The Most Authentic Purpose of Economics Is To Correctly Guide the Investment of Savings Into Enterprise

I suggest we need to start from a different place. The true place to begin is not ontological, but functional:

We cannot reason our way to an answer to this question. We have to start with a hunch, an insight, an hypothesis. Then, we can develop that hypothesis logically in preparation for testing it, existentially.

Let’s begin with this hypothesis:

There are a lot of hunches — or insights — built into the above declaration. It will do well to tease these all out, and explore each, individually.

The first hunch buried inside our statement of purpose is this. We, as people, are each born into a world not of our own making. Also, we are each empowered with some ability to take that world around us as we find it, and to change it to be more a way we choose to make it. We do that by learning in some way how the world works, and then putting that learning into action, changing the world to make it more a way we choose to make it.

Learning can be a solitary activity, but action requires a concentration of effort. It produces a surplus of experiences. These surpluses we can exchange with others, who concentrate their own efforts on applying their own learning to create their own surpluses of experience making the world a way they choose to make it. Through this shared work of concentrating effort to create and share surpluses, we, as people, pursue a utopia of living well and pursuing happiness that we never really reach, but we always keep striving for.

We do this by continuously evolving prosperous adaptations to life’s constant changes in a process that is formally cyclical and functionally historical. We learn about the world about us. We apply that learning to create surpluses that earn us a share in the surpluses created by others. Earning empowers spending. Spending empowers saving. Saving empowers investing in more new learning that empowers more new earning that empowers more new spending and more new saving and more new investing in yet more new learning, and so on, and on and on, without apparent end. We make change, and so we also make the need to constantly be evolving prosperous adaptatiosn to those changes.

If with each iteration of this cycle, we invest our savings in the right new learning, the cycle is virtuous, and life just keeps getting better.

If, however, we do not invest our savings in the right new learning, the cycle dysfunctions, and things get worse.

The purpose of economics, as learning that can be put into action, is to help us always be investing our savings in the right new learning, to keep things always getting better, as we move towards a Utopia of living well and pursuing happiness that we may never actually achieve, but we are always striving to create.

The way savings gets invested in new learning is through a two step process of:

We can identify six different purposes for which we, as individuals, save our surpluses, and six intermediating social structures for investing saved surpluses into enterprise. Each of these intermediating social structures comprises frameworks, processes, places and people for recognizing values in enterprise that align with the purposes for which the surpluses they are aggregating were saved.

By “enterprise” we mean the physical coming-together of diverse actors to co-creatively collaborate in putting learning into action in ways that are valued by others as conducive to their living well, and pursuing happiness.

Each enterprise can choose from a portfolio of six different intermediating social structures when it needs outside funding to support its work.

One purpose of economics, then, is to provide learning about how these different intermediating social structures are designed to function, learning that can be used by both individual savers and by enterprise leaders in choosing which intermediating structure to use for what purpose, and also to help society more generally see when any given intermediating social structure is not functioning correctly, according as it is designed to function, so that appropriate corrective action can be taken to restore that intermediating social structure to its correct function.

This is a primary function that economics is not fulfilling today, which explains why it needs to be radically remade.

The primary place where economics as learning that can be acted on is failing us today is in explaining the proper functioning of the intermediating social structure of Stewardship and its proper purpose to invest in pursuit of Sufficiency, sufficiently shared.

Instead, conventional economics is being used to mis-direct stewardship savings — the shared savings of society aggregated and maintained to deliver income security for retirement (pensions), for education and for philanthropy (endowments), and for our shared future, forever (both) — into the intermediating social structure of Securities Trading in pursuit of Growth.

This is causing the Securities Trading structure in pursuit of Growth to dysfunction, which is causing the Banking & Lending in pursuit of Profits structure to dysfunction and also the Taxing & Spending structure in pursuit of Policy.

All this dysfucntion is putting unsupportable burdens on the Church & Philanthropy structures in their pursuit of Mission and on the Family & Friends structure in their pursuit of Impact, both of which are under pressure to correct for the consequences of the dysfunctioning Stewardship, Securities, Banking and Taxing structures.

The right economics we need will take this pressure off Impact and Mission by correcting the dysfunctioning that is plaguing Policy, Profits, Growth and Sufficiency.

It must begin by studying Sufficiency.

This must begin by recognizing that enterprise is not defined by the trend line.

The truth about enterprise — as a physical coming together of diverse actors to collaboratively co-create surpluses for sharing with others — is this. It is defined by a social contract with popular choice that flourishes and fades over time, as times change, and people evolve prosperous adaptations to life’s constant changes, making new choices from time to time, that are more fit to changing times, and letting other previously popular choices fade into history.

As each enterprise moves through its own unique history of flourish and fade it is authentically aligned with valuing different values, which means it is also authentically aligned with different sources of investment at different points in time as it makes it journey through flourish to fade. Which means that for each intermediating social structure of saving for investment to function correctly, it must invest in enterprise at the right period in the history of that enterprise, the period when the values that enterprise is authentically pursuing align authentically with the purposes for which the savings being aggregated by that intermediating social structure are being saved.

If we can make a new economics as a theory of saving and investing through a diverse portfolio of intermediating social structures that is each designed, authentically, to support enterprise at a different point in time on the journey that every enterprise makes through the flourish and fade of its own, unique social contract with popular choice, that will be a good beginning.

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