What Is The Divine Economy Theory?

Divine economy theory is really just the recognition that the equilibrium power operating in the world of human affairs is infinite and therefore incomprehensible to the limited mind of humans. But all humans who fool themselves into thinking that they can understand all of the consequences of their intervention into the economy (for the sake of humankind) over the entire time horizon are ego-driven and have no moral authority. The best and quickest way to define and describe the beautiful force of equilibrium operating in the economy is to call it the divine economy.

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Does The Divine Economy Theory Differ From Austrian Economics?

The divine economy theory does not differ with Austrian economics unless, for some reason, Austrian economics is considered as finished. Just like Austrian economics has basically nothing to do with the economy of Austria, Austrian economics encompasses the advancement of economic science and praxeology beyond the remnant links (their students) to Mises and Rothbard. Of course there are criteria that can be used to determine if the advancements are true to the Austrian tradition and the tradition of classical liberalism.

If there is a noticeable difference between Austrian economics and the divine economy theory it has to do with the removal of religious prejudice and the creeping of atheism into 'science.' Some who contribute to Austrian economics have an exclusionary attitude that is not complementary with an attitude of comparative religion. Some who contribute to Austrian economics think that atheism is an expression of wertfrei and cannot fathom the harmony of sciene and religion. Let's be fair and measure these contributors with the existent criteria of what is Austrian and what is classical liberalism. I am up to the challenge. Are others?

Regardless, as an Austrian economist I continually test what is being developed as part of the divine economy theory and so far it meets the tests. As far as I am concerned the divine economy theory is merely a specialized study within the Austrian economics tradition and the classical liberalism tradition.


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Market Forces Will Moderate Business Sizes

Arbitrary regulatory designs and vain imaginings of bureaucrats always fail. In contrast, when decisions are made fluidly in response to the forces in the market then those who express their needs naturally as part of the market process are served quickly, efficiently, mercifully, and with justice. The size of firms - that can serve the people best - is one of the manifestations of this justice.

Divine Economy Theory Policy #3: Market Forces Will Moderate Business Sizes

Policy Statement: A rational and just policy would be to remove the institutionalized barriers that prevent property rights from being protected, and to remove the special privileges that artificially protect any entity from the equilibrating forces of the divine economy.

 

See this policy in the greater context here.
 

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The Right of Secession

It is time to bring back into common use - in our language - a term that is understood in the classical liberalism tradition. That word is subsidiarity. It is the necessary complement to federation. Without subsidiarity even the logic of federation is thwarted, thus becoming potentially tyrannical. The guarantee of the maintenance of the balance brought about by the complements of subsidiarity and federation is the right of secession.

Divine Economy Theory Policy #2: The Right of Secession

Policy Statement: A rational policy would be to develop discovered law in such a way that a jurisdiction would not have to accept any intervention that a larger jurisdiction tried to impose upon its economy.

See this policy in the greater context here.

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Well Defined and Continually Refined Property Rights.

Since property rights are inseparable from human rights and since the economy is really a natural extension of human beings, this - property rights - is the first economic policy of the divine economy theory.

Divine Economy Theory Policy #1: Well Defined and Continually Refined Property Rights

Policy Statement: A rational and just policy would be to develop discovered laws that specifically define, refine, and protect property rights in terms such that they are treated and considered as basic human rights.

See this policy in the greater context here.

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The Economic Policy of the Divine Economy Theory

Are you tired of all of the nonsense?

Here is a clear and concise list of economic policies that will transform all of the societies of our precious and unique world civilization (nowhere else in the universe is there such a creation) into places that are diverse, peaceful and prosperous.

Policy #1.  Well Defined and Continually Refined Property Rights

            Policy Statement: A rational and just policy would be to develop laws that specifically define, refine, and protect property rights in terms such that they are treated and considered as basic human rights.

Policy #2.  The Right of Secession

            Policy Statement: A rational policy would be to develop law in such a way that a jurisdiction would not have to accept any intervention that a larger jurisdiction tried to impose upon its economy.

