In 1995, the United Nations Commission on Sustainable Development (UNCSD) approved work on the indicators of sustainable development. The UNCSD operates under a pressure-state-response framework. Pressure indicators ask: why a said event happened? State indicators ask: what is happening? Whereas response indicators assess: what is being done about it? The framework was developed for environmental indicators but has been slightly reworked to allow the incorporation of economic, social and institutional indicators. It is the dominant conceptual model for sustainable development.
As the nature of the objectives suggests, the UNSCD deals with many of the issues beyond the scope of the GDP. In 2001, a final report featuring the framework of 15 themes and 38 sub-themes was developed. The primary goal of the indicator was to develop a means to assist national decision-making. Some have criticised this framework (the implied cycle of cause and effect) as too simplistic, while others note that the distinction between what constitutes a pressure, state or response can be quite ambiguous, as it is dependent on the epistemological standpoint of the viewer.
More importantly however, the indicator fails to address the issue of integration. That is, the selection essentially juxtaposes a list of environmental, economic and social indicators. The measure needs to illustrate the interactions between different sections of the economy more accurately.
The treatment of the elements as separate independent elements helps reinforce the status quo by legitimising the existing goals of society. By detaching the measure from its social and environmental context, it perpetuates the status quo and does not acknowledge that activities that contribute to progress can and do overlap. Furthermore, this detached outlook has nothing to say on how to deal with the unavoidably
conflicting objectivities of economic rationality, social justice and environmental sustainability (Lehtonen, 2004).
The UNCSD neither endorses any single set of indicators nor produces comparable cross-national indicators, as a result the measure is quite vague. In fact, it fails to specify how greater progress can be achieved. Additionally, to measure the separate elements with the same universal analytical framework does not reflect the multidimensional nature of progress measurement. As such, determinants of progress are likely to be undervalued.
Many other attempts have been made to measure the progress of nations, some of which include:
• adjusted gross product;
• economic aspects of welfare;
• integrated economic accounts;
• total income system of accounts;
• full gross domestic product;
• index of social health;
• index of economic wellbeing;
• the wellbeing of nations;
• ecological footprint; and
• human poverty index.
Having already reviewed the more prominent progress measures with a view to constructing a conceptual framework built on their strengths and weaknesses, the present research does not intend to discuss the progress measures listed above. Instead, the next section will briefly examine some other progress measures pertinent to the present research due to their valuation approach.
3.8 Other Progress Measures
The physical quality of life index (PQLI) is considered the first composite measure of progress. Morris and his colleagues at the Overseas Development Council in Washington developed it. It was a breakthrough measure since it measured progress
without utilising income or economic wellbeing. Morris believed that the reliance on GDP figures alone did not indicate anything regarding human wellbeing, while also ignoringdifferences in prices and the distribution of income (Morris, 1979).
The PQLI therefore arose due to the failure of alternative measures to the GDP to take hold due to their excessive complexity.82 With this in mind, Morris decided to identify only certain conditions that had to be satisfied to direct policy towards helping the underprivileged. Hence, the PQLI employs an index ranging from 0 to 100 based on equal weights which measures infant mortality, life expectancy at age one and basic literacy. Here, rankings occurred due to changes in real life chances and not changes in income (Morris, 1996).
The PQLI had to satisfy six criteria. Firstly, it should not assume that there is only one pattern of development. Secondly, it should avoid standards that reflect the values of specific objectives. Thirdly, it should measure results, not inputs. Fourthly, it should be able to reflect the distribution of social needs. Fifthly, it should be simple to construct and easy to comprehend, and finally, it should lend itself to international comparison (Morris, 1979).83
The PQLI objective is deliberately very limited. Its aim is to measure specific life- serving social characteristics. The index shows that some countries have much poorer life-quality results at quite high per capita incomes than often is assumed, indicating that the growth of disposable personal income over time, does not necessarily improve progress. For example, the Mideast oil producing countries attained PQLI scores in the low 30s. On the other hand, countries that the GDP rank as being quite poor, such as Sri Lanka, attained a high PQLI score of 82 despite very low monetary incomes (Morris, 1996).
