Fangyist Economics & Initiating Change

[+ Keynes Part 2]

Nosce Te Ipsum I

Book II: Society

Episode: 2
Category: MacroFangs
Publication date: March 15th, 2019

Future business concepts are not reality yet, because the debates about what change should look like, are not settled yet.

We are losing time with solely conversing about it. Fangyism is decisive. There are solutions that can be carried out in only a few weeks’ time. But there are some barriers that need to be broken, for this to become reality. In this article, I explain how this can (and should) be done.

To make my language more “cross compatible” (for there are no officially acknowledged Fangyist terms yet), I will reflect my future concepts to the way Keynes defined his future concepts, in The General Theory of Employment, Interest and Money. This article thus also indirectly touches on part 2 of that book.

The Value of Labor and Produce

In the second part of The General Theory of Employment, Interest and Money, Keynes takes a moment to elaborate on the solution to a challenge he had found for himself, in economic theory. The economic language he wanted to use to address the general issue and his solutions, was not used by any other economist yet (Keynes 2017, p.37). In his own words, he used those 4 chapters, to define the following:

“… firstly, the choice of the units of quantity appropriate to the problems of the economic system as a whole; secondly, the part played by expectation in economic analysis; and, thirdly, the definition of income.”

(Keynes 2017, p. 37)

I will use a similar approach, to define the flaw in today’s economic assumptions and give you the fundamentals of Fangyist economic theory.

Fangyism says that the current way value is assigned to products, labor and even nations as a whole, is incorrect. That is because the competitive nature of the assignment methods – “the higher the value, the better the status” is a form of competition – is in conflict with the fragility of nature.

In a competitive market, everyone his or her labor is intended for the maximization of the organization’s profit. Simultaneously, the media monitors the economic development of firms closely and the stock market fluctuates along.

Because of the general financial objective regarding maximum financial gains, earning as most as possible, with the least amount of capital and labor, is what dominates business philosophy. Regardless of the effect it has on nature, while that, in actuality, determines real value.

 

An example of this, is what is happening to the Cavendish banana. Scientists are incentivized to invent new races of bananas, because the popular curved yellow fruit that can be found in every supermarket, is threatened to go extinct. Fusarium fungi are destroying the plants and the soil they grow in (Reynolds 2018). (In Dutch, the illness of the species is called “Panamaziekte”.)

The consumer knows this, because the media have covered it (depending on their reach and audience). Other than that – in the western world – it seems to be business as usual. The bananas are in high demand, and the market is still competitive, so the price of the banana is kept low, and quick solutions are sought.

In the Netherlands, the short-term solution to this problem is to grow the Cavendish plants in glass houses, on rock wool and peat, instead of on regular soil (abroad).

Yes, in this way, the demands of our large and growing population are met. But our system, in this way, disregards the financial safety of plantation workers, and gets naturally grown high quality foods closer to extinction.

That is why – though it will not be in favor of many – Fangyism says it is better to let the price skyrocket, in a context like this. It is a better incentive to find a good solution to this problem of the risk of extinction.

As long as there is no alternative, collectively, the value of a banana should be based on the relationship between the amount of people who want the product, and the amount of products available. Prices would become higher, but nature would be treated better.

 

The Fangyist system, therefore, guarantees its citizens a basic income (of essential products) and uses a system to assign value to a product, which is based on availability, instead of on “competitive value”. This requires the use of calculation methods that are different from the ones we know and use today.

 

Calculation Methods of Today

The gross domestic product, also known as GDP, is an indicator of the total value of a national market. It is used as a controversial way to compare how wealthy a country is. But quality of and access to education, quality of and access to food, quality of and access to health care, and other sustainability related concepts, it does not indicate.

There are different ways to calculate the GDP:

 

  • The production approach
    By adding up all gross value added for goods and services, adding received taxes to that and subtracting product subsidies from that.
  • The income approach
    By adding all employees’ incomes, profits (or gains) of businesses and incomes of small and unregistered businesses to that, plus all received taxes, and subtracting subsidies.
  • The expenditure approach
    The equation for this calculation method, Y = C + I + G + (X – M), is known as the Keynesian model of macroeconomics, where Y (GDP) is equal to C (consumption), I (investment), G (government expenses), X (export), minus M (import). (In Dutch schools, this is Y = C + I + O + (E – M).)

In theory, every calculation method should have the same value as its outcome. Whether this is true or not, in the end, the value does not say anything about available resources and intellectual capital in a country at all. In Fangyism, available resources and intellectual capital (including individuals), is what determines national value. It does not acknowledge any of the GDP calculation methods.

Government expenses, for example, can, in my Fangyist optics, never be seen as an addition of value. By way of illustration, let’s say milk farmers are having financial trouble, because people are not buying enough milk, so the government keeps bulk-buying extra milk, until the farmers earn enough to not go bankrupt. This expense cannot be seen as an addition to national value, because of the following reasons:

  • The product was bought by means of support, because no one else was buying it, so it does not have its purchase value after being bought, because no one wants it. (It could have basically been given away for free, or have been used for a milk-themed pool party.)
  • The product has a due date.
  • Tax money has been spent to waste natural resources (though artificially sired Holstein cows exist, which I consider unnatural cows), just for the sake of keeping the prices in this economic mechanism low.

