Estimating the Wellbeing Model of Inter-variate Complementarities in Trade and Economy

Abstract

The philosophy underlying the social and natural sciences in their complete explanation of the moral-material domain is grossly lacking in non-Tawhidi mainstream literature. This lack of socio-scientific holism could not be addressed and completed by the human-concocted pursuit of shari’ah and fiqh as misguided conception of Islamic law in contrast to Tawhid as law of “everything.” A very important area of such erudition of the Tawhidi IIE(θ(ε))-model is the role of money and real economy in their wide conception and application as functional attributes of the Tawhidi law in its extensive context of functioning according to the principle of pervasive complementarities of the good choices of life along conscious continuum. The explanation of this functioning of money and the real economy in the extensive sense according to the Tawhidi law is a vastly analytical matter under the ta’wil interpretation of verses of the Qur’an.

Appendix 6.8

Monetary Phenomenon According to the Islamic Philosophy of Science via the Tawhidi IIE(θ(ε))-Model

Abstract

The meaning of the monetary phenomenon in terms of the principle of pervasive complementarities of money with all entities that it embraces and with the monetary and fiscal policies is expounded in the light of the foundation of Tawhid as law of unity of knowledge according to the Qur’an. The derived model of the particulars and generalization of the Tawhidi model that explains the intra-system and inter-system wellbeing objective criterion is presented to establish the role of the monetary phenomenon along with its moral-material role in it. A formalism of such a treatment of money and real economy substantively defined in the qur’anic sense is presented, as well as policy perspectives pointed out. Policy conclusion is provided for the case of money and fiscal moral-material contexts for stabilization of the Indonesian case of the monetary–fiscal moral-material complementarities in the widest money, society, ethics, and conceptual contexts in a derived theory of Islamic philosophy of science.

Keywords: Monetary phenomenon, Monetary and fiscal circular-causation relationship, Wellbeing objective criterion, The qur’anic approach of Tawhidi law of unity of knowledge

The Monetary Phenomenon in Comparative Islamic Framework

The monetary phenomenon as the extensive influence of money and its artefacts that touches all entities of the world-system is the overarching nature of money and its affected artefacts according to Tawhidi socio-economic theory by belief and activity. The domain of moral inclusiveness is central to this theory of the monetary phenomenon. Yet a substantive difference and effectual contradiction is made in the literature by the study of money and its influence in the overarching case of monetary phenomenon in the fullness of the world-system and its entities. In the holistic meaning derivable from the Qur’an, it is stated in this regard of the Islamic philosophy of science (Qur’an 18:46): “Wealth and children are an ornament of the life of the world. But the good deeds which endure are better in thy Lord’s sight for reward, and better in respect of hope.” This verse points to the functional complementarities between money and its various genre of artefacts within the generality of “everything” in the fullness of the world-system.

Money and Moral Inclusiveness in Comparative Coinage History

The sunnah of the Prophet Muhammad (PBUH) also points to this indelible fact of morality, money, and the details of the world-system in the sense of the moral inclusiveness that the field of Islamic philosophy of science embodies. For instance, the currency in circulation as money during the time of the Prophet had the following inscription in Arabic: “Muhammad is the messenger of Allah, who sent him with guidance and the religion of truth that He might make it supreme over all other religions (Qur’an: at-Tawbah, 33).” Indeed, the Islamic currency in its use as the widest domain of circulation as money prevailed in these imprints, design, and weight for a thousand years since the Prophet. Money was thus a fully circulatory artefact that linked with every artefact of the active world-system. It thus carried with this function the moral obligation of the purpose of money to relate with the good things of life through the principle of pervasive complementarities signifying the dynamics of Tawhid, unity of knowledge, in and between “everything.” The relevance of the Tawhidi Interactive, Integrative, Evolutionary (IIE) learning by consciousness (θ(ε))–IIE(θ(ε))-model derived from the Qur’an and relating to the generality and details of the world-system is therefore established in the moral inclusiveness theory of the monetary phenomenon.

