Our world is in the throes of financial, economic and environmental crises with the possibility of extreme collapse. The fundamental cause of the crises is that mainstream economics is based upon fifty nine false, interconnected assumptions about reality.

As a result, the prevailing major paradigm (or societal view of reality) is outdated, inaccurate and static thereby being incapable of providing solutions for global problems. The problems include disintegrating social order; incessant war; authoritarian tendencies; and uncertainty as to whether artificial intelligence will be for the benefit, or detriment, of the human race.

Unless the outdated paradigm is rejected and a new, accurate and dynamic one substituted instead, the problems will remain and extreme collapse becomes inevitable.

Nevertheless, NB, the research is not widely known and its precise location is now uncertain because it may have been suppressed. The exact reason for the suppression is unknown but could be related to nature of the third factor or to the future of the USA.

Apart from Copernicus and Galileo, there are other exemplars of ‘opposite mindset’ who came ‘from outside’ and greatly benefitted humanity. Indeed, inscribed in gold within the Annals of History, are the names of:

• Louis Pasteur who essentially established that the invisible – rather than the visible – is the source of disease
• Charles Darwin who proved that animals and plants did not recently enter the world all at once but, instead, evolved over millions of years
• Alfred Wegener who, taking into consideration a wide range of facts, explained that the world’s surface has tectonic ‘plates’ in continual motion and is therefore not merely a static outer layer with ruptures
• Barbara McClintock who showed that genes can ‘jump’ (change position)
• Cecilia Payne whose accurate spectrum analysis of the sun was rejected. Like McClintock, she was disparaged for being a woman
• James Lovelock who, with Gaia, challenged the idea that humanity can exploit and destroy its environment without threatening its own existence. He also took into consideration a wide range of facts.

In all cases, the conservative upholders of the prevailing paradigm were proved profoundly wrong and their progressive challengers spectacularly right.

Nevertheless, before there can be any change in major paradigm, there has to be widespread evidence that the old paradigm is failing and on the cusp of collapse.

Moreover, there must be widespread acceptance (by the academic community and by politicians and by members of the public) that the old paradigm is failing.

Here are some evidences of failure:

1. Ecocide. We should reflect on the pollutions and depredations which:
   – put plastics in the oceans – and into our bodies
   – destroy pollinators, flora and fauna
   – deplete resources
   – promote warming
   Alas! These things happen because ‘free market’ finance capitalism views environmental matters as extraneous and imposing unnecessary cost.
2. Preposterous accumulations of wealth (which do NOT ‘trickle down’ to ordinary people. (Oxfam Report, 2020. Piketty, 2017.)
3. Exclusion from the formal economy of women and girls who, every day, do 12.5 billion hours of 24/7 unpaid caring work without which the human race cannot exist! (Oxfam Report, 2020.)
4. Half the world’s population exists on less than $5.50 per day. And 860,000,000 have to try to exist on $1.80 per day. (Oxfam Report, 2022.)
   Moreover:-
5. Water and sewage situations are parlous. Globally, 10,000 people die each day from the effects of dirty water (Dirty Water).
6. Debt levels – personal, corporate and governmental – are higher than those of 2008 and much debt is un-repayable. A Minsky Moment approaches.
   There is also:
7. Lamentable homelessness – yet building materials are available.
8. Unravelling social order and political doubt e.g., robbing of shops; Capitol trespass,
9. Destruction of the middle classes. In America, real middle class incomes have been going backwards for twenty five years. The exportation of jobs is one reason. Another is that the Federal Reserve has been pumping billions of dollars into the hands of the existing wealthy and not into the hands of others.
   And, to cap it all, there is:
10. Inability to address the great technological shift which, instead of good, secure jobs, results in part-time, zero-hours-contract, ‘gig economy’ jobs which are not true jobs at all. The result is a precariat (Standing, 2011).
11. Sharply rising (? runaway) inflation hitting everyone.
12. A quadrillion (10¹⁵) dollar casino of derivatives! 
13. Huge concentrations of private ownership by tiny groups. 
14. Continuing migration from global South to North. As well as war, the migration is caused by finance capitalism expropriating resources and also ensuring there are no fair economies for the many (rather than the few).

