3.1. The Environmental Challenge
 
 

The idea of sustainable development arose essentially from concerns relating to the overexploitation of natural and environmental resources. Early discussions stressed the limits to economic activity imposed by the physical environment, and concluded that species and ecosystems should be utilized in ways that allow them to go on renewing themselves indefinitely (IUCN 1980). The anxieties expressed by environmental scientists and ecologists were recognized by policymakers and economists, who attempted to formulate concepts of "sustainable development". An early formulation by Robert Repetto (1985: 10) was as follows:

"At the core of the idea of sustainability, then, is the concept that current decisions should not damage the prospects for maintaining or improving living standards in the future...This implies that our economic systems should be managed so that we live off the dividend of our resources, maintaining and improving the asset base so that the generations that follow will be able to live equally well or better. This principle also has much in common with the ideal concept of income that accountants seek to determine: the greatest amount that can be consumed in the current period without reducing prospects for consumption in the future."

As we shall presently argue, this connection between the ideal of sustainable development and the economic accountant's concept of maintaining the income level (discussed, in particular, by Hicks 1946) is an important one to explore.

A more recent characterization has been suggested by Robert Solow (1992: 15): "The duty imposed by sustainability is to bequeath to posterity not any particular thing--with rare exceptions such as Yosemite, for example--but rather to endow them with whatever it takes to achieve a standard of living at least as good as our own and to look after their next generation similarly. We are not to consume humanity's capital, in the broadest sense."

The term "sustainable development", in fact, owes its widespread usage to the Brundtland Commission Report (1987), Our Common Future, which defined it as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts:

• the concept of 'needs', in particular the essential needs of the world's poor, to which overriding priority should be given; and
• the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs" (WCED 1987:43).

The Brundtland Commission definition is often cited and has become very influential.7 As ageneral statement, it reminds us that sustainability is about an obligation to future generations (towards meeting their "needs"), and thus it is necessarily about intergenerational allocation. Unlike some earlier statements, it also helpfully shifts attention away from conserving specific resources and "leaving the world as we found it" in every particular. The latter would appear to be neither feasible nor necessarily sensible: resources are basically fungible and can be substituted for one another.8 The Brundtland Commission's notion of sustainable development is indeed broader and invites examination even independently of environmental concerns.

Moreover, the obligation of sustainability cannot be left entirely to the market. The future is not adequately represented in the market--at least not the distant future--and there is no reason that ordinary market behavior will take care of whatever obligation we have to the future. Universalism demands that the state should serve as a trustee for the interests of future generations. Government policies such as Pigouvian taxes, subsidies, and regulation can adapt the incentive structure in ways that protect the global environment and resource base for people yet to be born. As A.C. Pigou (1932: 29-30) had noted, "there is wide agreement that the State should protect the interests of the future in some degree against the effects of our irrational discounting and of our preference for ourselves over our descendants. The whole movement for 'conservation' in the United States is based on this conviction. It is the clear duty of Government, which is the trustee for unborn generations as well as for its present citizens, to watch over, and, if need be, by legislative enactment, to defend, the exhaustible natural resources of the country from rash and reckless spoliation."
 

3.2.  Intergenerational Equity and Sustainable Development

What are our obligations to future generations? Joseph Addison, writing in The Spectator of 1714 was dismissive of any duty to posterity: "Most people are of the humour of an old fellow of a college, who, when he was pressed by the Society to come into something that might redound to the good of their successors, grew very peevish; 'We are always doing,' says he, 'something for posterity, but I would fain see posterity do something for us.'"9 Yet, of course, there is something posterity can do for us: it can inherit less physical and natural capital, and thus allow us to achieve--though not out of its choice--a higher standard of living at its expense.

How much capital should the future inherit from us? This has been the subject matter of optimal growth theory since the pioneering article of Frank P. Ramsey (1928). The theory has formed the basis of development policy and social cost-benefit analysis in the less developed countries. In the Appendix we present a simple two-period model which captures the central features of intergenerational allocation as seen in this approach.