It is not surprising that, even today, the American Dollar carries the insignia: “In God we trust.” Although the inspiration in the latter case may not be instilled by awareness, yet it carries its origin of usage in the belief of God during wars and calamities. That is, a spontaneous awakening of God invokes, at least, a momentary consciousness of the monetary phenomenon pervading the generality of the world-system as national monetary functioning, as well as the details of its association as complementary functioning in “everything.” These functioning convey the purposeful circularity of money as a pervasively complementary artefact and as medium of pronouncement of exchange in the good things of life. The dispensation of these and similar attributes of the monetary phenomenon across the world-system reflects on and establishes by conscious continuum the moral inclusiveness of money and “everything.” Such moral compunction of money was pointed out also by John Maynard Keynes in the following words in his Essays on Persuasion: “The strenuous purposeful money-makers may carry all of us along with them into the lap of economic abundance. But it will be those peoples, who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.”

In most recent times, the monetarist theory of Milton Friedman can be deconstructed as an offshoot of Keynesian theory of money, as well as the Fisherian, and Austrian theory of the exchange equation of money to explain the monetary phenomenon of economic circulation, including finance. For instance, in the Keynesian general equilibrium case, if the rate of interest is fixed at the low-level equilibrium trap at i = 0, then with technological induction and resource mobilization, the full-employment point is forever lengthened along the perfectly elastic equilibrium caused by points of equality of the aggregate demand curve and the aggregate supply curve. The resulting money demand and money supply curves then coincide in the limit of i → 0.

Generalized Evolutionary Learning Equilibrium and Mainstream Concept of General Economic Equilibrium

In the above case, money demand and money supply coincide with the infinitely elastic aggregate demand curve coinciding with aggregate supply curve in the limit. Money demand now representing resource mobilization (R) equating with output Y, (Y = R), with i = 0. This monetary phenomenon is denoted by, M_d = L(Y = R). The same monetary phenomenon is explained by the equation of exchange in Friedman’s monetarism and Austrian (Fisherian) epistemological foundation of money and the real economy. This is denoted by the Quantity of Money in Circulation, M.κ = p.Y; 0 < κ ≤ 1 denotes the money multiplier. In the limiting case, M = P.Y as i = 0 in the probability limit of money–economy equilibrium in perpetuity. Thus, the Keynesian M_d(Y) = M_s(Y) (monetary equilibrium) = M = P.Y, with i = 0 (Friedman and Austrian cases), with the recursive functioning of technological change to regenerate the resulting income multiplier along the perfectly elastic general equilibrium path. However, this form of equivalence between Keynesianism, monetarism, and the Austrian School of epistemological economic thought is not a dynamic formulation in respect of the consciousness parameter, {θ(ε)}.

Consequently, the general-equilibrium point of full-employment is a costly attainment by means of the exogenously induced technological change at these points along the elastic path of income-multiplier. Keynes and Friedman both surrendered to accepting the rationality axiom of resource allocation and attainment of general equilibrium in the limited scale of income, full-employment, exogenous technological change, and resource regeneration only by exogenously induced policies and programs. This is the definite mark of lack of the consciousness factor that plays the intrinsic role of ethical endogeneity affecting “everything” around the knowledge-induced evolutionary nexus of the learning neighborhood in unity of knowledge explained by unity of knowledge res extensa and res cogitans.

It is uniquely and universally only amid the principle of pervasive complementarities in and between “everything” res extensa and res cogitans whereby the resulting evolutionary learning equilibriums attain their dynamic inter-causality and profoundness of the moral elan in and across “everything” that is purposefully good. Money then purposively with conscious details endogenously interrelates with x(θ(ε)) = {x₁,x₂,…,e₁,e₂,…}[θ(ε)] as the moral-material fullness of the conscious world-system. In this configuration, then in all cases of the vector, x(θ(ε)), mentioned in the Islamic philosophy of science is induced by the denumerable vector (e(θ(ε)) of ethical values, as stated in the Qur’an (15:13). The endogenous interrelations signified by the principle of pervasive complementarities in conscious continuum of unity of knowledge is therefore implied by x(θ(ε)) = {x₁,x₂,…,e₁,e₂,….}[θ(ε)] = {x,e}[θ(ε)]. In this way, the monetary phenomenon in Tawhidi IIE(θ(ε))-model integrates all those functions that are left out of the non-Tawhidi mindset and practices, even in the best of their exogenous ethical molds. The attributes of the Tawhidi monetary phenomenon firstly make money an endogenous glue in transmitting the moral announcement, as it was accomplished during the Prophet’s times and for many years following that. Money performs as a principal factor in establishing endogenous linkage in the conscious continuum that sustains the inter-entity unity of knowledge, which is equivalent to the functioning of the principle of pervasive complementarities in and across multiverses.

