/ What is the economy for?

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Andy Hardy on 15 Jun 2017
There have been loads of threads about the effect of x,y or z on the economy, but none (I think) addressing the question of the purpose of the economy. Does it even have one?
Postmanpat on 15 Jun 2017
In reply to Andy Hardy:

What do you mean by "the economy"?
Andy Hardy on 15 Jun 2017
In reply to Postmanpat:

Good question, and no surprise that you chose to answer with one ;).

I guess I'm thinking of the "financial ecosystem" which we all inhabit.
ThunderCat - on 15 Jun 2017
In reply to Andy Hardy:

I don't think it's actually 'for' anything, is it? It's a by product of the system of millions of people making, selling, buying, consuming...millions of things. I suppose if it IS for anything, it's a rough measure of the health of that system.

Thats just me pondering... I have no real idea.
Dave the Rave on 15 Jun 2017
In reply to Andy Hardy:
> There have been loads of threads about the effect of x,y or z on the economy, but none (I think) addressing the question of the purpose of the economy. Does it even have one?

It is merely a tool that political parties use in order to embelish their own party's worth and to negate the ability of other parties that challenge them. All done in self interest.to improve their wealth and power?
Post edited at 20:30
Hardonicus - on 15 Jun 2017
In reply to Andy Hardy:

The economy is essential to out survival. Economic growth is a primary goal of any civilised society. It is best secured by ensuring generated wealth is funnelled upwards to those at the top who are best placed to nurture it.
NathanP - on 15 Jun 2017
In reply to Andy Hardy:

Inviting correction, it isn't exactly for anything: "the economy" is just a name for the collective consumption or output in goods and services of the region you are talking about. Even if we all decide to revert to being hunter-gatherers (after the mass starvation and societal breakdown) there would still be an economy, just rather a small one and lacking in UKC forums.
Andy Hardy on 15 Jun 2017
In reply to NathanP:

That's where I started, but the economy is an entirely man made thing. Given that, I wondered if there was some "point" to it.
Postmanpat on 15 Jun 2017
In reply to Andy Hardy:

> Good question, and no surprise that you chose to answer with one ;).

> I guess I'm thinking of the "financial ecosystem" which we all inhabit.

Well, I'd define it as something along the lines of "the production, consumption and exchange of goods and services" and it is for "the production, consumption and exchanges of goods and services" which are whatever people aspire to produce, consume and exchange.

The "financial ecosystem" is the plumbing that enables the economy to function.
pasbury on 15 Jun 2017
In reply to Andy Hardy:

Might be more pertinent to ask what growth is for.
Jon Stewart - on 15 Jun 2017
In reply to Andy Hardy:
The only point of anything is what is experienced by people: in fact, nothing else in the world really exists in any tangible form, only its imprints on human consciousness. So the only way to frame the value of anything is in terms of human suffering and human happiness.

As such, the point of the economy is to maximise human happiness and minimise human suffering. The products of a successful economy are increased lifespan, increased leisure time for art and sport, decreased chances of seeing your children die, less pain from disease, etc etc etc. There is a very good point in having a successful economy.

But this philosophy (which strikes me as totally obvious - why else would you do anything unless you've got weird religious world view that's about earning brownie points to cash in later in the afterlife, or whatever) also tells us why the products of the economy must be distributed widely in order for there to be any point. No one really believes that being stupendously wealthy makes you sttupedously happy, because what makes us happy is the basic stuff: not being in pain, our children being well, having control over our time, etc. Being stupendously wealthy only buys gaudy tat that doesn't contribute to the purpose of alleviating human suffering and maximising human happiness. So if you have sky high GDP, but the wealth is concentrated in a tiny minority while huge swathes of the population aren't getting the healthcare, the education that will allow them to take control of their time, the decent food and housing that will keep them in good health, then the economy is failing, no matter how much money it makes.
Post edited at 20:51
BnB - on 15 Jun 2017
In reply to Jon Stewart:

> The only point of anything is what is experienced by people: in fact, nothing else in the world really exists in any tangible form, only its imprints on human consciousness. So the only way to frame the value of anything is in terms of human suffering and human happiness.

