Desacralization of knowledge

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https://en.wikipedia.org/wiki/Desacralization_of_knowledge

In traditionalist philosophy, desacralization of knowledge or secularization of knowledge is the process of separation of knowledge from its perceived divine source—God or the Ultimate Reality. The process reflects a paradigm shift in modern conception of knowledge in that it has rejected divine revelations as well as the idea of spiritual and metaphysical foundations of knowledge, confining knowledge to empirical domain and reason alone. Although it is a recurrent theme among the writers of the Traditionalist school that began with René Guénon, a French mystic and intellectual who earlier spoke of "the limitation of knowledge to its lowest order", the process of desacralization of knowledge was most notably surveyed, chronicled and conceptualized by the Iranian philosopher Seyyed Hossein Nasr in his 1981 Gifford Lectures that were later published as Knowledge and the Sacred.

Origin of the concept

The theme of desacralization of knowledge has been an important topic among writers of the traditionalist school, going back to the French mystic and intellectual René Guénon, who previously spoke of "the limitation of knowledge to its lowest order", that is, the reduction of knowledge to “the empirical and analytic study”. However, the systematic conceptualization of the desacralization of knowledge was first introduced by the Iranian philosopher Seyyed Hossein Nasr in his 1981 Gifford Lectures. These lectures were subsequently published as a book titled "Knowledge and the Sacred".

Themes

According to Nasr, desacralization of knowledge is one of the most significant aspects of secularism, which he defines as "everything whose origin is merely human and therefore non-divine and whose metaphysical basis lies in [its] ontological hiatus between man and God". The core idea of desacralization of knowledge is that modern civilization has lost the transcendent dimensions of knowledge, which are based on revelation and intellection, by confining knowledge solely to rational and empirical domains.

[Nasr's] central thesis is that true knowledge is profoundly and by its very essence related to the sacred. This idea, he argues, underlies the basic teachings of every traditional religion whether Hinduism, Buddhism, Taoism, Zoroastrianism, Judaism, Islam or Christianity. Only in the Modern world, which he dates from the Renaissance, has the connection between knowledge and the sacred been lost.

— Micheal Allen, Dictionary of Literary Biography, 2003

In Nasr's exposition, the words "to know" and "knowledge" forfeit their unidimensional character. In his view, knowledge proceeds in a hierarchical order from empirical and rational modes of knowing to the supreme form of knowledge which he calls the "unitive knowledge" or "al-ma’rifah". Similarly, "to know" begins with ratiocination and progresses to intellection, a process that entails the attainment of spiritual knowledge through the human intellect—the perceived "universal faculty which is within the individual yet transcends his individuality". Nasr argues that while human beings possess the intellect, which is a divine gift that shines within their being, they are unable to fully utilize this gift because they have become too distant from their original nature or fitrah. He contends that as knowledge is inseparable from being, it is inherently connected to the sacred, which is synonymous with the Ultimate Reality. To be human is to know, which ultimately means knowing the Supreme Self—God—who is the source of all knowledge and consciousness. According to Nasr, it is the post-medieval process of secularization and a humanism that have eventually forced the separation of knowledge from being and intelligence from the Sacred, which "is both the Knower and the Known, inner consciousness and outer reality".

Knowledge of the Absolute means knowledge of the existence of superior spiritual levels, of the interrelatedness of the phenomena of nature, of the interrelatedness of their respective elements, and most importantly, of the derivation of everything from the Absolute itself. However, the awareness (and therefore the usage) of Intellect according to Nasr has been lost, together with the awareness of the Absolute itself. In Nasr’s reconstruction such oblivion characterizes the whole course of human thought that, in its dominant manifestations, can be described as a continuous desacralization of knowledge.

— Stefano Bigliardi, Above Analysis and Amazement. Some Contemporary Muslim Characterizations of "Miracle" and their Interpretation, 2014

In Nasr's view, modern science has reduced multiple domains of reality to a psycho-physical one. In the absence of a spiritual vision, science is said to become concerned with changes in the material world alone. According to this viewpoint, since modern science has rejected the notion of a hierarchy of being, scientific theories and discoveries are no longer capable of appreciating the truths that belong to a higher order of reality. Nasr thus views modern science as an "incomplete" or a "superficial science" that is only concerned with certain parts of reality while invalidating others. It is believed to be founded on the distinction between the knowing subject and the known object. This perspective maintains that modern science has lost its symbolic spirit and the transcendental dimension because it has repudiated the role of intellect in pursuing knowledge and truth by adopting a purely quantitative method. Nasr blames secularism for the desacralization of science and knowledge. In this process, science and knowledge is said to become separated, losing the uniformity that they had in the form of traditional sacred knowledge. According to Nasr, the structure of reality remains constant, but human perception and vision of that reality change. Modern Western philosophy, with no perceived sense of permanence, has reduced reality to a temporal process. According to Jane I. Smith, this reductionism is what Nasr identifies as the desacralization of knowledge and the loss of the sense of the sacred, necessitating a choice between a form of knowledge that tends to focus on change, multiplicity, and outwardness, and “one that integrates change within the eternal, multiplicity within unity, and outward facts within inward principles.”

Historical development

In saying "I think, therefore I am," Nasr contends, Descartes was not alluding to the "divine I" who proclaimed "I am the Truth" (ana’l-Haqq) through the mouth of Mansur al-Hallaj seven centuries before Descartes, the Divine Self which alone has the authority to proclaim I.

The process of desacralization of knowledge began with the ancient Greeks. According to Nasr, the rationalists and skeptics of ancient Greek philosophical traditions played a major role in the process of desacralization by reducing knowledge either to ratiocination or to cognitive exercise. In substituting reason for intellect and sensuous knowledge for inner illumination, the Greeks pioneered the process of desacralization of knowledge. Other major stages in the process of desacralization include the formation of Renaissance philosophical systems that had developed a concept of nature, which is independent and self-creative. The process, however, reached its climax in the thought of René Descartes, "the father of modern Western philosophy," who "made thinking of the individual ego the center of reality and criterion of all knowledge". Thereafter, knowledge eventually became rooted in the cogito. According to the Dictionary of Literary Biography:

Nasr analyzes the modern desacralization of knowledge and the consequent eclipse of human intelligence ... The roots of the crisis, he says, go back as far as the rationalists and skeptics of ancient Greece, but more immediate and grave in effect was the humanism of the Renaissance which shifted the focus of knowledge from God to human beings and from the sacred cosmos to the secular order, and the full blown rationalism of the Enlightenment which reduced human knowledge to reason alone. Nasr contends that epistemology since Descartes has taken an increasingly reductionist trajectory in which the traditional doctrine of knowledge rooted in intellection and revelation was replaced by an idolatry of reason. Rationalism gave way to empiricism, with its tendency to reject metaphysics altogether; and empiricism has been followed by various forms of irrationalism, including existentialism and deconstructionism. The general course of modern history has been one of desacralization and decay, robbing humanity of intelligence and stripping the cosmos of beauty and meaning.

