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or even in a loose network with other companies. Few last as long as the classic corporation of the 1950s and 1960s—the average independent life of a listed company has been in steady decline. This structure does not make it easy to offer stable employment and a pension, never mind more onerous social responsibilities. It is not even obvious that the most effective way for governments to collect taxes is via payroll deduction organized by companies, although most still do it that way.

And this is not the end of the contexts in which governance has become an issue. There has been a debate about the forms of international governance.38 Should half-century old institutions like the UN, IMF, and World Bank be reformed? How can the emerging BRICs economies be given a voice in international debate, given that they are not in the G7? Is the G20 the best vehicle for international economic management? Should the EU continue to expand? Do Africa or the Americas need something equivalent to the EU? At what level do societies and economies need governing? Is there a need for more and better transnational governance? Or should it be more local, reflecting the aspirations of smaller units such as Catalonia or Scotland? In terms of geographic scope and institutional form this debate is wide open.

These multiple failures of governance have been emerging over at least a decade. There is ample evidence from opinion polls that around the developed world the degree of trust in politics and public organizations—and also big companies and many professions—has been in decline.

CONCLUSION

High trust is essential to the kind of economy we have now, but at the same time fragile. Building social capital needs more careful attention; future prosperity will depend on husbanding and strengthening it. We start in a weakened position, due to the financial and economic crisis, and the overhang of debt that will be its legacy. The decline of trust and depletion of social capital takes us right to the central issue for the second half of this book: What institutional and governance reforms can start to correct the unsustainable trends identified here in the way we organize our economies? The need for institutional change in response to the underlying structural and technological changes is pervasive. Private and public sector organizations, rich and poor countries, local and global agencies, all face their own challenges of trust and governance. This chapter has touched on some of the institutional challenges; the issue of institutional reform is center stage in the second half of this book.

PART TWO Obstacles

SIX Measurement

The first half of this book has set out the central challenge of our times: economic growth is essential but the way it has been achieved for the past generation cannot continue. To argue, as has become fashionable, that Western economies should just stop growing is delusional. There is no quick fix to the challenge.

Growth offers material benefits and also, increasingly in the world’s richest economies, offers people more potential to develop their capabilities and shape their lives in enjoyable and meaningful ways. Social welfare, to use the technical language of economics, is without doubt improved by economic growth. At low levels of income, growth is essential to prevent hunger, improve health, provide adequate housing and communications. At high levels of income—and contrary to some of the stronger claims of “happiness” gurus—more growth continues to improve our well-being. We value greatly the variety and opportunities it brings. The structure of the advanced economies has changed dramatically, and much of the growth taking place now involves services and intangibles. We value these services, experiences, and creativity. Although it’s hard to visualize, this is still growth. Its absence makes us unhappy. So policy decisions will continue to need to deliver a growing economy.

Yet, as the previous chapters describe, the modern world has plunged into a crisis of growth. The nature and distribution of the