This framework is founded on the essentially utilitarian criterion of maximizing the sum total of welfare of different generations. It allows the welfare of one generation to be traded off one-for-one against that of another generation. If the benefit to us from economic activities which continue to emit greenhouse gases at the present rates outweighs the harm done to future generations from global warming, then the criterion would recommend no change in our activities. Other ethical notions of the total "good" may allow for different tradeoffs--for example, those that take account of welfare inequality between generations (see Appendix A.1). Yet others may allow no tradeoff in certain ranges --for example, those based on the "rights" of future generations to the same quality of environment and levels of clean air as the present generation has. This latter view of justice would give priority to specific rights that generations have over decisions based on a calculation of aggregate welfare (Rawls 1971, Dworkin 1978, Sen 1982a,b).

Within the broadly welfarist framework of optimal growth theory--by far the main economic approach used to analyze questions of intergenerational justice--it is relevant to enquire whether sustainable development is necessarily a consequence of growth being optimal. If it were, then a (derived) justification for sustainability could be found in maximizing the total good. Let us take sustainable development to mean non-declining welfare over time--although other definitions are formulated in terms of non-declining income, consumption, or capital stock.

Even though Ramsey (1928) had argued for treating the welfare of different generations impartially, much of the subsequent literature assumes a positive rate of pure time preference according to which well-being at a later time counts for less than well-being at an earlier time (see Appendix A.2).10 Now if the social rate of return to investing in environmental capital (protection) is not large, and in particular it is smaller than the rate of pure time discount, it is not worthwhile for the present generation to reduce its consumption and increase investment: the gain in well-being to the future generation will not compensate for the sacrifice in well-being of the present generation. This can lead to a decline in well-being over time.11 Moreover, a similar result obtains with a positive rate of pure time preference even in an economy with exhaustible resources (see Solow 1974b, Dasgupta and Heal 1979). On the other hand, universalism in the space of generational welfares--in the special form of no pure time discount--will typically lead to rising welfare over time in such models.

Yet there is no general presumption that sustainability will be implied by optimality in models of intertemporal allocation. It becomes an even less likely consequence once we incorporate environmental productivity and quality into production and welfare, respectively (see Pezzey 1992). Hence a justification for sustainability will have to be sought outside the framework of maximizing aggregate intergenerational well-being.

For Robert Solow (1974b, 1991), sustainability is simply a matter of distributional equity, about sharing the capacity for well-being between present people and future people: "[It is] an obligation to conduct ourselves so that we leave to the future the option or the capacity to be as well off as we are. It is not clear [to me] that one can be more precise than that. Sustainability is an injunction not to satisfy ourselves by impoverishing our successors" (Solow 1991: 3).

The notion appears to be founded on a forward-looking application of Rawls's Difference Principle, even though Solow (1974b) recognizes the difficulties of applying this principle to the problem of saving (see Appendix A.1). Still, his concern for intergenerational equity leads him to the view that we have done rather well at the hands of our ancestors, who were much poorer than we are and hence might properly have saved less and consumed more. According to Solow (1991: 7): "You could make a good case that our ancestors, who were considerably poorer than we are, whose standard of living was considerably less than our own, were probably excessively generous in providing for us. They cut down a lot of trees, but they saved a lot and they built a lot of railroad rights-of-way. Both privately and publicly they probably did better by us than a sort of fair minded judge in thinking about the equity (whether they got their share and we got our share or whether we profited at their expense) would have required. It would have been okay for them to save a little less, to enjoy a little more and give us a little less of a start than our generation has had." For Solow, then, sustainability would appear to be an obligation to preserve the present-day economic opportunities (such as productive capacity) for the future, not necessarily to increase them. This can be seen as an interpretation of the demands of "universalism" applied to intergenerational equity, and as such has much intuitive appeal.

