Discussing the factors of production in economics is one thing. Discussing them in the field of political economy is quite another. Common sense, of course, tells us that there is no difference between economics as such, and political economy as such, and in fact some dictionaries use the same definition for both “economics” and “political economy.”
There is, however, a difference once you take into account the fact that the modern Nation State has assumed a far greater role in economic life than can be justified under traditional notions of American liberal democracy or a personalist approach to life itself. The focus of modern life has shifted from the actuality of the human person, to some abstraction, whether it be humanity itself, the State, the community, the capitalist or socialist élite . . . anything and everything, in short that is not in and of itself a human person.
Thus, we have a common definition of economics as “the study of the production, consumption, and distribution of marketable goods and services” or some variation on that theme. Definitions of political economy often add “on a national level” and leave it at that. The Encyclopedia Britannica and a few other sources, however, throw in a twist: “The study of how a country — the public’s household — is managed or governed, taking into account both political and economic factors.” (Emphasis added.)
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Reflecting on that definition a bit (and recalling what was really taught in that college economics course you took), we realize that economics-as-she-is-understood-today is not the study of how production, consumption, and distribution of goods and services affect society and thus the political system, but how political and social demands affect the production, consumption, and distribution of goods and services.
In other words, what the State demands is what the economy should be doing, rather than what the people who are doing toe producing, consuming and distributing want or need. Even more simply put, in the modern understanding of economics, the economy was made for the State (or the community, humanity, the élite, or whatever), not for actual, flesh and blood human persons.
One thing that seems to annoy today’s political economists/economists about binary economics is that it puts the actual human person first, not the State or the economy, or any other abstraction. This is reflected in the three principles of economic justice and the four pillars of an economically just market economy.
The three principles of economic justice are:
· Participative Justice. This principle defines how one makes input to the economic process in order to make a living. It requires equal opportunity in gaining access to private property (control over, and enjoyment of the income from productive assets) as well as equality of opportunity to engage in productive work. Participative justice does not guarantee equal results, but requires that every person be guaranteed by society’s institutions the equal human right to make a productive contribution to the economy, both through one’s labor (as a worker) and through one’s productive capital (as an owner). This principle rejects monopolies, special privileges, and other social barriers to economic self-reliance and personal freedom.
· Distributive Justice. “The most classical form” of distributive justice, the out-take principle, is based on the exchange or market value of one’s economic contributions. This is the principle that all people have a right to receive a proportionate, market-determined share of the value of the marketable goods and services they produce with their labor contributions, their capital contributions, or both. This respects human dignity by making every producer’s and consumer’s economic vote count.
· Social Justice. As the feedback and corrective principle, social justice governs participative and distributive justice, enabling both to operate properly. Within an economic system, social justice restores balance between overall production and consumption. It rebalances participative justice and distributive justice when the system violates either essential principle. Social justice includes a concept of limitation that discourages personal greed and prevents monopolies and barriers to participation.
The four principles of an economically just market economy are:
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· A limited economic role for the State. As we hinted above, the State was made for man, not man for the State.
· Free, open, and non-monopolistic markets within an understandable and fair system of laws as the most objective and democratic means for determining just prices, just wages and just profits (the residual after all goods or services are sold).
· Restoration of private property, especially in corporate equity and other forms of business organization. “Property” is not the thing owned, but the natural, inalienable right to be an owner (i.e., “access” — the generic right of dominion), and the socially determined and limited rights of ownership (i.e., “use” — the universal destination of all goods). The rights of property include the enjoyment of the fruits or profits of what is owned. As Kelso put it, “Property in everyday life, is the right of control” as well as enjoyment of the income.
· Widespread capital ownership, individually or in free association with others. As it says in Article 17 of the U.N.’s Universal Declaration of Human Rights, “1. Everyone has the right to own property alone as well as in association with others. 2. No one shall be arbitrarily deprived of his property.”
And that leads us to the next posting on this subject, which is on the two factors of production in binary economics.