Harmonious Economics or The New World Order. 2nd edition by supplemented

1.2.1. What is economics?

…the reason for some gods to be overthrown, and for others

– worshipped, has always been and still is not religion, but politics…

    V. I. Sergeev

Let us consider this phenomenon in greater detail. The term “economics’ is derived from the Greek word oikonomike which means “the art of managing a household’. For the first time it was mentioned in the fifth century by Xenophon, who put it as a title for his work. In it he considered the rational rules for household and agricultural management with the view of increasing profitability. Later the scope of economy as a science was expanded to encompass the entire range of economic activities. It was also then when first discrepancies in interpretation emerged.

Plato, for instance, believed that the purpose of an ideal state was to “banish meanness and covetousness from the souls of men’ 

[36 - [Translator’s note: Cit. ex Plato, Laws. Translated by Benjamin Jowett (Cosimo Classics, New York, 2008). In the original, this quotation is attributed to Plato’s The Republic, wrongly.]]. Aristotle distinguished between the true economic activities aimed at producing goods for home and for the state, and other activities seeking to make profit (this second type was known as chrematistics) 

. In fact, he considered the latter type of economic activities perverted. In particular, the philosopher was indignant at the interest that let the usurer make profit without participating in the production of useful goods, but just by transforming money into a source of new money. This, according to Aristotle, distorted its nature, for money is meant for exchange, and not for making non-productive profit.

One of the first economists, Jean-Baptiste Say claimed in 1803 that economics “…teaches about the constitution, the distribution and the consumption of wealth’. Some modern scientists believe that “economics is a discipline that studies the way a society with limited, scarce resources decides upon what should be produced, how and for whom’ (S. Fisher, R. Dornbush, R. Shmlenzi). But there exist other definitions: “There are four main ways to acquire wealth: violence, lawful transfer, gift and exchange. Among the four, only the last one is related to economics’ (Jacques Leon Rueff). The problem is that people try to use economics in all of the cited cases.

The most complete definition of economics seems to be given by A. Marshall who considers that “Economics is a science about the regular human vital activity’. Nevertheless, this definition does not specify what “regular human vital activity’ is and how it can be achieved. So, let us try to elaborate on this idea.

Political economy as a science was thoroughly studied by Gottfried Wilhelm Leibniz (1672—1716). His theory was based on the vision of the world as a system of energy and material flows. That is why Leibniz’s understanding of economics was modelled on the principles realized in heat engines, as well as some other technological advances of the time. Thus, Leibniz believed that the level of efficiency of an economic process is determined by the amount of total human effort saved. Consequently, he introduced the idea of the “market basket’: while its contents remain unchanged, less effort is required of the society to produce it.

On this assumption, Leibniz formulated the main purpose of economics: increase the productive capacities of human labour through technical and organisational measures. The result of this approach was the theory of “natural law’ elaborated by Leibniz; it later served for justification of universal moral. According to this theory, an individual person is responsible not only for himself but for the entire humanity – both his rights and obligations to the society were thus detailed. Besides, Leibniz studies the basics of harmonious and self-consistent economic organisation of human beings, as well as many other questions 

.

Leibniz had his disciples. One of them, Jean Charles Léonard de Sismondi viewed political economy not as a study of wealth and the ways to increase it, but as a science of the social mechanism improvement for the benefit of the human beings. He considered economics a moral science dealing with human nature, not only with economic relations. Similarly, David Ricardo explored economics as a complex system with its objective economic laws whose functioning is supported by specific mechanisms related to the prevailing trends 

. One of the first Russian economists, I. T. Pososhkov (1652—1729) adopted a similar approach and studied the issues related to national economic development, instead of looking for ways to assure active trade balance. He saw labour as the source of prosperity and condemned wealth as a symbol of self-interest that contradicted the moral principles of the society 

.

Later, the works of Sadi Carnot, S. A. Podolinky, Lyndon LaRouche, P. G. Kuznetsov and other eminent scientists elaborated the idea of economy aimed at common benefit and not at profit. However, at present this economic approach has been abandoned.

The economic theory presented in the monograph continues the traditions of the said economic school. It views economy as an integral and self-consistent system, as a structure built in accordance with harmonious principles that do not contradict the laws of the Universe, but are bound together by a strict and consistent logic. The purpose of such economy is attainment of material and spiritual well-being both of individual people and of the society in general.

The theory of G. Leibniz was contradicted by the human society model proposed by J. Locke (1632—1704) 

. According to the latter, the state should be built upon the principle of personal freedom. “No man is entitled to limit the other man’s life, health, freedom or property’[37 - [Translator’s note: Translated by me.]], established this theory. Locke presented property as an integral part of any economic process. Moreover, he believed that the human soul is a “tabula rasa’ later imprinted with experience, and that the behaviour of every person is conditioned by their personal benefit. According to Locke, social instincts were underdeveloped in humans, and moral was not employed in economic activities. Thus, John Locke can be considered the founder of ideology of classical liberalism.

