Octagonomy - An Economic Social Contract for the 21st Century

In the previous post, I provided a general overview for a novel or modified economic system, which encompasses and rivals the qualities of the main prominent systems of the age; Capitalism and Socialism. This economic system, which I have called an Octagonomy, is composed of "eight" major factors that help define and provide a more coherent and effective system of management and production for any developed economy in the 21st century that is growing rusty by conventional and orthodox practices that have outplayed their hand in the uncertainty of today's markets and politics. This part of the study is more of a proposal that shall lay out these eight factors that make up an Octagonomic model and how it could provide the many solutions to the myriad of problems the world, in general, is facing economically and financially. The following will exhibit the "eight" major factors that would stir real economic growth for societal prosperity to commence.

Free and Open-Ended Specialization:

The emphasis on business or ﬁnancial majors may seem to be productive and beneﬁcial to societal growth economically but it does not ﬁnd positive chemistry whilst growing parallel to a gradual harmonious growth in happiness, groth or even wellbeing of the people. Politics matters in an Octagonomy, as the encouragement provided by governments to fuel the youth's interests in studying or nourishing their own talents and passions, would result in a more vibrant society. Diversity in nationalities or ethnicities or religious backgrounds is not enough to help enhance an economy. Instead, there needs to be a diversiﬁcation of talents and ﬁelds of expertise that would allow an economy to not only be diversiﬁed for increasing GDP or national income (an indicator that is deemed by Thomas Picketty as much more reliable to determine a country’s real growth) but also for improving the happiness index and the general welfare of society. Focusing entire nation's on mainly one type of industry, such as manufacturing, industrial, agricultural or service industries, are just depriving these countries from maintaining a balanced economy. Or, choosing between applying a command or market-based economy, rather than a mixed economy, is considered narrow minded by government or states, especially in the current epoch.

All of these "types" of economies are necessary to keep a country aﬂoat and immune to any setbacks, within the globalized age we are a part of. When economies tend to be focused, the types of educational majors or job opportunities tend to be rather overly focused, mundane and too narrow, to satisfy a certain craving for such an economic dynamic. This is seen within developed nations, like Western countries, where service markets require certain types of people that may stir their operations, such as students from business, ﬁnance or marketing backgrounds. Such ﬁelds are even made appealing through their lucrative exploits, which encourages the youth that are pushed by their parents, to pursue such ﬁelds for better living. The quest for ﬁnding a living to lead a good life, has overshadowed the quest for ﬁnding a passion that would lead to a prosperous life ﬁlled with daily opportunities for growth and development. If a citizen is happy and productive with being whom they sought out to be and not what they were expected to become, then their efforts would be translated to substantively positive outputs for the economy.

When the Renaissance began, which was mainly sparked from the unfolding of particular events and certain iconic ﬁgures that rose to fame in 15th century Florence, a liberation of arts, humanities and science took place, not accidentally, but willingly by visionary leaders and talented individuals that set a turning point within Europe - a continent dominated for centuries by religious dogmatism and an unwillingness to question or rely on one's curiosity. This type of liberation strengthened the economy of this little city-state, which others on the Italian peninsula followed suit, and ﬂourished at unprecedented levels. The political power swayed and economic might possessed, gave such city-states leverage and inﬂuence over the mightier powers that dominated European politics at the time - France, England and Spain. This case can be similar to certain cities in the United States, such as San Francisco, which have provided incentives and allures for certain individuals from the IT spheres whom developed an ecosystem that gave birth to monoliths in the technological industries. Allowing open-ended specializations gives breathing space for open-mindedness to increase amongst the youth of a country, which in return would provide the country with increased changes of growth.

When looking at a problem, the best way of solving it is not to ﬁnd only one strategy for ending it but to ﬁnd multiple ways of subduing it. These multiple ways give way for multiple results, which all may tackle a single problem and yet give way for multiple opportunities. Not placing a price tag on education but rather placing a moral and intellectual significance on education, is how inspiration may come about. Not all students of knowledge may end up becoming the DaVincis, Shakespeares, Edisons or Musks of their time, but it would lead to a new platform that may evolve the mind of the state and nation onto another higher level, transcending from the intelligence that we embrace, today, as probably ignorance, tomorrow. There is an imbalance between what is beneﬁcial and what is proﬁtable within free markets. Although capitalism has brought signiﬁcant beneﬁts to human beings, much of their creativity and efforts has been lost by focusing on the easier routes. For instance, there are an abundance of restaurants and cafes in towns that barely have a large population, let alone the same brands being present in multiple locations within one city, such as McDonalds.

