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Trevor Hancock: The economy should serve well-being, planet health, not dominate them

The economy is not a natural phenomenon, it is a human construct, so if it doesn鈥檛 work for us we should change it
Our current economic system seems perfectly designed to damage and destroy the Earth鈥檚 natural systems while 颅undermining society and heightening inequality, writes Trevor Hancock. Jonathan Hayward, CP

In exploring the need for a transformation of our values so they are fit for purpose in the 21st century, I have been using a piece of “scripture” from the World Wide Fund for Nature’s 2014 Living Planet Report.

The third realm from my piece of “scripture” is the economy, and the text makes an important but often overlooked point: Societies create economies. The ­economy is not a natural phenomenon, it is a human construct, so if it doesn’t work for us we should change it.

Well, this economy does not work for us. The ­Institute for Health Improvement, rooting its idea in systems engineering, states: “Every system is perfectly designed to achieve the results it gets.”

Our current economic system seems perfectly designed to damage and destroy the Earth’s natural systems while undermining society and heightening inequality.

At the heart of this problem are a set of values that prize money, wealth, greed, profit and “stuff” above planetary health and societal and human well-being; that is opposed to paying taxes on principle; that covets and accumulates power by heightening inequality, and that adheres to the absurd notion of indefinite growth.

Disastrously, the only wealth that is really valued is economic wealth, be it money or “stuff.”

As I noted in an earlier column, natural capital is not included in most economic models, nor for that matter are human or social capital.

The latter, by the way, is distinguished from human capital because human capital is all about the “wealth” of an individual — their level of education, creativity, health, sense of compassion, etc — while social capital is all about the extent and strength of our relationships with each other — the realm of community and society.

But in the 21st century, we have to value all these forms of wealth, which means we need at the very least to reform capitalism so it integrates all these forms of capital.

Real capitalists increase all forms of capital at the same time, and they most certainly do not deplete ­natural, social or human capital just so they can increase economic capital — that is false capitalism.

Turning to taxes, nobody said it better than U.S. Supreme Court Justice Oliver Wendell Holmes a century or so ago: “Taxes are the price we pay for a civilised society.”

So if you have a nagging feeling that society is less civilized than it used to be — and a society with the levels of hunger and homelessness we see today can hardly be called civilized — then there is your answer.

When it comes to the issue of continuous economic growth, Kenneth Boulding, a former president of both the American Economic Association and the ­American Association for the Advancement of Science, told the U.S. Congress as far back as 1973: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”

So the third set of value transformations we need has to do with the economy, which must a) be consistent with the reality of the finite and limited Earth on which we live, and b) be in service to society, thus creating the conditions that enable well-being for all, both now and for future generations.

Among other things, that means abandoning the absurd and impossible dream — actually, the nightmare — of perpetual and exponential growth, in favour of a steady state economy.

That will mean valuing sufficiency rather than affluence and excess: As the late Herman Daly wrote, “Enough should be the central concept in economics,” where enough means “sufficient for a good life.”

We also need to find new and better ways to value progress. The GDP was never intended as a measure of social welfare, and it is profoundly misleading, since it includes many unhealthy and indeed harmful costs, such as the costs of cleaning up after disasters or all the money spent on tobacco as well as the costs of ­treating tobacco-related diseases.

Alternatives include the Genuine Progress Indicator, Gross National Happiness, as pioneered by Bhutan, and here in sa国际传媒, the Canadian Index of well-being.

But above all else, the economy must be put in its place — subservient to, not dominant over, societal well-being and planetary health.

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Dr. Trevor Hancock is a retired professor and senior scholar at the University of Victoria’s School of Public Health and Social Policy.

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