The principle of preserving productive capacity, or society's broad "stock of capital", can also be defended in deontological terms without a direct appeal to distributional equity. The relevant notion here is that of usufruct rights. We may enjoy the fruits of the accumulated capital and environmental resources that we inherit (in the form of the income and amenities to which they give rise), but we may not deplete the total stock. This principle requires us to pass on to future generations what we have inherited from past generations--since we did not accumulate or produce it ourselves. It is not based on a claim of equal well-being for the next generation.

Preserving productive capacity intact is not, however, an obligation to leave the world as we found it in every detail. What needs to be conserved are the opportunities of future generations to lead worthwhile lives. The fact of substitutability (in both production and consumption) implies that what we are obligated to leave behind is a generalized capacity to create well-being, not any particular thing or any particular resource. Since we do not know what the tastes and preferences of future generations will be, and what they will do, we can talk of sustainability only in terms of conserving a capacity to produce well-being. As Solow (1991: 13) again emphasizes: "Sustainability as a moral obligation is a general obligation not a specific one. It is not an obligation to preserve this or preserve that. It is an obligation, if you want to make sense out of it, to preserve the capacity to be well off, to be as well off as we. That does not preclude preserving specific resources, if they have an independent value and no good substitutes. But we shouldn't kid ourselves, that is part of the value of specific resources. It is not a consequence of any interest in sustainability."

The idea that "income" is what can be spent while leaving the asset base intact is precisely the concept of sustainable income established by John Hicks (1946: 172) almost fifty years ago: "The purpose of income calculations in practical affairs is to give people an indication of the amount which they can consume without impoverishing themselves. Following out this idea, it would seem that we ought to define a man's income as the maximum value which he can consume during a week, and still expect to be as well off at the end of the week as he was at the beginning. Thus, when a person saves, he plans to be better off in the future; when he lives beyond his income, he plans to be worse off. Remembering that the practical purpose of income is to serve as a guide for prudent conduct, I think it is fairly clear that this is what the central meaning must be." It is easily seen why Repetto (1985) saw an analogy between the idea of sustainable development and the economic accountant's notion of what spendable income is.

Preservation of the resource base does not imply that all exhaustible (e.g. mineral and fossil fuel) resources must be conserved,12  that is likely to be unfeasible. But if society's broad stock of capital is to be maintained, we have to replace the non-renewable resources that are used up with something else. That has to be reproducible capital, whether physical or human. The idea that the proceeds from a "wasting asset" should be set aside and reinvested so that the yield from these investments compensates for the dwindling resource is also traceable to Hicks (1946: 187). He argued that: "If a person's receipts are derived from the exploitation of a wasting asset, liable to give out at some future date, we should say that his receipts are in excess of his income, the difference between them being reckoned as an allowance for depreciation. In this case, if he is to consume no more than his income, he must re-lend some part of his receipts; and the lower the rate of interest is, the greater the sum he will have to re-lend in order for the interest on it to make up for the expected failure of receipts from his wasting asset in the future".

It is essentially this Hicksian logic which lies behind Hartwick's (1977) Rule--a rule that has become, justly, much used in the recent environmental literature. He showed exactly how much from the use of a depletable resource should be set aside and invested in reproducible capital so that the total return (i.e. income) could be sustained over time. Hartwick's Rule says that if the entire competitive rents from an economy's use of a wasting resource are invested in reproducible capital, then it will be able perpetually to maintain a constant level of consumption. The competitive rents, or pure return to the non-renewable resource, are given by Hotelling's (1931) classic result that the shadow value of the resource rises at a rate equal to the current marginal product of reproducible capital.13 The accumulation of reproducible capital through investment of the Hotelling rents exactly offsets the (efficient) depletion of the exhaustible resource.