Another example of controversial added government value, is the taxpayer money spent to celebrate the king’s birthday as a national holiday. (I am sure that the holiday is valued, but when it comes to nature being stripped from its resources, it is not an addition.)  Before I tell you what calculation methods the Fangyist system does acknowledge, I would like to zoom in on another aspect of my digression.

 

Labor’s Total Value

Keynes defined the total value of labor, with the following equation:

E = N x W

Where E is the total wages and salaries, N stands for the total amount of employment and W stands for the (marginal) wage-unit. This means that N = 1 resembles one hour of labor for a regular employee. An employee with special skills (who receives a higher salary than a regular employee), his or her value of N is based on the relative difference in hourly rate.

So, for example, a firm has two employees, of which one is regular and the other one has special skills. They both work 5 hours. The regular employee is paid €10 per hour, and the employee with special skills is paid €20 per hour. For the regular employee, N = 5 and W = €10. For the special employee, N = 10 and W = €10. It follows that:

 

E = 15 x €10

E = €150

In this context, the value of labor is based on skill and/or education, and the amount of hours the employee has worked. Productivity, actual capabilities and inflation are not part of this calculation. Today, (in the Netherlands,) inflation is taken into consideration when a salary is calculated, and performance/productivity bonuses exist.

However, Fangyism does not consider an addition to the value of a nation, because many types of labor add more pollution than improvement, to nature. Any action that includes environmental destruction, for the sake of making profit, can never be seen as something that is beneficial to a country.

 

Fangyist Functions

Fangyist economics is a sustainable alternative to modern economics. Fangyist equations can be used by both firms and nations. Its outcomes are precise values, instead of estimates, indicating its value and indirect development status. They (solely) apply to the Fangyist system, of which all aspects are non-profit. As long as that system is not established yet, its functions are arguable.

The Value of Labor

The Value of Labor function, indicates, when results are compared over several periods of time, the general value and efficiency of Fangyist employment. It looks like this:

L: Labor, is separately measured in tangible Fangia (tF) and intangible Fangia (iF). (They can, in reference to part one of this article, still be renamed RLF and DF.) For nations and firms, in which both tangible and intangible goods and services are delivered, the total value of labor, is calculated in the following way:

 

L = LtF + LiF

N: The value of N, is the total of employees that have been/will be paid in tangible Fangia and/or intangible Fangia. Keynes translated this value to hours of labor and pre-defined skill about which price agreements are made. Fangyism counts one employee, regardless of whether he or she is educated or not, or has some other type of distinguishment, with the value of one. It is the calculation in between brackets that determines the monetary value yielded by an employee. So one uneducated employee and one employee with 6 PhDs, both solely working with tangible Fangia, give us: NtF = 2.

The total amount of employees, is distinguished in whether they yield and work with tangible Fangia and/or intangible Fangia. If an employee works with both tangible and intangible Fangia, his or her returns are calculated in both the tangible and the intangible labor function. For administration purposes, the total can be calculated like this:

 

N = NtF + NiF

R: This value stands for the return, which is what an employee earns back, in either tangible Fangia, or intangible Fangia.

I: The investment of resources, needed to yield the return, are deducted from the returns earned by the employee. This value includes not only what is literally needed to create the product or deliver the service. It also includes the employee’s cups of coffee, pollution from commuting and anything else the employee wouldn’t be doing in that measured period of time, if he or she weren’t working for D.O.C.I.S. International or one of its partners.

 

Let’s say we have a Fangyist business that sells art of an artist online and from the artist’s home studio. The Fangyist value of labor, is then calculated in the following way:

Value of Labor 1 Jan 2019 – 31 Jan 2019

i [Employee] Intangible Return Intangible Investment Tangible Return Tangible Investment
1 [The Artist]

iF 96,348 * 0.5

iF 0

tF 15,630 * 0.8

tF 5680

2 [Web development and web maintenance]

iF 96,348 * 0.3

iF 1,235 tF 0

tF 653

3 [Sales & Correspondence]

iF 96,348 * 0.2

iF 429 tF 15,630 * 0.2

tF 1864

Totals

iF 96,348 iF 1,664 tF 15,630

tF 8,197

When this is done for every month, which is a requirement for Fangyist accounting, individual and overall labor. The salary of a Fangyist is his or her basic income – which is equal for everyone – and what he or she has earned, which is his or her individual total of R – I. The way a salary is divided into tangible Fangia and intangible Fangia, depends on the choice of the receiver.

 

Fangyist accounting requires every single investment done to be reported (including indicating for which employee the expense is made), to keep a clear overview of the state of available natural resources and other products in a country.

