After World War II, America settled down to a comfortable life and much of the world started to rebuild. Using the industrial models that defined the times, including the war, the entire process was described in terms of developing a “consumer economy.” The main economic function of people was to consume what industry produced, guaranteeing profit and growth. It was dynamic in that money changed hands rapidly, yet static in the view of where capital comes from and how it was used.
As more nations developed the process was expected to continue. But it did not. Societies, particularly in Asia, found many reasons to save money and develop themselves and their families for the long haul. This has been a critical change which, when applied properly, makes market based systems work even better.
This is also why a true market based system focused on people has to emphasize investment over consumption. It is a big part of the definition of People’s Economics, as this continues.
The term “investment” is very loaded and means many things to many people. It is not just the purchase of an asset for the purpose of gaining future income or increasing value. The primary investment for both people and societies is always going to be the one that increases productivity and assures greater income for both.
As surely as the skills and drive of people are the most important resource of any nation, investment in people is the most important vehicle for growth, improvement, and happiness.
Markets, as a concept, are not precisely stable in the immediate moment. Their entire function begins with inequalities and ends with resolving them. For example, if I am hungry and you have food, the market can make us both happy by resolving this imbalance. The longer the term, the more the processes of markets have to work. This means that a market based world has a longer term focus, and the people who master a market based world live in the future – the world of the possible – as much as they can.
Yet there are barriers to genuine equity in any society. Equality of opportunity is a noble goal for lifting society and realizing full potential, but people do not start in the same place. Equity is a more active term for the process of identifying areas where an extra effort is needed to make the ideal of equality a reality.
For example, racism is simply everywhere. People are simply more willing to give the benefit of the doubt to others who look like them, talk like them, and have shared experiences. This means that opportunities are going to be more limited to any race which historically and currently has less social power, defined in terms of connections, money, and anything else you might want.
But social inequality is even more corrosive than this. After years of being on the short end of opportunity, many people define themselves in terms of the limits which they know are placed on them. They set their sights lower, to something achievable, because the world has taught them that is the best they can do.
People’s Economics begins and ends with the development of people – their potential, their connection, and their happiness. Racism and social inequality have to actively be stopped and genuine equity has to be achieved.
This is not necessarily a government function, and indeed there is only so much government can do. Laws might put an end to some hiring practices, but how do people learn about jobs in the first place? How do people who have suffered generations of being put down come to honestly believe that they can achieve anything, with real proof that
this is true?
Any system defined by People’s Economics has to first and foremost develop people, and work towards genuine equality of opportunity – knowing full well that like the concept of an Open Market this is an ideal which is defined socially and is never fully achieved. Though the work is never done, every improvement is progress and has to be celebrated and capitalized on.
Similarly, the use of equity over debt will define such a system, as ownership stakes are inherently more personal and draw from expertise more than simply capital. Equity generally defines People’s Economics, but as the definition of money is social the definition of equity itself has to be primarily social.
There are times when critical investments are needed, however, to move forward. By defining the economy primarily as an investment economy rather than a consumer one, critical areas where advancement in technology or resources which help everyone need investment.
Chief among these are infrastructure. Open markets always benefit from infrastructure development, which is nothing more than shared resources for information, goods, and people to make connections. Infrastructure can be public or private, but in all cases it provides a general social return that is greater than the individual one. It has to be supported, particularly as new technology demands new infrastructure.
Where the national industrial model required an economy defined by its ability to consume what was produced, a global market economy requires investment. That investment is primarily in people – their skills, their connection, their hopes, their happiness. But it also can define critical areas where advancement in technology will benefit everyone and certainly requires investment in the infrastructure which connects the world and defines new opportunities for everyone.
While people have needs and desires in the moment, an economy for people has to focus on the longer term. This is defined by investment, particularly when it is equity based, strategic, and connecting.