core of economic theory; and one does not stray away from mathematical and quantifiable theory either. What is to be measured and evaluated is the economic value of ownership rights over income and wealth—and the different economic effects of different patterns of distribution of income and wealth. Decisions relative to these issues are taken during the very process of production and exchange of wealth; they are not something to be concerned with only after the more impellent problems of production and exchange are resolved, as assumed in Keynesian economics and, mutatis mutandis, in mainstream economics, see, e.g., Klein ([1947] 1968: 187). The concern about the social relevance of economics—as all Institutionalists have devoutly wished—is now brought within the purview of the economist.

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Issues of distribution of economic values of income and wealth are not givens; they lie at the very core of the economic process and are determined by the inner workings of the process. On Mars the situation might be different; on our earth, people create not only real or physical wealth—they also assign values to this wealth. Indeed, it is economists (and accountants) who, assisted by the laws of supply and demand, assign these values as best they can. Lawyers only validate these statements by transforming them into negotiable legal instruments that are called ownership rights. These rights might belong to an individual person, to a corporation, or to the state; but they legally belong to someone. Any exchange of real wealth for monetary wealth involves at the same time an exchange of the value of ownership rights over real and monetary wealth. It is thus that, no matter the disclaimer by many economists, economic values are created and are created at the very core of the economic process.

3.3 Tools to Control Economic Policy Having discovered that the distribution of ownership rights over income and wealth is an integral part of economic theory, the question becomes: What are the tools to obtain the desired pattern of distribution of income and wealth? This is the eminent question of economic policy. Economic theory tells us that, once this pattern is set, most other questions of economic policy are automatically settled. A quick analysis of this question finds revealing answers. These answers are not apparent while considering modern practices. They become apparent through the reconnaissance of ancient economic history.

3.3.1 Existing Tool Kit Even though the historic roots of economics lie in moral philosophy, economists have lately assumed that they have nothing to contribute to the discussion concerning the selection of patterns of distribution of income and wealth. They have left the field to lawyers, ethicists, philosophers, sociologists, and political scientists. Mainstream economists believe that they do not have—and, what is more important, they ought not to have—any tools to control the pattern of distribution of income and wealth. Mainstream economists assume that this is a given, namely a determination that is and ought to be left to society as a whole. Economics, as pure science, as an autonomous mathematical science, is supposed to analyze the effects of various societal decisions, but not to intervene in those decisions. It is a direct consequence of this assumption that economic theory is fast becoming socially irrelevant. Under these conditions, the discussion on economic policy falls into a trap. The discussion becomes the property of various schools of economics, each purporting the benefits of its own dictates and none being able to convince the other schools of the validity of their positions.

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We do not need to put a step on this slippery slope. Once it is established that the pattern of distribution of income and wealth is an integral part of economic theory, the analysis is restricted to this question: How can we translate economic theory into economic policy? In the paragraphs below we will offer a set of new/old tools for consideration. This is the high road to re-establish social relevance to economics.

3.3.2 Proposed Tools to Control Economic Policy A mere glance at the history of economic thought makes us glean this proposition: The transmission belt that for millennia carried economic theory into economic policy is the doctrine of economic justice. While remaining astonishingly constant from Aristotle to the Doctors of the Church, see, e.g., Wood (2002: 83), this understanding allowed for continuous adaptations to the circumstances of the moment. The doctrine of economic justice was divided into two planks: distributive and commutative justice. Distributive justice guided rules and regulations that govern the division of wealth as it is created; commutative justice guided rules and regulations that govern the transferal of wealth between buyers and sellers at the moment of the exchange. While the Doctors of the Church left much room for discretion in the determination of distributive justice to the parties involved in the economic process, they reached a firm and revolutionary conclusion about the dictates of commutative justice. The commutation of wealth, namely the exchange, occurs in accordance with principles of justice, they discovered, only if it reflects a free market price: a price determined in a market that is not dominated by either governmental or private monopolistic forces, see, e.g., Schumpeter (1954: 98–99). While this formula appears simple, it envelops great complexities. With it, the Doctors of the Church unified the social requirements of freedom with those of morality in economics; and it was the exercise of morality that yielded freedom. The application of this formula created the essential conditions for the enterprise system to be as free as it could be at the time. Over time, this ordered set of priorities was twisted around and its power dissolved. Through insistence on unfettered economic freedom, the unity of freedom and morality—with its inherent social relevance—was shattered and the doctrine of economic justice was lost in the fog of time. Truth to tell, the dissolution of the doctrine of economic justice was facilitated by the fact that it was never presented with a visible head. Shopkeepers and people with direct ownership or indirect access to land and natural resources participated in the economic process as a matter of fact through well-established privileges and as a consequence of unspoken sets of rights (access to land and natural resources was also secured through the commons: for millennia, the safety valve to preserve the dignity of the poor). Hence, it never occurred to Aristotle or any of the Doctors of the Church to make explicit the requirements of a third plank that might be called participative justice (Gorga 1999, 2007). For a great variety of reasons, those conditions are no

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Fig. 3.2 Economic justice

longer in existence. Today, one has to beg in order to participate in the economic process. And if one does not take part in it, one is marginalized; one is shunted to the margins of society. Hence the plank of participative justice, as it is increasingly recognized from many quarters, must be explicitly formulated. When participative justice is added to the other two planks, the doctrine is completed and transformed into the theory of economic justice. Once that is done, one is presented with a framework of analysis that can be represented in this fashion. Figure 3.2 reads as follows. Participation in the economic process is a matter of justice, because only men and women who participate in the production of wealth are entitled to the distribution of ownership of a share of the wealth created through their participation.3 A just commutation of wealth, a just exchange, is implicit in the very distribution of wealth in accordance with one’s participation; but, of course, the principle of commutative justice extends itself to cover the exchange of wealth just created for other wealth existing on the market. It is in accordance with these objective principles that the pattern of distribution of current income and wealth is and ought to be determined. Economists can render these calculations very precise. And lawyers, as is their want, can make these provisions very agreeable. But economists have much broader tasks than these. Figure 3.2 is a mirror image of Fig. 3.1. If the distribution of ownership rights is an inherent part of the economic process, as we have seen in the previous section, economic justice becomes a natural extension of economic theory. Indeed, one can just as soon separate economic theory from economic justice as one can separate a person from her shadow. (The forced separation of these two entities has ineluctable consequences of its own that ought 3

What to do with the widow, the orphan, and the handicapped is a moral issue. Economics does not do anything for them. Indeed, as proved by the history of the world, even in the richest of the communities at the height of the business cycle, economics cannot do anything for them. Their number can become so overwhelming, their needs so vast, that even charity becomes powerless. Economics cannot do anything for the widow, the orphan, and the handicapped—unless, of course, they own stocks and bonds. But then they are not poor; they do not need any assistance through morality. They are capitalists and by the virtue of being capitalists, by the virtue of owning the machines, they participate—through remote control of the machines—by right in the economic process.

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to be of great interest to the investigative powers of the economist.) Given this condition, a minimum set of questions to be asked by economists in the formulation and evaluation of any economic policy might be: Does the proposed policy favor participation in the creation of wealth? Does it allow for a fair distribution of the wealth thus created? Does it allow for a fair transfer of wealth from one person or group to another? Much could be said on these issues, but since much is already well known, we shall shun away from broad and elaborate discussions of these issues. The wisdom of staying away from broad and elaborate discussions, however, does not necessarily require staying away from the specifics of the case. The specific question is: How can we transfer the principles of economic justice into the complexities of the modern economy? Needless to say, this is a question that is not formally and comprehensively raised in mainstream theory. This is a question that arises naturally and forcefully within the context of the structure of Concordian economics. This is the high road through which getting involved with messy issues of daily living, strongly eschewed in high places, returns relevance to economics.

3.3.3 A Pause In the mysteries in which thought evolves, we must realize that the temporary loss of the doctrine of economic justice has not been a total loss. We must realize that in its first two thousand years of life, economic justice was put in practice by gentlemen’s agreements. They could be easily broken. The economic justice of the future will be backed by economic rights and responsibilities. There will be awareness; there will be responsibility in the enforcement of economic justice.

3.4 Tools to Control Economic Practices In the section on economic theory we have seen how does the economic system create wealth, how its value is determined by economists and accountants, and how its value is then transformed in ownership rights by lawyers. In the section on economic policy we have observed how economic justice determines the apportionment of those ownership rights. In this section we shall observe how the economic system operates in practice.

3.4.1 Lack of an Existing Tool Kit “High” mainstream theory is silent on the practices of economics. This neglect is not due to chance; rather, it is due to the assumption that, since economic practices are

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determined by society at large and are supposedly controlled by allied social disciplines, they lie outside the economist’s field of expertise. Indeed, having abandoned the field to lawyers, and ethicists, and philosophers, and sociologists, and political scientists, mainstream economists have become passive takers of a proposition that lies at the very core of the issue. This is the proposition that present ownership rights provide practical rules for the distribution of future ownership rights. The proposition has long legs, because it determines the pattern of future distribution of income and wealth. Economists observe every day the manifold negative consequences of this belief but feel powerless to even address the issues. This is another juncture at which, by taking themselves out of the discussion, economists are threatening to make economics a socially irrelevant discipline. To regain their power, economists have only to look at the distribution of economic rights as an economic, rather than a legal, political, or moral issue. If they do that, they discover that their assumptions are faulty. The error is elementary. The reasoning is circular. In order to enter and to break this circular form of argumentation, namely that present property rights determine future property rights, economists need to remember that property rights are pieces of paper: a piece of paper does not—and cannot—create real wealth. It is not even the exercise of property rights that creates real wealth. Property rights are a bundle of rights that link human beings to things. Their current owners may wish as hard as they can, it is not in the nature of property rights to create wealth. It is not the use of property rights, but the use of property—namely, the use of real goods and services—that creates new wealth. The distinction is fundamental. The discussion is shifted away from the abstract legal field on to a concrete field. The discussion is focused on the observation of the economic reality. The use of real goods and services to create new wealth is infused, not by property rights, but by the exercise of economic power. To an economic power corresponds an economic right. As specified below, temporally, logically, economically, and legally, economic rights precede property rights. Economic rights are the generators, the fathers and the mothers, of property rights. The nature of economic rights becomes clear when the two rights, economic rights and property rights, are observed as separate and distinct entities, and then both rights are placed in contraposition with entitlements. The three terms (property rights, economic rights, and entitlement) are often used as synonyms. They are not. As specified in Gorga (1999). First, the content of these three entities is different. The object of property rights are marketable things, tangible or intangible things such as material goods and services. The object of entitlements are human needs, from food to shelter to health. The object of economic rights are economic needs. Second, the legal form of these three entities is different. Property rights are concrete legal titles over existing wealth; economic rights are abstract legal claims over future wealth; and entitlements are moral claims on wealth that legally belongs to others. Finally, the quantity that they measure is variable. While both property rights and entitlements relate to existing wealth, and therefore a necessarily finite quantity, economic rights relate to future wealth, an unknown and elastic—if not a potentially infinite—quantity.

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Economically, and consequently legally, real wealth is created by the exercise of economic rights—indeed, economic rights and economic responsibilities, as we shall see. Hence economists are fully entitled to extend their competence to the field of economic rights and economic responsibilities. Economists will discover that the field is wholly within their range of expertise and responsibility. At the end of this journey, economists shall be able to offer to lawyers, ethicists, and philosophers, as well as political scientists and politicians, this proposition: Future ownership rights are determined, not by property rights, but by economic rights—indeed, they are determined by economic rights and economic responsibilities. Thus the closed circuit that at present imprisons economic theory, the proposition that legal property rights beget property rights, is broken. Economists are in charge of economic issues.

3.4.2 New Tools to Control Economic Practices The transmission belt that carries principles of economic justice into the complexity of modern economic life and shapes objective guidelines for the formulation and evaluation of just economic policies is the presence of economic rights and economic responsibilities (ERs&ERs), both lodged in the same person at the same time. These two conditions need to be clarified. Economic rights and responsibilities need to be lodged into the same person, otherwise one does not follow an economic discourse in which everything is strictly related to everything else; rather, one follows escapism: if my father, my uncle, or the state is responsible for my welfare, we are lost, as Keynes used to say, we are “in a haze where nothing is clear and everything is possible” (Keynes 1936: 292). The second condition is equally important. Economic rights are rooted, not in abstract morality, but in our own concrete economic responsibilities (Gorga 1999). ERs&ERs come forward in response to the well-known requirements of the factors of production identified by Classical economists as land, capital, and labor—with the addition of a modern distinction between financial and physical capital. Guided by these economic needs, our focus of attention is on the satisfaction of the plank of participative justice; successive iterations that are mostly skipped in this presentation would reveal that the same rights and responsibilities satisfy also the requirements of the planks of distributive justice and commutative justice. A minimal set of economic rights and corresponding responsibilities is as follows: 1. We all have the right of access to land and natural resources. This is a natural right. It belongs to us just in virtue of our humanness. Land and natural resources are our original commons. They belong to us all. This is an essential right, because without the possibility of exercising it, we are deprived of the possibility of participating in the economic process. And without this participation, we are marginalized; we are made dependent on the good will of others. The most direct way of securing this right in the complexity of the modern world is neither through squatting nor through expropriation; rather, it is through the exercise of

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the responsibility to pay taxes for the exclusive use of those resources that are under our command—with a corresponding reduction of taxes on buildings and man-made improvements on the land. The exercise of the responsibility to pay taxes on land has a double function: It secures our right to the use of the natural resources that are under our command, and it also makes room for others to access land and natural resources that they need. Land taxation is the economic bridge between Hoarding, namely the accumulation of idle land, and the right of access to that land with its natural resources. Paying taxes on the value of land and natural resources gradually encourages dis-Hoarding, hence it lowers the price of the land, and correspondingly opens up the resources of that land to all those who need them and can make use of them. Worrisome Hoarding is especially that which occurs both downtown and in the belt surrounding major cities and towns. It is to leapfrog over this belt that people go to the suburbs in search for affordable land, thus creating overstretched lines of communication and protection and overlong commuting lines—with consequent waste of fuel that overtaxes non-renewable resources, the ozone layer, the pocketbook, and the nervous system. Paying taxes on land value is a most fair form of taxation because it implies returning to the community part of the value that is created, not by the individual owner, but by the community. Land that sits idle does not produce income, true; yet, it produces capital appreciation over time: Rare is the case of capital loss; and even when that occurs, the relative loss tends to be smaller than the loss on other assets. (To see how this pair of ERs&ERs meets also the requirements of distributive and commutative justice, let us simply consider that, if one avoids taxes, the total tax load is not going to be distributed fairly among the population. And if one avoids taxes, one obtains something—i.e., private control over a quantity of resources—for which one does not offer proportionate compensation to the rest of the community.) 2. We all have the right of access to national credit. Since national credit is the power of a nation to create money, and since the value of money is given by the value of wealth left over by past generations and the creativity of every person in a nation, national credit is the last frontier, the last commons. Without access to credit today one is made economically impotent. Worse, since this advantage is granted to the privileged few, it is automatically denied to the majority of the population who are henceforth condemned to pay a higher rate of interest, if they obtain credit at all. Of course, such a loan should be extended only on the basis of the responsibility to repay the loan. And these loans will have a high chance of being repaid because they ought to be issued at cost and issued exclusively to individually owned enterprises, Employee Stock Ownership Plans (ESOPs), and cooperatives, as well as states and municipalities, and issued exclusively for capital formation, namely for the creation of new wealth—not to buy financial paper, consumer goods or goods to be hoarded or to cover administrative expenses of states and municipalities. Capital credit liberates people, while consumer credit enslaves them. 3. We all have the right to the fruits of our labor. This right should not be limited to the right to obtain only a wage. It should be extended to cover the other major fruit

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of economic growth over time: capital appreciation—as well as being subject to capital loss, of course. The only justification for reserving capital appreciation for stockholders, the owners of a corporation, and excluding workers from it, can be found in the fact that loans are given only to owners of past wealth (the Catch-22 of today’s economic reasoning: “save and invest and you too can become rich”—as if this proposition were either economically feasible or ecologically sustainable). But from now on this right can be extended to people who do not have prior wealth through the right of access to national credit—especially by legally transforming workers into owners through individually owned enterprises, Employee Stock Ownership Plans (ESOPs), and cooperatives. Of course, this full right should be extended only in correspondence with the responsibility to offer services of value equivalent to projected compensation. And there will be an outpouring of such services because, while in a command and control economy workers are requested to check their brain at the factory gates, in a socially responsible economy—an economy in which rights are exercised on the basis of responsibilities—workers/ owners are legally, socially, and psychologically empowered to exercise their brain fully at their work post. 4. We all have the right to protect our wealth. This right seems to be universally accepted, except in one case that matters most: in the case of the trustification process, the process used especially after the Civil War in the United States (and now throughout the world) to create corporate trusts and repeated in a hundred subtle variations ever since. (People feel free, not only to acquire shares of the stock of one corporation, but free to use that stock to acquire another whole corporation by all forms of trusts, mergers, and acquisition. The very idea of the corporation, forever a public entity, has thus been privatized and monetized.) There are two ways in which corporations grow: One is through internal growth, and this approach ought to be protected in no uncertain terms; the other is through external purchase and, with limits, this manifestation ought to be prohibited in no uncertain terms. Why? Because this prohibition is the only certain way to protect the wealth of present owners. And if it is assumed that most stockholders of the modern corporation are happy to have their shares bought and sold on the market, it must be granted that growth-by-purchase takes wealth away from workers who have contributed to create that value—and many times, in the trustification process, lose their work site as well. All in the name of efficiency— a misnomer that stands for private financial gain generated at the expense of shifting costs onto the shoulders of the community at large. Of course, this right ought to be purchased only at the cost of the responsibility to respect the wealth of others. These are two-way streets. We cannot even attempt to restrain the PacMan economy, while we use Pac-Man instruments. These economic rights and responsibilities can be exercised by anyone who does not only want to receive economic justice, but also wants to grant economic justice to others. Indeed, these are the essential conditions for the establishment of economic justice, as well as the establishment of a free enterprise system, in the modern world.

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A brief note must be appended here. The trustification process is not an economic process. It is a cultural process. It a virus that has gradually affected our entire way of life. In industry, it has created the mega-corporation. In the retail industries, it has created the big box store. In urban design, it has created the megalopolis. Why, even not-for profit hospitals (!) have created gargantuan operations in which “the” patient is easily lost. All capped by “financialization,” whose tentacles cover the entire world—literally. The trustification process is an expression of the “winner-take-all” mentality. ∗ ∗ ∗ As a consequence of the dynamics of the implementation of these four marginal changes in our current practices, economic freedom will be expanded to embrace all who want to subject themselves to the rigors of the economic process—and then the few remaining hard cases can be easily taken care of by charity. No. There is no compulsion in any of the above suggestions. The landowner can pay more taxes and control more land or can escape the tax levy altogether by reducing land ownership to zero; the applicant for a national loan can escape the constraints suggested for access to national credit by tapping into private capital markets; the worker can escape the responsibilities of ownership by vying for a job rather than an equity position; and the owner of physical capital can escape the constraints implicit in the proposed anti-trust policy by remaining below the trigger of an agreed-upon threshold for growth-bypurchase prohibition. This prohibition should apply to the largest corporations first and be gradually expanded to include eventually all except, let us say, corporations engaged in intrastate or regional commerce. Intellectually, the proposed economic rights and economic responsibilities perform legal functions outlined in the conception of “general abstract rules” by Hayek (1960: 153), the “original position” by Rawls (1971: 12, 72, 136, 538), the “reverse theory” by Nozick (1974: 238), and the “Principle of Generic Consistency” by Gewirth (1985: 19); practically, they will function as Gladwell’s (2000) “tipping points.” Ultimately, it was a poet, Ferrini (2002), who caught the essence of economic rights and economic responsibilities by identifying their ability to provide “the answers to universal poverty and the anxieties of the affluent.” Operating as tipping points in our modus vivendi, ERs&ERs will set in motion a process of interdependence that respects the reality of economic affairs, and the reality of human relationships. Recognizing that most people and most businesses always act morally, the increasing number of “bad apples” that at times seem to receive all the attention (and envious support) of a superficial intellectual world will be recognized as dangerous exceptions, perhaps ostracized, but certainly no longer applauded. Once the tendencies of these people are kept in check, all wealth will be distributed, not equally—that is meaningless utopianism—but fairly. The assurance for this result resides in the transformation of the current social contract into a legal contract: when landowners pay their share of land taxes, they will sell their hoards and access to land and natural resources will automatically be opened up for most people; when people will get access to national credit, many will become independent

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entrepreneurs; when workers are transformed into owners, they will have the legal tools to demand a fair distribution of income—and ethical corporate operations; when growth-by-purchase will mostly become a forbidden activity, most corporations and most employee/owners will preserve their independence. These measures, by consistently curbing the excesses of the few for a period of at least ten years, will cumulatively lead to a fair distribution of income and wealth. To reassure ourselves of this outcome, let us comprehensively look at the issues from another point of view. If land owners were to use their possessions of land and natural resources efficiently (with efficiency measured through lower private capitalization and higher effective demand), would there be such wanting in the world? If national credit were made available to all entrepreneurs at cost, would we not translate the immanent reservoir of creative powers into economically profitable ventures? If workers were transformed into worker/owners, would we not increase our extant productive capacity incommensurably? If corporate growth-bypurchase—with accompanying translation of that economic power into corruption of our political system—were curbed, would we not obtain less concentration of economic power into a few hands? All four ERs&ERs naturally lead to a fairer distribution of income than prevails today. Eventually, with a fair distribution of income and wealth, there will no longer be any need for redistributive programs, which are an expression of double utopianism (first, people, as if living in la-la land are allowed to accumulate much, no matter how; and then they are expected to peacefully discharge their ill-gotten wealth). Preserving their current wealth, the rich will grow richer at a steady but slower pace; and the poor will no longer be poor, because they will have all they need. Lacking fuel at both ends, violent oscillations in the business cycle will be abated. We will thus recover the essential truth of economics. This is the truth that there are two conditions of growth: economic freedom and economic justice, as concrete expressions of freedom and morality. Both are essential. The relationship between the two is quite clear: While freedom does not necessarily bring justice with it, justice unavoidably brings freedom. One can abuse freedom by denying freedom to others, one can never abuse justice. Hence, the initial condition of freedom for all is proof positive of the existence of economic justice in the land. This is economics that is socially relevant. And the relevance is not an afterthought. The relevance is implicit. The social import of economic theory is realized when the distribution of ownership rights is seen as an integral part of its constitution; and the social import of economic justice and economic rights and responsibilities is simply stated: We must prevent all foreseeable injustices from occurring. Once an injustice has occurred, there is nothing that can be done to undo the dastard deed. This is the bosom of realism. One last question: Is the proposed program of action the latest expression of utopianism? The curt answer is: No. Utopianism has consistently been based on the wishful thinking of a single person. The proposed program of action results from filling in the gaps of a millenarian train of thought that, in a seamless web, extends itself at least from morality to economic theory and from there—through economic justice—to economic policy and practice. Utopianism promises immediate results, as if by magic. This proposed program of action asks for concerted, protracted effort.

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Whatever life Utopianism has, it is based on the fanatical following of a small group of people who try to force it upon the will of the multitudes. The proposed program of action advanced under the aegis of Concordian economics is expected to be readily understood and spontaneously implemented by the multitudes.

3.5 Conclusion The lament that economics lacks social relevance assumes many forms; they are mostly centered on the treatment of issues of distribution of income and wealth. We have found that these issues are not even investigated by economists today because they assume that they lie beyond the field of economics. Hence, by placing this issue at the very core of economics, we have given back social relevance first to economic theory, then to economic policy, and finally to economic practices. Without ever abandoning the field of economics, we have established a continuity of discourse between three stepping stones in economic analysis. We have followed this line of reasoning: In economic theory, we have discovered that the economic process is composed of the integration of (1) Production of real wealth, (2) Distribution of the economic value of ownership rights, and (3) Consumption or expenditure of money to purchase the output of the country. This is a formal equivalence of three terms: real wealth, monetary wealth and the distribution of the economic value of ownership rights. In economic policy, we have discovered that the theory of economic justice is composed of the integration of (1) Participative Justice, (2) Distributive Justice, and (3) Commutative Justice. We have discovered that there is indeed a perfect correspondence between economic theory and economic policy. In economic practice, we have discovered that to carry economic justice into reality we need a set of economic rights. It is the implementation of four rights and responsibility that naturally leads to four marginal changes in our fiscal, labor, monetary, and industrial policy. These changes gradually pursued over time will assure the benefit of steady and just economic growth to very nation on earth. Since Concordian economic rights are rooted in responsibilities, they are indeed rights—not privileges. They are unalienable universal rights available to one and all in society. They are essential to life, liberty, and the pursuit of happiness. ∗ ∗ ∗ Only civilized people, people truly integrated within themselves and within society can give and receive economic justice. Justice is a virtue. To give and receive economic justice requires love, the highest of theological virtues. Full relevance is returned to economics—and consequently to jurisprudence—when the walls of ignorance that (mainly, but not exclusively) separate the work of lawyers and the work of economists are filled with mutual understanding and cooperation. Just as economics, jurisprudence (and theology) has not covered itself with glory during the last four to

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five hundred years. I have not done a separate, in-depth examination of the issues. But it does not seem right for jurisprudence to have lost sight of the Aristotelean/ Aquinian doctrine of economic justice.

References Acharya, Sushant, Edouard Challe, and Keshav Dogra. 2023. Optimal Monetary Policy According to HANK. American Economic Review 113 (7): 1741–1782. Allen, R. G. D. 1970. Mathematical Economics, 2nd ed. London and New York: Macmillan, St. Martin’s. Blinder, Alan. 1999. Quoted in “Students Seek Some Reality Amid the Math of Economics,” by Michael M. Weinstein. The New York Times, September 18, A17, A19. Brady, M. Emmett. 1996. A Comparison—Contrast of J.M. Keynes’ Mathematical Modeling Approach in The General Theory with Some of His General Theory Interpreters, Especially J.E. Meade. History of Economics Review 25: 129–158. Clower, Robert. 1960. Keynes and the Classics: A Dynamical Perspective. Quarterly Journal of Economics 74 (2): 323. Ferrini, Vincent. 2002. Gorga Worthy of Note. Gloucester Daily Times, December 11, A6. Gewirth, Alan. 1985. Economic Justice: Concepts and Criteria. In Economic Justice: Private Rights and Public Responsibilities, ed. by K. Kipnis and D.T. Meyers. Totowa, NJ: Rowman & Allanheld. Gladwell, M. 2000. The Tipping Point: How Little Things Can Make a Big Difference. New York: Little, Brown & Company. Gorga, Carmine. 1959. A Synthesis of the Political Thought of Louis D. Brandeis. Graduation diss., University of Naples. Gorga, Carmine. 1964. Not Simply a National Fund, but a Stabilization and Development Fund. Mondo Economico 19 (14): 14–16. Gorga, Carmine. 1982. “The Revised Keynes’ Model” (An Abstract). Atlantic Economic Journal 10 (3): 52. Gorga, Carmine. 1991a. The Dynamics of the Economic System. Unpublished manuscript. Gorga, Carmine. 1991b. Bold new directions in politics and economics. The Human Economy Newsletter 12 (1): 3–6, 12. Economics, “The Human Economy” Newsletter, 1991, archives box: 01, Folder: 28. College of Social and Behavioral Sciences. Collection, 1961–2022, MSU Archives Collection 029. Minnesota State University, Mankato University Archives. Gorga, Carmine. 1994. Four Economic Rights: Social Renewal Through Economic Justice for All. Social Justice Review 85 (1–2): 3–6. Available at http://www.pelicanweb.org/solisustv11n03p age4.html. Accessed July 25, 2023. Gorga, Carmine. 1999. Toward the Definition of Economic Rights. The Journal of Markets and Morality, Spring 1999 II (1): 88–101. Gorga, Carmine. 2002, 2009, 2016. The Economic Process: An Instantaneous Non-Newtonian Picture. Lanham, MD and Oxford: University Press of America: 2002 hard copy, 2009 expanded (through Appendices) soft copy; expanded third edition by The Somist Institute, 2016. Gorga, Carmine. 2007. Economic Justice. In Encyclopedia of Catholic Social Thought, Social Science, and Social Policy, 335–337. Lanham, MD: Scarecrow Press. Gorga, Carmine. 2008. Concordian Economics: Tools to Return Relevance to Economics. Forum for Social Economics. Reprinted, with a New Introduction. Mother Pelican: A Journal of Solidarity and Sustainability 11 (2), February 2015. Available at http://www.pelicanweb.org/solisustv11n 02page4.html. Accessed July 25, 2023.

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Gorga, Carmine, and Norman G. Kurland. 1987. The Productivity Standard: A True Golden Standard. In Every Worker an Owner: A Revolutionary Free Enterprise Challenge to Marxism, ed. by D.M. Kurland. Washington, DC: Center for Economic and Social Justice. Gorga, Carmine, and Stuart B. Weeks. 1997. Fisheries Renewal: A Renewal of the Soul of Business. Catholic Social Science Review 2: 145–161. Hayek, F.A. 1960. The Constitution of Liberty. Chicago: University of Chicago Press. Keynes, J.M. 1936. The General Theory of Employment, Interest, and Money. New York: Harcourt. Klein, Lawrence R. [1947] 1968. The Keynesian Revolution, 2nd ed. New York: Macmillan. Klein, Lawrence R. 1970. The Use of Econometric Models as a Guide to Economic Policy. In Selected Readings in Econometrics. Cambridge and London: MIT Press. Manicas, T. Peter. 2007. Endogenous Growth Theory: The Most Recent ‘Revolution’ in Economics. Post-Autistic Economics Review 41: 39–53. Mankiw, N. Gregory. 2006. The Macroeconomist as Scientist and Engineer. Journal of Economic Perspectives 20: 29–46. Nozick, Robert. 1974. Anarchy, State, and Utopia. New York: Basic Books. Rawls, John. 1971. A Theory of Justice. Cambridge, MA: Harvard University Press. Schumpeter, Joseph A. 1936. The General Theory of Employment, Interest and Money. Journal of American Statistical Association 31: 791–795. Schumpeter, Joseph A. 1954. History of Economic Analysis. New York: Oxford University Press. Thompson, J.M.T. 1986. Nonlinear Dynamics and Chaos, Geometric Methods for Engineers and Scientists. New York: Wiley. Warsh, David. 2006. Knowledge and the Wealth of Nations: A Story of Economic Discovery. New York: Norton. Wood, Diane. 2002. Medieval Economic Thought. Cambridge, UK: Cambridge University Press.

Chapter 4

From the Revision of Keynes’ Model to Economics for Physicists and Ecologists

Abstract Economists study only money; physicists and ecologists study only real wealth. Thus never the two shall meet. This split in our metal disciplines, this split in our minds really, does not foster an intellectual climate in which we can seriously tackle the worrisome problems of our ecology, problems that seem to accelerate their bite with every passing year. Concordian economics is the mental framework which can give hospitality to both sets of disciplines. In Part I of this chapter we will concentrate our attention on the process of revision of Keynes’ model of the economic system; we revise the “forms,” not the substance, of Keynes’ ideas. The first section analyzes weaknesses in Keynes’ original model; the second suggests remedies and, ultimately, a new model of the macrosystem; the third section provides an overview of some of the implications of the new model. In Part II we shall see how this revision favors an integration of the world of real wealth with the world of monetary wealth.

4.1 Part I: A Revision of Keynes’ Model 4.1.1 Introduction It is in the nature of things that the bold and elegant Keynesian synthesis should have given way to a generation of analysis. Recalling the closing sentences of the General Theory, we would indeed upset Keynes’ calendar concerning the development of economic ideas was we not now to provide a new synthesis. An initial attempt toward this aim is presented in this chapter. The source from which we shall draw is, of course, the General Theory (Keynes 1936), a work which very few have consistently denied, and represents a marking stone in the development of economic thought. To acknowledge the significance of that work, however, should not prevent us from assessing its weaknesses. Indeed, as Gorga ([1974] 2023, 2008).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Gorga, Concordian Economics, Vol. 1, Springer Studies in Alternative Economics, https://doi.org/10.1007/978-3-031-47320-3_4

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shall be seen, Keynes himself was fully aware of those weaknesses. They centered around the choice of the “forms” he adopted to express his ideas. The first section of this chapter analyzes those weaknesses; the second section suggests remedies and, ultimately, a new model of the macrosystem; the third provides an overview of the implications of the new model.

4.2 Section I A few months after the General Theory was published, Keynes warned his early critics: “I am more attached to the comparatively simple fundamental ideas which underlie my theory than to the particular forms in which I have embodied them, and I have no desire that the latter should be crystallized at the present stage of the debate” (Keynes 1937a). As we shall see later on, Keynes even changed those forms—and changed them along the lines suggested here. Yet, not too much weight has evidently been attached to his words; and not too much weight shall be attached to this argument in this chapter. We shall rather try to heed that warning. We will take off from where Keynes left off. We will thus eschew a slew of logical mistakes. The overall mold into which Keynes cast his thought is the well-known model: Y =C+I S =Y −C S=I where Y = income; C = consumption; I = investment; S = saving. Instead of analyzing how the model works—or it is presumed to work. Cf. Klein ([1947] 1968, esp. p. 83)—we shall step out of its internal logic and consistency and shall analyze the definitions of each one of its component parts. It is well in fact to remember that the validity of that model resides in pure logic. Or, enlarging the range of application of the following words by Abba Lerner: “It follows from and is implicit in our definitions of income, consumption, savings and investment, and the postulate that in any period moneys paid out are equal to moneys received” (Lerner 1947: 625). Once those definitions are accepted, it is illogical to take issue with any of the implications inherent in that model. This is not the line of thought followed here. We shall rather isolate those definitions from the model and will take issue with them directly. We shall start with the analysis of the concept of saving. This concept is not formally defined in the General Theory. The most precise definition which, with the help of Leijonhufvud (1968: 28–29), one can reach is that of “non-consumption.” As

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Keynes was well aware, this is an “old-fashioned” definition.1 It has a formal validity only in relation to its equality to investment. (A relationship which was powerfully reinforced by the formulation of Keynes’ model.) Yet, substantially—as Keynes stressed—this definition of saving is “incomplete and misleading” GT (p. 83). It assumes that all individual savings are indeed investment; that they indeed represent a net addition to (or at least a replacement of) the national stock of investment. Instead, as Keynes repeatedly emphasized, savings can be simple transfers of wealth among individual persons, ibid. (esp. pp. 83–85 and 212). Thus, that definition is incomplete. And it can also be misleading because it explains away what in the first decades of this century, especially through the inquiry of Robertson and Keynes, came to be identified as the central economic problem: the “savings investment nexus”; or, in different terms, how savings are transformed into investment; or, at a deeper level of analysis, the reasons for the fluctuations in the rate of investment. Ibid. Cf. also Lekachman (1966: 67–73). The merits of these issues are well known and do not need to be restated. What is important to stress is: (a) that there are inherent weaknesses in the definition of saving used by Keynes, and (b) that Keynes was well aware of these weaknesses. A simple operation shall highlight this point. In mathematics, one of the conditions of equivalence is that the terms be symmetric, Suppes (pp. 213–220). If the equivalence of S to I, therefore, is valid, one should be able to substitute one of the terms with the other and obtain the same logical results. Substituting S with I in the first equation of Keynes’ model, one obtains the following results: Y =C+S S =Y −C S = S. From this conclusion, it is impossible to reconstruct the equivalence of S to I without running into the error against which Keynes repeatedly warned: “The error lies in proceeding to the plausible inference that, when an individual saves, he will increase aggregate investment by an equal amount. It is true, that, when an individual saves he increases his own wealth. But the conclusion that he also increases aggregate wealth fails to allow for the possibility that an act of individual saving may react on someone else’s savings and hence on someone else’s wealth,” GT (pp. 83–84: cf. also pp. 177–178). With two more statements, Keynes left little room for misunderstanding. First: “Every such attempt to save more by reducing consumption will so affect incomes that the attempt necessarily defeats itself,” ibid. (p. 84). Second: “This is the vital difference between the theory of the economic behaviour of the aggregate and the theory of the behaviour of the individual unit, in which we assume that changes in the individual’s own demand do not affect his income,” ibid. (p. 85). 1

General Theory (p. 83) and Keynes (1937b, p. 249). To be precise, Keynes used the qualification “old-fashioned” for the entire proposition of the equality of S to I. The emphasis, however, was on the concept of saving.

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Without entering too deeply into the merit of the issues, it might be well to point out how—it is here believed—Keynes overcame the weaknesses in the definition of saving. In the General Theory and afterward, but not in the Treatise on Money (1930), obviously: Treatise, esp. Vol. I (pp. 123–126)—when speaking of the equality of S to I—Keynes repeatedly refused to give any content to the concept of saving. While he provided a detailed list of the content of investment, GT (esp. pp. 74–75), he steadfastly refused to provide any such list for the concept of saving. Neither did he ever state that its content was identical to that of investment. Rather, he used such similes as “bilateral character of the transactions between the producer on the one hand and, on the other, the consumer and purchaser of capital equipment,” ibid. (p. 63); or, “two-sided transaction” represented by the depositor’s relation to his bank, ibid. (p. 81); or, “there cannot be a buyer without a seller,” ibid. (p. 85); or, the law of demand and supply (Keynes 1937b, p. 249). In other words, he consistently refused to give to the concept of saving its traditional content. It seems clear, whenever he spoke of the equality of S to I, Keynes simply talked of saving in terms of investment—not the other way around. The difference is substantial. To every increase (or decrease) of investment, there must be an increase (or decrease) of assets; and these assets must necessarily be owned by somebody, they must correspond to someone’s “savings.”2 Yet, every increase (or decrease) of saving will not correspond to an increase (or decrease) of investment. This device, together with his warning that the definition of saving he had accepted is “incomplete and misleading,” left him free to analyze some of the concrete functions which saving—independent of investment—performs in the economic system, GT (esp. pp. 210–213). Keynes then felt free to proceed with his analysis of the concept of investment— the analysis which he really meant to concentrate on in the General Theory. Of concern here is neither this analysis nor the definition of investment—provided this concept is agreed to mean any addition to (or replacement of) the stock of productive wealth or all productive wealth per se. Of concern here are the implications of this concept. The first obvious implication is that investment is assumed to be the motor of the economic system. This implication is so obvious and evidently so taken for 2

This interpretation implies that the equilibrium between saving and investment is instantaneous and continuous. In the General Theory (pp. 183–184), Keynes in fact stressed that: “Saving and Investment are the determinates of the system, not the determinants. They are the twin results of the system’s determinants, namely, the propensity to consume, the schedule of the marginal efficiency of capital and the rate of interest.” (Italics added). (Cf. also p. 328).

a. Consequently, this interpretation also implies that one cannot accept Keynes’ classifications and admit a difference between ex-ante and ex-post saving (as Robertson is entitled to do), or between “observable savings” and “schedules of savings,” Klein (pp. 91–92 and 110–117), or between actual and desired savings, Hansen (1949: 225), or any other such distinction. b. On the other hand, it should not be denied that there are passages in the General Theory which— if read literally—might lead to a different interpretation than the one provided in the text. (Cf., sp. pp. 74, 117, 122–123, and Chap. 14).

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granted that two of its ineluctable consequences are rarely taken into consideration: (1) if the abstract concept of investment is related to concrete human beings, it must be concluded that the motor of the economic system is the entrepreneur3 ; (2) if, as Keynes pointed out, Consumption—to repeat the obvious—is the sole end and object of all economic activity,” GT (p. 104), it must be concluded that there is a minor contradiction in point of logic here: the dictates of deductive logic should compel one to start the analysis from the ultimate end—consumption—and not an intermediary one such as investment. The second implication of the concept of investment is perhaps more serious. The equation Y = C + I can be considered simultaneously with the equation S = Y − C only if the entrepreneur—in his official capacity, not as a private individual— can ever be assumed to engage in the act of saving. Yet, in strict logic and outside of the validity of the equality of S to I, the entrepreneur cannot functionally save and invest—either at the same time or at successive periods. Retained earnings by a corporate enterprise clearly represent investment either imposed upon or allowed by the stockholders—and so are the retained earnings of an unincorporated enterprise. They represent income which, more or less consciously, is automatically reinvested. Retained earnings cannot represent savings, unless the meaning of this term is bent out of recognition to suit every purpose. Those two equations cannot be made to refer to the consumer either, because otherwise the entrepreneur is eliminated from the field of observation. Even less tenable would be the proposition that the first equation refers to the entrepreneur and the second to the consumer. Yet, these are the only alternatives warranted by that model; and none is entirely satisfactory. The concept of consumption as used in Keynes’ model also presents some difficulties. This concept has two meanings, yet only one of them—the negative one—is stressed in that model. (In contrast to the model, the General Theory stresses instead the second meaning.) Etymologically, consumption means: (a) to take wholly or to destroy; (b) to spend. Destruction of wealth occurs only with obsolescence and natural or man-made disasters, such as earthquakes and wars. (It must be stressed that we are speaking here of destruction in economic and not in physical terms.) Taken over a long period of time, the weight of this form of “consumption” is rather minimal. By far the most important case is the other one: the case in which consumption is a synonym for spending. If the field of observation—as taught in particular by the General Theory—is the national economy and not the individual person, then the major economic function of consumption is simply a transfer of wealth.4 3

The relevance of this observation resides in the obvious linkage which exists between economics and the larger social and cultural context: viz., the Protestant/Puritan ethic; viz., the social and political status accorded to the businessman in the contemporary world. 4 The precise definition of consumption in the General Theory (p. 62) is drawn in terms of sales. And a sale is only an exchange of wealth. Also, income is in the same page precisely defined as total sales minus aggregate user costs of the entrepreneurs—with user cost including the concept of obsolescence, destruction, etc. (see pp. 23, 53–55, 58, and 66–73).

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Writing S = Y − C and S = I, this economic function of consumption is, however, underplayed and perhaps even confused with the first. A superficial reading of the model would suggest this interpretation: the more spent on consumption, the less saved and the less available for investment. If this were the message of the General Theory it would have hardly elicited strong criticism from so many economists, Cf. Harris (1947: Chaps. III, IV, and V, and esp. p. 29); it would have hardly supported Keynes’ hopes that he was writing a book which would “revolutionize” economic thinking.5 There also are in that model two implications of the concept of income defined as consumption plus investment which are worthy of note. With this definition Keynes fostered a trend to look forward which is not in full agreement with his belief that “… we have, as a rule, only the vaguest idea of any but the most direct consequences of our acts” (Keynes 1937a, p. 184). This consideration assumes a special significance if (a) this tendency to look forward is seen as giving great encouragement to economic planning, Cf. esp. Klein (Chap. VIII, p. 224), and (b) if economic planning is seen as a great departure from the classical tradition of primarily observing facts, events which have already happened and not venturing too far and too deep into the world of the future which—by definition—is unknown. Cf. esp. Hayek (1960, Chaps. I, IV, V, VI, and VII and pp. 34–42). The above has nothing to do with analysis and forecasting as agents which alter the future. With income defined as consumption plus investment, the second implication is that there is a need to distinguish between consumption and investment. And yet, such a distinction must be arbitrary. As Keynes pointed out, “Any reasonable definition of the line between consumer-purchasers and investor-purchasers will serve us equally well, provided that it is consistently applied,” GT (p. 61). Italics added. Were Keynes’ model—as well as the second generation of models which formally followed it, Leijonhufvud (1968, esp. p. 327 and Chap. III:2)—not used so much with the aim of arriving at predictions about the future but as a tool to understand the economic process (as Keynes undoubtedly intended it) the arbitrary distinction between consumption and investment would not have direct practical consequences. This is not the case. Those models are used to make predictions about the future and influence economic policy, and that arbitrary distinction—coupled with the definitional problems of the concept of consumption—is bound to have an effect. The autonomous and direct impact which consumption has (or can have) on the economic process is bound to be discounted. The most famous historical case in point appears to have been the fate of the forecasts which were made toward the end of World War II. With the exception of W. S. Waytinsky, all other economists grossly misjudged the future, Lekachman (1966: 164). Finally, the concept of wealth in Keynes’ model is largely left indeterminate. In summary, all major definitions in Keynes’ model seem to present some logical difficulties which can escape attention for a variety of reasons: (1) the concept of saving is made to perform a “passive” role6 ; (2) the flaws in the concept of investment 5

Cf. Keynes’ letter of January 1, 1935, to George Bernard Shaw quoted in Harrod (1951: 462). Kaldor and Mirrlees, speaking of the characteristics of their model, stated (1971: 166): “… like all ‘Keynesian’ economic models, it assumes that ‘savings’ are passive …” (Italics added).

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are covered by its equivalence to the concept of saving; (3) the concepts of income and wealth are derivative concepts and therefore assume a secondary importance; and (4) it is rare that consumption takes the major lead as the spur of the economic process. Those flaws, however, are there, and very few might deny that a model without those flows should be able to produce better results. We shall now attempt to reach new definitions of the same economic concepts and build a new model.

4.3 Section II 4.3.1 Introduction The starting point shall be the definition of income. Keynes, in fact, pointed out that this definition was one of the “three perplexities which most impeded (his) progress in writing” the General Theory (p. 37; Johnson 1961). This time we shall approach the task from the point of view of the consumer. The first equation shall therefore be: Y =C+S

(4.1)

where the symbols represent the same concepts as in Keynes’ model, but their definitions and their relationships to each other are different. The suggested equation of income is self-evident. It refers to the use to which income is put by the consumer. And income must be either spent or saved. In the 1937a chapter, Keynes wrote (p. 190): “… an increase in income will be divided in some proportion or another between spending and saving …” (Y = C + S). Only one objection can be raised against this equation. At first sight, it excludes investment from the field of observation. It shall be seen, however, that this objection is not valid in terms of the model we are trying to build. Investment is taken into account. Hint: In Concordian economics it is included in C: one buys consumer goods, capital goods, and goods to be hoarded. ∗ ∗ ∗ Before proceeding any further with the task of model building, let us pause to analyze the definition of a key concept included here, that of saving. It seems that clarity of economic discourse would compel us to have a concept of saving which is independent of any other economic term. Such independent meaning, it is maintained here, can be reached only if saving is made to represent all wealth which can neither be consumed nor can be confused with investment. If this condition is accepted, then the concept of saving can be made to cover exclusively all forms of unproductive wealth—i.e., gold, unproductive land, jewels which are never worn,

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cash in a vault, etc. [To avoid confusion, the word “saving” was eventually substituted with the word “Hoarding.” Most interestingly, while hoarding does not formally exist in the General Theory, it abruptly erupts where it counts most, in the “substance” of the General Theory: interest is defined as “the reward of not-hoarding” (1936, p. 174).] These are all forms of wealth which can indeed be saved. They do not lose any value over time. On the contrary, since their carrying costs are either negligible or nil and since the history of the world is a history of inflation, with the exception of cash in a vault, these forms of wealth generally acquire value over time. ∗ ∗ ∗ One of the chief benefits of writing Y = C + S is the fostering of the immediate recognition that an increase in S improves one’s balance sheet, but it does not increase national wealth. An increase in savings ultimately does not even increase personal wealth; with saving defined as above and in the absence of inflation, saving can not even do that. In the final analysis, whatever gain is shown in the personal balance sheet at the end of the year has been acquired at the expense of one’s own consumption and/or investment potential. Another chief benefit of writing Y = C + S might be the possibility of arriving at more precise forecasts of the future in periods which—like the current one (summer of 1974)—there seems to be a flight from productive investments and a strong tendency to “invest” in unproductive wealth as an edge against inflation. Once the concept of saving is defined, investment becomes an equally very definite concept—i.e., all productive wealth, all wealth which produces income, goods, and services. Thus we have (almost) all the necessary elements to build the second equation in our model. If the second equation of Keynes’ model is maintained, one simply holds an empty and inoperative tautology. If one changes it to I = Y − C, one reaches the conclusion that I = S. This conclusion is untenable, not only because it reverses the problems mentioned in the previous section in relation to Keynes’ model, but because— recalling the newly reached definition of saving—one would equate productive wealth to unproductive wealth. Neither can one conveniently introduce any other term—such as credit, for instance—to build the second equation. Once the definition of saving is firmly established, preferably as suggested above, the second equation must inescapably be I = Y − S.

(4.2)

Combining (4.1) and (4.2), one reaches the conclusion that I = C. “I = C, I love it!” wrote in 2014 a correspondent who wishes to remain anonymous. “In fact, I think Keynes’s General Theory is incoherent without it … Someday, I = C will shift from radically ridiculous to patently obvious. I hope you get some of the credit.”

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This Reader evidently has a keen understanding of the General Theory. The General Theory has forever been in a state of seriously conflicting interpretations. One more observation about this Reader: he had the patience to wait for the full development of the I = C equality. (As we shall see, “I” is scaffolding which upon demolition reveals the transformation of Investment into Production. What is the purpose of investment if not to produce new wealth?) ∗ ∗ ∗ Before proceeding any further, let us focus our attention on matters of definition. Consumption, in accordance with the new model, is all monetary wealth which is used for the purchase of any other good or is directly hoarded. Investment is all real (physical) wealth which is used to produce new wealth or it is directly hoarded. Investment and consumption are two sides of the same coin: the economic process seen first from the point of view of investment and then from the point of view of consumption. In the proposed model, I = C, indeed. Thus the new model brings about an operation that fundamentally overcomes one of the major shortcomings of mainstream economics: the new model clearly separates real wealth from monetary wealth. Not only that. The new model creates the intellectual framework in which one can not only clearly separate one from the other; one can also devote much study to the understanding of both real wealth and monetary wealth.7 The equality of I to C c + C k echoes the classical distinction between, respectively, “unproductive” and “productive” consumption. It immediately conveys the meaning attributed to consumption in the General Theory. It is “modern” in the sense that it gives to the consumer the role of prime mover in the economic system. (It is the consumer who decides to spend his income directly on consumer goods, or buys a plot of land, a house, a machine shop or even decides to hire a professional entrepreneur to look after his interests—or to hoard his money.) This equality is also historically and logically correct. The first act of production— i.e., reaching for the apple (?) on the tree—must have been indistinguishable from an act of consumption. Today, in a money economy, this relationship should be even more evident: an act of production makes consumption possible; and consumption, in turn, creates anew the need for production. Indeed, in a money economy, with an act of consumption one does not only convey the message of a need for more production; one even transfers the financial resources which allow others to continue their productive activity and prosper. The I = C equality becomes intelligible as soon as one disaggregates both I and C into their component elements: the first component becomes I = K c + K k (where K c stands for production of consumer goods and K k stands for production of capital goods), and the second component becomes C = C c + C k (where C c stands for consumption of—or expenditure on—consumer goods and C k stands for consumption of—or expenditure on—capital goods). In the 1937a article, Keynes wrote, p. 190: “I say that effective demand is made up of two items—investment-expenditure … and consumption-expenditure.” (I = Ck + Cc ). [Formal changes were brought to this paragraph in 2023]. 7

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Let us now look at their different functions. Let us look at changes in their inner nature over time. Logically, there is no difference between an act of consumption (of consumer goods) and an act of consumption of (expenditure on) capital goods/ investment. At least, entrepreneurs do not see any such difference. They look at other entrepreneurs as consumers—consumers just as the apple-eaters. They scan the market and produce, not in accordance with any such distinction, but in accordance with the availability of purchasing power, which is ready to be spent, or, as Keynes would say, availability of “effective demand” in the market. Certainly, neither duration of life nor ability to produce further wealth are inherent qualities of investment versus consumption goods. Dried apples can outlast machines; one can make juice and tarts from apples. The only difference between investment goods and consumption goods resides in their intended use: the former are used to produce further wealth (i.e., delayed and indirect consumption satisfaction); the latter are used to derive direct satisfaction and enjoyment. Yet, as far as use or “consumption” is concerned there is no difference. Both types of goods are consumed. Once the definitions of the three major concepts—i.e., consumption, investment, and hoarding—are accepted as valid, the definition of income as the sum of consumption and hoarding is also confirmed as valid. Indeed, using the disaggregate form of consumption, the definition of income becomes: Y = C c + C k + H. This definition, if seen as value of stocks and not as flow of funds, immediately yields a precise definition of wealth (W ): W = Cc + Ck + H. This definition is in accordance with common wisdom which says: out of last year’s income I consumed “x,” invested “y,” and saved/hoarded “z.”

4.3.1.1

From an Equality to an Equivalence

An equality is logically valid if it is or becomes an equivalence (see, e.g., Suppes 1957). How can we transform the I/C equality into an equivalence? As indicated above, I is scaffolding which upon demolition reveals the transformation of investment into production. What is the purpose of investment if not to produce new wealth? We have also seen that for the new model I (or P) represents all real wealth and C represents all monetary wealth. How do these two fundamental components of the economic reality relate to each other? A third element, an element invisible to the naked eye, accomplishes this feat. The third element is the distribution of the economic value of ownership rights. Contrary to the understanding that reigns in mainstream economics, the distribution of ownership rights does not occur in the future; it occurs at the very moment of production. The law abhors a vacuum; the law apportions the ownership of new wealth to the owners of the wealth engaged in the production of new wealth.

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We have thus obtained the equivalence of production to distribution to consumption. This result becomes of immediate evidence as soon as it is cast into a familiar diagram. The economic process is instantiated even in the purchase of a chocolate bar: money is exchanged for real goods, and the distribution of ownership rights is revealed in the sales slip. One exits the store without the sales slip at one’s own risk and peril. The infinity of transactions composing the macroeconomic process was put in movement from the first moment man, or was it a woman, who reached for the apple on the tree (an act of production), held the apple in her hand (a clear evidence of ownership), and ate it (an act of consumption). In the course of time, I have learned with great pleasure of Galileo’s remonstrance: I did not put those items up in the sky …

4.3.1.2

A Reformulation of the Mathematical Model

Figure 4.1 one gives us a geometric formulation of the Revised Keynes’ Model. Substituting hoarding for saving, the revised model is here reformulated as: Y =C+H I =Y −H I =C where Y = income; C = consumption; I = investment; and H = hoarding. There are three major benefits in this reformulation: (1) the model clearly incorporates the concept of hoarding that is common to Moses and Jesus; (2) the second equation clearly presents a mathematical formulation of the Parable of the Talents: “Investment is Income minus Hoarding”; (3) the model reverses what Adam Smith did: Adam Smith took Hoarding out of economic analysis; the revised model clearly puts hoarding back in. Fig. 4.1 Economic process

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4.4 Section III 4.4.1 Introduction It is believed that the proposed model does not only eliminate those flaws from Keynes’ model which have been discussed above; it also makes the ideas expressed in the General Theory of more immediate apperception. The value of the proposed model, however, has not only an academic value; it does not only provide a new classification of economic terms and eventually make the exegesis of the General Theory relatively easier to expound. Rather, it is pleasant to believe, the value of this model resides in its application to economic theory and policy. This model might give rise to a new Theory of Growth. Through the prism of the proposed model, it can immediately be seen that economic growth can occur not only through an exogenous influx of public investment—as in the end, due to the immediate circumstances, Keynes felt obliged to suggest. Economic growth can also occur through a reduction of private (as well as, indeed, public and corporate) savings [hoarding]. Thus, savings can be either invested or consumed: i.e., gold can be used for dentistry (?) and art, unused land for housing and recreation, etc. At the limit, with S = 0, or H = 0, the proposed model reads: Y =C I =Y I = C. Needless to say, increased investment—together with increased consumption—in “year” 1 is going to produce a bigger income in “year” 2. And, if the proportion of income spent on the two items (consumer goods and capital goods) is in relation to their respective production, there will not be any inflation. Needless to say, implied here is not the economics of perfect calculations, ease, and abundance. There will always be errors in judgment. It will always take effort to produce wealth; and there will always be temporary limits to the economic process set not only by the availability of purchasing power and readiness to spend it, but also by the availability of human as well as natural/artificial resources. The suggested adaptation of the proposed model to the Theory of Growth might also begin to give us a new understanding of the inflationary process. Here only the two crucial events in this process will be outlined. First, any purchase of unproductive wealth—even at the bottom of the recovery— is by definition inflationary. An amount of money is injected into the economy for which there is no correspondent increase of goods and services. The flow of the economic process is cut into two—with one half left frozen, or unproductive of further income and/or goods and services, and the second half fluctuating. This second (monetary) half might be directed toward the purchase of more unproductive wealth. Then the negative effects of the action of the first marginal operator might

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become cumulative. Indeed, the entire process has to be seen over time as accompanying, or, perhaps better, itself constituting the business cycle. (At the bottom of the cycle, demand for unproductive wealth is almost zero; and the effective demand for productive wealth begins to grow. At the peak of the recovery, the composition of the aggregate demand function is reversed.) The second crucial event on which we shall lightly touch occurs toward the peak of the recovery, when the largest part of the flow of money still runs into productive wealth: investment outlets become scarcer, the marginal efficiency of capital decreases (or is believed to decrease), and “the” interest rate rises—not so much because the supply of money is somehow deficient as because its demand is abnormally high. This increased “liquidity preference,” in turn, is due to a large number of factors, some of which shall be listed below: (a) The flow of money reverses its course (hence an increased demand for it) from investment goods back into comparatively scarce unproductive wealth; namely, savings or presumably secure wealth; (b) The financial needs of the productive process must somehow be satisfied, and they will be satisfied through borrowing; (c) Financial fortunes are lost in the bear market; (d) The price of unproductive wealth increases; (e) The price of consumer goods also increases. With ongoing disinvestment and high interest rates, the productive process begins to provide less than the peak flow of such goods and services; (f) The price of investment goods also increases, while their production decreases; (g) Less money income—both in the form of labor income and of capital income—is created and distributed; (h) Less revenue is received by the productive process because of a lower consumption rate. These processes are, of course, largely circular in nature. They tend to reinforce each other. Certainly, not enough of the economic process has been observed here and not at sufficient depth to suggest any economic policy which might be followed in the presence of current events or at any other time. One general observation, however, might be warranted. If the above propositions are deemed to possess any value, eventually they will unavoidably influence economic policy. There is certainly a great difference between a diagnosis—as Keynes’ model suggests—that economic ills stem from a volatility of investment, and a diagnosis—as suggested by the proposed model—that economic ills stem from a cyclical desirability of non-productive wealth. The economic policy which flows (or should flow) from one diagnosis has to be different from the economic policy which flows (or should flow) from the other. Policy effects like these and many other aspects of Concordian economics will be considered in due course. At this juncture we shall attempt to cast some light sideways, so to speak; we will highlight some effects of this revision of Keynes’ Model upon two sister disciplines, physics and ecology. With increasing knowledge

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offered by physics and ecology, we are getting increasingly worried about the future of humanity on this blue dot within the Cosmos. We will not cover the entire realm; rather, we will confine ourselves to one observation. Can we ever dream of landing on a sane and sound physical world if economics remains far removed from the concerns of ecology—and vice versa, if ecology remains far removed from the concerns of economic and financial affairs? Our interest here, therefore, is to try to foster an integration of these various disciplines. We shall see that physicists, ecologists, and economists have much to learn from each other. The issues are too vital to have them addressed by chance.

