"Organize your actions for your own benefit," wrote Heinrich Gossen, the German economist, in 1854.
It was, he argued, no less than God's will that pursuit of economic self-interest be the motivating force of human progress -- to deny it was sacrilegious.
Economists have, of course, progressed since then -- a little. So Charles Schultze, former presidential economic adviser, could write in 1987 that:
"Market-like arrangements . . . reduce [Gossen would have said eliminate] the need for compassion, patriotism, brotherly love and cultural solidarity. . . ."
In fairness to economists, self-interest is a powerful force, and free-market capitalism is not a bad way of harnessing it. But when I hear Congress' newly reinvigorated free marketeers like House Majority Leader Dick Armey saying: "government is always wrong . . . the market is always right," I worry.
I worry because we protect what we value; and how we account for ourselves, literally -- how we construct our economic world view, is inextricably linked to the fate of the environment.
It is an attractive theory -- just free everyone to pursue their self-interest -- imagine that technology will arise to solve unforeseen problems -- and the common good will follow.
No wonder market worship is burgeoning in Congress and many statehouses -- a system so comfortingly perfect that T. S. Eliot once observed of it, "no one needs to be good." A scholarly and readable caution to free-market fever is "For the Common Good" (Beacon Press, 1989) by Herman Daly and John Cobb. It is the best critique of modern economics I know; about practicing economics as if the earth mattered; also human community. It is no New Age tract, or call to some utopian realm.
Cobb is a respected theologian and philosopher. Daly is a seasoned economist, who recently came from the World Bank to the University of Maryland faculty, where he should become a resource for the Chesapeake Bay restoration program.
The following is based on Daly's book, and a recent conversation with the economist at his home near the College Park campus.
Q: You think we are deluding ourselves with our present use of GNP (Gross National Product) as the prime measure of economic achievement?
A: GNP measures only economic activity. Cut a forest into logs, or pay to clean up an oil spill and it rises. But GNP can't possibly tell us if we're getting richer or poorer, because, among other things, it doesn't measure environmental depletion or pollution. It's like selling your house and saying, 'I'm rich'; but then you have to find a place to live.
Q: What's the alternative?
A: I and others have worked on an Index of Sustainable Economic Welfare as a better measure of progress.
That index views wetlands and farmland, for example, as capital, and deducts when these and other natural resources are degraded.
Also, we correct for additional dollars going to the rich [counting them as less than] additional dollars going to the poor -- this is a very traditional economic concept of diminishing marginal returns.
Since 1950, compared to GNP, our index has shown small increases when GNP shows large ones; and since the 1970s, as GNP has risen sharply, our index has leveled off.
Q: You write that there's not been much difference between capitalism and socialism as far as environmental destruction. Is there a third path you advocate?
A: Generally, we favor private ownership of capital and pricing and allocation of the free market system; but both capitalism and socialism seem options that are secondary to the question of community.
Aristotle made an important distinction, lost on most of today's economists, between chrematistics and oikonomia.
The former means the manipulation of property and wealth to maximize short-term monetary gain to the owner. Modern economics is akin to this, with its emphasis on 'homo economicus,' the individual driven by self-gain.
Oikonomia, or management of the household, has to do more with increasing the value of the household to all its members over the long term.
And if we expand 'household' to include the larger community of the land, shared values, resources . . . that is a good definition of an economics that recognizes community.
For oikonomia, there is such a thing as 'enough,' for chrematistics, more is always better.
Q: You make a distinction between growth and development -- one that often seems lost on politicians who feel their town or county must 'grow or die.'
A: GNP does not adequately distinguish between quality and quantity, between growth and development.
The earth, for example, has continued to evolve, to develop toward greater complexity and diversity, but it has not grown, changed its diameter, or its mass.
A human at maturity ceases to grow, but may develop immense potential through the remainder of his life. A cancer cell never develops, just grows, replicating itself.
As human economic systems grow, and become a larger and larger part of the total, non-growing [boundaries] of the earth, some notion of maturity, of development without growth, is implicit, or the planet's capacity to provide natural resources and absorb pollution becomes exhausted. GNP treats both sources of raw materials and pollution sinks like the air and water as infinite, or easily substituted for with capital. It is not sustainable.
Q: You seem to have ambivalent feelings about capitalism and its market forces -- capable of great harm, yet not so bad at doing what they do best.
A: We're not calling for a revolution. Markets and prices allocate resources efficiently, better than regulation, for the most part.
But the market can't determine an optimal scale; can't find the level [of production or consumption] that won't overwhelm the sources and the sinks -- it is the sinks, incidentally, such as the air, and not the sources, like oil, where growth seems to be reaching its limits now.
In other words, you can load a boat optimally, but if there is twice as much weight in it as the boat is built for, it will sink just the same.
Also, the market alone can't produce a just distribution of resources. So we have to add, to market forces, both ecological and ethical criteria. That's where community becomes important.
Q: No revolution; but yet you write "the changes that are now needed in society are at a level that stirs religious passions."
A: Yes, because the changes have to do with the way we think of ourselves as creatures vs. creators.
The modern view is that we create -- the world is raw material; but fundamentally we're creatures. We can alter, we can be creative; but we're part of a larger earth system that we're not so free to dominate as our current economic system might lead us to think.