Why Usefulness

When economics, understood in terms of the science of exchange, was first conceived the planet was degrees cooler, plants and animals were more diverse, water and air were cleaner and Adam Smith’s water diamond paradox captured the imagination of economists and law makers. The most useful things were not scarce.

In the 19th and 20th centuries the biggest problems to be solved by economics were how to decide prices, wages, the distribution of income in a world brimming with life.

But no longer.

Useful things are becoming scarce - peace, spare time, savings, languages, bees and butterflies, thriveable incomes, native forests, fertility and birth rates, attention spans, topsoil, housing, social license, fish and other wildlife in number and species, research and development, liveability, food, fresh water, bowling clubs, liberal arts degrees, and even listed companies. All useful and disappearing.

In this century, Smith’s paradox exists in reverse. Why is it that the things with the greatest price cannot buy the things with the greatest usefulness? All the diamonds ever mined unable to re-acquire a fraction of the seas, rivers, lakes, and aquifers dried up, diverted, poisoned and polluted in the pursuit of profit and the productions of things with exchange or instrumental value.

Why don’t the most useful things things get produced any more? And why is there so little research into usefulness?

The obvious answer is economics. Dig into the theory of value behind the faith in markets, demand and supply and prices and you won’t find anything that explains how the most useful things are supplied and distributed.

The problem with economics is that economists confuse their ambition to solve every problem faced by humanity with perfect markets with their ability to grasp even the most elemental laws of physics that are at the core of each of those problems.

If mainstream economists can’t explain where all the useful things have gone and why markets aren’t replacing them, why do politicians and regulators continue to take their advice?

The search is on for a modern theory of value that explains how useful things or things with value in use get produced. An approach that explains why economists give terrible advice and will one day replace the economic foundations of corporate law and corporate governance. I call it the the Millennia Challange and it’s been the work of my lifetime.