In this policy brief for CROP (Comparative Research Programme on Poverty) GovInn director Lorenzo Fioramonti explains how alternative indicators are likely to highlight the important contribution of social cohesion and natural welfare to economic development, thus helping to eradicate poverty in the continent.
“Modeling Dollar and Community Currency Flows in a Virtual US County Using Python.” A general overview of the LEDDA framework and the LEDDA Partnership by John Boik, author of “Economic Direct Democracy: A Framework to End Poverty and Maximize Well-Being”.
To know more, visit the LEDDA page on our website.
Fioramonti’s article this week focuses on the dangers on relying on simplified figures such as GDP to assess the development and the wealth of a country and make business decisions.
“When businesses base investment decisions on indicators such as the gross domestic product (GDP) they miss the forest for the trees. GDP is a very myopic measure of economic performance, which counts profits but excludes costs. Moreover, it flattens society and the market, thus giving the impression that growth affects all businesses (and people) in the same manner. In fact, there can be good and bad, equal and unequal, sustainable and unsustainable GDP growth.
“The “Africa rising” debate animating the investment community these days is a case in point, insofar as it does not pay attention to issues of sustainability and distribution, which are likely to hamper the performance of these “rising” economies. “
“Even good numbers can be misleading: indeed, numbers, by design, (over)simplify reality. In a numbers-driven world, only what can be measured counts. A metric-dependent business is more likely to forfeit long-term goals, which are harder to quantify, for short-term returns.”
Read it all on BusinessDay
“GDP became the yardstick for measuring progress and still often serves as a proxy for overall national well-being. Policymakers think of national economic life in terms of GDP: raising GDP is a primary policy goal and people across the world look to GDP growth rates to assess how well their leaders are guiding economic policy choices. Yet today GDP is under fire from a variety of sources. Why?”
Gross Domestic Problem is reviewed along with Diane Coyle’s “GDP: A Brief but Affectionate History” and Zachary Karabell’s “Leading Indicators: A Short History of the Numbers That Rule Our World”. In his in-depth analysis Stephen Macekura, postdoctoral fellow at the John Sloan Dickey Center for International Understanding at Dartmouth College (US), says of Fioramonti’s book:
“Fioramonti presents the most scathing critique. He criticizes the deeply held faith that raising GDP can solve all political and social problems—what he calls the “dogma of infinite GDP growth.” For him, the reliance on GDP derives from a technocratic worldview that glorifies experts, corrodes communal values, and devalues the natural world. In addition to inveighing against this worldview throughout his book, he highlights contemporary social movements that are challenging both the use of GDP and mainstream society more broadly. He explains the “transition” and “de-growth” movements, which seek to downscale production and consumption, encourage participatory decision-making, decentralize power towards the community level, redistribute resources along more equitable lines, and lower humankind’s ecological footprint. Similarly, he recounts the efforts of communities that use their own currencies and banking systems to break free of the larger financial power structures (states, multinational corporations) that dominate economic transactions worldwide. In general, he sees technocracy and its GDP “dogma” as powerful centralizing and anti-democratic forces, and he celebrates grassroots, local movements that show “alternative ways of life are not just possible but also desirable.” His prescriptions are thus cultural and political; no merely technical fixes will suffice.”
Read the full article on Public Books
By Frank Mattheis GovInn Senior Fellow
As the eyes of the British political elite are all on Scotland this week the report of the Social Impact Investment Taskforce, initiated by Mr Cameron last year, became second-tier news at best.
Yet, so-called social investments are the biggest trend among experts and practitioners trying to polish the dented reputation of capitalism. The Taskforce’s chair, venture capitalist Sir Ronald Cohen talks of uncovering the “invisible heart of the market”. The trick is to reconcile greed and ethics by creating more profits for capital being invested to resolve social problems. The Taskforce thus recommends all sorts of regulatory changes to financially reward those doing good for society. But simply, governments need to define the costs of undesired social phenomena. They then can create social impact bonds to offer investors appealing yields if the problem is solved with their money. If the measures of the bonds succeed in a given goal – e.g. preventing ex-convicts from reoffending – the state pays out returns from the spared social spending.
The idea seems brilliant because it is so simple. But there is a fine line between simple and simplistic. The core mechanism of social investment is to transforming reduction in national spending into private revenues.
Consequently, the ‘new paradigm’ presented in the report translates into an entire re-definition of public goods. The most urgent social problems are not identified by the society itself but according to how much of a drain they represent to public budgets. How much attention illiteracy or domestic violence receives would be determined by the yield assessment of investors.
“Framing Environmental Problems: Problem Entrepreneurs and the Issue of Water Pollution from Agriculture in Brittany, 1970–2005” by GovInn researcher Magalie Bourblanc was included in the special selection that the Journal of Environmental Policy & Planning on the occasion of the The 9th International Conference on Interpretive Policy Analysis.
The papers included in the selection are described as “excellent examples of the deployment of interpretive and critical approaches in the field of environmental policy and planning”.
Abstract: The claim that public problems are constructs is now widely recognized as justified and was first established in social problem theory. The high instability of problem definition activities in the case of water pollution coming from agriculture in Brittany demonstrates this particularly well. The objective of this article is to describe ways by which an environmental movement organization (EMO) conceives its activities of public problem construction. Inspired by social movement theory, but aiming at overcoming its weaknesses, the paper seeks to highlight the influence of EMO endogenous meaning production in problem construction processes, a dimension often overlooked even by framing theory. In a bid to support that claim, the paper shows the influence of the affective dimension over the strategic one within the problematization process. Forging a conceptual distinction characterized by a perceived problem and strategic definitions, the paper underlines the fundamental interrelated nature of these two components and consequently emphasizes the reciprocal dependence of the perceived problem over the strategic (either material or cognitive) definitions. Finally, the paper evokes the benefit and impact of this conceptual distinction on the policy-making process. Read the full paper here
American author and de-growth activist Charles Eisenstein visited GovInn in August 2014. Eisenstein is known worldwide for his original writing and his criticism of the monetary system and of the patenting of seeds.
Vandana Shiva addressing the participants of the Governance Innovation Week 2014
A few moments of the Governance Innovation week 2014