In the case of the general-equilibrium theory of mainstream economics, the exogenous ethical induction of the vector x(θ(ε)) is explained by the dissociated sets such as

$$ {\displaystyle \begin{array}{r}\mathbf{x}\left(\uptheta \left(\upvarepsilon \right)\right)=\left\{{\mathrm{x}}_1,{\mathrm{x}}_2,\dots {\mathrm{x}}_{\mathrm{n}},{\mathrm{e}}_1,{\mathrm{e}}_2,\dots, {\mathrm{e}}_{\mathrm{m}}\right\}=\cup \left\{{\mathrm{x}}_{\mathrm{i}},{\mathrm{e}}_{\mathrm{i}}\right\};\cap \left\{{\mathrm{x}}_{\mathrm{i}},{\mathrm{e}}_{\mathrm{i}}\right\}=\upphi; \mathrm{i}=1,2,..,\mathrm{n}.\\ {}\cup \left\{{\mathrm{x}}_{\mathrm{j}},{\mathrm{e}}_{\mathrm{j}}\right\};\cap \left\{{\mathrm{x}}_{\mathrm{j}},{\mathrm{e}}_{\mathrm{j}}\right\}=\upphi; \mathrm{j}=1,2,..,\mathrm{m}\\ {}\left\{{\mathrm{x}}_{\mathrm{i}},{\mathrm{e}}_{\mathrm{i}}\right\}\cup \left\{{\mathrm{x}}_{\mathrm{j}},{\mathrm{e}}_{\mathrm{j}}\right\};\left\{{\mathrm{x}}_{\mathrm{i}},{\mathrm{e}}_{\mathrm{i}}\right\}\cap \left\{{\mathrm{x}}_{\mathrm{j}},{\mathrm{e}}_{\mathrm{j}}\right\}=\upphi, \end{array}} $$

(6.8.1A)

i = 1,2,…,n; j = 1,2,…,m. “ϕ” denotes marginalism between entities everywhere and in “everything” in respect of optimal resource allocation in a rationalist competition postulate.

The finitude of the various categories of these x(θ(ε))-vector causes the elements to be subject to marginalist impact of scarcity of resources and economic competition under the rationality axiom.

Intra-system Generalized Evolutionary Equilibrium According to the Tawhidi IIE(θ(ε))-Model

Contrarily, the generalized evolutionary equilibrium case is explained firstly by specific ethical endogenous application of the Tawhidi IIE(θ(ε))-model, along the learning path of conscious continuum. This is the intra-system case explained by the induction of {θ(ε)}. From this formalism, the system of circular-causation relations results in respect of evaluation of the wellbeing function. Finally, the simulated form of the wellbeing indicator follows. Quantitative policy-theoretic inferences therefore emerge in the light of the epistemic implications of Tawhidi unity of knowledge and all that this embodies in the emergent mind-space and application of Tawhidi reformation. The following properties apply within specific intra-system cases: (d/dx(θ(ε))[f_k(x(θ(ε))] > 0; ∪^interaction∩^integration{f_k(x(θ(ε))} ≠ ϕ; k = 1,2,… by expansion of (i,j)-denumerable numbers. {f_k(.)} denotes monotonic transformation of {x(θ(ε)} by ethicality and consciousness.

Inter-system and Intertemporal Generalized Evolutionary Learning Equilibrium According to the Tawhidi IIE(θ(ε))-Model

The inter-variable system of circular-causation relations defining the generalized evolutionary learning equilibriums is given by the inter-systemic and intertemporal case of the intra-system specific evolutionary equilibrium result. The properties of the generalized evolutionary learning equilibrium are as follows: (d/dx(θ(ε))[∪^interaction∩^integration f_k(x(θ(ε))] > 0 by expansion across systems intertemporally; ∪^interaction∩^integration{f_k(x(θ(ε))} ≠ ϕ; k = 1,2,… by expansion of (i,j)-denumerable numbers across inter-systems and intertemporally. The path of conscious continuum of evolutionary convergences of the generalized evolutionary learning equilibriums of inter-systems over time is more resilient than the case of specific intra-systemic evolutionary learning equilibriums. The joint wellbeing indicator across systems is given by the expansion of the product expression, Π{θ(ε)^}_s.t, with {θ(ε)^} as the vector of wellbeing indicators evaluated inter-systems “s” and over time “t.”

