Capital is a Part of Every Thing in the Economy!

When a tool is used or when a fork is used it is true that we forget that these are capital goods. They represent intermediary goods, goods that facilitate. They are now so well integrated into our lives that they are assumed to be final goods themselves, appearing side-by-side with our other final goods.

The important point that I am making here is that capital is infused into every good that we use or consume. The distinction of being a capital good becomes one of relativity. Some intermediary goods are obviously capital goods since they are early in the production cycle.

Capital is so vital an element in the economy that it is simply inseparable. It is like trying to separate you from your intellect or from your personality or from your soul! This is the premise of the Divine Economy Model ©.

Those who deride capitalism may have a good reason since they do not make the distinction between capital and the corruption that comes from intervention. Corruptions such as corporate and political cronyism exist in a system of intervention. These are the parasites on the capital in the economy. As parasites they are seen closely associated with capital but they are an affliction not an outcome.

Capital exists because people have a vision for the future. Capital is what fulfills that vision. Capital goods are the steps taken in that direction. It is not critical that we recognize a fork as a capital good. What is critical is that we stand tall and boldly counter the biases about capital that are being promulgated in this age of economic ignorance.

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The Ego-Driven Interventionists Are the Cause of Disease.

When the interventionists have the license to meddle in the economy they demonstrate their ignorance and their intentions. Their lack of understanding of savings is a perfect example.

However, savings is not difficult to understand. It is the choice to consume later. So there is a very small difference between consumption and savings. It is simply the time frame that is the difference.

Saving is a personal choice made by each person, assuming that we have the freedom to make our own choices. While our savings fulfills the desire we have to consume later it also can earn a return, so it most often becomes capital.

Why are the interventionists opposed to savings? It is because they have allied themselves with political expediency. As the long term vision inherent in a monarchy was replaced with short term democratic cycles it became expedient for politicians to intervene to discourage savings. They may not be still be around in the long run so they want to make a splash now to satisfy their egos. They want consumption to happen now.

Consider the consequences of an artificially low interest rate set by an act of intervention. Savers feel discouraged. The incentive is to spend more now than they would have if they knew the real interest rate. This shorting of savings represents a consumption of capital!

The Divine Economy Model © makes it clear that the capital structure that is built upon savings is the cause of transformation. That is how vital savings is. That is why intervention is so destructive.

The current political systems and structure feed on interventionism and are parasitic to the economy. Eventually the people of the world will see the ego-driven interventionists as the cause of disease. At that point the healing will begin and the divine economy will enable everyone to reap the benefits of prosperity.

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The Divine Economy Will Eventually Purge Itself From Interventionism.

Since the divine economy is a system of justice there is no room for cheating in the divine economy. Bypassing the real mechanism of the economy with artificial data is a type of deception and it is cheating.

The real mechanism of the economy is the market process. It is real because it is the expression of people: what they want, where and how much. The market process is this exchange, it is this communication. If all of this information that is communicated leads to an outcome that is deemed incorrect by someone (in their normative assessment) then the interventionists 'rear their head' to modify the market outcome.

On the surface it sounds 'reasonable' to modify the outcome but let's look a little deeper. Who is this 'all-knowing' person or entity that knows more than the collective wishes expressed in the market process? Consider this: the choices made by market participants takes into account their personal history and assets. Their choices may convey information about their savings which then passes along information about their ability to buy and their desire for goods in the future. If someone arbitrarily alters the market outcome but does not know the reasons why the market process went that direction, then they are disregarding information that the market participants consider important.

No one is saying the market process is perfect, in fact it is always in disequilibrium, but it cannot be improved on by ego-driven interventionists who think that they know more than the dynamic expression yielded through the market process. Think of the market process as a means of communication. Prices represent the words in the market process language. Economic calculation is the meaning of the words. Knowing the meaning of what is being communicated is interfered with if words (prices) are rendered meaningless, as would be the case if someone outside the conversation changes their meaning.

Intervention disregards and distorts prices. It parasitically uses the prices generated by the market process, but if carried to its ultimate end there will be no real prices and the economy will cease functioning.

Why do we tolerate the ego-driven interventionists? They do not understand how economic calculation works, and yet they arbitrarily claim that they know what, where and how much for you and me and for everyone else on the planet! Rest assured the divine economy will eventually purge them from the system, which is nothing but justice. Knowledge about the Divine Economy Model © will be a part of this healing process.

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The Divine Economy is a System of Justice!

