The Value Revolution in Economics

Wealth, Indicators & Accounting

Redefining Wealth

Quantitative: Money & Material

Accumulation

Qualitative: Well-being

Regeneration

Industrialism

River Economy: Linear FlowsDivided Economy:

– Production / Consumption– Formal / Informal– “Workplace” / Home

Resource-intensive / people displacing/deskilling

Concentrated production / energy forms

Industrialism: The Divided Economy

Invisible Visible Use-value Exchange-value “Consumption” “Production” People Things Unpaid Paid Women Men Informal Formal Private Public

Invisible Economy (1) Total Productive System of an Industrial Society

(layer cake with icing)

GNP-Monetized

½ of CakeTop two layers

Non-Monetized

Productive ½ of Cake

Lower two layers

GNP “Private” SectorRests on

GNP “Public” SectorRests on

Social Cooperative

Love EconomyRests on

Nature’s Layer

“Private” Sector

“Public”Sector

“underground economy

“Love Economy”

Mother Nature

All rights reserved. Copyright© 1982 Hazel Henderson

2

Invisible Economy (2)

Green / Postindustrial‘Lake Economy’:

--cycling / waste-as-food / biomimicry

Integration of production & consumption

--home / workplace

People-intensive / Knowledge-culture-based

--resource-displacing

Decentralized / distributed

…Make the Invisible Visible: “What is counted counts”

Historical Trends

Dematerialization

Detoxification (& decarbonization)

Decentralization

Waste, Demand & Artificial Scarcity

Permanent War Economy

The Suburb Economy:

Oil / Autos / Subdivisions

Indicators

“[If it is to be achieved, the new economic system] will result from our becoming better ecological accountants at the community level. If we must as a future necessity recycle essentially all materials and run on sunlight, then our future will depend on accounting as the most important and interesting discipline.”

Wes Jackson,

Becoming Native to This Place

Indicators & real wealth

• Qualitative Wealth is far more complex: requires more quantification

• Qualitative Wealth is place-based or specific to circumstances

• Qualitative Wealth is needs-based, requiring examination of consumption.

A Dashboard for the Cockpit

• The ‘Family’ of indicators:– Mass balance– Genuine Progress (GPI)– Ecological Footprint– 5 capitals: personal, professional, spiritual, environmental

and financial

– Firm sustainability accounting– Industry-based accounts: food, building, forestry,

etc.– Sustainable Community Indicators– Etc. etc.

The Evolution of Indicators

• Difficulties with many early indicator sets:– Wish-lists, divorced from solutions or

relationships– Either too detailed or too aggregated

/oversimplified

• Next Generation of Indicators:

from “librarians” to “plumbers”

Indicators

• organized around a purpose• highlight important trade-offs• Varieties: those that…

– cause an outcome (e.g. reduce air pollution)

– document the outcome (e.g. amount of smog)

– react to the outcome (air pollution legislation)

Genuine Wealth Assessment Life-cycle

Business-related Applications

Internal accounts Natural Step, ISO 14000, Eco-footprint,

Sustainability ReportingGovernment RegulationAlternative Industry Standards --LEED green bldg.; FSC wood ; B Corporation ; Innovative Business Models: -- B Corporation -- McDonough/Braungart Protocol

--Local Food Plus

Business Applications-II

• Builds external costs into firm decisions

• Essential to Triple Bottom Line

• SBLS: can be translated into financial bottom line

• Crucial to Stakeholder relationships

• Made easier by network support: --market transformation

Business Applications-III

• Sustainability accounting : Global Reporting Initiative

• Triple Bottom Line accounting

• Social accountability reports

• Outcome-based reporting & mapping

• etc.

Genuine Wealth Applications

• All 5 “capitals”: financial, built, natural, social, human

• Balance sheet for each

• Full-cost sustainable income statement

• Progress indicators

• Genuine Progress Report

LCA and Product life-cycles: Environmental Lock-in over a

Product’s Development Cycle