In sum, there is widespread failure and, after some precipitating ‘black swan’ event, a collapse is inevitable.

Mainstream propaganda supposes that a collapse is impossible because it says that finance capitalism is always:

• balanced (and, if sometimes out of kilter, will soon return to equilibrium)
• efficient
• free and
• just i.e., all people get what they deserve.

However, the supposition is preposterous – every sane person knows that finance capitalism is unbalanced; inefficient; unfree (most people are prevented from acquiring productive capital) and unjust.

Thus the true explanation of persistent poverty today is:
(In addition to lack of good jobs), a lack of ownership of, and access to, what:

• really does create the wealth i.e., technological and natural productiveness as embodied in capital instruments
• finances the acquisition of technological and natural productiveness i.e., low cost capital credit (Ashford & Shakespeare, 1999.)
• legally consolidates technological and natural productiveness (i.e., capital ownership)

together with

• the burden of compound interest and
• a thoroughly outdated understanding of economic reality

But mainstream economics, always acting as a gatekeeper protecting the estates of the elite, ignores this true explanation preferring the belittlement of any explanation for persistent poverty other than its own.

Another false assumption is ‘trickle-down’ theory which says that wealth ‘trickles down’ from rich people to poor. Yet reality contradicts the theory. Thus the world’s richest 1% has more than twice the wealth of 6.9 billion of the world’s population and the twenty two richest men have more wealth than all the women in Africa (Oxfam, 2020). That is astonishing!

The truth is that ‘trickle down’ does not, and cannot, happen – the rich never spend all their money and, in any case, it is impossible for them to do so because their wealth increases faster than they can spend it…!
More false assumptions are set out below.

Here is a truly astonishing thing – no matter how false are the mainstream assumptions of today, at some time in the past many of them DID represent fair and reasonable apprehensions of reality i.e., they USED to be true!!

Below is a brief look back as to how five of today’s particularly pernicious false assumptions came into existence.

1. 1. False assumption which USED to be true – In any task producing goods or services humans do all, or most, of the work in creating the output.
      
      This false assumption has already been discussed in relation to the explanation for poverty.  However, it is so fundamental to the structure of the old, outdated paradigm that a little further elucidation – in relation to capital instruments – is necessary. 
      
      Prior to the start of the Industrial Revolution around 1750, human labour DID do all, or most, of the work (as stated by Adam Smith). Nevertheless, at the same time, it was also true that some highly-productive capital instruments were already in existence e.g.:
      • windmills and keystone bridges (operating by themselves)
      • pack-horses (carrying loads largely by themselves)
      • ploughs, wagons, lifting equipment, ships and brick kilns (all of which did a lot of work but also required human – or animal – input). 

In summary, although capital instruments existed in Adam Smith’s time, it was still broadly true that humans did all, or most, of the work in creating the output.  

But that was then and not now.  Things change.  Today the capital instruments are doing more and more of the work in creating the output and so, if there is to be a true balance of supply and demand, there must be wide ownership of productive capital instruments.

1. 2. False assumption which USED to be true – Banks lend existing money i.e., lend a real thing.

      Mainstream propaganda deliberately cultivates the belief that the banks lend existing money.  But this is completely false.  Today’s bank money is created out of nothing by the pressing of computer buttons! 

      “When banks extend loans to their customers, they create money by crediting their customers’ accounts.” 

      However, long ago, money was NOT created out of nothing but was something solid e.g., copper, silver, gold – even stone disks.  Therefore money was commodity money i.e., a real thing.

Of course, governments – and bankers – then realised they could create more money for themselves through debasement i.e., by lessening the amount of copper, silver or gold in a coin, or by printing more banknotes.  Thus, although there was debasement, in theory (and particularly in the widespread propaganda) the principle of commodity money remained and so people believed that the lent money was a real thing which maintained its value.

But that was then and not now – things change and today’s reality is electronic binary digits existing on some computer (McLeay, 2014).  

1. 3. False assumption which USED to be true – Interest is necessary.
      
