Measuring Social Progress in the Knowledge Age

Measuring social progress in its own right is critical. Improvements in economic welfare capture many aspects of what makes life more fulfilling and less perilous for people. Yet higher material living standards need not guarantee an improved quality of life overall. And in the so-called Knowledge Age, social progress may instead be essential for our economic welfare. Here’s why:

Communities matter. Indeed, they have always done so since we are social beings. But in the Knowledge Age, our ability to include people and to create living and working environments that are conducive to collaboration is more important than ever before.

In the Industrial Age, local and environmental amenity were nice to have - if you could afford them - but inessential to the productivity of an industrial economy. Eventually, advanced industrial economies began to deliver improved environmental and social amenity because these are desirable in themselves, and people demanded them as their incomes grew.

In knowledge economies, the quality of our lives in community, including the physical amenity of the environment in which we work and live; the harmony, diversity and vibrancy of the social settings we encounter; and our capacity to influence both of the above determine our willingness and ability to collaborate with others.

And this collaboration is critical in the Knowledge Age. It is the source of creativity and innovation. This in turn drives productivity and material living standards in knowledge economies.

Collaboration is fundamentally a social activity and people need to be free to collaborate as well as encouraged to do so. In the Knowledge Age our ability to break down barriers that exclude people from collaborating will determine the material as well as non-material quality of our lives. Whether those barriers be physical, social or environmental, if they impede collaboration, they impede productivity and ultimately our ability to improve the quality of people’s lives.

Measuring social progress matters because, increasingly, social progress is necessary for economic progress rather than the other way about.

Ian Harper is one of Australia’s best known economists. In May 2016 he was appointed to the Board of the Reserve Bank of Australia and recently chaired the Federal Government’s Competition Policy Review, a “root and branch” review of Australia’s competition policy, laws and regulators. Ian is often asked to comment on economic and financial issues in the media. He was a Partner of the firm from March 2011 until May 2016 and is now a Senior Advisor to Deloitte Access Economics Pty Ltd.

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