— Micheal Allen, Dictionary of Literary Biography, 2003

Hegel is said to have taken a decisive step in the process of desacralization, turning the whole process of knowledge into a dialectic inseparable from change and becoming.

In his contribution to the volume of the Library of Living Philosophers, which was devoted to Nasr's life and thought, Liu Shu-hsien, a Neo-Confucian philosopher, writes:

Nasr's critique of modem European philosophy has also presented a very interesting perspective. He pointed out that Descartes's individual was not referring to Atman or the divine I, but rather the "illusory" self, which was placing its experience and consciousness of thinking as the foundation of all epistemology and ontology and the source of certitude. After the Humean doubt, Kant taught an agnosticism which in a characteristically subjective fashion denied to the intellect the possibility of knowing the essence of things. This situation further deteriorated into the Hegelian and Marxist dialectics, as they denied that there is anything immutable behind the appearance, and this loss of the sense of permanence was characteristic of mainstream thought of modern Western philosophy. In the analytic philosophy and irrational philosophies that followed, the sacred quality of knowledge was completely destroyed.

— Liu Shu-hsien, Reflections on Tradition and Modernity: A Response to Seyyed Hossein Nasr from Neo-Confucian Perspective, 2000

One "powerful instrument" of desacralization in history includes the theory of evolution, which according to Nasr "is a desperate attempt to substitute a set of horizontal, material causes in a unidimensional world to explain effects whose causes belong to other levels of reality, to the vertical dimensions of existence". He says the theory of evolution, and its use by modernists and liberal theologians including Aurobindo Ghose and Pierre Teilhard de Chardin has been a "major force" in the process of desacralization of knowledge. According to David Burrell, the "roots of the betrayal" may be found "on the other side of Descartes", in the high scholasticism that includes the thought of Thomas Aquinas, Bonaventure and Duns Scotus. According to Nasr, their syntheses "tended to become over-rationalistic in imprisoning intuitions of a metaphysical order in syllogistic categories which were to hide, rather than reveal, their properly speaking intellectual rather than purely rational character".

Effects

For Nasr, the adoption of the rationalist branch of ancient Greek philosophy, particularly Aristotle, led to a shift away from sacred knowledge in the West.

According to the traditional perspective, externalization and desacralization of knowledge has led to the belief all that can be understood is science in terms of information, quantification, analysis and their subsequent technological implications. The questions of religion, God, eternal life and the nature of the soul are all outside the realm of scientific knowledge and thus are only matters of faith. The desacralized knowledge is said to have affected all areas of culture, including art, science and religion, and has also had an impact on human nature. This account maintains that the effect of desacralized, profane knowledge is felt within the value system, thought processes and structure of feelings. Nasr says the desacralized knowledge and science affects the use of technology and has resulted in ecological catastrophes. It results in highly compartmentalized science whose ignorance of the divine destroys the outward and inward spiritual ambience of humans.

Reception

According to Liu Shu-hsien, the process of desacralization of knowledge is not as bad as Nasr has anticipated. Shu-hsien says there is an overwhelming necessity for desacralization of knowledge within the domain of empirical science because the quest of certainty is no longer a viable objective. According to David Harvey, the Enlightenment thought sought demystification and desacralization of knowledge, and social organization to free humans from their bonds. Svend Brinkmann says of the need for desacralization of knowledge; "if knowing is a human activity, it is always already situated somewhere – in some cultural, historical and social situation". For David Burrell, scholars are more at ease with Nasr's criticism of "enlightenment philosophical paradigm" in an explicitly postmodern world. Those who would argue "if knowledge cannot be secured in Descartes’s fashion, it cannot be secured at all" might have modern presumptions.

Other scholarly trends

Maslow’s desacralization

The American psychologist Abraham Maslow's (1966) concept of desacralization is based on "the type of science that lacks emotion, joy, wonder, awe, and rapture". He urged scientists to reintroduce values, creativity, emotion, and ritual to their work. For this, science must be resacralized, which means it needs to be imbued with ritual, passion, and human values. Astronomers, for instance, need to be astounded by the stars as much as study them. Psychologists must appreciate, be excited about, be in awe of, and have affection for the people they examine.

Other accounts

Several other academics have discussed the theme of secularization of knowledge in a number of other contexts. In a 1989 paper, British historian of science John Hedley Brooke, for instance, described the secularization of knowledge in the context of the eighteenth century scientific developments, contending that the process of secularization of science is evident in the changes of the theories of matter, celestial mechanics, the earth sciences, and the life sciences. Brad S. Gregory, a history professor at the University of Notre Dame, sought to examine the impact of the Reformation era on the field of knowledge in his 2019 article, in an effort to demonstrate how "religious disagreements" within the Christian tradition opened the way for the secularization of knowledge.

Individuation

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https://en.wikipedia.org/wiki/Individuation

The principle of individuation, or principium individuationis, describes the manner in which a thing is identified as distinct from other things.

The concept appears in numerous fields and is encountered in works of Leibniz, Carl Jung, Gunther Anders, Gilbert Simondon, Bernard Stiegler, Friedrich Nietzsche, Arthur Schopenhauer, David Bohm, Henri Bergson, Gilles Deleuze, and Manuel DeLanda.

Usage

The word individuation occurs with different meanings and connotations in different fields.

In philosophy

Main article: Principle of individuation

Philosophically, "individuation" expresses the general idea of how a thing is identified as an individual thing that "is not something else". This includes how an individual person is held to be different from other elements in the world and how a person is distinct from other persons. By the seventeenth century, philosophers began to associate the question of individuation or what brings about individuality at any one time with the question of identity or what constitutes sameness at different points in time.

In Jungian psychology

Main article: Analytical psychology § Individuation

In analytical psychology, individuation is the process by which the individual self develops out of an undifferentiated unconscious – seen as a developmental psychic process during which innate elements of personality, the components of the immature psyche, and the experiences of the person's life become, if the process is more or less successful, integrated over time into a well-functioning whole. Other psychoanalytic theorists describe it as the stage where an individual transcends group attachment and narcissistic self-absorption.