Although Hartwick's original rule applied to rather simple economies (with constant returns to scale, a given stock of exhaustible resources, no technical progress, and no population growth), there have been significant generalizations and elaborations of it, including the incorporation of resource amenities (see Dixit et al. 1980).14 Solow (1986) suggests that Hartwick's Rule can be given the interpretation that an appropriately defined stock of capital is being maintained intact, and that income is the interest on that patrimony. The broad notion of the stock of capital allows for exhaustible and renewable resources, for human capital, for freedom from pollution, and for other suitable forms of "environmental capital"15 Moreover, the rule has considerable intuitive appeal within the general framework of universalist ethics. It seems appropriate enough to meet our obligation to the future by channelling the rents on our use of non-renewable resources into capital formation, any kind of capital formation--physical or human. The policy allows future generations to sustain indefinitely the income, or capacity to consume, of the present generation.
 

3.3. Intragenerational Justice and Human Development

We have emphasized that sustainability is a matter of distributional equity in a very broad sense, that is, of sharing the capacity for well-being between present people and future people in an acceptable way--that is in a way which neither the present generation nor the future generations can readily reject. This is a criterion of justice that has been forcefully used--though not in the context of intergenerational equity--by Thomas Scanlon (1982) and, more recently, by John Rawls (1993).

There would, however, be something distinctly odd if we were deeply concerned for the well-being of the future--and as yet unborn--generations while ignoring the plight of the poor today. The moral obligation underlying sustainability is an injunction to preserve the capacity for future people to be as well off as we are. This has a terribly hollow ring if it is not accompanied by a moral obligation to protect and enhance the well-being of present people who are poor and deprived. If one thinks that people will be deprived in the future unless different policies are followed, then one is morally obliged to ask whether people are deprived right now. It would be a gross violation of the universalist principle if we were to be obsessed about intergenerational equity without at the same seizing the problem of intragenerational equity: the ethic of universalism certainly demands such impartiality.

A concern for equity right now, and not merely for equity between periods of time, requires redistribution to the deprived contemporaries.16 But redistribution to poor people today might be felt to be disadvantageous from the standpoint of sustainability. It might be interpreted as leading to an increase in current consumption, not to an increase in investment. However, much depends on what form that redistribution takes.

This is precisely where the significance of human development as a means comes in (on this see the discussion in Section 4.4). Redistribution to the poor in the form of improving their health, education and nutrition is not only intrinsically important--in enhancing their capabilities to lead more fulfilling lives--but it is also instrumentally important in increasing their "human capital" with lasting influence in the future. A general increase in educational levels, for example, will raise productivity and the ability to generate higher incomes, now and in the future. The importance of maternal education in raising the quality of life and agency of later generations has also been well established (see, for example, Summers 1992). Thus human development should be seen as a major contribution to the achievement of sustainability.

This argument should be contrasted with other arguments that have been proposed in the context of sustainable development. For example, poverty alleviation has been suggested as an instrument to protect the environment from degradation (World Bank 1992). There it is argued that alleviating poverty is a prerequisite for environmental conservation:

"The poor are both victims and agents of environmental damage. About half of the world's poor live in rural areas that are environmentally fragile, and they rely on natural resources over which they have little legal control. Land-hungry farmers resort to cultivating unsuitable areas--steeply sloped, erosion-prone hillsides; semiarid land where soil degradation is rapid; and tropical forests where crop yields on cleared fields frequently drop sharply after just a few years.... Poor families often lack the resources to avoid degrading their environment. The very poor, struggling at the edge of subsistence, are preoccupied with day-to-day survival. It is not that the poor have inherently short horizons; poor communities often have a strong ethic of stewardship in managing their traditional lands. But their fragile and limited resources, their often poorly defined property rights, and their limited access to credit and insurance markets prevent them from investing as much as they should in environmental protection" (World Bank 1992: 30).17

This argument provides an instrumental justification for poverty alleviation, as a means of protecting the environment. There is much substance in this. But the human development argument goes beyond that. Human development is defended as a goal in itself; it directly enhances the capability of people to lead worthwhile lives, so there are immediate gains in what is ultimately important, while safeguarding similar opportunities in the future. There is hardly any example in the world of the expansion of education and health being anything other than monotone: good education and good health seem to generate powerful demand for these opportunities (and more) for our children. This is a relationship that goes well beyond the redistribution of income to the poor at a given point of time--important though that is. It should also be noted that any instrumental justification for human development is not gripped by some impersonal objective such as conserving the environment, but relates concretely to people's ability to generate for themselves more income and other means of good living.

