Including Non-Monetary Values
in Decision Making
According to economists, all is well if GDP is growing. GDP (Gross Domestic
Product) is the total money value of all goods and services purchased over
a given period. Judging everything by how much money changes hands has come
to dominate policy and planning so thoroughly that if an activity makes
money, social and environmental damage is routinely overlooked.
The evidence increasingly shows that we ignore social and environmental
damage at our peril, but the system is blinded by success as measured in
its own monetary terms. Bringing other values to bear in decision making
will require dedicated action. This article looks at how we came to this
state of affairs, some problems arising from the narrow focus on GDP growth
and a plan for reintroducing non-monetary values into the decision making
Civilization is Coming of Age:
Civilization is at a stage similar to late adolescence. We are feeling
omnipotent with the power of physical maturity. The scientific process,
its technical applications and the power of harnessed fossil energy are
not unlike the strength felt by teenagers as their intellect incarnates,
their skills develop and they enjoy the use of their full grown bodies.
Unlike the physical growth of teenagers, unfortunately, civilization
has no automatic mechanism to limit its expansion once sufficient capability
has been reached. Unless we choose otherwise, there is nothing to moderate
our growth except the rigid natural laws of resource limitation and ecological
tolerance to waste.
In some ways, money is like sugar. Sugar can satisfy hunger yet leave
a person malnourished. Money can give the impression of progress even as
our social and environmental foundations erode away. We approach the new
millennium officially dedicated to increasing the amount of 'sugar' (money
as measured by GDP) passing through our collective metabolism while unemployment
scars millions, family structures disintegrate, soil fertility and petroleum
reserves diminish and the global climate de-stabilizes. What are we to do?
For teens, the passage to adulthood is marked by the assumption of responsibility.
As a society, we must also refine our ability to respond to the reality
unfolding before us.
Money is as old as civilization, but only recently has money become
a value unto itself. There is a difference between a coin having a value
equivalent to a sack of grain for example, and money being valued as something
to make and spend as much as possible of. It has long been recognized that
a sack of money can provide the security of a great deal of grain and other
products, but, it was also understood that "it is easier for a camel
to pass through the eye of a needle than for a rich man to enter heaven"
and so the pursuit of wealth was restrained within a broader moral framework.
It wasn't until 1776 when Adam Smith's book "The Wealth of Nations"
was published that the foundation was laid for the accumulation of monetary
wealth to become a socially sanctioned goal. Smith pointed out that when
people pursue their self interest by making money supplying what others
will buy in open markets, that they do more good for society than if they
intentionally set out to do good "...as if guided by an invisible hand."
Smith was on to something which is not disputed in the broader field
of ecological economics. In their excellent book, For the Common Good; Redirecting
the Economy Toward Community, the Environment and a Sustainable Future,
Herman Daly and John Cobb comment on the vigor and resilience of the open
market system of economics: "The most important insight that economists
have to convey about the market", they write, "is how independent,
decentralized decisions give rise, not to chaos, but to a spontaneous order."
Millions of people making their own decisions about what to buy and produce
does a remarkable job of providing what people need from the labor and resources
When Adam Smith clearly described the market phenomena, he was midwife
to its birth as an intentional process. At the time, there was little one
could do to enrich oneself that did not benefit society by increasing the
supply of goods or services. There was a dark side for slaves and sweat
shop labourers, but the process proved extremely powerful. Not only were
many people pleased with the goods and services available, but those becoming
rich from the process were extremely pleased and worked hard to press the
values of self-interest and the market to ever greater heights.
Whatever culture the value of the 'invisible hand' has emerged in, it
has been in the context of well understood traditional values. Adam Smith
himself was best known in his lifetime for his book "The Theory of
Moral Sentiment". At the time, social acceptance of money making as
a value was just an oddity in the well established company of loving one's
neighbour, sharing, honesty, service, mutual aid and the like. With each
successive generation, however, the value of pursuing wealth has expanded
to take up more and more of the moral landscape to the point today where
it has largely eclipsed other values.
" It's OK to be greedy now."
Financial trader Ivan Boesky commenting on the philosophy
underlying Ronald Regan's economic policy.
Selfishness has moved from a merely tolerated behaviour to its present
position as the foundation of economic thought and planning. Greed and covetous
behaviour are now handsomely rewarded for stimulating economic growth. The
greedier people are, the more they will do to make money and cause the economy
to grow. Other values are often seen as weaknesses that make people less
competitive in the market.
