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:
We experience the economic aspect intuitively as value, and as managing limited resources frugally. 'Eco' means 'household' (Greek), implying sustainable viability within limits. Resources can be of any type (here, words) and may be understood as an object that is treated as having value. Outwith the household, value is usually symbolised quantitatively by currency.
Also meaningful within the economic aspect are concepts and ideas like: 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.
The good possibility the economic aspect introduces to temporal reality is sustainable viability. 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.
rather than:
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.
That is not sufficient, because (a) he merely asked the question "What do we mean by being economic?" and did not ask what unique Good possibility the aspect introduces to Reality. (b) His view of economics is limited to that of Lionel Robbins, and, while it contains useful insight, there is more to economics than that (as Adam Smith, John Maynard Keynes, Alfred Marshall and Paul Samuelson and others argue). So, while frugality might indeed be its core norm, its core meaningfulness - that which is not afforded by earlier aspects - is around several things (that make frugality an appropriate core norm):
(Remember that the meaning-kernel of an aspect can never be fully defined, but only grapsed with intuition, so we must rely on triangulation from several concepts like those.)
Why those? In all aspects there is the possibility of a subject-object relationship, in which the object is 'used' as part of the subject's functioning in the aspect. The economic aspect is the first to introduce an explicit idea of value. In all earlier aspects, the object is merely an object, something that enables the subject to function well in that aspect. In biotic functioning, the subject treats the object as potential food, in psychical, as an affordance (e.g. a rock affords an animal a vantage point), in analytical, as a concept, in formative, as a tool or component, in lingual, as a piece of meaningfulness to express, in social, as a colleague or companion. In none does the subject treat the object explicitly as something with value (though in each there is implicit value in enabling or supporting the subject's functioning in that aspect).
To accord value to an object gives it respect as an object. It recognises that the object should not be squandered or wasted (the norm of frugality). The economic aspect is thus future-oriented, towards sustainability of the function in which the object may have value in the future.
'Eco', meaning 'household' (Greek), implying sustainable viability within limits. Resources can be of any type (here, words). Limits increase value. But the economic aspect extends beyond the Greek word, and so there is value even if resource does not seem limited. Outwith the household, value is usually symbolised quantitatively by currency.
For fuller discussion of this, see On the Kernel of the Economic Aspect.
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.
See collection of articles written from a Dooyeweerdian point of view by Bob Goudzwaard, Emeritus Professor of Economics, VU.
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:
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).
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.
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.
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.
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:
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.
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. 21 November 2024 value, and list from r4-mmm to rw Aspect Itself and Intro; canonical.