Understanding the
Global Economy

Comprensión de
la economía mundial

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In Capital, Volume I, Marx wrote the following passage:

    For the conversion of his money into capital, the owner of money must meet in the market with the free laborer, who is free in the double sense. As a free man he can dispose of his labor power as his commodity, and that, on the other hand, he has no other commodity for sale and, thus, is short of everything necessary for the realization of his labor power. The question why this free laborer confronts him in the market has no interest for the owner of money, who regards the labor market as a branch of the general market for commodities. For the present, it interests us just as little. In theory, we cling to the fact as he clings to it for practical reasons. One truth is certain, however, nature does not create on one-side owners of money or commodities and on the other men possessing nothing but their labor power (arbeitskraft, G: the energy force of work). This relation has no natural basis and neither is its social basis one that is common to all historical periods. It is the result of a past historical development, the product of many economic revolutions, the cause of the extinction of a whole series of older forms of social production.

    So too, the economic categories we discuss bear the stamp of history. Definite historical conditions are necessary so that a product may become a commodity. It must not be produced as the immediate means of subsistence of the producer. Had we gone further to inquire under what circumstances all or even a majority of products take the form of commodities, we should have found that this can only happen with a specific kind of production, which is capitalist production.1

Those words seem optimistic today. The implied message is that earlier periods of social evolution had other forms of social relations and different forms of property. In those times the trade of commodities and labor power either did not exist or was not dominant. Karl Marx sought to restructure the ordinary person's perception of the everyday world of common sense. He wanted us to see the budgets, bills, wages, debts, bank accounts, taxes and the many economic institutions, which we take for granted as outcomes of a process spanning thousands of years to advance Europe to its 1867 erudition. When we see the everyday world as a temporary configuration of human practices, we can then infer that social evolution is occurring too. If the institutions of the past were, overall, different than and inferior to the institutions of the present, then it follows that the institutions of the future would be different and improved.

In the 150 years since Marx wrote, however, little has changed. The owners of money in the market still confront the masses of so-called free men and women possessing nothing but their labor power. Moreover, the economic categories that Marx articulated in the intervening years have rooted more firmly outside Europe. The masses of Africa no longer live in tribal groups on land that they own, but instead live in townships and teeming cities. The masses of India and of China are now more fated by commodity production and work if they can find jobs for wages.

Since Marx, the rules that govern life in the market economies have remained the same. For a time, revolutions inspired by Marx' concepts controlled areas that were home to one third of humanity and seemed likely to conquer the areas inhabited by the remaining two thirds. Instead of expanding, they shrank until today only a few isolated governments, such as North Korea and Cuba, fly Marxist banners. The global trend today is that the owner of money meets in the market with the so-called free laborer.

Yet, the analysis by Marx, often discredited and refuted in theory and in practice, refuses to go away. Its basis is the analysis of commodity and the exchange of it (in my view the basic meaning of capital, though it is at variance with some eminent scholars). That, along with the labor theory of value as a principle for planning the efficient deployment of human energy, is central to Marx, it does not go away. In addition, Marx showed that the poverty and instability of modern society are rooted in the basic cultural forms that govern its leading institution that is the market. About this, he wrote:

    The simplest form of the circulation of commodities is C-M-C: the transformation of commodities into money and the change of money back again into commodities, which is selling in order to buy. Yet, alongside this form we find another form: M-C-M: the transformation of money into commodities and the change of commodities back again into money, which is buying in order to sell. Money that circulates in the latter manner is potential capital and, thus, becomes capital.2

Marx' work does remain with us, not because he solved the problem—in some ways he was mistaken—but, instead because he identified the problem. He exposed the deep source of the structural constraints known, in Marxist terminology, as the contradictions, which are rooted in the cultural forms defining both everyday life and the global economy. They frustrate even the most well-intentioned efforts to make the world work for every human without ecological injury.

Not by accident, capitalism is still unstable at its basis, which is the exchange process compelled to pursue its fatal addiction to so-called growth in its desperate effort to stabilize. A root of the problem is that most people remain short of everything necessary for the realization of their labor power. They still face capital in the labor market with no commodity to sell other than their vital energy. Until the achievement of a sustainable steady state economy happens, Marx' analysis of the inherent tendency toward infinite expansion of the exchange process will not go away. Marx wrote in quoting Aristotle that:

    The circulation of money to produce more money is unnatural because money is in principle infinite and unlimited. There are no bounds to its aims, these aims being absolute wealth.3

I have suggested throughout my review of scientific theories that purport to explain the global economy accurately that the problems of the world economy cannot resolve when they are defined as economic problems. As Fritjof Capra put it: —Poverty is not solvable in the economic terms.4 Marx helps me to make my point, too, as he wrote:

    Poverty is inherent within a global economy where the owner of money meets in the market with the free laborer, free in the double sense that as a free man he can dispose of his labor power as his commodity. On the other hand, he has no other commodity for sale and, thus is short of the realization of his labor power.

Poverty is therefore inherent whenever the economic categories are those characteristic of historical conditions such that all, or a majority of, products take the form of commodities. It follows that poverty is not a problem economics can solve because the data of economics is prices, sales, investments, loans, rates of interest, wages, etc. That is to say, the facts with which the study of economics makes records to frame explanatory hypotheses presupposes that: 1) economic categories of commodity production exist 2) the capitalist as Homo economicus going to the market to buy labor power and 3) the worker as Homo economicus going to the market to sell labor power. These basic categories are the ones that Marx showed as having the germs of contradictions, which will not go away until the basic categories themselves become restructured. Using economic thinking to frame a solution to the problems of the global economy is like trying to lift yourself by pulling your shoes upward.

The diversity within economics includes thousands of economists I have never met or read. I will, thus, limit the assertion that economics cannot solve the problem of poverty—because it assumes the use of concepts with a scope in which poverty is inevitable—to those economists who do assume the use of those concepts. Then again, perhaps it would be better to identify the mavericks, radicals, and alternative thinkers as other than economists. In any case, I think that both the socialist planners and capitalist economists have advanced theories that, in principle, cannot solve the problem.

The inverse of that conclusion argues that a capitalist economy is the only viable economy. We know that the worldwide expansion of capitalism is the context in which economics as a science arose and from which it derives its data and its concepts. If we then postulate that economics is in general a valid science, it follows that a capitalist market economy is the only feasible economy. That is the sort of argument Ludwig von Mises and Eugen von Bohm-Bawerk made after the 1917 Russian Revolution: the socialist planning could not be done. As they conceived the matter, economics requires that goods have prices derived from values. The market sets values, they thought, by observing the revealed preferences of consumers. Therefore it follows that if there is no market, then there are no values, no prices and thus no economy.5

In reply to von Mises and in an effort to show that socialist planning was doable, the Polish economist, Oskar Lange used the concept of opportunity cost.Therefore, it was not necessary to have private property in the means of production to set prices for goods. The central planning board could construct a functional equivalent for a capitalist market mechanism by

  • setting an initial price
  • ordering managers of state-owned enterprises to produce at quantities based on the assumption that they would sell the product at the initial price, while minimizing the costs of production and
  • letting consumers spend their incomes as they see fit. When a shortage occurs, the planners increase the price. When a surplus occurs, the planners lower the price. Production costs, which the managers are supposed to minimize, could be set in quantitative terms that planners could use by counting as the cost of an input, which is a number measuring what had to be sacrificed: the alternatives and opportunities as the opportunity cost.

Therefore, planning a socialist economy is doable,6 however, here Lange might seem to refute, along with Mises and Bohm-Bawerk, my claim that the categories of economics preclude overcoming the contradictions that Marx analyzed.