Policy #3.  Market Forces Will Moderate Business Sizes

            Policy Statement: A rational and just policy would be to remove the institutionalized barriers that prevent property rights from being protected, and to remove the special privileges that artificially protect any entity from the equilibrating forces of the divine economy.

Policy #4.  Enforcement of Property Rights

            Policy Statement: A rational policy would be to initially begin enforcing property rights at the level of the individual, and then to learn how best to refine property rights from these efforts. Each community has this right and responsibility. The role of government is simply to protect its citizens from fraud or acts of violence by enforcing property rights.

Policy #5.  Education About Entrepreneurship

            Policy Statement: A rational policy would be to encourage all providers of education to acknowledge the role of entrepreneurship in advancing prosperity and to teach any and all skills that help to make people discerning and alert.

Policy #6.  War and Inflation Violate Property Rights

            Policy Statement: War and its exorbitant costs and its destruction, and inflation of the money supply by the central bank, are unacceptable violations of property rights and those who try to impose either of these should be held accountable by legal means. Authority to take these actions needs to be specifically assigned so that there is specific and definite accountability.

The legal liability for such acts needs to take precedence over the act itself. The government-created veils of self-protection and inculpability need to be removed so that property rights can be protected.

Policy #7.  Gold Passes the Market Test

            Policy Statement: Clear the banking system of all of its barriers and restrictions — these are acts of intervention designed to control the economy and direct wealth towards the favored ones of the ego-driven interventionists — and let the market process determine if the current system is a viable one or not. Legal tender laws are unnecessary in a divine economy where the medium of exchange is universally recognized simply because of its independence from monetary intervention along with its other merits.

Policy #8.  Counteract the Misinformation About Capital

            Policy Statement: Encourage providers of education to recognize that every improvement an individual makes — their education, for example — is a form of capital. Then instead of spreading negative impressions about capital the education system will compliment itself for being a contributor to capital formation around the world and will empower the next generation with knowledge about this factor — capital. This is a significant contribution to an ever-advancing civilization since capital is the most limiting factor in the economy.

Policy #9.  New Capital is a Good Start

            Policy Statement: Recognize that having secure property rights leads to savings and then to new capital which then begins the advancement towards prosperity.

Policy #10.  International Free Trade

            Policy Statement: All trade barriers interfere with the divine economy and cause unnecessary suffering. ‘Free trade’ agreements are really acts of intervention and therefore are a misnomer. Free trade, in reality, is action not words and it will occur automatically if the ego-driven interventionists are removed from the picture.

Policy #11.  Minimal Taxation

Policy Statement: Since under most circumstances taxation is a deterrent to private production and employment there is no sound economic reason to generate tax revenue to support a government beyond its purpose. The purpose of government is to protect life and liberty.

 

The Overarching Policy – The Moral Authority of the Divine Economy

            To quote Ludwig von Mises: ‘The first condition for the establishment of perpetual peace is the general adoption of the principles of laissez-faire capitalism.’[16]

I would like to modify his recommendation slightly. First, we can rest assured that the prosperity of an ever-advancing civilization emanates from the divine economy. Second, we can trust in the equilibrating power of the divine economy. Third, we can trust in the divine justice that comes from protecting property rights and that comes from recognizing that property rights are human rights.

            Those who fail to admit their own limitations and then expect others to believe their assertions that they can comprehend all that is going on in the economy — thereby giving them the right to interfere — these are the ones who are now without authority. It matters not what position of influence one holds or what degree one has or what record of publication one has. There is no human act of intervention in the economy that is not feeble-minded when compared with the omnipotent and omnipresent nature of God.

All interference with the economy is necessarily ego-driven; and it lacks moral authority. The economy is a divine institution in the domain of human action and all human action emanates from the human operating system, which is divine — created in the image of God.

 

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The Three Entrepreneurial Stages.

At the beginning of this elucidation about entrepreneurship it is important to know how natural and basic entrepreneurship is to the human being. Humans seek truth, by nature, because it is what leads to betterment. Truth can be seen as the discovery of the laws in operation all around us and once these laws are relatively more understood the potential for advancement is present.