The basis of civilization is the contract. I am not talking about signing on the line necessarily. I am talking about the implied contracts that are a part of all human cooperation. The contract represents a trust, a trust that all parties are trustworthy. Those who are trustworthy will prosper and they will contribute to the advancement of civilization. Those who are not trustworthy will quickly be outcasts and will need to either change or become depraved.

As you can see the divine economy is a system of justice. The divine economy is a contractual society. It functions in a way that encourages trustworthiness.

It is the contract that becomes a defining entity for the betterment and advancement of human civilization. It is binding and has the capacity to be defined and refined with exacting precision. The degree of precision necessary all depends on the requirements of the situation.

Every arrangement made has this contractual nature. I can promise my friend that I will come and give him a hand moving some furniture. I can borrow money with the promise to pay it back. I can expect that employers pay employees and that the employees show up and do their job.

It is this contractual society that can be refined and which will bring about justice.

There is one standard, not one for people and a different one for government. This duplicity is where our present-day civilization falters. Combine such duplicity with the government as the holder of the reins of the justice system and it becomes clear how perversely favored government becomes. This is an injustice.

The justice system needs to be made independent of government and it needs to hold all parties accountable to the contracts. If areas of agreement are murky then the contracts need to be defined with precision.

The most powerful starting point for the renovation of justice is to define property rights as human rights and to continually refine the property right contracts.

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Capital Structure Extends as Far as Transformation Allows.

Consider the time structure of an organism like a tree. It starts as a seed. It becomes a seedling and then a sapling and then it begins to take on its structural identity. It continues to mature and it yields fruit.

Now consider capital and its structure. It starts as savings. It becomes investment and then it enters the production process which gives it a structural identity. Part of this identity is the time frame of the specific production process. Does it yield products immediately or does it yield products in a roundabout manner? Regardless, capital is an essential part of structural maturation.

In the divine economy model the capital structure extends from the womb of the market process, where it is acted upon by the exercise of entrepreneurial alertness, all the way to the outer reaches of production and as far as tranformation allows.

The capital structure of the economy is like the plant ecology of a forest. There are many different types of plants of great variety in size, shape, rigidity, function and longevity. All play an important role and all operate according to the principles of symmetry and reciprocity. Similarly, capital is heterogeneous and it, too, is an intricate latticework.

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What is the Pure Rate of Interest?

The ideal is purity. Is it attainable? Is it understood?

To answer these two questions as it pertains to the pure interest rate the answers are: "Not really" and "Hardly," respectively!

The pure interest rate underlies the market interest rate. The market interest rate includes risk, intervention effects, and the impact of these on the cultural time preference. Eliminating intervention and its impact on risk and its impact on the cultural time preference leads to a fairly close approach to the pure interest rate.

Most people see a number that represents the interest rate, and that is all they care about. It is unfortunate but true that there are two layers that have to be removed before most people can see beyond the numbers. First, the interest rate is a price and it serves as a means of communicating about the availability of savings. Monetary intervention is like lying since it communicates the wrong information.

Second, the interest rate is a vital link between the present and the future and so it greatly ameliorates the inherent uncertainty. Without this link functioning well, uncertainty increases. Intervention expands and intensifies uncertainty.

What the pure interest rate represents is an ideal that clearly shows the extremely harmful effects of intervention. In contrast to interventionism the pure interest rate conveys trustworthiness and advances the economy in accordance with peoples' time preference.

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Athletes, Explorers and Profit Seekers are Noble!

What is the difference between profit and loss? The difference is the correct decision made about a future event! Because of uncertainty there is always risk involved in decisions.

What are some analogies to profit and loss? If I am an athlete I choose a difficult and often grueling lifesyle to master enough skill to be the best. What if I lose the competition?

If I am an explorer I am trying to find the object of my quest? Not every explorer succeeds.

But if I am the best athlete and I win the medal or if I am the explorer and I make the discovery, am I scorned as evil and labeled with unpure motives? No! The same human quality is being exercised by all of these noble individuals. The profit seeker is aspiring in a field of endeavor just like the athlete or the explorer.

To scorn profit seeking degrades our human reality just like scorning an explorer would degrade our human reality. If an explorer uses methods considered uncivilized (for example, the early American explorers used native people to facilitate their explorations) the 'institution' of human exploration is not denigrated. The ignorance of the explorer is recognized as the historical condition and is seen as a weakness, but the idea of exploration as a noble deed is always held up.