The PQLI was never intended to be a measure of economic development or total welfare. By purposely restricting itself to the provision of health and educational
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Attempts have been made to rectify this. In September 1986, The Economist introduced the Big Mac index as a more effective measure to overcome variations in the purchasing power of the dollar that made comparisons by the GDP unreliable. This could then give meaning to the percentage figure of persons who live on less than a dollar a day. Of course, the measure’s irony was not lost given that very few people in poor countries can afford a Big Mac.
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services, the PQLI is quite limited. An important outcome for the present research however, is that the findings of the PQLI lends support to the notion that any measure employed to assess a nation’s progress cannot solely rely on income, or for that matter, a market-centric analysis. The accumulation of money and material wealth is not the sole indicator of progress, rather it is but one of many factors.84
Another non-monetary approach to measuring progress is GNH. It employs a Buddhist perspective of development striking a balance between materialism and spirituality. The term was first adopted in 1972 by Bhutan’s King Jigme Singye Wangchuck whose aim was to displace the GDP as a measure of progress for Bhutan. The GNH is seen as a distinctively indigenous measure of aspirations for government and development activity in Bhutan (Faris, 2004). The GNH is broken into nine domains. They are: living standards, health, education, eco-system diversity and resilience, cultural vitality and diversity, time use and balance, good governance, community vitality and psychological wellbeing (Marks et al., 2006).
This attempt presents a radical paradigm shift away from the GDP. The natural science approach primarily adopted by classical economists excludes the ability to make qualitative distinctions (see Section 3.2.1). Yet, as Tideman (2004) argues, it is these qualitative aspects that are fundamental to our understanding of the ecological, social and psychological dimensions of economic activity. Thus, the GNH measure abandons definitions of the world that involve isolated market interactions; instead viewing humans as part of a larger whole.
The proponents of the GNH claim that a continued focus on ‘things’ (tangibles) will miss the relations and the whole context that makes the ‘things’ possible.85 In effect, whole systems give rise to specific things not the other way around. Thus, patterns of relationships of material structures, and not the structures themselves, need to be considered for measuring progress; an understanding that is apparent in modern physics, biology, psychology and the social sciences (Tideman, 2004).
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The next major non-monetary approach was the HDI, which was discussed in an earlier section. 85
The assessment of the economy in the light of the whole system deals with ‘universal social connection’. This connection is an issue that can be traced back to Aristotle and the epistemological question of the unity of knowledge about social reality (Zafirovski, 2005).
Of course, the GNH is not without its critics, Kahneman and Krueger (2006) argue that the GNH is overly ambitious given the present state of knowledge. Their preference is to employ subjective wellbeing measures to complement traditional analysis.86
A more recent non-monetary approach lies with the happy planet index (HPI). It has as its mantra to strip back the view of the economy to the absolute basics: what goes in (natural resources) and what comes out (length and happiness of lives). This differs from the array of measures that employ the GDP and then subtract social costs. Its goal is to assess the environmental efficiency towards sustaining wellbeing. It covers 178 countries. The HPI comprises of three indicators: life expectancy, ecological footprint and life satisfaction, where wellbeing is the ultimate end and resource consumption is the major input. High levels of wellbeing therefore must be tempered by responsible consumption, and economic development must not occur at the expense of other important contributors to wellbeing (Marks et al., 2006).87
Like the HDI, the HPI is quite crude consisting of only three variables, two of which: ecological footprint and life satisfaction, are contested. Although these variables are included in the current studymodel, they are grouped with other variables to ensure that their limitations are compensated for. Unfortunately this does not occur here. Such a heavy reliance on only three variables to capture something as complex as progress is not, the present research adds, analytically sound.