4. Development and human agency

4.1. Human Agency and Institutions
 
 

A universalist concern with the rights and interests of all can be effective only through a combination of individual efforts and institutional support. Over the last few decades, skepticism about planning and about reliance on government wisdom has grown by leaps and bounds. The utopian image of a benevolent state looking after the interests of everyone with equity and justice carries little conviction today, no matter what popularity it might have enjoyed in the past. The need for the individual adult to look after herself, rather than relying on a "nanny state", is well understood, and the point has been stated often enough not to require much repetition.

On the other hand, it is important to recognize that what an individual can do with her own agency is conditional on many circumstances, over which she may or may not have much control. For example, a child who is not sent to school, not taught any skills, and not given much means to support herself, might conceivably still do well for herself, given unusual initiative, ability and luck, but the cards are certainly stacked very firmly against her. On the other hand, institutional support from the family, from the public education system, and from social cooperation in general can transform radically what she can or cannot do on the basis of her own agency. It is the complementarity between individual agency and institutional support that is crucial for individual opportunities and achievements in different fields, including the capability to lead satisfactory and worthwhile lives.

In general, the quality of life that may be enjoyed by people depends not just on the exercise of individual initiative of the respective persons, but also on social circumstances--which are thoroughly dependent on institutional arrangements. Social policies in enhancing education and skill formation, in expanding employment opportunities, in safeguarding the rewards of individual initiative and enterprise, and so on, can make a major difference to what we are able to achieve in the lives we may try to lead.

This complementarity is important enough even when attention is confined to the lives and prospects of the present generation. If, on top of that, the focus of attention includes the prospects of future generations as well, it becomes even more important to take full note of the complementarity between individual agency and institutional policy. The idea of sustainability, which was discussed in some detail in Section 3, sets an agenda which can be fulfilled only through systematic institutional arrangements. Whether we are concerned with limiting emissions of greenhouse gases, or restricting effluents into the waters, or preventing the destruction of forests and natural habitats, or averting premature depletion of exhaustible resources, there is need for institutional intervention and support in making the agencies of contemporary individuals take adequate note of the interests and rights of the generations that are yet to come.

In analyzing the complementarity between personal agency and social institutions, it is also important to note the different levels at which this complementarity works. Institutional changes themselves are dependent on human agency, even when the changes result from evolution rather than conscious selection. In fact, however, both for environmental protection and for the elimination of contemporary poverty and deprivation, there is much need for deliberate institution building. There is indeed considerable scope for deliberate decision making in giving individuals the incentive (through ownership rights, or through taxes and subsidies, or through public education) to economize on consumption patterns that are harmful to future generations. The same applies to arranging social services (such as education, or health facilities, or social insurance) that would help lift the underprivileged from the cycle of poverty and destitution. In influencing these decisions--through debate, discussion or agitation--human agency must again play a central role. The dynamics of public action involves interaction at different levels, and in interdependent ways.18

The informational focus on human development can be seen as a contribution to intelligent decision-making for the building of institutions. By focusing on central features of human lives, opportunities and deprivations, which are often neglected in opulence-oriented financial accounting, it is possible to force attention on challenges that may otherwise go unaddressed. One of the characteristics of human agency--as opposed to the agency of other animals--is the ability to scrutinize and reexamine our values and priorities in the light of fresh information and new understanding.19 The process of institutional reform is thoroughly dependent on such scrutiny and critique. The enterprise of reporting on human development can be usefully interpreted in this broad light.

4.2. Markets and Governance

The successes and failures of any institutional arrangement tend to include both commission and omission. This applies to the market mechanism also. The markets do certain things, and abstain from doing others. In assessing the efficacy of markets, we can distinguish between commissional problems and omissional difficulties. Most of the traditional critiques of the market mechanism focus on the omissions.

