What is the purpose of economy?

Post Reply New Topic

what i said. Most output for the least input.

If the progress is driven by the highlighted motto, at some point waste management becomes much more problematic than obtaining goods.
I think this moment is not far away from us, we're entering this region or even we're already there?

That's the big economic question. Most would agree that the government should not interfere in such a way that hinders efficiency or increased scarcity. Some would say that the government should interfere to minimize poverty or at least mitigate the suffering that comes with poverty.
While government is a means for the economy to be steered or otherwise influenced, the economy can be influenced from within. We are all part of the economy (unless you *really* go off the grid) so we all have some agency wrt how the economy functions or changes. The issue is that there is rarely equality of agency in the economy--the haves have more power than the have-nots. For this reason, those without economic power must work through democratic government to exercise meaningful collective influence over the economy, beyond just changing one's employment, purchasing habits, business practices, etc.
Unfortunately, government has become more of a vehicle for those with the most economic power to protect and enhance their economic power at the expense of the majority in such a way that undermines efficiency and meritocracy. This is an unavoidable result of money's sway over politics, and the treatment of money as speech. This is why the US is being increasingly recognized as an oligarchy rather than a "true" democracy (or whatever you want to call it when it isn't oligarchical)

This has been an issue for a very long time--this started happening with the invention of permanent settlements and became painfully obvious with the industrial revolution. Nor is it just an issue of waste, but also resource extraction. The costs of extraction, for example, land degradation, were not put into the equation.

Ahh, A Nobel prize question... and I'm guessing about half of Economic Nobel price recipients have tried to answer that question.

And having read a lot of their works, I suppose it could be possible to divide government involvement in the economy into 3 overall categories:

- Regulation (property rights, conflict resolution, transaction costs, market errors etc.)
- Distribution (who gets what, when, where and why... and who is going to pay for it*)
- Production (the actual supply of goods and services)

One could fit anything from a complete anarchy (zero government involvement in all 3) to Maoist China (maximum government involvement in all 3) into those categories.

*Probably not Mexico.

I would not agree that those two are the dividing concepts. I agree government intervention can simply be to counter market failure, which is an inefficiency in the economic system. So the government is regulating to preserve market efficiency.

The other reason for government intervention is not all social needs are market based. Public goods are important, whether that is common defense, public health, or freedom of speech. None of which exists in a market. Your point about poverty is question about equity, another factor that cannot be determined by markets. But the equity question can be an economic problem--poverty can create serious costs to a society. Social equity is an important function of government which falls outside market economics.

The problem with this topic of economy is we are discussing one concept of economics--market economics. Mostly, we discuss ideological formations of that. The current ideology is neoliberal economics, which champions free-market and supply-side economics--also known as trickle down economics. There is plenty of research critical of this ideology.

These categories I would find rather useful to conceptualize means of government involvement (or uninvolvement) in the economy, not its goal.

As you say, the government is impossible to separate from the economy.

There are several ways to classify the ways government can get involved in the economy, but I’d pick out three desirable things that overlap to an extent:

- Create an environment that is conducive to business: Make it easy to start a business, keep the infrastructure in good shape, educate your workforce, keep tariffs and taxes low, make it easy to hire and fire staff, keep the country safe. Ensure your people have access to international markets, including financial markets, and keep inflation under control. Where possible, keep regulations harmonised across your country and internationally.

- Correct market failures: Tax externalities, mandate standards in advertising and branding, provide a carefully considered level of intellectual property protection, protect the environment, invest in research and development, and some kind of correction in the imbalance of power between employers and employees.

- Provide essential services that the market cannot easily provide: Infrastructure (roads, railways, pipes, wires, bridges, airports, generators, reservoirs), policing, defence, the justice system, social workers, waste collection, fire fighters. You probably need government involvement in education and healthcare, particularly for the economies of scale government buying power can provide, but there are different ways to achieve this. Trade negotiators, central bankers, policy officials - all need to be government staff.

