Our proposed science of SORAnomics is derived almost entirely from The Wealth of Nations by Adam Smith and is fundamentally different from the current science of Economics which is completely objective in nature. For example, Economics targets specific, numerical goals like 10% GDP or 4% inflation and then imposes them on people.
SORAnomics on the other hand, balances the objective with the subjective. It asks what the people want to achieve in the first place, and then creates its objectives from them, implemented as a resource allocation system. This is how all economic activity happens anyway, and that’s why SORA means Social Resource Allocation which physically manifests as a social network where people can express what they want to achieve. This network can then work according to the invisible hand, which is one of Smith’s most famous ideas, to help them achieve their socioeconomic goals. This 'hand' forms the core of our entire system as it leads to division of labour which then sustains human societies.
As it is so fundamental, an explanation of this invisible hand is required. Unfortunately, it has been corrupted so much by Paul Samuelson (perhaps on purpose to advance his own agenda). Since then, it has been unjustly blamed for bad things about the economy and has even been denounced by some economists.
Therefore, the first step is to start with a blank slate and separate the popular definition of the invisible hand done by Paul Samuelson in his textbook Economics:
Of course, that is absolutely false, since Smith pointed to sympathy and benevolence(the exact opposites of selfishness), as the substance that keeps the machine called society running smoothly. Samuelson merely cherry-picked Smith’s views on self-interest (which to Smith was a 'praise-worthy' positive quality) and corrupted it into selfishness (a negative quality):
Regard to our own private happiness and interest often appear as very laudable principles of action. The habits of oeconomy, industry, discretion, attention, and application of thought, are cultivated from self-interested motives. These habits are seen as very praise-worthy qualities..
Our instinct for self-preservation instructs us to take proper care of our health, life, or fortune. A person who fails in this would be pitied instead of hated. Carelessness and want of economyare universally disapproved of because it shows a lack of attention to the objects of self-interest and not because of the lack of benevolence.Simple Theory of Moral Sentiments, Part 7, Section 2, Chapter 3
The cause of the easy corruption of self-interest into selfishness is the word 'self' that is present in both ideas*. To solve this, we will instead use 'personal interest', using the Latin word 'person', meaning mask, instead of the English 'self' which means 'I'. Metaphysically, a mask refers to an indirect ego, different from 'I' which is the direct ego. To prove this, we cross-reference it with Chinese language where in '[wo]' has one character while '[jibun]' has 2 characers. A word that has fewer characters is a more fundamental or direct expression than one with more characters, just as 'Sun' is more fundamental than 'Sunday'. Thus, Samuelson's invisible hand leads to selfishness, while that of Smith implies personal preferences or choice. If a man orders burgers instead of fries, we never say that he is selfish for burgers. We would only say that he is selfish for burgers if his entire self revolves around burgers as to eat it for breakfast, lunch, and dinner 365 days in a year.
Now that we have separated Samuelson's invisible hand, we can move to the one described by Smith. Its best description is not in The Wealth of Nations, but in The Theory of Moral Sentiments, wherein he describes the innate human desire for things to work as they were meant to:
To Smith, humans have an innate desire for man-made things to function as they were designed. This desire comes naturally, even for human systems such as resource allocation:
The proud and unfeeling landlord views his extensive fields, and without a thought for his brethren, he imagines to eat its whole harvest.. The capacity of his stomach is far less than the immensity of his desires and receives no more than that of the meanest peasant. The rest of the food he is obliged to distribute among his servants who fit up his palace and keep in order all the different baubles and trinkets employed in the oeconomy of greatness. His servants derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or justice.
The rich.. divide with the poor the produce of all their improvements despite their natural selfishness and rapacity. They are led by an invisible hand to make nearly the same distribution of life’s necessities which would have been made, had the earth been divided equally among all its inhabitants.
Thus, without intending or knowing it, they advance the interest of the society, and afford the means to multiply the species.
When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who were left out in the partition. These last too enjoy their share of all that it produces. In the REAL HAPPINESS of human life, they are not inferior to those who seem so much above them. In ease of body and PEACE OF MIND, all the different ranks of life are nearly on a level. The beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for.Simple TMS, Part 4, The Effect of Utility on Approbation [emphases added]
This inherent desire for perfection of the distribution of resources is thus done by employment. When a school's basketball team looks for players, it doesn't base its hiring on the players' friendliness, but on their skill. This is true for entrepreneurs hiring workers or outsouring jobs and production to other countries. This focus on skill is more fundamental and basic than the focus on compassion or community:
Here Smith clearly states that public benefit or societal productivity does not come from sympathy or the feeling for others. Liberals jump into this idea in order to justify selfishness. They disregard the fact that the patriot is PUBLIC-SPIRITED IN THE FIRST PLACE, which is the opposite of selfishness. They corrupt Smith by disregarding the non-selfish parts.