      However, interest is an unnecessary cost put on top of administration cost. Moreover, in order to hide the true amount of the interest, bankers long ago confused everybody by conflating (i.e., mixing together) the interest with administration cost, principal repayments and (sometimes) a sum for collateral so that they could not be distinguished from one another.  Bankers have always been able to do this because of their negotiating power – “I have the money and if you want some, it’s on my terms, not yours.” 
      
      Thus any distinction between necessary administration cost, principal repayments, collateral and interest was obscured and, in practice, lost.  A fair administration charge is always necessary, but interest is not. 
      
      And so it was true (in the sense that, because of the confusion, it was believed) that interest is necessary.  But that was then and not now.  Things change.  Today, when money is created out of nothing, it is outrageous that interest is unnecessarily added.  (The deleterious effects of interest are in Appendix Three.)
      
      Furthermore, people today are perfectly capable of distinguishing between administration cost (which is necessary) and interest (which is not).

4. 4. False assumption which USED to be true – Population levels should not, and cannot, be voluntarily reduced. 
      
      In past times, humans did create most of the output and so there was no reason to limit (or aspire to reducing) the population which did the creation.
      
      Moreover, starvation, war and disease devastated populations with the consequence that, at the very least, population replication was always essential.
      
      Furthermore, the past was a time when, generally, the world’s natural resources were not being strained.
      
      Thus, in the past, it was true (i.e., it was believed) that population levels should not, and cannot, be voluntarily reduced. But that was then and not now.  Things change.  Today, it is observable fact that when a society has a reasonable standard of living, good health and education with status for women, population levels DO stabilise and reduce – voluntarily.  This happens primarily because children are not generally needed to provide for their parents in old age and the death rate for children is low.

4. 5. False assumption which USED to be true – (The concept of) homo economicus is an accurate characterisation of human psychology.
      
      Homo economicus is the mainstream concept of psychology which sees ALL humans as ‘rational’ meaning ‘self-interested’.  In practice, this means ‘endlessly selfish and greedy’ i.e., wanting more and more material possessions and never, ever, being satisfied.
      
      Mainstream economics claims that homo economicus is fundamental psychology which identifies unalterable human characteristics and, as such, cannot be changed. With some exceptions (e.g., of gift economies discovered by anthropology and some commendable individuals), selfish, greedy homo economicus was – and still is – a fair characterisation of human psychology. 

The evidence is seen in today’s societies where it is impossible to stop the desire for endless material accumulation with its disastrous consequences for fauna, flora, resources and the environment.

BUT the falsity today is in claiming that homo economicus cannot be changed.  On the contrary, homo economicus CAN be changed because human psychology DOES change when human circumstances change (see section H). 

In summary, the five examples of today’s particularly pernicious false assumptions came into existence because, at some time in the past, they were reasonable (or at least believable) representations of reality.

But that was then and not now. Things change.
It therefore behoves us to keep our basic assumptions under review so that we do not make complete fools of ourselves by being egregiously out of date.

The new paradigm is efficacious because it is:

• accurate
• internally consistent
• comprehensive
• simple – the simplest explanation of the facts is best (Occam’s Razor); and
• fruitful i.e., revealing new phenomena, new relationships and seemingly endless beneficial possibility.

The efficaciousness enables a new methodology.

After paradigm, methodology generally decides everything e.g., the results of research, proposals for reform (or not), policy and outcomes. Inevitably, the present outdated paradigm results in an outdated methodology and so a failure to find badly needed solutions.
Yet, fortunately, arising out of the new, accurate and dynamic paradigm, there is a new methodology – EDCReD – which:

• Examines the facts and, like Alfred Wegener and James Lovelock, takes into consideration a wide range of facts
• Detects the assumptions about the facts made by mainstream schools
• Checks to see if the mainstream assumptions are accurate deciding, for example, if the mainstream reason for persistent poverty is true
• Reverses inaccurate assumptions (whereon the reversals or near-reversals are seen to be true!) This is done fifty nine times!
• Deduces new, beneficial policies from the reversed assumptions

By examining the facts, then checking if mainstream economics accurately understands them (and, when it does not, substituting a more accurate understanding), EDCReD is following in the footsteps of Copernicus and Galileo who used scientific induction. (This contrasts with mainstream economics which, like the old Ptolemaic system, deduces its policies from false assumptions.)

