Short-term cash: Pretended justice

“For there is but one essential justice which cements society, and one law which establishes this justice. This law is right reason, which is the true rule of all commandments and prohibitions. Whoever neglects this law, whether written or unwritten, is necessarily unjust and wicked.

“But if justice consists in submission to written laws and national customs, and if, as the Epicureans persist in affirming, every thing must be measured by utility alone, he who wishes to find an occasion of breaking such laws and customs, will be sure to discover it. So that real justice remains powerless if not supported by nature, and this pretended justice is overturned by that very utility which they call its foundation” ― Cicero, On the Laws

Money and law … profit and justice

In “Money and the Rule of Law” which is heralded by some economists as “a profound and highly original assessment of monetary policy”, three fellow economists [Boettke, Salter and Smith] have suggested that monetary policy be subject to the rule of law … so that, as Alexander Salter [one of the authors] explains in a recent article,

“everyone [including the poor abroad who rely on the US$ as a reserve currency?] knows how much of their wealth to split between short-term cash holdings and long-term savings or asset purchases”.

Unfortunately, Salter’s article [and perhaps the book] fails to explain how being able to distinguish short term cash from long term savings is a hallmark of justice flowing from the rule of law. It is more like wishful non-thinking that robbers agree to limit their plundering to certain houses on certain days of the week during certain hours of the day so that property holders can better defend themselves … if that makes sense.

Cunning speculators that make clowns blush

Why is it that “our best minds” in economics have failed so completely to grasp long established and elementary notions of “justice”? Because “monetary profit” is the only language most economists speak and understand … they have a quite limited vocabulary. Consider the thoughts below … which are neither profound nor original in the larger history of mankind.

“It is not true, as certain people maintain, that the bonds of union in human society were instituted in order to provide for the needs of daily life; for, they say, without the aid of others we could not secure for ourselves or supply to others the things that nature requires; but if all that is essential to our wants and comfort were supplied by some magic wand, as in the stories, then every man of first-rate ability could drop all other responsibility and devote himself exclusively to learning and study. Not at all. For he would seek to escape from his loneliness and to find some one to share his studies; he would wish to teach, as well as to learn; to hear, as well as to speak. Every duty, therefore, that tends effectively to maintain and safeguard human society should be given the preference over that duty which arises from speculation and science alone.” ―  Cicero, On Duties

“There is the greater need, therefore, of insisting on the natural and unavoidable penalties of conscience. For if either direct punishment, or the fear of it, was what deterred from a vicious course of life, and not the turpitude of the thing itself, then none could be guilty of injustice, in a moral sense, and the greatest offenders ought rather to be called imprudent than wicked. … If we are determined to the practice of goodness, not by its own intrinsic excellence, but for the sake of some private advantage, we are cunning, rather than good men. What will not that man do in the dark who fears nothing but a witness and a judge? Should he meet a solitary individual in a desert place, with a large sum of money about him, and altogether unable to defend himself from being robbed, how would he behave? In such a case the man whom we have represented to be honest from principle, and the nature of the thing itself, would converse with the stranger, assist him, and show him the way. But as to the man who does nothing for the sake of another, and measures every thing by the advantage it brings to himself, it is obvious, I suppose, how such a one would act; and should he deny that he would kill the man or rob him of his treasure, his reason for this cannot be that he apprehends there is any moral turpitude in such actions, but only because he is afraid of a discovery, and the bad consequences that would thence ensue. A sentiment this, at which not only learned men, but even clowns must blush. ― Cicero, On the Laws

"The Creator himself pre-ordained that the criterion of all human behaviour was not profit but justice, and on the strength of this all efforts to define levels of profit are always useless. Not one person has ever known, or can know, what the final results of a certain action, or series of actions, will be, either for himself or for others. But each one of us can know which action is just and which is not. And likewise, we can all know that the consequences of justice will, at the end of the day, be as good for ourselves as for others, although it is beyond our power to say beforehand what this good will be and of what it will consist." John Ruskin, 1870

Have I made my point? If not, consider these two thoughts as a potential condemnation of modern economics pursued as a “science” rather than as a “philosophical” endeavor to expand our potential as fellow beings in an organic universe.

“An old established metaphysical system gains a false air of adequate precision from the fact that its words and phrases have passed into current literature. Thus propositions expressed in its language are more easily correlated to our flitting intuitions into metaphysical truth. When we trust these verbal statements and  argue as though they adequately analysed meaning, we are led into difficulties which take the shape of negations of what in practice is presupposed. But when they are proposed as first principles they assume an  unmerited air of sober obviousness. Their defect is that the true propositions which they do express lose their fundamental character when subjected to adequate expression.” AN Whitehead, Process and Reality

“What does it profit a man to gain the whole world, yet forfeit his soul? Or what can a man give in exchange for his soul?” Mark 8

As I said … most economists [on both sides] have a very limited and generally incoherent vocabulary.

