Toward a New Money Reality and a Quantum Economy – A Visionary Look at How Money and The Economy Can Become Connecting Forces for a New World. Email: [email protected]
Laurie Hyland, a financial advisor soon to give a finance course for The Shift Network and already working with Barbara Marx Hubbard, has written the book below and created a section of it about ‘the old rules of finance now becoming the new rules of finance.’
Chapter 7: The Birth of Quantum Economics
We have seen how the influence of the Newtonian/Darwinian Worldview on Traditional Economics led to a hardened belief system. For embedded in Traditional Economics is a set of rules. These rules have become the way we’ve implemented and acted out our economic beliefs.
Now we will take a new belief system rising out of quantum physics and weave it into our current economic system by suggesting new rules. These rules are not the final word on this topic, but rather a way to disengage from the Traditional Economic belief system
During this exploration it will be useful to remember the quantum Principle of Complementarity, “our everyday senses [are] not to be trusted to give a total view of reality. There is always a hidden, complementary side to everything we [experience.]” Thus, as we attempt to name new rules for the economy, we will look for the hidden side of our current rules. This will become clearer in the next several pages.
To begin, we will list the old rules of Traditional Economics and compare them with potential new rules of Quantum Economics. An explanation of each set of rules will follow.
Traditional Economic Rules – Quantum Economic Rules
|Traditional Rules||à||Potential Quantum Rules|
|Closed, Static, Linear System||Becomes||Dynamic, Open, Active System|
|Maximization of Utility||Becomes||Holistic Utility|
|People Are Rational||Becomes||People Are Multidimensional|
|Labor as Commodity||Becomes||Labor as Resource|
|Equilibrium of Supply and Demand||Becomes||Expanded Supply and Demand|
|Profit Maximization||Becomes||Profit Optimization|
|Shareholders’ Profit||Becomes||Stakeholders’ Profit|
|Business Cycles||Becomes||Business Progression|
|Free Market||Becomes||Flowing Exchange|
|Social Safety Net||Becomes||Conscientious Connection|
|Gross Domestic Product||Becomes||Gross Satisfaction Indicator|
|Finite Resources||Becomes||Unlimited Potential|
|Predictability||Becomes||Adaptation and Learning|
|Deficit Spending||Becomes||Dynamic Spending|
|Laissez faire Distribution||Becomes||Responsive Distribution|
A Closed, Static, Linear System Becomes a Dynamic, Open, Active System.
Traditional Economics, as it merged with Newtonian Physics, became a system that was locked in place. Our current system tends to be inflexible, closed and static. Since the Quantum Worldview allows for less predictability, an economic system under this philosophy becomes dynamic and open. This new system would have unlimited potential for the economy.
Maximization of Utility Becomes Holistic Utility.
Beinhocker writes that English philosopher Jeremy Bentham (1748-1842) first identified “a quantity that he termed utility to measure pleasure and pain. He argued that economic choices were the result of an individual’s calculations as to what actions would maximize his or her utility.” This simply means that everyone is out to enable their own happiness by their choices of material possessions or economic purchases. Collective happiness would ensure a refined version of Adam Smith’s social harmony.
Now, if we use the Principle of Complementarity to look for the hidden side of maximization of utility, we might find a new rule of holistic, or encompassing, maximization. This new rule would not only measure happiness from material satisfaction, but also measure emotional and spiritual needs, overall satisfaction with one’s life, leisure time, and pursuit of meaning. While it might seem impossible to measure these intangible items, Dan Buettner, a researcher who has studied the happiest places to live, does just that and reports on his findings in his book Thrive: Finding Happiness the Blue Zones Way. He has found a system to measure the happiness, which includes material and non-material attributes, in a person’s life. While it was not possible to measure these intangible pieces years ago when economists measured utility, it is now possible to measure holistic satisfaction with life.
People Are Rational Becomes People Are Multidimensional.