Piero Sraffa went even further in his book, The Production of Commodities by Means of Commodities. He generalized Ricardo's corn model in a way that shows that an economy could, in principle, function without people. The idea is that an economy based on a mono-product of production and consumption needs only a certain quantity of, in this case, corn for seed and energy to do the work of growing corn. Therefore, corn could reproduce corn and use corn to produce corn. Sraffa showed that in an economy with any number of commodities, the necessary inputs could be calculated to produce the necessary outputs, which would in turn be the inputs of the next cycle of production. The quantity of an input needed for a given output is a technical coefficient that an engineer or agronomist can provide. Neither factor—consumers maximizing preferences nor investors maximizing profits—send the signals that tell the economy what and when to produce.7

Before and after Sraffa, a number of economists have created computer generated input-output models of the world and national economies. The outputs of some processes are inputs for other processes, which in turn produce more outputs, which become new inputs. If observed ratios continue to hold in the future, models using input-output principles can predict the operation of the present world economy. To assume that past and present ratios and relationships will continue to hold, often amounts to assuming the positive feedback loops of a trend as stronger in the future, like compound interest. The almost uniform result of such future modeling is that the projecting of present trends forward shows that the future of the world economy is one of system collapse, as pollution, resource depletion and population growth combine to impose disasters. Projections show sustainable scenarios to be feasible only if radical social and environmental changes happen soon.8

Lange and Sraffa have shown that a sustainable economics without capitalism is doable. Lange, Sraffa and others invented ways to build a non-capitalist economic system by organizing production according to principles that depend less on the free consent of the owners of factors of production. Thus, they made great progress in the physical planning of socialism, though not in the human planning of socialism. They showed how to dispense in part with Homo economicus, while relying in part on consumer choices and monetary incentives, which presuppose the same Homo economicus, as did capitalism. They do not, however, show how to transform Homo economicus.9

Marx, if he were alive today, would likely join those who argue, based on the many horror stories drawn from history, that opportunity cost and the input-output planning lend themselves to a net regress, which is from misery under capitalism toward misery under slavery. The transformation of basic cultural structures comes from Marx. He revealed the intractable problems built into the formal structure of the social relations that provide both the framework of every day life and the global economy, which include the free laborer, the market, the commodities bought and sold. Marx recognized that 1) the exchange of commodities was the substance of everyday life throughout the capitalist world 2) world economy was a single system and 3) governments of nation states were its local administrators, not its lords and masters. Public opinion has vindicated Marx, in recent years, due to the decline of the nation state power in the wake of the globalization of production.

The flourishing of Western European social democracies encouraged many people after WW II who underestimated the significance of the temporary features of that historical period and of the privileged role that Western Europe had in the international division of labor. Thus, they perceived Sweden, Denmark and or The Netherlands to be the image of the ideal future of human society, give or take a glitch or two. If Sweden could have full employment, high wages and universal health care then, as erred, all other nations could do the same. What is possible for one nation of the world economic system must be possible, as supposed, for all.

The ideas of Marx, who was considered a pessimist, seem to have failed due to the ability of capitalist nation states to redistribute income through elected labor governments and strong labor unions. I do think that Marx was too pessimistic in underestimating the possibilities of using political power to shape a national economy. In addition, Anthony Giddens' A Contemporary Critique of Historical Materialism gives good reasons for judging Marx' vision wrong in this respect.10 Overall though, Marx was right as was brought home by the present crumbling of Western European welfare states under the relentless pressure of global economic competition. This point is further brought home by the fading dream that some day the poor of Guyana, Botswana and the USA will achieve the level of security enjoyed by the poor of The Netherlands. I will not repeat here the arguments of Part II, but will note that the quasi-mechanism identified in Part II is the basic cultural structure that is the basis of Marx' analysis, which is the explanation of the success of global capitalism's end run around labor governments and labor unions.

Politics is important because it matters who is elected and what programs and policies governments implement. In general however, governments do not rule humanity. A modern government, like any modern institution and much like an individual, has bank accounts, an income, expenses, a budget and the struggle to pay its bills and interest on its debts. A government cannot simply rewrite the rules of the system on which its existence hinges. Moreover, humanity's existing economic institutions are not the mere creations of a privileged class of powerful people who made them up and who could make up different ones whenever they might choose, or might find it in their interest to do this. Therefore, what we need is not so much insight into who and what does not rule the world, as insight into who and what does rule the world. One would hope that it is possible to

  • gain a better understanding of who and what rules the global economy and
  • learn how to contribute more effectively toward solving humanity's and, thus, the Earth's problems, if we had a better theory. Thus, I propose that
    • one of the fatal flaws in most of the economic theories is their metaphysical alliance with the natural sciences, borrowing most of its metaphors and mathematical tools from mechanics and
    • we will do better by treating economics, which is planning, as a human science and as a social science, which would be closer to
      • linguistics
      • philosophy
      • cultural anthropology and
      • sociology.

If cultural forms are, as Marx and others have shown, the root causes of the phenomena to be explained, it would be logical to seek a methodology for explaining them in those sciences devoted to the study of cultural forms.In the next section, we develop the concept of a market as a language (posed in the introduction to Part I). I will expand the theory that the scientific explanation of international trade and other advances in economic phenomena by approaching markets as systems of meanings.

II

The two ideas that linguists of the 20th century have found most helpful toward understanding language are 1) the distinction between the diachronic study of language and the synchronic study of language and 2) the distinction between the signifier and the signified.

I propose that these same ideas are useful both for scholars seeking to understand the global economy and for activists seeking to change it. I will do this without exaggerating the similarities between economics and linguistics and without pretending that scholars have reached consensus concerning the nature of linguistics.

In his Course in General Linguistics, Ferdinand de Saussure used the analogies of markets and prices to introduce and demonstrate his ideas of diachronysynchronysignifier • signified. Thus, a procedure now exists to show the bearing of his key linguistic ideas vis-a-vis economic institutions. It consists of comments made about Saussure's text, inverting the direction of the analogies, using linguistics to shed light on economics, whereas Saussure used economics to shed light on linguistics. Saussure introduced the distinction between the diachronic and synchronic linguistics in this passage:

    Few linguists doubt that the intervention of the time factor creates special difficulties for linguistics and that it places their science before two routes that are divergent. Most sciences know nothing of such a radical duality. Time does not produce any special effects. Astronomy has established that the stars undergo notable changes, but she has not been obliged for that reason to split itself into two disciplines. Geology reasons almost constantly about successive states. However, when it comes to focus upon the fixed states of the Earth, it does not make of them the object of a contrasting study. There is a descriptive science of law and a history of law. Nobody opposes one to the other. The political history of states moves in time. Yet, if a historian describes an epoch, one does not have the impression of making an exit from history. In contrast, the science of political institutions is descriptive, though on occasion, it can deal well with historical questions without disturbing its unity.
    On the contrary, the duality of which we speak imposes an authority upon the economic sciences. Here, contrary to what happens in the preceding cases, political economy and economic history constitute two disciplines separated in the heart of the same science. The recent books in print on these subjects accentuate that distinction. Proceeding in this way, one obeys, without an awareness of the fact, an interior necessity. It is a similar necessity that obliges us to separate linguistics into two parts, each having its own principle. It is the case that there, as in political economy, one confronts the notion of value. In the two sciences, it is a matter of a system of equivalence between two things of different orders, in one: work and salary, in the other: the signified and the signifier.

    To better mark that opposition and crossing between two orders of phenomena relative to the same object, we prefer to speak of synchronic linguistics and diachronic linguistics. Synchronic includes everything that refers to the static aspect of our science. Diachronic refers to everything that acts within evolutions. In the same way, synchrony designates a state of language and diachrony names a phase of evolution.11

Saussure therefore finds that linguistics and economics are unusual among sciences because part of their subject matter, the diachronic exists in the flow of time, while another part, the synchronic exists outside of time. The part of linguistics that is synchronic includes what the non-linguist calls grammar and word usage. A lexicon of linguistics would display how the meanings as values of all the words in a language are defined in relation to each other without any reference to the temporal and non-temporal processes that caused the meanings to be what they are. Economics would have a list (lexicon) of the prices as the values of all the goods for sale in a market. Therefore, economics would give the ratios at the right monetary exchange as a report about a given moment of time, without regard to the passage of time.12

Perhaps Saussure overestimated what he called the—inner necessity to separate diachronic and synchronic studies as opposites in linguistics and in economics. Perhaps he underestimated the extent to which a similar distinction might apply to other sciences. More important, however, than the accuracy of Saussure's premise is that we see what makes human life give his view plausibility. This is what led him to say that values are outside the flow of time, while system change is immersed in the flow of time. Before we look closer at the synchronic/diachronic distinction, let us observe the other key distinction Saussure uses in the passage quoted: the signifier from the signified.