As for educational degrees, there has been an overemphasis on business majors, rather than arts and sciences, which indicates a major human catastrophe within growth and development. More so, you have other matters like there being too many economists but not enough practitioners or policy makers, which clearly is proven by how a large number of notable economists could not foresee numerous recessions, such as the Great Recession. When we reach to a stage where one that comes up with a new mobile app is considered to be an inventor or an influencer over society is regarded as a blogger that does bizarre videos that have no clear meaning or value, then one has to question the authenticity of such claim or contribution as truly inventive. There are too many life coaches but not enough masters of professions, whom truly have something to share from their long experiences or apprenticeships on their specializations. Instead, everyone seems to be preaching at their own accord and making a living off of simple talks or tasks that serve more as entertainment than enlightenment.

Balanced Trade (between free markets and state intervention):

To create a more functional balance within the economy, there must be a balance established between the size of markets and governments. The neo-liberal or Keynesian models, determine either a small state or a large state, respectively. Both have their beneﬁts and both have had their ﬂaws exposed with severe consequences. Regardless, both are essential characteristics that require a more thorough attention. An Octagonomy seeks to combine both traits of laissez-faire and big state, by creating no size comparisons or separations between the two avenues of power: market and state. The market must come in between the state and the people. The state pitches in as a guiding body hovering above, while the people engage as users and appraisers of the market. The people may sound quite vague or abstract but what an Octagonomy would infer to is a special civil body composed of qualified individuals that act as censors in Roman times, hotel inspectors, academic evaluators or corporate oversight inspectors, that have no direct interests in the market; interests like businesses of their own.

The market serves all and must therefore be contained by all sides of the spectrum. As for trade, there must be a limit as to what comes in and what goes out. In other words, more control and a greater balance on the imports and exports of trade. Countries that focus heavily on imports and less on exports, or vice versa, are countries that are not properly managed neither independent. There should be a balance, as every country has resources that are worth investing in, exporting and beneﬁting the nation with. The most important resource is the people of a country. Their skills, mentality and cultural aspects help produce the ultimate resource - Singapore being an ideal example. More importantly, favouritism within markets must come to an end. Some products might be favoured over others, which can destroy certain aspects of a market and even put a large number of people out of their livelihoods. Every resource is essential and valuable, if only there is a proper state and civil regulatory body that would ensure that such products or resources are made use of. Oil was a resource that always existed, as it came naturally from the depths of the earth. However, its use only came to the fore, once its value was deemed a necessity for certain industries during the 17th century. Today, countries are waging wars, physical and economic, over such a resource, as its value is linked to such countries' dominance. Soon, water might be a resource that although taken for granted, many would fight desperately for its diminishing supply in the years ahead.

Prioritized Competitive Markets:

Every market within an economy has its own prominence. Yet, some markets are favoured over others, for their monetary value and gain and not for their impact on society. Consumerism has weakened the very understanding and reasoning behind business, entrepreneurial and ﬁnancing options and decisions. Business folk seem to have an almost unlimited freedom in deciding what is the type of demand craved by the people and the supply needed to accommodate the demand, without really caring about what the people should have to enrich their lives the proper way, and not merely materialistically. The most important markets must be the great necessities humans require. Industries such as water must be better dealt with, not monopolized by some private investor, affordable and better distributed throughout the lands. When there is a segment of the population that does not have any or enough access to water, especially in countries that do possess such resources (e.g. Lebanon or most African countries), then there is clearly an issue in the governance over such a province. Prioritized markets are also markets that actually beneﬁt the people's wellbeing and not the continued expansion of product lines, such as Apple and Samsung phones, that do not really change except in mere looks. Having such products, which are not essential for life but have been made imperative for modern survival, on the top of the priority list or main inﬂuencers of the economy, must be also reviewed.

