I have studied economics through many books written by various economists but I was not satisfied for reason that it failed to answer some of my questions. After careful observation, I noted that economists who were interested in emphasizing a particular aspect favorable to them wrote most of the books. Adam smith was exception to that and so I began to rearrange findings of many of them whose books I had studied. In this posting, I want to give only my findings and shall not write anything about other economists to be brief. As we all know that this is a topic for a book. To understand corruption we should know difference in the two varying aspects of economic activity namely real economics and parasitic economics.

According to my understanding, there are only three basic types of economic activities. They are real economics, parasitic economics and third category I call intermediate economic activity for the reason that it, even though eats up sizable part from the real economics, is essential to support it but at the same time it could become parasitic when it exceeds the safe limits. That means intermediate economic activity is the bridge between the other two.

By definition Real Economics is that financial activity which contributes towards growth of economy of the state; and Parasitic Economics is that activity which exploits the assets created by real economical activity. And so it being a parasitic in its nature defined as parasitic economics. Parasitic economic activity eats up resources created by real economic activity and in the end makes it weak. There are advantages and disadvantages of these two economic activities. Advantage and disadvantage to the state are different from advantages and disadvantages to a person or group.

• Manufacturing (farming, processing and all creative activities come in this)

• Marketing in real value, sell and purchase

• Reasonable stocking

• Distribution

• Advertising

• Transport

• Research

• Consultation

• Education

• Information technology

• Internet activity

Following economic activities come under parasitic economics

• Gambling

• Speculation (dealing in notional values)

• Forward trading in notional values, stocks, shares and derivatives, hedge funds

• Unreasonable stocking (Hoarding)

• Prostitution and related work such as pimps

• Bootlegging, liquor bars

• Thieving (all stealing and cheating activities come in it)

• All other activities helping vices (unethical, immoral and criminal activities)

• Money laundering

• Black marketing

• Derivatives

• Races (horse etc.)

All parasitic economic activities are capable of being interrelated. That means person indulging in one parasitic activity is tempted to get involved in any other parasitic activity. We may say that indulging in parasitic economics is habit forming and may be related to some unknown mental disorder.

Following economic activities come under intermediate economic activity

• Professional Service activities such as commission agency,

• Investment in stocks and shares

By definition, real economics helps improve economics of the society and parasitic economics is that activity in economical ambiance which steals vital financial resource for non-productive activities. Just as a parasite plant grows on the host plant sucking it and growing at the expense of the host plant. That means we can call real economics as host economics to understand the interrelations between the three.

Today we do not see any attempt to treat these three economic activities separately. Most economists continue to treat them as if they are coherent economic activities. Albeit some of them do refer to parasitic activity with some doubts they nevertheless, do not attempt to reject that activity outright as unhealthy and greatly detrimental for the development of economic growth of the society. I also did not see anywhere any economist mentioning the activities of parasitic economics as parasitic, though that is bad for the society. This may be because parasitic activity has many advantages for the person/persons involved in it and writers of most economic books are trying to protect the interests of those groups, as they themselves are involved in them.

We know that host plant suffers due to overgrowth of a parasite on it and within a safe limit of growth that parasite may be tolerated; however, if that exceeds, parasite can destroy the host plant. Similarly, a parasite economics tolerated within some safe limit but all efforts are essential to control it in order to save the real economics. If not done, host (main) economics of the state can suffer showing effects such as recession and inflation of varying intensities. That means all parasitic economic activities within safe limit are also intermediate economic activities.

Characteristic differences in the two economics: -

1. Real economics grows according to the market forces; growth of parasite is manageable artificially by operators.

2. Real economics is natural and so not habit forming while parasite is habit forming in the sense one afflicted by it stays in it, pulling resources out of real economics causing whirlpool effect. This defect of parasitic economics helps it grow continuously.

3. Real economics is based on simple basic laws of economics using real values; while parasitic, involves mostly notional values requiring complicated mathematical formulas, to predict future values, making the jargon of economics vulgar. Today what they teach economics in education is mostly related with these superfluous laws making the subject unduly awkward. Albeit, this useless mathematics has given subject of economics an air of being some serious science, even though, economics is actually an art and not science in true sense.

4. Real economics is always a healthy activity while parasitic is considered as a disease when it exceeds the safe limit. Safe limit is very crucial and that is considered to be not more than 15% of the total economic activity of the state; however, this percentage is a subject of debate. We should understand that this percentage I am suggesting because of comparison of this phenomenon with that of plants, in case of plants 15% (maximum) overgrowth of parasite on the host plant is tolerable.

