Economics (2) Investment

Investment is the oldest or first economic practice, even though the practice started long before we seemed able to do the economic analysis to justify it.  Perhaps, evolution selects for investment in that those who make investments are more likely to have descendants; such would permit investment to become more common without yet requiring that humans do conscience analysis.

In its simplest form, investment is doing work, expending time and effort, before it (the product) is needed.  In that very simple form, investment only changes long term outcomes to the most trivial  extent: most transactions are unchanged, some become more efficient, and some are wasted work.  The efficiency of investment grows as we see patterns in our transactions and anticipate needs before they become acute.

A very large impact can arise when some product or intermediary can be used more than once.  This situation is the an example of “economies of scale”, albeit at the very small end of that scale.  Some very early examples are: building a nest to use for more than one night (repeat use of a product), saving a rock that has been chipped in order to form a knife (repeat use of an intermediary product), planting a perennial crop (repeat harvest), and planting a field with seeds for an annual (parallel treatment of very many plants).

Studying and learning are among the most abstract investments, and may also have the largest  payouts.

Investments have build (or at least paid for) all the accomplishments of humanity.  They are also the foundation for almost all the other advancements in economics, including specialisation and trade.  I suspect that investment has some hidden costs, such as making war more common than it might otherwise be.

Author: protin

A futurologist (madman) using systems analysis techniques to try to be prepared.

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