 

The Value of Produce

A second basic equation of Fangyist economics, is the Value of Produce. An individual product (or service), is valued in the following way:

For a single product:

P is the value of a product, in either tangible Fangia, or intangible Fangia. Which Fangyist valuta is chosen, depends on whether the product is tangible or not.

Q is the total amount of available products at a certain point in time.

D stands for the amount of people who demand the product.

This is multiplied by the multiplier of tangible or intangible Fangia, which is determined by all supply and demand traffic on Planet Fang.

 

For an accumulation homogeneous products:

The Fangyist value of an accumulation of products, is calculated by multiplying the value of a single product, with A: the amount of products (to be) sold.

 

Routinous Jobs

As you might have noticed, Fangyist labor gives an individual employee a lot of responsibility, and is more focused on different disciplines working together, than having large individual departments. All routinous jobs should be replaced by artificial intelligence, is one of the things a Fangyist lives for, to accomplish. I have several reasons why I believe this:

  • It is more reliable
    Productivity of AI is much easier to estimate, compared to the unpredictable productivity of a human being. There is also no risk of the device committing fraud, or loses out on productivity, because it has been gossiping in the coffee corner for too long. Aside from maintenance, it does not come with unpredictable costs.
  • It allows for easy, limitless improvement
    When a technique evolves, AI can evolve much quicker, compared to a human being, who needs to follow a re-education program and needs practice.
  • It is far more sustainable to nature
    An electronic device that runs on sustainable energy, pollutes a lot less than a human being, who pollutes the Earth by (most methods of) commuting, lunch breaks, requires office parties etc., and often still depends on technology (and the added pollution thereof), to do his or her routinous work.

One of the first objectives of D.O.C.I.S. International, aside from the general construction of its corporate state and compounds, is to implement this shift at once, for every nation and/or firm who is interested in forming a partnership with this organization.

 

Initiating Change

The change D.O.C.I.S. International aims for, is the rapid implementation of solutions that will make the common routine of life a more diverse experience, in a way that is the outmost sustainable.

To make the Fangyist system officially existent, the first step is collective currency conversion, officially establishing the Fangia. This is what happens after the second part of the D.O.C.I.S. International Partnership Agreement is signed collectively. Conversion is withheld, until the total value of the assets to be converted, is more than enough to fund our new state with.

The more-than-two-factor selection process, is designed to filter out those who are the best at keeping up with the level of complexity and responsibility this organization carries. This is because every officially registered and acknowledged member, is co-owner of the organization.

 

The Debate

Fangyism is extremely controversial. Still, some form of consensus, together with those who do not accept it, has to be found. That is why the debate is set up around the following questions:

  • Is the Fangyist system fair?
  • Can the Fangyist system last, in practice? Or will society’s common routine of life disrupt it, the way it disrupts nature?

 

Potential Outcomes

For an overview of Fangyists and non-Fangyists, in accordance with the Universal Standard of Human Reasoning, potential outcomes of the debate are pre-defined (though any other type of outcome is welcome as well):

  • We all agree that Fangyism is the way to go, and everyone qualifies for it
  • There is no consensus, thus a new parting of cultures will emerge

    This means that the world will then run on the modern economic system and the Fangyist economic system, parallel to each other, but as separate closed economies. Reasons for disagreement could be the following beliefs:
    • “The Fangyist system is not my utopia.” / “I don’t believe that the Fangyist system is an improvement to society.”
    • “I don’t want my life to change.”
    • “This is too difficult for me to understand.”

 

What is next?

As long as D.O.C.I.S. International does not have any ambassadors or sponsors, I will continue to attempt to make myself heard through text, until enough funds are acquired to deliver the message of D.O.C.I.S. International beyond its own digital realm. After that, the Fangyist system could be put into practice.

You will be kept up to date of the organization’s development and the moment the official (non-digital) debate takes place, by signing up for Project Nosce Te Ipsum.

Hopefully, by the time the next part of the MacroFangs part of the Nosce Te Ipsum series is released, there is a debate to discuss…

 

Reference List

Keynes, J.M. (2017), The General Theory of Employment, Interest & Money Wordsworth Editions Limited ed, Hertfordshire: Wordsworth Editions Limited

Reynolds, M. (2018), The banana is dying. The race is on to reinvent it before it’s too late [online], Wired [Viewed on April 14th], Available from: https://www.wired.co.uk/article/cavendish-banana-extinction-gene-editing

RTL Z (2018), Wageningse wetenschapper bedenkt oplossing voor zieke banaan [online], RTL Z [Viewed on April 14th], Available from: https://www.rtlz.nl/algemeen/binnenland/artikel/4517041/banaan-chiquita-cavendish-bananenziekte-wageningen

Click here to read MacroFangs part one, called Looking at Markets Differently [Keynes Part 1]

The featured image is made by Adrianna Calvo, downloaded from Pexels.com

I chose this image, because the Fangyist system is an economically safe, transparent and honest one, 
and Fangyist economics in practice, is a collective effort. 
An umbrella resembles reliability during bad times, and in this image, the sun is shining. The multitude of umbrellas, resembles the collective.