An Interesting New Way to Look at the Economy: Are Economies Like Ecosystems?

We need a new way of looking at how the economy works if we want to solve our serious economic problems. The current policies and talking points, based on mainstream economics, are clearly not up to the task. It's time to re-envision our economy as an ecosystem in which each part plays a critical role. Progressives can start creating a framework that can help us to coordinate the entire system so that all the parts are functioning and thriving, with the government acting as a good steward. It won't be easy to break through thirty years of mainstream economic frames (we'll have to occupy the legislatures and the classrooms), but the first step is changing our language and lenses.

What's in a Metaphor?

Current economic policies, focused on balanced budgets instead of spending money to create jobs, are based on outmoded metaphors of the economy as a self-correcting system. In this misguided view, if something goes wrong, it will hopefully just get better on its own and the government doesn’t have to intervene. The government, according to the old Econ 101 view, can only make things worse. According to most mainstream economists, the market is so efficient that whatever happens must be the best of all possible worlds – and they are true believers, even after the disaster of the financial crisis of 2008.

In an ecosystem, on the other hand, each part, or niche, performs a particular task and the parts are dependent on one another. If we think of an economy this way, we see that manufacturing provides the goods that people use, and also the goods that the service industries are based on. For instance, services such as retail stores are selling goods that have been manufactured. The airlines are using planes that have been manufactured. Even the banks are using computers that have been manufactured.

For most of the 20th century, manufacturing anchored the American middle class. In 1968, manufacturing employed about 25 percent of the workforce, but by 2010 that number had shrunk to around 10 percent. Meanwhile, the income share of the top 1 percent almost perfectly mirrored the fall in manufacturing employment – taking 10 percent of income in 1968, and 25 percent in 2010. This happened because the ecosystem was imbalanced by shipping jobs overseas and firing American workers. Unions, which have been the champions for middle class advances for decades, declined in lockstep with the decline in manufacturing. This evisceration of manufacturing is the root of the decline of ordinary Americans. By taking an ecosystem-perspective, we can see that the core of a policy to revive the economy must be to revive manufacturing -- but we need to think about manufacturing in a new way, too.

Economies are Part of Nature

Beyond the decline of manufacturing, we face a grave ecological crises that threatens the foundation of the economy. The pollution of manufacturing and energy production threaten the climate and the viability of natural ecosystems. On top of this, oil and other essential materials are not limitless, and a civilization based on the assumption of a never-ending supply of these elements skirts disaster.

In order for the economic ecosystem to thrive, we have to rethink our approach to energy, transportation, and the way cities are designed. Currently, we have an energy sector that is extremely dirty, but we could create an energy economy that is very clean and emits no carbon. We can build hundreds of thousands of wind turbines and millions of solar panels that will provide our electricity, and once we have these systems in place, we can power the rest of the system sustainably. But such a system, which will also need a well-thought out national electric grid, needs to be planned carefully so that the national electric system is always receiving wind or sun from somewhere, even though it may not be windy or sunny all over. This means that the government must design such a system.