{"id":200,"date":"2015-10-11T18:50:27","date_gmt":"2015-10-11T17:50:27","guid":{"rendered":"https:\/\/www.binaryeconomics.net\/wordpress\/?page_id=200"},"modified":"2019-08-22T09:03:42","modified_gmt":"2019-08-22T08:03:42","slug":"binary-economics-vs-conventional-economics","status":"publish","type":"page","link":"https:\/\/www.binaryeconomics.net\/wordpress\/fundamentals\/binary-economics-vs-conventional-economics\/","title":{"rendered":"Comparison"},"content":{"rendered":"

Binary Economics versus Conventional Economics:
\n<\/strong>A good understanding of binary economics can be obtained by contrasting various aspects with comparable aspects in conventional economics (especially mainstream neoclassical economics).<\/p>\n

<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
CONVENTIONAL ECONOMICS<\/strong><\/td>\nBINARY ECONOMICS<\/strong><\/td>\n<\/tr>\n
The first contrast is that mainstream neoclassical economics claims to be primarily a positive economics<\/strong> (i.e., an analysis of \u2018what is\u2019) whereas binary economics is considered (by mainstream neoclassical economists) to be primarily a normative economics<\/strong> (proposing an economic system that ought to be).<\/td>\nHowever, as compared to mainstream neoclassical economics, binary economics undoubtedly has a superior account of physical reality (i.e., of what is) \u2013 particularly in its analysis called productiveness.<\/em> Binary economics is therefore both a highly positive<\/strong> economics and<\/span> a highly normative<\/strong> one.<\/td>\n<\/tr>\n
Secondly, in its physical analysis of who or what creates the wealth, mainstream neoclassical economics upholds the concept of productivity<\/strong> (generally labour productivity<\/strong>).\u00a0 This attributes most, if not all, wealth creation to labour.<\/td>\nIn complete contrast, binary economics has the new concept of productiveness<\/strong> giving fair credit to the contributions of both<\/em><\/span> labour and capital. The binary productiveness analysis, as an understanding of physical reality, is far superior to the productivity analysis of mainstream neoclassical economics.<\/td>\n<\/tr>\n
Thirdly, conventional mainstream neoclassical economics believes that interest<\/strong> (as opposed to administration cost) is always necessary.<\/td>\nHowever, binary economics, again in complete contrast, states that, certainly where the development and spreading of productive (and the associated consuming) capacity are concerned, interest (as opposed to administration cost) is not<\/strong> <\/em>necessary (because a supply of interest-free loans coming from the national bank may be used).<\/td>\n<\/tr>\n
Fourthly, for newly-created money<\/strong>, conventional economics upholds the doctrine of the Time Value of Money<\/td>\nBut binary economics, noticing that money is created out of nothing by the banking system,<\/em> denies the Time Value doctrine. Consequently, binary economics rejects conventional financial savings doctrine (that there must be financial savings prior to investment) \u2013 no financial saving is necessary if money can be created out of nothing.<\/em> Indeed, what matters is whether the newly-created money is interest-free; whether it can be repaid; whether there is effective collateral; and whether it goes towards the development and spreading of various forms of productive (and the associated consuming) capacity.<\/td>\n<\/tr>\n
Fifthly, an assumption of general scarcity<\/strong> is at the heart of conventional economics.<\/td>\nBinary economics, however, denies the assumption of general scarcity. As Amartya Senhas shown, for example, starvation is primarily due to lack of money in the hands of the starving and not the general absence of food.\u00a0 Thus it is human attitudes, practices and institutions which are at fault.<\/td>\n<\/tr>\n
The contrast continues.
\nThus conventional economics:-<\/p>\n
    \n
  • is largely unconcerned that the present money supply (mostly created by fractional-reserve banking) is generally not directed at productive capacity<\/strong><\/li>\n
  • in practice engenders a continual inflation<\/li>\n
  • conceives of a self-centred homo economicus<\/em><\/li>\n
  • eschews ethics and belief in God<\/li>\n
  • ignores the imbalance in power relationships between people.<\/li>\n<\/ul>\n<\/td>\n
But binary economics views it as essential that:-<\/p>\n
    \n
  • the money supply be directed at the development and spreading of productive (and the associated consuming) capacity<\/strong><\/li>\n
  • the money supply be not inflationary, indeed, should be counter-inflationary<\/em><\/li>\n
  • recognises\u00a0homo reciprocans<\/em><\/li>\n
  • ethics and belief in God be upheld<\/li>\n
  • account be taken of the imbalance in power relationships between people.<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
Conventional economics claims that it promotes a \u2018free market\u2019<\/strong> which is free, fair and efficient<\/strong>.<\/td>\nVery fundamentally, binary economics rejects this claim. \u00a0It\u00a0states that the present \u2018free market\u2019 is unfree, unfair and inefficient<\/strong> not least because the \u2018free market\u2019 thinks it does not matter who owns productive capital and how it is distributed and does not worry if people do not have independent incomes.<\/td>\n<\/tr>\n
In a quite remarkable way the two economics differ on the subject of democracy<\/strong>.\u00a0 Conventional economics only upholds the periodic political vote<\/strong> (as in, for example, elections to government).\u00a0 It never mentions economic democracy.<\/td>\nBinary economics upholds the periodic political vote but then deepens democracy by insisting that productive capital and the practical everyday power its ownership gives to individuals be widely distributed as well<\/strong>. In binary economics freedom is only truly achieved if all individuals are able to acquire an independent economic base. In short, binary economics upholds political democracy plus<\/span> economic democracy<\/strong>.<\/td>\n<\/tr>\n
Perhaps most importantly of all, conventional economics is generally heedless of (or at least, not directly involved with) environmental issues<\/strong> but, even if it does heed them, does not have the specific mechanisms to address the environment in a large-scale way.\u00a0 Indeed, conventional economics generally views environmental solutions as imposing an economic cost<\/strong>, and a large one at that.<\/td>\nBinary economics, however, again in complete contrast, does have the mechanisms \u2013 particularly, interest-free loans \u2013 and its solutions do not impose economic cost<\/strong>.\u00a0 With binary mechanisms, large-scale environmental projects are possible<\/td>\n<\/tr>\n
Lastly, conventional economics claims that its mathematical equilibriums are a manifestation of a world-encompassing objective science<\/strong> expressing universal values.<\/td>\nBut binary economics denies that claim. Indeed, in this website the page FALSE ASSUMPTIONS sets out\u00a0fifty nine<\/em> false assumptions of mainstream neoclassical economics. It only needs two or three basic assumptions to be false for all of an economics to be false.<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
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