John B. Cobb, Jr., Ph.D. is Professor of Theology Emeritus at the Claremont School of Theology, Claremont, California, and Co-Director of the Center for Process Studies there. His many books currently in print include: Reclaiming the Church (1997); with Herman Daly, For the Common Good; Becoming a Thinking Christian (1993); Sustainability (1992); Can Christ Become Good News Again? (1991); ed. with Christopher Ives, The Emptying God: a Buddhist-Jewish-Christian Conversation (1990); with Charles Birch, The Liberation of Life; and with David Griffin, Process Theology: An Introductory Exposition (1977). He is a retired minister in the United Methodist Church. His email address is email@example.com..
This article was written for Religion Online March 3, 1998.
The author shows that the GNP is inadequate as an index of real growth. Instead, he proposes an Index of Sustainable Economic Welfare, and dvocates a new kind of economy, one based on the needs of the community, and suggests several steps to bring it about.
Everyone in Western society believes in growth -- or at least almost everyone. There are a few who would like to keep things as they are or go back to an earlier, simpler, and smaller world. But they are few. Our culture for a long time has been oriented to making things better, toward leaving a better world for our descendants than we found left to us.
During the past two centuries growth has been understood chiefly in economic terms. A few people have clung to notions of growth in virtue and knowledge. But public policy, with massive public support, has been geared to growth in the economy. As long as there is poverty anywhere, as long as there are unfilled desires for material goods, economic expansion seems to be at least an essential element in growth. And it is on this element that attention has concentrated.
Further, economic growth has been almost universally identified with increased production and consumption. Indeed, growth has been largely defined by growth of product. If gross national product increases more rapidly than national population, it is generally assumed that we are better off economically, and it is equally assumed that if we are better off economically in this sense, then we are better off humanly. Noone supposes that the only desirable growth is growth in per capita product, but almost everyone assumes that this growth is very desirable, and that it is the kind of growth on which society as a whole can agree to cooperate.
But I exaggerate. Questions have been raised for some time now. Beginning in the sixties, more and more people noticed that economic growth as measured by gross product involved costs. Some emphasized psychological costs, some, social costs, others, environmental costs. Still others pointed out that some of what increases gross national product does not contribute in any way to human welfare.
The criticism of the GNP as a way of measuring desirable growth was sufficiently serious that discussions were held at the highest levels of government and two fine economists undertook to provide an alternate way of measuring growth. I refer to Nordhaus and Tobin and their Measure of Economic Welfare. They took into account many of the complaints about the GNP and calculated the MEW for the period 1939-1965. Over this period they showed that growth in economic welfare had been much less than that of the Gross National Product, but they concluded that because MEW had nevertheless grown, continuing efforts to increase gross product were appropriate.
In reviewing their work it is hard not to conclude that their major interest was justifying the continuing use of GNP as an adequate indicator of economic improvement. One concludes this because it would be so easy to use their findings to reach quite different conclusions.
Basically their figures showed that growth in gross product and growth in welfare rose together from 1939 to 1947 but that since then a large continuing growth in product was accompanied by very little improvement as judged by the Measure of Economic Welfare. What their statistics seem to show is that under some circumstances increase in national product is an effective way of improving welfare but that in other circumstances it is not. They further suggested that since World War II the latter circumstances have prevailed. As a minimum it would have seemed worthwhile to continue measuring economic welfare to determine whether continuing growth in national product would once again begin to benefit human beings economically or whether that epoch in our national history had ended. If it had ended, then it would seem appropriate to ask what policies are now needed if our concern is to improve economic welfare of people rather than increase production for its own sake.
This question seemed so important to some of us that we decided a few years ago to try to bring the work of Nordhaus and Tobin up to date. If it turned out that in the twenty years after 1965 continuing growth of GNP had not been accompanied by improved economic welfare, then surely it was time for a national discussion of how welfare could be improved. Continuing to shape so much policy, at all levels, around the assumption that increasing production is always desirable might not be justified.
We found, however, that this task was not possible, or at least not possible for us. Some of the statistics used by Nordhaus and Tobin were not available for the twenty year period following their work. Furthermore, our own value judgments were somewhat different from those of Nordhaus and Tobin. Problems of pollution paid a very minor role in their work and resource exhaustion none at all. They did not consider questions of distribution of income relevant to welfare. We felt the need for additional columns dealing with these matters.
On the other hand, they gave a very important, even dominating, role to the valuation of leisure. As we investigated this, we found questions both of how to value leisure and of judging what constitute leisure very perplexing. The overall results for the index as a whole were overwhelmed by the quite arbitrary choices to be made on this one point. Our solution was to omit leisure from our index.