The essence of the theoretical foundations of this doctrine is the following: the liberals admit and even insist on the relations between personal freedom, private property, and the society’s economic prosperity. Besides, the individualism of this approach, which became one of the founding principles of the European civilisation, was not considered egotism and narcissism of people, but respect for the individual, and an absolute priority of every person’s right for self-realisation in this world.

The implementation of liberal ideas in everyday economic processes is due to Adam Smith (1723—1790). In his work 

 Smith presented the concept of economic person driven by egotism and thirst for wealth. The author claimed that when a person acts solely in accordance with their own selfish interests, they do not only increase their capital, but also multiply their wealth. Based on this assumption, Adam Smith introduced the famous idea of the “invisible hand of the market’ that manages on its own all economic processes. He considered money as a source of wealth and as a technical tool that simplifies exchange of commodities.

At the same time, none of the above-mentioned scientists have defined the limits of liberal doctrine application, that is why economics did not prevent the liberation of ones through restricting the freedom of others. On the contrary, it enabled certain individuals to make profit without bearing any responsibility. It did not oppose to living at the expense of others, whatever harm this way of life inflicted upon Nature and the society. Moreover, this doctrine infused western mentality economic system with the Darwinian struggle for existence, which justified any methods that assure personal success. Thus, the economic functions of production and distribution were separated from one another. As the result, the ideological basis of capitalism emerged.

It is this vision that is still applied today to the entire global capitalist system. It is part of the foundation of all present-day economic theories. What is more, this particular vision is studied and implemented by the modern economic science and economy, it is thoroughly supported by the legal framework and legislation, as well as justified through the history of human development. As the result, liberal economy gets a moral excuse not to serve the society in general but to satisfy the interests of specific individuals. The economists have been led to believe that this type of organisation is the only one possible and they fight against the multiple drawbacks of liberal economy by liberal methods: they are enslaved by the rudimentary profit-generating economy just because they are unfamiliar with other possibilities.

The logical consequence of this situation has been the desire to govern this amorphous human mass with the help of such universal tool as money. For this reason, all the current and previous reputed economic theories have to a certain extent been focused on financial instruments and the methods of making various types of profit. This is why “economics is mostly interested in the study of methods of setting monetary price for commodities and services sold at the market’[38 - [Translator’s note: Translated by me.]] (Ludwig von Mises

). As the result, economics has moved to serve business rather than the society in general, to care for income and profits, rather than general well-being. Furthermore, little attention is given to developing efficient labour factors.

This narrow-mindedness of economics has made this science groundless and largely remote from the reality. The objectives of various social strata have drifted apart, which in itself is a sign of regression. For instance, the acquisition of foreign goods often produces additional income, however, it leads to repression of local manufacturers. Moreover, the very citizens of a country become out of demand within such economy. Hence additional profit is made by certain individuals at the expense of others. This is an objective controversy that needs to be resolved.

Such economy actively employs the principle of differentiation of labour, and rarely – its cooperation. Competition has become dominant, and initiatives that unite people fail to be integrated in this system. Social responsibility of all enterprises has been forgotten. But on the other hand, all profit-generating activities, including criminal ones, have been justified. This is the main reason of the soaring crime rate, devouring corruption and ruinous permissiveness that all modern states are living through.

Such situation can be easily explained. Indeed, the focus of any economy can lie either with its productive functions, that is, with human labour, or with the distributive functions, represented by money. It is evident that where efficient labour is encouraged, the well-being and the quality of life of the population grows. On the contrary, if the income of money owners is stimulated, if rent and profit are to increase, then the number of wealthy people grows, while the rest of the population goes poor and dies out.

For a country to be successful, it should support production instead of consumption; it should create suitable conditions for those who generate real values instead of virtual ones. Economics should encourage fair work and condemn harmful activities as counterproductive. Then the moral and ethical environment will change dramatically, and order and benefit will replace chaos and evil at the rudder of the society. Economics should teach people to improve the productive and moral mechanisms that exist in a society; it should not act as a bad doctor who makes the best of his patients’ conditions. Economic science should make dishonest people fair, and not vice versa. “Among the ancients, we never come across an investigation into which form of landed property, etc., is the most productive, creates the greatest wealth… The enquiry is always about which form of property creates the best citizens’ (K. Marx)[39 - Cit. ex K. Marx, Marx 1857—61. Marx and Engels: Collected works, Vol. 28. Translated by Ernst Wangermann (Lawrence & Wishart, Electric Book, 2010).].

In the light of the foregoing, the capitalist model of economy only pushes the humanity further towards a dead end. It is suited for energetic, selfish and cruel people. Therefore, it primarily creates appropriate conditions for such individuals, while the rest of the society is seen as a nutrient medium for them.

At the same time, if nature created humans different it was not for some of them parasitizing the others. In reality, different human qualities are required to reinforce the general human ability to survive, to adapt to any developmental scenario and to explore the world compared with the same abilities of a separate individual. For this reason, an economy focused on one type of people only is inevitably weaker, less vigorous and more defective.

