Economics and the Natural Law Concept

R. Pincham

[Reprinted from Economic Incentives, September-October 1977, published by the School of Economic Science. Principals public end-of-term lecture, E.S.S.R.A., March 1977. Reproduced and edited by T. Fielding. Acknowledgements to the speaker and Mr, G. Rarasey of the Toronto School of Philosophy who obtained this tape for our mutual enjoyment and enlightenment.)]

Economic concepts revolve around three basic questions - where have we come from, where are we now and how may we go forward? The School of Economics in London* dates back to the depression which stimulated keen interest in the science and, in turn, led to the school's inquiry into the roots and foundations of economic ideas. Members maintained a deep conviction that truth and justice do exist as tangible values in human lives. This may have been a vision, but the school adopted the purpose of discovering and teaching the natural laws of human relations in society and their economic significance.

What are humans? Where are they living and why? What is the true potential for the human race? There exists a tremendous range of potential and variety from the lowest to the highest aims. A human outside society cannot relate to or affect this or any relations in that society.

Skills of humans are bounded by the planet's surface wherein all resources are found and developed as well as uses discovered. Many discoveries are hard to date - precise events lost in the midst of time. The planet produces variety and is the only stage for human prosperity. In due course human producing potential, through abilities and skills in cooperation, give us more than the initial consumption provided. With all this positive effort, why then do poverty and unemployment exist? The equation of "Poverty and Prosperity" often tempts us to headlong political conclusions instead of looking at causes.

There are as many economic theories as there are economists. Theory is not the role of the school's teaching. Rather it is the discovery and teaching of causes and the discovery of natural laws. Many doubt that the latter exist in spite of the obvious existence of anatomical and physical laws and their effect on mankind. The term "law" is unchanging - and its understanding and acceptance gives both power and freedom. Yet societal "laws" are harder to see even if closer at hand - eg. employee/employer laws, governed/ government laws and banker/merchant laws. The British system of justice is such a law of unparalleled value - man-made and effective because it reflects more general hidden laws of human nature. Why can a system of government not allow all humans in a nation to be "free", to enjoy just rewards for labour and allow free interplay of talents? Who is to blame? The trade unions? The bosses? Paper money and credit? There are all kinds of short-term blames and theories but no explanation. Why can we not govern ourselves and sort out the economic system? Confusion, not law, is the picture.

It's easier to assume that total chaos is more "natural" than an economic law. Does the latter exist and what evidence is there of its existence?

Three steps in identification need to be taken:-

• (i) At the level of mind - a clear head, no fear, seeing clearly (and determinedly) the way forward. Opinions held at the start are not all wrong but are partially true. True concern must be with direct experience and feeling.
• (ii) Study - every person to find out truths for himself through previous work, agreement and disagreement with work, not necessarily conducted chronologically, but studied with patience and honesty of mind.
• (iii) Observation - the economist must look around today and not go to seek in a specific time/place. See what is successful today - which economic desires are uppermost. Start with simple honesty of mind. Look at your own ideas, see where they come from, be aware of shortcomings and be open to new ideas.

Having started with the whole of mankind, acting on the resources of a planetary framework, we then looked at humans in society. The latter term is simply the relationship of one to another on a global scale - an important consideration in every facet of existence. Humans are socially interdependent creatures -- this is a natural law! The world we depend on is outside -- the society of the many. The concept is one of a global village - the world is one and this natural law recognises no national boundaries.

Humans live on the land; land is of varying value. The more real wages are kept down, the more rea1 land prices rise - an odd but true corollary of a natural law. The wealthy and fortunate possess land - the poorer seek permission to use it. This is a powerful basic economic observation. They're not making land anymore -- generally we gain as much we lose. In spite of such artifices as the Dutch and Japanese concert, the volume remains the same. As population increases, landed power increases.

Land is an uppermost .-desire in human natural law. What is the significance of this fundamental principle? Wealth, as it is created, is undivided. Not until it is produced can we discuss its division, yet we are too interested in this -- not wealth's creation. Labour is the only producer of wealth. That which humans create has to be maintained -- otherwise it falls to pieces. Without work, service or effort there is no wealth. We inherit a world created for us to maintain -- we don't know the people who created it for us. There is a sense of unity of mankind at work in the acknowledgement of the concept. Before dividing wealth, we should recognise the concept of unity of man at work. When a few remove effort, the whole is reduced or eliminated. This is not a commununal or national, but global concept.

Value attached to land has causes, usually in natural differences but these are not the only source. There is also a community difference - a process of human observation decides where the best areas are.

These basic principles illustrate that production may be divided naturally from that part derived from natural and human advantages of site and that derived from labour on that site -- a community created value. Values in London (Eng.) change in great bands away from the centre -- a centre of communal gravity. When the U.K. joined the Common Market, that centre of gravity shifted across the channel. This must be allowed for in the development of the community. The U.K. is now offshore, marginal and disadvantaged. The values in the centre of London reflect the existence of a global community and as such, reflect a value created, in part, overseas I (e.g. ten areas of Ceylon)

"Truths" must be re-examined. How many of these natural law observations may be applied in human affairs? How far have liberal economists identified natural laws or are they still confused? What responsibility does knowledge have for each of us? Is this world idealistic -- with no link to reality? Is something untrue in a society with unionism yet 1 1/2 million unemployed? Yet politicians accept it as "true". How is it that the only way to reward effort is in a depreciating currency? Some say the answer lies in "indexing" -- everything adjusts by itself and thus everyone is put into an "economic alcoholic stupor".