The Regulatory Merry Go-round:

Regulations must always go through a cycle of refresh or discussion on what works and does not work during the present times. Every ﬁve years, at the very least, regulations that help protect the market and the people’s livelihoods must be brought out in broad daylight to be reviewed. Regulations and reforms must be processed by two separate bodies: A special bureau by government and a civil group appointed by the people, in order to both interfere and maintain a balance within the economy. Lobbying must be banned by law, as lobbying by ﬁnancial or corporate moguls turns democracies fragile and eliminates any say by the people, since most of those corresponding are conducting it behind closed doors. Every business or corporation must undergo inspection, particularly of its ﬁnancials and contributions to society, in order to be determined worthy or not. A special reward system may be put into place, where if a corporation or business provides a signiﬁcant return to the society that they are a part of, then they get provided contracts, licences or even more manoeuvrability through the markets they are engaged in. There must be constant revaluation of the regulations in place, especially when new players enter the market or new trends takeover. Applying the same set of regulations that were tailored for speciﬁc market dynamics at a speciﬁc time, endangers the stability of an economy. Regulations are set not to protect businesses but to protect consumers.

Companies or businesses abide to a certain conduct set by a state, to ensure no foul play is to commence. Their only freedom is to produce and earn but not dictate and determine what is right and wrong or good and bad. As for the notion of a corporation is seen as an individual in the eyes of the law, such might ensure protecting investors through limited liability but it does not serve well to the conditions of justice and, most importantly, fairness. How can this "special individual" (corporation) that consists of hundreds to thousands of personnel and wealth that may be compared to that of nations be equivalent in court to that of a poor individual from the working class who does not have enough means to get by, let alone sue to demand for his rights? Proper regulations must be set to protect the ordinary individual from the superficial individual, by law, in order to grant fair trials and just conduct on securing the wellbeing of citizens. Corporations must not be allowed to lobby and must not be granted special privileges. A citizen’s wealth is no determinant of their value in the nation and should not provide them a carte blanch to roam free without restrictions. In the market, it has its special privileges in terms of access or ability to sway the market to favour their interests. However, as every citizen is supposedly held equally accountable to the laws of the land, then the same must be applied within the economy, which acts like a sub-nation according to an Octagonomy.

Value Based on Majority and not Minority luxuries:

Products that are favoured by a minority must be assessed thoroughly. For what applies to the minority may not work in the favour of the majority, unless such a product would be unquestioned or easily bypassed by the majority because it does not adversely affect the majority (Kosher food being an example). More so, it is time to determine whom is the minority, as the minority rule to this day plays into an unrealistically great effect. Capitalism has worked wonders, yet it has not truly achieved a special recognition for "beneﬁcial value", which would aid in a consumer's wellbeing or development. This is not something that can be ﬁxed within the market, as the market decides on what price tag it places on its own products. However, if the consumer base shrinks and the demand for such costly and unnecessary items, like watches, plummets, then markets are forced to reconsider the pricing and selling strategies. What can provide a better understanding to determine what is to be valued – necessities – over luxury items – the unnecessary – or how to contain one's consumer spree, by purchasing several supercars when 1 may just do, is through the education of balance over extremity.

The distinction between luxury and essential products is one of the most troublesome aspects of our current economy. Economies are focused on product-favourite specializations, and not often within ﬁelds or for the sake of products that are of the essence. Luxury products may remain but their emphasis or significance must be eradicated. This means less advertising on such products, which obviously bear no significance to our well-being but simply scratches the surface of our desires. Another way is through education, by literally enlightening the youth on how certain products, even though deemed luxurious, do not actually provide a luxurious life. When it comes to choosing between a book and a watch or a sports car and a house, many tend to be lured towards the secondary options provided. Value is being measured from a far and not from up close proximity, making our choices in life quite dubious. We are more attracted to the vagueness of details than to the thoroughness or to the short-term benefits than the long-term. The more technical matters of economics get, the more confused and disenchanted the people become. This is where so-called experts budge in and become gurus in a profession that remains shady and conspicuous. The people should stir and monitor the economy, are those that not only have knowledge about economics, but have overall knowledge about society, politics and human psychology. They must have something to lose, as they are a part of the game and they must not be owners of any business, as that would mean that their self-interests would play a heavier hand in any future decision-making.