The Concept of Money–Real Economy Phenomenon in the Tawhidi IIE(θ(ε))-Model

Contrary to the human-concocted shari’ah meaning of money and real economy, the Tawhidi IIE(θ(ε))-model has a vaster meaning according to the criterion of wellbeing evaluation as the objective of the Tawhidi comprehensive world-system. A candidate of this is the socio-economic system. It holds its vastness of complementary existence with money in circular-causation relations with every other entity-signifying variable. Accordingly, the concept of money and real economy in the wellbeing sense assumes its true meaning in reference to the entire system of inter-causality between the variables of W(x(θ(ε)) and the simulation of the wellbeing indicators by diversity of complementary systems in their specificity and generality of intra-system and inter-systems. The money–real economic generalized evolutionary learning equilibriums according to this relationship with wellbeing is vastly more extensive in meaning than that conveyed by the mainstream economic theory and in a limited way by the shari’ah perspective. The idea of full-employment equilibrium associated with money, real economy, and a limited extant of the vector, x(θ(ε)), is also widened and elastic in the wellbeing sense, evaluated subject to the entire system of circular-causation relations between the variables of the vector, x(θ(ε)). This includes the monetary, fiscal, financial, and moral-material-induced variables denoted by

x(θ(ε))^ = {x₁,x₂,…,e₁,e₂,…}^[θ(ε)^]; (d/dx(θ(ε))[∪^interaction∩^integration f_k(x(θ(ε))] > 0, by expansion across systems intertemporally; ∪^interaction∩^integration {f_k(x(θ(ε))} ≠ ϕ; k = 1,2,…, intra-system and inter-systems along conscious continuum.

Monetary and Fiscal Policies in Wellbeing Implications of Real Economy According to the Tawhidi IIE(θ(ε))-Model

The dynamics of monetary and fiscal policies follow from the application of the principle of pervasive complementarities between these variables. Thus,

M_s(Y(θ(ε)) = [a((θ(ε)).F(Y(θ(ε)) + b(θ(ε))).f_k(x((θ(ε)))], “a(θ(ε))” and b(θ(ε)).) are dynamic coefficients of money circulation, M_s(Y(θ(ε)), complementing with fiscal expansion and denumerably many elements of the functional transformation of x. Y(θ(ε) denotes income generated by extensive inter-entity complementary activities.

We denote the fiscal function augmented by moral inclusiveness concerning spending by F(Y(θ(ε)). We write M_s(Y(θ(ε)) = money circulation as regenerated resource in k-items of diverse entities = (Σ_kP_k.Y_k)[θ(ε)] + b(θ(ε))).f_k(x((θ(ε)) = aggregate spending = [a((θ(ε)).F(Y(θ(ε)) + b(θ(ε))).f_k(x((θ(ε)))], k = 1,2,… The implication in this equation is that of evolutionary learning equilibriums of wellbeing evaluation, subject to the list of circular-causation relations between the multivariates. This further signifies the endogenous ethical influence and the functioning of the principle of pervasive complementarities along the holism of the elastic form of the multiplier path of M_s(Y(θ(ε)) = [a((θ(ε)).F(Y(θ(ε)) + b(θ(ε))).f_k(x((θ(ε)))] along conscious continuum.