> As such, the point of the economy is to maximise human happiness and minimise human suffering. The products of a successful economy are increased lifespan, increased leisure time for art and sport, decreased chances of seeing your children die, less pain from disease, etc etc etc. There is a very good point in having a successful economy.

> But this philosophy (which strikes me as totally obvious - why else would you do anything unless you've got weird religious world view that's about earning brownie points to cash in later in the afterlife, or whatever) also tells us why the products of the economy must be distributed widely in order for there to be any point. No one really believes that being stupendously wealthy makes you sttupedously happy, because what makes us happy is the basic stuff: not being in pain, our children being well, having control over our time, etc. Being stupendously wealthy only buys gaudy tat that doesn't contribute to the purpose of alleviating human suffering and maximising human happiness. So if you have sky high GDP, but the wealth is concentrated in a tiny minority while huge swathes of the population aren't getting the healthcare, the education that will allow them to take control of their time, the decent food and housing that will keep them in good health, then the economy is failing, no matter how much money it makes.

Someone had to spoil a nice philosophical thread with more bloody politics. No matter that you're probably right.
bouldery bits - on 15 Jun 2017
In reply to Andy Hardy:


The economy is the thing that allows people to get stuff and go places and get the services they want and need.

Martin W on 15 Jun 2017
In reply to bouldery bits:

I'd say it's the other way round: the economy is the result of people producing 'stuff' and delivering services that other people want and need.

We measure that effort and endeavour in various ways - usually money-based in modern Western civilisation - and call that "the economy".

It could be argued that you only really need the economy to growth if the population is growing. Which, of course, is the ultimate "elephant in the room": discounting occasional population crashes due to plague, war, famine etc, human population growth is 'the norm', so economic growth to provide the wealth to support that population has become regarded as the only desirable goal. But as a sentient, rational species we could have the capability within ourselves to change that paradigm...
Lion Bakes on 15 Jun 2017
In reply to Andy Hardy:

Without an economy there would be nowhere for you to buy, sell or exchange your skills or services or goods. You'd basically be a hunter gatherer or maybe a farmer with a small holding making all your own stuff. So an economy arises as soon as you move from a situation of full self sufficiency relying on your own skills to one where there in an exchange of skills etc to mutually benefit each party.

wintertree - on 15 Jun 2017
In reply to Andy Hardy:

It gives economists something to be wrong about.
bouldery bits - on 16 Jun 2017
In reply to Martin W:

Chicken. Egg.
BusyLizzie on 16 Jun 2017
In reply to Jon Stewart:

Absolutely spot on.
L DanielByrd - on 16 Jun 2017
In reply to Andy Hardy:

Does the government really think they do the best for the people of this country?
DancingOnRock - on 16 Jun 2017
In reply to Andy Hardy:

It's a measure of all the trade that happens. The bigger the value, theoretically the more things are being bought and sold, although they could be being bought and sold at higher prices. So we need to take into account inflation when we measure growth.

GDP is a measure of how much each person contributes to buying and selling.

What's it for? It's to determine whether we are being more, or less, productive.
summo on 16 Jun 2017
In reply to DanielByrd:

> Does the government really think they do the best for the people of this country?

It's better now than in a time when there wasn't elected accountable governments?
Pete Dangerous - on 16 Jun 2017
In reply to DanielByrd:

> Does the government really think they do the best for the people of this country?

No of course not. They try and make us think they do but really they're mostly self-serving and like most people in power, they abuse it. Theresa May is a shining example of a high ranking politician who has absolutely no idea what it's like to be part of the majority. They're in the worst position to make decisions for a whole country.
Jim Fraser - on 16 Jun 2017
In reply to Andy Hardy:

> There have been loads of threads about the effect of x,y or z on the economy, but none (I think) addressing the question of the purpose of the economy. Does it even have one?


