Is There A Model Of The Unhampered Market Economy?

The answer is yes. In the tradition of classical liberalism much of the logic and reasoning is done by the use of words and so the model of laissez-faire or an unhampered market economy is visualized in the minds of the readers of the authors of the causal-realistic approach to economics.

The most extensive and intensive and unified example of a causal-realistic model of the unhampered market economy is the Divine Economy Model © which laid the foundation for the divine economy theory.

As proof of the unhampered market economy nature of the divine economy theory we only have to look at the clear and definite scientific verification found in the theory: there is absolutely no moral authority for any intervention into the economy!

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Evenly Rotating Economy Versus The Unhampered Market.

Both of these are mentioned in the Austrian economics literature but they are quite different. Conceptually they are both models in the sense that they are attempts to picture certain conditions for the purpose of gaining insight into how the economy works.

Evenly Rotating Economy

“The evenly rotating economy is a fictitious system in which the market prices of all goods and services coincide with the final prices. . . In reality there is never such a thing as an evenly rotating economic system. However, in order to analyze the problems of change in the data and of unevenly and irregularly varying movement, we must confront them with a fictitious state in which both are hypothetically eliminated. ”

“The only method of dealing with the problem of action is to conceive that action ultimately aims at bringing about a state of affairs in which there is no longer any action, whether because all uneasiness has been removed or because any further removal of felt uneasiness is out of the question. Action thus tends toward a state of rest, absence of action.”

“The essence of this imaginary construction is the elimination of the lapse of time and of the perpetual change in the market phenomena.”

For all intents and purposes the use of the words ‘imaginary construction’ is conceptually just another way of saying the word ‘model.’ The chief characteristics of the model of the evenly rotating economy are given above.

Unhampered Market

In contrast, the concept of the unhampered market as an imaginary construct (model) has as its chief characteristic only the elimination of economic interventionism. All of the natural processes and the natural laws and economic laws that pertain to human actions are permitted full expression in this model.

The essential difference between these two conceptual models is that the evenly rotating economy is one that is in the state of equilibrium whereas the unhampered market is in the state of disequilibrium. Since the economy is always in the state of disequilibrium the unhampered economy conceptual model is significantly more powerful.

Those familiar with the literature of Austrian economics may then wonder whether this powerful model of the unhampered economy has ever been further advanced. The answer is yes. It has been explored and explained further using deductive reasoning and logic by many of the great Austrian economists. I am aware of no more penetrating and complete exposition of the unhampered market model than the divine economy model and the divine economy theory.

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The Human – “Perpetually Entrepreneurial” – Being!

Of all of the undeveloped aspects of natural law, entrepreneurship in human beings is the most under-appreciated and the most under-correlated to the inherent economic behavior of human beings. For some reason the science of economics is regarded as something that emerged as a discipline rather than as being an essential feature of human action within the matrix of social cooperation. Humans exist and have a unique reality therefore the economy exists!

And so what about the natural law of a human being and how is that related to entrepreneurship?

All of the senses and the potentials of humans are used for perception. The human kingdom is expanded beyond the animal kingdom in ways that make the distinction clear but that does not mean that the greatness of the human kingdom is fully appreciated. Sometimes science hovers around the bare minimum and proudly proclaims that there is a distinction. What if the bare minimum is like the difference between a drop and the vast oceans?

A major deficiency in economic science is the appreciation of the entrepreneurial spirit of human beings. Even those relatively few that have identified the primacy of entrepreneurship are reluctant to fully embrace its natural potency because ‘science’ has taught them that there is a disharmony between science and religion.

How can the full potential of entrepreneurship be appreciated and how can it be correlated to the inherent economic behavior of human beings if the spiritual nature of humans (the physical and intellectual natures are recognized) is ignored? In a nutshell humans are seekers after truth; that is their spiritual nature (some of this can be incorporated as part of the intellect but not all of it).

It is because of this weakness in the understanding of natural law as it pertains to human beings that entrepreneurship is only partially able to be explored scientifically. Hence these are the Dark Ages of economics!