The common sense model of language regards a language as mainly a set of words that represent things, such as table, a word representing the thing called a table. Similarly, all or most words represent the things that they name. This model, nevertheless, soon proves inadequate for the scientific study of even one language, not to mention the study of many languages. Linguists have replaced the distinction of the word-to-thing with more accurate technical distinctions, which includes the well known signifier to signified.

When Saussure introduces the idea of signifier he identifies it with the acoustic image in which the signifier is the pattern of sounds that the speaker speaks and the listener hears. Thus, the signifier has its identity both as a spoken word and as an identity with other entities that play a similar role. The suffix `ier (`iant in French) indicates that the signifier is what is active because it acts. It corresponds to the verb: the active part of the sentence and to the will: the active part of the human soul. The spoken word can signify, though something else could signify too, e.g., a footprint, a drumbeat, a kiss, a tassel on a hat, then it would be a signifier.

The active, controlling and responsible side of the notion of the signifier enabled Jacques Lacan, a psychiatrist charged with treating insane prisoners referred by the French justice system, to diagnose paranoid psychosis as a disorder of the signifier. His diagnosis is apt as well because of its link to the imaginary voices that some who suffer psychosis hear.

Another, related, way to think about signifiers is to answer the question: What is a signifier?" with "A signifier is not anything." Therefore, to say that something is — is to say that it is identical with itself. Performing its function, however, constitutes a signifier. Its function is to direct the hearer beyond itself to something else. Pointing outward might, so to speak, exhaust the being of the signifier. Once the pointing occurs there is nothing left or, what is equivalent, whatever is left is not a signifier. A corollary of thinking about signifiers in this second way and then thinking of language as a system of signifiers is anti-essentialism. With such a view, the signifiers do not vanish, they remain as free-floating signifiers relating to each other and become what language is all about. What vanishes is the strong sense of the word is, which implies that we live in a world of stable essences identical with themselves.

According to Saussure, the signifier points to something that is the signified (Fr. signifie). He at first identifies the signified as the concept. In other words, what the signifier points to is an idea, a meaning, or, in Saussure's terms, a value.13 The spoken word that is tree, functioning as a signifier, does not directly signify a particular solid, real-live tree with some pine needles some fresh and others dusty, roots that curl deep in the ground around pieces of rock and gum oozing from joints in its trunk.

Saussure maintains that the signifying process is about social values and not directly about brute facts of nature. This not an arbitrary principle that he dreamed up without reason. It is a principle imposed upon linguists, although they do not all use Saussure's terminology in the subject matter of their science. It leads to an important philosophical point: Homo sapiens is not a species in direct contact with reality. As a social and language-using species, we operate in terms of curtains of meaning interposed between reality and us.

To return now to the text quoted above, Saussure draws an extended analogy, which is that the

  • Signified is to signifier as
  • Diachronic is to synchronic as
  • Work is to salary.

If we change our focus and recast this set of three parallel distinctions as two sets of three, then we have all of the first terms: signified • diachronic • work as having something in common. All the secondary terms: signifier • synchronic • salary, as Saussure tells us, have something in common. They are all concerned with values. They are all socially defined counters, which can enter into transactions with equivalent counters and can be exchanged for their equivalents. A salary (or a wage), according to the classical economists, thus, represents the exchange value of work.

The first three of each pair: signified • diachronic • work are, in Elizabeth Anscombe's  terminology, brute relative to the second three of each pair.14 Without boasting of any miraculous unsullied contact with nature uncontaminated by a human interpretation of it, they are closer to nature. The orderly systems found in the second three of each pair— signifier • synchronic • salary—are models of reality that are constructed by social factors.

The first three of each pair, signified • diachronic • work, are social constructs as well, though they play different types of roles in the social construction. They float free of nature to a lesser degree, they are closer to pine needles and roots, closer to history and to expenditures of energy, effort, sweat and toil.

III

Jean Baudrillard illuminates the two passages from Saussure about which I have comments:

    Saussure offered two perspectives on the exchange of language terms when he compared them to money as follows: a piece of money can be placed in relationship to all the other terms of the monetary system. It can be exchanged against a real good of some value. It was for the former dimension that Saussure increasingly reserved the term value. Therefore, 1) the relativity of all the terms among themselves, which is internal to the general system and composed of distinctive oppositions instead of the other possible definitions of value and 2) the relation of each term to what it designates, of each signifier to its signified, as each monetary unit has a corresponding object as the exchange for it.

    The first type of relationship corresponds to the structural dimension of language, the second to its functional aspect. The two dimensions are distinct, though articulated, which is to say that they work together and in coherence. It is a view that characterizes the classical configuration of the linguistic sign,which can be placed with the commodity law of value, where the function of designation always appears as the goal or finality of the structural operation of language. At this classical stage of signification, there is a complete parallel with the mechanism of value in material production as Marx described—Use value functions as the horizon and finality of the system of exchange value. Thus, as defined, use value qualifies the concrete operation of the commodity in (the act of) consumption (a moment of the process that is parallel to the sign's moment of designation) and exchange value refers to the interchangeability of all commodities under the law of equivalence (a moment parallel to the structural organization of the sign). Use value and exchange value are organized together as dialectic throughout Marx' analyses and define a rational configuration of production regulated by political economy.15

So far, so good. Use value functions as the horizon and finality of the system of exchange value. ... This is just what Adam Smith proposed in the first great work of economic science as he elaborated to write:—The whole point of economic activity is to supply the necessities and conveniences of life in ever-greater quantity and quality.

The free market is preferable to the rigid institutions of bygone times and distant places because, through an exchange among self-interested individuals, powerful motives achieve the common good. Smith noted, with pride, that the high degree of market-driven capital investment applied to improvement of land and stock in his 18th century Britain had produced greater wealth than had been found in the empires of yore, or among peoples that he (with ethnocentric pride) regarded as savages. The market, which is the system of exchange value, was for Smith a social quasi-mechanism that functioned to produce goods, which were, by nature, useful.

The leading progressive thinkers of the 18th century did not doubt that social institutions could reform in order to serve natural functions better. As the 21st century begins, we need to reassess and refine that premise, as well as other founding premises of modern Western civilization that we have inherited from Adam Smith and other great 18th century thinkers. We can see that in some ways the 18th century was a demented one full of violence and dressed in incoherent ideals. Nature was deemed to be at once savage and the source of so-called true norms. Freedom was viewed as, at once, liberation from the constraints of an ethics of virtue and as the source of the moral legitimacy of contracts.

As a better theory, Saussure's distinctions will help us through a difficult process of discernment, which is deciding which ideals of modern Western civilization we should value and keep. This may well show us that what is best about Western civilization is the common ground it has with Eastern civilizations. The best features of modern civilization will update, revise, and improve the achievements of ancient civilization for the improvement of the modern.—Use value functions as the horizon and finality of the system of exchange value.—Adam Smith

Further applying Saussure's terminology, we may expand this thought—the purpose of the synchronic structures of language (words, money and economic exchange [signifier, synchronic and salary triad]) is intended to make life better in the real world (pointed toward by the signified, diachronic and work triad). Looking at life in view of this thought, two corollaries about social activism follow:

1. Society cannot transform in the positive sense through violence. It affirms the idea that improving the cultural forms that guide humans urges us to work with the cultural forms, the process of negotiating social reality and the signifier, the synchronic and the salary as one of Saussure's three distinctions.

