Reframing Economics

Associative Economics: Axioms & Leading Thoughts

April 29, 2010 @ Youth Annex, Morris St.

Guest Comment: Shelly Murphy

“I wish that we had sat in a circle tonight to see each speaker and connect ideas with faces. It appears that we all have an idea of what economics is...what a great exercise in simplifying, or trying to simplify, the concept. I am struggling with putting a $ value on my time, at the moment. Good food for thought, as I find myself allergic to "market" models. More, please. And thanks,” 

Guest Review by the ʻSpectatorʼ

The presenter began by describing his work in Associative Economics with colleagues from around the world. Mr. Osmer suggested that, like Waldorf Pedagogy and Biodynamic Agriculture, Associative Economics comes from working together out of the School of Spiritual Science at the Goetheanum in Dornach, Switzerland. *

Albert Einstein**, John K. Galbraith, Rudolf Steiner and a few others were quoted for their emphasis on determining essential principles, basic axioms and symmetries when it comes to understanding and explaining the invisible and ever fluctuating ideas in physics or economics. Apparently, Sebastopol has long been a welcome haven for individuals and institutions re-examining our relationship to and understanding of modern economic life. In 2003, the Colors of Money 3 day workshop was held at the Sebastopol Center for the Arts with 14 participants. It was announced that Arthur Edwards, from the Center for Associative Economics in England, will offer it later this year at the Youth Annex. The workshop begins by examining the history and purpose of money and how it can be the main instrument for bringing about real and lasting change in our economic circumstances. Also: A one-day seminar for educators and parents involved in the teaching of economics and communicating it to youth will be announced in cooperation with the Economics Conference.

He enumerated some of the partial truths and myths featured in high school economics texts for the past 50 years:

  1. If you look after your own self-interest society will automatically order and balance itself 
  2. Market forces are just like the forces that maintain the planets in their place 
  3. It is in everyoneʼs best interest to insist on the ʻlowest priceʼ
  4. The ʻinvisible handʼ of the market will inform us in matters economic
  5. Collateral is a necessary element for obtaining financing to start a new enterprise 
  6. Economics is primarily about allocating scarce resources 
  7. Ê»Oh, it is just a matter of supply and demand!ʼ What about Katrina and a little “Circulation”? 
  8. Unrestrained competition is the best way to sustain and balance economic life 
  9. A sustainable economy must be able to increase and produce more and more each year - growth 
  10.  Ê»Itʼs just the business cycle! Duck if you see it.ʼ 
  11. Human beings are but ʻnoiseʼ in the equations

Using color chalk and narrative, the speaker expanded on the old economic aphorisms and pictures listed above by offering new alternative images for understanding economic life – Including yet expanding on the conventional view. “Do more drawing and less talking”, was the assessment by more than one participant. The images, even though hard to see at times, seemed to touch a nerve and helped ignite a lively conversation, especially for such a potentially Ê»dismalʼ subject. According to the presenter, it is the Ê»human exchange of valueʼ that is the true starting point in economics. The first drawing depicted the fact that, in any economic exchange, it is possible and desirable to take into account not just oneʼs own interests but also the interests of others and the needs of the specific situation itself. The image used for this was simple but evocative. One science buzz café regular anticipated the presenters image by making the startling comment, “It is possible to have an enlarged view of self-interest that includes the interests of others.” The image attempted to show an expanded view of the human being that can be motivated not only by instinct and self-interest, but ideals and the well being of others at the same time. The second image depicted the one earth we all inhabit and rely upon. This was shaded with red chalk and represented the economic value created from nature – tangible goods and trade – operating under the laws of a closed system with limited growth (Land). The third earth globe was shaded blue and represented the economic value created from the intangible and invisible world of new ideas, innovation and credit – operating under the laws of an open system with unlimited growth (Capital). The point then is to perceive which one is at play at any given moment and how to make conscious objective adjustments. The question was posed: Are we citizens of two worlds with different but valid logics?

He never did tell us what he meant by the ʻmysteryʼ of human exchange, it must have something to do with the question asked of the crowd of faithful science buzzers, “What is Capital?” The many and varied responses were listed on a white board for all to see; From 1) capital equals money, 2) to left over savings as capital, 3) capital as a unit of value, 4) capital as potential future growth, 5) land as capital, 6) or capital is an asset, and the last suggestion, 7) capital is the collection of resources used to produce further goods.

Using only four PowerPoint slides, a better question with a more dynamic answer was put forth by Mr. Osmer, “What is the capital formation process?” The material for the slides about capital came from ʻPrelude in Economicsʼ page 16 ( “The image behind capital in this book is that it is a kind of crystallization or materialization of capacities that people first experience as talents or gifts with which they have been born (Potential Capital). These talents can then be honed or educated to become consciously applied skills (Kinetic Capital). It is the application of such skills to nature that results in capital in material form (Manifest Capital).” This is just a wider and more comprehensive view of capital articulated in Associative Economics.

Someone from the participants asked a question that prompted a fourth drawing on the strange looking black paper taped to the wall. A horizontal white ʻtimelineʼ was created in the middle of the temporary ʻblackboardʼ. From left to right, the steady red line going way back in time represents the ʻgoods marketʼ of normal world trade, while the other blue line, just beginning to appear around 1810-15, represented the newly forming ʻmoney marketsʼ. Significant dates and events were marked on the timeline – 8,000 BC, 340 BC, 1202, 1494, 1776, 1797, 1810-15, 1971, 1973, 1985 and 2008. The blue line (surplus, money markets and the world of finance) took a noticeable leap upward in the early 1970ʼs and really took off in 1985 and then zoomed exponentially as 2008 approached. Back in 1815 the goods economy was 99% of world trade and the world of finance was a paltry 1% at best. Now it is reversed. Now, 97% of world trade is the financial economy as compared to the goods market. That means there is not enough red money for purchases and excess blue money for investment – but investment into what and for what?

