The Economics of Enough_ How to Run the Economy as if the Future Matters - Diane Coyle [88]
Solutions to the formidable problems set out in the first section of this book will lie in rethinking institutions and the rules by which they operate. This includes both private and public institutions; both formal—like companies and governments—and informal—social norms and habits. The question is how, in the context of both dramatic social and technological change and a crisis of sustainability in the economy and in nature, we can continue to thrive in large and complex societies. It’s a difficult challenge, and this section of the book sets out in more detail why it is proving so hard to achieve necessary changes, by looking at some important obstacles.
This section of the book is thus about the institutions and rules according to which the economy operates, and in particular about why it seems to be so hard to respond to the many problems facing the leading economies.
This chapter will start with the question of measurement. It might seem an odd starting point, tangential to the serious issues needing to be addressed. But I share the Enlightenment belief that good information, based on careful quantification, is essential for making decisions that can change things for the better. All of the leading thinkers of that era regarded accurate measurement as fundamental to the advance of knowledge and progress of human kind and were greatly interested in the detail of measurement systems. (Thomas Jefferson, for example, tried to introduce the French system of metrification to the United States.)5 Roy Porter, one of the leading historians of the Enlightenment, speaks of a “growing culture of quantification” that characterized and enabled the advancement of knowledge.
Why does measurement matter? Starting with measurement questions is a way of exposing some key conceptual gaps in how we think about the economy. The fact that the measurement framework no longer fits the shape of the economy is not a trivial issue. What and how we measure anything is shaped by and also shapes the concepts we use to try to understand what’s happening. Measurements also carry a special weight in policymaking because they make it easier to justify decisions, even though many important considerations might not be at all easy to measure. Measuring those things that can be measured is essential but so is remembering that some things can’t be measured.
This exploration of the gaps leads on to a discussion in the next chapter about the differences between what is measured and what is valued. Value has a moral as well as a practical dimension. But economists have for decades avoided discussing both the difference between value and prices, and the importance of values in the wider, moral sense in shaping the economy. This has only reentered economic debate quite recently. One example is the focus on “social capital,” referred to in chapter 5. But more generally, the recent financial crisis means there has been a surge of interest in the question of whether markets go with the grain of moral values or against it. The next chapter argues that the benefits of markets in delivering good economic outcomes—the central claim of economics—depends on the values that structure those markets, because markets are social institutions that embody underlying values and cultural and social norms. One reason markets have come into question in the general debate is because the values embodied in the way they operate have departed from the values held by many citizens—not all markets are immoral, but the operation of markets in recent times has become in some respects immoral. Important as the measurement