Questing for Economic Utopia, Part 2
The economy serves society. It's time to start acting that way.
Posted Oct 11, 2017
Society does not serve the economy. The economy serves society.
That seems obvious and yet core to redrawing the maps that guide us toward “prosperity."
The first Renaissance proved powerfully that society’s progress is a bigger concept than economic progress. Historians look back on the Renaissance century, from 1450 to 1550, as Europe’s break from the medieval ages to the early modern era. In the 1450s, Europe lagged the rest of the world on many measures of civilizational progress (e.g. science, exploration, navigation, iron- and steel-making, weaponry, agriculture, textiles, and timekeeping), but by 1550, Europe was leapfrogging every other region and boasted more organizational and energy resources than any previous civilization on earth.
But look back at the same time period through the lens of economic growth, and, according to economic historians, nothing happened. Western civilization achieved some historic transitions: from local to intercontinental Empire, or from looking for truth in Revelation to finding answers in present-day observation. (That philosophical shift led ultimately to the scientific revolution and the Enlightenment.) But “GDP per capita” barely budged. Economic growth statistics failed to capture these monumental shifts, for the simple reason that the economy is only one dimension of society. Some shifts transcend the economic dimension.
Our notions of “progress” and “prosperity” must do the same.
To that end, Bhutan famously measures national progress according to its Gross National Happiness index. The GNH a home-grown substitute to GDP that combines economic prosperity, social cohesion and environmental sustainability “in search of a more balanced society." We’ve all heard about Bhutan’s happiness index in the media at one time or another. It’s worth taking two minutes out of our busy lives to browse the specific dimensions that Bhutan’s government measures in its report of public “happiness," such as: emotional balance, spirituality, “healthy days” (as opposed to sick days), artisan skills (like painting and weaving), hours of sleep, victimhood (by crime, abuse or other), pollution levels and housing quality. Sounds sensible. Every household is classified on a spectrum from “Unhappy” to “Deeply Happy."
My friends at the Boston Consulting Group, where I once worked, have developed a substitute to GDP called SEDA, the Sustainable Economic Development Assessment, as another way to shift the national goal from “wealth” (i.e., GDP) to “well-being." It considers a narrower, but perhaps more familiar, set of indicators: economic factors like GDP, unemployment, and inequality; public infrastructure, health, education and the like. Like my letter last week, SEDA makes the point that, while tracking economic growth makes sense, focusing on growth alone misses the point. Converting economic growth into general well-being is not automatic, and it occurs very differently from country to country.
In China, the ruling Communist Party, which has made economic growth its main focus for the past 30 years, looks set to reform its Constitution at its once-every-five-years powwow in mid-October to enshrine a wider notion of prosperity. To quote the official translation of the official draft text from the official propaganda bureau: "The people-oriented development thought should be implemented to solve the conspicuous problems faced by the country and…to promote balanced economic, political, cultural, social, and ecological progress.”
The Wake Up Foundation, run by a former chief editor of The Economist, thinks about prosperity less in terms of progress and growth, and more in terms of resilience in a time of flourishing risk. It ranks 35 rich democracies according to how prepared they seem to “deal with the big forces we all know will pummel us over the next decades." Their ranking considers demography, education, innovation, globalization and institutional strength. They rank Switzerland first, Canada 12th and the U.S. 23rd.
Even the pope is taking part in this conversation. In his second encyclical, Laudato Si’ (2015), Pope Francis writes:
A technological and economic development which does not leave in its wake a better world and a higher quality of life cannot be considered progress. Frequently, in fact, people’s quality of life actually diminishes—by the deterioration of the environment, the low quality of food or the depletion of resources—in the midst of economic growth.
From macro to micro
My plan was to switch gears at this point, away from the big-picture macro question of “What does prosperity mean?” and start exploring the micro question of “What does it look like to pursue something other than growth within the economy?”
I was going to share some of the thinking from the Ellen MacArthur Foundation about shifting from a linear to a circular economy. I was going to share some examples of startup companies that aim for long-term, stable profits rather than short-term, lucrative exits, like Meetup.org or Pando Daily.
But I’ve hit my word limit again, so…tune in next week.
Three links to help navigate the now:
- Listen to Oxford psychiatrist Ian McGilchrist. In this interview on Australian national radio, he helps us to make better sense of the world by using our left- and right-brain, or, as he calls them, the Master and his Emissary.
- Follow Max Tegmark. He’s a physicist at MIT and tries to make the issues presented by Artificial Intelligence accessible to everyone so that we can all take part in the conversation about it.
- Watch a clip about Being Abroad in Japan, by my friend and professional YouTuber Chris Broad. We met on a long flight from London to Singapore earlier this year. In one of his latest clips (they’re all short), he lives through the experience of being awoken by a North Korean missile flying overhead. Ah, the times we live in.