Towards the end of the presentation the punch line leaked out. It is the potential development and education of all the children in the world that makes up the future economy and the true capital of the world – our childrenʼs, childrenʼs, children. The message was, take the long view and shape our economic life around basic principles that we can all own. After all, “It is the economic task of the cultural life to use up values by transforming capital into new capacities. These new capacities will in turn create new values when they are employed in the economic realm.”

As the ʻspectatorʼ, I found it interesting to hear at least two participants mentioning education and potential development as key ingredients for a healthy economic life and the source of capital. They get the prize for being economically awake and recognizing the role of the innate creative intelligence of the human being as the source of capital and economic value. Economic life is now the shared responsibility of all human beings, not just the province of bankers and financial planners.

The many people in attendance recognized that in economics it is the invisible exchange of ʻvaluesʼ that is considered and not the physical goods. For values ever fluctuate with place, time and the specific individual. Also accepted, was the fact that in considering economic value, there is no such thing as ʻintrinsicʼ economic value, for in economics; it is the external relationship to other values that counts. Intrinsic ʻinnerʼ virtue of a thing may stay consistent and constant, but the intrinsic economic value depends on its relationship to other things and the changing needs of human beings. This is not to exploit or treat the environment, human labor or even capital as an economic commodity subject to arbitrary pricing and thoughtless profit. In associative economics, land labor and capital are not commodities within the economy, but more clearly seen; they are the boundaries of the economy and not ʻinʼ the economy. Some things are just priceless.

* The School for Spiritual Science was founded by ʻscientific seerʼ, Dr. Rudolf Steiner (1861 – 1925).



Associative Economics - Quotes Displayed:

Albert Einstein, 1921 – Physicist & Thinker

“My interest in science was always essentially limited to the study of principles ...“

“The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift.”

John K. Galbraith, 2006 – Economist & Author

“Economics is a bi-polar affair.”

Rudolf Steiner, 1922, 1918 – Economics Course, Waldorf Education & Biodynamics

“Economics is about both theory and practice, the point being, how to bring them together.”

“The truth is that the economic life of a particular time, and the spiritual life of a particular time (albeit a lag), hold the same relation as a nut to its shell; the economic life is invariably the shell which the spiritual life has thrown out. It takes its cast from the spiritual life. Todayʼs abstract economic life is, therefore, the product of an abstract spiritual life.”

D. N. Dunlop, 1916 – Industrialist & World Leader

"It is not possible to get beyond self-interest; what is possible is an enlargement of intelligence to perceive how extensive self-interest really is. Petty, personal self-interest learns expansion through experience. In its narrow, self-seeking aspect it is revolting to intelligent persons, and is ugly as an ostrich with its head buried in the sand. But it is a stage in the process by which we all evolve. In natural organisms Individuality and Cooperation are as exactly adjusted as the most delicate balance, but in most organizations of men one is always threatening the other, because it is not recognized that cooperation is necessary to give value to individual efforts."

Walter J. Stein, 1932 – Waldorf Teacher and Author

" ... the Earth is much more than a celestial globe floating in space, much more than an object of dry, abstract study. We feel the Earth not merely as a structure composed of continents and seas, rivers and lakes, mountain ranges and plateau, but also as a friend, as a being of intelligence and soul. It is our duty in this age to carry the wisdom of the Earth herself into our economic arrangements."

Christopher Houghton Budd, 1979 – Economic Historian and Director, Center for Associative Economics “Modern economists speak of inflation as if it has no other meaning than rising prices. No connection is seen

3between ever rising land values and the placing of capital in the land (an economic impossibility). Nor does it seem to be understood that if one then trades against these false values economic life becomes bankrupt. False values are exchanged for real values. Assets for liabilities. One is left waiting for doom to strike from some unknown quarter of the economic compass.”

Upcoming Events

AE Café #13
Inside the Federal Reserve
6:30pm July 14, 2011
Location: Coffee Catz

Will feature a story about the Federal Reserve and how they attempted to balance the "store of value" (SV) or capital.

Previous Events

AE Café #12
Finance at the Threshold
6:30pm June 16, 2011
Location: French Garden

Before we all listened to a story about how an entire nation made a monetary course correction, the presenter briefly described some basic precepts of associative economics and also asked four economics related questions...

AE Café #11
Yellow and Blue Money: Humanity at the Threshold
6:30pm April 14, 2011
Location: French Garden

A Symmetry Theory of Value and a 24 minute YouTube video 'Finance at the Threshold' followed by discussion.

The Colors of Money
An Introduction to Associative Economics
October 22-24, 2010
Location: French Garden Confrence Room

AE Cafe #10
The Economics of Education: Rethinking Our School System
Sir Ken Robinson TED talk
November 4, 2010
Location: Youth Annex

AE Café #9
Symmetry II: A Twin
Theory of value with Daniel Osmer
September 2, 2010
Location: Coffee Catz

AE Café #8
Reframing Economics: An Introduction to Associative Economics Principles and Axioms
with Daniel Osmer
April 29, 2010
Location: Youth Annex

AE Café #5
March 19, 2010
Location: Youth Annex

AE Café #4

March 12, 2010
Location: Youth Annex

AE Café#3

Prelude in Economics
February 26, 2010
Location: Youth Annex