With so many measures in existence, each with their own epistemological standpoint, and with economic and scientific valuation techniques under greater scrutiny than ever before, the current climate for measuring progress (and economic assessment in general) seems somewhat uncertain. Yet, as the three measures discussed above and the HDI prove, a non-monetary approach to progress is both valid and justifiable.
3.9
Where To From Here?
Currently, traditional scientific discourse is undergoing a major transformation, as scientists in different schools argue over epistemological claims. The problematic nature
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Kahneman and Krueger (2006) propose a U-index connected to time allocation, where the U represents unpleasantness or undesirability.
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of epistemology and its effect on dealing with integrating economic theory and modelling is perhaps best summed up by Hicks who views economics as being:
… on the edge of science because it can make use of scientific, or quasi- scientific methods; but it is no more than on the edge, because the experiences that it analyses have so much that is non-repetitive about them … aspects of economic life which we need to select in order to make useful theories can be different at different times. Economics is in time, and therefore in history, in a way that science is not. (Hicks, cited in Redman, 1991, p. 106)
The debates revolving around epistemology are quite complex, and as stated earlier in this chapter, are not the main purpose of the current study. These debates however have opened the door to a number of methodological practices in progress measurement. The so-called ‘collapse of the science view’, has meant that the measurements employed in economics are now regarded as epistemology (Beed, 2005). This employment of epistemology however, must tread with caution.
… epistemological clarity in the discipline of economics requires careful attention to the creation of bridges, connections or accordances between mathematico-economic structures on one hand, and real-world phenomena and policy recommendations on the other. Such bridges are essential if the structures erected are to assist in the provision of knowledge of actuality. (Katzner, 2003, pp. 565-566)
Thus epistemological clarity is needed, though given that the modern economy is constantly evolving, and embedded in a web of social institutions, customs, beliefs and attitudes (Solow, 1985), assigning values to emerging variables and factors is a very complicated process. The review of some of the existing progress measurements demonstrates that no one particular measure gives a privileged knowledge. Instead, as Wolff and Resnick (1987) state, different theories tell us different things depending on the assumptions and questions the researcher asks. Hence, any measure that claims to purport a single, absolute truth providing valid and superior knowledge is misguided. The multidimensional nature of the progress concept requires a framework that can include and exclude factors that are important to the creation of progress. Moreover, this multidimensional framework should, at the very least, include measures of distribution, sustainability, social capacity, as well as human outcomes, such as health and education (Nelson, 1997). Of course, this does not mean that the proposed conceptual framework
should try and explain all the existing interrelations as this would lead to the ‘theory of everything’ (see Section 3.2.2).
Once one accepts that knowledge is standpoint dependent, one can then argue for a pluralist accommodation of multiple theories. This resists the desire of researchers to establish the framework they prefer as the privileged ones. What is needed therefore is a framework that emphasises epistemological and discursive pluralism (Samuels, 1991). The absence of a universal framework recognises that the determinants possess their own individual logic. The purpose of this type of approach is not necessarily to explain some underlying fundamental causation; instead it is to make us understand one or more parts of the progress phenomenon. This however, does not mean that anything goes, if anything one needs to be even more critical since one can no longer assume that what a researcher believes is unequivocally correct. Under this approach, the standard of proof is not as high, given that knowledge now only needs to be useful, rather than privileged. To recap, Table 3.3 below provides a summary of the main progress measurements reviewed in this chapter. In particular, the table will review the advantages and disadvantages of these measures in capturing what the present research considers to be important contributors to national progress.
Table 3.3 Summary of the main progress measurements
Measure Nature Strengths Weaknesses Gross domestic product
A market driven measure. Measures total value of all production in money terms. Assumes market place equals progress.
Easily comparable among a whole range of nations.
Critical in determining a range of socio-economic policies.
The stock of HC and NC, as well as other non-market resources, is largely ignored.
Doesn’t examine desirability of production.
Measure of economic welfare Measures welfare by adding benefits
and subtracting costs.
Assumes market and welfare are not the same.
Goes beyond the scope of the market and national accounts in assessing welfare.
Unlike GDP, the nature of the need is of concern.
