The Algorithm of Humans
The Role of Humans in Economy
Humans are the main actors in the economy. This is because the economy is an activity for living and an activity to sustain human life. Goods and “money” are merely supporting roles. This is because goods and “money” are means and tools to sustain human life. The essence of the economy cannot be seen if viewed from the perspective of “money.”
Humans are both the cause and the result.
The root of the economy lies in morality. In a sense, the economy is extremely religious. Why do humans live? Why do humans work? Why do humans need to work to live? The answer lies in the economy. Therefore, the economy is morality. The ultimate goal of the economy can be said to be self-realization. Not just living, but living in a way that is true to oneself. That is the state the economy should aim for. It depends on what the people of that country consider good and what kind of society they base their lives on. If this point is ambiguous, the economy cannot be understood. People absolutize their own values. Therefore, they cannot understand the thinking of people with other values. Because they cannot understand, they cannot predict what will happen in countries with different economic systems. If values change, the nature of the economy also changes.
Modern people, especially those in capitalist countries, tend to absolutize the value of “money.” There is a tendency to believe that even love and happiness can be bought with “money.” The root of the economy is not “money.” It is living, survival. If this is forgotten, even the soul and life may be sold. The important thing is not what values are absolute, but what kind of values the economy is built upon. Unless this point can be considered objectively, the essence of the economy cannot be understood. A good example is the consideration of interest rates. The pros and cons of interest rates are more of a religious issue than an economic one.
Therefore, moral hazard is of significant importance in human issues. Under what circumstances do humans change their behavioral norms, and by what? What factors decisively influence and distort human behavioral norms? What kind of behavioral norms improve the economy? This is a fundamental issue of the economy.
The mechanism that drives the economy and the purpose of driving the economy are different. The driving force of the economy is “money,” but “money” is a means, not an end. The purpose of driving the economy is to sustain and enrich people’s lives. The purpose of the economy is to make people happy. It is pointless if people are made unhappy despite having a lot of “money.”
The center of the economy is humans. The economy exists to sustain humans, not the other way around. The economy exists because humans are at the center. The role of the economy is to produce and procure what is necessary for humans to live and distribute it to all people. Therefore, the mechanism of the economy is to adjust the surplus and shortage of resources. “Money” and markets exist as means for this purpose. The economy does not exist for the sake of “money,” nor does it exist to build palaces, castles, or pyramids. Cities and countries are built to make living easier for humans, not for the sake of the economy. However, in modern times, cities and countries are being built centered around the economy. The economy is becoming such that it does not matter if human lives are ruined as long as the economy improves. If only production efficiency is considered, cities only need to be functional and do not need to be beautiful. Culture is merely a desire. Humans are not slaves to the economy. The economy is a slave to humans. The economy exists for humans, not the other way around. The economy must be cultural. The center of the economy is humans.
The scale, development, and growth of the economy are based on population. The standard of living of people is fundamental, not the amount of money. The only seed for economic growth is the number of humans. It is impossible for economic growth to continue indefinitely. What is important is how many people can live richly. Economic growth is not necessary. It is enough if people can live peacefully and richly.
It does not matter how much profit is made. What is important is what and how much can be bought.
Therefore, the center of the economy lies in the way humans live. What kind of life people desire is the central issue of the economy. The economy also has population constraints. The economy cannot develop beyond the number of people. Therefore, economic growth cannot continue indefinitely. The amount of food a person can eat and the clothes a person can wear in a lifetime are limited. Humans are not immortal. They always live within limits. The issue of the economy is what kind of life to live within limited time, limited things, and limited space.
The economy exists for humans. The economy does not exist for “money.”
Even in foreign trade, the issue is whether what is necessary for the people’s lives can be procured domestically. If everything can be covered domestically, there is no need for foreign trade. In fact, Myanmar and the Kingdom of Bhutan once effectively isolated themselves. Foreign trade is conducted because there are necessary supplies for the people’s lives. Foreign trade is not conducted for the sake of “money.” Today’s economy is based on the premise of foreign trade. In other words, survival is impossible without foreign trade. Therefore, foreign circumstances directly affect the domestic economy. Moreover, if necessary supplies cannot be procured from abroad, it affects the survival of the nation. It is impossible to discuss the nature of the nation without considering this point. The issue is what is lacking domestically and where it is procured from. And what is necessary to procure the lacking resources from abroad. Procuring lacking resources is a matter of national survival. Therefore, how to procure resources that are lacking and affect national survival is a matter of national strategy. Our country depends heavily on foreign countries for energy and food. To import these supplies, foreign currency must be prepared. Therefore, energy, food, and means of earning foreign currency are important matters related to Japan’s national strategy.
The economy has a tendency to seek balance. This is no exception in the international market. Therefore, international trade always has a force to correct disparities. Especially, the force to correct income disparity and price disparity is a pillar. Income disparity is wage disparity and affects the standard of living and prices. Price disparity affects exchange rates and prices. In high-income countries like developed countries, there is always downward pressure, and in developing countries, there is upward pressure. If individual countries cannot sustain their lives, international trade cannot be sustained. This is because the economy itself cannot be sustained. Foreign trade is based on the premise of mutual work, and the economy cannot be sustained with one-way work.
The economy refers to activities for humans to live. In short, humans are the center. “Money” is not the center. “Money” is necessary to live within the market economy. The root of the economy is how to sustain people’s lives. The economy cannot be sustained if humans are forgotten. However, in recent years, there is a tendency to prioritize “money” issues over human issues. And humans are being neglected. Humans do not refer to specific individuals or forces. The economy is to ensure that all people can live.
Producing and consuming goods is the internal economy. “Money” developed because it is necessary for the external economy. “Money” is nominal value, and the need for “money” is a non-productive activity. This is because productive activities have tangible production goods. Those engaged in productive labor can share production goods. Those engaged in non-productive labor have no production goods to share. Therefore, “money” is necessary, and power is necessary.
The mechanism of the economy has the role of distributing necessary resources to people’s lives as needed. Therefore, the standard for measuring the economy is what is necessary for people. Whether it is distributed to those who need it in the appropriate amount and at the appropriate time. However, many people mistakenly believe that the mechanism of the economy exists for the sake of “money.” This distorts the original function of “money.” As a result, what is necessary for people’s lives is forgotten. Consequently, economic value is determined only by supply and demand. Desired goods are prioritized, and it is not reflected in monetary value whether truly necessary goods are produced as needed. This creates disparities and biases in the world. For example, even an immoral movie is considered correct if it is a hit. Moral discussions are taboo in art. Of course, suppressing speech is not allowed. However, suppressing criticism because it is profitable and denying even moral discussions is not guaranteeing freedom of speech.
People receive rewards according to their work as compensation for their social contributions. Rewards are shares. And part of the reward is offered as tax for the public share, and the rest is used for oneself, for private purposes. Taxes have two aspects. One aspect is for the public, and the other is tribute to the rulers. There is a thought that labor is a punishment. The idea is that labor is a punishment given by God. From such a perspective, labor itself may be denied. This is because the positive function of labor is lost. However, originally, labor is proof of being a member of the community. By working for the community, one is recognized as a member of the community. By being formally recognized as a member of the community, one is given the right to a share. If labor costs are denied as evil, the economy cannot be sustained. Profit is not the only purpose. The important thing is the cost structure. This is because costs converge to labor costs. Labor costs are compensation for human activities. Costs are a means of distribution, and denying costs is denying distribution itself. Therefore, demanding minimum income and improving working conditions are workers’ rights. Originally, taxes are distributions for the public. When the function of exploitation becomes stronger, power loses legitimacy. State power degenerates into mere violence.
In the past, necessity was the root of economic value. “Money” is an indicator of exchange value. Exchange was conducted as needed. Ascetic people, especially practitioners, tried to eliminate unnecessary things as waste. However, if this goes too far, even the joy of living is denied. Truly necessary things may also be denied. Desire becomes a force to improve the economy. The balance between necessary things and desired things is important. However, the root is necessity. Desire has no limit. The economy moves with desire as a force based on necessity. If desire is made the root of the economy, the economy becomes limitless. However, the real world is finite. What is truly necessary for people’s lives? If this is forgotten, conflicts will never cease in this world. This is because conflicts deviate from the original role of the economy.
Purpose and Role of Economics for People
The purpose of economics is not “money.” It is to make people’s lives peaceful and prosperous. To enrich people’s lives, it is necessary to provide what people need, when they need it, and in the required amount. The essence of the economy lies in people and goods, and “money” is a means to supply the necessary goods to the necessary people at the necessary time.
