FOREWORD
I hold a firm belief: We will not change our behavior unless we change the ways we measure our economic performance.
If we do not want our future and the future of our children and grandchildren to be riddled with financial, economic, social, and environmental disasters, which are ultimately human disasters, we must change the way we live, consume, and produce. We must change the criteria governing our social organizations and our public policies.
A tremendous revolution awaits us—we can all feel it.
This revolution will only be fully completed if it is first of all a revolution in our minds, in the way we think, in our mind-sets and values.
Such a revolution is inconceivable without deeply challenging the way we represent the consequences of what we undertake, the results of what we do.
If we apply the critical approach proposed by the commission headed by Joseph Stiglitz to the past two or three decades, and this leads us to revise our judgment regarding the consequences of our choices; if our models ultimately prove to have been counter-models; if our performance ultimately proves to have been poor—then the need for change becomes compellingly obvious.
But if we remain convinced that we have made genuine, sustainable progress during these years, why change?
Our statistics and accounts reflect our aspirations, the values that we assign things. They are inseparable from our vision of the world and the economy, of society, and our conception of human beings and our interrelations. Treating these as objective data, as if they are external to us, beyond question or dispute, is undoubtedly reassuring and comfortable, but it’s dangerous. It is dangerous because we get to the point where we stop asking ourselves about the purpose of what we are doing, what we are actually measuring, and what lessons we need to draw.
That is how the mind begins to close, leaving a doctrinaire approach with no room for doubt.
That is how we begin to march ahead blindly while convinced that we know where we’re going.
That is how we begin to create a gulf of incomprehension between the expert certain in his knowledge and the citizen whose experience of life is completely out of synch with the story told by the data. This gulf is dangerous because the citizens end up believing that they are being deceived. Nothing is more destructive of democracy.
All over the world, people believe that they are being lied to, that the figures are false, that they are being manipulated.... And there are good reasons for their feeling this way. For years, people whose lives were becoming more and more difficult were told that their living standards were rising. How could they not feel deceived?
For years, people were told that finance is a powerful engine of growth, only to discover one day that the risk it had accumulated was so great that it had plunged the world into chaos. Who could fail to understand why those who had lost their home, their job, their pension, would feel deceived?
For years the statistics portrayed increasingly strong economic growth as a victory over scarcity, until it came to light that this growth was endangering the future of the planet and was destroying more than it was creating. Is it any wonder that those whom we are now asking to make efforts and sacrifices and change their way of life before it is too late feel deceived?
The point is not that anyone wished to deceive people deliberately, for neither the statisticians defending the relevance of their GDP or price index nor the accountants convinced that their “fair value” is the best possible measure of an asset’s worth are liars.
The problem stems from the fact that our world, our society, and our economy have changed, and the measures have not kept pace. The problem stems from the fact that ultimately, without even realizing it, the statistics and the accounts were made to say things that they weren’t saying and that they couldn’t say. We have wound up mistaking our representations of wealth for the wealth itself, and our representations of reality for the reality itself. But reality always ends up having the last word.
It is possible to go for a long time without paying the true price of scarcity and risk while being convinced of the contrary, but sooner or later the true price has to be paid. The bill is then much heavier, as behaviors based on these erroneous economic calculations have heightened the scarcity and the risk.
This is the situation in which we find ourselves today.
We have built a cult of the data, and we are now enclosed within. The enormous consequences of what we have done are beginning to dawn on us.
With all this in mind, in February 2008 I asked Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi to set up a commission composed of the world’s leading experts. To remedy the situation we face, we had to break with the old ways of thinking. A debate had to be launched at last. It had to be carried on at the highest levels of expertise. And it had to be global.
This was the spirit in which the members of the commission were selected and carried out their work. They devoted their time, their intelligence, and their knowledge to this mission. What they accomplished in eighteen months is remarkable. A collective discussion has now been launched at the international level. And it will go on and on.
I would like to pay special tribute to Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi. Without them, nothing would have been possible. It is thanks to their prestige, their authority, and their energy that so much expertise could be brought together.
There will be a “before” this commission, and an “after.”
There will be a “before” this report, and an “after.”
Events have ensured that this report is arriving at a decisive moment. The crisis is not only giving us the freedom to imagine other models, another future, and another world—it compels us to do so.
