Sunday, March 05, 2006

The Divine Economy Model is Compatible with Human Action.

The mid-1800's was a revolutionary time in so many ways and all branches of science leapt forward with new and wonderful discoveries that occurred during and since that period. In economics the breakthrough concept that surfaced at that time was the concept of marginal utility.

Decisions are made at the margin, in other words, humans consider the improved condition that will come from a good or service and compare that to the improvement from a unit of other goods or services.

This concept did not guarantee progress in economic understanding though. Two major errors lead most astray. Empiricists assumed cardinal relationships between units and they tried to avoid the subjective nature of human decision-making by assuming empirical valuation. Their models are void of the essence of the nature of the human being.

The divine economy model incorporates the concept of marginal utility, based on the theory of subjective valuation, which makes the model compatible with human action. This brings a bright and hopeful realism into economic science.

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