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Unity of knowledge versus Kantsheteronomy with a reference

to the problem of money, financeand real economy relations in a

new global financial architectureMasudul Alam Choudhury

College of Commerce and Economics, Sultan Qaboos University,Muscat, Sultanate of Oman and

Trisakti University, Jakarta, Indonesia

Abstract

Purpose The paper aims to offer a new perspective casting original light on the foundationalsocio-scientificargumentation premised on the application of the epistemology of unity of knowledge acrosscontrasting shades of reasoning, to the problem of religion, science and society. Kantian epistemologicalreasoning is questioned within this argumentation. The specific case of money, finance and real economy istreated in the context of the epistemology of unity of knowledge contra Kantian problem of heteronomy.

Design/methodology/approach The comparative study of received literature in the history ofepistemological thinking is applied to the issue of universality and uniqueness of theory and itsapplication in the learning dynamics between organically complementary relations, called circularcausation, to the ethical interdependence between money, finance and the real economy. The goal is toattain social and economic sustainability.

Findings A new epistemological outlook in occidental sciences is needed to repair its intrinsic

dualism. Kantian thinking is instrumental in this structural flaw. Unity of divine knowledge ascomprehended by functional ontological formalism in the deepest of scientific terms compromises theuniversal and unique alternative in everything. This claim has been formalised.

Research limitations/implications This is a theoretical exploration.

Practical implications Important global implications of the need for a new outlook of unitybetween monetary, financial and real economic variables are presented within the contrastingepistemological argumentations. The direction of such money-real economy reform in the light ofIslamic economics and finance is pointed out.

Originality/value This is an original conceptual paper, whose content argued out in rigorousscientific language of topological mathematics aims at showing the link between the epistemology ofunity of knowledge and the world-systems. The same is impossible in the Kantian worldview.

Keywords Epistemology, Economics, Finance, Philosophy, Sciences

Paper type Research paper

IntroductionNeo-liberal economic and social thought has for long now been influenced by a scientificpursuit of dichotomous realities (Holton, 1992). This approach spells out the assumptionsupon which all of economic and social argumentation is based. They are namely,

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competition, full-information, perfect foresight, consumer preferences and productionmenus as datum, and wherewithal, the fundamental axiom of scarcity of resources andeconomic rationality, and scientific rationalism in all of social inquiry. The end picture ofhuman behavior and the social world depicted by the structure of such assumptions

taken up ensemble is that of a world-system competing for scarce resources. This state ofaffairs defines the landmark of methodological individualism and self-interest (Minogue,1963).

Yet the dichotomous nature of economic distribution and use of resources, and thecompetition nature of social ordering are neither the perceived nor the desired goals ofhuman well-being. The true condition of sharing of wealth, income and outputs, andthe complementing of resources are found to be the accepted modes of the social order.Examples here are co-financing of projects and the goals of objective economicglobalization (Dunning, 2004).

The idea of pervasive complementarities between possibilities in the economic andsocial worlds is a vast one. It has its deep scientific implications. The principle ofextensive complementarities invokes agent-agent specific and agent-principal specific

codetermination of output and resources. It also implicates organic unification byinteraction, integration and evolutionary learning between the underlying variables inthe system of analytical equations defining contracts between the variables and theirrepresentative agents. This is the idea of strong interaction used by Smith (1992), andis a concept contrary to social Darwinism. The latter concept underlies the neo-liberalassumptions, axioms and dichotomous relations, despite its scientific nicety.

ObjectiveIn this paper, we will argue that the heritages of the two perspectives of economy andsociety owe to epistemological origins carried through rational developments. Thus, theneo-liberal differentiated economy and society and the interactively embedded ones by

organic complementarities between the variables and agencies of these human domains,arise from their different epistemological origins. In this paper, we will argue that in thehistory of science and rationalism, and the impact of this felt on the development ofneo-liberalism, shares with the Kantian idea of heteronomy. Heteronomy is the problemof failure in synthesizing the relational order of cause and effect. Kants rationalismplayed a significant role in the neo-liberal development.

We will then go on to an alternative way of explaining the learning paradigm ofcircular causality embedded in the organic relations between economy, society andethical possibilities. Our application to such contrasting ideas will be to examine theeconomy and society unifying linkages in terms of money, finance and the real economycomplementarities. Here, the Kantian problem of heteronomy and its alternative inpervasive systemic complementarities as two opposing epistemologies will be examined.