It would have been impossible to launch this debate in a world of certainties, convinced that it was heading in the right direction. At best the report would have been confined to academia. The experts would have discussed it. There would have been a decision to change a few indices. Perhaps there would have been progress on a few specifics. But there would have been no change in the way things were measured and the data were viewed. We could not have compelled a debate about our collective representations and about the purposes of what we are doing.
This shows that, in today’s circumstances, this report is important not just technically. It is also important politically. It deals with questions that concern not only economists, statisticians, and accountants, but also politics.
France will put debate on this report’s conclusions on the agenda of every international gathering and of every meeting and discussion concerned with the construction of a new global economic, social, and environmental order. France will strive to get all the international organizations to modify their statistical systems in accordance with the commission’s recommendations. It will propose to its European partners that Europe set an example by implementing the recommendations. France will adapt its own statistical system accordingly, and it will put the study of this report on the curriculum of all the country’s civil service training institutions.
If, at some point or other during their training, everyone in the world in a position of responsibility were to study this report’s contents and establish a minimum critical distance from the dominant statistical and accounting model, decisions would no longer be taken as they are today, and the world would find itself radically changed.
We do not have the time to wait for the slow shifting of mind-sets and the gradual awakening of a growing number of leaders, scientists, and experts to one day produce results.
In February 2008, I felt the urgent need to do away with the set ideas and dogmas that had locked in all our thinking and action, and that were making us lie to ourselves. I felt the urgent need to stop giving the response to all those voicing their troubles, difficulties, suffering, doubts, and anxieties: “You are wrong: our statistics prove the contrary.” I felt the urgent need to eliminate this dialogue of the deaf that was undermining democracy.
In the comments on the commission’s work that Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi sent me, I noted this sentence: “One of the reasons that most people may perceive themselves as being worse off even though average GDP is increasing is because they are indeed worse off.” The fact that some of our most prestigious economists are saying this so frankly was absolutely indispensable in order for us to get things clear in our own minds, to put the public debate back on a foundation of truth, and to change our relationship with the truth. There has indeed been a long-standing problem with what we calculate and the way we use what we find. The experts have been aware of this for a long time, and they’ve been discussing it for a long time. But this discussion didn’t change anything. It made no impact. We knew that our indicators had limitations, but we went on using them as if they didn’t. They made communications easier. Above all, these indicators were a key component of our vision of the economy and society and of an ideology that had spread all over the world; calling them into question seemed so outrageous that no one would even seriously consider it. We preferred to wait for the contradictions and blind alleys to emerge on their own. That day has come. But, as we all know, victory is far from a foregone conclusion.
The intellectual, moral, and political battle has begun between those who want everything to go back to the way things were before, because they are unable to change the way they think or out of self-interest, and those who are convinced that nothing can stay the same as before and that change must be made as quickly as possible.
France has chosen its camp. It will be a force for proposals and change. All those who play a role in the conduct of world affairs have a historic responsibility.
The world tomorrow will no longer be the same as before the crisis, as breaches have been made in fixed mind-sets and can no longer be closed.
The world tomorrow will no longer be the same because everywhere mentalities are changing and will continue to do so.
There are injustices, improprieties, acts of folly that in future will no longer be tolerable and will not be tolerated.
It remains to be seen whether we will be capable of making this change in a relatively quick and cooperative way, guided by common sense, or whether we will await new disasters to impose change on us that we are incapable of deciding upon ourselves.
We are in a period of history when politicians cannot content themselves with being managers, with simply sorting out the present economic situation and assisting with change.
They must instigate the change, accelerate it, and determine its objectives. Politics is the collective project, the human will pitted against all types of determinism and fatalism. It is the freedom that we all have to choose our destiny together.
The situation is urgent.
We are in one of those eras when, with our certainties shattered and our traditional ways of thinking shown to be impotent, everything has to be rebuilt and reinvented. We are in an era when the central question for politics is what model of development, what model of society and civilization, we aspire to live under and bequeath to our children.
After so many excesses and so many mistakes, and facing such a serious ongoing crisis, when the world has come so close to the abyss, the question of devising a “politics of civilization” is not detached from reality, a matter for consideration in some distant future that is irrelevant to the difficulties of the present. It is a question for today that calls for an immediate answer because the time to change our trajectory is now. Amidst all these difficulties we cannot rest content with reacting on a day-to-day basis; we will not recover from the crisis with just ad hoc solutions.
