The Economic Aspect

The economic is one of Dooyeweerd's fifteen aspects, between the social and the aesthetic aspects. This growing page is offered to help us: (a) understand Dooyeweerd's notion of 'economic, (b) think more widely about economic issues, (c) to critically discuss Dooyeweerd's ideas.

Contents:

• Briefly ...
• Defining the Aspect
  • Kernel
  • Some central themes
  • Common Misconceptions about this aspect
• The Aspect Itself
  • Non-Absoluteness of the aspect
  • Special Science and Disciplines
  • Institutions related to this aspect
  • Contribution to Shalom
  • Harm from this aspect
  • Contributions from the Field
  • Dooyeweerdian Economic Theory
• The Aspect Among Others
  • Law-dependencies
  • Analogies
  • Antinomies related to this aspect
  • Common Reductions
• Notes
• References
• About this page

Briefly ...

We experience the economic aspect intuitively as managing limited resources frugally. 'Eco' means 'household' (Greek), implying sustainable viability within limits. Resources can be of any type (here, words). Limits imply value. Outwith the household, value is usually symbolised quantitatively by currency.

Also meaningful within the economic aspect are: goods, customers, orders, etc.; business, bank, etc.; budgets, deadlines, etc.; markets, commons, the economy, money; activities like administering, storing, distributing, conserving, recycling; properties like sustainable, valuable, rare, careful, sparing; and their opposites. Dooyeweerd's discussion occurs on pages 66-7, 122-7, 344-5, 360-2 of [1955,II], most devoted to economy of thought, logic, language, aesthetics and law rather than 'the economy'.

The good possibility the economic aspect introduces to temporal reality is sustainable viability / prosperity. The negative is carelessness and waste and its repercussion, destitution or superfluity.

Modern economics is distorted by a mechanistic view of the world [Dooyeweerd, 1955,II, 344]. Successful economic functioning presupposes that (a) we balance different needs, (b) exchange is just, (c) generosity stimulates, (d) brokers operate in 'good faith' -- antecipating the next four aspects.

Defining the Aspect x

Kernel: x

• "Frugality" (Dooyeweerd's rendering)
• "Managing limited resources frugally. Introduces Sustainable prosperity" (Basden's intuitive rendering)
• Resources
• Having regard to limits
• Carefulness

rather than:

• Finance (which is largely quantitative)
• Production, distribution and consumption (which is more to do with formative power
• Supply of wants
• The worth of a thing (which may be largely symbolic)

Note: satisfaction, not maximisation (of profits, income, owner value, GDP); cf. Simon [1956]. Note: frugality, not consumption, competition, growth. Frugality, whether during scarcity or exhibited in self-control during plenty, is normative because it not only sustains future prosperity but also stimulates originality, responsibility and generosity (the next three aspects). Modern economics is distorted by a mechanistic view of the world [Dooyeweerd, 1955,II,p.344].

However, Dooyeweerd's discussion of the economic aspect is not deep, and is aligned with only one view from the field; see Critique below.

Some central themes x

• The Greek root word, 'oikonomou', means 'household'. Economics is, from Dooyeweerd's standpoint, management of the 'household', i.e. a set of limited resources within known boundaries. This leads to a number of other themes.

• Scarcity is a concept that is meaningful in the economic aspect.

• Superfluity is a dysfunction in the economic aspect. Even though it might make certain things immediately easier, it has various harmful effects, especially indirectly and longer term.

• Conservation. This is care for limited resources, and is closer to the Dooyeweerdian understanding of 'economic' than the conventional issues related to money and business. Here are two examples:
  • Environmental action has frugality as one of its central themes, because it is the ultimate: proper management within the limits of the planet. This is usually biotic or physical resources.
  • Waste recycling or reuse. This is 'economic' when we treat waste as a resource, rather than a nuisance. Reuse recognises the original qualifying aspect of the surplus item, or another aspect. Recycling does not, but recognises the physical or biotic aspects of the materials from which it is made. To treat waste as a nuisance is dysfunction in the economic aspect, though it may be functioning in the formative aspect.