Therefore, what decisively affects the economy are things related to people and goods, such as epidemics, wars, civil wars, crimes, droughts, famines, earthquakes, floods, tsunamis, fires, and accidents. Many economic disasters are man-made.
The economy is based on relationships between people and is an activity to sustain people. Fundamentally, it goes back to human life.
The ultimate goal of the economy is to return to people. In short, it is to make the citizens happy. This point needs to be clarified. Even if we say enriching the citizens, it is about the content of that richness.
The scale of the economy is determined based on the population. The way the economy is directed is influenced by people’s values. The root of the economy is people.
The scale of the economy is determined by what is necessary for all citizens to live. It is about whether the resources necessary for life are secured. The surplus or shortage of goods and “money” for people affects the economy.
The economy is a state. The economy refers to a state. The economy is not a concept, nor is it any kind of existence or action. The economy refers to the state that arises through activities for people to live. Moreover, the economy is an artificially created state. The economy is a purposeful act, and people do not produce goods aimlessly. Therefore, in economic activities, the purpose plays an important role. It is different from nature. In other words, it is something that is done, not something that happens. Therefore, clarifying the purpose is the first step to understanding the economy.
The state of the economy is represented by the business climate. We say the economy is good or bad to describe the state of the economy. When the economy is good, it is called a boom. When the economy is bad, it is called a recession. Although we describe the state of the economy as good or bad, the true meaning of the business climate is not clear. What does it mean for the economy to be good? Without clarifying this, it is fundamentally impossible to judge the economy’s quality. When the economy is bad, it is either because the purpose is bad or the economy is working in a direction different from the purpose. In many cases, the biggest problem is that people have lost sight of the original purpose.
What is the business climate? Basically, a good business climate means the state of the economy is favorable. The economy refers to a state. What does it mean for the economic trend to be favorable? It should be considered from the original purpose of the economy. The purpose of the economy is to supply the necessary goods to the necessary people in the necessary amount at the necessary time. Therefore, a favorable economy means a state where the necessary goods can be supplied to the necessary people in the necessary amount at the necessary time. To maintain a good business climate, “money” must function normally. To maintain a favorable market condition, the circulation of “money” must be smooth. This is because “money” is a means of distribution. “Money” is the blood of the economy. If “money” does not circulate evenly throughout society, the economy will not function. It is essential to ensure that “money” circulates evenly throughout society. First, people earn “money” by working or renting out their homes, and then they procure the necessary goods from the market with that “money” as needed. Goods are produced or procured by people’s work. “Money” is paid as a reward for people’s work. In other words, the economy operates through the exchange and circulation of “money.” Therefore, the business climate is influenced by the circulation of “money.” When “money” does not circulate, the business climate worsens. In other words, the liquidity and turnover rate of “money” are crucial in the economy. The premise is the surplus or shortage of people and goods. The main activity of the economy is to sell surplus goods and replenish insufficient goods. The root lies in people.
However, the fundamental point is to supply the necessary goods to the necessary people in the necessary amount at the necessary time. “Money” exists to realize this. The reason the business climate worsens due to “money” is that “money” fails to fulfill its original role. This point must not be mistaken. The business climate does not worsen because there is not enough “money.” The problem is that the necessary amount of “money” does not reach the necessary people at the necessary time, or “money” is not circulating. Since “money” is a means of distribution, it does not function properly if there is too much or too little of it. Adjusting to an appropriate amount is the role of finance and fiscal policy. Therefore, economic measures are about whether the necessary goods are supplied in the necessary amount and whether the necessary amount of “money” reaches the necessary people at the necessary time. Making money is just a means to that end. Making money as a means does not become the purpose. The production entity produces goods as needed and supplies them to the market, acquires “money” through the revenue, and distributes “money” through expenses. The consumption entity earns income by providing labor and procures the necessary goods from the market through expenditure. Profit is just a guideline for measuring the performance of revenue and expenses. Profit itself does not have substance; what is considered revenue and what is considered expense is crucial. The market is a place to convert and exchange the acquired “money” into resources necessary for life.
If the economy represents a state, what kind of state is steady? What kind of state is unsteady? What causes change? Is change caused by some event? Or is change caused by the state? That is the problem. The policies to be adopted will also change accordingly.
Is the state of the market permanent? Or is a steady state rare (abnormal)? When we assume some law or standard, we need to clarify the space or state that serves as the premise. Is it a phenomenon that occurs under certain conditions or premises? Are the laws or standards constant even if the conditions or premises differ? Many economists seem to think that changes or differences in conditions or premises do not matter when formulating economic policies. As evidence, there are economists and critics who stubbornly insist that deregulation will solve everything, even if the conditions or premises surrounding the market change. No matter how much you tell them that the conditions or premises have changed, they do not listen.
Many people believe that the market generates economic value inexhaustibly. And they think about the economy on the premise that economic value is generated inexhaustibly. However, the root of the economy is people. The number of people is limited. Also, the environment in which humans can live is limited. The things people need in a lifetime are limited. The food a person can eat in a lifetime and the clothes they can wear are also limited. The base of the economy is people and goods. People and goods are finite, so their quantity can be measured. In contrast, “money” is infinite. Therefore, there needs to be an upper limit on “money.”
The economy is an activity for people to live. Therefore, the starting point of the economy is people. The act of producing or procuring the goods people need and distributing them to everyone is the economy. “Money” is a means or tool to produce or procure the goods people need and distribute them to everyone.
People do not live for “money,” nor are they kept alive by “money.” “Money” is necessary to live in a market economy. Living is the purpose, and “money” is the means.
The role of people is to be born, work, get married, build a family, have children, and raise them. This is the basic. Of course, this is the basic, and different ways of living can be chosen. However, the standard is to be born, work, get married, have children, and raise them. Otherwise, descendants cannot be left.
And this basic involves birth, aging, illness, and death. This shapes the purpose and role of people in the economy.
The purpose of the economy lies in the lives of the citizens. The main actors in the economy are people.
Unnecessary things in the world cost “money.” This is because they are unnecessary in the world. Necessary things in the world align with reality and the economy. Unnecessary things can only be measured by “money.” Therefore, if there is no necessity, the price will rise indefinitely. If the price of “rice” is as expensive as a jewel, “rice” cannot be a staple food. If a jewel is priced the same as “rice,” the jewel does not have value as a jewel. However, what is indispensable for people to live is “rice,” not jewels.
Things necessary for living are cheap. There are many such paradoxes in the economy. However, this can lead to misunderstandings about the essence of the economy, causing the misconception that cheap things have no value. It is not that they have no value because they are cheap. They become cheap because they have value.
We must not forget that prices are the result of social division of labor and are determined relatively. For example, if the total production of a country does not change, even if the number of income sources increases, only the distribution ratio changes, and the actual scale of the economy does not change. Also, even if nominal income changes, the actual scale of the economy does not change.
If the land area for housing remains the same, even if the number of houses increases, the area per house will only become smaller. In that case, the price does not necessarily reflect the quality or value of the house. It is simply based on supply and demand. It may also be based on the supply of “money.” It may reflect income disparity.
What is important is what people are seeking, and we must not forget that prices only reflect the relationship between people, goods, and “money.” Otherwise, we will end up paying a lot of “money” for things with no value.
“Money” has expanded due to unproductive and unnecessary parts. And the most unproductive and unnecessary act is war. War has expanded and developed the monetary system. Therefore, modern economy and war are inseparable.
The productivity of productive jobs such as agriculture and manufacturing has increased, so the proportion of unproductive jobs has also expanded. Productive jobs and unproductive jobs do not exist independently without relation. If the proportion of unproductive jobs expands beyond the production volume created by productive jobs, the economy will collapse as it cannot absorb the demand. The composition and proportion of income and expenditure are a microcosm of the economy. Therefore, the relationship between production, income, and expenditure represents the economy.
Many people misunderstand economic efficiency. Economic efficiency means obtaining more economic utility with fewer resources and energy. In other words, it means obtaining the maximum utility with minimal resources and energy. This ultimately depends on how many people’s needs are being met. It is not about making a lot of “money,” gaining competitiveness, or producing goods without limit. The basic principle is to produce only what should be produced as needed and consume only what should be consumed as needed. What should be produced are the goods people need, and what should be consumed are the goods necessary for people to live. Producing wastefully and discarding wastefully worsens economic efficiency. Saving and frugality improve economic efficiency, while wastefulness worsens it. Producing as much as you want and discarding what you cannot consume is not the way.
