The challenge of economics is to unveil and explore the workings of an extraordinarily complex system: the choices of people as they interact with one another and with the rest of the universe. Progress in economic science occurs as its scope grows to include larger and more important aspects of life, such as externalities beyond easily-measured commerce in material goods. Sir Partha Dasgupta, a Cambridge professor, reviews Jared Diamond's book Collapse: How Societies Choose to Fail or Survive in the 19 May 2005 issue of the London Review of Books . In his critique Dasgupta neatly describes what we owe to our children's children:
An economy's productive base consists of its capital assets and its institutions. Ecological economists have recently shown that the correct measure of that base is wealth. They have shown, too, that in estimating wealth, not only is the value of manufactured assets to be included (buildings, machinery, roads), but also 'human' capital (knowledge, skills, health), natural capital (ecosystems, minerals, fossil fuels), and institutions (government, civil society, the rule of law). So development is sustainable as long as an economy's wealth relative to its population is maintained over time. Adjusting for changes in population size, economic development should be viewed as growth in wealth, not growth in GNP.
In his book Human Well-Being and the Natural Environment Professor Dasgupta begins with a brilliant summary of what life is all about:
The concept of a well-lived life is fraught with difficulties, but its basic features are not controversial. As regards personal growth, most people would place emphasis on being able to realise a certain type of character, one that they themselves can admire, something that is a source of self-respect, for example having a disposition towards honesty and charitability, being able to stand up for one's principles, having the patience to probe and to discover where one's innate gifts lie (and to then develop them), and being capable of displaying and receiving affection. In the related social sphere, most people would place emphasis on a successful family life, warm friendships, a meaningful job, fruitful vocational activities, an occasional trip to see other places and cultures, and at the end of it a reflective and useful old age. ...
He goes on from there to explore issues of well-being across space (different countries) and time (many generations). Quantitative measures of human progress clearly must take into account a huge range of factors. It's no good, in the long run, to make more stuff at the cost of greater environmental destruction, increasingly widespread ignorance, or an ever-thinner fabric of civilization.
(Dasgupta's book clearly belongs on my exponentially-lengthening "to read" list; cf. CelebrityHistory (8 May 1999), BasementWorries (15 Jun 2002), ThatWhichIsNotSeen (5 Sep 2002), FeedOrFeedback (6 Sep 2004), ...)