Karl Marx described economics as a science that studies “historically determined forms of production and exchange, as well as corresponding social relations’. Therefore, the USSR, where this understanding of economics was put into practice, defined this science as a branch of knowledge related to the study of the objective social development laws and to the formulation of practical recommendations in the area of production and distribution of material goods. Such economics served the society more than specific individuals. It put more emphasis on the peculiarities of class war rather than class cooperation, and encouraged collaboration over competition.

The governance within such system turned out to be overcentralized, as the result, the ruling elites acquired all-embracing power. The worker became just a cog in the production machine, well cared for (the Soviet social security system is still unrivalled), but deprived of all rights. And this lack of harmony eventually conditioned the collapse of the socialist system.

Resuming what has been said above, it is possible to conclude that neither the capitalist, nor the socialist economic models is perfect. Neither of the two has reconciled labour differentiation and cooperation, the private and the common, the functioning of the active and the passive social forces. Therefore, the economic success of both capitalist and socialist countries was less impressive than it could have been provided the current scientific, technological and human intellectual development.

In order to elaborate the harmonious approach to this phenomenon, we shall consider that economics is a science that studies the mechanisms of increasing human labour productivity and assuring better life quality for the population. Importantly, the life quality of the current generation, as well as of all the subsequent generations. Economics should encourage human integration in the Natural ecosystem; it should abide by the laws of this ecosystem and increase the moral and cultural level of the human society. This science is supposed to reinforce the moral principles of society, instead of annihilating them. It should stimulate a coordinated evolvement of the entire human society and consider a human being as part of the Universe executing its specific functions, and not as an ordinary consumer, who pursues his selfish goal or become a victim of the desire of others.

This monograph is dedicated to the description of the main rules and forms of such organisation.

Without any doubt, this will be a completely different economics. Therefore, neither the capitalist, nor the socialist theories is fully suitable for it. The main objective here is not prioritizing the interest of any of the parties, as we can witness in the current economic relations, but enlarging the scope of economic activities so that everybody could have their fair share.

The harmonisation of economic relations will render the society more human, it will become stronger, kinder, and more spiritually developed. Besides, an enormous amount of human energy will be liberated and directed towards production rather than struggle for existence. The ultimate goal will be prosperity for all instead of well-being of the privileged few; normal life instead of bare survival. That is why the economic model corresponding to these principles will be called harmonious economics. This means self-consistent, orderly, where parts will be coordinated with the whole to make one organism that will oppose the chaos.

Harmonious economics will resort to both differentiation and cooperation of labour, and complete both individual and social functions of production to integrate both the strong and the weak into society. Money will become obedient servant of humans, instead of capricious master that it is now. Taxes will no more function as a mechanism for income alienation, but as a tool for income increase.

Such economics will benefit entrepreneurs as much as wage workers. The rules of conduct will encourage the exchange of labour products, as well as fairness and harmony of human relationships, and will not destroy them any more. All types of property will exist and prove useful through fair competition. This means that none of the useful factors will be abandoned but all of them will be combined harmoniously. Such organisation will be very natural, as in Nature all things rationally coexist.

If the purpose of economics is well-being of the few at any expense, then capitalism is the best model to apply. If it is needed to reinforce the state at any expense, then the socialist model is the best choice. But if the country seeks prosperity of the entire nation and of every single individual in it, then neither of the model is sufficient. Such a purpose requires a fundamentally different type of economic ideology. And it is obvious that different economic doctrine cannot be created following the same standards or share common rules or ideology.

1.2.2. Fundamental purpose of harmonious economics

From now on we shall hold that the mission of economics is encouraging harmonious integration of humans in the Natural ecosystem, abiding by its laws, increasing the productivity of human labour and assuring smooth development of society. In this event, the model to emulate is not the economic organisation of the US, of Japan or any other state, as we have been trying to do, but the natural order of things. Obviously, none of the countries mentioned is ideal. It is better to use nature as the perfect standard rather than resort to any surrogate models. This does not mean that the experience of others should not be taken into account; however, it should be applied selectively, as part of the coordinated system of natural patterns.

How can the purpose of economics be formulated so as to reflect this principle?

When studying the harmonious laws of economic organisation, we shall from now on consider that the purpose of economy as any other productive activity is satisfying the needs of individuals and of the entire human community. Indeed, “Consumption is the sole end and purpose of all production…” (Adam Smith 

). John Keynes echoes this idea: “Consumption – to repeat the obvious – is the sole end and object of all economic activity’ 

.

So, it is not the generation of profit, income or money at any expense, as it might be concluded from the present-day economic theories, but working out the ways to assure best life of the individuals. Without any doubt, this assumption does not exclude the existence of income, however, it is not dominant, and is not achieved at the cost of others. The source of income is in increasing the productivity of common labour, not in the redistribution of its results.