Society comes before markets

What is society? It sounds like an obvious question, but modern economics rarely answers it well.

Too often economics starts with the idea of isolated individuals making rational choices in markets, as if society somehow emerges afterwards. I argue that this has the relationship completely the wrong way round.

We are not born as independent individuals. We become who we are through our relationships with other people. Families, education, communities, trust, language and shared knowledge all come before markets. Society creates the conditions in which individuals can flourish, not the other way around. In other words, society does not emerge from independent individuals. Independent individuals emerge from society.

That changes how we should think about the economy.

This is also true of markets. They are important, but they depend on trust, law, public infrastructure, education and a stable monetary system. Society creates them.

Money also only works because society collectively agrees that it does. And accounting records relationships, not just transactions. Economics has too often forgotten that fact.

If society is fundamentally a network of relationships, then its purpose is not simply to maximise GDP or consumption. Its purpose is to create the conditions in which everyone can realise their potential while respecting the limits of the natural world.

This video is the next step in my Economics of Hope series. It builds on earlier discussions about human potential, money and taxation and prepares the ground for the next question: why do governments exist, and what should they actually do?

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