4.5 Part II: Economics for Physicists and Ecologists 4.5.1 Introduction There is a well-known lack of communication among physicists, ecologists, and economists, see, e.g., Nadeau (2008). Using Concordian economics, this chapter attempts to build bridges among the various disciplines so that lines of communication can be opened and solutions can be found to today’s vexing problems of economics and ecology. Physicists, being practical problem solvers, and ecologists, being deeply concerned about the status quo, might join together in this mission to let economics reach the splendor of its full potential.

4.5.1.1

Problem Statement

Lack of communication among physicists, ecologists, and economists is rooted in the practice of economists, who have developed their own specialized—horribly faulty— forms of mathematics (see, e.g., Nadeau 2008) to analyze economic problems and have reduced the number of admissible problems to those that exist in the market at the moment of the exchange. Thus they analyze only flows, not stocks of wealth; and they observe only money, not real resources. In particular, physicists have long remarked that modern economic theory cannot possibly be a fit description of the reality because, among other reasons, it is a closed system without inlets and outlets (Nadeau 2006). Ecologists, on their part, never seem to engage economists because, among other reasons, while they are mainly concerned with stocks of real wealth, economists are mainly concerned with flows of money (Daly et al. 2008).

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Findings

Three essential findings of Concordian economics are repeated here: with the assistance of modern mathematics and geometry, stocks are separated from flows of wealth; the real economy is separated from the monetary economy; these two parts of the economic process are then joined together through the introduction of the legal and institutional economy into the equations. Through painstaking analysis, Gorga (2002: 23–158), real wealth (RW) is defined as stocks of consumer goods (CG), plus capital goods (KG) and goods hoarded (GH). The fundamental model of production (P) is formulated as follows, ibid. (pp. 38, 313): P = CG + KG + GH IA = P − GH IA = (CG + KG) where IA = investment assets (until sold). Monetary wealth (MW) is defined as the sum of all financial instruments used to purchase CG, KG, and GH as well as other financial instruments: corresponding equations form the model of consumption, ibid. (p. 318). The legal economy is defined as the value of all rights of ownership over real and monetary wealth: corresponding equations form the model of distribution, ibid. (p. 316). Since the structure of these models is self-similar, they are omitted here. The three systems of equations form an equivalence, the equivalence of production to distribution and to consumption. They describe the same entity, the economic process, observed from three strictly interconnected points of view. In more detail, this equivalence refers to the production of all real wealth; the distribution of ownership rights over both monetary and real wealth; and consumption (or expenditure) of monetary instruments to purchase real wealth. This equivalence can be more easily observed with the assistance of geometry. Thus, using established protocols, it is possible to synthesize the above three systems of equations into one unit represented by the diagram—as observed in Fig. 4.1 and reproduced here in order to show some other characteristics of the economic process. Figure 4.1 represents the economic process at the moment of the exchange— as in mainstream economics, but with an enlarged focus. The unit of account can be the economy of an individual person, an individual firm, the local, the national, or the world economy. Figure 4.1 reads as follows: when goods and services pass from producers to consumers, monetary instruments of a corresponding value pass from consumers to producers. For the exchange to occur, the transactors must be the owners of both money and real wealth. Then, one cycle of the economic process is completed. As can be seen, Concordian economics is wholly relational and inherently dynamic. This second characteristic becomes more explicit if one sees each rectangle of Fig. 4.1 as a Poincaré section. In Fig. 4.1 the economic process is observed at one static moment in time.

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There are three approaches for a comprehensive study of the dynamics of the economic process. One is the analytical/mathematical approach. It yields the following generalized system of equations: p . = f p( p, d, c) d . = f d( p, d, c) c. = f c( p, d, c) where p . = rate of change in the production of real wealth, d . = rate of change in the pattern of distribution of ownership rights over real and monetary wealth, and c. = rate of change in the consumption or expenditure of monetary wealth. The second approach for the study of the dynamics of the economic process is the historical/latitudinal one. This study calls for following the dynamic transformation of the system, ideally from the beginning of time till today. Starting from flows of real and monetary wealth one obtains a result that is very familiar to modern physicists, a strange attractor or a Lorenz attractor, see, e.g., Thompson (1986: 228). A few cycles are reproduced here. With Fig. 4.2, we are not only within the economic process—an area that is a black box to mainstream economics, see, e.g., Petrongolo and Pissarides (2001); we have also found the inlets and outlets requested by physicists. The inlets are flows of real and monetary wealth; the outlets are consumer goods, goods hoarded, and money hoarded. It is only capital goods and money to purchase real wealth that remain permanently within the system. The flows of the legal/institutional economy are fully inserted in this construction: they are invisibly present at the moment of the exchange. In order to buy and sell wealth one has forever had to have ownership of that wealth. Indeed, to think of the extreme complexity of the reactions that occur within the economic system, the Reader is encouraged to mentally close the two halves of Fig. 4.2 thus creating the image of a torus or a cyclotron. In the reality of daily life, stocks and flows of real and monetary values do not organize themselves into neat patterns but tend to intermingle and interact with each other. The third approach is the longitudinal/programmatic one, through which one obtains an external view of the economic system as a whole. This is a new perspective that yields a simplified understanding of other characteristics of the economic system. This mode of analysis can be briefly described as follows: if the economic system were composed of three identical, synchronous, and compenetrating spheres (obtained by rotating each rectangle of Fig. 4.1 at ever-increasing speed and in all directions about their geometric center), the system would leave behind only one trajectory as an indication of its dynamics. This line—whatever its pattern—would indicate that the three spheres were in continuous equilibrium with each other. This is not the case in economics: as Mandelbrot (1983: 1) is fond of saying, “Clouds are not spheres, mountains are not cones, coastlines are not circles, and bark is not smooth, nor does lightning travel in straight lines.” Can economic systems be expected to be represented by perfect solids?

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Fig. 4.2 Flows of values

Fig. 4.3 Trajectories of the system as a whole

To say the least, the trajectory of aggregate values of monetary wealth (MW) can be expected to soon leave the initial condition of equilibrium (0, 0, 0) and, spurred by the facility with which monetary instruments can be produced, grow at a faster rate than the trajectory of values of real wealth (RW). Also, the spheres representing the pattern of distribution of values of ownership rights over real and monetary wealth, which are known to remain rather static over time, can be conflated into two overlapping straight lines to be identified as DO. Then, over time, eliminating all short and long-term, cyclical, random, or aperiodic loops, breaks, and turns, the system as a whole can be expected to leave behind idealized traces of motion as in Fig. 4.3. The gap between RW and MW will eventually yield the mathematical measurement of the “bubble.” Current efforts to identify the bubble are especially intense8 ; physicists adept at chaos theory have been investigating this issue for quite some time.9 Area “a”—with its alternative subareas a' and a'' —attempts to describe the 8

Because of its guidance from Ben Bernanke, most notable now is the work done at the Bendheim Center for Finance at Princeton (May 26, 1997, and ff.). 9 See much work done at the Santa Fe Institute.

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condition of disequilibrium (the bubble) that so often develops between monetary and real wealth and suggests that the smaller this area, the smaller the loss of real income over time. How to close the gap between the real and the monetary economy in the shortest possible time is clearly a problem of control, namely a problem of economic policy—the problem of creating a just and sustainable economy.

4.5.2 Conclusion There is much work to be done. As can be seen, the intellectual framework is mostly done; it is the practical work that is all to be done. This is the work of organizing the data in accordance with the categories of thought specified above; this is the work of analyzing the data with the assistance of modern tools of scientific research. The tempi for the performance of this work can be enormously speeded up if physicists, ecologists, and economists assiduously work together (Matthews 2000).

References Daly, H.E., L. Bouckaert, H. Opdebeeck, and L. Zsolnai. 2008. Frugality: Rebalancing Material and Spiritual Values in Economic Life, 207–226. Oxford, Bern, Berlin, Bruxelles, Frankfurt am Main, New York, Wien: Peter Lang. Gorga, Carmine. [1974] 2023. A Revision of Keynes’ Model: The Roots of Concordian Economics. EconCurrents, June 18. Available at https://econcurrents.com/2023/06/18/arevision-of-keynesmodel-the-roots-of-concordian-economics/.Accessed 19 Oct 2023. Gorga, Carmine. 2002, 2009, 2016. The Economic Process: An Instantaneous Non-Newtonian Picture. Lanham, MD. and Oxford: University Press of America. Third edition by The Somist Institute. Gorga, Carmine. 2008. Economics for Physicists and Ecologists. Transactions on Advanced Research 4 (1): 6–9. http://internetjournals.net/journals/tar/IPSI%20TAR%20Jan%202008.pdf. Accessed 19 Oct 2023. Hansen, Alvin H. 1949. Monetary Theory and Fiscal Policy. New York: McGraw-Hill Book Company. Harris, S. Edwin. 1947. The New Economics. New York, NY: Alfred A. Knopf. Harrod, Roy F. 1951. The Life of John Maynard Keynes. New York: Harcourt, Brace and Company. Hayek, F.A. 1960. The Constitution of Liberty. Chicago: University of Chicago Press. Johnson, Harry G. 1961. The General Theory After Twenty-Five Years. American Economic Review LI (2). Kaldor, Nicholas, and J.A. Mirrlees. 1971. A New Model of Economic Growth. In Readings in the Theory of Growth, ed. by F.H. Hahn. London: Palgrave Macmillan. Keynes, J. Maynard. 1930. A Treatise on Money, 2 vols. London and New York: Macmillan. Keynes, J. Maynard. 1936. The General Theory of Employment, Interest, and Money. New York, NY: Harcourt. Keynes, J. Maynard. 1937a. The General Theory of Employment. Quarterly Journal of Economics 51 (2): 209–223. Keynes, J. Maynard. 1937b. Alternative Theories of the Rate of Interest. The Economic Journal 47 (186): 241–252.

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Klein, Lawrence R. [1947] 1968. The Keynesian Revolution, 2nd ed. New York: Macmillan. Leijonhufvud, Axel. 1968. On Keynesian Economics and the Economics of Keynes: A Study in Monetary Theory. Oxford University Press. Lekachman, Robert. 1966. The Age of Keynes. New York, NY: Random House. Lerner, Abba P. 1947. Savings Equals Investment. Reprinted in The New Economics, ed. by S. Edwin Harris. New York, NY: Alfred A. Knopf. Mandelbrot, Benoit, B. 1983. The Fractal Geometry of Nature. New York: Freeman. Matthews, Emily. 2000. The Weight of Nations: Material Outflows from Industrial Economies. Washington, DC: World Resources Institute. Nadeau, Robert L. 2006. The Environmental Endgame: Mainstream Economics, Ecological Disaster, and Human Survival. Piscataway, NJ: Rutgers University Press. Nadeau, Robert L. 2008. Brother, Can You Spare Me a Planet? (Extended Version) Mainstream Economics and the Environmental Crisis. Scientific American. Petrongolo, B., and C.A. Pissarides. 2001. Looking Into the Black Box: A Survey of the Matching Function. Journal of Economic Literature XXXIX: 424. Suppes, Patrick. 1957. Introduction to Logic. Princeton, NJ: D. Van Nostrand Co. Thompson, J.M.T. 1986. Nonlinear Dynamics and Chaos, Geometric Methods for Engineers and Scientists. New York: Wiley.

Chapter 5

From the Logic of Mainstream Economics to the Logic of Concordian Economics

Abstract The logic of modern economic theory is the logic of balancing contradictions: as soon as a deadly flaw is discovered, a patch is constructed. So the problem is not resolved. The logical resolution of modern economic problems can be found in Concordian economics. This new paradigm results from strict obedience to such fundamental principles of logic as the Principle of Identity, the Principle of Noncontradiction, and the Principle of Equivalence. Concordian economics also respects rules governing all appropriate tools of epistemology.

5.1 Introduction As Keynes specified in the preface to the General Theory, “…if orthodox economics is at fault, the error is to be found not in the superstructure, which has been erected with great care for logical consistency, but in a lack of clearness and of generality in the premisses.“ If one applies the principles of formal logic to the inner structure of economic analysis, one discovers that not one of its major component terms respects fundamental principles of logic. This is what we have seen in Chap. 4. This is what Goldsmith (1955, p. 69n), a professor of economics at Yale, tells us in a footnote in the second of his three volumes titled A Study of Saving in the United States. Examining the “specific (operational) definitions of saving,” he found that “... the number of theoretically possible variant definitions of saving as change in earned net worth is as high as 25 × 55 or 100,000.“ Which Principle of Identity is respected? Investment is never defined—except as being “equal” to saving; hence, by necessity it also acquires 100,000 meanings. Consumption, in modern theory, does not mean physical destruction of wealth; it means expenditure of money; yet, not all expenditures of money are counted as consumption; only expenditures to buy consumer goods are arbitrarily counted as consumption. Is an expenditure to buy a tractor not an expenditure? Not one of the fundamental building blocks of mainstream economic theory respects the dictates of the Principle of Identity: a term must mean one thing and one thing only.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Gorga, Concordian Economics, Vol. 1, Springer Studies in Alternative Economics, https://doi.org/10.1007/978-3-031-47320-3_5

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If principles of logic are not applied, what is the logic of economics, then? Analysis demonstrates that the consistency of economics that was claimed by Keynes and, implicitly or explicitly, by most economists is not an external consistency measured against principles of logic, but an internal consistency. History proves that the logic of economics is the logic of balancing contradictions. As soon as a contradiction is discovered, great effort is undertaken to repair the flaw; yet, since the effort does not go to the root of meeting the challenges of formal logic, the attempt is destined to fail. This is the reason why mainstream economics has been in a state of crisis since the publication of Keynes’ General Theory. This is commonly recognized. What is not generally admitted is that the crisis is older still. It goes all the way back to Adam Smith. Economics has regularly been subjected to such major upheavals ever since 1776 as recorded in the books of the history of economics. From classical economics we were led to neoclassical economics to the marginalist revolution to the economics of Keynes to Keynesian economics to post-Keynesian economics to monetarism to real business cycle theory to behaviorism—let alone Marxist economics or Austrian economics or Georgist economics or Kelsonian economics; indeed, let alone such (major) splinter programs of research within each major school of economic as labor economics, industrial economics, feminists economics, and so on and so forth.

5.2 The Root of the Problem Many ideas are just like flowers, brilliant in the morning wilting by evening. Yet, ideas have a tremendous power as tools to acquire, retain, and transmit knowledge, because they synthesize information relating to homogenous facts. The “idea” of the tree does—indeed, must—not only be capable of incorporating all conceivable trees; it must also be capable of incorporating all the detailed information concerning each particular tree. In short, an idea is a first level of abstraction of concrete, factual information. This is the first intellectual container to include exclusively homogeneous items: trunk, bark, and branches form trees—and all trees are trees. (Biology and chemistry confirm that the same “elements” cursor through all component parts of the tree: roots, trunk, branches, leaves, and lymph; thus, making the idea of “tree” a definite homogeneous entity.) An idea can be as broad as possible, but it remains subject to the rules of the Principle of Identity: an idea has to put homogeneous “things” together. At a higher level of abstraction than tree, the idea of wood can include trees, bushes, and brush, but it cannot include nails. An idea can be as broad as possible, but it cannot include non-homogeneous, contradictory information.

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5.2.1 The Need for Homogeneous Ideas These requirements are easy to identify when dealing with concrete ideas. The danger with abstract ideas is that unbeknownst to the writer and the Reader, they might contain non-homogeneous facts, contradictory observations, and information. A detailed dissection of the content of the idea of saving in economics, for instance, yielded the conclusion that this word embraces a long series of basic contradictions: To remain at an elementary level of analysis, the word saving includes bark, leaves, and nails. We are out of the realm of words and concrete ideas such as tree and wood. In what world are we? We are in the world of abstract ideas. In economics, we are in the world of saving.1 Wood and nails are included in the word saving—what is more evident that one can “save” nails? Yet, the inclusion of this—hidden—tiniest of all contradictions, the inclusion of wood and nails in the word saving, explodes into a series of contradictions that result in the crisis in which the structure of economics is inveigled today. Both Aristotle and Thomas Aquinas were aware of the crushing importance of small fractures at the basis of an intellectual construction. Abstract ideas can arbitrarily cover nonhomogeneous entities and thus lead to large unresolved and unresolvable conflicts of understanding. To enlarge a bit our focus, let us remember that since saving is “equal” to investment in mainstream economics, investment automatically assumes 100,000 meanings. This is the root of interminable controversies about the meaning of “capital.” For confirmation, see evaluations of Piketty’s Capital in the Twenty-First Century (2014). How can we resolve this crisis of abstract ideas? Learning from the past, we can assuredly state that we can resolve the problem of hidden contradictory information contained in abstract ideas only by splitting the information and creating new containers, which, being synthesizer of homogeneous ideas, do not contain contradictory information. This type of container is the concept.

1

To emphasize the point, Professor R. W. Goldsmith calculated that saving can assume 100,000 possible meanings. Saving in mainstream economics is not restricted to one and only one definition, but it indeed assumes 1 + 99,999 meanings. Any wonder that mainstream economics is in a state of crisis today? Individually, they are all logically tenable meanings. In fact, one can include in this container all the shades of opinion (and possible action) from hoarding to non-consumption. Yes, not consuming can be a form of saving—provided the item saved is not perishable. (Examples of contradictions multiply the closer one looks at the idea of saving: can a banana be saved? Is a savings bank account that yields interest a saving—or is it an investment?) Notice the conflation of “things” and opinions. Yet, even in the field of opinion one must respect the Principle of Identity: one cannot introduce contradictory ideas in the same conversation.

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5.2.2 Concepts More technically, our effort at solving the crisis of abstract ideas involves the transformation of ideas into concepts, a next level of abstraction, a more selective tool that allows us to synthetize an enormous amount of detailed information, all the while eliminating the possibility of being confronted with hidden contradictory information. Thus rather than fixating on saving, I enlarged my focus of attention to observe “wealth.” Wealth then yielded a clear-cut difference between being productive or non-productive. I defined investment as an entity that, at the moment of observation, includes all productive wealth. Outside of finance, what is the purpose of an investment if not to produce further wealth? I defined saving as an entity representing all non-productive wealth. (Later, to avoid confusion I defined saving as hoarding.2 ) Totally unawares, I changed vague ideas into concepts. A concept is a synthesizer of knowledge that contains homogeneous ideas. Indeed, a concept can be formally defined as a relationship among homogenous ideas. Kant ([1781] 1966, pp. 66–67) provides the rules that help us identify concepts: In every cognition of an object there is unity of concept, which may be called qualitative unity, so far as we think by it only the unity in the comprehension of the manifold material of our knowledge . . . Secondly, there is truth, in respect to the deductions from it. The more true deductions can be made from a given concept, the more criteria are there of its objective reality. . . Thirdly, there is completeness, which consists in this, that the plurality together leads back to the unity of the concept, according completely with this and with no other concept.

What allows us to put wood and nails into the same container is the idea of wealth. This broad idea, then, allows us to distinguish productive from non-productive wealth. It is on the basis of this distinction that we can logically analyze the content of the word saving. The word saving can definitely include wood and nails that are in a non-productive state.

2

This solution was a drastic one. The solution forced this writer to discard the word saving, expunge it from the world of economics, and relegate it to the practice of financial accounts. As pointed out earlier, saving is a word that, as Professor R. W. Goldsmith calculated, assumes 100,000 logical meanings. Saving is not a tenable scientific word; it is not a useful tool of knowledge.

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Automatically, wood and nails that are in a productive state can be included in investment. Investment is the concept that—by an unspoken agreement—includes all productive wealth. Thus, these two concepts, hoarding and investment, allow for the study of elements that perform homogeneous functions (they keep wealth together that is either in a non-productive or a productive state).

5.2.3 Theories Just as one swallow does not spring make, so one or even a few separate concepts are not harbingers of anything spectacular. In fact, individual concepts, just like individual propositions, might lead to much confusion. A concept, in fact, reduced to semantic or linguistic terms is only one thought or one statement. Individual statements or propositions by themselves have no meaning. The classic example is the question: do parallel lines meet? Without inserting the questions in a larger context—i.e., a theory—it is impossible to give any definite answer.3 Needless to say, individual propositions are analyzed, especially in economics, as if they were going to yield definite truth content. To insist on this important point, it is only theories that provide the larger context or intellectual world in which individual statements—or concepts—have a definite meaning. Theories then are relationships among homogeneous concepts. (That concepts have to belong to a homogeneous world in order to form a theory is selfevident. No sense would be made by mixing the concept of gravity in physics with the concept of investment in economics). Relating hoarding to investment is an exercise in theory that this writer has lately come to define as A Theory of the Cause of Poverty. Let us see how. With saving defined as hoarding, through painstaking logico-mathematical reasoning one passes from the equality of saving to investment to the complementarity of hoarding and investment. This relation—and its effects—is better analyzed when placed in a Lorenz diagram, as follows (Fig. 5.1). More hoarding and less investment result in less growth. More money spent on hoarded goods, more money in circulation—with less growth—results in more inflation. More hoarding and less investment—and more inflation—result in more poverty. These hypotheses can be proved valid or disproved only when numbers are collected in accordance with the categories suggested by Concordian economic.

3

Advances in the field of fractal geometry are so rapid that I have yet to see these differences pointed out: while in Euclidean geometry parallel lines do not meet, in imaginary geometry parallel lines do meet—and in fractal geometry parallel lines do not exist.

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Fig. 5.1 Effects of hoarding

5.2.4 Systems The assurance that the analysis of the discipline of economics was complete, at least as far as modern economics is concerned, was given by the inclusion of hoarding into Keynes’ model of the economic system. Meeting this requirement yielded surprising results. Thus: Income = Consumption + Hoarding Investment = Income − Hoarding This system resulted in the equality of investment to consumption (I = C). “I = C, I love it!” wrote a Reader who desires to remain anonymous. “In fact, I think Keynes’s General Theory is incoherent without it… Someday, I = C will shift from radically ridiculous to patently obvious.” The I = C construction is scaffolding that comes down and becomes obvious as soon as investment is transformed into production—what is an investment if not for production of real wealth? As an entity capable of effectuating an exchange, consumption is understood to mean expenditure of all monetary wealth to purchase real goods and services or financial assets of a different nature (not simply as expenditure on consumer goods as in mainstream economics). The new result was P = C. This conclusion yielded the automatic separation of the real economy from the monetary economy—thus bringing much clarity to the economic discourse. (Economists see only money; only the monetary economy.)

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Fig. 5.2 Economic system

Then, since an equality has to be an equivalence in order for the relationship to be logically valid, see, e.g., Suppes (1957), a third term was searched for and found out of the need to apportion the ownership of wealth to someone as soon as it is created. This term is distribution (D) of ownership rights. This logical need yielded the additional benefit that the two parts of the economy—real wealth and monetary wealth—were not left hanging separately but were ultimately joined together through the concept of distribution of the value of ownership rights over real and monetary wealth. The fundamental proposition of economics thus became: Production ≡ Distribution ≡ Consumption. Out of this equivalence, the following Fig. 5.2 resulted. The easiest way to explicate this figure is to relate it to the purchase of a chocolate bar. The real wealth of the chocolate bar (1) is exchanged for money (2); the third invisible item is (3) the exchange of property rights: property rights over money are being exchanged for property rights over real wealth. This invisible element of the economic process is made visible in the graph, and it is made tangible by the sales slip. To exit a store without the sales slip, one is exposed to the risk and peril of going to jail. Some characteristics of Concordian economics are these: the diagram allows us to see all relationships at once; it allows us to constantly see each item within its appropriate context (ever been struck by the vacuity of positions trying to establish the priority or preeminence of specific items in a system of thought?); and it also gives us the basic dynamics of the interrelationships among the various elements of the presentation. More explicitly. One of the implicit merits of Concordian economics is to transform reductionism and linear thinking of mainstream theory into relational patterns of thought.

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Fig. 5.3 Theory of economic justice

Annotating—for the second time—my fundamental book titled The Economic Process (2002, 2009, 2016), the Journal of Economic Literature in its December 2017 issue (p. 1642) states: “Expanded third edition presents the transformation of economic theory into Concordian economics, shifting the understanding of the economic system from a mechanical, Newtonian entity to a more dynamic, relational process.” All the pieces of the economic puzzle are ready to spring into action. Until they remain static, they manifest all the key elements of the economic system. Indeed, this writer can only repeat with Galileo, These three elements I have not put in the economic system; rather, I have found them there: (1) real wealth; (2) monetary wealth; and (3) rights of ownership. Kant’s analysis is that “The more true deductions can be made from a given concept, the more criteria are there of its objective reality”. Accordingly, we realize for instance that, once the economic process is reconstructed, one is granted the privilege of completing the Aristotelian/Aquinian project of economic justice.4 Thus: Clearly, Fig. 5.3 is the mirror image of Fig. 5.2. This body of knowledge disappeared from our consciousness once Locke shifted our attention from it and made us focus on the justice of property rights. Tied to the fervor for the justice of property rights, capitalism was in the saddle. To which Socialists and Marx retorted: let us rather focus on the injustice of property rights. Tied to the fervor of the fight against the injustice of property rights, socialism and communism were in the saddle. And there the political discourse stands today. 4

Since they both justified slavery, Aristotle as well as Aquinas was condemned not to see the need for “participative” justice as justice for all; their construction was arrested at the development of Distributive Justice and Commutative Justice.

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Fig. 5.4 Dynamics of the economic system

5.2.5 Processes The economic system described by Concordian economics is eminently dynamic.5 This characteristic is more clearly observed by reducing the rectangles of Fig. 5.2 to three points (0, 0, 0) and then extending each point into a line. Over time, these lines are expected to create the following patterns (Fig. 5.4). For its ease of production, monetary wealth (MW) can be expected to grow at a faster rate than real wealth (RW). At a first level of analysis, the rate of change in the distribution of ownership rights (DO) can be assumed to be shooting through the sky and then collapsing. The area between MV and RW can be described as the “economic bubble.” This is an area that can be precisely measured with the help of the following values: p-values, d-values, and c-values (production values, distribution values, and consumption values) all measured with the same yardstick, the legal currency of the country.6 Modern mathematics seems to be fitted to a “t” to Concordian economics. Indeed, this new system requires, not the stale horse of linear math, but the systems analysis pursued by nonlinear math and chaos theory. The geometry of this construction yields a figure such as this (Fig. 5.5). This figure reproduces the cumulative cycles of production and exchange that one obtains combining natural resources with monetary wealth over time. This figure records all the cycles that have occurred since the beginning of civilization (with

5

“Process thinking is the most needed and the most demanding form of modern thinking. Most modern thinkers manifest in one form or another this type of reasoning as well as a variegated response to the needs of modernity” Gare (2002). 6 The issue of measuring real wealth has been one of the most difficult problems to solve in economics. I was distinguishing these values by color, when my wife, Joan, suggested they can be distinguished by calling them p-values, d-values, and c-values. Brilliant.

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Fig. 5.5 Flow of economic values

some civilizations dying over time). Closing the two halves together, one obtains the image of a cyclotron. This is a figure that is well known to contemporary scientists. It is called a strange attractor. Time will tell whether these conclusions are validated or disproved for economics.

5.3 Conclusion Using the logic of “balancing contradictions” yields the cacophony of modern economics, and using the Relational Method of Analysis (RMA) yields a realistic description of the economic process. As we have seen, RMA is composed of ancient principles of logic, such as the Principe of Identity, Non-contradiction, and Equivalence, and faithfully obeys the dictates of all the tools of epistemology. A realistic understanding of the economic process gradually leads to the construction of Concordian economics, a new paradigm whose use will gradually yield a social legal and political world that, being built by the tween pillars of morality and freedom, is going to be at least more just and stable than the world built on the dissonances of modern economics. To reduce things to the bare minimum, to hoard or not to hoard is an intrinsic question of freedom and morality.

References

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References Gare, Arran. 2002. The roots of postmodernism: schelling, process philosophy, and poststructuralism. In: Process and difference: Between cosmological and poststructuralist postmodernisms, eds. Catherine Keller and Anne Daniell, 31–53. New York: SUNY Press, New York. Goldsmith, Raymond W. 1955–1956. A Study of Saving in the United States, vol. II. Princeton, NJ: Princeton University Press. Gorga, Carmine. 2021. From rationalism to relationalism. Academia Letters, Article 1212. Available at (DOC) From Rationalism to Relationalism | Carmine Gorga - Academia.edu Accessed 25 July 2023. Kant, Immanuel. [1781] 1966. Critique of pure reason. Trans. F. M. Muller. Garden City, NY: Doubleday. Piketty, Thomas. 2014. Capital in the twenty-first century. Cambridge, MA: Belknap Press. Suppes, Patrick. 1957. Introduction to logic. Princeton, NJ: D. Van Nostrand Co. Wood, Diane. 2002. Medieval economic thought. Cambridge, UK: Cambridge University Press.

Chapter 6

Preparing for Concordian Econometrics

Mainstream econometric models “… have a very poor record forecasting recession. Conclusions based on such models must be suspect.” Alan Greenspan, August 7, 2010

Abstract For the creation of Concordian econometrics, this chapter offers a synthetic view of some technical characteristics of Concordian economics, a field of research that yields an advanced understanding of the complexities of the economic process, including bubbles, for three fundamental reasons: first, Concordian economics integrates into its analysis hoarding, defined as all wealth that has zero use rate. Second, Concordian economics uses the mathematics of modern science and engineering: nonlinear mathematics and fractal geometry. Third, Concordian economics looks into the “black box” of mainstream economics and studies the economic process, not as separate events, but as a systems dynamic unit.

6.1 Introduction Everything takes time. In 1991, an anonymous referee of the Journal of Economic Theory pointed out that what later was called Concordian economics contains “a new analytic engine” and that this engine ought to be “put through its paces” (Anon 1991). All the work researched and published in the meantime, see, esp. Gorga (2008), confirm the validity of that insight. The present chapter is meant to achieve that goal. The immediate spur is given by four events: first, the publication of an expanded edition of The Economic Process (Gorga 2002); second, the publication of Gorga (2010a) in the History News Network, an essay titled “Hoarding and Most Economists”; and third, the publication of Gorga (2010b) in The Rheol World, an essay titled “Concordian economics: A non-Newtonian Construct.” Both publications were requested by the editors. Adapted from Gorga (2012).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Gorga, Concordian Economics, Vol. 1, Springer Studies in Alternative Economics, https://doi.org/10.1007/978-3-031-47320-3_6

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Concordian economics takes its lead from a revision of Keynes’ model of the economic system (Gorga 1982). Starting with a 1974 seminal paper, Gorga ([1974] 2023) and powerfully assisted by Professor Franco Modigliani, Professor Meyer L. Burstein, and other eminent thinkers, this writer has for many years been engaged in a complex program of interdisciplinary research and publication that evolves from the revision of that model. For some evaluations of this work, see www.a-neweco nomicatlas.com/p/evaluations.html. As Brady (2007) pointed out in his review of The Economic Process, while Keynes states that hoarding is a major problem, he “does not emphasize it … Gorga’s reinterpretation of the Y model allows him to reach Keynes’s conclusion … [and to] integrate it into a complex systems analysis …” This chapter includes mathematical models and the geometry of Concordian economics to show that these models make full use of the best advances in current mathematics and geometry, see, e.g., Thompson (1986), Mandelbrot (1983). As soon as data are collected in accordance with the categories of thought of Concordian economics, these models are ready be transformed into econometric models. At first examination, the Reader will notice the following particular characteristics of Concordian economic models: • • • • •

With a change of scale, they apply to micro as well as to macroeconomics; They grow in a gradual progression from stocks to flows; They are all interrelated with each other; No element of the economic system is excluded from them; They are of general comprehension as they are easily translatable into English.

This chapter is especially focused on some of the technical characteristics of Concordian economic models. These characteristics mainly regard the choice of units of measurement of various forms of wealth and specify a set of nonlinear hypotheses on which the entire structure of this economic research program is based. The recognition of these characteristics ought to provide an incentive for the transformation of Concordian economics into Concordian econometrics.

6.2 A Few Simplifying Assumptions It might appear that the means for the creation of a Concordian econometric models are beyond the means of any single institution or even many governments. That is true, because the models rely on new categories of economic thought; therefore, they require a new apparatus of data collection and manipulation, and ultimately a new method of analysis that makes full use of modern nonlinear mathematics and fractal geometry. Practical considerations, however, have never been insurmountable obstacles for economists. They do know how to get around obstacles of a practical nature. They assume that their hypotheses are a fairly faithful representation of the reality. And then they test the validity of such hypotheses.

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A plan for the transformation of Concordian economics into Concordian econometrics would incorporate an imaginative application of this practice. The suggestion is to work at first with fictitious numbers. Once the econometric relationships in the datasets are discovered, then a recommendation will be made to the appropriate authorities to invest real resources to collect data in accordance with the new categories of economic thought. Then fictitious numbers will gradually be replaced with true numbers.

6.3 The Question of Units of Measurement If the meter were as flexible a unit of measurement as the dollar, we would never have been able to reach the moon and return as safely and effectively as we did. If an authority as high and as directly involved in the evaluation of current econometric models as Alan Greenspan can be as negative in his assessment of these tools of analysis as quoted at the beginning of this presentation, it is mainly because all such models use each country’s currency as the unit of measure. As is well known, this shortcoming of mainstream economics becomes more telling when values of imports and exports are included in the computations and when measurement of the economy of many nations enters the analysis. The search for new units of measure of the economy is that important, and it has been recognized as such ever since the beginning of modern economics. Since it divides the economic system into four (reducible to three) equivalent modules, Concordian economics uses four units of measurement respectively for (1) the system of real wealth, or production process, or pure aggregate supply; (2) the system of monetary wealth, or consumption process, or pure aggregate demand; the system of distribution of ownership of values of (3) monetary wealth as well as values of (4) real wealth, or distribution process. Assuming perfect equilibrium, one can alternatively chose either (3) or (4) and thus reduce the operational number of modules to three. In accordance with this tripartite division of the economy, the first unit of measurement is used to estimate the quantity of real wealth. This unit is based on a new unit of account: in Concordian economics, the quantity of stocks of real wealth is conceptually measured with the help of a stable and constant numeraire such as “labor-units, yards of silk, or beans” (Gorga 2002: 38, 308–309). This yardstick was later pinpointed as p-values. The name is not important. What is important is that the unit be firm, uniform, and as standard as the meter. The second unit of measurement, as in mainstream economics, is the currency in “constant” units: this unit is used to calculate the value of monetary wealth. This yardstick was later pinpointed as c-values. The third unit compares values of quantity of real wealth with value of monetary wealth in order to calculate the pattern of distribution of values of ownership rights over real and over monetary wealth (as noted above, in equilibrium there will be a one-to-one relationship between these two values). This yardstick was later pinpointed as d-values.

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One of the benefits of the proposed Concordian system of metrics is that it will let the economics profession face the issue of measurement openly and squarely. Keynes was aware of the essential need for a uniform unit of measurement; otherwise, he said, “precision will be mock precision” (1936, p. 40); following Smith, he proposed labor-units; but he basically had to give up on this unit of measure, ibid. (p. 138). Today there is a considerable body of literature involved in the search for a unit of measure that is objective, firm, and standard, cf. Matthews (2000). This literature has to be evaluated and, most importantly, integrated into Concordian economics. This work is essential for three reasons. First, one cannot have Concordian econometrics without a unit of measurement of real wealth that is as clearly identifiable, firm, uniform, and standard as the meter. Second, one cannot understand Keynes’ General Theory without unraveling these issues of measurement. To mention only one fundamental case, it is impossible to understand what Keynes meant by the marginal efficiency of capital (mec) without resolving the issue of measurement of stocks of wealth. Suffice it to recall that Keynes’ most important operational analysis is all built on expectations of the interrelationship between mec and the rate of interest. Yet, the measurement made in mainstream econometrics of the value of mec is strictly and exclusively in monetary terms. Third, one cannot resolve the issue of valuation in economics without a clearly identifiable, firm, uniform, and standard unit of measure as the meter. As current raging discussions demonstrate, in mainstream economics this issue is left to accountants to resolve. Perhaps the community as a whole should be involved: after an initial period of turmoil, the global village will eventually settle on p-values, d-values, and c-values (however imaginatively may they be defined or redefined). These units will indeed have to become as clearly identifiable, firm, uniform, and standard a unit of measure as the meter. In Concordian economics, the issue is intellectually resolved because, as noted, there are three systems and three units of measurement. These three sets of values are first estimated independently of one another, and thus they offer the opportunity of a triple check on one’s reasoning and calculations, and then, as Professor Modigliani specified, they are tied together through an index of proportionality, see Gorga (2002: 215–221). The proposed econometric study will transform this intellectual understanding of economics into the operational functioning of Concordian econometrics: p-values, d-values, and c-values are the proposed units of measurement. Their inner nature becomes much more clear when they are inserted into the geometric and mathematical models of Concordian economics, models that are the result of about fifty years of study.

6.4 The Geometry of Concordian Economics The geometry of modern economics, as observed in Chaps. 1 and 2, yields a black box (Fig. 6.1). The geometry of Concordian economics is better evaluated when put in relationship with the geometry of classical and neoclassical economics, which as seen

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Fig. 6.1 Input and output Fig. 6.2 Looking inside the black box

Classical and Neoclassical Analysis Price

D

S E

Quantity E = equilibrium and exchange

in Fig. 6.2 is built on points and lines, lines resulting from the disconnected measurements of comparative statics. The geometry of modern economics, as observed in Chaps. 1 and 2, yields a black box. Figure 6.2 is a more elaborate presentation of the issues. The central geometric model of Concordian economics is given in Fig. 6.3, in which the entire economic process is observed at a glance. It represents the equivalence of the production of real wealth (aggregate supply) to the distribution of ownership rights over real and monetary wealth and to the consumption or expenditure of monetary wealth (aggregate demand). This figure indicates that a cycle of the economic process is completed when the entire production of the period is sold to the consumer. Then an exchange occurs between money and real goods. For this exchange to occur, both the producer and the consumer, in an ordered society, must be the legal owners of the wealth they exchange. The full potential of the geometry of Concordian economics is realized when this figure is seen as a dynamic representation of the economic reality. In other words, one needs to rotate at ever-increasing speed each rectangle in Fig. 6.3 about its geometric center. One then obtains the image of three circles rotating around each other, as in a Venn diagram. And what is a circle if not a two-dimensional image of a sphere?

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Fig. 6.3 Concordian economics

Then, assuming perfect equilibrium in the system, one obtains the vision of three intercompenetrating spheres rotating inside each other. On this assumption, a projection of the development of these three basic values over time would yield three lines conflated into one—just as in mainstream economics. (It is not generally realized that any demand and supply analysis yields three points: the point on the supply curve, the point on the demand curve, and the hidden point of the intersection of demand and supply.) A more realistic assumption of Concordian economics is that these values differ over time. Thus one can assume that the trend line of the values of distribution of ownership rights (DO) tends to remain rather constant over time; however, because of the relative ease of creation of monetary values, the trend line of the monetary wealth (MW) tends to grow at a faster rate than the trend line of real wealth (RW), up to a certain point when it collapses, as indicated in Fig. 6.4.

The Bubble

MW = Monetary Wealth RW = Real Wealth DO = Pattern of Distribution of Ownership Rights

Fig. 6.4 Trajectories of the system as a whole

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Disaggregating AS A Poincaré section of production process CG KG

GH CG = Consumer goods KG = Capital goods GH = Goods hoarded

Fig. 6.5 Stocks of real wealth

It is through reasoning and calculations such as these that one discovers “the bubble” and consequently one can develop policies to reduce the amount of lost real income suggested by area a and alternative areas a' and a'' . The beginning of analysis in Concordian economics occurs not only on these overarching issues of theory and policy but in the discovery of the details of the economic process by disaggregating each one of the three major processes of Fig. 6.3 into their component elements.1 The comprehension of this stage of Concordian economics is facilitated by prior understanding of Austrian economics, see esp. Hayek (1935), in which the exchange occurs as a consequence of variations in relative prices that prevail in differentiated markets for money and consumer goods, capital goods (and goods to be hoarded). Through a Poincaré section of the three rectangles of Fig. 6.3, one obtains (Figs. 6.5, 6.6 and 6.7). These disaggregated components of the economic process are put back together again at the moment of the exchange as in Fig. 6.8. This figure strongly resembles a well-known figure in the physical sciences, the image of a strange or a Lorenz attractor: will detailed analysis confirm this similarity? (Fig. 6.9).

1

Through a Poincaré section of the rectangle of production in Fig. 6.3, Concordian economics yields the following categories of real wealth: (1) stocks of capital goods, (2) consumer goods, and (3) goods hoarded. Through the same procedure applied to the rectangle of consumption, Concordian economics obtains the following categories of monetary wealth: in addition to money directly hoarded, there are stocks of various forms of financial instruments used to buy consumer goods, capital goods, and goods hoarded as well as stocks to buy one another in the alternative structures of risk and rewards that are expressed in the form of short-, medium-, and long-term financial investment, cf. Mandelbrot and Hudson (2008: 262). Correspondingly, the disaggregation of the category of distribution yields the value of ownership rights over each one of the categories of monetary and real wealth listed here.

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Fig. 6.6 Ownership rights over stocks of wealth

Disaggregating AD A Poincaré section of consumption process

ECG

EKG

EGH

E = expenditure on consumer goods (CG), capital goods (KG), and goods hoarded (GH)

Fig. 6.7 Stocks of monetary wealth

6.5 A Method for the Transformation of Keynes’ Model See Figs. 6.10, 6.11 and 6.12.

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Flows of Values

Fig. 6.8 Flows of values

Strange Attractor

Fig. 6.9 Strange attractor

6.6 The Mathematics of Concordian Economics The essential characteristic of the mathematics of Concordian economics is the breakup of the saving-investment nexus, a well acknowledged “quagmire” in mainstream economics. Through a complex logico-mathematical operation (see Gorga 2002, pp. 3–137) in Concordian economics saving is replaced with hoarding, and the relationship between hoarding and investment is found to be one of complementarity. This relationship is best represented with a classical Lorenz diagram, as in the figure titled “effects of hoarding” (Fig. 6.13).

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Fig. 6.10 Keynes’ model

Fig. 6.11 Pivoting Keynes’ model

Pivoting Keynes’ Model

Y

=

C

+

S

=

Y

-C

S

=

I

I

Around Saving (Hoarding) Fig. 6.12 Revised Keynes’ model

6.7 A Set of Nonlinear Hypotheses

95

Fig. 6.13 Effects of hoarding

Effects of Hoarding 100%

Hoarding

0%

Investment

More hoarding, less growth More hoarding, more inflation More hoarding, more poverty

More hoarding clearly equals less investment—hence less economic growth. More money spent on goods hoarded, more inflation (money remains in the system, but less is produced). Again, the relationship between hoarding and poverty is of immediate comprehension: more is accumulated by the few, and less is available to the many. To insist on the important point, the explanation of why when there is more hoarding there is more inflation resides in this simple fact. When one buys property and keeps it in a passive state, the money used to buy that wealth remains in circulation and creates an imbalance with the amount of wealth that is for sale in the market. Hence, prices rise. That is the seed of inflation. The difficult nature of hoarding is revealed by this simple fact. At times, when financial and industrial corporations—and even governments—hoard cash, hoarding performs a deflationary function. This is a peculiar function that, apart from few aberrant cases (and the general case of economies with insignificant financial institutions), occurs only at the bottom of the crisis and is quantitatively miniscule when put in relation to the value of the economic system over the entire business cycle (Figs. 6.14, 6.15, 6.16, 6.17 and 6.18).

6.7 A Set of Nonlinear Hypotheses As cursorily noted above, once attention is focused on the dynamics of the economic system, one observes not only solids moving in space but also the inside of a torus, customarily a section of a torus, or a Poincaré section. The torus that can be expected in economics is likely to present many bottlenecks, due not only to the irregularities in the planes of production and consumption but especially to the shape of the plane of distribution which, as seen in Fig. 6.6, is that of a rhombus.

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Fig. 6.14 Production process

Fig. 6.15 Distribution process

It is likely that stroboscopic analysis will yield lines that, at least over certain portions of the phase diagram, form any one of the typical Lorenz attractors (see Figs. 6.8 and 6.9). But perhaps the analysis does not necessarily have to terminate in any one of the typical “chaotic” representations of the reality. It seems more likely that the economic process ultimately takes the shape of a Mandelbrot set, see Gleick (1987: 226). The construction of three intercompenetrating spheres outlined in the discussion of Fig. 6.3 and the Mandelbrot set have one essential characteristic in common: each point of any sphere (or, in disequilibrium, each point of the smallest sphere) touches at least one point of each of the other two spheres. Gleick (1987: 220) explains: “When a pie is cut into three slices, they meet at a single point, and the boundaries between any two slices are simple. But many processes of abstract mathematics and real world physics turn out to create boundaries that are almost

6.7 A Set of Nonlinear Hypotheses Fig. 6.16 Consumption process

Fig. 6.17 General synthetic model

Fig. 6.18 General analytic model

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Fig. 6.19 Likely “generator”

A Likely “Generator”

unimaginably complex … The boundary (in the Mandelbrot set, for instance) has the peculiar property that every point on it borders all three regions.” Mandelbrot (1983, Ch. 37) also provides convincing evidence that trends in economics follow a constant pattern. This pattern might eventually be proved to be a fractal set that can be simply described as follows: up to a certain point, actions and reactions reinforce each other; then both begin to fade away; a rather abrupt break in the trend generally follows; after some recovery, there is a period of relative stasis; and then the cycle starts anew. Correspondingly, a first scanning of the data suggests that the shape of the originating curve (the “initiator”), an apparent constant in economics, is shown in Fig. 6.19. The “generator” has to be determined through analysis of historical data from combined price-quantity volumes, see Mandelbrot (1983: 31, 34b, and 119b). Some curves are likely to be discontinuous, and for certain stages of the business cycle the shape of the originating curve is likely to be turned upside down. Certain “parts” of the resulting teragon might have different topological and fractal dimensions.

6.8 Concordian Economics and the Business Cycle In Concordian economics the analysis is always in real time; hence, it is always related to each one of the four phases of the business cycle. Even though the shortterm shape of the initiator appears to be constant over the entire cycle, each phase of the cycle, as in general mechanics, has its own characteristics. In the first phase, trends tend to increase at an accelerating rate. In phase two, trends tend to increase at a decreasing rate of acceleration, until growth stops altogether, and at times abruptly. The next instant marks the beginning of phase three, in which the trend is one of decrease at an accelerating rate. When the rate of deceleration is under control and peters down to zero, then the cycle enters its phase four. This is the phase of stasis or stagnation.

6.9 Concordian Economic Analysis

99

Of course, trends in economics do not strictly parallel the trends in the physical world for a great variety of reasons. Any trend in economics can be brought to an abrupt halt through willful application of effective counter measures. Not all actions in economics have well-understood reactions as to timing and size. And, perhaps most importantly, trends in economics do not reflect a univocal reality. Let alone differences due to geography, trends in economics can move out of phase with each other because of differences in timing: a particular phase for a certain trend can take place too early and another too late to be in synchronism with overall patterns. Above all, as seen above, trends in economics are the result of actions that occur— mostly independently of each other—in a variety of fields: the field of production of real wealth; the field of production of monetary wealth; and the field of attribution of ownership rights over real and monetary wealth. To say the least, each one of these fields is governed by its own rules and regulations; and each one of these fields is fractured into a myriad of subfields that are well known to most economists who specialize in the understanding of any one such field. Public goods certainly behave differently from private goods or from common goods. And then today, given their extraordinary size, one will certainly reach wrong conclusions if the behavior of not-for-profit institutions is not taken into consideration. Perhaps the major benefit of Concordian economics is its capacity to put each element of the system, no matter how small or insignificant, in relation with all other elements of the system as a whole. Indeed, in Concordian economics there are no elements that are too small; none that are insignificant. The expansion of Concordian economics into Concordian econometrics will only sharpen such a sensitivity to the real world. And indeed, as Keynes demanded, this capacity will give precision to our discourse and analysis. Also, in Concordian economics there are not a few variables that, alone, need to be followed. One needs to follow them all—and follow them all at once. They form part and parcel of the system of equations as formulated so far; and it is fully to be expected that many of these variables need to be much further refined and broken down into more detailed components. In Concordian economics one does not observe each variable independently of all others, but always in concert with all the others. Finally, movements in Concordian economics do not follow a smooth flow as in Bach’s music; rather, as in Beethoven’s music they form cascades of harmonies and dissonances falling on each other to form a powerful dynamic compound.

6.9 Concordian Economic Analysis Of all the writings in Concordian economics that have appeared in print so far, none contains economic analysis. Each one of them describes tools in economic theory, economic policy, and economic practice that will eventually allow us to perform a comprehensive economic analysis. Whatever qualitative judgment should have been uttered so far on the basis of Concordian economics has been consciously withheld for a complex variety of

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reasons. The most important among such reasons is the expectation that eventually we will use, not simply Concordian economics, but Concordian econometrics. Only then economic discussion can be, not only relatively concise, but as precise as possible—at least as precise as Keynes demanded.

6.10 Some Concluding Comments When in the study of economic theory one discovers that a word in that structure, “saving,” as Professor Raymond Goldsmith (1955–1956, Vol. II, pp. 68, 69n) calculated, can assume 100,000 possible meanings, one does not need any further justification for revising that theory. Yet, for good measure one can add that the tools of analysis of mainstream economics present the economist with a “black box,” cf. Petrongolo and Pissarides (2001). Then one is not surprised by evaluations of mainstream economics as negative as those uttered by Greenspan (2010); specifically, one is not surprised to find that mainstream econometric models “have a very poor record forecasting recession. Conclusions based on such models must be suspect.” Opening the box of modern economics, as seen above, opens our minds to an extraordinarily rich economic reality, a complexity that might well be identified as Concordian economics. The transformation of the various models of Concordian economics into one comprehensive econometric model will allow us to integrate all key elements of the economic process and eventually will allow us to gain a better understanding, evaluation, and control of any proposed set of economic policies. Full disclosure. In the course of fifty years of study, the writer has designed a set of economic policies that can be implemented as a ten-year program for the abatement of much unnecessary economic pain in the world. One of the functions of the proposed econometric model is to allow for a decisive evaluation of that program. It is an important program, if for no other reason than this evaluation of Ferrini (2002). The Concordian economic development program, he intuited, “has the answers to universal poverty and the anxieties of the affluent.”

Appendix 1: Symbols, Meanings, and Definitions Meanings in Concordian Economics and Mainstream Economics Y = income produced and consumed in mainstream economics Y = income produced, distributed, and consumed in Concordian economics C = consumption or expenditure to buy consumer goods in mainstream economics C = consumption or any type of expenditure in Concordian economics S = saving means literally 100,000 things in mainstream economics

Appendix 1: Symbols, Meanings, and Definitions

101

S = saving means financial savings in Concordian economics I = investment is equal to saving in mainstream economics I = investment is all productive wealth in Concordian economics. ∗ ∗ ∗

Definitions in Concordian Economics and Mainstream Economics Concordian economics

Mainstream economics

Hoarding

Non-productive wealth, distinguished between real wealth and monetary wealth

Does not exist

Saving

Financial savings, accounted as a form of money

100,000 possible definitions, as calculated by Professor W. R. Goldsmith

Investment

Productive wealth

Identified through synonyms

Consumption

Spending

Spending on consumer goods

Production process

Creative activity applied to combination of financial and physical assets (result of division of labor as well as added activity)

For an analog, see aggregate supply derived from production function (function of various combinations of capital and labor; result of division of labor)

Consumption process

The matching of availability of For an analog, see aggregate demand goods and services with readiness to (at times considered as automatic spend that results into an exchange response to aggregate supply)

Distribution process

Availability of money supply matched with ability to obtain part of that supply

Not identified

Economic process

Resultant of production process, consumption process, and distribution process

For an analog, see market exchange

Income

Value of goods and services produced (real income, measured in any stable numeraire), distributed, and sold (monetary income)

Monetary value of goods and services produced and sold

Personal income

Sum of proceeds from rent, dividends, principal and/or interest, labor, borrowing, sale of goods, transfers

For an analog, see national income, in which borrowing cannot exist (just as borrowing exists between nations, but not in total world economy)

Wealth

Monetary wealth is distinguished from real wealth

Monetary wealth is not distinguished from real wealth (continued)

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(continued) Concordian economics

Mainstream economics

Real wealth

Sum of consumer goods, capital Generally understood as sum of real goods, and goods hoarded measured wealth and monetary wealth measured in any stable numeraire in stable money

Monetary wealth

Sum of all financial instruments

Generally understood as sum of all forms of money

Money

Sum of values of all financial instruments

Changing definitions of M1, M2 … depending on the category into which one puts currency and various forms of bank balances

Flows

Flows of monetary wealth are distinguished from flows of real wealth

Flows of monetary wealth are not distinguished from flows of real wealth

Stocks

Stocks of monetary wealth are distinguished from stocks of real wealth

There are no models of stocks

Models

Mathematical models of flows are distinguished from models of stocks. There are models of stocks and flows of production, distribution, and consumption

There is an enormous variety of mathematical models, each attempting to represent a specific human activity Lately, economic models of non-economic activities have also been produced

Appendix 2: The Derivation of the Distribution and Consumption Function in Concordian Economics from Modigliani’s Saving Function Modigliani’s (1990) saving function is S = YL + rW − C,

(6.1)

where S is saving, YL labor income, rW capital income, and C consumption. Equation (6.1) can be transformed into a consumption function C = YL + rW−S,

(6.2)

where r as an individual symbol is the rate of return on wealth. The sum YL + rW is assumed to represent the effect of the distribution of income. By adding to this expression the rent (R) from land and natural resources, one obtains the complete distribution function (d) given in the text as Modigliani (1980). Since, in accordance with the Life Cycle Hypothesis of saving, consumption is a function of net wealth (see, e.g., Modigliani 1980), it is necessary to take the rate of

References

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growth of wealth into account. Once wealth is distinguished between stocks of real wealth (W ) and stocks of monetary wealth (M), one obtains w = f (W ),

(6.3)

where w is the growth of real wealth, and m = f (M),

(6.4)

where m is the growth of monetary wealth. Equation (6.2) can then be restated as c. = f (w, d, m) − S.

(6.5)

Since at this stage of the discussion saving (or hoarding) is treated as a residual, Eq. (6.5) can be reduced to the consumption function (c:) given in the text as Modigliani (1980). An Important Postscript March 2016 The important issue of measurement of economic units was recently settled. As soon as I mentioned to my wife, Joan, that I had finally solved the issue by using different colors, she said: “But you can use p-values, d-values, and c-values.” Brilliant!

