The economically active population of a place comprises "all persons of either sex above a specified age who furnish the supply of labour for the production of economic goods and services (employed and unemployed, including those seeking work for the first time)  during a specified time reference period." (OECD).

The proportion of the population that is economically active can be a useful indicator of the health of an economy and its capacity for growth. The ratio can, however, change between jurisdictions because of differing social norms.

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Economics is the study of how societies organise the creation, distribution, and use of resources so that people can live well together. It is not, as it is so often taught, a science of markets alone, nor a study of scarcity in isolation. It is about choices, power, institutions, and the care of people and planet over time.

First, economics is about provisioning. Every society must decide how food is grown, homes are built, health care is provided, knowledge is shared, and infrastructure is maintained. These are questions about real resources, whether they be labour, land, technology, or ecological limits. Money is a tool used to organise these activities, but not the purpose of them.

Second, economics is about distribution. Who gets what, on what terms, and with what consequences? Wages, profits, rents, taxes, and social security payments all reflect political choices about fairness and power. Most especially, markets do not deliver neutral outcomes; they embed rules about ownership, bargaining strength, and access to opportunity. It is the role of the state to create markets where they are required and to compensate for market failures when they happen.

Third, economics is about institutions. Governments, people, firms, trade unions, banks, regulators, and communities shape economic outcomes. The idea that the economy is a natural system operating independently of the state is a myth. Law creates markets, defines property rights, enforces contracts, and decides what behaviour is acceptable. Economics is therefore inseparable from politics and democracy.

Fourth, economics is about time. Investment decisions today determine living standards tomorrow. If we fail to maintain our five forms of capital (financial, physical, environmental, human, and social), future generations will be poorer. The logic of sustainable cost accounting, which I have argued for on Funding the Future, is therefore essential to good economics.

Fifth, economics is about care. An economy exists to meet human needs with dignity and security. Health care, education, child care, care for the elderly, care for others in need, and environmental stewardship are not peripheral activities; they are the foundation of well-being. When economics ignores care, it becomes an ideology that justifies inequality and ecological damage.

Finally, economics is not value-free. Every model embeds assumptions about what matters. Much mainstream economics assumes rational individuals, efficient markets, and scarcity as the defining conditions of life. These are poor approximations to the reality of economic life and the human condition. Real economies are messy, cooperative, unequal, and shaped by power. That is why they are so interesting.

Economics should, therefore, be reclaimed as the study of how we build a sustainable, fair, and caring society. It is not about maximising growth for its own sake. It is about ensuring that everyone has the resources and security they need to flourish within the limits of our planet.

See also: Money, macroeconomics, microeconomics, household analogy, money creation.

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The "economics of failure" is the system of policies and ideas that deliberately produces poor economic outcomes in order to discredit democratic government and justify the transfer of power and resources to private interests. It is the economic mechanism created by the politics of destruction, which is m,y term for neoliberalism, to make public provision appear unworkable so that it can be cut, privatised, or replaced by market substitutes available only to a few.

First, the economics of failure is manufactured. Artificial fiscal rules, obsession with balanced budgets, and myths about “taxpayer's money” are used to starve public services of resources. Health care, housing, education, social security, and infrastructure are asked to do more with less. When they inevitably struggle, that struggle is presented as evidence that government provision “does not work”. The failure was planned.

Second, that manufactured failure becomes the excuse for privatisation. Once public systems are weakened, market-based alternatives are promoted, whether they be private schools, private health care, private pensions, private housing finance, or private infrastructure. These services are usually more expensive, less accountable, and are universally accessible mainly to those with wealth. Public provision shrinks; corporate revenue streams expand.

Third, income and wealth are redistributed upwards. The system rewards ownership over production. Landlords extract rents, monopolies extract excess profits, and financial institutions extract interest. Tax policy favours capital over labour. This is rentier capitalism by design, not accident.

Fourth, the economics of failure weakens demand. Inequality reduces the spending power of the majority, so growth stagnates. Investment falls because markets are weak. Productivity declines because education, health, and infrastructure are underfunded. The resulting stagnation is then blamed on the government, not on the policies that created it.

Fifth, the economics of failure undermines democracy. Economic insecurity discourages participation. Concentrated wealth buys influence. Corporate power shapes policy. As accountability weakens, citizens lose trust in public institutions. This is not incidental: the objective is to hollow out the relationship between voter and representative so that democratic control over the economy diminishes.

Sixth, it creates fertile ground for extremism. When public services fail, and living standards fall, anger grows. That anger is redirected towards scapegoats, such as migrants, minorities, or the poor, while the real causes remain hidden. The economics of failure, therefore, feeds the politics of hate and opens the pathway to authoritarianism and fascism.

