The Key to a Healthy Economy

The key fallacy of the predominant approach to people and a healthy economy is the idea that the individual is subordinate to the system, i.e. that people are there for things.

It is immediately apparent in how people in leadership positions get taught to see their roles. If you ask people for a definition of leadership most will say that leadership is about achieving a result through people. This, by definition, turns people into a resource or a means to the end of achieving a result or an objective.

TRANSACTIONAL CORRECTNESS

There are a number of things wrong with this view. One of the issues that I want to draw attention to is that it neglects to acknowledge where results really come from. In fact, if we want to do absolutely no violence to the truth, we have to understand that the basic constituent of a healthy economy is not people, companies or government. In actual fact, what an economy is made up of is transactions, the basic unit of any healthy economy are the transactions that go on between individual human beings (who may or may not be acting as a representative of a larger group of human beings).

If you have a bunch of companies but none of them are transacting, then you do not have an economy, economies only exist through transactions. Although it is often useful to think of the economy as the product of conscious people or companies producing and trading, there is much to be gained by viewing the basic building block of an economy not the individual person or the individual organisation, but the individual transaction.

IS THE TRANSACTION ADDING VALUE?

When viewed from this point of view the key question to consider is whether a transaction is value adding or not. If a transaction adds value then the goods or services rendered will reflect the intention of the seller to, metaphorically, give the baker’s dozen, in other words, go beyond pure transactional balance to serve the requirement of the customer or client. On the other hand, the price paid will reflect the gratitude of the buyer for having been well served. Both these variables, the generosity of the seller and the gratitude of the buyer, are vested in the intent of the participants to the transaction. These two variables reflect what it truly means for there to be a healthy economy, one that is populated by healthy transactions.

The complimentary variables of the generosity of the seller and the gratitude of the buyer reflect the intent of both parties to do what is just in the transaction. The degree to which the average transaction in a market reflects the intention of the participants to do what is just is the degree to which there is no need for an overall management of the economic system. However, should this not be the case then there clearly is a need for an overall management of the system. The degree to which that is true is the degree to which the individual is subordinate to the system and people are subordinate to things.

This suggests that while it is true that we cannot ascribe the person to a subordinate role in the economy, it is unavoidable as long as the central concern of the transacting individual is not to do what is just.