References Anon. 1991. Referee Report, ‘The Dynamics of the Economic System,’ by Carmine Gorga. Journal of Economic Theory # 91297. Brady, M. Emmett. 2007. A Dynamic System’s (The Economic System as a Complex, Evolving Process) Reinterpretation of Keynes’s Y = C + I Model. In A Review of the Economic Process: An Instantaneous Non-Newtonian Picture by Carmine Gorga, July 8. Available at http://www.amazon.com/Economic-Process-Instantaneous-Non-NewtonianPicture/dp/ 0761821562/ref=cm_cr_dp_orig_subj. Accessed July 25, 2023. Ferrini, Vincent. 2002. Gorga Worthy of Note. Gloucester Daily Times, December 11, A6. Gleick, James. 1987. Chaos: Making a New Science. New York: Penguin Books. Goldsmith, Raymond W. 1955–1956. A Study of Saving in the United States, vol. II. Princeton, NJ: Princeton University Press. Gorga, Carmine. [1974] 2023. A Revision of Keynes’ Model: The Roots of Concordian Economics. EconCurrents, June 18. Available at https://econcurrents.com/2023/06/18/a-revision-of-keynesmodel-the-roots-of-concordian-economics/. Accessed July 25, 2023. Gorga, Carmine. 1982. “The Revised Keynes’ Model” (An Abstract). Atlantic Economic Journal 10 (3): 52.

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Gorga, Carmine. 2002, 2009, 2016. The Economic Process: An Instantaneous Non-Newtonian Picture. Lanham, MD and Oxford: University Press of America: 2002 hard copy, 2009 expanded (through Appendices) soft copy; expanded third edition by The Somist Institute, 2016. Gorga, Carmine. 2008. Concordian Economics: Tools to Return Relevance to Economics. Forum for Social Economics. Reprinted, with a New Introduction. Mother Pelican: A Journal of Solidarity and Sustainability 11 (2). Available at http://www.pelicanweb.org/solisustv11n02page4.html. Accessed July 25, 2023. Gorga, Carmine. 2010a. Hoarding and Most Economists. History News Network. Available at https:// historynewsnetwork.org/article/129965. Accessed July 25, 2023. Gorga, Carmine. 2010b. Concordian Economics: A Non-Newtonian Construct. The Rheol World. Available at https://rheolworld.blogspot.com/2010/09/non-newtonian-economics.html. Accessed July 25, 2023. Gorga, Carmine. 2012. Beyond Keynes … Toward Concordian Econometrics. International Journal of Applied Economics and Econometrics, Part III of the Special Issue on J.M. Keynes 20 (1): 248–277. Republished in Econintersect, May and June 2016. Greenspan, Alan. 2010. Quoted in Chen, Sewell. 2010. “Greenspan Calls for Repeal of All the Bush Tax Cuts.” The New York Times, August 7, B1. Available at https://www.nytimes.com/2010/08/ 07/business/economy/07greenspan.html. Accessed July 25, 2023. Hayek, Friedrich A. [1935] 1967. Prices and Production, 2nd ed. New York: Augustus M. Kelley. Keynes, J. Maynard. 1936. The General Theory of Employment, Interest, and Money. New York, NY: Harcourt. Mandelbrot, Benoit B. 1983. The Fractal Geometry of Nature. New York: Freeman. Mandelbrot, Benoit B., and Richard L. Hudson. 2008. The (Mis)Behaviour of Markets: A Fractal View of Risk, Ruin and Reward. London: Profile Books. Matthews, Emily. 2000. The Weight of Nations: Material Outflows from Industrial Economies. Washington, DC: World Resources Institute. Modigliani, Franco. 1980. “Utility Analysis and the Consumption Function: An Interpretation of Cross-section Data” (with Richard Brumberg) (1954), in The Collected Papers of Franco Modigliani, Vol. 2: The Life Cycle Hypothesis of Saving, ed. by A. Abel. Cambridge, MA: MIT Press, pp. 79–127. Modigliani, Franco. 1990. Recent Declines in the Savings Rate: A Life Cycle Perspective. MIT. Unpublished Manuscript. Petrongolo, B., and C.A. Pissarides. 2001. Looking into the Black Box: A Survey of the Matching Function. Journal of Economic Literature XXXIX: 424. Thompson, J.M.T. 1986. Nonlinear Dynamics and Chaos, Geometric Methods for Engineers and Scientists. New York: Wiley.

Chapter 7

The Economic Bubble and its Measurement

Abstract In mainstream economics, the sight is restricted to forms of financial bubbles. In Concordian economics, instead, a bubble is defined as a separation of monetary values from values of real wealth in the national accounts. Hence, the concern is with the behavior of the entire economic system. Once defined, Concordian economics allows us to measure the bubble. To obtain this result, Concordian economics overcomes one of the major hurdles in economics, the measurement of real wealth as an entity separate and distinct from monetary wealth.

7.1 Introduction The extant economics literature talks of many bubbles, such as the Dutch tulip bubble of 1637, the housing market bubble, the stock market bubble (various years). Common sense suggests their classification as partial or “commodities” bubbles. In Concordian economics, instead, one is concerned with the economic bubble, namely the general bubble that permeates the economic system as a whole. In Concordian economics, the economic bubble is defined as a separation of monetary wealth from real wealth. In the following paragraphs, we shall attempt to show that, within Concordian economics, the bubble can be identified geometrically and measured mathematically. Measures can then be taken for the abatement of its negative effects.

7.2 Concordian Economics and the Economic Process While modern economics studies a great variety of economic theories, Concordian economics confines itself to the study of the economic process, Gorga (2002). The fundamental conception of the economic process is contained in the following Adapted from Gorga (2017).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Gorga, Concordian Economics, Vol. 1, Springer Studies in Alternative Economics, https://doi.org/10.1007/978-3-031-47320-3_7

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7 The Economic Bubble and its Measurement

Fig. 7.1 The economic process

Fig. 7.1, which reproduces the three essential component elements of the economic process: 1. The Production of Real Wealth (RW); 2. The Distribution of Ownership (DO) rights over monetary and real wealth; 3. The Consumption—or expenditure—of Monetary Wealth (MW) to purchase real wealth (or financial assets of a different nature and risk factor). With the help of Fig. 7.1, we can see that even in the purchase and sale of a car we have these three elements: the car, the money, and the deed of ownership. Indeed, these three elements exist in the purchase of a chocolate bar as well: without the proof of purchase, or the sales slip, one risks arrest in transporting the chocolate bar out of the store. This figure reads as follows. As soon as an item of real wealth held by a producer is exchanged for monetary wealth held by a consumer, one cycle of the economic process is completed. For the exchange to occur, in a civilized society both transactors have to be the legal owners of the wealth they exchange. There is much that can be said on this figure. We are using it here to obtain the measurement of the economic bubble.

7.3 The Geometric Identification of Economic Bubbles The geometric representation of the bubble is offered in the following Fig. 7.2, which is derived from Fig. 7.1 in this fashion: all three rectangles representing respectively production, distribution, and consumption—or expenditure—of wealth are reduced to three segments of a line. When we project these elements over time, we obtain an idealized figure such as follows: MW stands for monetary wealth. As we know, over time the value of monetary wealth tends to grow faster than the value of real wealth. Various factors contribute to this result, chief among them today is the greater impact of “financialization.” It is in this disjunction that we find the definition of a bubble. A bubble is the separation of monetary values from real economic values.

7.4 The Mathematical Measurement of the Economic Bubble

107

Fig. 7.2 Idealized trajectory of values over time

RW stands for real wealth. As we know, the value of real wealth tends to grow over time. But then, at times it does decrease. When its value decreases, production tends to decrease. History tells us that the decrease of real wealth can stop at any time, but there is no assurance as to when or at which point it will stop. With real wealth gone, some civilizations have even disappeared from the face of the Earth. DO stands for distribution of ownership rights over monetary wealth as well as real wealth. As a first approximation, we assume that notwithstanding significant changes this line remains constant over time. Hence it is depicted as a flat line. Development of this issue will eventually give us information as to who owns what, who even owns which part of the bubble. The line is held constant because at this stage of the discussion we are not concerned with the dynamics of the creation of the bubble, but with the measurement of the size of the bubble—at any moment in its development. The economic bubble can be identified as the area between RW and MW. The formulas for the measurement of this area is given in any standard physics textbook. For general reference, see Wikipedia.

7.4 The Mathematical Measurement of the Economic Bubble In economics, until recently, one ran into a huge snag if one wanted to measure the area between RW and MW of Fig. 7.2, see, e.g., Gorga (2012). The reason is that in economics, with everything being measured in “money,” there was no way of distinguishing the numeric values that the three lines represent. Yeoman efforts were carried out by Keynes in his attempt to design “labor units” for the measurement of real wealth. To no avail. Successive attempts have been pursued under the hope to use objective units such as British Thermal Units (BTUs). But none of these attempts have proved to be workable; thus, measurement of the bubble has remained confined to some specialized financial markets. Rather recently, a breakthrough occurred—and

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has been finalized only in the last few days. As soon I announced to my wife, Joan, that I had solved the problem of measuring wealth by distinguishing values of the real economy (Production), from values of the legal economy (Distribution), and values of the monetary economy (Consumption) by using different colors, she said: “But you can call them p-values, d-values, and c-values.” I must acknowledge: “Brilliant.” When will the importance of this feat be recognized? This is an achievement whose value extends well beyond the realm of economics. Many professions will eventually be affected from lawyers to accountants to kibbitzes. Many considerations are to be made. The ultimate consideration is this. Up until recently, working under a common misconception I misled himself and other people because conventional economic thinking led me to believe that the problem of the numeraire—yet to be found—was restricted to the measurement of real wealth. Thus p-values were expected to resolve all issues of measurement in economic. Not so. Recently, I have discovered that the problem needs to be transformed from a specific to a general task. In Concordian economics the numeraire remains the same in every field, it is always the currency of the country of observation. All we need to keep distinct is the object that we want to measure. In Concordian economics, we clearly separate real wealth from monetary wealth and we measure real wealth in p-(dollar)values, while we measure monetary wealth in c-(dollar)values. The two modules are brought together again by the insertion between them of the value of ownership rights over real and monetary wealth, which are measured in d-(dollar)values. These units will permit us to separate our understanding of the behavior of the real economy from the behavior of the monetary economy and the behavior of the legal economy. In Concordian economics, p-values are different from c-values, and different from d-values, not because they are measured by a different yardstick, but because they themselves are entities different from each other. The yardstick of measurement remains the same, the local currency however denominated. Thus, for the US economy, we obtain this description: • p-values are dollar values that record purchase and sale of real wealth, such as tables and chairs and services (p-dollar values); • d-values are dollar values that record the value of distribution of ownership of real and monetary wealth (d-dollar values); • c-values are dollar values that record purchase and sale of monetary wealth, such as currency and stocks and bonds (c-dollar values). These numbers represent common economic values—with some major differences from standard economic theory. One difference is that, in Concordian economics, “real” values relate to the value of real wealth, not financial values minus inflation. The other major difference is that the real economy, the monetary economy, and the legal economy are constantly kept separate from each other. In mainstream economics for the measurement of car production, for instance, one adds all the values in any specific currency of the production of cars in a given unit of time, and then one analyses the behavior of these numbers over time. However, as soon as one gives

7.6 Better Than Gold

109

values of the production of cars in dollars, for instance, the result is a dollar value. Where is the car? Cars are no longer to be seen. The real economy disappears in the midst of the monetary valuation of real transactions. In Concordian economics, instead, p-values are identified and remain forever distinguished from d-values and c-values. To repeat, p-values measure real wealth; dvalues measure the value of ownership rights over real and monetary wealth; c-values measure the value of monetary instruments used to purchase real wealth. Also, in Concordian economics, “money” is identified as the sum of all financial instruments that are used to purchase real wealth. Specifically, contrary to all extant standard definitions, money is assumed to be the sum of the value of coins, currency, mortgages, stocks, bonds, derivatives, and all conceivable financial instruments. Stocks and bonds, in particular are used to purchase entire factories, and should they not be counted as money? To my knowledge, only Murray Rothbard (2010, pp. 259–265) includes stocks and bonds in the definition of money.

7.5 How Are these Values Determined? These are not arbitrary values determined by a coterie of friends or market conspirators. They are values determined by the market as a whole, and denominated in the local currency of each country of the world. There are, of course, enormous controversies surrounding any issue of valuation in economics. Eventually, the framework of analysis of Concordian economics will help resolve many of these controversies, because we are going to have a continuing triple check on our deliberations. More specifically in relation to our primary concern here, we will see bubbles develop; we will become more careful with our money and other people’s lives. An ancillary issue. How are the data concerning the distribution of ownership rights collected? This is an entirely new and delicate issue. It will arise when data are collected in accordance with the categories of Concordian economics. It must be solved by the collective wisdom of many experts.

7.6 Better Than Gold As soon as Michael David Rubin (personal communication August 30, 2016) read the paper on the definition of the bubble, he urged me to advocate for the adoption of a gold standard. The purpose of the recommendation, of course, is to develop a monetary system that is stable. Arguably, the Gold Standard as it worked mainly during the 19th Century was better than the Fiat Money system that rules the world today. Since even the best designed Gold Standard has the essential drawback of being tied to a scarce commodity that is not flexible enough to accommodate the

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needs of the market, and since the oscillations in the price of gold can be rather drastic at times, I am utterly confident that p-values are better than gold. As conceived long ago, see Gorga and Kurland (1987, pp. 83–86), p-values are measurements suited to the creation of a Golden Standard. This is the creation and measurement of a monetary system that reflects and fosters the creation of real wealth. Under a Golden Standard, monetary resources are always sufficient to satisfy the needs of the market, and are flexible enough to accommodate the needs of volatile human beings, but will automatically curb the urges of market speculators and manipulators. Today, market speculators and manipulators can even be excused because no one knows the extent of the damage they cause; they are covered by a veil of ignorance. With the assistance of p-, d-, and c-values, we will see, as the Russians say, that “Greed ruins the greedy.” As currently proposed on the pages of Mother Pelican and Econintersect, the Golden Standard will eventually be implemented through three recommended changes in the rules of the monetary system. A petition is currently circulating on the Internet concerning these changes and another petition advocating the Jubilee Solution or a systematic reduction of debt to avoid unruly crashes in financial markets.

7.7 Conclusions It is not the valuation of a car, new or used, that is difficult to determine nor is the aggregation of these values in larger unit a problem. (Speaking more directly, it is to be stressed that in Concordian economics one uses the same models in microeconomics as in macroeconomics.) It is the value of financial instruments that is so exceedingly difficult to determine. One of the major functions of Concordian economics will be to resolve these issues of valuation of c-values. It is p-values that ought to indicate c-values—not the other way around. In other words, while still subject to the vagaries of human expectations, p-values can be objectively verified—as well as c-values, as well as the separation of monetary values from real values. The bubbles will become manifest and measurable on an ongoing basis. Measured bubbles are a warning to the greedy. Needless to say, the measurement project cannot be carried out by any single person or even a single institution. Most economists have to agree to the scientific necessity of collecting data in accordance with the new categories of thought outlined in Concordian economics; most governments of the world will have to implement this collection of data project. The sooner, of course, the better.

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References Gorga, Carmine, and Norman G. Kurland. 1987. The productivity standard: A true golden standard. In Every worker an owner: A revolutionary free enterprise challenge to marxism, ed. D. M. Kurland. Washington, DC: Center for Economic and Social Justice. Gorga, Carmine. 2002, 2009, 2016. The economic process: An instantaneous non-Newtonian picture. Lanham: University Press of America: 2002 hard copy, 2009 expanded (through Appendices) soft copy; expanded third edition by The Somist Institute, 2016. Gorga, Carmine. 2012. Beyond Keynes….. toward Concordian econometrics. International Journal of Applied Economics and Econometrics, Part III of the Special Issue on J.M. Keynes, 20(1): 248–277. Republished in Econintersect, May and June 2016. Gorga, Carmine. 2017. The economic bubble and its measurement. Theoretical and Practical Research in the Economic Fields 8(1): 19-23. https://journals.aserspublishing.eu/tpref/article/ view/1286. Accessed 25 July 2023. Rothbard, Murray N. 2010. Strictly confidential: The private volker fund of Murray N. Rothbard, ed. David Gordon. Auburn: Ludwig von Mises Institute.

Chapter 8

The Moral Problem: The Free Rider Problem

Abstract This chapter might be titled “The Revenge of Morally.” With the exclusion of morality from the social sciences operated by Adam Smith and strictly enforced by economists today, the discipline is left powerless to forbid minor infractions. Economists are then condemned to magnify the problem and … call upon the infinite power of the Fascist or Communist State to\punish what other people see as minor infractions, if they are infractions at all. But then much more has been written about this “problem” that lies beyond our scope.

8.1 Introduction How I wish I had been trained as a rabbi, a priest, a minister, an imam, or a monk. I would now be able to offer you such an impassioned plea about the “Free Rider Problem” that would keep you at the edge of your seats, only to spring up into action at my last peroration, which is this. Forget the “free rider problem!” It is a small problem. Besides, since it is deep inside our psyche, to resolve it you are liable to create much bigger problems. To resolve the free rider problem within the fisheries, for instance, we all become complicit, some knowingly and most unknowingly, in the ongoing destruction of the family fishing fleet. ∗ ∗ ∗ Who does not want to receive something for nothing? Don’t we all deserve a better life than we are experiencing? Should not the community show appreciation for my gracing her with the presence of my pretty face? Especially since Thomas Hobbes, we have made a huge deal out of this basic attitude. We have even created a specialized name. We call it the “free rider problem.” We have assumed that people behave like wolves toward people. We have assumed that Adapted from Gorga (2019).

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most people will go to any length to get something for nothing in life. Not simply to get something out of the community for nothing, but even to damage the community to an extent greater than the value of the personal benefit. On these assumptions, naturally, many feel entitled to go to any extreme to curb the free rider. It is this conception that yields the ultimate explanation for the current plight of the family fishing fleet. It is only by casting the behavior of government bureaucrats, environmentalists, and economists within this cultural framework that one can understand their concerted decision to put a stop to overfishing, an activity that has been assumed to be the cause of depleting stocks of fish and eventually replacing fish with jellyfish. Never mind that there is no scientific base for this fear; never mind that the family fishing fleet does not—and especially today, with its so few remaining vessels, cannot—do the overfishing. Ideology always trumps reality. There are many proofs to establish the simple fact that overfishing, when it does occur, is done by the large corporate, generally subsidized, enterprises of the world and by the moveable feast of the natural predators of fish. No. Scientific, statistical, biological, and historical evidence counts for nothing. Here is the dynamics of predator/pray relationships, a dynamic uncovered by a mathematician and a biologist, Lotka and Volterra, more than one hundred years ago, when they were trying to understand the periodic disappearance of anchovies from the Adriatic Sea (Fig. 8.1). It is most likely that these patterns, if investigated in depth, will be found to exist between the bottom fish and the pelagic, fish that live in the middle of the water column. It stands to reason that bottom fish become prey of the pelagic as soon as they rise toward light and plankton on the surface of the ocean—as well as when they go down to live in their natural habitat at the bottom of the ocean. Codlings have been found in the stomach of mackerel, fish that live in the middle of the water column. The periodic disappearance of bottom fish is due to the action of their natural predators, the pelagics: herring and mackerel. Biology counts for nothing. Ideology must prevail.

Fig. 8.1 Simplified predator–prey model

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The damage done to the individual fishermen and their families counts for nothing: they MIGHT be the culprits after all. The damage done to the livelihood of communities that depend on the wealth generated by the fishermen counts for nothing. If one sees the free rider problem in such an apocalyptic context as the struggle of good versus evil, moderation and reason cannot stand in the way of the final solution to the free rider problem. Overfishing must be stopped, and it must be stopped now. It is a moral imperative. Overfishing must be stopped now, through the enclosure of the last commons— the oceans—and the creation of the Catch Shares program (fishermen have to buy— expensive—corporate shares to be able to catch the amounts of fish allowed by the government) because, as it has been openly acknowledged during the last few years, this approach will turn to the benefit of the few remaining trustworthy fishermen who promise not to overfish and are assumed to be privileged enough to survive the current onslaught of governmental rules and regulations. Did not someone talk of the “survival of the fittest” after all? There. There can one find final evidence of the aptness of this nefarious mode of thinking. Never mind that competition did not determine the value of the Catch Shares. No, it is by government fiat that the value of those shares was determined, because the government—without rhyme or reason—was arrogating to itself the right to determine how much fish can be caught. Such a blatant disjunction between intentions (reduce overfishing) and results (destruction of the family fishing fleet) would not be possible if we were not all complicit in the final outcome. To make these complicated relationships clear, I have some explaining to do. Once I am done, I hope you will clearly see that we are indeed all complicit. In the meantime, trust Congressman Barney Frank. He saw it all very clearly. He saw very clearly that NGOs are running a “moral” crusade, because they are fighting the “free rider.” Congressman Frank was also right in seeing that the end result of the current mismanagement of the fisheries is “to dispossess the fishing people and replace their small scale and archaic methods with investor powered global corporations.” But does the rest of the American people understand it?

8.2 The Free Rider Problem and the Social Sciences The discovery of the problem of the free rider did not originate with the enforcers of the preferred solutions of privatizing the commons and the proposal of the Catch Shares program. The discovery properly belongs to the subtle reasoning of a group of people who stand behind the scenes and ultimately control the mind of bureaucrats, environmentalists, and economists. These people identify themselves as social scientists.

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They come in many stripes: they are statisticians, mathematicians, game theorists, economists, philosophers, political scientists, and outright social scientists. This mutual admiration society is unified by the goal of dealing with the free rider problem once and for all. How do social scientists want to resolve the problem of the free rider? Well, the answer is obvious. They want to impose the most stringent rules of behavior on all members of society, even to the point of building a Leviathan, a monster government, which will punish the free rider with the Gulag. That is the preferred solution of governments tending toward Communism as well as governments tending toward fascism: they do not mind starving the transgressor to death. The more sufferance inflicted, the more blood spilled, the more exciting the intellectual game. The more thrilling the chase. The higher the odds of success. C. S. Lewis was rights: “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive.” Clearly the free rider problem would be solved, if all members of society were indeed to behave as social scientists suggest they ought to behave. Social scientists make their wishes known in a forceful way. They rely mainly on the fear engendered by the menace of life threatening penalties, penalties imposed with overwhelming force. They further assume that no cheating would in the end occur, because any cheating is inconceivable among few trustworthy survivors. This is indeed an intellectual reduction to the absurd. The non-cooperating reality offers a different answer: the free rider is going to exist no matter how stringent the government rules, and no matter how few the survivors. Recent examples exist to prove the validity of this observation. What, then, is the solution? (Wait until the next section). For the time being, I hope I have made it clear that, explicitly or not, much of the academic establishment is supporting the proposed rules and regulations that are killing the family fishing fleet. That is the reason why we do not hear a pip against the plight of the family fishing fleet. That is the reason why government bureaucrats have—with impunity—been treating fishermen as if they were criminals. That is the reason why the national press is absent when 5000 fishermen show up on the steps of the Capitol to ask politely for the preservation of their right to fish. That is the reason why so few people even notice the disjunction between branches of the federal government spending billions of dollars to create new jobs and the plight of the fishermen who are restrained by a different branch of the federal government in their right to fish, whereby the fishermen create jobs on the oceans and on land, at no taxpayer’s expense. That is the reason why the majority of the public is witnessing the plight of the family fishing fleet and still takes no sides: too many people claim to be confused by the complexity of the issues. Still confused? Clearly, no amount of evidence will convince people who have negatively prejudged the fishermen.

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To complete this cultural/sociological picture, we need to add one more notion to the panorama: the unresolved conflict between “small is beautiful” of Jeffersonian memory and “big is efficient” of Hamiltonian memory. Hence, down with the small independent fisherman; hurray for the strong and efficient sectors, the Big Corporate Fishers, the proposed enforcers of the Catch Shares program. This is a conflict that divides the American house. We all know that a house divided against itself does not stand. The fisheries, caught in this maelstrom of conflicting ideas, are collapsing. It is always the weakest member that suffers most.

8.3 The Free Rider Problem and Morality As I said, I wish I had been trained as a rabbi, a priest, a minister, an imam, or a monk. I would then work on the source of the problem. The source of the problem is this. Unawares, social scientists have separated the issue of trust from its source: morality. They have placed trust in the context of the positive sciences—pure sciences that are measurable and experimental. Hence, they have made trust depend on reciprocity. In addition, since pure sciences abhor abstract unmeasurable entities such as morality, they have expunged morality from their systems of thought. Adam Smith replaced morality with the sentimentality of the individual human being who, according to him, is guided by the superiority of the free individual conscience, the “impartial spectator.” In brief, social scientists believe that morality either is powerless or does not exist, and they have made the problem of the free rider insoluble.

8.4 A Bit of History On the heels of John Locke’s work, it became easy for Adam Smith to expunge morality itself from the social sciences. In 1759, Adam Smith published a book titled The Theory of Moral Sentiments. As the title promised, he declared that morality is a “sentiment,” a fickle sentiment. What serious person would ever vouch for such a thing as a fickle sentiment? With his Wealth of Nations (1776, esp. Bk. V., Ch. 1, par. 158), by inveighing against the morality “of the (drunken) monks,” Smith decoupled economics from morality and substituted it with his own Theory of Moral Sentiments (1759). Of course, Adam Smith camouflaged his contention. Thrusting the full burden on the shoulders of the individual human being, Adam Smith declared that our conscience obeys a higher authority, a moral authority, which he defined as the “impartial spectator.”

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Who is this unspecified moral authority? No one has dared to ask the question, but the answer is clear: the “authority” is lui-même. The individual person. Individualism settled in the saddle. Morality was thus expunged from the moral—sorry, the social—sciences. Economists today abhor any question of morality. They are the defenders of pure science, science uncontaminated by such trifling issues as moral concerns. Efficiency is in the saddle—financial efficiency, to be exact—is in the saddle.

8.5 And Yet, and Yet It is only the re-entry of morality in the social sciences that can solve the problem of the free rider. How? By this maxim of morality: you do good for its own sake; you act morally, not when you act in self-interest—i.e., expecting some positive result in return, namely reciprocity; you act morally when you act selflessly. You act morally when you do not expect anything in return. And you know that, when you act morally, society—and, ultimately, God (or Nature?)—will give you everything in return. Society and God will give you above all self-esteem. The problem of the free rider, then, is not for social scientists to resolve, but for the community of people who have been shut out of any serious social conversation during the last four to five hundred years: rabbis, priests, ministers, imams, and monks. Did I forget to mention the shaman? Should I not add the literati? It is this group of people alone who, dealing with cultural and spiritual issues and working on the deepest levels of our psyche, have the power to tussle with the problem of the free rider. And if this community of people is unable or unwilling to deal with the problem, let us not fret over it. The problem of the free rider is a small problem. Let us absorb the small damage it creates and move on with our lives. Any damage done by the free rider to the fishing community is, by definition, a problem of miniscule size. Overfishing is not done by the family fishing fleet; overfishing is done by the large, generally subsidized, corporate enterprises; overfishing is done by the natural predators of fish. If government bureaucrats, environmentalists, and economists really want to attack the problem of overfishing at its source they should unite and instruct the public and the politicians to wage a fight against horrible practices of large corporate enterprises and to truly manage the fisheries by working with the laws of nature. They should purposefully reduce the population of the natural predators of fish—a population that changes nature over time: preys eventually become so large as to be predators of their previous predators. The relation between predator and prey, as modern science is pointing out and specific studies have confirmed, is a moveable feast. Predators today become prey tomorrow. Hence, while the policy of taking predators out of the water ought to remain constant, what will vary is the specific species of fish that ought to be taken

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out of the water: the species that is abundant at the moment. This is the fish that is the predator of the moment. This is scientific fisheries management. Ocean pollution, ocean warming, and birds predators must also enter the equations.

8.6 The Free Rider Problem and the Community Not stringent government rules and regulations, but appeal to self-esteem solves the free rider problem. Needless to say, this solution presupposes the existence of a strong and viable community to validate the self-esteem of its members. Many social scientists will tell you that there is no such thing as a strong and viable community today. They ought to know, because many of them, mostly unawares, have performed the function of storm troopers who, not independently wealthy themselves but mercenaries paid by the domineering few, have destroyed one community after another. They have also attacked the family farmer and the independent retailer by falsely accusing them, respectively, of overcharging and being too expensive. Falsely, because in their calculations social scientists, mostly unawares, omit many costs incurred by the consumer of products sold by Big Farm and the “box store.” Externalities are they called: the costs of disposal of animal waste and fertilizers are not included in the price of common agricultural products; and the cost of a car together with insurance and fuel needed to reach the large, but distant, box store are not added to the cost of obtaining consumer items these days. And obesity, who is carrying the costs of obesity? What contributes to obesity, to mention only one of our modern diseases? Is not obesity due, in large part, to lack of walking and overreliance on the car? Who is keeping track of the physical damage to our bodies? Who is evaluating the mental anguish? While family farmers and independent retailers have been accused of overcharging, fishermen are being accused of overfishing. Cheaters all three of them; free riders all three of them. You can get on a high horse, even the high horse of morality, and take upon yourself the task of resolving the problem of the free rider—all by yourself and a coterie of friends. You can get on a high horse and conclude that you really need to— and you will, if you have your druthers—change human nature. Out of non-cheaters, you will create the “new man.” Or you can acquire a more realistic view of morality. Human nature is perfect as it is. You need only carefully change some of the institutions in which human beings operate. One can agree that the institutions within which the family fishing fleet, the family farm, and the corner store operate today need to be changed. Let us forget Concordian economics for a moment. Ancient wisdom indicates that wise solutions will have

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to be designed from the bottom up, and they have to be imposed from within the community of fishermen, farmers, and merchants. One can also agree that this movement forward will not come by itself. The cultural and spiritual community of rabbis, priests, ministers, imams, and monks will have to help. As it is written in the Good Book, if you want to be fishers of men … well, you have to help fishermen and farmers and merchants now in their hour of need. Members of the cultural and spiritual community do not need to learn how to mend nets to help the fishermen. They need only counteract the classical approach of conquerors: isolate those whom you want to subjugate, cut them off their community, and it is so much easier to scare them and to force them into submission. To counteract these maneuvers, the cultural and spiritual community will have to call the affected people together, to hold each member in trust to each other, and to keep the invaders out. No matter how good their intentions, the invaders are fishing in troubled waters, not for the benefit of the community, but for their very own self-interest—and the interest of their masters. We have had proof after proof of this dynamic: when members of the community no longer trust each other, some of them call in the experts from the outside. And the experts benefit only themselves, their friends, and their relatives. The shadow of the community is left there to mourn the present. A murder is occurring before our very eyes. Who can remain neutral while watching the community of fishermen, farmers, and small merchants being economically annihilated? The list of issues that lie at the bottom of all this mayhem might be long, but each one of them is not that complicated after all. It is up to all of us to ascertain the truth behind these maneuvers and to reveal the truth. The truth alone shall make us free, but only if we serve the truth.

8.7 The Free Rider Problem and History History proves that any central government, operating from the top down, does not solve the problem of the free rider. But it offers only solutions that are worse than the problem it wants to solve. The government offers measures of social engineering and social planning that are destined to fail miserably. The proposed Catch Shares program, as presently designed, is failing miserably. The family fishing fleet is disappearing from coastal communities, and imports of seafood have soared to over 90% of domestic consumption. The international balance of trade lists in one direction. The first reason the central government has traditionally failed in its experiments at social engineering and most certainly will fail in the future is that it does not accept the doctrine of subsidiarity: problems have to be solved where they arise. A higher level of social organization has to have patience and faith that the problem will be solved where it arises.

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There are other fundamental reasons why the currently proposed solutions of the free rider problem in the fisheries and elsewhere will cause only havoc. These solutions have been designed from the top down. And they are imposed from outside of the community of independent fishermen, farmers, and small merchants. To solve the problem of overfishing, the National Oceanic and Atmospheric Administration (NOAA), an arm of the federal government, is enclosing the last commons, the oceans that belong not to the government but to the community as a whole, and enclosing them by instituting a system of Catch Shares, small monopolies, which are beyond the financial means of small independent fishermen and thus basically exclude them from fishing. Catch Shares will admittedly concentrate the ownership of those shares into a few hands—even absentee, “Wall Street,” hands. Thus, the wealth created by the fishermen will no longer be distributed among the members of the local community, but will be shipped to other communities. Profits will definitely go wherever the owners of the shares reside. And, when absentee owners extract a larger share of the profits than customary, the local community will automatically have that much less. But even in the best of all worlds, the fewer fishermen left will definitely catch less fish (otherwise the proposed system of Catch Shares will have no justification at all). Hence, the local community will be impoverished by that amount. A complementary reason why we have wasted 300 years of thought and action trying to solve the problem of the free rider is that we have lost track of a most fundamental truth. Contrary to the common wisdom of believers in the problem of the free rider, the community is not defenseless against the free rider. The community has a set of measured defenses that spring into action as soon as the problem of the free rider is definitely identified. Much time might elapse before the community identifies the problem. Causes might be, as they are, always new and innovative. But that time is well spent, because the target is unmistakably identified. No energy is wasted thereafter. No shot is scattered. The defenses of the community, typically, are shame, isolation, and ostracism. What seems to be even less well understood by social scientists today is that the community, rather than being defenseless, evolves rules for the prevention of the problem of the free rider. Those are community rules that are developed from the bottom up. Elinor Ostrom received a Nobel Prize for her tireless work on these rules; but economists have not really listened to what she was recommending; and ecologists have no economic tools to implement those recommendations. ∗ ∗ ∗ How to summarize these complex issues? How to tie so disparate issues together? Attentive participation be the Reader is required. Let us start from the top. If there is a developed sense of morality in the community, the common sense of the common good ultimately prevails. Without trusting our common sense of morality, without depending on it, we feel compelled to take drastic measures. We

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call upon the brute force of the Fascist or Communist State and this type of state intervention leaves only havoc in its wake. All this is true and good. The real tragedy of the absence of reliance on morality to solve economic problems is discovered at another level of analysis, a true complex and comprehensive analysis, an analysis that—as we have cursorily done above in relation to the family fisherman—truly and deeply integrates ecological realities with economic realities. When that analysis is done, it becomes apparent that neither the family fisherman nor the family farmer nor the corner store merchant is guilty of any wrongdoing. In-depth analysis of all relevant factors reveals that the family fisherman is not guilty of overfishing; the family farmer is not guilty of overproducing and overcharging; the corner store merchant is not guilty of overcharging. Let us look at them at a bit closer range; numerous related issues emerge. The family fisherman. Deep analysis of the biology of fish reveals that overfishing is done by the natural predators of fish. The complexity of these relationships is that the predators grow to such an extent that they collapse and make room for the preys of today to gradually become the predators of tomorrow. This is a reality that was brought forward by Lotka and Volterra more than one hundred years ago. Tragedy over tragedies. In great part, thanks to the work I did with the Gloucester Laboratory of the National Marine Fisheries Service we introduced fresh fish in the national supermarket chains. Hence, the demand for fresh fish increased, but the supply dwindled. Result: a large hole in our balance of trade. Dollar bills are accumulating in foreign hands. The family farmer. The family farmer, the “organic” family farmer, is penalized for being overproductive and too expensive. The family farmer is being paid for not producing crops! Big Farms benefit from such policies more, and create other disadvantages for the family farmer. Beyond appearances, true judgments can be passed only after making at least one additional inquiry. What is the lending policy to which the family farm is subjected, as opposed to Big Farm? But here too a full account of costs reveals a deeper truth: who is absorbing the overwhelming costs of dealing with clearance of negative effects of fertilizers and pesticides? The corner merchant. The corner merchant does not overcharge. Calculation of the “cheaper” prices at the box stores is a fallacious calculation: it does not include all the hidden costs that are shifted upon the customer. Absent from the prevalent calculations are costs associated with the travel required to reach the far away box store: costs of car, costs of gasoline, costs of car insurance are nowhere treated. Neither does the value of time spent by the “modern” customer to reach the store and to navigate the long isles in such stores. Woe to the distracted customer who has to retrace the steps to grab the item overlooked in isle one. Truth, the whole truth of how the family fisherman, the family farmer, and the corner merchant is the first thing to fall by the wayside. Is not truth an essential component of morality? Is not truth an essential component of life? Well, it is. The right economic analysis is a natural ancillary of the morality of good economics.

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References Gorga, Carmine. 2019. The Free Rider Problem. Mother Pelican, A Journal of Solidarity and Sustainability 15 (2). Available at http://www.pelicanweb.org/solisustv15n02page8.html. Accessed July 25, 2023. Smith, Adam. 1759. The Theory of Moral Sentiments. London: A. Miller. Smith, Adam. [1776] 1904. An Inquiry into the Nature and Causes of the Wealth of Nations, ed. by Edwin Cannan, 1756 5th ed. London: Methuen & Co.

Chapter 9

Ethics in Concordian Economics: Economic Justice—The Economics of Morality

Abstract In Concordian economics, morality is not shunted aside. Morality occupies center stage, explicitly and forcefully. Here are the major stages of this development. Morality enters into Concordian economics at the level of theory, policy, and practice. Morality is a fundamental construct of the theory of distribution of ownership rights and this theory lies at the very core of Concordian economic theory. Next stage: Concordian economic policy is guided by the theory of economic justice. Morality, finally, enters into Concordian economics in the analysis of daily practices, with emphasis on the play between economic rights and economic responsibilities and the focus on the methods of accumulation of capital. Put explicitly, the theory of economic justice is an essential component of Concordian economics. Put in other terms, Concordian economics is the Economics of Morality.

9.1 Introduction A few years ago, I was invited to prepare a “document” for the forthcoming United Nations Conference Rio+20. I remember well that I wrote a good portion of it under the majestic gaze of the Andes. Somehow it was easier to relate to the tasks of the conference. I titled my contribution “Ethics in Concordian economics.” Considering the work already done by that point, it became nearly automatic to report that ethics enters Concordian economics at three stages: economic theory, economic policy, and practice. The occasion to write today makes me emphasize not only that economic justice is such an integral part of Concordian economics, but especially that issues of ethics are issues of morality. Morality in other words stands at the very core of Concordian economics.

Adapted from Gorga (2012).

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Ethics appears explicitly at three crucial stages of the structure of Concordian economics. Ethics is inherent in the theory of distribution of ownership rights over financial as well as real resources and this theory is no longer an afterthought to be dealt with at some mythical ideal future state of the economic system, but is located as the core of the economic process: hence, no action is ever recognized in Concordian economics that does not involve the full force of the theory of distribution of values of ownership rights. In Concordian economics, ethics also enters the economic discourse at the moment of transition from economic theory to the formulation of economic policy: economic policy is no longer rooted into the political and ideological whims of the moment; economic policy is guided by the age-old theory of economic justice. Ethics, finally, enters into Concordian economics in the analysis of daily practices of economic agents who are endowed with the armor of economic rights and responsibilities. With ethics, one focuses the attention on the processes of accumulation of capital. Accordingly, the chapter is divided into three parts. Part I deals with ethics in Concordian economic theory. Part II deals with ethics in Concordian economic policy. And Part III deals with ethics in Concordian economic practices.

9.2 Part I: Ethics in Concordian Economic Theory Concordian economic theory has its roots into the mathematical and logical consequences of inserting an age-old word, Hoarding, into the structure of Keynes’ model of the economic system (Keynes 1936: 63). This is the model on which all mainstream, Austrian, and even heterodox theory is built. The initial result of these operations, a result that can be easily duplicated by any willing researcher, is the transformation of the structure of that model, which, in honor of the genius of Keynes, is named the Revised Keynes’ Model. A cautionary word: substantively, the two models represent entirely different intellectual worlds. The current crisis in economic affairs must be due to many factors; but in a fundamental sense it is due to structural and conceptual weaknesses contained in Keynes’ original model of the economic system: that model still rules economic theory and policy. Prior to its full development in Gorga (2002), the new model was reported in Gorga (1982). It was republished with some explanatory notes in Gorga (2008) and with minor editorial changes and an addendum—on ethics and the theory of distribution of ownership rights—is reproduced in the following paragraphs, which, it is worth to emphasize, contain statements that are as true today as they were in 1982 or 2008. Keynes; model must be revised. The proposition S = I is not an equivalence, as it must for it to be formally valid. The terms are neither reflexive nor symmetric nor transitive. Saving has the potential of assuming 100,000 meanings. And, by necessity, so does investment. Consumption means spending; but in contemporary economics this meaning is arbitrarily cut off at spending on consumer goods. Keynes’ model must be revised. Manipulating the original model, one obtains:

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Income = Saving + Consumption

(9.1)

Investment = Income − Saving

(9.2)

Investment = Consumption

(9.3)

The meaning of terms is different in this model. Saving means all non-productive wealth. This term becomes clearer if it is substituted with the word “Hoarding.” Investment means all productive wealth. And Consumption means any expenditure of money (or other wealth). The relationship between saving (or better, Hoarding) and investment is changed from equality to complementarity. Equation (9.3) becomes a formally valid equivalence by inserting in it the theory of distribution and substituting the word investment with its old meaning of production. One thus obtains: Production ≡ Distribution ≡ Consumption Using the looking glass of S = I, unable to distinguish saving from investment, most of the economics profession has fallen through the rabbit hole of “Adam Smith’s Fallacy.” This is the assumption that private greed turns out to be public good. This is a world in which—as today’s events confirm and Keynes pointed out—“nothing is clear and everything is possible.” Through the looking glass of Hoarding, the world looks totally different. Strangely, later, to my unending surprise I had to discover that is the lens constantly used from Moses, through Jesus of the Parable of the Talents, to Locke. Adam Smith offered a discontinuity in this millennial tradition. Graphically, this equivalence can be represented as shown in Fig. 9.1. For the full unfolding of this model into the structure of Concordian economic theory, see Gorga (2002, 2020). Fig. 9.1 Economic theory

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Perhaps the relationship between ethics and the theory of distribution ought to be made more explicitly clear. Even though ethics enters into Concordian economics at each and every moment of its development, the necessary presence of ethics is nowhere as clear as in the distribution of ownership rights. In Part III we shall make this relation emphatically clear; there we will also introduce the fundamental distinction between ownership of property rights and ownership of economic rights, see Gorga (1999). For the time being suffice it to say that ethics in economics converges into the application of the theory of distribution of ownership rights and is diffused from there into every corner of daily practices of economics. When the producer creates real wealth, since the law abhors a vacuum, an ownership right is automatically created; and, since the law is supposed to be rooted in ethics, the values of ownership rights are represented by financial instruments that can be newly created by financiers and are supposed to be created in accordance with the real value of the wealth created. Let us specify: the producer creates a chair worth $200; the value of the corresponding ownership right ought to be worth $200. The financial note to denote ownership of this title ought also to be stating worth $200. This is the type of values among economic, financial, and legal relationships that the theory of creation of ownership rights obliges us to establish. In simplified fashion, this is how the values of the economic process are created and accounted for at each moment in time. The entrepreneur sets up a joint production with the accountant, the lawyer, and the financier. The financier transforms the static legal note of ownership into a transferable financial instrument. This is how values of ownership rights are created in theory: how are they distributed? Specifically, who owns this new wealth? Following customary practical applications of the theory of economic justice, the value of the newly created real wealth and newly created financial instruments is automatically apportioned among the present owners of existing wealth. In Part III we shall enter more deeply into this process by distinguishing property rights from economic rights. Nor does the story of ethics in economics end there. With every market exchange, there is an invisible transfer of ownership rights among buyers and sellers: ownership rights to goods and services are transferred from producers to consumers, and money—or other financial instruments representing ownership of financial wealth—is transferred from consumers to producers. These legal, financial, and economic relationships are analytically taken into account in the theory of Concordian economics; hence, one can easily observe whether these relationships are carried forward in an ethical or unethical manner. The legal and financial accounting is one thing; the judgment of the ethics of the operations is necessarily another level of abstraction. Yet, the ethical judgment is neither disjointed nor arbitrary: it is synchronous and objective.

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9.3 Part II: Ethics in Concordian Economic Policy In Concordian economics each and every policy and each and every activity is advanced and judged in accordance with the dictates of the age-old construction of economic justice.

9.3.1 A Bit of History For a complex set of reasons, economic justice, a two-thousand-year-old tradition was obliterated by John Locke. He concentrated his—and our—attention of the justice of property rights. Thus today the new wealth is legally and morally owned by existing owners of property rights. It is in Concordian economics that the theory of economic justice is completed and it is highly recommended for action: a new and different dynamics is opened to view. If these issues appear to be rather esoteric, remember they are the bread and butter of the disagreements between Capitalists and Socialists/Marxists. As we have seen before, in the mysteries in which thought evolves, we must realize that the temporary loss of the doctrine of economic justice was not a total loss. We must realize that in its first two thousand years of its life, economic justice was put in practice by gentlemen’s agreements. They could be easily broken. The economic justice of the future will be backed by economic rights and responsibilities. There will be awareness; there will be responsibility in the enforcement of economic justice.

9.3.2 What Has Taken the Place of Economic Justice? Economic justice today is obscured by the prevalence of the undefined and undefinable doctrine of Social Justice. Interestingly, while nearly everyone talks of Social Justice, almost no one talks of economic justice. Needless to say, this dichotomy is a synthetic manifestation of a major dysfunction in economic policy today—worldwide. Why is Social Justice undefined and undefinable? Long story. Its fundamental flaw is the disjunction of rights from responsibilities. Each and every program of Social Justice wallows in the la-la land of the pursuit of happiness—happiness bought on the cheap. Social Justice attributes rights to some and responsibilities to others. It is the “individual” person who has all the rights—and his and her rights are multiplying daily nowadays; the “government” has all the responsibilities. In a robust program of economic justice, an economic policy program advocated by Concordian economics, rights and responsibilities are located in the same economic entity—constantly. The same person. (A revelation has occurred to me

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just at this writing: no wonder feeble minds with weak spines, exposed to Concordian economics, fade away like comets; while sturdy minds, once attracted into the orbit of Concordian economics, stay with it forever, forever contributing and forever wanting to know more about it.) The structure of the theory of economic justice, which, although not practiced, can still be read in the documents of the Catholic Church, was presented in Gorga (2007) and is reproduced in the following paragraphs with two additions: one concerns the enlarging, whenever necessary, the focus of observation from the Church to Concordian economics and to society as a whole; the other concerns making explicit the relationship between Concordian economic theory and Concordian economic policy. Underlying the doctrine of economic justice is the Aristotelian/Thomistic division of justice into political and economic justice. The principles of distributive and commutative (“exchange”) justice are part of the Church’s ancestral patrimony. Since Rerum Novarum (# 34 and 46), the Church—mostly unaware—has been adding to them the plank of participative justice, offering thus a full-fledged theory of economic justice. To repeat, most people are still unaware of this transfomation. The three planks of the theory of economic justice are related to the tripartite division of classical economics into production, distribution, and consumption (however consumption was understood). Simply put, people who participate in production are empowered to participate in the distribution of wealth; and owners are free to exchange their share for other goods and services, invest it anew in the process of wealth creation, consume it—or give it away for charitable purposes. Anchored in morality, the theory of economic justice establishes the rules, the invisible threads—peculiar to each culture and age—that connect us by mutual rights and responsibilities, Leo XIII, Rerum Novarum (# 2, 10, 12, 13, 14, 15, 25, 37, 53, 58). These rules transform wealth from a material entity into a force that affects the quality of life of people and society, because property is indissolubly linked to life and liberty.

9.3.3 The Content of Economic Justice The Doctors of the Church defined the principles of distributive and commutative justice. They left the plank of participative justice unspoken, for reasons to become apparent forthwith. Participative Justice. Owning a farm or a store was for ages the main way to participate in economic life; and, since in the Jewish, Greek, Roman, Christian, and Muslim tradition most studies were done by and for landowners, the issue of participative justice did not arise early on. Landowners did not necessarily till the land— just as stockholders do not necessarily sit at the assembly line. Over the centuries, landowners established relationships with tenants, who did the tilling and received an agreed-upon proportion of the product. The dispossessed had a right of access to

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the commons, through which they became landowners in fact, if not in title. With the enclosure of the commons, the economic condition of Europe changed radically. And the need to address issues of participative justice eventually became explicit because, as Pope John Paul II maintained in John Paul II, Centesimus Annus (# 33–35), either people and nations participate in the economic process or they are marginalized—are made poor and placed at the margins of society. One participates in an enterprise through sole proprietorship, partnership, membership in a cooperative, or holding stock in an incorporated business. These are forms of private enterprise traditionally fostered by the Church and acknowledged by society at large. Workers do not participate in the life of the corporation for which they work because, legally, they are outside contractors: they offer their labor services and receive wages. The traditional support of the Church and society at large for unions is due to the recognition that labor unions tend to equalize the relationship between the individual worker and the powerful combines that have been formed during the last two centuries. But unions do not provide final protection. Hence the challenge to transform human beings into owners, launched by Leo XIII, RN (# 46), represents the most living and vital portion of the Church—and society at large—a moral engagement with the socio-economic structures of contemporary society. Employee Stock Ownership Plans (ESOPs) are ideal tools to translate this ideal into reality. My constant recommendation to unions during the last 40 years or so has been this: do tie your membership dues, not to higher wages, but to equity sharing through ESOPs and CSOPs (once corporations assume a legal responsibility to distribute some of their profits among their consumers). A huge footnote must always be appended to any discussion about labor unions. The constant is the struggle to improve the lives of their members. The struggle is not always fair or pretty. More often than not, labor unions fight against millionaires at the top, for workers—workers—who have to be on the public dole to survive; millionaires at the top who, still today, use cruel union-busting techniques to discourage workers from even joining a union. We must never forget that “Unions helped create the American middle class and delivered livable pay, a two-day weekend, sick leave and overtime.” This is how Stack (2023) succinctly put it in her review of modern labor busting techniques. And labor busting, she pointed out, is illegal in the United States. Distributive Justice. Participation in production is not enough. Issues of fairness in the distribution of income and wealth also need to be addressed. Rooted in the Jewish tradition of the jubilee, the doctrine of distributive justice spans the arch from consideration of grace from overpowering financial debt to perennial vigilance against monopolies. The keystone in the construction of distributive justice during the Middle Ages was the status of economic “superfluities” as legally belonging to the poor. The Church collected the surplus and made it available to the poor. No questions asked—urged St. John Chrysostom. Commutative Justice. The definition of just price as any competitive price, first reached by the Doctors of the Church, forms the foundation of commutative justice. The doctrine covers condemnation of practices that run contrary to doctrine as well as encouragement of practices that foster competition in the market. Usury, defined as the exchange of money loaned for excessive interest payments, an issue very much

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Fig. 9.2 Economic policy

alive in the Muslim tradition, used to be a primary target of the moral wrath of the Church and society at large. No space was left open to chance—hence the practice of guilds as administrators of fair prices, quantity, and quality was wholeheartedly embraced by the Church and society at large. In commutative justice one finds the moral justification for much contemporary anti-trust legislation. The attentive Reader will have noticed the self-similarity of the structure of the economic process and the structure of economic justice. There is a one-to-one correspondence between participative justice and production; distributive justice and distribution of ownership rights; commutative justice and consumption or expenditure of financial resources. One looks at the world of economics from the point of view economic theory, the other looks at the world of economics from the point of view of economic policy. A familiar diagram makes these relationships very clear (Fig. 9.2). This is the structure of economic justice in bare bones: does an economic activity— or more generally, an economic policy—offer fair participation in production, distribution, and exchange of wealth? Then it is just. Technically, if prices of factors of production are set unfairly high, participation becomes prohibitive; if excessive values are distributed to some, these factors become overpriced and others underpriced; then the basis for objective evaluation of fair prices in the exchange of wealth vanishes. Adumbrated in these positions is the reality that unfair prices do not lead to efficiency.

9.3.4 Justice and Charity Through comprehensive application of the theory of economic justice, Concordian economics treats all members of society alike and, by protecting everyone, protects especially the poor who are otherwise abandoned to themselves and absent from the table where vital decisions are taken by the powerful and the efficient. This effect suggests the need for a clear distinction. The call for justice is not a call for charity. While justice, according to St. Thomas Aquinas, exercises a practical (cardinal) virtue, charity exercises a theological virtue. The need for charity generally signals

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a failure of justice. More, in Quadragesimo Anno (# 4) Pope Pius XI issued a firm injunction against using charity “to veil the violation of justice.” Indeed, the full exercise of economic justice is essential to the success of charity. Only if its need is rather miniscule, the call for economic charity can be fulfilled. We are not saints. Charity, high as it is in the moral sphere, is a last resort in the economic sphere.

9.4 Part III: Ethics in Concordian Economic Practices Each and every action in Concordian economics is judged in accordance with the following mental apparatus, which was presented in Gorga (2002, 2008) and is reproduced in the following paragraphs.

9.4.1 Lack of an Existing Tool Kit “High” mainstream economic theory is silent on the practices of economics. This neglect is not due to chance; rather, it is due to the assumption that, since economic practices are determined by society at large and are supposedly controlled by allied social disciplines, they lie outside the economist’s field of expertise. Indeed, having abandoned the field to lawyers, and ethicists, and philosophers, and sociologists, and political scientists, mainstream economists have become passive takers of a proposition that lies at the very core of the issue. This is the silent proposition that present ownership rights provide practical rules for the distribution of future ownership rights. The proposition has long legs, because it determines the pattern of future distribution of income and wealth. Economists observe every day the manifold negative consequences of this belief, but feel powerless to even address the issues. This is another juncture at which, by taking themselves out of the discussion, economists are threatening to make economics a socially irrelevant discipline. To regain their power, economists have only to look at the distribution of economic rights as an economic, rather than a legal, political, or moral issue. If they do that, they discover that their assumptions are faulty. The error is elementary. The reasoning is circular. In order to enter and to break this circular form of argumentation, namely that present property rights determine future property rights, economists need to remember that property rights are pieces of paper: a piece of paper does not—and cannot—create real wealth. It is not even the exercise of property rights that creates real wealth. Property rights are a bundle of rights that link human beings to things. Their current owners may wish as hard as they can, it is not in the nature of property rights to create wealth. It is not the use of property rights, but the use of property—namely, the use of real goods and services—that creates new wealth. The distinction is fundamental. The discussion is shifted away from the abstract legal field on to a concrete field. The discussion is focused on the observation of the economic reality. The use of

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real goods and services to create new wealth is infused, not by property rights, but by the exercise of economic power: the power/the right to access and control real wealth. As implied here, to an economic power corresponds an economic right. As specified below, temporally, logically, economically, and legally, economic rights precede property rights. Economic rights are the generators, the fathers and the mothers, of property rights. The nature of economic rights becomes clear when the two rights, economic rights and property rights, are observed as separate and distinct entities, and then both rights are placed in contraposition with entitlements. The three terms are often used as synonyms. They are not, as specified in Gorga (1999). First, the content of these three entities is different. The object of property rights are marketable things, tangible or intangible things such as material goods and services. The object of entitlements are human needs, from food to shelter to health. The object of economic rights are economic needs. Second, the legal form of these three entities is different. Property rights are concrete legal titles over existing wealth; economic rights are abstract legal claims over future wealth; and entitlements are moral claims on wealth that legally belong to others. Finally, the quantity that they measure is variable. While both property rights and entitlements relate to existing wealth, and therefore a necessarily finite quantity, economic rights relate to future wealth, an unknown and elastic—if not a potentially infinite—quantity. Economically, and consequently legally, real wealth is created by the exercise of economic rights—indeed, economic rights and economic responsibilities, as we shall see. Hence economists are fully entitled to extend their competence to the field of economic rights and economic responsibilities. Economists will discover that the field is wholly within their range of expertise and responsibility. At the end of this journey, economists shall be able to offer to lawyers, ethicists, and philosophers, as well as political scientists and politicians, this proposition: Future ownership rights are determined, not by property rights, but by economic rights—indeed, they are determined by economic rights and economic responsibilities. Thus the closed circuit that at present imprisons economic theory, the proposition that legal property rights beget property rights, is broken. Economists are in charge of economic issues.