Seventh, it damages the future. Underinvestment in the five forms of capital (environmental, human, social, physical, and financial) leaves societies poorer over time. Declining infrastructure, weakened education and health systems, and ecological neglect are the long-term costs of deliberate short-term policy choices.

Finally, naming the economics of failure matters. If we believe decline is inevitable, we accept it. If we recognise that it is constructed, we can change it. That means rejecting false fiscal constraints, restoring democratic control of essential services, taxing rents and wealth properly, rebuilding social security, and investing in people and planet.

The economics of failure is not a mistake. It is a strategy. It exists to discredit government so that markets dominated by wealth can replace it. Unless we confront that directly, the politics of destruction will continue to hollow out democracy and pave the way for authoritarian alternatives. The answer is politics for people, grounded in accountability and a politics of care that restores the economy to its true purpose: meeting need, fairly and sustainably.

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The economics of hope is the alternative to and antidote for the economics of failure. It is an approach to political economy that uses democratic power, honest accounting, and public investment to build an economy designed to meet need, reduce insecurity, and sustain the future. Where the economics of failure manufactures decline to discredit government, the economics of hope demonstrates that good public policy can deliver well-being.

First, the economics of hope begins with purpose. The goal of an economy is not growth for its own sake, but security, dignity, and opportunity within planetary limits. Policy is judged by how it treats those with least power. If the vulnerable are protected, society is stronger; if they are abandoned, both morally and economically, policy has failed.

Second, it recognises real constraints. Governments like the UK that issue their own currency are not financially constrained in the household sense. The limits on public spending are resources and inflation, not myths about balanced budgets or “taxpayer's money”. Honest macroeconomics allows governments to invest when investment is needed and stabilise demand when recession threatens.

Third, the economics of hope rebuilds public provision. Health care, education, housing, transport, energy, water, and social security are infrastructure for a functioning society. When these are publicly accountable and adequately funded, productivity rises, inequality falls, and trust grows. Where privatisation has failed, democratic control can be restored.

Fourth, it tackles rent extraction. Proper taxation of wealth, land, monopolies, and excess profits curbs pleonexia and redirects resources towards productive activity. Regulation that limits monopoly power and secrecy jurisdictions restores fairness to markets. Finance becomes a servant of the real economy rather than its master.

Fifth, the economics of hope strengthens demand. When incomes at the bottom and middle rise, spending increases, businesses invest, and growth becomes sustainable. Multipliers work in the right direction. Inequality falls, and the economy becomes more resilient.

Sixth, it invests in the future. Maintaining the five forms of capital (financial, physical, environmental, human, and social) ensures long-term prosperity. Education, health, climate transition, infrastructure, and community support are not costs; they are investments that expand real economic capacity.

Seventh, the economics of hope restores democracy. Transparent public accounts, fair taxation, accountable institutions, and strong social security allow citizens to participate confidently in public life. Economic security makes democratic engagement possible.

Finally, the economics of hope replaces the narrative of scarcity with one of possibility. It recognises that most modern economies have the resources to meet basic needs; what is lacking is the political will to organise them fairly.

The economics of hope is therefore the pathway out of the economics of failure. It replaces the politics of destruction with politics for people and a politics of care, creating an economy built on accountability, fairness, and shared prosperity that works because it is designed to serve society as a whole.

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The economy is the system through which a society organises the production, distribution, and use of resources so that people can live their lives. It is not the stock market, GDP figures, or the financial sector alone. It is the total process by which we provide food, housing, health care, education, transport, energy, culture, and care for one another and for the environment on which we depend.

First, the economy is about real activity. It is the work done by people in homes, communities, firms, farms, hospitals, schools, and public services. Much of this activity is unpaid and invisible in conventional statistics, but without it society would collapse. Care work, in particular, is foundational. Any economic story that ignores care is telling only half the truth.

Second, the economy is about distribution. Who owns resources, who earns income, who pays tax, and who receives social security determines how fairly an economy works. Markets do not decide these outcomes by magic. Law, regulation, bargaining power, and political choice do. That is why the economy cannot be separated from politics and democracy.

Third, the economy is about institutions. Governments, central banks, companies, trade unions, charities, and communities shape outcomes. Money itself is created through public authority and banking systems. When we pretend the economy is a natural force driven by markets that is beyond the control of policy, we excuse failures that are in fact the result of political decisions.