This shift in values manifests on the level of governance in the almost
exclusive reference to GDP as the measure of how we are progressing as a
society and as the guiding light for policy formulation. The result is a
narrow perspective of well-being which fails to take into account many considerations
with significant long-term consequences.
The Invisible Elbow:
In "The Green Economy", Michael Jacobs writes about the
'invisible elbow' accompanying the 'invisible hand'. Elbows he points out,
in addition to being useful for pushing one's way to the front of a crowd,
are also known to accidentally knock things over. While the pursuit of self-interest
can produce a lot of good, it can also create problems. Now that we have
become almost religiously dedicated to the service of the 'invisible hand'
of the market, society and the environment are being badly bruised by the
Not only are some of the foundations of society being undermined, money
spent dealing with the problems is added to the GDP suggesting that the
problems improve our lot. The best known example is the economic 'gain'
associated with the grounding and rupture of the Exxon Valdez oil tanker.
By the time clean up efforts were terminated, the ship repaired and lawyers
paid, some $2 billion had been spent. All of this registered as positive
numbers in the GDP. Surely, this disaster was not a good thing. It would
be madness for coastal communities to encourage oil spills on their shores
when they need an economic boost.
Achieving economic gain through massive oil spills is sufficiently extreme
to be detected by common sense. Unfortunately, gains made by polluting,
consuming limited resources and automating people out of work and other
damaging side effects are not so easily detected. Money made treating pollution
related disease, selling burglar alarms and extracting soil fertility are
recorded as entirely positive. No account is made of the personal suffering,
lost ability to work, social disintegration and the foreclosure of options
for our childrens' future.
If we don't acknowledge the negative consequences of the 'Invisible
Elbow', how can policy and action ever respond to prevent them? It is the
role of governance to see to the broader issues of society and environment.
If our problems are to end in anything but catastrophe, it is necessary
to take a more inclusive view of how our collective activities affect things.
Problems resulting from the conventional economy are often the result
of its success. Within the context of its stated objectives, the economic
system extended by international trade is extremely successful. It mobilizes
enormous creativity for the production of goods and services at minimum
cost and the volume of production has increased steadily with only minor
slow downs since the Second World War. It is this continuing success at
growing that causes problems. One set of problems is due to the unintended
side effects of resource depletion and pollution. Another set is from the
level of "efficiency" becoming so great that it takes far fewer
people to provide everything that people need than there are people who
The material production process can be likened to bread mold. Without
governance, the system will convert resources into products and waste at
an ever accelerating rate in much the same way that bread mold consumes
a loaf of bread. A spot of mold under productive conditions will grow faster
and faster until all the bread has been digested. When the mass of the mold
shrivels and dies it leaves spores behind to drift on the breeze in search
of more bread. The planet Earth is our loaf of bread. Whether or not we
can send people out in search of other planets when this one is consumed
is irrelevant to the billions of humans who toil to raise their children
hoping that they will lead long and healthy lives. Better to recognize that
perpetual expansion of resource consumption and the resulting pollution
is impossible on a finite planet and establish governing rules to prevent
On another front, people need opportunities to contribute to the economic
system in order to acquire the things they need to live. Personal dignity
requires a legitimate way to participate. The negative consequences of exclusion
in terms of physical and emotional health and the well-being of families
and communities are well documented.
As the processes of globalization, corporate expansion and merger make
production ever more 'efficient', a mere 200 corporations have come to account
for 28% of Gross World Product yet they employ only 1/3rd of one percent
of the people. As long as expanding economic activity is the only criteria
by which decisions are made, this trend will continue.
Efforts have been made in the past to govern the dis-equilibrium between
the number of jobs available and the number of people needing to work. In
the latter part of the 1800s, increasing productivity was already causing
unemployment. The work week was adjusted from 70 hours to 60 hours, to 50,
to 40 over a few decades around the turn of the century. In the 1920s, proposals
were made to lower the work week again to 30 hours. In addition to sharing
available work, a premise was introduced suggesting that there was more
to life than just working and that a 30 hour week would enable people to
spend more time with their families, do community work, and develop aspects
of themselves for which they had never before had time.
For various reasons, the powers of the day found this to be intolerable
and chose instead to encourage people to consume more. This new approach
for keeping up with mushrooming material productivity was stated eloquently
in the words of Victor Lebow, a retail analyst in the post war years:
"Our enormously productive economy . . . demands that we make consumption
our way of life, that we convert the buying and use of goods into rituals,
that we seek our spiritual satisfaction, our ego satisfaction, in consumption.