The idea that society cannot be transformed by violence is a corollary based on the idea that social life is organized by signifiers, which function in a synchronic world of social ritual and meaning. Some readers may see no logical link between the symbolic character of social reality and the necessity to use nonviolent means to transform it. What will clarify this, however, is to think it through and read Hannah Arendt's On Violence, which distinguishes the various forms of power from violence.16

2. Society cannot transform by way of superficial action. This is a way of saying that transforming cultural structures to adjust them to physical reality can only be done by working with physical reality, which lies behind the • signified • diachronic • work part of the Saussure's three distinctions. Ecology (Gk oikos: house + logic) is the key to transformation—rather than economics, which is part of the system of social values that need transformation, rather than the natural framework defining the physical context in which social transformation happens. To understand the natural framework, it is necessary to coordinate the findings of physics, chemistry, biology, geology, and astronomy. Thus, we understand the interrelated systems of the biosphere as the bio-network of ecology.

Baudrillard, however, is among those thinkers who are in principle committed to a superficial philosophy. Right after the passage from his works quoted above, he asserts that:— A 20th century revolution in thinking occurred that has eliminated production, use-value and all reference to real things. Baudrillard uses that passage only as a point of departure in order to describe the modern worldview (in the specific forms it assumed in Marx and Saussure) which postmodernism has now, in his opinion, deconstructed and destroyed.

I will not argue that anything of substance is shown to be true merely because once certain definitions are handy, then certain logical conclusions follow. However, it is worth noting that the concepts of Saussure's that I defined are not arbitrary definitions, but ones with much support because of their capacity to facilitate the scientific understanding of the phenomena of linguistics, economics and, in general, as Saussure wrote:— It is all those areas of culture concerned with values.

It follows from the logical conceptual framework, which I have developed, that the (only) solution to humanity's and, thus, the Earth's problems is the one I call nonviolent transformation. (I have explained why violence does not work.) I have two reasons for joining nonviolence with transformation. First, the word transformation means that the forms of human existence, the cultural structures must change (trans + form, derived from the Latin, means to change form) thus, no point exists in trying to change the laws of physics, chemistry, or the other natural sciences; therefore, culture must change. Second, the word transformation connotes that the changes needed are deep and profound. For example, poverty and other human problems will resolve only by restructuring the basic structures identified by Marx (among others). Similarly, more than superficial change must happen. Change must be practical and physical in relation to the Earth body and the bodies of humans.

The conclusion that nonviolent transformation is possible and desirable can be drawn from various sources. Perhaps most urgently, it is drawn from the practical experience of those who have lived it. Nevertheless, it is important to notice that it follows as a corollary from widely accepted principles of anthropology, linguistics and the human sciences. Before expanding the theory of nonviolent transformation in the next section, here is an example of the theory in action. In the same city of the IMF and World Bank headquarters is another organization, although with a philosophy worlds apart, the Church of the Savior. It meets the physical and human needs of people whom the system has abandoned. Its goals and methods are those that are often reflected in practice, almost identically. Thus, a review of the Church of the Savior applies, with slight variation, to thousands of organizations worldwide, many of which I have observed.

The Church of the Savior is a model that offers to its community:

  • bakeries in which homeless learn job search, attitudes and skills
  • a system of charitable donations
  • a network of volunteers
  • interns as volunteers
  • modest stipends
  • the recycling of donated items and
  • assets as funding from public and private agencies.
  • In terms of Saussure's analysis, The Church of the Savior has a clear grounding in the real world, the aim of which is to meet people's needs. In the social world of economic values, the Church of the Savior is eclectic, for example, it does not 1) seek to accumulate profits, 2) stop an activity, due lack of profit, before needs are met and yet 3) neither does it shrink from running a viable business. The Church of the Savior organizes whatever pattern of human action it takes to get the job done.17

    The Church of the Savior is not extraordinary and, because of this, it represents a practical approach. My theory, of which the Church of the Savior is an illustration, is not extraordinary, either. Therefore, it is more likely to be true and an extraordinary outcome may occur when humans follow the practices of the Church of the Savior. The world will have 1) freedom from poverty and ecological balance, 2) gender equality respect for diversity and 3) no war and pretext for war. In the Church of the Savior, as in the base community movement, creative alternatives and empowerment go together. Positive alternatives show the way to a positive future and build the advantage that at once influences and reshapes the system that is now in place.

    IV

    I base my confidence that the path of the Church of the Savior will solve humanity's problems upon seeing it as one illustration of a principle that works. I am not a member of that church and do not know the quarrels, quirks and foibles among the members, which make its everyday life differ from the ideal picture of it that I use for my example. I assume that despite the faults they likely have, they commit to a spirit inspired ethic of love and they dedicate their ethic to a path with heart.

    Earlier, I noted that the signifier does not refer directly to things, but instead to the signifieds, which, roughly speaking, are concepts. More broadly, the human species does not relate directly to reality. Instead, culture as words and money, images and rituals is a surrogate that removes most humans from direct continuous interaction with the Earth. Certain aspects of culture, such as the free market, property rights and the self-interested individual all sustain the global economy. Thus, global trade is in accord with:

  • comparative advantage
  • the globalization of production
  • choosing unsustainable technologies
  • accumulation
  • instability
  • the private appropriation of the social product
  • balancing the social accounts of the Keynesian struggle and
  • the signified, the synchronic and the salary of Saussure's extended analogy governs the process of value exchange. All these operations proceed according to the regular exchange of equivalent values.
  • I have assumed that the members of the Church of the Savior have bypassed the market. They have achieved a direct insight into the relatively brute nature found in the signified, in the diachronic and in the work side of Saussure's extended analogy. They have done that by observing with empathy the homeless people huddled on the streets of Washington, DC, some in the very shadows of the buildings that house the IMF and the World Bank. They observed that the homeless, cold at night and hungry in the morning, need care such as medical attention, regularity in their lives, bonding and love, shower facilities, a change of clothes and a safe, clean, warm, dry place to sleep.

    We can assume that the members of the Church of the Savior know about global warming, acid rain, holes in the ozone layer and the end of fossil fuels. Unlike Smith, who believed that the more use values were produced the better, they realize that the objective reality of our species is that it has to become a responsible family within the larger community of Earth's living systems. Economists have devised complex quantitative methods for choosing the optimum use of scarce resources. In contrast, the Church of the Savior has made simple observations that bypass economic calculations as well as the market. They observe that all the needs of some people go un-met. They have asked people to commit to the stewardship of their resources and skills. Insofar as they have called forth resources that would otherwise be idle, they have given purpose to resources that otherwise would never act. In the light of their practical demonstration of values in action, the mathematical models used at the World Bank to determine what would be the optimum way to use a scarce resource to meet an un-met need are convicted not so much of erroneous mathematics, but of an erroneous metaphysics. They resolve to operate within a worldview that assumes that the socially constructed reality of an economic metaphysics is a natural and inevitable reality. Yet, when Elizabeth O'Connor of the Church of the Savior urges that:—Servant structures must become the accepted global economic structures. It affirms the value of the opportunities deferred when a resource is put to one use instead of some other use.

    Taken on its own, the ability of a group of church members to bypass the circulation of commodities and gain direct insight into objective reality might lead to practices like those depicted in Solzhenitsyn's Gulag Archipelago. The Stalinists in Solzhenitsyn's novel say, "You must obey me because I know the objective truth." 18

    I am sure that the members of the Church of the Savior have not made that mistake. They know that a cultural and spiritual reality exists beside the physical. Only the elimination of the human species can eliminate the signifier-synchronic-salary side of Saussure's extended analogy. Therefore, no alternative to transforming it or to treating the means as ends exists. Hence, they work as Gandhi did with truth conceived as respect and faithfulness in relationships (satya: truth and openness to another's being in Sanskrit sat: being, ya: open). Through this, truth is conceived as more than a mere objective scientific fact.