• Value. This has two meanings. Non-economically, value means meaningfulness. Economically, value is meaningfulness transduced to being a resource, and usually further transduced to the quantitative aspect. As such, value is a limited issue in economic thinking, and by no means the primary issue.
  • Money is a token of quantitative value, usually enabling easy exchange. Hence is qualified by the lingual aspect rather than economic. Money (finance, accountancy) should never be seen as the primary issue in economics, but only as a particular expression of a limited issue. However, it also has a juridical aspect in that exchange is presumed to be reasonably just.
  • GDP, Gross Domestic Product. A quantitative measure of the total exchange money of the institution that is a state. This is even more limited than money, because it has completely lost its symbolic token function and is a mere quantitative measure. Yet it is made so important in the world of finance, to the detriment of all, Goudzwaard argues.

• The business is an institution qualified by the economic aspect. So most business themes are often qualified by the economic aspect, but not always, and they always involve other aspects too. This implies that a purely economic view of business, which is commonplace, is harmfully limiting. See two types of business, below.
  • Needs are usually seen in terms of resources. (However, needs in Maslow's sense, refers more to positive functioning in a number of aspects.)
  • Products. A product itself is an object resulting from formative functioning and the economic functioning might be minimal. But often we treat products as resources required by a buyer; in this sense they are economic.
  • Production and consumption (transformation of resources). These are part of the exciting enterprise that is economics; but only part - when we elevate them to the whole, harm comes. So, thinking in terms of production and consumption is a limited view, and should be recognised as such.
  • Supply and demand. This is part of economic functioning, which focuses on products as such rather than on the human functioning of producing them. That it is thus a limited view should always be borne in mind.
  • Marketing and selling. These occur in service of business and hence for economic purposes. But marketing, as communicating the value of a product to a potential customer, to persuade them to buy, and of attracting customers, is primarily lingual functioning. They also involve aesthetic functioning, in attraction, juridical functioning in whether the customer and product are given their due, ethical functioning (usually dysfunction, in that the usually the main motivation is to shift the customer's money to my own pocket), and pistic functioning in getting the customer to believe they need the product (often dysfunction, in that marketing seeks to generate absolute commitment to the product).

• Deadlines are an economic treatment of time as we experience it as limited.

• Occam's Razor. This is the economic aspect of analytical thinking: Get rid of superfluous concepts.

• ... and so on.

Common Misconceptions x

• Some modern economics seems to have been reduced to finance; reducing economics to the quantitative aspect.
  • However, "Protecting my budget" by externalising costs, so that the costs are borne by the other person's / department's budget or even by the environment, is NOT good because it goes against the ethical norm of self-giving.
• How much something is worth is not a matter of economics, though scarcity of course does have a part to play in determining worth. e.g. antiques. But worth of a thing is worth of the thing to me, that is the worth I assign to it. Is it symbolic, then? Not primarily, since in assigning worth to a thing we are not primarily (deliberately) communicating. Rather, the worth to me is determined by what I see myself as (Credal, q.v.). The assumption that worth is fundamentally economic (or rather financial, Quantitative), has proved something of a conundrum. The more recent assignment of worth to interpretation is also misleading.
• Economics is sometimes seen as the science of supply and demand, production and consumption. This is a misconception since it contains no concept of responsible frugality. If Dooyeweerd is right in proposing that frugality the kernel of this aspect then such a conception should lead to harm. See below.

The Aspect Itself x

Also meaningful within the economic aspect are: goods, customers, orders, etc.; business, bank, etc.; budgets, deadlines, etc.; markets, commons, the economy, money; activities like administering, storing, distributing, conserving, recycling; properties like sustainable, valuable, rare, careful, sparing; and their opposites.

Non-Absoluteness x

If, in that country, there is injustice such that the rich will cream off the money that pours in, then the whole economy will falter. If that country is denied proper prices for its exports then it its economy will be increasingly centred on producing drugs etc. Even if we argue that an economy based on drugs, or one that involves only the rich, can be a sound economy, we find that argument is thin. Because it is not sustainable, even if its financial mechanisms seem to be working for a short time. We can see that a sound economy requires at least a sound functioning in the juridical aspect.

