If people, instead of raw growth, were the focus of our economic thinking, then nonmarket activities would assume their proper value in our understanding of the economy. Over the last fifteen years, much research has been dedicated to raising our awareness of the economic value of nonmarket, unpaid work, which includes work done in the household, free services between friends and neighbors, and community-organized voluntary activity. These studies point to the importance of unpaid work in the overall sustenance of people’s livelihoods.
Preparation of food in the home, cleaning, ironing and mending clothing, health care, education and professional training are the main items of this voluntary work, which is by no means unproductive. In fact, these activities uphold the productivity of people and thus are vital for the market economy as well. “If voluntary services disappeared, either our standard of living and quality of life would decline dramatically, or the services would have to be replaced by pay,” says Ronald Colman, director of GPI Atlantic (1).
The 1995 UNDP Human Development Report estimates that “$16 trillion (or 70%) of the $23 trillion of global output is performed in the non-monetary sector.” And the Australian Bureau of Statistics estimates the value of unpaid work at around $250 billion a year, approximately half of GDP, as indicated in an August 2001 press release (2). The Japanese Department of National Accounts of the Economic Planning Agency assessed the value of unpaid work in 1996 in Japan at 76 to 116 trillion Yen, or 15 to 23 % of GDP (3). These reports make very visible an important but often ignored column of our national and global balance sheets. Given the immense value of nonpaid work, it is clear that we must continue to strive for its integration into the total picture of our economic thinking and planning.
In the US, the Committee on National Statistics is designing nonmarket accounts for the United States. Its Interim Report (2003) has this to say about indicators like GDP: “Since their first construction for the United States by Simon Kuznets in the 1930s, there have been concerns that the accounts are incomplete and misleading because they omit such nonmarket activity as unpaid work, volunteer activities, the value of leisure time, and most investment in human capital.” (4)
Developing vs. Developed economies
Developing countries are so called because their formal market economy is weak and underdeveloped. Attention of policymakers is largely focused on the parts of the economy that can be captured in the Systems of National Accounts (SNA), such as the GDP statistics. But in developing countries unpaid and voluntary work often constitutes a larger part of the economic lives of people than does their market participation. We must note, however, that much of this work is not voluntarily unpaid, as people often have little choice in conditions of extreme poverty. Still, the magnitude and all-pervasive presence of nonmarket economic activity indicates that it must get priority attention if we want to develop the economic lives of people. The same can be said about the informal sector—the labor is paid but not accounted for in SNA and therefore it is largely ignored by policy.
The global policies of the strongest economies ignore these realities of developing economies, and often put them under more pressure. For example, the International Monetary Fund’s Structural Adjustment Policies, with a fixation on finance only, impose strict budgetary constraints on developing-country governments. The result being a loss of jobs, free education, and free health care for millions of people. Unpaid work may certainly surge as a consequence, but not so much by free will as by pressure to stay alive.
Would it not be better policy to give budgetary support to voluntary work by mothers, fathers, children, elders and communities, building on their existing capacities and then growing further from there? Domestic economic policies may overlook the value of nonpaid work, but global policies are totally blind.
Even the most advanced economies are far from perfect. The current structures of highly developed economies come with not only wealth and money, but also costs and pain. Youth without decent work prospects, adults losing a sense of life’s purpose, and the elderly left by the wayside all drain a society’s productivity. In addition, we now know that degeneration of the natural environment is well under way. While we strive for so-called economic success, we end up endangering our very livelihoods. Researching the effects of social and environmental damage, and making the link with the value of voluntary work in the community—work that repairs and protects socioeconomic integrity—should convince us of the need for policy intervention right from the start, not just when carelessness has already solidified in statistics of crime and disease.
Interdependent Economy vs. the Growth Paradigm
People and societies, no matter how basic or primitive, are always economically active. They must always be fed, clothed, and housed at the very least. However, it is only at higher levels of societal complexity that we begin to ask ourselves about the best ways to fulfill our needs of livelihood. The discipline of economics was thus created to answer this fundamental question.
It seems that in the 21st century, when livelihoods are so globally connected, we must ask another question: How did we come to lose that initial and basic economic purpose? How come we now only ask ‘How can our economies grow?’ and stop at that? How come we now equate a healthy economy with constant growth, even when that leaves billions of people impoverished, jobless, and falling behind? GDP has become the ultimate economic indicator that leads our thinking, and it measures only growth. It does not inform us about the livelihoods of people, nor their empowerment to control their economic lives. In fact, these have become matters of second importance, or of no importance at all.
In the book Interdependent Economy, I describe an economic view that is inclusive. It includes all sectors of our economic lives: formal markets, informal markets, and nonmarket activity. It includes the economic lives of all 6.5 billion people of this planet and respects their different economic cultures. An economic culture primarily bent on growth is inherently exploitative and implies a struggle for markets and the survival of the fittest. When will we, this human race, decide to rise above the lifestyle of the jungle? When will we opt instead to foster livelihoods, and follow an economic policy that is perpetually wealth-creating for all?
My views of Interdependent Economy are embedded in a long personal path of Buddhist mind training and transformation. Such training results in the recognition of life and value in each and every individual. But as many individuals together we also exist interdependently. Therefore, when defining strategies and choosing methods to organize our societies, we must keep in mind the universal values that connect us all. ‘Do not harm’ is one Buddhist tenet that serves us all and can be universally applied. In economics this translates to ‘Do not harm the livelihoods of others’. In global economic relations this means ‘Do not harm the productive potential of other economies, however small and undeveloped’. And in international trade this amounts to ‘Do not take markets that others need for their bare survival’. But life is more than just to do no harm, and so says the Buddhist creed: ‘Do your utmost to serve others’. By expressing my views in Interdependent Economy, I have attempted to serve the world and inform the reader about important universal values of human livelihood.
Liem Giok In is author of the book Interdependent Economy: From Political Economy to Spiritual Economy.