. . We need things consumed, burned up, worn out, replaced and discarded
at an ever increasing rate."
With nearly every newspaper, magazine, radio, television and billboard
carrying the message that we need more things to be happy we have since
been subjected to the most extensive propaganda campaign ever conducted.
Besides keeping unemployment temporarily at bay, the extensive promotion
of consumerism has cultivated a materialism that further eclipses non-material
values and forms of enjoyment.
Even with massive consumer promotion, there are limits to how much people
can consume. To continue expanding economic activity, it has been necessary
to cut the ties that connected financial markets to the material world.
This increased opportunities for growth but also introduced new dangers.
Speculative Financial Growth:
The economic system abandoned gold as its foundation in 1971, and
moved into the electronic accounting of cyber space. The portion of economic
activity taking place in financial markets: buying and selling stocks, bonds,
futures, options, and other financial instruments has grown far faster than
the goods and services economy. At present, $100 changes hands in the financial
economy for every $1 in the goods and services economy. The justification
of usury reveals one danger of this development. It is considered legitimate
to charge interest above the rate of inflation for the use of money because
the owner foregoes the pleasure of using that money for personal benefit.
If for some reason creditors choose to enjoy their money rather than lend
it, there would be many times more money looking for things to purchase
than there are things available. A high rate of inflation would follow as
the market balanced supply and demand. It is unlikely that all creditors
would choose to spend their fortunes at the same time, yet the disequilibrium
is still cause for concern.
The difference between the accounted value of financial assets and the
real value of things people can use presents serious problems. This difference
was essentially why the 'Asian Tiger' economies collapsed in 1998. Prices
of real estate and other investments were driven higher and higher through
repeated buying and selling. When the values accounted were found to be
out of proportion with the real world, investors withdrew and the economies
collapsed into recession and unemployment followed by inflation as their
currencies were devalued. This differs little from the process that drives
Western financial indexes higher and higher. Huge corporations, pension
plans, mutual funds, and millions of individuals are constantly bidding
up the prices of all manner of financial instruments. The size of this bubble
and its apparent need to keep inflating are warning signs.
For reasons beyond the scope of this article, the system does not cope
well when it is not growing. The absurdity of this struck me during the
recession of the early 1990's. Job loss and bankruptcies caused a lot of
fear and personal hardship, yet the economy was just standing still; it
wasn't shrinking. Since the economy had been growing for decades with only
minor slow downs, the hard times were accompanied by the highest rate of
economic activity ever experienced. The fact that hard times can coexist
with such a massive level of economic activity suggested that there is something
wrong with the system. The idea of sufficiency - producing what people need
and enjoying life - is sadly missing and apparently excluded by the very
structure of the system.
Industrial civilization was already a massive undertaking at the time
of the 2nd World War. With more than twice as many people consuming far
more per person than fifty years ago, the system has reached enormous proportions
and still our only goal is to keep growing. Warnings abound about pollution,
resource depletion, social breakdown, and unstable financial markets, yet
decision makers see no options but to continue doing more of what has brought
us to this point.
Over the long term, our chances for maintaining society within the natural
resource base and waste absorption capacity of the Earth would be far better
if we aim for sufficiency rather than depending on increases in materially
wasteful consumer practices and financial speculation to maintain a system
with no concept of enough. If our accounting practices say otherwise, we
should get an auditor with expertise in both economics and the life sciences.
"The Market is a great servant but a poor master."
The market is excellent at matching short term supply of products
and resources to short term demands. When people want something enough to
pay for it, others will produce it. The market's ability to protect against
resource depletion is unfortunately limited to the increasing costs when
materials actually become harder to find and extract. It offers no serious
warnings until a critical resource nears exhaustion. The market's sensitivity
to waste is limited to the cost of the wasted materials and the expenses
of disposing of solid materials that pile up and get in the way at production
sites. Liquid and gaseous wastes that flow or blow away are invisible to
markets and will accumulate in the environment until popular demand and/or
legislation require someone to take responsibility. As for the social repercussions
of not having enough work for everyone who needs it, the market thrives
on unemployment. The more people there are without work, the lower the wages
they will accept and the greater will be the profits for employers.
