a new economic model that recognises the environment…

Ross Gittins is interestingly proposing a new economic model that recognises and measures the centrality of the environment. He points to the limitations of  the measure of GDP – “GDP, our great de facto measure of progress, counts the short-term benefits from all this exploitation, but ignores its long-term costs.” But  the economy is not driven by the measure of GDP. It is driven by what owners of capital decide will make profitable investments. The GDP, after the event, measures traded goods and services, which indicates how much productive capacity (of goods and services) has grown. Environmental resources could be “accounted for” in economic decision making by attempting to integrate environmental costs into profit expectations,  governments putting prices on environmental damage  (e.g. a carbon tax)  which is not a new economic model, but adapting the current economic model in which profitability estimates made by company managers are the main criteria for significant investments.  Alternatively social needs and environmental impact could be the main criteria for investment in production, and to circumvent both the profit motive and bureaucratic self-interest, decisions would need to be made by highly democratic forums of  workers and consumers who live with the consequences of the decisions made. These democratic forums would need reliable measures of social and environmental impact to inform their debates. So yes – new measures are relevant, but won’t make any difference whilst profitability is the main criteria for decisions on using resources, i.e. while the owners of capital have the power.

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