"Bes" Report/26 - Relational wealth hiding by the side of GDP. In the era of the common goods it is the stocks (environmental, relational, spiritual and social) that must return to the centre of the stage
by Luigino Bruni
published in
pdf
Avvenire
(49 KB)
on 11/08/2015
The topic of we...
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[introtext] => "Bes" Report/26 - Relational wealth hiding by the side of GDP. In the era of the common goods it is the stocks (environmental, relational, spiritual and social) that must return to the centre of the stage
by Luigino Bruni
published in
pdf
Avvenire
(49 KB)
on 11/08/2015
The topic of welfare, well-being, public happiness or social well-being has been and still is at the centre of the Italian tradition of civil economy. In recent years there was a significant growth of the debate around the need to go beyond GDP or, according to some, to start using other indicators telling about the other dimensions of well-being as well.
However, in this coupling of GDP with other, non-economic indicators there is a serious risk. The emerging scenario is very similar to what happens in football.
[fulltext] => After the game, some statistical data are shown on the screen with a number of indicators: the percentage of ball possession of the two teams, the fouls made and sustained, the number of shots on goal etc. But, located on top of the statistics tables, the number of goals is the indicator that dominates: it is the only thing that really matters, and that no statistics on its side can change, not even remotely. Human development, ecological footprint, Bes (short for "benessere equo e sostenibile" - Equitable and Sustainable Well-Being; a category created by the Italian National Institute of Statistics) and other similar indicators today are very much like ball possession and the number of shots on goal, which act only as 'contours' for the number of goals scored (i.e. GDP). How to get people take other indicators of well-being really seriously and overcome the idea that GDP is the only important figure in the economic game of our society?
First, a bit of history. GDP, as we know it today, is a relatively new concept, since it is linked to the development of national accounting starting from the thirties of the twentieth century. Its actual founding fathers (or grandfathers) were the so-called Physiocrats, French scholars of the mid-eighteenth century who were convinced that the economic strength of a country is not measured by its capital (assets) or value stocks (as it had been thought until then, as the wealth of a nation had been largely based on the amount of gold owned by it). Instead, they said that what really mattered in terms of wealth was flow, i.e. income. Since then we have more or less all been thinking that a people is not made "rich" by its wealth of land, raw materials, coastline, museums, cathedrals, cultural or human capital, but by the ability to "turn over" those capitals in order to 'make them profitable' and generate new types of flow.
Today we know, and in Italy we see more and more, that if a people is not able to ensure that its funds are used in productive ways, it remains poor, even if its citizens are sitting on top of gold mines. The annual flow of new wealth is also a creation of the physiocrats: it serves to tell us how rich a national community is. So before doing away with GDP, let us treasure this value in its DNA: a person, a community, a region remains economically poor if it is not in the (institutional, cultural and political) conditions to transform its capital into income. But when a country - despite the capital - can no longer produce revenue, the income kills the profit, and societies start to decline. Other indicators or more sophisticated economic indicators are very useful in these cases, but let's not forget that without a flow indicator, we cannot measure our ability to value our capitals, to see if we are enhancing or depleting them over time.
For this reason, I believe that a major task in terms of more sophisticated measurements of the economic and social development of a country would be not to rely on GDP only but to consider some additional, but equally trusted and relevant indicators that year after year are capable of grasping the state of health of our capitals, especially that of our social, environmental, cultural, relational and spiritual capital. Despite the important lesson of the Physiocrats, it is still true that revenue (flow) is born by capital (stock), and if capital deteriorates or expires, revenue decreases and eventually disappears.
In the era of the common goods that we dramatically entered with the third millennium, stocks are expected to return to occupy centre stage in the economic, social and political world. The environmental issue, but also the relational and social (migration, social inclusion, terrorism...) ones, and other topics that have become central again in the era of the common goods, are all matters of stock, because they are linked to forms of capital, whether present or absent - we now know from many studies how much intolerance and racism are connected to the lack of cultural and artistic 'capital' in people. But there's more. Excessive emphasis on creating flows, including large financial flows that dominate by far among the flows of goods and real services, is producing many serious effects on the stocks of our economies and our planet. We must learn how to properly measure our assets, which, like non-renewable energy, are undergoing severe impoverishment precisely because of the great invasion of income flows (measured by GDP).