Traditional Economics has long stood on the rule that people act in a rational manner. Beinhocker tells us that
it is important to note that the key behavioral assumptions of Traditional Economics were not developed because anyone thought they were a good description of real human behavior; they were adopted to make the math work in the equilibrium framework.
If we look at the hidden principle behind rationality, we see that intuition plays a large role in the decision-making process. In the Quantum Worldview decisions happen as ongoing exchanges of information from multiple sources. This information is gathered through all the senses—mentally, kinesthetically, and spiritually. A multidimensional integration happens. This brings with it more uncertainty and less predictability, but amazing potential for creativity. Being multidimensional—curious, open, creative—gives us all a wider range of possibilities, even in our economic lives.
Labor as Commodity Becomes Labor as Resource.
Over 300 years ago the Industrial Revolution gave birth to three factors of production: land, capital, and labor. Thus, from the very beginning of capitalism, labor was considered a commodity. Over the years, Arnold Kling suggests, “every business was seen as a type of machine with its capacity for output.” Labor, as commodity, also became a machine. How much output can a person—also viewed as a machine—produce in a day?
From the Quantum Worldview, where everyone is connected and everyone has potential for immense creativity, it is time to see labor or workers as a resource, a resource that now is thrown aside during an economic downturn. In the Quantum Economy, employees would be cherished for potential creativity to help solve current issues.
Equilibrium of Supply and Demand Becomes Expanded Supply and Demand.
We know from Traditional Economics the concept of the equilibrium of supply and demand. Prices control supply and demand, and theoretically balance all the supplies and demand in the marketplace. It has been assumed that this concept kept the economy in equilibrium. Yet we know that this equilibrium was based only on the supply and demand of material goods. As John Bogle, founder and former CEO of Vanguard Mutual Fund Group, tells in his book Enough, we have saturated ourselves with material goods.
But how might this all be different? In the quantum world we can peer behind the equilibrium of supply and demand and notice that it shifts into expanded supply and demand. In the Quantum Economy this expanded supply and demand is a supply of goods that encompasses the whole person. While we can see that this is already under way, further expanded demand would show itself as the need for leisure-time activities—such as yoga and meditation, access to the healing arts, proactive health, and artistic pursuits, as well as green industries such as increased forestation and exploration of geothermal energy. This demand for non-material products then would call forth an increased supply, which would help fuel the economy. This expansion, holding the entire range of human needs, would provide a greater stability and equilibrium than just the equilibrium of material goods.
Profit Maximization Becomes Profit Optimization.
Under the old rules, profit maximization is the unquestioned premise or rule to which all businesses adhere. It is the reason to exist. The more profits the better. More profits keep the shareholders and CEOs satisfied, even as companies are under the gun to lay off employees to become even more profitable. Something is terribly wrong with this picture. We are allowing precious human resources to be unused in favor of more money.
What might be the hidden side of profit maximization? Looking through the quantum lens, we see a new rule emerging: Profit Optimization. Profit Optimization looks not only at money as profit, but also at people as a gifted resource. Profit Optimization honors the creativity of employees, and as a rule does not lay people off in difficult times. It honors workers as people and not as machines. This would result in less unemployment, and thus less volatility in the business cycle. While less financial profit might be made in the short term, more would be made in the long term, or at least profits might even out, if companies and people were less subject to the ups and downs of the market.
Lincoln Electric is a superb example of how a company honors its employees.
Lincoln Electric employees earned paid vacations, among the first in the nation, in 1923… Employees were guaranteed continuous employment in 1959. The early 1980s were a time of hardship, with Lincoln Electric’s sales dropping 40 percent in response to the combined effects of inflation, sharply higher energy costs, and a national recession. Although guaranteed continuous employment received a severe test, not one Lincoln Electric employee was laid off for lack of work.
This policy continues through today, proving this scenario is possible.
Shareholders’ Profit Becomes Stakeholders’ Profit.
Under this old rule today’s corporations are strictly accountable to shareholders, with little or no accountability to their employees. Schwartz reminds us: “most companies are focusing on cost-cutting to keep profits growing, but the benefits are mostly going to shareholders instead of the broader economy.”