People are sovereign in a democracy. The sum total of our intelligence is the ruling intelligence in the nation. The latter also reflects the sum total of our aspirations. The realm of aspiration must be that justices exist and that people do get the government they deserve. The three great streams of life in a nation are law, language and religion. The "national characteristic" depends on the degree to which each is studied. We must understand and accept law, learn its language and appreciate that "religion" is synonymous with a national belief in values. The younger generation constantly questions the definition of "prosperity". Why? Shouldn't there be a sense of "value controls" in relation to this? For example, what economic effect results from a slower exploitation of a resource like oil? Does this necessarily mean less prosperity?

The contribution of the school members is to use minds, to sort out fashions. If seeking the truth, look for simplicity. Philosophy and economics go together since the nature of mankind is as important as the nature of economic natural law. A simple observation of one leads to a discovery of the other. However, this is not "predestination" because another natural law is that humans change and modify themselves in relation to nature and this affects all communal relations. Living at peace, or further from it, with oneself in the community is the same as moving closer to or further from nature.

The true purpose of economics is good housekeeping in the community with everyone taking part, contributing effort through work and ideas, avoiding waste and using everything. If we throw away 25% of high priced food as waste, that is not good economics or good housekeeping.

If we learn natural law we experience a feeling of degrees of liberty and freedom even if outward conditions remain as before. Conditions can be created for a nation to renew advances through awareness levels in each person. Popular movements give an impetus to expression of new ideas in universities. No change of government makes an effect without a movement in the people.

Natural laws are impartial; they work everywhere but with differing effects, Natural law considerations are not for answers, considering the current situation of government laws. If natural law is observed, there should be improvement in the former. Natural laws ignore countries, philosophies and ideologies, but they themselves are ignored at a price -- that price is peace.

Question and Answer Period

The centre of economic gravity has moved to the continent. In terms of trade and commerce, the U.K. has joined a customs union -- the common market. Observable facts - economic advantages of the new heartland (the Lower Rhine) - identify a central point in the main markets of Europe. S.E. England is less advantageously located but is less marginal than N. Ireland or Scotland, How can the system recognise this? The E.E.C. must gather revenues and bear advantages in mind, ensuring that tax configuration matches wealth configuration. Each area bears what it can at the moment and the present tax system taxes successful productivity anywhere regardless of actual disadvantages. We are moving towards an economic union and these facts must be borne in mind. If we draw concentric circles (on a map of Europe) from the Lower Rhine outward, the most disadvantaged areas are at the periphery. Our economic policies don't match this natural observation. We think the duty of government is to change the way things are by having government job creation programs - so politicians can give a precise answer - instead of more naturally changing taxes at the margins to increase employment and productivity. This doesn't give precise, easy results and is no control, but it succeeds eventually. The situation is analogous to obtaining a green lawn by laying down artificial, and costly, plastic turf, or by watering and fertilising over a longer period. Unfortunately people expect the former type of control. The choice is to observe things as they are and behave accordingly, or else to control things.

Is a natural law platform a politically viable one? Laws will be the same, and knowledge is important regardless of party politics. Administration is the same, varying only in degrees. The government follows events, enacting what has already happened. As the government has bodily expanded, its power has diminished. Conservative philosophies concentrate more power and responsibility in certain parts of the community from which an observance of duty is expected. The other point of view expects the above duty from where the power and responsibility is placed. But if power is used for self-indulgence, disaster ensues. Thus it is a law that democrat is not necessarily the best government. Some ideals of government ask it to stand above and outside directly economic considerations, which is impossible if people want a government to deal with short-term economic "band aid" solutions. In ideal law, the government should deal more in long-term macro-economics more externally concerned with national life. It should look to the future.

Many aims of government are not fulfilled by legislation - e.g. "Brotherhood of Humans". Calvin tried it in Geneva, equating sin, crime and government control of ideology. Obviously this is not acceptable today. Such concepts come into being through knowledge, education and enlightenment. We look for things today that are "easy" but know that in the long term this is disastrous. Short term 'solutions' often contravene natural law. We should know and recognise the power and value of humanity itself and know also that Communities and Nations exist as powerful but hard-to-define forces and that many 'feelings' in those forces (e.g. liberty ideals in the U.K. today) are both hard to quantify and hard to govern.

(Ed. note - In the interests of length, the lecture question period report is curtailed at this point. The views of Mr. Pincham do not necessarily parallel those of our school since, as he observes, national and communal feelings change certain observations. However, the plea for observation of natural laws is world wide and the dissatisfaction with economic "band aid" solutions to socio-economic ills is shared by more than just liberal macro-economic philosophers, We invite readers to comment on Mr. Pincham's philosophies with either a positive or negative -- but dispassionately intelligent -- observation.)


*Ed. note - Not to be confused with the London School of Economics, University of London