9.4.2 New Tools to Control Economic Practices The transmission belt that carries principles of economic justice into the complexity of modern economic life, and shapes objective guidelines for the formulation and evaluation of just economic policies is the presence of economic rights and economic responsibilities (ERs&ERs), both lodged in the same person at the same time. These two conditions need to be clarified. Economic rights and responsibilities need to be lodged into the same person, otherwise one does not follow an economic discourse in which everything is strictly related to everything else; rather, one follows escapism: if my father, my uncle, or the state is responsible for my welfare, we are lost, as Keynes used to say, “in a haze where nothing is clear and everything is possible”

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(Keynes 1936: 292). The second condition is equally important. Economic rights are rooted, not in abstract morality, but in our own concrete economic responsibilities, cf. Gorga (1999). ERs&ERs come forward in response to the well-known requirements of the factors of production identified by classical economists as land, capital, and labor—with the addition of a modern distinction between financial and physical capital. (This is a Schumpeterian perspective.) Guided by these economic needs, our focus of attention is on the satisfaction of the plank of participative justice; successive iterations that are mostly skipped in this presentation would reveal that the same rights and responsibilities satisfy also the requirements of the planks of distributive justice and commutative justice. A minimal set of economic rights and corresponding responsibilities is as follows: (The Reader who has already read the following paragraphs can skip them; they are repeated here because the context is different: earlier they gave relevance to economic theory, here they are used to give practical content to economic justice.) 1. We all have the right of access to land and natural resources. This is a natural right. It belongs to us just in virtue of our humanness. Land and natural resources are our original commons. They belong to us all. This is an essential right, because without the possibility of exercising it, we are deprived of the possibility of participating in the economic process. And without this participation, we are marginalized; we are made dependent on the good will of others. The most direct way of securing this right in the complexity of the modern world is neither through squatting nor through expropriation; rather, it is through the exercise of the responsibility to pay taxes for the exclusive use of those resources that are under our command—with a corresponding reduction of taxes on buildings and man-made improvements on the land. The exercise of the responsibility to pay taxes on land has a double function: it secures our right to the use of the resources that are under our command and it also makes room for others to access land and natural resources that they need. Land taxation is the economic bridge between Hoarding, namely the accumulation of idle land, and the right of access to that land with its natural resources. Paying taxes on the value of land and natural resources gradually encourages dis-Hoarding, hence it lowers the price of the land, and correspondingly opens up the resources of that land to all those who need them and can make use of them. Worrisome Hoarding is especially that which occurs both downtown and in the belt surrounding major cities and towns. It is to leapfrog over this belt that people go to the suburbs in search for affordable land, thus creating overstretched lines of communication and protection and overlong commuting lines—with consequent waste of fuel that overtaxes non-renewable resources, the ozone layer, the pocketbook, and the nervous system. Paying taxes on land value is a most fair form of taxation, because it implies returning to the community part of the value that is created, not by the individual owner, but by the community. Land that sits idle does not produce income, true; yet, it produces capital appreciation over time: rare is the case of capital loss; and even when that occurs, the relative loss tends to be smaller

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than the loss on other assets. (To see how this pair of ERs&ERs meets also the requirements of distributive and commutative justice, let us simply consider that, if one avoids taxes, the total tax load is not going to be distributed fairly among the population. And if one avoids taxes, one obtains something—i.e., private control over a quantity of resources—for which one does not offer proportionate compensation to the rest of the community.) 2. We all have the right of access to national credit. Since national credit is the power of a nation to create money, and since the value of money is given by the value of wealth left over by past generations and the creativity of every person in a nation, national credit is the last frontier, the last commons. Without access to credit today one is made economically impotent. Worse, since this advantage is granted to the privileged few, it is automatically denied to the majority of the population who are henceforth condemned to pay a higher rate of interest, if they obtain credit at all. Of course, such a loan should be extended only on the basis of the responsibility to repay the loan. And these loans will have a high chance of being repaid because they ought to be issued at cost and issued exclusively to individually owned enterprises, Employee Stock Ownership Plans (ESOPs), and cooperatives, as well as states and municipalities with taxing powers, and issued exclusively for capital formation, namely for the creation of new wealth—not to buy financial paper, consumer goods or goods to be hoarded or to cover administrative expenses of states and municipalities. Capital credit liberates people, while consumer credit enslaves us. 3. We all have the right to the fruits of our labor. This right should not be limited to the right to obtain only a wage. It should be extended to cover the other major fruit of economic growth over time: capital appreciation—as well as being subject to capital loss, of course. The only justification for reserving capital appreciation for stockholders, the owners of a corporation, and excluding workers from it, can be found in the fact that loans are given only to owners of past wealth (the Catch22 of today’s economic reasoning: “save and invest and you too can become rich”—as if this proposition were either economically feasible or ecologically sustainable). But from now on this right can be extended to people who do not have prior wealth through the right of access to national credit—especially by legally transforming workers into owners through individually owned enterprises, Employee Stock Ownership Plans (ESOPs), and cooperatives. Of course, this full right should be extended only in correspondence with the responsibility to offer services of value equivalent to projected compensation. And there will be an outpouring of such services because, while in a command and control economy workers are requested to check their brain at the factory gates, in a socially responsible economy—an economy in which rights are exercised on the basis of responsibilities—workers/owners are legally, socially, and psychologically empowered to exercise their brain fully at their work post. 4. We all have the right to protect our wealth. This right seems to be universally accepted, except in one case that matters most: in the case of the trustification process, the process used especially after the Civil War in the United States and the rest of the world to create corporate trusts and repeated in a hundred

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subtle variations ever since. (People feel free, not only to acquire shares of the stock of one corporation, but free to use that stock to acquire another whole corporation by all forms of trusts, mergers, and acquisition. The very idea of the corporation, forever a public entity, has thus been privatized and monetized.) There are two ways in which corporations grow: one is through internal growth, and this approach ought to be protected in no uncertain terms; the other is through external purchase and, with limits, this manifestation ought to be prohibited in no uncertain terms. Why? Because this prohibition is the only certain way to protect the wealth of present owners. And if it is assumed that most stockholders of the modern corporation are happy to have their shares bought and sold on the market, it must be granted that growth-by-purchase takes wealth away from workers who have contributed to create that value—and many times, in the trustification process, lose their work site as well. All in the name of efficiency—a misnomer that stands for private financial gain generated at the expense of shifting costs onto the shoulders of the community at large. Of course, this right ought to be purchased only at the cost of the responsibility to respect the wealth of others. These are two-way streets. We cannot even attempt to restrain the PacMan economy, while we use Pac-Man instruments. It might be useful, therefore, to repeat that core. The core of the economics of morality is this: When people do not pay the full share of the taxes they owe, especially taxes on land and natural resources, they steal from fellow citizens who are burdened with the total share of the costs of running a country. When the central bank sells a pool of common wealth—i.e., national credit—to preferred customers, the central bank sells for a mess of pottage a national treasure that belongs to the entire population. Private appropriation of common goods—such as land and money—without compensation is expropriation and plunder. When stockholders cash in the value of their stocks and bonds, they rob the workers who have originally contributed to the creation of that value—and are excluded from that bounty by the faulty legal institute of the “wage contract.” When one purchases a whole corporation, and uses other people’s money to concentrate the wealth of the nation into fewer and fewer hands, one robs at least the workers, if not also the previous as well as future potential stockholders, of the ensuing capital appreciation of the corporation. These economic rights and responsibilities can be exercised by anyone who does not only want to receive economic justice, but also wants to grant economic justice to others. Indeed, these are the essential conditions for the establishment of economic justice, as well as the establishment of a free enterprise system, in the modern world. As a consequence of the dynamics of the implementation of these four marginal changes in our current practices, economic freedom will be expanded to embrace all who want to subject themselves to the rigors of the economic process—and then the few remaining hard cases can be easily taken care of by charity. No. There is no compulsion in any of the above suggestions. The landowner can pay more taxes and control more land or can escape the tax levy altogether by reducing land ownership to zero; the applicant for a national loan can escape the constraints suggested for access

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to national credit by refusing to apply for such a loan and presumably tapping into private capital markets; the worker can escape the responsibilities of ownership by vying for a job rather than an equity position; and the owner of physical capital can escape the constraints implicit in the proposed anti-trust policy by remaining below the trigger of an agreed-upon threshold for growth-by-purchase prohibition: this prohibition should apply to the largest corporations first and be gradually expanded to include eventually all except, let us say, corporations engaged in intrastate or regional commerce (in the United States). Intellectually, the proposed economic rights and economic responsibilities perform legal functions outlined in the conception of “general abstract rules” by Hayek (1960: 153), the “original position” by Rawls (1971: 12, 72, 136, 538), the “reverse theory” by Nozick (1974: 238), and the “Principle of Generic Consistency” by Gewirth (1985: 19); practically, they will function as Gladwell’s (2000) “tipping points.” Ultimately, it was a poet, Ferrini (2002), who caught the essence of economic rights and economic responsibilities by identifying their ability to provide “the answers to universal poverty and the anxieties of the affluent.” Operating as tipping points in our modus vivendi, ERs&ERs will set in motion a process of interdependence that respects the reality of economic affairs, and the reality of human relationships. Recognizing that most people and most businesses always act morally, the increasing number of “bad apples” that at times seem to receive all the attention (and envious support) of a superficial intellectual world will be recognized as dangerous exceptions, perhaps ostracized, but certainly no longer applauded. Once the tendencies of these people are kept in check, all wealth will be distributed, not equally—that is meaningless utopianism—but fairly. The assurance for this result resides in the transformation of the current social contract into a legal contract: when landowners pay their share of land taxes, they will sell their hoards and access to land and natural resources will automatically be opened up for most people; when people will get access to national credit, many will become independent entrepreneurs; when workers are transformed into owners, they will have the legal tools to demand a fair distribution of income; when growth-by-purchase will mostly become a forbidden activity, most corporations and most employee/ owners will preserve their independence. These measures, by consistently curbing the excesses of the few for a period of at least ten years, will cumulatively lead to a fair distribution of income and wealth. To reassure ourselves of this outcome, let us comprehensively look at the issues from another point of view. If land owners were to use their possessions of land and natural resources efficiently (with efficiency measured through lower-priced private capitalization and higher effective demand), would there be such wanting in the world? If national credit were made available to all entrepreneurs at cost, would we not translate the immanent reservoir of creative powers into economically profitable ventures? If workers were transformed into worker/owners, would we not increase our extant productive capacity incommensurably? If corporate growth-by-purchase—with accompanying translation of that economic power into corruption of our political system—were curbed, would we not obtain less concentration of economic power into a few hands?

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All four ERs&ERs naturally lead to a fairer distribution of income than prevails today. Eventually, with a fair distribution of income and wealth, there will no longer be any need for redistributive programs, which are an expression of double utopianism (first, people as if living in la-la land are allowed to accumulate much, no matter how; and then they are expected to peacefully discharge their ill-gotten wealth). Preserving their current wealth, the rich will grow richer at a steady but slower pace; and the poor will no longer be poor, because they will have all they need. Lacking fuel at both ends, violent oscillations in the business cycle will be abated. We will thus recover the essential truth of economics. This is the truth that there are two conditions of growth: economic freedom and economic justice, as concrete expressions of freedom and morality. Both are essential. The relationship between the two is quite clear: while freedom does not necessarily bring justice with it, justice unavoidably brings freedom. One can abuse freedom by denying freedom to others, one can never abuse justice. Hence, the initial condition of freedom for all is proof positive of the existence of economic justice in the land. This is economics that is socially relevant. And the relevance is not an afterthought. The relevance is implicit. The social import of economic theory is realized when the distribution of ownership rights is seen as an integral part of its constitution; and the social import of economic justice and economic rights and responsibilities is simply stated: we must prevent all foreseeable injustices from occurring. Once an injustice has occurred, there is nothing that can be done to undo the dastard deed. This is the bosom of realism. One last question: Is the proposed program of action the latest expression of utopianism? The curt answer is: No. Utopianism has consistently been based on the wishful thinking of a single person. The proposed program of action results from filling in the gaps of a millenarian train of thought that, in a seamless web, extends itself at least from morality to economic theory and from there—through economic justice—to economic policy and practice. Utopianism promises immediate results, as if by magic. This proposed program of action asks for concerted, protracted effort. Whatever life Utopianism has, it is based on the fanatical following of a small group of people who try to force it upon the will of the multitudes. The proposed program of action is expected to be readily understood and spontaneously implemented by the multitudes.

9.4.3 Conclusion Ethics enters forcefully the field of Concordian economics at three crucial stages: at the center of Concordian economics, namely at the center of the analysis of the economic process, lies the theory of distribution of value of ownership rights—with ownership rights being composed of both property rights and economic rights. Thus the central problem that bedevils contemporary economics is brought into the field of economic analysis and gets under control.

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The economic process is defined as the integration of the production (of real wealth), distribution (of ownership rights), and consumption (expenditure of financial instruments). The theory of economic justice controls decisions in the field of Concordian economic policy. And the clear attribution of economic responsibility determines the creation of economic rights in daily Concordian economic practice. Thus rooted, not only present and future, but also past property rights will be able to withstand any ideological ill wind. The theory of economic justice comprises three planks: participative justice, distributive justice, and commutative justice. The theory of economic justice is the mirror image of the economic process: one cannot be separated from the other, just as it is impossible to separate a person from her shadow. Rather than trying to summarize what has been said above in the field of Concordian economic practices, allow me to give you in a few sentences the brutal core of this analysis both in a negative and a positive format. This core was offered on December 12, 2011, as a set of comments to Radford (2011). Here they are: Economics without ethics is an empty mental exercise. The ethics of economics are exceedingly simple. They can be reduced to this one maxim: do not steal. If you do not pay taxes on land and natural resources that are under your exclusive command, you steal from members of your community who will have to pay correspondingly higher taxes. If you enjoy exclusive use of access to national credit, a common good, you steal from others in your community who will have to pay you interest for their loans. If you pay only wages, you steal from your workers the fruits of capital appreciation. If you agglomerate wealth into your hands using unethically acquired financial resources, you steal future capital appreciation from existing owners. It would not be healthy to leave this text on a negative and perhaps frightening note. Let us therefore observe the same economic reality with an optimistic eye. The basic recommendation of this chapter is this simple: foster economic policies that avoid all these four temptations to steal, nay, equalize the initial conditions among all citizens of a nation, and you shall automatically put the economic world aright. Once distribution of wealth as it is created occurs fairly, the need for its re-distribution will vanish. The economic condition of the world has been allowed to deteriorate to such an extent that these words might appear as a practice of magic rather than hard economic analysis. This would be a wrong inference. For detailed analyses of the expected consequences, see especially Rawls and Hayek. Above all, to see how realistic they are, Concordian economic policies and practices have to be put in the context of time. Then it will be realized that the expected results will be obtained not overnight but as a consequence of perhaps ten years of steadfast application of Concordian economics into daily reality. As in tipping points theory (and chaos theory), a new world will automatically arise in the very application of these practices.

References

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References Ferrini, Vincent. 2002. Gorga Worthy of Note. Gloucester Daily Times, December 11, A6. Gewirth, Alan. 1985. Economic Justice: Concepts and Criteria. In Economic Justice: Private Rights and Public Responsibilities, ed. by K. Kipnis and D.T. Meyers. Totowa, NJ: Rowman & Allanheld. Gladwell, M. 2000. The Tipping Point: How Little Things Can Make a Big Difference. New York: Little, Brown & Company. Gorga, Carmine. 1982. “The Revised Keynes’ Model” (An Abstract). Atlantic Economic Journal 10 (3): 52. Gorga, Carmine. 1999. Toward the Definition of Economic Rights. The Journal of Markets and Morality, Spring 1999 II (1): 88–101. Gorga, Carmine. 2002, 2009, 2016. The Economic Process: An Instantaneous Non-Newtonian Picture. Lanham, MD and Oxford: University Press of America: 2002 hard copy, 2009 expanded (through Appendices) soft copy; expanded third edition by The Somist Institute, 2016. Gorga, Carmine. 2007. Economic Justice. In Encyclopedia of Catholic Social Thought, Social Science, and Social Policy, 335–337. Lanham, MD: Scarecrow Press. Gorga, Carmine. 2008. Concordian Economics: Tools to Return Relevance to Economics. Forum for Social Economics. Reprinted, with a New Introduction. Mother Pelican: A Journal of Solidarity and Sustainability 11 (2). Available at http://www.pelicanweb.org/solisustv11n02page4.html. Accessed July 25, 2023. Gorga, Carmine. 2012. Ethics in Concordian Economics. In Documents for Rio+20 United Nations Conference, February 12. Available at http://rio20.net/en/documentos/ethics-in-concordian-eco nomics/. Accessed July 25, 2023. Gorga, Carmine. 2020. From the ‘Dismal Science’ to the Economics of Jubilation Through Concordian Economics. Generis Publishing. Hayek, Friedrick A. 1960. The Constitution of Liberty. Chicago: University of Chicago Press. John Paul II. 1991. Centesimus Annus. [Encyclical Letter on the Hundredth Anniversary of Rerum Novarum]. The Holy See, May 1. Available at https://www.vatican.va/content/john-paul-ii/ en/encyclicals/documents/hf_jp-ii_enc_01051991_-annus.html.centesimus. Accessed July 25, 2023. Keynes, J. Maynard. 1936. The General Theory of Employment, Interest, and Money. New York, NY: Harcourt. Leo XIII. 1891. Rerum Novarum. [Encyclical Letter on Capital and Labor]. The Holy See, May 15. Available at https://www.vatican.va/content/leo-xiii/en/encyclicals/documents/hf_lxiii_enc_15051891_rerum-novarum.html. Accessed July 25, 2023. Nozick, Robert. 1974. Anarchy, State, and Utopia. New York: Basic Books. Pius XI. 1931. Quadragesimo Anno. [Encyclical Letter on Reconstruction of the Social Order]. The Holy See, May 15. Available at https://www.vatican.va/content/pius-xi/en/encyclicals/docume nts/hf_p-xi_enc_19310515_quadragesimo-anno.html. Accessed July 25, 2023. Radford, Peter. 2011. “Ethics in economics—Where is it?” Real World Economics Review, December 1. Vol. 58: 2–8. Comment by carminegorga. Available at https://rwer.wordpress. com/2011/12/12/rwer-issue-58-peter-radford/. Accessed 18 November 2023. Rawls, John. 1971. A Theory of Justice. Cambridge, MA: Harvard University Press. Stack, Megan K. 2023. This Is How the Bosses Win. New Yok Times, July 23, SR 6–7.

Chapter 10

The Definition of Economic Rights and Their Functions

Abstract Antonio Genovesi was the first academic in the world to teach economics, an event that took place at the University of Naples in 1754. Being in the tradition of Giambattista Vico, he gave much importance to the “social” aspects of life and opened a path for Emanuele Gianturco, an important Italian legislator of the nineteenth century, who tried to do something that, totally unawares at first, is being accomplished here through the definition of economic rights. Gianturco tried to build a “diritto sociale-privato” (a social-private jurisprudence). From the jurisprudence of private rights, we pass to the jurisprudence of social rights and responsibilities: social rights which, once codified in the laws of the land, become public rights and responsibilities. This effort is being continued in Naples at the Scuola di Economia Civile (Civil Economy School). The issue is that important. Intellectually, it concerns a question left open by Kant, the question of the definition and content of “public” rights. This is an issue that starts with being legal and ends up being eminently economic and political. This is an issue that, once settled, puts a stop to the interminable diatribe between Capitalists and Socialists on how to build a civilized society. Economic rights and economic responsibilities (ERs & ERs) perform many functions. In this chapter we will see how they offer much concreteness both to the practice of jurisprudence and the theory of justice.

10.1 Introduction Capitalists and Socialists argue pro and con property rights, as if property rights were capable of standing alone and doing anything by themselves. The issue is that abstract. There is a reality that they, both, do not seem to know: Economic rights are the fathers and mothers of property rights. This is the reality we are continuing to investigate in the following pages. Four economic rights are essential, because there are indeed only four factors of (modern) production. While the right of (1) access to national credit is the most Adapted from Gorga (1999, 2008).

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fundamental one, three more rights ought to be gradually implemented as conditions for the construction of a sane and sound society: (2) the right to the fruits of one’s labor and (3) the right to the protection of one’s wealth by controlling the pursuit of the Pac-Man Way of mergers and acquisitions; the last but not least economic right is (4) the right of access to land and natural resources, which can be gradually gained by society as a whole by raising taxes on land. Hoarding of land will be penalized and, by inducing selling of the land, the price of the land will go down; hence, more people will afford to buy land. Economic rights and responsibilities perform many functions. In this chapter we will emphasize the very core of the issues, how do we obtain the definition of economic rights and responsibilities. In the course of this investigation we will see that ERs&RSs perform a key function of subtracting much abstraction from our understanding of jurisprudence and the theory of justice. ERs&RSs ultimately make these pillars of society rather concrete.1 There is one more hidden function that economic rights and responsibilities perform, a psychological function: men and women who will (a) call for the official declaration by The Government of these rights and responsibility and (b) will directly exercise them in The Market will experience a subtle transfiguration of their own personalities: from Individualists or Collectivists, they will become social men and women operating in the social context: Somists; from Capitalists or Socialists/ Marxists, they will become Concordians. All this might be called “the economic justice project.”

10.2 New Introduction For about 3000 years we have tried to give content to the economic justice project by using a narrow series of abstract ideas: justice, equity, fairness, even reciprocity at a stretch. The discussion has been rather heated at times, but the in-depth analysis of the content of these words has not added much clarity and ultimately not much security to humanity. Legal, political, and/or philosophical issues have been divorced from economic issues. A deadly error. Not by design, but by sheer luck—a religious person might call it divine providence; the intervention of an invisible hand, perhaps—this writer ended up devoting nine whole months to the definition of economic rights. I knew where to start and I knew where to finish, to wade my way through from beginning to end I spent full nine months making my way amidst an accumulation of abstract constructions. We will not run that full course together here because, though enlightening, it offers little practical usefulness. Here we are left with the task of recognizing the essential 1

In the next chapters we will observe more functions of ERs&RSs. The fundamental function of economic rights and responsibilities in economic policy is to call for four marginal changes in our fiscal, labor, monetary, and industrial policies. Thereafter we will look at the functions that ERs&RSs perform in sociology and political science.

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characteristics of economic rights and responsibilities and hint at their variegated functions. First, rights are alive because they give life to corresponding responsibilities—and vice versa. This is what we are going to observe in this chapter. The key finding— still not well understood overall—is that economic rights and responsibilities are the fathers and mothers of property rights. In the following chapter we will see how economic rights and responsibilities are giving rise to four economic policies, how they clamor for four marginal changes in our economic policies. We shall thereafter see how the implementation of economic rights and responsibilities changes human beings themselves from staunch Individualists or Collectivists to humane, lovable Somists, men and women fully integrated in their social context—and fully concerned about the climate created by these policies. Not only that. Men and women who pursue the four economic policies will also transform themselves from staunch Capitalists or Socialists into lovable Concordians. Economic rights and responsibilities are the pivot.

10.3 Introduction, Again With the assistance of a rigorous analysis of a long sweep of history by Finn (1995), the central legal dilemma of our age can be identified as follows: we either redefine property rights or we define economic rights. This chapter attempts to define economic rights. Currently, the terms economic rights, property rights, and entitlements are treated as nearly interchangeable synonyms. We will see that these entities are, in fact, connected to one another by many subtle links of timing sequence and by many overlapping intellectual conditions determining their respective identities. In the process, distinctions will emerge that separate these three entities from each other and firmly implant economic rights within the structure of the theory of justice. From a practical point of view, the judgment that economic rights are neither entitlements nor the same entity as property rights leads to a fundamental realization. Since no accepted definition of economic rights can be found in theory, there is no rationale for the exercise of economic rights in practice. There is observable evidence of the need of access to economic resources, but, clearly, the fact of access is not the same as the right of access. The task of defining economic rights assumes particular importance because these rights occupy a pivotal position in an integrated system of social thought. They can be conceived not only as the focal point of economic policy and economic theory, but they can also be construed as the keystone in the arch of economic justice. To anticipate the conclusion of this chapter, only those who exercise economic rights can be said to participate in the economic process in full dignity and self-reliance.

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10.4 Toward the Definition of Economic Rights To clarify issues concerning the definition of economic rights, it might be useful to begin with an overview of three factual distinctions between economic rights, property rights, and entitlements. These distinctions can be taken as facts at this stage of the discussion but they will be justified in the course of the argument. First, the content of these three entities is different. The object of property rights are marketable things, tangible or intangible things such as material goods and services. The object of entitlements are human needs, from food to shelter to health. The object of economic rights are economic needs. Second, the legal form of these three entities is different. Property rights are concrete legal titles over existing wealth; economic rights are abstract legal claims over future wealth; and entitlements are moral claims on wealth that legally belongs to others. Finally, the quantity that they measure is variable. While both property rights and entitlements relate to existing wealth, and therefore a necessarily finite quantity, economic rights relate to future wealth, an unknown and elastic—if not a potentially infinite—quantity. Economic rights can be defined as follows: economic rights are rights of access to resources—such as land, labor, physical, and financial capital—that are essential for the creation, legal appropriation, and market exchange of goods and services. Economic rights are self-evident. However, for their full recognition, economic rights require at least three conditions: (1) they require a knowledge of basic economic needs for a person to operate in the economic world; (2) they require a knowledge of their legal characteristics; and (3) they have to be fully integrated into the theory of justice. This chapter attempts to articulate a framework that satisfies these three conditions.

10.5 Basic Economic Needs The basic economic needs of any human being extend over one or more functions that are related to the creation, legal appropriation, and market exchange of goods and services. These needs have traditionally been satisfied through access to labor and land, which also includes natural resources. In the modern world, one must include access to physical as well as financial capital among the prerequisites of an independent and productive economic life. There is no economic activity that does not require labor, land, and natural resources to be carried out. No poet or painter, let alone an industrialist, can perform any function without access to these resources. Furthermore, once money is seen as a means of exchange, it will be conceived to include all forms of wealth, whether physical or financial wealth. Then it can be seen how, even in a condition of barter, money is essential to carrying out any market function. And equally essential to carrying out any economic function today is access to physical capital, whether it is a pen, a computer, or a shovel. In earlier times, poets may have subsisted on berries and may have been able to produce their own papyrus on

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which to scratch their poems. Today, we have restricted our own capabilities through the acquisition of specialized knowledge and so, in order to function properly in the economic sphere, we need access to physical capital that is generally owned by others. To put it restrictively, access to labor, land, natural resources, financial, and physical capital is essential to the performance of any economic function—whether it is production, legal appropriation, or market exchange of wealth. Indeed, access to these resources is essential to the very existence of human life. This is generally well-known. What is not known—and, if known, not readily granted—is the legal fact that only productive people acquire by right the title to marketable products and services, a title that is independent of other people’s will. And what is openly disputed is the claim that only productive people have the legal as well as the practical means to exchange goods and services in the market. The great tension that exists in the field of entitlements is the attempt to overthrow these basic legal and economic realities. In accordance with these complex practical and theoretical conditions, four economic rights can be isolated from other potential rights, which must be placed at the foundation of a modern economic policy that is concerned with the production, legal acquisition, and exchange of marketable goods and services. These four rights are formulated in correspondence with the factors of production of classical economic analysis; namely, land, labor, and capital—with capital being specified in both its financial and physical aspects. These rights belong to each human being, and can be expressed in these terms: • • • •

The right of access to land and natural resources; The right of access to national credit; The right to own the fruits of one’s labor; The right to protect one’s wealth.

This system of rights can be subdivided in a variety of ways. To be established singly and jointly, these rights have to be justified on many grounds. In some of my earlier work, Gorga (1982, 1991, 1994), Gorga and Kurland (1987) and Gorga and Weeks (1997), Readers can find the contours of the economic, political, and moral rationale for these rights. Our primary focus here has to do with the legal grounds of these rights.

10.6 Some Legal Characteristics of Economic Rights Economic rights are rights of access to resources that are essential for the creation, legal appropriation, and market exchange of goods and services. In order to obtain a more precise understanding of this definition, the legal characteristics of economic rights can be pinpointed as follows.

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10.6.1 Economic Rights Distinct from Property Rights and Entitlements Economic rights can be clearly distinguished from property rights, once it has been acknowledged that economic rights are the necessary precondition for the creation and the legal establishment of property rights and entitlements. Property rights cannot be identified with economic rights. Property rights are the bundle of dominion rights over existing goods and services that are demanded for the fulfillment of human needs. Economic rights, on the other hand, are rights of access to resources that are needed to create future goods and services. This differentiation is transparent when economic resources are not owned by anyone at the time they are energized to serve in the production process. For instance, in the process of creating consumer goods, one can fish or hunt for animals that are still held in the commons, and the only legal tool that one needs is the right of access to those resources. Moreover, one can make use of a financial resource such as credit—an entity that manifests itself as the power to create money not exclusively by a government agency but by private parties as well. Indeed, by looking deeper into the subject it becomes evident that the power to create money belongs to the people exclusively, and the role of government agencies is confined to administering that function properly. The differentiation between economic rights and property rights holds even when resources are owned by someone else at the time they are acquired and energized to serve in the production process. The bundle of legal prerequisites involved in accessing those resources constitutes the set of economic rights. Thus, the process of creating new wealth, of legally acquiring ownership, or transferring ownership of wealth, involves the exercise of economic rights. Ownership of specific items of wealth involves the exercise of property rights. Property rights are static; economic rights are dynamic. Property rights involve stocks of wealth; economic rights involve flows of wealth. Entitlements must be distinguished from economic rights. Entitlements transfer the possession of specific property (e.g., money or things) and property rights from one person to another—forcibly, if necessary, under penalty of retribution from an agency of the state. An example of this power is exercised by the Internal Revenue Service in the United States. Entitlements relate to existing wealth. Both property rights and entitlements have a clear market value and are social to the extent that if society did not exist, property rights not only would not exist but would not be necessary to human existence. Property rights and entitlements are social and alienable, while economic rights are innate and inalienable. Since economic rights are inextricably linked to the basic requirements of life, they accompany the very existence of life; and unless one wants to live the life of enslavement—a condition that is not legally permissible in a civilized society—they are also not alienable. Succinctly put, provided economic rights are in vigorous existence, the denial of an entitlement or a property right would not necessarily imply a denial of the right to life. With due qualifications, singly and jointly, the denial of the right of access to land and natural resources, the denial of the right of access to national credit, the

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denial of the right to enjoy the fruits of one’s labor, and the denial of the right to protect one’s property, essentially amounts to a denial of the rights to life and liberty, and certainly to the denial of civilized life and liberty. The major differences between economic rights, property rights, and entitlements can be summarized this way: economic rights represent a legal claim on potential property rights; property rights represent a legal claim on wealth that is already in existence; and entitlements represent a moral claim on wealth that is legally owned by others.

10.6.2 The Differentiation Between Private Rights and Public (or Constitutional) Rights The proposed set of economic rights offers the interesting theoretical possibility of establishing the category of public rights within the theory of justice. For some reason, the category of public rights does not exist in any of the texts or the standard reference books of Anglo-Saxon legal literature. Therefore, it seems that in order to realize this possibility, we need to go back to Immanuel Kant’s Philosophy of Law (1796), where the foundation for the distinction between public and private rights is clearly defined. However, it is important to realize that Kant left the category of public rights as an empty set. He concluded his analysis by stating that “… the Matter of Private Right is, in short, the very same in both”—namely, in the “sphere of PRIVATE RIGHT” as in the “sphere of PUBLIC RIGHT” ([1796] 1959: 252). The acceptance of economic rights would give content to the category of public rights, and would help to differentiate between public and private rights within the field of economic justice. This differentiation would be useful not only in establishing continuity of thought with the range of political freedom where most public rights are fully recognized. The immediate usefulness of the category of public rights would consist in clearly distinguishing property rights from economic rights. Property rights would be categorized as private rights and economic rights as public rights. If the category of public rights were unacceptable for some reason, then economic rights could be classified as constitutional rights.

10.6.3 Another Difference Between Property Rights and Economic Rights If the distinction between private and public (or constitutional) rights is accepted, one can further clarify the essential differences that exist between property rights and economic rights. By confining property rights to the category of private rights and assigning economic rights to the category of public (or constitutional) rights, one could clearly see that property rights regarding a specific item of wealth belong to

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us exclusively on either a personal or an individual basis. Economic rights, instead, are those that belong to everyone on a universal basis. To eliminate a potential source of confusion, it is necessary to classify the right to ownership in general as an ancillary economic right and therefore as a public right—a right belonging to everyone. While the right of ownership over a specific piece of property would always be classified as a property right and therefore as a private right, economic rights, instead, would belong exclusively to the category of public (or constitutional) rights. These are not simply intellectual distinctions. They have a solid foundation in fact. While property rights restrict other peoples’ freedom, because they necessarily exclude people from using specific pieces of property, economic rights enlarge the range of freedom for everyone. Economic rights are similar to voting rights. Voting rights do not restrict the freedom of anyone; rather, they enlarge the range of freedom of everyone.

10.6.4 The Differentiation Between Rights in Posse and Rights in Esse Public (or constitutional) rights are potentialities; they are rights in posse. For example, the right to vote is a potential right and not the actual act of voting. Public (or constitutional) rights are recognized by the community on behalf of all its citizens. Private rights, on the other hand, are granted by the community to individual persons exclusively. Thus, economic rights are rights in posse and property rights are rights in esse. In these theoretical questions, the issue of the practical usefulness of economic rights is embedded. Succinctly stated, their usefulness rests on the fact that they represent a legal claim on future property rights. In other words, economic rights, as many other rights, represent legal potentialities. To distinguish them from other rights, these potentialities perform a specific function. They represent opportunities to create wealth. Thus, their exercise allows people to exist in the economic sphere with full dignity and a degree of interdependence. Since, by nature, economic rights are universal they represent a fair distribution of opportunities to create future wealth.

10.6.5 Rights and Responsibilities From Mazzini (1862) to Holmes (1962: 398), it has been recognized that the very essence of rights is that they imply responsibilities. There are various reasons for the existence of an indissoluble link between these two entities. The first reason can be found in the very nature of rights observed in the full glory of social and communal relations. If rights are innate, they belong to all human beings universally. Therefore,

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since the community does not possess them, when it assigns them to each individual person—i.e., when their title is conferred by society—the community must request a quid pro quo as compensation for all other people. The quid is the responsibility. It is the assignment of responsibilities that, given community relationships, provides legal legitimacy to the assignment of rights. Then there is the issue of moral legitimacy. Society cannot give rights away without simultaneously assigning responsibilities. Responsibilities, so understood, confer moral justification for rights. One justification for this linkage can be found in the domain of political science. David E. Stephens, a moral theologian, once suggested the following to me in a letter: “If one has responsibilities but no corresponding rights, then one is bound by and a victim of necessity—in the form of some kind of tyranny. If one has rights and no corresponding responsibilities, then one is unaccountably free, a state of anarchy.” He went on to make an important philosophical argument: “Yet, in both cases the linkage between right and responsibility is inescapable: if one is bound by necessity, either one has a responsibility to conform to necessity or to suffer the alternative sanctions. If one is unaccountably free, then either one is self-accountable or self-destructive. Barring destruction of the party or parties in either state, some responsibility or some rights must coordinate with the state of necessity or freedom. Between these polar states, a full spectrum of proportionality of coordinated rights and responsibilities are to be found.” A society that wants to be civilized must link people together through a set of mutual rights and responsibilities. Human relationships then become legal because they are moral, and they are moral because they are legal. From one perspective, responsibilities are the quid pro quo that diminishes the reasons for society to ever take rights away from individual human beings, and thus binds society to the individual person. From the other side, responsibilities represent what is given back to society, and thus bind the individual person to society. In either case, responsibilities provide the moral justification for rights. If the right balance is found, the statesman builds not only upon a moral foundation but he also ensures stability for the future. Members of society will not desire to alter those relationships.

10.6.6 Corresponding Economic Responsibilities Responsibilities cannot be superimposed upon rights arbitrarily. Rather, they are an inherent part of them, and are time- and place-specific. If the rights are conceptual, then the responsibilities must be conceptual. Yet, as soon as the exercise of rights becomes concrete, their inherent obligations become legal obligations—obligations, that is, enforceable in a court of law. All too briefly, since the arguments belong mostly to the field of economic analysis and economic policy, the responsibilities that one might want to associate with the four economic rights enunciated above can be pinpointed as follows. In correspondence with the right of access to natural resources, there ought to be the duty to pay taxes for the use of those resources. The basic rationale for this duty is not only that

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natural resources are a common good and the good of all requires that they be equitably shared, but that the payment of taxes is a token compensation for the exclusion of others from the use of those resources. Furthermore, the rationale is that much—but by no means all—of the value of one’s property derives from communal efforts (e.g., the provision of water, sewer, and electric lines; schools, theaters, and museums). The rationale is also that by paying taxes on land and natural resources one eliminates the incentive to hoard those resources and thus, with full compensation, one makes the resources that are hoarded potentially part of the commonwealth through voluntary market exchanges. The alternative is clear: one can hold on to the land but one must pay taxes on those holdings. Taxes on land and natural resources cannot be construed as “takings.” Quite simply, they represent payment for the provision of public services received directly by the owner of the land. The extent to which taxes on land and natural resources should exceed the value of the public goods received can be ascribed to payment for the social and economic benefits of the absence of Hoarding. In correspondence with the right of access to national credit there ought to be the duty to repay the loan. The exercise of this right should be subjected to the following restrictions: (1) Access should be limited to capital credit to create new wealth (consumer credit, credit for paper transactions, as well as credit for transfer of ownership titles would not qualify); (2) It should be issued to benefit all participants in the enterprise; and (3) It should be issued at cost. The rationale for the basic duty to repay the loan is that national credit is a common good. Failure to repay the loan causes the pool of common resources to be drained. Worse yet, due to inflationary effects, by not repaying the loan one debases the currency to the detriment of everyone—the abuser of the right included. Corresponding to the third right mentioned above, the right to own the fruits of one’s labor, there ought to be the duty to meet the obligations outlined in the performance of the work. Likewise corresponding to the right to protect one’s wealth, there ought to be the duty to respect other people’s wealth. A brief note regarding the implementation of these duties should be appended here. As it can be seen from this list, the obligations are not obligations of the state. If the state does not have economic rights to apportion, it cannot assume economic obligations to fulfil. The obligations flow from individual human beings to other human beings. The state can only administer the policies that make for an easy fulfillment of those obligations.

10.6.7 Theory and Practice The natural mutuality of interests and concerns among human beings makes for an integration of rights and responsibilities. We have seen that since this integration is such an essential part of the theory of economic rights, one might conclude that the link forms an implicit contract. However, does this imply that the theory is always respected in practice? Since the law does not have a soul, since it does not have an

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essence of its own, there is no ultimate justification in the law for this linkage. The justifications we have found occur in the domain of morality, sociology, politics, and philosophy, but not in the law. The law is a tool, in fact, a neutral tool of society. In the end, the law can accomplish anything society wants it to accomplish. Hence, there is no legal justification for rights to be tied to responsibilities. Indeed, since rights are social entities, they are a two-edged sword. Society giveth; society can take away. Society can only grant privileges. Society cannot grant rights; it can only recognize them. But society can prevent their exercise. The link between theory and practice can be dissolved; yet if the link is a natural one, many problems will arise from its dissolution. Rather than the administration of universal rights, one shall find the granting of factional privileges. Rather than the protection of the laws, one shall find a favoritism imposed by force. Rather than freedom for all, one shall find libertinism for the few. Rather than social integration, one shall eventually find social disintegration. Liberty and stability exist only in a regimen of just laws. For moral, sociological, and political reasons it is advisable that rights be indissolubly tied to responsibilities. With such a burden lying on the propriety of the link between rights and responsibilities, one must make sure that the theory is indeed sound.

10.7 Economic Rights Within the Theory of Justice We will examine five tests of legal validity that the proposed economic rights must pass before they can be accepted as true public (or constitutional) rights. Thereafter, we will see whether they conform with established principles of economic justice. Finally, we will see what sort of place they might eventually occupy within the structure of the theory of justice.

10.7.1 Some Theoretical Perspectives For these rights and responsibilities to be accepted, they must pass a number of theoretical tests that belong to the legal understanding of justice. First, do the proposed rights and responsibilities yield the essential elements of “the original position” envisioned by Rawls (1971: 12, 72, 136, 538)? Second, do they meet the requirements of the “reverse theory” enunciated by Nozick (1974: 238)? Recognizing that “particular rights over things fill the space of rights, leaving no room for general rights to be in a certain material condition,” Nozick postulates: “The reverse theory would place only such universally held general “rights to” achieve goals or to be in a certain material condition into its substructure so as to determine all else; to my knowledge no serious attempt has been made to state this “reverse” theory” (ibid.).

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A third theoretical test of validity can be construed in relation to the Principle of Generic Consistency, which has been carefully designed and cogently argued for by Gewirth (1985). Will the above set of four rights and responsibilities pass this test? Gewirth’s principle to “Act in accord with the generic rights of your recipients as well as of yourself ,” ibid. (p. 19) is an attempt to synthesize the logical requirements advanced by Rawls with those of Nozick. There are many other tests of validity. The next that might be considered is based on the conditions for the existence of a “system of rights” as specified by Martin (1985: 114–118, 129). Can those rights function as a system of rights? One final test comes to mind. Are the proposed rights and responsibilities properly “integrated within a robust vision of a very traditional Catholic concern, namely, the common good,” as Finn (1995) recommends?

10.7.2 The Principles of Justice For the proposed economic rights and responsibilities eventually to become an integral part of the theory of justice they have to be expressions of sound legal and philosophical principles. The most important test that those four rights and responsibilities, singly and jointly, have to sustain is this: are those rights built on the basis of solid principles? The essential principles submitted for scrutiny are: • Each specific right shall make us free (the intellectual, rationalist argument); • Each specific right shall be universal (the idealist as well as the utilitarian argument); • Each specific right shall be fair (the emotional, naturalistic, transcendentalist argument); • Each specific right shall be enforceable in a court of law (the positivist argument); • Each specific right shall create social order (the political and aesthetic argument). Only a few questions can be raised here to point toward the necessary analysis that must be done to determine the correspondence of those rights with the above principles: (1) Is each one of those rights intimately related to the question of truth— and hence to freedom in general—as well as to issues of economic freedom in particular? (2) Is each one of those rights an expression of universality and even of universal utilitarianism? (3) Is each one of those rights related to natural rights theory? (4) Can each right also be justified in terms of positivism? (5) Does each right have the potentiality to contribute to social as well as intellectual harmony?

10.7.3 A Place Within the Theory of Justice If the proposed rights and responsibilities pass the specific tests of legal validity mentioned above and if they pass the theoretical test of concordance with basic

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principles of philosophy, in order to become fully accepted, they have to occupy a specific place within the theory of justice. Is there such a place for them? A place for economic rights and responsibilities within the structure of the theory of justice will be found only if two requirements are met. First, one must adhere to the ancient division of this body of knowledge into two fields: political justice and economic justice. With regard to economic justice, we must add to it a new plank: participative justice. From Aristotle to the late Middle Ages, and within the Catholic tradition up to Monsignor Ryan’s work in the twentieth century, the theory of economic justice was thought to be composed of two major parts, distributive and commutative justice— with the latter presenting rules of justice that applied to the exchange of goods and services. The right to participate in the production of wealth must have seemed so natural, so innate in human beings, that no need was felt to specify it in writing. With the progressive closure of the commons, the full development of a monetary economy, and the propensity to cluster immense concentrations of wealth in a few hands, the economic conditions of the world have, indeed, changed. The right to be an active participant, rather than being relegated to the margin of economic life is a right that needs to be asserted. Implementation of the requirements of participative justice is imperative today. Taking the lead from the seminal economic policy analysis of Kelso and Adler (1958) and Kelso and Hetter (1967: 10, 28, 32), this addition to the theory of economic justice can be justified from many points of view. Its moral rationale can be most clearly found in the social teaching of the Roman Catholic Church. In Centesimus Annus (1991: # 35), for instance, Pope John Paul II calls for a “society of free work, of enterprise and of participation.” In the preceding paragraph he specifies: “Inseparable from that required “something” (which is due to man because he is man) is the possibility to survive and at the same time to make an active contribution to the common good of humanity,” ibid. (# 34). Some of the legal rationale for this addition is provided by Nozick with his principle of “justice in acquisition” (Nozick 1974: 150ff., esp. 168). The economic rationale can be found in the revision of Keynes’ model first envisaged by this writer in the summer of 1965, and gradually developed ever since. This work yields the equivalence of production to distribution to consumption. In accordance with these results the test is as follows: can the proposed system of rights be justified, through a series of iterations, by the requirements of participative, distributive, and commutative justice? All too briefly, without the exercise of the proposed four rights, people are not free to participate in the economic process. They are not put in a position of parity in relation to the apportionment of shares in the process of the distribution of wealth. If people do not participate in the production process or are at a disadvantage in the process of the distribution of wealth, then they are automatically at a disadvantage in the process of the exchange of wealth. It would be naive to see the latter set of needs as involving only problems of consumerism; one must enlarge the scope to encompass problems of monopoly and Hoarding of wealth. Note Ryan’s major work, Distributive Justice: The Right and Wrong of Our Present Distribution of Wealth ([1916] 1942), where he builds on the solid tradition of the past but without

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ignoring the problems that are still with us today. For instance, this work contains a legal and economic analysis of the minimum wage that is far superior to anything existing in the current literature on the subject.2

10.8 The Importance of Economic Rights A “seminal” conception in the application of Concordian economics to jurisprudence is, indeed the issue of the definition of economic right and responsibilities. I published a paper, a paper titled “Toward the Definition of Economic Rights” in the Journal of Markets and Morality. I have often read that this paper, published in 1999, is being cited in support of some constitutional rights somewhere in the world or to buttress the case for antitrust action. This chapter waits to be appropriately studied; I still do not have the necessary time to devote to the task. Let me put the case another way. It is whispered that, once Mahatma Gandhi was pressured to answer, he reported: “I have shown the Universal Declaration of Human Rights to my mother. After some time, she asked, ‘I see rights; where are the responsibilities?’” In summary, the proposed four economic rights offer the opportunity to complete the structure of the theory of economic justice. The structure can be built upon three planks: participative justice, distributive justice, and commutative justice. The three component parts of the structure do not operate sequentially. As in a physical structure, they operate synchronously, and the theory becomes a powerful engine of decision and analysis.

10.9 Conclusion There are many indications today that, while public struggles over the last few centuries were mostly concerned with issues of political justice, the current struggle is one of economic justice. Foundational to this struggle is the issue of defining economic rights. This chapter has sought to define these rights as rights of access to essential resources in the process of production, distribution, and the exchange of wealth. It is through access to land, (the fruits) of labor, financial capital, and physical capital that one creates property and property rights. The practical thrust of this chapter consists in transforming the fact of access to economic resources into the right of access to economic resources. Rich and poor alike—the rich to an obviously greater degree than the poor—live today in a legal regimen that is one of privilege. They acquire access to economic resources as a fact—not as a right. This is the ultimate source of instability in the modern polity. The fact of access has to be transformed into a universal right. If rich and poor alike 2

Ryan ([1916] 1942: 249–302). The historic emphasis there is on the living wage.

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are to live under a regimen of laws, economic rights have to be defined and exercised universally. This chapter has sought to provide an understanding of basic economic needs that are met by corresponding rights. It has also described an understanding of the legal characteristics of economic rights. Throughout we have suggested that these rights and responsibilities have to be imbedded in the theory of economic justice, a theory that should be seen as composed of participative justice, distributive justice, and commutative justice—three planks that have to be treated not as three sequential segments but as three synchronous parts. Their requirements are either satisfied simultaneously or do not exist at all.

Addendum We need an Economic Bill of Rights.

Martin Luther King, written in 1968 just before his assassination We’ll never revitalize our market economy till … every single American is protected by an economic bill of rights.

Jerry Brown, “We the People, Take Back America” Under a second Bill of Rights a new basis of security and prosperity can be established for all - regardless, of station, rank, or creed.

President Franklin D. Roosevelt, State of the Union Message, Jan. 11, 1944 At the United Nations, the Pope urged the rich to show solidarity with the poor. His social teaching has emphasized that this moral commitment should not be done by dole that creates dependency, but by empowering the poor to become full participants in economic life.

George Weigel, President, Ethics and Public Policy Center.

References Finn, Daniel Rush. 1995. Catholic Social Thought on Property: An Urgent Need for Extension and Renewal. Paper presented at the Conference on “The Legacy of Msgr. John A. Ryan”. University of Saint Thomas. Gewirth, Alan. 1985. Economic Justice: Concepts and Criteria. In Economic Justice: Private Rights and Public Responsibilities, ed. by K. Kipnis and D.T. Meyers. Totowa, NJ: Rowman & Allanheld. Gorga, Carmine. 1982. “The Revised Keynes’ Model” (An Abstract). Atlantic Economic Journal 10 (3): 52. Gorga, Carmine. 1991. Bold New Directions in Politics and Economics. The Human Economy Newsletter 12 (1): 3–6, 12. Economics, “The Human Economy” Newsletter, 1991, archives box: 01, Folder: 28. College of Social and Behavioral Sciences. Collection, 1961–2022, MSU Archives Collection 029. Minnesota State University, Mankato University Archives.

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Gorga, Carmine. 1994. Four Economic Rights: Social Renewal Through Economic Justice for All. Social Justice Review 85 (1–2): 3–6. Available at http://www.pelicanweb.org/solisustv11n03p age4.html. Accessed July 25, 2023. Gorga, Carmine. 1999. Toward the Definition of Economic Rights. The Journal of Markets and Morality, Spring 1999 II (1): 88–101. Gorga, Carmine. 2008. Concordian Economics: Tools to Return Relevance to Economics. Forum for Social Economics. Reprinted, with a New Introduction. Mother Pelican: A Journal of Solidarity and Sustainability 11 (2). Available at http://www.pelicanweb.org/solisustv11n02page4.html. Accessed July 25, 2023. Gorga, Carmine, and Norman G. Kurland. 1987. The Productivity Standard: A True Golden Standard. In Every Worker an Owner: A Revolutionary Free Enterprise Challenge to Marxism, ed. by D.M. Kurland. Washington, DC: Center for Economic and Social Justice. Gorga, Carmine, and Stuart B. Weeks. 1997. Fisheries Renewal: A Renewal of the Soul of Business. Catholic Social Science Review 2: 145–161. Holmes, Oliver Wendell. 1962. Uncollected Letters. In The Wisdom of the Supreme Court, ed. by Percival E. Jackson. Norman, OK: University of Oklahoma Press. John Paul II. 1991. Centesimus Annus. [Encyclical Letter on the Hundredth Anniversary of Rerum Novarum]. The Holy See, May 1. Available at https://www.vatican.va/content/john-paul-ii/ en/encyclicals/documents/hf_jp-ii_enc_01051991_centesimus-annus.html. Accessed July 25, 2023. Kant, Immanuel. [1796] 1959. Philosophy of Law. In The Great Legal Philosophers: Selected Readings in Jurisprudence, ed. by Clarence Morris. Philadelphia: University of Pennsylvania Press. Kelso, Louis O., and Mortimer Adler. 1958. The Capitalist Manifesto. New York: Random House. Kelso, Louis O., and Patricia Hetter. 1967. Two-Factor Theory: The Economics of Reality. New York: Vintage Books. Martin, Rex. 1985. Rawls and Rights. Lawrence, KS: University of Kansas Press. Mazzini, Giuseppe. 1862. The Duties of Man. London: Chapman and Hall. Nozick, Robert. 1974. Anarchy, State, and Utopia. New York: Basic Books. Rawls, John. 1971. A Theory of Justice. Cambridge, MA: Harvard University Press. Ryan, John A. [1916] 1942. Distributive Justice: The Right and Wrong of Our Present Distribution of Wealth. New York: Macmillan and Company.

Chapter 11

From Four Rights to Four Policies

Abstract Those who know Concordian economics at times ask me, “Why is Concordian economics not a common topic of discussion yet?” There are many answers, many reasons. The last one I have found is this: I have not yet explicitly linked the four economic rights and responsibilities of Concordian economics to their corresponding economic policies. Let me try to do this now. The primary aim here is to link the economy of Wall Street to the economy of Main Street.

11.1 Four Economic Rights As the Reader knows, there are four factors of (modern) production: (1) Land and natural resources; (2) Money or financial capital; (3) Labor; and (4) Physical capital, as tools that make any task easier to accomplish. As there are four factors of production, so there are four necessary and sufficient economic rights in Concordian economics. The corresponding rights are: (1) Right of access to land and natural resources; (2) Right of access to national credit, an entity whose value We the People create and on the basis of which we create money; (3) Right to the enjoyment of the fruits of our labor; (4) Right of enjoyment of the fruits of our property, especially as specified in the tools of production (capital). Each and every product of our agricultural, industrial, or commercial activity is a result of the amalgamation of these four economic rights. Where do these rights come from? They are natural rights, which satisfy human needs; they come from our very nature as being human. We are not angels, therefore, we cannot do anything without land and natural resources; we cannot attempt any great socially constructive endeavor without money (conversely, let us think how much more difficult would life be without money); we cannot do anything without labor; we cannot do anything without tools, the result of our imagination and ingenuity. Without the enjoyment of these four rights, we cannot even bake our daily bread. Adapted from Gorga (2023).

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It so happens that Jesus’ prayer to Our Father encloses the totality of Concordian economic policy. To make our daily bread, we need access to all for factors of production. In addition to the call for the exercise of these four economic rights, in response to the Mosaic seven-year jubilee, there is in Concordian monetary policy the call for the systematic cancellation of all debts every seven years. In general, rather than becoming dependent on society, the borrower who has been freed of the burden of debt can start a new productive life to the benefit of everyone. Will the cancelation of debts every seven year ever be conceived as a (personal and social) responsibility? Economic rights are explicitly the creators of property and implicitly they are the creators of property rights.

11.2 Rights Arise from Responsibilities Being social human beings, we do not derive economic rights out of thin air but from a corresponding set of economic responsibilities: (1) The responsibility to pay taxes on the land and natural resources that we keep under our exclusive personal control—because taxes on land reduce the price of land by reducing its hoarding and thus making larger portions of it available to a larger number of people; (2) The responsibility to repay the loans that we receive through access to national credit—because repaying loans is not only a general responsibility, but fulfills the responsibility to restore the integrity of the pool of our national credit; repaying loans we also destroy money in circulation and thus we reduce the danger of inflation; (3) If working for others, the responsibility to perform tasks required in the performance of wealth creation—because we thus establish an equivalence between the value of performance and the value of compensation for tasks performed; (4) The responsibility to respect the wealth of others—because that is the best legal assurance that our wealth will be respected.

11.3 A National Discussion The day will come when economists, no longer concerned about being “pure” scientists, will seriously welcome the intervention of lawyers (and philosophers) in understanding the ways society works. Then they will ask for a national discussion about the importance of economic rights and responsibilities. Indeed, that day economists and lawyers and philosophers will be joined by historians, if they all want to have an in-depth understanding of the “mess” we are in. Historians will let us all understand how and why did John Locke abandon the millenarian doctrine of economic justice to make us rather focus on the justice of property rights. To which Karl Marx, predecessors and followers said: let me tell

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you of the injustice of property rights. Focus on economic rights, being the creators of property rights, will break the impasse that exists between Individualists and Collectivists, Capitalists and Socialist/Communists. Focus on economic rights will help us all establish a common goal and join forces to create the common good. The coming of that day will be accelerated if a few logicians and a few epistemologists join the conversation in earnest: they will help us all learn how to use words—in the old/new proper ways. Perhaps, we will first have to realize that, while Individualism is built on an abstraction (the Individual does not exist), Collectivism is built of a double abstraction (Society is not a collection of non-existing Individuals reduced to abstract Thinking Martians, but a collection of men and women). Similarly, who needs to argue any longer that Capitalism needs improvement? Or that Communism unavoidably leads to disaster? Were Keynes and Hayek alive today, they might agree that The Government and The Market are two complementary entities: one cannot exist without the other. Not discord, but concord; not confusion, but clarity of thought will then speed us all toward a unanimous conclusion: National economic policies ought to officially recognize rights and diligently enforce responsibilities.

11.4 Concordianism Is the Answer I coined the word Concordianism a few years ago, but I have not used it much. It seems a bit pretentious and I was waiting for others to use it. Lately, I have discovered that it clarifies the mind. Above all, it has clarified my mind. It has made me realize that I have not yet advocated for the transformation of economic rights and responsibilities into corresponding national policies. Our focus here is the United States, but the policies seem to have applicability all through the world. Here we go.

11.5 National Policies to Recognize Rights and to Enforce Responsibilities Fully expounded, the above economic rights and responsibilities give birth respectively to four full blown national economic policies in the fiscal, monetary, labor, and industry. al realm. For reasons that become apparent in the proceeding let us take them in reverse order. Industrial policy. In the United States as in many other countries, we do not have an industrial policy today. Everything goes. As a result we have an industrial practice whereby the winner-takes-all. Thus, we obtain corporations that are too-big-to-fail. And when they fail, we give them inordinate amounts of public money and keep them on the respirator support system for as long as necessary. Some eventually are weaned off public money and succeed; others still fail.

