Purposeful Economics

It is shocking to find mainstream economics has no purpose - no explicit purpose. Most texts refer to Economics as 'the social science concerned with the production, consumption, and transfer of wealth'. This definition suggests an implicit purpose, centred around the creation/maximization/transfer of wealth (i.e. money/assets). This implicit purpose becomes increasingly visible through the economic practice of classifying any non-monetized activity (e.g. parenting, housework, good deeds, volunteering) as not being of value to, or part of, an economy (GDP).

Whilst not being explicit, this implicit purpose is driving 'the system' (i.e. the economic system), in many unforeseen ways and with many unintended consequences (e.g. growth from failure/profiting from harm). Indeed, in the 1960's Robert F. Kennedy referred to the dysfunctional use of Gross National Product (GNP) as a measure of success of an economy, stating "GNP measures everything except that which makes life worthwhile". In the current system humans are only relevant if they produce/consume something and a monetary/asset transfer is involved. However, we are human beings, not human capital or economic actors, and our health/wellbeing should not be classed as irrelevant or an 'externality'. Neither should nature, the environment, or the natural world.

Bhutan, realising the profound implications of the above, and on hearing Robert F. Kennedy's speech, took early steps to refocus its economy on improving Gross National Happiness (GNH), rather than GNP/GDP - an approach it still uses today. This early move signalled the importance/need to re-purpose economics, and this movement is now growing (e.g. Circular Economics, Regenerative Economics, Doughnut Economics, Wellbeing Economics, Mission Economics, Post AI Economics, Virtue Economics, Sustainability Economics). Emerging economic theories all take a wider perspective than purely monetary transactions and provide differing purposes, breadth and priorities. As economics becomes explicit in purpose (e.g. human & planetary wellbeing), and economies become increasingly effective in terms of outcomes, they become Purposeful^†, i.e. Purposeful Economics focused on creating a Purposeful Economy^†.

Despite knowledge and wisdom continuing to grow, mainstream economics is yet to change tack. Why? Unintended consequences are growing and getting worse (e.g. mental wellbeing crisis, obesity and related ill-health, climate change). Why are we not acting? Is it because we don't know how to change it? Is it because its purpose has not been sufficiently/explicitly defined? Is it because the system is working very well for a small minority, who don't want it to change? Is it a mix of these, or none of these and something far more profound?

What we do know is that performance and outcomes are mostly determined by the overall system (90-95%), not individuals within it (5-10%). Individuals are themselves driven by 'the system', the driving purpose of the system (e.g. profit/money/GDP), so to improve the effectiveness of 'the system' we must first clarify/re-define its purpose (e.g. with a meaningful purpose that's intrinsically motivating to us as human beings). This has been understood for many years, with forward-looking people such as Dr. W. Edwards Deming (an early 'systems thinker' and author of "Out of the Crisis" and "The New Economics: for Industry, Government and Education") using this knowledge (e.g. the 'System of Profound Knowledge') to help transform corporate practices and to successfully rebuild Japan's economy following the war (n.b. Dr W. Edwards Deming was awarded the Emperors' Medal, the Order of the Sacred Treasure, for his services to Japan).

This work has moved increasingly forward and organizations are now realising the power/critical importance of 'purpose', and having a clear purpose focused on solving societal/environmental problems (cf profiting from creating them). The British Academy highlighted this shift and BSI recently published standards/guidance for creating Purpose-Driven Organizations. A movement now expanding to over 170 countries as an ISO standard. Forward-looking companies are not only moving beyond CSR/ESG, they are also building their unique purpose into their DNA (i.e. fully embedded with engaged and self-actualised employees) and into every decision their enterprise makes. By doing this, organisations move from 'purpose' to being 'purposeful' - a Purposeful Organization^†.

Governments are, not surprisingly, increasingly realising the importance of this movement now. They are responsible for a multiplicity of services provided to their citizens (e.g. education, healthcare, social care), all of which need to be purposeful (e.g. Purposeful Education, Purposeful Health, Purposeful Wellbeing^†). Government also needs to be purposeful and have a clear/explicit purpose that becomes embedded into their DNA and visible in every decision they make. This includes economic decisions, with Purposeful Economics helping to define an inspirational vision (e.g. for a Purposeful Britain^†) and helping to create a thriving Purposeful Economy^†.