The role of governance is illustrated by this mechanical device which
shares its name. [drawing to come] The governor shown here was fixed on
the rotating shaft of an early motor. The weights spun outward with centrifugal
force as the motor sped up until the inside ends of the connecting rods
pressed against the turning shaft preventing further acceleration. The motor
ran of its own accord, but if it began turning too fast for the well-being
of the motor or for the task it was designed to perform, the governor kept
it within safe bounds. So too the self organizing process of open markets
can operate freely within an overriding framework that prevents it from
breaching planetary limits or the bounds of healthy communities.
Such governance goes uncontested in some areas. It is generally understood
that a company is not allowed to get ahead by killing the executive of its
competition or by bombing their factories. These rules apply to everyone.
The 'playing field' is level. All firms are free to compete in open markets
governed by the rule of no killing the competition. No one screams to the
World Trade Organization complaining that economic freedom is stifled because
they are not able to kill their competitors. This sort of rule needs expansion.
Industrial interests should not be allowed to get ahead by killing ecosystems
or damaging communities. It is our task as the millennium dawns to clearly
identify and govern the boundaries within which economic activity can safely
How can we institute the values of economic inclusion, respect for resources
limitations and for the Earth's limited ability to absorb and tolerate pollution?
We can be relatively certain that the political power formed by the success
of the present system isn't going to initiate significant changes. The system
serves itself very well and the tendency for people to block out information
that runs contrary to their personal interests is a familiar aspect of human
On the other hand, many of the problems that have to be addressed are
known to much of the population. The foundation for change can be provided
by the majority of people who's primary concern is for the well-being of
their communities and for their childrens future.
The taboo against mating with our brothers and sisters predates
history. It is not hard, however, to imagine the elders in a community noticing
the increased likelihood of mental handicaps among the off-spring of closely
related couples. Before libraries and universities, elders were respected
as the holders of knowledge and perspective. When they detected the problem
with incest, their words would have been heard. With subsequent observations
and perhaps confirmation from other communities, the caution against incest
grew into a full taboo.
When communities were small enough to be maintained through personal
relations, rules were enforced by social pressure. As settlements grew it
became necessary to augment socially enforced norms with a system of laws
and law enforcement. Nevertheless, the process of governing society for
collective long-term well-being remains the same: A problem is observed,
likely causes identified, and rules drafted to avoid the causes.
Many of the causes of modern problems are well known, but in the face
of the overriding value of financial gain, the process of rule making is
often blocked when it looks like a rule might inhibit economic expansion.
Economic expansion is itself a rule that evolved from observations about
how to deal with society's problems. There was a time before human impacts
threatened ecological balance when increasing economic activity was almost
entirely positive. More goods and services generally meant more employment
and more assets to go around. With automation and global concentration of
productive opportunities, mushrooming population and substantial increases
in consumption per person our circumstances have changed drastically. The
faith that economic expansion is always good has to be questioned and its
application has to be modified to respect social and environmental realities.
There are many ways to re-tune our basic social/economic/political system
so that it inclines us away from problems rather steering us into them.
To bring these techniques into use we have to overcome the road block of
denial on the part of vested interests and a distressed population.
The first step, opening our eyes to what is going on around us, is obvious.
The custom of paying attention only to GDP is like driving a bus looking
only at the speedometer. It is essential for us to recognize how other factors
affect our well-being. We need to keep an eye on social and environmental
indicators and pay attention to how they are changing as we steer our way
into the future. The "7th Generation Act" which will be introduced
into the Canadian House of Commons this fall embodies the goal of sustainability
and calls for the development and regular reporting of information indicating
how we are progressing toward that goal. It identifies: economic inclusion,
the recognition of unpaid work, involvement in decision making, opportunities
for personal development, ecosystem health, long-term management of renewable
and non-renewable natural resources and pollution as factors we should pay
attention to. Collecting information and reporting openly on this range
of indicators, along with GDP figures adjusted so as not to mistake money
spent on costly mistakes as a sign of progress, would inform better decisions
by business, governments and the general public. Better decision making
is a prime objective of the "7th Generation Act".
Vast numbers of people have heard that we are seriously threatened by
the present order of things. Without reasons to hope that we can solve the
problems, however, their only options are to despair or to deny that we
are in a crisis state. Unlike those who deny the crisis because they are
being enriched by the present order, the vast majority of people will tend
to, respond positively if cause for hope can be provided. Providing hope
is another purpose of the "7th Generation Act". The Act lays a
foundation for governance tha