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By Guest Autor: Shoham Adizes

Published in Mexico Business News

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Everyone talks about “the economy” as if it were a fragile child. Is it up? Is it down? Did the recent storms hurt it?

Administrations come and go because of it.

Our well-being depends on it.

And yet, what is it, really?

Google offers a simple definition: “A system of how people make, buy, and sell goods and services.”

Helpful, but incomplete.

Here is another way to see it: The economy is the sum of our interdependencies.

Every day we rely on countless people we will never meet. If you take the bus, you depend on the driver, the mechanic, the fuel supplier, the scheduler, the manufacturer of the engine, and so on. Each of those people depends on others. And somewhere in this vast web, someone depends on you.

When we do our “job,” whatever our role is, we are contributing our part to this enormous system of mutual reliance. That system is the economy.

Now imagine the opposite.

If everyone suddenly became a subsistence farmer, producing everything for themselves, the economy would collapse instantly. Not because the land disappeared, but because interdependency disappeared.

Our economy exists because we need each other’s help. It is precisely this cooperation that allows specialization. “You take care of that, I will take care of this.”

Specialization enables focus, and as a result, innovation, and innovation raises our standard of living.

But specialization comes at a price.

The Hidden Cost of Specialization

The same interdependency that raises our living standards also reduces our personal freedom.

If you heat your home with electricity, you depend on a utility company, the power grid, linemen, natural gas suppliers or wind turbines, engineers, regulators, and maintenance crews. If any part of that chain breaks, you lose heat — even though you did nothing wrong. A person who heats with firewood, however, controls their entire supply chain: cut, chop, store, burn. Less efficient, but far more independent.

Modern food is another example. Most of us rely on farmers, trucking companies, grocery stores, packaging plants, refrigeration networks, and even international shipping. This gives us year-round strawberries, but it also means a single supply-chain disruption can empty supermarket shelves in 48 hours.

Even careers have become deeply specialized. If your profession depends on unique software, licensing, or complex organizational structures, changing jobs, or even changing processes, requires the cooperation of many others. The more specialized the role, the harder it becomes to pivot quickly.

Interdependence increases comfort but decreases autonomy.

And resilience suffers as well. A tribe of 150 people may not be as technologically advanced as a modern city, but they are capable of rebuilding their entire society if needed. A globalized world of 8 billion cannot easily “reset.” It depends on countless fragile connections: shipping lanes, semiconductor plants, communication cables, fuel pipelines. When a single chip factory shuts down, entire industries stall. When one strategic waterway closes, global prices spike.

The more interconnected a system becomes, the more efficient — and the more fragile.

The Many Economies

We often talk about the economy as if it were singular, but there are layers:

• The informal economy: Favors, helping friends, unrecorded exchanges.
• The black-market economy: Illegal or off-the-books interdependencies.
• The formal economy: Taxable, regulated, documented exchanges.
• And the full economy: All interdependencies combined: formal, informal, and everything in between.

When the economy is “up,” it means interdependence is growing. We are relying on one another more.

When the economy is “down,” we are doing more things independently — less cooperation, less exchange, fewer connections.

Interdependency fuels innovation and progress. But too much of it reduces freedom, increases fragility, and makes large-scale change harder.

How the Federal Reserve Actively Shapes Interdependence

In the United States, the Federal Reserve attempts to manage the economy primarily through interest rates. In effect, it manages how easy or difficult it is for us to depend on each other.

When interest rates are low, it becomes easier to borrow. That makes it easier to:

• Start businesses
• Buy homes
• Expand companies
• Invest in long-term projects

Low rates encourage people and organizations to lean on one another more, because future repayment feels manageable. In other words, low interest rates actively stimulate interdependency.

When interest rates rise, the opposite happens.

Borrowing becomes more expensive. Expansion slows. Fewer long-term commitments are made. People and organizations become more cautious, more self-protective, and more selective about who they depend on. High interest rates restrict the growth of interdependency.

To guide this delicate balance, the Federal Reserve targets roughly 2% average inflation over the long run, believing this level supports sustainable expansion and employment. In the same spirit, many economists view 2–3% GDP growth as the ideal range for a “healthy” developed economy.

In other words, even at the policy level, the system is not designed for explosive growth, but for controlled, managed interdependence.

Should an Endlessly Growing Economy Be Our Goal?

If growth means more interdependency, then limitless growth implies limitless dependence.

That raises a profound question:

Are we improving our standard of living, or merely trading resilience and freedom for convenience?

And if so, is “bigger” always better, or should a healthy society seek a balanced economy, rather than an endlessly expanding one?