Nations will naturally want to define their own unique purpose, and the purpose/priorities of their economy. At the same time, countries will naturally collaborate where there's a mutual interest, for instance on how to create a government & economy focused on wellbeing and future generations, as in Scotland, Wales, Iceland, New Zealand, Finland and Canada. Thought-leadership and best practice in Purposeful Economics in terms of purpose, priorities, indicators, practices, and implementation, will need to be brought together, developed further, and shared, for the benefit of humanity as a whole too.

From the beginning of time humankind has sought meaning and purpose, in life and in all it does. This is a central part of being human and critical to human flourishing. The philosopher Aristotle called this 'Eudaimonia', now referred to as 'psychological wellbeing' and the 'art of human flourishing', which also aligns very well with the Japanese concept of 'Ikigai' and the 'reason for being'. Today highly respected neuroscientists are sounding the alarm, highlighting how humankind has become dangerously distracted by fame and fortune (i.e. money and likes), at the expense of others (people), communities (places/society) and the planet (nature/environment).

Money and social media 'likes' are both man-made creations and addictive. Money is an artefact (e.g. metal/paper/plastic/code) initially invented to create a more sophisticated way of organizing/bartering people's time which has taken a life-form all of its own, both positive (e.g. global trade, national prosperity) and negative (e.g. usury, printing money, gambling, counterfeiting, theft, fraud, corruption, avarice), with some now referring to money as the new 'God' (i.e. replacing ethics, virtue, religious beliefs). Social media 'likes' are also starting to have a huge negative impact on mental wellbeing, especially within younger generations, and social media companies are deliberately deploying state-of-the-art behavioral science to maximize levels of addiction.

Dr. Mark Carney, a renowned economist, author, and ex Bank of England Governor, in a landmark speech made reference to numerous respected philosophers/economists (e.g. Plato, Aristotle, Adam Smith) and highlighted how every crisis the world has ever faced (e.g. famine, war, financial crises, covid, homelessness) is the result of one root cause - having only one 'measure of value' - money. He said "this has served us badly in the past, and it will not serve us in the future", and stated humankind needs to move to a world where "values are valued". His speech not only highlighted the shift required in economics, but the shift required in what we collectively value as humans too i.e. a cultural shift.

For humanity to survive and thrive in the future we need to create 'a world where values are valued' - a world where 'good deeds' are valued (and nurtured into habit), even if no exchange of money takes place. Money has become an extraordinarily powerful and arguably dysfunctional extrinsic motivator ('reward'). Once basic needs are met (e.g. see Maslow Hierarchy), having meaning/purpose and doing good for others, communities, and the environment is a more subtle, intrinsic, ethical/virtuous motivator - and one that's sadly been over-ridden by the drive/desire for money. This will need to be directly addressed too if we are going to see a significant cultural shift.

Money can drive people to act in the most inappropriate of ways, both ethically (e.g. harming others and/or destroying the planet) and economically (e.g. profiting from failure). Humankind can sense what it's doing isn't right, however it is what the current 'system' drives/compels them to do (with values/ethics/virtue being pushed aside by money). To avoid this, the system needs to change and alternative/additional measures of value are needed. For instance a unique/intrinsic measure that recognises/rewards the good people voluntarily do could be introduced and integrated into a country's values system, economic system, and monetary system, in such a way that 'good deeds' are equally recognised/valued (e.g. Good Points^†) - leading to a shift in the cultural perception of what's important.

In a similar way, Purposeful Organizations focused on systematically targeting/eliminating societal and environmental problems (ie not profiting from creating them) reduce the number and level of market/system failures a government has to fix, e.g. mental wellbeing crisis, obesity crisis, ill-health, pollution, waste. This results in a government having to raise less tax, and presents a unique opportunity to offer additional social/economic/monetary incentives to these organizations. Conversely, governments could introduce additional economic/monetary disincentives to organizations profiteering from the creation of societal and environmental harms, e.g. worsening the mental crisis and/or polluting the environment. All the above are already being proposed and actively considered.