By expanding shareholders to stakeholders, an image shift could happen. Stakeholders would share a commitment not only to profit, but also to employees, the environment, and the larger community. Stakeholders would know that, since we are all connected, expanding their concerns would eventually reap the same, if not more, profits to which they have become accustomed. Fewer lay-offs would equal less volatility in the marketplace.
Danah Zohar reminds of the quantum perspective when she writes: “it’s no longer about ‘me and you’ but about ‘us.’ It’s not separation; it’s integration. It’s not isolation; it’s an understanding that we’re all part of one great interwoven system.”
Business Cycles Becomes Business Progression.
We briefly explored the causes of market downturns in Chapter II, including the belief in laissez faire, the unknown risk of relying on quant models, a Federal Reserve that kept interest rates low, and the housing mortgage scandal. The most serious business downturn of 2008 is still on our minds, as the job market, while improving, has not yet provided “full” employment, and many people continue to suffer from the consequences. Traditional Economics did not provide immediate solutions to this dire situation.
If we look at business cycles through the eyes of quantum physics, we are reminded that everyone is connected. How might this connection apply during a steep market downturn? Perhaps in the Quantum Worldview, laissez faire becomes full participation, and all sectors of the economy intervene when the cycle begins a downturn. Companies would be committed to not only retaining employees, but also finding ways to engage all employees’ creativity to deal with a crisis. Governments would use the power of mathematics and institutional influence with legislation that considers all the players. Thus, an economic downturn would be less harsh and the economy could keep on a fairly steady pace… a progression instead of a cycle.
Free Market Becomes Flowing Exchange.
As stated in the above paragraph, we are continuing to experience the downside of a free market. While government intervention has been intended to soften the blow of recessions and depressions, this philosophy has been out of vogue since the Reagan years. Both Republican and Democrats are caught in the Newtonian Worldview in attempting to find solutions. Granholm and Mulhern, in their 2011 Newsweek article, tell us, “laissez faire is not a winning strategy in a global economy where the competitors play a much more muscular game.”
In Quantum Economics we might begin to see Flowing Exchange rather than a Free-market system. Deepak Chopra reminds us that flowing exchange is an inherent part of the universe. If this is true, then flowing exchange has a magnificent part to play in our economic world. At the moment, we are so aware of how unbalanced the flow of giving and receiving has become as the world is divided between the 1% and the 99%. It is a matter of creating an economic world that follows the universal operation of dynamic exchange where nothing is done in isolation. Every interaction becomes collaborative.
Social Safety Net Becomes Conscientious Connection.
In our current economic world we talk about Social Safety Nets, the topic of which is under continuous discussion and conflict. For some, it is considered a burden to sacrifice to provide for the welfare of others. If we realize that we are connected to everyone, the Social Safety Nets become Conscientious Connection. The connection we have with each other overrides or subsumes our own self-interest.
Gross Domestic Product Becomes Gross Satisfaction Indicator.
In Traditional Economics many measurements have evolved to determine the health and progress of the economy. One of these is the Gross Domestic Product, which measures how well our economy is producing. However, it only measures material items. It does not measure happiness or satisfaction. It is time to create new metrics and measurements that include total satisfaction with one’s life.
In Quantum Economics this measurement becomes Gross Satisfaction Index. Dan Buettner illustrates how sophisticated surveys are now available to measure all areas of life. We just need to articulate what it is that leads to our satisfaction as human beings. It must include leisure time, artistic pursuits, the need to collaborate and use one’s creativity. It might also include our optimism about resolving issues and trust in our fellow human beings and in the future. All aspects of life need to be part of our criteria for measuring economic success.
Finite Resources Becomes Unlimited Potential.
There is constant discussion today about the competition for limited resources on our small planet. Yet our materialistic economy has depended on keeping consumer demand growing by creating artificial physical needs. Goswami gives us examples of these artificial needs: “new annual fashions for women’s garments or male-ego-boosting new car models. It is very wasteful, and very detrimental to finite resources.” And yes, it is true, oil will not last forever, nor can our planet continue on the path of increased environmental pollution.
