Towards a Global Comprehensive Context-Driven and Decision-Focused Theory and Method for a New Political Economy

4. The Necessary Elements of a New Paradigm11
If we are searching for a global economic theory important to the entire global community, there would appear to be three things that the approach to a new paradigm should develop. These four characteristics are as follows:12

  1. It must be contextual, i.e., it must perceive all features of the social process of immediate concern in relation to the manifold events comprising the relevant whole.
  2. It must be problem-oriented.
  3. It must be multi-method.
  4. It must be interdisciplinary with a focus on the dynamics of global interdependence and global inter-determination.

A new paradigm must have a focus that accounts for the social process context of the global economy and contextualize an orientation to the global processes specialized to the generation of “wealth.” It should clarify the concepts of reciprocity, barter, and money and examine the process from the perspectives of the participators including their perspectives regarding capital accumulation, surplus and the fundamental myths surrounding capitalism, socialism, and cooperativism. It must examine the concepts of free market and command economies. It should clarify the base values, which underlie the wealth process. It should examine the strategies relating to the conservation, production and distribution of wealth, introducing particularized strategies that relate to finance, production development and research, procurement and services, as well as aggregate strategies that for example are required in a money economy which in order to operate smoothly must generate a stable monetary unit and an adequate monetary supply. It must account for particular and aggregate outcomes and effects. In particular, the indicators of national wealth. Attention is given briefly to the gross national product, net national income, money supply, and the role of the government sector.

As a background to the evolving international norms of political economy, it is useful to consider the crisis of the great depression of the early 1930s. One of the great myths of the period was that the market was a completely autonomous, self-regulating entity. The great challenge to this form of economic orthodoxy was that the Great Depression was caused by human choices and could be resolved by human choices. Additionally, one of the struts of the belief in an absolute market was that it was the only appropriate guarantor of liberty. Again, Roosevelt challenged this idea by suggesting that necessitous human beings experienced diminished liberty. The central role of law invalidating the invisible hand of the market was the law’s construction of the meaning of property and contract in particular. The question that emerged juridically was whether property was essentially an aspect of liberty and was juridically absolute. This required a deconstruction of the notion of property itself.

The role of the New Deal in regulating the legal foundations of its economic emphasis permitted government intervention to restrain the unlimited power of the private sector often validated by fundamental law. Two of the most important consequences of the victory of the New Deal were reflected first in the Atlantic Charter, which articulated the war aims of the allies. In the war aims of the allies was a future in which there would be freedom from want. These ideas found expression in post-war efforts to give direction to global economic development. The economic foundations of international human rights were expressed in the Universal Declaration as well as several important UN documents culminating in the Declaration of the Right to Development. These developments confronted the emergence of neo-liberal political economy, with a claimed global reach.

One of the important limits on the conventional paradigm of political economy is its stress on excluding certain segments of reality that are generally seen as inconvenient externalities. This approach essentially is excluding the relevant social universe of human interaction which involves the broadest possible range of economic activity. Excluding such activity excludes its economic value and distorts the outcomes of economic inquiry. Let me provide an illustration from the fields of law and economics that provide some promise in bringing in the context to inquiry about the interrelationship of law and economics.

Professor/Judge Posner provides a model of economic social process based on wealth. He believes that wealth is a defensible value.* The model runs as follows: Human beings pursue wealth through institutions based on wealth to achieve more wealth. In this model wealth is a desired goal and wealth at the same time is a base of power to acquire more wealth. The problem with this model is that there are other social values universally identifiable based on either human needs or basic human claims. This is a model that would limit the focus of the economic inquirer.

Now let me recommend a more comprehensive model of social process that includes a comprehensive range of value institutional relationships. Here the model may be stated as follows: Human beings pursue all social values through institutions based on resources. We may now consider the relevance of the other values to a realistic theory of political economy. First, we have indicated that wealth may be sought as an economic value. We may have omitted the fact that wealth may serve as a base of power to acquire more wealth. Wealth may also serve as a base of power to acquire other important values in social process. For example, wealth as a base of power may be used to acquire power, to acquire respect as well as enlightenment, health and wellbeing, skill, affection, rectitude and aesthetics. However, all these other values may be used to acquire wealth. In short, power may be a base to acquire more wealth. Respect may be a base to acquire more wealth as might be the case of enlightenment, health and well-being, skill, rectitude and aesthetics. This picture of value processes interacting with each other to reproduce themselves or to reproduce other value processes is almost an indispensable focus for a realistic global foundation of a new paradigm of political economy. This is a useful way to underscore the relevance of both interdependence and inter-determination in the global social process.

We now provide elements of the context especially relevant to a new paradigm that is comprehensive and particular in its focus.

5. The Context of Ecological Values
There was a time when the conventional wisdom in economics was that nature and related environmental resources were unlimited. Today, the reality of climate change challenges this earlier altruism. A new economics must consider both the potentials and the limits of the ecology of the planet. The ecology of the planet, therefore, is a crucial factor of context for a new political economy.