We can see that it also requires sound functioning in other aspects. But I have chosen a later aspect here because earlier aspects might be involved merely in a dependency manner whereas non-absoluteness goes beyond this to require all aspects.

It will be noticed that we have taken the conventional view of 'economy', as to do with finance, which, we argue elsewhere, is not the kernel of the economic aspect. This is not invalid in this instance since finance is indeed part of economy and we are not talking about mere quantitative measures like 'maximizing profits' here.

Mow take the case of advanced economies. Capitalism contains genuine insights into the nature and laws of the economic aspect. However, it is in danger of absolutizing the aspect. Jeremy Rifkin argues that Capitalism will decline, because of its own operations not because of some external threat. Likewise Karl Marx argued for the inner inconsistency within Capitalism. Rifkin argues that it is the Internet leading to a 'zero marginal cost society', which will undermine Capitalism.

Special Sciences and Disciplines x

• Economics
• Management sciences
• Business science (but this has social overtones)
• Finance (but this has quantitative overtones)
• Accountancy (but this has quantitative and juridical overtones)

See collection of articles written from a Dooyeweerdian point of view by Bob Goudzwaard, Emeritus Professor of Economics, VU.

Institutions x

• The business is the primary economically qualified institution
• Banks
• Warehouses
• Perhaps also local authorities' planning departments, which are responsible for land-use planning? Because land is their main (limited) resource for which they are responsible. But maybe they are more qualified by the juridical aspect?

Contribution to Shalom x

• Wise, frugal use of limited resources can be exciting and fulfilling, and it forms the basis for aesthetics. (But, too often it is constraining and diminishing.) For example, Igor Stravinsky said "The more constraints one imposes, the more one frees one's self of the chains that shackle the spirit ... the arbitrariness of the constraint serves only to obtain precision of execution." [Poetics of Music].

• On maximization. Contrast "Maximizing profits" with "Keeping within budget". Both are to do with money, but maximizing profits the emphasis is on a quantitative property in itself, while budgets are fundamentally economic. If the kernel of the economic aspect is frugality rather than maximization or optimization, then protecting from extinction is a major norm. Extinction (e.g. of species) means the utter destruction of what might be seen, from the economic aspect, as a resource, such that it can never be recovered. But, some might ask: what if the species or resource is of no value to us? There are at least three answers to this that are commensurate with Dooyeweerd's thinking:
  • One day it might be of value in ways we cannot now perceive, and maybe to future generations.
  • When thinking of the natural world and species, God, who created it, values it for itself; see Job 39, Hebrews 1:2, the last verse of Jonah, and where Jesus told his disciples that even though sparrows were so cheap in the market, "not one of them falls to the ground without my Father's consent".
  • Each aspect contains echoes of the others. The kernal of the ethical aspect is self-giving. The attitude portrayed by the above statement is the opposite of that, and thus anti-normative. Care for a resource for its own sake, and without reference to our own needs, desires, convenience, is an echo of the ethical aspect.

Harm x

• Grinding poverty. When people do not have reasonable resources - but notice the word 'reasonable', which is juridical in nature, so poverty is partly a juridical evil.
• Waste, squandering. Often comes from the following.
• Over-stimulation of demand and consumption; see below.
• (Harm also comes from reducing economics to finance.)

• Competition. Capitalist thought assumes that competition is a fundamental Good within economics. Competition, it says, is essential for stimulating technical progress and engendering choice because otherwise we get lazy or form cabals. But a Dooyeweerdian understanding of economics would question that. Competition has in practice led to lack of real choice by closing down the smaller and more creative suppliers. Competition has stifled technical progress. The kernel of the economics aspect is frugality, which is very seldom helped by competition over the longer term; indeed in practice it has been seriously hindered by competition. Also, it is a falsity that competition is the sole motivator to technical progress or choice; in life there are several other motivators, such as altruism, vision and even fascination with technical things. Competition in economics is the opposite of the ethical good of self-giving because it is deeply directed by pitting oneself against the other even to the point of killing them off. It would seem that the only aspect where competition is part of the kernel meaning of an aspect is the biotic.

