Economic Theory 

In addition to standard revisions to economics - externalities, ecological feedback loops, Genuine Progress Indicator, Buddhist Economics ("incredibly high satisfaction with incredibly low consumption"), Inspired Economies proposes these alternative economic theories:

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Preference Failure vs Pareto-Efficiency & Edgeworth Box:  
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To increase utility, change preferences

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Killing Time is not Rational, just because that's what the individual thinks he/she wants (Depth Psychology)

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Productive Consumption - consume only to create. digest what you consume, incorporate it into your being so you are not burdened with stuff, possessions which then possess you.

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Consumptive Production - utility comes from production, not just from consumption.  
According to Economic Theory, even Environmental Economics, if there were no incentives, people would not work.  Environmental Economics (in the flow chart on the right) advances upon the linear assumption of classical economics (Resources -> Production -> Consumption -> Utility) by showing the feedback loops from waste, and noting that people get utility (happiness) directly from natural resources, but it still assumes that people get utility from consumption, not from production.  Would our economy be different if our economic theory recognized that people get utility from production, and that inspired people consume only in order to produce? 
In fact more utility comes from production than from consumption.  But, there is a:

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Diminishing Marginal Utility of Labour - which supports the idea that utility comes from production, up to a point.

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Losses from Trade [these items are under review]:
#1 - Commerce erects artificial barriers, and so stifles synergy.  Free Trade makes great arguments against protectionist barriers to economic activity, but fails to acknowledge that trade is itself a barrier.  (Then again, once we contract to work on a project together as a team, within that context we operate without hoarding ideas.)  

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Pragmatic Poetry, with reference to Amartya Sen's ___ & Capabilities - To increase utility, change your perspective.

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Bliss Point, Revisited:  Beyond some amount of consumption, I would feel disgust at my wastefulness, so I do not have infinite material wants.

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Not "How to allocate scarce resources among infinite wants", but "How to allocate finite material resources and infinite spiritual resources among finite material wants and infinite spiritual wants".
Economics is designed to solve the problem: how to allocate finite resources among infinite wants.  
Spiritual Economics recognizes 
(a) a person who consumes 2000 calories of energy may be twice as energetic as a similar person who consumes 3000 calories of energy, due to inspiration.
(b(i)) the most efficient and ecological way to improve our quality of life is via the imagination, and 
(b(ii)) beyond some point of consumption, I would feel disgust at my wastefulness.
So Inspired Economies redefines the economic problem as:
how to allocate finite material resources and infinite spiritual resources among finite material wants and infinite spiritual wants.

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Ownership does not mean I can do what I want with something.  It means I am response-able to that thing to put it to its greatest use.  (Distinguish: putting financial capital to where it yields the highest false-cost/private rate of return versus putting it where it yields the highest true-cost/GlobalSelf rate of return.)

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Externalities revisited - Incentives are more often Perversions than intelligent indicators - economic theory claims prices enable us to allocate resources efficiently but do they not create conflicts of interest between doing what the world needs and doing something that can benefit you privately, possibly at the expense of the rest of the world?

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Finally, here's one speculation which needs refinement:  
How can money have value?  "putting financial capital to where it yields the greatest return on investment" suggests money has the ability to do work, and that without it, work cannot be done.  But people will do what the world needs, whether they are paid or not, even if they are offered money to do other work that the world does not need.  So is money then value-less?  It enables people to do what they believe the world needs, because they are able to work for the world, and still buy food and shelter from a market which will not give away its products.  These producers may be willing to contribute their products to people who are working for the world, but they don't know who is working for the world, so they use money as the [divining tool]. 

Petition to Change Economic Textbooks

From "The Gift Economy":
"The term “cornucopia of the commons” was coined by noted software programmer Dan Bricklin. 
The GPL, in short, prevents enclosure of the free software commons and creates a legally protected space for it to flourish. Because no one can seize the surplus value created within the commons, programmers are willing to contribute their time and energy to improving it.
Despite having no bureaucratic organization, corporate structure, or market incentives — only cheap and easy communication via the Internet — tens of thousands of computer programmers around the globe volunteered their time throughout the 1990s to develop a remarkably stable and robust operating system. The program, which is considered superior to Microsoft’s NT server system, now commands a phenomenal 27 percent of the server market. The GPL is the chief reason that Linux and dozens of other programs have been able to flourish without being privatized."

