On Saturday 5 November on the INSEAD campus in Paris, Jean-Paul Fitoussi of Sciences Po, Joseph Stiglitz of Columbia University and Amartya Sen of Harvard University were awarded a Progress Medal for their fundamental contribution to measuring societal well-being in ways that go beyond traditional measures such as an economy’s GDP.
In an interview for Sciences Po, Professor Fitoussi introduces the new metrics for measuring wellbeing and invites us to reflect on the role of business in society.
The Society for Progress recently awarded you a Progress Medal for the research you conducted jointly with Joseph Stiglitz and Amartya Sen. In your opinion, what makes this research particularly remarkable?
Remarkable, I don’t know, but important, certainly. We are trying to go beyond our present knowledge of the economy and society, with the aim of promoting social progress. For that purpose, we are proposing to build new metrics to measure wellbeing and some neglected phenomena–human capital, social capital and natural capital–and to understand the way they are affected by current policies. If a policy destroys human capital even if it delivers on the public debt front, it is a bad policy. Measuring wellbeing is complex but we discovered that it is not an impossible task. In a nutshell, we are looking at what is important for a society and what is the best way to report to it so as to be credible.
“If science must be a force for truth, business must be a force for good”. What do you think of this quote from INSEAD Dean Ilian Mihov?
It is an elegant quote. Science is looking for truth, knowing that truth is out of reach. Claude Levy Strauss said once, “the more science progresses the better it will understand why it can’t succeed”. The end of science is not at hand. For business it is another matter: firms are looking for profit, which is normal. They are not looking for good, nor for bad, but for profit. A firm constrained to trade-off profit for good, whatever that word means, may go out of business. And that will not necessarily serve the economy! Business is an instrument; it is not an end in itself. This means that a policy may be designed to make business aim more to do good, but it will not happen spontaneously. Think of the financial sector: without regulation, it will certainly not look spontaneously to do good.
If you were in politics, which strategy would you adopt to break away from the dogma of economic growth and move towards a more sustainable economic model?
We are not proposing to throw national accounting and GDP out the window. We are just stressing the fact that national accounting has many flaws and that GDP is not a measure of wellbeing but of market activity. Besides, the growth of GDP or of income is an average and in these times of growing inequality, nobody feels accurately reflected by an average. The relevant questions are: the growth of what and for whom? The answers are simple: the growth of wellbeing and for the great majority of the population. Achieving these aims is not as difficult as one might think. The first element of the strategy is to equip people with those characteristics which increase their freedom to choose the life they would like to live: health, education, a decent job, insurance against economic and physical insecurity, and a much greater reduction of both, etc. These factors directly affect people’s real lives; notice also that when they are provided collectively, they constitute powerful instruments for reducing inequalities. The strategy would lead to the sustainable growth of wellbeing if we were able to pass on to future generations a capital at least equal to the one we have enjoyed, i.e., if we invest.