It's for us.
Andy Hardy on 16 Jun 2017
In reply to Jim Fraser:

That's not really a purpose.
Blue Straggler - on 16 Jun 2017
RomTheBear on 16 Jun 2017
In reply to Andy Hardy:

> There have been loads of threads about the effect of x,y or z on the economy, but none (I think) addressing the question of the purpose of the economy. Does it even have one?

Purpose ? To avoid having to kill each others to get something to eat ?
tripehound - on 16 Jun 2017
In reply to Hardonicus:
> The economy is essential to out survival. Economic growth is a primary goal of any civilised society. It is best secured by ensuring generated wealth is funnelled upwards to those at the top who are best placed to nurture it.

Continued economic growth is not sustainable on a finite planet, something has to give eventually. Its the same with population growth. The two are linked.


P.S. I seriously hope your last sentence was tongue in cheek!
Post edited at 13:46
jkarran - on 16 Jun 2017
In reply to Andy Hardy:

At its most basic it allows us to achieve more with our time than we could as solitary subsistence farmers or hunter gatherers.

Is there any point in 'achieving more'? That basically boils down to "what's the point of life?". There arguably isn't one but as I see it we might as well enjoy the life we get as best we can and life with: tools, toys, medicine, travel, plentiful food... that's better than just subsisting.
jk
bouldery bits - on 16 Jun 2017
In reply to jkarran:

. There arguably isn't one but as I see it we might as well enjoy the life we get as best we can and life with: tools, toys, medicine, travel, plentiful food... that's better than just subsisting.

> jk

Capitalist scum!!!!!!




































:P
ads.ukclimbing.com
Murderous_Crow - on 16 Jun 2017
In reply to Jon Stewart:

Excellent post. Have another like to add to the many it deserves.
AdrianC - on 16 Jun 2017
In reply to Andy Hardy:

The economy is like life. It doesn't have a purpose. It's a by-product of a trillions of local events that can't not happen.
birdie num num - on 16 Jun 2017
In reply to Andy Hardy:

The economy is the hugely complex task of balancing receipts with expenditure.
It's as simple as that.
SenzuBean - on 16 Jun 2017
In reply to Andy Hardy:

Lots of nice simple answers about the economy so far. So far all of them have missed out that the real economy is based around fiat currency and fractional reserve banking. So actually what the economy does - does not directly reflect the output of what was generated (to put it as kindly as possible...)

Worth a read: http://positivemoney.org/
Andy Hardy on 16 Jun 2017
In reply to SenzuBean:

Thanks but I was more interested in whether or not the economy, as an entirely man made thing, had some purpose, or not. As opposed to what the economy is.
Most people seem to be going with no, no purpose.
SenzuBean - on 17 Jun 2017
In reply to Andy Hardy:

> Thanks but I was more interested in whether or not the economy, as an entirely man made thing, had some purpose, or not. As opposed to what the economy is.

> Most people seem to be going with no, no purpose.

Well answering that is sort of like answering "what is the purpose of the internet?" or what is the purpose of any large man-made structure that cannot be understood in totality by a single person. Sure you could come up with answers for both questions, but ultimately there is no single answer.

One of the multitude answers I alluded to in my previous reply. The economy has become decoupled from the resources and products/services that it used to represent - grossly decoupled. This is not an accident. I had a quick look and I found an article that more-or-less sums this answer: https://www.opendemocracy.net/beyondslavery/andrew-sayer/moral-economy-different-way-of-thinking-abo...
L DanielByrd - on 17 Jun 2017
In reply to Andy Hardy:

Who says the economy is for us, who the hell is he kidding?
julesf7 - on 17 Jun 2017
In reply to SenzuBean:

Unfortunately your response to the simple answers contains an equally simple conflation, that of the real and monetary economies. Can an economy exist without fiat money and fractional reserve banking? The answer to this is a resounding yes, albeit with the caveat that it will, most likely, be significantly less efficient since it is based on the mutual coincidence of wants that barter relies upon. Therefore you cannot argue that the real economy is based on the operations of the financial market, quite the opposite in fact.