In the news industry

The news industry has begun using the term individuation to denote new printing and on-line technologies that permit mass customization of the contents of a newspaper, a magazine, a broadcast program, or a website so that its contents match each user's unique interests. This differs from the traditional mass-media practice of producing the same contents for all readers, viewers, listeners, or on-line users.

Communications theorist Marshall McLuhan alluded to this trend when discussing the future of printed books in an electronically interconnected world in the 1970s and 1980s.

In privacy and data protection law

From around 2016, coinciding with increased government regulation of the collection and handling of personal data, most notably the GDPR in EU Law, individuation has been used to describe the ‘singling out’ of a person from a crowd – a threat to privacy, autonomy and dignity. Most data protection and privacy laws turn on the identifiability of an individual as the threshold criterion for when data subjects will need legal protection. However, privacy advocates argue privacy harms can also arise from the ability to disambiguate or ‘single out’ a person. Doing so enables the person, at an individual level, to be tracked, profiled, targeted, contacted, or subject to a decision or action which impacts them - even if their civil or legal ‘identity’ is not known (or knowable).

In some jurisdictions the wording of the statute already includes the concept of individuation. In other jurisdictions regulatory guidance has suggested that the concept of 'identification' includes individuation - i.e., the process by which an individual can be 'singled out' or distinguished from all other members of a group.

However, where privacy and data protection statutes use only the word ‘identification’ or ‘identifiability’, different court decisions mean that there is not necessarily a consensus about whether the legal concept of identification already encompasses individuation or not.

Rapid advances in technologies including artificial intelligence, and video surveillance coupled with facial recognition systems have now altered the digital environment to such an extent that ‘not identifiable by name’ is no longer an effective proxy for ‘will suffer no privacy harm’. Many data protection laws may require redrafting to give adequate protection to privacy interests, by explicitly regulating individuation as well as identification of individual people.

In physics

Two quantum entangled particles cannot be understood independently. Two or more states in quantum superposition, e.g., as in Schrödinger's cat being simultaneously dead and alive, is mathematically not the same as assuming the cat is in an individual alive state with 50% probability. The Heisenberg's uncertainty principle says that complementary variables, such as position and momentum, cannot both be precisely known – in some sense, they are not individual variables. A natural criterion of individuality has been suggested.

Arthur Schopenhauer

For Schopenhauer, the principium individuationis is constituted of time and space, being the ground of multiplicity. In his view, the mere difference in location suffices to make two systems different, with each of the two states having its own real physical state, independent of the state of the other.

This view influenced Albert Einstein. Schrödinger put the Schopenhaurian label on a folder of papers in his files “Collection of Thoughts on the physical Principium individuationis.”

Carl Jung

Main article: Carl Jung

According to Jungian psychology, individuation (German: Individuation) is a process of psychological integration. "In general, it is the process by which individual beings are formed and differentiated [from other human beings]; in particular, it is the development of the psychological individual as a being distinct from the general, collective psychology."

Individuation is a process of transformation whereby the personal and collective unconscious are brought into consciousness (e.g., by means of dreams, active imagination, or free association) to be assimilated into the whole personality. It is a completely natural process that is necessary for the integration of the psyche. Individuation has a holistic healing effect on the person, both mentally and physically.

In addition to Jung's theory of complexes, his theory of the individuation process forms conceptions of an unconscious filled with mythic images, a non-sexual libido, the general types of extraversion and introversion, the compensatory and prospective functions of dreams, and the synthetic and constructive approaches to fantasy formation and utilization.

"The symbols of the individuation process . . . mark its stages like milestones, prominent among them for Jungians being the shadow, the wise old man . . . and lastly the anima in man and the animus in woman." Thus, "There is often a movement from dealing with the persona at the start . . . to the ego at the second stage, to the shadow as the third stage, to the anima or animus, to the Self as the final stage. Some would interpose the Wise Old Man and the Wise Old Woman as spiritual archetypes coming before the final step of the Self."

"The most vital urge in every being, the urge to self-realize, is the motivating force behind the individuation process. With the internal compass of our very nature set toward self-realization, the thrust to become who and what we are derives its power from the instincts. On taking up the study of alchemy, Jung realized his long-held desire to find a body of work expressive of the psychological processes involved in the overarching process of individuation."

Gilbert Simondon

Main article: Gilbert Simondon

In L'individuation psychique et collective, Gilbert Simondon developed a theory of individual and collective individuation in which the individual subject is considered as an effect of individuation rather than a cause. Thus, the individual atom is replaced by a never-ending ontological process of individuation.

Simondon also conceived of "pre-individual fields" which make individuation possible. Individuation is an ever-incomplete process, always leaving a "pre-individual" left over, which makes possible future individuations. Furthermore, individuation always creates both an individual subject and a collective subject, which individuate themselves concurrently. Like Maurice Merleau-Ponty, Simondon believed that the individuation of being cannot be grasped except by a correlated parallel and reciprocal individuation of knowledge.

Bernard Stiegler

Main article: Bernard Stiegler

The philosophy of Bernard Stiegler draws upon and modifies the work of Gilbert Simondon on individuation and also upon similar ideas in Friedrich Nietzsche and Sigmund Freud. During a talk given at the Tate Modern art gallery in 2004, Stiegler summarized his understanding of individuation. The essential points are the following:

• The I, as a psychic individual, can only be thought in relationship to we, which is a collective individual. The I is constituted in adopting a collective tradition, which it inherits and in which a plurality of I ’s acknowledge each other’s existence.
• This inheritance is an adoption, in that I can very well, as the French grandson of a German immigrant, recognize myself in a past which was not the past of my ancestors but which I can make my own. This process of adoption is thus structurally factual.
• The I is essentially a process, not a state, and this process is an in-dividuation — it is a process of psychic individuation. It is the tendency to become one, that is, to become indivisible.
• This tendency never accomplishes itself because it runs into a counter-tendency with which it forms a metastable equilibrium. (It must be pointed out how closely this conception of the dynamic of individuation is to the Freudian theory of drives and to the thinking of Nietzsche and Empedocles.)
• The we is also such a process (the process of collective individuation). The individuation of the I is always inscribed in that of the we, whereas the individuation of the we takes place only through the individuations, polemical in nature, of the I ’s which constitute it.
• That which links the individuations of the I and the we is a pre-individual system possessing positive conditions of effectiveness that belong to what Stiegler calls retentional apparatuses. These retentional apparatuses arise from a technical system which is the condition of the encounter of the I and the we — the individuation of the I and the we is, in this respect, also the individuation of the technical system.
• The technical system is an apparatus which has a specific role wherein all objects are inserted — a technical object exists only insofar as it is disposed within such an apparatus with other technical objects (this is what Gilbert Simondon calls the technical group).
• The technical system is also that which founds the possibility of the constitution of retentional apparatuses, springing from the processes of grammatization growing out of the process of individuation of the technical system. And these retentional apparatuses are the basis for the dispositions between the individuation of the I and the individuation of the we in a single process of psychic, collective, and technical individuation composed of three branches, each branching out into process groups.
• This process of triple individuation is itself inscribed within a vital individuation which must be apprehended as:
  • the vital individuation of natural organs
  • the technological individuation of artificial organs
  • and the psycho-social individuation of organizations linking them together
• In the process of individuation, wherein knowledge as such emerges, there are individuations of mnemo-technological subsystems which overdetermine, qua specific organizations of what Stiegler calls tertiary retentions, the organization, transmission, and elaboration of knowledge stemming from the experience of the sensible.

The Birth of Biopolitics

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https://en.wikipedia.org/wiki/The_Birth_of_Biopolitics 

 

The Birth of Biopolitics: Lectures at the Collège de France, 1978-1979

Author	Michel Foucault
Translator	Graham Burchell
Country	France
Language	French
Published	St Martin's Press
Media type	Print (Hardback & Paperback)
OCLC	214282391

The Birth of Biopolitics is a part of a lecture series by French philosopher Michel Foucault at the Collège de France between 1978 and 1979 and published posthumously based on audio recordings. In it, Foucault develops further the notion of biopolitics introduced in a previous lecture series, Security, Territory, Population, by tracing the ways in which the eighteenth-century political economy marked the birth of a new governmental rationality.

Foucault uses the term Governmentality and raising questions of Political science, political philosophy and social policy concerning the role and status of the State and neo-liberalism in twentieth century politics.

New rationality

For Foucault, biopolitics is political power exercised on whole populations in every aspect of human life. Foucault discusses the basic definition of the practices of the neoliberal art of government. Foucault then tries to redefine the boundaries set by liberal thought on this matter. Foucault concentrates on the monetary aspect of government as a point of concern, frugal government, the art of maximum and a minimum and between the total opposite minimum and maximum.

Foucault looks at the early institutional practices of this method of frugal government, which starts from the early Middle Ages down to the early 16th and 17th centuries. The market appears from the early Middle Ages where the function of interest on money lending was strictly prohibited; one of the reasons being that the church was the main institution lending money at interest on church property where rental income was charged on church property a primary source of income for the church and it would have brought down the price of the church rental income if faced with rival competitors. Justification, according to Foucault, for the market was justice which was why the market existed in the first place. But, what was meant by justice? Foucault offers this explanation; it was a site of justice in the sense that the sale price fixed in the market was seen, both by theorist and in practice, as a just price, or at any rate a price that should be the just price, which meant to the theorists of the day a price that was to have a certain relationship with work performed, with the needs of the merchants, and of course, with the consumers needs and possibilities.

The next general theme Foucault introduces is the German Ordoliberalism, the Freiburg School which produced general problems among themselves, namely the state apparatus and its reconstruction after the Second World War. This general theme led to neo-liberalism heavy reliances on the law obviously, but it too, had to produce a new kind of consensus and a rearrangement consensus between the general populace; the working population, those engaged in production. This general or collective consensus produced 'economic partners' in this so-called 'economic game', such as; investors, employers, government officials, work force, and trade union officials. Foucault then offers some explanation on what was the reasoning behind this consensus between all these so-called different economic partners. According to Foucault this produced another kind of consensus, which was political power of the electoral community, not the political power of the right to vote, but the right of the political community to exchange seats, a rearrangement of the very relations of the so-called change of 'government' which gives and protects legitimacy. Which becomes political consensus, inasmuch as the 'economic partners 'accept the economic game of freedom. This is very much on neo-liberalism agenda, which according to Foucault was exactly the agenda that neo-liberalism required.

A strong Deutschmark, a satisfactory rate of economic growth, increased wages, an expanding purchasing power, and a favorable balance of payments which became a by product of the effects of good government. Foucault reads into this that in contemporary German which was in reality a founding consensus of the state. Foucault notices that this formation of a liberal type of governmentality had general shifts within this circle which can be traced back to the 18th century old or classical liberalism programmed by the Physiocrats, Turgot, and the other economists, for whom the problem was the exact opposite. The problem that neo-liberalism had to resolve was the following: given the existence of a legitimate state, which is fully functional under the police state with all its administration form of police state, how can this be limited within the existing state and, above all, allow for the necessary economic freedom within it.

For Foucault, this was the exact opposite because after the Second World War, the war machine that was unleashed was due to the fact that the system of economic rationality had broken down and the organisational network of world trade and its accompanied trade settlement system had completely become untenable, in which trust in the final payment settlement system had completely vanished, therefore initiating the military machine.

Policy of society

Another theme Foucault concentrates on is the neo-liberalism conception of social effects, Gesellschaftspolitik, known in English, from the German, as the policy of society, this policy of society addresses the whole consensus of society. But this Gesellschaftspolitik had a two sided inconsistency, it had to produce the willing actors who take part in the economic process to accept the reality of their economic position and therefore their fate. The working population or labor force, the ones involved in production, madness, disease, medicine, delinquency, sexuality, but somehow, none of these faults/errors never existed before practices were involved and invented to become part of collective consciousness within practices. Foucault deals with this problem as necessary intrinsic operations of government which inextricably can produce regimes of truth (Foucault means regimes of truth as necessary social practices which become necessary objects of knowledge).

The ability to extrapolate a collective of co-ordinate errors becoming co-ordinated practices which become something that did not exist in the first place, but now becomes established systems of knowledge objects. The political regimes of truth (political power upon every aspect of human social life), the battle between legitimacy, submitting to a fabricated division between true and false. Foucault begins to try to trace back through time how this was at all possible, Foucault manages this task by reading into the set of practices interwoven into the policy of society, this was accomplished from the 16th until the 18th century where there was a whole set of practices of tax levies, customs, charges, manufacture regulations, regulations of grain prices, the protection and codification of market practices, etc.