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What we have been attempting to form as an industrial policy is a congeries of efforts spanning a great latitude of fields and institutions. Automatically, what we do in monetary policy affects our industrial, commercial, and agricultural activities— setting interest rates and determining the money supply unavoidably affects these activities. The panoply of agencies, from the Federal Trade Commission to the Interstate Commerce Commission, affect these activities. Even the determinations of the Food and Drug Administration have such an effect. Dominating all these agencies, automatically, stands the power of the Anti-trust Division of the U.S. Department of Justice. This is the agency that has the final say on the nature and composition of our agricultural, commercial, and industrial activities. This is the agency that has the final say on which mergers and acquisitions stand and which are prohibited. For a comprehensive look at this power, let us notice that this is the agency that determines the destination of organizations to become or not to become “too-big-to-fail.” “Too-big-to-fail” are organizations that are likely to be serially rescued by extraordinary infusions of money by the Federal Reserve System. Trouble is, the Anti-trust Division of the U.S. Department of Justice does not have a steady, objective policy impervious to external political and financial influence. Far from it. It is here that Concordian economics helps to provide a clear distinction between activities that ought to be permitted and policies that ought to be sternly prohibited. To become clear and feasible, Concordian industrial policy ought to be applied progressively to the first, say, 100 largest corporations for one or two years and then progressively enlarged to the next tranche and the next, until we reach the level of corporations that do business only within the limits of one state. The largest corporation ought to be subjected to this firm Concordian policy first. Internally, these corporations can grow as large as they can; external mergers and acquisitions ought to be prohibited in no uncertain terms. They should not buy other corporations, no matter how large or how small; they should not be allowed to be bought either. One or two years of observations will give sufficient evidence whether this policy will free the great captains of our industry from looking outside their confines and looking behind their shoulders. They ought to look exclusively at the internal welfare of the organization. Current practices of the Pac-Man Economy eventually give rise, not to internal harmonious growth, but to zombie corporations that are indeed “too-big-to-fail.” These ventures/vultures must be allowed to fail—if they fail. Corporations should be free to grow as large as they can through internal growth. To have a harmonious development we must prohibit all external mergers and acquisitions. Attempting to complete Louis D. Brandeis’ thought, I like to call this the Brandeis Rule. Labor policy. As we have no industrial policy in the modern world, so we have no labor policy. Again, a congeries of agencies deal with labor practices, but they pay no attention to what is essential for labor to prosper. Labor practices are restricted to external constraints rather than internal ones. Most attention is focused on two goals. We pursue policies of labor unionization and high wages. Unions, while essential in today’s industrial organization, carry with them a considerable set of negative attitudes: feather bedding, resistance to mechanization, and political involvement are some of the characteristics that set them to work against

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“capital” rather than in collaboration with capital. Thus is the modern world split asunder. The policy of high wages is involved in a mirage. Immediate benefits are destroyed by long-term negative effects: high wages invite competition, foreign and domestic, that destroys the golden egg. Work sites move to another region; they even move abroad. Workers stay put. In the meantime, once corporations raise prices, high temporary wages turn out to be a bane on people on a fixed income. There is a much better labor policy, the Concordian policy of equity distribution. Wealth should be owned by the producers of wealth in accordance with the value of their contribution. Apart from favoring policies that enlarge the number of individual entrepreneurs, Employee Stock Ownership Plans (ESOPs) are ideal instruments to achieve this aim. (For support ESOPs today rely on favors from the taxman; our suggested policy is for them to rely, as everyone else, on monetary policy.) Once the task of labor policy is shifted from the task of raising wages to the policy of equity distribution, an exceedingly bright future comes within our reach. The distribution of profits will be fair; the opprobrious policy of income distribution for top executives 200, even 300, times the wage of the average worker will become a sad memory of the past. Even consumers can then be made an integral part of the corporation, by distributing a share of the profits of the organization in accordance with the amounts they have spent to purchase the product of the corporation. This is not wishful thinking. It has been practiced for generations by the Harvard Coop; it is steadily increasing under our very eyes—in the form of cash-back. Consumers, after all, are an integral element of the web of relationships that keep the corporation afloat year round. This policy ought to be legalized by determining a certain amount of profits to be legally owed to (owned by) the consumer of goods and services used by that corporation. Once labor policy and economic growth are looked at this way, the introduction of robots will be welcomed. The ownership of robots will be apportioned fairly among those who create the robots. Much of the increasingly abstract conversation about the forthcoming age of AI should be focused on this concrete Concordian policy: let the Chatbots be owned by “We the People” as concretely represented by those who create them. Monetary policy. The Federal Reserve System (the Fed) is instructed today to achieve two goals on which it has only an indirect power: control inflation and favor full employment of our national and human resources. Concordia economics maintains that the Fed has control only over the creation and distribution of money. Therefore, it assigns to the Fed three tasks: (1) Create money only for the creation of real wealth; (2) Distribute loans among individual entrepreneurs, corporations with Employee Stock Ownership Plans (ESOPs) and/or Consumer Stock Ownership Plans in their constitutions, (CSOPs), and among public agencies with taxing power; (3) Issue loans at cost. Concordian economics also calls on all public and private creditors to systematically destroy debts every seven years.

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In general, rather than becoming dependent on society, the borrower who has been freed of the burden of debt can start a new productive life to the benefit of everyone. Debtors free of debts will be able to create more wealth to the benefit of everybody. How to enumerate some of the benefits of Concordian monetary policy? Well, first of all, restricting the issuance of public money to the creation of real wealth only, Concordian monetary policy implicitly prohibits the use of public money to foster financialization and hoarding of wealth: one is an empty churning of human resources; the other is a waste of natural resources. And economic freedom will still prevail. Those who enjoy the games of financialization, those who enjoy the accumulation of passive wealth, will be free to pursue their inclinations. But not with public money. They will have to rely exclusively on the private financial market. By expanding the ownership basis of the nation through favoring ESOPs and CSOPs, one gradually restricts the monopoly power of capitalists, not to reduce the amount of wealth they have legally accumulated in the past, but the amount of wealth they will be legally accumulating in the future. Thus one of the most pernicious practices that has been in vigor ever since time immemorial will be gradually reduced. Obscene wealth inequality in the presence of horrible conditions of poverty will be gradually abated. The moral economy will be allowed to operate freely. Eliminating the waste that current practices foster, enough wealth will be gradually created in the future in an ecological sound ambient. Should the Fed issue loans at cost? Yes, of course. The Fed is a public agency. It should not be allowed to make a profit on its operations. To be fair, the Fed transfers most returns to the Treasury. But the damage that payment of interest creates cannot be canceled with the stroke of a pen. And let us give a glance at the positive effects of interest at cost: how many more ventures will become feasible? Let foreign countries equalize the terrain; let them also issue loans at cost. The more pursue the efficiency of morality, the better. Fiscal policy. The complexity of the fiscal policy of today is mostly due to an attempt to recover what has been legally granted to oligopolists and monopolists. Fiscal policy is considered after the operations of the economic process have been completed. If instead we have a fair industrial, labor, and monetary policy that take care of a fair distribution while income and wealth are being created, then we realize the only fair tax is a tax on land and natural resources. The condition for the implementation of a policy of taxes on land and natural resources only is perhaps more daring and more interesting than the implicit moral value of such a suggested policy. One would need to reduce the sprawling size of the modern administrative structures of the State. More easily said than done? Perhaps. But I would count on a voluntary exit from a self-selected bureaucracy and a preference to spend one’s life in a “free” market. The complex implications of these policies become clearer when placed in the context, not so much of Keynes’ or Hayek’s writings, as the writings of four powerful American thinkers: Benjamin Franklin, Henry George, Louis D. Brandeis, and Louis O. Kelso. Individually, their works do not stand; together they form a formidable fortress.

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11.6 A Summary of Expected Effects Among the many expected effects of Concordian economic policies three seem more important and urgent than others: first, the Federal Reserve System ought to shift its attention from Wall Street to Main Street; if Main Street functions properly, Wall Street will prosper properly. Second, with our four economic policies functioning properly, all segments of the population will benefit fairly. MAGA People will no longer be the sacrificial lambs of the elites. Third, the roar for redistribution of wealth will be a noise of the past. Once Concordian economic policies are implemented, the distribution of income and wealth will have been achieved fairly and squarely. The affluent do not need to contribute one cent of their wealth to the exercise of economic rights and responsibilities. The “masses” will be satisfied.

11.7 Conclusion The COVID pandemic has been remaking the world. The tools of Concordian economics are the result of the wisdom of the ages. They have never really been given a full chance to show what they can do. At best, they have been implemented piecemeal. In a post-COVID pandemic age, we have a much better chance to put them in full display—and to pursue their goals fairly and squarely. Will we seize the opportunity? The opportunity is none other the answer to the ancient, perennial issue about the best form of government. This is the short-form answer: The best form of government is the one that governs on the basis of self-imposed (hence democratic) rules of economic justice. In this system, The Government—after much vetting—declares a set of economic rights and responsibilities to be shared by the entire nation and leaves The Market free to execute them. Ideally, the vetting will converge on the creation of the set of economic rights and responsibilities enunciated throughout the work on Concordian economics. Certainly changes of such magnitude as those advanced by Concordian economic policies cannot be implemented without thorough vetting. It is largely a mystery how do national discussions get started. Most often, they are initiated by a study group. Is there such a group on the horizon? Is a FoCe, a Friends of Concordian economics group on the horizon? Foce in Italian means “spring.”

Reference Gorga, Carmine. 2023. Four Economic Rights and Responsibilities: Tools to Make the Corporation—And Governments—Serve the Needs of Human Beings. EconCurrents, July 16. Available at https://econcurrents.com/2023/07/16/four-economic-rights-and-responsibilities/. Accessed July 25, 2023.

Chapter 12

Somism: Beyond Individualism and Collectivism

Abstract Somism, a new word attempting to signify “men and women in the social context,” tries to discover some of the natural interrelationships that exist in sociology, economics, and politics. These interrelationships tend to transform our understanding of each discipline and to destroy the current polarization in our social, economic, and political language. These relationships will eventually become safe guides to action. The action is to transform four Concordian rights and responsibilities into four economic policies. In the act of doing it, this operation will transform for men and women from their current prevalent warring conceptions of Individualism and Collectivism into Somism. Somists will we become.

12.1 The Context As the mind controls the hand, so ideas control actions. We live in a polarized political world today, because our ideas live in two opposite extremes: the Individual vs. Society. On the basis of “the Individual,” we build the language of Individualism and Capitalism; on the basis of “Society,” we build the language of Collectivism: Socialism and Communism. There is no peace on earth. The psalmist knew it, a house divided against itself cannot stand.

12.2 A Prequel My cousin in California, Tony Zingarelli, was a very clever man. He made a deep observation. He said: “All the cities in California are named after Saints, but the people are little devils.” A funny bone helped him to survive the hardships offered to an Italian immigrant. He eloped with my splendid cousin, Anna, and he asked for forgiveness from his father-in-law, promising he “would not do it again.” Adapted from Gorga (2014).

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When did all this start? The history of mankind has a long pedigree. Should we start from Socrates and Plato and Aristotle, to name only the most famous Greek thinkers (should I mention Gorgias da Leontini who, I was assured, is a direct ancestor. Yech, a sophist. Am I paying for his sins?); should we continue through Saint Thomas Aquinas, and the Doctors of Salamanca? Or, should we start from the East, from Confucius and The Buddha and Lao Tzu? Both in the East and the West, amazingly, at about the same time in history there was a fundamental agreement. We must start our study of mankind from Being or not-Being and from God. That led to a simple, but far from simplistic observation. This was the Aristotelean diktat: men and women are “social” animals. That was enough of an agreement to lead to sufficient coordination of human affairs. Dear Reader, please read slowly: centuries of developments are covered in a few words. For many convoluted reasons, this agreement collapsed in the West at the end of that splendid season: the Renaissance. We were sure of nothing any longer. Our minds, our souls were in turmoil. How many angels can dance on the head of a pin? It was not an enemy of mankind who, in jest, set the mind to this phantasmagoric quest. It was one of the Doctors of theology and philosophy. They knew more than they could say. Rene’ Descartes came along. He appeared to calm the intellectual waters when he said, “[Of this I am sure:] I think, therefore I am.” And we have built on this certitude for the last 400–500 years. Is not this a huge success? This was a Copernican revolution, however. We started looking into our isolated selves, the “I”—the me–me–me. An abyss. That is what we found. Jeremiah knew it all along: “More tortuous than all else is the human heart, beyond remedy; who can understand it?”

12.3 Two Ways to Climb Out of the Abyss There are two well-known ways to climb out of the abyss. One is to feed the Ego. The Ego will grow so large until it explodes into nothingness—no matter how painful it is for the individual human being or for society at large. Some evidence? Descartes’ resolution of the intellectual crisis experienced by humankind 500 years ago is a dichotomy, not an equivalence. The equivalence that results from those two premises. “I think, therefore I am,” is specious: I think ≡ I believe ≡ It is true. This is an empty dangerous equivalence. The other is to feed the abyss with Spirit. I have the impression that people misunderstand the nature and the function of the Spirit. They look for it all over. They should look for it inside the self. Once they do that they do eventually realize that they can feed the Spirit… with Faith. All this is not supposed to be anything esoteric, but a simple observation of facts. Nothing “religious” even. Only a sharp scientific eye: as the first letter to the Hebrews says, “Faith is confident assurance concerning what we hope for, and conviction about things we do not see.” Uncertainty? Yes. But uncertainty under our control. Who wants certainty, in any case?

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A longer treatment of these issues, one way to unify Past and Present, East and West, and gain control over our lives can be found in Gorga (2016), a book titled The Centrality of the Resurrection: Are We Ready to Let Jesus Enter our Hearts? (Relationalism) (Volume 2).

12.4 Returning to Earth Apart from the splendid succession of successes in science and technology, we are so overpowered by the riches of our gadgets that we cannot any longer reach the downtown of most any city in the world. The “I,” the “me,” the little me is in the saddle. The rational me. The riotous little me is all over the board making mischief. God is nowhere to be seen. Except as a desired rational puppy: “Wiggle your tail, little puppy; wiggle your tail.” We cannot accept the reality that some of God’s actions appear to be irrational to us. In compensation, we are all creative engineers these days! Mary Shelley knew it well: when we put our mind to it, we create Frankensteins. We are in denial. We refuse to admit how good is the Lord. Did he not create flowers? Was he not free to create things that appear (can we ever claim to we see things clearly?) as horrors, as well? Job knew how to receive good and evil from God. Will we ever return to a faithful conception of God? God is good. Science might be helpful. We now know or we should know that our brain is so constructed that it creates dopamine when it is stressed beyond its tolerance. Is not losing our mind our ultimate safety net? In high places the quest now is: “How many angels can dance on the head of a nonexisting pin?” Yes, our intellectual minds live in the stratosphere of such abstractions. No wander the quick and the sharpies say: “Go on, I will grab as many of the riches of the Earth as I can.” We all know the degrees of poverty and inequality that exist today in society. We all know them. But we are powerless to change the scales even by one ounce. We let disastrous periodic collapses of our financial systems to do that—only to restart the conditions of poverty and inequality at the very bottom of what used to be called “the business cycle.” All in the name of Individualism. All in the name of Collectivism.

12.5 The Warring Factions There are no gentlemen’s disagreements between them. There is continuous tic for tac. It is mostly a silent war. But all too often it becomes the daily newspaper headline. Or the guerrilla of a faction. Or the war of a nation.

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It was all rationalized by John Locke. On the heels of the Reformation, it was possible for Locke to destroy the memory of a two-thousand-year-old institution associated with the Catholic Church. Aristotle enunciated it; Thomas Aquinas corroborated it; the Doctors of Salamanca perfected it: this is the Doctrine of Economic Justice. Locke destroyed it—and no one even noticed it. He destroyed it by focusing our attention on a similar looking but completely different issue: the justice of property rights ([1689] 1764, pp. 27–31). He was able to concentrate our mind on one— notice, one—item. The justice of property rights. Notice, one minuscule item, separated from the immensity of the social canvass. I have known it forever, it seems: The closer you look at the head of a pin, the bigger it gets. If you are foolish enough, it will even blind you. The Socialists and Karl Marx took the hook. They rebutted: “Let us rather talk of the injustice of property rights.” And in those controversies the political conversation is still mired today. One observation that goes beyond the scope of this work is this: it is clear that John Locke had an easy ride because the Economic Justice project was somehow associated with the presence of the Catholic Church. Why did the Church not point out—indeed, why is the Church still not pointing out—that Economic Justice is an Aristotelian, if not a universal project? The preferred way out for the Catholic Church has been to develop a form of justice all of her own fashion: Social Justice. As I have often pointed out in a variety of places, the ultimate result of the Social Justice project has been to create a community of beggars: the poor beg for food and shelter; the middle classes beg for a job; and the rich beg for tax reductions and subsidies.

12.6 How to Get Out of this Vice The detailed analysis of economic rights and responsibilities will eventually put to rest the complex controversy about the “justice” of property rights. The settlement should be around the proposition that economic rights and responsibilities are the fathers and mothers of economic rights. The struggle will have to be concentrated on the declaration and performance of economic rights and responsibilities. More complex is the issue about the injustices of property rights. As well established, the controversy will be settled only meeting Karl Marx’s positions head-on. This is what I have lately discovered at Gorga (2023).

12.7 A Rebuttal of Karl Marx’s Positions Karl Marx’s positions have been rebutted in a thousand ways. When put to the test, his expectations have consistently resulted in disastrous practices. And yet, in high places, we are currently faced with yet another robust revival of his theories. Wrong

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ideals never die because it would be splendid were they ever to succeed. It is worth going once more to the roots of the many failures of Marxism. Karl Marx made three strategic mistakes. These mistakes doomed his high expectations about eliminating the faults—the injustices—associated with the exercise of property rights. The ultimate justification for the perennial revival of Marxism is that we are all indeed mightily suffering from these injustices. Although not widely acknowledged, is not financial insecurity a general condition of the modern world?

12.7.1 First Failure: Overdependence on the Power of Words Marx believed that his analysis was so convincing as to induce people to change their minds. This is the common, congenital belief of the Enlightenment in the power of words—as distinguished from systems of thought—to change the world. The reality is that the analysis of the faults of property rights can be extended from here to infinity; it is not going to redress any of those faults. The sum total of wrongs does not give any inkling as to possible needed solutions. Intemperate belief in the power of words is a common mistake of Enlightenment thinkers, which in its worst forms leads to bloviation, an explosion of words directed by muddy thinking, a form of intellectual bullyism; see, Gorga (2018). The shortest proof that Marx, the author of Das Kapital, fell into this trap can be found in the fact that today there is still deep uncertainty about the meaning of “capital.” See disquisitions about Piketty’s (2017) work.

12.7.2 Second Failure: Overlooking Social Relationships Quite strangely for an inveterate sociologist, Marx believed that his analysis was so convincing as to induce people to change their ways. He relied mostly on the power of his words to incite people to action. But what action? Ideas have no legs. They acquire their legs when they enter the hearts of people who will then change their practices. And here, Marx made his second strategic mistake. The few suggestions he offered about the need for Marxist practices were largely without content. To see how weak the Marxist prescription is, we have to conceive of society as a box. Marx simply turned the social structure upside down: What was private, he suggested, be made public. He was not at all concerned with what happens within the box—he thought that social relationships would change automatically. (This is mostly a repetition of the first mistake enlarged from economics to sociology, essentially meaning “culture” as a whole: a phantasmagoric change.) To see the weakness of this assumption, we need to ask, “Does it really matter whether the dominant factor in the making of cars is called The Department of Transportation or Ford Motor Company?” Karl Marx did not even consider the consequences of joining political with economic power.

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12.7.3 Third Failure: Considering Labor as Merchandise The third strategic mistake of Karl Marx is the most serious. He did not realize, and, apparently, his disciples and followers have not yet realized, that he gave up the fight before entering the ring. Once he conceded that labor, or euphemistically, the “services of labor” are treated as merchandise to be bought and sold on the market, the fight for justice was over. Compensation for those services is determined within the governance of property rights—a sphere that is not encumbered with too many objective limits enforceable in a court of law. The right way is to consider labor as the owner of the wealth it produces. This statement is Lapalissian. There is no question as to its truth, its validity, its tremendous implications for our social, economic, and political relations. It is nearly universally and consistently accepted in theory. Even John Locke reaffirmed and emphasized it. At (1689, Bk. II, Ch. v, paras 25–27), he stated in no uncertain terms: “The labour of his body, and the work of his hands, we may say, are properly his.” Yet, it is often neglected in practice, where it most counts. Fortunately, the world is so constructed that the validity of this fundamental statement can be ascertained through the proper set of economic, let alone moral, theories. (Facts are infinite; therefore, theories are indispensable.) That the product of work rightfully belongs to the person who creates it, as we have seen, can be definitely ascertained through the analysis of economic rights. Above these controversies, and largely controlling them, there are two even more abstract intellectual positions concerning Individualism and Collectivism. Social peace will not be acquired before settling these cumbersome intellectual extremes.

12.8 The Two Extremes Do not ever underestimate the power of abstract ideas. Individualists, like Lady Margaret Thatcher or the famous Ayn Rand, will say that society does not exist (!). They are every day ready to send human beings to sleep, hungry, under a bridge, under the stars. To die there. Collectivists, when in power, are all too ready to send “dissidents” to the wall or to the Gulag—to die there. Should we pause to consider who the dissidents are? These are innocent people who see the reality and say, “There must be a better way.”

12.9 The Present Social Problem Communism, as one of the extreme forms of Collectivism, is intellectually dead— even though quite a few intellectuals prefer to keep it on ventilator support. And Individualism is not too well off. Guided by ideologies oscillating between these two

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extremes, the social, economic, and political world is falling back into Dickensian conditions that once gave rise to Communism. Dismal conditions are again prevalent the world over. Are we forever going to swing back and forth between these two extremes? The hallmark of Civilization is a constant search for balance between extremes. It is clearly time to look for an alternative to both extreme systems of sociology: and many a “third way” have indeed been created. But they are all based on Ideology. Not on economics. Individualism and Collectivism are the two extreme poles of the social discourse. They are both abstract entities without real content. At their base, stand the Individual alone and Society without human beings. These are all-encompassing abstractions. The “Individual,” the person alone in the world, is an abstract creation of the last five hundred years: if you have a father and mother, you are a member of society; if your father and mother were men and women in white chemise manipulating the content of glass beakers in a biology lab, you are a member of society. Society without human beings is, of course, a more offensive abstraction: Yet, this abstraction has assumed the power to send human beings to be shot as traitors or to the Gulag or to a hard pavement in a gelid night—to die there. Apart from brilliant rhetoric, nothing solid could have possibly been built on either one of the two abstractions. The rhetoric is as brilliant as it is powerful. Calling upon the higher aspirations of human beings, each abstraction not only infuses fanaticism about one’s own superiority; it has a built-in enemy in the person who happens to fall for the allures of the opposing ideology. Both constructions split society in two and pit one part against the other.

12.10 What to Do? The first thing to do is to change our modes of thinking and expression. We need new language. Let us restart from basics. We need new language, a language that reflects the nuanced reality of daily life rather than the polarized vision dictated by ideologies. The reality is that human beings live in a series of interlocked circles, one into the other, up and down an ascending and descending ladder that organically goes from the Individual to an ever larger circle and higher level of Society and from the highest level of Society back to the Individual. The social reality is composed of “men and women in the social context.” This is too long an expression for today’s fast minds. Can it be contracted into “Somism”? Totally unawares, I have lately found out that the roots of Somism are very old indeed. As David S. Wise rather recently pointed out to me, Soma was the ancient Hindu “Moon” god, also called Chandra, the father of the Buddha was also a counterpart of Ambrosia and manna; one verse of the Rigveda (8.48.3) relates that “We have drunk Soma and become immortal; we have attained the light, the Gods discovered.” In ancient Greek, Soma means body, namely a “living, aware, bodily person.” In

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genetics, somatic cells contain DNA arranged in chromosomes; each pair of chromosomes comprises one chromosome inherited from the father and one inherited from the mother. A society right there. In its modern formulation, the word Somism was coined by this writer in the 1960s. Somism stands for the theory and practice of the (Social) men and women in the social context, the civilized person. Somism is offered as the goal we are searching for, if we want to gradually climb our way out of the abyss into which both Individualism and Collectivism have plunged us for way too long now. Individualism and Collectivism, as extreme intellectual bipolar constructs, find their roots in Rationalism—whose death throes we are now witnessing. See Lukacs, At the End of an Age (2002). In any case, as we shall see in Chap. 14, Somism is rooted in a correct expansion of Rationalism. This is work in progress carried out during the last twenty years, work that this writer likes to call Relationalism. See, Gorga (2021). The aim of Relationalism is gradually to put everything in relation with everything else in a methodical, logical, and technical fashion. Thus Somism is an attempt to find the connections that exist in reality between Individualism and Collectivism, a way of relating individual parts to the whole of society. This is a way of discovering truths that exist in each part and relate them to the context of men and women in society. This is a way of discovering the reality of social harmony.

12.11 The Fundamental Structure of Somism Somism is an intellectual attempt to integrate the aspirations of Individualism with those of Collectivism. This is not a search for the “third way;” rather, it is a search for the right way. The historical roots of Somism lie, in equal parts, in Individualism and in Collectivism. The full display of Somism is contained in the following Fig. 12.1. This construction allows us to make a fundamental adjustment in our understanding of the world of sociology. It allows us to see that Individualism and Collectivism, rather than being opposed to each other, are two complementary conceptions of the social and political reality. One moves the observation from society to the Fig. 12.1 The Somist synthesis

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individual person, the other from the individual person to society. The two visions, if and when complete, are perfectly symmetrical—even though they are upside down. That explains the harshness of the feuds. Family feuds are the harshest. The dialogue, and often the lack of dialogue, between adherents to Individualism and Collectivism primarily stems from their insistence on giving primacy either to society or to the individual person. Underneath this choice there are terribly complex philosophical issues, which are eschewed here just because Somism is an attempt to escape the circularity of argumentation that is unavoidable in any symmetrical visions of reality. To achieve this feat, rather than two, Somism posits the existence of three objective entities: Man, Society, and Man in Society. The difference between the Individualist, the Collective, and the Somist understanding of society can be put this simply: for Individualists, society does not exist1 ; for Collectivists, society is composed of the numerical addition of Self plus The Other; for Somists, society is composed of the relation between Self and The Other. Somism accepts the existence of both Man and Society, not as separate elements but as an integration of the two. Hence, the social man and woman, the civilized person: the individual person observed into the context of the civilized society. The essence of Concordian sociology is this: We are all dependent on each other.

12.12 What to Do Next? Somism is best approached through an analysis of its content, a content that naturally bleeds into the content of Concordianism as we shall see in the next chapter. The ancient aspiration of humanity has always been to build the ideal society in which the individual human being thrives, not at the expense of other human beings but in synchrony with others. With Concordian economics today more than ever we have the tools and the wherewithal to build as nearly an ideal society as we can imagine it. Let us do it.

1

Most famously, Margaret Thatcher, now the late Lady Thatcher, falls into this category of thinkers. Interestingly, it must be remembered that, as Alasdair MacIntyre emphasized in After Virtue (1981), the conception of “the individual” has come into existence only during the last four to five hundred years, with Pico della Mirandola as a standard bearer leading the parade.

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12.13 An Important Sidestep With the absorption of Individualism into Somism, its companion traveler, Liberalism,2 also disappears from sight.3 Its original sin was to grant to Individuals rights without responsibilities. Libertinism of the few settled in the saddle. With Somism, Liberalism disappears from sight, not through a play of words but actions: through the proclamation and implementation of economic rights and responsibilities. The original sin of Liberalism was to separate Freedom from Morality. Intellectually, Liberalism has smitten us with the pixy-dust allure of the promises of Liberty and has allowed us to perform some high-wire acts, giving us the apotheosis of the thought of Kant, Hegel, and Trump (Trump!!!???—thought?)—yes, the (vile and vicious) rhetoric of Trump.4 Practically, Liberalism has been an abject failure either directly committing some heinous acts or being unable to curb such heinous acts as genocides, racism, abject poverty, and wars. French liberals had the unmitigated gall to offer “their” freedom or the guillotine to the Nuns at Compiegne. The nuns chose the guillotine. And the “masses” were encouraged to eat their lunch while looking at heads rolling away from their bodies. Confining Liberalism to history is a small price to pay. Liberalism is beyond redemption. Through its “good” intentions, Liberalism— allied to Rationallism—can sweat talk us to rationalize any evil. We lose nothing if we expunge it from our vocabulary. We only gain the freedom to examine true alternatives. With the Left eating itself and the Hard Right falling prey to violence, the time to get out of our straits is short. May BOTH EXTREMES find in Somism and Concordianism answers to their just demands. A Special Appeal There might be other ways to get rid of the strictures of both Individualism and Collectivism. So far no alternative has been found. Concordian economics remains our best hope/certainty. Somism and Concordianism offer Liberty the opportunity to atone for its past sins and reinvent itself by joining forces with its long-lost sister: morality. Long live Freedom and Morality.

2

In the next volume we will expand on the age-old roots of Liberalism. For the many weaknesses of current Liberalism, which the author claims is under siege not only in America but throughout the world, see, e.g., Samuel Moyn (2023). 4 Trumps’ reasoning is built of this specious equivalence: I think ≡ I believe ≡ It is true. 3

References

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References Gorga, Carmine. 2014. Somism: Beyond individualism and collectivism toward a world of peace and justice. Mother Pelican Journal 10(11), 11. Available at http://www.pelicanweb.org/solisu stv10n11page2.html. Accessed 25 July 2023 Gorga, Carmine. 2016. The Centrality of the Resurrection: Are We Ready to Let Jesus Enter our Hearts? (Relationalism) (Volume 2), The Somist Institute. Gorga, Carmine. 2018. The Redemption of the Bully: Through Love Toward the Beloved Community. Scholars’ Press. Chisinau, MD-2012, Republic of Moldova. Gorga, Carmine. 2021. From rationalism to relationalism. Academia Letters. https://www.academia. edu/49593701/From_Rationalism_to_Relationalism. Accessed 25 July 2023. Gorga, Carmine. 2023. Finding Economic Justice. EconCurrents, November 12. Available at https:// econcurrents.com/2023/11/12/finding-economic-justice/. Accessed 27 November 2023. Locke, John. [1689] 1764. The two treatises of civil government, ed. Thomas Hollis. London: A. Millar et al. Lukacs, John. 2002. At the end of an age. New Haven: Yale University Press. MacIntyre, Alasdair. 1981. After virtue, a study in moral theory. Chapel Hill, NC: Notre Dame Press. Moyn, Samuel. 2023. Can liberalism save itself? New York Times. https://www.nytimes.com/2023/ 08/26/opinion/liberalism-trump-russia-china-cold-war.html. Assessed 27 August 2023. Piketty, Thomas. 2017. Capital in the Twenty-First Century. Translated by Arthur Goldhammer. London, England: Belknap Press.

Chapter 13

Concordianism: Beyond Capitalism and Socialism

Abstract Concordianism is a new word signifying “men and women practicing Concordian economics.” Concordian economics tries to discover some of the interrelationships that exist among politics, economics, law, philosophy, and spirituality. These are disciplines currently in jeopardy. The injection of Concordianism tends to transform our understanding of each discipline and to destroy the current polarization in our actions and our cultural language. Concordianism can eventually become a safe guides to action. This operation will transform our prevalent, warring conceptions of Capitalism and Socialism/Communism into Concordianism. Practicing these guiles, Concordians will we become.

13.1 Introduction Concordianism is Concordian economics in action (Gorga 2022). Fifty years in the making, 27 of them assisted by Professor Modigliani, a Nobel Laureate in economics at MIT and 23 years assisted by one of the sharpest minds in economics, Professor M. L. Burstein, Concordian economics offers a set of integrated policies to fight both inequality and poverty at the same time. This is a property that was pointed out by our first Gloucester poet laureate, Vincent Ferrini (2002), who, reviewing for the local paper my fundamental book titled The Economic Process (2002, 2009, 2016), wrote that Concordian economics “has the answers to universal poverty and the anxieties of the affluent.” Practicing Concordian economics, we can reach these tween goals because Concordianism is purified Capitalism Capitalism—as well as purified Socialism. Concordianism shares some of the goals, but none of the means of Socialism. In Concordianism, the Government—the State?—democratically decides on the rules of the road and lets the Market 100% free to operate within those rules.

Adapted from Gorga (2021).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Gorga, Concordian Economics, Vol. 1, Springer Studies in Alternative Economics, https://doi.org/10.1007/978-3-031-47320-3_13

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13.2 The Roots of Concordianism This overall practice of Concordianism is the immediate result of the fusion of the thought of Keynes and Hayek (Gorga 2012a). In-depth analysis finds the thought of these two great, dead economists as complementary systems of thought. Basically, both The Government and The Market are essential components of the civilized society. This is the intellectual reality out of which Concordianism is built. The roots of Concordianism are longer than that. In Concordianism, there is not even a scent of the bloviation of Hegel or Marx. Faithful Marxists do not seem to have yet realized that Marx was a sociologist and a philosopher: he was not an economist. Once he conceded that “labor” is a commodity to be bought and sold on the market, he gave up the good fight before entering the ring. In Concordianism, “workers” are the owners of whatever they produce; in Concordianism there is this “ancient” category of thought: Ownership of Property. This is a category of thought erased—literally erased—from polite political discourse by none other than our beloved Thomas Jefferson. The operation is well known. In order to preserve the union of the Colonies and as a price to pay for the preservation of the original sin of slavery, he found no better solution than to amend the Lockean formula—literally a synthesis of Locke’s system of thought, a system developed over the centuries by many minds—of life, liberty, and property. In the Declaration of Independence, Jefferson changed the formula to life, liberty, and the Pursuit of Happiness. What is happiness? What is its pursuit? Is this a task to be removed from personal responsibility and slapped on to the state for fast production? Is this goal ever to be achieved? What a tangled mess has the thought of our best thinkers during the last four to five hundred years produced! For some highlights, see Gorga (2017), “A Cascade of Errors (1517–2017).” Yes, let us get away from abstractions. After reintegrating men and women in the social context as Aristotelian Somists out of Individualists and Collectivists, through work done in the previous chapter, there will not be any longer a view from the left and a view from the right of the political spectrum. Ideology will disappear, and room will be made for a search of the Truth. Concordian economics creates Concordians and Concordianism out of its wisdom and foresight.

13.3 The Content of Concordianism Concordianism accepts the existence of both Man and Society, not as separate elements but as an integration of the two. Hence, we observe the Social Man and Woman, the Civilized Person: the individual person inserted in the context of the civilized society. And, with the goal of building or rebuilding the civilized society, rather than spending much time on the analysis of its general characteristics, Concordianism prefers to deal with specifics. Specifically, Concordianism makes twelve concrete and

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three abstract recommendations. The first four relate to politics; one relates to socioeconomics; and four relate to economics; some of these suggestions are then fused into three additional recommendations to be applied in international relations. The chapter concludes with three intellectual recommendations concerning Concordian financing, Concordian ontology, and Concordian spirituality.

13.4 Concordian Politics Four recommended practices of Concordian politics are: Unity in Diversity; Popular Sovereignty, Democratic Equality, and the Rule of Law. These four core ideals have been discovered by this writer’s colleague, William R. Collier, Jr., who synthesizes them as United People’s Democratic Republic, from which the acronyms Upadaria and Upadarianism spring forth (see Upadaria). The four ideals are an integrated set: it is not possible to achieve any one of them without achieving all four of them as a pervasive and lasting state. Also, while these four core ideals have been well understood individually so far, only by Collier have they been proposed together as an integrated system of politics. Only an integrated system of politics can realize the ideals of Concordian economics.

13.4.1 Unity in Diversity A Biblical insight states, “A house divided against itself cannot stand.” It cannot stand for long; it cannot stand well. Unity is essential to the preservation, indeed to the very dynamic existence, of any political state. Without unity nothing can be achieved; and whatever was ever achieved at great cost in the past is put in jeopardy by protracted disunity. If so, how can unity be achieved? The answer is only apparently contradictory, which means that it hides a deep verity. In a state like the United States unity can be achieved only if the infinite diversity of “the other” is deeply respected. This truth is self-evident and has mostly been practiced in the United States; yes, it is valid for every other country in the world as well. There is no state that is so homogeneous as not to require respect for diversity; and even if one could produce a country homogenous in one respect, it would not take long to discover elements of deep diversity in its population—whether in relation to distribution of incomes or distribution of talents. As the French say, “Vive la différence.” In the face of such ineradicable differences among human beings, how can one achieve unity? The magic solution—and the solution is indeed magic, because it is not reducible to the constraints of mechanical reproduction—is to reduce the search for unity to the area of essentials. The greater the respect for diversity, the higher the chances of achieving unity. The search always starts anew. The solution is never achieved forever.

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The respect for diversity is rooted in the acknowledgment that everyone has something to bring to the table of life. Not only that. The respect for diversity is rooted in the acknowledgment that diversity is the source of life—whether biological or intellectual life. Essential are matters that relate to preservation of the states’ existence and preservation of morality. The first duty of a state is to preserve its existence; the second is to preserve the conditions of morality. And morality cannot be reduced to sex. Morality is the condition that allows for a maximum space for love and maximum restriction of the sources of hate among human beings. It takes love to give and to receive economic justice. Thus morality, properly interpreted, fosters the life of other human beings and automatically the life of all human beings—no matter how different they are from us. Hence morality is the precondition for the preservation of the state. In matters of preservation of existence and morality there can be no compromise; in all other cases compromise ought to reign—especially if, as Louis D. Brandeis pointed out, the other fellow insists on wanting something I want to get rid of. Preservation and development of morality is the common goal that unifies a nation. Morality, as the ancient understood it, is a virtue-based morality. To be moral an action must respect all virtues. A modern definition of morality encompasses three injunctions; do not do harm to others; do not do harm to yourself; do not allow others to harm you; see Gorga (2012b).

13.4.2 Popular Sovereignty In a non-theocratic state, the sovereign is neither the king nor the mob. In the United Sates, it is clear who reigns. The sovereign is We the People. We are all singly and jointly sovereign. We govern ourselves; we have self-government; we have government of the self. Which means that we, the ideal citizens, are those who have fully integrated into our existence the principle of Unity in Diversity—as well as those who are fully conversant with the principle of Democratic Equality. Equal (indiscriminate) access to national credit is one of the essential conditions for the existence of Concordian economics.

13.4.3 Democratic Equality Equality has become an ideology capable of destroying the infinite individuality of each human being. What is equality then? While in the present we are all unique, in relation to the future we are all potentially equal: we all have the same potential of becoming saints and/or sinners. We are all equal only to the extent that we are all different from one another. Equality does not destroy all differences. True equality tends to elevate each one of us to the standards of those who have pursued

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and achieved the highest virtues in life. This is a topic whose most important characteristics are best addressed within the concrete context of economic policy. True equality means non-discrimination—non-discrimination especially where it counts most, in the exercise of the four essential rights and responsibilities of Concordian economics.

13.4.4 Rule of Law We can achieve and preserve unity only if we live by and in the law. We respect the law, because we made it. After much considered opinion, we can even change the law. We can change the law because we made it. We all contributed to the extent of our potential to the creation of the law. We make the law because we govern ourselves. And the best laws we make are those that respect each and every one of us in our awesome diversity. If we pursue these four core ideals, in Bill Collier’s word, we achieve Concordia. So far, Concordia is the private Utopia of a few Concordians. If, as John Kenneth Galbraith put it to this writer, our thrust is in the right direction, we will get there: we will live with multitudes in Concordia. In any case, as Robert Louis Stevenson put it in “El Dorado,” the journey is more important than the destination. The important decision is to start walking together now. Come to think of it, do not these four core ideals constitute the spirit of the United States Constitution? Do they not form our spiritual constitution in America? Do they not represent the Constitution in action; do they not translate the Constitution into daily action? If we aim to preserve our Constitution, as stressed by Benjamin Franklin, the father of Concordian monetary policy, we had better observe these four core ideals in our daily lives. We had better walk in our forefathers’ shoes. The way is tested and true. It is the tempting detours that are leading us astray. The rest of the world will eventually stop envying and idealizing America and start practicing all our human virtues. Virtues were not born in America.

13.5 Concordian Socio-Economics From Sun Tzu to von Clausewitz and their followers, the world has spent an inordinate amount of time devising ways to create relations of subjugation and dependence among people. The genius of the American Revolution and the United States Constitution was to create structures of Political Independence. It is now time for everyone to learn socio-economics, a task which is much simplified in the classic, “I, Pencil: My Family Tree as told to Leonard E. Read.” It is available at the Foundation for Economic Education. The lesson learned by Leonard Read is that economics is ruled by relations of interdependence (Gorga 2012c). Hence, the

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core of Concordian socio-economics is composed of only one recommendation: do call for a Bill of Economic Rights and Responsibilities.

13.6 A Bill of Economic Rights and Responsibilities The core of Concordian economics is composed of the following integrated set, a bill, of economic rights and economic responsibilities.1 This bill is constructed on the basis of the needs of the three factors of production that were identified by Classical economists as land, labor, and capital—enlarged to four factors so to clearly distinguish between modern forms of financial and physical capital. First Set: We all have a right to access natural resources and a responsibility to compensate the community for the exclusive use of such resources; Second Set: We all have a right to enjoy the fruits of our labor and a responsibility to work to the best of our ability; Third Set: We all have a right to access national credit for the purpose of creating new wealth while spreading its ownership among all those who create it and a responsibility to repay any such loans; Fourth Set: We all have a right to protect our wealth and a responsibility to respect the wealth of others. As it can be seen, any economic right is rooted into its own correspondent economic responsibility. Indeed, as pointed out by this writer in the Spring 1999 issue of the Journal of Markets and Morality, economic rights can be legally and morally acquired only through the exercise of their correspondent economic responsibilities. This is a construction that does not only allow us to receive economic justice from everyone, but also to grant economic justice to everyone else. Since this bill of economic rights and responsibilities is an expression of true interdependence, its implementation will do wanders; especially if it is implemented at home and abroad. Hence we need to advocate for Concordian international relations; we need to build a world of peace and justice.

13.7 Concordian International Relations: Toward a World of Peace and Justice We all talk peace. From the United Nations to City Halls to family parlors, we all talk peace. But, harsh as the expression might sound at first hearing, we do not do peace. We seem to labor under the spell of The Great Rationalistic Illusion that it is enough to utter the word in order to perform the deed. There are three actions we have to pursue, if we really want peace. 1

The word “bill” was added by Stuart-Sinclair Weeks. The list here has been shortened a bit.

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We have to create three sets of teams for peace and justice.

13.7.1 First Set of Teams Experts in Foreign Affairs Within a Department of Peace. We have to stop thinking that we have to destroy the town in order to save the town; that we have to destroy the country in order to make it safe for democracy. The Department of Defense can save us from attack, but it cannot bring peace to lands where there is no peace. It is only a Department of Peace that can bring peace at home and abroad—and in the long run it is the only instrument for humans to win the war against terrorism—a scourge of the modern world. As advocated by US Representative Dennis Kucinich, let us establish a Department of Peace right here in the United States. If we do that, it is reasonable to expect that Europe, and perhaps even Russia and China and Iran and Venezuela, will follow suit. Duplication of effort, redoubling of effort throughout the world should be welcomed. Let us assist Palestinians to establish their own Department of Peace, immediately thereafter. And of course, the other country that should be encouraged to establish a Department of Peace is Israel. And then there are all other countries from Iraq to Sudan to Armenia, to Bosnia, to Rwanda. We know the list. The most important element in the chain of needs is that the Department of Peace, without resources, would be a mockery. But where do we find the resources, especially at a time of substantial deficits and budget cuts? Well, the first candidate is a voluntary—free and willing—transfer of, say, ten percent of resources from the current budget of the Department of Defense. The experts in this department will candidly tell you that it is impossible—with their means—to stop terrorism. What the voter has to see is that, given the proper means, it is possible to stop terrorism. We cannot give in to pessimism and despair. We must indeed stop terrorism. Only a Department of Peace can plan for peace, by intimately knowing the geography, the history, and the culture of each county in which the USA and Europe and Russia and China is involved, by creating SWAT Teams for peace and justice for each country, then by training local people to carry out their mission of peace and justice, and finally endowing them with satisfactory intellectual and material means to achieve their goal. These then are the next two sets of teams that we have to create: Teams for Peace; Teams for Justice—teams that no longer talk and plan about peace and justice, but teams that actually carry out the tasks of peace and justice on location.

13.7.2 Second Set of Teams SWAT Teams for Peace. The second suggestion is for the Department of Peace to create an appropriate number of SWAT teams for peace. (Would not ten percent of

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the people currently working within the Department of Defense give an eyetooth for the transfer of their energies toward such a function?) Call them Circles of Love. I prefer to call them Mary’s Messengers of Mercy, because Mary is the only person who is highly respected in all three monotheistic religions. If we monotheists truly honor her, she will be more easily honored by other religions as well. The Circles of Love should do precisely what their name implies: they should create Circles of Love around hamlets, and villages, and cities, and nations where hate prevails today. Depending on the number of teams available and the specific mission to be carried out, the pacification program should proceed house by house, starting from the outermost ring of the area of trouble and proceeding toward the center. The ideal is to build “Circles of Love” around every trouble spot of the world. Each team should be composed of at least two or three volunteers—one volunteer from each of the major faiths that prevail in the areas to be pacified. There should be no discrimination as to age or sex. The specific formation of the teams will depend on the particular needs to be addressed. Indeed, one need not even go abroad. With perhaps only minor modifications, the entire approach might also be used to help solve many problems of “downtown” areas in all major cities of the world. In each nation there seem to be areas in which peace does not reign. The prerequisite should be a simple willingness to pray together with the victims of violence. The teams should implore for the shooting to stop—and for the vicious circle of revenge to stop. No sane politics issues from the barrel of a gun. Contra Bullies. Today, it is not only the terrorists who threaten the peace of the world. Who are the people who engage in schools massacres and church massacres and temple massacres? Are they not the bullies? And if not bullies, are they not those who have been so victimized by the harassment of the bully as to explode into murderers. Is there any difference between a bully and a terrorist? Circles of Love have to be created within each school. The methods to bring peace to the soul of the bully might need to start within each classroom. See Gorga (2018). A More Specific Definition of Means. Governments use force trying to achieve peace. And they rarely succeed. The synagogues, the churches, the mosques, and most other religious affiliations know this reality quite well. They have always preached that peace can be achieved only through love. The time perhaps has come to transform preaching into teaching and enacting. Training the Teams. Perhaps the most important tool to be given to each member of the team is the ability to pray together with people of a different faith. Each team should be trained to speak local language(s), and should be familiar with the history and the culture of the place to be pacified. But development of leadership skills and negotiating techniques such as “getting to yes” should also be part of the curriculum. Above all, members should not only teach but practice the four core ideals of Concordian politics. Participation by Civil Authorities. The various religions might want to start the effort on their own. But, if the formation of such teams should involve large number of trainees, financial support from various Departments of Peace might be a necessity. To a very minimum, overall support from governments might be requested from the start for a variety of purposes: for instance, to obtain current intelligence data, and at

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least detailed information about the geography, demographics, and economics of the area to be pacified. But since the “circles of love” should be conceived as an army of love, advice as to strategic deployment of the teams should also be obtained from military experts of the various nations that might want to participate in the effort. Risk to Life and Limb. Undoubtedly, there would be risk to life and limb involved in the deployment of such teams. The rationale for accepting this risk is simply stated. If the various Departments of Peace and the various religions do not take the initiative to obtain peace, the military sooner or later will intervene. Through the military, risk to life and limb is increased many times over for all contestants—not excluding extant civilian populations.

13.7.3 Third Set of Teams SWAT Teams for Justice. The third suggestion is for all religions and the Department of Peace to create SWAT teams for justice. Specifically, SWAT teams for economic justice. It is easy to conceive of teams of farmers and plumbers, carpenters and electricians working together with local populations building projects that are essential to the sustenance of life—all the while using the four sets of economic rights and economic responsibilities concerning land, labor, financial capital, and physical capital. They would indeed do peace; they would indeed practice justice.

13.7.4 An Urgent Necessity The recent painful events in Israel and Palestine make one thing evident: the insufficiency of today’s conception of the state itself. The state is officially defined as a “monopoly of force.” Force is never going to heal the reciprocal wounds that Israelis and Palestinians, for example, have inflicted upon themselves. Clearly, we need new institutions. The suggestions offered above might be a start. But they have to be capped with a new conception of the structure of the state. The state has to become a dispenser of love. One solution worth experimenting with to reach this goal might be Two States, one presidency, with a yearly revolving president—elected in turn independently by Palestinians and Israelis. The history of the Rotating Presidency of the Council of the European Union might yield useful insights concerning the operations of the proposed yearly rotating presidency in Palestine.

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13.8 Upadaria or Concordia, the New Utopia The health of all past Utopias has not been too strong or long lasting. No sooner was their intellectual structure erected that it was destroyed by mad men and not a few mad women in authority. Indeed, if the world appears to be touching the bottom of despair these days, it is because we are no longer able to do much better than conceive of Negative Utopias—and with Communism and Fascism we did realize them, thankfully only for a relatively short time. What is the hope then of ever building Upadaria or Concordia, to use words coined by Bill Collier, as the long lasting New Utopia? The hope stems from the realization that all past Utopias were going into the future blind and directionless. There was no practical intellectual structure to inspire and sustain them. Concordia is instead led by Somism in its tripartite division of Concordian politics, Concordian socio-economics, and Concordian economics—to be implemented both at home and abroad. And, if this is not enough reassurance yet, Somism has in its quiver three additional recommendations that can also be deployed: Concordian financing; Concordian ontology; and Concordian spirituality. These are constructs that, even without our awareness, enter deeply into every aspect of our lives.

13.8.1 Concordian Financing So far, this writer has not dared to utter the word “Capitalism,” not so much because it is one of those ultimate words that arrest the conversation, but because we did not yet have the proper framework of ideas to deal with it. We do now. The inner spirit of Capitalism is such a mysterious and powerful force that it was transmogrified into State Capitalism, where it was supposed to be destroyed by its presumed mortal enemy, Communism. (Rarely, if ever, is it realized that Communism is State Capitalismminus-political freedom.) Such an adaptable institution as Capitalism must be a peculiar variety, a stunted variety, of true Capitalism—just as true Communism has been construed as being transmogrified into State Communism. The Capitalism of our daily experience can in fact be identified as 1% Capitalism— or Capitalism that favors only about 1% of the population. These transformations can be clarified by placing into our familiar framework (Fig. 13.1). The middle rectangle of this construction presents a new entity, Concordianism, not as a form of abstract Concordian economics but especially as a specific form of financing: Concordian financing. (Concordianism is not as a “third way” between Capitalism and Communism, but the right way.) The task is to build a system of capital financing that benefits 100% of the population 100% of the time. Other possible names are: 100% Capitalist, or Upadarian, or Somist, or Relational financing. For

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Fig. 13.1 Three forms of financing

such concrete alternatives, the Reader might look into some of the financial institutions designed by this writer over the years: see, e.g., Three Types of Financial Interdependence Fund (Gorga 2023). The most synthetic expression of a Bottom Up, Rights-Based Monetary Policy (see Gorga and Kurland 1987) can be found in the following petition that is circulating on the Internet. A Patriotic Reform of the Fed: A Petition to the Chair of the Federal Reserve System and U.S. Representatives and Senators

After celebrating the 100 anniversary year of the creation of the Federal Reserve System (the Fed), intense scrutiny of its charter is inevitable. While many today are agitating for the destruction of the Fed, our campaign is designed to Reform the Fed. It is our considered opinion, as set forth in the following paragraphs, that all we need to do is to bring three technical changes to the Fed’s process of creation and distribution of money. While small, in their implementation these changes will function as tipping points, whereby everything will change in the economic system to benefit every member of a nation—to the detriment of no one! The Chair of the Federal Reserve System in the United States has the power to implement these changes through administrative decision. Unless the Federal Reserve System exercises its freedom to implement these changes through administrative decision at the earliest possible date, we request that our Congress enact these changes into law. In this case, we will have to call for a thoroughgoing review and revamp of the Fed’s Congressional Charter and more democratic governance, including openness, transparency, and accountability. And should the Fed be opposed to these changes, we suggest an alternative course of action: the Congress shall leave undisturbed all functions that the Fed is so admirably performing, but will create a new federal bank and/or a set of regional banks to administer the process of creation and distribution of public money in the interest of the nation as a whole, as suggested below.

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At present this petition is being circulated by a small grass-roots group of people in the Greater Boston area. We are inviting people from all walks of life and all regions of the country to join us so that this petition represents the will of “We the People.” Credit to the People Whereas: The current management of money is broke, because in varying degrees: It does not serve the poor; It does not serve the middle class; It does not serve the rich, but the quick and the sharpies; and Whereas: The Fed creates new money on the strength of national credit; and Whereas: The value of national credit is not created by bankers; Whereas: The value of national credit is created by the blood sweat and tears of all of us, We the People; Therefore: We ask that the Fed administratively decides or legislatively be made to issue 1. Loans—not grants—ONLY for the creation of new real wealth (neither for the purchase of consumer goods, nor for the purchase of financial assets or goods to be hoarded); 2. Loans for the benefit of all the people in our country; hence, loans have to be issued not exclusively to financiers, but to individual entrepreneurs, governmental entities, cooperatives, and corporate enterprises that have Employee Stock Ownership Plans (ESOPs) and/or Consumer Stock Ownership Plans (CSOPs) in their constitutions; 3. Loans at cost of administration (not at variable interest rates). thus We the People shall exercise our unalienable right of access to national credit.

13.9 Concordian Ontology It was a healthy shock to this writer’s being to discover a few years ago that at the same time Plato—circa 500 BC—set the intellectual world of the West ablaze with his conception of Being, Buddha set the intellectual world in the East ablaze with his conception of Not-Being. The world has not stopped intellectualizing about the meaning of these two entities ever since. In the process, both the East and the West have—though apparently unawares—agreed that both conceptions cannot be static. They must be dynamic. Hence both the East and the West have concentrated their attention on the conception of Becoming. Thus the West has automatically lost its faith in the totally abstract conception of Essence—without ever asking the simple question: essence of what? The East, instead, has been much more advanced and concrete in its intellectualization of Becoming. The East has investigated it deeply

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Fig. 13.2 Relational ontology

through the amazingly complex and fertile apparatus of Yin/Yang. Strangely enough, but quite naturally enough, the Middle East—or more specifically, the Muslim World—came up with a middle ground conception beyond Being and Becoming: at its very birth during the VII Century AD, Islam discovered the conception of Existence. Western ontology has fought the acceptance of this conception ever since, preferring the unavoidable death of metaphysics, cf. Gorga (2009). Relational methodology allows us to rebuild ontology along the following lines. Figure 13.2 reads as follows: Being, an entity which we know not, hence might equally appropriately be called not-Being, becomes existence. And existence constantly attempts to return to the state of Being.

13.10 Concordian Spirituality We will not achieve peace—and concord, or Concordia—in the world, until we achieve intellectual peace. Relational ontology offers us a chance to create peace horizontally, so to speak, across the vast geographic confines of the world, where East meets West. Yet deep—or vertical peace, so to speak—peace and concord will not be achieved until we obtain peace internally within each one of us. Relational spirituality might grant us that grace. Again, the world of spirituality is replete with strife. We have even given at least one prominent name to this state of affairs: we call it the war of the “two cultures.” It all starts with, well, the Cartesian, rationalistic conception of the world, namely, the split between mind and matter. Starting from this dualistic, hence totally symmetric—and yet still presented in a linear fashion— conception of the world, our familiar relational methodology offers us the opportunity to construct a tripartite and organic understanding of the world. When Einstein revolutionized the world of physics, he announced his discovery as the equivalence of matter to energy. Yet, neither he nor any other physicist has asked this question: if the relation between matter and energy is one of equivalence, where is the third term? I discovered the third term one day while reading Capra’s The Tao of Physics (1980). I was then up up up in the sky over the Atlantic. Did this position help me

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along? Whatever the case, this is the answer I found that day: Spirit.2 Spirit is the third term that logically and indissolubly links matter to energy. Saint Paul (of course) discovered it first and (of course) discovered it in a fully comprehensive way: “The Lord is the Spirit, and where the Spirit of the Lord is, there is freedom.” I then built this equivalence: Matter ↔ Spirit ↔ Energy. Later, these relationships were analyzed in greater technical detail, presented together in our familiar geometric format, and published in a peer-reviewed journal run by a group of physicists, see Gorga (2007). As pointed out there, the simplest way to read the present construction is this: one enters into the stone with a hammer; into the energy of the stone with a cyclotron; and into its spirit with prayer. In 1946 Einstein remarked: “The unleashed power of the atom has changed everything save our modes of thinking” (1946: 376). With the establishment of the equivalence of matter to spirit and to energy, everything changes. The war between the two cultures will eventually come to a screeching halt, because, as Einstein also said: “Science without religion is lame, religion without science is blind” (ibid.). We will then be on the road to acquiring internal peace. In fact, even the wars among the various religions might come to a screeching halt. This is the last aspiration of Somism; the last aspiration of the Social Man and Woman, the Civilized person. It might take some doing and some time. Yet, if we think hard about it, this goal is fully within our grasp. Certainly, adherents to Hinduism will recognize themselves in the fundamental equivalence proposed above; and adherents to Americanism, the religion of the American Indians, will do the same. But what of the three monotheistic religions? It seems that the conception of the Messiah is the stumbling block. Yet, a true understanding of the Messiah reveals an astonishing similarity in the inner structure of the three religions: Christians and Jews will no longer disagree, if we Christians are humble enough to ask this question: sure I hold in my spirit the precious body of the historic Christ at Communion, but do I also hold the Spiritual Christ? Do I have faith that some day Jesus will enter my spirit? That is the Jewish Messiah, indeed. The followers of Allah will have the most difficult task of all. Their conception of the Messiah is written very deep into the Koran. Vali Asr is the revered Hidden Imam, whose appearance someday, Shiite Muslims believe, will establish the perfect Islamic political community. Is Vali Asr any different from the Jewish Messiah? It is up to Christians to reveal to the world that Jesus came to unify the world, not to divide it. It is up to the Christians to live up to their tripartite commandment to love God, love neighbor, and love oneself. It is up to Christians to reveal that Jesus did not ask to be revered but to revere “our father,” namely to revere Yahweh just as much as to revere Allah! If we do believe that Jesus is God, then Jesus is Yahweh; Jesus is Allah, see Gorga (2016). 2

How can Spirit be measured? The same way Matter and Energy are measured. Some names for this specific quantity to be measured? Idiness and Ipsiness come to mind.

