Rethinking the Economy

Now that I’ve used Getting Green Done to flesh out part of my argument, here’s the latest version of my framework.

The conventional economic framework, a.k.a. Econ 101, says the economy can be broken into 3 layers:

• People are calculators: they rationally pursue their self-interest given near perfect information about the world
• Organizations are calculators
• The Market is mostly efficient (with some help from the government)

The RTE framework says, that’s not how the economy works. The economy is like a game with complex rules that shape folks actions at different levels of the economy. In other words, the real world looks like this:

• People Aren’t Calculators: Behavioral Economics / Psychology / Anthropology / Sociology
• Organizations Aren’t Calculators: Organizational Development / Sociology of Organizations
• Political Economy: government sets many rules of the game, so players can try to win by:
  • Playing by the rules
  • Changing the rules

So if you want to make the world a better place, a simple, clean Econ 101 model won’t cut it. You’ve got to get your hands dirty and understand how the economy actually works. To do that, you need 2 perspectives on the economy:

• Practitioner’s Perspective: Understanding the rules that shape the actions of individuals and organizations in a particular niche of the economy.
• Movement Perspective: Stepping back, looking at the bigger picture, and forcing yourself to ask not what the most personally satisfying or most comfortable act we can take but what’s the most effective action.

Here’s how the 2 perspectives are related to the 3 levels of the economy:

• The 3 levels of the economy
• The metaphor of economy as a game with rules
• The ideas/principles embedded in the 2 Perspectives

What’s missing or needs work:

• Now that the idea of Perspectives has been rattling around in my head for a few weeks, it doesn’t feel like it’s working. I’m not sure why. It might make more sense to focus on the principles underneath the Perspectives rather than the Perspectives themselves. I don’t want to lose the impulse behind the idea of Perspectives. But I need something more fundamental, more bedrock.
• Issues like the role of race in the economy are implicitly in the framework, but they feel like they are getting buried.
• There isn’t a clear connection between understanding the mechanics of how the economy works and what really matters to us — our dreams, desires, fears, and overcoming feelings of helplessness. For example, where does a feeling like “we want our country to work again” fit in the framework?