Extending vocabulary

The notion of reality as a marketplace in which the exchange of information is the fundamental process by which management [nomos] continuously approaches [or is distanced from] the rules [logos] of the household [oikos] appears generally sound as a basis for understanding the relationship between eco-nomics and eco-logy. Indeed, Cicero describes justice as a continuous exchange between conscience and nature. Where our would-be economists err is in loving money [merely the medium in this exchange] more than the knowledge it facilitates [properly prioritized in Cicero's statement of our "duties"] ... a common mistake.

Within natural boundaries, money as a medium of exchange is a blessing, but placing “profit” above “justice” [ie. loving money per se more than the knowledge it promotes as a naturally functioning medium of exchange] is a curse ... indeed, THE curse or "spell" that [according to Revelations 18] is driving the world mad. The separation of money from nature by non-organic, GMO fiat was a fatal mistake that will be rectified ... one way or another … but not by the thinking prevalent in economics today. A vocabulary change will be needed. Perhaps, it is time for “profit” to be extended into “potential” as Eichner attempts to do in “The Free-Market Family”.

The great divorce

CS Lewis wrote that the great divorce was between heaven and hell … but, perhaps, we might rephrase his thesis to propose that it is between philosophy [loving knowledge] and science [knowing]:

“In its use of the [philosophical] method [of generalization] natural science has shown a curious mixture of rationalism and  irrationalism. Its prevalent tone of thought has been ardently rationalistic within its own borders, and dogmatically irrational beyond those borders. In practice such an attitude tends to become a dogmatic denial that there are any factors in the world not fully expressible in terms of its own primary notions devoid of further generalization. Such a denial is the self-denial of thought.” AN Whitehead, Process and Reality

It is no coincidence that the study of “economics” as we know it today came to us in praxeological form through theologians in Spain and an ethicist in Scotland attempting merely to further explain [not constrain] the larger universe. But economics has too often become the haunt and habit of so-called scientists trained within narrow walls who cannot imagine much less articulate what exists beyond those walls.

Until our economists are able to expand their imaginations beyond “monetary profit and wealth”, they will understand neither the meaning of profit, wealth and money [on which they love to pontificate] nor the functioning of the non-monetizable reality which comprises the greatest part of our individual and collective existence and, as such, is per se unsuitable for “economic” regulation using “competition and prices” according to one of economics own heros … FA Hayek.

Sound money as a civil right

coherent - Latin com="together" + haerere="to adhere, stick"

“Coherence, as here employed, means that the fundamental ideas, in terms of which the scheme is developed, presuppose each other so that in isolation they are meaningless.” AN Whitehead, Process and Reality

Had he lived long enough, MLK Jr. might have become a brilliant economist. We all know of his defense of racial minorities … of the turbulence in his conscience when he observed “inequalities” that were inconsistent with his simple notion of how the world “should” work. But most do not appreciate that before he was killed, his focus had moved away from racial discrimination to wealth/income discrimination [a current topic] as he began to champion the poor [regardless of race] as “entitled” to something of which they had been deprived.

What MLK saw was that black Americans were constituents in an even larger multi-racial group of Americans who had been systematically deprived of something to which they were justly entitled. And, of course, he was right in his conclusion. The question is WHAT are they entitled [ie. have a civil right] to:

• wealth and income in some nominal or relative amount or
• the articulation and enforcement of “laws supported by nature” [to use Cicero’s notion] which [like Adam Smith’s invisible hand] would regulate the allocation of income and accumulation of wealth … if not overridden by "unjust and wicked" humans that violated them for selfish gain?

In the end … we all share the same household [oikos]. And that household has rules [logos] which enforce coherence [Col 1:17]. So the only question is how will we manage [nomos] this household we share. Let our best eco-nomists and eco-logists think again about money as an original civil right [MACRO2020] … or, if they dare to expand everyone’s vocabulary, about how to actually and organically link economy to ecology through education [e3] … now and for the generations to come !!

"A little learning is a dang'rous thing.
[So] fools rush in where angels fear to tread.
[But] to err is human; to forgive, divine.”
Alexander Pope, Essay on Criticism

For more on this topic, stay tuned to Divorcing Economics from Philosophy … a work in progress.