Fourth, the economy is about time and sustainability. If we consume what we should be maintaining, future generations lose. Good economics, therefore, requires maintaining the five forms of capital I often discuss on Funding the Future:

• financial,
• physical,
• environmental,
• human, and
• social capital.

GDP tells us little about whether we are doing that well.

Fifth, the economy is about purpose. It exists to meet human needs with dignity and security within planetary limits. Growth in financial wealth that destroys communities or ecosystems is not success. A healthy economy is one that delivers well-being, stability, and opportunity for all.

Finally, the economy is not the same thing as finance. The City of London and other financial markets may dominate headlines, but the real economy is the nurse caring for a patient, the teacher educating a child, the engineer maintaining infrastructure, the farmer growing food, the professional relieving stress and worry, and the volunteer supporting neighbours. Finance should serve these activities, not the other way round.

The economy is, therefore, a social system shaped by collective choices. If we want an economy that delivers care, security, and sustainability, we must design it deliberately with democratic accountability, fair taxation, and the investment in the future it requires, rather than leaving it to the myths of markets and the interests of those who already hold power.

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See real interest rate.

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See freeport.

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Environmental capital is the stock of natural systems that make economic activity possible. It includes:

• ecosystems,
• biodiversity,
• soil,
• water,
• atmosphere,
• climate stability and the
• biophysical processes that sustain life.

Environmental capital provides material resources, energy flows, waste absorption and ecological stability. Without it, no other form of capital can exist.

Conventional economics treats environmental harm as an externality. This is an accounting choice, not a fact of nature. Environmental degradation is capital consumption. Pollution, biodiversity loss, soil depletion and climate destabilisation represent the liquidation of environmental assets, even when they appear as profitable activities in financial terms.

Environmental capital maintenance requires that natural systems be preserved within their regenerative and absorptive limits. Sustainable Cost Accounting makes this explicit by identifying the cost that would need to be incurred to prevent or reverse environmental harm. Where these costs are not provided for, apparent income is, in reality, the transfer of value from the future to the present.

Environmental capital maintenance is preconditional. Without it, physical capital cannot be sustained, human health deteriorates, social cohesion breaks down, and financial capital claims become fictitious. An economy that destroys its environmental capital cannot, by definition, be generating true income.

Related posts:

• Capital
• Capital maintenance concepts
• Financial capital
• Physical  capital
• Human capital
• Social capital
• Sustainable cost accounting
• Income

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Equilibrium

At the heart of neoclassical economics lies a comforting faith: that markets are naturally self-correcting. Left alone, they supposedly return to equilibrium after any disturbance. It is an appealing story and one that excuses inaction. But history keeps disproving it.

Assumption

The assumption is that markets, like physical systems, tend toward balance. If demand exceeds supply, prices rise, encouraging more production and less consumption until the gap closes. If supply exceeds demand, prices fall. Shocks are temporary, and the system restores itself. This belief underpins the idea that governments should not intervene except to remove obstacles to adjustment.

Reality

Real economies are never in equilibrium. They are dynamic, evolutionary systems full of feedback loops, herd behaviour and uncertainty. Financial markets amplify shocks rather than dampen them. Booms create bubbles; bubbles breed collapse. The 2008 crisis, like those before and after it, was not an anomaly but a manifestation of inherent instability. Small imbalances can snowball into systemic breakdowns because expectations, debt and confidence interact in unpredictable ways. Path dependence means history matters: once a market collapses, recovery can take years or decades.

Moreover, economies are embedded in society and nature — both of which have thresholds and tipping points. Climate change, for example, shows that “equilibrium” can be permanently lost.

Why It Matters

The myth of self-correction justifies political passivity. It tells governments that markets heal themselves, that unemployment will adjust, and that crises are momentary. In truth, only active fiscal policy, regulation and public investment can restore stability. Economies are living systems that require care, not clockwork that requires no attention. The pursuit of equilibrium has made economists blind to instability, the very feature that defines capitalism.

Summary

Markets do not self-correct; they self-destruct unless society chooses to manage them. Equilibrium is part of the mystical and mythical belief system of neoclassical economics, but bears no relationship to any known state that exists in any economy.

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The EU Code of Conduct on Business Taxation promotes fair tax competition both within the EU and beyond.

The original Code of Conduct was agreed by EU finance ministers in 1997 as an intergovernmental, legally non-binding instrument. It has been primarily used to identify and assess preferential tax measures (i.e. measures that provide for a lower level of taxation than the level which is applicable in general) that are possibly harmful.

On 2022 the Ecofin Council approved a revised Code of Conduct, broadening the scope to include not just preferential tax measures but also 'tax features of general application', which create opportunities for double non-taxation or can lead to the double or multiple use of tax benefits.

