The Forgotten Purpose of the Economy: A Decent Life for All

The objective of the economy is to give everyone willing to work hard and contribute a good life.

The objective of the economy is to give everyone willing to work hard and contribute a good life with dignity.

That sounds obvious, until you realize it’s an idea too many have forgotten. We talk about the economy in an entirely mechanical way. We quote statistics. We watch markets. We obsess over profits and growth. We act as if the point of the economy is to enrich investors and make the green numbers on spreadsheets go up. We forget what an economy is for.

The economy exists to productively employ the talents of everyone willing to contribute, in order to make the things people want and need. It’s supposed to make sure everyone, at every level of society, can plug themselves in somewhere to do something productive that helps society, so that everyone who is willing to contribute can have a decent life.

The purpose isn’t to make the state strong, producing resources it can use to project power. That was the theory behind the Soviet Union, and now of modern China, that citizens go to work each day to increase the power of the state. It’s certainly better for a country if it’s capable of projecting power against competitors, but unless you’re at risk of invasion that’s a second order concern.

The economy also doesn’t exist merely to fuel growth and innovation. Many business leaders and economists judge the health of an economy based on numbers, stockmarkets, businesses forming, innovations, and efficiencies. Those are all good things, but they’re not the point. The economy isn’t an end in itself. An economy that’s growing isn’t good if it doesn’t provide people with decent lives.

The purpose of the economy also isn’t to create profits for investors. If you can create a successful business, good for you. If you want to pore over charts to find arbitrage opportunities, enjoy your big house and boat. Why should anyone else care about whether you can easily get rich, much less structure their entire society around helping you achieve it? If the economy allows you to make a profit, that’s great, but everyone else isn’t required to work each day just to make you rich.

The economy exists to provide people with good lives. It should produce houses they can live in, and grow food that they can eat. It should create medicines and treatments to cure their cancer. It should educate their children. It should produce cars, and trains, and airplanes that get them where they need to go. It should build bridges, highway systems, and restaurants. It should make music they can enjoy, shows they can watch, and sports leagues that make them cheer. We go to work each day and produce things to meet our needs in order to produce happy lives.

Good lives, moreover, don’t mean producing enough nice things in the aggregate that some people can enjoy them while others struggle. It means good lives for everyone willing to work and contribute. Not everyone can have a life of luxury, and as people make different choices some will have more material things than others. If you work hard and contribute, however, you should get a decent life. The economy should make enough real productive things and get them into everybody’s hands—comfortable homes, delicious dinners, enjoyable leisure, productive educations, flourishing health, opportunity, and most important of all dignity.

People don’t exist to serve the nation. They’re not fuel for the system to burn up so it can grow. They’re not an underclass of servants who labor to make others rich. They aren’t objects for others to exploit in their quests for innovation or immortality. The system exists to serve the people, not the other way around.

What it Means to Live a Life of Dignity

Saying the economy exists to give people good lives doesn’t just mean paychecks. Money is an abstraction.

We’ve all seen economic charts demonstrating that ordinary Americans today are richer than they’ve ever been on aggregate. They show Americans richer than Europeans, and in fact richer than almost any other nation in the world. Americans by historical standard are insanely rich compared to any people at any time in history. What can ordinary working Americans possibly complain about?

These charts always remind me of the old talking point that working Americans today are richer than a medieval French lord. The lord lived in a drafty castle with no heating, air conditioning, electricity, or indoor plumbing. He had no access to a car, and had to ride a horse around. He had no smartphone. He ate well, but couldn’t get fresh fruits or vegetables out of season. He had no access to the Internet, and even books in his time were obscenely expensive. His clothes had to be handcrafted, with no fast fashion to fill his closets. By any standard of material prosperity, the lord was worse off than you. In fact, if you had to trade places with his standard of living, you wouldn’t.

At the same time, the lord didn’t care if he had a smartphone because he didn’t even know what one was. Who would he even text? The lord didn’t care he didn’t have a flat screen or Netflix because those concepts didn’t exist in his world. He might have appreciated central air if he had it, but didn’t miss it because it wasn’t something he knew he wanted. Not having those things mattered to him as much as you feel deprived that you lack a teleporter and a jetpack. Someone in the future might feel sorry for you because you don’t have a teleporter, which is essential in their world to travel to a job, see friends, or have access to the world. You would probably enjoy a teleporter, but it isn’t something you need to live a life of dignity in your world. For you, it’s just a novelty. Having one would be fun, but not having one doesn’t make you feel deprived, affect your life, or make you poor.

The French lord is better off in his world than you are in yours because he has all the things he needs to live a flourishing life. The things you have that he doesn’t don’t matter to his world at all, but they matter a lot to yours. In your world, a mobile phone isn’t a luxury but a necessity to communicate and participate. You need a house with the basic comforts of our society. You need a college education to secure a decent job.

The measure of whether you’re well off isn’t about wages or economic statistics or even absolute material prosperity but whether you have access to the things you need to live a life of dignity in your society. Do you have the resources and opportunities that allow you to do a job, fulfill your needs, and when you’re done relax and enjoy your life? Or are you struggling and desperate, forced to choose which bills to pay and which necessities to go without? Can you hold your head up high as a free and equal citizen, or are you frightened all the time about your future and forced to beg and scrape and bow like someone’s serf?