We call our proposal the Index of Sustainable Economic Welfare. It is far from perfect, and indeed we have already made a number of revisions based on significant criticisms we have received. The deeper one goes into the choices to be made, the more one realizes that there are no neutral and objective ways of measuring economic welfare. Nevertheless, I am convinced that rather than continue to assume that growth, as measured by Gross National Product is an appropriate goal of national and international policy, we must examine how it relates to economic welfare, and that requires that we dare to make judgments about what constitutes welfare.
I do not want to pretend that we had no prejudices going into our work. Whereas Nordhaus and Tobin were obviously prejudiced in favor of continuing use of GNP as the basic guide to policy, we were prejudiced against this. Nevertheless, in the compilation of statistics, prejudice is not all-determining. It is striking that our index shows considerably more improvement of welfare accompanying growth of GNP during the period from the end of World War II to 1965 than does that of Nordhaus and Tobin. It is only in the more recent period that our index shows growth of GNP accompanied by static and even declining welfare.
My reason for beginning with these comments is not at all to suggest that we are able to give accurate statistical information about economic welfare. Noone can. My point is only that rough approximations to measuring economic welfare strongly suggest that the time for viewing increase in gross product as the appropriate goal for national policy is ended. I believe this to be a change of historic importance, and that the sooner we recognize this change and begin to reflect on its implications, the less the danger of self-destruction.
I have co-authored a book with Herman Daly, entitled For The Common Good, in which we suggest how a different economic goal would work out. We propose that economics should serve human community, whereas economic policies designed to increase gross product repeatedly work against human community. We also propose that the community that should be served extends beyond presently existing humanity into the future and also to the natural environment. We think that individuals are better off when the human and natural communities of which they are a part are healthy, and that the health of these communities is what policy should aim at. Of course communities that do not produce or consume sufficient goods are unhealthy. But when the increase beyond sufficiency is at the expense of community, it no longer serves real people.
One major conclusion to which we came is that an economy in the service of community must be one over which the community exercises some control. If the most important decisions about our lives, especially about our economic lives, are made by people who are not part of our community, then the community is weakened. This means that healthy communities are relatively self-reliant and self-sufficient economically.
Obviously, this flies in the face of standard economic doctrine. That doctrine has called for more and more specialization over larger and larger areas in an ever-expanding market. Whole nations are encouraged to specialize in what they produce most efficiently, importing their other needs. We know that this has rendered most of the countries in the world unable to feed themselves and hence radically dependent on international trade. The terms of this trade are little influenced by them. As a result the political independence so painfully gained by many former colonies has done little to empower their people in ways that really count.
We believe that the globalization of the market pulls our economy also in the wrong direction. We have weakened restrictions on monopolies, supposing that only very large concerns can compete with those of other economic powers. It is not evident that increasing size always improves competitive ability, but I do not mean to get into that issue. My point is rather that the justification of bigger and bigger corporations with less and less commitment to any geographical community, even the nation, works against community and true human welfare. Even if it leads to increase of gross production, which may or may not be the case, the cost to human beings and the natural world is too great. For the sake of human beings and the natural world, we need decentralization of the economy.
A decentralized economy will greatly increase the possibility for local government to become important. In a national economy, political power must be concentrated nationally or be drastically subordinated to economic power. If we continue to move from a national economy to a global one, then we must either develop much stronger concentrations of international political power or else accept a world governed by naked economic power. If we do not like either of those options, and I do not, then decentralization is the one alternative.
It is my assumption that all of you could describe in far more concrete and realistic ways than I the tension between regulations designed to encourage increased production and those that protect community, present, future, and natural. Again and again we are told that we must sacrifice what we have valued for the sake of progress, and usually "progress" means increase of gross product rather than improvement in the quality of life. We need other ways of thinking of growth and progress so that the respective merits of differing policies can be seriously debated. I think statistical measures of welfare, with all their limitations, can help in enlivening this discussion, but they are not essential.
I am not arguing that every commitment to preservation of what is is better than every proposal of change. That would be ridiculous. We want healthy change, real growth, real progress. The issue is, in what does this consist. My thesis is that we want changes that increase the identification people feel with their communities, their willingness to take responsibility, and their ability to participate in making decisions about their shared lives. This requires that they be able to take care of our economic needs, but it may not require that each year we consume more goods and services than the year before.
Probably the most powerful argument in favor of increasing production is that this is the way of bringing jobs into the community. Again and again we are forced to choose between jobs and other values such as the environment. I was recently in Oregon where feelings are running very high about restrictions on logging for the sake of preserving old-growth forests. The loggers are understandably furious that their opportunity to work is curtailed for the sake of a few owls! Since the state of Oregon has been specialized in lumber, the suggestion that the loggers be trained for other employment is too easy to make and too hard to implement. Nevertheless, I hope that the old-growth forests are preserved. Our nation has been vastly impoverished by our forestry practices over centuries. The decimation of our forests has led to enormous economic dislocations as well as many environmental losses.