- BEYOND THE GIFT ECONOMY
- not i give you a gift i produced, and maybe you give me or someone else a good you produce, but we co-create something which did not exist before.
- not giving but creating. giving doesn't inspire me; creating does; collaborative co-creation does.
- save santa - dissolve the give:receive dichotomy; get what you really want - co-create.
- The Gift Economy does not highlight value of imagination in enabling rich lives regardless of constraints.

Could the internet be made by volunteer activity alone?   It was made 1/2 by the gift economy, 1/3 by the market, 1/6 by gov't; it could not be made by the gift economy alone - who would build and install the global networks of cables and the computers? well, perhaps many people would enjoy building these, but TQM reliability would be low and project management would be next to impossible, always dependent on the whim (or promise?) of the givers. Promises are interesting: they may be given freely, but once they are given the thing promised is an obligation, not a gift.

The Gift Economy:

The only thing we did wrong in the beginning was to shift from the gift to the exchange paradigm. Perhaps this is what the story of the Garden of Eden was all about. In the gift paradigm, no repayment is necessary. Only when we shift to the exchange  paradigm do we find the necessity to repay. By treating the eating of the apple as a sin of disobedience, which required repayment, the Bible shows humans effectively entering into the exchange paradigm with God, casting Him into the role of punisher, providing 'just' reprisal. A God who was for- giving, functioning according to the gift paradigm, would not have required repayment. S/he would have taught the children gift-giving by modeling it. 

Perhaps Christ's self-sacrifice was an attempt to model giving and forgiving - an attempt to show the giving model in a situation of scarcity of justice and real lack of kindness.  But the exchange paradigm was still the frame for interpretation, so he was seen as 'paying for' humanity's sins. His death 'evened the score', but that could not get humanity out of the exchange paradigm. Even if he was paying in advance also, for the sins people were going to commit, exchange was still the issue. The exchange archetype underlies everything we do, and influences our consciousnesses to a great degree. Even when our spiritual intuition and our hearts draw us towards altruism, these patterns pull us and our interpretations of religion back to the masculated model.
pg 377 (edited)

Adorno: "Violation of the exchange principle has something nonsensical and implausible about it; here and there even children eye the giver suspiciously, as if the gift were merely a trick to sell them brushes or soap."

If a region has a below-average annual income, but dancing, edible landscaping, improv theatre and house-building are learned naturally, communally, as part of the culture, it has a greater quality of life than places where the average annual income is higher but one must pay to learn essential skills.  Indeed the higher income is only because you only work if you are paid, and you must have money in order to have access to dancing, edible landscaping, improv theatre, etc. 

Hypothesis:
socialists are capitalists - unions refuse to work unless paid. 
or do they organize so their work so they can move us toward an inspired economy?  (some do, most don't)

Transaction Costs, & Benefits:
(This may need to be challenged/clarified.)  If I had to contract before every interaction, we would spend half our time transacting, leaving only half our time for exchanging, and at no time would we be co-creating.   (Is this just saying 'sometimes transaction costs exceed benefits, and in those cases, but those cases only, it is more efficient to not transact'?)

Contracts are substitutes where trust is lacking.
Incentives are substitutes where inspiration is lacking.
Incentives frustrate inspiration, and then claim they are necessary because inspiration is impotent.  So are incentives more powerful than inspiration?  No, inspiration can be frustrated, but inspiration can [overcome frustration] -
(a) deconstruct reality to tap potential energy - [Pragmatic Poetry, under construction]
(b) once contracts/covenants/trust exist(s), inspiration can reign, spontaneous co-creation is the norm.
Does (b) suggest that contracts enable trust?  Within a contract, whether the scope is narrow-and-short or broad-and-long, people will still be trying to get the best of the deal for themselves; we have agreed to constraints on our greed, rules within which we will play our usual game.  Contracts that are born from distrust will be pervaded with distrust, and so will not create the home/garden/environment for free co-creation.  Contracts can be born from trust, but are unnecessary, and can shift a relationship of trust, of free co-creation, into a relationship of calculation.

Deconstruct my hierarchical dichotomy, inspired>incentive.
    Are contracts, incentive economies, market economies (money; proportional compensation) good, in some contexts?
    Can we distinguish which context deserves which economic system?  
    If a context is best suited for an incentive economy, we should not try to change it into an inspired economy, but should we try to change the context so the inspired economy becomes the apt system?  In other words, can we, and should we, change the contexts so we can change the economic system?

