How do we know whether economic activities are beneficial or detrimental to wellbeing—of ourselves, of others, of civil society, of our planet, of future generations?
Today the world of business hums with debates about social entrepreneurship and corporate social responsibility. Several businesses now espouse the principle that “[p]rofits are necessary and good, but only as a metric of sustainability.” Success, according to this line of reasoning, is predicated not just on fulfilling the demands of quarterly bottom lines, but also on meeting the needs of customers and communities. New terms have entered the conversation, such as the triple bottom line, addressing social, environmental, and financial requirements, or serving people, planet, and profits.
Given the mounting combined challenges of inequality, ecosystem deterioration, and viable economic development, finding smarter goals for economic activity may well be the moral imperative of our times. Moreover, these challenges have far reaching policy implications for our communities, our state, and our nation across a range of areas.
After some three decades of serious study on the nature of national economies—the products they make and the incomes they generate—the father of national income accounting, Simon Kuznets, raised some fundamental questions about economic activities. What was the purpose of the economy? Whom or what did it serve?
The problem, as Kuznets clearly understood, is that the bottom line as defined by our national accounts matters a lot more than all other considerations. To his growing dismay, direction of economic activity came to be defined by a measure of output. GDP became the primary metric of success and national welfare. Considerations about social progress or environmental impacts are secondary, often no more than a function of growth.
That GDP growth is not a sufficient measure of progress or prosperity is well understood by now. Less well understood is how a single economic metric—GDP—continues to define national and international economic activities. In the words of sustainability entrepreneur Paul Hawken, “At present we are stealing the future, selling it in the present, and calling it gross domestic product.”
In short, Kuznets’ question, “what are we growing, and why,” remains largely unanswered. Today, the combined challenges of sustainability, inequality, and social cohesion require approaches that go beyond the confines of single disciplines. Direction and purpose of tomorrow’s economies requires input from business as well as politics, from the humanities as much as from the natural and social sciences.
What is needed is a broader exploration into viable economic goals – and smart indicators capable of representing such goals. We believe that the quality of this exploration depends on best available knowledge, which, in turn, is a function of bringing together vital expertise and perspectives from across all major disciplines and walks of life.
We also believe that the arts can significantly contribute to a creative and meaningful dialogue on economic goals and indicators. Inventors, trailblazers, and paradigm shifters are often artists, using the larger canvass of the human experience in order to raise new and more expansive concepts of life. Rethinking big, fundamental questions requires creativity and discipline, broad conceptual thinking as much as an appreciation for detail and practicality, and above all input from a wide range of different perspectives.
The universities of the Triangle, and the Kenan institutes in particular, are ideally situated to initiate and organize an exploratory dialogue across schools and disciplines, including business and environmental leaders, on indicators for smart and sustainable economic success. Creatively combining existing initiatives could subsequently allow Kenan to play a leadership role in emerging debates of increasing local, national, and international significance. Indeed, Kenan could serve as a hub in a potential Silicon Valley of sustainable development research.
With a clear focus on two central questions, this proposal serves as an incubator for a variety of possible follow-up projects and initiatives—conceptual and practical, scholarly and political, international and local. The two central questions are: