I'm around a lot of Economists, I've studied economics and I have a general idea of how the international economy works. The some background to the question; When the economy turns south everyone gets really worried and panicked. People kill themselves, get depressed, lose their houses and have less to eat, no work to do. On the surface it makes logical sense; less demand for various objects and services reduces the labor force proportionally. - People are unable to afford land because the holders of the land believe their land is worth more than people are able to pay. - People are unable to afford food because food production costs rise as a result of reduced raw material output is reduced. Question 1; There's always been and always will be the same amount of Earth...and there's plenty of it . Why can't we seem to devise a system where everyone has a place to live? How come someone can own land where they don't live or frequent? For example a lot of Europeans and Americans own property in Jerusalem that sit dormant because the owners live in their host countries and only visit on rare occasion. They make it difficult for people to afford living in the city by driving up prices like this. I believe the issue is directly tied to economics...why has this behavior always been deemed acceptable in modern Economics? Question 2; There's the same amount of food before a depression as there is after. Why can't we separate food production from the general economy so that we always have a constant food supply and production cost? Wouldn't this significantly increase quality of life for everyone? Fundamentally the Earth is the exact same before and after a depression....what changes that causes things as severe as death? It's like everyone all of the sudden forgets that there is a real physical world that exists.
There's 2 versions of the economy: the fake economy... and the real economy. The real economy consists of real workers and real businesses, which manipulate goods and services for the good of everybody. The fake economy consists of fake workers and extraneous businesses, which manipulate money and bank accounts for the good of themselves. Unfortunately, these two economies are so intertwined, that if one goes south, so does the other. It's time to design an all new, modernized government and economic system. Foremost, I believe that land should not be owned, but be shared by all, and managed fairly and conscientiously by local government. Land is the ultimate limited resource, and should be treated as such. Land, or houses, should only be rented out by (...this hypothetical new system of...) localized government, at the lowest prices practical. (This does not mean that all houses will cost the same to rent. A bigger house, on better land, would be rented out for much higher than an inner city row home.) Land should not be owned by anyone. It is immoral and selfish, and no longer necessary in such a modern, globalized society. Capitalism is no longer a necessary evil- it has now become unnecessary. And like most evil things we are addicted to it. We are brainwashed to it and cannot force ourselves to think in other ways. For example- when I stated that no land should be owned, I bet most of you reading this nearly crapped your pants. I also believe that businesses should not be owned and everybody should receive their paychecks exclusively from the government....
I am tired, about to go to bed so will not try to answer OP's questions but just note that there is always an economy when goods and services are exchanged. It is quite simple if these exchanges are delivered at the same current time. For example two farmers, one giving the other four chickens for his baby pig. It gets complex when one of the deliveries is delayed. Farmer with the chickens takes promissory note from the pig farmer (instead of his pig) for later delivery of the pig. It gets even more complex when money exists which is a government's promise. This is sort of like the chicken farmer taking the pig farmer's note to the baker and exchanging that note for some bread. I.e. the baker is accepting on faith that the pig farmer , exists, will honor his note etc. US's current economical problems are and extreme case of the exchange of notes which no one really understood what the notes said; but others rated note or said they were probably good. (Gave a rating with scale like: "AAb is rate of this note probably of being honored.”) To ask your OP questions better, you need to tell more about what level of complexity is the economy you are interested in.