There are three kinds of entrepreneurs and all human beings are at various times and places functioning as one of the them. In other words, the potential of alertness exhibited by human beings is a synonym for the concept of a seeker after truth. Humans are all entrepreneurs because they are the possessors of the entrepreneurial spirit (seekers after truth). They are either unalert or they are alert (and inactive) or they are alert and active.

I will give a few stark examples to make the distinctions clear. 1). A person who is very ill or a person under the influence of a drug may miss opportunities because of a lack of alertness. 2). A person who is without many means but who is alert may discover opportunities but then cannot take action to benefit from the opportunities. 3). A person who may or may not have means but who is alert and discovers opportunities and takes action to use or find the means necessary to take advantage of the opportunities.

How deprived our ‘education’ system is! It ignores the true nature of humans and it ignores the most powerful agent in the world of social cooperation.

It is time to flip the light switch of illumination to dispel the Dark Ages of economics!

 

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Hayek’s ‘Fatal Conceit’ Is Explained Much More In The Divine Economy Theory.

One of the things that I find interesting about the general response to some of the terminology in the divine economy theory is a disconnect – in the minds of those who act like the terminology is incomprehensible – with the essence of classical liberalism and Austrian economics in the literature. I am not sure when Hayek first mentioned ‘fatal conceit’ or if he is the true originator of the term but I am curious about the reaction and response that he got when he laid it out with clarity. Was the new terminology received well?

Of course Fredrich von Hayek was a renowned scholar and academic which I am sure aided in the acceptance of the idea of ‘fatal conceit’ but at the same time Hayek deviated from pure subjectivism. He was a socialist and an empiricist when he read Socialism by Ludwig von Mises and he immediately recognized the fact that interventionism is error-based. His occasional weakness in championing subjectivism may be attributed to his earlier ingrained ideological leanings or maybe it was the consequence of the tendency towards atheism in academia. Humans as unique creatures with the potential to mirror all the virtues or attributes of God is the true essence of their subjective nature but academia in these – the Dark Ages of economics – has a difficult time permitting such a realization.

Back to fatal conceit, Hayek lays out the following:

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account.” The Fatal Conceit : The Errors of Socialism (1988), p. 76

The delusion of ‘the naïve mind’ ‘that can conceive of order only as the product of deliberate arrangement’ is driven by something. Of course there is ignorance of what reality is like but something drives the possessor of the naïve mind; something that stirs up enough arrogance to presume that a finite mind can comprehend what is relatively infinite and to presume that justice can come from such a puny comprehension. The ego (there is a duality to ego in humans) that blinds a human to his/her own limitations, and at the same time represents a denial of the All-Knowing and All-Merciful God, has always been a part of the dual nature of humans and in Scriptures of old it has been called satan.
In the divine economy theory fatal conceit is explained more thoroughly. All interventionism is ego-driven and all reasoning used to justify interventionism is ego-driven interpretation.
Ironically the moral relativism that emerged when classical liberalism was attacked by the State is also responsible for the fallacy that claims that wertfrei requires the separation of science and religion. And so hand-in-hand interventionism and atheism destroy economic science and civilization.
Ego-driven interventionism and ego-driven interpretation explain in much greater detail the invalidity and the immorality of the fatal conceit. What this means is that if you think that the scientific works of Fredrich von Hayek are important for the cause of liberty then the divine economy theory is at least as important! As a scholar or as a scientist or simply as a subjective human being interested in an greater understanding of human action you do not want to ignore the discoveries uncovered in the divine economy theory.

Austrian Business Cycle Analysis Is A Part Of The Human Civilization Equilibrium.

World over there is only one explanatory economic theory that truly and truthfully identifies the cause and effect of intervention, yet it cannot break through the unfathomable uncertainty inherent in the world and so the exact time and the intensity of the inevitable correction is not known. The intensity is related to the degree of the distortion of the equilibrium forces and how close to the entropy of equilibrium the system returns.  No one knows what the trigger event will be and no one knows how much cascading will take place.

The one explanatory economic theory that provides this great insight and offers viable and ethical solutions is the Austrian Business Cycle (ABC). This is the theme of the work that won Fredrich von Hayek the Nobel Prize in 1974.

