Can we please evaluate economics in terms of its effects on the well-being of the community!

By | November 11, 2013

In a previous post I reported about students at Manchester University, UK, expressing their dismay at being taught orthodox, free-market economics and little else, even though since 2008 much of this has been discredited. It seems the students at Manchester were not alone in their disquiet.

Today, The Guardian  reports that the Treasury is hosting a conference in London to discuss the crisis in economics teaching, which has ‘remained largely unchanged since 2008’. Michael Joffe, a professor of economics at Imperial College, London, has called for economics courses to embrace the teachings of Marx and Keynes to undermine the dominance of neoclassical free-market theories. He adds that ‘the aim should be to provide analysis based on the way the world works, not on the way theories argue it ought to work’.

On this basis I would  like to see more talk about values when discussing the economy. At the moment we have an almost unquestioning adherence to GDP and ‘growth’ when assessing the importance of economic activity. Growth is seen as a measure of progress. Vandana Shiva   calls it ‘the most powerful number and dominant concept of our time’. She argues it hides the poverty it creates. Work done for ourselves and our communities is not part of GDP, neither is nature’s wealth. For example, water might be freely available from a river. This does not count as GDP. If you can restrict access to this river, bottle the water and sell it, GDP increases. So does poverty for those who previously had a free water supply. The same could be said about child care – care for your own children and it doesn’t ‘count’. Care for somebody else’s and get paid for it – that counts.

So often, what makes ‘economic sense’ flies in the face of the values and aspirations ordinary people have. Nobel prize winner Amartya Sen understood this when he devised his ‘capability approach’ to economics. This so-called ‘welfare economics’ seeks to evaluate economic policies in terms of their effects on the well-being of the community. As Shiva puts it ‘GDP does not capture the human condition ….. We need to create measures beyond GDP, and economies beyond the global supermarket, to rejuvenate real wealth. We need to remember that the real currency of life is life itself’.

Margaret Meredith