Introduction - Opening The Door
The first step to improving how the economy works is to believe that it can be done. I started thinking about economics about ten years ago with the assumption that the economy could work much better than it does now. To give up this view, I needed to be convinced that our current economic system was the best possible system. I read some books. I did a Master’s degree in Economics. I still believe that we can do much better than we are doing today.
Mainstream economic theory is interesting. Brilliant people over the years have thought about how the economy works and have had some great insights. A wrong turn was made, however, early on. Economists decided to simplify their economic theories by assuming we are far smarter than we actually are. Much of mainstream economic theory relies on our having a perfect understanding of the world we live in. There have been many academic studies done that show that our understanding of the world is, in fact, flawed. I don’t, however, need the academic studies. I often can’t find things I’ve misplaced around the house. I know for sure that I don’t have a perfect understanding of the world I live in.
If you agree that there are some gaping holes in our understanding of the world, a whole lot of room is created for new ideas about how to organize our economy. Mainstream economic theory relies on the assumption that we have a perfect understanding of the world when it argues that markets are the best way to organize the economy. Take away that assumption and the number of possibilities explodes. Markets become just one of many possible economic systems to be evaluated based on their strengths and weaknesses.
If our understanding of the world isn’t perfect, the economy needs to be designed to help us be productive despite the mistakes and errors we inevitably make. It needs to allow our strengths to shine and to compensate for our weaknesses. Instead of trying to design the best possible theoretical economic system, we should focus on developing an economic system that can reliably meet our needs.
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