by Barbara Stahura
FOR DECADES, ECONOMISTS AND THE GOVERNMENT HAVE proclaimed that the higher our gross national product (GNP) or gross domestic product (GDP), the better the national well-being. This belief has solidified into bedrock that supports much public policy, even in areas not directly connected with economics. Yet while the GDP has grown 89 percent since the mid-1970s, the country’s social health has declined 45 percent, according to a 1995 study from Fordham University’s Institute for Innovation in Social Policy
Fueled with such ammunition, the voice of those challenging traditional national accounting systems is growing louder. One of the most prominent and longstanding of these challengers is Hazel Henderson, a self-taught progressive thinker who has made it her lifework to change this system.
Futurist, author, and international consultant on sustainable development, Henderson charges that economics as we know it is not a science but “assumptions parading as science.” In her book Paradigms in Progress, she writes, “We must never forget that, in the most scientific sense, reality is whatever we pay attention to! Indicators only reflect our innermost core values and goals.”
So, by using the output of goods and services in the money economy as the overall benchmark of national success, the ideology called economics offers only a shallow, distorted world view that “glorifies all the goals and assumptions of industrialism,” Henderson told ON THE ISSUES. “In a society like the United States, about 65 percent of the GNP is supported by heroic feats of consumption and $147 billion a year of advertising.”
Henderson considers the GNP/GDP as “conceptual prisons that keep us trapped in the ideas of fear and scarcity and guilt.” For the past three decades, she has been working on an innovative index that reflects the whole truth about economic activity – including the value of unpaid work, the depletion of natural resources, and the distribution of income.
Child of the War Economy
The sources of the national accounting systems now in use worldwide go back half a century to Simon Kuznets’s uniform national accounts developed for the U.S. in 1932 and a paper by John Maynard Keynes called “The National Income and Expenditure of the United Kingdom and How to Pay for the War [World War II],” which used many of Kuznets’s ideas. Since Keynes’s paper helped the Allies win the war, economists became sought-after experts on American public policy in the postwar years, and the new importance of national economic analysis shot it into the realm of “truth.” In modified form, the system later spread around the world as the United Nations System of National Accounts.
Traditional economic systems are designed to keep women at home engaging in heroic feats of production and Consumption.
In effect, then, countries still operate under an economic system that encourages war Production – rather than, say, education or healthy children – and ignores the fact that human and social resources make up an estimated 60 percent of the wealth of nations, according to the World Bank. Another problem is that GNP/GDP is a “cash flow” account with no asset side to its balance sheet, meaning that the social and environmental costs of production are counted as increasing, rather than decreasing, national wealth. For example, the clean-up costs for the Exxon Valdez disaster increase the GNP while the value of a clean ocean goes uncounted, thus encouraging its exploitation. According to former World Bank economist Herman Daly, the current system treats the planet like a liquidating business.
Henderson is seeking to change our reality by refocusing our attention. “Using the GNP as a method of calculating wealth and progress channels our thinking into a very narrow framework and is really a form of control,” she asserts. “We need a multidisciplinary view because societies are multidimensional.”
To accommodate her view, she has devised a new national scorecard to highlight areas neglected or even harmed by the tunnel vision of the current economic system. Her Country Futures Indicators (CFI) uses a reformulated GNP to provide more monetary information, such as income distribution, military-to-civilian budget ratio, and natural resource depletion. It also includes factors not reflected in economic data, such as population growth, education, health and nutrition, status of minority and ethnic populations and women, environmental quality, bio diversity, and informal and household-sector production. This will “help the American people have the debate they’re trying to have on a political level,” says Henderson, a debate now “straight jacketed by the GNP language.”
Henderson needed a vehicle to carry the CFI to the public. She turned to the Calvert Asset Management Group, the investment-management arm of the Calvert Group Mutual Funds, for which she is an advisor. She says Calvert already recognizes the same “double bottom line” as she does, which is “a healthy bottom line in financial terms as well as an additional bottom line that addresses people’s growth needs and their psychological, spiritual, and cultural values.” The CFI has been renamed the Calvert-Henderson Quality-of-Life Indicators and is scheduled for release this fall.
The Calvert-Henderson Quality-of-Life Indicators will be released directly to the American public so that people can make up their own minds about the country’s progress. “What we’re trying to do is smoke the economists out and get them to admit that all economics is political and that there could be a better way,” Henderson says. She cheerfully admits that her indicators are also political – but better than the obfuscating GNP.
Counting Unpaid Work
Henderson also views traditional economics as a patriarchal system designed to keep women at home engaging in “heroic feats of production and consumption.”
The worldwide annual value of Women’s Unpaid Work is $11 trillion, or nearly half the world’s entire economy.
Not surprisingly, few economists publicly agree with Henderson’s assessments even though they might admit sympathy with her ideas. For instance, consider the push by Henderson and others to include women’s unpaid work, a large part of what she calls the world’s “cooperative economy,” in national economic statistics.
The worldwide annual value of women’s unpaid work is $11 trillion, or nearly half the world’s entire economy, according to The 1995 Human Development Report for the UN’s Development Program. (Men’s unpaid work is valued at $5 trillion.) By ignoring this immense amount of vital work, economic systems tell women their unpaid tasks do not count in any meaningful (read: monetary) way, implying that neither do the women themselves. In industrialized countries, unpaid work often includes caring for children, sick relatives, and the elderly, as well as household tasks, but in developing countries, women may also perform the labor of hauling water and firewood long distances and cultivating fields for family consumption.
Henderson believes that adding the value of unpaid work to national accounts will “bring into focus the importance of the work that women have traditionally tried to do.”
Economist John Kenneth Galbraith also believes that “concealment [of women’s unpaid work] reflects the natural and very strong instinct of economics for what is convenient to influential economic interest.” In the 1983 article “The Higher Economic Purpose of Women,” he wrote: “It has long been recognized that women are kept on a political leash primarily by urging their higher commitment to the family. Their economic role is also concealed and protected by submerging them in the family or household. Once women see that they serve purposes which are not their own, they will see that they can serve purposes which are their own.”
Unbundling the Numbers
Can something as subjective as quality-of-life issues be measured to everyone’s satisfaction? While many of the CFI indicators, such as infant mortality, life expectancy, and nutrition, can be, and already are, for others direct measurement is not always necessary, according to Henderson. “Cultural diversity is just as precious as bio diversity. Each culture has a precious gift to give to the world economy. It doesn’t have to be automobiles,” she declares. As an example, she cites some of the contributions of her native Britain to the world: Robert’s Rules of Order, habeas corpus, gardening, and, she adds with a chuckle, eccentricity.
According to several recent surveys from the Americans Talk Issues Foundation, she says, over 70 percent of the country agrees with her notion of new indicators. So do some of the world’s economic players. Both the Australian Treasury and a parliamentary report in France have recently called for new progress indicators. Even the World Bank, bastion of traditional economic measures, has developed a new Wealth Accounting System, which, Henderson says, “dealt another death blow to the increasingly discredited GNP.” Their new index counts natural environmental resources, human resources (healthy, educated citizens), and social capital (families, communities, institutions) in addition to produced assets, which are only 20 percent of a nation’s wealth.
After 30 years of work, Henderson is pleased her efforts are beginning to pay off. It’s time, she says, that we admit “the ‘invisible hand’ of the so-called free market is not God’s; it’s our own. And it would be much better if we acknowledged our ingenuity, cleared up the confusion, and came out of denial.”
BARBARA STAHURA, a freelance writer based in Evansville, Indiana, frequently writes about women and economic issues.