“One must be prepared to be enlightened about oneself…and to act upon this enlightenment.”
– Nevin, 1989
Our objective is meaningfully to increase our practical ability to build a society and economy that allows individuals to Flourish.
But how to do this is not immediately obvious. If nothing else, the Great Financial Crisis, the subsequent five years of economic misery in developed countries (particularly Europe), and indeed the decline in middle class living standards in the US for 40 years all underscore how difficult a goal we pursue.
Our inability even to understand what we don’t know has been elegantly and inadvertently highlighted by one prominent macro-economist, who stated in 2005 that ‘we essentially understand macroeconomics now… this is a great achievement and triumph of modern economics.’
It is time not only to rebuild the way we think about the economy, but also to act meaningfully upon that thinking. To help structure this daunting journey, each article here addresses one or more Categories of economic thinking that correspond to the 4 Principles.
Understanding the issues embedded in each of these Categories gives us the insight – and courage – to build an economy that is much closer to delivering what we all know an economy should be delivering – a society that Flourishes.
The Categories are:
1. Management of the Economy and Public Policy – Above all, we aim to be practical. As Principle 1 states, Economics is an empirical discipline. This category explores specific policy options that will help us to build economies and societies in which more people Flourish. We believe that now should be the golden age for economics, as there are currently close to 200 nations in the global financial and economic system. Every one of these nations is exploring options for economic management, tax regimes, education systems, health systems, infrastructure development, and environmental and ecosystem management. We can find dozens of examples of how nations in diverse circumstances tackle these issues, giving a rich empirical view of what works and what doesn’t, but this view must be carefully constructed, as there are many confounding factors and – as we will learn from Systems Thinking – there is often a long lag between the implementation of a policy and its intended (or unintended) consequences.
2. Systems Thinking – The economy is a highly dynamic system in which every part depends on other parts. A system does not behave like its constituent parts, as is dramatically illustrated by recent attempts by Europe and the US to use budget reductions to address recession. While a household or company might effectively employ austerity to solve its economic challenges, this solution cannot scale up to the global economy, for obvious reasons – though not obvious to the proponents of universal austerity. The articles in the Systems Thinking category explore these issues in depth, paying particular attention to the complex dynamic effects that economic policies engender. Framed by eco-system thinking – the closest model we have to a complex economic system – the articles in Systems Thinking help us understand the need to work through the complex dynamic impact of economic policies and highlight the need for policy makers to pay attention to much more than market shares and industry concentration if they are to make sure an economy retains dynamism. The 2nd principle of economic reality states that The economy is a human construct and we can set the rules. Put simply, the task is to build an economic ecosystem that delivers the result we want – Flourishing. And to do this requires we understand deeply how a system works.
3. Social and Individual Objectives – Principle 3 states that the The [economic] rules we set – how we construct the economy – depends on what we are trying to accomplish. Unless we are explicit about what we want the economy to do for us as individuals and as a society, we cannot make it better. We employ Flourishing as the metric. However, we still need to explore in depth the relationship between Flourishing and more traditional economic metrics (such as GDP, inflation, and unemployment) and other important factors such as income distribution, education levels, and population health. And our chief focus will be to explore less well understood areas – such as creating the optimal environment for individual development and developing resiliency – that are nonetheless at the core of Flourishing. This category brings back to the centre of the debate discussions about what the economy is trying to accomplish: a defined purpose linked to the need for the economy to serve society and its people makes better economic management possible.
4. Realities About People – Principle 4 says that we need to take into account Realities about People to develop the best economic rules. The economy is constructed for people. So unless we understand thoroughly how people actually Flourish, and what conditions are required for them to Flourish, we will never design the economic policies that achieve our objective.
Articles are published that address issues within each of these general Categories of economic thinking so that, over time, the collection of work will give rich and powerful insights into what we need to do at all levels to build a society that Flourishes.