To be just the same 'rule' needs to be applied to profit seeking. The profit seeker can always be refined and made more perfect but the idea of 'exploration' for profit opportunities needs to be justly seen as a noble and exalted deed.

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The Purchasing Power of Money is an Indicator of Economic Disease.

Power is at your fingertips! That is the reason for having a medium of exchange. It is by the means of a medium of exchange that the barriers that exist in barter disappear.

With this powerful tool - money - the market process accelerates and all types of exchanges flourish. The language of the market then functions at a high level leading to much coordination and cooperation. Money has purchasing power!

This is the condition of the economy when it is 'healthy.' This is the way the divine economy works.

But then we have entry into the system by ego-driven interventionists who have as their objective to 'correct' the economy in their favor. One of the symptoms of this disease - interventionism - is the loss of purchasing power. Its ramifications are greater than just a decrease in purchasing power since it also causes discoordination, and it causes partisan bickering rather than cooperation.

Therefore the purchasing power of money is an indicator of economic disease or of economic health. In an economy free from intervention the purchasing power of money is always increasing, as depicted in the Divine Economy Model ©.

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Blog Slowdown as Next Book Approaches Completion.

I am in the final stages of writing my second book and so I have less opportunity to write my blog contributions. Please browse some of the earlier ones during this lull. I will write a few, perhaps once every 3 or 4 days for the next week or two.

The Productivity of the Capital Structure and of Property Rights.

Productivity is easily recognizable as an economic concept and it receives much attention. In the Divine Economy Model © productivity has been placed in a quadrant the boundary of which is defined by capital structure and property rights.

In this context productivity comes to life. The means to improve productivity is capital and the structure of capital over time and across the spectrum of economic production. Equally as influential upon productivity is the existence of property rights. If my efforts are rewarded I will be more productive, it's as simple as that.

Additionally, the Divine Economy Model © places productivity in the domain of transformation and law. Of course productivity leads to the transformation of something from one degree to the next but it also stirs a sense of accomplishment and stimulates further creative acts. Finally, as the law protecting human rights (and its most important manifestation - property rights) becomes more ideal there will be a corresponding increase in productivity.

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Property is the Standard Indicating the Degree of Interventionism.

The most primal ingredient of the economy, according to the Divine Economy Model ©, is the recognition that property rights are human rights! The economy exists only because human beings exist. That sounds simplistic but it far more profound than that.

The human spirit expresses itself, and that expression then comes into existence. This replicates the creative power of God (known as "Be and it is") since 'we' are created in His Image. This is why the economy originates with the human. To carry the profound implications further, this is also why the economy is divine, because human beings are divine.

But the point of this posting is property. The status of property rights is tremendously significant. Property is the standard of measurement used to determine the degree of interventionism. It is the indicator showing how far we have gone towards socialism, and towards totalitarianism.

In the divine economy all intervention is a corruption. Interventionism is an act that robs the property rights from someone somewhere. It is an injustice and it is a violation of human rights.

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Immeasurable Importance of Immeasurable Time Preference!

Mortality, our connection to our earthly existence, is what makes time a scarce resource. Our constant perception that time is omnipresent makes time a dominant element in the economy. Yet despite this very obvious importance of time the concept known as time preference appears as a major economic determinant only in classical liberalism.

In a sense time preference is self explanatory. Because of time we humans prefer things now rather than later.

The subtle significance of time preference is that the future is bridged to the present. Future goods can be given present value, ultimately as a result of time preference. The willingness of people to finance any efforts that are not immediately, palpably fruitful depends on the degree of confidence there is in the future (as expressed in time preference).

Now comes the reason time preference is disregarded by empirical economists - it is not directly measurable! It is reflected in the pure interest rate which is also not directly measurable! Those 'economists' who are after convenience rather than seeking to understand time preference leave the scientific arena without discovering its significance.

The whole world of capital and capital structure came out into the open to those patient, probing economists of the classical liberalism tradition because they sought to understand time preference.

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Imperfect Knowledge is an Economic Truth Extraordinaire!

The exciting aspect of imperfect knowledge is that it is a relative condition. It is always a relative condition, the economy is always in disequilibrium, and human beings are always imperfect but striving for higher degrees of perfection.

This is what makes knowledge so powerful. It is what resolves the critical aspects of our imperfect knowledge. Knowledge is the ingredient of the economic matrix that plays the role of overcoming our condition of imperfect knowledge.

