We Don’t Understand Economics

We Don’t Understand Economics

We destroy the earth, and ourselves, in name of something we do not truly understand. Too often the phrase, “Because the economy…” is used as a scapegoat. It is used as a scapegoat by people asserting their understanding of and control over a collective force we have very little understanding of and control over. Adam Posen, president of the Peterson Institute for International Economics says of economics, “We’re really at the level of Galileo and Copernicus,” still figuring out the basics of how things work.

Current Economic Theory is… Arrant Nonsense

We understand the economy and economics so little because, well, the fundamentals of them make no sense. The foundational concepts of economics are based upon concepts that are generally not true of the real world. As Jeremy B. Rudd, senior adviser at the Federal Reserve, admits “Mainstream economics is replete with ideas that ‘everyone knows’ to be true, but that are actually arrant nonsense.” Adding to this, author Tom Bergin points out, “The failure of the neoclassical (supply and demand curve) framework to explain important segments of economic life hasn’t dented economists’ faith in the universal applicability of them. In the past 40 years or so, in fact, the trend has been to claim that such economic principles apply to more and more domains of life.” Curious, isn’t it? As a social science, economics does itself no favours by not needing to apply its assertions and understandings to real-world scenarios. When we get right down to it, economics as a discipline and field of study is pretty airy-fairy.

Despite our lack of understanding about “the economy,” the assertions we make about it have a huge influence over our global decisions. “If even the simple supply-and-demand curve, a staple of the orthodox neoclassical (economic) framework, fails on something so fundamental as wages and employment, why do economists cling to it? And why do policymakers keep listening to them?” asks author Tom Bergin.

Why do we allow our assertions about “the economy” to have so much undue influence?

Current Economic Theory is… Disconnection from Self

I don’t know about you, but in the real world, the world I buy and sell in, and make my choices in, I create my own economy. I choose what I buy and from where and whom, and I decide what I sell, trade, and barter. I decide what the value of a dollar is to me and what my relationship to money, other people, and exchanging value is. Holding this truth, I’d argue there are as many economies as there are people, and that the larger Economy with a capital E, is a collection of our personal economies and the choices we make within them.

It’s no wonder economics and what it truly is and how it operates is such a giant black box. If my theory holds water and the larger Economy is a collection of our personal economies and the choices we make within them, then our personal economy would be as big of a question mark as we are to ourselves. Without reflection and understanding of our own economic choices, we have little capacity to understand the collective economy. Saying this another way, we can see our irrationality (and lack of self-awareness as humans) in that we’ve shaped a theory of buying and selling (economics) where we are rational players. We’ve agreed to collectively ignore our experiences of regretting a purchase, of making an impulse buy, of misunderstanding the true value of a product, and so on. We’ve agreed to collectively ignore a part of our self, our irrational self, and that it engages in the marketplace.

That’s not very rational of us, is it?

Further to its faulty foundations, economics is inherently patriarchal in its formulations of reality. It’s historically blind to women and households, and to the natural world. For instance, Gross Domestic Product (GDP), a darling of economic theory, is a partial and misleading measure of national wealth and well-being. Jane Gleeson-White explains, “The problem is that it does not measure key goods in our economy, those unpriced but priceless services carried out by domestic workers and by nature.” This current economic theory ignores huge swathes of value to human life.

Current Economic Theory is… Pseudoscience

Okay, so the foundations of economics are faulty. We don’t understand what we are studying, and that’s okay. Unfortunately, in economics though, it’s not so okay to say “I don’t know.” Economists are rewarded with influence for knowing things, even when they don’t. “Since economics wants to be seen as a science, it should act like one and take a firmer line on falsehoods,” concludes Paul Romer, Nobel Prize winner for economics in 2018. Economics massive narrative problem needs to be addressed. As Tom Bergin problematically points out, “Economists have so much faith in the rules (they follow) that they don’t study a market before asserting it proves their theory of how markets work.” And we listen to them because we don’t truly understand.

We believe they, the experts, know better.

A Way Forward

Considering all this, I’d say Adam Posen is right, we’re at the very beginnings of understanding economics and the economy. We’ve perhaps shaped a square wheel for ourselves and we have got a lot more awareness to grow in before we’ll realize the wheel’s true circular shape. Part of this growth will be in fundamentally accepting our current ideas need re-working. We need to admit we don’t understand the economy, and that economics as we know it is nothing more than a rough estimate and a jumping-off point for greater understanding.

I feel what we may come to understand more closely mimics Jane Gleeson-White’s perspective, that “the economy is a sacred social space organized around relationships of care.” We’ll come to see and understand the value of its circular, nodular and interconnected nature, and begin to shape our ideas around it based not on how we’d like for it to behave, but on how we observe it operating.


