JOIN USThe measure of progress
The human quest for knowledge has been sustained by an unspoken assumption: that the answers to life’s questions can be found if we try hard enough. And when we do, we will be able to reorganise society in rational ways, free from superstition, dogma, and oppression. Yet, the ideas that liberate one generation become the shackles of the next. It is the relentless march of ideas that add to the beauty, poignancy and the idiosyncrasies of life.
One such simple, but transformational idea was the Human Development Index (HDI) as a measure of progress. This December, we commemorate the 30th anniversary of the HDI. First introduced in the UN Human Development Report in 1990, the HDI was a step-change in Development Economics. It measures human development along three dimensions: a long and healthy life, acquisition of knowledge, and a decent standard of living. Pakistani economist Mahbub-ul-Haq, the originator of the HDI, recognised the importance -- despite considerable scepticism from many -- of one simple number that could capture the complex reality of human development and deprivation. He insisted stubbornly that “We need a measure of the same level of vulgarity as GNP -- just one number -- but a measure that is not as blind to social aspects of human lives as GNP is.” The rest is history.
Haq was born in Gurdaspur, Punjab, in undivided India, and studied alongside Amartya Sen at King’s College, Cambridge. He was a heretic among economists, but went on to transform our understanding of the development process and had a profound impact on the global approach to human development. He emerged as the most compelling voice for the Global South, and was deeply concerned with the poor countries and what they could do to become less poor.
In its explicit purpose, “to shift the focus of development economics from national income accounting to people-centred policies,” the HDI has been eminently successful; and the rationale for a humane, alternative approach is presented in Haq’s book Reflections on Human Development. “We are rediscovering the obvious,” he wrote, “that people are both the means and the end of development.” The success of the HDI lies in its ability to bridge the gap between research and policy, and Haq’s pre-eminence, his ability to build this bridge. He was convinced that a simple composite measure of human development was needed to persuade governments, academics, and politicians alike, that they can and should evaluate development not merely by economic growth but by improvements in human well-being.
Development praxis owes much to Haq and the simple yet profound idea of the HDI. The UN SDG Agenda 2030, in substantial measure, rests on the conceptual framework of the HDI. To understand why this is so, we must make a brief detour to consider the Gross Domestic Product (GDP), the other measure of progress that governments continue to rely on; and which, in the public mind space, conjures up a powerful statistical indicator of national development, no matter how far removed it might be from the freedom of choice to be or to do.
The modern concept of the GDP as an empirical measure of economic growth, and hence of national development, was proposed by Simon Kuznets in 1934. But it was not until the Bretton Woods conference in 1944 that GDP became the main tool for measuring a country’s economic progress. Kuznets went on to win the Nobel Prize for Economics in 1971, while Haq remains much less celebrated than he ought to be for the profundity of his contribution -- new empirical avenues to measure human progress.
Ironically, besides the dodgy data that goes into generating the GDP number, it is the method of calculation that makes it the handmaiden of political expediency: GDP = (C + I + G +[X – M] or consumption plus investment plus government spending plus net exports), gives governments of the day an incentive to spend more money, because greater government spending tautologically increases that sum. Bear in mind that the value of government spending includes the salaries of government employees, not the value of their output. It is not surprising then that the GDP as a measure is often described as “the price of everything and the value of nothing.”
The HDI compels us to ask what matters more, the quantitative expansion of an economy, or the qualitative improvement in the capabilities of society. Haq’s true contribution was to infuse an ethical dimension to the development discourse. “There is a missing moral core in our technological advance. In rich nations and poor, the moral foundations of economic growth are often lacking. And we are too embarrassed even to mention morality anymore,” he lamented.
Three decades later, this has greater resonance than it ever did.