Since almost forever, people wrote and continue to write books. Nowadays in addition to this, they write on blogs, which has become sort of a fancy way to stand out of the crowd. Regardless the mode, the reason why people do it is generally the same, namely to communicate something to the world.
In the infinite enthusiasm regarding my new project I was thinking what to write about and since this is going to be a business blog, I decided to reflect upon things that seem to be obvious to us, but still essential to be constantly revisited in our minds. I want to talk about what drives our economy.
In the café where I sometimes go to have a coffee there is a beautiful opening to the streets of Copenhagen. You can see different people passing by. You can see cars and buses driving on the roads as well as different buildings with big billboards on it. You can also see other cafés and shops on the opposite side of the street. Basically, you can see the life of the city running in its own rhythm. It’s a nice view and I was enjoying it. However, at a certain moment I started paying attention to things that one normally does not recognize in the daily rush. For example, I saw a couple walking on the street with big Starbucks labeled coffees-to-go, or someone smoking a cigarette in a hurry, or someone standing at the corner of the street and selling umbrellas to tourists when it started to rain.
Why people buy all these things? The immediate answer to this question would be: because they need it. But did they need it before companies that produce it told them they need it?
I was thinking about what I have been learning at the university and how societies and economies are shaped. I was thinking that in our contemporary society everything is about money, but nothing is ever only about money. Suddenly, I started seeing the whole picture in a different way.
Everything around us is a human product created for us people to buy it. The more we buy it, the more we need it. Indeed, this might sound like a paradox, but this is what drives the economy since the development of the modern capitalist system. This system knows very well how to assign roles and functions to both: those who have power and resources and those who do not. This system has established principles of doing business, directions of marketing a product, ways of managing people to mention only a few examples. All these have been studied and improved along the development of the modern society. The system that drives modern economy is a powerful machine that functions already by itself. In this context, one might even wonder; do people still create the economy, or are they created by it? What is the role of people in today’s economic world?
As I pointed out above, there are two roles people can take: the producer/seller and the consumer/buyer. The amount of resources available is limited. Therefore, everyone wants to get as higher payoffs as possible. Now the reader can probably guess the sequence of these actions. Some people sell, other people buy. Looks like a game with established rules. The better defined the rules the more systematic the actions of the players are. Of course, people who have more power and resources are better off than those who have less of it. However, it is created the impression that not even the former are strong enough to control the system since they too submit to the one rule of the game, which is to maximize their payoff.
Nevertheless, we know individuals and companies, which have changed the standards and imposed new ones. We know billion dollars worth companies that started in a garage or in a college dorm. Where does this come from?
I believe the power of people lies in their creativity, in their ability to think out of the box as well as the ability to use the system to create value out of ideas. Every time someone does something different or in a different way, the system is challenged. Creativity is one of the greatest human assets because by definition it implies breaking beyond any imposed standard settings and creating something new. The only drawback is that every creative idea at some point becomes a standard and therefore, replicates the system as one of the greatest intellectuals of the 20th century, Joseph Schumpeter, very precisely described this in his concept of “creative destruction” as a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” (Capitalism, Socialism and Democracy, 1942).