This simply isn’t a situation the people who make economic decisions ever face. They have secure roles within the system giving them access to all the things they need to live lives of dignity. They have no idea what it’s like not to be able to buy brand name cereal at the store. They never worry about paying the phone bill. They never feel terrible that their kids are attending a less prestigious college to save money. They never cancel Netflix because it’s gotten too expensive, or pass on a Chipotle burrito that no longer safely fits into their budget.

The people who do get this are the voters, only they lack the influence to do anything about it outside of politics. They can protest, act out, and vote. Increasingly, that’s exactly what they’re doing, and I understand why. It’s because too many of the people in a position to do something—making sure every American who is willing to work and contribute can do so—don’t.

What Decision Makers Don’t Get: Dead Ideas.

When you say to people the economy exists to create good lives, too many Americans don’t understand what you mean. Their minds are frozen around dead ideas from twentieth-century debates.

The old left-right economic debates were about trade-offs between markets and regulation. When you say you want to make sure ordinary people are treated with dignity in the economy, people therefore think you mean you want to institute more 1960s-style welfare policies, play with minimum wages, regulate markets, or tinker with interest rates. The left thinks you want to abolish capitalism, raise taxes, and punish millionaires. The right is worried you want to empower more bureaucrats that will burden the economy and institute socialism. These are knee-jerk responses based around dead debates.

Does anyone truly think the solution to any of America’s problems today is more 1960s-style social programs? Will simply redistributing income through old welfare-state policies ensure that everyone who contributes gets a decent life? Will railing at billionaires and pretending we’re going to tax the rich do anything productive? Does anyone truly believe setting the economy free from any rules will magically accomplish it either? When jobs get sent to other nations or destroyed, have new and better jobs always miraculously appeared? Will there always be enough work so everyone who wants to work hard has the opportunity to earn a living with respect? When private equity buys productive enterprises and loads them with debt until they collapse, is that truly economically efficient? When AI replaces all the entry-level office jobs, is that truly in America’s long-term interest?

Are our only choices the dead idea of communism, outdated 1960s welfare statism, or total hands-off market fundamentalism? Or perhaps are those ideologies, appropriate for the world of 1980, no longer up to the task of dealing with the problems we face today? Do any of them offer answers to ensure everyone who works hard and contributes not only gets to survive, but gets to lead a decent life with dignity?

An increasing number of Americans don’t think they do. A warehouse worker sleeps in his car despite working 60-hour weeks at a billion-dollar company. A laid-off software engineer burns through savings as job rejections mount. A home health aide keeps others alive while skipping her own medical care because she can’t afford it. A young designer saddled with student debt competes with AI and gig workers from India. This is an era of incredible disruption. Old economic models are collapsing. What are we going to do to make sure every American in this new economy who wants to contribute can get that decent life?

People need a safe and comfortable home. They need to be able to afford McDonalds hamburgers and good food at the grocery store. They need to afford medicine and healthcare. They need to be able to afford Spotify and Netflix. They need a smartphone, a car that isn’t a clunker, and clothes that aren’t all secondhand. They need to be able to buy insurance. They need to go out for drinks sometimes with friends. They also need the security to know that if something happens, they won’t get thrown into the street. These things aren’t luxuries in 2025 America. They’re the basic things a person in 2025 America needs to live a life of pride and dignity.

Everyone who works should get the basic things they need to live a decent life in the circumstance of America as it exists today. You wouldn’t accept going without them, and you’re no better than they are even if your degree is fancier and you think your job is more important. This isn’t an impossible thing to accomplish, and it has nothing to do with the old economic left and right.

Our era increasingly looks like the populist revolts of the late nineteenth century as industrialization tore up the agricultural model, leaving middle-class family farmers broken and left behind. Or similarly, it looks like the depths of the Depression, when the system wasn’t working and old tools that previous governments used to fix downturns hadn’t worked. These disruptions caused similar turmoil in politics until smart policy people discarded old debates and aggressively experimented with bold new ideas no one had ever tried. They tossed away old policy books and abstractions and thought from first principles about how to rebuild their society for a new era. This is what we need to do again.

If I were in charge of a major political party with the power to dictate its message and agenda, I’m confident I could win every election for the next decade or more by simply repeating the purpose of the economy is give everyone willing to work hard and contribute a decent life. I would offer a Dignity Economy agenda organized around making sure it happened.

A Dignity Economy has mechanisms to help anyone who wants a job to find one. It makes sure employers treat employees with dignity, instead of costs to squeeze. It makes sure housing is plentiful and affordable. It makes sure job-seekers aren’t lost in automated hiring systems or ghosted by employers. It makes education affordable, and more than a credentialing mechanism for hoarding opportunity. It helps people start businesses and take risks. It considers how businesses treat workers. It makes it possible for profitable businesses not to need to chase pointless eternal growth. It provides access to good healthcare independent of employers. It fights monopolies and the rot-spiral of service degradation in the services people depend upon and use. It builds public infrastructure that’s clean, efficient, and reliable. It creates stability in people’s lives, so that if they suddenly lose their job they’ll be okay until they find a new one. It has mechanisms to fund socially-useful things that markets don’t, like ideas, music, and art.

It reorients the state from the outdated fight over who should act—private markets or government—to whether things work and serve the people. It makes government about not who should get the power, but how to make the system deliver a good life to everyone willing to contribute. Until someone does this, our system will continue its tumble downward.

The point of the economy is to give people good lives. Repeat that until the people who can make it happen hear it.

What do you think about the Dignity Economy? Join the conversation in the comments.