“Sapiens” and Economic Value

To some extent, Economics is the study of how people produce more (both variation and volume) when they work together. Most of the time people have a place in the world’s economy when they provide value, which is measured by money and credit…mostly.

The book “Sapiens: A Brief History of Humankind” by Yuval Noah Harari has me thinking differently about economics. Harari takes us into critical transitions in human history; like the years just before and after the invention of “credit”. According to Harari, “credit” is anchored in the belief that the future will be better than the past. For most of human history, people assumed the reverse. The future was no match for the glory of the past.

Once credit took hold, however, both for good and ill, it allowed for a greater and more frequent transfer of value. Humanity could start to build a future together. And value could begin to be sought out in all corners of the globe. Trade and credit meant that we could do more together. And the more humans worked together to produce what they needed (or wanted) the more the economy grew. With all the benefits of economic growth, humans also witnessed exploitation and abuse of this system. Individuals and institutions figured out how to steal value from others who weren’t in a position to know better or defend themselves.

Unfortunately, trading on stolen value still happens today. But in the greater scheme of things, I find myself wondering about how we’re going to manage value and economic growth in the future. We’re moving from exploiting people to simply eliminating them from the equation all together. If people are not providing direct value to the global economy, will they be able to participate? Will there be huge swaths of people who can’t take advantage of all the value being created because they won’t have anything to offer in exchange for it?

Think of the countries or societies that are generating value and those that aren’t. Countries that don’t generate value fall victim to crime and exploitation. The further they get from full participation in the global economy, the further they get from the benefits of modern society. Disproportionately they end up on the downside of the world’s value systems.

As a result, with no value accessible to them, citizens in these countries migrate toward countries where value is accessible; where they have a chance of participating and producing value of their own. These value destinations, however, have responded by restricting their borders. Also, they attempt to control the flow of value by forcing their hand in trade deals. But these kinds of restrictions are antithetical to what actually makes a global economy work in the first place. We generate value when we work together.

Sure, there’s competition, but ultimately the real wins happen when we engage countries and societies who have been left out. And we all win when we help them generate value. The more overall participation we get, the better we’ll all be. Both because we’ll benefit from what these countries have to offer and because they won’t become feeders for crime and violence.