Constants in the economy

Originally published 27 December 2015. AI polished for a better reading experience: 11 August 2026.

Economics today feels a lot like physics after Newton. When Newton published his theory of classical mechanics, it was a revolution — in the same spirit as Adam Smith’s Wealth of Nations for political economy.

But Newton’s model had limits. It worked for large objects and still left a gap between the quantum and classical pictures of the world. Roughly two centuries later, Einstein’s theory of relativity completed much of how we understand nature and unlocked unprecedented discoveries. In essence, he introduced something Newton’s framework lacked: a constant. With a true constant, you can measure everything on a common scale. That is a huge leap in science. Einstein’s mass–energy equivalence may be the most famous formula in the world:

E = mc²

Where c is the speed of light in vacuum — a constant, a holy grail of physics, the Archimedes lever of the modern scientific age.

And that is precisely what economics is missing right now: a constant that would link a scarcity-driven world (microeconomics) with a world of abundance (macro).

When I was studying economic growth, I could not believe there was nothing we could use as such a constant. As a self-imposed challenge, I tried to build a model that would help me understand real economic growth more clearly.

I began by listing what a true economic constant would need in order to belong in the system:

• It should be comparable across countries and across time — so that a value of “0.15” in the USA in 1830 means the same thing in Russia in 1995, with no conversion required.
• It should be independent, with no room for discretionary change.
• It should be simple to understand.

I am not a professional economist, so I claim the right to be wrong. Do not judge me too harshly. With those parameters in hand, I started looking for a characteristic that would match them.

Money, gold, oil, platinum, even antimatter (today among the most expensive substances on Earth) — all of them change over time or by region, so they fail the test. Almost everything on Earth is relative rather than constant — except the Earth itself. We know there is one Earth. We do not expect to find another soon, nor do we plan to slice it into eight segments like an orange. So I tried to imagine a monetary model built on that constant.

If there is only one Earth, we have a scarcity that can be measured and that remains fixed over time. What if we invented a new electronic currency — not expansive like ordinary money, but scarce — so that the sum of M2 (notes and coin, near cash, short-term deposits, and 24-hour money-market funds) always equalled 1?

If we believe in endogenous growth, what might follow?

• As productivity rises, money would tend to appreciate steadily: each unit would buy more goods.
• Population growth would reinforce that effect: a scarce resource would be divided among more people, and the cost of labour would decline.
• Those two forces create a problem: prices are flexible, but wages are rigid.
• The setup might work better in a society of freelancers than in a classic wage economy.
• Growth might actually slow — steady appreciation of money would push interest rates higher.

As a full monetary system, the model raises more problems than it solves. People often prefer comfortable illusions to hard reality. Governments like the ability to devalue currency: it cuts real wages without the same social shock as an open pay cut. A scarcity-based currency is suited only to mature societies.

But what if we treat the model not as a proposal for a future currency, but as a proposal for a new economic indicator? Just as we speak of “constant dollars of year X,” we could express economic quantities in this fictional unit. For example:

• How much credit have we drawn on our planet — a global M4−M2 gap (M4 being M2 plus longer-term credit)?
• The real difference in pay between a UK worker in 1918 and a Russian worker in 2015 — comparable on a single scale.
• The real appreciation of money over time.
• Each person’s real share of Earth as a whole — we are, after all, its shareholders.
• And many other comparisons that today’s patchwork of indicators obscures.

If almost everything could be expressed through one transparent indicator, economics would become more open to ordinary people. Clearer measures would support sharper demands on governments and strengthen democratic oversight. With today’s mess of formulas and incompatible bases, that kind of public scrutiny is nearly impossible.