Missing the point

This image might seem like a silly joke but it points out an important effect of our economic system. Economic development is important as a mean to satisfy the needs of a society. The basics of Economy have always been to manage scarce resources, that is, to make the best use of the available resources which implies there is a goal different from "managing" itself. Mistaking economic development as a goal instead of a mean seems to be a terribly common mistake.

Economic development has evolved to a simplified conception of economic growth. Even worse due to the most commonly used indicator to measure this (GDP or a variant of it), many times people are actually talking about "production level/growth". While this can arguably a simplified way to express the "economy size" (a more complete definition should include a measure of capital and natural resources, not only production), it is very far away from what true economic development should mean, fundamentally because it refers to the outcome of a system as a way to describe the system; this completely avoids the potential of the system or the characteristics that brought this outcome into place. Describing a car in this way would be something like "10000 km/year" which definitely leaves a lot of important elements of the car out.

An even deeper discussion of this topic would mean if it makes sense to qualify an economy on its size. Is it a bigger economy better than a smaller one? Even on "per capita" terms, this indicator is rather limited. It doesn´t tell you anything about how efficient is the economy in generating benefits from the resources available, or on what is the potential for keeping this level of economy in the future. More fundamental questions like whether this economy can satisfy the necessities of its people (which should be the goal of any economic system) are very far away.

It is said that what can´t be measure can´t be improved, however the way we measure something sets the direction in which this will be improved. We can´t expect to have a sustainable development unless we start evaluating the potential of an economic system to generate future benefits. Furthermore, achieving any kind of development is meaningless if this development doesn´t improve the situation of the society.