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Eureka: The evolution of the economy on one foot Eureka: The evolution of the economy on one foot
by Akli Hadid
2017-10-20 08:54:48
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Maslow's hierarchy of needs actually provides a very simple line to explain how the economy evolved over the last couple of centuries and what kind of economy we have today. Something businesses, business start-ups and economic planners should keep in mind.

econo1_400Until about 50 years ago, the main purpose of the economy was to meet the basic needs, what Maslow calls the “physiological needs” of human beings. The economy revolved mainly around keeping people fed, housed and healthy. Food was simple, housing was simple, and staying healthy meant eating well enough and getting enough sleep.

The there was what I would call the first revolution, which started at different points in time around the world. Maslow would call it the “safety needs” revolution. Television and the radio did not exist yet, that was for later, but there was a revolution of arms, weapons, door locks, security guards, militias, police patrols, advances in medical science and in police investigations along with walls and fortresses that made safety an important part of the economy. This may have started in the 18th and 19th century in Europe and North America, and lasted until recently in many other countries. Before the safety revolution, the economy revolved around food, drink and housing, then safety took over as the largest expense in the economy. Of course safety always existed, but spears, bows and arrows or muskets made way for more advanced weaponry and organized armed forces.

Then came what I would call the “belonging and love needs” revolution. This is when cosmetics, home decoration, fashion, the radio, television, the press, organizations, associations, fraternities and other products directly linked with belonging and love needs started being monetized and became a bigger part of the economy. When food was the largest expense, or when weapons and safety products were a big expense, suddenly products enhancing our sense of belonging became a larger part of our expenses. People bought televisions so they could belong to groups of virtual people who were almost part of the family, the press became an important expense, and socializing at dining halls, restaurants, bars, cafés, pubs or social clubs became a large part of the expense. That's when there came the notion of the paycheck being spent at the bar. This was the trend between, let's say, depending where you live, the 1960s and the 1980s or 90s.

Then came what I would call the “esteem needs” revolution came around the 1990s or 2000s. According to Maslow, esteem needs are the needs for social status, for prestige and for accomplishment. This is when jet setting became a huge expense in many households and travel bloggers became a dime a dozen. Average people started joining prestigious social clubs, luxury expenses became mainstream, average people started finding money to buy expense bags, clothes, cars, and in some cases housing, boats, yachts, going to night clubs that charge a lot of money and paying egregious fees for an evening where a few celebrities seem to have been invited.

Finally, we have another revolution, what I would call the “self-actualization” revolution. By self-actualization Maslow means that human being feel they have reached their full potential. This means that a lot of the production and consumption is showing signs that every detail has been accounted for. Dinner is no longer macaroni and cheese but many families have resorted to detailed gastronomy for dinner. A sandwich is no longer bread stuffed with ingredients, it's now carefully cooked bread stuffed with carefully made and seasoned ingredients. Apartments and houses are no longer simple lodges with no clear design and architectural plan, every detail from floor plans to ceiling decoration are now taken into account. Vacations are no longer about spending time in the sun or in the mountains, they are now carefully planned escapades with carefully taken pictures. Precision and detail has become part of the economy, and a lot of experiences and expenditures are done with attention to detail.

The next revolution will perhaps be the “transcendence” revolution, where Maslow argues that human beings feel that they have reached their full potential and are looking for something bigger than life. It has already started. People pay for paintball and laser tag experiences, virtual reality experiences, to travel to space or visit museums that recreate something of the past or the future.

Is all this quantitatively demonstrable? Hire me and I promise I'll do the quantitative study to see if this hypothesis is positive or null.

 


     
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