Last time, I laid out my roadmap for describing my vision for the future of the economy. Now, again awaiting an algorithm’s end, I take the first step.
Today’s topic is simple – “what is an economy?”
Whether you’ve studied economics or not, (and I never have in any academic setting), that is a tricky question.
To some, the economy is “the intersection of supply and demand.” To others, it’s what falls out of comically complex equation like these. To the dictionary, it’s:
3. the management of the resources of a community, country, etc., especially with a view to its productivity.
4. the prosperity or earnings of a place.
My more modest proposal – “the economy is everything.”
Or, less dramatically, everything (even potentially) useful to human life collectively constitutes “the economy.”
Some examples, in order of increasing controversy:
Economy:
Not Economy:
As I’ll explain more clearly in subsequent posts, it’s significantly more cogent to include immaterial “objects” like interpersonal relationships, human knowledge, or natural beauty in our definition of “economy”.
Every useful thing, whether material or immaterial, can then be labeled a “resource”. The economy is merely the sum of all resources.
A brief aside – taking a broad view of the economy can be a dangerous game, and there are many very powerful ethical arguments to be made against viewing human relationships etc. through an economic lens. The core fear is that we will start treating human relationships with the sort of “non-ethical, anything-for-a-dollar” ethos that permeates the phrase “it’s not personal; it’s just business.” Instead, I am hopeful that we will instead do the reverse and allow human decency to seep back into traditional economics.
Now, one more step. The size of the whole economy is much less important than prosperity, which is the sum of all resources divided by the number of people utilizing those resources (i.e. Sweden is a very prosperous country, but if we divided the wealth of Sweden across the population of India, the resulting country would not be very rich at all.)
Good economic policy should have a single-minded focus on increasing prosperity (properly conceived, so that we aren’t bulldozing geysers to build factories.)
But how exactly do we increase prosperity? Tune in next time…
P.S. It makes me smile that “bulldozing geysers” formerly had no Google hits.