Limited Government Control and Corporate Empowerment - An Economic Contract:

There should be a support for market liberation but not for corporate exploitation. Markets are only as free as the progress and beneﬁts they provide in enhancing the people's lives. Giving too much power to corporations, which they end up lobbying to protect and further their interests must be put at a halt. The economy must be perceived of as a sub-nation within a nation, where it has its own regulations, norms and procedures that are detached from the affairs of state and society. To keep the connection between these sides within a country intact, an economic contract, as opposed to a social contract, must be established. This contract would address the following:

Transparency provided by all business entities working in the market. The market is free, so long as the people are engaged. Just as how the idea advocated by Aristotle indicates that the more engaged people are within politics, the healthier society shall be, the same should be applied within an economy. This means an economic and financial education from an elementary level is necessary.
Full cooperation with clients or citizens, on providing and addressing their needs and wants.
Discussion forum to be established, in order for corporate executives, entrepreneurs, ﬁnanciers and all other stakeholders to discuss publicly the various challenges and objectives the economy is facing or undergoing.
The idea of too big to fail must be eradicated. Any business, no matter how large or inﬂuential, must be trailed for any crime or deviation, such as involvement in corrupt activities, in order to establish a clear line between right and wrong.
A periodic assessment (every six months) on how companies make their fortunes and how such fortunes are spent. We may call this economic inventory.
Conducting evaluations on company performance in contrast to client satisfaction and perceived beneﬁt.
The economy must be a place for all people within a country to be actively enrolled or engaged in. All citizens will have access and are perceived of as stockholders within the country. This means having a more direct hand in the market, apart from corporations, is imperative for a balance to take place. Creating a checks and balance system within the economy, which is not linked to political activity, is a healthy option.
Matters pertaining to health (e.g., insurance), or security (e.g., rights), or utilization (e.g., infrastructure), must not be part of the economy but must be realized by the State. In other words, a clean split of public and private must be achieved.
Any ﬁrm or business that breaks any term or condition from the economic contract, which is established to protect citizens from fraudulence, must be penalized.
Markets must be open to all. Citizens should be provided a minimum allowance, granted by government, to help them invest within the economy, like that of financial aid for students. As long as money circulates through the economy, as a form of injection, and measures are taken by the institutions situated to protect the economy from leakages or muscling in of any sort, then stability would be ensured. An interesting concept according to the World Economic Forum revealed that the German government is providing students an allowance to actually go and enjoy museums, exhibitions and other facilities pertaining to the arts, to help foster a fondness for such subjects that bring life and job to a society.
Bankers and financial officials must be the first to be supervised, questioned and constantly reminded of their main tasks, which is not to make money but to protect the money of the people. Special regulations must be set to keep such individuals within the loop and the type of professionals being employed must also undergo some form of character or psychological test to ensure their emotional capacity to be able to handle the pressures and responsibilities of the job. Similar to the incompetence of the Silicon Valley Bank (SVB), which brought forth a banking crisis in March, 2023 that could have caused a massive crisis to the US economic growth and recovery in the post-Covid period.
Compensation of money during financial stagnations for depressions, through the process of government bailouts, must be conducted on the basis of helping securing the people’s money in those banks and not securing the bankers themselves, which sadly happened during the 2007-2008 financial crises where bankers were compensated and managed to get out with huge compensations and pay checks, while the people took the hit with their mortgages and deposits.
Corporations must not be seen as “individuals” in the eyes of the law. They must be seen as individual constructs that possess no rights but only benefits that would be used to assess their value and longevity if still found handy or appropriate. In other words, a “corporation” must not shield its owners or executives from the lack of responsibility shown to follow the law or ethically abide to certain principles and practices.
Corporate or market lobbying is ought to be eliminated. Big Bucks Businesses (BBB) as I like to call them, such as cigarette conglomerates that produce products which negatively affect people’s health, must not be given a carte blanche to waver special rights or privileges in the courts of power. No corporation must have a hand in political affairs, as the political relates to the wellbeing of the social. The economic is focused on pumping blood and circulating the blood through the body of the social. The economic is not the provider, it is the producer. The government’s job is to provide, protect and guide the people towards prosperity.