We have to know where we want to go and what goals we are pursuing.
When the commission ponders the relationship between quantity and quality, between the objective and the subjective, and between the market and the nonmarket sectors, it is clearly reflecting on the conception we have of what we call civilization, the basis on which we are going to judge what we accomplish.
If we refer to a representation of the world in which the services people render within a family have no value compared with those we can obtain on the market, we are expressing an idea of civilization in which the family no longer counts for much. Who could imagine that this won’t have consequences?
If leisure has no accounting value because it is essentially filled with nonmarket activities such as sports and culture, this means that we are putting the criterion of high productivity above that of the realization of human potential, contrary to the humanist values that we proclaim. Who could imagine that this won’t have consequences?
If the poor maintenance of transport infrastructures causes more accidents and higher repair costs, and even higher medical costs, which increase output; if we count activities that lengthen the distance between home and work and increase insecurity and exclusion as positive contributions to progress; if ever-growing nervous tension, stress, and anxiety undermine society, and the ever-greater resources devoted to fighting their effects are included in economic growth—if we do all this, then what, concretely, is left of our notion of progress?
If we give no value in our accounts to the quality of public service; if we remain locked into an index of economic progress that includes only what is created and not what is destroyed; if we look only at gross domestic production, which rises when there has been an earthquake, a fire, or an environmental disaster; if we don’t deduct from what we produce what we consume in the course of production; if we don’t include the drafts that we are drawing on the future; if we don’t take account of how innovation is accelerating capital depreciation—how can we expect to realize what we are really doing and face up to our responsibilities?
The kind of civilization we build depends on the way we do our accounts quite simply because it changes the value we put on things. And I’m not speaking just about market value.
Our measuring systems make financial trading a high added-value activity. But it is set up only to manage a risk that has been deliberately created and that it is contributing to increasing. If financial trading creates the volatility it claims to protect against, where is the value to society of the service rendered?
If our measuring systems overvalue the usefulness to society of speculation compared with work, entrepreneurship, and creative intelligence, then this dangerously reverses the value system underpinning our vision of progress and introduces into the heart of capitalism a contradiction that can only end up ruining it.
Our measuring systems make us reason on the basis of averages. But if we go on reasoning in averages, we will forge our beliefs and build our decisions on data that are increasingly divorced from real life. The average individual doesn’t exist, and heightening inequality is detaching this average even more from the real experience of life, for talking about the average is a way to avoid talking about inequality.
Behind the cult of the data, behind all our statistical and accounting representations, there lies the cult of the market, which is always right. There is this idea that the market can resolve all problems and assign everything a true price.
If the market had the answer to everything, we’d know, and if it were never wrong, it would be obvious.
There are incomplete markets, and there are imperfect markets.
The market does not give us a sense of meaning, or responsibilities, or projects, or vision—and the financial markets even less so.
We don’t know the value of an asset because the market prices it every second. The truth is quite the opposite.
The law of supply and demand has to be able to find expression.
The market gives us valuable information. But a project for society or for civilization cannot be built based solely on the market. A project for civilization is born out of a collective will, a collective effort over the long term. It is not the fruit of the instantaneous confrontation of supply and demand.
We will not resolve the problem of global warming simply by allowing a supply–demand balance to be established on the carbon market, any more than we have managed to control economic and financial risks by allowing a balance to be established on the venture markets.
We cannot focus solely on the data the market supplies us. By acting as though the market were the source of all truth, you wind up believing it. But if that belief were true, we wouldn’t be where we are. Markets and statistics are being made to say things that they are incapable of saying.
I firmly believe that from now on this will no longer be possible.
This report doesn’t tell us where the truth lies, but it does tell us how to look for it. It compels everyone to face up to their responsibilities, to reason differently, and to decide differently. This report does not replace one single statistical approach by another—and this is what makes it so rich and meaningful. It shatters the very idea of a doctrinaire approach. It releases us from this tragic belief we’ve been locked into whereby there’s nothing more to decide since there is only one way of seeing things.
This report frees our minds.
It’s now or never.
The only thing that will save us is unchaining our minds so as to gather the strength to make the necessary changes.
The only thing that will save us is unchaining our minds so as to free ourselves from conformism, conservatism, and short-sighted interests.
Let there be no doubt that this report contributes to that effort.
—Nicolas Sarkozy