    If we travel halfway around the world, from the lavish suites and the brutal streets of Washington, DC to the rural villages of Sri Lanka, we will see another movement that illustrates respect for and transformation of the meanings found in local culture. The Sarvodaya Shramadana movement works with the twelve-fold path of Buddha's enlightenment. Some of the Singhalese language examples of the path are: karuna: compassion, metta: loving-kindness, muditha: joy in the joy of others, purushodaya: awakening and artachariya: constructive activity.19

    My confidence in what the people create at the Sarvodaya as with the Church of the Savior comes from its example. I see it as an example of meeting objective needs with spiritual inspiration and appropriate culture. The Church of the Savior and Sarvodaya Shramadana are just two examples of what intelligent people of good will are doing worldwide. They do it with or without pay, drawing resources from wherever they can be found, to meet needs, to save the environment and to build peace. As the mainstream careens toward oblivion, creative minorities respond to the heartfelt problems in ways that contain the elements of a positive future. Beyond churches and grassroots movements, the creative minorities act within

    • political parties government offices
    • labor unions international agencies and
    • foundations and all professions, which even includes the management of profit driven business. Standard forms of economics are not working, therefore, people who see a need and act to meet it are inventing alternatives that do work, often by trial and error. The alternatives that work will, in practice, be alternatives that depart from and modify the metaphysics of economic society, which includes:
      • materialism
      • self-interested individuals looking out only for themselves,
      • private property and
      • goods production only if there is profit to be made.

    V

    My comments on the logical status of two statements, first — The alternatives that work depart from and modify the metaphysics of economic society. It might appear to have the logical status of an empirical generalization. Almost every word in my second statement — A spiritual and a cultural reality exists alongside the physical reality—would benefit from a clarification of its logical status. I will comment first about the word spiritual.

    The status of spiritual and cultural, as opposed to physical, is a matter of repeating the distinctions I have drawn from Saussure that the spiritual and cultural is associated with the synchronic side and, thus, with the mental. Spiritual is, however, a controversial term that lends itself to evasions and abuses and, therefore, the objection might be raised that it would have been wise policy to avoid using it, even though it has a legitimate logical status. The following three reasons may tilt the balance of policy in favor of taking the risk of speaking about spiritual realities. First, spirit-talk invites communication with the wisdom of ancient, medieval and non-Western sacred texts and practices, which modern Western secular philosophy has too often decided not to understand, Second, spirit-talk acknowledges that the transformation of the global economy must mainly be a transformation of the will. In many languages and contexts, the meaning of the words will and spirit are so alike as to be synonymous. For example, The Spiritual Exercises of St. Ignatius Loyola states that the exercises are designed to purify the will and bring the will into harmony with the divine will. The third advantage for speaking openly about spirit is an acknowledgement that dreams and myths move the world at least as much as concepts.20

    The alternatives that work depart from and modify the metaphysics of the economic society.

    Therefore, if we 1) regard this statement as having the logical status of an empirical generalization and 2) we have a social science designed a research methodology to test it, then its meaning would need an explanation in terms that could be measured. Criteria would have to be established to determine what alternatives work by departing from and modifying the metaphysics of the economic society using transformative alternatives.21 With proper studies in place, using research methods to gather information tied to appropriate criteria, studies would show that the successful policies, programs and projects are those that transform. Why am I sure of this?

    The alternatives that work are at the same time alternatives that transform by departing from the mainstream Western worldview. We can validate this through the various extant studies and research. In Dharma and Development, a Study of Sarvodaya Shramadana, Joanna Macy shows in detail how the movement that transforms is rooted in values distinct from those of the modern Western secular culture in which economic thinking has its context. In my empirical study, The Evaluation of Cultural Action, an evaluation report on the Parents and Children Program (PPH) in Chile, I dialogue with an imaginary interlocutor, "The Reasonable Social Scientist." Through it, I show that even the procedures that seem to be unbiased and scientific, nonetheless, allow the realities of a social movement with an ideology that transforms to slip through their conceptual nets.22

    In Cultural Expression and Grassroots Development, a collection of eleven case studies from Latin America, editor, Charles Kleymeyer, conceived the idea of cultural energy.23 It is the name for a power that is foreign to the explanatory categories that I have been calling economic metaphysics. Cultural energy revitalizes and empowers communities. However, in order for those seeing it work to believe what they see, it is necessary that they depart from and modify the existing economic ideology.21b Yet, it is still misleading to assign the logical status of an empirical generalization to the statement. A serious attempt to test it would then show that it is wrong to think of it as a hypothesis to be tested. After conducting the proper studies using appropriate criteria, I am certain about the truth of the statement above.

    It is a foregone conclusion that any attempt to carry out a comprehensive empirical study designed to test it, would soon become embroiled in controversies over what criteria would make the proper links between the evidence and the concepts. Some would say that the social market economy (sozialmarktwirtschaft) of post WW II West Germany, (as designed by Finance Minister Ludwig Erhard) which both encouraged business and taxed profits to finance a welfare state, was an example of remaining within the framework of the worldview of economic society with success.

    In contrast, the genocide by Pol Pot in Cambodia was an example of departing from the concepts of universal human rights, which are essential to the metaphysics of an economic society. Pol Pot departed from modern Western ideals, albeit on the path of negative transformation, not the positive path that transforms. Quite the opposite are people, such as Ludwig Erhard, a Christian Democrat 24 and his British counterpart Sir Stafford Cripps of the Labor Party, 25 who worked for an economics guided by social conscience. Due to this, the Western European welfare states that flourished under their stewardship were, with due regard to their limitations, positive steps toward transforming human beings into humane beings.

    The leading philosopher of Christian democracy was Jacques Maritain. The author identified having the most influence upon the thinking of freshman Labor MPs at the close of WW II was John Ruskin. Both writers shared, as the raison d’être of their lives and works, an earnest dissension from the metaphysics of economic society.26

    At some point, some of the members of the panel would begin to suspect (rightly) that the reason I was sure that a study would confirm my statement was that it was not an empirical generalization at all. They would notice that whenever they found evidence proving it false, I would cite reasons for using the same evidence to prove it true.

    All the evidence, with a built-in tendency to be true by definition, supports the statement — The alternatives that work depart from and modify the metaphysics of economic society. We see it with a Venn diagram, drawing a circle to represent alternatives that work. Another circle represents the positive departures from the metaphysics of economic society. We draw the two circles to overlap and cross out the parts outside their intersection.

    Fig. 5: Positive alternatives

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    All the alternatives are positive departures and, alternatives that work are positive. Due to the ease with which evidence that might falsify and, in concept, disqualify the statement, it would be better to regard the statement as a secondary empirical one and regard the metaphysical shift as primary. This calls us to look at known facts in a new way. We know that some people act in loving, cooperative, intelligent and enthusiastic ways as they have more interest in solving problems than in making profits or holding onto preconceived ideas. We know that they are implementing alternative solutions while the standard solutions prove unworkable.

    The logical status of the proposed new way of looking at these known facts (the status it would occupy if the new worldview it proposes were accepted) is similar to that of the central assertions of the great metaphysical systems of the past. Aristotle, Aquinas and Kant unified the categories and cosmologies of Western civilization at three different periods of its history. Studying their writings shows that once the conceptual framework the philosopher operates within is understood and accepted, the central statements of the metaphysical system become necessary truths.

    I suggested in Part II that to transform the metaphysics of the global economy we could benefit by using Wittgenstein's concept of language-games. I then endorsed Charles Taylor's proposal to make the constitutive rules fundamental to research in the social sciences. Now I will develop these ideas further to explain the logical status of

    The alternatives that work depart from and modify the metaphysics of economic society.

    The first language-game that Wittgenstein discusses in his book Philosophical Investigations is a means to criticize the simple view held by St. Augustine that the essence of language consists of names for objects. About this Wittgenstein wrote:

      Imagine a language for which the description given by Augustine is right. The language should serve to communicate between a builder A' and an assistant B'. A' builds with building-stones, blocks, pillars, slabs and beams. B' delivers the stones in the order in which A' needs them. For this purpose, they use a language consisting of the words: block, pillar, slab, beam. A' calls them out and B' brings the stone which he has learned to bring at a specific call. We conceive that as a complete primitive language.27

    Even more than Saussure's model, Wittgenstein's model of language sees words as embedded in activities, in social roles, in norms, in the interaction of humans with physical things. The idea of game presumes rules, a notion Wittgenstein examines at great length. Thinking of human action in terms of language-games presumes a idea of consciousness-raising that the way things are, is not the way things have to be. Unlike Saussure's model, Wittgenstein's model is not based on the exchange of equivalents. In some games equivalents are exchanged, in some games not. From Wittgenstein's analysis, the general pattern of humans interacting with each other and nature is to get some sort of game going. When the game works, it fulfills needs and brings joy.