Here is the English translation of the provided text:
Living Space
The economy is an activity for living. In other words, the mechanism of the economy exists to sustain people. The mechanism of the economy exists to support people’s lives. So, what are the factors that sustain people’s lives? If this becomes clear, we can understand the elements that constitute the economy.
First, for people to live, they need to procure the necessities of life. The means of procurement are either self-production or receiving from others. Resources that cannot be self-supplied need to be received from others. Receiving from others means exchange. Other than receiving necessary resources from others, there is also the means of plundering or taking by force. However, in modern society, acts of taking by force are generally considered crimes. Therefore, the scope of economic activities is fundamentally defined based on transfer. The means of transfer are either sale or gift. In a market economy, sale is the basis. This is because the market is based on exchange. Exchange is based on the premise of mutual work.
The market economy is sustained by providing means of production in some form, earning income as compensation for providing means of production, and procuring necessary resources for life from the market with the earned income. The basic principle is to live by the earnings obtained from working. This is the principle.
From this, it is required that the total production representing how much production has been done in the whole society, the total income representing how much income has been earned, and the total expenditure representing how much expenditure has been made are balanced. Among these, total income restricts total production and total expenditure. Next, the issue is whether income is distributed to people. Income is paid as compensation for production, and expenditure is made within the range of income. If income is not evenly distributed, the market economy cannot be sustained. In other words, when income is not distributed, the market economy collapses. From there, the relationship between the population engaged in production and earning income and the total population. The unemployment rate representing how much of the population that cannot earn income through work occupies in relation to production labor. How many people live on one person’s income, etc., become important. The average and variance of income per person, the upper and lower limits. It is necessary to know the lower limit because if the minimum income required for living is not guaranteed, life cannot be sustained, that is, there will be people who economically collapse. From the perspective of expenditure, whether the necessary resources for living are procured, whether the demand representing people’s desires is met. What is the composition of expenditure? Changes in the composition of expenditure are reflected in changes in the composition of industries and income. And the trend of prices. The relationship between supply and demand is reflected in prices, that is, in prices. Another important thing is the role of “money.” “Money” is a tool that mediates exchange and a means of distribution. “Money” must always be supplied and stored in the market as a constant amount of payment preparation. Also, a constant amount of “money” must always circulate in the market. A constant amount means the economic amount.
Human economy is sustained in the living space. The living space is also a place of consumption. In the past, the living space was integrated with the workplace and daily life. The place of production and consumption was one. As the living space expanded, the place of production and the place of consumption split. The market was established in that gap. The place of production became the workplace, and the place of consumption formed the home. The home is a place for the family and also a place for childcare.
The living space is also a living community. The living community was both a production entity and a consumption entity. As the workplace and living space separated, the production entity and consumption entity were separated and established, and the distribution entity was formed. In the process of separating production and consumption, the distribution entity and the market as a place of distribution were formed. Also, money developed as a means of distribution.
Economic units are fundamentally based on economic entities. Economic entities create internal and external economies. Internal economy is non-market, non-monetary, moral (internal norms), organizational, and closed space. In contrast, external economy is market-based, monetary, non-moral (external rules and laws), free, and open space.
In the process of establishing places of production, distribution, and consumption, changes also occurred in individual work. When production, consumption, and distribution were integrated, individual issues could be unified as holistic issues, but as social division of labor deepened and the places of production, consumption, and distribution separated, individuals had to use different roles and behavioral norms in each place. This caused a split in values as a single human being, resulting in extreme tension and stress.
As a father, as a husband, as an organizational person, as a worker, as an income earner, as a producer, as a consumer, or as a mother, as a wife, as a professional, as a woman, as a family person, one person had to integrate these roles within their own personality.
As production and consumption separated and the market economy developed, the nature of the economy inevitably changed.
Currently, to sustain life, it is necessary to work and earn income. The schooling period is a preparation period for the working period. In other words, working to earn “money” and obtaining the means of living with the earned “money.” That is people’s daily life. And this daily life is fundamentally a repetition of the same thing. What to do is decided in a certain order, and it is repeated daily. In that repetition, people choose their own way of living. That constitutes the algorithm of humans. The algorithm of humans is like a path.
The basic tone and rhythm of daily life are fundamentally ordinary. Waking up in the morning, washing the face, brushing the teeth, eating, and going to work. Working at the workplace, having lunch at noon. After work in the evening, going home, having dinner, taking a bath, and going to bed. This repetition gathers to form the rhythm of the economy.
People’s lives build the foundation of the economy. Three meals a day create agriculture, fisheries, and the food industry. Clothes nurture the fashion industry. Houses form the construction industry. Things necessary for daily life and entertainment become the foundation of the electric power industry, petroleum industry, and communication industry. Children’s education and childcare become the education industry.
People’s lives are the starting point and the endpoint of the economy.
One of the ultimate goals of the economy is to build a regional community.
Family
The foundation of human economics lies in the family. The family is the beginning of all economics.
The family is the basic economic unit. The fundamental unit of modern economics is the family. The family is the origin of the economy. The family forms the consumption entity.
The family constitutes the living space. The family was once both a place of production and consumption. The family is a living community. In the process of separating the place of production and consumption, the production entity and the consumption entity were established, forming internal and external economies. The family is fundamentally established by blood relations. In other words, the root of the economy is blood relations, namely, husband and wife, parents and children, brothers and sisters. The family is composed of several generations. The way generations are combined forms the basis of the family system.
The way the family is structured forms the foundation of the economic framework. The structure of the family is reflected in the family system. A family system where parent-child relationships span three generations is called a middle family system, a family system that extends beyond that is called an extended family system, and a family system composed only of the nuclear couple and their children is called a nuclear family system. As the living space and the workplace separate, the extended family system transitions to the nuclear family system and further to single-person households. This is also linked to the disintegration of the living community.
The extended family once referred to the entire clan and relatives. Some even hired workers such as stewards, maids, servants, housemaids, and nannies. Fiscal studies originated from household management, which developed into the study of government offices. The consumption economy was established. Royal families, nobles, and other power holders were also groups centered around the family. Therefore, the family system formed the core of the feudal system. It is not an exaggeration to say that the family system itself was the state.
Changes in the family system qualitatively and quantitatively expand social disparities. One reason is that the internal economy is compressed and the external economy is expanded by subdividing household units. The internal economy is a non-market economy, a non-monetary economy, while the external economy is a market economy, a monetary economy. Therefore, the scope of the market and money expands. During the era of extended familyism, there was less reliance on cash income, but as nuclear families became more common, reliance on cash income increased. This led to an increase in dual-income households and the outsourcing of household chores, with the external economy replacing the internal economy. As a result, income disparity directly translates into economic disparity. The extended family system can function even with low income. However, higher income is required in a nuclear family. On the other hand, the extended family is less convenient compared to the nuclear family.
Secondly, there is the globalization of the economy. Economic globalization equalizes income and labor. In other words, it promotes the global equalization of wages for the same work. As a result, regional economic disparities are directly reflected in national economic disparities. This also causes economic friction between developed and developing countries. Globalization makes economic disparities between countries more apparent. There is a force that tries to equalize living standards, price levels, and income levels. This leads to the polarization of labor. High-value-added labor and simple labor become polarized. Income disparity reflects economic disparity between countries. In developed countries, high-value-added labor is required, and those who cannot adapt to it are relatively forced to accept low wages or lose their jobs. It also causes industrial hollowing out. If economic development is simply sought in productivity, countries with high income levels converge on high-value-added labor. However, the base of the economy is supported by simple, repetitive, unskilled, and manual labor. Jobs have aptitudes. The economic system is not only for those with special skills or special knowledge. Those with special skills or special knowledge are overwhelmingly in the minority. Ironically, the rise in income levels brings the disparity with low-income countries into the country. The disparity between domestic and foreign income levels amplifies domestic income disparity. No matter how much the economy develops, human abilities do not develop to the same extent. Even those who can only do simple manual labor have the right to live. Income is also related to working conditions. Seeking low prices easily leads to the deterioration of working conditions and promotes the export of poverty. Also, the arrogance of so-called intellectuals expands economic disparity. The mistake of developed countries is to underestimate ordinary labor.
Thirdly, there is the expansion of intergenerational disparity. This is the so-called aging problem. In the extended family system, the incomes of three or four generations are combined. However, in a nuclear family, dependence on the income of one generation becomes stronger. This widens the gap between generations that can earn income and those that cannot. The important thing is that the period during which income can be earned and the period of survival are different. In the era when multiple generations such as extended families formed a living community, income was equalized within the internal economy, and elderly care was also provided. However, as nuclear families became more common, household finances became independent between generations, exposing intergenerational disparity. In a society where nuclear families have progressed, it becomes necessary to redistribute income between generations through pension and care systems. This increases the social burden.