Photo by Xavi Cabrera on Unsplash


Your Economic Opportunity to Co-Create

Your Economic Opportunity to Co-Create

The ideology of profit-centred, protectionist capitalism fails as a worldview to guide us through the twenty-first century. Our current economic system is not sustainable.

We are in need of a more mindful capitalism. We are in need of a capitalism where we are responsible for the impact of our investments and the true costs of the things we acquire.

An Invitation to the New World

An Invitation to the New World

We stand at a time where we are collectively bearing witness to the abuses of power around us. What if our response to this abuse was to take action, by becoming architects of the new world? Through these actions, you have the power to shape a world where social empowerment is the priority in designing a just society.

Your acts of architecture in this new world are yours to define. If you see pricing and value as a place of reform, paying what it’s worth may be part of your new world portfolio. Paying what it’s worth is a socially empowered method of valuing goods and services. The buyer pays what they feel the product is worth, based upon the value they receive, and the seller receives a fair price for the value they provide. Through the simple act of creating a non-zero-sum scenario in your economic exchanges, you are creating collective social action in support of a sustainable, regenerative economy.

If you imagine a different kind of market society and a different way of valuing the world, understand you have the opportunity to create it. You have the power and ability to create your own economy and your own system for doing business. The type of economy and market you inhabit, as a customer and as a business, is yours to define and to choose. You have a choice in whom you do business with and how.

If we’d like for others to stop abusing their power, we first need to work on how we abuse ours. The current economic system is not working, and it supports us in abusing the value and costs of creation. It supports us in getting things cheap—at less than their worth—without an eye to the true costs of doing so. These true costs come in many forms, and their price is always paid, in one way or another. This universal truth is one we’ve been trying to outrun for too long.

The ultimate misuse of our power is in giving it away by not paying attention to the price tags of our actions, and their future implications. Isn’t it time we stop and take stock of all the costs we ignore? Of all that weighs us down?

Let’s architect together a new world where we pay attention to the price tags of our actions. For when we account for the cost of all our actions, economic and otherwise, we empower ourselves—and others—to do the same.

A More Empowered Economic Reality

A More Empowered Economic Reality

Since Dec 2020, new price tags can be found throughout Amsterdam that include the true and complete costs of the goods being produced and purchased. Amsterdam is becoming a “Doughnut City,” creating an economic reality where businesses and their customers are accountable to the true costs of goods and services being created and purchased.

Similar to the Pay What It’s Worth pricing system, Amsterdam’s approach and the “Doughnut Economics” they’re embracing are examples of people re-examining dated economic theories to help usher us into a more socially empowered 21st century.

Explore the principles behind “Doughnut Economics” more in this Time article: https://time.com/5930093/amsterdam-doughnut-economics

Pay What It’s Worth Is On Sale Today!

Pay What It’s Worth Is On Sale Today!

The long (at least it has seemed long to me) wait is over! Pay What It’s Worth: You Don’t Need to Set a Price on Value, my new and first book, is on sale today!

Thank you for your patience and understanding on this journey. As you may know, I wrote this book from 2009 to 2015, as I discovered, explored, and played with the concept of not setting prices. This exploration led me to better understand my perceptions of worth and value, and how I express them in my exchanges and relationships.

I’m very proud to have persevered on my first publishing journey (which is in no way over yet). It has been quite a ride bringing this baby into the world. Copies of the paperback book are currently available only on my website, but soon will be available at major online retailers too. The digital version of the book will also be available for purchase on my website in the coming weeks. I’ll be sure to update you when the digital version is available.

pay what it's worth by tara joyce
What is value? And who defines it? Explore with me how our relationship with money, value, and exchanging it shapes our perception of the world.

An ask for help

On a related note, in the coming months (nay years?), I will be working to connect with independent book stores and retailers in Canada and globally, in hopes they’ll be interested in carrying Pay What It’s Worth. While I am happy for the book to be found by readers through major book retail channels (such as Amazon), I very much desire for the book to reach people through more grassroots localized retailers. Beyond these avenues being my preferred way to shop, these small, intimate retailers may also be more open to practicing with pay what it’s worth and supporting the book’s ethos. Major retailers, however, insist there be a set price for the book and I need to work within their systems. Change takes time and I’m happy to start where I can.

I’m sharing this as I’d like to ask for your help, should you like to provide it. Would you help me connect this book with a small, independent book retailer in your community?

If you’re open to this, please email me at tj [at] elasticmind [dot] ca. In exchange for your support and leadership, I’ll happily provide you with a complimentary copy of the book, and we can explore from there how I can support you in sharing this book with your local community.

I appreciate your help and support.

Thank you for your time and attention, and for your interest in paying what it’s worth. You are invaluable to me.

P.S., I know I keep saying I won’t be writing in this space anymore but I keep being drawn back to it and I can’t deny it. Let’s just say for now, I am comfortable not-knowing what I am doing with this space. I hope you can also be okay with this not-knowing.