Once we have these new indicators in place we also need to start to examine what we mean by “progress”. Is it burgeoning GDP? Is that our greatest legacy? Or is it all the “stuff” that it has brought us? Or is it something else less quantitative and growth orientated – more about qualitative development? These are the questions which Ecological Economics and what we are calling Wellbeing Economics focus on and can help us to answer.
Standard neo-classical economics – or “autistic economics” as some call it – and ecological economics differ in some fundamental ways. The former thinks in terms of how humans can manage ecosystems for instrumental purposes of optimising “wealth”. It assumes no limits to growth despite the fact that we live in a closed, finite resourced system. It approaches the uncertainties about natural systems by denying them or suggesting human ingenuity will overcome them. Reflecting this, our current economy is primarily concerned with maximising profits and income growth through ever-reducing costs and ever-increasing revenues. Courtesy of Adam Smith it also places the pursuit of “rational” individualistic self-interest at its heart. It assumes perfect knowledge for all actors to act in a utility rational manner. In the light of new thinking around behavioural economics this is badly outdated.
Courtesy of J.S. Mill, the economy assumes that utility is inherently linked to price, and so utility must increase if income increases. It also makes the leap that utility equals happiness and so more money makes us happier. As we have shown, the assumptions are flawed. The evidence suggest otherwise.
Today’s version of economics, however, has no place for ethical considerations nor a vision or ability to see how a ‘good’ society might be achieved.
This now “dismal science” was originally conceived as a “moral philosophy”. The likes of Voltaire and the founders of modern economics such as Smith, Malthus and, later, Marx viewed progress as more than just economic growth, encompassing also social context and development. Today’s version of economics, however, has no place for ethical considerations nor a vision or ability to see how a ‘good’ society might be achieved.
Today’s version of economics, however, has no place for ethical considerations nor a vision or ability to see how a ‘good’ society might be achieved. As Clive Hamilton says of the idea of progress in Growth Fetish: “Applied science, evolutionary biology and ethics no longer powered the idea. The new engine was more mundane: material advancement would drive progress, and the measure of success became standard of living.”
Professor Victor says in his forthcoming book Managing Without Growth: “The measurement of happiness has confounded economists ever since it was proposed by Bentham and the other early Utilitarians. Rather than pursue the impossible, economists gradually moved away from the quantification of happiness, first by reconstructing the theory of demand based on ordinal utility and then by avoiding interpersonal comparisons of utility. This allowed some normative statements to be made about specific changes in an economy but made it very difficult for economists to say anything about the relationship between economic growth and happiness.”
Once we have accepted that the Earth is our one and only planet and that it and its resources (our throughput) are finite in nature and that it is at or beyond a ‘full state’, it becomes clear that an infinite-growth based paradigm is a madness.
“The economy is a wholly owned subsidiary of the environment”, Archbishop Rowan Williams
As the Sustainable Development Commission puts it: “We see [today] a society and a Government whose primary objective is still the achievement of economic growth as conventionally understood and measured, with as much social justice and environmental protection as can be reconciled with that central goal. We envisage a society whose primary goal should be the Wellbeing of society itself and of the planetary resources and environment that sustains us all, with economic objectives shaped to support that central goal rather than the other way around.”
Archbishop Rowan Williams has said: “The economy is a wholly owned subsidiary of the environment. The earth itself is what ultimately controls economic activity because it is the source of the materials upon which economic activity works.” Or as Professor Victor puts it: “Nature can get on very well without humans. It did once and will likely do again, but as humans we have an interest in staying around, which means attending to our dependence on nature and doing so through the kinds of society and economy that we create.”