Economics have, Economics has always existed in human society.
Economics encompasses the dynamics in which wealth is created, maintained and lost by human endeavor; and also includes the theory and practice built on understanding these dynamics. It is kin to ecology which encompasses the broader dynamics of wealth and diversity in the biosphere.
- While its laws and theories apply where there are money and other instruments of finance, economics is not dependent upon them.
- It exists even if we are ignorant of its existence--in the same sense that physics existed before humankind recognized it and gave it a name.
- Failure to act in accordance with the laws of economics is unfortunate, even tragic, but rarely immoral.
Finance is a conscious creation of humankind.
Finance emerged in societies where money or money-like tokens came to be exchanged as if they were real wealth. These tokens have little or no intrinsic value. A euro, a corporate stock certificate, an I.O.U are virtually worthless pieces of paper unless their possessor knows they can be exchanged for a chunk of society’s wealth. Even to stamp them from a precious metal is a curious waste of time and energy unless they can be exchanged for something more valuable. Finance encompasses the dynamics, institutions, customs and rules that describe and control such exchanges.While finance cannot escape the laws of economics in the long run, it can violate them in the short run because it is an imperfect human construct.
- Like our legal systems, finance exists only if we are aware of its existence and if we have a pact with others to behave according to a set of its rules
- Finance will fail society where its rules and instruments are poorly constructed and managed; where there is immoral, criminal, pact-defying bad faith; and when its dynamics violate underlying laws of economics.
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If this leaves you in a quandary, I refer you to a poem:
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