The family forms the household. The household is also an administrative unit in the economy.
The number of workers in a household and how many of them earn income form the basis of the economy. The members of the family, workers, and income earners are not the same.
There are generally dependents in a household. Dependents are family members who cannot earn income themselves and rely on the income of other family members. Mainly, this refers to children before adulthood, retired elderly people, and full-time housewives. However, it is originally strange to consider full-time housewives as dependents. This is because full-time housewives are not unemployed. Rather, they contribute significantly economically. It is just that their labor is unpaid. The old family system was established because of the significant contribution of housewives. The center of the household economy is the housewife and mother. The father once went out to work to protect the household. Therefore, the household and the outside world are equal. If the internal economy is denied, the economy cannot function. The center of consumption is the internal economy. Those who work in the household and those who work outside should respect each other.
The consumption entity is the basic unit of the economy. The reason why the consumption entity is the basic unit of the economy is that consumption involves everyone, while production and distribution involve only a part of the people. Also, consumption is the ultimate goal, and production and distribution are constrained by the way consumption is. It is consumption that determines what is essential for life, not production or distribution. Therefore, the root of the economy lies in consumption.
The total number of family members, that is, the total population, determines the scale of the economy. The number of workers determines the scope of the real economy, and income determines the scale of the market.
Even if dual-income households increase, it does not mean that added value increases. If there is no change in production volume, it simply means that the number of income sources has increased.
The nuclear family is less economical than the extended family. Therefore, as nuclear families become more common, it becomes necessary to compensate for the uneconomical aspects of nuclear families. Larger families can save more in various ways. They can also mitigate surpluses and shortages.
Initially, people went out to work to earn the “money” necessary to maintain the family’s life. The basic principle is to maintain the family’s life.
The biggest problem with the declining birthrate and aging population is distribution. An increase in pensioners means an increase in those with unearned income. In extended familyism, the total income of the family supported all family members. In other words, those who could not work due to old age, those engaged in household labor (full-time housewives), and dependents were supported by the income of those engaged in production. The purpose of going out to work was to earn the overall living expenses. However, today, with the progress of nuclear families, it is all one can do to support one household, and it has become the principle to supplement the shortfall with pensions, welfare, unemployment insurance, etc. This means that the role of public expenditure is expanding. In other words, the way of distribution has fundamentally changed. And this change promotes the declining birthrate and aging population. In other words, the more income belongs to individuals, the less distribution there is to support the family. Income belongs to individuals. As a result, dependents and the unemployed must rely on public expenditure, but the income that supports public expenditure depends on tax revenue. Since public expenditure does not create added value, tax revenue must depend on personal income or consumption. As long as personal income itself depends on individual living, it is unlikely that tax revenue will be sufficient to cover the expenditure of those with unearned income. In that case, the shortfall must rely on government bonds. In other words, the source of expenditure shifts from income to debt. The shift from income tax to consumption tax is inevitable because distribution from income cannot maintain distribution to those with unearned income. The basis of distribution must be sought in consumption.
This means a transformation of the market economy based on income and revenue. Profit-making businesses will no longer be viable. Also, personal income alone will not be able to cover consumption. The problem is whether the balance between flow and stock can be maintained and whether the willingness to work can be enhanced and maintained.
The fundamental principle of working to earn rewards as compensation for labor and living based on those rewards, or living based on the rent earned by renting out a room, collapses. And living on income obtained through debt or subsidies. In that case, the meaning of productive activities such as working or renting out a room is lost. Inevitably, the willingness to work is also lost. The relationship between production, work, and consumption is lost. Whether you work or not, it is the same. If you can live without working, there is no motivation to work hard. Working itself becomes ridiculous. In that case, there will be no workers. However, it is impossible for humans to be completely liberated from labor, and the meaning of labor is lost. Labor is not only a negative factor in living but also plays a decisive role in self-realization. Labor is also human relationships. It is also the bond of the family. If the relationship of working and supporting the family with that reward is lost, the bond of the family is also lost. This is also the background of the declining birthrate and aging population. Labor is not just a hardship. It is a means of self-realization.
People have always tended to see profit-making businesses as enemies. Making money is considered an evil act. Especially in religion, there is a tendency to see interest as evil. Interest is like a representative of added value or time value. Denying added value or time value leads to denying profit. Therefore, the objective significance of making money and its function are not properly evaluated. Because they are not properly evaluated, there are those who make unjustly excessive profits or receive exorbitant income. As a result, disparities expand. Unless the function of income and revenue and the significance of profit are properly evaluated, the market economy will not function effectively. Excessive profit is evil. However, legitimate profit has its own function. Profit is a kind of indicator.
The Basics of Economy Lie in Income
The core of a market economy is the balance of income and expenditure. The composition of income and expenditure consists of income, borrowing, and asset liquidation for income, and settlement, repayment, and asset formation for expenditure. The core of this composition is income. The balance of income and expenditure revolves around income. Opposite to income is expenditure. When repayment exceeds income, total assets decrease.
The danger lies in the reversal of the flow of debt repayment beneath the surface compared to the visible flow of income. In essence, if the repayment amount for previously borrowed money exceeds the earned money, the economy cannot be sustained. This applies not only to households but also to nations. Some argue that nations and households are different, but in reality, nations, companies, and households are the same. It only appears that they are not bankrupt as long as they can continue borrowing. However, this leads to an endless increase in debt.
This undermines the significance of labor. Losing the significance of labor means losing the significance of production.
Living on the rewards earned from work is the foundation of a market economy. If one can only make a living through debt or subsidies, the foundation of the market economy changes. When the repayment amount of debt exceeds income, life becomes unsustainable. If one borrows to repay debt, it is the end because money no longer serves its original function. Money is a means of distribution and a tool to connect producers and consumers. The market’s original function is to connect producers and consumers. If people live on debt or subsidies, the market ceases to function.
The basic principle of a market economy is to earn income using some means of production and to support the family by purchasing necessary resources from the market. This point is crucial. The market economy’s foundation is how many people can be supported by the earned income.
In other words, a market economy is an economic system based on income. Misunderstanding this point leads to a failure to understand the nature of the economy. Income is not the only means of revenue; borrowing is also a means. The problem in modern society is that the role of income is being replaced by borrowing. Borrowing lacks a tangible counterpart. Borrowing is payment preparation and fund transfer, meaning it lacks productivity.
Opposite to income is revenue. Revenue is another pillar of the market economy. Fundamentally, private companies bear the burden of debt because they can engage in profit-making activities. Financial institutions earn interest, governments earn taxes, and households earn income, but interest is not born from production activities, and taxes are fund transfers. The essence of income is cost, and its source is revenue. Taxes, interest, and income do not generate added value. Private companies can repay debt through profit-making activities. Therefore, only private companies can bear debt. By generating revenue through production activities, private companies enable financial institutions, households, and governments to repay debt.
Income is a cost. Profit is an indicator of the balance between revenue and cost. If costs exceed revenue, labor costs cannot be borne. Income is both a cost and a resource for living expenses. Therefore, if appropriate revenue is not maintained, income cannot be borne. Another important point is that debt repayment funds are covered by revenue. However, the repayment amount is not recorded in profit and loss, meaning the work is invisible. This can lead to sudden death for companies and loss of liquidity in the market.
The root of fiscal problems lies in the government bearing debt, resulting in expanded stock and compressed flow. This disrupted the balance between the surface and underlying flows of funds in the market. The amount of funds for transactions beneath the surface has exceeded the amount for payments. Consequently, money cannot perform its original function.
The decline in asset value has reduced collateral capacity, and unprincipled deregulation is squeezing revenue. Unless these two points are improved, the market cannot recover its normal function.
The important thing is distribution. What criteria are used to distribute to whom and where? If distribution is based on individual income, the burden on households, companies, governments, and overseas must be considered. This point is not well understood. When trying to distribute corporate revenue and taxes from individual income, the nature of individual income becomes an issue. Individual income is not always derived from productive activities. Besides rewards paid for work, there are non-productive incomes like pensions and subsidies. Pensions and public subsidies are paid through taxes. Additionally, debt repayment must be made, including public debt. If taxes rely mainly on individual income, the source of pensions and public subsidies ultimately comes from individual income. Therefore, as the population ages and birth rates decline, reliance on individual income alone becomes unsustainable, necessitating a shift to consumption tax.