Some definitionsWe define the social perspective of financial economy in relation to the endogenousethical value of the financial portfolio. Endogenous ethical values are induced into ourchoices by the text of laws and the resulting nature of selection of the social well-being.The social well-being function is defined as the criterion for estimating the degree ofunity of knowledge and its application gained in the study of specific issues and problemsin the light of the primal ethical induction arising from an epistemological reference.

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The emanation of social choices is from the text of moral laws. Such morally (ethically)induced social choices influence the formation of human preferences. Therefore, such lawsare universally and uniquely acceptable to ethical forms of social behavior everywhere.Within this social implication is the induction of the value-loaded individual preferences.

The ethically induced preferences are then collectively aggregated in complex ways toform social preferences, social choices and the social well-being function.

The social well-being function is thus an evaluative criterion that is premised on theprecept of universality and uniqueness of the epistemology of unity of knowledge in itsrelation with the unity of the world-system. Within the world-system, we will particularizeour focus on financial portfolio selection. The resulting formalism is an undertaking inanalytical ethics. About such analytical ethical methodology, Edel (1970, p. 289)writes (edited):

The EP (existentialist perspective of an ethical theory) of a given ethical theory is its view ofthe world and its properties, mans nature and condition, insofar as these enters into itsunderstanding of moral processes and moral judgments.

The methodological approach we will suggest in addressing the above-mentionedpoints in terms of the analytical EP approach is a combination of what Edelprescribes as the analytical approach, causal-explanatory approaches and evaluativeapproaches. The analytical method in this paper takes the form of theorems. These arepresented below in a discursive style.

I. Theorem 1: the universal EP is derived and formalised in the functionalontological form in reference to a meta-epistemological foundationCategories of epistemologically derived knowledgeThe importance here is to note the definition of epistemology, knowledge, and thefunctional ontological effects of formalised functions. Knowledge essentially means

the discerning and differentiating power of Truth over Falsehood. In between thesecategories is also indeterminateness of knowledge that characterizes murky areas ofhuman experience between Truth and Falsehood. The fact of the matter is that in mostworldly matters we have a slight understanding of Truth and Falsehood, if theseprecepts are rendered to rationalistic thinking. If rationalism is made the determiningepistemology of what we humanly perceive as Truth and Falsehood, then such anepistemology has no social convergence in most cases concerning worldly matters.Institutions of law, courts, democracy and cultural acceptances, merely enforce atime-honored socio-cultural development of norms over historical time.

But a conscious understanding of facts, and the critical evaluation of possibilities,invokes human consciousness. The epistemological origin of human consciousness insocial determination and its continuance cannot be rendered to the whims of variegated

rationalistic ideas. Instead, there must be an epistemologically determined commonlyacceptable idea for all everywhere. Such is also the principle underlying global ethics(IMF, 1995).

Thus, the determination of Truth and Falsehood takes up an epistemological basis ofunderstanding what is meant by the precepts of universality and uniqueness. Thereby,the indeterminate concepts that lie in between humanly best determinations of Truthand Falsehood are subjected to the incidence of knowledge. That is, as the learningbased on organic unity of knowledge and the world-system grows, individuals and

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society sharpen their better acquired knowledge of Truth and Falsehood. Thereby, theindeterminate domain between Truth and Falsehood fades away into a clear dividebetween these categories of knowledge and de-knowledge, respectively.

Ultimately therefore, the growth of knowledge premised on the epistemology of

unity of knowledge and the world-system, deciphers what is Truth and Falsehood withincreasing levels of consciousness. Yet the progress of such learning according to theevolutionary epistemology being non-depreciative, incessant and undiminished, ourprogress towards the perfect state of acquiring Truth and Falsehood is never perfectlysettled in the temporal order of being and becoming.

QueriesWe now categorize the levels of human flight of consciousness towards acquiringincreasing deciphering of Truth and Falsehood, and consequently, the disappearance ofthe indeterminate domain of knowledge-murkiness. Towards understanding thecausality between epistemology, knowledge, Truth and Falsehood and the learning

towards these in the human realm, we raise the following questions: what is the nature ofthe fundamental, i.e. meta-epistemology referred to here? What the meaning of knowledgeis as derived from the meta-epistemology? What are the derived meanings of Truth,Falsehood and indeterminateness of knowledge as derived from the epistemological core?What are the meanings of universality and uniqueness in reference to the meanings ofTruth and Falsehood arising from the meta-epistemological core?

