Systems Economics: Essay 1 - Definition of the economic product

Abstract

This essay is the first in a series labelled Systems Economics, that re-examines some fundamental economic concepts using a systems approach with an objective to help guide advice on institutional arrangements for economic exchange in the real world of continuing dynamic change in values and motivations of the entities in a democratic society. These concepts incorporate past insights and evidence from forensic analysis of current human action that shows a gap between theory and practice. The objective is to help explore alternatives to the current institutional arrangements dominated dimensionally by the simplistic binary options of economic exchange between entities being characterized as market or firm (including government bureaucracy) and product characterization as public or private. In this essay to put economic action in context I first take a look at the general nature of entities and the resources they control. Then the nature of the rights to resources is explored together with actions that can be applied to such rights, all of which can be characterised as exchange. The motivation of each entity and the role of causality in economic action are explored. This brings us to the definition and role of products, including their dimensions. Finally, the ramifications of focussing on the exchange of accurately defined economic products are briefly contrasted with the current focus on consumption of physical products.