The recent and ongoing global financial crisis has shaken the confidence of many people in the trajectory and organization of global development. The effects of the 2008 crisis were experienced around the globe and its adverse impacts on human wellbeing have been profound.
While much attention has been paid to issues of governance and regulation in financial markets, it is also possible to go deeper and ask whether the economics that has guided our societies has had a role to play in the crisis. Orthodox economic thinking may have guided decades of economic growth in some countries and regions, but it has also generated a number of the major challenges that confront humanity: it has driven global environmental damage; large numbers of people still live in chronic poverty and others are marginalized from the benefits of growth; and the world remains a very unequal place. In this consultation for the Bellagio Initiative we seek to generate a discussion on what a new and more inclusive kind of economics might look like. It centres around the question as to whether contemporary economics can support us better in our efforts to live well together.
Threats, challenges and opportunities
As we move into the 21st century, the pace and character of contemporary globalization present both opportunities and threats. The perceived threats in the form of rapidly transmitted social, economic, health and environmental shocks, present us with a new and more challenging context in which to seek global improvements in human wellbeing.
In order to meet these challenges new forms of thinking about the development of our societies is required and new approaches to public policy are needed. These new forms of thinking must critically interrogate old orthodoxies and seize on the opportunities of new technologies and the new geopolitical distribution of economic, policy and intellectual innovation.
Conflict, inequality and living well together
Recognizing that the purpose of development is the promotion of human wellbeing—and not just the increase in per capita income or even just the reduction of poverty—helps focus the discussion. At the same time it broadens and changes the agenda of issues that must be considered. 1
Thinking on human wellbeing has advanced considerably over the last decade and it has been developed both in terms of its conceptual clarity and its relevance to public policy and practice 2. At the heart of the wellbeing approach is the recognition that we all aspire to live well. We need make no grand assumptions about what that consists of, or what it requires, because across the globe and between generations we hold different views of what wellbeing is and how we should achieve it. But whatever the detail and differences, we do need to find ways of living well together.
There is widespread acceptance of the view that as we move into the 21st century it is likely to become more difficult to live well together. 3 Some of the paths of change that we are experiencing are already sources of conflict and there are other changes in motion that will increasingly challenge our ability to live well together.
Some of these paths of change are already the subject of global debate and action (e.g. climate change); others, such as increasing concern and manoeuvring over resource scarcity (oil, water, land, and so on), are emerging as topics for heated debate. But other paths of change, which involve less material aspects of change and which are less amenable to hard scientific exposition also represent serious possible sources of harm for humanity and for our prospects of living well together. These include increased levels of inequality, processes of individualization and social fragmentation, movements for radicalization and polarization, and the rise of intolerance.
As we embark into the 21st century, the global distribution of wellbeing is highly uneven. Some people live well (some very well) and many others do not manage to live well at all. Increasing recognition that many people around the world fail miserably to live well (or even to live decently) has been the rationale and driving force for international development efforts. It was formally and globally reaffirmed in the struggle against poverty as framed by the vision of the Millennium Declaration. This aspiration is also the wellspring for philanthropy in many corners of the world.
In order to illustrate the power of the argument about our need to live well together we can take an extreme example: the antithesis of living well together is war. War is a prima facie indicator of us failing to reach peaceful agreements to live well together with others. Whether it is ideologically driven, identity driven and/or it is conflict over resources or territory, war results in obvious and massive levels of harm: people die, they are maimed, they go hungry, shelter is destroyed, families and communities are torn apart, people are subjected to and commit atrocities that haunt them for the rest of their lives, and massive levels of psychological damage result. These harms are the most shocking and profound forms of wellbeing failure.
Challenges to the global order
But wars are just one of the most visible and extreme ways in which wellbeing failures come about. When we identify harms as a core indicator of wellbeing failure then we can recognize that the harms produced by poverty, malnourishment and social exclusion are the result of less overt forms of conflict over the distribution of resources in our global society. They are equally a testament to our failure to live well together.
This global mal-distribution of wellbeing does not come about by chance nor is it a recent accident of circumstances. It is produced by the structures of our global society and is the result of the exercise of power. Sometimes power is exercised in a fairly blatant way: to deny people sufficient food to eat by physically appropriating their produce, their land or their means of generating a livelihood. In other cases the exercise of power is more diffused, operating through social, economic and political structures that systematically result in some people having insufficient food to eat while others do very well from the same business.