Truth and FalsehoodThe fundamental premise or meta-epistemology is the reference for discerningbetween Truth and Falsehood on the basis of unity of knowledge as themeta-epistemological core. Thus, the meta-epistemology comprises the text of laws,

instruments and social arrangements that together enable unity of knowledge andorganic unity in reasoning, artifacts and relations between agencies and variables toprevail in all issues of the world-system. Likewise, the meta-epistemologicalfoundation determines the nature and functions of Falsehood simultaneously withthose of Truth. The functional or engineering ontology (Gruber, 1993)[2] of thisepistemological origin comprises the mapping of the laws, instruments and socialarrangements onto specific problems and issues of our real world-system.

The result of this analytical approach first is the formulation of such a body ofinformation derived from laws, instruments and social arrangements, and organizesthem into functional edicts. The second phase is the analytical construction of ways ofinterrelating the edicts and their representative variables so as to measure organicunity of knowledge between them. Third, such an empirical estimation of the

functional ontological forms is done by quantitative and discursive methods. This iswhere the social well-being function as the objective criterion for the estimation of thedegree of unity of knowledge as gained in the analytical system is determined. Themethod is to simulate the social well-being function across phases of learning in respectof circular causation between the representative variables and reconstructed relationsout of normative meta-epistemological directions (expression (1)).

Truth then is the state of unity of knowledge as epistemologically established,conjoint with its impact on the unity of the world-system via the medium of the laws,

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instruments and social arrangements that together enable such organic unity ofknowledge to take up functional ontological forms invoking logical formalism.

Falsehood is differentiation of the artifacts, variables and relations that come aboutvia such laws, instruments and social arrangements. They cause differentiation as

opposed to organic unity. Rationalism and social Darwinism are two cases of this state,where they are based on methodological individualism, differentiation by means ofconflict and competition, or by initial limited affinity but parting eventually intoindependence and differentiation (Primavesi, 2000).

Indeterminate knowledgeIndeterminateness is the murky area between Truth and Falsehood due to the fact thatknowledge is progressive along evolutionary epistemology towards increasinglyperfecting the knowledge of Truth and Falsehood as opposite kinds in the limiting case.The path of evolutionary epistemology creating unity of knowledge in the world-systems,and thus differentiating this from the nature of Falsehood, conveys the meaning oflearning by interaction leading to integration (conscious convergence or organic unity),and these two states followed by creative evolution of similar reasoning and individualand social actions and responses that establish causality (expression (1)).

UniversalityThe precept of universality is the meta-epistemological, conceptual andmethodological state of pervasiveness of the differentiated meanings of Truth andFalsehood. This certainty is to be proven across the broadest range of issues andproblems.The knowledge-induced socio-scientific fields in such a case transcend economics, society,science and philosophy. Since the meta-epistemological foundation leads into a functionalontological formulation of relations of organic unity of knowledge and its unificationconsequences in the world-system, therefore, the epistemology of Truth is contrary to the

differentiated methods of Falsehood.Yet the emanating systems in the two cases are empirically viable and conceptually

explainable by the logical formalism of the meta-epistemological approach. The meta-epistemological foundation thus explains both Truth and Falsehood simultaneously.Contrarily, the epistemologies of Truth and Falsehood by themselves alone cannot explainunity of knowledge and differentiation, simultaneously. In other words, in this separatedstate of the two categories there is no comparison to evaluate one against the other,morally, ethically and materially.

Universality and uniquenessThe above-mentioned attributes of knowledge together convey the meaning ofuniqueness within universality. The two go together.

The super-encompassing knowledge domain that universally and uniquely explainsTruth, Falsehood and the indeterminate is the meta-epistemology for comprehendingsimultaneously what is Truth and Falsehood. The meta-epistemology is the penultimatefoundation of knowledge in this sense of its universality. Hence it self-references.Self-referencing is the attribute of universality and uniqueness (Choudhury and Zaman,2009).

Finally, we also note that since meta-epistemology establishes the universality anduniqueness by assigning the definitions of Truth, Falsehood and indeterminateness,

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therefore, any complex relationship in each of these domains defined on the basis of thismeta-epistemology, with the text of laws, instruments and social arrangements along thelearning path of evolutionary interaction and integration, is a representation of unity ofknowledge in the world-system. The functional ontology of the generic world-system

induced by unity of knowledge brings out such unification consequences.