If we could combine the potential of the quantum universe with the awareness of what our real human needs entail, we would most likely prioritize creativity and connectivity above this materialism. The power of constant connection and creativity has yet to be tapped by the majority of the population. Greg Braden gives us a glimpse of this power when he asks:
what problem can’t be solved, what illness can’t be healed, and what condition can’t be improved if we’re able to tap the force and change the quantum blueprint where all of these things come from?
This blossoming creativity is an infinite and precious resource.
Predictability Becomes Adaptation and Learning.
We know that Traditional Economics views predictability as a result of cause and effect. This has encouraged a mindset in all of us that if we can just plan carefully enough, the outcome will be predictable. Yet, in this world of quantum physics and complexity economics, there are other options. Beinhocker tells the story of a GE Capital executive who stated that he saw the point of strategic planning “not as predicting the future, but as a learning exercise to prepare people for a future that was inherently uncertain.”
Beinhocker continues this line of thought when he says that
it takes a courageous executive to… admit the inherent uncertainty of the future, and emphasize learning and adapting over predicting and planning…. Even if we were as rational as possible and had all the information we could want, the computational complexity of the economy is such that the future would happen before we have time to predict it.”
Adaptation, learning, flexibility and creativity subsume predictability in the Quantum Economy.
Deficit Spending Becomes Dynamic Spending.
In our world today deficit spending has acquired a negative image. While national and individual debt is concerning, the Complementarity Principle sees Dynamic Spending as hidden behind Deficit Spending. Dynamic Spending places people before debt. Job creation and the maximization of creativity have priority over deficit reduction. Money is about giving and receiving, not about withholding in order to justify an old rule that says deficits are always unacceptable.
Laissez-faire Distribution Becomes Responsive Distribution.
While Smith did not intend it, the offshoot of capitalism over the years has become individualistic materialism. The rule has become the more for me, the better—a bigger house, a better car, fancier clothes, and pricier educations. At the same time the divide between the rich and poor has increased.
Heilbroner reminds us again that we are interdependent.
Even in our prosperous and secure society, there remains, however unnoticed, an aspect of life’s precariousness, a reminder of the underlying problem of survival. This is our helplessness as economic individuals…. The richer the nation, the more apparent is this inability of its average inhabitant to survive unaided and alone.
Yet in the quantum world, knowing that we are all connected would result in a more responsive distribution. Warren Buffet has recently made a proposal that the very wealthy pay more in taxes. He grasps the unfairness of the current situation, and he understands the interconnectedness of us all. Interestingly enough, Buettner’s studies of Denmark show that “high taxes have nudged people away from pursuing material wealth giving time for more leisure and to pursue artistic talents.”
Fear Becomes Confidence.
Fear may not be a rule, but it is a common emotion in our economy. A 2011 Reuter/Ipsos poll stated “economic fears are weighing heavily on Americans, with a large majority saying the United States is on the wrong track and nearly half believed the worst is yet to come.” Fear would lessen greatly if the majority of people in our nation felt economically secure. Former British Prime Minister Gordon Brown believes that “confidence in the future will breed confidence today.”Were the general populace given more support for their individual economic situations, confidence in our economic future would replace fear.
These new rules may sound like socialism. Let me assure you they are not! Quantum Economics does not do away with entrepreneurship or the free market. Instead, it consciously brings our economic system into the abundance of the universe, thus aligning our economic system with amazing new possibilities of creativity and connection.
These rules are only a beginning. My hope is that others will be inspired to expand them, enlarge them and make them relevant for a new economy. Before we leave this chapter, I believe that there are two critical concepts we must remember: first, Traditional Economics no longer works—something new needs to emerge. Secondly, it will take the all-inclusive context of the Quantum Worldview to create a more useful economic system for everyone.
In this chapter we have taken a global look at what might be possible for a new economic world. In the next chapter we will look at how we might take a different and more enlightened relationship to our personal money.