Intellectual Property - citations.

Should I properly cite material I quote?  Yes, if the reader might benefit from reading more by the quote's source.  Otherwise no, our productivity is hampered if I spend time properly noting sources.  Is this theft?  No, we are collaborating, are we not?  The world's future depends on all of us, does it not?

Fair Trade Deserves Our Support

By YANN MARTEL
Globe and Mail - Thursday, May 6, 2004 - Page A23

In 1923, the Austrian Jewish philosopher Martin Buber published a short book called I and Thou. It's a book about dialogue and relation, about how human beings relate with the world, whether the natural world of rocks, plants and animals, our fellow human beings, or God, whom Buber understood in the broadest, most ecumenical terms.

One key sentence in the book has stayed with me my whole life: "Everything is meeting."

Buber submitted that our relations with the world could be categorized in two ways: as reflecting an "I-It" relation, or an "I-Thou" relation. Each relation is not just a posture or attitude, but a mode of existence. The I-Thou relation is the greater relation. In its fullest embodiment, Buber imagined it as the relation a person would have with God, something experienced with the fullness of one's being. A great love or a deep friendship would be more usual examples of an I-Thou relation. Such a relation is characterized by engagement, intensity, mutuality, presentness, trust. It is an encounter that is truly significant, that is touched by grace.

The I-It relation involves a lesser or more partial involvement, in which only a part of oneself is given to the other. The It in question is not necessarily an object. In human terms, it is most often a role played. The relations between teachers and students, doctors and patients, priests and parishioners, salespeople and customers, bosses and employees would all be I-It relations. The I-It relation is characterized by utility, design, purpose, calculation. An I-It relation is fine so long as we realize the limitations of It-ness. No I-It relation can encompass the whole person or plumb the deeper meaning of life.

To stay too long at the level of I-It relations diminishes our humanity, the humanity of both participants. For the nature of the I changes depending on the relation entered. In the I-It relation, the I, however benignly or momentarily, is measuring, calculating, using. Not so in the I-Thou relation, in which the I opens up, trusts, lets go, affirms. A relation, any relation, affects both participants.

Buber called for an I-Thou relation whenever possible, and an I-It relation whenever necessary. He pleaded that behind every It, we not forget the Thou that exists.

I can think of no application of Buber's philosophy that is more urgent, more necessary, than now in our economic relations with developing countries. Economic iniquity breeds not only material poverty, but whole-person poverty -- a poverty of both body and spirit. And not only over there, in the Third World, but within us, here in Canada.

The I-Thou, I-It distinction is the reason I believe in fair trade; that is, trade that is characterized by a concern for social and economic justice. Fair-trade coffee, the flagship fair-trade item, is produced in co-operatives characterized by fair wages, decent working conditions, democratic involvement of the workers, and concern for the environment. Fair-trade coffee approaches an I-Thou relation with those who supply us with our morning jolt.

In buying fair-trade products, we show respect for the men and women who make and trade that product. In Canada, that means buying products with the TransFair Canada logo: "Fair Trade Certified."

We live in a world that is at present dominated by It-ness, where profit and convenience often seem to matter more than quality of life. Our relations with developing countries have been especially marked by egregious It-ness.

The Thou-ness of fair trade is a way of reclaiming our humanity and that of those who are less fortunate. The I-Thou relation is not a matter of a rhapsodic encounter with God. Buber did not believe in elites, whether economic, hereditary or mystical. Giving oneself, much like withholding oneself, is not a luxury affordable only to a few. An I-Thou relation is available to us all. We must only make the effort of reaching out.

Montreal writer Yann Martel, who won the 2002 Booker Prize for Life of Pi, is currently writer in residence at the Saskatoon Public Library.

