Systems Economics Lexicon · Supporting Concepts — The Locus Model

Economic System

The abstracted representation of a generalized, product-producing economic agent — applicable to a business, government, organization, department, or individual.

StatusSupporting term
SectionSupporting Concepts — The Locus Model

Understanding Economic System

The concept was developed as a response to the “black box” problem in classic economic theories of the firm: production-function models treat the transformation of inputs (land, labor, capital) into outputs as an unexamined black box, whereas the Locus Model’s Economic System concept opens that box and systematically characterizes its internal structure. Its canonical diagram, the ’Rosetta Stone,’ draws subject resources as squares placed inside the 12-part Activity Cycle to depict their inseparability from the cycle itself, while inputs and outputs appear as triangles at the ends of a line running through the system, with inputs entering at position 1.2 and outputs leaving at position 3.2. Because the same functional structure is presumed to apply at any scale, the same apparatus describes a multinational corporation and a single job with no modification, covering not only standard entities like firms but also subcomponents (departments) and aggregations (industries or national economies). This scale-invariance rests on a recursive/nested structural claim: any activity within a higher-level Economic System’s cycle implies the existence of a complete Activity Cycle at a lower level, so systems can be “zoomed into” indefinitely (agent to department to work group to sub-work group, and so on), with the same 36-activity structure describing each level and differing only in what the central 2.2.2 activity is reoriented to produce.

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