There is often a discussion about how many people of working age must be supported. This is an illusion. The issue is not the absolute amount but distribution. If the entire burden is placed on the working-age population, appropriate income is required. If income distribution can cover pensions and various social security costs, it is sustainable. If not, public debt accumulates. More serious is when debt repayment exceeds income, making an income-based economy unsustainable.
To measure the appropriateness of income, it is necessary to know the average, variance, deviation, maximum, minimum, and range of income.
The root of the economic system is distribution. The root of distribution is per capita income. Income generates purchasing power, which drives consumption. The composition of per capita expenditure reflects the distribution of consumption. Consumption is the source of the economy, forming the market and being the source of demand. Demand is composed of aggregated consumption, generating revenue and forming industries. Therefore, the level and distribution of consumption form the foundation of a nation’s economy. The expansion and contraction of consumption determine the direction of market expansion and contraction.
The sectoral composition of total production reflects the industrial structure, and the transition of total production reflects changes in the industrial structure. The composition ratio of primary, secondary, and tertiary industries also reflects changes in consumption and productivity. For example, a relative decrease in the share of primary industry income in total income may indicate improved productivity.
The industrial structure forming total production is based on the composition of expenditure, which is sourced from income. The industrial structure reflects the household structure. The structure of total production, income, and expenditure is integrated and reflects the economic structure. Income restricts expenditure, expenditure restricts industries, and industries restrict income.
The root of the economy lies in income because distribution preparation is made through income. For example, international trade is based on the balance of income levels. The current account balance reflects the force in the international market to balance income levels. The force to correct income disparities works in the direction of balancing wage levels. This process causes trade imbalances and industrial hollowing out. Wage disparities exist, but even in low-wage countries, the economy cannot be sustained if life is unsustainable. For life to be sustainable, income and expenditure must be balanced. Income and wage disparities are relative. If income and expenditure are not balanced, life becomes unsustainable. Therefore, income and price levels are crucial. Income and price levels represent purchasing power. The purchasing power of the international market works towards balance, based on the principle of one price for one good, known as purchasing power parity.
It is meaningless if the domestic economy cannot be sustained through international trade. Wage disparities between countries will not continue indefinitely. Price disparities between countries also arise from differences in working conditions. The issue is that income as a cost is low. Income is reward, revenue, wage, labor cost, and living expense. One income has many aspects, which must not be forgotten.
Even in developing countries with relatively low wages, people have lives. If life becomes unsustainable, the economy cannot be sustained. The economy in developing countries is sustained because life is sustainable even with low wages.
Life in developing countries is sustainable because the prices of daily necessities are low. In some cases, working conditions are poor. However, low wages do not mean that people’s lives are unsustainable. This is the issue, and it reflects the essence of the economy.
If income remains low and living standards do not improve, it cannot be called a liberal country. As the economy grows, income improves, and costs rise. In so-called developed countries, income has grown as much as possible. In developing countries, income also expands as the economy expands.
Developing countries cannot remain developing forever. They will eventually catch up to the living standards of developed countries. When income reaches a certain relative level, downward and contraction pressures are applied to the market, transitioning from growth to maturity. Just as an airplane cannot continue to ascend indefinitely, it eventually reaches a cruising altitude, where it remains for a longer period.
The world economy is driven by forces towards a balance of living standards. The essence of income is work, not the absolute amount. Income is a relative function. Income exerts its utility through expenditure. Therefore, the function of income appears as the composition of expenditure. The essence of the economy is summarized in the composition of expenditure. Expenditure is a microcosm of the economy.
The quality of expenditure is changing, with a relatively increasing proportion of fixed expenditure. Particularly, debt repayment such as installments and loans, and recently increasing fixed charges. Even small amounts of debt repayment and fixed charges accumulate to squeeze disposable income. When income growth stops, debt repayment becomes a burden. When it exceeds payment capacity, the burden of debt tends to multiply. Fixed expenditure also leads to revenue rigidity, tightening cash flow. Tight cash flow suppresses economic activity, worsening market liquidity.
The economy has a public part besides the part used for living. The distribution of private and public parts also appears in income. The public part is spent on national defense and national order. Much of public expenditure is non-productive. Public expenditure mainly includes national defense, disaster prevention, security, education, welfare, and income redistribution. However, an increasing proportion of the public part squeezes living standards. The economy must not forget that it is a distribution system. For example, if military spending becomes excessive relative to the economic scale, living standards are squeezed, and finances are unknowingly squeezed. National defense spending must focus on protecting the nation. Bankrupting finances through military spending is counterproductive.
The distribution of income reflects the state of the economy. Widening economic disparities significantly weaken economic efficiency.
Changes in family composition form the fundamentals of the economy. In the past, men monopolized income, and families were supported by one person’s earnings. Even in farming households, men reigned as masters in a feudal system. As women’s economic independence was promoted, earners were no longer limited to one person, households split and became independent, nuclear families formed, and the smallest economic unit shifted to individuals. This changed the fundamentals of the economy. First, the collapse of the family system. As the economy became individualistic, family ties weakened, and families as communities ceased to exist. This weakened mutual dependence within families, increasing the role and burden of the state. Second, market expansion. Market expansion means the expansion of monetary space, with all values converted to monetary value. Third, generational disparities are disappearing. Meritocracy and performance-based tendencies are strengthening, reducing personal elements from rewards. For example, the burden on child-rearing generations is relatively increasing, increasing the burden on households with many dependents, which increases single-person households and accelerates the aging population. In essence, those who do not marry and have families are economically advantaged.
Such environmental changes are altering the fundamentals of the economy. First, questioning the nature of families and marriage systems. Second, improving gender relations. Third, addressing childcare issues and reducing the burden on child-rearing generations is an urgent task. Fourth, addressing elderly issues. Fifth, addressing labor and employment issues. Evaluating labor is becoming important. Sixth, addressing health and medical issues.
Families are the foundation of the economy.
Day, week, month, season, year
The economy has waves. Economic waves and cycles drive the economy. Economic waves include regular and irregular waves.
The basic movement of the economy is cyclical, compensating for excess and deficiency. Therefore, the economy generates periodic movements. The foundation of the economy is repetitive movement. Therefore, it does not rise unilaterally or continue to fall. There are also adjustment and contraction periods, not just growth and expansion. The economy maintains harmony by mixing expanding and contracting markets.
Besides waves generated by cycles and repetition, there are long-term cycles generated by stages of creation, growth, maturity, decline, and regeneration, and cycles generated by processes of production, distribution, consumption, and savings. There are also cycles generated by borrowing and selling due to fund excess and deficiency.
Some people assume that the economy always grows, but the economy does not only grow. The market repeatedly expands and contracts in cycles. There are adjustment phases, not just growth, because the basic movement of the economy is cyclical. The excess and deficiency of money are repetitive. Repetition causes fund circulation. If fund excess and deficiency do not repeat, economic stagnation accumulates. The economy is based on the balance of borrowing and selling. Those with money must spend it, and those lacking money must work to replenish it. The activities of those with and without money circulate funds.
In other words, the market economy is sustained by activities of spending money (expenditure) and replenishing money (income).
The purpose of the economic system is to supply necessary things to necessary people in necessary amounts at necessary times. The elements constituting this purpose create waves in the economy. Things create waves through production and life cycles. People create waves through consumption and needs. Necessary amounts create waves through harvest and storage. Time creates waves through production, consumption, inventory, and transportation.
The economy is fundamentally influenced by seasonal variations. Even factory-produced goods like clothing have seasonal consumption variations, making it difficult to adjust production equipment. Therefore, economic trends are influenced by seasonal variations. Understanding how to handle seasonal variations is crucial for understanding the economy. To understand the mechanism of seasonal variations, it is necessary to understand the factors and structures causing them.
Producing necessary things takes time. Agricultural and fishery products vary in type and quantity by season. Industrial products vary in production quantity based on equipment installation. Some products, like houses, take long periods to produce. The production period and time vary by product and production means.
Consuming goods also takes time, creating consumption periods. Consumption periods create waves in life. Waves created by consumption periods form the rhythm of life, which forms the rhythm of the economy.
Life has a rhythm, formed by daily activities repeated in cycles. These daily activities are not simple but are based on religious and cultural constraints. In regions with a habit of eating three meals a day, meals create daily cycles of morning, noon, and evening. Such daily, cyclical activities form the basic functions of the economy, appearing as income and expenditure. Under a market economy, economic entities operate through income and expenditure. Some goods, like clothing, are consumed annually. Some, like cars, are replaced periodically. Some, like houses, are bought once in a lifetime. The nature of funds varies by consumption cycle.
These regular activities have internal and external economies. Internal economy is household economy, and external economy is outside household economy.
