Beyond Money: A Systems View of Economics for Urban Planners (and Everyone Else)

Economics as Resource Transformation, Not Just Money

Economics. The mere mention often brings to mind images of stock tickers, interest rates, and a whirlwind of figures revolving around dollars and cents. But what if we redefined economics not as being solely about money, but rather about the transformation of resources? At its core, economics is about how societies convert resources—natural, human, intellectual—into wealth. Wealth, in its broadest sense, extends beyond financial accumulation. It encompasses the value derived from economic activity and the transformation process itself, which meets societal needs and creates value from available resources.

Adopting a systems dynamics approach reveals the economy as a web of interconnected chains, where the end products of one activity become the starting resources for another. Ideally, these chains are circular, efficient, and sustainable, though every economic transformation requires resources and results in some waste. The essence of this approach is that economic activity, by creating societal wealth, enhances conditions over time. Let’s explore how this systems-based perspective on economics can inform urban planning and decision-making.

Wealth Beyond the Wallet - Permanent, Semi-Permanent, Fleeting

To truly understand wealth, we must look beyond the wallet. Societal wealth can be categorized into three interconnected forms: Permanent, Semi-Permanent, and Fleeting.

1. Permanent Wealth: This enduring form includes behaviors and knowledge—technical know-how like science and engineering, as well as cultural understanding like arts and traditions. Replicated across generations, permanent wealth enriches a society’s culture, providing resilience and shared meaning. Language, scientific understanding, and artistic traditions are prime examples of permanent wealth.
2. Semi-Permanent Wealth: These are long-lasting physical elements such as infrastructure and buildings, which facilitate future economic activity and complement permanent wealth. Roads, bridges, schools, and historic buildings provide a stable environment for society to function and progress.
3. Fleeting Wealth: Although short-lived, fleeting wealth encompasses essential services and consumables that sustain daily life. Services like healthcare and education, along with consumables like food and clothing, are crucial for meeting immediate needs.

All three forms of wealth are essential for a flourishing society, creating a balanced ecosystem of societal well-being.

Economic Activity as Transformation - Chains, Byproducts, and Circularity

Economic activity is the transformation of resources into wealth. It forms a chain where the product of one activity becomes the resource for another. Consider timber harvesting leading to lumber production, which then supports housing construction. Each link in this chain involves byproducts, which can be valuable resources or waste.

The ideal of a circular economy maximizes resource use and minimizes waste. While complete circularity is unattainable due to inherent linearity and resource constraints, striving for this ideal enhances sustainability. Despite resource inputs and waste, economic activity remains beneficial by meeting societal needs and generating wealth. The challenge lies in maximizing benefits while minimizing negative impacts.

Applying the Framework - Urban Planning and Societal Wealth Maximization

Urban planners can apply this systems-based economic framework to make more informed decisions. This involves assessing the total wealth contribution of projects, prioritizing long-term wealth creation, promoting circular urban economies, and ensuring equitable distribution.

For instance, investing in public transit not only provides semi-permanent wealth (infrastructure) but also reduces pollution, supports fleeting wealth activities, and enhances social connectivity (permanent wealth). Urban planning must embrace sustainability and resource management, focusing on equitable wealth distribution.

A Broader Vision of Prosperity - Urban Planning for Societal Wealth

By moving beyond a purely monetary view of economics and adopting a systems perspective, urban planners can achieve more holistic assessments, prioritize sustainable wealth creation, and address equity issues. It’s time to shift from financial metrics to a broader vision of societal wealth and well-being. Let’s build cities that generate lasting wealth in all forms—permanent, semi-permanent, and fleeting—for a more prosperous, equitable, and humane urban future. Urban prosperity transcends GDP growth; it’s about building a society enriched by knowledge, culture, infrastructure, and well-being. Let urban planning embrace this broader vision and become the architects of truly wealthy and thriving cities.