Spending in the good choices is upheld by the Qur’an (2:267): “O you who believe! Spend of the good things which you have earned, and of that which We bring forth from the earth for you, and seek not the bad to spend thereof when you would not take it for yourselves save with disdain; and know that Allah is Absolute, Owner of Praise.” The matching of money with such fiscalism (spending measure) is also pointed out in the Qur’an (18:19): “Such (being their state), we raised them up (from sleep), that they might question each other.” Said one of them, “How long have you stayed (here)?” They said, “We have stayed (perhaps) a day, or part of a day.” (At length) they (all) said, “God (alone) knows best how long you have stayed here…. Now send you then one of you with this money of yours to the town: let him find out which is the best food (to be had) and bring some to you, that (you may) satisfy your hunger therewith: And let him behave with care and courtesy, and let him not inform any one about you.” Thus, the monetary policy outlook is equated with the fiscal policy outlook in both the intra-system and inter-systems cases amid the moral implications of such policies in the moral and good choices. The social formation of the individual (entity, system wide) preferences is attained by the aggregation of the type, Pref(x(θ(ε)))_soc = ∪^intersection∩^integration{Pref(x(θ(ε)))_ks}, k denotes numbered (sampled) entities and s denotes intra-system or inter-systems. The functioning of the entire dynamics of complementary relations between monetary and fiscal policies according to the expression, M_s(Y(θ(ε)) = [a((θ(ε)).F(Y(θ(ε)) + b(θ(ε))).f_k(x((θ(ε)))], along conscious continuum, depends upon the limiting case of phasing out the rate of interest to zero and the intensification of {θ(ε)}. The cases are reflected by the properties, (d/dx(θ(ε))[∪^interaction∩^integration f_k(x(θ(ε))] > 0, by expansion across intra-systems and inter-system intertemporally and ∪^interaction∩^integration{f_k(x(θ(ε))} ≠ ϕ; k = 1,2,… by expansion of (i,j)-denumerable numbers across inter-systems and intertemporally.

The monetary policy in conjunction with fiscal policy are ascribed by

• (1) interest rate (i) phasing out in the limit to zero;

• (2) replacing bond rates and interest-based savings rates by real yields (r) in the sense of the real socio-economic system. Thus, (r/i)-relative rates increases, with r increasing, and “i” decreasing in this relative scale;

• (3) activating the participatory financial instruments to mobilize monetary resources across the multidimensional spending domain of complementary entities;

• (4) intensifying the algorithmic study of the monetary phenomenon and its fiscal complementarity by institutionalizing the multivariate wellbeing function; and

• (5) making (4) along with the institutional discourse as the bases of deriving inferences by requisite quantitative policy-simulation.

Transformation into the Monetary Program of 100% Reserve Requirement Monetary System

Transformation of money and fiscal spending as endogenous variables embedded in {x(θ(ε))} in the generalized wellbeing indicators with the explanation given above necessarily means full mobilization of savings in commercial banks into the real economy as the concept is defined above. The monetary and fiscal interrelations between the central bank, commercial banks, participatory financial instruments, and the widest possible moral-material domain of “everything” establishes the financial program of a convergent 100% reserve regeneration of money, fiscalism, and the real economy through the commercial banks and marker system.

A cursory description of the monetary and fiscal systems of their complementary linkages in the definition of the real economy according to the Tawhidi IIE(θ(ε))-model is now provided. The inter-variable (entity) circular-causation endogenous complementary interrelations are studied between the Central Bank, the Commercial Bank, the objective of Generalized Wellbeing, and the moral-material comprehension of the Real Economy.

Central Bank is governed by its enacting programs and policies in the circulation of money, comprising the following activity variables:

• Quantity of money in circulation, M

• Fiscal management in equivalence with M, (F,f_k)(θ(ε))

• Stock of gold for stabilization of value of currency in circulation, G

• Monetary and fiscal policies, as explained above, P

• Discursive institutionalism with the commercial bank for regulation of wellbeing, output, prices, employment, and the pursuit of the generalized measure of evolutionary equilibrium along conscious continuum by moral inclusiveness, W(x(θ(ε))

  Thus, in all, the Central Bank vector of principal variables feeding into the generalized wellbeing objective function is X_CB(θ(ε)) = {M,F,f_k,P,G,x,e}[θ(ε)]; e(θ(ε)) denotes the endogenous ethical vector.

Commercial Banking sector is governed by its enacting program of mobilizing the circulation of money in attaining the wellbeing objective criterion. This objective goal includes stabilization, socio-economic development, employment, and endogenous linkages with the extant of the moral-materiality entities for the common good. The variables of the inter-variable circular-causation relations are the following:

Savings as continuous financial resource mobilization into the sector comprises the holism of the vector {F,f_k,P,G,x,e}[θ(ε)]. Savings as mobilized resources do not represent withheld financial resources by interest-bearing banks, as interest rates converge to zero with the functioning of money, fiscal spending, and the extended definition of the wellbeing-based real economy that is mentioned above. Thus, X_COB(θ(ε)) = {M,F,Sp,f_k,P,G,x,e}[θ(ε)]. The spending vector Sp equals personal and fiscal spending using participatory financing instruments.

