The necessity to change the rules of the current economic system is quite obvious.

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from Ikonoclast

Conventional economics is a prescriptive discipline pretending to be a descriptive discipline. I find it useful, at a first principles level of thinking, to distinguish between “rules” and “laws”.

(1) A “rule” is a prescribed guide for conduct or action by any agent (human or machine).

(2) A “law” is a fundamental law of (physical) nature described by the hard sciences after extensive observation, experiment, deduction and mathematical analysis.

A “rule” is made in a given way by culture, custom, convention, regulation or legal prescription and could be made in other ways. A fundamental law of nature is unchangeable by humans.

A “rule” may be possible or impossible to obey or execute depending on its relation to natural laws. Rules may also be executable for a period of time until natural limits are reached. Executable rules tend to work better if they are consistently obeyed by agents, although this tendency can reverse when consistent obedience leads to trends which run up against natural law limits.

Our entire political economy, at the formal level, is a rules-based system. Its rules are used to construct a combined culture and economy. Its rules, as a system affecting other systems, can be judged by two sets of standards. The first set of standards is that of moral philosophy. The second set of standards are those of hard science. Where the outcomes of economics rules are bad, by widely held moral philosophy standards and/or by scientifically measurable standards then the economics rules need to be modified. [1]

From a pragmatic stance, the necessity to change the rules of the current economic system is quite obvious. It is leading to ever rising inequality (a clear violation of most religious and humanist ethics right across moral philosophy) and it is leading to environmental destruction, the 6th mass extinction and very likely human extinction.

Consistent adherence to the current rule set of capitalism (and the emergent behaviors this adherence leads to) does not lead to a morally or environmentally supportable civilization. This is becoming clear from Piketty’s r > g tendency “law” concerning rise in inequality as growth slows and also from the limits to growth themselves which are playing an increasing role in slowing global growth. Rather than consider certain founding rules of this capitalist system “sacrosanct”, for example open-ended accumulation of private property by a few (it’s always a few), the founding rules themselves need to be changed. This is the only logical conclusion. The founding rules are now inconsistent morally and environmentally with a sustainable civilization.

We have crossed a threshold are now in a different state space. Capitalism only considers formal “dimensions” (really parameters) and notional quantities. We are now at the point where real dimensions, real forcea and real quantities impose a new state space on what the economy can do and be. Persisting with old rules will not work. Rules cannot change fundamental natural laws. New rules consistent with natural laws must be developed.

Note 1: Conventional economics makes the attempt to be entirely self-referential. That is to say, economic rationality (capitalisation and money calculations) is essentially specified as the ONLY valid rationality. Economics seeks to cut itself off from both consequentialist moral philosophy and from hard science and real systems; especially in the latter case from the needs of all real humans, as real physical and conscious systems, and from the operations of the biosphere as a compound complex real system, physically and biologically.

https://rwer.wordpress.com/2019/07/14/why-economic-models-do-not-give-us-explanations/#comments