Would it be possible to expand on the meaning of the final sentence, however?
SenzuBean - on 17 Jun 2017
In reply to julesf7:

What use is talking about types of economies we don’t have other than for aspirational purposes? It’s a bit like answering “what is the political system for?” and talking about some system (e.g. a technocracy) that we don’t have.
Also both fiat money and fractional reserve banking has nothing to do with coincidence of wants.
RomTheBear on 18 Jun 2017
In reply to tripehound:
> Continued economic growth is not sustainable on a finite planet, something has to give eventually.

That's nonsense. It's perfectly possible to grow the economy without using finite resources. In fact it's perfectly possible to grow by using less finite ressources.
Post edited at 08:47
tripehound - on 18 Jun 2017
In reply to RomTheBear:


> That's nonsense. It's perfectly possible to grow the economy without using finite resources. In fact it's perfectly possible to grow by using less finite ressources.

I'd be intrigued to know how that works. It sounds like you have found a way to bypass the laws of thermodynamics.
RomTheBear on 18 Jun 2017
In reply to tripehound:
> I'd be intrigued to know how that works. It sounds like you have found a way to bypass the laws of thermodynamics.

Nothing to do with the law of thermodynamics. What creates added value, and hence growth, is what people give value to.
If we attribute value to decrease our use of ressources and energy, then decreasing our use of value and ressources creates economic growth.

Basically you don't have to use more energy or more ressources to create economic growth. In fact a lot of economic growth comes from people finding new ways to do the same thing with less energy and less ressources.
Post edited at 12:06
tripehound - on 18 Jun 2017
In reply to RomTheBear:
Thats very interesting. I suppose my point is that as populations expand there is an increased use of resources no matter how effectively we manage them. But I can see what you are getting at.

wbo - on 18 Jun 2017
In reply to SenzuBean:

> What use is talking about types of economies we don’t have other than for aspirational purposes? It’s a bit like answering “what is the political system for?” and talking about some system (e.g. a technocracy) that we don’t have.

The best reason for those discussions is exactly that it's aspirational! Don't you want a fairer and better world with more opportunity for all? Apparently not, it's aspirational - only the currently existing can be discussed.

your economics links veer dangerously close to calling for the return of the gold standard.

To tripe hound - I'm with Rom here. Trying to explain economies by reference to the law of thermodynamics needs a lot of assumptions

SenzuBean - on 18 Jun 2017
In reply to wbo:

> The best reason for those discussions is exactly that it's aspirational! Don't you want a fairer and better world with more opportunity for all? Apparently not, it's aspirational - only the currently existing can be discussed.

Of course. But the question was about the economy, and answers with simplified versions of the economy that talk about goods and services (without mentioning the absolute absurdity of FRB and how it creates infinite debt, which requires infinite growth) are essentially aspirational by omission. That was what I wanted to address.

> your economics links veer dangerously close to calling for the return of the gold standard.

Which one? The positive money one only asks for fiat money, without fractional reserve banking. The other one was not really my view exactly, it did however talk about "unearned income" which is my view, that unearned income should not (in an aspirational economic system ;) ) be vastly more powerful than earned income.
freeheel47 on 18 Jun 2017
In reply to Andy Hardy:

What is the economy? It is what economists study. What do economists study? Depends on which economists you mean.

I'd suggest reading Ha Joon-Chang's two fantastic books. Economics- a users guide and also 23 things they didn't tell you about capitalism.
ian caton on 22 Jun 2017
In reply to Andy Hardy:

I read something recently that all nations and thereby economies are purely military constructs. The nation state is needed to be able to raise the cash to pay for increasingly expensive arms. Industry is needed and an educated workforce required to build them. Hence serious investment in education tends to happen mostly after wars.
RomTheBear on 22 Jun 2017
In reply to ian caton:
True, but I would dissociate the concept of economy and the concept of nation. To a large extent "the economy" is global.

Post edited at 15:38
freeheel47 on 17:46 Sat
In reply to ian caton:

so what is Iceland?

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