Besides daily cycles created by daily activities, work creates daily, weekly, monthly, seasonal, semi-annual, annual, and long-term cycles. A week creates cycles through working hours and activities. A month creates waves through settlements and monthly salaries. A year creates waves through annual settlements and seasonal variations. The economy changes through these combined waves.
Daily life repeated in regular cycles is formed by sequential and repetitive structures. These structures are the root of economic waves. To understand economic trends, it is necessary to elucidate the algorithms created by these structures.
An example of internal economy is waking up, washing the face, preparing and eating meals, cleaning, doing laundry, preparing dinner, having dinner, bathing, and sleeping. Three meals, cleaning, laundry, and childcare. External economy is fundamentally formed for earning income.
A Person’s Life
A person’s life forms the framework of the economy.
It is said that people have history, and in that sense, the economy is a historical product. The modern economic system did not exist from the beginning. The economy is inherently purposeful and artificial. It does not naturally form on its own; it is created by human will.
The base of the economy is people. The number and composition of people have a decisive impact on the economy. A person’s life determines the nature of the economy. The customs and habits of the citizens forming a country shape the foundation of its economy.
The root of the economy is people. It is a person’s life. A person’s way of living determines the foundation of the economy. The economy is an artificial construct. It is created by people and reflects their way of living. The economy is an activity for living.
Without considering a person’s life, the true nature of the economy cannot be revealed.
Today, the resources necessary for living must be procured from the market using money. It is necessary to clarify how much money is needed in a lifetime to obtain the resources required for living. This is because the period during which one can earn income through their own efforts is limited. When one can no longer earn income on their own, they must rely on their savings or depend on public institutions like the government or other people. If the government or others cannot be relied upon, it is necessary to save the required funds before becoming unable to work.
The starting point of the economic algorithm is people, and the endpoint is also people. It begins with people and ends with people. This is the basic principle of the economic algorithm.
Tokugawa Ieyasu likened life to carrying a heavy load over a long journey, advising not to rush. He said that if one considers inconvenience as normal, there will be no lack, and if one desires something, they should remember times of hardship.
Life consists of four sufferings: birth, aging, illness, and death. These four sufferings are also the source of the economy.
A person’s life is irreversible and linear. It cannot be redone. Time is cruel. Once aged, youth cannot be regained. No matter how powerful, no one can achieve immortality. Everyone is destined to age and eventually die.
Death is a certainty. However, a person’s life is not of one kind. Each person’s life is different. Regardless of whether they desire it or not, each person chooses their own life.
A person’s life is diverse, with no two lives being the same. Yet, there are commonalities. Change, constancy, and simplicity define life. These determine a person’s algorithm. What changes, what remains the same, and what causes these changes? Cause and effect. When examined closely, a person’s life is simple. Laughing and crying, living within limits. People live their limited lives laughing and crying.
Even if one repeats the same actions like the ebb and flow of waves, aging creeps in. One day, they find an aged self in the mirror.
The economy exists to sustain people and for living.
How much income can be earned in a lifetime, and how much will be spent? The issue is that the period of earning income is shorter than the period of spending. Therefore, it is necessary to earn as much as possible when one can and save for times when they cannot earn. This is the essence of a person’s economy.
A significant obstacle arises when lifetime earnings do not match lifetime spending. If spending exceeds what one has earned in their lifetime, they cannot cover the shortfall on their own. Especially with the increase in nuclear families, divorces, and single-person households, it becomes difficult to rely on family to cover the shortfall. This is the underlying trap of the pension problem, and it will become more apparent as the population ages and birth rates decline.
The nuclear family system appears to promote financial independence but actually contains elements that dismantle household finances. In the aging problem, the focus is often on money, facilities, and systems, while ethics and life perspectives are not considered. The biggest issue in the aging problem is who will care for the elderly and how.
When one can no longer work and earn income, they fall into poverty. Especially with the deepening of the salaried worker system, retirement cuts off income sources other than pensions. If reemployment is not possible, they must rely on past savings and public support. If the pension system collapses, there will be no salvation.
In a family system that completes in one generation, the income and expenditure of one person’s life become everything. In old age, if savings run out, it becomes impossible to live independently. The elderly are inevitably placed in a weak position. As they age, medical expenses increase, leading to more elderly bankruptcies and increasing the social burden.
No matter how much one saves for old age, it is uncertain how long they will live. This uncertainty has led to the view that longevity is a risk. The nature of the family system and community must be fundamentally questioned.
In the past, children served as insurance. They worked while they could, and when they could no longer work, they relied on their children. In such cases, the issue of old age was not about money but about what was necessary for living as a person, both tangible and intangible. The elderly had their roles, and the question was how to live life.
This system was possible because work and living spaces were integrated. However, as production and living spaces have separated, it is becoming less feasible to rely on children when one can no longer work. Modern society revolves around money. Those who cannot earn money through work are seen as burdens.
Retired salaried workers often find themselves in a miserable state, with no place in society. The necessities of life cannot be obtained without money. When one can no longer earn money through work, society is expected to provide the saved money. Money is the only thing that can be relied upon, which is why there are pensions, unemployment insurance, and social welfare. If one becomes unable to work due to illness, health insurance covers the costs. However, this support is only possible as long as finances are stable. If finances collapse, the support ends. The government can provide support as long as it has money, but once the money runs out, it cannot continue.
These circumstances are not yet widely understood. Therefore, the pension problem is not yet seen as severe. However, when savings run out, there will be a major uproar, but by then, it will be too late.
It seems that since people began to think of the economy centered around money, they have lost the true understanding of the economy. In times when production and living spaces were integrated, people understood what was necessary for life and how to obtain it with their own hands. They grasped the reality of what would happen if they could no longer obtain the necessities of life on their own.
In modern society, production (workplace) and living (home) spaces are completely separated. Even in agriculture, harvested products are often converted into cash. Income is often replaced by salary income. As a result, harvests are seen as money rather than goods. When income can no longer be earned, it is the end.
The increase in solitary deaths among the elderly is rooted in economic issues. The root of the economy is people. The motivation for marriage and raising children stemmed from the necessity of life. This was the essence of the family and deepened bonds. It was about sharing life together and helping each other live. This is the essence of the economy. Parents worked to support their families. Children went to work in the city to send money home and were valuable workers. The family was a single community.
When economic bonds were lost, families became mere cohabitants. Economic bonds are not about money but about the necessities of life. Money, in fact, cuts economic bonds because the economy becomes solely about money. True economic relationships are about cooperation and mutual support. Nowadays, even parents and children, and spouses keep separate finances.
The foundation of the family is human relationships. Morality lives within the family. The family is the basis of human relationships and the root of morality. The family is the purpose of life. Now, society is pitiful. The family is also the source of joy, anger, sorrow, and pleasure.
To live, what is necessary? How can the necessities of life be obtained? Thinking about this is the economy. Indeed, in modern society, money is indispensable for living. However, money cannot be eaten or worn. It is not a necessity for living but a means to obtain the necessities of life. The true necessities for living are food and clothing.
Why and for what purpose? The answer is because one is a father, mother, child, brother, sister, grandfather, grandmother, uncle, aunt, or because they are family and for the sake of loved ones.
Birth, aging, illness, and death, and ceremonial occasions.
In Buddhism, the root of suffering in the world lies in birth, aging, illness, and death. However, birth, aging, illness, and death are life itself. If one cannot escape suffering, it is important to grasp something from it. This is the true meaning of the economy.
In the past, life expectancy was said to be fifty years, but now, more people live to be a hundred years old. As people live longer, the quality of the economy naturally changes. What is important in life is not the result but the process. This is because, in the result of death, all people are equal. Before death, all people are equal. Therefore, life is about work, not the result. How one lived is questioned, not the result. The result is death.
Facing the reality of death, people are required to live the present moment correctly. This is the economy. Thinking about the economy is thinking about life. What matters is not how much one earned but what one accomplished. In the end, what is questioned is whether one lived and worked in a way that they were satisfied with and could accept. No matter how much money or assets one leaves behind, everything is settled by death. Before death, wealth and fame have no value.
The long-term framework of the economy consists of birth, aging, illness, death, and ceremonial occasions. How one deals with birth, aging, illness, and death is the economy, and ceremonial occasions are the colors and goals of life.
Thinking about the economy is thinking about life and the state of the nation. A person’s life has milestones that change their way of living. Birth, aging, illness, and death create these milestones, and the ceremonies that symbolize these milestones are ceremonial occasions.