If the processes that produce our current and growing mal-distribution of wellbeing are not challenged and some of the more destructive pathways of development that we are currently embarked upon are not altered, then we might expect the global context to worsen. We will witness increasing difficulty in findings ways to live well together. We may expect increased resistance to the existing global order and more overt conflict.
Using a social conception of human wellbeing as a diagnostic
As we have noted, what wellbeing consists of and how it is achieved differs according to location and according to the identity of the person. But in all places our sense of wellbeing is produced through our relationships with other people: through exchange relationships with others in markets; through relationships with those that represent our systems of government; through relationships of affection with family and friends. How wellbeing is constituted has specific meaning for people according to the social and cultural contexts in which we live. But, when we take it to a broader level, wellbeing has use as a universal concept which provides a different perspective on development problems and which encourages us to explore new forms of thinking and policy.
As universal framework, a social conception of human wellbeing identifies three categories of factors that contribute in all places to the sense of human wellbeing. These categories are:
- The things that we have
- The relationships that we have that enable us to achieve our desired goals
- The feelings that we have about how well we are doing in life. 4
In order to understand whether the things that we have enable us to meet our human needs and feel good about our lives it is necessary to focus on the role of our relationships with others. A social conception of human wellbeing encourages us particularly to look at what shapes the relationships that we each have in the world and to consider how these relationships are changing either to make it more likely or more difficult to meet the challenges of living well together.
The recent global financial crisis forced a good deal of rethinking and discussion about the ideas and institutions that we have relied on in our current development models. It forced us to consider the ways in which the costs of coping with an unsustainable model for the pursuit of wellbeing (the sub-prime crisis) were transmitted globally to produce hardships, social tensions and family break-ups for people who had no benefits from the system that generated the problem. 5 Synthesizing some of that discussion and using the social wellbeing perspective to analyze the challenges of living together well suggests three big starting points for discussion:
1 Redesigning systems of governance for living well together
Ideas and systems of governance (combining political systems, legal systems and the notion of enfranchisement – aka participation) are amongst humankind’s most sophisticated inventions. One interpretation of systems of governance is that they are dedicated to the objective of enabling us to live well together.
Recent crisis events have underlined that we live in a profoundly globalized world and that we need effective systems of governance that are able to legitimately balance the challenges to global governance in a way that acknowledges the interconnections from local to global levels. The great global institutions that were borne out of the world wars of the early 20th century (the Treaty of Versailles, the League of Nations, the United Nations, the Bretton Woods institutions, the European Union) were all designed to stop future wars between nation states. In seeking to find ways for us to live peacefully together they all wrestle with what the balance should be between local sovereignty and more global needs. The concept of human wellbeing (as opposed to economic growth, for example) can be used to assess whether our current institutions of global governance are fit for the purpose of meeting the future challenges of living well together in the 21st century.
2 A more inclusive economics in the making
Modern economic thought has been another great human invention. But while our current approach to economics has served some of us well in the development and modernization of society through the 20th century, some claim that it is now part of the problem. Our progressively globalized systems of commerce have enabled some societies to grow economically and reap benefits. At the same time, it has witnessed the persistence of mass chronic poverty, stagnation for some economies and the growing challenge of climate change. In a new world order where new economic powers are on the block it is a question whether the basic rules of the economic game must change. 6
The global financial crisis suggested not just that the institutional framework for the global economy is flawed but that some of the core values that have been propagated by modern economics are also harmful for the future prospects of living well together. Authors such as Tim Jackson propose that we need to find ways to redefine prosperity 7 and Eric Beinhocker asks whether we need a new kind of economics that comprehends economies as complex adaptive systems 8. From the human wellbeing perspective we can ask whether the unalloyed profit motive (which has been aggressively promoted as both a private and public ideology) can continue to have such a pre-eminent position as we struggle to find ways to live well together in the 21st century. We can also ask whether the mantra of ‘efficiency’ should be questioned such that economic decision-making internalizes consideration of the impacts of a particular course of action on the social relationships involved (both near and distant)?