Contributions from the Field x

Adam Smith (1700s) argued that labour and capital as well as land are productive, and that each economic actor should act for themselves and their profit alone, and an 'invisible hand' would then bring about good for society. This goes against three of Dooyeweerd's precepts, that economics is to do with frugality rather than profits, that it is more than just production, and that the economic aspect should serve the norms of other aspects rather than solely its own. From a Dooyeweerdian point of view, Smith seems to have taken economics off in the wrong (i.e. ultimately unhelpful and harmful) direction.

J S Mill (1800s) argued that society should intervene in the market. While this recognises the embeddedness of economic functioning within other functioning, and of mutual dependency between aspects, it focuses too much on the entity that is the organ of society, such as the state. Dooyeweerd would give a juridical function to the state rather than economic.

Karl Marx, as economist, focused on the link between labour and value, and exploitation of labour by capital. In this, he emphasised human functioning in economics, as Dooyeweerd would, in contrast to the abstract ideas of profit, market, society. However exploitation, though it has economic manifestations, is primarily meaningful in the juridical aspect.

Neoclassical economics concerned itself with supply and demand, prices and income, and distribution. A key concept is maximization of utility. It has a tendency to overuse transduction to quantitative measures. From a Dooyeweerdian point of view, we see neoclassical economics as very limited and even distorting of genuine economic activity, because of its focus on certain aspects, the quantitative for prices and maximization, and the formative for utility. If utility were to be seen instead as multi-aspectual normativity, then neoclassical economics might be enriched.

Samuelson noted three views of economic and suggested an amalgum:

• Wealth definition, Adam Smith. Economics is the "science of wealth", that is, the economy of a nation depends on the wealth generated through the goods and services, which may be exported and imported, in which consumption and production are most important meaningful factors.

• Societal needs definition, Alfred Marshall. Economics is the "means to ends", where the means are the available goods and services that are available and the ends refer to the needs and requirements by people that are satisfied through the means, so economics science studies societal needs and means.

• Scarcity Definition, Lionel Robbins. Economics is "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." [Robbins, 1935, p. 16].

• Amalgamated Definition, Paul Samuelson. Economics, amalgamating all above, is about how wealth is used for employing scarce resources that can have substitute uses. The goods and services made out of the scarce resources are distributed to the society for usage.

J M Keynes, interested in macroeconomics, emphasised aggregate demand (total spending in the economy). Keynes is used to support public sector finance not just private. From a Dooyeweerdian point of view, Keynes recognised that money is not just a personal possession but operates across society. However, the public-private distinction would be meaningful, to Dooyeweerd, not primarily in the economic aspect but in the juridical, as would the notion of possession. The conflation of juridical with economic issues is likely to bring problems in both theory and practice, including that one cannot argue from one to the other. Also, Dooyeweerd would criticise him, with most of the above, for focusing too narrowly on quantitative value and finance.

Ronald Coase, in The Nature of the Firm (1937), tried to explain why economic activity was organized within firms (as opposed, for example, to being all in a single huge market), and why is a particular activity organized within a particular firm. His views are now again attracting interest (e.g. Madhok A, 2002, Strategic Management Journal, 23) and are centred on the notion of limited resources (usually expressed by money). Dooyeweerd's view that the kernel is frugality of limited resources, and Coase was, as Dooyeweerd hoped, trying to delineate the kernel of economics from within. To Coase, firms are coordinated through authority relations while markets are coordinated through price mechanisms. This speaks of the dependence of the economic on the social aspect.

Milton Friedman, and 'moneytarism', argued that the sole purpose of business is to increase owner (shareholder) value, and that social responsibility should be deliberately ignored when making economic decisions in a firm. This goes against Dooyeweerd's recognition of the interwovenness of aspects, and absolutizes what is non-absolute. We can now see the immense harm that moneytarism has done since it became fashionable in the 1980s.

By contrast, Muhammad Yunus introduced the notion of micro credit and social business. Business, he says and has demonstrated, need not be run for profit or owner dividends, but can be run solely for the purpose of solving a social problem. He brings things like friendships, environmental responsibility and even "joy" alongside economic responsibility. He also argues the importance of trust and being willing to lose. This strongly echoes, and is supported by, a Dooyeweerdian multi-aspectual view (these are respectively, social, juridical, aesthetic, economic, pistic, ethical aspects).

