Economists can analyze trends in production and consumption, but they cannot delve into the depths of the human soul; They can only observe the consequences of certain human business actions and draw limited conclusions. Unlike the laws of natural science, economic laws refer to free and rational people and are therefore free from determinism.
Given our organic approach to the current crisis, we will not only insist on the subordinate role of the economy in a social order, but also insist that the social and economic orders are inseparable. Any treatment of the current crisis must take both areas into account.
Karl Polanyi states that before modern times “the motives and circumstances of productive activity were embedded in the general organization of society”.[1] Therefore, we consciously propose an organic society as part of the solution to an economic problem because we believe that economic activities, when taking place in the context of society, allow for the natural limiting influence of human institutions such as custom, morality, family, etc. or community to calm the markets and prevent frantic excesses. In fact, this organic social order is so important that we have no hesitation in calling it the heart and soul of an economy.
heart and soul
This conclusion stems from the fact that it is appropriate for us, as social beings, to associate together to produce, exchange, and enjoy together goods that we deem helpful to the common good and the perfection of our nature. It is appropriate, therefore, that some of the vivid and spontaneous aspects of our free and rational nature and emotions flow into these transactions. This is what makes economic activity so unpredictable – it depends on the very differentiated dispositions and free actions of people. Economics can never be an exact science like physics, which deals with matter that always moves according to strictly defined laws of nature.
In business, there are always unforeseen factors that come from people’s hearts and souls. Economics can define norms by which it is possible to create wealth with the means at hand, but it cannot determine the end of human actions that can change the outcome of choices made to create wealth. For example, an economist might determine whether a factory can be built in a given location given the appropriate resources. Still, the same economist cannot decide whether it should be built considering all the political, social and moral factors that might go into the case. Economists can analyze production and consumption trends, but they cannot see the motivation behind consumer behavior. They cannot penetrate into the depths of the human soul; They can only observe the consequences of certain human business actions and draw limited conclusions. Unlike the laws of natural science, economic laws refer to free and rational people and are therefore free from determinism.
Modern economists try in vain to minimize or eliminate these unquantifiable factors from their books. It is precisely these human elements that we will now focus on and celebrate.
“A vast world of self-sufficiency”
We must remember that the economy, in its ancient and even etymological origins, arose around the warm hearth of the family home.[2] Aristotle was the first to distinguish between the household on the one hand and production for profit on the other.
In pre-modern times, an economy of both forms was always an accessory embedded in the social and cultural structures of the time. As sociologist Robert Nisbet affirms, in every successful economy we find “associations and incentives nurtured by the non-economic processes of kinship, religion, and various other forms of social relationships.”[3]
Such non-economic processes constitute what the French historian Fernand Braudel calls “the vast world of self-sufficiency” that has long dominated the West and continues to this day.[4] They are sources of immense material and spiritual wealth, most of which are uncompensated, unrecorded, or defy quantification. We believe these vast sectors are the heart and soul of the entire economy.
defining these areas
These sectors can be found everywhere. The first is the family, a dynamic source of unpaid activity that provides housing, food, education, affection, and health care to its members free of charge. There is also the church with its liturgical, moral and religious practices that bring immeasurable spiritual benefits to a community. Your moral code secures the nation. She gives culture, charity and education to her children and society as a whole free of charge.
We can refer to local, cultural, or religious associations that produce arts, civics, and charities that enrich the community in ways that cannot be quantified. This can also be observed in any type of organic neighborhood or ethnic community where residents reap the great benefits of solidarity and a strong local identity. Joint local transactions, bartering or neighborly actions are clearly valuable measures that strengthen the economy. All of these institutions and activities have an indirect impact on the formal economy and really nurture and sustain it. This is especially true in the agrarian society, where the land not only freely gives its fruits and creates abundant wealth, but also inspires a sense of self-sufficiency and a strong attachment to property.
Focus on real estate
Before private property became a modern commodity, it had a high intangible value. Real estate, especially land, was an anchor point or refuge from which a family could develop. Where there is a strong sense of private property, there is a strong family. A close connection between owner and possession becomes clear when, for example, a house or property is identified with a family over years or generations. In such cases, land and property become embedded in social relations. They are not mere commodities, but become part of the social and political organization itself, conferring the intangible qualities of honor, authority, and status on the owner.
social capital
So important are these intangible relationships that there is a growing field of sociological studies focused on the value they hold for the economy. Sociologists claim that intense networks of mutual human relationships produce what they call social capital.
David Halpern defines social capital as a social network governed by shared norms and values and maintained by sanctions.[5] It is a social fabric that serves as a kind of capital because it creates conditions for trust. Although not quantifiable, it enriches and enriches social, civic and economic life, giving it an undeniable value. Embracing the familiar while exploring the menacing is also a source of immense security.
When that trust is lost – and we agree with Halpern that it is waning – the basis of commerce and business is compromised and the general well-being of society is lost.
Source of human warmth and stability
All of these sectors represent the essential human element that is so important to the economy and what makes it so differentiated and unpredictable. They provide the essential braking mechanisms within the economy that prevent the rule of frenetic excess.
In such spheres lies the drama and poetry of life. Like economics, literature was born in the warm hearth of the family household and has no place in the accountant’s ledger. If this informal economy holds such a great attraction for us today, it is because we long for the human warmth found in these social institutions, rather than for our over-rationalized, mechanized world and its economy.
These reflections are not nostalgic musings about the past. Rather, all of these dynamic elements—church, community, family, personalized property—form an invaluable human infrastructure that actually provides the moral capital, mental health, and stability upon which even our modern economies must be built. Although little noticed in modern economic life and threatened on all sides, their contribution to the economy is incalculable and their demise will prove catastrophic.
importance of this sector
Our focus on this vast “invisible” economy in no way denies the need or importance of a formal economy in the life of a nation. We merely claim that these two economies are intertwined; The prosperity of one depends on the other. Our primary concern should be centered on this vast primary “world of self-sufficiency.”
Because when these institutions and sectors fail, the nation atrophies. This could be seen in the tragic failure of the Soviet experiment, which is clear evidence of a soulless planned economy that deliberately strangled this “invisible” sector and paid for the consequences of misery.
Now, if we are to return to an economy without frenetic excess, a large part of the solution lies in reviving this huge sector that is off the business books. We now turn to this task.
In vain do we attempt to revitalize an economy unless we revitalize the family, community and so many other institutions that are its heart and soul. Indeed, what purpose have we when all this withers away?
This essay is from Return to Order: From a Frenzied Economy to an Organic Christian Society and is republished here with the kind permission of the author.
This paper was first published here in August 2013.
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Remarks:
- Polanyi, The Great Transformation, 73.
- Business. “MF yconomie, fr. ML oeconomia, fr. Gk oikonomia, fr. oikonomos household manager, fr. manage oikos house + nemein 1. archaic: the administration of household or private affairs and esp. costs.” Webster’s New Collegiate Dictionary, Edition 1981, SV “Economics”. It should be noted that the term “household” at the time of Aristotle often referred to an inheritance and did not rule out a certain additional economic production.
- Nisbet, Seeking Fellowship, 212-13.
- Fernand Braudel, Afterthoughts on Material Civilization and Capitalism, trans. Patricia M. Ranum (Baltimore: Johns Hopkins University Press, 1977), 19.
- See David Halpern, Social Capital (Cambridge: Polity Press, 2005), 10.
The image shown is “A Walk on the Beach” (1896) by Michael Peter Ancher and is in the public domain courtesy of Wikimedia Commons.
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