What is the Purpose of Our Economy?

imagePerhaps a good starting point for our discussion of “In what economy do we flourish?” is to ask the question, what is the purpose of our economy? While admittedly over-simplistic, I propose that there are four primary economic motivations:

  • To Make Money (Financially Driven): Let’s be honest, we all need to eat and for most of us money is the way we make that happen. As a former budget analyst who’s married to a CPA, I am not willing to understate the importance of money (especially as many people have fought and continue to fight valiantly for fair wages to provide for themselves and their families). At the same time, “man can not live on bread alone” and when the finances becomes the overwhelmingly dominant economic motivation, we are all poorer because of it. An example of this is a friend I had in college who was exploring a business concept involving a car that would drive around the city pulling a billboard trailer. Why do it? Because the numbers worked. By his estimates, the revenue he received from advertisers would more than cover the operating expenses of a driver and gas and, over time, the capital expenses of the equipment. As the owner of a profitable company, this was a path to wealth. While this balance sheets view is important, it is far from holistic. Noticeably absent from his mentality were considerations about the greater good of society, the best use of the Earth’s natural resources, and whether his work provided dignity to his employees. Sadly, this mentality manifests itself systematically in the stock market mentality, where companies and their CEOs are primarily judged based on quarterly profits and earnings potential.
  • To Make Stuff (Product Driven): Many of our greatest, most profitable and most fascinating companies started with a simple, unrelenting dedication to making great products. Thomas Edison at General Electric, Steve Jobs at Apple, and Elon Musk at SpaceX/Tesla all come to mind as engineers driven by their desire to perfect their craft. Depending on how it is executed, product driven motivation has the ability to both fully engage the creative capacity of the worker on the one hand (especially when the company is in start-up mode) or to silo the worker into mind-numbing work through division of labor on the other (Henry Ford’s assembly line as an example). The output of this product-driven motivation is technological progress and more products at cheaper prices. Yet, similar to the finance driven model, often externalities (such as people or the environment) are secondary factors to the larger product goal – resulting in a world where layoffs and pollution are seen as the price of progress.
  • To Make a Better World (Mission Driven): Concern for the world we live in and trying to improve this environment is certainly a noble goal as our inner, fresh-out-of-college selves all believe. Organizationally, these do-gooders tend to gather around public and non-profit organizations and institutions, where the primary motivating factor for decision-making in this category revolves around organizational visions, missions and goals. Under this model, the balance sheet and workers are not the motivating factors themselves, but serve the greater mission. Contrasting the finance and product-driven motivations, the mission-driven motivation tends to cover more holistic goals related to people and the environment. On the flip side, mission driven organizations rarely tend to lead in the areas of innovation, technological progress, or cheap prices.
  • To Make a Better Me, You, Us (Person Driven): Person driven organizations focus primarily on the promotion of the dignity of the person, the relationships between people, and the cultivation of community. A great example is Mobile Loaves and Fishes (MLF) based in Austin, Texas. What started as delivering meals to the homeless out of a minivan has developed into the cutting edge of solving homelessness through providing dignity to our brothers and sisters living on the streets. MLF’s Roads Micro-Opportunity Business Program helps the chronically homeless participate in our economy in a dignified way, through carpentry, car washing or selling ice cream. While Roads makes products and has a mission and balance sheet to guide it, its focus on the person and community makes the success of these efforts less quantifiable than the other models of economic motivation, and they tend not to compete in the realms of innovation, technological progress, or cheap prices.

If we consider the above four economic motivations our primary colors, then most real-world scenarios are a blend. In my opinion, the motivations coloring the overall economic portrait are out of order. Our economy does not exist to make certain people rich or others powerful. It does not exist to provide our lives with the latest gadgets, entertainment or to make goods cheaper or more abundant. Our economy exists so each and every one of us has the opportunity to become the best version of ourselves as we learn to discover our destiny: the unique purpose for which God has put us in this place, with these people, at this time. As such, our economic focus (the determination of how scarce resources are allocated) should be the formation of men and women with great characters and souls, with money, technology, and our institutions playing supporting roles. Yet this is not the vision of economics taught in universities today, and because of this gap, it seems a worthy topic for this blog to explore.

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2 thoughts on “What is the Purpose of Our Economy?

  1. Pingback: Six Foundational Elements of Community | The New Localization

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