Our current capitalistic economic system is one of acquisition. Its goal is to acquire capital in its many forms. Real estate, factories, patents, web companies, … and ultimately the one to rule them all: money. And all these assets are perceived to be scarce. If I want something I can’t allow you to have it too because there is not enough for the both of us. This creates unhealthy competition and a world where the ‘get as much profit as possible’ business model is king. If you can’t turn it into a business model that creates profit you’ll have a hard time getting it funded. And it doesn’t end there. You need to make more profit every year because otherwise your business will be branded as a failure. Grow, grow, grow! is the mantra of the day.
This mentality is costing lives, literally! Real, life saving projects like the one that wants to create cheap, paper based blood test devices to be used in developing countries get left in the dust because they are not profitable enough.
In a world where perceived scarcity runs the show and it’s all about collecting as much as possible, greed is the only outcome. And we all know how that pans out. It’s a destructive force that eats away at our naturally helpful nature. It even has a measurable effect on 3 year olds.
But it doesn’t have to be this way. We created this economic system, which means we can also change it.
The components of an economic system
An economic system, at its core, consists of goods and services that are traded. A monetary system is usually used to facilitate that trade.
Now I’m sure economists will say I am oversimplifying things and I’m sure they’re right if we want to talk about the full complexity of economic systems. But take away goods and services and you won’t have much of an economy left. The complexities of the economic system arise from the wants and needs that are associated with these goods and services, and the design of the monetary system if one is used.
An economy runs in a society. You need people to have economic activity, even if those people use computers and robots to perform that activity for them (think smart trading algorithms on Wall Street). Since it ultimately comes down to running a well functioning society through economic and other activities, we can look at which economic activity we need in order to have this well functioning society. In other words, which goods and services need to be passed around (traded) in order to keep everyone happy?
The primary goods are clean water, food and shelter. Without the first 2 we’d just die, without shelter life can get very harsh, depending on where you live.
There is no real shortage of either of these resources, yet we see people starve from hunger, die from a lack of clean water and then I’m not even mentioning the countless homeless people who are sleeping on the streets all over the world. Why? The answer is simple. Because those people don’t have enough access to money. If they had, it would open the doors to clean water, nutritious food and decent shelter. Now neo liberalists will claim these people just don’t work hard enough and if they would they’d be lifted out of poverty in no time. Nick Hanauer states it differently in his TED talk: luck is a major factor in your success.