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13.11 Concluding Comments This is certainly not the place to defend the validity of any one of the proposed recommendations included above. Each one of them will have to stand on its own. They can be seen as a series of spheres within spheres. There is plenty of room for improvement; there is plenty of room for detail to be added on each point. There is no separation among the worlds of politics, economics, law, philosophy, and spirituality. Our innermost being is deeply rooted in each one of these worlds. We do not achieve a world of peace unless we integrate all those worlds within ourselves first and in relation to other fellow human beings thereafter. There was a time when all we had to do was to care for (to love) the neighbor next cave over. Then we started taking care of the neighbor within our village. With the development of the megalopolis, we have lost all ability to recognize our neighbor. Strangely though, the neighbor is now clamoring to be recognized across national boundaries as well as across spiritual boundaries. We had better listen to that person, the potential terrorist, the bully on the verge of turning mass murderer. Chaos theory, after all, has proven that the flap of a butterfly in China might lead to a hurricane in the United States. How much more true is this theory in human relations! How much more true it is in international relations. No. This is not an ideosincratic position. Through an elaborate detailed analysis,3 Bertrand Russell (1951) reached this fundamental conclusion: “… happiness and the means to happiness depend upon harmony with other men.” A Special Appeal There might be other ways to get rid of the warring strictures of Capitalism and Socialism/Communism. So far no alternative has been found. Concordian economics remains our best hope/certainty. With the Left eating itself and the Hard Right falling prey to violence, the time to get out of our straits is short. May BOTH EXTREMES find in Concordianism answers to their just demands.

3

The blurb of Russel’s work. reads: “This book is concerned with methods of curing three kinds of conflict which have afflicted mankind. They are the conflicts of man with nature, with other men, and with himself. Of these, the first is the concern of science, the second of politics, and the third of religion and psychology.” No economics. Yet, the blurb gloriously continues: “Modern techniques have made poverty unnecessary, and have provided the possibility of a much higher level of general well-being than has ever existed at any former time. Failure to realize this possibility is due to the persistence of beliefs, principles, emotions, and habits of thought that were appropriate in earlier ages, but which should now be obsolete. The new techniques have made co-operation more important and competition is less desirable than at any earlier time. The gloomy fears by which our time is oppressed are unnecessary, and if men in general would realize the happiness that modern knowledge and skill render possible, they could within a very short time remove the main causes of fear and hopelessness.”

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With Concordianism, both Capitalism and Socialism/Communism lose their appeal, not though a play of words but actions: through the proclamation and implementation of economic rights and responsibilities.

References Capra, Fritjof. 1980. The Tao of Physics: An Exploration of the Parallels Between Modern Physics and Eastern Mysticism. Boston, MA: Shambhala Publications. Einstein, Albert. 1946. Einstein on Peace, ed. by O. Nathan and H. Norden. New York: Avnet Books, 981 ed., from a pamphlet published by Beyond War in 1985 entitled A New Way of Thinking. Ferrini, Vincent. 2002. Gorga Worthy of Note. Gloucester Daily Times, December 11, A6. Gorga, Carmine. 2002, 2009, 2016. The Economic Process: An Instantaneous Non-Newtonian Picture. Lanham, MD and Oxford: University Press of America: 2002 hard copy, 2009 expanded (through Appendices) soft copy; expanded third edition by The Somist Institute, 2016. Gorga, Carmine. 2007. On the Equivalence of Matter to Energy and to Spirit. Transactions on Advanced Research 3 (2): 40–45. ISSN: 1820-4511. The original publication is available at Microsoft Word—prednjeKoriceTAR (ipsitransactions.org). Accessed July 25, 2023. Gorga, Carmine. 2009. Toward Relational Ontology: From Matter to Spirit Through Physics and Metaphysics. Available at SSRN, https://deliverypdf.ssrn.com/delivery.php?ID=161070001 067085066085126093026014123120047030012065075094107116097002031100007067120 049062054045104022006127120011094001123105123011053034003093090003095105106 025084001048072124069089085105092025085099101111119103006100102103067096000 125072078094099&EXT=pdf&INDEX=TRUE. Accessed September 11, 2023. Gorga, Carmine. 2012a. Reconciling Keynes and Hayek Through Concordian Economics: A Revolution from the Center. International Journal of Applied Economics and Econometrics, Part V of the Special Issue on J.M. Keynes 20 (3): 358–387. Available at https://econcurrents.com/2022/ 08/21/reconciling-keynes-and-hayek-through-concordian-economics. Accessed July 25, 2023. Gorga, Carmine. 2012b. A Contemporary Definition of Morality. The Ethical Spectacle, November. Available at https://www.spectacle.org/1112/gorga.html. Accessed July 25, 2023. Gorga, Carmine. 2012c. A Declaration of Economic Interdependence. In Documents for United Nations Conference, Rio+20, February 19. Available at http://rio20.net/en/propuestas/a-declar ation-of-economic-interdependence/. Accessed July 25, 2023. Gorga, Carmine. 2016. The Centrality of the Resurrection: Are We Ready to Let Jesus Enter Our Hearts? (Relationalism), vol. 2. The Somist Institute. Gorga, Carmine. 2017. A Cascade of Errors (1517–2017). OpEd News, October 31. Available at https://www.opednews.com/articles/A-Cascade-of-Errors-1517-by-Carmine-Gorga-Ph-Eco nomics_Economy-Economics-World_Politics_Spirituality-And-Politics-171101-986.html. Accessed July 25, 2023. Gorga, Carmine. 2018. The Redemption of the Bully: Through Love, Toward the Beloved Community. Chisinau, MD-2012, Republic of Moldova: Scholars’ Press. This book has been published in eight languages. Gorga, Carmine. 2021. Concordianism: Beyond Capitalism and Socialism. Mother Pelican, A Journal of Solidarity and Sustainability 17 (2). Available at http://www.pelicanweb.org/solisu stv17n02page12.html. Accessed July 25, 2023. Gorga, Carmine. 2022. An Overall View of Concordian Economics. EconCurrents, October 5. Available at https://econcurrents.com/2022/10/03/an-overall-view-of-concordian-economics/. Accessed July 25, 2023.

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Gorga, Carmine. 2023. Three Types of Interdependence Funds. EconCurrents, February 12. Available at https://econcurrents.com/2023/02/12/three-types-of-interdependence-funds/?utm_ source=rss&utm_medium=rss&utm_campaign=three-types-of-interdependence-fundsms. Accessed July 25, 2023. Gorga, Carmine, and Norman G. Kurland. 1987. The Productivity Standard: A True Golden Standard. In Every Worker an Owner: A Revolutionary Free Enterprise Challenge to Marxism, ed. by D.M. Kurland. Washington, DC: Center for Economic and Social Justice. Russell, Beltrand. 1951. New Hopes for a Changing World. New York, NY: Simon and Schuster. By the way of Maria Popova’s The Marginalian, August 27, 2023. Available at https://www.goo dreads.com/book/show/1417671.New_Hopes_for_a_Changing_World. Accessed August 27, 2023.

Chapter 14

From Rational to Relational Economics

Abstract Modern economics is linear, hence the term “Rational economics” is quite appropriate. For more complex explanations, see Gorga (2002: 59-66, esp. pp. 6465). Concordian economics, on the other hand, is fully Relational economics. How did this evolution from Rational to Relational economics take place? The full answer resides in the development of the Relational Method of Analysis (RMA). Once in the distant summer of 1965 I found myself confronted with two mathematical models of the economic system, both logically consistent, mathematics lost its usefulness. Gradually, mostly unawares, I discovered that I was in the process of building a new method of analysis. Only in most recent years have I found the need and the clarity of mind to describe this method. RMA serves to identify not only how Relational economics was born, but how it can be applied to most mental disciplines. Hence, the entire train of thought of Rationalism is transformed into Relationalism. From the cultural disunity of the modern world we come to discover how are most things, intellectual and practical things, harmoniously and systematically related to each other. From discord we pass to concord. Let us start at the beginning.

14.1 Introduction Surprisingly, perhaps, we must realize that Logic and Epistemology have from time immemorial been the most powerful assistants to human beings in the process of exercising their intellectual powers. Incredibly at first sight, from the very first beginning, Logic was not simply logic, but Relational Logic. And epistemology was born with the creation of the Word. Eventually we shall see how epistemology evolved to reach its completion into Relational Epistemology. It is the combination of Relational Logic and Relational Epistemology that gives certainty to our thought processes. Adapted from Gorga [(1979) 2016], (2021). A version of this chapter is forthcoming in Cosmos and History: The Journal of Natural and Social Philosophy.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Gorga, Concordian Economics, Vol. 1, Springer Studies in Alternative Economics, https://doi.org/10.1007/978-3-031-47320-3_14

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Relational Logic establishes relations between the three basic principles of logic: identity,1 non-contradiction, and equivalence.2 These three principles were used (!) by CroMagnon men and women to “name names.” Ever since the Greeks used the principle of equivalence, not to analyze any longer concrete entities such as names, but to determine the truth value of individual words and individual propositions our mind has plunged into a world of abstraction. Relational Epistemology uses all tools of epistemology. In addition to names, ideas, and concepts, Relational Epistemology calls upon the functions that only theories, “systems of thought,” and “processes” (the analysis of the dynamic of systems) can perform. Dialectic ideas and ideals are also most useful tools of epistemology. The indissoluble union of Relational Logic and Relational Epistemology yields the Relational Method of Analysis (RMA). Faithfully applying RMA to a variety of mental disciplines, one unifies them and obtains the transformation of Rationalism into Relationalism. From the atomism and discord of the modern world we pass to the discovery of systematic and harmonious relationships of everything with everything else. This work is in obeisance to Lukacs (2002), and others, who have stated that we are “At the End of an Age”—and the beginning of another. The chapter is divided into three parts: Part I, Relational Logic; Part II, Relational Epistemology; Part III, Relationalism. Each part offers a schematic presentation of exceptionally long and complex developments in human thought. Each Part is designed to give us a better understanding of our confused moment in history. Special emphasis is placed throughout on how the present analysis can be of help in clarifying and solving the crisis in modern economic theory. More precisely, this method was developed to solve the crisis in modern economic theory. As a result, Concordian economics became the core of Relationalism.

14.2 Part I: Relational Logic 14.2.1 Abstract, Again The word “logic” is very misleading because there is not one system of logic. There are many. Eleven of them are analyzed in this chapter. Scanty hints are given about the cultural context in which these systems were developed and prospered. Systems 1

An identity relation is itself an equivalence relation, cf. Suppes (1957: 218). Is Relational Logic simply repetitive? Not at all. The identity relation directs the observation always deeper, and deeper into the event, the haecceity, the “thing” itself. This mental framework analyzes internal relations. This analysis is not a concern of this paper. In internal relations one finds the four operators of standard Relational Logic (!): negation, conjunction, disjunction, implication, and equivalence (equivalence!). 2 The equivalence relation, instead, directs the observation outward, linking the event always closer and closer up with the outside reality.

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of logic are all structurally identical, but the principles of logic that they adopt are different from one another. They all perform the same identical function of providing rules of correct reasoning—but only from within each system. Communication across systems of logic requires attentive translation, otherwise it might lead to serious misunderstanding; modern economics is especially prone to logical misunderstandings. Of course, it is to be hoped that some day human beings will all use one, the same, system of logic. Relational Logic, built on principles that have been most constant in history, is offered here as a candidate to perform such a unifying function.

14.2.2 Introduction (Again) After a summer of intense intellectual struggle with the General Theory, I changed one term in Keynes’ model of the economic system and found myself in a totally different intellectual world. Impressed by the enormity of the discovery, I wrote a few pages, locked them in a desk drawer, and went to look for a job. After losing the War on Urban Decay and, in rapid succession, the War on Poverty, eventually I thought I had better find out what was in the intellectual world I had fallen into through the revision of Keynes’ model. Gradually, very gradually, I discovered that the new world contains precisely the solution to Urban Decay and Abject Poverty, which, whether with our full knowledge or total ignorance, are the bane of our existence. So far, I have documented many of those solutions. The “truth” appears when layers and layers of rationalizations are removed from our thinking processes. The first immediate discovery was that mathematics is unable to solve problems of economics: I was facing two mathematical models of the economic system. They were both “consistent,” the experts I consulted assured me. Thus began my long trek through logic and epistemology. Let us start with logic. ∗ ∗ ∗ The word “logic” is used in common parlance no less than in formal treatises. And yet this word is one of the most dangerous and misleading tools of communication, because there is not one system of logic. There are many, and there are profound differences among them. This discovery occurred to me in the 70s while doing research on economic theory, specifically when the need to understand “economic logic” became imperative. The deeper the search, the clearer became the realization of the existence of that many systems of logic—as well as the need to add one or more systems to the list. But, if logic is supposed to provide the “rules of correct reasoning” and these rules change from system to system, what type of guidance does Logic provide? The answer is no longer simple. It becomes threefold. First, one must indeed recognize the existence of that many systems of logic. Second, one must recognize differences and similarities among those systems. Third, one must learn not so much to choose among those systems and adopt the one that is best suited to one’s needs

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as, when communicating across systems, to translate each and all verbal and written expressions from one system into another. Contrary to expectations, these operations are less complex than they might appear beforehand, and they are less complex because all systems of logic share basic common characteristics. Each one of them is built on a set of equivalence relations; if properly developed and applied, each system has an internal impregnable consistency; and, in their consistency and sufficiency, those systems are all equivalent to each other. Just like languages: see, Noam Chomsky. These are the basic issues treated in this chapter. Interspersed in the analysis is the attempt to show how systems of logic influence culture—from economics to physics, from religion to mathematics, from art to politics. The short-range purpose of the chapter is to demonstrate that all discussions across systems of logic are fruitless. The long-range purpose is to foster tolerance of all systems of logic—not only through the demonstration that all systems are indeed equivalent in their consistency and sufficiency, but especially through the presentation of a synthesis that includes the essential elements of all previous systems. This synthesis is the outline of a new system of logic that might be called Relational Logic. Most of what follows is bound to be well known to expert logicians. It seems to be totally new to most other people. Expert logicians also know the characteristics of equivalence relations. Yet even they might be surprised at how well the principle of equivalence serves to unify the manifold fields of logic.

14.3 The Value of the Equivalence Relation If the equivalence relation has indeed such a far-reaching and fundamental value, it might be useful to inquire about the reasons for this status. The equivalence is a relation among three terms (A, B, C). There are two forms to express the equivalence relation: A ≡ B ≡ C; or, alternatively, A ↔ B ↔ C. The first reason for the extraordinary importance of the equivalence relation is that it gives us the opportunity to triple-check the basis of our reasoning. The second reason undoubtedly can be found in the development of precise rules concerning its application: Each term of the equivalence must be reflexive, symmetric, and transitive, cf. Allen (1970: 43547, 748–52) or Suppes (1957: 213–20). Thus, we obtain not only three, but nine checks on our reasoning. If any of those conditions is not respected, our reasoning is not valid. To say the least, it requires more or different support. A term is reflexive when it remains identical to itself all through the discussion— and, ideally at least throughout an entire discipline, let alone across disciplines. A term is symmetric if each term is a mirror image of the other two terms of the equivalence. A term is transitive if it allows us to observe the same reality from three different points of view: it permits us to give a peek into a new world—or into three different worlds, worlds that, logically, are linked together by the equivalence relation. And that is how we can confront the “messy” daily reality. One specific

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example: that is how we can look at the economic process as a whole, even though it is composed of (1) real wealth, (2), economic values of economic rights, and (3) money. A personal experience will perhaps succinctly relate the importance of the equivalence relation in no uncertain terms. The writer was in the new Philadelphia airport. At landing, he went straight for his car. In the hall, he glanced at one exit (A) and doubted that that was the exit to the parking lot. He went to the opposite symmetric exit (B). The two exits were so identical that he could have forever gone in circles and never been offered the certainty of where the parking lot was. The solution was to actually step out of any one of the two doors, thus creating a third term of reference (C) and ascertain whether he needed to use Exit A or Exit B. This case does not establish the equivalence of Exit A to Exit B to Parking Lot (C); it only verifies the bare-bones validity of the need for three points to ascertain the truth. Technically, if A was the exit, B was not the exit needed to reach C, the parking lot. Herein also can be found the essential validity of the principle of non-contradiction. As proof of its extraordinary importance, the equivalence relation is profoundly used by mathematicians as well as by philosophers. It stands at the very foundation of all the sciences: science does not move one inch on the basis of two observations. Science knows that two observations lead only to an unending circular reasoning. Science starts to move as soon as it has acquired knowledge of “the” third term. And that is why dichotomies, such as saving and investment, are the bane of our intellectual world. A third reason why the tool of equivalence is so important, perhaps, is that “the world” itself seems to be built on a set of equivalence relations. The triangle, after all, is an equivalence; and Buckminster Fuller (1975) has provided incisive insights and convincing applications of this tantalizing possibility. But this is not the place to explore such an issue at any depth. When the original paper was submitted to Buckminster Fuller in 1979 for his examination, he found it “to be extremely interesting” (personal communication, November 15). In a similar vein, incidentally, did Moses Abramovitz, then editor of the Journal of Economic Literature, react. Equally encouraging were a few other Readers to whom this work has been shown over time. In any case, if the above reasoning is correct, we have the basis for carrying the analysis forward. And, going forward, we shall eventually lay the foundation to a new system of logic: Relational Logic.

14.4 Many Systems of Logic In the next paragraphs, we will review the essential elements of the following systems: (1) Primordial Logic; (2) Classical Logic; (3) Rational Logic; and (4) Dialectic Logic. We shall find that Eastern Logic (5) occupies a place of its own in the history of the mind. Thereafter, we shall observe some of the subsets of these major systems,

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namely, Conventional Logic, Positive Logic, Deductive or Syllogistic Logic, Inductive Logic, Instrumental Logic, and Economic Logic. We shall conclude with the bare outline of Relational Logic. These forms of logic are rather standard, non-technical modes of thinking. Zenkin (2000) analyzed the technical modes contained in modern logical-mathematical treatises and concluded: “About thirty years ago, for the sake of ‘sports interest’ I began to collect various ‘logics’ used in modern logical-mathematical treatises. When their amount exceeded the second hundred, it has become clear: if the logic can be selected ‘on a taste’ (or even can be constructed ‘on a need’), such notion as ‘science’ becomes here simply inappropriate.”3 Two warnings are in order at the outset. First, we shall have to neglect a great many details that actually put flesh and blood on the basic structure of these many systems of logic. Second, the order in which these systems are presented is dictated by ease of exposition. Any inclination to see in this order the possible existence of a temporal succession, or, worse, an order of importance, should be strenuously resisted. If these two warnings are firmly kept in mind, only a little prompt might occasionally be necessary to make the Reader aware that all systems share common characteristics. Provided they are indeed complete systems, they provide sufficient assistance to the conscientious thinker to make him or her reach a comprehensive understanding of the surrounding world—the world of ideas, no less than the world of things. But how can an unbiased observer realize that this feat is in fact accomplished, while in the presence of that many systems of logic? The observer simply needs to realize that certain elements in the various systems undergo not always subtle shifts in position. Specifically, the observer needs to realize that while the shifts in position—or modes of usage—lead the adherents to each system to emphasize or de-emphasize certain elements, the shift itself does not make those elements disappear. They are camouflaged.

14.4.1 Primordial Logic There is obviously no written record on the system of logic used by our early ancestors, with the Cro-Magnon man of 40,000 years ago as the most famous and best known of our ancestors—and, most likely, much—much—earlier men and women still. But that system must be reconstructed, if we genuinely want to understand not only the development of thought but especially the function which every system of logic performs. More importantly perhaps, today we have all the tools necessary to reconstruct this fundamental first link in our modes of reasoning. Of course, the Reader has to overcome a potential negative bias. The Reader has to be open to consider the possibility that, as Calhoun (2015) points out, “while the content of

3

This reference is owed to Vladimir I. Rogozhin.

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thinking may have changed over various epochs, ecologies, and cultures, the process of thinking itself has not.” To insist on one point, in the following paragraphs we shall be concerned with the broad outline of this system of thought, which might be called Primordial Logic, and neglect the many details of this reconstruction—especially because we shall have to adhere strictly to an intellectual distinction that does not exist in reality, the distinction between logic and epistemology. That continuum has to be broken here. In Part II, a bit more will be written to catch some of the manifold nuances of our encounter with the past. The question is: How did it all start? What are the beginnings of knowledge, our conscious understanding of the world? Let us try to recapture that miraculous moment in which a Cro-Magnon man is exiting the Lascaux cave—and faces the moon rising and the salmon jumping on the horizon. How did s/he learn to distinguish between the two flickering signs?4 Many years ago, while I was analyzing the structure of economic theory and finding principles of logic to be essential to the task, a friend and editor of much of my work, David S. Wise, brought to my attention a book by Alexander Marshack titled The Roots of Civilization (1972). Fairly soon after devouring Marshack’s book, I jotted down a sketch of the use that Cro-Magnon man must have made of three basic principles of logic, and I started tracing their development over time. Apart from necessary distinctions, most philosophers, as well as mathematicians, agree, an agreement of extraordinary importance in itself, that there are three fundamental principles of logic: the principle of identity, the principle of non-contradiction, and the principle of equivalence. Our Cro-Magnon man made use of all three. Here is that sketch, only slightly altered over the years, which has yet to be validated, or its validity denied, by many scholars in many fields.

14.4.1.1

The Use of Three Principles of Logic by Cro-Magnon Man

Alexander Marshack announced a fantastic hypothesis in his book. He had discovered scratches—i.e., generally points but at times also lines—on bone upon bone and stone upon stone that are preserved in archeological and anthropological museums the world over. He announced the hypothesis that with those scratches our early ancestors were actually inscribing “notations.” One point represented something! Scratches were neither idle doodles nor an aesthetic arabesque. Their simplicity and repetitiveness implied purposefulness. What was this something? Let us unpack the question. Alexander Marshack has been acclaimed as single-handedly revolutionizing the field of Paleolithic art research. Let us stress, art research. In fact, it is fully granted that he allowed scholars to see portable art objects and cave paintings “with fresh eyes, to ask new questions, and to understand their technology and production far more precisely,” Bahn (2009). 4

Lately one revelation, with profound consequences, has hit me. Plato’s observer looks at the wall of the cave. A Plato Person explores his/her shadow, not the outside “real” world.

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However, Marshack himself concentrated his attention on a deeper penetration of the meaning of those scratches. He suggested that those notations record the early steps of our knowledge of astronomy and calendar time. And he has been chided for going too far, Robinson (1992). The suggestion here is that neither Marshack nor other scholars have gone far enough in the understanding of those notations. The inspired idea that scratches made by Cro-Magnon man on stones and bones were notations is a discovery of immense importance. To repeat, the question is: A Cro-Magnon man and woman is exiting the Lascaux cave while facing what we know today as the moon rising and the salmon jumping on the horizon. How did they learn to formulate a complete vision of each image? How did they learn to distinguish between the two images—and the “billions and billions” of other images on the horizon? Once they stopped relying on memory, the first decision of these human beings was to grab a stone and start recording observations about any specific object at any one time. Let us pause on this incredibly important first step in the history of humanity. In plain words, with that single act they made use of all three fundamental principles of logic at once: the principle of equivalence, the principle of identity, and the principle of non-contradiction. Let us see how. Undoubtedly unaware of all the implications of what they were doing, by placing a mark on a stone our early ancestors established this set of mental relationships: T his notation ≡ On this stone ≡ Specific information about . . . this flicker. Clearly, our ancestors made full use of what is today known as the relationship of equivalence. There are three “equivalent” related terms in that construction: (1) the scratch on the stone, (2) the stone itself, and (3) these two entities stood for something else in the mind of the researcher: What was that? Evidently, whatever information was of interest to the researcher at the moment. Let us say, the shape of flicker, length of flicker, duration of flicker. Clearly, all this mental activity was preceded by the development of the number system, which must have started with counting the fingers of the hand. Why else are numbers called digits? What stood inside the above equivalence is a full-fledged application of the Principle (or Axiom) of Identity. This notation represents facts concerning this flicker—and this flicker only. Geometrically, it is useful to represent the Principle of Identity through a single point. Thus (Fig. 14.1): Our ancestors did not need any other mental apparatus to proceed with their discovery of the world. Duplicating the use of the Principle of Identity over and over again, our ancestors eventually discovered that they needed another stone to represent facts concerning a different flicker like the moon. Let us see why.

Fig. 14.1 A point

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At first, our ancestors might have made notations about both flickers at once; needless to say, our attention here is concentrated on the two flickers of our imagination. Our ancestors were faced with thousands of stimuli all at once. What is suggested here is a “glorious” simplification that will have to be appropriately broken down into more and more finite details in order to be validated or its validity denied. Returning to this terrain from the point of view of gnoseology and epistemology, we shall be able to retrace more of the steps that led our early ancestors from the observation of “flickers” to naming the objects they were observing. The conclusion is this. Simply by taking a few steps away from the cave, our early ancestor must have experienced that the two flickers on his horizon represented two different entities: One was near, the other was far away; the behavior of one event was completely different from the behavior of the other. Soon (?), a careful study of who knows how many objective recordings intellectually, convincingly confirmed that the two flickers on the horizon actually belonged to two different phenomena, two different aspects of reality: our ancestors were compelled to realize they were observing two distinct objects. Therefore, they needed two stones to record any further observation. Let us call them Stone A and Stone B. Only when satisfied that they had observed each flicker from every possible point of view, they named one of them “moon” and the other “salmon.” That was the ultimate inestimable gift by the principle of identity to humans. Our Cro-Magnon man—or woman—was still using (in relation to both stones) the same principle of identity, but with a twist. Let us think this through. If they had not made the distinction between the two Stones and two Events But —and respected it religiously—our Cro-Magnon man and woman would have soon become utterly confused. Does this notation belong to the object near me or the one far away? This operation appears simple and obvious today, and it might have occurred in one single spurt. Its importance does not need to be underestimated. Indeed, the full importance of the discovery and application of the Principle of Identity can be better appreciated considering that there are mental disciplines upon mental disciplines, and intellectual discussions upon intellectual discussions, which still do not make scrupulous use of this essential distinction. Economics, above all, still insists on using—as R.W. Goldsmith (l955: 69n) calculated—any one of the possible 100,000 definitions of Saving at any one moment in its analysis.5 It is as if our ancestors had had one hundred thousand tablets representing the object far away, which they eventually called the moon, and each person had insisted on inscribing different notations—one’s own perceptions—on any one of those tablets at random. The disrespect of the dictates of the principle of identity does indeed necessarily lead to incredible misconceptions of the objective reality. If our ancestors had insisted on the prevalence of their personal perceptions, we might have ended up with eventually, necessarily, giving 100,000 different names to the one moon that is in the sky—with consequent 100,000 different descriptions (and analyses) of that one phenomenon in the sky. Our early ancestors did not do that. 5

For some of the theoretical effects of this practice on economic science, see Gorga (2002: esp. pp. 69–137).

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Our ancestors avoided this confusion. They instinctively (?) respected the dictates of the Principle of Identity. Using modern symbols, they made sure that: (Stone) A = (Stone) A; (Stone) B = (Stone) B…; (Stone) Z = (Stone) Z. In fact, as the Greeks were eventually to point out, the Principle of Identity carries implicitly with it, unavoidably, the Principle of Non-Contradiction: A is not B. In classical notation, A /= B Pace Hegel and some Hegelians, Stone A is not Stone B; the moon is not the salmon. The moon is always identified by Stone A, and notations belonging to the moon are never placed on Stone B that identifies the salmon. As Boland (l979: 503) points out, “Aristotle was probably the first to systemize the principles of [classical] logic”; but he continues, “most of them were common knowledge at this time.” To Aristotle belongs the pride of paternity. With the Greeks, we meet recorded history, and a system of logic that is universally identified as Classical Logic. To emphasize, our Cro-Magnon men and women used the principle of identity, the principle of non-contradiction, and the principle of equivalence in their deliberations. They used a system of logic that might be identified as Primordial Logic—or, eventually, Relational Logic.

14.4.2 Classical Logic Aristotle enunciated three fundamental principles of Classical Logic. He proceeded in this fashion. He put the Principle of Identity at the foundation of an elaborate construction. The moon must be the moon throughout our entire discussion: A = A. We cannot change the definition of our terms in the middle of the discussion—or, abstracting even further, the “truth” remains the truth throughout. But how do we know that the moon is actually the moon, or the truth remains the truth? The simplest test is that the moon is not the salmon; the truth is not falsity: A /= not-A. The Principle of Non-Contradiction was formally born. Geometrically, it can be said that Aristotle (and many other thinkers) began to look not only at single points, but also at the area surrounding individual points. In order to make this area visible, we shall draw a circle around the point. Thus: which can formally be read: “The circle is not the point.” But what did the area between the point and the circle represent? Aristotle, with classic Greek clarity, did not tolerate “gray” areas. He formulated the third principle of Classical Logic to take care of this issue, the Principle of Excluded Middle. Nothing can be the moon and the salmon at the same time; or, abstracting the issues even further, a statement cannot be true and false at the same time. As Boland (op. cit., p. 504n) puts it, “statements that cannot be true or false, or can be something else,

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Fig. 14.2 A circle around a point

Fig. 14.3 A sphere

are prohibited.” Aristotle simply denied the existence of “gray” areas. He declared them inadmissible in any conversation or logical formal reasoning. Appropriately compressing the issues, namely making all gray areas between the point and the circle of Fig. 14.2 disappear, Classical Logic can be represented through a sphere. In this fashion (Fig. 14.3): We thus obtain an immediate image of the “wholeness” of Greek thought. And it is this wholeness that explains not only the great clarity and firmness of that thought, but also its enormous successes especially in philosophy and physics, sculpture and the theater—arts and sciences which must be presented in “tutto tondo.” And yet, it was perhaps the self-assurance that existed at the foundation of Greek thought that enabled it to avoid any serious confrontation with economic theory and other topics that require the study of messy, “gray” areas. And yet the reality of economics could not be avoided altogether. Rather than through hard theory, it was faced with the softer tools of economic policy, which was treated in such a realistic fashion that it endured, basically unaltered, for two thousand years. Aristotle enunciated the doctrine of economic justice, a doctrine that, fully accepted by Saint Thomas Aquinas, was completed in the form of the theory of economic justice by Gorga (1999) and (2017a). Before leaving the field, it behooves us to inquire: Have we gathered all that we could from the vast field of Classical Logic? What does the shift from Primordial Logic to ClassicalLogic imply? Evidently, the shift implies a momentous stepping stone in the history of humanity. It is almost as if men and women had no more

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concrete items—such as the salmon and the moon—to discover, to name, and to analyze. The finite world of physical products of the universe was almost nearly all cataloged. By the time we meet the Greeks, human beings had named nearly all objects within their range of observation. What was there left to do? The world of abstraction, the world created by all our moral and intellectual capabilities was all there to be explored.

14.4.2.1

Classical Logic and the Principle of Equivalence: Deductive or Syllogistic Logic

What happened to the Principle of Equivalence, which as we have seen played such an important part in Primordial Logic? Logically enough, it had two places to go, and it went there. On the one hand, it went (1) underground—where it can still be found today. Strangely enough, it is well known to both (mirabile dictu) philosophers and mathematicians. And it is much used by both. But where is it openly located? Where the Greeks left it: (2) in the development of syllogisms, of course! More generally still, the Greeks used the principle of equivalence to build syllogisms and led us to the stratosphere of abstraction. The principle of equivalence became a tool of analysis of such abstract entities as propositions. A syllogism is the equivalence of three propositions: If the major premise and the minor premise are true, the logical conclusion is also true. All men are mortal. Socrates is a man. Socrates is mortal. Do not laugh. For two thousand and more years, our culture—what our intellect produced—was unified by an extended, detailed exploration of the applications of this methodology. All advancements in philosophy, theology, and science were sustained by this methodology. Even the mathematical model of the economic system developed by Keynes(1936: 63) is a syllogism: If, Income = Consumption + Investment And Saving = Income – Consumption Therefore, Saving = Investment.

From such a simple set of starting propositions, the “figures” of the syllogism, through a variegated set of permutations and combinations, over the years became more and more complicated (see, e.g., Van Vleck, 2014)—not unlike econometric techniques today. All certainties in science up to the fifteenth or sixteenth century were derived from the validity of the syllogism. The applications of syllogistic logic culminated in the “realism” of Saint Thomas Aquinas and Duns Scotus, and from there it degenerated into the formalistic casuistry of the late Middle Ages and the Renaissance. Formalistic casuistry of the syllogism led to complicated formulas that at times yielded contradictory results—just like the results of econometric analysis today; see, e.g., McCloskey (1983). Logic, and especially syllogistic logic, could no longer be relied upon as a guide to thought processes.

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Left alone without theoretical guidance, the mind was thrust in a state of unsustainable all-encompassing doubt. Even theology, to remain living and vital, was confined to mysticism, especially the mysticism of Saint Teresa of Avila and Saint John of the Cross. We shall see how philosophy gradually devoured itself from within; for the time being, let us draw an important distinction in the existence of mysticism. Mysticism is mysticism. Yet, apart from such forms of mysticism as Kabbalah and Sufism, there is a fundamental difference between the mysticism of the East and the mysticism of the West. The mysticism of the East is immersed into the sublimity of emptiness; the mysticism of the West is immersed into the sublimity of the fullness of Jesus Christ. At the end of the Renaissance, everyone was left on his own—just like we are all, again, left on our own today. No guidance is accepted or acceptable from logic or philosophy, let alone theology. A mind as acute as that of Lorenzo il Magnifico could issue such degenerate instructions as “He who wants to be happy, be happy. Tomorrow is uncertain.” The mind could not tolerate an abject state of doubt. René Descartes came to the rescue.

14.4.3 Rational Logic The Greek civilization collapsed. Was it because the sphere was actually empty? Thereafter, its heirs, the Roman and the Byzantine empires, also collapsed. And the Renaissance gradually became not at all sure of itself; indeed, it became so unsure of itself that its heirs were led to believe that they could settle theological disputations through religious wars. The certainty of the Greeks had disappeared. The Age of Uncertainty was in the saddle. All the hard work of the past to create the civilized society, the polis, seemed to have been in vain. Intellectual issues are rarely without practical consequences. Not too much time went by, the Western world was plunged into the religious wars. What was that changed in the classical system of logic? The Principle of Identity and the Principle of Non-Contradiction were preserved and much strengthened over the centuries. But the soft Principle of Excluded Middle was replaced by the Principle of Indifference. Was the collapse of past civilization which created the need for a change in the ruling system of logic, or was it the other way around, or a combination of the two? Thinking “firmly” and “securely” is the foundation of life and civilization. No one seems to know when or by whom the Principle of Indifference was formulated. But it was well known in the Sixteenth and Seventeenth Century. In fact, it was formally incorporated into a new system of logic by Descartes, which is denoted as Rational Logic. Descartes reached this new synthesis formally, but not explicitly. One needs to operate a considerable “translation” and interpretation of his words in order to see how those principles are “clearly and distinctly,” Descartes ([l637] 1938: 17) organized to form the system of Rational Logic.

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Fig. 14.4 A line

Descartes reduced to three “the great number of precepts of which Logic is composed” (Ibid.): “The first was never to accept anything for true which I did not clearly know to be such; that is to say, carefully to avoid precipitancy and prejudice, and to comprise nothing more in my judgment than what was presented to my mind so clearly and distinctly as to exclude all ground of doubt” (ibid.). Observing Fig. 14.4, it becomes apparent that one single “point” (a single point in front of our eyes) corresponds to this “precept”; and, as seen in Fig. 14.1, one point is also the simplest representation of the Principle of Identity. “The second, to divide each of the difficulties under examination into as many parts as possible, and as might be necessary for its adequate solution” (ibid.). Observing Fig. 14.4, it becomes apparent that Descartes had simply in mind points B, C, D on any line; and the validity of such points—while they undergo examination—does not need to be determined a priori. One has to be “indifferent” to their validity. Hence this second precept formally incorporates the Principle of Indifference into Rational Logic. For confirmation, it is sufficient to quote the following passage: “If some of the matters… should offend at first sight, because I… seem indifferent about giving proof of them, I request a patient and attentive reading of the whole… for it appears to me that the reasonings are so mutually connected… that, as the last are demonstrated by the first which are their causes, the first are in their turn demonstrated by the last which are their effects” (op. cit., p. 60). For the discourse not to be too cumbersome, not every point needs to be proved at once. “The third, to conduct my thoughts in such order that, by commencing with objects the simplest and easiest to know, I might ascend by little and little, and, as it were, step by step, to the knowledge of the more complex; assigning in thought a certain order even to those objects which in their own nature do not stand in a relation of antecedence and sequence” (op. cit., p. 17). Observing Fig. 14.4, it becomes apparent that with this third precept Descartes was observing an entity that might—for short— be called not-A. This entity can not only be properly defined as “Infinity.” It can also be said to incorporate the essence of the Principle of Non-Contradiction; e.g., Infinity is the negation of the concreteness of A and Z. Rational Logic is best represented geometrically by a line; specifically, an infinite line. Thus: This representation of Rational Logic is not arbitrary. Descartes himself, in the next breath, stated: “…I thought is best for my purpose to consider these propositions in the most general form possible, without referring them to any objects in particular…. Perceiving further, that in order to understand these relations I should sometimes have to consider them one by one, and sometimes only in the aggregate, I thought that, in order the better consider them individually, I should view them as subsisting between straight lines…” (op. cit., p. l8).

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This representation of Rational Logic also explains why Descartes further specified that his method called for “enumerations so complete, and reviews so general that I might be assured that nothing was omitted” (op. cit., p. 17). This maxim is not a fourth precept but an implicit conjunction of the three principles of logic mentioned above. In his summary, he simply spoke of “the three preceding maxims” (op. cit., p. 24). Rational Logic is, of course, the dominant mode of thinking in the West. And if there were any doubt as to the direct influence exercised by Rational Logic in our culture, it would suffice to consider its impact on the development of economic thought: One can simply open any economics text and observe how much of its analysis is conducted with the assistance of straight lines. Yes, our entire Western culture is imbued with Rational Logic. Indeed, it is upon this system of logic that the entire philosophical structure of Rationalism is built. Before we look at Rationalism, we need to ask: Is Rational Logic the only mode of thought today? Far from it. Just under the surface, and prevailing in Communist or Fascist regimes, is another system of logic: Dialectic Logic.

14.4.4 Dialectic Logic Dialectic Logic’s fatherhood is credited to Hegel, but it was already known to Aristotle—and indeed was implicit in Primordial Logic. The principles of Dialectic Logic are exactly the same as those of Rational Logic, but they change direction. Instead of the two extreme points of the line proceeding toward infinity, they converge toward the middle, a point which Hegel called “process.” Thus (Fig. 14.5): When Marx acquired this system of logic from Hegel, he saw in the new shape of things the Class Struggle and all that. While some people put their ear to the ground and hear the rumble of the Class Struggle, others cannot even pick up a faint tremor. Who is right? Who is wrong? Are there other positions in between? These are substantive issues that cannot be addressed in this chapter. But the methodological question is clear-cut. Once one’s thought is guided by Dialectic Logic, the Class Struggle becomes a self-evident phenomenon. The poor fight against the rich. Those whose thought is guided by other systems of logic are likely to be insensitive to it. Incidentally, notice also that, once the third point—or “infinity” of Rational Logic—was eliminated (or, better, shifted position and turned inward), it was very consistent of Marx to fight against all religions. Allowing the mind to escape toward the infinite, instead of concentrating its attention on the affairs of this earth, with Communism religion became “The opium of the people.” And since the extremes always have points in common, some of the fundamental positions are shared by Fig. 14.5 A Hegelian process

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Capitalism as well. Fight, fight, fight is the order of the day. Indeed, competition, competition is for the Alpha man; coordination and cooperation is for the weak. Dialectic Logic’s second major innovation was the destruction of the principle of non-contradiction. We are thus plunged back into the pre-Socratic tradition of sophists and rhetoricians that Aristotle had put to rest. After point A and Z have fought with each other and are transformed into P, the distinction of A from Z disappears. They are both transformed into P. The destruction of the principle of non-contradiction has opened the mind to the consideration of infinite possible transformations, cf. Brandom (2014). Yet, the destruction of the principle of non-contradiction has also done much damage to the clarity of the discourse. Now everything can be contradicted, and the speaker is authorized to become dictatorial. Giovanni Gentile, the friend of Fascists, was explicit about this. He said: “He who possesses the truth has the right to repudiate the affirmation of those who contradict him,” quoted in Holmes (1937: 61). The speaker is always right. Who is the judge of the one “who possesses the truth”? Lui-même, he himself, of course. Brute force is then the last resort to resolve disagreements. Avicenna got it right: “Anyone who denies the law of non-contradiction should be beaten and burned until he admits that to be beaten is not the same as not to be beaten, and to be burned is not the same as not to be burned.” The miasma emanating from the type of discourse engendered by the negation of the validity of the principle of non-contradiction is asphyxial; it leads to suffocation. The only retort must be this. Granted that the principle of non-contradiction is not necessarily valid in a dynamic analysis of the long run, its denial at the static moment of the initiation—or ending—of the discourse is utter non-sense and leads only to confusion of mind. A tiny example might suffice: True, over time something ugly can be transformed into something beautiful, to deny this possibility is to deny life; yet, before that final moment the ugly cannot enter the container called beauty, it cannot be called beautiful. At any one moment, anything is either beautiful or ugly. The beautiful is the antagonist of the ugly; it is not the ugly; it cannot be confused with the ugly. Money cannot be not-Money. Not-money cannot be Money.

Where is the ultimate flaw in the attempted destruction of the validity of the principle of non-contradiction? The flaw is hidden in the assumption that A and Z necessarily fight with each other in order to reach point P. As we will see, in Eastern Logic the transformation of A and Z into P is generally—very creatively and imaginatively—conceived as an entirely peaceful process.

14.4.5 Eastern Logic Generally, no one speaks of Eastern Logic. But there could hardly not be one such system of logic. The hint of its existence included in the following paragraphs can

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Fig. 14.6 Yin-Yang

hardly be considered satisfactory, especially because this writer does not know of any formal treatment of the issue—whether through a Western or an Eastern source. A glance at Tibetan logic, Brinkman (2014) suggested by Bob Arnold, an expert in the field, reveals not a system of logic but an application of syllogistic logic. In any case, Eastern Logic can be represented geometrically through the wellknown Yin-Yang symbol: An analysis of this symbol and cursory acquaintance with Eastern literature reveals that Eastern Logic is perhaps the available synthesis of all systems of logic observed above. One can recognize in Fig. 14.6 all symbols belonging to the systems of thought mentioned so far: the point, the circle, and of course the sphere. What is a circle, if not a flat mental image of a sphere? The line is also in Eastern Logic. Snap a circle, and you obtain a line. In reverse, going back one step or two you can build a circle out of a line, by bending the line. Whether you extend the line point by point or you reduce it to a point, and whether or not you blow up the point into a sphere, the line easily leads the mind to infinity. Smale transformations help. Only one point might perhaps be emphasized here. Yin and Yang can actually appear to be revolving around each other and even fighting each other. Is this the major reason why China accepted the Marxist ideology? Are the differences between Dialectic Logic (Fig. 14.5) and Eastern Logic (Fig. 14.6) sufficient to explain the differences in the behavior of Stalin and Mao? Are these differences sufficient to provide clues for the different approaches to industrialization and “modernization” between Russia and China? Generally, however, the transformation of Yin into Yang, like the transformation of night into day, is assumed to be totally peaceful. Pace Hegel, if we had the capacity of Eskimos to distinguish snow from snow, we would not be deceived by our inability to see Dawn as neither Night nor Day. We would call it a “little-less-night-but-stillnight” or a “little-more-day-but-not-yet-day” or much more imaginative words. Does Dawn fight the Night?

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14.5 Propositions and Systems of Thought Logic cannot be separated from the theory of knowledge. It is the integration of the two fields that eventually will give us a reliable, complete method of analysis. For the time being, faced by the reliance of both Rational Logic and Eastern Logic on individual propositions it is important to realize that there is no way of determining the validity of individual propositions; only systems of thought can do that. Quick proof. Do parallel lines meet? In Euclidean geometry, they do not meet; in modern Imaginary non-Euclidean geometry, they do meet. Generally unaware of this fundamental weakness of syllogistic logic, in the West as well as the East we are still going on basing our beliefs on—and arguing the validity of—single propositions. No wonder we are having such a difficult time clearing our minds and communicating with each other. No wonder the Greeks and the Buddhists (at the same time) have both thrown us into the stratosphere of abstraction and left us there. Difficulties are compounded by the personal attachment to modes of thought that do not form complete systems of thought. These are more clearly understood if grouped together under the heading of non-systems of logic. We can then rationalize, we can argue the validity of any proposition; and we like to cow our opposition by maintaining that our position is logical (implying that the position of our opponents is illogical).

14.6 Non-systems of Logic As we have seen so far, a system of logic includes all fundamental principles of logic that are necessary to understand reality. The following subsets use the word “logic,” but they are not systems of logic. Let us see some of their particular limitations.

14.6.1 Conventional Logic Believers in Conventional Logic maintain that there is no such thing as the truth. For them, it is all matter of “conventions.” If they stopped here, they would not build any “system” of logic. But they shift position and accept other systems of logic. It is useless therefore to insist on their non-system—except to notice that they who sincerely believe in their original position give up the struggle for understanding before they enter the ring. What is Thought supposed to do, if not being constantly engaged in the search for Truth? (The key words are purposely capitalized). Why carry an empty shell in our skull? Why behold a Convention at all? Is it because other people hold it? Is it to feel superior or, at least, more “critical,” more cynical than other people?

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As interpreted by Peter J. Bearse: “Conventional Logic is not a system of logic, because it accepts illogical statements that make no sense.”

14.6.2 Positive Logic Positive Logic has apparently taken its first steps from Primordial Logic. Geometrically, Positive Logic can be represented in this fashion: in which each point represents an individual observation. Econometrics and the appearance of the computer are two of the latest developments which keep much economics—and many economists—locked in within the realm of Positive Logic. Just like Conventional Logic, however, Positive Logic is not a “system” of logic. There is no relation between points. Just the facts, Ma’am; just the facts. What are the characteristics of Positive Logic? There are two fundamental characteristics. It is enough to observe Fig. 14.7 to realize that there is not a rule to help its practitioners reach a decision as to when it is possible to stop making observations and start analyzing whatever information has been collected so far. Positive Logic, denying the existence of ideas, is locked in within the realm of “facts.” As Boland (op. cit., pp. 507, 5ll) points out, “Contrary to the hopes of the inductivists, even though one can distinguish between positive and normative statements, there is no inductive logic that will guarantee the sufficiency of any finite set of singular statements. There is no type of argument that will validly proceed from assumptions that are singular to conclusions that are general statementsc. one cannot directly solve the problem of induction.” Let us put it this way: In the midst of a serious monetary crisis, much effort is spent analyzing inexhaustible reams of financial data and we are still proceeding without the definition of money. Economics textbooks tell us the functions of money; they do not tell us what money is. Perhaps it is not entirely unfair, then, to conclude that pure Positivists are still at the level of the first observations taken by primordial man. They have a long way to go. Of course, “pure” Positivists (or, as we shall see, pure Deductivists or Inductivists) are stereotypes that—if encountered in reality—would be more akin to caricatures than to genuinely thinking people.

Fig. 14.7 A line of dots

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14.6.3 Deductive or Syllogistic Logic Deductive Logic is locked in within the realm of ideas. Ideas are generally expressed through simple propositions; it is not generally realized that single words also contain ideas. The “big” idea, of course, is the idea of Being. Even when combined with the complementary idea of not-Being (especially not-Being of the East), discussion has exhausted the intellectual resources of many a philosopher for 2500 years, but not too much enlightenment has been gained. Perhaps all to the good, contemporary thinkers who are imprisoned in this nonsystem of logic, Deductive or Syllogistic Logic, can be counted on the fingers of a hand in the West. Do these statements and those concerning the limitations of Positive and Inductive Logic that follow contradict the assertion made at the beginning of the chapter that all systems of logic are equivalent to each other in their consistency and sufficiency? Not really. First of all, it is questionable whether all claims of expressing logical propositions are planted indeed in systems of logic. But, more fundamentally, all men are locked in within limitations. Those who prefer to be locked in within the confines of facts and those who prefer to remain locked in within the confines of ideas, observed from inside their “systems” of thought, hardly suffer from any limitation. After all, both facts and ideas are infinite. And the (supposedly) mutually exclusive observation of facts or ideas has its own hidden potential which bursts forth as soon as one considers the work of Leontief (1976) or Boulding (1956) for instance. What are the limitations of Deductive Logic? Deductive Logic has forgotten how systems of logic ever developed. It was from the observation of factual evidence, and the abstraction from that evidence of successive sets of ideas that eventually helped give names to “things.” Progress occurred when common properties (ideas) were found to bind individual facts together. Thus, one operated a synthesis of Inductive and Deductive Logic.

14.6.4 Inductive Logic What has been said in relation to Positive Logic and Deductive Logic largely exhausts what needs to be said in relation to Inductive Logic. The abstraction of ideas from factual evidence is essential to the construction of our understanding of the world. And yet, there is no such thing as an absolute “inductive” or experimental proof of the truthfulness or validity of any statement. In brief, the old dichotomy between Inductive and Deductive Logic is a false one. The two approaches are complementary. Only then are they both productive; otherwise, they are both sterile. Clearest evidence of this deficiency can be found in the limitations of enormously important movements of the Middle Ages, both nominalism and realism as well in their modern revival. See, “Second Crisis” below as well as Prawat (2005).

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14.6.5 Instrumental Logic The Reader who has read Boland’s paper very carefully and who now perhaps has a better acquaintance with Eastern Logic will automatically discover the great similarities between the latter and Instrumental Logic. But one characteristic of Eastern Logic needs to be made explicit: its mysticism. How does Eastern Logic reach its conclusions? The answer might be put this simply: “The ways to knowledge are many and arcane. One needs to assiduously study (contemplate) the evidence. Do not judge me on how I reach certain conclusions. I do not know. Rather, judge me on the validity/truthfulness of those conclusions.” Instrumentalism might thus be called modern Western mysticism. Both Instrumentalism and Eastern Logic aim at communication, predictability, and control (of at least temporary attention from their audience and disciples). Both rely on luck. But their luck is often the result of hard thought. Essentially, Milton Friedman, who with his Chapters in Positive Economics (1953) was the major exponent of Instrumentalism, could have used Descartes’ words: “For myself, I have never fancied my mind to be in any respect more perfect than those of the generality; on the contrary, I have often wished that I were equal to some others in promptitude of thought, or in clearness and distinctness of imagination, or in fullness and readiness of memory.... I will not hesitate, however, to avow the belief that it has been my singular good fortune to have very early in life fallen in with certain tracks which have conducted me to considerations and maxims, of which I have formed a Method that gives me the means, as I think, of gradually augmenting my knowledge.... My present design, then, is not to teach the Method which each ought to follow for the right conduct of his Reason, but solely to describe the way in which I have endeavored to conduct my own” (op. cit., pp. 5, 6). There is a particularly good reason for singling out Milton Friedman in this chapter. Milton Friedman is the last of the great economists who so believed in the need for a method that he created his own tools: Instrumentalism. All other economists have succumbed to the numbing dictum of Paul Feyerabend, who declared himself Against Method: Outline of an Anarchistic Theory of Knowledge (1975). So today everything goes. The result is that economics, in the famous dictum of Jacob Viner, has become “what economists do.” Everyone is free at last. Everyone is for himself; the penalty is that followers are free to follow no one.

14.6.6 And then There is Economic Logic …And then there is economic logic. As Keynes specified in the preface to the General Theory, “...if orthodox economics is at fault, the error is to be found not in the superstructure, which has been erected with great care for logical consistency, but in a lack of clearness and of generality in the premisses.” If one applies the principles of formal logic to the inner structure of economic analysis, one discovers that not

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one of its major component terms respects fundamental principles of logic, Gorga (2002: Chaps. 4–15). As already noted, this is what R. W. Goldsmith, a professor of economics at Yale, tells us in a footnote in the second of his three volumes titled A Study of Saving in the United States (1955: 69n). Examining the “specific (operational) definitions of saving,” he found that “… the number of theoretically possible variant definitions of saving as change in earned net worth is as high as 25 × 55 or 100,000.” Which Principle of Identity does Saving respect? Investment is never defined— except as being “equal” to Saving. Consumption, in modern theory, does not mean physical destruction of wealth; it means expenditure of money; yet, not all expenditures of money are counted as consumption; only expenditures to buy consumer goods are arbitrarily counted as consumption. Not one of the fundamental building blocks of economic theory respects the dictates of the principle of identity: A term must clearly mean one thing and one thing only. If principles of logic are not applied, what is the logic of economics, then? Analysis demonstrates that the consistency of economics that was claimed by Keynes and, implicitly or explicitly, by most economists is not an external consistency measured against principles of logic, but an internal consistency. History proves that the logic of economics is the logic of balancing contradictions. As soon as a contradiction is discovered, great effort is undertaken to repair the flaw; yet, since the effort does not go to the root of meeting the challenges of formal logic, the attempt is destined to fail. This is the reason why mainstream economics has been in a state of crisis since the publication of Keynes’ General Theory. This is commonly recognized. What is not generally admitted is that the crisis is older still. It goes all the way back to Adam Smith. Economics has regularly been subjected to such major upheavals ever since 1776 as recorded in the books of the history of economics. From classical economics we were led to neoclassical economics to the marginalist revolution to the economics of Keynes to Keynesian economics to post-Keynesian economics to monetarism to real business cycle theory to behaviorism—let alone Marxist economics or Austrian economics or Georgist economics or Kelsonian economics; indeed, let alone such (major) splinter programs of research within each major school of economic thought as labor economics, industrial economics, feminists economics, and so on and so forth.

14.7 The Issue of Consistency It should be apparent now that discussions across systems of logic are destined to be fruitless. The external manifestations of these systems are so many and so varied (even neglecting the myriad of details) that one can hardly become thoroughly familiar with any of them through a lifetime of study. And without complete familiarity that is available only to insider cognoscenti, action and reactions based on external criticism can be irritating but are certainly pointless.

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Dialogue begins to become possible only when any two interlocutors are within the same system of logic. Otherwise, an optimistic assumption relies on three conditions: First, that the interlocutors are aware of the existence of different systems of logic—thus avoiding the pitfall of believing that there is such a thing as only one system and using the word “logic” indiscriminately; second, that each interlocutor reasons exclusively from within one system of logic; third, that an attempt is made to “translate” meanings from one to the other system. The situation begins to appear a little less despairing as soon as one observes the internal structure of those systems. Then it is possible to agree, first of all, that all systems of logic are consistent. The simplest proof of the validity of this position is not so much to suggest the tautology that if they are not consistent, they are not systems of logic, but especially to advance the proposition that all fully constructed systems of logic are built upon at least one or a set of equivalence relations: they contain at least three basic propositions, and these propositions are equivalent to each other. Let us observe this all-important phenomenon, at least in relation to those systems of logic in which it is most evident.

