Historically, when observers to the Bretton Woods institutions would raise issues of macrocritical value distortion, they were generally told “That’s not our business.” The common practice was to treat environmental damage, the degradation of basic rights, limited access to education, as “unquantifiables” or as “social issues”. IMF leadership would refer to the founding mission as dealing exclusively with the health or unhealth of fiscal math in a given country—its budgetary solvency. At the World Bank, the mission of ending poverty was not seen as directly linked to the building of basic civic and economic infrastructure required for sustained human development.
So, for a long time, macrocritical considerations would make their way into analysis and reports, but global economic leaders went on about their business without worrying too much about environmental impacts, gender inequality, or systemic multi-directional feedback loops like the climate system.
In the last couple of decades, the World Bank has made serious efforts to put in place safeguard mechanisms that would prevent development assistance from generating perverse outcomes. This is an implicit recognition of the problem of macrocritical value distortion: corruption makes good outcomes less achievable and less “sticky”; misuse of funds can directly finance bad outcomes.
On Christmas Eve 2013, the small island nation of St. Vincent and the Grenadines experienced more rainfall in 3 hours than any other place in recorded history; the result was a loss of 15% of GDP. In the words of one IMF Executive Director, when you lose 15% of your entire economic output in just 3 hours, you no longer know how to value money. The fiscal math is now hopelessly distorted. The unprecedented extreme weather caused by climate change is a macrocritical impact that cannot be ignored when one is doing fiscal math.
In Lima, in October 2015, the IMF Managing Director announced that “anything that is macrocritical is the IMF’s business,” going on to cite climate change, education, gender equality, and reducing income inequality as four of the macrocritical areas the IMF would now see as mission critical when assessing the fiscal health of a given country.
One of the single most powerful indicators for whether a nation is likely to descend into sectarian violence is the routine under-education and mistreatment of girls. Access to education and gender equality are macrocritical drivers that help to determine the resilience of nation states. We are entering a new phase in history where macrocritical value generation is central to understanding and managing the politics of global peace and security. We cannot say we are secure if we are eroding the foundations of value on which human civilization is built. We cannot say we are achieving prosperity if we are building societies in which human beings are not allowed to flourish openly as individuals and as citizens, or to be rewarded for the development and contribution of their talents.
Honest fiscal math must consider how human-ecosystem relationships affect the availability of green fields, clean air, reliable rainfall, background biodiversity, and a robust and diverse food supply. Public policy that adds 20% to the future risk of extreme events can drive the true cost of maintaining a stable society to 200% of baseline projections. The same is true for macroeconomic distortions related to the funding of corrupt entities or the underfunding of basic infrastructure, open innovation or transparent elections.
What we forget to value in one place can degrade value everywhere else. In other words, it is time to align all policy with the health and wellbeing of people and planet. If we do not, we will find everything a lot harder to do going forward. Learning how to talk about macrocritical value generation is learning how to talk about the design of a livable future. The mission of our moment must be to design, build, and sustain a future where that kind of value added is integral to how we live.
[ The Note for June 2016 ]