This was well conceived by the exercise of sovereign rights, feudal rights, as the maintenance of customs, as effective procedure of enrichment for the financial administration of the general sovereign or the tax authorities, or as techniques for preventing urban revolt due to the discontent of this or that group of subjects. Foucault takes a look at these general practices through looking at the economic practices involved from the 18th century (where Mercantilism was at its peak) where a coherence strategy established an intelligible mechanism which provided a coherent link, together these different practices and their effects, and consequently allows one to judge all these practices as good or bad, not in terms of a law or moral principle, but in terms of propositions subject to the false dichotomy between true and false. Governments, Foucault noticed, were compelled to enter this competitive environment, by doing so entering into new regimes of truth with the fundamental effect of reconfiguring all the questions formally beset by the art of government.

Foucault turns his attention to ordoliberalism's view on social policy and how this can be woven into society's political power which differentiates from Adam Smith's liberalism two centuries earlier. This problem was faced head on by ordoliberalism; how can the overall exercise of political power be modeled on the principles of a market economy? To accomplish this the old version of classic liberalism had to be subjected to a whole series of modifications. The first set of transformations was the dissociation of the market economy from the political principle of laissez-faire, this uncoupling of the market and laissez-faire was replaced with, not abandon by a theory of pure competition which produced a formal structure and formal properties which could lay the fundamental principle of the coompetitivestructure that assured economic regulation through the price mechanism. This is a break from traditional liberalism principles. Founded by traditional liberals such as Walter Lippmann and expressed by many other traditional liberals such as Jacques Rueff, Wilhelm Röpke, Alexander Rüstow, Friedrich Hayek, Robert Marjolin, Ludwig von Mises, and their intermediaries and a non-economist, but however, was highly influential, according to Foucault Raymond Aron.

How would neo-liberalism define the new governmental action? Foucault traces three examples which neo-liberalism call a conformable economic action; firstly the question of monopolies which they claimed differed somewhat from classic liberalism. The classic conception of the economy as the monopoly seen as somehow semi-neutral, semi-necessary consequence of the competition in a capitalist system. The neo-liberal dream of competition cannot be left to develop without monopolistic phenomena appearing at the same time. This would eventually have the effect, of suppressing the operation of mechanism that facilitate, bring with them, and hopefully determine its eventual destiny. However, Foucault notices specific problems began to emerge for neo-liberalism, not only specific to neo-liberalism was how to incorporate civil society, political power; and Homo oeconomicus into a non-substitutable, irreducible atom of interest. Foucault makes the starting point of his investigations into this process from the 18th century where Homo oeconomicus has to be integrated into the system of which he is a part.

Civil society

The concept Homo economicus had specific problems being interwoven into the new-found economic process of the 18th century. Foucault manages to trace this anomaly through the subject of right (known as consent of the governed the theory of right of that legal theorists of the 18th century tried to establish during their legal discourse) which did receive a great deal of attention because of what was perceived at the time of problems regarding the sovereign's power. The subject of right had to perform slight modifications because of the implication of him (the subject of right) limiting the sovereign's power. Which certainly differed from classical liberalism's conception of the sovereign power, which from the 16th century was conceived of as impenetrable to any rational discourse. The sovereign was conceived of as absolute, but the discovery of the people, subject of rights, homo oeconomicus, changed all that because of the arrival of market practices (the market system of capitalism) from the 18th century. Even the Physiocrats insisted that the market, the sovereign had to really respect the market.

How could this new problematic of liberalism, the sovereign, the market, and the new-found political power, homo oeconomicus which economic activity had at least specific patterns of correlation could be moulded into one tight unit? Foucault seeks the answer to this with a new field of reference, civil society. Foucault answers this question on the process of how to govern through governmental technology, the new neo-liberals, economic liberals sought to have a heterogeneity of the economic and the judicial which must be pegged to an economy understood as process of production and exchange. Civil society, according to Foucault's analysis, must place particular attention to its correlation of technology of government, the rational measure of which must be judicially pegged to an economy understood as the process of production and exchange.

What made this version of civil society tick? Foucault makes the amalgamation of civil society into society, which at the end of the 18th century became known as the nation (now known to us as the nation state). This became omnipresent, nothing was allowed to escape, which was to conform to the rules of right, and a government which nevertheless respects the specificity of the economy, will be a government that manages civil society, the nation, society, and the social. Foucault continues the theme on Homo oeconomicus which became part and parcel to this feature, Homo oeconomicus and civil society were two inseparable features and belonged to the same ensemble of the technology of liberal governmentality. For Foucault this was no mere coincidence, since the 19th century, civil society has always been referred to in political philosophy discourse as a fixed reality, which according to this theory, was outside of government or the state or state apparatuses or institutions. This omnipresent has many characteristics and one its main features are a primary and immediate reality which forms part of modern governmental technology.

Foucault views this governmental characteristic as simply the direct correlation of modern society's direct association with madness, disease, sexuality, criminal recidivism and criminal delinquency which he calls transactional realities. Although civil society, along with its associated governmental technologies haven't always existed they are nonetheless real, by real he simply means the power dynamic and their interplay with the rest of society in which all those involved, everything within it constantly eludes them. It is in Foucault's analysis where he makes four important points on this governmental modern technology of biopolitics; an absolute correlative to the form of governmental technology which liberalism associated itself with, and it is pegged, tied to the specificity of economic process.

How were all three incorporated into rational liberalism philosophical discourse? Foucault cites the well-known texts of Adam Ferguson: Essay on the History of Civil Society; from the 18th century to show how liberalism approached this problem from different angles and Adam Smith and his The Wealth of Nations which complement one another with regards civil society. First: there is a political and social correlate in terms of civil society. Second, civil society as principle of spontaneous synthesis; third, civil society as permanent matrix of political power; and fourth, civil society as the motor element that drives human history.