Theorem 2: self-referencing is congruent with the attributes of universalityand uniqueness of the meta-epistemology of unity of knowledgeSelf-referencing as a scientific methodology that was investigated extensively by Godel(1965) refers to the irreducibility of the penultimate axiom, which is the epistemologicalcore of unity of knowledge, and its differentiating characterization of Falsehood in thearea of rationalistic tendencies. Self-referencing cannot take place in rationalism, andhence, in any of its derivatives. Examples of the latter case are neo-liberalism and socialDarwinism. This is because the rationalistic origins of these doctrines survive in

everlasting and continuous falsification and conjecture, as exemplified by Poppers(1998) conjectural universe. Another example of the same kind of randomness ofconflicting epistemologies in social inquiry is Marxs over-determination problem(Carchedi, 1991). In this case, a plethora of theoretical constructs arise from competingepistemological origins, just as divergent intellectual contests create competing socialscenarios. Marxs Social Model was thus a disequilibrium model of all such conflictsbetween different social agents and ideas. Consequently, labor and capital foreverremained opposed to each other in Marxs social and economic study of alienation andsurplus value.

But because the meta-epistemology explains the universe in the framework of organicunity while at the same it studies the opposite world-system of social differentiation andrationalism, therefore, there is place for self-referencing of eachof these sub-systems in thismethodology. In other words, according to the self-referencing theorem, the contrastingepistemologies of Truth and Falsehood segregate the texts of laws, instruments and socialarrangement oppositely between the categories of Truth and Falsehood. Hence Truthself-references; Falsehood self-references. The indeterminate domain of knowledge is atemporary phenomenon. As knowledge derived from the meta-epistemology advances thedifferentiated recognition of Truth and Falsehood, the indeterminate event is finallyabsorbed by either of these two, as the final determination may be. The deciphering in thiscontinuous learning dynamics is event-specific, that is based on specificity of issues andproblems wholly comprising everything in the world-system.

A consequentialist socio-scientific extension of the EP formalismIn the resulting socio-scientific system, thereis a one-to-one relationship between knowledgeformation and its socio-scientific variables that are induced by the knowledge-flows.Likewise, this is true of de-knowledge-flows characterizing Falsehood. Note here thatwe associate all knowledge-flows with the Truth sub-set of the meta-epistemology.We associate all contrary kinds of knowledge with the Falsehood sub-set of themeta-epistemology and refer to it as de-knowledge. Nowby a simple notation we write theformal expression (1):

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V!Su! xu! {sets of circular relations! social evaluation! recall V!S

between {u;xu} ! continue

Meta-epistemology world-system social evaluation evolutionary processe

1

The bold variable in expression (1) denotes a vector of variables that are complementary toeach other as the result of epistemology of unity of knowledge and its unification impact onthe artifacts and variables of the problem under study.

In economics, and finance, we can denote x(u) by the variables for money (x1(u)), andreal economy (x2(u)) {u} here denotes the knowledge-flows involving text, instrumentsand social arrangements that arise from meta-epistemology and establish unity ofrelations via the circular flows of causal relations between (x1(u)) and (x2(u)). Thenet-worth of the analytical system then is to increase the level of well-being as measuredby our earlier mentioned simulated social well-being function, subject to circular causationbetween the included variables. The circular interrelationships between the variablesrepresent the gained social reconstruction of the system to attain complementarities

between the variables. This is the sign of the level of unity of knowledge gained betweenthe variables of the problem under study.

But the same set of causal relations, first, yields estimates of the prevalent forms ofrelationships in the economy at large. Then the reconstruction of the estimated forms isdone and used to implicate the social forms that are guided by the norms of unity ofknowledge. If the (x1(u)) and (x2(u)) values are also vectors, then we have extendedcircular causation interrelations signifying the positivistic picture of such circularcausation relations, leading thereafter, to social reconstruction in the light of unity ofknowledge. The latter case is justified by the complementarities that are normativelystructured between the vector-variables.

The example is ofx1 as a vector of money and financial variables, x2 as the vectorof real-economy variables, both being induced by the knowledge of organizing the

economy along lines of organic unification between the monetary sector, financialinstruments and the real-economy. As knowledge-flows that are derived from theTruth sub-system of the meta-epistemology increase, systemic unificationintensifies.

