Systems Economics
What Systems Economics is
Systems Economics is a new field built on a unified framework for the economy, grounded in systems science. Like a metabolic map of a cell, the periodic table, or the Standard Model, it identifies each component of an economic system, locates it in the system’s functional sequence, defines its role, and reveals its relationships, flows, dependencies, and contribution to the system as a whole.
This framework, called the Locus Model®, applies the underlying principles of General System Theory to develop a universal functional coordinate system for economics. Just as geographic coordinates anchor geographic information systems and temporal coordinates organize calendars, the Locus Model uses functional coordinates to place the economy’s operational parts in a common frame of reference. The resulting system is a Functional Information System, or FIS®. Its founding coordinate system is documented in depth on the Coordinate System page; the methodological grounding for the claim — why Systems Economics is a process science rather than a formal one — is set out on the Systems Approach page.
The goal of Systems Economics is to identify and locate the functional role of each economic component, and to trace and measure the flows of economic activity across the system — so that decisions about growth, maintenance, and stability take into account their effects on the whole.
The central axiom
The central axiom of Systems Economics follows General System Theory (GST) for living systems, developed by biologist Ludwig von Bertalanffy and economist Kenneth Boulding, co-founders of the Society for General Systems Research. GST held that living systems are isomorphic in their fundamental organization: each is an open, dynamically organized system that maintains itself in a steady state through continuous exchange of matter and energy with its environment, and the ongoing synthesis and breakdown of its components.
Systems Economics states this principle as functional isomorphy: all living systems share one invariant functional architecture, in two parts.
- Invariant roles. The functional roles of activities and resources are fixed. Every living system performs the same sequence of those roles: at root, produce and restore.
- Variable performers. The particular actors and resources that fulfill those roles are not fixed — they change with time, place, and field.
Applied to economic systems: the functional roles of activities and the resources they use are invariant; the firms, people, and things the system draws on to fulfill those roles vary. This is the mathematical and structural basis for a functional organization of the economy — the precise role of each activity, the relationships among parts, and the position of each component within its functional sequence and the operation of the whole — enabling the study of any job, resource, product, business, industry, or geographic region through a single, standardized coordinate system, applicable at any time, in any geography, and at any scale.
From taxonomy to coordinates
The central breakthrough of Systems Economics is the move from a taxonomic approach to economic classification — a stipulated category that is inherently subject to change — to a coordinate-based one, where position is derived from an entity’s own facts rather than assigned by committee. Coordinate systems do more than measure precisely: they classify every unit in a field by its literal position on an underlying grid, the same way GIS classifies a parcel of land and a calendar classifies a moment in time. Today’s economic classification standards fall into two siloed domains instead:
- Business taxonomies. Enterprises classified by industry — by production process or primary revenue source. NAICS, SIC, ISIC, NACE, GICS, ICB, TRBC, and RBICS differ in granularity and governance, but all answer the same narrow question: what industry is this business in?
- Product taxonomies. Physical goods categorized by material composition or intended use — the Harmonized System (HS), Global Product Classification (GPC), and the UN Standard Products and Services Code (UNSPSC).
Because these categories are stipulated, they are defined and limited by the technology and economic environment of the exact moment they were written, and maintained by manually updated committees that inevitably fall behind as markets and technologies evolve. Systems Economics replaces that structural bottleneck with an invariant coordinate space: the Locus Model and its Functional Information System.
Traditional taxonomies
Discrete, human-assigned buckets. Business industry codes (NAICS, SIC, GICS, NACE) ask “what bucket does this firm belong to?” Product classifications (HS, UNSPSC, GPC) ask “what category does this item fit into?”
Systems Economics
Unified, standardized functional coordinates, via the Locus Model and FIS®. The question becomes: what is the functional role of an activity or resource, and where does that place it in economic space?
The reference system analogy
The Locus Model and FIS® function like any other standardized reference system: their core advantage, shared with every foundational map, is that they maintain absolute precision without reinventing their category definitions each time the world changes.
| Reference frame | Coordinates | What stays stable |
|---|---|---|
| Spatial (GIS) | Latitude and longitude | A parcel of land keeps the same address whether it holds a farm, a house, or a skyscraper. |
| Temporal (calendar/clock) | Year, month, day, hour | Time progresses along a continuous grid rather than a shifting set of category names. |
| Functional (FIS®) | Fixed functional coordinates | Every economic actor — an employee, a product line, a corporation, a macro-industry — maps to a position based on its own operational process, independent of text-based industry codes. |
The source disciplines
Systems Economics is drawn from three disciplines that each solved the same class of problem in their own domain: how to organize complex entities by function rather than by surface appearance or historical convention.
Biological systems
Living systems built from repeating, ordered functional activities and the resources that staff them — the model for economies as self-sustaining, self-initiating cycles rather than static snapshots.
Botanical classification
Taxonomy that organizes by function and structure rather than appearance — the precedent for a classification method that survives changes in convention.
Categorical theory
The mathematics of structure-preserving relationships — the formal grounding for a coordinate system that composes and computes rather than merely labels.
The proof
The textbook
Systems Economics: The Parts and Processes of Economic Systems (Locus Analytics, 2019, 3rd edition, 294 pages) is the primary technical specification of the Locus Model and the FIS® methodology.
The patents
20 granted U.S. patents, inventor Rory Riggs, assignee Locus LP, spanning Functional Coordinates, the Functional Coordinate System, Functional Location, Functional Space, Functional Proximity, Functional Trajectory, the Functional Information System, and Systems Syntax. Representative grants include US 9,361,358, US 9,910,910, US 10,019,509, US 11,151,096, US 11,657,026, and US 12,242,431. See the full Justia patent index.
The applications
Financial markets and pharma & life sciences, including biotechnology, are each an application of the same coordinate logic — proof that the system works at any scale, in any domain. See Applications.
Systems Economics is a field. FIS® is what it produces.
Systems Economics names the discipline; the Locus Model is the framework within it, and Functional Coordinates the instrument it produces. Once an entity has a functional coordinate, two further operations become possible that industry codes never supported: Functional Proximity, the measured distance between two functional positions, and Functional Trajectory, the computed path an entity traces through functional positions over time. The full vocabulary — Economic Physiology, Economic Morphology, the Enterprise Barcode, and more — is documented in the Lexicon.