Finally, here are the economic ideas already presented in the Philosophy page: 

Inspired Economies

Economic systems which attempt to control behaviour by incentives, whether material, social or spiritual, whether rewards or punishments, can tap individualistic self-interest, but miss most potential energy.   "You cannot overcome decadence merely by waging war against it." - Nietzsche.  Incentives are band-aid solutions where spirituality/joie-de-vivre is lacking.  Through community development and technological innovations which facilitate collaboration, Inspired Economies evolves economies from incentive-requiring economies to inspired economies.  In terms of Christianity, the only logical interpretation of Jesus' Good News is: We are all "in", so we need not fret and fight.  By choosing this interpretation, by being freed from dysfunctional beliefs which beget guilt and shame, our innate passion to create beauty is freed and healthy economies are born: people are spontaneous and enthused, and employ management accounting to ensure resources are allocated optimally, because we love life and want everyone everywhere to experience this health forevermore. You can't get that from ordinary social institutions. 

Whence Violence?  Violation! Our system requires us to violate our values, to follow $ to buy a mini-paradise in my self-centered world, instead of spontaneously doing what I believe the world needs, treating Earth/God as my employer, knowing that Spontaneity begets Serendipity, that Earth First! = me first, because a healthy ecosystem is a hospitable home.

OrgasmicPlanet.com - The Entire Economy Making Love with Gaia
If one person is gardening, he/she can be 'making love with Earth', if 2 people are gardening together (perhaps one digs, one waters, ...), they can be in relation with each other instead of with the Earth, or they can be making love with the Earth, together; if 3 people garden together, the specialization of task and division of trade continue; with 4 people, perhaps one person does not touch the Earth, but only provides services to help the gardeners - this person can still be making love with Earth, by consciously appreciating his/her role; this can extend to every person in the economy.  Would the world be different if everyone saw him or herself as making love with Earth?

Ideas - free to a good home Perhaps I should employ hundreds of people to develop and market my ideas.  I think my world will be richer, however, if I give my ideas to whomever I think can use them best.  Perhaps they'll "steal them", and then make me pay if I want the finished product.  That's okay - I have too many ideas to develop them all myself.  Perhaps they'll collaborate, because they see that if I have this interest I'll be helpful in the further development and marketing of the product.  Besides, they're not my ideas, they're ideas that originated within me, but as a result of the flow of ideas in our culture, and, well, they belong to the world because the world needs them.  Ego will only hold me back. 

My Piece of Pie
if I let my ideas be free if I hoard my ideas
small % of large pie
large % of small pie
Hypothesis: my piece is bigger if I give my ideas away where they can develop freely and where my whole world benefits than if I try to capture the benefits within my private world by restricting others from developing the idea or gaining the benefits.
[Hey, look what I found: www.half-bakery.com]

[Challenge: This does not mean that I should not consider the product of my labour as my property, but rather that I should get government grants to fund the research and development of this work.  The application process is not a waste of time; it ensures my work has real and optimal impact.]

More powerful than money or might, 'namaste' makes resources flow my way.  Namaste: "The highest good within me honours the highest good within you."  If you first learn to manage a garden, resources (machines, money, people) will beg to come under your management, for they know you have the heart and skill to help them fulfill their purpose.  And they know that you honour them - you do not conceive of them as resources, but as partners - they fulfill you as you fulfill them.
To love, or not to love; that is the question.  To live in love or to live in sin; to live in God-consciousness or to live separate from God-consciousness; that is the question.    

Work is love made visible
And if you cannot work with love but only with distaste, 
It is better that you should leave your work and 
Sit at the gate of the temple and take alms of those who work with joy. 
  For if you bake bread with indifference, 
You bake a bitter bread that feeds but half man’s hunger. 
  And if you grudge the crushing of the grapes, 
Your grudge distils a poison in the wine. 
  And if you sing though as angels and not love the singing, 
You muffle man’s ears to the voices of the day and the voices of the night. 
~ Kahlil Gibran

