Purpose of an economy

Last week my friend and I started talking about weed (or marijuana to be specific). I expressed my concern over the fact that alcohol and nicotine cigarettes are legal but marijuana, which doesn't have any short term effect and negligible long term adverse effects, unless you're a hopeless addict, its an illegal commodity. In fact my friend, few of my other friends and many others whom I've talked to, and my hours of browsing the internet told me only one thing, Marijuana is a harmless drug. In fact, doctors recommend it in some cases even for Cancer and AIDS patients! To resolve this dilemma, my friend told me something that I still can't understand. He said, Marijuana makes a person feel happy, and its harmless. Moreover, its a weed so a person can grow it in his backyard, and is quite cheap if you manage to procure it. If this is made legal, people will consume it and remain happy. But corporations don't want that, economy doesn't allow that. How will economy grow if people remain happy? Happy people won't buy products they don't need. But then, I thought, why can't we remain happy and live with less, won't that be good? Making marijuana illegal is like making potato illegal !! Both are easy to grow and universally consumed. He exclaimed, maybe in some civilization sometime in history, potatoes were made illegal for similar reason.
It makes me wonder, what's the purpose of an economy? Consumerism? To keep people miserable so that they keep buying things, and to keep them engaged in this vicious cycle doesn't feel right to me. I have been and will continue to only take what I need and get out of this cycle, and will enter it only when I again need something.
Peace and happiness is our final destination. Material goods may be tangible but their existence is quite fragile in our lives. Peace and happiness is what makes us strong and life worth living.