The Theory in a Nutshell

Give & Take Economics redefines the model of how individuals make decisions. It replaces the idea that they solely balance external prices and quantities in a scarcity-driven trade-off with the notion that they make an internal psychological trade-off of how much cost they’ll bear to obtain benefit. On this intuitive foundation, decisions are modeled with a pragmatic Leaning X diagram. The theory goes much further however, to also redefine the way individuals interact with each other. It expands the classic supply and demand curves into give and take curves, which places all social agreements (including economic transactions), within this context of individuals mutually balancing personal total cost (PTC) and personal total benefit (PTB).

This new framework has major implications. It makes equilibrium impossible and explains how booms/busts and fads/counter-fads occur—something that current theories can’t address. It also produces a powerful tool that we can use to immediately determine the effectiveness of policies and institutions—coupling analysis—based on the notion that most social problems result from social coordination failure, where PTB and PTC are decoupled across individuals and populations.

Decoupling results primarily when populations disengage enough to allow the formation of powerful intermediaries (including government and business); a situation that has resulted in our current strained models of capitalism, socialism and representative democracy. The only sustainable solution is to ensure that policies and institutions effectively couple PTB and PTC, which is achieved by evolving our current systems into a new framework—a FreeAccountable Society. A FreeAccountable society is progressive and sustainable because it is built on voluntary and proportionate coupling of PTB and PTC, meeting four specific axioms of freedom that result in freedom with accountability.

Below is a brief 3500 word article written for business leaders and economists that explains how economic theory has been reinvented, by way of Give & Take Economic theory. Download and reference this article to use in your own business applications. Your comments are welcome on this blog. Direct questions for the author to admin@economicsreinvented.com.

Economics Reinvented – Give and Take Economic Theory

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