Economy

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A people's or nation's economy is traditionally defined as its method for allocating scarce resources; who gets what, and when? There are a great many theories as to how to answer the question of allocation, from capitalist theories of supposedly meritocratic disbursement, to more egalitarian-based systems based on theoretical need such as socialism. Beyond the question of allocation, economic systems share some fundamental similarities.

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Scarcity and abundance

Of primary importance, an economy is traditionally framed in terms of its scarcity, not its abundance, and especially as this relates to the human race, not by any ecological or planetary measurement. To illustrate, breathable air, a necessary good, is not finite in meaningful terms, and hence has no price. It is readily available to all. It is abundant. Thus, as abundance increases, all things being equal, scarcity is reduced, and the economy should necessarily be smaller. It is not surprising that in many indigenous cultures where all imagined needs and wants could be met by available resources, that there was necessarily little or no economy. This is not the world we inhabit, obviously, as additional needs and wants are identified or manufactured to create a “larger” economy (and hence, an increase in perceived scarcity). The greater the economy, the greater the power and control of those who can fill the scarcity, be it perceived or legitimate.

Resource flows

Secondly, as a measure of the allocation of scarce resources, economic indicators tend to look only at flows, and to disregard stocks of wealth, especially those that escaped the original definition of a people's economy. Flows can often be increased dramatically in the short term to make the stock of supposed economic “wealth” appear to increase. Any resource used before it is naturally replenished is a drawdown of a people's true wealth, though scarcity has increased and the economy will be said to have “grown.” As one example among thousands, poisoning water through agricultural or resource extraction run-off makes fresh water scarce, leading to the need of the people to pay more for the scarce need. The extraction and the degradation has, in conventional terms, made the economy “grow,” but only by drawing down the people's long term stock of wealth, and by making an abundant resource scarce. For a metaphor, imagine a family that owns their home, but mortgages it and uses the money to buy huge quantities of junk food. Their health and wealth has declined, but their economy (as measured as a flow of money) has increased.

An economy cannot grow infinitely, as the amount of replenishable resources is limited. However, this does not mean that a people cannot live with all their needs and wants met. A just economy recognizes what these resources are, how much of each can be used, and determines how to distribute them in a fair and sustainable way. Since traditional definitions of economy rely on scarcity and fail to acknowledge resource limits, it is necessary to redefine what a given people's allocation system is.

Additional resources

See also

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Authors: Stephen & Rebekah Hren