All become part of purposeful decision-making by a Purposeful Government^†, a Purpose Driven Government focused on creating a Purposeful Economy. Purposeful Economics actively accounts for the natural disruption to traditional models of economics and taxation resulting from the explosive/global growth in Artificial Intelligence (AI) too - creating a robust Post-AI economics. The world is facing a transformational technology shift, which in itself will drive a re-purposing of mainstream economics and humankind's unique role within it.

If the world of work is increasingly taken up by AI/robotics, how do individuals earn money to pay for what they need to survive and thrive? Will a 'Universal Basic Income' (UBI) become necessary in the future, as many experts now believe? If so, how will governments find the money to fund this if AI businesses can easily move locations to avoid tax? How will the wellbeing of humanity and the planet be affected? How will individuals find meaning/purpose in the absence of work? Will the wellbeing of people and the planet continue to be a casualty to the accumulation of money/wealth by a few?

Solutions exist, and Purposeful Economics will be needed to join the dots to ensure humanity and the planet both survive and thrive. Purposeful Economics will need Purposeful Organizations, Purposeful Education, Purposeful Finance, and Purposeful Government^† working alongside it - to superpower a Purposeful Economy and to create a thriving future (e.g. Purposeful Britain and a Purposeful World^†). All the above are possible and are being created, and new, holistic, and meaningful (i.e. purposeful) economic measures/systems are needed too.

Purposeful Economics will need to steer investment into changes that improve wellbeing. It will also need to invest in 'purposeful growth' (growth in wellbeing, not failure) and consider taxing the ownership/profits obtained from 'unproductive' assets/investments (to steer finance to purposeful growth) and significant harmful activities (to reduce negative 'externalities'). Again recognition/rewards linked to good deeds we do, for each other, our community, and the environment, will come to the fore - providing meaning, purpose, long-term happiness and human flourishing (Eudaimonia/Ikigai).

As the world of economics focuses increasingly on wellbeing, new purposeful measures/indicators will be needed; for value systems, social systems, governance systems, and economic systems. The economic system, and its governance, will require clarity of purpose, alongside the additional systems necessary to create a Purposeful Economy (e.g. Purposeful Education, Purposeful Organizations, Purposeful Finance, Purposeful Government). This will require a thorough understanding of systems and key intervention strategies to successfully change systems.

A key part of any system is communication and storytelling, which are ever more critical when change is required and significant barriers to change exist. Storytelling is how cultures are created and passed on (e.g. religions), and how movements and shifts in cultural perceptions are created (e.g. human rights movement) - which is still true today. The key difference today is the increased influence of traditional media, social media, institutions, corporations, money, and 'influencers'. Purposeful Storytelling (purpose-driven storytelling) will be key to creating motivation, engagement, and movement. It will also be key to avoiding misinformation, disinformation, deep-fakes and purpose-wash.

All these areas will need to be addressed, e.g. with Purposeful Ambassadors^† i) highlighting all the huge negative human impacts that the current system is creating (e.g. mental wellbeing crisis, homelessness, societal collapse, climate crisis), ii) challenging head-on the flawed argument that economics is a complex science/system that most people won't understand (e.g. using Purposeful Economics), and iii) creating a simple/engaging story of what economics is for, what a Purposeful Economy is, and how Purposeful Citizens, Purposeful Organizations and Purposeful Government^† co-create it.

There is much to do, and humanity is relying on us to do all the above both quickly and well, i.e. to be purposeful. Great work has already been done, and much of what's needed is already starting to happen. To be purposeful we now need to join the dots, overcome systemic barriers to change, and deliver - so humanity can flourish today, tomorrow, and in the future.

David Clift

Purposeful Ambassador®

Co-founder, Purposeful Education

Founder, Good Turns & Purposeful Enterprises

Co-developer of Purposeful  Britain and a Purposeful World

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© Good Turns 2024.

^† Purposeful Economics™, Purposeful Economy™, Purposeful Organisations™, Purposeful Enterprise™, Purposeful Education™, Purposeful Government™, Purposeful Communities™, Purposeful Society™, Purposeful Council™, Purposeful Citizen™, Purposeful Ambassador™, Purposeful Life™, Purposeful Growth™, Purposeful Britain™, Purposeful World™, Purpose Driven Government™, Purposeful™, Purposeful Storytelling™, Good Points™, Values are Valued™ are all recognised/registered trademarks.