The Invisible Core Economy

We human beings have created two economic systems.

In the first, money drives the activity. The monetary economy has two major components: the private sector and the public purpose economy that includes government, philanthropy and non-profits. This is what the economists measure and what officials look at. This is what we usually think of when we think of economics.

The second economy consists of family, neighborhood, community, civil society. It is not primarily driven by money. It runs on a thin stream of money – but it is primarily powered by our minds, our spirits, our hearts. It runs on psychological energy: love and kindness, caring and compassion, encouragement and moral duty. And for some, we need to add guilt and anger and shame. But it does run – and money is not the primary fuel. This is the Core Economy.

What does this Core Economy do? What does it produce?

It provides care to infants, children, teenagers, families, seniors.

It produces safe vibrant neighborhoods, community, democracy, civil society

It produces love and caring, helping and sharing.  

That’s all.

It does not do all of that perfectly. But nonetheless, we need to be aware that the Core Economy is both critical and vast.

  • The value of unpaid household work in 1998 was estimated to total $1.911 trillion – about one quarter the size of the U.S. gross domestic product (GDP) that year.
  • The national value of informal care giving that keeps seniors out of nursing homes in 2014 was $522 billion annually, a “figure [that] dwarfs national spending for formal home health care and nursing home care.”
  • Economists, including Nobel winner Gary Becker and MacArthur “Genius Award Winner” Nancy Folbre estimate that at least 40% of economic activity takes place in the Core Economy and is not reflected in the GDP.

Family, neighborhood, community, civil society – this is the Core Economy. It supplies much of the basic ecosystem for our species. Without the families and communities that produce human capital and social capital, no work force, no industry, no culture, no social structure, no political structure could develop, or thrive.

Like clean air and water, we have always taken families and neighborhoods and community for granted. Now, we need to filter the air and buy bottled water.  Increasingly, we are having to buy foster care and kinship care and elder care. And the systems providing that care are breaking down. We need to invest in rebuilding families, neighborhood, community and civil society.



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