Trying to locate the economy, even in a simple, conceptual way, sheds a lot of light on what's important and why we struggle with major problems. Being lost, even just for a few minutes, can be anxiety-inducing and disorienting. People generally like to know where they are. Actually, we kind of like knowing where everything is. The first thing explorers do is make maps. Today, we have Google Earth and GPS devices so we can pinpoint the location of anything, even ourselves.
Knowing where something is located is useful if you want to make money, or spend money, or make a trade, or find a resource. Everything and everyone has a location. Those of us who work in cyberspace even have an "address."
But, on a grander scale, where is all of this activity - working, exchanging, spending money, mining - happening? In other words, where is our economy located?
Going by what I learned in economics, I would say... Well, I wouldn't be able to answer the question. The economy just is. It exists. Somewhere. Does it really matter?
As it turns out, it does matter. In fact, trying to locate the economy, even in a simple, conceptual way, sheds a lot of light on what's important and why we struggle with major problems.
Everything (with the possible exception of the universe itself) fits into something larger. We refer to this "something" as environment. Whether you're trying to understand cells, complex organizations, entire species, automobile engines, human behavior, or geology, you have to understand that thing's environment.
Economies are no different. They must be understood in relation to their environment. Unfortunately, we have a tendency to think of economy and environment separately. This leaves economies to seemingly exist in a vacuum.
The fact is that human activity takes place within and depends on the biosphere, a complex system that determines climate and weather, controls and manages the chemical composition of the air we breathe, cleans, desalinates, and distributes the water we need, manufactures soil and fossil fuels, and filters cosmic radiation so we can live safely. In order to create wealth, we "use" resources from the biosphere. When we use resources, we generate waste, which returns to the biosphere. How can we make good decisions about resources and waste when our basic economic model essentially ignores the foundation on which everything depends?
The answer is we can't make good decisions over the long term if we think that economies exist independent of our environment. Viewing human industry as distinct and separate from natural systems has led us to believe that the laws governing the behavior of and determining the success and failure of all living systems do not apply to economic systems. The underlying assumption has been anything goes.
When there were fewer people and seemingly limitless resources, we got by. But we're discovering that we need a better way to think about these things. In fact, with a different perspective, we're discovering new opportunities.