I-Thou Economics for a People-Centered Economy (Summary)

It can be possible to create a discipline of economics that is highly efficient and people-centered, seeing personal relations as meaning and wealth creation as means. The purpose of such economics will be to facilitate an economy that points people to see to each others wellbeing and penalizes “rat-race”, i.e. people are pushed to work harder without increasing wellbeing.

By David Nordfors, Co-Chair i4j
This is a summary. Reach the longer article here.

Economics can be counterintuitive and have negative effects. Increased commuting distances are bad for commuters but good for economic growth because it creates infrastructure. Paying people for doing things we prefer doing ourselves is “good for the economy”. This does not make sense to the lay man. GDP measures how much people rely on each others services, but it makes no difference between when people love or hate doing it. The relation between wealth creation and well-being is therefore problematic. Economics is agnostic to what people consider meaningful. People see meaning in caring for their loved ones and they work in order to create the means — the dollars needed for the interpersonal relations that really matter in life, the personal relations between people; friends, relatives, spouses and children. There are “I-Thou” relations. But the economics of today has no Thou, it defines meaning as maximizing the means; production and money. For individuals these are the “I-It” relations to things that can be traded.

It may seem like a reasonable assumption if people always apply their available means to make their lives meaningful. But in reality, people fall under the influence of economic thinking, adopting a view that maximizing their means is what brings meaning to life. Indeed, there are those who live in isolation from each other, caring more about money than people. Let us assume that the meaning of life is to be here for each other and that we create the means for it by working on things and ideas for dollars. This is a two-dimensional economy with “I-Thou”, interpersonal relations, having a higher degree of meaning than the “I-it” relations, which provide the means. Applying this idea to economics suggests that there are two types of value, “Thouness” and “Itness”.

Consider a case that creates both itness and thouness. Bob visits his friend Ann who lives in a different city. Bob works two hours for Acme Inc and earns $50. The Railex train return ticket costs ten dollars. They go to the Rose Pub. where Ann’s friend Marie works as a waitress. Bob pays the Rose Pub $40 for the dinner. Marie earns $10 by serving their table. Bob takes a liking for Marie but she does not have time to notice him.

The graph describes the interrelations between some people (red dots). They work and interact with organizations (Blue dots) in order enjoy each other’s company. The red lines are their interpersonal I-Thou relations that are made possible by the money they earn (green lines) in return for services (gray lines).

The sum of the green lines is the “GDP”. The sum of the gray is the total production of services. If their ratio changes, that means inflation (or deflation). This is the task centered economics we know today. The interpersonal relations (red) is not a part of it. This is tending to family and friends.

We may define “Thouness” as the sum of the red interactions, and “Meaningful Efficiency” as the ratio between Thouness and Itness. In other words, the amount of meaningful interpersonal relations the production of goods and services leads to.

The Table shows how people-centered economics, where meaning is defined as increasing Thouness and Meaningful Efficiency, and the present task-centered economics, where meaning is seen as increasing GDP. The weirdness of the GDP-economy disappears when including Thouness and meaningful efficiency.

The different view on what is meaningful in task-centered economics and people-centered economics is this:

• Task-Centered Economics: “It is meaningful that people want to raise families because it makes him work”. This comes across as cynical.
• People-Centered Economics: “It is meaningful that people work so that they can raise families”. This is how individuals think and speak about their lives.

Read the longer article here.