Capital formation

From Wikipedia, the free encyclopedia
https://en.wikipedia.org/wiki/Capital_formation

Gross capital formation in % of gross domestic product in world economy

Capital formation is a concept used in macroeconomics, national accounts and financial economics. Occasionally it is also used in corporate accounts. It can be defined in three ways:

• It is a specific statistical concept, also known as net investment, used in national accounts statistics, econometrics and macroeconomics. In that sense, it refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period. To arrive at this measure, standard valuation principles are used.
• It is used also in economic theory, as a modern general term for capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock.
• In a much broader or vaguer sense, the term "capital formation" has in more recent times been used in financial economics to refer to savings drives, setting up financial institutions, fiscal measures, public borrowing, development of capital markets, privatization of financial institutions, development of secondary markets. In this usage, it refers to any method for increasing the amount of capital owned or under one's control, or any method in utilising or mobilizing capital resources for investment purposes. Thus, capital could be "formed" in the sense of "being brought together for investment purposes" in many different ways. This broadened meaning is not related to the statistical measurement concept nor to the classical understanding of the concept in economic theory. Instead, it originated in credit-based economic growth during the 1990s and 2000s, which was accompanied by the rapid growth of the financial sector, and consequently the increased use of finance terminology in economic discussions.

Use in national accounts statistics

In the national accounts (e.g., in the United Nations System of National Accounts and the European System of Accounts) gross capital formation is the total value of the gross fixed capital formation (GFCF), plus net changes in inventories, plus net acquisitions less disposals of valuables for a unit or sector.

"Total capital formation" in national accounting equals net fixed capital investment, plus the increase in the value of inventories held, plus (net) lending to foreign countries, during an accounting period (a year or a quarter). Capital is said to be "formed" when savings are utilized for investment purposes, often investment in production.

In the US, statistical measures for capital formation were pioneered by Simon Kuznets in the 1930s and 1940s, and from the 1950s onwards the standard accounting system devised under the auspices of the United Nations to measure capital flows was adopted officially by the governments of most countries. International bodies such as the International Monetary Fund (IMF) and the World Bank have been influential in revising the system.

Different interpretations

The use of the terms "capital formation" and "investment" can be somewhat confusing, partly because the concept of capital itself can be understood in different ways.

• Firstly, capital formation is frequently thought of as a measure of total "investment", in the sense of that portion of capital actually used for investment purposes and not held as savings or consumed. But in fact, in national accounts, the concept of gross capital formation refers only to the accounting value of the "additions of non-financial produced assets to the capital stock less the disposals of these assets". "Investment" is a broader concept that includes investment in all kinds of capital assets, whether physical property or financial assets. In its statistical meaning, capital formation does not include financial assets such as stocks and securities.
• Secondly, capital formation may be used synonymously with the notion of capital accumulation in the sense of a reinvestment of profits into capital assets. But "capital accumulation" is not normally an accounting concept in modern accounts (although it is sometimes used by the IMF and the United Nations Conference on Trade and Development), and contains the ambiguity that an amassment of wealth could occur either through a redistribution of capital assets from one person or institution to another, or through a net addition to the total stock of capital in existence. As regards capital accumulation, it can flourish, so that some people become wealthier, although society as a whole becomes poorer, and the net capital formation decreases. In other words, the gain could be a net total gain, or a gain at the expense of loss by others that cancels out (or more than cancels out) the gain in aggregate.
• Thirdly, gross capital formation is often used synonymously with gross fixed capital formation but strictly speaking this is an error because gross capital formation refers to more net asset gains than just fixed capital (it also includes net gains in inventory stock levels and the balance of funds lent abroad).

Capital formation measures were originally designed to provide a picture of investment and growth of the "real economy" in which goods and services are produced using tangible capital assets. The measures were intended to identify changes in the growth of physical wealth across time. However, the international growth of the financial sector has created many structural changes in the way that business investments occur, and in the way capital finance is really organized. This not only affects the definition of the measures, but also how economists interpret capital formation. The most recent alterations in national accounts standards mean that capital measures and many other measures are no longer fully comparable with the data of the past, except where the old data series have been revised to align them with the new concepts and definitions. US government statisticians have admitted frankly that "Unfortunately, the finance sector is one of the more poorly measured sectors in national accounts". The main reason is that national accounts were at first primarily designed to capture changes in tangible physical wealth, not financial wealth (in the form of financial claims).

Gross and net capital formation

In economic statistics and accounts, capital formation can be valued gross, i.e., before deduction of consumption of fixed capital (or "depreciation"), or net, i.e., after deduction of "depreciation" write-offs.

• The gross valuation method views "depreciation" as a portion of the new income or wealth earned or created by the enterprise, and hence as part of the formation of new capital by the enterprise.
• The net valuation method views "depreciation" as the compensation for the cost of replacing fixed equipment used up or worn out, which must be deducted from the total investment volume to obtain a measure of the "real" value of investments; the depreciation write-off compensates and cancels out the loss in capital value of assets used due to wear & tear, obsolescence, etc.

Because of government tax-incentives and valuation issues, depreciation charged by businesses is rarely a true reflection of the loss in value of their capital stock. Hence, statisticians often revalue actual depreciation charges according to data about asset values and average service lives of assets, in order to obtain measures of true "economic depreciation".

Technical measurement issues

Capital formation is notoriously difficult to measure statistically, mainly because of the valuation problems involved in establishing what the value of capital assets is. When a fixed asset or inventory is bought, it may be reasonably clear what its market value is, namely the purchaser's price. But as soon as it is bought, its value may change, and it may change even before it is put to use. Things often become more complicated to measure when a new fixed asset is acquired within some kind of lease agreement. Finally, the rate at which the value of the fixed asset depreciates will affect the gross and net valuation of the asset, yet different methods are typically used to value what assets are worth and how fast they depreciate. Capital assets can for instance be valued at:

• historic cost (acquisition cost)
• current replacement cost
• current sale or resale value
• average market value
• business value, assuming a certain profit yield
• value for tax purposes,
• value for insurance purposes
• purchasing power parity value
• scrap value.

A business owner may in fact not even know what his business is "worth" as a going concern, in terms of its current market value. The "book value" of a capital stock may differ greatly from its "market value", and another figure may apply for taxation purposes. The value of capital assets may also be overstated or understated using various legal constructions. For any significant business, how assets are valued makes a big difference to its earnings and thus the correct statement of asset values is a perpetually controversial subject.

During an accounting period, additions may be made to capital assets (including those that disproportionately increase the value of the capital stock) and capital assets are also disposed of; at the same time, physical assets also incur depreciation or Consumption of fixed capital. Also, price inflation may affect the value of the capital stock.