Likewise, any positive functional transformation defined on the variables is alsocomplemented by the same kind of epistemological effect. The relationships between thevariables and their monotonic positive transformations are the functional ontologicalforms caused by the meta-epistemology denoted by [V! S] in the string relation (1).Because of the positive monotonic transformation of the uniquely knowledge-inducedvariables and their transformations, this implies the existence of a learned equilibriumat any phase of learning as signified by the recalling and continuation of evolutionarylearning processes in expression (1). In this case, we can derive an extended version of

Brouwer and Kakutanis Fixed Point Theorems (Nikaido, 1989) for open spaces oflearning behavior in systemic unification of knowledge between the variables and theirmonotonic positive transformations (Choudhury, 1993).

Generalizing the formalism of universality to everythingThe above-mentioned methodology is consistent and applicable to the broadest categoryof socio-scientific problems within organically unified domains of relationships. Thus,the precepts of universality and uniqueness in their analytical sense are shown by first

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studying the prevalent differentiated domains, as in neo-liberalism and rationalism. Aswell as now the same methodology can be used to study the organically unified andinterrelated learning domains of pervasive complementarities. Complementary statesand forms of the analytical system are equivalent to the participative relations caused

by unifying variable-linkages and appropriate rules to attain unity in this particularissue of the examined world-system. This state is also the primal property of Truth.Above all this is the overarching existence of the meta-epistemology. It determinessimultaneously Truth (unity of knowledge) and Falsehood (differentiation ofknowledge) along there, respectively, differentiated paths of systemic evolution.

II. The impossibility of universality and uniqueness in Kantianrationalism implications for ethics and economicsInvoking Kant on the question of universality and uniqueness, Carnap (1966) had anincisive critique of Kants divided worlds between noumena and phenomena, and

likewise, between a priori and a posteriori, pure reason and practical reason. This is theessential nature of dualism between deductive and inductive reasoning. Carnap referredto it as the problem of lack of synthesis in Kants reasoning for the sciences andphilosophy. This problem of dualism contrasts with Imam Ghazzalis Islamic [IMAM](1997) thought (Marmura, 1997), which was centered on the unified perception ofknowledge and the world-system reflected in inner and outer realities as an integratedphenomena. The theme is explained by Choudhury (1997) in studying Kants problem ofheteronomy.

Kant (1949, p. 25) wrote on such a dichotomy of knowledge that influenced all hissocio-scientific thought and penetrated Western scholarship:

This, then, is a question which at least calls for closer examination, and does not permit anyoff-hand answer: whether there is any knowledge that is thus independent of experience andeven of all impressions of the senses. Such knowledge is entitled a priori, and is distinguishedfrom the empirical, which has its sources a posteriori, that is, in experience.

The resulting lack of unity of knowledge between the two kinds of reason causes theimpossibility of unifying knowledge between God, whose law is in the abode of a priorireason, and the world that receives the divine law in the a posteriori domain. Thus,there comes about the impossibility of embedding God as the functional unity in all ofthe Western worldview. This parting reality presents itself as the problem of duality inscientific thinking.

In such a Kantian manifestation, the circular causation and continuity methodologyof the unity of knowledge that carries unity by the creatively dynamic interrelationshipsamong epistemological, ontological and ontic (evidential) forms could not be realized

either in Kantian epistemology or in latter days occidental thinking. Such animpossibility of unifying a priori and a posteriori categories of knowledge becomes thepermanent methodological character of occidental thought. Thus, Kants epistemologydoes not present unity of knowledge encompassing mind and matter. The resultingsocio-scientific order that overarches between mind and matter remains devoid of anepistemology of causal linkage between the two in Kant. This is the problem of Kantianheteronomy. This state of incompleteness of Kants epistemology explains Carnapscriticism of Kantian failure in knowledge synthesis.

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The consequence of the pervasive lack of unity of knowledge and the resultingabsence of a circular causation and continuity worldview resulted in permanentlydichotomizing the methods of deductive knowledge, which marked the epistemologicalorigin of Kants thought from inductive knowledge, which was otherwise

Humes (1992). Likewise, the normative and the positive aspects of knowledgeremained dichotomized. In the end, by both cause and effect of such relations, religion andscience became permanently divorced from each other (Dampier, 1961). Neither religionnor science could bequeath to the socio-scientific world-system a meta-epistemologicalholism.

