“Economics: the study of mankind in the ordinary business of life”. —Alfred Marshall (economist)
From the above definition then, we can say that an economy is mankind at the ordinary business of life. As we enter the 21st century, we can look back over 3,000 years and see various economies that have evolved over the ages. Each reflects the needs of the humans of those times along with their accumulated knowledge and wisdom to apply in the “ordinary business of life”. Once we were hunter-gatherers that provided for a subsistence lifestyle and simple inventions. As we learned more, the agricultural economy emerged and while still subsistence on many levels, it did enable some levels of diversification for increasing knowledge and wisdom in new areas.
This was the primary economy for over 2,000 years but the seeds of the industrial/consumer economy were being planted within it. Global trade hearkens back to these times but it would not be until the 1700s that the industrial economy would become more visible. It would still take another 100 years for it to become the primary economic system. By 1850, it was well on its way to taking over the agricultural economy but not until 1960 would it reach its highest levels. Over all this time, we continued to expand our knowledge and wisdom accumulation and with each decade, more knowledge enabled new businesses and opportunities for “the ordinary business of our lives”.
The first computers emerged in the 1940’s but it would be another 40 years until this technology would significantly impact most people. Amazingly, within less than 20 years after this, the service/consumer economy would replace the industrial/consumer economy — well, at least in the Western world. By 1975, the US and Europe were outsourcing manufacturing to China, India and Mexico who would handle the industrial aspect of the consumer economy while citizens in the West were participating in the service/consumer economy as the major employers in their areas.
Now, in 2010, we sit on the precipice of another economy, an Integrative Economy. We have labeled it an Integrative Economy because it will include aspects of all of the earlier economic systems as it transforms each of them to meet the needs of the 21st century and beyond. We’ve accumulated a lot of knowledge and wisdom over the last 5000 years and yet, we realize there is still much to be learned. At the same time however, this knowledge accumulation enables us to consciously choose to include the best of all the earlier economies yet transform them to meet the needs of who we are now in the “ordinary business of our lives” and in respect to the challenges that are before us.
This article appears in Oct 14-20, 2010.