6. The Context of Global Social Interaction
Global social interaction involves the shaping and sharing of all values. The outcomes of this process generate the aggregate statistics of human development or the lack of human development. One of the most important problems that emerges from global social interaction is the problem of effective power and social conflict. However, the new economic theory must have a useable model of the global social process in order to fully appreciate the problems it generates on a global basis for all values.

7. The Global Process of Effective Power
The global social process reproduces the institutions and imperfections of the production and distribution of global power. It is well understood that the outcomes of global power represent conflict and competition. Additionally, the expression of global power in society is done through the process of decision-making itself. We can call this decision-making according to naked power. Since power expresses itself in terms of conflict, war and often violence, it will be obvious that peace and security are critical foundations for a social process that seeks to maximize its human capital resources. In short, war consumes human capital resources, and does not enhance or reproduce it. The new economic theory must, therefore, account for the global processes that generate and sustain human conflict, since these processes generate deficits in development.

8. The Evolution of Power into Behavioral Constitutional Processes
Conflicts about power do not always endure indefinitely. Indeed, there are periods when the power broker contestants in conflict may see that the continuance of conflict may only result in zero sum losses. This realization may generate the elements of inter-elite collaboration from which understandings may emerge about how to manage power in ways that avoid conflict and promote collaboration. If this happens, a society may emerge with a series of understandings about how power is to be distributed, indeed allocated among the power broker contestants. This level of institutionalization of power will reflect the emergence of the power dynamics constrained by distributions, which have the support of the authority of community members. When there is a form of constitutional process, we effectually have expectations about institutionalizing the forms of authorized decisions about decision-making itself. This is the foundation for the establishment of a system of public order in which all the values are distributed and produced via the authorized institutions of society. It would, therefore, be appropriate that the new economic theory develop and map the constitutive process (local to global) because it provides the framework of authorized decision-making regarding all the basic values in society including wealth. In this sense, a constitutional order that has a working capacity has an approximation to the idea of the rule of law. And the constitutive process is made operative by the constitutive functions of decision-making. Thus, constitutive decision-making may both directly and indirectly influence development and progress. Additionally, a theory of economic novelty would have to account for the decision-making functions.

9. The Functions of Decision-making relevant to a New Economic Paradigm
1. Intelligence. Intelligence, which includes gathering information relevant to making decisions and its processing, storage, retrieval, and distribution to all participators performing decision functions.

2. Promotion. The decision-making function of promotion requires agitation and recommendation of certain policies, which in the form of prescription have the quality of law. In this sense, promotion is a critical component in decision for directly changing the common interest. It is in this sense that we cannot look at economics as value-free.

3. Prescription. This decision function implicates the formulation and adoption of certain policies as authoritative pronouncements in appropriate sectors of the social process.

4. Invocation. This function of decision-making is essentially a provisional decision function that characterizes behavior as incompatible with the law and goals of the community. Those who perform the invocation function raise the question of what initiatives enhance or violate community prescriptions.

5. Application. This is the authoritative characterization of conduct as lawful or unlawful. To secure lawful ends, the applier must use tools of some form of sanction to secure appropriate application. In terms of the objectives of development, the consequences of development may be critically related to the actual applicative performance. The new economic initiative must, therefore, give careful attention to the idea of application if development goals are to be real.

6. Termination. The decision function of termination means the termination of something in the status quo and its replacement by something that changes the status quo. New economic theory must ensure the termination of dysfunctional traditional standards and embrace new thinking.

7. Appraisal. The theory of decision-making as applied to economic policy requires that there be constant measures that may be appraised in terms of advancing toward progressive economic goals and avoiding the regression to the opposite.

11. To explore the necessary elements of a new paradigm, we have branched out into advanced international law theory and used concepts developed in that theoretical quest to advance, hopefully the foundations of a new economic paradigm. The following references may be of use: Myres S. McDougal, Harold D. Lasswell and Michael Reisman, “Theories About International Law: Prologue to a Configurative Jurisprudence,” Virginia Journal of International Law 8 (1968): 188-196. A development of some of these ideas in contemporary context by WAAS scholars is reflected in Garry Jacobs and Ivo Šlaus, “In Search of a New Paradigm for Global Development,” Cadmus 1, no. 6 (2013): 1-7.
12. Myres S. McDougal, Harold D. Lasswell and Michael Reisman, “Theories About International Law: Prologue to a Configurative Jurisprudence,” Virginia Journal of International Law 8 (1968): 188-196. A development of some of these ideas in contemporary context by WAAS scholars is reflected in Garry Jacobs and Ivo Šlaus, “In Search of a New Paradigm for Global Development,” Cadmus 1, no. 6 (2013): 1-7
* There are limits to this defense of wealth accumulation when we ask what wealth is for. Does it satisfy greed, or entrenchment of plutocracy?

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