In conclusion to this section, we note that there neither exists a methodology norinstruments, whereby the epistemological need for unity of knowledge and theworld-system can be brought together in Kant and the classics and neo-classics. Yetthis problem of unification applies to the special case of social economics and finance intodays volatile world-system where organically unifying relationships have beenruptured between money, financial and the real economy. This is a topic we willaddress briefly. The idea is extracted from Choudhury (2009a, b).

According to the earlier -stated theorem on universality and uniqueness ofthe episteme of unity of knowledge, unity of the world-systems, and thereby, thedifferentiation between Truth and Falsehood, unification between money, finance andreal economy is rationalized in the following way.

In an extensive program of privatization, while being cognitive of markets for thegood and productive things of life in exchange and trade, commercial banks come toacquire the power of mobilizing the full thrust of savings into the real economythrough the medium of participatory financial instruments. Such financial instrumentsthat lubricate the flow of resources through commercial banks into real assets in themarket economy must logically liberate reserve accumulation and savings from theunproductive accumulative effect of interest-rate. Contrarily, capital accumulations,

non-inflationary economic growth and market transformation in the learned choicesof the good things of life the Rawlsian primaries (Sen, 1989) while filtering out thesocially harmful exchanges (Korten, 1995) are realized by productive returns in thereal economy.

An example of such a development transformation in an extensively participatoryeconomic and financial framework is the dynamic basic-needs development regime.Within this regime is also the example of an evolutionary and path-dependentdevelopment future, as in Schumpeters creative destruction along the learningprocesses of the unifying organic relations. Here money, finance and the real economyunite together to share wealth and resources productively between them. Now moneyacts as a contravention of valuation; participatory financing instruments as the enablingway to fully mobilize resources through the banking sector; and the real economy is

where productivity in the good choices of life appears to attain sustainability of thelearning (participatory) system.

By the logical argumentation of such socio-economic transformation it becomesnecessary to reduce the rate of interest, and thus divert money from reserves and banksavings into spending in the real economy. The real economy with the regulation that isendogenously learned by participation between commercial bank functions, the centralbank regulation and supervision, and the real economy social choices, now increasinglymove away from the kind of segmentation that is otherwise entrenched in the economy in

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the presence of interest rates and the blockage of the flow of resources of moneyto the real economy through the medium of the productive resource-mobilizingfinancial instruments. Over all these relations prevails the need for organically unifyinglearning between the activities.

Kantian world-system with its differentiation between a priori and a posteriorianalysis, noumena and phenomena, pure reason and practical reason (Seidel, 1988)reflect the condition of separation of the monetary sector from the real economy. Thefinancial instruments, in the middle of this dichotomy, lose their participatory functiondue to the holding back of resource mobilization by the rate of financial interest in banksavings. Indeed, Keynes wondered about the predicament (Ventelou, 2005) withmarginal propensity to save as withdrawal from the income multiplier.

Figure 1 explains the above problem of Kantian differentiation both in respect ofepistemological questions of science and religion, and for the broken links between money,finance and real economy. Kants theoretical constructs, failing to apply to the organicneed for methodological synthesis in knowledge and reasoning, deny causality to prevail.Thus,the theorem of universality anduniqueness, which we have earlier formalised, and itfalls off in Kantian thought.

This formal inference is utterly destructive for modern socio-scientific reasoning.Consequently, the entire domain of the sciences has always viewed an isolated existenceof its own, separated from any endogenous theory of morality, ethics and sociality in it.Even when social Darwinism is invoked to explain process in scientific theory (Hull,1988), competition, conflict, methodological individualism and biological differentiationare found to fully color the organic relational domains. Now symbiosis in socio-scientificprocesses is meant to explain instead, the continuum of endogenously embeddedforces of competition, conflict, methodological individualism and differentiation(Holton, 1992).

The result of Kantian dichotomy and problem of lack of synthesis, that is

heteronomy in economics and finance, is resource scarcity. Kantian rationalism isnow seen to enhance the other systemic constrictions. Learning cannot be extensivelyrealized, as it should be by its endogenous consequence of sustainability (Primavesi,2000). Thus, there is the pressing epistemological need to examine, study and

Figure 1.Socioeconomic effect of the

problem of Kantianheteronomy

A priori

kantian

noumena

pure reason

Heteronomy

the problem of

lack of synthesis

A posteriori

kantian

phenomena

practical reasonVoid reality

God World-systemImpossibility

Money Void relation for

mapping money and

finance in the presence

of interest rate and

thus the absence of

impossible

productive relations

Real economy

productive

relations with

money, finance

and real economy

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implement a new historical perspective based on the endogenous nature of unity ofknowledge and of the world-system (Hubner, 1985).

