The Australian National Development Index, the Gross Domestic Product and the Global Movement to Redefine Progress
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The Australian Economic Review, vol. 46, no. 1, pp. 78–91 Policy Forum: The Measurement of Well-Being Measuring the Kind of Australia We Want: The Australian National Development Index, the Gross Domestic Product and the Global Movement to Redefine Progress Mike Salvaris* Abstract 1. The Real Wealth of Nations There is a growing global movement to re‐ Too much and for too long, we seemed to have define progress beyond gross domestic product surrendered personal excellence and community values in the mere accumulation of material things. (GDP) and develop new measures of equitable Our Gross National Product, now, is over $800 billion and sustainable well‐being. GDP’s shortcom- dollars a year, but that Gross National Product – if we ings as the chief measure of societal progress judge the United States of America by that – that Gross have been clearly exposed, but it is still widely National Product counts air pollution and cigarette used in this role, with increasingly adverse advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the consequences. This article examines the les- jails for the people who break them. It counts the sons from this global movement and the destruction of the redwood and the loss of our natural technical and democratic requirements for wonder in chaotic sprawl. It counts napalm and counts developing new national progress measures. nuclear warheads and armored cars for the police to fi ’ fl It focuses on a new Australian project, the ght the riots in our cities. It counts Whitman sri e and Speck’s knife, and the television programs which Australian National Development Index, which glorify violence in order to sell toys to our children. Yet will develop a composite index of national the Gross National Product does not allow for the progress and key progress ‘domains’ through health of our children, the quality of their education or a national community engagement process the joy of their play. It does not include the beauty of supported by a cross‐disciplinary research our poetry or the strength of our marriages, the intelligence of our public debate or the integrity program. of our public officials. 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. And it can tell us everything about America except why we are proud that we are Americans. [Kennedy 1968]1 In a famous speech just months before he was assassinated, Robert Kennedy argued that the real wealth of a nation is not its economic output alone. Rather, it is the well‐ being, skills and wisdom of its people, the values and qualities of its society, the vitality * Applied Human Rights and Community Wellbeing, and integrity of its culture and institutions RMIT University, Victoria 3000 Australia; email <salva- and the health of the environment which [email protected]>. nurtures it. °C 2013 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research Published by Wiley Publishing Asia Pty Ltd Salvaris: Measuring the Kind of Australia We Want 79 The underlying question that Kennedy Keynes (1931) argued to a similar effect, posed—What is true progress or well‐being although without explicitly advocating a for a society?—is in fact a very old one, ‘steady‐state’ economy or rejecting a continu- debated for thousands of years in many ously growing economy. He believed that, at a civilisations. Yet, despite differences of lan- certain point, common agreement will be guage, culture and history, it is surprising how reached on what he regarded as the secondary often the same themes have recurred over the or instrumental ‘problem’ of how to operate an ages: Is progress primarily about individual or economy for the benefit of society, which could collective development? Is it the ‘destiny’ of then apply its attention to higher order problems humankind or merely an enlightened possibil- such as culture and human relations. Smith ity? Is it a necessary consequence of political (1776) argued for limits to economic growth or economic power? (see, for example, Bury from a somewhat different perspective. He 1920; Nisbet 1980; Salvadori 2008; Salvaris believed that the population growth generated 2010). by economic growth might start to produce Perhaps, the most venerable question of all is negative impacts on human progress and this: How far does true progress (or well‐being quality of life, such as depressed wages and or ‘the good life’) consist of an increase in depleted natural resources.2 On the basis of material wealth and living conditions, rather these views, all three might have made than qualitative improvements, such as in common cause with the Club of Rome and wisdom, happiness, justice, peace, spiritual latter‐day economists and environmentalists and cultural well‐being, or merely ‘a balanced like E. F. Schumacher, Kenneth Boulding, life’? This problem has preoccupied especially Nicholas Georgescu‐Roegen, Manfred Max‐ philosophers in all ages and cultures. Aristotle’s Neef, Herman Daly, Donella Meadows, John (1952, p. 341) memorable aphorism ‘Wealth is Cobb, Hazel Henderson, Paul Hawken, Robert evidently not the good we are seeking, for it is Costanza and Tim Jackson. merely useful and for the sake of something Ultimately, though, the meaning of progress else’, had its counterpart in Confucian and early for any given society is not just a philosophical Islamic thinking and its echo 2,000 years later or an economic question. It is a matter of intense in John Ruskin. ‘That country is the richest public, practical and democratic concern. which nourishes the greatest number of Throughout history, the idea of ‘progress’ has noble and happy human beings’ Ruskin and been a powerful political driver, which carries Rosenberg (1980, p. 270) and in Amartya Sen with it a sense of inevitability and national (see Nussbaum and Sen 1997) and Robert destiny (see Salvaris 1998). The way that Kennedy in our own times. progress is officially defined and measured in It is a question that has also engaged some any society—and by whom—has direct con- thoughtful economists, in this form: Is con- sequences, not just for national policies and tinuous growth in the economy a necessary pre‐ public debate, but most importantly for the condition of human and social progress? Adam actual outcomes and life chances of ordinary Smith, John Stuart Mill and John Maynard citizens. In a truly democratic society, there- Keynes, all in their different ways, argued for a fore, citizens have the right, and the duty, to shift from quantitative economic growth to participate in defining the goals and priorities— quality of life, not only because of resource and hence the broad directions of progress—for limits or physical laws but also on ethical and their society. social grounds. Mill (1848) argued that the economy would 2. Is Gross Domestic Product (GDP) an 3 reach a certain point of size or efficiency at Obsolete Measure of Progress? which it would become stable and regenerative In a world divided by religion, politics, and culture, there and not need to grow any larger; at this point, is at least one thing that unites us. From Washington to men would be free to concentrate on more Pyongyang, Bombay to Berlin, Mecca to Rome, govern- important aspects of moral and social progress. ment and business the world over worship this one thing °C 2013 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research 80 The Australian Economic Review March 2013 with absolute devotion. Legions of acolytes track its one is prepared to argue that producing and progress and prophesize its future course, believing consuming goods and services in a market wholeheartedly that growth in this thing is the road to salvation, and decline in it the path to damnation. This economy represents the highest form of human thing is a number. The number is Gross Domestic progress or societal good. This seems, at best, a Product. strangely hollow and reductionist view of the [Butler 2004] richness and diversity of human life and the possibilities of cultural and societal develop- For nearly 60 years, GDP has been the ment as noted by thinkers through the ages. It world’s most recognisable and influential shrinks the notion of social progress to one measure of the overall progress of nations. simple equation: ‘life equals shopping’. How did this come about, when on its face, it Criticisms of GDP as the single or principal seems unsuited for the purpose? measure of societal progress have been gather- GDP is usually defined as: ing from many different directions over the past 50 years. Some focus on its narrow scope and fi the total market value of all nal goods and services methodology, others on its implicit social produced in a country in a given year, equal to total consumer, investment and government spending, plus rationale: that the progress of society is best the value of exports, minus the value of imports. achieved, and most other problems can be [OECD 2008a, p. 236] solved, by continuous growth in the production of goods and services in a market economy. From this definition and as a matter of logic Some of these criticisms may reflect a alone, it is difficult to see how GDP could itself misunderstanding of the original (and limited) constitute a satisfactory measure of the ‘overall purpose of GDP, but others more justifiably progress of society’. target the knowing misuse of GDP. A sample of The concept of societal progress, by even the these criticisms includes the following: most parsimonious definition, is complex and multi‐faceted.