In life, the period during which one can earn income through their own efforts is limited. During periods when income cannot be earned, one must rely on others. Babies cannot live alone, and retired elderly people cannot earn income other than pensions. Therefore, in the extended family system, when one could no longer earn income, other family members took care of them. Therefore, it was necessary to inform all relatives of life’s milestones. The ceremonies to inform these milestones are ceremonial occasions.
Ceremonial occasions represent the turning points in life. They are rites of passage. In other words, ceremonial occasions represent life’s milestones. In the past, work also had seasons. Life had seasons. Festivals were decided for each season to mark the end of work. Seasons guided life and restricted economic activities. The four seasons created the framework for economic activities. Ceremonial occasions, which are extensions of the seasons of life, created the foundation and framework of the economy. The seasons of life shaped the economy.
What is the framework of the economy? Time plays an important role in the economy. The environment and circumstances change moment by moment with the passage of time. There are both steady and unsteady changes.
Life’s milestones require a significant amount of money. The means to procure the money needed for these milestones are borrowing, receiving, or depleting savings. Therefore, people save little by little from their daily earnings. Savings, borrowing, gifts, and inheritance form the long-term financial functions in life. This is the foundation of economic activities. The purpose of people’s savings is not only for ceremonial occasions but also to prepare for unforeseen circumstances such as illness, accidents, and disasters.
Education expenses, housing construction, and retirement expenses are said to be the three major expenses in life. Life planning revolves around these three expenses. Additionally, one must prepare for unforeseen expenses such as illness, accidents, and disasters. Insurance is a means to prepare for unforeseen expenses.
Work and life consist of collections of tasks and actions. Tasks and actions have periods. There are deadlines. Rewards are paid for periods or evaluations of results. Periods form the value of time. There are manufacturing periods, sales periods, inventory periods, consumption periods, and settlement periods. There are also product lifespans, best-before dates, and expiration dates. These restrict the cycles of production and consumption. Production goods also have lifespans. The lifespan of goods includes manufacturing, sales, inventory, consumption, and dismantling cycles. The periods for manufacturing, sales, inventory, consumption, and dismantling, and the associated costs form the framework of the economy.
Economic fluctuations are formed by combinations of periods, quantities, numbers of people, and amounts of money. The economy is a function of time. Time is considered as periods rather than points because the length and breadth of time play important roles. Economic fluctuations are influenced by variables of periods, quantities, numbers of people, and amounts of money. The economy is a complex collection of people’s lives. Life is composed of elements of time, things, people, and money.
Everything has a beginning and an end. Life also has a beginning and an end. The beginning and end of life are birth and death. The economy exists in the process of the beginning and end of things and the beginning and end of life.
Life involves not only daily living but also investment. Investment forms the long-term function of money. Besides the money used for daily living, there are long-term expenditures. The sources of these funds are savings or borrowing. Consumption investment forms household assets and liabilities.
Life involves housing investment, education investment, marriage investment, childbirth and childcare investment, and preparation for old age and illness. Investment for consumption is supported by stable income.
Savings for housing, education, marriage, childbirth, childcare, and old age form the foundation of the economy. In a people-centered economy, relationships between people form the basis for housing, education, marriage, childbirth, childcare, and old age economies.
Therefore, in the extended family system, marriage meant the union of families. Families spanning three or four generations formed a single community and economic unit. Multiple generations combined to mitigate life cycle fluctuations. Nuclear families and single-person households find it difficult to mitigate age-based fluctuations. Therefore, public institutions take over the care of the elderly and the sick.
The Role of Humans in the Economy
An individual plays various roles in the economy. Humans are subjective beings and are actively involved in the economy. This subjectivity is the root of human activity. In other words, in the economy, a person plays multiple roles.
A person is a subject. A person is an individual existence. A subjective existence appears as the self. The self is the only one in this world, a unique existence. The self is the premise of all recognition. The self is a subject. The self is an indirect object of recognition. Humans form their self through interactions with surrounding objects. One cannot directly recognize oneself. Without a mirror, one cannot see their own face. One cannot see their own face directly. Humans cannot establish their self without interactions with others. The external world is a mirror of the self.
Existence is absolute, and recognition is relative.
When the subjective existence of the self is objectified, it becomes an individual. Therefore, an individual inherits the characteristics of the self as they are. It is the individual’s work that connects the subjects and places created by production, distribution, and consumption. An individual changes their role depending on the aspects of production, distribution, and consumption. In the place of production, an individual is a worker and a producer. In the place of distribution, an individual is an income earner, and in the place of consumption, an individual is a consumer and a living being. An individual cannot be defined by isolating one aspect of these roles. However, in economics, only the aspect of the worker is often isolated, or only labor costs are considered, or the focus is solely on the role as a consumer. The nature of an individual is comprehensive and integrative. An individual is a worker, a producer, a consumer, a living being, and an income earner. If society as a whole reduces costs simultaneously, it leads to a reduction in total income.
An individual is a political being, an economic being, a social being, a familial being, and a national being.
Humans cannot live without interactions with the external world. The sustenance for living is obtained from the external world. Without air, food, and water, humans cannot exist in this world.
In terms of recognition and existence, humans cannot survive without interactions with the external world. Physically and biologically, humans cannot exist alone. Humans are living beings. These interactions with the external world give rise to the economy. The activity of living itself is the economy. Life is the seed of the economy.
Humans do not live solely for profit and loss. Profit and loss are merely a means of recognition. Humans live for the sake of living. Living itself is the purpose. This is because the existence of the self is an absolute premise. Without the existence of the self, the world is as good as nonexistent. This is because the self is the self. It is a premise of existence. Therefore, it is self-evident.
An individual, that is, a person, connects and integrates the places of production, distribution, and consumption.
The role of humans in the economy is based on the roles they fulfill in society. First, humans are producers. Second, humans are living beings and consumers. Third, humans are workers. Fourth, humans are individuals. Fifth, humans are social beings. Sixth, humans are humans.
Humans are producers. As producers, humans sell their labor power as a means of production to earn income. Humans are living beings. As living beings, they must procure the resources necessary for living from the market. To obtain what is necessary, they must spend their available funds. Humans are workers. They procure money as compensation for labor. The compensation for labor is a cost known as labor costs. Humans are individuals. An individual is the smallest unit of the economy. Humans are social beings. As social beings, they have obligations to follow the law. They have rights and obligations as social beings. Humans must act as organizational beings. Humans live as humans. They are beings that achieve self-realization. Humans are living beings. They live by breathing air, eating food, drinking water, wearing clothes, and living in houses. The fact that humans are living beings forms the root of the economy.
Humans are living beings and consumers. Consumption has cycles. The cycle of consumption is influenced by the time and period it takes to consume. Goods have lifespans. The consumption time of food and the consumption period of housing are different. The time and period of consumption create consumption cycles. Consumption cycles create economic waves. Consumption cycles can be daily, monthly, seasonal, semi-annual, annual, or lifelong.
Consumption has structures based on time, goods, money, and people. The nature of consumption changes depending on the object of consumption.
Consumption includes necessities and luxury goods. There are consumables and durable consumer goods. Necessities are not always more expensive than luxury goods. Luxury goods are often more expensive. This can be a factor in income disparity. Necessities are indispensable goods for living. Luxury goods are not absolutely necessary. Yet, market value often places luxury goods higher. This can weaken industries producing necessities. Moreover, industries producing necessities should inherently create stable employment. When industries producing necessities weaken, employment becomes unstable. The decline of primary industries weakens the foundational strength of the economy.
Population
Humans are the foundation of the economy. The collection of people is a natural number and a discrete number. Humans form the unit groups of the economy.
The nature of the population composition forms the foundation of the economy.
The population involved in production, distribution, and consumption is not unified. The age involved in production is limited. The population of production age is called the production-age population. The rest is called the non-production population. Essentially, the population involved in production is also the labor population. The labor population is the population involved in employment, influenced by the unemployment rate. The difference between the production-age population and the non-production-age population decisively affects economic productivity. The consumption population is essentially the entire population.
Thus, the role of the population is significantly influenced by population composition. Population and population composition form the foundation of the economy. Therefore, population is one of the bases of the economy. The increase or decrease in population becomes the ultimate goal of the economy.
Population decisively regulates the actual economic scale. The important thing is population composition. The criteria for population composition include age, gender, occupation, etc. The distribution of the population also decisively affects the economy.
Population composition restricts economic activity. The proportion of the production-age population is particularly important in the economy.
