Economics as if anything mattered

Elizabeth May, Leader of the Green Party of Canada:

This is an article I wrote for the series "10 Ways to Fix the Economy" originally published in the online publication, www.themarknews.com.

Looking toward Canada’s 150 year mark, we know what kind of society we want -- healthy, fair, and diverse. We know what kind of citizens we want -- engaged, empowered, fulfilled. We know what kind of world we want -- sustainable, secure, and peaceful.

Underlying all those things we want is a whole lot of assumptions about the kind of economy that delivers the “goods.” But what if our economic assumptions deliver the opposite? What if our unquestioned addiction to consumerism and unlimited economic growth delivers a lot of “bads”?

Herman Daly, former Senior Economist to the World Bank, once observed that the “economy is a wholly-owned subsidiary of the environment.” Building on that thought, he concluded that we shouldn’t treat the Earth as though it was a “business in liquidation."

How do we square that circle of economic health without damaging levels of exploitation of our planet’s natural and human capital? How do we avoid the casino capitalism that shook the foundations of the global economy?

The answer depends on whether we make the mistake of treating market principles as having God-like wisdom, or whether we recognize the limits of the free market and correct for unhealthy distortions.

Replacing our existing economic theory, committed to endless growth, accompanied with a voracious appetite for energy and raw materials, to one striving toward a steady-state economy, relying relatively more on labour and less on capital to deliver the goods, is do-able. The best recent book on the challenge is Peter Victor’s Managing Without Growth: Slower by design, not disaster (Edward Elgar Publishing, 2008). Professor Victor puts forward a series of cogent policy changes, all tested in economic models as having economic, social and environmental benefits over our current system. For example, it makes sense, as Green policy argues, to move toward full employment by reducing work weeks and providing for more flex-hours. It is prudent to set tax policy to reduce waste of energy and encourage employment.

The Green approach starts with recognizing the inadequacy of GDP as the measure of anything useful. We need to measure and value a great deal more than the amount of money that changes hands to build a healthy society. We need to measure our real progress – in terms of social cohesion, environmental health, employment, and wealth. The GDP provides no useful information about these indicators. Only a Genuine Progress Index can measure the real condition of our society. Perhaps one of the first prescient critics of GDP was the late Senator Robert F. Kennedy, who in 1968, scant weeks before his death, said:

“Too much and too long, we have surrendered community excellence and community values in the mere accumulation of material things....The (GDP) counts air pollution and cigarette advertising and ambulances to clear our highways of carnage. Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile.”

Last September, Nobel Prize winning economists Joseph Stiglitz and Amartya Sen delivered the same message in a report to French President Nicolas Sarkozy.

Canada in its 150th year must have already moved to a new paradigm. It is time to insist that human existence, natural systems and communities are not viewed as mere raw material to an economic engine. The economy exists to support the things we value.

Elizabeth E. May, O.C. is the leader of the Green Party of Canada.
Originally published in the online publication, The Mark News