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

12. Indices of Value Accumulation in the New Paradigm
We have given an overview of the problems inherent in conventional economic theory and method; we have also proposed a radical new way of approaching a new paradigm for economic theory and practice. We have illustrated that a new paradigm must have a focus that is global and comprehensive and yet have the dexterity to be problem-oriented and solution-directed. In this sense, a new paradigm must also be decision- or choice-oriented in focus. To this end, we have outlined the architectural or decision functions, which could enrich the level of economic discourse and practice. We have also provided the Vicos illustrations of the comprehensive global and local fora.

We conclude with a more specific explanation of the evolution of wealth and capital in economic discourse to the challenges of a newer “wealth” epistemology, we would submit that the approach we recommend will be well-suited to properly account for the omission using conventional economic measures of such vital value generating indicators as found in the service sector of the economy in social process.

Hence, it may be useful to start with the problem of the housing bubble and the “$35 trillion” of “value” generated by it. The critical questions are, are these new value instruments such as credit default swaps and related instruments a real indictor of value in social process, or are these really an illusion of real value? Adam Smith, for example, saw the production of value in industrialization. This represented a closer focus for the creation of real value, than the tracks of the financial markets have taken. In our time, importance of a framework of more realistic indices of value in social processes lies in Veblen’s thesis about the parasitical leisure class. Marx’s analysis of the importance of political economy and class stressed, inter alia, the value of the building and control of capture, which facilitated the generation of the monetization process. This, in turn, facilitated the emergence of the states controlling the political economy (the command economy), by elites who controlled the state.

The rise of the new liberal economy validates the role of the private sector’s control over the political economy. Here, the private sector corporately exercised, generates a tendency to plutocracy. Neither of these perspectives solves the problem of realistic indicators of economic value, how to measure it, and how to make it serve the common interests. In short, the old paradigm distorts reality. It does not help.

The important economic theorists insist that salient transformations are happening in a world of economic value and we need a more comprehensive focus of inquiry to understand their social process impact and consequences. For example, Orio Giarini has indicated that global economic relations today are largely shaped by the emergence of a global service economy.14Giarini states that,

“At his time, rightly, Adam Smith underlined the priority of industrialization, which was in between agriculture (an important sector, but which of course had to improve) and services (depending on “dedicated” people, but with no recognized economic relevance).

The point is that services tend today to provide about 80% of all the “productive” activities. The higher levels of technology, in most cases, become more and more efficient every day and the tools are becoming cheaper. But they require more and more services to conceive, manufacture, distribute, finance, control etc.

Some economists (see those who were involved in the GATT discussions) tried to include in the “normal” economic theory, the evidence of the growth of services, saying that they are simply products that you don’t feel even when they fall on your feet.”

A proper appreciation of development of services in the nature of their real economic value is linked to the notion of risk management in time. This suggests that an aspect of value is linked to the future. This has profound implications for the science behind the notion of a service economy. According to Giarini,

“Uncertainty and probability are the rules of the game (a little like going from Newtonian physics to Quantum physics). The economic value depends largely on the period of utilization, which also includes costs. At the beginning of the whole process, research is also based on managing probabilities, as well as market success, maintenance and security up to disposal costs. Value is necessarily linked to the notion of performance (in time). Entrepreneurs know this.”

Unfortunately, conventional theory underappreciates the salience of service-related value as an indication of producing wealth in society. If our focal lens about epistemology of other wealth generating forms of activity such as the service sector were made a central indication of the emergence of the new property, we would in effect be taking steps towards a new social reality, which implies a realistic optimization of wealth and a better distribution of it. A better distribution of wealth would also be an indication of social empowerment. Social empowerment would probably be in a progressive direction and the new property and its distribution would stimulate important developments for strengthening the global rule of law and global governance as processes generating a more enlightened regulatory scheme, which promotes and defends human rights law.

It would also be appropriate to examine important legal forms that new property might take.

Property as a form of wealth is one of the most enduring of legal institutions. Its chief characteristic has been its conservative nature. The legal myth is that stability mandates changes in the nature of property are slow and incremental. This myth still has vitality in legal culture. However, in the real world property is actually one of the most dynamitic institutions in social process. The forms of new property are often far ahead of normal legal regulation of its creation, uses and termination. In fact, very few property lawyers would effectively describe the nature, functions and boundaries of the new financial property institutions. Additionally, new property forms are liberally incubated in the human imagination and emerge through complex social and technological processes into new forms of property such as intellectual property. A new paradigm must account for real conditions of property creation, duration, and termination no matter how contingent these processes are and also the value of human capital and its relation to social capital as well as the dynamic role of technological innovation generated by human and social capital and how it impacts on the social and economic consequences on society.

13. Conclusion
We conclude this paper encouraging the reader to appreciate the relevant economic and political markers and their interdependence and interrelationships. We have stressed that we need a comprehensive contextual approach that permits a focus on problem particularity and permits the use of multiple methods cutting across disciplinary lines.

The contextual map below represents the idea of a comprehensive global social, economic, and political process with the capacity to link a multitude of markers and pointers of relevance to economic theory and policy.

We hope our contribution facilitates the further exploration of the appropriate boundaries of political economy guided by the normative imperative of universal human rights and universal human dignity.

14. Orio Giarini, “Need for a New Economic Theory,” Eruditio 1, no. 4 (2014): 52-54.

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