We need to stop trying to measure progress by calculating the worst our society has to offer.

Extensive research has revealed that the dramatically escalating consumption of the last half century has brought no increase in the satisfaction levels of Americans. According to Manfred Max-Neef’s “Threshold Hypothesis” when macroeconomic systems expand beyond a certain size, the additional benefits of growth are exceeded by the attendant costs. (Max-Neef 1995.)

And as Elizabeth Kolbert eloquently illuminates in the New Yorker:

But let’s imagine, for a moment, that we had enjoyed ourselves for the past fifty years. Surely, trashing the planet is just as wrong if people take pleasure in the process as it is if they don’t. The same holds true for leaving future generations in hock and for exploiting the poor and for shrugging off inequality. Happiness is a good thing; it’s just not the only thing.

And this is all to say nothing of the actual dollars and cents value of the contributions of nature to our fiscal progress. Whether you’re using the GDP or something more realistic, you can’t discount the $33 trillion per year (in the 1990’s) that nature contributes to our economy (as calculated by Robert Costanza and other theorists of natural capital). Researchers arrived at the figure by analyzing 17 specific areas of contribution by the natural environment, including water filtration, pest control, pollination and erosion control among others.

So what are the alternatives? Measuring and evaluating our progress as a society is important work and we don’t want to “throw the baby out with the bath water”. Enter the Genuine Progress Indicator or GPI. Developed in 1995 by a few geniuses in California, it was promptly and whole heartedly endorsed by about 400 other geniuses (Nobel laureates, economists, business leaders etc) in the following joint statement:
Since the GDP measures only the quantity of market activity without accounting for the social and ecological costs involved, it is both inadequate and misleading as a measure of true prosperity. Policy-makers, economists, the media, and international agencies should cease using the GDP as a measure of progress and publicly acknowledge its shortcomings. New indicators of progress are urgently needed to guide our society…The GPI is an important step in this direction.
The creator of the GDP himself even warned of its limitations:
The welfare of a nation can scarcely be inferred from a measurement of national income… Goals for “more” growth should specify of what and for what.
A group in Nova Scotia currently working towards a shift to the GPI astutely observes
The things we measure and count — quite literally — tell us what we value as a society and determine the policy agendas of governments.
The GPI may not be the last word in progress measurement, but it is certainly a more complete indicator than what we’re currently working with. The group in Nova Scotia has this to say about the scope of the GPI
The GPI system and framework is based on a capital accounting framework, in which the value of human, social, and natural capital are recognized along with the manufactured and financial capital that are currently measured. Like conventional capital, this human, social, and natural capital is seen as subject to depreciation, and requiring re-investment in the event of depletion or degradation. Based on this approach, the GPI assesses the economic costs of liabilities like crime, pollution, sickness, and natural resource depletion, rather than counting defensive expenditures in these areas as contributions to prosperity (as current measures do).
At this point, it’s safe to assume that as the GDP increases the actual quality of life will be decreasing. What does that say about the relevance of financial capital to social capital?
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