February 16, 2012, 9:31 pm
Filed under: brave new world, the sweet life | Tags: , , , , ,

Math time.  Equations are given so no need to memorize them.

The first equation – from Umair Haque’s article on measuring the economy from the Atlantic, which I have excerpted below – is the standard measure of economic strength used universally by economists today.  It describes an idea of economic health using a fairly simple mix of some basic concepts:  consumption, government, investment and trade.

We live in a market age and we are all more or less conversant with these terms.  We’ve seen the idea represented by this very base equation come to occupy a central place in how we organize our society.  These are the terms of our market society lingua franca.

Eudaimonia is Aristotle’s concept of highest human good or flourishing, and Haque’s second equation is an attempt to define it.  Eudaimonia or well being includes many of the same elements of the good economy described in the first market society equation – capital and organization and smarts etc.  But Aristotle’s creed demands the inclusion of other – are they esoteric? – criteria like social and emotional capital and out of this richer vision comes the promise of lush life.

That’s really the point of this math exercise, that the ‘market’ formula we live by is reductive and base, and has crass and maybe even cruel outcomes, and that Aristotle’s ‘well being’ formula could lead to a general flourishing.

Look at how Haque describes Aristotle’s inclusion of social and emotional capital: they are scarcer and stickier but also enduring and productive.  Nothing worth having comes without some kind of fight, in this case a sticky one.  But look again at what you get:  abundant life.

From the quote from Haque’s article:

Here’s a tale of two equations that represent human exchange. The first is the standard macroeconomist’s recipe for an economy:

Y = C+G+I+NX

It says: output equals consumption, plus government expenditure, plus investment, plus net exports. Now here’s a crude approximation of what eudaimonia might look like:

W = N+F+I+H+S+E+O

It says: real human welfare equals natural capital, plus financial capital, plus intellectual capital, plus human capital, plus social, emotional, and organizational capital. Not all these kinds of wealth are created equal; I’d suggest that higher-order wealth, to the right, is scarcer, stickier, more enduring, and more productive.

GDP Needs Help: Let’s Build a Second Measure of Economic Strength, Umair Haque, The Atlantic

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