The Application of Transparency and Contingencies:

More openness leads to increase of trust, while a layered economy leads to a strong support system in times of crises - the assumption that banks relied on governments to bail them out in times of crises is not a valid excuse, for governments are constructed to serve the people's interests, ﬁrst and foremost. Rather than the economy being treated as a whole entity, the economy should be divided into parts with their own goals and objectives to safeguard the nation from one massive blow. Limitations on interconnectedness must become a staple within this new economic framework. Transparency must come in the form of not only exposing the books of such corporations or businesses but also of the relationships and daily processes that is portrayed within such work environments. If people are investing their money in such businesses or if such businesses have a huge influence over countries, then they must give up some of their privacy for the sake of the public good. Along with transparencies, there ought to be contingencies for any potential crises. Scenario building must become a domain, for the regulatory division or institutions that an Octagonomy seeks to set to safeguard and monitor the economy, in order to prepare the country for any setback they may face.

The 2008 Recession was a critical reminder of how economists, banks, businesses and government could not foresee the potential dangers of the market bubble that exploded, as they were not thinking of the long-term but only of the short-term gains. And, as there was no proper oversight taking place, since no one seemed to worry, inquire or care, everyone was blown out of proportion from such an economic recession. Every building, technically, tends to have an exit door or stairway, in case of emergencies. People do not usually use the stairway or go through the exit doors provided in a building, unless they have to. That must serve as a model of contingency for an economy, in order to always have the people involved or impacted brought to safety when the smoke fills the halls, and I don’t mean simply hoarding large piles of gold bars in some vault to ensure that if an economy goes bust then the state still has something to lean on for support.

The Layered System

The economy must be in a constant state of creative destruction, something that has been echoed by Joseph Schumpeter. There should be no linear but rather a cyclic motion. This cyclic motion is what defines the structural shape of an Octagonomy. It runs parallel to the Allocratic governing model, as both go hand-in-hand when governing a nation. Creative destruction in this instance would mean, once a certain path of development has been fulfilled, rather than trying to jump up to another higher stage of the same path, the system must reinvent itself by scratching out everything already accomplished and building a new path towards the same direction, goal or vision. Why is that necessary? The reason for such is, by undergoing such a process, the system avoids relying on “norms” or “standards” that tamper with its actual progress or main intentions of achieving certain goals for the sake of the people’s prosperity. Undergoing such a gruesome act, also avoids comfortability towards a certain method or process, which blinds our ability to envision the future, protect ourselves from future catastrophes or be too caught up in the moment of our progress.

An example could be the monetary policies of central banks, like the Federal Reserve, which usually resorts solely to pumping money in times of crises (Quantitative Easing) or they hike up the interest rates to curb inflation in times of stagnation (Quantitative Tightening). Capitalist economies, especially the neo-liberal version, has proved to be similar to a compulsive gambler. They enter the casino every day and are willing to spend everything they have on minor gains and will never stop even if they do make some considerable win, because they believe that more is available. Imagine the casino, if noble by design, someone from the management would come to the guest and stop them after their first or most considerable win. Somehow, that compulsiveness within the gambler would be put to a halt, because they were physically stopped and allowed to enjoy their winnings. But unfortunately, such matters are not even in movies, as the house always wants back what it believes is theirs. And so, the casino will try to engineer every possible manoeuvre or throw every possible attempt on stripping off the gambler from the money they won and the money they initially possess. Creating such limitations is imperative to save the economy from itself, when success seems to become a norm. However, the entire Global Financial Market and the institutions that help fuel this system, have the same approach of casino owners and managers towards the investors and traders. This, in itself, is troublesome and could lead to further negative implications down the road.

The economy must be separated from corporate interests and political mongering. For, what used to be political economy has now become economics, an independent discipline in its own right thanks to economists like Alfred Marshall and John Maynard Keynes. However, the rulers of a country have a say in economic matters that potentially impact a country, as history has proven time and time again on how political ﬁgures have managed to strengthen or protect economies when economists would oppose their decisions and vice versa – a great example could be the initiation of the “New Deal” proposed by Franklin D. Roosevelt in the 1930s. The economy under an Octagonomy is like a simulation, where everyone that participates starts off with the same points. The more they contribute or create within this economic simulation, the higher up the score board they shall be. But the purpose of one’s participation is not only to generate wealth, but it is also to be a contributor in “wealth creation”, rather than simply abide to practices of “rent-seeking”. Allowing for new talents, or introducing new fields, or promoting novel ideas and innovative products that can actually improve people’s lives to the better, are all essential aspects of the economy. An economy that is based on rules that protect certain players over others, such as BBBs, are not permitted. The bigger a corporation is the more powerful it becomes and that is inescapable. But their power is placed under check once it tries to leave the playing field. Corporations that grow in size and means have power within the market, but may not be able to use such power to spill over to other aspects of a country, such as politics or society. The players within the economy, small or big, must be treated as fish in the lake; they may only survive within their waters until they try to jump out of the lake onto land, then they shall realize that they have escaped the only adaptation they are equipped for.

