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By Root 1582 0

in this wide sense, will depend on their legitimacy. In the Western economies the institutions of democracy (elections, parties, the legislature) are usually the focus when it comes to considering legitimacy. However, the opinion poll figures cited earlier suggest this is not a good focus—the formal political institutions appear to have lost a great deal of legitimacy.1 Collective assent to any policy reforms can’t be assumed just because a law passes Congress or Parliament; and conversely, policies with wide appeal might never make it through the partisan political process. What’s more, although many people share the sense of malaise about politics and the kind of society we have, they are unlikely to embrace some of the changes I’ve argued will be needed. It’s hardly going to be popular when governments cut public spending and jobs, or start to reduce entitlements to pensions or old age healthcare. In many Western countries, the people don’t think much of the politicians, but the politicians have a pretty low opinion of electors too, given the reluctance to face up to the need for difficult changes.

For this reason, the proposals below emphasize the importance of the mechanisms for generating public debate and consent. Even in a context of crisis, a change of direction in terms of behavior and policy by hundreds of millions of people is difficult to achieve. The last time the framework for governance and policymaking changed as much as it needs to now was in the decade after the Second World War. Today’s Crisis of Enough is a slower burn than the massive trauma of a global war—thank goodness. There is enough of a breathing space that there’s time to adapt. But this also means there’s a huge challenge in engaging the public debate and winning consent for change.

MEASUREMENT

I make no apology for beginning with the question of measurement. Understanding begins with careful observation and measurement. This is just as true of human society as the natural world. The information technology revolution—computer processing power, online databases, social networks—mean there is a massive opportunity to collect much more and better data on our societies and economies, and then to analyze and act on it. Nobel laureate Herbert Simon once noted: “In the physical sciences, when errors of measurement and other noise are found to be of the same order of magnitude as the phenomena under study, the response is not to try to squeeze more information out of the data by statistical means; it is instead to find techniques for observing the phenomena at a higher level of resolution. The corresponding strategy for economics is obvious: to secure new kinds of data at the micro level.”2

The measurement question has several aspects. One is supplementing GDP, the measure of the flow of income generated by the economy each year, with a wider array of statistics measuring social and economic progress. Growth is essential for social welfare but other things will also contribute and governments should certainly monitor them too. But in addition, the way GDP is measured has not kept up with the changing structure of the economy and the intangible nature of growth. A better measure should include activities outside the market economy such as caring within the household and other uses of time. And the measurement of wealth, in its different forms—natural capital, human and social capital—must urgently be added to the measurement of income; the balance sheet of the economy is just as important as the annual change.

Improving the statistics we use to steer the economy is in principle the easiest of the reforms I suggest here, but nevertheless hard enough in practice. In large part, the challenge is a question of research. Economists and statisticians need to work on the concept of comprehensive wealth and its components, in order to bring future impacts of current policies into decision-making; on generational accounting, so the future pension and welfare burden is made explicit; and on the concept of productivity in services and intangibles as