    Smith's account of living by exchange, starting from what he observed as the natural tendency to use the barter system, is a more specific account of what humans do, as Newton's theory is a special case of Einstein's. Marx' general formula for capital, which is buying in order to sell, noted as C-M-C, is one among many basic kinds of language-games people can play, and happens to be the dominant one in capitalist society. What do we make of Keynes' basic observation that the sum of sales must also be the sum of purchases because what is a sale and revenue for the seller is a purchase and expense for the buyer? Is that just a way of saying x = x, a thing is identical with itself and, thus, not subject to the variation through human creativity implied by the game model? As Wittgenstein said, "A thing is identical with itself." There is no finer example of a useless proposition, albeit connected with a certain play of the imagination as if within imagination we put a thing into its own shape and see that it fits. We might as well say, "Every thing fits into itself," and "Every thing fits into its own shape."At the same time we look at a thing and imagine a blank left for it, which now is an exact fit."28

    Therefore, we play with identity too, as Keynes did when he played with that self-identical thing: the unit of currency. He suggested that after the 1917 Revolution the Soviets could have inflated away debts by printing lots of money. Governments could then have created employment in Western countries by burying money to make profit in paying people to exhume it.29

    One might object that the language-games model does not apply to the proletariat (working class). Life might be a game, albeit a serious game, for one who plays the stock market. Life, however, is not a game for the person who has no other commodity for sale, short of the necessities to realize his labor power, which is sadly, also the necessity to seek a job in order to earn the money to buy the necessities of life. In any case, the value of every word and even game ends at some point, as Wittgenstein insisted. Another way we have to see the violence inflicted upon the poor by way of the laws of property and contract is violence masked by the common sense of the victim in the street who has yet to realize that, as Marx wrote:

      Nature does not produce owners of money or commodities on one side and workers possessing nothing but their labor power on the other side. This relation has no natural basis, neither is its social basis one that is common to all historical periods.

    The process known as consciousness-raising helps people become aware, for example, that their oppression is the unnatural consequence of mutable social rules. Consciousness-raising might even be defined as the shifting from a metaphysics of economic society, which in the classical sense defines the economy as a social machine, to a language-game model of the economy as a game that people play. About this, Paulo Freire wrote:

      One of the main results of consciousness-raising is becoming aware of the untested feasibility. Untested feasibility is all the possible action you can take to change the human world that you have never tried. You have never tried it because your worldview [the view of the world you accept from the culture of others] has made you believe that the human world cannot be changed.30

    Regarded as observed regularities in human behavior, in some given group at some given time, social rules are as the regularities observed in nature as spring, summer, autumn, winter, day follows night, bedtime follows bath-time, the passenger pays the fare then takes a seat on the bus. Regarded as norms, rules have a feature that natural phenomena do not have: breaking rules exposes the rule-breaker to criticism. Rules can be regarded in yet a third way: they have what H. L. A. Hart, in his analysis of rules, refers to as

    An internal aspect in which the normal citizen 1) behaves with a certain degree of predictable regularity, 2) joins the general disapproval of those who violate the cultural norms and 3) is self-directed using a conscientious awareness of the accepted rules to monitor and guide the self.31

    Of particular interest among social rules are those that define the background in which human action takes place. They create social objects and relationships, which would not exist without them and, thus, set the stage upon which social actors act. Those are the constitutive rules that create the social world. John Searle suggests that the general form for a constitutive rule is that X counts as Y in C where X is some brute or relatively brute fact, Y is an institutional status conferred by the rule and C is a context.32 Searle excludes from the category of constitutive rules cases where the Y term just assigns a name or label. So, this sort of object X is called a chair Y is not constitutive because you could sit in X whether you called X a chair or not.33 A true constitutive rule has to set up the rules of the game, which (for example chess, which Saussure and Wittgenstein used, Taylor, Searle and others) would not exist and does not play at all without its constitutive rules. Searle wrote:

      If it has a certain kind of shape, we can use it as a chair regardless of what anyone else thinks. However, when we say that such and such bits of paper count as money, we have a true constitutive rule because satisfying the X-term such and such bits of paper, is not by itself sufficient for being money. Nor does the X-term specify causal features that would be sufficient to enable the stuff to function as money at all without human agreement. Hence, the application of the constitutive rule introduces these features: the y term has to assign a new status that the object does not have just by virtue of satisfying the X-term. A collective agreement must exist, or at least acceptance, both in the imposition of that status on the stuff referred to by the X-term and about the function that goes with the status.

    Our sense that there is an element of magic, a conjuring trick, a sleight of hand in the creation of institutional facts out of brute facts derives from the nonphysical and non-causal character of the relations of the X and Y terms in the structure where we simply count X-things as Y-things. In our toughest metaphysical moods we want to ask: Is an X really a Y? For example: Are these bits of paper really money? Is a piece of land, in truth, somebody's private property? Is making the prescribed noises in a ceremony truly getting married? Is the utterance of certain sounds through the mouth the actual making a statement or a promise? When you get to the core, those are not facts, rather they are symbols of facts.34

    The aim here is to show that to understand the global economy it is necessary to understand its constitutive rules, the history of those rules and the effects of them. I do not agree with Searle's analysis that constitutive rules are non-causal, because, in fact, they have profound consequences. Without the as institutional facts presupposed by the metaphysics of an economic society, the quasi-mechanisms that explain international trade according to theories of comparative advantage would not exist. Theories of the globalization of production, which explain the exploitation of labor in the third world, along with unemployment and deindustrialization in the first world, rely on the same quasi-mechanisms as their explanatory principles. Theories of technological change contend with only half the problem, while the other half is culture. Ecological design solves only half the problem. The other half of the solution is the transformation of cultural forms and, above all, the transformation of the constitutive rules that govern economic relationships.

    In our time, the steady march of social democratic welfare states guided by Keynesian macroeconomic principles has encountered both physical and institutional limits. The latter take the form of un-payable debt, which cannot be overcome without revision of what Marx called the capitalist economic categories without revision of the constitutive rules.Marx pioneered methods for following out the consequences of those constitutive rules of economic society, which produce accumulation, which exacerbates the contradictions if the constitutive rules are not transformed. The historians Braudel, Wallerstein and Polanyi have, in exhaustive detail, clarified the story of the processes by which market structures, as defined by the constitutive rules of capitalism, became, over time, an interlocking set of interrelated quasi-mechanisms, which expanded outward from Europe to become today's global economy. The post-structuralists have deconstructed the guiding and legitimating ideas of socially constructed realities, which include among others: development, global economy and capitalism. They have unmasked the pretensions of mainstream economists who treat poverty as a quasi-physical problem solvable by economists who are quasi-engineers.

    Those who solve social problems are not quasi-engineers trained to operate conventional quasi-mechanisms. Those who march to the beat of a different drum solve problems in the traditions of Gandhi, Jane Addams, Eugene Debs, Dorothy Day, Hazel Henderson, Dr. King, Fuller, Paulo Freire, Mother Teresa, Norberg-Hodge, and millions who are famous and unknown. Their lives transform the conventional rules of economic society because they live according to alternative rules, which, though unconventional now, foretell of a bright future.35

    Resources

    1. Karl Marx, Capital 2, various editions, page references are to the Modern Library edition, p. 188

    2. Ibid. p. 164

    3. Ibid. p. 170

    4. Fritjof Capra, Charlene Spretna, Green Politics,  New York: E. P. Dutton, 1984, p. 82-83

    After the elections of Reagan, Thatcher and Kohl, pollsters exposed that in each of their victories, the promise of economic recovery had been the primary factor. While those politicians did receive mandates to solve the economic crisis, they have not delivered except for some fluctuating improvement in a few areas. The reason they and other political leaders on the left, the right, or in the center cannot find solutions is that they and their economic experts subscribe to narrow perceptions of the problems. About this, Capra wrote:
      What economists must do ASAP is reevaluate their entire conceptual foundation and redesign their basic models and their theories accordingly. The current economic crisis will reverse only if economists are willing to participate in the paradigm shift that is now occurring in all fields.