Excludes renewable and non- renewable natural resources, due to long-run substitutability.
Under-represents HCs impact on progress.
Environmentally adjusted net domestic product
Adjusts national accounts for changes in quality of natural environment and depletion of natural resources.
Indicates whether economic growth is sustainable.
Highlights unsound production and consumption patterns.
Needs to emphasise other non- monetary areas.
Excludes social costs and distributional issues.
Genuine savings Meant as a new measure of
sustainability, over whole range of assets – physical, natural and human. Comprise only of marketed values.
Easily comparable among a whole range of nations.
Has expanded NC definition from previous measurements.
Concentrates on a narrow monetary measure. Thus, it omits the impact to society from air and water pollutants, forests, fisheries and biodiversity.
Genuine progress indicator Index based on consumption and not
production.
Challenges notion that all growth is good.
Addresses impact of NC and income inequality issues.
Indicates if economy is on a sustainable path.
To not account for HC at all totally underestimates a nation’s progress. Ignores exchange activities that don’t increase progress.
Human development index
Non-monetary approach. Measures aspects of longevity, knowledge and standard of living. Human wellbeing, and not national income, is its goal.
Important alternative to GDP, and is comparable among nations.
Indicates a sustainable human development path.
Provides a rather limited view of NC and development in general.
Results heavily influenced by GDP figures.
A crude index.
Table 3.3 Summary of the main progress measurements (continued)
Measure Nature Strengths Weaknesses United Nation’s Commission on
Sustainable Development
Operates under a pressure-state- response framework.
Developed to assist with national decision-making.
Assesses environmental, economic, social and institutional indicators. Comprehensive measure – 15 themes and 38 sub-themes.
No integration between the different indicators.
Seen as a vague measure, failing to specify how greater progress can be achieved.
Physical quality of life Index
Non-monetary approach.
First composite measure of progress. Measures progress without utilising income.
Provided distinct alternative to GDP. Focus was on results and not inputs. Comparable between nations.
A limited measure of progress. Restricted to the provision of health and educational services.
Gross national happiness
Non-monetary approach.
Paradigm shift away from the GDP. Strikes a balance between
spiritualism and materialism.
Accounts for qualitative aspects fundamental to progress.
Comprehensive approach – divided into nine domains.
Overly ambitious measure given present state of knowledge. Subjective nature may lead to political manipulation.
Happy planet index
Non-monetary approach.
Assesses environmental efficiency towards sustaining wellbeing.
Provides distinct alternative to GDP. Comparable between nations. Comprehensive conceptual approach – health, environment and subjective wellbeing.
A crude index.
Consists of three variables, two of which are contentious.
3.10 Conclusion
In spite of recent trends towards methodological pluralism, mainstream economists are still reluctant to incorporate the role of values in economics, since this would require a very different conceptualisation of economic behaviour and processes (Van Staveren, 2001). This refusal means the standard theory of choice model continues to be the most prevalent model used in progress measurements, despite widespread and systematic deviations of actual behaviour from the normative model (Kahneman and Tversky, 2000).
A complex phenomenon such as progress should not be exclusively assessed with measurement tools that are designed for precise phenomena; after all, paraphrasing Keynes, ‘to be vaguely right is preferable to being precisely wrong’. The intention of this statement is not to ‘do away’ with mathematics in economic analysis, for mathematics continues to be of great benefit in addressing real-world situations. In fact, it is of tremendous value in enabling the construction of models that allow one to reflect and better understand the socio-economic circumstances that confront a nation.
The Law of Incompatibility best illustrates this, which is part of Zadeh’s theorem of fuzzy logic that deals with social complexity. Basically, Zadeh stated: ‘As complexity rises, precise statements lose meaning and meaningful statements lose precision’ (Zadeh, cited by McNeill and Freiberger, 1993, p. 43).88
Thus social complexity is contradictory, as it is the origin of numerous paradoxical and conflicting forces that potentially act together, while at the same time, it is a result of