The regenerative inter-entity circular-causation relations of the critical vector forms the Real Economy: {M,F,f_k,P,G,x,e)[θ(ε)]}, with x(θ(ε))^ = {x₁,x₂,…,e₁,e₂,…}^[θ(ε)^]; (d/dx(θ(ε))[∪^interaction∩^integration f_k(x(θ(ε))] > 0 by expansion across systems intertemporally; and ∪^interaction∩^integration{f_k(x(θ(ε))} ≠ ϕ; k = 1,2,… numbered intra-system and inter-systems along conscious continuum. These evolutionary convergences of learning variables in the regenerative field of moral-materiality are evaluated by the wellbeing objective criterion. Necessary simulation of the inter-variable complementary relations by way of unity of knowledge as conveyed by the coefficients of the inter-variable circular-causation relations and the evaluation of the resulting wellbeing indicators. These inferences recursively evolve and lead to degrees of resolution, thereby feed recursively between concerted levels of interaction, integration, and evolutionary learning. The resulting dynamic interrelations are explained represented by expression (6.8.2A).

(6.8.2A)

Subject to inter-variable circular-causation endogenous relations by estimation and simulation.

Evaluation of the wellbeing function takes place intra-system and inter-system into wellbeing indicators. These issues were explained earlier.

The functioning of CB and COB in respect of their vector of variables feed into the Real Economy are fed into the generalized wellbeing objective function, W(M,F,f_k,P,G,x,e)[θ(ε)], across the intra-system and inter-systems of complementary moral-material linkages. This guides the way toward formation of the principle of pervasive complementarities extensively between the inter-causal variables (inter-entity). The result is effective policy inferences that can be gained by improved levels of inter-entity complementarities between the variables of the vector, {M,F,f_k,P,G,x,e)[θ(ε)]}. The result of such wellbeing simulation toward regenerating the real economy via the institutional and macro-dynamic relations explained in expression (6.8.2A).

The Role of Gold Value of Financial Values in the 100% Reserve Requirement Monetary System with Complementarity of the Fiscal Policy

It is now important to understand the critical role of gold in the money, fiscalism (spending), and real economy sustainability with stability in prices (price level), and the generalized advancement of wellbeing by means of the inter-variable complementarities between the variables. The sustainability of all forms of resource mobilization and advancement of the real economy requires the role of the commercial financial sector (e.g., commercial banking) in mobilizing the fullest possible amount of savings into socio-economic regeneration and the wellbeing objective.

Thus, the mainstream theory of statutory reserve requirement of the commercial bank at the central bank is replaced as the mobilization of savings into the real economy is enhanced. There remains no obligation of the commercial banks to hold reserve at the central bank. The central bank becomes a lender to commercial banks of the last resort. This banking contract is temporary. It ceases to continue at the very instance the commercial banks return of the loanable funds to the central bank by establishing the demand for financial circulation in the real economy. On the other hand, when potential financial mobilization by the commercial banks remains in excess of the demand of the real economy, then the excess funds for circulation is saved at the central bank to be liquidated when the real economy demand improves. In the short-run, this equilibrating financial situation with the real economy happens by financial transactions globally, and diversification of finances occurs in the real economy. In all such cases of liquidation of the excess reserve requirements and the fractional monetary system between the central banks and the commercial bank, the 100% circulation of monetary resources by financing the diversification of the real economy sustains the equation of exchange. The final form of the quantity theory equation is M = Σ_k(P_kY_k)[θ(ε)]. The micro-money result takes the form M_k(Y) = P_kY_k(θ(ε)), k-1,2,…. The social function of money in circulation is realized by Pref(x(θ(ε))_soc = ∪^interaction∩^integration{Pref(x(θ(ε))_k}, k = 1,2,…

In the 100% reserve requirement monetary system, all commercial bank savings remain potentially mobilizable. The fractional reserve requirement of the central bank disappears. The function of gold created at the central bank and utilized by the commercial banks is to stabilize market prices and exchange rates of currency (C) as money in circulation via the participatory instruments between the financial system and the real economy. We note that

$$ \left(\left(\mathrm{M}.\upkappa \right)/\mathrm{G}\right)\left[\uptheta \left(\upvarepsilon \right)\right]=\left(\mathrm{P},\mathrm{Y}/\mathrm{G}\right)\left[\uptheta \left(\upvarepsilon \right)\right]=\left(\mathrm{C}/\mathrm{G}\right)\left[\uptheta \left(\upvarepsilon \right)\right]; $$

