True wealth

Klaxon: this week sees the publication of National Wealth: What is Missing, Why It Matters, edited by Kirk Hamilton and Cameron Hepburn. The book is a collection based on the Wealth Project, itself a follow up to work by the World Bank on measurement for sustainability. As sustainability inevitably involves thinking about the future, there is a need to measure an economy’s stocks of different kinds of capital assets rather than current income or consumption flows (which is what our GDP lens does).

I have a chapter in the book about the political economy of moving to a new framework of economic indicators from the current system of national accounts. This is a shift analogous to changing a global technical standard, in which enough key participants have to make the move to tip everyone else into following suit. I conclude, though, that for this to come about there has to be enough consensus about what new standard to move to, which is still a work in progress. There’s a proliferation of dashboards and alternative indices. We need just one framework to get the shift.