I’m not an economist by education—as I’ve previously mentioned, I was a linguist—so it has taken me a few years and a lot of reading to arrive at what seems like an obvious statement in retrospect:
The economy is people.
This fuzzy concept we call “the economy” is about a system of tools that enable people to provide for themselves, that measure how well people are able to shelter and feed themselves, and how much people are able to invest back into their own well-being.
You could say that this statement is the “everything is connected” of economic ideas. It sounds simple and self-evident, but it’s the layers of its truth that give it revelatory impact.
The COVID-19 crisis has robbed the world of so much, but I do have to thank the crisis for teaching me so clearly that the economy is people—both in terms of our well-being and our productive output. Also planet, as in the state of nature and natural resources. I hate that I spent so much of my life thinking of the “economy” as merely a monetary abstraction.
Measuring a human health crisis in terms of dollars makes no sense. We should be measuring it in terms of human lives impacted, in terms of human potential cut short, in terms of human experiences thwarted. But those are more nebulous figures, and somehow less motivating in a boardroom.
If we are to be proponents of capitalism, as I’d venture many of my readers are, then capitalism must be about solving people’s problems in alignment with a focused business objective.
The economy, then, should really be a measure of how efficiently people’s problems are solved. And we can apply this to discussions of the various subeconomies: the sharing economy, the gig economy, the knowledge economy. At the end of the day, what we’re talking about in every case is people: The economy is built on people.
So it’s been a lucky break for me that in the past few months I’ve had the opportunity to deliver keynotes for conferences with audiences of credit union leaders, financial regulators, asset managers, and a variety of other financial and banking professionals.
This serendipitous convergence has been an interesting opportunity to re-examine my research and writing on the future of value and money from A Future So Bright, as well as the research and writing on the future of trust and truth.
So what does this weirdness mean for you?
Well, you’re going to have to accept it because money isn’t just weird now, it will continue to get weirder. Cryptocurrencies and non-fungible tokens (NFTs) are two developments you should look at to understand this “weirding.”
Together these technologies will change not only how people view assets, but how they manage those assets and their resulting wealth. What’s important about crypto and NFTs isn’t that they’re part of the future, but the effect they have on shaping that future.
People will have to understand the importance of decentralization, as well as just what a blockchain is. They’ll need to be tech savvy enough to invest in the future without getting scammed out of what they’re worth now.
In short, people are going to have to deal with a lot of weird stuff — which is why it’s so important for business leaders to look at the emerging trends now, for people to familiarize ourselves with the shifting landscape, and for social justice issues to be factored into that future.
In case you haven’t been tracking closely enough, here are a few key trends that may be showing up on your radar screen:
meme stocks – these are digital assets issued for companies that are based on memes and viral content.
cryptocurrencies and blockchain protocols – while some people view cryptos as the key to decentralization, others see them more like a payment method or commodity. Cryptocurrencies are likely to continue to play a key role in how people do digital transactions, but they won’t be the end-all, be-all for money or assets.
People also need to understand what a blockchain protocol is if they want to invest in the future of money and value. Blockchains are the decentralized ledgers that record transactions and timestamps on a network, and they were first introduced as part of Bitcoin (BTC). Those protocols will increasingly impact other industries outside of finance, but there’s work to do first in terms of educating people about their potential impact. (And that includes their ecological impact, as I wrote about in A Future So Bright.)
NFTs – these are the digital tokens that have created a new kind of asset class. They represent ownership, whether it’s decentralized or centrally managed, and they can be fungible (like cryptos) or non-fungible (unique like art).
Enthusiasts see NFTs as the key to decentralization, because they take people out of the center where their worth is defined by institutions.
digital scarcity – We tend to think of tangible goods as scarce and digital assets as freely reproducible, but NFTs limit the supply of a digital asset and create inherent value without institutions or centralization.
If none of that helped clear anything up, just understand this: every day, the future of money is getting weirder than ever before, but with that weirdness comes opportunity. If you’re not thinking about what that means for your business and industry today, you may be missing out on the chance to create new value and experiences. And you may be surprised when someone comes out with, say, a blockchain protocol that makes your business obsolete. You need to understand how this “weirding” will impact your space.
Remember: The Economy is People
I’ve madethis pointrepeatedly, but it’s more important than ever to remember that the economy isn’t just an abstract concept of money and digital assets — it’s people. It’s about people and their well-being, how well they can provide for themselves, and what they want for themselves and their families. It’s also about who will be dis-empowered if we don’t work now to secure our digital rights.
The importance of financing climate resilience
We’re already seeing the impacts of climate change; it’s going to be a key factor in our ongoing future. Left unresolved, the effects of climate change will have devastating impacts on human populations around the world. Because of its severity, we need to address this global crisis now, and there’s an opportunity here: finance innovation can help us better prepare for the worst of possible futures.
It’s about making sure that communities can survive when things get worse. It’s about allocating capital to projects that will help them thrive in the face of climate change. And it’s about investing in new technologies that will help people adapt to a changing world.
The future will always bring surprises, so we’d better prepare for those as well. It’s about laying plans for the best possible outcomes, while also being prepared to adapt to the worst, or just anything that comes next.
The future may be weird, but it can also be bright if we make empowered decisions today to invest in a better tomorrow.