What is an Economy?

Ernst Haeckel coined the term Ecology drawing on the Greek root eco, “Oikos” - a home or place to live, and "logos", being logic or knowledge. Ecology is the 'study of the house', or of the environment in which a creature lives. Since all life is energy-driven, ecology essentially maps energy flow through an ecosystem.

"Economy" stems from the same Greek word oikos (home) , and nomy derived from nomos, a law or principle. In economics, the "management of the household" is under scrutiny. Household management encompasses a lot of things, but chief among them is providing for the household's residents the basic elements of survival, namely food and shelter, both derived from energy.

Interestingly enough, in both an ecosystem and an economic system, the plant is the foundational element upon which everything will be built, since it is the plant that converts raw energy into usable forms. In an ecosystem, members of the plant kingdom convert the sun's energy into the chemical energy that fosters the development of the food web. The plant is the producer, and in order for life to exist, an ecosystem must first have a population of producers (and a convertible energy source).

In an economy, the plant that forms the underpinnings of the system is the manufacturing plant. This plant converts raw , unusable materials, such as minerals, fibers and crops, into products usable by man, the primary participant in the economic system. The manufacturing plant, through its conversion of raw materials, becomes the producer element in an economy. These manufactured products are distributed not through the familiar hunter/gatherer method of the natural world, but through mutual agreements using an exchange unit known as currency. This currency circulates through the economy just as energy circulates through the ecosystem.

Among the many differences between the energy flow of an ecosystem and the currency flow in an economic system, one stands out: consciousness.
In an ecosystem, there is no conscious oversight of how and where the energy will flow. It is purely Darwinian, since by definition, the survival of the fittest distills down to 'a klutz and his energy are soon parted'.
In an economy, however, the whole process is very much a conscious endeavor, with forethought, sound judgment and knowledge being demanded of its participants; else 'a fool and his money are soon parted.'

Businesses in their natural state are built upon the natural flow of currency generated by the needs and abilities of the individuals with whom a business must interact, known as consumers (some of which also serve as lenders) and producers. This information is signaled to the business segment through product demand, savings rates, and unadulterated interest rates.
To centralize an economy is to direct artificially where the currency will flow. Using the ecosystem as a model, we understand that artificially directing the flow of energy will have disruptive consequences at various levels within that ecosystem. Segments that are suddenly cut off from the energy flow will unravel into ruin, while others that are flooded with energy will experience population booms and/or habitat destruction. (In an economic system we call these 'bubbles').

But what happens to an economy when its currency is suddenly rerouted for political reasons, specifically designed to benefit select elements within the economic system? We see the demise of certain affected economic engines and a cascade of economic contractions in certain related veins of the economy on the one hand, and conversely the formation of 'bubbles' in other segments. (I prefer to think of these as aneurysms... a catastrophic hemorrhage waiting to happen.) And when legislation becomes egregious to the point of making manufacturing an impossible task, the conversion of raw materials into usable products eventually ceases, (or goes overseas) and with it, the currency and the economy it nourished.

Put on your tin foil Sci=Fi hat for a moment, and imagine the consequences of an entity that masterminded a way to control the amount of the sun's energy reaching planet Earth. You don't even have to think very long to figure out two things: 1) This won't end well for the inhabitants, and 2) There will be an attempt made to 'improve' something, either the planet's inhabitants (ignorant benevolence) or the well-being of the controller and his cronies. The siren call of power is simply irresistible to conscious beings.

Socialism is the centralization of the means of both the production and distribution of an economy. It is not based on the realities dictated by the participants in the economic system. It is based on the utopian fantasies of those who believe they can consolidate and control this colossal power derived from the genius and work of hundreds of millions of living, breathing human beings.

And Socialism can only lead to Communism, because such access to power must be further constricted to an elite echelon subjugated to a single ruling authority, precisely because power is a two-edged sword, and its dangers multiply at every degree of concentration within the hands of a few as opposed to when it is dispersed across the hundreds of millions of autonomous, thinking individuals inhabiting a geopolitical confine. Communism has always resulted in economic failure, large scale human suffering, and worse, by vast numbers of the population, precisely because it is based on the dreams and visions of 'the visionaries' (aka intellectuals) and NOT on the real dynamics of people living at the community level.

True free market Capitalism is absolutely dependent upon unencumbered signaling between individual producers and individual consumers. But with the Federal Reserve manufacturing imaginary currency ('energy') for Congress to inject into the economic system to effect their own political agendas and play out their ideologies and fantasies, the U.S. economy has never been the house of cards that it is today.
But then I'm guessing you already knew that.