14.8 The Equivalence in All Systems of Logic Quite apart from possible conclusions from deep future philosophical and/or neurological studies, the equivalence is a mysterious invention of our mind that gloriously gives us a triple-check on our conclusions. Thus, our early ancestors and classical logicians reasoned as follows: How do I know that the moon (or the truth) is the moon? The first evidence I have is that I am consistently observing something that I have chosen to call the moon. The second piece of evidence is that I do not see anything which contradicts the evidence I have assembled. Therefore, until contrary evidence is brought forward, I can rest assured that I am actually observing some individual event that I have chosen to call the moon—and I am not observing a salmon. That gave certainty to Greek thinkers—no less than to our earlier ancestors. Primordial Logic, as we have seen, is based on an extremely basic equivalence relation that automatically includes the principle of identity and respects the principle of non-contradiction. The syllogistic structure of Classical Logic forms sets of equivalence relations. There is more. Greek thinkers began to use the equivalence relation in many fields, and its applications have unmistakably multiplied ever since: A syllogism is an equivalence; a system of equations is an equivalence; trigonometry is based on an equivalence; regression analysis is based on an equivalence; many religions are based on an equivalence (The Father ≡ The Son ≡ The Holy Spirit); all systems of logic are based on an equivalence: Rational Logic (see Fig. 14.4) is based on the equivalence of A to Z to Infinity; Dialectic Logic is based on the equivalence of A to Z to P; Eastern Logic is based on the equivalence of Yin to Yang to ... the night, the day, the universe, etc.

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Fig. 14.8 Poincaré sections

Perhaps the point that regression analysis is based on equivalence relations deserves to be elucidated somewhat through the use of geometry, in the following fashion (Fig. 14.8): Given point A and point B, regression analysis is able to estimate point C, by projecting segment AB and making (alternative) estimated guesses as to where point C might lie on the horizon. These three points themselves form an equivalence; but the equivalence, as suggested by the circles drawn around each point, is much more complex than that. The equivalence is actually assumed to exist among the “situations” around those points—and indeed determining each point. In certain cases, these equivalent situations can be described as a Poincaré section. The greater the knowledge of conditions determining points A and B, the better the chances of estimating C correctly.

14.9 The Transition Toward Relational Logic The transition toward Relational Logic that has taken place within the work of this writer perhaps will remain forever enshrouded in the mysteries concerning the inner movement of thought. The spark that illuminated and indeed established the circuit between “moral” and “physical” sciences so barely outlined above occurred while reading that physicists—with Newton at the head of the parade—proceed without a definition of gravity. The spark can be simply put in this fashion. There are three “terms” in what physicists observe: Action and Reaction are the first two; the third term is the Relation between the two. The apple falls to the ground because the earth has a tremendously more powerful force of attraction within itself than the apple; but, though miniscule, the apple also has a force of attraction within itself. It is the play of these two forces that determines the direction of the action. Let us put it a little more technically: If the apple had no power of attraction within itself, it would fall to the ground at a minimally faster rate of speed—at the limit, instantaneously. The gravity that inheres in the apple has a minimal ability to resist the pull of gravity of the earth. This spark was ignited by the knowledge of Dialectic Logic. That knowledge sparked the following definition of gravity: Gravity is the process of action and reaction; namely Action ↔ Reaction ≡ Gravity

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Fig. 14.9 Gravity

Action and Reaction are the first two terms; the notation ↔ is the invisible link that fuses the first two terms together, in a fashion that we synthetically call “gravity.” All these relations are better observed in our familiar format (Fig. 14.9): At the distance of a few months from this discovery, the breakthrough occurred. The foundation of Relational Logic had been laid out.

14.10 The Foundation of Relational Logic The foundation of Relational Logic is composed of the following axioms, which are presented in a literary and geometric fashion. These axioms read as follows: I Axiom: A point is equivalent to a line, and both are equivalent to infinity. II Axiom: A point is equivalent to a circle, and both are equivalent to a sphere. III Axiom: A point is equivalent to a sphere, and both are equivalent to infinity. The whole of Relational Logic can be enclosed in the following geometric representation: Only three observations concerning Fig. 14.10 are permitted here. First, this figure encloses within itself all the essential elements of each system of logic observed above. Second, these elements are indeed enclosed here in an “organic” fashion. Third, Fig. 14.10 can be progressively interpreted as representing a single cell, many things in between, or the entire universe. Fig. 14.10 Many things

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Mathematically, in fact, Relational Logic can be synthetically expressed with the following equivalence, Gorga (2010): 0≡1≡∞ or, alternatively, 0 ↔ 1 ↔ ∞. Zero is equivalent to one, and both are equivalent to infinity. All three elements are complete systems in themselves; and yet, they can be fully understood only when observed in relation to each other—as in this expression: the infinitely small is equivalent to a blade of grass and both are equivalent to Infinity.

14.11 The Principles of Relational Logic As it can be seen from the above paragraphs, there has never been any disagreement about the validity of the Principle of Identity. The Principle of Non-Contradiction has also been implicitly or explicitly accepted as valid by all systems of logic, except (dynamic, long-term) Dialectic Logic. Indeed, both principles have been subjected to much refinement. They are accepted as given by Relational Logic. The struggle has always occurred on the validity of the third principle which must link the former two together. Explicitly, the Principle of Excluded Middle was replaced by the Principle of Indifference and both (for short) by the Principle of Process. Relational Logic suggests that any such principle be replaced with the Principle of Equivalence. Relational Logic is thus formed by the interrelation of the Principle of Identity, the Principle of Non-contradiction, and the Principle of Equivalence.

14.11.1 Some Applications of Relational Logic Mathematics respects religiously the dictates of the principle of identity and the principle of non-contradiction; mathematics is especially all built on equivalence relations, (Gorga 2010). Physics still benefits enormously from the application of this methodology, Gorga (2007). Through the “remorseless” application of this methodology, for many consilient reasons economics morphs from mainstream economics into Concordian economics, Gorga (2008a); sociology escapes the doldrums of the individualism versus collectivism paradigm and falls into the embrace of Somism, the theory and practice of the social man, the civilized person, Gorga (2014b); so does political science escape the doldrums of Capitalism and Socialism and falls into the embrace of Concordianism;

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theology is affirmed, Gorga (2009a); and philosophy is rejuvenated, Gorga (2009b) and (2021).

14.12 A Reader’s Guide The issues treated in this chapter are so numerous and cover so wide a field that it might be useful to reduce the chapter to an Abstract of two or three topics that might especially be of more direct and immediate interest to the Reader who specializes in economics.

14.12.1 On Friedman’s Instrumentalism Friedman’s Instrumentalism is a valid system of logic that might be reduced to the following equivalence: Economic Reasoning ↔ Useful Conclusions ≡ Economic Theory.

Friedman’s Economic Reasoning is not abstract. It is reasoning spurred by the continuous study of observable facts, but the facts are not observed through the lenses of a rigid system of economic theory. Theory for Friedman is a conclusion; it is a derivative. Rather, he uses all available theories to help him study economic facts in order to reach Useful Conclusions. And he wants to be judged not on the Economic Reasoning that precedes his conclusions, nor on the “Theory” that results from his efforts, but simply on the validity of his Conclusions. This methodology might not—and indeed it does not—satisfy everybody. But, as Boland makes clear, Friedman does not want to be judged on this issue. He wants to be judged on the validity of his conclusions. Besides, since he does not suggest that his methodology should be imposed upon others, others should not want to impose their methodology on him. This chapter reinforces the appropriateness of choosing one’s own methodology. With so many systems of logic available, one indeed has the duty to choose the methodology that best fits one’s own temperament and purposes in life, as well as one’s own intellectual, spiritual, and aesthetic capacities. The issue of the choice among systems of logic is more complex than can be indicated in this context. It of course starts with the knowledge of the existence of that many systems of logic. Indeed, this chapter tries to establish an even more important point. It tries to foster tolerance of all systems of logic by pointing out that, provided they are consistently and thoroughly developed and applied, all systems of logic are all equivalent to each other.

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14.13 On the Equivalence of Systems of Logic From the most simple to the most complex, all systems of logic perform the same function. They all provide rules of correct, disciplined reasoning. But rules pertaining to one system can be entirely contradictory when compared to rules of other systems. That is predictable and immaterial. What is important is only that rules should not be contradictory when compared to other rules belonging to the same system of thought. Hence methodological discussions across systems of logic are totally pointless. Consequently, this issue leads to the thorniest questions of all: What is the relationship between systems of logic and economic theory? Finally, how to judge the value of each economic theory?

14.14 On Systems of Logic and Economic Theory Each system of logic leads to a peculiar vision of the world. This vision affects all of man’s activities, from practices to theories—and hence, unavoidably, economic theory. Even though the issues require much elaboration, we have briefly seen how Classical Logic led to a de-emphasis of economic theory, or how Rational Logic led to what might be called Rational Economics, or how Dialectic Logic led to Marxist Economics. These correspondences might of course be a result of happenstance. But they are too strong to lead to any other conclusion. Systems of logic provide basic structure to thought, and economic theory is automatically influenced by that structure. Relational Logic has led to Concordian economics. This is an entirely new paradigm, which, though presented in a number of readily available books and papers (some) published in peer-reviewed journals, is still in its infancy. The field is wide open; everyone is welcome. So far, so good. The question, however, remains: How can we compare economic theories? This is the thorniest question of all.

14.14.1 On the Comparison of Economic Theories The question of how to compare theories is thorny. Indeed, it is insurmountable. Peace of mind is acquired only when one accepts the reality: Namely, do recognize the existence of many theories; accept their validity, if they are internally consistent; and then refuse to compare them.

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14.15 The Real Issue The real issue is a different one. The real issue concerns the fruits of each theory— hence the intrinsic validity, again, of Instrumentalism. While it is invalid to compare a pear tree to an apple tree (a tree is a tree), it is entirely appropriate, valid, and indeed necessary to compare a pear to an apple. Then the discourse flows. Then the discourse is profitable. This writer’s standard is to compare economic theories in relation to the solutions they propose for the problem of poverty. Other people might prefer a variety of other standards: efficiency, creation of wealth, preservation of the ecosystem are possibilities that easily come to mind.

14.16 Preliminary Conclusion This is a schematic presentation of various systems of logic, from Primordial Logic to Relational Logic. The implications—for economics, no less than for other mental disciplines—are vast and can only be explored through subsequent efforts. Two observations should suffice. First, this work proves that men and women of—at least—40,000 years ago were reasoning the same way as we have been reasoning ever since. Clearly, there has been an astonishingly constant use of identical principles of logic all throughout “recorded” history. The questions this observation raises are innumerable. They have to be left out of this presentation. Second, all complete systems of logic are equivalent to each other. And what does this rather cryptic expression mean? It means that each system of logic, if it is consistently developed and applied, enables the practitioner to reach an understanding of the world—or portions thereof—which is valid and true. That understanding can withstand all tests of validity. That understanding is true because the truth simply is: it was, it is, and it will be. What changes is the “amount” of truth that is grasped at each time. Certainly, the more “complex” the system of logic used to reach that understanding, the “greater” the amount of truth can be expected to be grasped. But each amount is equivalent to all others. The truth is the truth. A “larger” truth is not truer, even though it may be more useful than a “smaller” truth. Knowledge necessary for celestial navigation is not truer than knowledge for terrestrial navigation. Therefore, mastery of the knowledge of systems of logic leads not only to understanding. It also leads to tolerance.

14.17 Part II: Relational Epistemology Not Categories but Synthesizers of Knowledge. Ideas, Concepts, Theories, Systems, Processes, Dialectic Ideas, Ideals.

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14.17.1 Abstract Categories, long helpful tools of epistemology, have become part of the many problems we face. After dismissing the categories as organizers of information, we will focus our attention on synthesizers of knowledge. Synthesizers of knowledge are indeed synthesizers of knowledge: If we peek into the word/name “tree,” actually the idea denoted by the word tree, we find all the components of the idea: roots, trunk, branches, leaves—as well as all conceivable trees, all objects that we have named, or we will ever name “tree.” Next levels of abstraction and synthesis are expressed by concepts, which are associated with other concepts into theories and theories into systems of thought; systems are static, they become dynamic when transformed into processes. Complex ideas assume the form of dialectic ideas, which are resolved into ideals.

14.18 A Recurring Pattern of Crisis and Solutions In pursuit of knowledge and understanding, for long periods of time during the course of the millennia we have coped with the same crisis we are facing at present: a crisis of information—a crisis that in the end always turns out to be a crisis of knowledge; a crisis concerning the validity of what we know, what we do not know, and what we ought to know. The crisis is spurred by too much data and too many ideas to be contained in our mental britches. In economics, help is expected from the use of mathematics. But this is a vain hope. Mathematics was not useful to this writer when he was confronted with two “consistent” mathematical models of the economic system. More generally, mathematics, being itself a derivative of logic, cannot solve issues of logic—nor issues of epistemology. Mathematics does not advance one inch without first establishing a relation of equivalence. Is it not true that mathematics manipulates information, that it does not synthesize information into a new creation? The thrust of this chapter is that the solution of today’s crisis lies neither in computers and computer models—i.e., AI—nor in mathematics. It lies elsewhere. It lies in the understanding of the recurring pattern of essentially identical crises faced in the past and similar solutions so ingeniously devised by our ancestors. When faced with too much information, our ancestors synthesized it. They invented a set of appropriate intellectual tools: containers whose function was to include all relevant information. From then on, one would carry in one’s head only the container, and not the detailed mass of data which had been poured into and formed the container itself. Just think, how many books are contained in the expression “Keynesian economics.” At the same time, the original data is not destroyed. If

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one needs it, one simply has to look into the very composition and formation of the container. The list of such containers—or synthesizers—is not long. Through further refinements, the list might be made longer; but we shall pay only scant attention to such refinements. At this stage of the discussion, we are better served if we focus our attention on bare essentials. After dismissing the categories as organizers (not synthesizers) of information, we will be primarily concerned with the following synthesizers of information: ideas, concepts, theories, systems, and processes. Complex dialectic ideas are sublimated into ideals. Of course, these synthesizers of knowledge are individually known in great detail. But they do not seem to be commonly known in their relations to each other.

14.19 The Facts Just the facts. Just the facts, it is thoughtlessly repeated: This is a very misleading maxim. The problem is that “facts” are deceitful. One of the most egregious case in history is the “fact” of phlogiston. Everyone knew it was everywhere, until it was ascertained it was nowhere: it did not exist. Above all, facts are infinite. They have always been infinite. Therefore, we need mental tools that prevent our consciousness from being submerged in the sea of facts. Indeed, looked at the other way around, it can properly be said that the whole purpose and function of “knowledge” is to understand facts.

14.20 Two General Questions What is information? Information is all that enters—and goes out of—our consciousness. The expression “all”—especially when encompassing as it must, all those “entities” that enter our life without our awareness of them, those that enter our life above or below or sideways in relation to our awareness—clearly suggests an infinity of such entities as impressions, visions, imaginings, emotions, words, thoughts, numerical digits, virtual digits, and facts: facts relating to trees; facts relating to the economic value of trees; facts relating to the intellectual value of trees; theories that, when laid out, become “facts,” deeds, acts, that one can see and touch. If information is anything that enters our consciousness, what is consciousness? Beyond subtle distinctions and much deep thought spent on these issues, this is the place for enormous simplifications. Except for flickering data from neuroscience, we know virtually nothing about consciousness in particular. One of “the” big questions: Do trees have consciousness? They might, and we might be able to find objective evidence of this capacity one day; yet, since trees (and animals) do not seem to have an apparatus capable of responding—consistently and unambiguously—to our queries, the issue can be tabled. Our concern can reasonably be restricted to an inquiry about

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human consciousness. (To ultrasensitive souls who feel the pain suffered by animals I joyfully say: “I am with you; I feel the pain felt by a sheath of wheat cut by the scythe”).6 The shortest shortcut we are going to adopt is to believe that human consciousness is a synonym for human life.7 The complexity of the issues becomes clearer when we realize that we are thick in the flow of the fourth major crisis of information. The first climaxed perhaps 40,000 years ago; the second climaxed 2500 years ago; the third climaxed 500 years ago; we are now in the throes of a fourth such crisis.

14.21 What Happened 40,000 Years Ago? How did our early ancestors identify those flickers in front of their eyes; how did they distinguish a gazelle from a salmon or the moon? To repeat what we have seen in Part I, Alexander Marshack in his The Roots of Civilization (1991) revealed that Cro-Magnon men and women, if not much earlier people, accumulated notations upon notations by placing them on stones and bones that he found in archeological museums of the world. That must have been the first crisis of information faced by human beings. How could any one person keep all those notations in mind? What were those notations signifying? We have earlier attempted to reconstruct the mental process through which our ancestors distinguished a salmon from the moon. Instinctively (?), they used a system of primordial logic—a system that has remained constant ever since, a system that gradually came to be identified as being composed of the principles of identity, non-contradiction, and equivalence. With the help of this system of logic, they used those notations to record information concerning nearly all the objects composing the reality of the natural world around them, all objects that enveloped their lives. They also were enormously inventive in creating distinctive names for the objects in front of their eyes: salmon, moon, gazelle...

14.21.1 The Solution To gain a fuller understanding of the solution to the first crisis of information we have to realize that the creation and use of “names” had a deep significance. Any such name 6

These disquisitions can be settled only in the context of the equivalence of matter to energy and to spirit, whereby it can be agreed that it is the spirit of wheat, the spirit of the dog (whose eyes and tail are clear tools of communication), and the spirit of human beings that are capable of communicating with each other. For the original equivalence, see Gorga (2007). 7 Once the equivalence of matter to energy and to spirit is accepted, one can pass to this equivalence: Spirit ≡ Consciousness ≡ Being (alive). This equivalence solves two of Heidegger’s problems: What is the essence of being; what is the relation between Being and beings.

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was an “idea,” a concrete idea. To simplify things, rather than roots, and trunks, and branches, and leaves, thinking people—who came much before the Greeks—created one word, tree. Passing from linguistics to epistemology, we realize that this was not just a name; it was an idea, the idea of “tree,” a synthesizer of information that contained all trees, and all component parts of a tree—as well as all conceivable trees, all objects that we have ever named tree; all past and future trees we have discovered, might discover, or might create by craft and graft, all imaginary trees, such as the “tree of life” that was ever, or will ever, be conceived, depicted, or described are also included in the idea of tree. Through an intellectual process that still needs to be investigated in depth, CroMagnon men and women named all concrete objects around them: salmon, moon, gazelle, tree.8 In the process, as pointed out earlier, they synthesized much information: rather than trunks and branches and roots and leaves… they decided that they could name and remember just one word: tree. Mirabile dictu, once a name was selected the “entire world” seemed to coalesce toward its acceptance within each language system.

14.22 What Happened 2500 Years Ago? What happened to the Greeks 2500 years ago is not past history to be forgotten. One observation confirms the importance of that Culture: For nearly any scientific advancement that needs a particular name, we still use roots of Greek words to identify them. We are now going to see that whatever affected that Culture is still relevant today. We can still learn a lot from the Greeks—a lot more than we have ever learned from them. What were the minds of the Greeks supposed to do when the task of naming concrete things was (nearly?) complete, when all real entities around them—and between them—had already been given specific names? Remain in idle adoration of the accomplishments of their ancestors, “the legislators of words”? Just relish the memory of spectacular accomplishments of the past? Accomplishments were not only naming most everything, but having such names so widely accepted, worldwide, in any language, that there has not been much discussion ever since about the distinction between a tree and a bush—or such relations as quantity or quality. There are many more subjects that are not open to discussion, of course. Thus we are left with time to do more and better things. Are we not faced with so many needs that wait for a satisfactory solution? If we are really humble enough, we realize that— intellectually—we are faced with exactly the same problem faced by the Greeks. We have to solve issues they attempted to solve. 8

Did they also establish relations between them? Such a thing as “darkness” appears in the sky before light returns again; this salmon is longer than that salmon. How could Cro-Magnon men and women have avoided the whole slew of what might be called concrete relations and qualities such as time, and space, and quantity—and, of course, colors, and numbers (numbers!).

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What were the Greeks supposed to do, when there were no more concrete objects and relations to name?

14.22.1 The Second Crisis The real problem the Greeks faced concerned the past more than the future. What to do with the immense number of names of objects and relations that had been created? The sum total of those names was, most likely, beyond the capacity of any single human being to retain. That was the second formal crisis of information—this is a crisis in which we are, in part, still fully enveloped.

14.22.2 Three (Temporary) Solutions to the Second Crisis of Information The Greeks did not remain passive; rather, they were enormously inventive. Their work resulted in three extraordinary accomplishments: 1. The creation of the categories; 2. The creation of abstract ideas; and 3. The Syllogistic Method of Analysis to understand and define abstract ideas. 1. Categories No one knows who created the first abstract idea or the first syllogism; but we know who created the categories.9 Through a feat of the intellect that is still fully engaging philosophers today, Aristotle organized the names of the whole physical and intellectual reality known to man into 10 groupings.10 Aristotle called such groupings “categories.” All words that responded to such an attribute as “how much” were included in the category that he called quantity; all words that responded to the attribute “when” were grouped in the category time. And so on. These groupings included such entities as time, space, quantity, quality, and six more whose meaning is still much debated. (We temporarily assume that any one of the categories was ever defined unequivocally). Categories were later extended to 12 by Kant and to 4 [time x] by Whitehead and to…11 9

Aristotle was perhaps helped by many precursors whose work has not come to light yet. Also, works like Plato’s Sophist seem to be still in need of full integration into our understanding of the categories. And certainly Plato, in his Statesman dialogue, introduced the idea of grouping objects based on their similar properties. 10 See, Aristotle (1947: 14-30). See also, e.g., Vangeest (2022). 11 Gradually, the categories became far removed from the original Aristotelean conception of passive groupings and were assigned imaginative active functions. For Kant, categories were “pure concepts of the understanding,” not simply descriptive concepts; more abstractly still, for him concepts were “the condition of the possibility of objects in general.” For the moderns, categories are “metaconcepts.”

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2. Abstract Ideas Rather than resting on the laurels of the past, the richness of definitions of concrete “entities” to which their direct ancestors immensely contributed, the Greeks began to explore the field of abstract ideas. Abstract ideas cover fields that arise, not from the objective reality of the world, but from regions of our heart and mind and spirit that are still mostly obscure today. The relevance of the Greeks is evidenced by the fact that we are still exploring the meaning of such basic abstract ideas as what is beauty and truth and goodness and justice. More importantly, these are ideas that raise such perennial questions as how can we have more beauty and truth and goodness and justice in society? Were these accomplishments not sufficient to establish the incredible importance of the Greeks in our lives, a few questions should suffice. Who invented comprehensive mythology? Or philosophy? Or theology? Or logic? Or epistemology? Or rhetoric? Or psychology? Or history? Or political theory? Or geography? Or archeology? Or physics? Or medicine? Or drama? Or Theater? Or the mathematical distinction of melody from noise (Pythagoras)—and locking music into the “Western” canon? The list is far from exhausted. In addition, in the course of centuries we have lost some of the distinctions that were dear and clear to the Greeks: the distinction between agape, eros, and philia readily comes to mind. The essential characteristic of abstract ideas is that they require more than a single word to become clear. One cannot simply “point” to this or that entity for an abstract idea to become clear. To communicate abstract ideas to others, we need one or more propositions. The need then arose to determine the validity of propositions. 3. The Syllogistic Method of Analysis The Greeks basically established not only what to analyze, a kind of territory beyond which the mind—likely—could not and should not extend itself; they also established how we must proceed in our reasoning if we want to be understood and accepted by others. To establish the validity of propositions, the Greeks invented the Syllogistic Method of Analysis. THEY APPLIED THE PRINCIPLE OF EQUIVALENCE TO PROPOSITIONS. Thanks to these three accomplishments, the Greeks have forever dominated the world of the intellect. Socrates, Plato, and Aristotle—let alone Democritus. Parmenides, and Heraclitus—are as alive with us today as they were 2500 years ago. When in doubt about anything, we still consult them. Yet, all three solutions were partially faulty.

14.23 The Key Problem The problem with using the Greek system of thought is that, belonging to the stratosphere of abstraction, answers to our questions have never been very clear, never been definitive. There has always been something to add to or subtract from Greek

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solutions. Aristotle was fully aware of this limitation: He concluded his work on the Categories by saying, “Other senses of the word might perhaps be found, but the most ordinary ones have all been enumerated.” It is this lack of certainty that gradually led to the third great crisis of information and knowledge: a cultural crisis, a crisis of the spirit. The more closely we look at that crisis, the clearer the realization becomes that it was not only the crisis faced by the Greeks or the people of the Middle Age and the Renaissance who had adopted the three solutions offered by the Greeks to “their” crisis of information; we fully share the effects of that crisis. The crisis in our days, as we will see, is an extension of that crisis. But, first, what happened 500 years ago?

14.24 What Happened 500 Years Ago? Using the Syllogistic Method of Analysis, the Greeks and their followers all through the Middle Ages, working within the framework of knowledge established by the categories, explored all nuances of such abstract ideas as beauty, goodness, and truth—and justice. The concentration of philosophers, of course, was on such ideas as Being and especially “universals” and “particulars.” And then there were subtle disquisitions about the meaning of each one of the categories themselves that needed to be clarified. Conversations were fascinating, but the more these ideas were explored in depth, the less knowledge, the less certainty were they yielding. Two “schools,” at least two major schools, arose. No matter what Realists were proposing, Nominalists would demolish each and every one of their propositions—and vice versa. There is nothing beyond “names,” the Nominalists maintained. And the Realists retorted: “Reality” is all that there is; reality is the thing in itself, an entity that was later denominated as the noumenon.12 There is a fundamental distinction that Realists of the Middle Ages, including St. Thomas Aquinas, for a great variety of reasons, were not able to consider. They did not realize that only God is; all the rest exists in relation to God. See, Gorga (2009b). These issues have so many facets that one can change subject and predicate and obtain identical—or completely different—conclusions. And then there are many combinations and permutations of subject and predicate. People made fun of the subtle disquisitions of the “doctors”: the Doctors of Philosophy and Theology. Even some of them asked, “How many angels can dance on the head of a pin?” Gradually, as the Syllogistic Method of Analysis itself became more refined, it became more complex, and less manageable, less useful. Interested Readers might want to Google Argument Forms to be convinced of this reality. The answers this method yielded became problematic. We came to doubt everything. 12

This fundamental distinction still lingered three, four, five centuries after the overall crisis of the Renaissance was resolved. Kant eventually attempted to settle the issue, by saying that the noumenon is unknowable—thus precipitating the modern crisis in which we are directly involved.

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All work of the past seemed to have been in vain. Eventually, the majority of the people rejected the syllogistics method itself; they refused to accept its dominance.

14.24.1 Descartes Appeared The intellectual crisis became deeper and deeper,13 until, about 400 years ago, Descartes suggested a way out—in two parts. Without saying a negative word about it, he destroyed the foundations of the Syllogistic Method of Analysis14 —and the very value of abstract ideas.15 Thus, two of the major innovations of the Greeks were gone; what was left were the categories. Descartes convinced us that all doubts would gradually vanish if only we concentrated the mind on the understanding of “clear and distinct” ideas—which in the long-run turned out to be observations about objective measurable matters. Rationalism was born. Descartes intoxicated us with the injection of a good dose of math and geometry in his analysis (geometry generally makes mathematics visible). With math in the saddle, we have been riding to higher and higher levels of Abstraction—and Uncertainty.16

14.25 The Crisis About the Categories Eventually, the categories were also found faulty. Modern physics has been at the forefront of the struggle to demolish them; let us recall the treatment of space and time. These are entities in which our life appears to be enmeshed; our very life seems

13

Let us never underestimate the practical value of “abstract” discussions. Let us rather remember that the brain rules the hand; words determine actions. Let us remember that in those years religious wars in Europe were in full bloom. 14 The disappearance of the Syllogistic Method is questionable. What we did shed is its overuse—its abuse and the exclusive reliance on it. It mostly remains hidden in many a system of equations. Keynes’ model of the economic system most assuredly is a syllogism, Keynes (1936: 63). (And the mathematical model on which the General Theory is built, as Michael E. Brady has demonstrated, has not been discovered yet.) 15 Descartes implicitly forbade us from analyzing abstract ideas. But the mind cannot be so constrained; he simply made room for the faulty ideals of the Enlightenment. Equality displaced justice; liberty—which gradually became freedom of the “masters of mankind,” as Adam Smith labelled them—displaced freedom; and happiness displaced virtue; see, a paper titled “Wake up America. Wake up from Your 250-Year Old Slumber,” Gorga (2016). 16 One extension is the contemporary interest in the much-disputed String Theory.

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to be constructed out of space and time. Yet, they survive in modern physics only as a joint unit, space-time.17 Separate from the things they hold together, the categories themselves are found to be inventions of our mind that encompass no reality.18 The word “quantity” by itself is only a word; it contains nothing real. And the same is true for all other categories. When the entities they gather together are real, the categories remain useful organizers of information, nothing more, nothing less. The last vestige of the Greek tradition has been destroyed. Even though these are obvious conclusions, we must pause and think of the confusion that these realizations entail. When the content of the categories proves to be unreal, it is as if the intellectual ground were pulled from under our feet. Where is life, if not in time and space? During the last four to five hundred years, we have witnessed a cascade of errors, one worse than the other, one attempting to correct the other but, never going to the root of it, we are just falling into greater and greater abstraction. Phil Pilkington (2014b), limiting his observation to economics, put it right: “Mainstream economics moves forward not through logical development and integration, but through forgetting.” So can be said of Rationalism; see, Gorga (2017b). How did we reach this stage?

14.26 The Current Crisis Just as in the late Renaissance, we are again certain of nothing; human relationships are at a very low level of mutual trust; and communities are disaggregating under our very eyes. Truth is nowhere in sight. We have especially lost faith in the “method” we inherited from Descartes. This method encouraged us to place our trust in “clear and distinct” ideas—and clear and distinct propositions, we must add. All reinforced by the use of mathematics and geometry. What happened to this method? What happened to the common understanding that to do science is to follow an agreed-upon method of analysis—so people can repeat our experiment? If this lack of trust is found to exist in the “hard” sciences, how much more deeply does it apply to the “soft” sciences? To top it all, we are now of the conviction that 17

And yet, this conjunction has to occur in order to have the same conception in physics as in religion. Once we go beyond time as ordered by the mechanical clock, we realize that yesterday has gone, and tomorrow is yet to come. “Real” is only the sacred present. The wondrous reality of the non-existence of time; the confluence of past and future into the present, is the eternal present. 18 At 12am in Gloucester, MA, USA, it is 6:00pm in Rome, and 12:00 night in Manila. The least that can be said is that mechanical time is something that is relative to this earth. If time existed as an independent category of thought all of its own, would it not be the same time at least all around the earth? A dynamic view of the same issue? The year starts earlier in the East than in the West.

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our life is enveloped in “two cultures.” Not even a faint hope of healing the breach in our head, the breach in our lives.

14.26.1 The Kuhn/Feyerabend Attack Descartes’s method of analysis has been subjected to severe criticism for quite some time.19 Most reasons are well known and do not need to be repeated. Here it suffices to point out, not only that mainly as a result of Thomas Kuhn’s The Structure of Scientific Revolutions (1962) and Paul Feyerabend’s Against Method: Outline of an Anarchist Theory of Knowledge (1975) we are left without a method, but especially that we are left with a cultural bias against method, against any method of analysis. “Anything goes.” The only condition Feyerabend posited is the idealist situation in which the speaker welcomes criticism. For realism, see Gentile above. There is no agreement about anything anymore. Indeed, there is no agreement on how to proceed in order to escape the current crisis. In confirmation, we shall stress two veins that run deep through any such analysis: the crisis regarding individual words and the crisis regarding individual propositions.

14.27 The Crisis Regarding Individual Words: The Need for Three Concepts Why are we still arguing about the meaning of specific words? In a paper titled “The Abuse of Words,” Gorga (2017c), we found that the meaning of individual, abstract words will always be equivocal, the more abstract the content, the wider the room for lack of precision. The broad issue is text without context. Specifically, in search of a solution we found out that we need to put trust only in triads: Not one, not two, but three words (more specifically, as we shall see in a moment, three concepts) that, respecting the rules of equivalence give us the logical context in which specific words live—most assuredly, the context is observed from three points of view. The validity of this approach can be justified in many ways. The shortest is this: Two observations lead to circularity of reasoning. Science takes over only when a third point on the graph is identified. The point at the center of a circle and any point on the circumference give us only two points.

19

One of the most effective battles has taken place in economics through the revelation that conclusions reached with the help of econometrics are not definitive; see McCloskey (1983). Economics is a field of study which for a variety of reasons, as widely acknowledged, has been in a state of crisis for quite some time, at least since the publication of Adam Smith’s The Wealth of Nations (1776).

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Thus the discourse goes round and round. Among many consequences, this is worth stressing: This is why the world “dichotomies” crashes.

14.28 The Crisis Regarding Individual Propositions A proposition by itself has no meaning. Just as for individual words, the wider the context to which the proposition refers, the wider the room for misunderstanding. The locus classicus is such a stark proposition as “Do parallel lines meet”? While parallel lines do not meet in Euclidean geometry, they do meet in non-Euclidean geometry. The basic truth is this: it is theories that define propositions.

14.29 The Depth of the Current Crisis With Rationalism, human thought—largely unawares—gradually became involved in a narcissistic adoration of itself. Thought was expressed in a crescendo of abstract ideas and concepts, ideas and concepts of itself! Rationalism went its own merry way into an apotheosis of narcissism that is Kantian and Hegelian Idealism and Conceptualism: Abstract thought contemplating itself. This was a truly Copernican revolution.20 This is the apotheosis of the Individual. This is the apotheosis of Individualism. (Next came Nietzsche with his will-to-power. And then Freud came along. And then Hugh Hefner.) And can Thought ever find fault with itself? Yes, of course, continuously. But the result is a never ending succession of errors, followed by the justification of errors into a more abstruse composition of words—individual words. Rationalizations them all. Those thinkers who are lucky enough to go back over their works, revise them, and revise them again.21 American and European philosophy of the last century mostly refused to follow those abstractions. However, their escape routes, Pragmatism and Analytical Philosophy, did not yield satisfactory results. What else to expect since we have lately rejected “method” itself? It is as if unbridled reason could ever be trusted to produce anything that is not self-serving.

20

A Copernican revolution: Knowledge for Kant does not revolve around what the world is like, but what “we are like.” The answer to Hume skepticism should have been, not that we build, but we discover. 21 In 1831, the year he died, Hegel signed a contract to revise his fundamental book, Phenomenology of Spirit, he had published in 1807. The revision of other authors’ philosophy is an entirely different matter.

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14.30 A Turning Point Instead of extricating itself from these meanders, the trend is currently to go back to Kant and Hegel to see whether anything useful can be extracted from their systems of thought that had not been discovered before. As Gare (2002) points out, ”Schelling’s arguments against Hegel and his call for a positive philosophy brought about a philosophical revolution. Nietzsche and Heidegger were products of this revolution. The poststructuralists, Lacan, Derrida, Foucault, Lyotard, Deleuze, and Guattari, have continued to develop the arguments of these philosophers and sought to free civilization of the defective forms of thinking which have engendered an oppressive and domineering social order. Hegel is the thinker whose ideas have to be overcome.” Yes, there is a fundamental problem with Hegelian idealism and Marxist materialism: The dialectic process of thesis, antithesis and synthesis does not work; it cannot be made amenable to mathematical analysis; this type of thought cannot be made clear enough and precise enough to pass intense in-depth scrutiny. How to measure, how to rely on a “not-apple”? We need a new method of analysis.

14.31 The Grand Divergence Totally unaware at first, this writer has been pursuing a different line of thought. He has been observing the objective content of ideas and concepts and has found them as means to acquire knowledge of the external world, rather than a self-referential observation of thought itself. Hence, the Grand Divergence. It is the tripartite analysis of equivalence relations that overcomes the inability of Hegelian idealism and Marxist materialism to be subjected to mathematical analysis. The divergence, in brief, is this: Building on the stronghold of Relational Logic, the effort is to build a Relational Epistemology. The ultimate purpose is to build, from their conjunction, a new method of analysis, the Relational Method of Analysis. On the basis of past experience, we can assuredly state that the current crisis will be resolved only with agreement about a new method of analysis. If useful, the method will by itself gather the allegiance of many people.

14.32 Relational Epistemology Apart from the firmness of names and/or concrete ideas mostly ascertained more than 2500 years ago, we are still in a sea of doubt about any other entity; notwithstanding spectacular technical progress, we are in an ocean of ignorance and confusion regarding our intellectual, social, economic, political, and cultural life. There is

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no truth to which we can give our allegiance. There is no truth that, once lived, can give value to our life. In brief, rather than being guided by the categories any longer we are going to entrust our efforts to an organic series of synthesizers of knowledge that constitute Relational Epistemology. Relational Epistemology is represented by this sequence: (1) pure ideas—homogeneous ideas that contain no contradictions; (2) concepts: pure concepts—homogeneous concepts that contain no contradictions; (3) concepts are developed into theories; (4) theories into systems of thought; (5) systems of thought are developed into dynamic processes that try to understand life—they try to understand life as it goes by; they try to understand the panta rei; they try to understand the noumenon, the thing-in-itself. Select abstract ideas are then recognized as dialectic ideas, ideas that are sublimated into ideals. Let us look at these tools in rather rapid succession.

14.33 New/Old Synthesizers of Knowledge Relational Epistemology is composed of scientific synthesizers of knowledge; what happens in literature and the arts, as well as in technology, falls outside the scope of this chapter. The announced progression of tools of epistemology are individually known in great detail, but they do not seem to be known in their relation to each other. Let us observe them in this context. These synthesizers of information have been presented in Chap. 5; here they acquire new life—and then they are extended to meet Rationalism, Relations, and Relationalism.

14.33.1 Ideas—And the Crisis of Abstract Ideas Many ideas are just like flowers, brilliant in the morning wilting by evening. Yet, ideas have a tremendous power as tools to acquire, retain, and transmit knowledge, because they synthesize information relating to homogenous facts. The “idea” of the tree does—indeed, must—not only be capable of incorporating all conceivable trees; it must also be capable of incorporating all the detailed information concerning each particular tree. In short, an idea is a first level of abstraction of concrete, factual information. This is the first intellectual container to include exclusively homogeneous items: trunk, bark, branches form trees and all trees are trees. (Biology and chemistry confirm that the same “elements” cursor through all component parts of the tree: roots, trunk, branches, leaves, and lymph; thus, making the idea of “tree” a homogeneous entity). An idea can be as broad as possible, but it remains subject to the rules of the principle of identity: an idea has to put homogeneous “things” together. At a higher level of abstraction than tree, the idea of wood, can include trees, bushes, and brush; but it cannot include nails. An idea can be as broad as possible, but it cannot include non-homogeneous, contradictory information.

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These requirements are easy to identify when dealing with concrete ideas. The danger with abstract ideas is that unbeknownst to the writer and the Reader, they might contain non-homogeneous facts, contradictory observations and information. A detailed dissection of the content of the idea of Saving in economics, for instance, yielded the conclusion that this word embraces a long series of basic contradictions: To remain at an elementary level of analysis, the word Saving includes bark, and leaves, and nails. We are out of the realm of words and concrete ideas such as tree and wood. In what world are we? We are in the world of abstract ideas. In economics, we are in the world of Saving.22 Wood and nails are included in the word Saving— what is more evident that one can “save” nails? Yet, the inclusion of this—hidden—tiniest of all contradictions, the inclusion of wood and nails in the word Saving, explodes into a series of contradictions that result in the crisis in which the structure of economics is inveigled today. Both Aristotle and Thomas Aquinas were aware of the crushing importance of small fractures at the basis of an intellectual construction. (Examples of contradictions multiply the closer one looks at the idea of Saving: Can a banana be saved? Is a savings bank account that yields interest a saving—or is it an investment?) Abstract ideas can arbitrarily cover non-homogeneous entities and thus lead to unresolved and unresolvable conflicts of understanding. To enlarge a bit our focus, let us remember that since Saving is “equal” to Investment in mainstream economics, Investment automatically assumes 100,000 meanings. This is the root of interminable controversies about the meaning of “capital.” For confirmation, see evaluations of Thomas Piketty’s Capital in the Twenty-First Century (2014). How can we resolve this crisis of abstract ideas? Learning from the past, we can assuredly state that we can resolve the problem of hidden contradictory information contained in abstract ideas only by splitting the information and creating new containers, which, being synthesizer of homogeneous ideas, do not contain contradictory information. This type of container is the concept.

14.33.2 Concepts More technically, our effort at solving the crisis of abstract ideas involves the transformation of ideas into concepts, a next level of abstraction, a more selective tool that allows us to synthetize an enormous amount of detailed information, all the 22

Again. A professor of economics at Yale, R. W. Goldsmith, calculated that Saving can assume 100,000 possible meanings. Saving in mainstream economics is not restricted to one and only one definition, but it indeed assumes 1 + 99,999 meanings. Any wonder that mainstream economics is in a state of crisis today? Individually, they are all logically tenable meanings. In fact, one can include in this container all the shades of opinion from hoarding to non-consumption. Yes, not consuming can be a form of saving—provided the item saved is not perishable. Notice the shift from “things” to opinions. Yet, even in the field of opinion one must respect the principle of identity: One cannot introduce contradictory ideas in the same conversation.

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while eliminating the possibility of being confronted with hidden contradictory information. Thus rather than fixating on Saving, I enlarged my focus to observe “wealth.” Wealth then yielded a clear-cut difference between being productive or nonproductive. I defined Investment as an entity representing all productive wealth. Outside of finance, what is the purpose of an investment if not to produce further wealth? I defined Saving as an entity representing all non-productive wealth. (Later, to avoid confusion I defined Saving as Hoarding.23 ) Totally unawares, I changed a vague Idea into a Concept. A concept is a synthesizer of knowledge that contains homogeneous ideas. Indeed, a concept can be formally defined as a relationship among homogenous ideas. Kant provided the rules that help us identify concepts: In every cognition of an object there is unity of concept, which may be called qualitative unity, so far as we think by it only the unity in the comprehension of the manifold material of our knowledge… Secondly, there is truth, in respect to the deductions from it. The more true deductions can be made from a given concept, the more criteria are there of its objective reality… Thirdly, there is completeness, which consists in this, that the plurality together leads back to the unity of the concept, according completely with this and with no other concept.

What allows us to put wood and nails into the same container is the idea of wealth. This broad idea, then, allows us to distinguish productive from non-productive wealth. It is on the basis of this distinction that we can logically analyze the content of the word Hoarding. The word Hoarding can definitely include wood and nails that are in a non-productive state. Automatically, wood and nails that are in a productive state can then be included in Investment. Investment is the concept in economics that—by an unspoken agreement—includes all productive wealth. Thus, these two concepts, Hoarding and Investment, allow for the study of elements that perform homogeneous functions: they allow us to identify wealth that is either in a non-productive or a productive state.

14.33.3 Theories Just as one swallow does not spring make, so one or even a few separate concepts are not harbingers of anything spectacular. Individual concepts, just like individual propositions, might lead to much confusion. A concept, in fact, reduced to semantic or linguistic terms is only one thought or one statement. As we have seen, individual statements or propositions by themselves have no meaning. The classic example, to 23

This solution was a drastic one. The solution forced this writer to discard the word Saving, to expunge it from the world of economics, and relegate it to the practice of financial accounts. As pointed out earlier, Saving is a word that, as Professor R. W. Goldsmith calculated, assumes 100,000 logical meanings. Saving is not a tenable scientific word; it is not a useful tool of knowledge.

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Fig. 14.11 Effects of hoarding

repeat, is the question: Do parallel lines meet? Without inserting the questions in a larger context—i.e., a theory—it is impossible to give any definite answer. To insist on this important point, it is only theories that provide the larger context or intellectual world in which individual statements—or concepts—have a definite meaning. Theories then are relationships among homogeneous concepts. (That concepts have to belong to a homogeneous world in order to form a theory is selfevident. No sense would be made by mixing the concept of gravity in physics with the concept of investment in economics). Relating Hoarding to Investment is an exercise in theory that this writer has lately come to define as A Theory of the Cause of Poverty. Let us see how. With Saving defined as Hoarding, through painstaking logico-mathematical reasoning one passes from the equality of Saving to Investment (treated as ideas) to the complementarity of Hoarding and Investment (treated as concepts). This relation—and its effects—is better analyzed when placed in a Lorenz diagram, as follows (Fig. 14.11): More hoarding, less investment, results in less growth. More money spent on hoarded goods, more money in circulation—with less growth—results in more inflation. More hoarding, less investment—and more inflation—results in more poverty. These hypotheses can be proved valid or disproved only when numbers are collected in accordance with the categories suggested by Concordian economic.

14.33.4 Systems The assurance that the analysis of the discipline of economics was complete, at least as far as modern economics is concerned, was given by the inclusion of Hoarding into Keynes’ model of the economic system. Meeting this requirement yielded surprising results. Thus:

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Income = Consumption + Hoarding Investment = Income − Hoarding

This system resulted in the equality of Investment to Consumption (I=C). “I=C, I love it!” wrote a Reader who desires to remain anonymous. “In fact, I think Keynes’s General Theory is incoherent without it… Someday, I=C will shift from radically ridiculous to patently obvious.” The I=C construction is scaffolding that comes down and becomes obvious as soon as Investment is transformed into Production—what is an investment if not for production of real wealth? As an entity capable of effectuating an exchange, Consumption is understood to mean expenditure of monetary wealth to purchase real goods and services (not simply as expenditure on consumer goods as in mainstream economics). Not all wealth that is produced is physically consumed; some of it is exchanged for the money created by the Monetary Authority (some steps are more complex than this, but this is the essence of the process of creating money). The new result was P = C. This conclusion yielded the automatic separation of the real economy from the monetary economy—thus bringing much clarity to the economic discourse. (Economists see only money; only the monetary economy.) Then, since an equality has to be an equivalence in order for the relationship to be logically valid, see, e.g., Suppes (1957), a third term was searched for and found out of the need to apportion the ownership of wealth to someone as soon as it is created. This term is Distribution (D) of ownership rights. This logical need yielded the additional benefit that the two parts of the economy—real wealth and monetary wealth—were not left hanging separately but were ultimately joined together through the concept of Distribution of the value of ownership rights over real and monetary wealth. The fundamental proposition of economics thus became: Production ≡ Distribution ≡ Consumption. Figure 14.12 resulted: Fig. 14.12 The economic system

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Fig. 14.13 The theory of economic justice

The easiest way to explicate this Figure is to relate it to the purchase of a chocolate bar. The real wealth of the chocolate bar (1) is exchanged for money (2); the third invisible item is the exchange of property rights; (3) property rights over money are being exchanged for property rights over real wealth. This invisible element of the economic process is made visible in the graph, and it is made tangible by the sales slip. To exit a store without the sales slip, one is exposed to the risk and peril of going to jail. Some characteristics of Concordian economics are these: The diagram P = D ≡ C allows us to see all relationships at once; it allows us to constantly see each item within its appropriate context (ever been struck by the vacuity of positions trying to establish the priority or preeminence of specific items in a system of thought?); it also gives us the basic dynamics of the interrelationships among the various elements of the presentation. All the pieces of the economic puzzle are ready to spring into action. Until they remain static, they manifest all the key elements of the economic system. Once the economic process is reconstructed, one is granted the privilege of completing the Aristotelian/Aquinian project of economic justice.24 Thus: Clearly, Figure 14.13 is the mirror image of Figure 14.12. The body of knowledge included in the doctrine of economic justice, which ruled the world for 2000 years, disappeared from our consciousness, once Locke shifted our attention from it and made us focus on the justice of property rights. To which Socialists and Marx retorted: Let us rather focus on the injustice of property rights. And there the political discourse stands today.

24

Both Aristotle and Aquinas justified slavery. Ergo, they could not conceive of extending the right/ privilege of work to everyone.

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Fig. 14.14 The dynamics of the economic system

14.33.5 Processes The economic system described by Concordian economics is eminently dynamic.25 This characteristic is more clearly observed by reducing the rectangles of Figure 14.12 to three points (0,0,0). And then extending each point into a line. Over time, these lines are expected to create the following patterns (Fig. 14.14): For its ease of production, Monetary Wealth (MW) can be expected to grow at a faster rate than Real Wealth (RW). At a first level of analysis, the rate of change in the Distribution of Ownership rights (DO) can be assumed to be shooting through the sky and then collapsing. The area between MV and RW can be described as the “economic bubble.” This is an area that can be precisely measured with the help of the following values: p-values, d-values, and c-values (Production-Values, Distribution-Values, and Consumption Values) all measured with the same yardstick, the legal currency of the country.26 Modern mathematics seems to be fitted to a “t” to Concordian economics. Indeed, this new system requires, not the stale horse of linear math, but the systems analysis pursued by non-linear math and chaos theory. The geometry of this construction yields a figure such as this (Fig. 14.15): This figure reproduces the cumulative cycles of production and exchange that one obtains combining natural resources with monetary wealth over time. This figure records all the cycles that have occurred since the beginning of civilization (with some civilizations dying over time). Closing the two halves together, one obtains the image of a cyclotron.

25

“Process thinking is the most needed and the most demanding form of modern thinking. Most modern thinkers manifest in one form or another this type of reasoning as well as a variegated response to the needs of modernity,” Gare (2002). 26 The issue of measuring real wealth has been one of the most difficult problems to solve in economics. I was distinguishing these values by color, when my wife, Joan, suggested they can be distinguished by calling them p-values, d-values, and c-values. Brilliant.

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Fig. 14.15 Flow of economic values

This is a figure that is well known to contemporary scientists. It is called a Strange Attractor. Time will tell whether these conclusions are validated or disproved for economics.

14.34 From Dialectic Ideas to Ideals The work from concrete ideas to concept, theories, systems, and processes is not carried out in a vacuum. All throughout this road there is such a thing as the culture of the age. Culture is related to agriculture. Culture is always alive and new: Dead culture is the culture of the past (which might be more alive and vibrant than contemporary culture), some of which is preserved in museums and libraries. Culture does not proceed in the dark. The passage of culture is essentially assisted by four guideposts: the ideas of truth, goodness, beauty, and justice. These are complex ideas, actually they are most enervating, exasperating ideas. They are not “pure,” but extremely twisted entities. Each one of them is a dialectic idea: they contain in them their ineradicable opposite.27 Truth/falsity; beauty/ugliness; good/evil; justice/injustice. And not just a little bit of one and a little bit of the other; but, guided by the laws of probability they cover the continuum from 0 to 1. For example, a blank canvass has the value of zero (.1, to be exact?); the resulting Mona Lisa has the value of one. 27

Dialectic is a Greek form of logic and discussion that during the last centuries has been elevated to the status of philosophy; in two forms, Dialectic Idealism and Dialectic Materialism.

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Dialectic ideas are indeed real; they represent our reality quite faithfully. That is how the world is constructed. Their extreme importance is due to the fact that they forcefully lead to the ineradicable urge to reach ideals, and then to make ideals concrete. Pace Hegel and a large group of intellectuals, the task of each generation is not to distinguish beauty from not-beauty, this is an intellectual game, if left there; the task of each person is to identify the falsity, the ugliness, the evil, and the injustices of life; the task is to conquer the negative, and let the positive prevail. This is the task of living. This is a task that—likely—will end with the end of life. The task is to reach for the ideals of truth, beauty, goodness, and justice. Tools to reach those ideals are continuously evolving inside theories of truth, beauty, goodness, and justice. The goal is not to reach absolute truth, beauty, goodness, and justice; that is for god-like creatures. The goal for common mortals is to defeat concrete expressions of falsity, ugliness, evil, and injustice that diminish the quality of the life that we all should be able to live.

14.35 Part III: A Brief Note on Rationalism, Relationism, and Relationalism 14.35.1 Abstract At present, our culture offers three major modes of thinking and expression: Rationalism, Relationism, and Relationalism.28 Their distinguishing features are these: Rationalism commands (and is commanded by) the great variety of manifestations of Reason. Relationism reduces all knowledge to knowledge of relations: overlooked are the objects, the organisms, the ideas, the worlds which relations are presumably holding together; the substance, the essence to which relations refer, disappears from sight. Thus, reality becomes evanescent. Relationalism keeps three elements constantly in mind: the two (or more) entities, objects, organisms, ideas, concepts, worlds that are connected through relations and the relation(s) themselves. With the help of all principles of logic and all appropriate tools of epistemology, Relationalism studies as many entities as necessary and as they exist in relation with each other. Relationalism is a relatively new method of analysis that is being applied to a great variety of mental disciplines. By systematically discovering how everything exists harmoniously in relation to everything else, Relationalism clarifies and increases our knowledge of reality.

28

In 2016, the writer posted on his website a paper titled “Relationalism vs. Relationism.” He would now like to take this opportunity to add a few clarifying notes to that post and to his ongoing work on Relationalism.

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14.36 A General Question Why do mainstream economists find it so hard to change the framework of analysis within which they are working? Criticism from outsiders can be easily dismissed by attributing it to ill will. But how can they discount the criticism from many, too many authoritative insiders? Psychological attachment to a field in which one has worked for twenty, forty, sixty years is undoubtedly a partial explanation—but only partial. Scholars are generally capable of distinguishing their lives from the lives of the framework in which their minds work. The true total answer to our question is indeed deep-rooted. The complete answer is that mainstream economics is a rational discipline. And Rationalism, while tottering, is still in the saddle. It is still controlling most of our lives. Conversely, it is not the fault of sociologists, lawyers, and political scientists to accept the assumption that our current “reality” cannot be changed. That is what economists mostly tell them. And thus we go back to what economists think, that the world has been built rationally. So, on to the understanding of Rationalism, onto a deeper understanding of its likely substitute, Relationalism. On to the last push in the transformation of Rational economics into Relational economics.

14.37 On Rationalism Five hundred years ago, Western culture was in deep crisis. The world acquired some calm when Descartes announced his Method of Analysis (1637). Rationalism was born. Rationalism has sustained us for most of the last four hundred years. And now Rationalism is in deep crisis.

14.37.1 The Present Status of Rationalism Cartesian Rationalism has granted us many gifts; science and technology have benefited most: We plumb the depth of the ocean; we can see the neurons; we can see the atom; we can see beyond distant galaxies. We have sent men to the moon and brought them back safely. What remains to be said about some medicines and computers and communication systems ?29

29

These accomplishments might be directly attributed, not so much to Rationalism, as to its “junior sister” Empiricism, a philosophical guide that was supposed to have been destroyed by Kant. Technically, Kant was also supposed to have replaced Rationalism with Idealism. Rationalism persists.

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But Rationalism, guided by free, unbridled Reason, has not been an unadulterated blessing. As Goya knew well, “Dreams of Reason Produce Monsters.” To get an inkling of the grave problems in which we are inveigled at present, we can note that we have the hardest time reaching the downtown of nearly every city in the world. With its touchstone ability to analyze one thing at a time, Rationalism has given rise to reductionism and atomism; thus, the tendency to separate one human being from another. Racists have exploited this tendency of Rationalism most. What is not generally realized, however, is that racism is skin-deep; and yet racism is one of the major obstacles that prevent us from tackling—and even recognizing—thick problems of cultural and economic exploitation. At the core of things, Rationalism has split our minds, our lives really, in two: the “hard” parts (sciences) and the “soft” sciences. Even the culture of the hard sciences is currently in turmoil. Rationalism is in crisis. Theories of racism, plenty; but (quite often) not the practice in America! In America you find social institutions like hospitals run by people of all faiths and all colors. In America, you find social institutions welcoming the refugees and the hungry of all faith and all races. Yes, race is skin-deep; and faith is mind-deep: surface differences are tolerated. Eboo Patel elaborates: In America, people build institutions — hospitals, social service agencies, colleges, whatever — out of the inspiration of their own faith identity, but the institution serves people of all identities. That is not a common ethos in human history. But that’s the story of America. That is American pluralism at its best. That is civic cooperation. And I think that we should marvel at that every day, see, e.g., Warren (2023).

The Crisis is Societal. On the rock bottom of I think, therefore I am, René Descartes did not only build Rationalism; he reinforced our rational thinking processes with the explicit, powerful help of mathematics and geometry. The exalted union of Reason with mathematics and geometry yielded a total surprise. It gave birth to an unexpected child: Materialism. The reason is clear. Only material things can be easily counted, can be measured, and can be represented geometrically. And then materialism became absolutist. It did not tolerate the existence of anything that cannot be measured. Absolute scientism is older and deeper than the scientism identified by Hayek (1955). It denies the existence of anything spiritual. As a consequence of this encroachment of scientism, intellectually and rationally—as distinguished from the practical perception of billions of human beings—first, the soul went, and with the soul also went religion. Indeed, among the Illuminati and the cognoscenti, any conception of God was also systematically excluded from Nature first and from the nature of men and women thereafter.

