Who controls the economy?

The economy shapes much of our lives. It determines what job we can or cannot get; it determines what we can buy or cannot buy; it determines where we live; it determines what healthcare we can get; frankly there is little in our lives which is not influenced by the economy.

With something so important for us, it makes sense to ask what power controls it. For instance, if the economy is going well, usually well-being indicators point upwards; if the economy is doing poorly, misery ensues when hospitals cannot afford drugs or the government cannot afford to pay pensions. But who decides if the economy is doing well or not? Is it our modern democracies? Hardly. Politicians like to promise economic growth and jobs but, as a matter of fact, the economy is largely out of their control; since, though they may have some influence on the workings within one country through taxation and legislative frameworks for conducting business, no single political entity has any control over the world economy. And, if the world economy is doing poorly, so will the economy of individual country.

We might say that money is the driving factor of the world economy. After all, money tends to go where it can generate the highest returns. For instance, if you had one million dollars in an account at Bank A and Bank A would give two percent interest, you would quickly move your money to Bank B if this bank would offer three percent interest. This forces companies and countries to be competitive in the sense of being able to attract money. But this does not warrant to say that money would rule the world economy. If that were the case, it would be far more predictable. Money does not invest itself but is invested by people and these people often do not follow predictable pattern in investing their money. Furthermore, the flow of money and investments is limited in many ways by laws and governments.

I think that the economy is not shaped by any of the factors listed above but by all of them. Indeed, there are many more factors which shape the economy, such as the weather and technological development. The economy is very, very complex and we do not posses the knowledge or ability to steer it. I think this is a very scary situation. For something which is so important for us, why do we allow to have so little control over it? Since there are many ways in which we could exercise more control, such as by directing the flow of investments, I think this should be one of our foremost goals; to get a better understanding of the economy and empower ourselves to oversee it.

Since the economy is global, and has been this way for a very long time, we need to build global political systems in order to control it. We need to assure that the drive for high returns is used for the interest of the people and not against it.

Categories: politics