Calling it an ecosystem is probably my favourite answer. I don't think it is inherently efficient, or can be measured by a single thing. You have to look at a lot of human psychology to see why people do what, it is a total fiction that everyone acts logically.

And I also think that a government should never hinder perceived efficiency. For instance, a government should probably stop child workers from being a thing, even that would the economy a little less efficient by making certain products more expensive. Government should be a way to influence economics through agreed sets of values, where we say that we care about a fair shot for everyone (not let just those born into wealth succeed), a reduction of harm to as many people as possible (minimum wages and support for people who still fall through that system), and circumvent some game theory to have growth that might fail if everyone always just worked in their best interest. That would be creating public utilities and stopping monopolies.

Entire papers can be made exploring this topic of the purpose of an economy is, and although I don't entirely like the answer of just existing and thus has no purpose, I do think it has whatever purpose people give it. If people suddenly decided that it should be for people to prove their strength by fighting worthy opponents, that is what it would become.

70 Percent of the United States Economy is Consumption of Commercial Goods.

40 Percent of Environmental Resources for Humanity on the Entire Globe are
Used by 4 Percent of the Globe's Population; yes, US.

What Price Do We and the World We Lead, in a Global Consumer Economy Pay?

Look Around; Nature is providing An
Answer in Terms of Fires, Hurricanes
And Yes, A Pandemic When We Consume the Most
We Can Without Giving Back; Erasing Homes of Wild Life
Per the Entire Consuming Economy Globe to Warming the Oceans
And Atmosphere in Climate Change Leading to Record

Breaking Fires and Hurricanes too;

And that Brings me to the Fact
We Cannot Eat Money; and We are Already
Seeing the Tipping point that comes when a Species
that is so-called intelligent takes more than it Gives back
in a Consumer Economy So Intelligent that it 'eats' the Only Home it has;

The Earth of Course
When Any Species does
this We See an Intelligence
of a Real Zombie Apocalypse
Where We are yet to Lift the Veils
of Ignorance Enough to Even Save Our
Own Species in the Long Run; as Around
1 Million of 8 Million Living Species of Animal
And Plant Species are Projected to Go Extinct in the Coming
Decades for the Purpose of the Economy of Eating the Face of Nature

As 'Zombies'
in Fact, Naturally
do now too; as the
Consumer Economy Culture is
Doing Just that to the Living Sphere
of Where We Live; the Earth; that is
both Ignorant, Sad and Just plain Dumb.

The Purpose of the Consumer Economy, in Effect is to Be Dumb;
Side Effects include massive Drug Abuse, both Prescription and Illegal;
40 Percent Obesity Rates; And of course Highest Suicide Rates Now in

Youngest Generations too;

The List is much Longer than
that as We Do Reap What We
Sow When We Take More than We Give...

In my opinion, economy is how much money is made from businesses. We have money coming in and it is basically fuel to keep our country running. It is also what keeps businesses going. It's all a cycle. If a city only relies on one company and that is their engine for their economy, what happens is if that company shuts down, many workers lose their jobs and then other businesses lose money because the workers who have lost their jobs don't have the money to do fun things anymore to go out and go to a restaurant or film or to just shop for fun, so other businesses end up shutting down because they were not making enough money to keep their business open so they shut down and that is more jobs lost. Then you have people moving out of the city because there are not enough jobs and there are no jobs for them there so they abandon their home. They can't sell it because no one is going to buy it if they can't find a job there and there is no job opening there so they abandon their house. Then that is why we have depressing cities like Detroit and St. Louis and Gary, Indiana. Even Cleveland, Ohio went through it too, they used to be a much larger town but they saved their town by creating other businesses to keep their economy so they won't become like Detroit.

It is never a good thing for a city to rely on one major business that is the only engine of the city. And the downside to declining towns are it brings in more crime and that chases out more people because they don't want to live where someone can break into their house and steal stuff or if they have to have a gun now to defend themselves. Even businesses will shut down too if they are losing money from too much theft and people don't want to go there if there is lot of crime in that area so they shut down.

I was taught this is what economy is when I asked what it was and this was the simplest answer my mom could give me to help me understand the term.