Economic System (the Locus Model’s Frame Term)

Systems Economics Lexicon · Loci, Systems, Semiotics & the Theory of People

An Economic System is the abstracted representation of a generalized economic agent that produces a product, applicable to and representative of any business, government, organization, department, or individual.

This is the frame every other Locus Model term ultimately sits inside. A company is an Economic System. So is a single department within that company, a government agency, an entire industry, or one person doing a job — the Locus Model deliberately doesn’t distinguish between these by scale or legal form, only by whether the thing in question performs activities and produces a product. That’s what lets the same Activity Cycle and the same six resource categories describe a multinational manufacturer and a freelance contractor without needing two different vocabularies.

The book’s Theory of Economic Systems builds outward from this frame in two stages. A one-level model looks at a single Economic System’s internal Activity Cycles — how it produces its own product. A multi-level model then pivots around each of those activities to examine the subordinate Economic Systems that support it, since the resources any system uses were themselves produced by other Economic Systems performing their own Activity Cycles. That nesting — systems made of systems, all describable in the same functional language — is the mechanism that lets the Locus Model scale from describing one company’s operations to mapping relationships across the whole economy.

See also: Central Department Cycle · Economic Agents in the Locus Model’s Enterprise Barcode

Part of Loci, Systems, Semiotics & the Theory of People, course 3 of 7 in the Locus Theory series. For the full term-by-term specification, see the Lexicon.