Basics of Balancism 2: The Rationale for Balancism in Economics

Earlier this year Shimshon Bichler and Jonathan Nitzan wrote about the notion of “Capital Accumulation” and how it has been used by economists. Their essay goes to the core of the academic field of economics, and criticises its arbitrary usage of entrenched assumption regarding the type of logic from which the field draws. They conclude by arguing the need for a new approach in economics, to save the field from itself.

I would like to build on the criticism of Bichler & Nitzan to argue for a new, sociological approach to economics. The third realm of Balancism is after all one of how individuals and societies experience life economically, and a Balancist approach may be much better equiped to explain the endless ‘irregularities’ that the human agents introduce into the established economic frameworks, which assume the logic of rationality and mathematics as the norm for behaviour.

Over the past few decades, economics has isolated itself from other social sciences, and become a bastion of people following the reductionist view that economics can be explained by natural laws in the same way that physicists capture their aspects of the truth in natural laws. Economic laws are drawn up similarly, but fail to be upheld. With more and more innovations, the modern discipline has come up with increasingly complex models that still aren’t able to fully explain the economic reality. Thus, the quest for a Balanced economic experience of life on earth stalls.  

A Balancist approach to economics does not deny the mathematical patterns found in certain data presented by economists. Instead, it preferres to start with the experience of agents in order to have a more productive conversation about the economic situations at hand. After all, any shared conclusions regarding economic aspects of the truth should lead to policy proposals which focus solely on the improvement of the experience of the agents involved, without harming others or the environment.  

Now that both neo-classical and marxist economists have tried and failed to capture the concept of “value”, perhaps a newly to be formed group of Balancists thinkers may be able to describe it meaningfully. The Balancist aim to re-introduce the discipline of economics into the field of social science could catalyse new collaborations between economists on the one hand, and phychologist, sociologists, political scientists, and environmentalists.

To start off briefly, the concept of value as captured in currency fluctuates naturally, due to the social nature of the concept: it is only worth something because a social group agrees to accept it in exchange for goods and services. Extreme fluctions lead to great economic imbalances, and should therefore be avoided. Similarly, if an imbalance appears within a certain social group, this automatically leads to inequality of opportunities, and thus diminishes the economic experience of some. When wealth leads to unequal opportunities, social democracy may redistribute through taxation and providing services such as education & healthcare to ALL of the population. This way, money will maintain enough value for labour, entrepreneurship, and investment to remain enticing in a way that bring the economic experience of the entire population closer to a balance than it is presently.

I hope to explore this in the near future by looking into at least two lines of thinking in order to investigate whether and how these would be compatible with Balancism. The first is the notion of Doughnut Economics by Kate Raworth, and the second is the notion of Planetary Economics by Michael Grubb. If anyone has experience with these and would like to share their thoughts, or if anyone has suggestions for other relevant concepts, please do leave a comment.