A Capital-Based Approach

Converting social goals to capital (also assets) puts EvoLand on a better footing that has a large and growing literature. Ecologists discuss natural capital (Costanza and Daly 1992; Folk et al. 1994). Social scientists talk about social capital, and capital is central to the thinking of economists. A capital-based approach is even used child-rearing literature, particularly work by the Search Institute (2000; Benson et al. 1998). The Search Institute identifies eight asset categories, which contain four to six assets each (Roehlkepartain and Leffert 2000).

Robert Solow (1992:6) says, "When it comes to measuring the economy's contribution to the well-being of the country's inhabitants, however, the conventional measures are incomplete. The most obvious omission is the depreciation of fixed capital assets." If one economy generates income by depleting its resources and another produces the same income while maintaining its capital stock, which is more sustainable?

Following Solow, we could measure change in societal well-being, by giving consideration to change in the amount of capital. Some ecological and neo-classical economists define sustainability in terms of capital (Solow 1991, 1992; Costanza and Daly 1992; Ervin and Berrens 1993; Pearce 1993). Sustainability requires that capital be maintained. Where capital is depleted, the situation is not sustainable.

A broad definition of total capital (Ervin and Berrens 1993) is the sum of

To this could be added:

A broad definition of total capital is the sum of all these elements, but this definition has two implications. First, substitutions between various forms of capital are possible to maintain a total capital stock equal or greater in future generations. Human-made capital may be substituted for renewable resource capital.

The second implication is how do we add up natural, nonrenewable, human-made, intellectual, social, and cultural capital to get total capital? One approach has been to modify the calculation of gross domestic product (GDP) and develop other measures of human well-being like the Index of Sustainable Economic Welfare (Daly and Cobb 1989), the Human Development Index (UNDP 1999), and the Fordham Index (Miringoff and Miringoff 1999). Another is to sum the value of ecosystem services (Costanza et al. 1997). These are more akin to income than capital measures. We are developing a third with our metrics.

Thus, sustainability between time steps is defined as

K(t+1) > K(t)

Where K = NRK + RNK

or

Where K = NRK + RNK + HMK + IK + SK + CK


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Updated:Sunday, 24-Dec-2006 17:03:35 PST
URL is http://oregonstate.edu/instruction/anth484/capital.html