As noted, one of the first steps already signalled globally by the Sarkozy Commission for example, has been the call to reorient the measurement of societal towards human wellbeing rather than the production of goods and money. But it remains unclear as to whether the ideas and institutions of modern economics will evolve easily to match this shift in measurement focus.
3 Producing good societies
The global financial crisis has once again illustrated that when times get difficult the burden of caring for children, keeping families together, socializing adolescents and maintaining social cohesion often falls unevenly on women. That this happens informally and without much fuss, illustrates the insufficient attention that is paid to the challenges of producing good societies. In many of the political ideologies that have evolved through the 20th century, social reproduction has been seen as something that somehow miraculously happens by itself.
However, all signs point to the fact that the liberal or residualist view of social reproduction is no longer tenable. There are now a wide variety of contributions to contemporary thinking that suggest that we need to pay more attention to issues of education, socialization and the way that we shape key decisions about how we relate to each other in society. 9
As our societies become more complex and the challenges we face become more severe then the challenge of producing good people and good societies will become all the greater. In his analysis of social values of the late 20th century, Avner Offer identifies core problems in the development pathways of the US and the UK; where identity has been increasingly defined by consumption (which is usually carbon intensive) and where there has been a steady erosion of the social mechanisms of commitment. 10 We can also note that as part of the liberal approach to global development we have systematically turned a blind eye to the profit-oriented role of mass advertising on children and adults, and its consequences for a more rounded sense of human wellbeing. 11
The analysis from the wellbeing perspective indicates that we now know that we cannot expect positive social reproduction to happen by chance or as a result of the goodwill of some members of society (e.g. teachers, community volunteers) and of women at large. This calls for the analysis of the role and future of education—not just the amount but the quality—and a new approach to valuing the care economy.
The guiding question should be: to what extent can contemporary economics be reoriented to support us in our efforts to live well together in the 21st century? Some argue that the science of economics that has evolved through the 20th century has become increasingly individualistic and detached from its moral content. By refocusing on the protection and promotion of human wellbeing as the purpose of public policy and of systems of governance we are invited to consider how moral debates and considerations of human relationships can be reintroduced into the dismal science.
Photo credit main picture: Photo by: Arcady Genkin
Sumner, A. and McGregor, J.A. (2010) Beyond Business as Usual: What Might 3-D Wellbeing Contribute to MDG Momentum? IDS Bulletin, Vol. 41, no.1. pp104-112. Vaitilingam, R. (2009) Be well. Well-being: a new development concept. The Broker issue 12, January 2009.
Gough, I. and J. Allister McGregor (eds) 2007, ‘Wellbeing in Developing Countries: From Theory to Research.’ Cambridge University Press, Cambridge. See also ‘The Commission on the Measurement of Economic Development and Social Progress’, known as the Sarkozy Commission, was chaired by Professors Joseph E. Stiglitz, Amartya Sen and Jean-Paul Fitoussi and drew contributions from internationally renowned experts from universities, governmental and intergovernmental organisations.
Consider, for example, the gloomy ‘Perfect Storm’ scenario presented by the UK Government Chief Scientist Sir John Beddington after the Final Report of the Foresight Project: Global Food and Farming Futures.
McGregor, J. Allister (2007) ‘Researching Human Wellbeing: From Concepts to Methodology.’ In Gough and McGregor (eds.) Cambridge University Press: Cambridge.
‘Voices of the Vulnerable: Recovery from the Ground Up.’ Second Annual Report UN Global Pulse.
Pouw, N. (2011) When growth is empty. Towards an inclusive economics. The Broker issue 25, July-August 2011.
Jackson, T. (2009) Prosperity without Growth? The transition to a sustainable economy, SDC Report. London: Sustainable Development Commission.
Beinhocker, E. (2007) The Origin of Wealth: Evolution, Complexity and the Radical Rethinking of Economics. Random House: London.
For example, Avner Offer (2006) The Challenge of Affluence, Richard Layard (2005) Happiness: Lessons from a New Science. Thaler and Sunstein (2008) Nudge: Improving Decisions About Health, Wealth, and Happiness.
Offer, A. (2006) The Challenge of Affluence: Self-Control and Well-Being in the United States and Britain since 1950. Oxford University Press: Oxford.
Kasser, T. 2002.The High Price of Materialism. Cambridge, MA: MIT Press