In national accounts, there are additional problems:

• The sales/purchases of one enterprise can be the investment of another enterprise. Therefore, to obtain a measure of the total net capital formation, a system of grossing and netting of capital flows is required. Without this, double counting would occur.
• Capital expenditure must be distinguished from intermediate expenditure and other operating expenditure, but the boundaries are sometimes difficult to draw.
• There exists nowadays a large market in second-hand (used) assets. In principle, statistical measures of gross fixed capital formation are supposed to refer to the net additions of newly produced fixed assets, which enlarge the total stock of fixed capital in the economy. But if a substantial trade occurs in fixed assets resold from one enterprise or one country to another, it may become difficult to know what the real net addition to the stock of fixed capital of a country actually is. A precise distinction between "new" and "used" assets becomes more difficult to draw. How to value used assets and their depreciation consistently becomes more problematic.

The general trend in accounting standards is for assets to be valued increasingly at "current market value", but this valuation is by no means absolutely clear and uncontroversial. It might be understood to mean the price of the asset if it was sold at a balance date, or the current replacement cost of the asset, or the average price of the asset type in the market at a certain date, etc.

Perpetual Inventory Method

A method often used in econometrics to estimate the value of the physical capital stock of an industrial sector or the whole economy is the so-called Perpetual Inventory Method (PIM). Starting off from a benchmark stock value for capital held, and expressing all values in constant dollars using a price index, known additions to the stock are added, and known disposals as well as depreciation are subtracted year by year (or quarter by quarter). Thus, an historical data series is obtained for the growth of the capital stock over a period of time. In so doing, assumptions are made about the real rate of price inflation, realistic depreciation rates, average service lives of physical capital assets, and so on. The PIM stock values can be compared with various other related economic variables and trends, and adjusted further to obtain the most accurate and credible valuation

Controversy

According to one popular kind of macro-economic definition in textbooks, capital formation refers to "the transfer of savings from households and governments to the business sector, resulting in increased output and economic expansion" (see Circular flow of income). The idea here is that individuals and governments save money, and then invest that money in the private sector, which produces more wealth with it. This definition is however inaccurate on two counts:

• Firstly, many larger corporations engage in corporate self-financing, i.e., financing from their own reserves and undistributed profits, or through loans from (or share issues bought by) other corporations. In other words, the textbook definition ignores that the largest source of investment capital consists of financial institutions, not individuals or households or governments. Admittedly, financial institutions are, "in the last instance", mostly owned by individuals, but those individuals have little control over this transfer of funds, nor do they accomplish the transfer themselves. Few individuals can say they "own" a corporation, any more than individuals "own" the public sector. James M. Poterba (1987) found that changes in corporate saving are only partly offset (between 25% and 50%) by changes in household saving in the United States. Social accountants Richard Ruggles and Nancy D. Ruggles established for the USA that "almost all financial savings done by households is used to pay for household capital formation - particularly, housing and consumer durables. On net, the household sector channels almost no financial savings to the enterprise sector. Conversely, almost all the capital formation done by enterprises is financed through enterprise savings - particularly, undistributed gross profits."
• Secondly, the transfer of funds to corporations may not result in increased output or economic expansion at all; given excess capacity, a low rate of return and/or lacklustre demand, corporations may not in fact invest those funds to expand output, and engage in asset speculation instead, to obtain property income that boosts shareholder returns. To illustrate, New Zealand's Finance Minister Michael Cullen stated that "My sense is that there are definite gains to be made, both economic and social, in increasing the savings level of New Zealanders and in encouraging diversification in assets away from the residential property market." This idea is based on a flawed understanding of capital formation, ignoring the real issue - which is that the flow of mortgage repayments by households to financial institutions is not being used to expand output and employment on a scale that could repay escalating private sector debts. In reality, more and more local income and assets are appropriated by foreign share-holders and creditors in North America, Europe, Australia and Japan. In December 2012, managed funds statistics compiled by the NZ Reserve Bank indicated that New Zealanders have 49.8% of their KiwiSaver money invested overseas. These managed fund figures include capital contributions, capital gains and losses and dividends and interest received.

The concept of "household saving" must itself also be looked at critically, since a lot of this "saving" in reality consists precisely of investing in housing, which, given low interest rates and rising real estate prices, yields a better return than if you kept your money in the bank (or, in some cases, if you invested in shares). In other words, a mortgage from a bank can effectively function as a "savings scheme" although officially it is not regarded as "savings".

Example of capital estimates

In the 2005 Analytical Perspectives document, an annex to the US Budget (Table 12-4: National Wealth, p. 201), an annual estimate is provided for the value of total tangible capital assets of the US, which doubled since 1980 (stated in trillions of dollars, at September 30, 2003):

Publicly owned physical assets:

 Structures and equipment . . . . . .  $5.6
 Federally owned or financed  . . .    $2.2
 Federally owned  . . . . . . . . . . .$1.0
 Grants to state and local govt . .  . $1.0
 Funded by state and local govt . . .  $3.3
 Other federal assets . . . . . . . .  $1.4

Subtotal (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6.9 trillion

Privately owned physical assets:

   Reproducible assets . . . . . . . . $28.7
   Residential structures. . . . . . . $12.4
   Nonresidential plant & equipment  . $11.8
   Inventories . . . . . . . . . . . . $1.5
   Consumer durables . . . . . . . . . $3.1
   Land  . . . . . . . . . . . . . . . $10.2

Subtotal (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $38.9 trillion

Education capital:

  federally financed . . . . . . . . . $1.4
  financed from other sources  . . . . $44.0

Subtotal (3) . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . $45.4 trillion

Research and development capital:

  federally financed R&D  . . . . . . . $1.1
  R&D financed from other sources   . . $1.7

Subtotal (4). . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .$2.9 trillion

TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $94.1 trillion

Net claims of foreigners on US . . . . . . . . . . . . . . . . . $4.2 trillion

Net wealth . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .$89.9 trillion

(Note: these data obviously do not include financial assets, such as estimated by the McKinsey Quarterly, only "tangible" assets in US territory. The total value of marketable financial assets in the USA was estimated in 2007 at about US$46 trillion. This total obviously does not include assets, deposits and reserves that are not traded. The data series on national wealth provided in the budget annex were discontinued by the administration of President Barack Obama).

National accounts

From Wikipedia, the free encyclopedia

National accounts or national account systems (NAS) are the implementation of complete and consistent accounting techniques for measuring the economic activity of a nation. These include detailed underlying measures that rely on double-entry accounting. By design, such accounting makes the totals on both sides of an account equal even though they each measure different characteristics, for example production and the income from it. As a method, the subject is termed national accounting or, more generally, social accounting. Stated otherwise, national accounts as systems may be distinguished from the economic data associated with those systems. While sharing many common principles with business accounting, national accounts are based on economic concepts. One conceptual construct for representing flows of all economic transactions that take place in an economy is a social accounting matrix with accounts in each respective row-column entry.

