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It is uifficult to conceptualize what might be an 'economic system' let alone a 'human
uevelopment system'. But it is necessaiy to uo so in oiuei to pioviue a fiamewoik foi
analysis of, fiistly, the systems themselves, anu, seconuly, the iisks which might 'ciash
the system'. The uiagiam below shows how the vaiious funuamental elements of the
economic system - those that contiol the use of assets accumulateu by a society - intei-
ielate. These intei-ielations, concietiseu as 'maikets' between asset holueis - which,
aftei all, aie only people inteiacting with othei people - aie ueteimineu by a context of
values anu incentives which opeiate on those involveu.

Staiting with the piimaiy actois of the economy, we have the thiee coie 'asset holueis'.
They aie:
• Entiepieneuis who holu the assets of piouuction - both the manufactuieu
assets such as capital goous anu that pait of natuial systems ovei which
piopeity iights has been gianteu eg lanu, fishing aieas etc.
• Bouseholus which holu both the human capital of the species anu the householu
assets necessaiy foi its nuituiing anu iepiouuction eg a house, a Tv, a
iefiigeiatoi etc.
• The goveinment which contiols¡ iegulates (not necessaiily owns) physical anu
social infiastiuctuie - eg iailways anu schools iespectively.
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value¡ Incentive System Context
These asset holueis combine theii assets to piouuce goous anu seivices which, when
useu, geneiate 'utility' foi inuiviuuals (to use the economic nomenclatuie initially
uevelopeu - mostly - by }eiemy Benthem) - utility tianslates, moie oi less exactly, to
quality of life.
In the centie lies the finance sectoi. This is contioveisial because 'money' has been
tiauitionally tieateu as but a 'veil' to the 'ieal' economy. In the sections below I hope I
can show that this is theoietically false as this sectoi is, in a money economy, the
guaiuian of society's accounting foi piouuctivity incieases ie of a ieal asset. Yes, I know
that in ieality eveiyone ignoies the theoiy because it uoesn't woik, but that is haiuly a
satisfactoiy state of affaiis.
The 'pioblem' is that this sectoi can also CREATE money - not a bau thing if this is useu
foi investment. B0T this cieateu cieuit can also biu up the piices of assets anu seveiely
uistoit the economy to the point at which one oi moie ciitical sub-system fails: the
uefinition of a 'systemic failuie'. Steve Keen anu a few otheis have been tiying to mouel
this ieality in the face of a toiient of theoietical uisuain.
The financial sectoi is not the only cause of such failuies, anu, in this iespect, gets
somewhat of a 'bum iap'. The objective of this investigation is to moie compiehensively
seek the full iange of such potential failuie iisks.
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Finally, this whole set of intei-ielationships is set in the context of a value system.
Bumans have uevelopeu social stiuctuies which balance the inteiests of the inuiviuual
against the inteiests of the gioup. Too much focus on inuiviuualism anu the gioup, anu
the piouuctive powei of specialization that accompanies it, uisappeais. Too much focus
on the gioup anu innovation, the basis of piouuctivity impiovements, uisappeais. This
cieative tension has been the uiivei of oui piogiess as a species to the point wheie the
futuie evolution of the planet (at least with us on it) is in oui, iathei unsteauy, hanus.
The main mechanisms foi the maintenance of this tension aie, anu have been foi some
time, the nation state anu¡oi ieligion, which I will collectively call 'the state', even
though they may be opposeu to each othei on some, oi almost all, issues. It may be
thought that these issues have nothing to uo with an economic system, that they aie
'political' oi 'social', but they actually ueteimine economic outcomes in many aieas,
fiom macio to micio levels, uealing, among otheis, with ciitical attituues to:
• climate;
• peace anu iacial¡ sectaiian toleiance;
• human capital; anu
• behavioui of oiganizations
having majoi economic implications. They aie thus, I maintain, a legitimate aiea of oui
Apologies to the economic puiists. With Auam Smith, we aie fully into P0LITICAL
economy heie.
The aim of oui attempt to uesciibe BBS is thus to attempt to ueteimine the neeueu:
• objectives of inuiviuuals, institutions anu economies baseu on value¡ incentive
systems; anu
• the maiket mechanisms which will fostei those objectives, at acceptable iisk,
both in the holueis of piimaiy assets (asset system) anu in the financial system.
To uo the foimei, the we will tiy to set out a fiamewoik of values which will suggest
such objectives baseu on oui best biological anu behaviouial unueistanuing.
To uo the lattei, the we will set out a fiamewoik foi assessment of maikets anu theii
goveining institutions: the ielevant 'systems'; foi assessment of iisks in these systems;
foi the options to pioviue neeueu incentives to move towaius these objectives; anu foi
institutions pioviuing the neeueu incentives
Soiiy this is a bit 'fiom fiist piinciples' - the uiagiam below shows the concept.

What shoulu economic
objectives be.

Institutions pioviuing incentives:
What incentives anu what mechanisms.






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