Photo:NieckQ-, Creative Commons, Flickr
If we’re going to convert our economy to a sustainable one, we must first and foremost begin to measure our economic activity in a way that is connected to reality.
GNP and GDP are outmoded measures of economic growth. These measures are out of touch with the natural resources and well being upon which our very economy depends for growth. As such, these measures can not be considered sustainable because they do not account for depletion of either human or natural capital.
Consider this message from the late Robert Kennedy (father of leading activist Robert Kennedy, Jr.) :
The Gross National Product includes air pollution and advertising for cigarettes, and ambulances to clear out highways of carnage. It counts special locks for our doors, and jails for people who break them. GNP includes the destruction of the redwoods and the death of Lake Superior. It grows with the production of napalm and nuclear warheads… and if GNP includes all this, there is much that it does not comprehend.
It does not allow for the health of our families, the quality of their education, or the joy of their play. it is indifferent to the decency of our factories and the safety of our streets alike. It does not include the beauty of our poetry or the strength of our marriages, or the intelligence of our public debate or the integrity of our public officials… GNP 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.
According to the 2008 State of the World report produced by the Worldwatch Institute, GDP is “oblivious to the extinction of local economic systems and knowledge; to disappearing forests, wetlands or farmland; to the depletion of oil, minerals, or groundwater, etc.”
Our economy, which is built on old methods of thinking, is becoming increasingly self destructive as our system moves forward. The current methods of evaluating economic reality, disconnected from the rest of our world, were born in the times of Adam Smith, David Ricardo and others. Such thinking has not evolved to meet twenty first century realities. In the last 200 years global population has grown sixfold, and economic activity has increased roughly 60 times. Meanwhile, with massive increase in economic output, we are reaching the limits of the Earth’s ability to support the human species sustainably.
Photo:pfala, Creative Commons, Flickr
Yet, many individuals and organizations are recognizing the challenges and opportunities that this situation presents and moving toward an economy that takes nature into account.
The group Redefining Progress addresses these very points. It states:
We believe that if policymakers measure what really matters to people—health care, safety, a clean environment, and other indicators of well-being—economic policy will naturally shift towards sustainability.
Redefining Progress created the Genuine Progress Indicator (GPI) in 1995 as an alternative to the gross domestic product (GDP). The GPI enables policymakers at the national, state, regional, or local level to measure how well their citizens are doing both economically and socially.
The Genuine Progress Indicator takes into account factors that point to the heart of well being for a society. Some of the factors it considers include resource depletion, leisure time, environmental damage, lifespan of consumer durables and public infrastructure.
There is much going on in the public zeitgeist that already intuits the need for a move in the sustainable direction. The State of the World report continues:
The emergence of the sustainable economy is visible in a burst of creative experimentation involving design for remanufacture, ‘zero waste’ cities, environmental taxes, cap and trade carbon markets, car-sharing companies, maturing markets for solar and wind power, microfinance, socially responsible investment, land tenure rights for women, product take-back laws, and other innovations . . . Scaled up and replicated across the world, these and other experiments could form the basis of economies that meet the needs of people at the least cost to the natural environment.
If we start measuring our economic activity in terms of true costs and benefits, it will become glaringly obvious what needs to be done to steer our system toward well being and sustainability.
The math is simple: If you keep spending your principal, you’re going to run out at some point. We’re seeing signs of life in this new sustainable economy, it is now time for us to get with the program and change the way we operate as a civilization. It all starts with how we measure our progress, and how we define it.