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Considerations about Rationality of Economics

Considerations about Rationality of Economics

1st Premise

Economics analyses the relationship, which exists between demand and offer under the condition of scarcity.

1st Conclusion

The problem of water, ground, or air pollution, therefore, is not an economic problem, for those elements are not yet scarce in nature.

A few past surpluses in agriculture and foodstuffs (e.g. fruit and milk) have been destroyed just for managing the economy under the condition of scarcity, which is the premise of economics, instead of employing them for the survival of starving people.

It is a nonsense (incoherence) to produce and destroy the production at the same time.

Economics seems to be blind facing problems that have a logic different than its own logic. It seems that humanity is a certain thing, while economics analyses something different.

2nd Premise

Offer lies in producing and trading goods and services.

Demand set has the following elements: need, spendable income, and tastes.

In economics a need becomes demand only if it is supported by an income spendable in monetary terms.

2nd Conclusion

Every people with an income not spendable in monetary terms are not economic subjects (even those who can have the most brilliant and powerful ideas).

Therefore, how can we feed economic cycle when consumers have an income not spendable in monetary terms?

Why should we produce when we face consumers with income not spendable in monetary terms?

Finance has solved the problem through money creation with the fictitious multiplication of bank deposits.

Furthermore, money, which has no real value, gets worthiness from the first payee, who gives it worth when create new real worth with it. In such case, then, why is the first payee to pay an interest on money rather then the issuer? Is the current procedure coherent, or we should upset down the process?

How is it possible that the capacity of generating money from the banks by means of multiplication of bank deposits (a process that probably was correct when banks belonged to the Government and it was sovereign in its territory) is now attributed to private commercial and investment banks that in many cases belong to industrial and commercial large corporations?

All this does not seem science, but just tricks for taking advantage from a competence received from false and unjust civil laws.

3rd Premise

Economics investigates under the condition “ceteris paribus” (other things equal)

3rd Conclusion

In order to assess the value of determined functions, economics proceeds with a process which allows to state:”If we suppose that all other variables of a function do not change when we change one of them, then this variable assumes values that can be assessed in relation with a certain variable that we define as constant”.

That is not science, but simply conjuring tricks.

With such a technique economics excludes, voluntary or blindly, culture as element of the set, just because economics is not able to assess or understand culture.

In Economics makes no difference if human behaviour is inspired to love or hatred, cooperation or abuse. In Economics you can see neither “élan vital” defined by Bergson, nor any reference to “Strange attractors” of Chaos Theory, which can be defined only on the bases of cultural condition of a community or the entire humankind.

4th Premise

In Economics competition is rational, and welcomed.

4th Conclusion

Game Theory has demonstrated with Von Neumann, Nash, Taylor, and others, that the pay-off in collusion is always larger than the pay-off in competition.

John Nash has elaborated the Theory of Equilibrium in Competitive Games, assessing how much competitive behaviour is limited in pay-off by the state of equilibrium.

Furthermore, Keynesian model applied by Governments worked good when national economic system were closed. Today economic systems are open and competitive, therefore no deficit spending process can guarantee of activating any economic accelerator.

The only way for improving economic conditions of any community is to invest with ethical purposes in favour of that community.

In a global competitive context deficit spending policy is over.

Unfortunately (or voluntarily), we can find no comfort in Economics, which by a form of constitutional myopia, ignores so many values that should be considered to be objective, therefore credible.

Also Finance, deserving daughter of Economics, can see worth only in monetary terms. For that reason ethical investments are still ignored by major financial organisations.

Up to now Economics and Finance have too much power and too less scientific methodology to understand social problems.

Enrico Furia

School of World Business Law

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