The word “economy” is derived from the Greek and means “household management”.
But the implication of the first part of the word, eco or oikos (in Greek) is more than just financial management. In addition to family members, “household” includes the family’s land, livestock, and property as well. Originally then, oikonomos meant management of everything that is touched by the family and everything that touches them.
Just as wee cannot work to make our communities more resilient without addressing issues of social justice, likewise we cannot talk about changing our economic system without taking into account our community’s wellbeing.
Wendell Berry put it this way:
The “environmental crisis” has happened because the human household…is in conflict at almost every point with the household of Nature.In the Presence of Fear, 2001, pg 12
We have all heard the expression that capitalism is the worst economic system, except for all the others. that we are fortunate to live under a “free market” system that is not the product of “central planning”, ostensibly planned by the government. There are many examples of this story. You can sample just one of them here.
There are almost 600,000 people without homes in the United States.
Unemployment statistics are difficult to quantify due to the complexity of the data used and numbers of “unemployed” that are not reflected in official counts. This Forbes article is a good illustration of the data collected and what is used.
In addition to unemployment, “underemployment” has become an increasing phenomenon over the years. Today many people have become a “Gig worker”, a nonchalant term for people who have been driven to self-employment, working as a “contractor” for someone who provides no medical benefits or vacation or holiday time off and often not even wages.
We can look at how part-time or gig work has increased over time.
This chart also depicts the economic crises that occur with troubling regularity within the economy. These “recessions”, often referred to as “corrections” to the markets occur in a consistent 10-year cycle. We see the steady rise in gig-oriented work over the decades. This temporary work environment creates economic insecurity, stress on the work and the worker’s family and can lead to food insecurity and homelessness.
This is the economic system we live under.
What happens when the economy is not embedded in a due regard for the natural world…is not only that it wreaks its harm throughout the biosphere in indiscriminate and ultimately unsustainable ways…It also loses its sense of the human as a species and the individual as an animal needing certain basic physical elements for successful survival.Rebels Against the Future, Sale, 1995, pg 266
There must be a better way. There are better ways, and we explore them in our project Alternative Economies.
A different but related aspect of our economy is how we measure economic progress and quality of life.
Currently we have one, and only one way to measure: the Gross Domestic Product (GDP). By definition, GDP is the monetary value of all goods and services produced in a country. In essence, GDP measures spending. GDP is a rather recent creation, initially developed in the 1930’s in response to the Great Depression and then refined as World War II began.
In 1944, the Allies held the Bretton Woods Conference where they agreed to establish the International Monetary Fund (IMF) and the World Bank, among other things. They also agreed to use GDP as the standard measure of economic growth.
Today GDP growth is viewed almost as a sacred objective. Every economic as well as most political decisions are made based on how they will affect economic growth and GDP. Economic decisions are mostly driven by unabated acceptance of Okun’s Law of the relationship between economic growth and unemployment. High rates of GDP growth are used to express economic success.
Regardless of the concerns and many criticisms of reliance on GDP alone, local governments and nations rely on it almost exclusively to tout their economic success. And the criticisms are many, for example here and here. And there is this recent critique by Democratic presidential candidate Andrew Yang:
What we have to do is, we have to say, ‘look, there’s record high GDP and stock market prices, you know what else there are record highs [of]? Suicides, drug overdoses, depression, anxiety.’ It’s gotten so bad that American life expectancy has declined for the last three years.”
“The way we win this election is we redefine economic progress to include all the things that matter to the people in Michigan and all of us like our own heath, our well-being, our mental health, our clean air and clean water, how our kids are doing.”
There are alternatives to using GDP to measure economic progress and quality of life. Measures such as the Genuine Progress Indicator (GPI), the Index of Sustainable Economic Welfare (ISEW), the UN’s World Happiness Index, and many others.
In our project on Genuine Progress, we look at GDP use in more depth and explore other ways of measuring our economic wellbeing and our impact on the natural world. We also question what may be the most insidious aspect of economic activity: Economic Growth itself.