Finally, at the root of any development of new measurements, there is a more general cultural and political question that involves the business world directly. As long as the only indicators for the success of companies (especially large ones) are the profits achieved and the indicators consulted are purely economic, and as long as the "social reports" are glossy publications handed over to the stakeholders during corporate parties, without the 'social' data having any relevance in making important choices (the reconfirming or new appointment of managers, members of the board etc.), it will be impossible for our society to value other indicators apart from GDP.
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[text] => "Bes" Report/26 - Relational wealth hiding by the side of GDP. In the era of the common goods it is the stocks (environmental, relational, spiritual and social) that must return to the centre of the stage
by Luigino Bruni
published in
pdf
Avvenire
(49 KB)
on 11/08/2015
The topic of welfare, well-being, public happiness or social well-being has been and still is at the centre of the Italian tradition of civil economy. In recent years there was a significant growth of the debate around the need to go beyond GDP or, according to some, to start using other indicators telling about the other dimensions of well-being as well.
However, in this coupling of GDP with other, non-economic indicators there is a serious risk. The emerging scenario is very similar to what happens in football.
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The European Community, like every community, is a form of common good. And as the economic science teaches us, common goods are by their nature subject to the possibility of their own destruction. The so-called 'tragedy of the commons' (Garrett Hardin, 1968) is a well-known term for a what happens when the users of a common resource seek to maximize their individual interests, forgetting or leaving too much in the background the deterioration of the common resource caused by their consumption. If - as in the most famous example - the users of the same piece of grazing land only look at their own costs and benefits, they feel induced to bring more and more cows out, and so the final outcome of the process will be the destruction of the pasture.
So many people talk about economic recovery and GDP nowadays, as if GDP alone was capable of telling good tidings to us. The reality of our economy, however, says that businesses are suffering and will continue to suffer for a long time, and so will the world of work, too. And it is not only for the lack of markets and sales that they suffer. In fact, a common cause of suffering and failure can be found in some typical errors in the management of workers during the crisis. When going through long and difficult phases, in fact, we are more likely to commit many serious mistakes in the relationships between the ruling class and workers.
[fulltext] => 
Canadian political scientist Jennifer Nedelsky, professor at the University of Toronto, is one of the most innovative voices in the debate on the issues of care, rights and social relations. She is convinced that in our time there is a big priority that, however and unfortunately, remains much in the background of the life of democracies: the profound rethinking of the relationship between work and care, and thus between men and women, the young and the old, the rich and the poor. In fact, it is a critical issue in a world with more and more elderly people, and with elderly people who, thank God, live longer and longer. Without a collective and serious breakthrough in the culture of care in relation to the culture of work, democracy and equality among people are basically denied. I've known professor Nedelsky for a few years (and that explains the informal register of our interview); this time I met her in Italy at the 
“Parallel with the intensification of the economic crisis, a greater spread of the phenomenon of usury was observed, evidenced by reports of the doubling of suspicious transactions in 2013 over the previous year.” There are documents like this one – just published by the Financial Information Unit of the Bank of Italy – that every responsible and mature citizen should read, meditate on, and then act accordingly. Usury is a typical disease of any monetary society, since it is the visible phenomenon of the power relations and the power that are hidden under the apparent neutrality of money. The existence of money has many benefits, but it also generates high costs that are growing in intensity and importance with the expansion of the area covered by money within society.
We always knew that the Gross Domestic Product does not measure much and that many of the things that it measures it measures badly - and we often and willingly say this on these pages. But no one has ever thought of eliminating GDP to let other indicators of well-being take its place, because although democracy has a growing need for more economic and social indicators, it is still important to have an indicator of the production of goods and services of a country. The GDP is full of data that say little about our well-being or express exactly the opposite (e.g. gambling).
If we want to continue to write work as the first word of our social contract, today we have put some other words before it. Among these there is the care that goes along with work. To re-invent work the first thing to do is to recognize that a person's work experience must go beyond paid work (job) to include activities of care provided in the family and in the community. In the twentieth century we confined work to the workplace, to the factory and the office, leaving off all that work that had not been counted or valued only because it took place outside of the "labour market".
In Davos theair is filled with optimism in 2014. The great post-2008 crisis is seen already as outdated matter to be archived in the history books and in the drawers of sad memories of families and peoples. Too bad that this optimism does not have a solid foundation one could build on. So the key question becomes: why would Davos want to offer the public a picture of the economy other than what the vast majority of the people have so vividly in mind?
