Mind Map - Economics

This map sketches some ideas in play when we discuss "economics". Many maps could be drawn. The object is to aid thinking about issues. When we move from box to box and elaborate relationships we "drill down" on the concept of "economy", often discovering concepts that are not obvious or are often omitted when discussing the subject. The economic role of biodiversity is a good example. Another is the tendency to regard different compositions of individuals as separate kinds of actor - consumers, workers, owners, corporations, nations ...

Agent

An "agent" is a person or entity that acts like a person, showing things like agency and ownership. It is useful to regard all agents, not just individuals, societies, etc the same way. There is a connection to "dragon theory" here since actors can be "dragons". The corporation and the military are examples.

Lately, we have begun to see the environment as an active participant in the economy. It doesn't just "lie there" to be exploited, depreciated filled with waste. It actively "pushes back" with climate change -- a huge long-term factor in the economy.

Actor

As the name implies, an "actor" is active in the system. It has "behavior". An agent is an actor but not all actors are agents. The difference is that some actors behave according to rules with no "agency". Examples are "nature" which behaves according to the rules of physics and markets that behave according to a restrictive set of parameters. The environment is the most important non-agent actor.

Markets

In modern societies, money is "backed by" debt, not precious metals. Whenever money comes into the picture, we need to ask about the corresponding debt. These days, "markets" are generally "oiled" by money, but not always. For example, employment can be a market for skills that are only indirectly tied to money.

Markets are an example of impersonal "machines" that act as living things - dragons. What distinguishes dragons is governance by an algorithm and rigid rules rather than human goals.

Businesses, including individual businesses and corporations, act like captured markets, attempting to trade off resources to achieve "efficiency". The larger the business, the more it is likely to act like a dragon.

The same can be said of "nations", often characterized as "economies". The vitality of the internal marketplace is called the GDP.

Money / Debt

It is useful to split off money/debt from wealth since it is a hugely influential form of wealth. It acts very much like electricity with positive (money) charges flowing around fluidly as do negative changes (debt). The flow is called an "economy", producing things like "income". Most "wealth" doesn't act like this. For example, real estate kinda stays put.

Wealth

This includes the obvious stuff, such as money and the things it can buy, but that drags in debt as well. We need to consider credit (the ability to borrow) as an asset. There are many non-financial aspects of wealth, including "social capital" and the health of the environment. In the diagram, the environment is pictured separately. Part of it is "owned" as wealth, part of it does "work". Similarly, "wealth" of other types ("investments" and "capital") can do "work".  Wealth usually has some kind of maintenance cost that requires work.

Work

Work does many things, including creating wealth. In the same box is "anti-work" or entropy, which destroys wealth. That includes "depreciation" but also "consumption".  The "work" done directly by individual actors is called "labor", but that labor is usually done by composite actors. Individuals act much like "cogs in a machine". "Wealth" is considered as "capital" does "work" too ("plant" or equipment). Money/debt also plays a role but "financing" work and introduces a process like "friction" that is seen from one point of view as financial profit, or from another like "entropy".

Environment

The environment does work by providing energy for the process. It also depreciates and absorbs waste. Some, but not all of the environment is "owned" by "Actors" as "capital" or "wealth".

Most of the land surface of the Earth is "owned" by the Nation States. On a human scale, most of the rest can be seen as the "commons". All this depends on a certain prejudice we have of scale. Nobody really "owns" the sun, the atmosphere, the ocean or the microscopic world, all of which have a huge economic impact.

---------------

P.S. After a month or so of looking into economics, I'm sure I would re-draw this diagram. Even so, seeing the need to re-draw it is progress. Otherwise, the ideas just rattle around under the surface without ever being challenged. Specifically, the nature of money needs to be considered.