Furthermore, epistemology is essentially about methods for ascertaining the truth and so EDCReD is central to the epistemological challenge because it:

• includes ethics
• is holistic, embracing many subjects
• understands change over time
• is positive as well as normative
• is investigative and inductive (by accurately establishing the facts and their meaning) but also deductive in finding new policy from the facts.

The new economics/politics then arises from the challenge.

However, the new economics/politics cannot be understood without first grasping that ALL of the old economics/politics exists somewhere along a line (i.e., a linear spectrum) going from left to right. On the left is Communism and on the right is some form of laissez-faire capitalism. Keynesianism is somewhere in the centre.

Finally, full understanding occurs on realising that, whereas ALL of the old economics/politics is somewhere on the linear spectrum, the new economics/politics is OUTSIDE AND BEYOND (i.e., impossible to be placed upon) the linear spectrum!

Interest-bearing loans are the rule today. However, in future, many loans will be interest-free because there is no reason not to have such loans other than the outdated assumptions and practices now bringing our planet to destruction.

Therefore the new economics may be summarised like this:

THAT, in a truly modern society, for the purposes of addressing:

• major environmental issues (including global warming)
• the conservation of natural resources
• the necessity for sustainable economies

AS WELL AS ensuring that money is related to the real economy and its spreading,

THERE ARE NO INTELLECTUAL OR PHYSICAL BARRIERS to the creation by public banks, national banks or international banking institutions of a large supply of interest-free loans (locally administered by the private banking system and public banks on wide ownership, small business/farm, real economy and environmental principles charging a fair administration cost but no interest)

AS LONG AS the money is repaid and cancelled leaving behind in existence the productive or environmental asset for which the loan was originally extended. This is counter-inflationary.

NB:

• Whilst limiting the ability of the private banking system to create money out of nothing (by a gentle rise in required banking reserves which, in certain circumstances, can go down), a national bank may create interest-free (repayable) money IF it is used to spread the real economy, over time, to every person in society and also for environmental purpose. In this way a large part of the economy becomes free from interest.
• The total amount of overall interest-free creation is, in practice, always limited by the requirements for repayment, wide ownership and environmental benefit.
• Interest-free loans are rapidly repaid and borrowers are not weighed down by the burden of interest, particularly compound interest.
• Only periodic inspection of the private banks would be necessary. Any bank abusing the privilege of being allowed to administer the interest-free supply would lose the privilege.

If a person has a reliable job, that’s good, as is a small business. However, computers and incredible new technology are destroying secure well-paid jobs and replacing them, if at all, with temporary, insecure, low-paid, ‘gig economy’ ones. Unfortunately, mainstream economics has no way of ensuring the equivalent of good jobs.

However, there is a way – Universal Basic Income – which compensates for decrease in jobs by substituting capital ownership not only for employees, but also for non–employees. Thus the new paradigm creates Economic Democracy by spreading capital ownership (and its income) to every person in society.

NB. In the new economics ALL large corporations must pay out all their earnings all the time. In order to invest, therefore, they may have interest-free money AS LONG AS wider ownership is furthered. This is a main principle of Binary Economics.

Over time, people will come to own a basket of full-payout shares in the big corporations with payouts between five and eight times today’s payouts (Ashford & Shakespeare, 1999. Kelso & Kelso, 1990).1 This ensures that daily economic power (i.e., income) is in the hands of everybody thereby implementing a balance of supply and demand as required by Say’s Theorem (i.e., Supply = Demand). Mothers with children, therefore, will be able to bring up their children without financial pressure. Even small children will have income, sufficient for basic need. At the age of five (if education is not free) the income increases to pay for basic school fees, with increases at eleven and sixteen. Thereafter the income stays as part of the adult Competence defined as:

A capital estate large enough to supply current consumer income sufficient for supporting a reasonable life style (taking account of other people as well as environmental and resource considerations).

Research indicates that, aged sixty five, an adult would have an Universal Basic Income of (2005 figures) $26,000/year AND a Capital Accumulation of $200,000 with both figures increasing after the age of sixty five.

NB. The figures would be very much higher today. The Competence is in addition to any income from a job.

Interest-free money is important for water/sewage projects and generation of clean electricity e.g., geothermal power, solar towers, underwater turbines, wave machines and tidal lagoons which are easily-constructed.