It is by way of knowledge that order, transformation, unity, and justice become operational, according to the divine economy model. Knowledge is what serves as a foundation for law. And most vitally it is knowledge which is acted upon! The action then generates more knowledge (and exposure to more imperfect knowledge) which drives the perpetual cycle onward towards perfection!

As you can see 'imperfect knowledge' is not something that should be removed from economic models to make them manageable. Imperfect knowledge is a wonderful and glorious part of the human reality. The divine economy model rests firmly on the notion that humans are imperfect, striving for perfection.

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The Consumer is King in a True Democracy!

There is a flood of rhetoric about democracy but that ideal can never be achieved in the political arena. The true democracy is the free market, where each person's purchase is their vote. Those productive members of the community who provide the people with what they want get the most votes. If someone who has served in the past takes the people for granted, serves their own interests without regard to the community, they will stop receiving business (votes).

The beauty of this vision of democracy is that it is a blend of a monarchy and a democracy, in a way. There is a king, someone who is sovereign. It is the consumer who is sovereign. Which means that the same voice of the people (democracy) is the voice of the king!

In a free market all prices are determined from the subjective values of the consumers. The producers use this price information, seeking the votes (purchases) by making the products that people want. They do what the king(s) requests!

It is clear from the divine economy model that intervention into the economy runs counter to democracy and fosters corruption and advances socialism. Socialism and its precursor - interventionism - makes the consumer a peon, dethroning the king.

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Leisure is a Very Productive Pursuit!

Once basic subsistence is exceeded, human beings aspire to higher goals. One of these higher goals is the enjoyment of life called leisure. It is incorrect to think of leisure as unproductive because when a person does something that they enjoy they are likely to be very productive in that pursuit.

Leisure, it turns out, plays a significant role in transformation and so the effect it has on human capital cannot be discarded. All of a sudden leisure looks like a very productive force in the economy!

When we leave behind normative economics and recognize that the human operating system is praxeological and universal then we can begin to appreciate how the divine economy works as an expression of the human spirit. Leisure is a very important expression of the human spirit. Honoring the different forms of expression by finding how they fit into the divine economy model is a useful mental exercise that leads to a greater understanding of economics.

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The Contractual Nature of the Medium of Exchange.

Money can actually more aptly be described as a medium of exchange. By this description it can be seen that money facilitates the exchanges that take place in human life. It is by this indirect method that people can get what they want, and they can sell what they have to offer, without worrying about matching commodities. It is an advancement over barter.

Historically the commodities that were recognized to have value universally and that were easy to transfer to others, these were the commodities that served as mediums of exchange. The tendency towards having a universal medium of exchange narrowed the field to one or a very few commodities.

A medium of exchange represents a contract. The medium of exchange has value inasmuch as the contract is honored. Ever since its beginnings the best of the mediums of exchange were measurable and verifiable.

The justice on which the divine economy model is based assumes trustworthiness. Laws need to be strengthened to protect the contractual nature of the medium of exchange.

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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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The Divine Economy Model Uses the Subjectivist Methodology.

Since each person is unique there is only one person who can decide what is best. Each of us has that right and responsibility for our own self. When we act purposefully, exercising our right and responsibility, we do so based on our knowledge - our expertise - about one subject. That subject is ourself.

Subjectivism is based on an acknowledgement that this is how human beings behave. Whatever value a person places on something is derived from their own personal likes and dislikes ranked ordinally relative to other things.

Since humans make decisions subjectively the appropriate methodology for the social sciences is subjectivism. Using the subjectivist methodology leads to the discovery of universal laws that can then be used to understand the economy. The divine economy model is based on subjectivism and it carries forward the classical liberalism tradition.

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Willingness to Work is an Act of Transformation.

What really seems to be taken for granted is the fact that we are created and created unique. Consequently the purposeful action that irresistably comes from us may - as a result - be seen as ordinary or even further denigrated to a loathsome state where purposefulness is seen as sheer drudgery!

Time for a reality check! Our reality is truly noble! We are created unique which leads to division of labor and all its bounteousness.

This is where the willingness to work finds its proper station. Each of us has something remarkable and unmatched to bring into this world. Doing so is a way to express thanks to God. In the divine economy model the willingness to work is an act of transformation and it is an expression of the nobility of the human spirit.

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Division of Labor Brings Us All of These Things!