Just as tax ensures that government receive money from the people for enhancing the wellbeing and security of its citizenry, an inspection over the accumulation by corporate moguls must be placed in check, in order to have a certain reasonable portion of their surpluses getting injected back into the economy, rather than to be sent to foreign banks or safe havens to avoid any inspection or potential prosecution. A certain portion of company revenues must be taxed, but not for the sake of government, rather for the sake of the economy. Just as how Picketty proposes a hereditary or progressive tax, particularly on the top 5% decile of a population percentile, a similar strategy must be imposed on transnational companies or local corporations that are considered individuals in the eyes of the law. Reinserting money to improve the economy, through funding of research and development programs or providing funds for young and bright minded potential entrepreneurs or investors to produce something novel and innovative, would be considered a worthy investment. Owners or shareholders will still be receiving considerable amount of return from their businesses, but to avoid disparities between social classes and funds being taken out to not benefit the internal or local economy must be brought an end to.

As for the market, it is only as free as its competitive norm allows it to be. But it is in no place to dictate how one shall live or determine what class or position one shall be in. The economy here is the oxygen that is required to keep people alive, but it is not the blood that pumps through one's veins to keep their organs fully functional. For the latter is the responsibility of government. Also, a credit system is one of the interesting features of an Octagonomy. This system is based on providing a certain unit of measure, such as points, for every sole proprietorship, partnership or corporation that increases in wealth and influence. The higher up the economic ladder, the more points they accumulate. However, these points are not provided for how much wealth they generate, but how much wealth they contribute to the economy and the provision they provide in helping the nation. The more points gained by a certain company, the more support and privileges they receive for their mass contribution to the country.

Implanting the idea of competing institutions and not just businesses is integral for the security and stability of the economy, which translates to the security and wellbeing of the masses. Just as how a certain level of competition within the laissez-faire system is considered healthy for growth and development, having a certain level of competition between institutions that keep an eye on the economy and provide and enforce regulations, must also be considered healthy. Instead of having one institution or governing body, such as the Federal Reserve in the US or a central bank to be monitoring the economy’s monetary aspects for instance, having several of such institutions or more than one governing body to compete on which brings out the better set of regulations or methods to run and protect the economy, is vital for the overall stability on all facets of the economy. To complement such structure, the elimination of bureaucracy or the top-down model and introduction of institutional tentacles specialized in every major market or niche, is paramount. Rounded order where everyone has a seat on the table and a voice, is what an Octagonomy strives to achieve. There should be no one higher or more influential than the other, when it comes to dictating the terms over the market. Pricing, supply and even demand must be discussed on round-table discussions, where everyone is equal and everyone has a chance to speak about their views and experiences when it comes to market growth and stability. Discussion between business moguls, policy makers, or economists must not be set upon discussing the economy as a whole. There should be discussions set for resolving various technical issues in regards to every market niche. Discussions and arrangements for the food market must not be intertwined with the phone/gadget market, as both markets possess different protocols, arrangements, agendas and outcomes.

Checks and balances to be further magniﬁed within an Octagonomy, in order to ensure that the economy overall is balanced. Balance is essential and has been missing in most economic systems since time memorial as the interests of the few from a particular end have always prevailed over the interests of others that occupied other ends of the spectrum. To ensure that a checks and balance system within an “economic system” would truly work, an executive body that includes the round-table discussions mentioned above that guides the system must be set, along with a body split into several divisions (competing between one another as mentioned earlier) that focuses on regulative aspects of the economy, and finally a supervisory body that acts as a judicial branch to dictate and apply justice, fairness and impose any punishments necessary. To simplify it, an executive body called the Round Office, a legislative body called the Regulative Bureau and a judicial body called the Supervisory Court, would ensure that a balance within an Octagonomy is set.

Octagonomy - An Economic Social Contract for the 21st Century

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