    Fritjof Capra, The Turning Point (New York: Simon and Schuster, 1982) p. 193

    5. Ludwig von Mises, Economic Calculation in the Socialist Commonwealth. F. A. von Hayek ed., Collectivist Economic Planning, London: Routledge, 1935.According to Bohm-Bawerk, who wrote:
      The fundamental proposition Marx puts before his readers is that the exchange value of commodities—for his analysis is directed only to this, not to values in use—finds its origin and its measure in the quantity of labor incorporated in the commodities.
    Eugen von Bohm-Bawerk, Karl Marx and the close of his System, New York: Augustus M. Kelley, 1949, p. 66 Bohm-Bawerk points out that the fundamental proposition is an erroneous account of prices as set into markets. He adds that after his beginning of Capital with the observation that the wealth of capitalist societies appears as a vast collection of commodities, Marx later narrows the definition of commodity to include only products capitalists produce for the market by exploiting labor. Bohm-Bawerk finds that on a correct view the exchange value of commodities (broadly defined) occurs through supply and demand. Further, he finds that the existence of capital is not the result of exploitation, but rather the result of time. Time-consuming roundabout methods of production yield more. Capital (as the future means of production), therefore, has its price: interest. Because both supply and demand and the need to pay interest on capital are, in Bohm-Bawerk's analysis, rooted in the nature of things, they cannot be avoided by a socialist state, which will be compelled, in effect, although Bohm-Bawerk does not use the phrase, to adopt state capitalism. See "Interest under Socialism," p. 339-344 in Eugen von Bohm-Bawerk, Capital and Interest (South Holland, IL: Libertarian Press, 1959)

    6. Oskar Lange, On the Economic Theory of Socialism, Minneapolis: University of Minnesota Press, 1938) For the history of opportunity cost, as an idea, see Joseph Schumpeter, History of Economic Analysis, New York: Oxford University Press, 1954, p. 917

    7. Piero Sraffa, Production of Commodities by Means of Commodities, Cambridge, UK: Cambridge University Press, 1972

    8. Dennis and Donella Meadows, The Limits to Growth, New York: Universe Books, 1974; Beyond Limits: Confronting Global Collapse, Envisioning a Sustainable Future, Post Mills, VT: Chelsea Green Publishing Co. 1992; Mihajlo Mesarovic and Eduard Pestel, Mankind at the Turning Point, New York: Dutton, 1974

    9. Ernest Mandel, Marxist Economic Theory: II, London: Merlin Press, 1962,  p. 726-727; Mandel wrote:
      What the Soviet economic planners are trying to find is a system of automatic response, of self-regulating factors, which would enable optimum results independent of any conscious human intervention. It is less important to writers like Kantorovich, Novozhilov, Nemchinov, Malyshev and so on, to discover the economic laws of the epoch of transition from capitalism to socialism than to find solutions to practical problems. Among the latter, the problem of rational fixing of prices is the most outstanding. The Soviets were led gradually (rapidly later) to rehabilitate to an increasing degree the automatic functioning of the market.

    10. Anthony Giddens, A Contemporary Critique of Historical Materialism, Berkeley, University of California Press, 1981

    11. Ferdinand de Saussure, Course in General Linguistics, New York: McGraw-Hill, 1966, p. 79 (first edition in French, 1915) The quotation is my translation from French, which differs slightly from Baskin's. See Ferdinand de Saussure, Cours de Linguistique Generale (Paris, Payot, 1971) p. 114-115

    12. Lacan characterized paranoid psychosis as a disorder of the signifier in his doctoral dissertation. Jacques Lacan, De la Psychose Paranoiaque dans ses Rapports Avec la Personnalite (Paris, Éditions du Seuil, 1980, as a doctoral dissertation in 1932)

    13. General Linguistics. Part 1 chapter 1, "The Nature of the Linguistic Sign," in Saussure, op. cit. n. 11 above.

    14. G. E. M. Anscombe, op. cit. note 2 of Part IV above.

    15. Jean Baudrillard, Symbolic Exchange and Death: Selected Writings (Stanford University Press, 1988, first edition, 1976 in French) p. 124-125

    16. Hannah Arendt argues that power and violence are phenomena and concepts distinct from the other, although mixed in practice. Power is the human ability to act in concert (p. 44). She associates power with consent. Violence employs instruments (p. 46). Violence is associated with force, weapons and so forth. It seems that, on Arendt's plausible account, the concerted action that constitutes power requires communication and a meeting of minds. Violence cannot create power, because its instrumental nature excludes communication and a meeting of minds. For the same reasons that Arendt finds violence incapable of producing power, I see it incapable of producing cultural transformation. No doubt, guns and bombs can destroy a people, killing everyone, therefore, destroying the cultural meanings that give their life coherence and make communication and cooperation possible. Violence, however, cannot create a positive cultural transformation. At most, it can create a setting where cultural processes can happen, e.g., people might attend compulsory classes or therapy sessions. Even so, the cultural process itself, the classes or the therapy, has to proceed through communication, not through violence. See Hannah Arendt, On Violence (Boston, Houghton Mifflin Harcourt, 1970)

    17. See Elizabeth O'Conner, The New Community (New York: Harper and Row, 1976) See other books by the same author.

    18. Alexander Solzhenitsyn, The Gulag Archipelago: an Experiment in Literary Investigation (New York: Harper and Row,1974)

    19. Joanna Macy, Dharma and Development (West Hartford, CT: Kumarian Press, 1973) Although I realize that the Sarvodaya movement has suffered setbacks, I still believe that the success Macy describes illustrates the proposition that positive alternatives depart from and transform the secular metaphysical framework of economic society.

    20. St. Ignatious Loyola, The Spiritual Exercises of St. Ignatius of Loyola (New York: P. J. Kennedy and Sons, 1914) p. 3, Loyoa wrote:

      As strolling, walking and running exercise the body, so every way of preparing and disposing the soul to rid itself of all the disordered tendencies and after it is rid, to find the divine will as to the management of one's life for the salvation of the soul is a spiritual exercise.

    21. The term is part of the lexicon The Transformative Learning Center in Toronto, my think-tank for the new paradigm.

    22. Howard Richards, The Evaluation of Cultural Action (London, Macmillan, 1985)

    23. Charles Kleymeyer, Cultural Expression and Grassroots Development (Boulder, CO. London, Lynne Riener Publishers, 1994)

    24. "Render Unto the State What Belongs to the State," is an article published in Die Zeit, November 21, 1957, translated and reprinted in Ludwig Erhard, The Economics of Success (London: Thames and Hudson, 1963) p. 213, Erhard wrote:

      We run a grave risk of becoming bogged down in a morass of ultra-individualism. The reason is simply that we misconstrue the idea of freedom and would like to believe, out of sheer egoism against our better judgment and indeed against our own conscience that freedom implies the right to do or not do whatever pleases the individual or the group, without regard to the community and the state. This I call misconstruing freedom.

    25. Sir Stafford Cripps, Towards Christian Democracy (New York: Philosophical Library, 1946)

    26. Jacques Maritai, Christianity and Democracy (New York: Philosophical Library, 1946) See also other works by this prolific and influential author. About Ruskin, see Edward Alexander, Matthew Arnold, John Ruskin and the Modern Temper (Columbus, OH: Ohio State University Press, 1973)

    27. Ludwig Wittgenstein, Philosophical Investigations (Oxford: Blackwell, 1956) pr. 21

    28. Wittgenstein, op. cit. paragraph 216. Wittgenstein's idea of language-games has been used by Jean-Francois Lyotard to support a postmodern view defined as—incredulity toward metanarratives. Jean-Francois Lyotard, The Postmodern Condition: a report about Knowledge (Minneapolis: University of Minnesota Press, 1993) p. xxiv, p. 9-11. Using the method of language-games to deconstruct grand and overarching theories of all kinds, Lyotard wrote: 

      Science possesses no general meta-language in which all other languages can be transcribed and evaluated. This is what prevents its identification with the system and, all things considered, with terror.

