What is Progress? and How Do We Measure It?

Imagine 2012 continued

Ron Colemen, the Director and Founder of the Nova Scotia based GPI Atlantic (a non-profit research institute measuring wellness and developer of the Genuine Progress Index) spoke on the nature of progress and how the means of measurement work against a sustainable ecosystem. The following are my notes from his talk and the following commentary. However, first let me add a few comments. This conference didn’t just bring together economists such as Coleman and the cooperative world, it also presented a challenge to the existing cooperative paradigm. We need to do more that play by the rules that are made for us. We need to change the rules. As Coleman points out, the way that we count creates the the ability to hide the environmental costs of our actions. No accounting firm would ever allow a cab company to ignore depreciation of its vehicles and the surplus or profit shown would be expected to help replace those assets. So why don’t we have the same concept with natural assets (trees, water, breathable air, etc)?

Likewise, the small federal credit unions of Brooklyn have resisted the urge to get big. Not surprisingly, they maintain a humanity about them that has only become a marketing ploy of some giant credit unions. It isn’t enough to call a business a coop or credit union. It needs to be making a real difference in the world.

 Ron Coleman on the New Economic Paradigm

The window for change is shrinking rapidly. Within a short period time, the earth will be locked into the a period of climate change.

Coops are planting the seeds of the new economy. If change doesn’t happen within this movement, then where will we find it?  Yet every coop uses the same accounting system that has gotten the world into trouble in the first place. To make a change, we need an accurate accounting system that includes the human, social and ecological costs. If co-ops can structure their annual reports to include the real cost, it can affect price signals and make a change in the way that we do business.

Let’s begin with diagnosis and then change the way we measure progress.

Our current GDP based accounting system that only measures market flows in monetary value of what is produced. It ignores a wide range of social, human and ecological costs which send inaccurate signals to the public and the policy makers. Accounts assess values and we can change how that works. The current account mechanisms do not account for natural wealth, beauty and ecological services, voluntary work, family/leisure time and more.

Robert F. Kennedy on the GDP: “It accounts everything except that which makes life worthwhile.”

If you hire a housekeeper, the GDP goes up. If you marry your housekeeper the GDP goes down. If you hire a stranger to care for your child, GDP goes up, if you care for your child, it has no economic value.

The quicker we cut down trees, deplete our fisheries and use up our fossil fuels, the faster the economy will grow.

What we count reflects what we value. it determines what makes in ont the policy agenda and influences behaviour. Is this system appropriate for cooperatives and credit unions? We do our own members a disservice by using an accounting system that is fundamentally flawed and anti-cooperative.

Accounts Are Powerful.

If we understand that, then the alternative is very straightforward. We need to expand our accounting. We need to include social capital in our accounts. Natural resources should be subject to depreciation and requiring re-investment. Voluntary work, safe communities enhance social capital.

General Progress Index Accounts

Crime, sickness, disasters and pollution clean up are counted as costs rather that contributions to well being. 1/4 of the world’s prison population is in the United States and the Prison industrial complex grows the economy.

The GPI Nova Scotia has over 100 detailed reports. Natural Capital Account, Human Impact on the Environment, Living Standards, Social and Human Capital.

Price signals are very powerful. Nothing removed SUVs from the road more effectively than a massive increase in fuel.

This is the 20th anniversary of the Canadian moratorium on Cod fishing–the GDP sent no signals since the only thing that counted were the fish that were caught. There was no accounting method for fish stocks and when they collapsed, 40,000 jobs collapsed with them. This proves that environmental costs lead to dramatic economic losses.

Using a net process, we can see that the costs to farming are increasing as a percentage of Income.

Full Cost Accounting:

  • Internalize “externalities”
  • Recognize economic value of non-market assets (voluntary sector, natural capital)
  • Fixed–>variable costs (e.g. car registration, insurance)–give credit to workers to carpool or use public transit.
  • $ Values–strategic only= inadequacy of $ as valuation instrument. “Value” = larger.

Dutch experiment with part time work at good pay and benefits. People work better in shorter hours. .

The political will is not present (even with the New Democratic Party). What will bring the political will to happen? Bhutan is the first sovereign nation will be using this new accounting system and present the rudiments of the paradigm presented to the United Nations in 2013.

However, Cooperatives can start doing this today. They can be a powerful force in the development of a new economic paradigm.

Commentary on New Economic Paradigm from Joy Cousminer

Commented on how large credit unions call it the credit union industry instead of the credit union movement and that is antithetical to what credit unions are.

“BetheX credit union was formed to serve poor and working poor in New York City. Most early members were women on welfare  (Aid To Families with Dependent Children). the Board is a volunteer group. Members benefited by having a safe place to save compared to a sugar jar. Women made small loans and could avoid the loan shark and the pawn shop.

Our growth is horizontal–we seek out poor people and do not recruit from the middle class, but they find us on their own. We visit homeless and domestic abuse shelters to find new members.

We specialize in start-ups and run credit reports to please the bank examiner but ignore them. We make loans to seniors even those over 70. Employees come from the community and hire relatives (considered a “no no”) and all start as tellers and work their way up. The Credit union pays all health care and dental and a clothing allowance for the workers. We encourage staff to improve their education. As we do better financially, we reduce fees and interest.

Created a group called “We care for Credit Unions” to assist small credit unions.

By making money easily available, we are reducing stress, and helping families. Poor people do not dream of living in mansions, they dream commensurate with their station in life. They want a nice dress for their daughter and a car that won’t break down on the way to the family picnic.”


About John McNamara

John spent 26 years with Union Cab of Madison Cooperative and currently helps develop co-ops in the Pacific Northwest. He holds a Ph.D. in Business Administration and Masters in Management: Co-operatives and Credit Unions from Saint Mary's University.
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