A conceptual social-economy result according to the learning methodology

of unity of knowledge contra Kantian heteronomy: financialrisk-diversificationEvery point of choice and decision making according to the meta-epistemology of thelearning universe of unity of knowledge embodies a shifting form of the Bayesianprobabilistic field (Hogg and Craig, 1965). In it, perfect convergence to an embeddedequilibrium point is never possible. Only approximations exist due to the prevalence ofincomplete knowledge in the continuum of knowledge-flows, time and space dimensions(Choudhury, 2009a, b). This is also the implication of the evolutionary fixed-pointequilibriums occurring in continuum of knowledge, time and space dimensions.

As an example we ask: how is risk and uncertainty of financial occurrence of anevent denoted by (u,x(u)), measured in such a case?

Let the probability limit (plim) of an event in the random field of learning byinteraction, integration and evolution be denoted by, plim (u,x(u)) (u*,x *(u *)). Letthe intrinsic equilibrium of the learning system be denoted by (u* *,x * *(u* *)).Thereby, risk is denoted by the measured variance, Var(y 2 y *). But uncertainty ismeasured by Var(y 2 y * *) Var(y 2 y *) Var(y * 2 y * *) Risk anundetermined factor. Here, y ((u,x(u)).

The way to diversify the risk and uncertainty is to distribute it over shareholders inthe presence of risk and production diversifications. If the number of productiondiversification equals N, for which S shares are held per unit of N (thus product and riskdiversifications), then the total shares backing risk and uncertainty is S N. Theeffectiveness of such a joint force of production and risk diversifications between sharesS and production diversification N results in a positive function of resource mobilization.

As explained above, resource mobilization involves monetary transmission into the realeconomy through financial instruments that replace interest rates by trade-related onesin the good things of life, and are real assets that are in ownership at the time ofvaluation.

Now consider that f(y) CF/N . S, that is cash-flow CF generated per unit of sharecapital, N . S.

Consequently:

Varfy2 fy* 1=N : S2VarCF2 CF**

1=N : S2VarCF2 CF* VarCF* 2 CF** 2

Now as the valuation method learns increasingly with evolutionary u-values, which

is also exemplified by S and N increasing but finitely. Consequently, CF ! CF *.Thereby:

Varfy2 fy*! 1=N : S2:VarCF* 2 CF** . 0: 3

The result (3) is true no matter how small expression (3) may be under the force oflearning in unity of knowledge between the complementing money, finance and realeconomy interrelations. Effective risk and production diversifications have removedthe risk but not the undetermined uncertainty. Consequently, there is no pricing of

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measured risk, and undetermined uncertainty cannot be priced. Therefore, interestcannot exist on logical and ethical grounds.

In such a case, the law of unity of knowledge, bridging up the Kantian heteronomy,as explained in Figure 1, means that fallibility should always be included in financial

possibilities to avoid draconian market and psychological shocks that spread contagionpanic across financial and economic sectors globally.

Man is not the ultimate determiner of his destiny. God prevails over mankind withguidance and mercy in the face of errors and residual uncertainty that cannot beavoided. Thus, the benignity of the divine laws in Kants heteronomy is now replacedby the continuity of the divine laws across knowledge, time and space dimensions incontinuum. Thereby, the laws of the financial world in relation to the embeddedorganic unity between money and real economy is formulated as a new epistemologicaloutlook altogether.

Along similar lines writes Soros (1998, p. 4):

Because there is always a divergence between reality and our understanding of it, the gap

between the two, which I call the participants bias, is an important element in shaping thecourse of history. The concept of open society is based on the recognition of our fallibility.