    Ibid. p. 64. Somewhat contrary to the spirit of Lyotard's work, I suggest that the widespread global practice of exchange for money has the qualities of a language-game.

    29. Keynes was quite aware that money could be created by fiat and devalued by deliberate policies. Hence, his views support the concept that the entire existence of the signifiers that organize the global economy depends on moral custom, or convention as its cultural structures. Keynes wrote:

      Money is simply that which the State declares from time to time to be a good legal discharge of money contracts. The power of taxation by currency devaluation is one that has been inherent in the state since Rome discovered it. The creation of legal tender has been and is a government's ultimate bankruptcy or its own downfall, so long as this instrument still lies at hand unused. The tendency of money to depreciate has been in past times a weighty counterpoise against the cumulative effects of compound interest and the inheritance of fortunes.

    Keynes, A Tract on Monetary Reform, reprinted in Collected Writings: IV (London: Macmillan, 1972) p. 8-9. Keynes wrote:

      Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. As the inflation proceeds and the real value of the currency fluctuates much from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation or capitalism become so disordered as to be almost meaningless. And the process of wealth acquisition degenerates into gamble and a lottery.

    Keynes, The Economic Consequences of the Peace: Collected writings II, p. 148-149.

    30. Paulo Freire, The Pedagogy of the Oppressed (New York: Continuum, 1982 translation from Portuguese by Myra Ramos)

    31. H. L. A. Hart, The Concept of Law (Oxford, Clarendon Press, 1961)

    32. John Searle, The Construction of Social Reality (New York: Free Press, 1995) p. 28, 44

    33. Searle, op. cit. p. 44

    34. Searle,op. cit. p. 45

    35. The people on my list are renowned for what I call positive alternatives, what psychologists call post-conventional moral judgment. As I see it, research in moral development supports my belief that the conduct of millions of people represents a shift away from the norms of economic society. However, it was Aristotle who observed and wrote—Most men wish what is noble (kalos), though they choose what is profitable.—Aristotle Nichomachean Ethics: xiii

    Judgment and action are, nevertheless, quite related. Lawrence Kohlberg's well-known studies of the development of moral judgment places Homo economicus (individualism, instrumental purpose, exchange) at stage two of moral development. Most adults act at stages three and four (which Kohlberg, after Piaget, regards conventional). They conform to the conventional norms of society, which happen to be, at this stage of human moral evolution, largely the norms of market capitalist societies. Their conformity to conventional morality, however, is not due to reflective judgment on the comparative merits of contemporary institutions and possible alternatives. Instead, it is due to mutual interpersonal expectations, wanting to be a good person in relationships, interpersonal conformity, as stage 3 and conscientious support of the social system, as stage 4. See Thomas Lickona (editor) Moral Development and Behavior: Theory, Research and Social Issues. (New York: Holt, Rinehart and Winston, 1973) See also p. 34-35 in Lawrence Kohlberg, Moral Stages and Moralization: the Cognitive-developmental Approach. Parallel to Kohlberg, though relying on other researchers, John Rawls argues that humans have a natural morality of association (like Piaget and Kohlberg's conventional stages) by which morality improves and brings justice into social arrangements, such as those Rawls advocates as he wrote:

      The social arrangements would [once they are the norm] be kept in place by moral sentiments that are a normal part of human life.

    John Rawls, A Theory of Justice (Cambridge: Harvard University Press, 1971) p. 489. Kohlberg identifies Rawls along with Socrates, Gandhi and King as examples of post-conventional moral judgment characterized by a philosophical stance that analyzes social norms in the light of broad principles.

    Carol Gilligan is among those who have criticized Kohlberg for overemphasizing the justice principles and under-emphasizing the ethics of care. Carol Gilligan, In a Different Voice: Psychological Theory and Women's Development (Cambridge: Harvard University Press, 1982) Gilligan views the forecast for a metaphysical shift to a post economic perspective as even stronger because, in addition to complementing the ethics of justice as moral theories, her perspective based on her ethics of care finds roots for the growth of cooperation and solidarity in common experience.

      The experiences of inequality and interconnection, in parent and child relationship then give rise to the ethics of justice and care, the ideals of human relationship: the vision that society treats self and others as equal and worthy and that, despite differences in power, fairness prevails. The vision is the one in which society responds to and includes everyone leaving no one left alone or hurt.—Carol Gilligan, op. cit. p. 62-63.
    Because the normal and natural tendency of human moral development appears to be toward post-conventional thinking, the ethics of care, or both, it seems probable that people like those on my short list are numerous, perhaps at a growing rate. The basis for this hope blends with inspired moral leadership, conventional conformity and enlightened self-interest. It may be able to guide our species, imprisoned though we are within our cultural structures, toward the sustainable and happy adjustments to physical reality.

    Review

    1. In Marx' analysis of the inherent tendency toward infinite expansion, he uses an observation that Aristotle made about money. In your sense of it, how does Marx use Aristotle's view of money to support his premise?  p. 182,   p. 183

    2. Lange and Sraffa have shown that a sustainable economy is doable without capitalism. Therefore, in your view, what are the basic pre-agreement guidelines required for this to happen?

    b. What do you see as the overall means to that end? p. 186

    3. Based on what you have read, heard and surmise, why does Marx' work remain important to the understanding of political economy even though his theories did not solve the problem? p. 184

    4. The 18th century operated via a premise of incorrect ideals:  1) Nature as both the savage and as the source of true norms and  2) Freedom as the source of the moral legitimacy of contracts. As you see it, how did Saussure encourage a new paradigm?

    b. What do you find innovative about his approach?  p. 193

    c. How does Saussure's extended analogy set up the idea of socially constructed reality, which is also expressed in the phrase—curtains of meaning interposed between reality and us? p. 189 through p. 193

    5. How would you describe Saussure's system of equivalence, which is his analysis of the aspects of human existence within and outside of time, in relation to a transformation without violence p. 189 through p. 194

    6. Use value serves as the horizon and finality of the system of exchange value—Karl Marx.  p. 193 Consider the idea of horizon as literal art and as an artistic metaphor. Then, place the ideal of use value under the market's idea of exchange value. How would you interpret and describe what you see?  p. 193

    Project 10: A basic flaw of economics is its affinity to the concepts framed by the mechanics of physics. Therefore, you might find it helpful to recall some common metaphors that narrow the scope of the subject they describe because of their mechanical roots.

    In addition to the ones mentioned in the book, you might notice other mechanical metaphors that you use or hear in everyday language. You might detect (recognize) metaphors that relate to economics in a context, such as "gear-up for," "coined the term," "up to speed," metaphysical "shift" and other intentional machine-speak to simplify and reduce human behavior for analysis into terms of mechanical metaphors. You can make a lexicon list of machine-speak as you listen, read and experience the broad reach of economics. p. 11,  p. 125

    7. What new approach do you sense in the work of the Brazilian educator, Paulo Freire with consciousness-raising bring to nonviolent transformation? p. 204

    8. As you see it, (even a basic view) describe how the Wittgenstein's concept of language-games as p. 193 it intersects with Saussure's system p. 204 and Freire's p. 11, p. 203 work to support nonviolent transformation?

    Keywords: accumulation, alternatives that work, barter, capital, circulation of commodities, commodities, consciousness-raising, constitutive rules, contradictions, diachronic, economics, ethic of care, exchange value, free market, freedom, government, Homo economicus, human action, human rights, input-output models, international trade, labor power, language-games, linguistics, metaphysics, nation state, nonviolent transformation, opportunity cost, political economy, positive alternatives, poverty, profit, property, Sarvodaya, self-interest, Smith, social democracies, social product, socialist planning, spiritual, stewardship, sustainable economy, synchronic, use value, violence

    Description: Scientific conclusions about the global economy unifies the various theories in Part I through VII. This includes the author's current perspective of the established analysis of economy by way of linguistics. This frames Part IX of Understanding the Global Economy, 1) an expose of the economic rise and rule of free trade as enforced by trade in pacts between corporations and central governments and 2) a source for building an ethical, sustainable economy based on knowledge and research.

     

    Part X: Vision of a world free of poverty and insecurity TOC cover pagetop

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