The boom of the cycle is caused by economic intervention which stimulates overconsumption and malinvestment. The bust is the recession and depression that follows. If the bust is interrupted by economic intervention in an attempt to artificially stimulate the economy then the even more severe consequences are simply pushed into the future. The longer the correction is delayed the worse it will be and the less effective will be the attempts to artificially get out of the bust.

One interesting discovery in the divine economy theory is the broad view of the human civilization equilibrium. What is significant about the concept of the human civilization equilibrium is that all intervention into the economy not only disrupts the economy but it also disrupts liberty, order, peace, justice, law, ethics and morality! 

The divine economy theory shows scientifically that laissez-faire is not only the most efficient economic system but that with laissez-faire all facets of human civilization are kept in balance optimally. No claims can be made that any other way – the various types of interventionism – can yield more liberty or more order or more peace or more justice or more ethics or more morality!

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Production Possibilities Frontier (PPF) Pond Ripple Analogy.

Go to the economic literature and see if you can find more than a quadrant of a two dimensional figure to describe the production possibilities frontier.

Where does the production possibilities frontier come from and how is it related to the economy as a whole? As it is used in economics it is basically a much simplified ‘either/or’ exposition. It is a ceteris paribus construct that demonstrates how the limits within the economy constrains the choices to more of one at the expense of less of the other.

This is the status of contemporary economics and yet when I mention that there is a new economic theory out there (that I call the divine economy theory) these same economists chuckle under their breath or in one way or another do not deign to regard it as possible (to even the slightest degree).

Well maybe when they are educated about where the production possibilities frontier comes from (not historically in the literature but in the broad picture of the economy) then at least some of them will be astounded at the magnitude of the different conceptual knowledge gained from the divine economy theory.

This is where the pond ripple analogy comes in. Now go back to the two-dimensional quadrant and imagine it as a part of the pond ripples where the intersection of the x and y axes is the point where the pebble entered the water. And imagine that you take a snapshot in time where the arc goes from one point on the y axis to a point on the x axis and voila you have what is considered the ‘state of the art’ production possibilities frontier!

What you do not have in your snapshot are the other three quadrants which would combine to make up the four quadrants of a circle. Necessarily absent also then is the concept that defines what that circle is.

And what you also do not have are the other dimensions, which in the divine economy theory include the third, the fourth, and the fifth dimension. In the divine economy theory the fifth dimension is time and so instead of a snapshot it would be a video!

Just like Roger Garrison shows in his work – that the production possibilities frontier can either expand in an unhampered economy or shrink if there is interventionism – the divine economy theory uses the production possibilities frontier to show the favorable or not-so-favorable consequences of both laissez-faire and interventionism, respectively.

Economists that ignore – out of ignorance or pride or prejudice – the divine economy theory are becoming obsolete as evidenced by the production possibilities frontier pond ripple analogy! I suggest investigating the divine economy theory. What is there to be afraid of?

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“What If” . . . The State Is Destructive Of Civilization?

That would be a different viewpoint than the myth propagated by the various arms of the State: the education system, the media, and the voices of ‘authority’. That viewpoint is not in alignment with the propaganda that is transmitted to us via these channels

The State is not a natural part of civilization since it circumvents the natural process of social cooperation. The State is dependent on coercion and without coercive power it would simply and quickly be discarded voluntarily and replaced with the natural processes of social cooperation.

The artificiality of counterfeit fiat currencies that prop up nationalism and imperialism would fade away. The brutality of wars that prop up nationalism and imperialism would come to an end. The scheming of the political class to enrich itself by confiscation and oppression would no longer be tolerated.

Since the divine economy theory proves scientifically that there is no moral authority for interventionism all of the above tools used by the State to maintain itself are without any ethical grounds and can only bring into existence the plethora of injustices that destroy civilization.

If instead of the myth the real nature of the State was made known – that it is the destroyer of civilization – would anyone adhere to this satanic (ego-driven) form of nihilism?

One by one we need to make known the myth of the State before the plague of its destructiveness causes a calamity of unparalleled proportions.