National accounting has developed in tandem with macroeconomics from the 1930s with its relation of aggregate demand to total output through interaction of such broad expenditure categories as consumption and investment. Economic data from national accounts are also used for empirical analysis of economic growth and development.

Scope

National accounts broadly present output, expenditure, and income activities of the economic actors (households, corporations, government) in an economy, including their relations with other countries' economies, and their wealth (net worth). They present both flows (measured but it is over a period) and stocks (measured at the end of a period), ensuring that the flows are reconciled with the stocks. As to flows, the national income and product accounts (in U.S. terminology) provide estimates for the money value of income and output per year or quarter, including GDP. As to stocks, the 'capital accounts' are a balance-sheet approach that has assets on one side (including values of land, the capital stock, and financial assets) and liabilities and net worth on the other, measured as of the end of the accounting period. National accounts also include measures of the changes in assets, liabilities, and net worth per accounting period. These may refer to flow of funds accounts or, again, capital accounts.

There are a number of aggregate measures in the national accounts, notably including gross domestic product or GDP, perhaps the most widely cited measure of aggregate economic activity. Ways of breaking down GDP include as types of income (wages, profits, etc.) or expenditure (consumption, investment/saving, etc.). Measures of these are examples of macro-economic data. Such aggregate measures and their change over time are generally of strongest interest to economic policymakers, although the detailed national accounts contain a source of information for economic analysis, for example in the input-output tables which show how industries interact with each other in the production process.

National accounts can be presented in nominal or real amounts, with real amounts adjusted to remove the effects of price changes over time. A corresponding price index can also be derived from national output. Rates of change of the price level and output may also be of interest. An inflation rate (growth rate of the price level) may be calculated for national output or its expenditure components. Economic growth rates (most commonly the growth rate of GDP) are generally measured in real (constant-price) terms. One use of economic-growth data from the national accounts is in growth accounting across longer periods of time for a country or across to estimate different sources of growth, whether from growth of factor inputs or technological change.

The accounts are derived from a wide variety of statistical source data including surveys, administrative and census data, and regulatory data, which are integrated and harmonized in the conceptual framework. They are usually compiled by national statistical offices and/or central banks in each country, though this is not always the case, and may be released on both an annual and (less detailed) quarterly frequency. Practical issues include inaccuracies from differences between economic and accounting methodologies, lack of controlled experiments on quality of data from diverse sources, and measurement of intangibles and services of the banking and financial sectors.

Two developments relevant to the national accounts since the 1980s include the following. Generational accounting is a method for measuring redistribution of lifetime tax burdens across generations from social insurance, including social security and social health insurance. It has been proposed as a better guide to the sustainability of a fiscal policy than budget deficits, which reflect only taxes minus spending in the current year. Environmental or green national accounting is the method of valuing environmental assets, which are usually not counted in measuring national wealth, in part due to the difficulty of valuing them. The method has been proposed as an alternative to an implied zero valuation of environmental assets and as a way of measuring the sustainability of welfare levels in the presence of environmental degradation.

Macroeconomic data not derived from the national accounts are also of wide interest, for example some cost-of-living indexes, the unemployment rate, and the labor force participation rate. In some cases, a national-accounts counterpart of these may be estimated, such as a price index computed from the personal consumption expenditures and the GDP gap (the difference between observed GDP and potential GDP).

Main elements

The presentation of national accounts data may vary by country (commonly, aggregate measures are given greatest prominence), however the main national accounts include the following accounts for the economy as a whole and its main economic actors.

• Current accounts:

production accounts which record the value of domestic output and the goods and services used up in producing that output. The balancing item of the accounts is value added, which is equal to GDP when expressed for the whole economy at market prices and in gross terms;

income accounts, which show primary and secondary income flows - both the income generated in production (e.g. wages and salaries) and distributive income flows (predominantly the redistributive effects of government taxes and social benefit payments). The balancing item of the accounts is disposable income ("National Income" when measured for the whole economy);

expenditure accounts, which show how disposable income is either consumed or saved. The balancing item of these accounts is saving.

• Capital accounts, which record the net accumulation, as the result of transactions, of non-financial assets; and the financing, by way of saving and capital transfers, of the accumulation. Net lending/borrowing is the balancing item for these accounts
• Financial accounts, which show the net acquisition of financial assets and the net incurrence of liabilities. The balance on these accounts is the net change in financial position.
• Balance sheets, which record the stock of assets, both financial and non-financial, and liabilities at a particular point in time. Net worth is the balance from the balance sheets (United Nations, 1993).

The accounts may be measured as gross or net of consumption of fixed capital (a concept in national accounts similar to depreciation in business accounts).

Notably absent from these components, however, is unpaid work, because its value is not included in any of the aforementioned categories of accounts, just as it is not included in calculating gross domestic product (GDP). An Australian study has shown the value of this uncounted work to be approximately 50% of GDP, making its exclusion rather significant. As GDP is tied closely to the national accounts system, this may lead to a distorted view of national accounts. Because national accounts are widely used by governmental policy-makers in implementing controllable economic agendas, some analysts have advocated for either a change in the makeup of national accounts or adjustments in the formulation of public policy.

History

The original motivation for the development of national accounts and the systematic measurement of employment was the need for accurate measures of aggregate economic activity. This was made more pressing by the Great Depression and as a basis for Keynesian macroeconomic stabilisation policy and wartime economic planning. The first efforts to develop such measures were undertaken in the late 1920s and 1930s, notably by Colin Clark and Simon Kuznets. Kuznets building on a project that was underway https://www.nber.org/system/files/chapters/c4231/c4231.pdf, Lillian Epstein had been involved in earlier studies. Richard Stone of the U.K. led later contributions during World War II and thereafter. The first formal national accounts were published by the United States in 1947. Many European countries followed shortly thereafter, and the United Nations published A System of National Accounts and Supporting Tables in 1952. International standards for national accounting are defined by the United Nations System of National Accounts, with the most recent version released for 2008.

Even before that in early 1920s there were national economic accounts tables. One of such systems was called Balance of national economy and was used in USSR and other socialistic countries to measure the efficiency of socialistic production.

In Europe, the worldwide System of National Accounts has been adapted in the European System of Accounts (ESA), which is applied by members of the European Union and many other European countries. Research on the subject continues from its beginnings through today.