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 process.

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 Value:
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 " 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 available.

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 'invisible elbow'.

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 need work.

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 catastrophe.

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 take place.

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 nature.

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.

Making rules:
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