Thinking of Our Economy in New Ways

For so many years, our economic thinking has run backwards. We have thought that the key to prosperity involves reducing tax burdens at the top of the pyramid to stimulate growth at the bottom (supply side economics). Or, prosperity involves a “free market” — unfettered by any concerns other than profit and shareholder value — coupled with a shrunken, compliant government (neoclassical economics).

We have seen where this thinking gets us: a global economy that has chewed up the earth’s biosphere and income inequality so severe that our democratic institutions are eroding.

But what’s the alternative?

A number of economists have been working on this problem, and they are coming up with valuable insights: Kate Raworth, Eric Beinhocker, Marianna Mazzucato, Ha-Joon Chang, Brian Arthur, Stephanie Kelton, Daron Acemoglu, and James Robinson all have written books worth reading.

Here’s my take, based on years of rebuilding regional economies devastated by globalization.

We will be far more productive if we understand that 1) our Market Economy is embedded in a Civic Economy; and that 2) investments in our Civic Economy drive productivity in our Market Economy.

Our Civic Economy includes activities and investments that are publicly valuable, but not privately profitable (think schools, infrastructure, public health and safety). Our Market economy includes activities and investments that are publicly valuable and privately profitable (think any business that operates within the rules we set through government).

Civic Economy investments will determine our future prosperity and well-being. So, for example, the most powerful economic development programs we have had in the U.S. were the establishment of land-grant universities beginning in the 1860s and the GI Bill after World War II. Both represent major investments in our Civic Economy.

The most productive investments will take place on the boundary between our Civic and Market Economies. By definition, these investments will be collaborative. They consist of two types: publicly-led and privately-supported (think infrastructure) and privately-led, publicly-supported (think the development of research and clusters).

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Over the past decade, we have seen scholars try to define this boundary. They have suggested “business ecosystems“, “shared value“, the “industrial commons“, and “collective impact“.

The emergence of open, loosely connected networks is shifting the way economic activity is organized. While scholars have focused on describing “what” is shifting, they have not provided much guidance on the “how”. How do we form these more productive, network-based collaborations?

That’s where Strategic Doing fits in. It’s a discipline for addressing wicked problems by designing and managing complex collaborations…by following simple rules. I’ve just finished writing a dissertation on all of this. If you’d like to get a copy when it is released, please just email me: emorrison1@una.edu. Please put in the SUBJECT LINE: Dissertation Request. I’ll set up an e-mail rule, so I will not miss your request.

Got other thoughts? Just add them below.