Humans have different economic roles depending on age. The age at which one can work and earn income is limited. If one cannot earn income on their own, they must rely on someone else’s help. Those who cannot earn income on their own include children and the elderly. Additionally, income cannot be earned when one is ill. Full-time homemakers also cannot procure money. The declining birthrate and aging population reduce the generation that can earn income on their own, leading to less distribution to the entire population. The ratio of the working population to the non-working population is important.
Therefore, population is not just a matter of numbers. The composition is crucial. In this sense, population density holds the key.
Even if economic growth or apparent total income increases, the reality lies in the population. The resources needed by people are limited. Even if the population increases and total income rises, the land available for people to live on is limited. If the apparent total income increases but the land area for housing decreases, the economy is essentially shrinking. The reality of the economy must be viewed based on the population.
History
We must not forget that the economy is a historical product. How did markets come into being, and how were cities formed? Understanding the evolution of “money” to its current form is essential to understanding the economy.
The economic system is an artificial construct; it does not occur naturally. Human will plays a role in the background of constructing the economic system. The human will behind the economic system is crucial.
Financial systems, markets, and “money” are all historical products. Therefore, one cannot understand the economy without studying history. Moreover, economic systems rely on political and economic regimes. Without studying the history of political systems, one cannot understand the economy.
The economy has developed and collapsed through wars. The history of wars is also indispensable for understanding the economy.
Financial systems, market systems, and monetary systems are all human creations. This point must not be mistaken. Finance, markets, and “money” do not occur naturally. They are created based on some human will. Since they are created by human will, there is some intention and purpose behind them. It is necessary to elucidate this and clarify the difference between the original purpose and the actual situation. This is because the economy is teleological. If there is an error in the purpose, it needs to be corrected, and if there is a gap between the purpose and reality, the cause needs to be investigated.
It is said that history repeats itself. History evolves while repeating the same trajectory. Politics and administration pursue the ideal state of the economy by clarifying what has changed, what has not, and the relationships and laws that penetrate changes.
Markets, industries, and wealth are thought to repeat stages of creation, growth, maturity, decline, and regeneration. The structure and preconditions change at each stage.
The economy is constrained by geographical conditions.
In primitive societies, the center of the economy was eating. At that time, the place of production and the place of living were integrated. Therefore, markets and “money” were not needed.
Eating and protecting oneself from external enemies were the center of the economy. The acquired prey was shared among everyone, forming the backbone of the economy. Therefore, geographical conditions prioritized food and safety.
This prototype exists in animal societies. Therefore, the prototype of the economy exists in animal societies, and the economy is not exclusive to human societies.
In the natural world, geographical conditions are one of the absolute requirements for the economy. Animals move in search of food. Therefore, the staple food becomes the core of the economy. The nature of the economy differs between carnivores and herbivores. In this sense, agriculture brought a decisive transformation to the economy, leading to settlement.
In primitive societies, the internal economy was dominant. Markets were basically created on the boundaries of communities, as they were the contact points between the internal and external economies.
There are markets that are inseparable from the land and markets that are not bound by the land. For example, in industries that use electricity as a resource, the power industry has a fixed supply area and cannot leave it, while the home appliance industry can sell anywhere if conditions are met. Consequently, the power industry becomes a local industry, while the home appliance industry becomes a global industry. Thus, the economy cannot be considered separately from geographical conditions. The structure of markets changes based on preconditions and geographical conditions. Geographical conditions are the core requirements for industries and markets.
Among geographical conditions, urbanization is a phenomenon that well reflects the reality of the economy. Cities are inherently non-productive spaces and develop centered on consumption. Cities are consumption areas rather than production areas. Because they are consumption areas, they reflect the power structure and economic system of the country. The nature of cities is the most artificial space. Markets are built as extensions of cities. One could say that human economics begins with urban planning. The defect of modern cities is the lack of planning, which is due to the weakening of public economic planning. Modern cities are created by migrants, meaning they are not intentionally and systematically constructed. Some cities, like Brasília and Lisbon, were politically created, but whether they succeeded is questionable. However, pre-modern cities, whether capitals or temple towns, were systematically constructed as power bases for rulers. The rulers’ intentions were clearly expressed. Urban construction had clear purposes, which is why many cities were fortress cities. This is where the Chinese characters for country (國, 国, 圀) originated.
Human Algorithms
Human algorithms have income as both the endpoint and the starting point. This is because human algorithms consist of two processes: the process of acquiring income and the process of spending income. The principle of a liberal economy is to make a living based on the income earned from work. If this principle collapses, the foundation of the liberal economy itself will collapse. The purpose of a liberal economy is not to make money but to sustain people’s lives. Profit-making businesses and making money exist to sustain people’s lives. In other words, if profit-making businesses and making money become unsustainable, the market economy will also become unsustainable. The problem with the modern economy is that politicians, bureaucrats, and intellectuals view profit-making businesses and making money as sinful and despise commerce. This casts a shadow on national and market design. Excessive regulation and deregulation also despise profit-making businesses and making money, hindering the maintenance of appropriate profits. The problem of the market is a market problem, not primarily a money problem. However, if only management efficiency and production efficiency are pursued, the liberal economy will not be sustainable because it will lead to distribution imbalances.
Basically, the process of acquiring income means the process of producing goods, and the process of spending income represents the process of consuming goods. If these two processes are not kept separate, human algorithms cannot be organized or understood. The process of acquiring income is the process by which the production entity produces goods, and the process of spending income is the process by which the production entity earns revenue.
The economy ultimately boils down to the composition of income. This is because the relationship between income and expenditure represents the ultimate purpose of the economy. In other words, the relationship between income and expenditure defines the nature of the economy. The composition of industries is reduced to households. If military spending increases, disposable income is inevitably compressed. If finances are strained, households are also strained. If non-productive parts expand, productive parts are compressed.
Human algorithms include algorithms for earning income and algorithms based on expenditure. First, consider the algorithm for earning income.
Human algorithms first require “money” to obtain the resources necessary for survival from the market. People obtain “money” by borrowing from third parties, selling labor, or selling personal property, and then use that “money” to purchase the necessary resources from the market and consume them. Labor is a type of production means.
Life is a process. One is born, goes through infancy, adolescence, youth, adulthood, middle age, and eventually faces death. A person’s life is a journey with sequential structures. There is an order and logic to things. Life has several crossroads. Of course, a person’s life is not uniform. There are as many ways of living as there are people. There is no right or wrong way to live; each person has their unique life. People face several crossroads in their lives, such as whether to go to school, what job to take, whether to marry, or whether to build a house. When faced with a crossroads, people make their own choices. Life has a choice structure. Daily life is repetitive, with a repetitive structure.
Infancy and adolescence are school years when one cannot make a living on their own, requiring guardians like parents. Raising children is a parental duty. Once one can earn an income by working, they can form a household, the smallest unit of consumption. A household can be formed by one person once they can make a living on their own. After becoming economically independent and forming a household, the next step is to marry and form a family. In principle, a family is considered a single household. The breadwinner can be one or two people, but if they share a household, they are considered a single household. Basically, a couple is the core of a household. When children are born, they are considered dependents, and raising them becomes a duty. After passing the productive working age and becoming unable to work, one makes a living through pensions or subsidies. When one can no longer work, the children generally bear the cost of raising them. This is the foundation of the general human algorithm.
Next, consider the algorithm for expenditure. The algorithm for expenditure means the process of realizing life, the phase where the economy is realized.
The algorithm for expenditure begins with life planning, which is household management. Household management is also the basis of finance. On the extension of household management is the study of the cabinet, and further ahead is the study of finance.
Basically, people work, receive compensation for their work, and purchase the necessary items from the market within the range of that compensation to support their families. They wake up at a certain time every day, eat, go to work, have lunch, work until evening, return home, and have dinner. Daily life has certain routines.
Such daily life creates a certain flow of “money” cycles, forming the rhythm of life. Income and expenditure also have certain patterns.
Human algorithms encompass birth, aging, illness, and death, that is, a person’s entire life, and daily life.
A person’s life has rhythm, melody, and harmony. Life is like music.
Living
The ultimate purpose of human algorithms is to live and achieve self-realization. If one is preoccupied with status, power, promotion, fame, making money, and success, they lose sight of their inner purpose. Self-realization means becoming happy. The ultimate purpose of life is to become happy, and self-realization comes after considering what makes one happy. No matter how much status, fame, or power one gains, if they are unhappy, they have not achieved self-realization.
People do not live for bread alone. They need bread to live. Moreover, it does not have to be bread. The economy means activities for living.
If one only lives, life is purposeless. The self is an indirect object of recognition. Self-formation and self-realization occur through interactions with society.
Activities for living—that is the economy.