But humans are not always engaged in truth-seeking. Everyone has down time. Some have significantly more down time than others. This gets us to the first stage of entrepreneurship: latency. As is implied in latency, humans have the potential to be entrepreneurial - to be truth-seekers - but when that potential is not activated then it is in a state of dormancy.

Transforming from the first stage to the second stage requires a spark of interest, a quest for knowledge, an alertness or a desire for alertness, which transforms latent entrepreneurship into active entrepreneurship. Although somewhat rare, a pure entrepreneurial discovery can occur at this stage and bear its immediate fruit. With a pure entrepreneurial discovery the betterment that results from this pure entrepreneurial discovery requires nothing other than the discovery.

Most of the time the pursuit of knowledge in the active entrepreneurial stage is accompanied by the recognition that other economic realities like physical and human resources and/or capital are important additional means that are necessary for success.

This is when the third stage of entrepreneurship is entered. The search becomes purposeful, not just for the 'new discovery' but also for all of the new combinations, including those that occur over time. Purposeful entrepreneurship is the driving force in the economy and it is a manifestation of the operation and tendency of the equilibrating power in the market process which, by the way, always happens to be in a state of disequilibrium.

In summary, the three stages of entrepreneurship are: latent, active, and purposeful. For more about the three entrepreneurial stages go here.

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Bruce Koerber - Divine Economy Theorist

 

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Anatomy Of The Divine Economy













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Divine Economy Theory Passes The Test Of The Four Kinds Of Proofs.

First of all let me list the four kinds of proofs:

1. Through sense-perception
2. Through the reasoning faculty
3. From traditional or scriptural authority
4. Through the medium of inspiration

These are the standards that people use as proofs but each one is subject to error. I will give an example of an error for each of these 'proofs' that shows the weakness of relying soley on that kind of proof.

1. Sense-perception is fooled by a mirage.
2. Reasoning faculty alone falters because not all logicians come to the same conclusion.
3. Which tradition or scriptural authority can claim to be the correct one?
4. Could the promptings of the heart that lead to the inspiration be a vain imagining?

The point that we are getting at is that one or a couple of these 'proofs' is not sufficient and that only if all of these kinds of proofs are satisfied can there be certitude.

Now we will examine and test the divine economy theory using each of these proofs.

1. Sense Perception: The Divine Economy Model © is a visual graphical representation of the economy.
2. Reasoning Faculty: The divine economy theory uses logic consistent within the philosophy of classical liberalism to build the theory.
3. Traditional Or Scriptural Authority: Not only does it stem from the classical liberalism tradition but it ties together the ethical foundations inherent in all religions.
4. Through The Medium Of Inspiration: The model in its simplest form appeared to me in a dream in the autumn of 2004 and I hurriedly wrote it down so I would not forget it. I then applied my training as a technical economist to unfold it in its various applications (macroeconomics, microeconomics, ethical economics, and economic justice) over the next seven years (2005-2012).

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Definition Of An Unhampered Market Economy.

An unhampered market economy is one where everyone recognizes that human knowledge is finite and cannot comprehend the nearly infinite nature of the market process. This recognition translates into the understanding that all intervention corrupts the process because it is necessarily arbitrary and shortsighted.

Only those who are ego-driven can have the arrogance to pretend that they know what is best, but in the future these scoundrels will be rejected because of their ignorance of reality and because of their selfish intentions.

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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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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 Is Meant By The "Ego-Driven" Terminology In The Divine Economy Theory?

Here is how ego-driven intervention (or interpretation) fits in: Having partial or finite knowledge is part of the natural law of human beings. They are and never were and never will be omnipresent about that which surrounds them and of course the future is uncertain to them and so in terms of the effects over time they have never had, nor have they, nor will they ever have, knowledge that is omniscient. To take action with finite knowledge - which interferes with the dynamics of a system that is of an infinite nature - and which would ultimately affect other humans unjustly (because the arbitrary decision is error-based), in disregard for others, is certainly egotistic. In other words, only someone who is ego-driven (for whatever reason: out of ignorance or out of the lust for power, etc.) can have the audacity to try to impose their limited and narrow understanding of "how things should work' on others.

