Launch of Stiglitz report on economic performance and social progress

In September 2009, the Commission on the Measurement of Economic Performance and Social Progress submitted its report to the French President. Trade union reactions to the report are generally favourable; however, they highlight certain limitations. Among the criticisms are that the report reduces all aspects of life to capital and that its focus is too narrow. Employers take the general view that any indicators must not be too restrictive or reduce competitiveness.

In the context of the current economic crisis, on 14 September 2009, the Commission on the Measurement of Economic Performance and Social Progress (Commission sur la mesure des performances économiques et du progrès social) submitted its report. The commission was chaired by Nobel prize winner and American economist Joseph Stiglitz and brought together 22 experts, including another Nobel prize winner, the Indian economist Amartya Sen, as well as the French economist Jean-Paul Fitoussi. The French President, Nicolas Sarkozy, commissioned them to propose new indicators on measuring economic performance and social progress, as he considered that ‘the classical indicators do not suffice to convey the quality of life of French people’.

Report contents

The report begins with a relatively classical critique of gross domestic product (GDP). This indicator ‘mainly measures market production, although it has often been treated as if it were a measure of economic well-being. Conflating the two can lead to misleading indications about how well-off people are and entail the wrong policy decisions’.

In the opinion of the commission, ‘GDP is not wrong as such, but wrongly used’. It should therefore be supplemented by other accounting concepts, such as net national disposable income. This in turn should be improved, for example, by studying the evolution of households’ income – no longer as an average but according to social category in order to make a better assessment of the impact of the cost of living.

Both of the following parts of the report – devoted to quality of life and sustainable development – distinguish between an assessment of current well-being and an assessment of sustainability.

Current well-being has to do with both economic resources, such as income, and with non-economic aspects of peoples’ lives (…). Whether these levels of well-being can be sustained over time depends on whether stocks of capital that matter for our lives (natural, physical, human, social) are passed on to future generations.

The commission advocates measuring non-market factors of well-being, such as education, democracy, security and the quality of healthcare facilities and other institutions.

Trade union reactions

Overall, the trade unions have reacted favourably to the report; however, they highlight certain limitations or express reservations about certain proposals. For example, the General Confederation of Labour (Confédération générale du travail, CGT) emphasises that ‘happiness is not to be found in indicators, but in facts’ (press release (in French), 15 September 2009). It criticises the report for ‘giving a marginal role to work’ and reducing ‘all aspects of life to capital: human capital, social capital and physical capital’, thus opening the way to monetising and even commoditising ‘categories that are by their very nature non-market’. Moreover, CGT believes that the report underestimates corporate responsibility for creating inequalities and that it neglects the issue of ‘criteria that guide economic activity’.

The French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT) considers that the report ‘goes in the right direction’, but has reservations about the new proposed indicator of ‘adjusted net savings’. This indicator would aim to give a value to social and ecological capital in order to add them to economic capital. However, rather than wanting to create a single indicator ‘with the same risks that GDP has today’, CFDT refers to the opinion of the Economic, Social and Environmental Council (Conseil économique, social et environnemental, CESE) on indicators of sustainable development (in French, 970Kb PDF), which was presented in June 2009 by Philippe Le Clézio, a member of the CFDT group. Mr Le Clézio recommended in particular developing a roadmap composed of about 15 economic, social and environmental indicators.

Views of employers

The employers’ reaction to the CESE report may be extended to that of the Stiglitz commission, on which they have not directly commented. The main concern expressed by employers is that sustainable development indicators must not impose standards on companies that are too ‘restrictive’, as they would run the risk of ‘reducing their competitiveness’.

Michel Husson, Institute for Economic and Social Research (IRES)

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