Why Modern Economics Falls Short in Serving Our True Goals
Modern economics often falls short in addressing the fundamental issues of value, purpose, efficiency, and sustainability. As Richard Wolff’s videos illustrate, the disparities between the rich and the poor continue to grow, indicating a profound failing in the economic models we use today.
1. Wrong Value View: Value Misunderstood
At its core, economics deals with value and its movement. However, modern economics has a flawed understanding of what constitutes real value and the relationships between different values. It commonly mistakes market worth or utility for value, missing the deeper intrinsic worth.
2. Wrong Purpose of Living and Economy: Perpetual Existence Over Material Satisfaction
The ultimate goal of human existence should be perpetual existence, not just fulfilling temporary material desires. The purpose of economy should serve this broader goal, rather than merely satisfying the ever-growing needs of human material consumption. This misalignment leads to the inefficient and shortsighted use of resources.
3. Wrong Efficiency: Optimization of Real Value
The sole correct form of efficiency is the fundamental and universal efficiency: using the minimal real value to produce the maximum effective information. Real value includes direct inputs such as materials and indirect inputs such as human labor. Both must be minimized to optimize efficiency. The ultimate output should be the maximization of effective information that supports continual existence and progress.
4. Wrong Process and System: Unsustainable Economic Cycles
The current economic process, a closed cycle from material resources to final products and services, offers no sustainable solution. It is inherently limited and destructive, leading to exhaustion of resources and environmental degradation. This process cannot extend beyond the finite limits of our natural resources.
Instead, a rational process is needed that can sustain us into the indefinite future. This involves managing Earth's ecosystem to optimize long-term conditions and maximize the effective information that ensures our interconnectedness with the future.
Current economic processes are the natural outcomes of the social systems that gave birth to them. These natural processes conflict with the manmade structures they inhabit, leading to destructive effects. Natural processes alone cannot achieve rational goals or serve rational purposes.
The natural social system, a result of natural processes, provides stability but is fundamentally incompatible with rational processes. Rational systems and processes must be directed by rational thinking and efforts. They cannot naturally emerge from a natural system, showing the necessity of deliberate and conscious direction.
Conclusion
To truly serve our goals of perpetual existence and sustainable development, we must reassess and redefine the fundamental principles of economics. By adopting a more rational approach and focusing on the efficient use of real value, we can create economic systems that promote long-term survival and prosperity for all.