It is urgent that we re-think our economic goals so as to get past the point where specific issues of this sort constantly confront us. An economics for community will be one in which human beings support themselves in a sustainable and enjoyable way while allowing much of the natural world to remain natural both for the sake of future generations and for the sake of the other species with which we should share the planet. The detailed implications for the lumber industry are beyond my expertise, but I am sure they would be radical. The cost of wood would no doubt rise from present levels. There would be some suffering and sacrifice on the part of all of us.
But this scenario should not be set over against one in which present practices continue with no sacrifices. These practices insure that in time the cost of wood will rise as much or more, while much of the beauty we have enjoyed would be gone forever, along with many already endangered species. A shift now to sustainable lumbering in designated regions, leaving others intact, can provide as many or more jobs over the long haul and a better world for all.
Obviously the same kind of tension appears with respect to grazing in much of the West. Present practices are not sustainable. To yield to pressures for present profit, knowing that this must rapidly diminish, leaving impoverished land behind, is typical of the sort of thinking has been too much encouraged by standard economic theory.
We need a different vision of the community we seek and the economy that will support it. Otherwise we will continually confront impossible dilemmas. My own view is that once we agree on a vision of what we want that can replace that of ever increasing production, it will be possible to establish overall policies of land use and taxation that will reduce the need for detailed regulation of the market. But as long as acting on perceived economic interest constantly impoverishes the future, society as a whole must do what it can to protect itself against market forces.
Although this is not the place to make detailed proposals with respect to tax policy, I will indicate my own preference for a modified Georgian system of land taxes. These taxes remove land from speculative investment and bring to the community the unearned wealth that arises from movements of population. They also can give greater economic power to local communities.
The tensions between strengthening community and seeking increased production appear also with regard to programs to attract industry. As long as bringing in new industry is identified with progress, competition with other communities to entice such industries is the name of the game. Regulations designed for the sake of the existing community are often in tension with what will attract a large corporation to invest in a new plant.
Again it is often held that this must be done for the sake of bringing in new jobs. This is an area that requires research I have not done. But I will express an impression. There may be a brief period in which the presence of the new plant reduces unemployment and increases the income of those persons already in the economy. But generally the building of the plant primarily attracts new workers to the community. After adding to the industrial base of the town or city, the population is larger. The average income may be higher. But the number of unemployed or underemployed is not likely to be reduced. This unemployment is then cited as the reason for attracting more industry. The solution to the problem does not in fact change the nature of the problem. It does increase its scale.
My impression is that when local entrepreneurs develop new businesses on a small scale, more genuine progress occurs. These local businesses are more likely to employ local people and raise local standards. They do not require special concessions. People are strengthened in their loyalty to the community and shared concern for its wellbeing. Instead of rendering the community more dependent on decisions over which it has no control, the community's self-reliance is enhanced.
I do not know how much influence public service commissioners have over matters of this sort. But I believe you are one of the groups that can work with others to affect the climate of many towns and cities. I realize that there is a vast gap between general preferences of the sort I am expressing and the immediate practical decisions with which you must deal. But I do believe they are connected. And I want to register my strong conviction that we need to work toward a bottom-up economy in which many of the necessities of life are produced locally by individuals and companies that have their roots in the communities and do not see progress as meaning going national and global. To whatever extent governmental policies and regulations can encourage this kind of community, I hope that they will do so. Seeking to solve the supposed need for growth in a community by attracting outside capital investment generally leads to the wrong sort of growth.
One of the reasons, only one, that I favor local initiatives and control and a decentralized economy is that it can slow down the exhaustion of fossil fuels and survive the necessary transition to solar energy. Indeed, pioneering small scale uses of solar energy is one of the frontiers for local entrepreneurship. As transporting necessities, including fossil fuels, around the world by the use of fossil fuels becomes more and more expensive, the advantages of local production will become more apparent. Also small scale production often needs far less energy than mass production. Horses are returning to many smaller farms. Food sold in a farmers' market does not require the costly packaging for which we pay so much. And incidentally, the food may be tastier and more nutritious.
Furthermore, some substitution of human labor for fossil fuels absorbs unemployed workers. It is interesting that those who argue so vigorously for new plants as ways of bringing jobs do not often argue in favor of substituting labor-intensive for energy-intensive means of production in either farm or factory. The problem, they tell us, is that this reduces productivity, and that improved productivity is the key to economic progress.