The Nature of the Firm
Why is the economy populated by business firms, instead of consisting exclusively of a multitude of independent, self-employed people who contract with one another?  Production could be carried on without any organization at all, so why and under what conditions should we expect firms to emerge?
There are costs to using the market: transaction costs; search and information costs, bargaining costs, and enforcement costs, can all potentially add to the cost of procuring something with a market.  Firms exist to avoid the costs of using the market. 
There is a natural limit to what can be produced internally, however. There are decreasing returns to scale, due to increasing propensity for an overwhelmed manager to make mistakes in resource allocation. This is a countervailing cost to the use of the firm.  The size of a firm is a result of finding an optimal balance between the competing tendencies of the costs outlined above. In general, making the firm larger will initially be advantageous, but the decreasing returns will eventually kick in, preventing the firm from growing indefinitely.
From this argument we can conclude that just because there are advantages to collaborating, it does not follow that the world should become one global firm (communist).
Note: The above argument does not consider that organizations encourage employees to work as a team within, to share ideas and resources, yet to work with private profit-motive in relation to external entities. So do these capitalists believe self-interest is necessary for motivating the development and marketing of market-worthy ideas, or do they believe that self-interest inhibits collective productivity?   
("Collaborative Commerce" only addresses the obvious gains from using the internet to integrate business processes with suppliers and customers; it does not address 'competitors'.
My competitors are my collaborators - we have the same goal for the Earth, so we share ideas and techniques and marketing.
Coase, Ronald. "The Nature of the Firm". on-line version.
Coase's Penguin
, an attempt to extend transaction cost theory to explain the successes of Open source software

If it weren't for industrialization, we would not need industrialization [bottled water image here].  Anything interior design can do, permaculture biotecture landscaping can do better.  yet: The promises of technology have been delivered - practical post-scarcity is now available, but we escape freedom.  Like TV, there is a demand for work, to escape our power (response-ability) to do what the world needs.  Be how you wish the world to become.  

Deep ecology is not anti-technology, it is the ultimate technology - boosting efficiency of consumption, and boosting ecological productivity, plus forging care for life and so boosting human productivity.

Spontaneity begets Serendipity.  Adam Smith wrote a parable against spontaneity.  He described a man who thought the world needed his wooden duck sculptures, so he cut down 10 trees and carved 100 ducks.  Each cost $8 in materials plus 5 hours of his time. When he tried to sell them, he sold 20 for $10 each, 30 for $5 each, and 50 for $1 each (possibly bought for firewood).  Some people blame the free market for the sufferings of business failure, but he should have tested the market first, and it is thanks to the free market that he got feedback (a reality check) before he cut down more trees.  Despite that perfectly logical argument, I am convinced that any action from healthy poeisis is automatically the best allocation.  The carver's idea of what the world needs was not an informed idea.  Self-poeisis is not poesis if it is not connected to the planet, its inhabitants, and history. [also: follow your bliss, because what the world needs is blissful people [Within Reason].] 

The most efficient and ecological way to improve quality of life is via imagination - conscious interpretation, Pragmatic Poetry. 
Everyone is an artist - we all interpret our experience.  Everyone is a scientist - we all develop and test models/theorems.  Every interpretation is a model, an abstraction, i.e. a fiction.  Consciously create your world.  Choose healthy interpretations, pragmatic poetry.  Pragmatic Poetry is fiction which, if you choose to believe it, works!  Reality is a fiction, but not all fictions pass the reality check.  Scientists are artists and artists are scientists: formulating and testing hypotheses.  Yet many/most 'rational' atheists and agnostics have blind faith in the reality of reality.  So they are victims of their presumptions, and they are not empowered to energize themselves.  Metafiction: by seeing how fictions are created, we are freed to make healthy choices in the fictions/stories we are living/presuming.  So we are more inspired, so we are more productive and innovative.  Thus a post-realism economy is more productive and ecological.  
(Also:  If religion was understood as pragmatic poetry, then non-religious people would open up to religion, and religious people would relate to their religion more fully, replacing quiet doubt and enervating hypocrisy with engaged honesty.  Thus, not only do Inspired Economies transcend the equity/environment vs efficiency-&-freedom dilemma, thus pleasing conservatives, libertarians, liberals, socialists and environmentalists alike, the goals and means also unite all religious and non-religious groups.  A nominal Christian racked with doubt who discovers Pragmatic Poetry may then boldly declare "I choose to believe!  I know it may or may not be Truth, but all that matters is that by choosing to believe it, it is true for me, it works for me.  Inspired Economies transcends the insoluble debate as to whether a religion is true; Inspired Economies pragmatically values any way of being which enables people to be inspired (peacefully).)
(
It is only by removing the requirement of faith that I can have faith. I cannot have faith in a God who requires faith before he will accept me. I do believe Jesus strove to free us from guilt and shame, i.e. he said "good news: you're all in!" knowing this would free people to rejoice and create and produce and care and be healthy; he did not say "you're in if you're good enough" because that begets guilt and shame, and so it begets hypocrisy and violence and despair.)