Axioms of a Political Economy

1. The factors of production are matter, energy and information. They are grounded in the physical sciences and most precisely expressed with mathematical formality.

     a. Matter is defined by the periodic table of the elements and the standard model of elemental particles.

     b. Energy is defined by the axioms of classical physics and the general theory of relativity.

     c. Information is expressed by a continuum of binary states (electrical, optical, chemical, or biological ) that encode data and express facts.  It is the beginning of wisdom and the repository of discoveries by the methods of science.

2. The political prerequisites to a just economic system are rights in property, the rule of law, an ethical culture and an open society.

     a. Rights in property, like all individual rights, entail responsibilities, have limits and are constrained by conflicting rights.  In addition they contain the burdens of stewardship when exercised over any part of the biosphere.  

     b. The rule of law is just and legitimate when no person or group is above the law and laws evolve from the sovereignty of those who are ruled.

     c. An ethical culture subscribes to or abides by codes of ethics developed by individuals or groups within it when based on the simple but difficult precept to love one another.

     d. An open society -- a work perpetually in progress --is expressed in covenants and constitutions, written or unwritten, that define the growing body of rights and responsibilities of its members.

3. The basic social, political and economic institutions invented or described so far are the individual, the family, the tribe, the firm, the community, the political party, the nation and the community of nations.  

    a. A firm is defined by lawful charter of incorporation for the purpose of economic activity. As such it is a creature of the state and without inherent sovereignty or rights not expressly conferred.

    b. The family unit is defined by law and family extensions (tribes) by custom and choice.  When just it  reflects the full biological continuum of the human species and leaves out no one.

    c. A community is a self defined collection of individuals with shared interests. 

    d. A nation is defined by its recognition by, and independent status among, all other nations,  and possesses the attributes of sovereignty and territorial integrity.  It usually commands, occasionally earns, the allegiance of its citizens.

    d. The individual is self defining and equal in law to all other individuals.. An individual can act as a firm, but a firm is not the political equal of an  individual .  While a product of family and community, an individual strives to become autonomous.

    e. A political party, whatever its intentions, becomes an  association of interests for the purpose of gaining and exercising political influence and power.  As such it is a source of privilege and corruption, antithetical to political freedom and economic effectiveness. Would that we could be rid of it.  It may be a necessary evil, but its evil is not necessary.

   
4. The purpose of economic activity is the creation, distribution and preservation of wealth; the provision of basic sustenance,  and the enlargement of human choices.

    a. Wealth belongs equally to those who create it, and to the society which nurtures and supports the wealth creators. Wealth is not equitably distributed until none of it is idle.

    b. Sustenance and life are owed to the individual in return for needed work.
    c. Endless, mindless labor is antithetical to a life of choices and, though historically necessary, is without intrinsic merit.

5. Economic activity is constrained by and subordinate to the requisites of the biosphere; the axioms of economics are thus a subset of the science of ecology.

    a. Human activity that cannot continue will stop; the human species is not necessary for life on earth. 

    b. The limits to growth, whether economic or demographic, are set by an indifferent nature from which there is no appeal or second chance. 

    c. At some point, visible now on the horizon,  rising standards of living will be offset by either declining populations if we are wise or extinction if we are not. 

6. An economic system is a social invention of the political economy, which in turn evolves by methods analogous to the evolution of life. The basic mechanisms that experience has so far found necessary for the conduct of effective economic activity are:

    a. Lawful and equitable markets open to entry by anyone commanding the means and providing for orderly exit.

    b. A medium of exchange, i.e., money and credit independently managed for trade and commerce and as a consistent store of value.

    c. A legal system for contract creation, publication, adjudication and enforcement.

    d. A formal system of public accountability.

    e. Open information about transactional and systemic risks.

    f.  Insurance against risk that is itself free from risk.

    g. Legal remedies for fraud and other crimes and for self dealing by market agents.