Chapter 3: The Relationship between the Environment and the Economy
3.6. Economic Theory of Non-monetized Economy
All traditional economic theories, whether market theories or planning theories, have been conceived on the premise of a monetized economy, which is inevitable since human economic activities have developed around money since the invention of money as a means of exchange.
On the other hand, non-monetized economy has been the subject of anthropology (economic anthropology), which studies the customs of "uncivilized" peoples for whom monetized economy is not widespread. Such ancient customs, though interesting, cannot be brought into a "civilized" society.
As a result, even in the planned economies that began in earnest in the former Soviet Union, economic planning was pursued on the premise that the monetized economy would be maintained. There, the commodity form of exchange of goods and services for money was maintained, at least for consumer goods, and the state, which was the main actor in economic planning, invested its financial resources in priority areas, as in the past, using money to manage public finances.
In this respect, it was not so different from capitalism, except that it did not officially recognize the free market (although the black market was latent, albeit illegal) and attempted to control all commodities at official prices according to an economic plan.
However, the means of money was originally "invented" to make free barter easier, faster, and more repeatable, and is therefore essentially a means of exchange that presupposes a free market. Trying to apply this to a planned economy is so far-fetched that it can almost be described as "physically impossible."
Moreover, the ultimate proposition of equality of property, which has been the goal of many revolutions in the past, will remain a pipe dream as long as the monetized economy is maintained. This is because it is impossible to distribute equally to all members of society the money generated in the free market, which is the arena of competition among economic agents who are always striving to establish transactions favorable to themselves and to gain profits.
In fact, a planned economy is essentially an economic system that is not based on monetary exchange. It is precisely because it does not have a market based on monetary exchange that it requires an overall plan to regulate production and distribution. In this sense, the theory of a planned economy is necessarily an economic theory of a non-monetized economy.
In particular, an "ecologically sustainable planned economy" that aims to internalize the economy into the environment would not fit well with a monetized economy. This is because the environmental criteria that define the general framework of planning are, by their nature, not convertible into monetary values.
Then, from this point on, it is almost uncharted territory for conventional economic theory. However, in order to establish a true theory of planned economy, we must make a major shift in the assumptions of conventional economic theory and reconstruct an economic theory of non-monetized economy.
There, for example, concepts such as GDP (gross domestic product), which is measured by converting total production into monetary value, and "economic growth," which is indexed by the rate of increase in GDP, will be discarded. Instead, gross output will be measured in terms of actual output, and the emphasis will be on "quality of life" from the perspective of real people, rather than "economic growth."
Although it is theoretically possible to use the rate of increase in the quantity of output as a new indicator of "economic growth," in a planned economy guided by strict environmental standards, "economic growth" that endorses a constant increase in output would be a dangerous concept that could cause the economy to overtake the environment.
Instead, the key criterion for domestic economic conditions is the improvement of "quality of life" as evaluated comprehensively by various indicators, such as the nutritional and health status of real people, life expectancy, child mortality, living environment, and work and leisure time.
๐The papers published on this blog are meant to expand upon my On Communism.