Critique of Dooyeweerd's View

Notice that Dooyeweerd's view presupposes resource - "administering scarce resources". What is resource? Anything can be resource, something used by someone to achieve or make something. It is a prior object in some subject-functioning - like food in biotic, components in formative, vocabulary in lingual, and so on. In economic functioning, the prior object is resource, it is object treated as resource rather than food, component, etc. It is the nature of resource to be limited, and in need of careful administration. It is resource that enables prosperity.

However, the meaning of an aspect depends not solely on the aspect alone but on all the others. This is what other views recognise, for example the juridical aspect of justice in Marx and others, social in Marshall, ethical in trust, etc. Without these, economics does not work well. Dooyeweerd should have recognised this more deeply than he did.

Dooyeweerdian Economic Theory

De la Sienra [2001] discusses the modal laws of the economic aspect in detail. In [1998], he discusses how Dooyeweerd fulfils the requirements of a neoclassical economic theory, but of a widened version, and makes some useful suggestions about how the financial system should be structured. However, his theory is more a theory of monetary systems than of economics. It seems fixated on price mechanisms and finance, and not on the wider concerns of the economic aspect, namely careful management of scarce resources. It rests on an assumption that there is no gap between the 'real sphere' of the economy and the 'financial sphere' - but there is a huge gap: only 5% of international transactions are of the 'real' economy of purchasing goods and services. Moreover, his theory assumes the centrality of economic decision-makers and the economic entity, and seems to say little about the societal dimension of economics.

Goudzwaard [1979, 1995, 2001, 2002] tackles the latter issues as economic issues, while recognising their link with juridical and pistic aspects. He criticises global economics that elevates GDP as not only a measure but as a motivation. In place of idolizing economic growth, and while recognising the validity of developing nations to aspire to more economic growth, he suggests a blossoming economy model, in which economies grow like a tree: growing in numeric height when small, but stopping this when mature and instead putting their efforts into blossoming and fruit-bearing. Many other kinds of economy agree: 'new economics', 'circular economy', and even Yunus' social business. Goudzwaard differentiates between real and casino economy, on the basis that the latter is meaningless. De la Sienra, though, contests Goudzwaard's rejection of neoclassical economic theory.

In my view, Goudzwaard's view is more faithful to the Dooyeweerdian notion of the economic sphere, with De la Sienra providing some useful technical outworking of a narrow area thereof.

The Aspect Among Others

Law-dependencies x

• There is a element of creativity here, an element of deliberate planning.
• For true 'economic' activity, we need social interaction and relations. In particular:
  • For markets, we need social interaction
  • For firms, we need social institutions and, as Coase said, firms are coordinated via authority relations.
• It would seem also that it also requires symbolic attribution of value to things.
• Of course, many use numeric mechanisms as the main ways of doing this, but that is a very limited view; the worth of things goes far beyond their numeric value.

Successful economic functioning presupposes that (a) we balance different needs, (b) exchange is just, (c) generosity stimulates, (d) brokers operate in 'good faith' - anticipating the next four aspects.

Analogies x

• 'Value' is used in computer science to refer to the contents of an attribute. I think this is essentially quantitative in nature, though I use it also for other types of value, including textual, spatial, boolean (true-false), etc.
• Constraints are law-like. They may be seen as echoes of the juridical aspect in the economic.
• Growth (economic) is a retrocipatory analogy to the biotic aspect. That prosperity need not involve growth is discussed in Jackson [2009]: ignoring the environmental 'limits to growth' undermines the foundations of future prosperity.

Antinomies x

Common Reductions x

• Seeing economics are mainly finance reduces it to the quantitative aspect.
• Seeing economics as to do with production and consumption reduces it to the formative aspect, with strong analogical overtones of the biotic. See below.

Notes x

Economics as Supply and Demand

In process economics, the prime goal is flow, so that stimulation of demand is seen as a Good Thing. Whether or not the demand can be met, and whether or not the demand should be met. Thus, in the early days we found economics gurus saying that the prime task was to change wants into needs, and this idea has so completely penetrated the world view of establishment economics that few question it. But it has had several harmful effects:

• It puts pressure on supply, and leads to rapid depletion of resources.
• It leads to higher degrees of waste by products being produced.
• It tends to make people dissatisfied with what they have, and want, then need, more - a multiplying effect on the above harms beyond those of mere economic growth.
• A pistic factor, it also tends, over some years or decades, to instil in people the idea that they are fundamentally consumers, and this then colours all the rest of their functioning.