Smith then clarifies that this skill-engine that drives public benefit is the personal interest* or the desire of non-selfish people to work on something that they, and the society, are BOTH intrested in. If society were not interested in Person A's product, then that product would not be sold and there would be no public benefit. Person A's original interest in making that useless product would then not fall under the invisible hand, degrading it as useless-interest. That is, unless he improves it by trial and error to match the public interest without him knowing it. He will only know that it matches the public interest after it actually gets sold.
Thus, employment and sales are two of the many ways how the invisible hand taps the energy from personal interest and diffuses its products and productivity throughout society to quench the public interest.
This mixture of public interest with personal interest, usually creates confusion among shallow-thinking humans. Compassionate people or Socialists often highlight Smith's emphasis on the public interest, while skilled but selfish people or Capitalists highlight his focus on personal interest*. From our dialectical analysis, we can see that personal interest naturally comes first, but it is immediately followed by the public interest which is also much more important.
Thus, personal interest only has a temporal importance, but public interest has a bigger overall importance. The variable, time-based nature of the match between personal and public interest manifests as the ups-and-downs of one's career, corporate profits, company sales volume, etc.
A baker can bake a new kind of bread for himself. Other people might try it, like it, and want to buy it. At that point, his personal interest contributes to the public welfare by giving people a new experience that they are also interested in. He then bakes more, and other people 'replicate' and 'mutate' his idea as their own products to virally spread the new experience and benefit to all who have the same interest.
To spread and maintain this productive flow of beneficial experiences, humans systematize it by creating institutions for education, law, and administration:
Smith calls the visible effort to perfect the public interest, public benefit, and public order through personal interests as a 'hand', just as our personal hands arrange the furniture in our house to create a possibility* of convenience instead of actual convenience. He calls the unseen efforts as the 'invisible hand' and implies that human efforts are a 'visible hand' or the designing power of man.
Hence the origin of Polytheism.. which ascribes all the irregular events of nature to.. gods, demons, witches, genies, and fairies. In all Polytheistic religions.. only the irregular events of nature are ascribed to.. their gods. By.. their own nature: fire burns, water refreshes, heavy bodies descend, lighter substances fly upwards. The invisible hand of Jupiter was never perceived in those matters.
But the more irregular events were ascribed to Jupiter’s favour or anger: storms and sunshine, thunder and lightning. Savages only knew the designing power of man.Simple Essays, Origin of Philosophy [emphasis added]
Up to this point, Smith has described two invisible hands: one that runs and maintains man-made systems, such as clocks and institutions, and one for natural systems, such as typhoons and earthquakes. These hands are so fundamental to human nature and physical nature that they should have been observed by all civilized philosophers up to that point, even by those from Asia. For the invisible hand to be a universal principle, other cultures and philosophies must have had observed them too. Otherwise, such a hand would just be an opinion and not be suitable as the base for a new and better science of economics.
Fortunately, Asian philosophy has the same concepts as Bhagavad Dharma (human dharma) for human systems, and Rta dharma (physical dharma) for natural systems.
Dharma in Hinduism and Buddhism is basically the inherent nature of things. Unlike the English word 'nature' that is ambiguous and dualistic, as proven by the term 'Mother Nature', dharma is nondualistic and is integrated into Existence Itself.
A fire's dharma is to be hot and a water's dharma is to be wet. A fire that is not hot is not called a fire and a water that is not wet is not called water. Ice and water vapor will naturally make an effort by themselves to become water depending on the dictates of their external environment.
Similarly, a clock that doesn't run is called a broken clock, just as a starving society is a 'broken' one. We can thus say that a clock's dharma is to be tell time, and a human's dharma is to have security and sustainability as the continuation of the species. The latter is proven by the selfish landord sharing his food with his servants instead of throwing it away. He naturally knows that if his servants die out from hunger, then he himself will eventually be hungry from the lack of workers who use their personal labour and personal interest to tend to his fields. This symbiotic relationship is more common in the animal kingdom where we can easily see the mutual benefit.
