Implementation Theory of Degrowth (2): Is the Economy a Natural Phenomenon or a Designed System? — Re-examining the Premise of the 'Invisible Hand'

Note:

• (The following series is a compilation of a series of dialogues with ChatGPT.
  For details of the dialogue, please refer to the link to the original site.)

Original site (PC viewing recommended):

• [System : 4] Capitalism and the Limits to Growth, Designed Model Economy, Overview of a Sustainable Economy, etc.

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Part 2: Is the Economy a Natural Phenomenon or a Designed System?

— Re-examining the Premise of the 'Invisible Hand'

The feeling that 'the economy should be left to nature'

For a long time, we have treated the economy somewhat like a 'natural phenomenon.'

• The market moves autonomously

• Prices are determined naturally

• Intervention creates distortions

Such discourse has permeated not only specialized books but also news and daily conversation as a taken-for-granted premise.
And at the center of this is the so-called 'invisible hand' concept.

And at the center of this is the so-called 'invisible hand' concept.

This way of thinking played an important role as the starting point of modern economics.
However, the problem is that it has come to be viewed as 'absolute.'

However, the problem is that it has come to be viewed as
absolute.

How far did the 'invisible hand' cover?

We need to confirm this calmly here.

The world Adam Smith envisioned was one where:

• market participants were limited

• production and consumption were relatively close

• external impacts were small

under these conditions.

In other words,

• environmental destruction

• climate change

• ecosystem collapse

and other massive external costs were
hardly anticipated at all.

Nevertheless,
we in the modern era have applied

as a logic,
even to global-scale, intergenerational impacts, and irreversible losses
as well.

This is like continuing to use the same mathematical formula
even though the underlying conditions are completely different.

External costs have become the "main body," not the "exception"

In economics,
environmental pollution and health damage are called "negative externalities."

However, there is already a sense of discomfort here.

• Climate change is a byproduct of economic activity

• The loss of biodiversity is also a result of economic activity

• Resource depletion is the same

Are such widespread and serious impacts
really 'external'?

In fact, in the modern era,

than to say otherwise.

Yet, even so,
they are barely reflected in market prices.

Why is that?

Why have external costs continued to be ignored?

The reason is both simple and profound.

Because if you include external costs,
growth slows down.

• Profit margins fall

• Competitiveness drops

• Investment flees

These concerns have
stalled discussions on institutional design.

And there is one more
factor that cannot be overlooked.

Regions affected by environmental destruction,
future generations,
the socially vulnerable—

They were,

• With weak purchasing power in the market

• and little political voice

As a result,
they have been treated as 'invisible beings'.

Elitism and a Lack of Sensitivity

Here, I will make a slightly more pointed observation.

Those who have constructed many economic theories were
highly educated
and in relatively privileged environments.

For them,

• air pollution

• water contamination

• the destruction of living foundations

and similar issues
may have felt distant in terms of lived experience.

On the other hand,
for the socially vulnerable and people in marginalized regions,
these were daily realities.

In other words,

has been left unaddressed
for many years.

The economy is not 'nature' but a 'designed object'

Let us confirm an important fact here.

What supports the market is

• Definition of property rights

• Enforceability of contracts

• Monetary systems

• Accounting rules

These are all
products of political and social decisions.

In other words, the economy is

.

Nevertheless, for some reason, only the economy has been treated as

• 'something that must not be touched'

• 'a domain only for experts'

.

The strange divide between democracy and the economy

As a result, a strange composition has emerged.

• Politics is decided democratically

• But economic rules are taken as given

Democracy is

• how to set tax rates

• whether to provide subsidies

While it engages with peripheral details, it

• market design

• currency design

• evaluation criteria

and other core elements are
hardly touched upon.

This can be described as

as well.

Recovering the Idea of 'Designing'

Here, the core of this series becomes visible.

The issue is not

• market

• or state

as a binary opposition.

The issue is

.

• Which values should be made visible?

• Which actions should be incentivized?

• Whose voices should be incorporated?

These are all
problems of design.

And since it is a design,
there is room to discuss it democratically,
revise it,
and learn from it.

Next Episode Preview

Next time, we will focus on the mechanism of "interest" at the core of capitalism.
Why does interest create an "economy that must keep growing"?
And is the only choice really to either "eliminate" or "accept" interest?

When we re-examine the economy not as a natural phenomenon but as a "designed system,"
we will consider how interest can be "re-handled."

> Next article:

▶︎ Related Series Structure

• Implementation Theory of Degrowth (1): Why doubt the premise that "growth is necessary"? — The starting point of the idea of "redesigning" the economy

• Implementation Theory of Degrowth (2): Is the Economy a Natural Phenomenon or a Designed System? — Re-examining the Premise of the "Invisible Hand" --- This article

• Implementation Theory of Degrowth (2-2): Re-examining the driving force of interest — Why did growth become a premise?

• Implementation Theory of Degrowth (3): Redefining the economy as an algorithm — From "a study of empirical rules" to "a designable system"

• Implementation Theory of Degrowth (3-2): Is "autopilot" for the economy possible? — Designing a goal-convergent economy through transparent algorithms

• Implementation Theory of Degrowth (3-3): Implementation and feasibility — An answer to the question, "Does it really work?"

• Implementation Theory of Degrowth (3-4): Degrowth, donut economics, and "design-model economics" — Bridging the gap from ideology to implementation

• Implementation Theory of Degrowth (4): Can democracy design the economy? — A shift from "ex-post adjustment" to "ex-ante design"

• Implementation Theory of Degrowth (4-2): Why has the economy come to seem "inviolable"? — The "untouchable domain" created by power, capital, and ideology

• Implementation Theory of Degrowth (5): Can Citizens Participate in Economic Design? — Beyond 'Voting-Only Democracy'

• Implementation Theory of Degrowth (6): Economic Systems Starting from Experiments — The Realistic Strategy of Sandboxes

• Implementation Theory of Degrowth (6-2): Experiments Can Already Begin — Concrete Sandbox Examples of a Design-Model Economy

• Implementation Theory of Degrowth (6-3): How Systems Work — How Coarse Weighting Changes the Economy

• Implementation Theory of Degrowth (7): Can a Design-Based Economy Become an Academic Discipline? — The Approach of 'Expanding' Economics

• Implementation Theory of Degrowth (8): Money Is Not a Natural Object — Global Currency and the Dual Currency Concept

• Implementation Theory of Degrowth (9): Start Small and Change the World — Strategies for Introducing a Design-Based Economy into Reality

• Implementation Theory of Degrowth (10): The Choice to Redesign the Economy — Toward an OS Update for Civilization

• Implementation Theory of Degrowth (10-2): Proposal

• Implementation Theory of Degrowth (10-3): Executive Summary

> Original Site (PC viewing recommended):

• [System : 4] Capitalism and the Limits to Growth, Design-Model Economy, Overview of a Sustainable Economy, etc.

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Finally...

▼ A call for a "quiet revolution":