Another, ironic, aspect of this mis-perception of economics as process of supply and demand is that small firms can go bankrupt even though they are profitable, simply because of cash-flow problems.

Many now believe that harm has come of all this. One result of this is the growing awareness of green (environmental) issues. As mentioned earlier, frugality is central to the green view. (That is, the true green view, not the libertarian version, nor the anti-human version.)

But today's business managers do not see the problem, or at least not so clearly as to do things differently. Fineman (1997) (in "Constructing the green manager", British Journal of Management, v.8, pp.31-38) says:

"Its soul can remain, however, relatively untouched: environmentalism comes and goes according to 'business priorities'. Until there is a substantive change in the meaning of business, such that commercial and social value is inextricably tied to 'common-wealth' .. it is unlikely that managerial greening will progress beyond the formulaic [the mere lip-service to rules of the organisation]."

Note the phrase, "meaning of business". To Dooyeweerd, meaning was the essential element in all things. In other parts of his framework, he says that the human heart is the functioning centre, and that it is this that must be changed, reflecting, in different terminology, what Fineman has said.

References

De la Sienra, AG. (2001) Reformational economic theory. Phil. Ref. 66(1), 70-83.

Goudzwaard, B. (1979), Capitalism and Progress, A diagnosis of western society. tr. Josina Van Nuis-Zijlstra (ed.). Toronto, Canada: Wedge Publishing Foundation; Grand Rapids, MI, USA: William B Eerdmans.

Goudzwaard B., de Lange, H (1995) Beyond Poverty and Affluence, toward an economy of Care. Eerdmans Grand Rapids/ WCC Geneva, ISBN 0-8028-0827-1.

Goudzwaard B. (2001) 'Economic growth: is more always better'. pp.153-166 in Donald Hay and Alan Kreider (eds.) Christianity and the culture of economics. University of Wales Press, Cardiff, UK. ISBN 07-7083-1704-9.

Goudzwaard B, de Santa Ana, Julio (2002) 'Globalisation and Modernity' p.1-33 in Koshi, N (ed.) Globalization, the imperial thrust of modernity, Mumbai, India: Vikas Adhyayan Kendra.

This is part of The Dooyeweerd Pages, which explain, explore and discuss Dooyeweerd's interesting philosophy. Questions or comments would be welcome.

Copyright (c) 2004 Andrew Basden. But you may use this material subject to conditions.

Written on the Amiga with Protext.

Created: by 19 March 1997. Last updated: 30 August 1998 rearranged and tidied. 21 February 1999 slight change to a link. 7 February 2001 copyright, email. 21 January 2002 non-abs added. 14 March 2002 better kernel. 1 April 2002 occam's rzr. 8 June 2002 Coase. 11 September 2002 constraints as echoing juridical. 14 September 2002 Note after themes about being post-social. 20 December 2002 added about the shalom of the economic aspect i.t.of protection from extinction. 7 November 2003 Stravinsky quote. 12 March 2004 competition as a harm. 24 August 2005 .nav,.end. 4 September 2007 externalising costs anti-ethical. 5 January 2008 poverty. 23 June 2010 eg of masp in bz. 22 September 2010 Dooyeweerd's and Basden's kernel. 8 December 2010 added .html. 4 February 2011 ref, De la Sienra.

18 May 2013 Complete Revamp. Added introduction, contents. Rewrote many parts that were weak. Contributions from field now includes some main economists, and Dooyeweerdian economic theory moved after it. Brought in some text from the IJMAP aspects paper. 11 March 2015 link to using/eclipse.capitalism. 6 November 2015 link to aolr-gdz. 21 September 2016 briefly, rid counter. 18 February 2021 Gathered maximization, with label. 13 May 2022 brought frugality to first para, added objects as resources. 10 May 2023 critique section, and Robbins.