A new economic hypothesis

Society is made of individuals. Each person plays different roles. Some roles are critical to economic theory: The individual investor, the employee, the creative engineer, the manager, the business owner, the consumer and the regulator.

Each role has different priorities.

The individual investor wants to maximize returns with minimal investment, lowest risk and with total liquidity. The employee wants to be paid the most for minimum work. The creative engineer wants to create the most perfect product he can conceive, and would laugh at consumers who don't realize that that is what they need. The consumer wants the best product for the least price. The business owner wants to maximize shareholder value by having highest revenue and margins with minimal cost. The manager has to deal with resolving all these conflicting needs, while growing his salary and stock value. The regulator wants to ensure that the economy remains balanced - i.e., most people have ways to make enough money to have a prosperous life.

Adam Smith basically suggested letting everyone of these roles to sort it out without the regulator's intervention. He believed that the invisible hand of the free market would ensure prosperity without the need for heavy regulation. He also gave the highest power to the businessman as opposed to the employee.

Marx removed the businessman from the system and empowered the regulator and the worker.

Veblen and Galbraith argued for the rights of the consumer, and believed that the creative engineer should be empowered to produce the best product for the consumer.

Keynes gave power to the regulator to fix any imbalances, by inducing spending all around.

Given this background, let us articulate the problem we are set to solve. We want to find the best approach that satisfies all of these roles. We also want this approach to be stable, i.e., these roles must, as a whole, be satisfied for a long time under this approach.

We can analyze this problem by empowering each of these roles to go after its goals, and see if that achieves our two criteria: satisfying all roles concerned, and sustaining that satisfaction for a long period of time.

First, let us empower the individual investor to do whatever he can to achieve his goals - to maximize returns with low risk, minimal investment and highest liquidity. Now, there are several measures he can take to achieve this goal, and he may come up with this magic investment scheme where he makes a lot of money. However, this only benefits the companies who's stock he buys. He also does some Keynesian good, where he may pump more money into the economy due to his new found affluence, which leads to more allround prosperity. In this case, investor gains, the invested organization/industry's employees gain, though their actual revenue may remain unaffected. However, the business investor does not gain directly in any sustainable way, as the mere investment in his business does not guarantee any revenue or margins to his company. The creative engineer also doesn't gain anything from this. There is no specific reason for the regulator or the consumer of the firm's product or service to benefit from this.

Second, let us empower the employee - let us pay him for doing no work or minimal work. The employee may be happy, but everyone else would suffer. The creative engineer and the manager would slack, as they wouldnt need to work to get paid. The business would suffer, and so would the customer, and eventually, the reguators as well.

Next, let us empower the business owner. He gets lots of revenue, at minimal cost, driving share value up, investors are happy. However, the consumer is unhappy, since he didnt get anything in return for the money invested. The creative engineer is also unhappy - he is not funded to do what he believes will yield the best value for the consumer, since customers are willing to pay even without that cost. The regulators are happy, as long as consumers and creatives dont take to the streets in protest.

Now, let us empower the regulator. The regulator can, through some interest rate magic, possibly satisfy the businesses, employees, etc. However, he can never directly satisfy the creative engineer or the consumer.

Next, what if we empowered the consumer? Each consumer is given whatever he asks for. Businesses would never scale. Imagine a mass used product like some software - if each consumer, who may not know what it takes to provide a feature, begins to demand what he needs, then businesses will be drowned under the costs of providing individual personalized implementations for each consumer.

Finally, let us look at empowering the creative engineer. By engineer, we do not mean an engineering degree, all we mean is that this is a person who is passionate about building the best of technologies
for a given problem. The engineer creates the best product for a problem. The business is pleased, as it solves a genuine problem, and they can hence charge customers a good price for their effort of bringing the right solution for customers as a whole. This automatically builds the brand of the company with the best solution, and that gives the company the durability it needs. As long as companies continue to focus on creating value for the customer, customers will continue to trust them and be willing to pay for their effort. Most customers are happy as the solution focused on solving their problems. Finally, the regulators are happy as the economy is thriving which frees them and their resources up to work on other critical things.

Granted that these arguments are somewhat oversimplified, and you can argue almost any point here for years. But the obviousness of this thesis is unmistakeable. The summary? By every role focusing on empowering the creative thinkers to define the right solution for the segment of targeted customers, we have a positively reinforcing cycle of events that leads to overall prosperity for the economy.