From the Village Square

Is the economy only a component of society?

Posted by Joe Mangiamele on Jan. 13, 2009

"Free market?"

As the last of my three economic postings, I was going to write on what I describe as “justified earnings and justified profits,” fully realizing that I would also have to come up with a definition for what ”justification" is. 

How could I do this without creating a whole new religion, which I wouldn't be able to do on less than ten pages or at least with ten well-thought out points.

So instead, I'm going to try to explain my notion of economy as a social element of society that is directed mainly to benefit society rather than merely function as a vehicle for individual selfishness and aggrandizement. This discussion may perhaps lead to the consideration of “justification” at another date.

Keeping this brief of course also calls for some heavy lifting.

Society allows certain activities and forbids others. It may even require certain activities. Democracies of course, contain a love of freedom so we are prone to allow for more activities rather than less.

The idea of the free market puts us on the side of the notion that anything goes when it comes to what we refer to as “ doing business”. Yet we prefer to do business with honest, reliable and quality inclined businesses and business people. 

Even economist seem to understand that economy is a sub-function of the responsibilities of a society, as our social system includes many other elements. We find many religions whose philosophies are to be accommodated as well. And it is often said that democracy is based on fundamental concepts of religion.

But our society does not exist to serve the economy or our religions. It seems to me that the latter elements exist to serve society. They certainly are not independent of the society in which they exist. So society ultimately sets the rules.

Some of the rules come naturally and are part of the culture. Those required as formalized law are the result of the development of an element of society that we refer to as government. Government is meant to represent all members of society and acts as a formalized function of society in its common interests.

So governmental rules superimpose the rules of the market and the church and often even those informal rules of society itself. It does not serve the market nor the church as separate entities of society.

This means that government is the final authority through the people it represents, the whole society, and may place regulations on the “free market” or any other of its constituent elements or components. 

In a sense government can decide on “justified earnings” and “justified profits.” One way it seems to do this quite lightly and without referring to “justification” is by establishing a system of graduated taxes and tax administration. It exercises this authority through other regulations as well.

Therefore, the market is never absolutely free nor should it ever be, no more than individuals have absolute freedom in a democracy. The constitution does not give us absolute freedom. Instead it seem to fit us into some structured order.

Basic to both community and nation is the survival of the social unit. Therefore, we are inclined to justify most of the activities that support a functioning society.

In a democracy, society functions for all of us and doesn't require control from any of its subservient elements. Although these elements exist to make up the whole and because they involve human beings, their influence if and when expressed can only be expressed through a funnel of what is good for the society as a whole and for its overall survival.