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To balance things up, Materialists open their minds to experience billions and billions of miracles, like a flower blooming. But can they build a flower from nothing? The Crisis Is Personal. The strangest phenomenon of all is the ongoing battle to reduce the mind to a set of material—chemical and electrical—nodes and switch operations. Off has gone the unity of body, mind, and soul. The human reality has been reduced to a set of stick figures that only think: no feelings, no spirit. Martians, really. Could economists tolerate abject poverty otherwise? Could the rest of society otherwise believe economists that abject poverty is rather ineradicable? Thus Rationalism has given gave rise to extreme forms of Individualism—“I” think, therefore “I” am. This is an individualism that degenerates in solipsism, whose forerunner was a lovable narcissism. Yes, Descartes’ resolution of the intellectual crisis experienced by humankind 500 years ago is a dichotomy, not an equivalence. The equivalence that results from those two premises. “I think, therefore I am,” is specious: I think ≡ I believe ≡ It is true. This is an empty dangerous equivalence. It will never fill the bloated perception of the isolated human being. The Crisis Is Intellectual. The enormous influence of the current intellectual crisis can be pinpointed only by singling out that without an intimate knowledge of prevailing philosophical discussions (of any age), one cannot really understand the spirit of the age from which they arise. The least that can be said about Materialists is that they uniquely contribute to sharpening the mind of Believers of their age as well as subsequent ages. The intellectual crisis of five hundred years ago was characterized by the expression, “How many angels can dance on the head of a pin?” The current intellectual crisis might be characterized by (do notice the irony!) the expression, “How many angels can dance on the head of a non-existent pin?” Any argument advanced by Materialists and their cohorts is hard to follow. In the end, there is no there there. Reality becomes evanescent. There are even many books out that are titled Everything Is Nothing. The examination of fundamental questions is throwing us back into the world of Uncertainty. Much uncertainty is in the saddle. Rationalism cannot endure. We are living in the throes of its demise. Our current crisis has been specified in many ways. Through a comprehensive analysis offered by John Lukacs, among others, we have mostly concluded that we are At the End of an Age (2003), the Age of Rationalism. Through an uncanny characterization offered by Oscar Wild and endorsed by a great many people, we nearly all nod our assent to the proposition that we know “the price of everything and the value of nothing.” The Crisis Is Social. The specifics vary, but the general rule applies: Leave well enough alone. Do not interfere with advancements in science and technology—even though we have to give proper attention to applications and economic exploitation of science and technology. Here we can only tackle an area of broad concern. Rationalism has brought most social sciences to a dead end. If we want to liberate them, we have to dismantle the habit of absolute freedom in which human beings are held by Rationalism. The apparent freedom for everyone is actually enslaving each one

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of us to everyone else. The reality is the absolute freedom of the few, the powerful controlling few. Rationalism stands in need of a radical reform. A synthetic vignette might cover the result of efforts in the social sciences and social practices during the last five hundred years: The glitterati have spent their time dreaming of the windmills; engineers have devoted their minds to building the windmills; and the oligopolists have concentrated their efforts on acquiring control over the windmills. Another vignette? Out social sciences and social practices have reduced our communities to worlds of beggars: The poor beg for an entitlement; the middle classes beg for a job; the affluent beg for tax reductions and subsidies. These are not minor expressions of the overall need to reform Rationalism. Insurrections and wars are again (still?) our preferred methods to settle disputes.

14.37.2 The Abstract Theorizing of Rationalism We must reform Rationalism because its essential characteristic, abstract unbridled theorizing, is distracting us from searching for solutions to our most pressing, practical needs of daily existence—and mutual understanding. With Rationalism, human thought—largely unawares—has been expressed in a crescendo of abstract ideas and concepts, often without even distinguishing ideas from concepts (!). What to say of the unending series of crises tolerated by the modern economist? Do we not have here the apogee of Rationalism? One more abstruse theory after another—in the presence of abject poverty. Abstract thought is now engaged in contemplating itself. Are not economists often caught extolling the perfection of their theories? More. Much more. The human mind is now engaged in creating itself and the outside world. A complete revolution. The world is upside down. Will human beings ever create a flower from nothing? The unspoken hope currently is that AI will do that. I don’t believe it. That implies that computers can be creative. Fortunately, we can be sure that capitalists will never allow computers to change a comma into a period, We are more or less back where we were in the late Renaissance. The disaggregating tools of reason need to be fused with integrative and synthesizing tools of analysis. If we want to reform Rationalism, we now have the technical tools of Relational Logic and Relational Epistemology. If we bridle Reason with Logic and Epistemology, we are going to create a new world, the world of Relationalism, the world in which everything is in harmonious relation with everything else. First, let us give a look at an intermediate type of escape that is being carried out under the banner of Relationism. Let us give a look at this form of thinking and expression. Acquaintance with Relationism offers us the implicit benefit of unearthing some of the most hidden characteristics of Rationalism.

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14.38 On Relationism Including its major precursors,30 Relationism is a field of study still in relative infancy; with its already vast literature, it is covering many fields. Relationism is an esoteric disembodied enterprise. It focuses on relations, which are necessarily without body or substance, and neglects the entities that are in relation with each other. Overlooked are the objects, the organisms, the ideas, the worlds which relations are presumably holding together; the substance, the essence to which relations refer, disappears from sight. Sandwiches are intensely relational entities. If one focuses on relations alone, one neglects the meat as well as the slices of bread, namely the things that “sandwiches” are supposed to hold together and of which they are composed. Reality becomes evanescent. And that is what often happens in economics (!!!). Economists study money as the relation that holds the economic reality together: Where are the people? Where is the real wealth? Where are the institutions that handle money: studies of banks, studies of Central Banks do not exist in high theory. Keynes himself remarked that monetary theory ends “in a haze where nothing is clear and everything is possible” Keynes (1936: 292). Economists do not even have a definition of money. Culture plays tricks on us; it controls our minds even when we are not aware of its influence. Rationalism is not relinquishing its control over our mind without much resistance. In their death throes, certain aspects of Rationalism control Relationism. The propensity of Relationism to focus on relations alone is mostly due to the fact that our mind is not extricating itself from the strictures of Rationalism. If we become open to its historical roots, through a huge simplification we can reduce the spirit of Rationalism to its power to analyze “one thing at a time”—relations alone in our case. This is the window that lets us understand the rear-guard stratagem of Rationalism for controlling us through Relationism. 30

Three writers have generally been acknowledged as founders of “Relationalism”: Karl Mannheim, Rudolf Eisner, and Alfred North Whitehead. Each one of these writers offers complex systems of thought which cannot be explicated here. Our present concern is to ascertain that, rather than Relationalism, these systems of thought are exponents of various forms of Relationism. Karl Mannheim, in his Ideology and Utopia [(1929) 2015], advocated for a theory of knowledge that is more akin to sociology than philosophy. He asserted that the truth value of knowledge is determined by social class, location, and generation rather than by any objective standard. To separate his system of thought from the danger of relativism, he himself called it “relationism.” Rudolf Eisner, in his Dictionary of Philosophical Terms and Expressions (1899, 1927, 1930), advocated for a theory of knowledge as knowledge of relationships—rather than a theory of knowledge in itself. Relationships, to perform any function, necessarily require the presence of two or more objects, organisms, ideas, worlds. In the world of “knowledge of relationships,” all these entities, all this reality disappears from sight. The study of relationships can properly be classified as relationism. Alfred North Whitehead, in his Process and Reality (1929), advocated for a theory of knowledge as knowledge (or philosophy) of organism—rather than knowledge as theory of knowledge. Organisms, essential as they are to the understanding of (biological) reality, are irreducible complex entities closed-in in themselves. In fact, Whitehead argued that reality consists of processes rather than material objects, and that processes are best defined by their relations with other processes. Whitehead’s work can be properly classified as relationism.

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Indeed, in the practice of Relationism, two or three of the worst characteristics of Rationalism rear their ugly heads: solipsism, an extreme form of individualism, and narcissism. In the end, Relationism manifests itself as an extreme form of Individualism (the hidden soul of Rationalism: I think; I am): solipsism, really. To single out a prominent case, aesthetics, in A Relational Aesthetic (1994) by Harold W. McSwain, Jr, is defined as “aesthetic experiencing”: gone is the art, gone is the artist; what remains is the lonely spectator, “me,” the Universal Me, reduced to a “relation” for that matter, an abstract entity that is “experiencing” …aesthetics. Relationism, transmogrified into solipsism, is the tail end manifestation of a major “problem” of Cartesian Rationalism. Solipsism is a very important problem, the focus of Goethe’s Faust. Professor Stephen Thornton, in a personal communication (4 February 2016), assured me that solipsism is indirectly related to the ancient problem of narcissism. Really, not the whole “self,” but the lover of only the image of the self. One may be a solipsist, truly a “lone wolf” and other more esoteric expressions of individual “mental states”— like self-reliance—without being a narcissist, and vice versa. Clearly, some of those who like to call themselves solipsists can hate themselves. Narcissists are in love with themselves. Do we not often note an excess of pride in the performance of the Rational mind? This sketch does not exhaust what needs to be said about Rationalism or Relationism; it only helps us to demarcate the ground: What come next, Relationalism, immunizes us against narcissism and individualism. Imbued with the spirit of Relationalism, one cannot possibly be either a narcissist or an individualist. What a sigh of relief one hears from people who wish to be part of the polis.

14.39 On Relationalism There are many reasons why we have to get away from Rationalism—as well as Relationism—and have a conversion to Relationalism. Not the least of which is the need to close the gap between the “two cultures.” This abyss at the center of our modern life is due to the lack of a proper method of analysis, a common method of analysis. As Feyerabend liked it, we are even Against Method (1975). Relationalism has the power to bring us to a safe harbor, precisely because it is built out of a new method, the Relational Method of Analysis. This method results from the indivisible union of the twins, Relational Logic and Relational Epistemology. Using all three fundamental Principles of Logic and all appropriate Tools of Epistemology, Relationalism brings our unruly Reason under the control of reasonable human beings and synthesizes a bewildering amount of information into reliable trustworthy knowledge. Ultimately, Relationalism, a work in progress, is a new mode of thinking and expression that is gradually placing everything in harmonious relation to everything else (see Gorga 2021b). Relationalism does not abrogate Rationalism; it simply avoids its most dreadful mistakes, mistakes that are covered under a chain of rationalizations—basically faulty

14.39 On Relationalism

253

justifications of past errors. Why this manifest behavior? Because the most painful act for the Rational Mind is to admit error. How can the Rational Mind ever admit error, when all of its being is in search of Reason—the personification of perfection? Relationalism comes to the rescue. To use Benjamin Franklin’s beloved expression, Relationalism is a form of “improved and corrected” Rationalism. Relationalism proceeds only when the requirements of all fundamental principles of logic and the requirements of all appropriate tools of epistemology are satisfied. This writer’s work has been concentrating on economics, with sideway runs into a few ancillary fields. In his publications, one can find the following equivalence relations: Zero ≡ One ≡ Infinity...

Gorga (2010)

Matter ≡ Energy ≡ Spirit

Gorga (2007)

Body ≡ Mind ≡ Soul

already in, e. g., Plato, Aristotle, Aquinas

Thought ≡ Behavior ≡ Feeling

Gorga (2018b: 12–13)

Production ≡ Distribution ≡ Consumption

Gorga (2002: 161–234)

Participative ≡ Distributive ≡ Commutative (Justice)

Gorga (2017c)

Individualism ≡ Somism ≡ Collectivism

Gorga (2014b)

Capitalism ≡ Concordianism ≡ Socialism/Communism

Gorga (2021b)

Being/not-Being ≡ Becoming ≡ Existence

Gorga (2009b)

Western Philosophy ≡ Relationalism ≡ Eastern Philosophy

(To Be Written)

The writer has briefly analyzed these major triads in published papers, two of them in peer-reviewed journals; one of them in three books, one of which books is in its third edition. And one in another book that has been published in eight foreign languages, These triads are better analyzed if placed in a simple diagram like Figure 14.12. As it can be seen more clearly from Fig. 14.16, the last set of equivalence relations is an application, an extension of the first set. Put very briefly in ontological terms, Western philosophy has consistently concentrated its attention on Being (or One, the Full Set) and Eastern philosophy has consistently concentrated its attention on not-Being (or Zero, the Empty Set). Relationalism has within it the potential of integrating these two fundamental aspects of our human minds. Many efforts have been devoted and are being devoted to reach this goal. When that is done, our minds will certainly acquire much more equilibrium than they have exhibited in the past and are exhibiting in the present. In the meantime, 22 veterans commit suicide every day in the United States. ∗ ∗ ∗

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14 From Rational to Relational Economics

Fig. 14.16 Relationalism as a philosophy

We opened this chapter analyzing the functions of a discussion stopper of a word, Logic. We might as well close the chapter with a brief note of another discussion stopper word, Science. The word is used both in the soft and the hard “sciences” as a sledge hammer to submit an opponent into silence. I guess, the quickest retort might be this: Did the purported scientific effort pass the tests of Relational Logic and Relational Epistemology? Is the effort a Relational Science?

References Allen, R.G.D. 1970. Mathematical Economics. 2nd edn. New York, NY: Macmillan and St. Martin’s. Aquinas on Being and Essence: A Translation and Interpretation (1988). Joseph Bobik. Notre Dame, IN: University of Notre Dame Press. Aristotle. 1947. Categories, trans. E. M. Edghill. New York, NY: Random House. Bahn, Paul G., ed. 2009. An Enquiring Mind: Studies in Honor of Alexander Marshack. Oxford, UK: Oxford Books. Boland, L.R. 1979. A critique of Friedman’s critics, Journal of Economic Literature, 17 (2). Boulding, Kenneth E. 1956. The Image: Knowledge in Life and Society. Ann Arbor, MI: University of Michigan Press. Brady, M.E. 4.5 Stars—A dynamic systems (the economic system as a complex, evolving process) reinterpretation of Keynes’s Y= C+ I model, a review of “GORGA” by GORGA on Amazon Books, July 8. Brandom, Robert. 2014. Understanding the Object/Property Structure in Terms of Negation: An Introduction to Hegelian Logic and Metaphysics, 10/19/2014. Brinkman, Eric. 2014. Easy Logic: Tibetan Wisdom for Happiness and Success. Bowie, AZ: Diamond Mountain University Press. Broski, Mark. 2003. Review of “The Economic Process: An Instantaneous Non-Newtonian Picture. Carmine Gorga. Journal of Markets and Morality 6 (1): 297–98. Calhoun, Herbert L.2015. The Ultimate Challenge to Cognitive Archaeological Orthodoxy? June 12, 2015.

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Davidson, Paul. 2003. Review of “The Economic Process: An Instantaneous Non-Newtonian Picture”. By Carmine Gorga. Lanham, MD, and Oxford: University Press of America, 2002. Journal of Economic Literature, 16 (4): 284–85. Descartes, René.1938 [1637]. Discourse on the Method of Rightly Conducting the Reason and Seeking the Truth in the Sciences. New York, HY: Collier. Eisner, R. 1899, 1927, 1930. Dictionary of Philosophical Terms and Expressions. Oakland, CA: University of California Libraries. Feyerebend, Paul. 1975. Against Method: Outline of an Anarchistic Theory of Knowledge. London: New Left Books. Friedman, Milton. 1953. Essays in Positive Economics. Chicago, IL: University of Chicago Press. Fuller, Buckminster R. 1975. Synergistics: Explorations in the geometry of thinking. New York, NY: Macmillan. Fuller, Buckminster R. 1979. Personal communication to the author, November 15, 1979. Gare, Arran. 2002. The Roots of Postmodernism: Schelling, Process Philosophy, and Poststructuralism. In Process and Difference: Between Cosmological and Poststructuralist Postmodernisms, 31–53, ed. Catherine Keller, and Anne Daniell. New York: SUNY Press. Goldsmith, Raymond W. 1955-1956. A Study of Saving in the United States, vol. II. Princeton, NJ: Princeton University Press. Gorga, Carmine. 1999. Toward the definition of economic rights. The Journal of Markets and Morality II (1): 88–101. Reprinted with a new introduction and postscript at Mother Pelican Journal, November 2014. Gorga, Carmine. 2002. The Economic Process: An Instantaneous Non-Newtonian Picture. Oxford: University Press of America [(softcover 2009). The Somist Institute, 2016]. Gorga, Carmine. 2007. On the equivalence of matter to energy and to spirit. Transactions on Advanced Research 3 (2): 40–45. ISSN 1820-4511. Gorga, Carmine. 2009a. Concordian economics: Tools to return relevance to economics. Forum for Social Economics 38 (1): 53–69. Gorga, Carmine. 2009b. Toward Relational Ontology: From Matter to Spirit Through Physics and Metaphysics. https://relationalism.wordpress.com/2012/08/20/in-ontology/, December 21, 2009. Accessed 25 November 2023. Gorga, Carmine. 2009c. The Equivalence of the Three Persons of the Triune God. Social Science Research Network (SSRN), December 24, 2009. Accessed 25 November 2023. Gorga, Carmine. 2010. On the transformation of mathematics from a linear to a relational discipline—Toward the reunification of the physical and the social sciences. International Journal of Mathematics, Game Theory and Algebra 19 (4): 235–244. Gorga, Carmine. 2014b. Somism: Beyond individualism and collectivism toward a world of peace and justice. Mother Pelican Journal, 10 (11). Accessed 25 November 2023. Gorga, Carmine. 2016. Wake up America. Wake up from your 250-year old slumber. Mother Pelican Journal 12 (6). Accessed 25 November 2023. Gorga, Carmine. 2017a. A Cascade of Errors (1517–2017). OpEdNews, 10/31/2017. Accessed 25 November 2023. Gorga, Carmine. 2017b. The abuse of words. Mother Pelican Journal 13 (11). Accessed 25 November 2023. Gorga, Carmine. 2017c. Return to economic justice: From entitlements to rights. Catholic Social Science Review 22. Accessed 25 November 2023. Gorga, Carmine. 2018. The Redemption of the Bully: Through Love Toward the Beloved Community. Mauritius: Scholar’s Press. Gorga, Carmine. 2021a. Concordianism: Beyond Capitalism and socialism toward a world of peace and justice. Econintersect, September 6, 2021. Accessed 25 November 2023. Gorga, Carmine. 2021b. From rationalism to relationalism. Academia Letters. Accessed 25 November 2023. Hayek, Friedrich A. 1955. The Counter-Revolution of Science. Glencoe, IL: Free Press. Holmes, Roger W. 1937. The Idealism of Giovanni Gentile. New York: Macmillan.

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Kant, Immanuel. 1966. Critique of Pure Reason, trans. F. M. Muller. Garden City, NY: Doubleday. Keynes, John Maynayrd. The General Theory of Employment, Interest, and Money. New York, NY: Harcourt, 1936. Kuhn, T.S. 1962. The Structure of Scientific Revolutions. Chicago: University of Chicago Press. Leontief, Wassily. 1976. Studies in the Structure of the American Economy: Theoretical and Empirical Explorations in Input-Output Analysis. Armonk, NY: M E Sharpe Inc. Lukacs, John. 2002. At the End of an Age. London: Yale University Press. Mannheim, K. [(1929, 1936) 2015]. Ideology and Utopia. Eastford, CT: Martino Fine Books. Marshack, Alexander. 1972. The Roots of Civilization; The Cognitive Beginnings Of Man’s First Art, Symbol, and Notation. New York, NY: McGraw-Hill. Mccloskey, Donald N. The rhetoric of economics. Journal of Economic Literature 21 (2): 481–517. Mcswain, H.W. 1994. A Relational Aesthetic. New York, MY: Peter Lang. Piketty, Thomas. 2014. Capital in the Twenty-First Century. Cambridge, MA: Belknap Press. Pilkington, Phil. 2014. Authoritative Arguments in Economics. Econintersect Blog, November 9. Accessed 25 November 2023. Prawat, Richard S. 2005. The nominalism versus realism debate: Toward a philosophical rather than a political resolution. Educational Theory 53 (3): 275–311. Robinson, Judy. 1992. Not counting on Marshack: A reassessment of the work of Alexander Marshack on notation in the Upper Paleolithic. Journal of Mediterranean Studies 2 (1): 1–16. Smith, Adam. 1904. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. London: Methuen & Co. ed. Edwin Cannan, 1756 Fifth edition. Suppes, Patrick. 1957. Introduction to Logic. Princeton, NJ: van Nostrand. Van Vleck, Tom. The Figures of the Syllogism, 10/01/14. Availablle at https://www.multicians.org/ thvv/petrus-hispanius.html. Assessed 25 November 2023. Whitehead, A.N. 1929. Process and Reality. New York, NY: Free Press. Zenkin, A. 2000. Scientific Counter-Revolution in Mathematics. Independent Newspaper, 19 July. Supplement “IN-SCIENCE”, Number 7(32).

Conclusion: Almost as an Introduction

The meaning of the culture is the “spirit” of the age. The function of culture is for us to live in it. And we are not, mostly, aware of it. The shortcoming of mainstream economics are indeed dictated by the shortcomings of Rationalism—still the Spirit of our age. As usual, there are deep compensations in life. The shortcomings of Rationalism are not a total loss to mankind. Once identified, they help to turn Rational economics into Relational economics—and Rationalism itself into Relationalism. Rising above ideology and even shooting wars, Relationalism—systematically using all fundamental principles of logic and all appropriate tools of epistemology— can gradually help us overcome the degradation erupting from some of the most strident social, economic, and cultural wars that beset the world at present. We can enter the field of Relationalism at any point; and from there we can reconstruct the sphere of Relationalism as a whole. The traditional point of entry is Being/not-Being Becoming Existence or The Spirit of God the Father Becoming the Son.

For many religious people, this is the foundational relationship: Being is the Father, Being is the Son, Being in the Holy Spirit. Everything else exists in relation to the Trinity. Existence is clearly composed of Matter, Energy, and Spirit. We human beings are clearly composed of Matter, Energy, and Spirit. Using wisely superabundant Matter and Energy, we can—we must—create a better world of the Spirit. Clearly, we can create a better world for ourselves only if we all, or nearly all, work together to create a better world than the one we found at birth. The purpose of life? The purpose is

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to enjoy the inexhaustible wondrous existence of our world of Matter, Energy, and Spirit.1 With clarity of understanding everything is possible.2 Relationalism does not abrogate Rationalism. On the contrary, it perfects its rational modus operandi and brings Rationalism to its full bloom. Starting from the atomism of Rationalism, Relationalism moves thought toward universality, a system of thought in which everything is logically and organically related to everything else. Relationalism enriches us all, in all our lives. Two most beguiling expressions result from a close encounter with Relationalism: Women are not irrational; they are relational. God is not rational, he/she/it is relational. The hope is that liberated from abstract considerations, we have a better chance of inquiring how can we get organized to produce a world that is truer to itself, more beautiful, contains more goodness—and is more just—than the world we inhabit today. Concordian economics is poised to give an answer to the ancient, perennial issue about the best form of government. This is the short-form answer: The best form of government is the one that governs on the basis of self-imposed (hence democratic) rules of economic justice. In this system, The Government—after much vetting—declares a set of economic rights and responsibilities to be shared by the entire nation and leaves The Market free to execute them. Ideally, the vetting will converge on the creation of the set of economic rights and responsibilities enunciated throughout the work on Concordian economics. Concordian economics and its full-blown shell, the world of Relationalism, is a work in exploration of reality. It systematically recognizes how everything is in mutual relation with everything else. Is this closeness that will eventually allow us to live harmoniously with everyone else? Relationalism, as per Gare’s goal, allows us “to understand the immanent dynamics, intrinsic significance and the diversity of processes participating in the creative becoming of the world, including ourselves. This is the condition not only for an effective opposition to the destructive imperatives of modernity. It is the condition for overcoming it” (Gare 2002). There are certainly many more aspects of Relationalism that need to be brought forward. These are most dear to this writer at this moment, in the form of a recap/ starting point that might be appropriate to highlight here. It all started in 1965. After a summer of intense intellectual struggle with Keynes’ General Theory (1936), after being accused at page 328 of that work of being of confused mind, I realized that Saving must be defined as wealth that at the moment of observation stands in a nonproductive state. I inserted this definition in Keynes’ model of the economic system, a model that serves as the departure point for all modern economic theory, and the model was shattered. I changed the second equation of that model to Investment = Income − Saving, and I found myself facing a new model of the economic system. Kind of frightened 1

Edith Stein, via Cliff Garvey (2023), put it more in a more orthodox and technical way: “…our relationship with God is truly and forever the real content of our lives.” 2 Whitehead confirms: With Relationalism we are provided with a goal “not only to advance understanding but to create a society based on a better understanding of the world and ourselves than has been possible with either scientific materialism or idealism” (Quoted in Gare 2002).

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by the enormity of the discovery, I wrote a few pages and placed them in a desk drawer. I went looking for a job. Having lost in rather rapid succession the War Against Urban Decay and the War on Poverty, in the early 70s I felt compelled to return to that discovery. My problem was how to show “my” model to Professor Samuelson, for instance, and say: “My model is better.” How to justify that assertion? Math was of no value to me; both models, I was assured by many experts, were consistent. What to do? After many trials and errors, I decided to go to the source of all knowledge: philosophy. To Kant, no less. I devoured the first fifty pages or so of the Critique of Pure Reason (1781) and Bingo. I found the definition of concept: In every cognition of an object there is unity of concept, which may be called qualitative unity, so far as we think by it only the unity in the comprehension of the manifold material of our knowledge … Secondly, there is truth, in respect to the deductions from it. The more true deductions can be made from a given concept, the more criteria are there of its objective reality… Thirdly, there is completeness, which consists in this, that the plurality together leads back to the unity of the concept, according completely with this and with no other concept.

I had finally found terra firma. No matter that Kant goes on in the next fifty pages or so to treat “ideas” and “concepts” as if they were the same. I closed that book and started investigating other books in logic. Those books allowed me to determine that not one term in mainstream economics obeys any rule of logic. Saving, I eventually learned, assumes 100,000 possible definitions; Investments must have the same number of definitions, because in mainstream economic Saving is equal to Investment; Consumption is expenditure of consumer goods: is an expenditure to buy a factory not an expenditure? Basically not one of the terms used by mainstream economics respects the Principle of Identity, which firmly establishes that the words we use must have one meaning and one meaning alone—at least in any one conversation. And, of course, not one of those terms respects the Principle of Non-Contradiction either. So, “my” model started from Saving, which, to eliminate confusion, I eventually called Hording: Income = Consumption + Hoarding. The second equation reads: Investment = Income − Hoarding. The result was I = C. “I = C, I love it!” wrote in 2014 a correspondent who wishes to remain anonymous. “In fact, I think Keynes’s General Theory is incoherent without it… Someday, I = C will shift from radically ridiculous to patently obvious. I hope you get some of the credit.” “I” was scaffolding, which became clearer by identifying Investment as Production. Is not an investment made to produce more wealth? The equation thus read: P = C.

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All the wealth produced in one year, or any other time period, must be sold for the economic process to continue. In the exchange, both real goods and money change hands. The equality of P = C left me stomped for some time, if I recall well. Once I read in the books of logic that an equality must be an equivalence to be a logically valid relation, I went on searching for the third term. The search did not take me long. In the years spent on the War on Poverty, I had encountered the thought of Luis Kelso. That thought gave me the third term: Distribution of (economic values of) ownership rights. There I had the clear equivalence, Production ≡ Distribution ≡ Consumption which reads that the distribution of ownership rights occurs when wealth is created— not at some imaginable time later on, as mainstream economics assumes. An assumed timing that gives rise to such questions fast and furiously: When is the value of the wealth created distributed? By whom? To whom? Mainstream economics, if at all concerned, fantasticates about the answers. Most often than not economists disclaim any interest in the answer because its roots lie in sociology, law, politics. Economists tend to keep their discipline “pure.” By giving an answer to the immediate questions about distribution of ownership rights, the Concordian framework of analysis is extended to include within its ranks the power of those disciplines that today are excluded from social discussion by economics: sociology, law, politics, logic, epistemology. So, we have the basic tools to start the economic discourse again from scratch. The starting points for our analysis is most interesting. It starts from the second equation of Keynes’ Revised Model. As we have seen, the second equation of the new model reads: Investment = Income − Hoarding. This answer, I eventually learned, is nothing but the technical definition of Hoarding, specifically, the Hoarding of the Parable of the Talents. Jesus sends the Hoarder directly to Hell: no trial, no appeal. But why? The theology of it eventually became clear to me; the Hoarder has no faith in the infinite bounty of God’s goodness. The economics of the case were truly enthralling, I gradually discovered. More Hoarding, clearly less investment and less growth. More Hoarding, more inflation because money spent to buy goods that are hoarded remains in circulation, while there are fewer goods being created, therefore more inflation. More Hoarding by the few, more poverty by the many. Hoarding, I eventually discovered, had been taken out of the economic discourse by no other than Adam Smith, the acclaimed founder of modern economics, by simple magic manipulation of words: Saving forms an accumulation of capital. All that is not consumed is saved. Thus no room is left for Hoarding. Voilà! But can a banana be added to one’s wealth forever? There I saw Adam Smith slipping on a banana skin. Eventually, the study of Hoarding reconnected me to the Aristotelian/Aquinian doctrine of economic justice, a doctrine that controlled daily actions for two-thousand

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years. Economic decisions were taken on trust, on the basis of gentlemen’s agreements. Although arguments about the distribution of wealth are open to an infinite series of disagreements, it seems reasonable to conclude that most results in the distant past were better than today’s results; they were more equitable: poverty was less acute, and inequality was less pronounced. But privileges reigned; there were rather static social privileges, at that. So the world had to change. And it did change. Rather than focusing on the ills of a contemporary society, this work relies of the wisdom of Buckminster Fuller who famously said, "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” This is what we have done in this work and will continue doing in the companion volume titled Concordian Economics—Some Applications. Two major discoveries along the way: Economic justice stands at the core of Concordian economics; and Concordian economics stands at the core of Relationalism. In the process, economics is transformed from a Rational to a Relational discipline.

Index

A Abba Lerner, 54 Abramovitz, Moses, 201 Abyss ecological, 10 Access to national credit, 46–48, 136, 138, 140, 143, 147, 148, 152, 159, 160, 182 Acharya, Sushant, 34 Adam Smith’s Fallacy, 127 Aesthetic experiencing, 252 Age of rationalism, 249 Age-old theory of economic justice, 126 Alternative facts, 5 Americanism, 192 American Revolution, 183 American thinkers great, 29 Analytical/mathematical approach, 68 Application of concordian economics to jurisprudence, 156 Aquinas, Thomas, 7, 16, 29, 75, 132, 170, 232, 239, 253 Argument Forms, 232 Aristotelean/Aquinian doctrine of economic justice, 51 Aristotle, 7, 16, 21, 37, 41, 75, 80, 155, 168, 170, 206, 207, 211, 212, 230–232, 239, 243, 253 A Tablet, see Tablet Atomism, 6, 198, 248, 258 Attractor, 82, 245 Austrian economics, 74, 91, 218 Avicenna, 212 Axiom I, II, and III, 221

B Bahn, Paul G., 203 Balancing contradictions, 10, 73, 74, 82, 218 Bearse, Peter, 215 Beauty and truth and goodness and justice, 231 Beggars, 170 Being/not-Being Becoming Existence, 257 Big is efficient, 117 Black box, 2, 3, 17, 19, 68, 85, 89, 100 Blinder, Alan, 33 Boland, Lawrence R., 206, 215, 223 Brady, Michael E., 38, 86, 233 Brandeis, Louis D., 1, 27–29, 34, 162, 164, 182 Brandeis rule, 27, 162 British Thermal Units (BTUs), 107 Broski, Mark, 9, 20 Bubble commodities, 105 economic, 11, 22, 81, 105–107, 244 Burstein, M. L., 9, 19, 86, 179

C Cartesian rationalism, 247, 252 Cash industrial corporations hoard, 95 Cassidy, John, 16 Categories ancient, 180 following, 91 independent, 234 new, 86, 87, 110 Categories of concordian economics, 109

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Gorga, Concordian Economics, Vol. 1, Springer Studies in Alternative Economics, https://doi.org/10.1007/978-3-031-47320-3

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264 Category time, 230 Cave, 193, 203, 205 Centesimus Annus, 131, 155 Central banks, 137, 251 Characteristics of equivalence relations, 200 Chocolate bar, 63, 79, 106, 243 Choice of units of measurement, 86 Circles interlocked, 173 larger, 173 Circularity, 175, 235 Classical economists, 39, 45, 135, 184 Classical logic, 201, 206–208, 219, 224 Clearly and distinctly, 209, 210 Collier, William R., 181, 183, 188 Combination of Relational Logic and Relational Epistemology, 197 Communities to worlds of beggars, 250 Community, 8, 9, 42, 46, 47, 88, 113–115, 118–121, 135, 137, 140, 150, 151, 170, 192, 234 Competition, 115, 131, 163, 212 Concordian economic analysis, 5, 36, 99 Concordian economic policy, 3, 24, 125, 130, 140, 160, 165 Concordian economic practices, 140 Concordian financing, 181, 188 Concordian international relations, 184 Concordian monetary policy, 2, 24, 160, 164, 183 Concordian ontology, 181, 188, 190 Conditions of equivalence, 55 Confucius, 5, 30, 168 Consumer credit enslaves, 46, 136 Consumer Stock Ownership Plans (CSOPs), 131, 164 Content of economic rights, 44, 145, 146 entitlements, 44, 134, 145, 146 property rights, 44, 134, 145, 146 Contradictions basic, 75, 239 minor, 57 Conventional logic, 202, 214, 215 Cooperation civic, 248 Cooperatives, 46, 131, 136, 190 Coop, Harvard, 163 Corporations, 22, 27, 40, 47–49, 115, 131, 136–138, 161–163 largest, 48, 138, 162 zombie, 162

Index Credit capital, 46, 136, 152 consumer, 46, 136, 152 national, 46–49, 136–138, 140, 143, 147, 148, 152, 159, 160, 182, 184, 190 Crisis in modern economic theory, 198 Crisis regarding individual propositions, 235, 236 Crisis regarding individual words, 235 Cro-Magnon, 202–206, 228, 229 Cumulative cycles of production and exchange, 81, 244 Currency country’s, 87 local, 108, 109 Cyclotron, 68, 82, 192, 244 D Davidson, Paul, 9, 20 Declaration of Independence, 10, 180 Deductive logic, 57, 216 Definition of hoarding, 260 investment, 54, 56, 259 money, 2, 18, 109, 215, 251 saving, 54–56, 60, 73, 205, 218 wealth, 62 Definitions in concordian economics and mainstream economics, 101 Descartes’s method, 235 Descartes, René, 168, 209–211, 217, 233–235, 247, 248 Determinants, system’s, 56 Dialectic ideas to ideals, 245 Dialectic logic, 201, 211–213, 219, 220, 222, 224 Dialectic materialism, 245 Disaggregate form of consumption, 62 Discovery of concordian economics, 10 Do parallel lines meet, 77, 214, 236, 241 Dynamics, 9, 22, 48, 67, 68, 79–81, 85, 89, 95, 99, 107, 114, 120, 129, 137, 148, 181, 190, 198, 212, 222, 226, 238, 243, 244, 258 E Eastern logic, 201, 212–214, 217, 219 Economic freedom and economic justice, 49, 139 Economic logic, 199, 217 Economic thought contemporary, 5

Index Economic value of ownership rights, 39, 50, 62 Economists, 1–4, 8, 10–12, 16–18, 33, 35, 36, 39, 40, 42–45, 50, 53, 58, 66, 74, 78, 85, 86, 99, 100, 110, 113–116, 118, 121, 133, 134, 160, 180, 215, 217, 218, 242, 247, 249–251, 260 Economists study money, 251 Economy of Wall Street, 159 Effective demand higher, 49, 138 Effects of hoarding, 6, 7, 78, 93, 95, 241 Efficiency of morality, 164 Employee Stock Ownership Plans, see ESOPs Employee Stock Ownership Plans (ESOPs), 26, 46, 47, 131, 136, 163, 164, 190 Endorsed Henry George’s prescription, 25 Energy, 121, 186, 191, 192, 253, 257, 258 Engine, a new analytic, 85 Enterprise system free, 47, 137 Environmentalists, 114, 115, 118 Equality, 6, 23, 55–57, 61, 62, 77–79, 181–183, 241, 242, 260 Equality to complementarity, 127 Equilibrium perfect, 87, 90 Equivalence, 6, 20, 22, 37, 50, 55, 59, 62, 67, 79, 82, 89, 126, 127, 160, 191, 192, 198, 200, 201, 203, 204, 206, 208, 219, 220, 222, 223, 226, 228, 235, 237, 242, 253, 260 Equivalence of production to distribution to consumption, 63, 155 Equivalence of systems of logic, 224 Equivalence of Yin to Yang, 219 Equivalence relations basic, 219 Ethics in concordian economic policy, 126, 129 Ethics in concordian economic practices, 126, 133 Ethics in concordian economic theory, 126 Euclidean geometry, 214, 236 Excessive interest payments, 131 Exchange of real wealth for monetary wealth, 40 Excluded middle, 206, 209, 222 Excruciating problem of measurement of real wealth, 11 Exercise of economic rights and responsibilities, 165

265 Exercise of property rights, 44, 133 Expected effects of concordian, 165 Expenditure of monetary wealth, 4, 7, 20–22, 68, 89, 242 F Factors of production, 5, 8, 23, 24, 30, 45, 132, 135, 147, 159, 160, 184 Fair distribution of income and wealth, 49, 138, 139 Family farmer, 119, 122 Family fisherman, 122 Family fishing fleet, 113–116, 118–120 Fathers and mothers of property rights, 143, 145 Federal reserve system, 24, 162, 163, 165, 189 Ferrini, Vincent, 9, 48, 100, 138, 179 Feyerabend, Paul, 217, 235, 252 Financial efficiency, 118 Financial instruments, 37–39, 67, 91, 102, 109, 110, 128, 140 Financial interdependence fund, 189 Financialization, 48, 106, 164 Financial savings, 101 Fiscal policy, 11, 34, 164 Fish fresh, 122 Fisheries management, scientific, 119 Fishermen, 8, 115, 116, 119–121 Flow of economic values, 82, 245 Flows model, 37 Food, 44, 134, 146, 162, 170 Formalistic casuistry, 208 Formal logic, 73, 74, 217, 218 Foucault, Michael, 237 Foundation for economic education, 183 Franklin, Benjamin, 26, 28, 29, 34, 164, 183, 253 Free rider problem, 7, 11, 113, 115–117, 119–121 Friedman’s Instrumentalism, 223 Fuller, Buckminster, 201, 261 Functions of money, 2, 18, 215 Fundamental principles of logic, 10, 73, 203, 204, 214, 218, 253, 257 Fundamental weakness of syllogistic logic, 214 G Galileo‘s remonstrance, 63 General analytic model, 97

266 General synthetic model, 97 General theory, 1, 4, 9, 16, 20, 53, 54, 56–61, 64, 73, 74, 88, 199, 217 Gentlemen’s agreements, 6, 43, 129, 261 Geometric representation of economic dynamics, 22 Geometry of concordian economics, 10, 86, 88, 89 fractal, 85, 86 George, Henry, 25, 26, 29, 34, 164 Georgist economics, 74, 218 Gold, 35, 59, 109 Golden Standard, 110 Goldsmith, Raimond W., 73, 100, 101, 205, 218 Grand divergence, 237 Great rationalistic illusion, 184 Great variety of economic theories, 105 Greek form of logic and discussion, 245 Greeks, 130, 168, 173, 198, 206–209, 214, 219, 229–234 Greenspan, Alan, 3, 16, 30, 87, 100 Growth, 6, 18, 22, 35, 47, 49, 77, 98, 103, 136, 137, 139, 162, 241, 260 Growth-by-purchase corporate, 49, 138 Guilty of overfishing, 122 Gulag, 116, 172, 173

H Hayek, Friedrick A., 48, 58, 91, 138, 140, 161, 164, 180, 248 Heading of non-systems of logic, 214 Hegel, 176, 180, 206, 211, 213, 236, 237, 246 Hegelian process, 211 Hidden imam, 192 Historical roots of Somism, 174 History ancient economic, 40 human, 248 History of economics, 41, 74, 218 Hoarding, 2, 4, 6, 9, 16, 18, 20, 24, 29, 37, 46, 60, 62–64, 76, 77, 85, 93, 95, 103, 126, 127, 135, 144, 152, 155, 160, 164, 240–242, 259, 260 Hoarding and investment, 6, 77, 93, 127, 240, 241 Homogeneous ideas, 75, 76, 238–240 Horses of inequality, 23, 24 How to create access to financial capital, 24

Index fruits of one’s labor, 24 national credit, 24

I Idea of Saving in economics, 75, 239 Ideas clear and distinct, 233, 234 complementary, 216, 241 Identity, 82, 145, 198, 203–205, 248 Image mirror, 11, 20, 21, 42, 80, 140, 200, 243 Impartial spectator, 117 Implementation of concordianism, 5 Implementation of economic rights and responsibilities, 145, 176, 194 Important issue of measurement of economic units, 103 Inclusion of hoarding, 78, 241 Independent fisherman, small, 117 Independent retailers, 119 Indissoluble union of Relational Logic and Relational Epistemology, 198 Individual propositions, 77, 198, 214, 240 Inductive logic, 202, 215, 216 Industrial policy modern, 27 Inequality unbridled, 24 Inflation financial values minus, 108 Information synthesize, 74, 226, 229, 238 Instrumentalism and eastern logic, 217 Instrumental logic, 202, 217 Integration of, see economic justice, free rider, Relational logic capitalism, 5, 188 collectivism, 11, 167, 172, 174 commutative justice, 15, 21, 50, 131, 135, 140, 157 concordianism, 180 consumption (or expenditure of money), 4, 7, 20–22, 81 c-values, 244 distribution (of ownership rights), 15, 20, 140 d-values, 81, 108, 244 distributive justice, 15, 21, 50, 131, 140, 157 ecology, 66 economics, 4, 39, 50, 66 fiscal, 8

Index four economic rights & responsibilities in relation to, 15 four modern actors of production, 15 individualism, 11, 167, 174 industrial policy, 8, 161 labor, 8 liberty, 153 monetary, 4, 8 morality, 153 participative justice, 15, 21, 50, 130, 140, 157 physics, 66 principle of identity, 204, 206, 209, 222 equivalence, 73, 204, 206, 208, 219, 222, 228 non-contradiction, 73, 82, 198, 201, 203, 204, 206, 209, 219, 222, 228 production (of real goods and services), 15, 20 p-values, 81, 244 rationalism, 6, 246, 250 relationalism, 6, 12, 174, 246, 250, 253, 258 relationism, 246 socialism/Communism, 12, 193 somism, 174, 175 Integration of all tools of Epistemology, see Relational Epistemology International relations, 181, 193 Introduction of hoarding in economic analysis, 19 Invisible hand, benign, 22 Issue loans, 163, 164 Issues of social relevance of economics, 39 J Jefferson, Thomas, 10, 180 Jesus’ prayer, 160 Joan, 4, 22, 81, 103, 108, 244 John Paul II, 131, 155 Journal of economic theory, 85 Journal of markets and morality, 156, 184 Jubilee solution, 110 Jurisprudence, 30, 50, 143, 144 Jurisprudence of social rights and responsibilities, 143 Justice and peace, 11, 30 K Kant, Immanuel, 76, 80, 143, 149, 176, 230, 237, 240, 259 Katz, Lawrence F., 9

267 Kelso, Louis O., 26, 29, 34, 155, 164 Kelsonian economics, 74, 218 Keynes’ model, 16, 18, 53, 65, 78, 86, 92, 94, 155, 199, 241, 258 Keynesian economics, 39, 74, 218, 226 Keynes, John Maynard, 1, 4, 18, 19, 25, 30, 35, 45, 53–59, 62, 64, 73, 74, 86, 88, 99, 100, 107, 126, 127, 134, 161, 164, 180, 208, 217, 218, 251 Keynes’ principle of effective demand, 38 Keynes’s general theory, 60, 78, 242, 259 Klein, Lawrence R., 38, 39, 54 Krugman, Paul, 3, 16, 30 Kuhn/Feyerabend Attack, 235 Kuhn, Thomas, 235 Kurland, Norman G., 110, 147, 189

L Labor, 3, 5, 11, 21, 23, 24, 26, 34, 45, 46, 50, 65, 74, 101, 102, 131, 135, 136, 144, 146, 147, 149, 156, 159, 161–164, 180, 184, 187, 218 Laborious logico-mathematical steps, 36 Labor unions, 131 Labor-units, 87, 88 Lady Margaret Thatcher, 172 Land, 5, 11, 21, 23–26, 34, 37, 41, 45, 46, 48, 49, 59, 61, 64, 102, 116, 129, 130, 135, 137–139, 143, 144, 146–148, 152, 156, 159, 160, 164, 184, 185, 187 Land taxation, 46, 135 Lascaux cave, 203, 204 Law abhors a vacuum, 62, 128 Legal appropriation, 146, 147 Leijonhufvud, Axel, 54, 58 Leo XIII, 130, 131 Libertinism, 153, 176 Life cycle hypothesis of saving, 102 Lines, 5, 10, 30, 34–36, 39, 46, 50, 54, 58, 66, 68, 69, 81, 89, 90, 96, 106, 107, 130, 135, 191, 203, 210, 211, 213, 221, 237, 244 Liquidity preference, 65 Loans, national, 137 Locke, John, 6, 16, 80, 117, 127, 129, 160, 170, 243 Logic, 16, 34, 37, 54, 57, 74, 82, 197–203, 206–212, 214–216, 218, 219, 221, 223–226, 231, 246, 252, 254, 259, 260 Logic and epistemology, 197, 199, 203, 250

268 Logic of concordian economics, 10, 73 Logic of mainstream economics, 10, 73 Lord’s prayer, 30 Lorenz attractors, 68, 91, 96 Lorenz diagram, 77, 93, 241 Lui-même, 118, 212 Lukacs, John, 174, 198, 249

M MacIntyre, Alasdair, 175 Macroeconomics, 38, 63, 86, 110 MAGA People, 165 Mahatma Gandhi, 156 Mainstream economics, 1, 3, 4, 11, 16, 30, 33, 35, 36, 39, 61, 62, 67, 68, 74, 75, 78, 85, 87, 88, 90, 93, 100, 105, 108, 133, 222, 234, 239, 242, 247, 257, 259, 260 Mandelbrot, Benoit B., 68, 86, 91, 96, 98 Mankind, masters of, 23 Marginal efficiency of capital, 65, 88 Markets and morality, 156, 184 Marshack, Alexander, 203, 204, 228 Martin, Rex, 154 Marx, Karl, 160, 170, 180, 211, 243 Math linear, 81, 244 non-linear, 81, 85, 244 Mathematics of concordian economics, 93 Matthews, Emily, 70, 88 Maxims, vile, 23 McCloskey, Donald N., 208, 235 Measurement, 11, 69, 87–89, 105–108, 110 Mercedes, 2, 18 Mergers external, 162 Methodology of modern economics, 17 Modern economics praxis, 12 Microeconomics, 37, 38, 110 Middle ages late, 155, 208 Millenarian field of economic justice, 33 Mirabile dictu, 25, 208, 229 Mission of peace and justice, 185 Model of consumption, 67 Model of distribution, 67 Model of production, 67 Models of stocks and flows, 102 Modern economics, 4, 12, 16, 18, 45, 66, 73, 78, 82, 87, 89, 100, 105, 134, 147, 197–199, 241, 258, 260 Modern factors of production, 23

Index Modes of thinking and expressions, 6, 12, 173, 246 Modigliani, Franco, 9, 19, 20, 86, 102 Monetary and real wealth, 37, 38, 67, 70, 91, 106 Monetary wealth, measure, 108 Money lending, 30, 122 Money and goods change hands, 38 Morality, 5, 7, 8, 11, 25, 35, 41, 45, 49, 82, 113, 117–119, 121, 122, 125, 130, 135, 137, 139, 153, 176, 182 Moral sentiments, 117 Mosaic debt jubilee, 30 Museums, archeological, 203, 228

N Nadeau, Robert L., 66 Names of objects and relations, 230 Natural resources, 23–25, 41, 45, 46, 48, 81, 102, 135, 138, 144, 146–148, 151, 159, 160, 164, 184, 244 Neoclassical analysis, 89 New/Old synthesizers of knowledge, 238 New Keynes, 16 New mode of thinking and expression, 252 New paradigm, 1, 10, 19, 30, 82, 224 Newton, 220 Nominalism, 216 Non-Euclidean geometry, 214, 236 Non-linear mathematics, modern, 86 Non-productive wealth, 16, 37, 65, 76, 127, 240 Notations record, 204 Not-Being, 168, 190, 191, 214, 216, 253 Noumenon, 232, 238

O Object of economic rights, 44, 134, 146 Object of entitlements, 44, 134, 146 Object of property rights, 44, 134, 146 Oliver Wendell Holmes, 150 Orwell, George, 5, 30 Ostrom, Elinor, 121 Overfishing, 114, 115, 118, 119, 121, 122 Ownership rights, 3, 4, 6, 10, 11, 15, 20–22, 33, 35, 37–40, 42–45, 49, 50, 62, 63, 67–69, 79, 81, 87, 89–92, 99, 107–109, 125, 126, 128, 132–134, 139, 140, 242, 244, 260 Owners of past wealth, 47, 136

Index P Pac-Man economy, 47, 137 Paleolithic art research, 203 Parallel lines imaginary geometry, 77 Pattern of distribution of values of ownership rights, 69, 87 Peace and justice, 184, 185 Pencil, 183 Perplexities, 59 Pet rocks, 35 Petrongolo, B., 68, 100 Piketty, Thomas, 1, 75, 239 Pilkington, Phil, 234 Pissarides, C. A., 68, 100 Pivoting Keynes model, 94 Planes and solids in space, 34, 36 Plato, 168, 190, 231, 253 Poincaré section, 67, 91, 95, 220 Points and lines to planes, 38 Policy of high wages, 163 Policy of taxes on land and natural resources, 164 Political justice and economic justice, 155 Political world polarized, 167 Poor record forecasting recession, 100 Pope John Paul II, 131 Pope Pius XI, 133 Positive economics, 217 Positive logic, 215, 216 Possessions of land and natural resources, 49, 138 Possible variant definitions of saving, 73, 218 Post-Autistic economics review journal, 33 Poverty abject, 176, 199, 249, 250 horrible conditions of, 3, 164 Power of abstract ideas, 172 Practice of economists, 66 Pragmatism, 236 Prawat, Richard S., 216 Precise definition of consumption, 58 hoarding, 9 income, 42, 54, 60, 62 investment, 54, 59, 62 money, 54, 61 saving, 54, 59 wealth, 5, 42, 59, 62, 81, 244 President Truman, 2 Pre-Socratic tradition, 212

269 Primordial logic, 201–203, 206, 208, 211, 215, 219 Primordial logic to classical logic, 207 Primordial logic to relational logic, 225 Principle of excluded middle, 206, 209, 222 Principle of indifference, 209, 210, 222 Principle of non-contradiction, 73, 201, 203, 204, 206, 209, 210, 212, 219, 222, 259 Principle of Process, 222 Principles of dialectic logic, 211 Principles of logic by Cro-Magnon, 203 Private capital markets, 48, 138 Privileged access, 24 Privileges divide, 24 Problem solvers, 66 Process thinking, 81, 244 Productive wealth to unproductive wealth, 60 Professionals, 2, 11, 16, 18, 61 Program of action, 25, 34, 49, 50, 139 Progressive movement, 1 Proof of purchase, 106 Propensity of relationism to focus on relations, 251 Protestant/Puritan ethic, 57 Public domain, 26–28 Public money, 2, 161, 164, 189 Public rights, 143, 149, 150 Pure reason, 259 Purpose of investment, 61, 62 Pythagoras, 231 Q QJE, 1, 9 Quadragesimo Anno, 133 Quantity of stocks of real wealth, 87 R Radford, P., 140 Raising taxes on land, 144 Rand, Ayn, 172 Rate zero use, 85 Rate of growth of wealth, 103 Rate of return on wealth, 102 Rational economics transforming, vii Rational irrationality, 16 Rationalist argument, 154 Rationalizations, 199, 236, 252 Rational logic, 201, 209–211, 214, 219, 224

270 Rawls, John, 48, 138, 140, 153, 154 Rayan, John A., 156 Read, Leonard E., 183 Real goods and money change hands, 260 Real income lost, 70, 91 Realists, 232 Real wealth and monetary wealth, 61, 79, 101, 102, 242 Real world economics review, 33 Reintroduced hoarding, 1 Relating hoarding to investment, 77, 241 Relational aesthetic, 252 Relational economics, 12, 197, 247, 257 Relational logic and relational epistemology, 252, 254 Relational method of analysis, see RMA Relational Method of Analysis (RMA), 12, 82, 197, 198, 237, 252 Relational ontology, 191 Relationism, 246, 250–252 Relation of equality, 37 Renaissance, 168, 208, 209, 232, 234, 250 Rerum Novarum, 130 Responsibilities assigning, 151 corresponding, 24, 45, 135, 145, 151 personal, 160, 180 Return relevance to economics, 10, 33 Revised Keynes’ model, 18, 63, 94, 126 Revolutionary conclusion, 41 Reward of not-hoarding, The, 60 Rheol World, 85 Rights to life and liberty, 149 Rights unite, 24 Robert Louis Stevenson, 183 Roosevelt, President Franklin D., 157 Rothbard, Murray, 109 Rules change, 199 Ryan, Monsignor John A., 155

S Samuelson, Paul, 1, 259 Saving in mainstream economics, 75, 101, 239 Schools of economics, 40 Schumpeter, Joseph, 38, 41 Scientism, 248 Sentiment, fickle, 117 , 117 Separation of monetary wealth from, 22, 105

Index real wealth, 37 Shelley, Mary, 169 Shiite muslims, 192 Shiya Iyer, 29 Silent exchange of values of ownership rights, 38 Simplified predator-prey model, 114 Slavery, justified, 80, 243 Smale transformations, 213 Smith, Adam, 6, 8, 16–18, 22, 63, 74, 88, 113, 117, 127, 218, 233, 235, 260 Socrates, 168, 208, 231 Solipsism, 249, 252 Solution to urban decay, 199 Soma drunk, 173 Sphere of PRIVATE RIGHT, 149 Sphere of PUBLIC RIGHT, 149 Stack, Megan, 131 Stalin, 213 Steal, 137, 140 Stephens, David E., 151 Stocks, flows capital goods, 67, 91 consumer goods, 67, 91 goods hoarded, 67, 91 money, 66, 91, 109, 137 Story of ethics in economics, 128 Strange attractor, 68, 93 Strength of economic rights and responsibilities, 5 Strictures of rationalism, 251 Study of saving, 73, 218 Substituting hoarding for saving, 63 Sum of real wealth and monetary, 102 Suppes, Patrick, 55, 62, 79, 200, 242 Supply-Side economists, 39 Syll, Larsen P., 3, 16, 30 Syllogistic method of analysis, 230–233 Synthesizer of information, 229 Synthesizers of knowledge, 226, 227, 238 Synthetic model, 39 System of primordial logic, 228 System of rational logic, 209 Systems of logic, 199, 200, 202, 211, 213, 214, 216, 218, 219, 222–225 Systems of logic influence culture, 200

T Tablet four economic responsibilities, 24 four economic rights, 24

Index corresponding to, 159 Taxes on land and natural resources, 137, 140, 152, 164 Teams for peace and justice, 185 Technical definition of hoarding, 260 Technical tools of Relational Logic and Relational Epistemology, 250 Thatcher, Margaret, 175 Theory of Moral Sentiments, 117 Thinking processes rational, 248 Third principle of classical logic, 206 Thornton, Stephen, 252 Title legal, 44, 134, 146 Tolstoy, Leo, 19 Too-big-to-fail, 161, 162 Tools of epistemology, 73, 82, 198, 226, 238, 246, 252, 253, 257 Tools to return relevance to economics, 33 Torus, 68, 95 Trajectory of values of real wealth, 69 Transformation of rational economics, 247 Treatise on money, 56 Treatment of space and time, 233 Trend line of real wealth, 90 Triads, 235, 253 Tripartite analysis, 237 Trusts, 47, 48, 115, 117, 120, 136, 234, 235, 261 U United Nations Conference Rio, 125 Universal Declaration of Human Rights, 156

271 Usury, 131

V Validity of individual propositions, 214 Values of imports and exports, 87 Vangeest, Jacob, 230 Van Vleck, Tom, 208 Viner, Jacob, 217 Vivek Murthy, 9

W Wages high, 162, 163 Wall Street, 38, 121, 165 Warren, Tish Harrison, 248 Wealth of Nations, 22, 117 Weigel, George, 157 Wells, H. G., 30 Western philosophy, 253 Whitehead, Alfred North, 230, 251 Wild, Oscar, 249 Winner-take-all mentality, 48 Wise, David S., 173, 203 World War II, 58

Y Yahweh, 192 Yin-Yang symbol, 213

Z Zenkin, A. A., 202