Here we come full circle. The economic progress to which improved productivity is the key is increased production. If we are committed to increased production, we must accept the process of substituting fossil fuels for human labor. Then we must bring in more industry to absorb the labor no longer needed. But if we do not follow this scenario, if we stay with means of production that are more labor-intensive, others who do follow the scenario will underprice us and put us out of business altogether. It seems that only in a community that has some control over its own economic life can there be freedom to decide about the respective roles of human labor and fossil energy.
Since it is not now possible for communities to protect themselves against global market forces, the main support for new patterns of production with reduced use of fossil fuels will be the rising cost of those fuels. Rather than wait for the abrupt and drastic rise the future will inevitably bring, I am convinced we should have a fairly rapid planned rise in this cost from year to year. This can be effected by taxes. Such a plan could enable businesses to make their own plans knowing what the relative costs of fossil fuels, solar energy, and human labor are likely to be over time. In this way economic forces could support rather than inhibit the necessary shift away from an oil-dependent economy.
An economics for community will not affect market activity alone. It will also call for new ways of ordering and organizing our shared life. Let us focus on the crucial issue of shifting away from dependence on oil without recourse to other dangerous and environmentally destructive fuels. Although relatively benign use of solar energy can help, the most important matter is the reduction of total energy use. Our hope must be that we can reduce the use of energy without reducing the quality of life, indeed, while enhancing it. How can this be done?
I have already suggested two answers. First, produce more of what we need locally, thereby saving the energy needed for packaging and transportation. Second, use small scale production facilities, such as family farms, where human and animal energy can replace some of the fossil fuels now employed. This is related to a shift to organic farming that greatly reduces the use of fossil energy in pesticides, herbicides, and fertilizers.
A third step, is energy efficiency. Amory and Hunter Lovins have showed us innumerable ways in which we can attain the same end use with far less energy input. This is both a matter of more efficient electric appliances and cars, and a matter of constructing buildings in such a way that far less energy is needed for heating and cooling.
A fourth step is planning cities of a different type. Living in southern California I am painfully aware that this whole megalopolis has been planned around the freeway and the private car. Obviously other cities have grown up around subways and trains to a much greater extent, but we all know that during recent decades the trend has been in the direction of Los Angeles. This needs to be reversed. There are, of course, some examples of planned communities that embody the needed changes to some extent.
My own view is that nothing yet done goes far enough. The goal should be to plan a habitat in which the lack of a private car would be no sacrifice at all. That would be a habitat in which all the desirable destinations were readily accessible quickly on foot or by convenient and inexpensive transportation. This habitat should also be designed to make maximum use of the most benign form of energy, passive solar energy. And of course it should be designed so as to facilitate the development of stable and satisfying community life.
I know of only one thinker who has envisioned the sort of habitat that is required. That thinker is Paolo Soleri. Thus far he has been treated as an artist-dreamer, and he is certainly that. But he is also presenting practical solutions to an extremely urgent set of problems. It is past time to experiment with the implementation of his proposals. Or, for those who do not like his solutions, the time has come to accept them as a challenge to come up with better ones.
Perhaps you will now see why I have been so concerned to opposee the habit of thinking that increase in gross product is essential to true growth. Implementation of the proposals I have made would reduce the GNP. This is for the obvious reason that energy costs are an important ingredient in the GNP so that reduced use of energy directly reduces GNP. I hope it is clear that I believe that such reductions can be effected without reducing economic wellbeing. But reduction of GNP would be even more drastic if we built cities in such a way that private cars and motor transportation in general were not needed. Again, I hope it is clear that I do not believe that living in one of Soleri's arcologies without a car would make me poorer in any way that counts in comparison with living in a suburb and commuting into Los Angeles. My point is that I would need less income to live an equally comfortable and, I believe actually, a more enjoyable life. Certainly the quality of community in an arcology is likely to be superior to that in most suburbs.
I have now made enough controversial proposals to evoke some reaction. I am very interested in some of the specific proposals I have made with respect to the direction in which we should go, and I will be pleased to hear your responses. But my main concern is to call for a fundamental debate about the kind of growth we want. I am deeply convinced that the GNP does not measure the kind of growth I want, and when people understand clearly what it does and does not measure, I feel rather confident they will agree that it does not measure the kind of growth they want either.
The growth we do want, or at least the growth we should want, is in getting more good living and strong community with less use of resources including sinks, and while allowing more space for the other species with which we share this planet. Thus far efforts in this direction are a sideshow; but they must become the main event. To make this shift in thought and practice is a challenge of utmost importance. Every policy should be measured against that goal, and the technical expertise of the nation, indeed of the world, should be directed to that end. Much can be done, and some of it can be done rather quickly. But little of it will be done until the understanding of growth is changed. The sooner, the better.