Noone out there can pretend to imagine that they could have everything that they use daily by making it themselves. Who can put together a computer, make clothing, produce foodstuffs, discover new medicines, and compose and perform inspiring music, not to mention the plethora of other tasks that we take advantage of?

Each human being is created unique and when that potential becomes expressed through purposeful action something comes into existence that is also unique. It may be a new way of doing an ordinary task which leads to greater productivity, which then frees up resources that are used to make new things. Or it may be an act that leads directly to a new and unique product or service.

We all are the beneficiaries of this aspect of God's grace. Our God-given uniqueness leads to division of labor; and division of labor brings about the tremendous bounty of goods and services that we (perhaps) take for granted.

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Price Theory is the Study of the 'Language' of Economic Order!

Order in the world cannot exist without a bridge between the individual and society. Human beings are social beings. Order is the outcome of cumulative expressions of value across the whole. It is directional and representative.

The communicative vehicle used to convey value is price. If I value something more than the person who sets a certain price and I value it more than other things then I buy it. Everyone does this, and this is like a language telling those who are listening how to order things.

Price theory is a study of this 'language.' Pursuing this analogy further it is the entrepreneur who listens most skillfully and it is the capitalist who publishes what the speakers ask for. Another use of the analogy makes it clear that the reason a 'planned economy' cannot work is because that would be the same as outlawing the use of words and then expecting the language to function.

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A New Definition of Economic Equilibrium.

Equilibrium is one concept that appears universally in all economic literature. Despite the differences in the ideas about how its significance plays itself out, the equilibrium forces are too powerful to ignore, which accounts for the universal agreement.

The center of the divine economic model is a restatement of this equilibrating force. The center of the divine economy model is called the 'divine economy.' This is a new definition of economic equilibrium.

The equilibrium called the divine economy implies that things that run counter to the Will of God cannot sustain themselves. The prosperity infinitely bestowed upon mankind is inherently built in. As mankind becomes more 'in His Image' by acquiring virtues the economy will respond accordingly.

Human interventions into the economy, therefore, are actually acts of corruption within a divine institution. There is no doubt that we live in a time when people doubt that God is the All-Bountiful Provider. It is this lack of trust that tempts us to interject ourselves into the economy. Despite having imperfect knowledge and despite our obvious uncertainty of the future we delude ourselves into thinking that we are equipped to delve into the economy. There will come a time in the future when all these efforts will be seen as child's play that occurred before the promised age of maturity. The sooner we enter this age of maturity, the less turmoil and suffering for all.

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An Unsurpassed Definition of Economic Intervention.

One way of understanding intervention is to see how and where it appears. Using the divine economy model a straightforward definition of intervention, one that has not appeared in the economic literature yet, can be set forth.

Intervention is anything that disrupts the order (the market), the transformation (the capital structure), the law (property rights) or the human spirit (purposeful action).

Intervention hampers the flow of information, alters the perceived time horizon, weakens human rights, and discourages the human spirit. But the incredible force in the economy known as the tendency towards equilibrium makes all these consequences of intervention ephemeral. The moment intervention is stopped the economy heals itself. Then information flows, the time horizon dawns, human rights return, and prosperous encouragement of the human spirit reigns.

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Eminent Domain Laws Violate Property Rights!

In the first edition of my first book I did not discuss taxation however I will occasionally touch on this subject in this blog. Taxation is an act of intervention, imposed upon the divine economy, and so it impacts all of the cardinal 'petals' of the divine economy model.

To demonstrate how pervasive and complex are the effects of taxation let us consider eminent domain. Initially taxes are taken from individuals. (This coercive act is a source of grief to the human spirit otherwise it would be voluntarily sent in as a contribution!) Once these taxes form the revenue of the government the assumption is that it pays for services rendered, not for a pool of funding to be used to motivate the government to expand itself and to confiscate people's property.

Eminent domain laws violate property rights. It is a narrowly defined type of taxation directed specifically at owners of pieces of property desired by the government for its purposes. It is such a severe tax that it physically removes the individual from their property. The net tax is the difference between the real market price and the 'fair market price' given by the government. If the property is not on the market because it has great intrinsic value to the owner then this tax, eminent domain, is extremely high.

Property rights are human rights. Laws that actually serve justice protect property rights. Eminent domain 'laws' violate human rights, nor do they serve justice. Eminent domain law is a misnomer and is used by government to confiscate property. By using eminent domain laws the government makes confiscation legal, nevertheless, it is unjust.