This is in contrast to the non-ego-driven behavior which comes from the recognition that there is no moral authority to alter that which is divine (infinitely complex and operating by invisible forces that can be described as having qualities such as grace, unity, justice, bounty, mercy, peace, etc.). The forces of economic equilibrium are operable and powerful and symmetric and reciprocating in ways that are incomprehensible, and are completely and truly independent of human interference. Only someone who is ego-driven would substitute their narrow arbitrary view for a magnificent, all-encompassing potency.

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Government As Seen By Mises And In The Divine Economy Theory.

Minarchists agree with this statement by Ludwig von Mises:

"Government, i.e, a social apparatus of coercion and compulsion, is a necessary requisite of peaceful cooperation. The market economy cannot do without a police power safeguarding its smooth functioning by the threat or the application of violence against peace-breakers” (Human Action, p. 324).

The key to understanding this in the context of the divine economy theory is to acknowledge that the difference between the State and the government is the perversion resulting from ego-driven intervention (using, or should I say abusing, the coercive powers of government) and subsequently (or precedently) justified by ego-driven interpretation.
 

This difference between them can be best understood using new terminology. The divine economy theory introduces the terminology of 'ego-driven interventionism' and 'ego-driven interpretation' which is an advancement in economic science because it not only explains the deviation from the free market, but also since it identifies the disease, it suggests ways to remedy this malady through education and through acknowledging that inviolable property rights are human rights.

Government as a contractual agreement - using an assessment to pay for services rendered by the created administrative entity - is merely one of many different means that can be used to accomplish the ends chosen. This chosen means - government as described above by Mises - can still be voluntarily chosen as part of the consultative process in a society as long as there is no coercion preventing people from leaving that jurisdiction or no coercion to prevent other means from being tested in the effort to find the best means.

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Spiritual Maturity Reflected In The Economy.

The state of affairs at any point in time reflects the spiritual maturity of mankind and the corresponding condition of the economy. As mankind as a whole matures, individuals increasingly care for themselves and for others. The economy always fully serves at the level it is capable of as an institution with divine potential, but unfortunately it has historically been significantly constrained by human intervention.

MORE THAN LAISSEZ-FAIRE, p. 7

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Classical Liberalism Of Today Stops Ego-Driven Interventionism.

Classical liberalism is not a thing of the past that offered something that fell short and never grew beyond that partial knowledge. I am a classical liberal and I am making contributions to classical liberalism in this day and age and I can honestly say that it is now a proven fact within economic science that there is no moral authority for any interventionism, economic or social. Not only in the logic of language but also using subjective modeling techniques, all interventionism is proven to be a corruption of the natural order. Therefore classical liberalism is alive and well and it is able to eliminate the State.

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The Laissez-Faire Natural Order Is Now Modeled In The Divine Economy Theory.

"Say, like Molinari, went to great pains to denounce the use of force in all human affairs, especially when used by the state or the privileged political class. The state was nothing more than a tool used by the politically privileged to maintain an "artificial order" which endures only through force...the greatest enemies of the laissez-faire liberals were the monopolies, whether granted to privileged individuals or exercised by the state itself."
 --Chapter 24. David Hart. Gustave de Molinari and the Anti-statist Liberal Tradition

The interesting, commonly-agreed-upon part of this statement is that there is an 'artificial order' that is diametrically opposed to laissez-faire. This implies that there is a natural order that laissez-faire operates within. The classical liberals hinted at this and made numerous contributions of tidbits down throughout history about this natural order. The breakthrough in economic science right now is the discovery of a way to model this natural order and that is what the divine economy theory is all about!

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Divine Economy Theory Is Starting To Reach The Economic Literature.

Although you mention the divine economy and examine it through the lens of 'spontaneous order' and the 'organizational' lens, neither of these captures the divine economy as unfolded in the divine economy theory.

I am grateful though that you are using the term and identifying it as a 'variety' of economics. Indeed, from my perspective the divine economy theory is an authentic economic science in the classical liberalism tradition that comes from the harmony of both science and religion; which means that it gives honor to the human spirit, and permits the recognition of the inseparability ethics and economics, and has the potency to address justice, unity, law, and order in the context of transformation.

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