Yin-yang and 67-33 cursor in economics

 Yin-Yang in economics (essay)

Yin and Yang are two principles, in Eastern philosophy, that states

that things,  situations, people moves are based on two types

of elements that interrelate,  intermingle by:

Complementing and supporting each other

At the same time opposing each other,

This brings a dynamic equilibrium which is always moving,

with a variable cursor position between both.

Those principles would be active in most fields. Or at least they would help in
many fields to make more fertile reasoning, as not limited by Aristotelian
binary logic
(*).

(*) which is useful also, but stays rudimentary and prone to fallacies,
     as based on simplistic axioms, which admit only the 100% true and
     the 100% false that exclude each other.

Modern economy, as well in everyday reality as in academic research, has
tended, in the last decades, to develop the share of « soft » economic
activities and approaches compared to « hard » ones.


Maybe it is a pendulum effect that follows an era that might have stressed a
little too much "pure reason" and material things (but on the other hand maybe
we should not now go too far in the opposite direction).

=> Here are examples:

 

Yang (male, Sun)

Yin (female, Moon)

Economic
activities


Hard: primary and
secondary sectors

Natural resources, physical
equipments, manufactured
products.

Soft: tertiary and
quaternary sectors:

Immaterial, services,
knowledge and information,
creation and technology,
finance

Economic

theories

Positive approach:

Descriptive models

Normative approach:

Economic and social
doctrines and policies

Economic

relations

Competition

 

Cooperation

 

Attitude /

objectives

Optimizing performance
and return

Optimizing safety and
adaptation

Modes of

decision

 

Homo oeconomicus
:(Economic man)
Rationality, transitive
preferences, stable balance,
efficient market, utility

Behavioral economics

Limited and evolving
cognition, and strength
of emotions,
bringing an
unstable equilibrium

 

"Tilted" laissez-faire and
     "67-33 cursor theory" (essay)

Make your choice!

Any doctrine driven to its extreme of "purity" becomes a fundamentalism,
and loses itsadaptability to situations an to human and social needs.

Let us illustrates this by looking at the three best known "offers" (or doctrines)
in thenormative economic shop :


"Laissez faire", coupled with private property (capitalism) when applied
     at reasonable doses,
draws its force precisely from  its adaptability, sense
     of initiative and efficiency

     But too high doses leave much ground to behavioral excesses, imbalances
     
(crises) and abusive human disparities.


State collectivism, the opposite theory, is not much an alternative solutions,
   as it has its own biases,
is more rigid (less initiatives and less self-correcting
   mechanisms)

   This makes of it a source of inefficiency, (lack of productivity...).

    It also degenerates easily in totalitarian oppression. as its philosophy tends to
    consider the individual more as a property and tool of society than society as
    a property and tool of individuals.


  
Specific hybrid models that we could call, let us not be afraid of paradoxes,
      oxymorons and
fuzzy logic, "socialist laissez-faire" or "laissez-faire socialism"
      in which the State fills some common needs and has some latitude of i
      intervention.

   Another example the associations and cooperatives system, a form
   of private initiative. It certainly has an interest, but cannot apply to the
   whole spectrum of economic activities within a country or in the whole
    world.

   Even so, it shows pathways for economic federalism, network economy
   (something that the Internet boosts), bottom up economic development,
    economic solidarity...

   The sharing economy is a new form of this cooperative approach.
    Nobody knows how far it will extend

Altogether, after comparing the behavioral biases that affect any system,
laissez-faire seems to provide the best, or least bad, guarantees, even if not
complete ones, to fulfill human needs.

So, OK for laissez-faire, as the default option?

Not so fast, as we have to avoid fundamentalism, as already said, and also
veneration for gadgets that can do everything.

It would be useful to replace the Aristotelian binary debate (see above), by
a "fuzzy logic" tool, the cursor theory.

In economic matters, there must be a point, above or under which the social
constraint on one side and the individual freedom on the other
become
insufficient or excessive, less and less the solution and more and more the
problem.

The cursor's position, variable according to situations, might lie in the
vicinity (*) of:


67% free initiative,

33% rebalancing by political social institutions.

(*) yes, vicinity, here we have human appreciation, not precision weighing
     nor equation's result)

Of course those institutions, to bring a Montesquieu-type balance of power
(between the market power and the political power in that case) should be
based on:

democratic processes, for example a total or partial random drawing to
   choose people's representatives
would avoid a political caste to be all
   powerful,

and a division of power (here in the political area), for example under a

   federalist form  at various levels: local, regional, national, continental,
   global.


Oh yes, federalism at the global level also!


This is how globalization, accused of all evils by nostalgic lovers

of a divided world, would find its full positive expression:

World democracy / democratic globalization

To take the example of finance, what is needed is some global financial
council and court
that intervene when excesses are obvious.

Anticipation and intelligence are better than bureaucratic regulations that are
usually based on past financial problems, therefore blind to new financial
practices.

A few principles (for example about the general overleverage, and also the
corporate governance, giving a premium on stable equity owners, might be
enough.
The European court of human right could be a model, as it started with
a few set of principles that every member-state signed.

separ

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