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Capital is the Most Limiting Factor!

One of the reasons why primitive thinkers, like Marx, didn't identify capital as a vital economic element is because capital is not an independent productive factor like land and labor. But life is more complex than that, with manifold subtleties and nuances. Humans are not merely the physical frame!

Although not an independent productive factor capital is unmistakably of great significance. In fact capital is the most limiting factor in the economy!

There are two imperceivable qualities, to those who lack vision, that are inherent in capital. First, there is the human spirit which motivates humans to act and act in ways that lead to continual improvement. The human operating system is divine and it is ever-advancing towards its infinitely great Creator, knowingly or unknowingly, and irresistably. Second there is time, the elusive economic element that is efflorescently full of uncertainty.

There are those who want to contain all this in an imaginary form; they play games with definitions of human beings and with time so they can devise equations. They make the same errors as Marx!

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Social Cooperation Brings about Civilization.

Once individuals express their subjective choices through action it becomes a part of the social nature of humanity. And it is true that humans are social creatures.

The market is the social expression of the subjective choices of all of the individuals belonging to that civilization. We are now living in the era where the civilization is worldwide.

The market is an expression of social cooperation and it is this social cooperation that brings about civilization.

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Entrepreneurial Action Advances Intertemporal Prosperity.

One of the major features of the divine economy model is the immersion of its modus operandi in the matrix of latent and active entrepreneurship. This step of the model is described as the "Driving Force of the Divine Economy Model."

It is true that entrepreneurship operates effectively to facilitate transformation, based on information provided from the market process. This action taken then serves as information and knowledge for the next round of perception and action.

This leads to a discussion of the intertemporal effects of entrepreneurship. Symbolically, the divine economy model axis can be visualized as moving to the right, representing an ever-advancing civilization. By definition, in the model, then both justice and unity are advanced as well by active entrepreneurship.

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Prosperity of Expression Leads to Prosperity!

The divine economy, one that is uncorrupted by human intervention, allows the greatest expression of the human spirit. It is within such an encouraging environment that the unique talents and faculties of the individual prosper, which is conveyed speedily throughout the economy by the potent elements which are described in the divine economy model. Then the prosperity of expression translates further and undergoes transformation such that it causes prosperity for the entire system.

The further translation of prosperity is another way of stating that knowledge and the flow of knowledge in the system stimulates others and other processes. The transformation that radiates from the individual's prosperity of expression happens as a result of alert action by entrepreneurs and the application of capital.

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Socially, the Human Spirit is Sheltered by Laws.

There is shelter for the human spirit and that shelter takes many forms. Intellectually the human spirit is sheltered by creativity and independence. Physically the human spirit is sheltered in the human body. Socially it is sheltered by laws.

When there is an environment that encourages and supports human action the economy is operating close to its relative capacity. I speak of relative capacity since the capacity of the divine economy is ever-advancing.

Laws that encourage and support human action, and not laws that discourage or hinder human action, lead to prosperity according to the divine economy model.

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Strengthen the Laws that Protect Property Rights

The structure of the economy that brings about order is the capital structure. Amazingly it is also capital that is the transformative element, in a physical sense, as it is applied by the entrepreneurs who are alertly seeking out the needs and wants of the people.

None of these - the capital structure, capital itself, or entrepreneurial action - can function properly without the protection of law. Without protection of property rights each of these vital ingredients of the economy is stifled.

Either out of economic ignorance or from deliberate acts by persons indoctrinated in Marxist thought, many societies are continually undermining the laws that protect property rights thereby sapping the transformative power of the economy. The divine economy model clearly shows that strengthening laws that protect property rights brings about order and transformation and also justice and unity.

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Interventionism Brings About Chaos.

The order of things in the economy is not static but it is continually adjusting to meet the peoples' needs. There is, necessarily, transformation taking place all of the time.

What can be easily seen from the divine economy model is that the order that forms as a result of a response to needs has structure, and that particular structure is an intricate latticework of capital infused into the production process. Order has structure and the structure leads to order.

What is clear at this point is that capital is a cardinal element of the economy. If the structure is destroyed then order is replaced with chaos. The flow of knowledge becomes nearly impossible in a state of chaos. Thus Marxism, communism, socialism and interventionism bring chaos because they attack capital and private property thereby destroying order.

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The Market Process Moves Quickly to Bring Order.

Think about how the human spirit has a natural sense of order. Not one that is prescribed but rather one that is recognized and sought out. It is naturally a part of us since we are social beings.

It doesn't take long for systems of organization to move progressively towards those ways and means that are most beneficial and most responsive. These are the characteristics of a market - in other words - a market has emerged. And since the market is a process, it moves quickly to bring order and it will continually change for the sake of all.

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Protecting Property Rights is the Ethical Thing to do!

In the real world everything is in disequilibrium tending towards equilibrium. In the real world there is uncertainty because the future is unknown and there is limited knowledge because we are not all-knowing. Mixed together in this state of affairs is the time element and the subjective nature of human actions.

The ethics of futurity, a law of justice that needs to be in place to honor entrepreneurial service, stimulates actions that ameliorate the conditions of uncertainty in the economy. The ethics of finder's keepers, another law of justice that needs to be elucidated and upheld, facilitates discovery which lessens the impact of and narrows the margin between what is known and what is unknown.

Because these creative acts of the entrepreneur originate within and can be directly attributed to the entrepreneur they constitute part of his/her property rights. Protecting these property rights is the ethical thing to do!

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The Ethics of Entrepreneurship.

If you discover something, say, you are walking along a creek and you find a stone that has an interesting shape, this rightful pleasure is justly yours. This is the ethics of 'finder's keepers' and it applies to entrepreneurship.

If you happen to be one who thinks about the future, in contrast to others who are focusing on the present, and as a result you act in a manner that makes the future better, in all fairness, you deserve to be rewarded. This is the ethics of futurity and it applies to entrepreneurship.

These are aspects of justice that appear in the classical liberalism tradition but that are not yet given the respect that they deserve, in general. The divine economy model demonstrates that when justice is violated somewhere in the system, the outcome will be disunity.

The enigmatic nature of the entrepreneur and ignorance of its relevance is the reason that this type of 'just' compensation is not yet recognized. Part of the enigma comes from the fact that everyone is latently entrepreneurial but that only some are actively entrepreneurial. And part of the enigma stems from the inherent uncertainty and limited knowledge that makes some entrepreneurial actions non-fruitful. Yet without these acts of 'finder's keepers' or 'futurity' things would come to a standstill!

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The Human Spirit Aspires to Know!

What is the difference between the human being and the human spirit? A human being is a person. The human spirit is the energizing essence behind the motive to purposefully act.

From its primordial matrix of the human mind and soul the human spirit aspires to know. This is why the axis around which all things revolve in the divine economy model is the 'nature and role of knowledge.' Its nature is for the human spirit to seek knowledge and its role is paradoxically to enable the human spirit to seek knowledge.

This is where there is an interface with the divine - where the human spirit manifests itself in purposeful action. Every instance where there is purposeful action is such an interface with the divine. Regardless of how far along the path of social evolution, whether culturally advanced or barbaric, the human actions that begin the economic processes are expressions of the human spirit.

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Dynamic Interplay Between Unity and Justice.

There is a vibrant and dynamic interplay between unity and justice. They are part of the symbiotic nature that comes from human cooperation. There is constant motion in this interplay since we are always learning more about ourselves and others.

Similar to the condition of disequilibrium - where there is perpetual give and take - the forces of unity and justice are 'alive' and active and ever-changing. Dissimilar to the strong tendency that always drives the economy towards a center called equilibrium (functioning much like gravity), the poles of unity and justice advance onward towards a horizon just like our galaxy speeds through space.

In the divine economy model, all of the foundational economic elements are irresistibly drawn by equilibrium forces towards a center designated as the 'divine economy' but the poles of the model - unity and justice - remain impervious to this centering tendency. The force that the poles of unity and justice answer to is 'external' and in a ever-advancing direction.

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Law and Order Go Hand in Hand.

Law and order go hand in hand. Implied in order is an operational practice, one that inherently guides people individually and at a higher, more cooperative level. Implied in law is a truth that defines and describes the outcome with a high degree of certainty. The causal relationship is strongly from law towards order.

The most basic right from which springs all others is the property right, defined broadly enough to include the human being. Laws that protect property rights (which are essentially human rights) serve to bring about the divine economy!

When money is counterfeited it violates someone's property or someone's title to property and this is where the practical side of law comes into play - law is there to protect against injustice, such as counterfeiting by governments or individuals.

The divine economy model shows that by violating the foundational element of law (property right/human right), it leads to the atrophy of order, it squelches the human spirit, and it diminishes the transformative power given to us by a Loving Creator.

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