We've known for a while that the consumer economy has been
transitioning into a knowledge/service economy but in today's economic
recession---everyone remains focused on getting the 'old
economy/consumption' going again.
A Full Spectrum Economy enables us to make the transition and its a
much better economy overall.
June’s jobless numbers added 467,000 more to the ranks of the unemployed. This sobering news prompts a litany of responses by politicians about the need to ‘get America back to work’. That’s the code phrase that means consumers need to start consuming so businesses can hire them back to produce the products that they’re consuming.
What politicians aren’t saying is that the consumer economy is in major transition right now and unlikely to ever return to the status quo. We’re watching the ‘demolition derby’ of the consumer economy. Markets and government crash into each other when consumers stop consuming. As businesses suffer, they fire their employees and then government becomes responsible for unemployment compensation but of course, this is paid for by taxes paid by still viable businesses. As unemployment increases, consumers ramp down even more on their spending and more businesses go out of business---crash, crash, crash!
From the viewpoint of the status quo, it would appear that the
only way out of this is that consumers have to start consuming again.
Thus, there have been stimulus packages and bailouts to help jump start
this dying engine. But, alas, we remain in a ‘great recession’.
Economists keep putting out statements saying that “the signs point to
consumer confidence returning or we’re close to the bottom and things
should turn around soon” with the hope that somehow by saying this, it
will actually become true.
But all of these statements defy a reality that no one wants to talk about—that the consumer economy is coming to an end. Much like the agricultural economy ended and we moved on, now it is the consumer economy’s time…and we are not prepared. This transition began in 1975 (Oil embargo)and by and large, it is now complete. Only, we’ve been trying to ignore this reality for a very long time. We keep hoping that some economist will pull a miracle out of his hat and we’ll be able to remain a consumer economy. However, this time, we need to bite the bullet and accept the transition. And here’s the thing--once we decide to do this, we’ll discover that the Knowledge/Service economy can offer us a better economy overall. We need to stop resisting this and embrace it!
In 1950, 8 out of 10 workers produced something tangible for the consumer economy. But in 2009, only 2 out of 10 workers are attached to a production industry. The other 8 people are now connected to a Service/Knowledge job. A Service/Knowledge economy is significantly different than a consumer economy—just as the consumer economy was significantly different than an agricultural economy. Different isn’t a bad thing—but it does require us to make some adjustments and view the potential of our future economy through a new lens.
One significant part of this will be how we
measure our economy. Trying to measure a service/knowledge economy by
the old rules of the consumer economy is like forcing a square peg into a
round hole. Just as we changed our measurement systems from the
agricultural economy to the consumer economy, this new economy deserves a
new measurement system too. Because production will be considerably
less of the overall economy and knowledge, service and caring will
become a greater portion, we need to recognize the new sectors where
this work will be taking place—and begin measuring and monetizing them.
A Full Spectrum Economy is exactly what we need to set the foundation for a new measurement system. A Full Spectrum Economy measures and monetizes all the activities necessary to live life. This means we will expand and measure 6 sectors instead of the current 3 sectors of the markets, government and illegal activities. We will be adding the household, volunteer and natural environment sectors as measureable activities. These activities are absolutely vital for the success of a thriving Knowledge/Service economy but they currently remain outside of the economic measurement system. These are also the areas where new employment will arise to replace the jobs that will not be returning from the consumer economy. Just as factories and consumer businesses replaced farm jobs, now businesses that foster full human capacity development will replace massive consumption industries. Because the bottom line is that in a Knowledge/Service economy, the ‘raw material’ that makes this economy expand is high functioning humans. This requires us to ensure that all humans have the opportunity to reach their full capacity or development. This will be possible when we add the 3 missing sectors because this where much of this work takes place.
This broader economic measurement system gives significance to activities done in our homes, through volunteer work and through the natural environment. Thus, we will still measure the GDP (Gross Domestic Product) but to it we will add the GHP (Gross Household Productivity) and GVP (Gross Volunteer Productivity). Thus, GDP + GHP + GVP = the Gross Real Wealth Product (GRWP). This is what a Full Spectrum Economy is all about.
This can be terrific news if we’re willing to see what’s staring us in the face—that a world built on caring services, enabled by ensuring that all humans have the opportunity for full human capacity development is poised to raise us all to a higher level. It is an inclusive economy and builds a world that works more effectively than the world we have now. It requires much more education and human capacity development—all of which is possible in a Service/knowledge economy.
Current business leaders can’t see it—but the 30 somethings can…..
When I’m talking with someone over the age of 55 about the changing economy—they find these ideas difficult to comprehend and they will often revert instantly into a ‘consumer economy’ language. Everything is about ‘profit motives’, increasing next years’ sales and what new products they can make/sell. This is natural because it is the world they grew up in. This model worked for them and they can’t imagine it not continuing to be successful. So it’s not unexpected that they’re stuck in their assumption that today’s economic recession needs only to get back on the old track and once people start ‘buying again’, all will be well. What they haven’t done however is paid attention to the reality that significant factors have changed. And those factors make a consumer economy no longer the solution for the future.
However, when I talk to the 30 somethings, they get that things are changing but they find themselves stuck in the middle while this train is changing tracks. It is a difficult position to be in. They are ready to let go of the consumer economy, but can’t figure out how/where they’ll work. The new model is still so new that it is next to impossible to find their place in it. They get it on the intellectual level, but until we as a country have acknowledged the need for the Full Spectrum Economy and its new work sectors/economic measurement system, we leave the upcoming generation stuck between a rock and a hard space. That’s why it is imperative that we open the dialogue and begin building a Full Spectrum Economy.
The good news is that the household enterprises and volunteer services are already active. All that’s missing is the measurement and decision to compensate for this work. This could easily be enacted through a national referendum and a decision to ‘invest in Main Street”. The Household enterprise sector could be launched and the National Volunteer Service Registry could be enacted within the year—we have all the technology available to make it possible. In doing this, we will start to institute the changes necessary for building a Full Spectrum Economy. At that point, we’ll be able to watch this new economy begin to take off and head us into the right direction. Then, we won’t be sitting around waiting for “consumers to start consuming again”—we’ll be busy doing the most important work of all—caring for humans and the planet and creating a “real wealth” nation. And it’s right there under our noses—just waiting to happen. Let’s get started!