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The Economy and Its Lost Essence

The Economy and Its Lost Essence

By Cristián Gutiérrez

In these times we are in the presence of the failure of the economy as a science that seeks the best allocation of resources to satisfy the needs of men. This set of ideas has built instruments that serve the economy to validate itself, but that contribute little or nothing to the goal of achieving the development and well-being of the population.

In these times we are in the presence of the failure of the economy as a science that seeks the best allocation of resources to satisfy the needs of men. The accelerated expansion of malaise over well-being, in all spheres of human life, has allowed economic proposals based on naive faith to fall into a pit, due to beliefs that economists themselves have been concerned with constructing throughout history. history, trying to put together a coherent and logical conceptual body. This set of ideas has built instruments that serve the economy to validate itself, but that contribute little or nothing to the desired goal of achieving the development and well-being of the population.


A clear example is that of the National Accounts, an instrument through which a nation records its main economic movements. The System of National Accounts (SNA) is an analytical and comprehensive model that provides a description of the economic process and the structure of the productive apparatus, as well as its changes over time. The periodic systematization of the National Accounts has made it possible for countries to know the behavior of their main economic results such as production, consumption, investment, as well as national income.

Regarding the ecological problem, the critics that question the SNA, not only place the accent on the internal limits of the system, in the sense that it would effectively reflect the well-being of a population, but also on its theoretical foundations, which show to economic and productive activity as a closed and self-sustaining system. For this reason, one of the most fundamental criticisms, from the perspective of environmental problems, and which is part of a widely extended consensus, is that the depletion of natural resources is not considered as depreciation, understood as consumption of natural capital.


In the SNA, the depletion of natural resources is accounted for in production. Therefore, the exploitation of natural resources and their depletion have the effect of increasing the growth indicator, the Gross Domestic Product (GDP) and hence, the more such resources are exploited and the higher their depletion rate, the higher will be economic success and well-being associated with growth indicators.

The hypothesis that natural resources are unlimited and perfectly substitutable, with which macroeconomic accounting systems and, in general, modern economic theory have worked until today, is being strongly questioned.

For example, a country that exploits its fishing resources in an irrational way will see its income increase, without making any correction for the depletion of its natural capital. At the same time, this country may authorize higher levels of consumption without them being able to be maintained once its natural resources are depleted, unless some other natural resource is found to exploit. In this context, the indicators provided by the SNA do not allow guiding true sustainable development.

If natural resources are treated as capital goods, that is, if we work with a broader concept of capital - which includes natural capital - and not only with physical capital built by man, it will be necessary to adjust the GDP indicator as natural resources are extracted. In the case of the fishing industry, if it is corrected in this way, an adjusted GDP or the “green GDP” of the fishing industry is obtained.

In an attempt to achieve progress in this matter, Oceana proceeded to count the use of fishery resources during the nineties, in order to adjust the Gross Domestic Product of Fisheries. According to our calculations, the largest capital loss, corresponding to the depreciation of fishing biomass, corresponds to the year 1996, which amounted to almost 67,000 million pesos. It is followed by the 1993 loss, which exceeded 63,000 million pesos.

Therefore, the “green GDP” of the Chilean fishing sector is the difference between the current GDP of the sector and the valuation of the depreciation of biomass. The main conclusion of the Oceana study is that the traditional GDP overestimates the GDP corrected for the depreciation of the marine natural capital for seven years out of the ten considered.

Although this result is robust, it only indicates a trend, since the adjustment carried out in any case is not enough to measure the real impacts of fishing activity on natural capital. To have a measure much closer to reality, it is necessary to have a much more sophisticated methodology that has not yet been theoretically developed, and to have more and better statistical information, especially in relation to the calculations of stocks of fishing biomass, which in Chile are quite significant. precarious. www.EcoPortal.net

* Cristián Gutiérrez
Economist
Oceana, Office for South America and Antarctica


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