What does a well-balanced economy look like?

A well-balanced economy, as defined by the Business Dictionary, is the financial condition of a country where there is an equal proportion in exports and imports. This view, while practical, is also simplistic and there are several other factors that many would consider to be present in a a balanced state. Factors such as the output of goods, unemployment and the balance of prices spring to mind as the most crucial.

However, many would would argue that a well-balanced economy is simply a fanciful ideal that no country has ever managed to fulfil. For example, in a perfectly balanced economy, consumers and businesses would be perfectly matched, there would be virtually no unemployment and prices would sit at just the right level for all individuals. Of course, such a scenario can never come to bear in a capitalist society, since capitalism depends on the very notion of supply and demand and of competition between businesses and producers. And it is doubtful that a perfect economy could be fulfilled in any other type of society either.

Nevertheless, the concept of a balanced economy and the goal of striving towards one is a useful and good endeavour to pursue. So, let us look at some of the indicators that should be present in order to consider an economy well-balanced:

An appropriate level of inflation

While social and economic inequality and quality of life are already measurable, a mutual guarantee index has yet to be developed. Before such an index is manifested, it is necessary for an economy to maintain a certain level of inflation as the level of prices in an economy has an instant connection to the level of well-being of individuals across all levels. The most suitable inflation rate for a well-balanced economy is 2 percent, as set by the Federal Open Market Committee or the FOMC. This figure is consistent with the mandate of the Federal Reserve in ensuring optimal employment and stable prices. The purchasing power of consumers will be eroded when the inflation rate is higher. In contrast, when the inflation rate is lower, it may result to deflation where earnings and the price of goods will go down, which indicates weak economic condition in the country. In order to maintain the 2 percent inflation level, it was necessary for a monetary policy to be implemented by the FOMC to maintain the rate for a certain period of time.

Different Perspective on Profit

It is necessary for existing social and economic systems to be consistent with the concepts of cooperation, proper distribution of information and resources, equitable consumption and mutual respect for each other. In addition, it is important to combine the different fiscal, monetary and economic approaches to attain a well-balanced economy. Each individual takes others into consideration in the new system. In contrast, the existing economy focuses on personal gain and productivity. Competition and conflict among individuals and countries are also encouraged by existing economies.

Consumption Level is not linked to Income Level

A well-balanced economy also shows that everyone is capable of purchasing products and services based on their need for a reasonable standard of living without taking into account of income levels. However, it is important for each individual to make his or her own contribution to society. In this situation, the needs of everyone will be met based on their individual contributions, which require cooperation and transparency. While the removal of the link between consumption level and income level is applicable to everyone, it does not signify everyone is equal in terms of income, possessions and individual contributions to society.

Distinctive and proportionate equality

Disparities in socioeconomic status will be reduced and eventually removed in a mutual guarantee economy. However, the arbitrary distribution of wealth and resources to ensure equality among all members of society is not necessary since resources are distributed based on the specific requirements for a reasonable standard of living of each individual. The specific requirements of individuals are determined by what is needed to ensure comfortable living. The immediate environment is also taken into account so that everyone can live above the poverty line. It is necessary for everyone to agree on the standard used to ensure everyone can live a comfortable life. Equality becomes evident when resources are equitably distributed, the decision-making process is transparent and everyone contributes for the benefit of all members in society.

Ensuring realistic living standards

Everyone deserves a suitable standard of living to ensure they live a relatively comfortable life. Each member of society will receive food, clothing, education, medical care and housing, among others. These benefits ensure a comfortable life for each individual as determined by the financial capability of society. This makes it necessary for the standard of living to be beyond the poverty line, which may also result to a decrease or increase in the standard of living for some members of society. But, everyone should agree to the process. Due to the adoption of mutual guarantee in society, each individual should also have a sense of mutual responsibility and be concerned with the welfare of others. These changes are instilled into each individual through education and information campaigns with the goal of attaining relative equality and offering suitable living standards to everyone.

Stable economy

A well-balanced economy requires stable consumption. The integration of the interdependence of each individual in the international market can have a significant effect on the economic paradigm. Economies will shift from being wasteful, self-centered and materialistic into a cooperative, stable and balanced economy. This shift may eventually result to a philanthropic economy. All aspects of the economy will be modified to prevent shortages or excess supplies.


Making economic development as the primary objective of society can put pressure on the economy and society as a whole. Development will no longer become a goal in a balanced economy since the GDP will not be used as a measure for economic success. Providing a reasonable living standard for all citizens will become the primary concern of the country along with the development of the potentials of each citizen.

Excess Resources

Considerable excess resources will result from a mutual guarantee economy since everyone will know that all of their needs are already ensured, In this situation, individuals, companies and governments will find it unnecessary to save on financial reserves, which can result to excess resources. These excess resources are manifested through an abundance of natural resources and a surplus of available land. Income will also be equitably allocated as magnates work on reducing inequality in society.

Attitude of Sharing

Materialism in a mutual guarantee economy will mainly be limited to the acquisition of basic necessities, as shown on kabbalah.info. The mutual guarantee principle will promote the attitude of sharing wherein individuals contribute for the welfare of each member of society. The level of contribution will become the new standard for success. The attitude of sharing is a product of change within the person, environmental factors and awareness of the concept of mutual guarantee.

Programs to Reduce Unemployment

In an ideal economy unemployment may at first result from the change from a competitive and money-oriented economy to a well-balanced economy. It is necessary to deal with this unemployment issue since it may result to inequality, division, violence and instability within the government and society as a whole. The mutual guarantee principle will be used in dealing with unemployment wherein unemployed individuals will receive a fair sustenance-scholarship if they participate in the educational process.

Integration of financial and government systems

Promoting mutual assistance, information sharing and collaboration among cultures are currently managed by a number of international organizations, including the International Monetary Fund, UNESCO and the World Bank. International cooperation will be facilitated by mutual guarantee, a socio-economic treaty that links people with each other. Collaboration among countries will be enhanced since they are connected with each other and responsible for the welfare of other countries. This integration includes fiscal and monetary systems based on a unified system under a single head.

Social magnate

The role of magnates in a mutual guarantee economy is mainly to utilize their inherent talent for the benefit of society. However, it is necessary to ensure that the magnates focus on offering socially-beneficial values rather than dominating the market at the expense of others. When these values have been modified, gratification for the magnates comes from the contentment of having been able to provide for the needs of society.

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