(6.8.3A)

Now, as the gold-values of resources in circulation increase with stability, then

$$ \left(\left(\mathrm{M}.\upkappa \right)/\mathrm{G}\right)\left[\uptheta \left(\upvarepsilon \right)\right]\uparrow \iff \left(\left(\mathrm{P}.\mathrm{Y}\right).\mathrm{G}\right)\left[\uptheta \left(\upvarepsilon \right)\right]\uparrow \iff \left(\mathrm{C}/\mathrm{G}\right)\left(\uptheta \left(\upvarepsilon \right)\right)\uparrow . $$

(6.8.4A)

G then can acquire two possibilities: (1) G can decline relative to the nominal values of the other variables as shown; and (2) G can increase but relatively less than the nominal values of the other variables. These relative gold-values of the variables are possible when money in circulation is valued in terms of the prices of goods, services, and currencies in exchange. In the fullest mobilization of monetary and currency resources via financial instruments and cash in the good choices, interest rates of every kind in transaction must necessarily reduce to zero. This situation is also that of expansion of the social and economic system along the elastic multiplier path of the moral-material transformation of the socio-scientific system in the limiting case of the lowest level liquidity trap, with i → 0. The deficiency of the exchange equations (6.8.3A) and (6.8.4A) is their absence of the extensive moral-material vector. The conscious parameter of unity of knowledge, {θ(ε)}, must apply to the extended vector, {M,F,f_k,P,G,x,e)[θ(ε)]} in the inter-variate circular-causation equations.

Policy Conclusion

We conclude this Appendix by noting the consequences that the policy variables (P(θ(ε)) in the consciousness moral-material vector, {M,F,f_k,P,G,x,e)[θ(ε)]}, can have an actual case of monetary policy. We take the case of monetary policy enacted by Bank Indonesia. There is the goal of complementing monetary and fiscal policies aimed at stabilizing the economy in terms of controlling inflation and exchange rate devaluation. Toward attaining these goals, Bank Indonesia (BI) coordinates its policies with the government and corporate sector. In its goal of controlling inflation, BI uses inflation targeting approach. According to this policy approach, the inflation rate is targeted to an assigned level over given time periods, during which period stated monetary goals are pursued. In exchange rate stabilization, BI adopts a floating rate policy.

According to international economic theory, monetary policy remains effective in its stabilization objective of floating exchange rate, but fiscal policy loses effectiveness: “Monetary expansion in the home country causes the home currency to depreciate, output at home to expand, and output abroad to move in an uncertain direction. Also, the current account may either improve or deteriorate. Moreover, in most cases, fiscal expansion in the home country causes the home currency to appreciate, output at home and abroad to expand, and the current account to deteriorate.” In the case of Indonesia, the uncertainty in exchange rate movement, economic growth, and uncertainty of current accounts balances leaves monetary and fiscal policies in Indonesia to be indeterminate

In summary, the following policy points present the overview of the economic approach that Bank Indonesia, Indonesian Government, and the Indonesian corporate sector aim on regarding Indonesian development plan using monetary and fiscal combinatory approach. The website of Bank Indonesia states: “national economic policy synergy is constantly strengthened to further stimulate domestic demand, incorporating five salient aspects. These are namely, (i) reopening productive and safe sectors; (ii) accelerating fiscal stimuli; (iii) stimulating bank lending on the supply and demand sides; (iv) maintaining monetary and macroprudential stimuli; and (v) accelerating economic and financial digitalisation, particularly in terms of SME development.” The expected complementary relationship between various driving sectors of the Indonesian economy could be more extensively actualized if the moral-material holism of variables, pointed out in this Appendix, are interactively integrated with the economic framework via the evaluation of the wellbeing objective criterion. Finally, we note that the circular evolution of the Tawhidi IIE(θ(ε))-dynamics applied to money–fiscal–real economy domain with the moral-material driving variables is actualized intertemporally by the continuous evaluation of the wellbeing function, W(M,F,f_k,P,G,x,e)[θ(ε)]. This dynamic functioning is actualized according to the Money-Commodities-Money regenerative model. This model originated with Robert Heilbroner in his book The Nature and Logic of Capitalism.