Gravity batteries (also easily constructed) store electricity and there are new technologies, e.g., bio-oil from algae – important for the local generation of energy.

Mangrove-crested sea barrages are capable of sequestering as much CO2 as rain forests (Mangroves).

As a result of compound interest, many countries have A.I.D.S. – Accumulated International Debt Syndrome (Anjum, 2004) – being:

• entrapped into everlasting debt
• controlled by outsiders and
• having their resources expropriated.

The situation is dire. Forced to beg for relief from the International Monetary Fund, they become owned lock, stock and barrel by the banking elite. This shocking situation, however, is directly addressed by the new Universal economics and finance which decolonise countries and enable their independence by ensuring that they control and issue their own interest-free money supply rather than always borrowing foreign money at extortionate rates of compound interest.

There is a need to remedy colonial, war, slavery and other injustices perpetrated on populations in the past not forgetting, in the present:

• unpaid women
• all those people denied access to capital income

and so there comes a Call for Reparations. The Call can be satisfied by implementing the new economics!

Binary Economics, too, is humanist and participatory. It is famous for being the originator of the Employee Share Ownership Plan (ESOP). The new economics forwards Binary Economics – www.binaryeconomics.net

Ever-onwards goes the march of technology, often in the form of automation, with more and more people becoming aware that their job (or their chances of a job) could soon be disappearing. So what will be the future? It will be :

In addition to being acceptable to all progressive political, economic and social justice movements, the new economics is acceptable to ALL the main religions.

Thus, advocating a humane economics, Pope John Paul issued the 1981 encyclical Laborem Excercens (which traces back to Pope Leo X111’s 1891 encyclical Rerum Novarum).

Moreover, (when compound interest makes debt un-repayable), there is the Christian tradition of Jubilee debt cancellation. Wealth – a Christian View (Dundee Report) was published in 1962.

Many Christian groups (e.g., the Christian Council for Monetary Justice) understand the need for new paradigm and desire widespread reform. The Golden Meand Society Foundation has published Ending the Blind and Pointless Battle – https://www.arcocarib.com/ebooks/ending-the-blind-pointless-battle/

In respect of Hinduism, the Arthashastra has a collective ethics and, particularly notably, understands the need for public capital projects.

Buddhist economics, too, is strongly ethical, very co-operative and based on harmony with nature.

Rapid modernisation

Furthermore, as a result of the work of authoritative scholars (Ghazanfar, 2005), Islam is rapidly modernizing and its requirements now include:

Advocating modern knowledge (Bee et al. 2005), the scholars say that new thinking must take account of a wide range of subjects and not be narrowly legalistic (Hanif & Furqani, 2005). Moreover, it has been stated that:-

“(The) Islamic economic vision has to be universal and contemporary not chauvinistic and medieval. As we move in that direction we may be pleased to discover we have good company from amongst modern economists in the West and East. The search for a more humane political economy is now universal. The challenge is – Who leads the way?” (Siddiqi, 1994.)

Market theory says that who or what creates the wealth should get the resulting income. Islam requires free markets and wide ownership which spread both productive and consuming power (Anjum, 2005).

Moreover, although mainstream economics says that forwarding social and economic justice decreases efficiency, Islam says that justice and efficiency are compatible (Al-Jarhi & Zarqa, 2005). Indeed, the one reinforces the other so that:

The Justice creates the Efficiency and the Efficiency creates the Justice.

Through wide ownership, Khums/Zakah is effectively implemented. Traditional Khums/Zakah is commendable as charity but, in reality, is only a palliative rather than a structural solution to poverty.

All progressive movements and the main religions welcome the new economics which:

• eliminates interest (to an extent that no other proposal or practice has ever done before)
• forwards good water, sewage, health and education systems
• addresses resource depletion and environmental issues
• lessens National Debt and taxation.

USA economist Robert Solo wrote:

‘A great part of the $10 billion of annual interest on the federal debt, which systematically transfers income from the poorer to the richer, from those who are without to those in great possession, is a cost of a social tabu (taboo).’ (Solo, 1967).

For micro-credit and small businesses/farms please see Appendix Six.