This human dharma of distributing resources rationally, despite humans having selfish-interest, extends itself into all aspects of life, even in local and international trade:
Every individual necessarily works to render the society’s annual revenue as great as he can. He generally does not intend to promote the public interest, or know how much he is promoting it. By preferring to support domestic industry over foreign industry, he intends only his own security. By directing that industry to produce the greatest value [for society], he intends only his own gain. In this case, as in many other cases, he is led by an invisible hand to promote an end which he did not intend. Nor is it always the worse for the society that it [the society] was no part of it [the goal].
By pursuing his own interest, he frequently promotes the society’s interest more effectively than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation not very common among merchants. Very few words can be used to dissuade them from it.Wealth of Nations Book 4 [emphasis added]
Through the sale of the products that they are personally interested to make, as well as the employment in work that they are interested in, humans realize which of their own products and services match the common interest or the interests of other humans. This then makes them maximize their work and effort for their own sake, without really thinking about how it benefits society (which is often beyond the ability of humans).
Unknown to many, it was Socrates, and not Smith, who first emphasized the importance of knowing one's personal interest in relation to the common interest, as to create the division of labor:
Like Smith, Socrates asserts that the common interest is promoted by personal interest through trade and employment. He also shows that such a personal interest leads to personal peace, exactly the kind that kings are fighting for, as described by Smith. Socrates, however, adds a missing ingredient to achieving such a peace, by explaining that one's focus on one's personal interest helps one to discover his true self, which is then the key to peace. Do such concepts also exist in Asian philosophy in order to make such principles universal?
Luckily again, we find that Hinduism has such a concept in svadharma and Taoism has the concept of the Tao.
Svadharma means self-dharma or the inherent nature of the self. It means one's own path, nature, or destiny and is described in the Bhagavad Gita:
Thus, the local manufacturer follows the dharma of local manufacturing in order to create excellent goods for local consumption, not expecting it to be exported. He finds them getting exported anyway and even going viral overseas because of its superior quality and fit for purpose. This is similar to the Tao, which is one's own, natural way:
Knowing others is intelligence;
knowing yourself is true wisdom.
Mastering others is strength;
mastering yourself is true power.Tao Te Ching verse 33
To the Tao Te Ching, knowing and mastering others is human dharma, while knowing and mastering oneself is svadharma. A manufacturer who knows his core competencies will be a better manufacturer who is a jack of all trades and a master of none. An army squad made up of specialists will perform their missions better than one made up of general infantry.
To Socrates, this respect for everyone's personal interest is then the foundation of justice and therefore the basis for society. A society collapses when its members do not respect each others' existential interests.
Like human dharma, svadharma works unconsciously in humans and is not based on compassion or fellow-feeling, just as typhoons do not operate on the wind's affections for the land. Svadharma's purpose is to secure, propagate, and add meaning to life, giving everyone ease of body and peace of mind in their own way.
Smith wrote that governments must understand the invisible hand of svadharma in order to create proper policies and avoid disorder:
The man of system is.. often so enamoured with.. his own ideal plan of government.. He imagines that he can arrange the members of a great society with as much ease as the hand arranges the different pieces on a chess-board.
He does not consider that the pieces.. have no other principle of motion besides that which the hand impresses upon them. But that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress on it. If those two principles.. act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.Simple TMS, Part 6, Chapter 2
Thus, the invisble hand is never an external imposition, but rather an internal principle of movement -- the same principles that make a fire burn or the wind blow. The West eventually discovered the way to find this internal principle through suffrage or by asking everyone to express their desire on who should be the leader of their society. Nowadays, surveys and school exams are the most common ways to discover the interests of each person, and this is why education is very important. (Asking a child what he wants to become is another common way, but even this is often not emphasized in some cultures)
We can now see how different the invisible hand described by Smith is from the one described by Samuelson. The former's hand has public and private aspects working together according to the designer of Nature:
Every individual can, in his local situation, judge much better than any statesman on what domestic industry his capital produce the greatest value. The statesman who directs private people how they should employ their capitals would load himself with a most unnecessary attention.Book 4, Chapter 2
While Samuelson applies the invisible hand shallowly to justify deregulation and personal selfishness, Smith's invisible hand is applicable to so many non-business and non-selfish aspects of human life:
With this, we can now expand the scope of the invisible hand away from business and trade, into politics, education, organizations, and society in general. Smith gave other types of invisible hand in The Theory of Moral Sentiments that mirror the observations made by Hindus, which we can simplify as follows:
In our future posts, we shall compare these different invisible hands to show how physical and human dharma oppose each other morally. We will also show howashrama and varna dharmas were used by ancient China and India to become prosperous by maximizing labor productivity and quality, leading to great, prosperous empires, without any "profit maximization function" or any of the fanciful "supply or demand curves" advocated by the West.
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