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Exchange traded funds (ETFs) are collective or pooled investment funds that are quoted on stock exchanges.

The funds usually have a very narrow focus. They do, for example, invest in government bonds, or a particular stock exchange or commodity index. They might also have a particular sector focus.

Exchange traded funds provide a compromise between collectivising risk and targetted investing.

The big concern with ETFs is with regard to their liquidity in the event of rapid changes in the perception of the value of either the fund or the underlying sector in which they invest.

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Excise duties are specific sales taxes usually added to the price of goods that are considered harmful or which create a specific economic externality.

Excise duties are commonly applied to tobacco, alcohol and carbon-based products but can be used for other purposes.

Excise duties are very effective revenue-raising taxes, partly because of the price inelasticity of demand for many of the products to which they are applied, e.g. cigarettes, which are consumed by those addicted to nicotine whatever the price charged.

The revenue raised is often dependent upon the ability of a jurisdiction to control smuggling and illicit products. Excise duties have a social as well as a revenue function (see entries on the reasons to tax).

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Export processing zones are artificial enclaves within states where the usual rules relating to taxation and regulation are suspended to create what are, in effect, tax havens within larger countries.

The rules that are relaxed may be for import and export taxes or corporation taxes or all three and may also extend to relaxing other regulations e.g. on health and safety or the environment. There may also be a relaxation of local taxes e.g. land taxes and social security charges.

See also freeports, of which these zones are a type.

As with all freeports, these zones are open to abuse, fraud and criminality, because of the relaxed regulation that tends to typify their operation. There is little evidence that they add economic value to the locations that host them.

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Externalities are the costs that a product gives rise to which are not usually reflected in its sale price because they are borne by society at large and not by the specific consumer of the item made available for sake e.g., the pollution from driving a car is an externality the cost of which the motorist does not directly bear.

Excise duties are often used to correct for the cost of externalities.

Tax externalities can arise from the impact one tax or the practice associated with one tax base can have on other taxes or tax bases, both within and between countries. These externalities are also known as tax spillovers.

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What is Extreme Centrism?

Extreme centrism is not moderation. It is not the balanced, thoughtful negotiation between political extremes. Instead, it can be described as a radical form of political inaction, disguised as neutrality, which prioritises preserving the status quo above all else.

It is, at heart, deeply conservative, but unlike traditional conservatism, it avoids scrutiny by wearing the respectable mask of reasonableness. It positions itself in the “centre” of politics—claiming to rise above ideology—while in reality, it defends existing power structures, economic inequalities, and institutional failures by refusing to question or change them.

Key Features of Extreme Centrism

1. Status Quo Above All Else

   Extreme centrists argue that their role is to keep things “stable” and “sensible.” But what they actually protect is the existing system—flawed and unjust as it may be. They claim to be pragmatic, yet they treat current arrangements as immutable, regardless of the harm they may cause.

2. Managerialism, Not Vision

   These politicians frame their work as technocratic competence: balancing budgets, tweaking regulations, and fine-tuning systems. But this is not leadership—it's administration in the face of crisis. The world may be heading for the rocks, yet they believe their job is to “steady the ship,” rather than change its direction.

3. Resistance to Reform

   Whether it's on inequality, climate action, or democratic accountability, extreme centrists resist the big ideas that social and ecological crises demand. To propose real alternatives is, in their view, irresponsible. But in clinging to “business as usual,” they deny the reality of the moment we are living through.

4. Moderate in Name Only

   Their language is couched in the language of caution, restraint, and “balance.” But this is misleading. By actively blocking transformation, extreme centrists often become more dangerous than overt conservatives, because their apparent neutrality allows them to undermine progress with far less public scrutiny.

Why Is This a Threat?

Extreme centrism is a political dead end. It pretends that we live in a world where only minor adjustments are needed—when in reality, we are living through polycrises: climate collapse, economic inequality, democratic decay. The centrists' refusal to acknowledge or respond to this with urgency is a threat in itself.

By claiming to offer safety, they dull public awareness of the real dangers ahead. By marginalising radical ideas as “unrealistic,” they block the emergence of alternatives. And by doing so, they leave the political space open to reactionaries and authoritarians who promise decisive action—however misguided or dangerous it may be.

In Summary

Extreme centrism is:

• Conservatism in disguise, cloaked in the language of balance.

• A refusal to act, masquerading as political responsibility.

• A barrier to progress, posing as maturity and good governance.

• A threat to democracy, because it suppresses the debate, vision, and ambition required to build a better future.

It is not the safe middle path—but a form of extremism in its own right.

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