Economists have established GDP and inflation as key measures of the performance of national economies worldwide.
‘Macroeconomics‘ covers conglomerations of national economies and larger regions.
‘Microeconomics‘, however, addresses individuals, households and firms.
In the spirit of ‘microcredit’ and ‘microfinance’, ‘microeconomics’ needs to measure the performance of ‘social business’ and ‘the future of capitalism’.
‘Microeconomic performance metrics’ cover the degree to which social objectives are met while financial performance is measured in terms of profit.
In the attempt to influence the future of capitalism, it is key to appreciate not only the use of language but also of measurements as well as of levels of generalisation:
– spend time as employee or employer or investor
– need money for food and shelter
– may receive active income from work
– may receive passive income from interest, rent, dividends or the welfare state
– may pay off debts
– may suffer from repossessions and overindebtedness
* Companies in the ‘Real Economy’
– comprise investors, managers and employees
– measure ‘profit’ as difference between income and expenses
* Companies in the ‘Financial Economy
- comprise pension funds, insurance companies and banks as ‘institutional investors’
- measure ‘profit’ as ‘return on investment’
* Social Business Entrepreneurs
– create and run companies to meet social objectives
– have social aims with respect to their employees
– practice social business procedures
* Charitable Organisations
– are called ‘trickle down economics’ by Dr. Yunus
– receive donations which, for the donor, may be an alternative to paying taxes
– may not pay taxes on their profits.
* National Institutions
– Companies House regulates for-profit organisations
– The Charities Commission regulates charitable organisations
– Inland Revenue receives taxes on income and profits
– Customs and Excise receive Value Added Tax.