Since its introduction during World War II as a measure of military
production, Gross National Product (GNP) has become the foremost
indicator of national progress, and its increase has become the
foremost priority of national governments. Continuing on this
path, however, defies common sense and biophysical reality. Under
current methods of economic accounting, maximizing GNP also results
in maximizing social and environmental degradation. It is scientifically
evident that the human economy, which is a subsystem of the biosphere,
has already exceeded numerous biophysical limits to growth. But
the central question is not between growth or no growth. We must
differentiate the types and purposes of growth-growth of what,
for whose benefit, at whose expense, based on what type and rate
of resource use.
Since economic growth as measured by GNP does not account for
depletion of the natural and social capital on which the future
of the economy depends, our perception of increased economic health
is a partial delusion. Yet it is this delusion that guides our
economic course towards further environmental and social degradation.
By valuing the goods and services that ecosystems provide to people
and the economy at 'zero', the price system transfers the cost
of environmental and social degradation from those responsible
to society at large. When this nature-blind and person-blind accounting
is combined with capital mobility, the profit motive induces capital
to search out the most vulnerable communities and environments.
The Genuine Progress Indicator
At Redefining Progress we have developed a new system of measurement,
the Genuine Progress Indicator (GPI), which is a measure of the
general well-being and sustainability of the nation. In contrast
to the GNP, which is merely a measure of economic production,
the GPI takes into account both environmental and social factors.
It is intended to give citizens a general guide to how well off
we are as a nation, and how our national condition is changing
over time. Because the GNP and the GPI are both measured in monetary
terms, they can be compared using the same scale. Personal consumption
constitutes the single largest element of both the GNP and the
GPI. In contrast to the GNP, the GPI adjusts for the following:
1 ) Resource Depletion-A sustainable economy is one that supplies
a physical base for economic activity for later generations. The
GPI measures the loss of future availability of resources such
as wetlands, farmland, and minerals as a current cost when these
resources are depleted or degraded.
2) Income Distribution-According to economic theory, the value
of additional income to the poor exceeds the value of extra in
come to the rich. The GPI rises when the poor receive a larger
percentage of national income, and falls when their share decreases.
3) Housework & Non-Market Transactions-Much of what people
value are the services we do for ourselves: e.g., childcare, cooking,
cleaning and home repairs. These are ignored in official figures
such as the GNP.
4) Changes In Leisure Time-As a nation grows richer, people should
be able to choose between more output and more leisure. The GPI
treats an increase in leisure as a benefit and decrease in leisure
as a cost.
5) Unemployment and Underemployment-Many Americans are unable
to find a job or work as many hours as they need. The GPI counts
the hours of chronic unemployment or underemployment as a cost.
6) Pollution-The GPI subtracts the costs of pollution as measured
by damage to human health and the environment.
7) Long-Term Environmental Damage-Greenhouse warming and management
of nuclear wastes are two long-range costs of nonrenewable energy
use that do not show up in ordinary economic accounts. The GPI
treats these deleterious choices as costs.
8) Life Span of Consumer Durables & Infrastructure-It is important
to value the service received from durable items rather than the
money spent on them. When you buy an appliance, for example, GNP
records the value in the year of purchase, yet ignores how long
it lasts. The GPI treats money spent to buy capital items as a
cost and the value of the service derived from capital items as
a benefit. This applies to both private capital items and to public
infrastructure.
9) Defensive Expenditures-Funds spent to maintain a given level
of service, without increasing the amount of service received,
are treated as "defensive expenditures" (i.e., costs)
in the GPI. Money spent on the medical and material costs of automobile
accidents, and the money households spend on personal pollution
control devices such as water filters are examples of defensive
expenditures.
10) Sustainable Investments-If a nation allows its capital stock
to decline or if it finances its investments out of borrowed capital,
it is living beyond its means. The GPI measures net additions
to the capital stock as a positive contribution to sustainable
well being and treats money borrowed from other countries as reductions
in national self-sufficiency and sustainability.
For more information on the Genuine Progress Indicator, contact
Redefining Progress, 1 Kearny Street, 4th Floor; San Francisco,
CA 94108 (415) 781-1191.
this article is from the book
CORPORATIONS ARE GOING TO GET YOUR MAMA
edited by Kevin Danaher
Common Courage Press
Box 702
Monroe, Maine 04951
phone - 207-525-0900
fax - 207-525-3068
Reforming
the System