Sunday Review: The economics of enough: How to run the economy as if the future mattered by Diane Coyle

by Anthony Painter

The Israeli management guru, Eli Goldratt, once asserted: “Tell me how you will measure me and I will tell you how I will behave.” What we measure defines what we value. As a society we measure many of the wrong things so we value the wrong things.

As Diane Coyle argues in The Economics of Enough:

“Profit-oriented capitalism has always drawn on support from other institutional values. The policies of the past thirty years have lost their anchor in values outside the market.”

It should be stated out the outset that this is not a book that is solely about measurement. Its scope is staggeringly broad. It is iconoclastic, counter-faddist, intricate, readable yet grounded. That is some achievement given the book’s ambition: to redefine how we look at our economic institutions in the light of how they contribute to shared social values.

The easy thing to do when writing a book like this is to shoot off into the distance and say what we value is valueless; instead of material things, we should value happiness, the environment, each other and so on. Instead, Coyle articulates a pluralism of values and given that then argues for a balanced economy that allows us to achieve a mixture of fairness, efficiency and freedom while being honest about the contradictions between them. The easiest trick to pull is to say that fairness equals efficiency equals freedom and that’s the trilemma resolved. Generally when things are too good to be true they are and there are choices to be made. Coyle is brutally honest about that.

Of all the conversations that are intelligently engaged with in The economics of enough it is the one about measurement that has the potential to be the most radical. It is worth dwelling on the context in which this book has been written for a few moments. We no longer have an industrial economy. Yet we still operate as if we did. Agrarian economies distribute scarce resources via subsistence. Industrial economies distribute on the basis of productivity and a bargain between labour and owners. A service-based economy, however, has intense difficulties measuring productivity so how can we measure real value?

It has become clear that because we measure service providers as if they were production workers we are systematically underpaying many of them and fail to value and reward the right skills. This is one of the root causes of the so-called squeezed middle  (others being technological shifts and the globalisation of supply chains.) Let me illustrate. You have two baristas serving in a coffee shop. One is pretty miserable and inattentive. She serves a hundred coffees per hour. Her colleague is brilliant with people and customers love her. And yet, she too serves a hundred coffees per hour. Who is the more productive barista?

The answer, of course, is that they are equally productive. As a result they both receive the same wage of £7.50 per hour. And yet, one of the baristas is adding value to your business and the other is not, and may even be subtracting value. But in this scenario they are equally productive and have the same incentive- their wage- to perform to this standard. The reality of course is that the friendly barista’s additional value is extracted by the brand and is paid to senior managers and investors. This same process happens across much of the service economy- both public and private.

In the industrial economy productivity could be clearly measured and a power struggle between trade unions and owners would take place as to how that was distributed. In the service economy, real productivity is generally miscalculated and there is no real power struggle to make it any other way.

Government imposed minimum wages and living wages address some of this at the low wage end but the fundamental issue for the ‘squeezed middle’ remains- highly ‘productive’ workers are systematically underpaid and it’s comes down to how we measure value in a service economy. The end of this story is that because so many are systematically underpaid there is an insufficiency of demand which means that the coffee shop doesn’t have enough customers. Even Henry Ford understood the circularity of a successful economy.

Coyle advocates a ‘dashboard’ approach whereby we assess more than simply growth. Growth matters not least because unemployment makes us miserable. She basically does a demolition job on the neo-utilitarian ‘happiness’ movement:

“Growth alone is not enough for a good society- but neither is happiness alone.”

Instead she calls for a mixture of: the right measurements that take account of more than material wealth but don’t ignore it; the right mix of values arrived at through open discourse and dialogue; and the right institutions that prioritise the long over the short term without sacrificing too much of the latter for the former.

It turns out that what makes us ‘happy’ is: having a job, being married, holding religious beliefs, being in good health, and enjoying political liberties (control, empowerment are goods in making us ‘happy.’) There is only so much that Governments can do to achieve these things: it can pursue the right economic policies and create the right institutions; it can provide good quality healthcare; and it can ensure we are politically free. These are the things it should focus on instead of trying to make us ‘happy.’

The economics of enough sits alongside a number of recent works challenging the fundamental way in which we view the economy. Like economic thinkers such as Umair Haque, Dominic Barton, Gary Hamel, Michael Porter, Diane Coyle is insisting that we build a set of economic institutions and behave in a way that is consistent with our wider social values. She doesn’t fall into the trap that some have fallen into in defining those values or ‘virtues’ for us. That’s for us to decide but once we have let’s get about protecting those values, measuring the right things, and building the right institutions to sustain them.

A mostly service-based economy in the midst of a technological revolution in the context of intense global competition, austerity, social anxiety and ecological threat creates a very different set of challenges to the old industrial economy. If the nice barista is to get her just reward, if the squeezed middle are to get theirs, we need a smart economy of enough. How we are measured determines how we behave. We are not measuring the right things. As a consequence, we are in an economy of both too much and not enough.

Anthony Painter is an author and critic.

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2 Responses to “Sunday Review: The economics of enough: How to run the economy as if the future mattered by Diane Coyle”

  1. Perhaps a useful and complementary book to Diane Coyle’s is Michael Perelman’s (2011) “The Invisible Handcuffs of Capitalism: How Market Tyranny Stifles the Economy by Stunting Workers” which highlights how mainstream economics has purposely neglected, ignored or denigrated three subjects necessary to understand how the economy functions: work, workers and working conditions. This process began with Adam Smith, though he was by no means the worst one in this regard, and mainstream economists prefer focusing upon exchange or transactions between individuals (producer and consumer). Perelman’s book helps to explain the devaluation of work and workers at present – such as the attack on public sector workers and their pensions, despite the responsibility of large corporations and finance professionals.

  2. Paul Allin says:

    As director of the measuring national well-being programme in the Office for National Statistics, I am very interested in taking forward the dialogue on ‘GDP and beyond’ in ways that recognise that happiness is one aspect of well-being, but that other, more objective measures may also be needed. Diane Coyle’s comments on measurement are timely. We actually have a number of measures that Diane Coyle includes in proposing a Comprehensive Wealth measure – a household wealth and assets survey, and estimates of human capital, for example – so is the issue more about how to use new measures, in policy formulation, business decision-making and public debate, including on values?

    We asked the public and organisations ‘what matters to you?’ in our national debate on measuring national well-being, earlier in 2011. Our findings and our forward work programme are summarised in the National Statistician’s report at

    We would welcome further feedback, including on the initial set of national well-being indicators that we plan to published in the Autumn of 2011.

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