Making and Breaking the Grid
New Metrics for a new economy
"When the world we are trying to explain and improve, [...] is not well described by a simple model, we must continue to improve our frameworks and theories so as to be able to understand complexity and not simply reject it."
Elinor Ostrom (2009) Nobel Prize Lecture, December 8.
What to do when the grids we are seeing the world through are no longer right? Today, success is still expressed in terms of gross domestic product (GDP), EBIT and returns - business ratios that describe economic growth, a company's operating profit or return on invested capital. These metrics include air pollution, cigarette advertising, and ambulance calls for accident victims. They include security locks for our doors. They include the rising price of land and displacement in cities and urban sprawl in rural areas. They include the outsourcing of production to low-wage countries and the distribution of disposable goods.
They do not take into account people's health, the quality of their education and the pleasure they derive from their work. They do not include the beauty of our nature or the strength of our initiatives. They do not include the preservation of our building culture, the intelligence of our disputes or the cohesion in our neighbourhoods.
The debate about whether the current focus on purely monetary indicators offers orientation is not new. It was strengthened above all by the Corona crisis. Anyone who would have claimed before the crisis that a reorientation of state governance on this scale would be possible would probably have received awkward looks. But in the end, case numbers in many countries determined what was economically feasible. The state in its paternalistic shining role: economic action is steered in favour of minimising damage. And at least intellectually, it is no longer a far leap to see metrics such as social participation, cultural preservation and regional promotion as economic success.
But where to start?
In her Nobel Prize-winning work "Governing the Commons: The Evolution of Institutions for Collective Action", Elinor Ostrom talks about the power of the commons and proves that, especially in the case of resource scarcity and in compliance with guidelines (so-called design principles), local stakeholders are always superior to institutional control. This means that the smaller the gap between supposed experts and those affected, the more sustainable and efficient economic activity is possible. Now, the expertise is not only in the hands of the authorities but also in the private sector. They act according to the logic of effectiveness, which does not include local involvement. Would it not be conceivable to involve those affected more in planning and production? Wouldn't those affected be able to decide more wisely about the function of agriculture in their neighbourhood? Shouldn't their word be above that of the investors? Is there not even more potential for the private sector to look at society more sharply from their margins instead of serving a fuzzy average? The idea of the transformation processes that could be triggered if those affected became experts and the private sector became a partner awakens desirable scenarios.
The Corona crisis called for more courage from all of us to include other scales in the calculation. It showed that with the help of a social consensus, a reassessment is possible that has an impact. It showed that economic innovation is also possible out of the crisis (and this does not mean monetary growth) and that social transformation can also go hand in hand with economic transformation. At the height of the Corona pandemic, the OECD published the compass "Beyond GDP: What Really Matters in Economic and Social Development" (OECD 2020) - a proposal for metrics for sustainable economic activity taking into account economic, environmental and social goals. Fair enough, that this proposal is miles away from actionable items. But, the question is no longer what to do or how to do it, but when to start and where to experiment. The ingredients are there to try out a new king of grid together.
August 8, 2021 (AW)