Philosophy Hammer
Philosophy, Economics, Politics & Psychology Tested with a Hammer

104: Marilyn Waring Part VIII:
Glimpsing The Whole

Summary by: Jeff McLaren

The author credits Hilkka Pietilä a Finnish activist as the creator of a model that “most glimpsed the whole.”

“Pietilä’s diagram … describes the nonmonetary part of the economy as the free economy, since it consists of the work and production that people do voluntarily for the wellbeing of their families and for pleasure without requesting or receiving pay. [(Q1)] The protected sector, consists of production and work for the home market as well as public services (such as food production, construction of houses and infrastructure, administration, schools, health, and communications). This sector is, in most countries, protected and guided by legislation and official means, and thus the prices and other terms can be determined independently without too much pressure from the world economy. [(Q2)] Large scale production for export is usually called the open economy, Pietilä calls it the fettered economy, since this is fettered to the world market. The terms of this sector, the prices, competitiveness, demand, and so on are determined by the international market. [(Q3)] Pietilä writes that, in terms of the UNSNA, the whole life of society is geared to support this sector, while it accounts for a quite modest proportion of the total production in any one nation and in the world. [(Q4) (Q5)] In addition Pietilä recognizes that money payment is not the sole criterion for the assessment of work. Work can also be assessed by volume: in terms of labor power involved in the process…or the work time absorbed….”

This system’s perspective and methodology could impute value according to human values observed; it could subtract costs from benefits; and it could allow both qualitative and quantitative statistics. The author writes: “Hikka Pietilä’s concept offers us an alternative, one that, as a legislator and policy maker, I would have found invaluable. It offers us the opportunity for assessing data by way of quality, and quantity, by way of hours and money invested. It invites us to consider interactions. It permits use of all advanced statistical mechanisms. It exposes propaganda in the place of a lack of knowledge or where inconsistencies abound. Its great value is in its application for domestic policies for a nation’s government and in the adaptation that can readily be made for a regional or global picture.”

Bringing this system about could be gradual. We would need to get out of hundreds of international obligations such as NATO, WTO, Basel III, and many “free trade” agreements. We would need to adopt or create a currency for foreign transactions and start determining how we want to live without the “guidance” (ie propaganda) of the economists. We would need to start formally valuing (in the national accounts) according to how we actually value in our lives.

Q1 Here I am speculating and extrapolating to fill in an explanation. I believe the author means that the free economy would include a universal basic income guarantee with a fixed (or no) exchange rate to other currencies. A universal basic income would re-balance any economy in the direction of people-centric goods and services. Statistics could be gathered in any way and on any topic imaginable. A plurality of values could be measured and adapted. For example the “saving” or “store of value” function of money could be limited or non-existent if economic equality were valued. In such a system it is often argued that people would never work – that is without the ability to save and with a basic income guarantee – do you believe that people would stop working in this free economy?

Q2 the protected sector is where money as a motivator beyond the basic income guarantee enters the domestic economy. In an analogous way to how non-profit organizations work in our economy as jobs created to achieve a certain desired non-market end, the protected sector imputes more value than the basic income guarantee. The imputations are based on the legislative value desired by the people. Do you see a need for charities and non-profit corporations in our society? Their purpose and value should be part of the system of national accounts. As it stands now the value of a non-profit is exactly equal to its budget. – however in Pietilä’s concept the ends or goals of non-profit corporations would be incorporated into the national accounts. Their incorporation into the national accounts would give policy makers the ability to see the value as it relates to national goals. We have this in part already; the difference is that health care, education, law enforcement, the courts, infrastructure etc. would have a qualitative value attached to the national accounts. Could you imagine a domestic economy composed mostly of non-profit corporations whose value is determined by their end goal rather than their budget?

Q3 Free trade, in its ideal and as taught in most economics courses, involves the trading of one product from a country with a competitive advantage for another product from a different country with a different competitive advantage. This is a barter system and both countries would be materially better off. By introducing a domestic currencies the nations expand the range of products that can be traded beyond the double coincident of wants (a good thing) but it exposes their populations to the vagaries of the international market (a bad thing). The biggest bad thing a direct connection to the international market brings is the reduction of all higher order values to economic value. The purpose of separating the domestic market from the international market is to keep the good aspects and protect the people from the bad aspects of the international market. The international currency should not be used domestically and vice versa to avoid the lower order value of profit from supervening on the society’s domestically determined higher order values. Do you see any downside to NOT being able to spend Canadian dollars to go to Cuba?

Q4 Compared to 1988 the export sector is now probably the biggest sector of the counted economy in that pretty much everything in all sectors has an international component. Yet this should not surprise us since the system privileged that direction in the economy since its inception. This is an example of how the privileging of an end or course of action in the system makes it come about. Today, is it hard to imagine living in the sixties? Is it hard to imagine living in a world without GNP or GDP (these terms became important as a result of the UNSNA)?

Q5 The production of military hardware is profitable for the produces. The use of military hardware is non-profit. It is expected to be put in harm’s way; to be destroyed. This is analogous to an export oriented economy that produces and produces without a real return. In this sense our market system is very wasteful – fashion and design obsolesces are examples of excellent tools to keep production up without imparting any permanent value. A goal of production that would serve people (consumers) better would be to get a better return on the investment that is a long lasting benefit. What would be better for people and the environment: producing a new washing machine every five years or producing one that lasts 100 years? Export oriented economies (like China, Japan, Korea and Taiwan) have developed their GDP but have become dependent on a low currency relative to the US to the US’s advantage – in this sense they have enslaved themselves in a gilded cage. Are they really better off?

© 2008 - 2017, James Jeff McLaren