(originally posted 5/24/20)
The economy is a tool, one of many in the arsenal of humankind. Toolmaking is one of the defining characteristics of the human that has led to our success, especially in conjunction with cooperation. In their ideal state, economies are complex tools for facilitating cooperation. This is an important thing to remember. The economy is not a God, nor is it a natural system. It is a tool built by humans in the form of a set of rules. It may reflect a particular view of a natural system but it seems to be a simplistic one that ignores complexity, empathy, and cooperation. (There are many worthwhile questions about whether our economy is indeed about cooperation as opposed to funneling money to an increasingly rich minority but that is a different, related discussion that I won’t be writing about here).
The economy is not a tool for measuring human well-being. This is something to remember when we panic about its performance. It measures exchange but exchange doesn’t always mean welfare, happiness, or health. What is necessary for human health and well-being right now is for people to simmer down and maintain some distance from each other. This will invariably reduce the rate of exchange. That is not a problem unless you are putting the economy above human well-being; that is, if you are putting the health of the hammer above the strength of the house it is being used to build. Perhaps one of the cracks in our society laid bare by the COVID-19 pandemic is our single-minded focus on financial exchange of goods between private entities as the basis of human well-being.
There is a saying that goes, “if all you have is a hammer, everything looks like a nail.” We often speak of the economy as if it measures total, holistic human well-being. That is not what this tool does. If we want it to do that, we will need to restructure it. Until then, we should remember that if the hammer doesn’t seem to be working for the job we’re trying to do, maybe we’re trying to drive in a screw and should put the hammer down for a bit and pick up a screwdriver.