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economics
The first studies of economics were the result of the
enlightenment of the 18th century and were derived from the same scientific and
political changes of the era, as well as the new democratic and political reality of
the time.
"Political economy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to supply a plentiful revenue or product for the people, or, more properly, to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign." Adam Smith 1723-1790 The most basic concept of capitalism is that greed is the "invisible hand" that moderates free markets. "It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest." Adam Smith 1776 Yet the intent of Adam Smith was not to create mathematical model of supply and demand, nor to create tools to make personal wealth. His goal was to improve moral and ethical structure through wealth and good statesmanship. Sometimes over looked is that Smith had written prior to "The Wealth of Nations" a thesis on morality, "The Theory of Moral Sentiments". It is from this line of thought that we have these first ideas of capitalism, and free markets. During the enlightenment period, freedoms and rebellions are rampant. Science has dared to defy the Church. Free thinkers are governing themselves. For the first time, it is discovered that we are governed by a brain. Prior to this discovery we generally believed that God and the Devil were responsible for our actions. We were motivated by spirits. That we were somehow connected to God. Madness was explained as demonic possession. For philosophy, it was the age of reason, questioning was in fashion. Who are we, what are we, replaced the dogma of the Church that previously enforced ignorance. If Adam Smith were able to know what we know now, he would have seen that a society can be smothered by its wealth. That self interest is not the only invisible hand or the only motivation we possess. The closer you are to starvation the more deterministic the actions of supply and demand are. As a society gains wealth and well being, it has a propensity to become better educated. With education, individual demands change and with that change a more focused economic model would be appropriate. The solution I find is micro socio/economic units that operate within free economies to focus the the economic power of a community to specific ends. A "competitive socialism", business specifically designed to enhance the the quality of life. Designer villages that operate on altruism rather than self interest or greed. The study of macro economics functions very similarly to the laws of thermodynamics... why not?... after all, we burn everything from oil to steaks a most natural economic activity. Chaos theory can be used to predict activity. The world economy is so large that its become like the weather. A small change across the world can have unpredicted effects in sectors that appear unrelated. Production and Wealth will no longer be the problems of our future. Quality will supersede quantity. The disorganized system of free markets works well in macro scales, and in micro scales when there are shortages. That said, it does not work well when there are surpluses particularly for the individuals. The fact is that individuals get lost in large scale free market economies. Gangs and cults develop to prey on ignorance. Individuals can find themselves quickly marginalized and without community or care. Self interest is not the only possible motivator to economic systems. Today and in the future we will need new systems to deal with the evolving economic and social realities.
Change and the present condition Site marginal revolution
THE NEW PARADIGM FOR FINANCIAL MARKETS
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