Who Designed the Economy We Live In?
Why I’m writing about money, power and the living world—and why these questions belong together.
I come to economics as an entrepreneur, an author and someone interested in how systems work. Building businesses means dealing with incentives, financing, constraints and consequences. It also means asking whether the design still serves its purpose.
That question runs through my book, De regeneratieve beschaving, and my own regenerative project. It motivates this series: how do our economic arrangements shape what we build, what we neglect and what we leave to the next generation?
These questions reach into everyday life: the cost of housing, the security of work, the survival of a farm, the condition of our soil. Behind each sits a set of rules about what receives funding, what counts as value and who carries the risk.
There is a substantial intellectual history behind questioning those rules. John Maynard Keynes’s monetary theory of production placed money and finance inside the explanation of how an economy works. Expectations, uncertainty and liquidity preference—the desire to keep money readily available—shape investment, production and employment. An economy can leave people and productive capacity idle without automatically correcting itself. Keynes is an important foundation for the monetary and post-Keynesian strand explored here. L. Randall Wray examines that legacy in Keynes’s Approach to Money. wp438-paper.doc
My reading also brings me into conversation with Stephanie Kelton, Steve Keen, Richard Werner, Kate Raworth, Ann Pettifor, Jason Hickel, Dirk Bezemer and Eric Kaufmann, alongside Wray. They offer different explanations, priorities and proposals. Their disagreements matter. So do the connections we can develop between their work.
I will organise this exploration around four questions.
The first concerns money and banks.
In March 2014, the Bank of England explained in Money creation in the modern economy that commercial banks create deposits when they make loans. They do more than transfer existing savings from one person to another. This mechanism is acknowledged by a central bank itself. the UK's central bank
That makes the political question sharper: how should this understanding change the way we discuss investment and economic possibility? Who decides which activities receive newly created credit? What makes one project financially attractive while another, with substantial public benefits, struggles to proceed?
Public finance raises further questions, with different mechanisms and responsibilities. Those distinctions deserve careful explanation.
The second concerns private debt and financial instability.
Borrowing can finance useful investment. It can also support arrangements that depend increasingly on refinancing or rising asset prices. Hyman Minsky’s Financial Instability Hypothesis examines how prolonged prosperity can encourage a shift towards more fragile financial structures. The relationship between income, repayment obligations and refinancing becomes crucial. Levy Economics Institute of Bard College
A single debt ratio cannot explain all of that. We need to ask what borrowing finances, how borrowers will service it and who absorbs the losses when expectations fail. These questions connect household security to the architecture of the financial system.
The third concerns the economy’s relationship with nature.
Raworth’s Doughnut framework offers a clear starting point: meeting human needs within ecological limits. Housing, food, health and political voice belong in the picture alongside climate, fertile soils and the living systems on which we depend. Kate Raworth
For me, this changes the design brief. What should economic success mean if its measurement allows the foundations of future wellbeing to deteriorate? How do we distinguish activity that restores those foundations from activity that consumes them?
Regeneration makes that practical. Restoring soil, improving water retention and maintaining ecosystems require work, knowledge and time. Our institutions determine whether people can earn a living doing that work.
The fourth concerns models, power and the stories we tell about success.
An economic model selects parts of reality. The important question is whether its assumptions help explain the problem at hand—and what disappears from view when they do not.
Economics contains substantial debate and research on inequality, imperfect information and market power. My concern is how particular ideas acquire authority in public decisions. When is a political choice presented as an unavoidable economic requirement? How much of someone’s income reflects work and innovation, and how much reflects ownership, bargaining power or inherited advantage?
Those questions place responsibility back inside the discussion.
Across this series, I want to make the mechanisms understandable, examine the evidence and develop constructive proposals. Where I connect different thinkers into a regenerative vision, that synthesis is mine to defend. Their names cannot substitute for an argument.
The foundation of my book is the need for a new system design suited to the twenty-first century: institutions that can finance useful work, support human wellbeing and restore the living systems that make both possible.
My starting conviction is clear: we have the money to invest in our own future and in regeneration. Society has the monetary capacity to create and direct finance. Turning that capacity into regeneration requires appropriate rules, capable institutions and people doing feasible work.
Next week, I will explore that financing argument through Modern Monetary Theory: how a country can invest in its own future, and how finance can reach the people building it.
Who gets to decide which future receives that support?
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