Relation between the two economic activities is controlled by the intermediate economic activity; so by proper legislative provisions controlling intermediate activity, state law can limit growth of parasitic activity effectively.

Now we shall see properties of real economics with a view to see advantages and disadvantages of first, then those of parasitic and then we shall compare them so that we will be able to understand why these economists, I call them lobbyists or vested interests, are trying to hide the truth. Advantages to state are marked in bracket (S) and for person or group of them (P)

Properties of Real economics, advantages: -

1. This activity actually adds to the wealth of the state and the individuals involved in it since it creates new and renewable assets. (S) (P)

2. Money invested it that returns with dividend when the activity is done properly. (S) (P)

3. Does not suck in, large funds to destabilize the monetary status of the economy of the state (S) (P)

4. Equitable distribution of assets amongst people is possible (S) (P)

5. Never can cause effects such as inflation and recession (S) (P)

Disadvantages: -

1. Over all growth, at any given time, is always slow at personal level.

2. Artificial finance manipulation is not easy as it is primarily dependent on real value market

3. Bull and bear positions are controlled by the market

Parasitic economics advantages: -

1. Huge profits are possible, (P)

2. At personal level, helps improve that person’s economic status if worked well in exceptionally short time (P)

3. Over all growth rate could be enhanced staggeringly by finance manipulations. This aspect charms most people and they are attracted to this, ultimately are stuck in it to the detriment of themselves and the state. (P)

4. Bull and bear positions can be predicted and manipulated cleverly (P)

5. Market activity is controllable (P)

Parasitic economics disadvantages: -

1. Does not create any new assets for the state

2. Does suck in, large funds to destabilize the monetary status of the real economy called, whirl pool effect

3. Activity does not add to state economy

4. Sucks away valuable finance required by the real economic activity

5. Creates effects such as inflation and recession

6. This activity is habit forming and so can demoralize society if spread to measure section of the people, like any other vice.

We see that in real economics all advantages benefit both State, persons equally while parasitic benefits only persons, and State suffers. All parasitic activities within safe limit are generally included as intermediate economic activity. Intermediate has all the advantages of real economic and parasitic activities and so state should support it with caution so that it does not exceed the safe limit.

Supporters of parasitic to justify it beyond this safe limit present apparent paradox. For that, they show that government earns revenue due to various parasitic activities; however, government is Not State. State interest benefits only when real economy improves. Very often government interest is mistaken for State interest but we should realize that state is different from a government that manages it; government is a public body or a private body depending upon what type of government is functioning; and so in that way revenue earning is the benefit of persons or group of person involved in that government. Quiet often government machinery misrepresents State interest as government interest and misguides people for their own benefit. In addition to that, when we rate the activities within safe limit by postulating intermediate economics as a valid activity, this excuse becomes redundant.

Possible control methods to keep the parasitic economics within safe limit, I postulate, are based on certain human needs. The controls I suggest are of two types namely, direct and indirect.

Direct methods: -

Taxation - we know, use of taxation method called ‘preventive taxation’ to control overgrowth of any parasitic activity for that any intermediate economic activity that exceeds the limit will pay some exorbitant tax, that way state administration can avoid overgrowth of parasitic activity.

Preference for real economics by law - use of low taxation called ‘incentive taxation’ to encourage real economics.

Licensing - this method often used to control overgrowth of any activity. To bring overgrowth of any intermediate economic activity so that it does not become parasitic, licensing method can be used.

Prohibition - banning such activity may be possible in case of some parasitic activities, there it can be of use more effectively than the other two mentioned previously.

Indirect methods: -

Moral education - educating people about danger of parasitic economic activity through moral classes at the school level may help but we see that parasitic activity benefits persons strongly and so desire to overlook needs of state, as against the personal benefit is always the measure problem in this regards.

As I have already noted that, this is a topic that merits a book to give full details to explain various topics coming under it. My intention of putting this article, giving the basics of economics in a different way than the traditional, on my blog is to bring to notice the difference in various economic activities to my readers. More will follow in time if need be. American terminology calls parasitic economic activity as Wall Street and real as Main Street.

A study of this difference is essential today because our present economic problems have their roots in the parasitic economic activities.

I invite you to visit my other blog if you are interested in stories.

Ashok Kothare’s Blog

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