We briefly note that in accordance with the Kantian implications on heteronomy ofFigure 1 regarding money, finance and real economy complementarities and circularcausality, there is no mechanism that can make the system of production and riskdiversifications learn adaptively into unity of knowledge. The Kantian implication ofheteronomy in this case is that although the a priori knowledge has its moralimperative, it remains causally disjoint from a posteriori reason and law. Hence themoral law, the instruments and social arrangements to bring about circular causationlinkages between the a priori and the a posteriori domains remain disjoint. No particularsubstantive theory of avoidance of interest and its replacement by participatory

financing instruments can be devised in the theory of money, finance and real economycircular causal and complementary linkages.In the end, we note that neither of expression (2) or (3) for production and risk

diversifications in the money, finance and real economy complementary linkages can beexplained by the application of Kantian heteronomy in this case. Such a social-economycase cannot be analyzed over the knowledge, time and space dimensions. The analysisreduces to the space-time dimensions alone, with knowledge being left exogenous andepistemologically imperfect in its state of heteronomy.

ConclusionIn conclusion, this paper has explained that the overarching meta-epistemology of a

theory of everything (Barrow, 1991) needs to answer the question of continuity in theknowledge, time and space dimensions. This approach to the epistemological inquirymust be able to decipher uniquely and universally the meanings of Truth and Falsehood.It must combine the a priori with the a posteriori reasoning by learning processesacross continuums of analytical and ontic formalisms in terms of complementarycircular causation between the variables and their underlying edicts. Such relationscomprise the functional ontological formalism that is necessary for explaining totalreality, and not be limited to particular ones or separable ones (Maxwell, 1962).

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The quest for the overarching meta-epistemology, which we have formalised in thisarticle, when applied to the state of the economy today, brings out certain structuralproblems of economic theory. According to the new meta-epistemology, the endogenousethical and learning dynamics of economic theory suggests that the dichotomies

between ethics and economics, between microeconomics and macroeconomics,and indeed, between religion and science were mistaken. But so also themicroeconomic foundation of macroeconomics is equally flawed. Within this field ofintellectual inquiry economic paradigms such as rational expectations hypothesis andgeneral equilibrium welfare economics are in problem. The central problem in all theseareas is the overly neoclassical or aggregate Keynesian or monetarist leaning.Neoclassical economic theory as a deductive reasoning has poor inductive power.Keynesianism (Dasgupta, 1987) and monetarism (Friedman, 1953) are based oninductive reasoning, and are thereby, removed from the ethical moorings of deductivereasoning. Thus, the two kinds of reasoning cannot connect by circular causality. Thiskind of methodology is of the Kantian genre reflecting heteronomy.

Such a differentiation between deductive and inductive reasoning, between the apriori and a posteriori reasoning has also invaded pure scientific theories. Thedifferentiation between relativity and quantum mechanics is the prominent evidence ofthe breach (Penrose, 1989). Likewise, in Poppers (1998) kind of conjectures and scientificrefutations, the silence on unity of knowledge between forms, entities and their relationshas caused loss of directions in the purpose of science. Husserl (1970) laments on such astate of moral emptiness in the pure physical sciences. Godels (Smullyan, 1992) rejectionof self-referencing according to the theorem of incompleteness of the arithmeticalsystem, which was a rejection of the claim of the finality of mathematical machinerygiven by Russell and Whitehead (1910-1913) in theirPrincipia Mathematica, is great. Butit is subject to questioning. Godels denial of self-referencing leaves out the theme ofunity of knowledge in the possibilities of the socio-scientific universality and uniqueness

by the self-referencing theorems (Choudhury and Zaman, 2009).Conclusively therefore, the occidental socio-scientific epistemology is bereft of the

overarching meta-epistemology of unity of knowledge and its impact on the organicallyunified world-system. Prevalent theories and their empirical and institutional pursuitscannot therefore succeed in analyzing and reconstructing the economic, financial andsocial worlds into a cohesively relational unity for the common human future.Sustainability of learning in such a system, remaining devoid of the overarchingorganic unity of relations, is denied.

Notes

1. Functional ontology is a formal concept of existence of factual relations (Gruber, 1993). Suchanalytical relations are formalized on the basis of the meta-epistemology and are rendered

amenable to estimation empirically. Thereafter the normative implications of socialreconstruction and social continuance follow by changes in the estimated forms implyingdevelopment of pertinent strategies, policies and rules.

2. As noted earlier in[1], engineering or functional ontology is the analytical way of establishingexistence and causation towards existence of real artifacts and logical categories.The analytical system so generated is known as logical formalism.

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Corresponding authorMasudul Alam Choudhury can be contacted at: masudc@squ.edu.om

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