Alternative Measures of Progress — a Personal Experience
25 years ago, in 1994, during my research work on smart control for energy efficient buildings at the Technical University of Vienna, Austria, I became very interested in passive houses, renewable energy and sustainable economy. I was reading books and papers on these subjects, including publications by the “Wuppertal Institute for Climate, Environment and Energy”, and the famous “The Limits to Growth” by Donella H. Meadows, Dennis L. Meadows, Jørgen Randers and William W. Behrens III, which had been published 22 years earlier, in 1972. At the time I really felt very passionate about the limits of material growth in a finite world.
To me as an Engineer, who needs to verify design and implementation using appropriate metrics, the problem seemed to be related to both the economic metrics employed, the Gross Domestic Product (GDP), and the established paradigm that this number has to increase steadily, i.e. the implicit expectation of growth. It is this combination, this fixation on mostly material growth figures, that results in an ever accelerating cycle of production and consumption, fuelled by fossil energy and natural resources only to yield heat and rubbish. The result may prove fatal for mankind due to the chosen metrics. Once, in 1994, I wrote in an essay on:
“In itself, there is nothing intrinsically bad in growth. Bad is when growth is reduced to the increase of material or monetary values only; continuously increasing consumption and production is conducive to this interpretation of growth. Given the present understanding of economic value, a shift of activities into the social, academic, creative or artistic field does not serve this interpretation of growth; a car accident, however, would. Also, family work or parenting is not seen as a growth-promoting activity. Economical is what promotes growth in a reduced view, and vice versa. That is the determinant thinking on the economization of the world.”
In parallel to my work on smart control algorithms, I kept thinking about two issues: first, economic metrics, in particular GDP, and second, the limitation in these metrics given the limited resources on earth. As it happened I started a discussion on alternative measures with two leading figures of Austrian politics at the time, Dr. Wolfgang Schüssel, Minister for Economic Affairs, and Dr. Erhard Busek, Vice-Chancellor of Austria and Minister for Science and Research. In an email to both I proposed in August 1994 a kind of metric which is common in engineering: efficiency. As an example, I suggested the following:
“We should not use an absolute value such as the gross domestic product (GDP) as a measure for the economic success, but rather a relative quantity, for example an efficiency that relates the accrued GDP to the total energy expenditure:
efficiency = GDP / total energy
or, alternatively, an efficiency that relates the accrued GDP to the primary energy consumption, i.e. fossil fuel consumption, as:
efficiency = GDP / primary energy
These quantities correspond to energy or economic efficiencies and are to be associated with the values of GDP in order to express the effort at which wealth or economic performance is bought. In this case, a pure agrarian society with a high degree of self-sufficiency would have a high efficiency, a pure industrial society would have a low one. If much is recycled or energy is saved, the efficiency increases. Looking ahead, improving the efficiency while maintaining gross domestic product would be just as much an improvement and progress.”
Both ministers responded and agreed to that in principle. For instance, Dr. Busek wrote back:
“Thank you for your e-mail and the suggestion made in it, to relate the economic parameter gross domestic product in the future to the national energy consumption or primary energy. Adding to that, I would like to tell you the following.
For quite some time, well-known national economists have been working with the question of the improvement or adaptation of the performance indicators of national economies. The gross domestic product exhibits in its current form several shortcomings. First, it is true as you have shown that generated people’s assets are in no relation to the necessary energy input made; thus no conclusion on the efficiency or on the qualitative progress of economy and industry is possible. Secondly, it is also a fact that the gross domestic product includes all production and services, e.g. also accident and accident costs, repair costs in the environmental sector and many others more, which should be avoided in the interests of sustainable management. In gross domestic product, on the other hand, they seem to be false positive contributions for our economy.
I take your e-mail as an opportunity for eventual Government negotiations after the next election for a revision of the gross domestic product into the demanded program to take for a new government agreement.”
Today, in 2019 and 25 years later, I do not know whether the promise made went into the Austrian government program with any significant effect. I am certain, however, that there are more and different metrics for the assessment of a national economy as well as discussions on economic values; suffice to search the Internet for “alternatives to GDP” or “alternative measures of growth” or any other variant of the same topic. On the upside, I can see that this kind of thinking is gradually entering mass media. It is interesting, however, to observe how long it takes for a way of thinking to become mainstream and accepted, nearly 50 years altogether from the publication of “The Limits of Growth”. Perhaps it always needs a tangible and serious threat to our living conditions to start acting. Unfortunately, market mechanisms tend to counter proportionally to the severity of a state, which may not be enough; perhaps we ought to act proportionally to the trend towards a severe state, with providence.