People already had this thought. The huge US government involvement in agriculture, all the subsidies and they paying farmers not to grow food and all the other myriad of programs was to stabilize food prices for the farmers and the consumers. The Big agriculture lobby may have twisted these programs into plain old corporate welfare and these programs may have crushed rather than helped small farmers but the intent was to "separate food production from the general economy so that we always have a constant food supply and production cost." To some degree the US government did achieve it's goals. Food prices have been much more stable since the Great Depression and US Ag programs than they were before the Great Depression and government meddling in agriculture. Unfortunately stabilizing food prices is a bit like trying to stabilize the weather. There are too many variables that the government can not control. Commodities had a run up in prices last summer partly because people were buying futures as a hedge against a falling dollar. Nobody quite understands why spot markets follow futures markets but they do. Remember Costco rationing rice a year ago? Milk prices paid to farmers last year was one of the best years for dairy farmers. This year is one of the worst years for dairy farmers. Dairy farmers are having to sell milk for less than it cost to produce. The US government milk subsidies are not large enough to stop the dairy farmers from losing money. They have send perfectly good young dairy cows to the butcher because they can't afford to feed them. Part of the problem is Dairy farmers increased their herds to much during the good years and part of the problem is the rise of the dollar. Also the economic slow down has reduced cheese consumption. Somebody is profiting from the dairy farmers pain but I have not seen much of a fall in milk prices at my supermarket. Government actions can have many unintended consequences. NAFTA forced Mexico to end tariffs on US government subsidized corn which forced millions of poor Mexican corn farmers out of business because they could not compete against subsidized corn. This increased the number of Mexicans moving to the cities and illegally immigrating to the USA. I sometimes buy Mexican Coca-Cola at Costco because it tastes more like the Coke of my youth that I liked better. It is because Mexican coke uses sugar while American Coke uses corn syrup. The USA does not allow the importation of sugar due to the political influence of the US Sugar and corn lobbies. But the rest of the world produces sugar much more cheaply than the US does. Therefore if I want Coke made with sugar I must buy imported Coke. Ireland was exporting food to England during the Irish Potato Famine. This was a political socioeconomic famine more than it was a potato blight famine. British policies to force India to produce more cotton reportedly led to the deaths of 30 million Indians in the late 1800s. France, Germany and Japan have policies in place to try to keep their farmers from going out of business despite the fact that they can not compete in a open global market. This is considered an issue of national security for these nations. They don't want to become reliant on imports for the food supply. In Africa it is said that many of their famines are political and economic rather than crop failures. US policy is to send US grown food. NGO's say it would make more sense to buy food in the African markets because it needs transportation and is more efficient and say that bringing food from the USA for famine relief hurts African farmers. The problem is not that food is not available in Africa; the problem is that the people experiencing the crop failure can't afford to buy the food.
The common sense answer is that we can if every body produces goods and some services to uplift all the boats...err...all the people. But certain groups create elaborate systems to prevent that production. For example there are a billion people in Africa. But they produce very little, even though there are plenty of resources. Today, there were rich people coming out of the woodworks against normalizing relations between Cuba and the USA. Go figure....
A example of an economy. The worlds population is 3. 1 has a chicken, 2 has a dollar and 3 has a book. 2 trades the dollar for a book and 3 uses the dollar to buy the chicken, but 1 is left with a dollar. A economy is assigning a trade value to a product, thus the dollar is used as a material of "Worth" assigned by the public to be worth what it is. If the public views it's dollar as worthless, then indeed it is. The economy ends when the book is burned, or the chicken is ate, because the dollar serves no purpose but to trade for something else. There are no other books, or chickens. Pick what one are you. 1, 2 or 3.
I think it has to do with the state of our society up until this point. One good question to ask is, why do we have do we allow private banks to not only essentially own all money but to also charge an interest rate on it; since they own it all, the only way to deal with the interest is to ultimately borrow yet more money from the bank or to essentially declare bankruptcy. In this type of a society, the people who are allowed to borrow the most and then get their loans forgiven the most (or get the government to pick them up as 'toxic assets') are the ones who get the richest; a refined form of thievery; the more connections you have, the more likely you can do quite well with this scam... Take a look at the trailer at this site: http://www.moneyasdebt.net/ I personally saw the video in parts on youtube.
That, as they say in math and logic, is a necessary but not necessarily sufficient condition (as I fear we will see in less than a decade.)
I still think the key to sustainable economy is for all citizens to produce physical products (or content in those products, with some exception like music, movies and eBooks that are in the digital form) for the society to consume. This assumes that the stuffs are safe, environmentally friendly etc. But when products and services are consumed that are normally an expense item such as security, healthcare etc. and when the production starts somewhere else and people borrow money to buy stuff...then the system gets lop sided and fails.
