Nobel Prize of Economics: Back to the basics

This year’s Nobel Prize of Economics to Elinor Ostrom and Oliver Williamson seems to have attracted more attention than previous years, and by reading the comments, I have the feeling that everyone saw signs of what they find important. I believe that the reason for this is that both recipients worked on broad subjects, that have become mainstream, thanks to the climate change issue and the Great Recession of 2008-2009.

The title in this week’s The Economist is “The bigger picture”, and the subtitle is “This year’s Nobel prize has rewarded the use of economics to answer wider questions”. This sounds to me like common sense having turned into some revolutionary concept for some people.

Per definition, economy is the management of natural and human resources to sustain human population. Therefore, it is the very essence of economy to address wider questions and the big picture indeed. To that extent, their receiving the Nobel Prize definitely makes a lot of sense, especially in a time when common sense (aka wisdom) has been widely forgotten and economy has been reduced to just money and profits. What we forgot in our drive for instant gratification is the long-term consequences, and the costs associated to those.

The definition of economy tells it all: it is about the Earth, money and people and it is sustainable. Well, this sounds a lot like the triple bottom line concept, doesn’t it?

Triple bottom line and sustainability are not ideological concepts, and those who try to make it so, are probably making as big a mistake as those who ignore them. Needless to say that reducing such concepts to PR and to marketing are even bigger mistakes, because such an approach only serves the short-term.

Economy, triple bottom line and sustainability are about just one thing: life and survival of our species; and that requires integrating the long-term vision of our societies. If we ignore the future, we will not have any. It is all back to the basics.

Copyright 2009 The Happy Future Group Consulting Ltd.

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