Q.1: What is the nature of a prosperous society? How can a government influence the economic activities of autonomous individuals for the benefit of society generally?
Q.2: How exactly should a government intervene so as to support prosperity in any particular situation given certain economic factors?
THEE can answer Q.1 only: its framework enables understanding of economic activities and interventions, without determining precisely what must be done. This orientation is meta-economic, not economic.
Q.2: is valid and important, but remains the responsibility of particular governments in particular societies at particular times. Their choices will be a function of: economic and political factors, relevance of conventional theory, cultural assumptions, social development, quality of pertinent information, influence of key advisors, &c.
However, in every specific case, meta-economic choices will be made implicitly or explicitly.
The task here is to clarify the framework for those choices, including how that well-recognized duality in economics, rational v political, manifests and can be resolved.
As explained, constructing the follows from the application of the . In this context the government interacts with society (rather than specific individuals) and aims to benefit society and itself (as a government).
The TET diagram shows the ModesModes are the context of approaches and contain values and principles that can be widely accepted. Where different approaches refer to methods that tend to conflict and be incompatible, modes are compatible. with their associated government imperatives.
The forces driving any government are:
► internal: desire for a prosperous stable society (and re-election)
► external: economic pressures and global forces.
No program is proposed here for any society or its government. However, the list of imperatives suggests that society will suffer (and the government, if democratic, may not get re-elected) if they are not heeded e.g. if a society embraces socialism or has a predatory form of , then politicians will be suborned and is likely to be weak or harmful to individuals, as well as to society as a whole.
Governments typically seek to foster prosperity, even if it is not their top priority. They also recognize commerce is based invalues, even if these are somewhat alien to the culture. These initiatives are not always followed through.
pushes for ever greater entrepreneurial drive in society.
… this takes little account of the fact that there are very many individuals for whom entrepreneurial activities are uncongenial, if not utterly alien. Unless governments deal with the resulting wealth inequalities, divisions and tensions are liable to grow. In addition, entrepreneurs need a supportive network that provides capital, advice and more.
goes the other way and emphasizes the importance of state intervention. Such governments tend to emphasize their role as guardians, picking winning industries and firms, and redistributing income.
… the fantasy notion that an economy exists as an entity to be managed, is prevalent. As a result, corruption is common; incompetent bureaucracies are the norm; regulations proliferate; entrepreneurs are weakened; free-riders proliferate; and economic forces and the need for hard work tend to be denied.
emphasizes provision of state regulation of key markets: which is rather important; whilst:
emphasizes the protection of domestic industries—reasonable within limits and in certain circumstances: but not if the protection is no more than a transfer of money from tax-payers to vested interests.
… the failure of governing elites to sufficiently desire prosperity for all, and to effectively regulate themselves, their central banks and their financial sectors, is perhaps the defining disillusioning discovery of the initial decade of the 21st century.
Note: Government strategies are often blunderbuss affairs and forget that individual autonomy lies at the root of commerce. Governments may need to intervene, but doing so effectively is a difficult political endeavour. As will become evident, principles from all Modes are required. As in previous frameworks, critical issues in the meta-economic context are found to emerge in a logical step-wise fashion.
Start with the meta-economic foundation of prosperity: individual-based market-centred activity.