For example, the market mechanism may deal badly with so-called "public goods", where the consumption of the good by one person does not conflict with the consumption of the same good by another person. Examples vary from uncrowded public parks to socially oriented public education and the elimination of infectious diseases. The role of the government and of other social institutions is easy to see in this context, aimed at eliminating the identified omissions, to wit, the absence or inefficacy of the relevant markets.

Environmental arrangements (e.g., those needed to reduce the emission of greenhouse gases) are often also of this type. Many of the environmentally relevant "products" are not bought or sold in the markets. These omissions call for rectification, either through the use of "as if" markets, or through direct state intervention in lieu of relying on a market-like structure. The approach of human development, applied to the prospects of the future generations (in addition to the present), can help to draw attention to environmental priorities. Some of the policy requirements call for public action at the global level. This has been a subject of intense international discussion in recent years, and there are many global initiatives afoot. The supplementation needed over reliance on individual initiatives and market behavior calls not only for well-formulated policies of national governments, but also for the more difficult exercise of selectively global governance. In some ways, the consulting apparatus set up at the Rio conference in 1992 and other moves of that kind can be seen as the beginning of a much bigger initiative centering around environmental issues, including the task of making development safely sustainable.

It also worth noting in this context that the absence and unworkability of the markets for environmental effects has the consequence of significantly reducing the informational value of the standard statistical measures of GNP, GDP, etc.--even as possible guides to economic prosperity--since these measures do not include the value (or disvalue) of environmental impacts that are not marketed. The informational failures go hand in hand with misdirection of policy, and there is a need to consider the necessity of policy change together with the case for greater informational coverage of environmental issues. The Human Development Reports have a direct role in the latter task (that of informational presentation), but they can also be relevant to the former, that is, policy response--by contributing to the effort to bring informed discussion to bear on these challenging questions.
 

4.3. Values, Information and Indicators

The making of policies and the building of institutions have to be based on systematic and informed evaluation. In doing any evaluation, we can distinguish between two different questions: (1) What objects do we value? (2) How valuable are the respective objects? Even though the former question is really an elementary aspect of the latter (in the sense that the objects of value are those that have positive weights), nevertheless the identification of the objects of value is substantively the primary exercise which makes it possible to pursue the second question. Also, the identification of the set of value-objects, with positive weights, itself precipitates a "dominance ranking" (x higher than y if it yields more of at least one of the valued objects and at least as much of each).20

The objects of value identifies what may be called an evaluative space. In standard utilitarian analysis, the evaluative space consists of the individual utilities (defined in the usual terms of pleasure, happiness, or desire-fulfillment). Indeed, an evaluative system can be helpfully analyzed in terms of the informational constraints that it entails.21 The issue of valuation is not settled by the choice of an evaluative space, but it is nevertheless an important step in the direction of getting a more complete valuation.

The informational focus of the Human Development Reports has tended to force attention towards particular features of the evaluative space, making it necessary to take adequate note of the characteristics of human living, rather than of finance, income and commodities only. In contrast, the reliance on a standard measure of economic progress such as the growth of GNP not only specifies an evaluative space (the world of commodities--irrespective of their distribution and use), but also particular weights to be put on the respective commodities. For example, the use of market prices for the purposes of weighting--in calculating real income or real consumption--amounts to attaching the same weight per dollar to the rich person's many dollars as to the poor person's meager means.

This "completeness" is often seen as an advantage of the traditional GNP-centered measures of progress.22 Certainly, it reduces the need for social values, but for the same reason, it also eliminates the opportunity of conscious social valuation. The completeness is achieved at the price of forcing an accounting system that we have good reason to reject: for example, why must we be locked into a system that obliges us to take each casual dollar of a millionaire as having the same social weight as a much-valued dollar of the very poor? In contrast, the specification of an evaluative space in the form of conditions of living, even when supplemented by some indicators of economic means such as the GNP, leaves the analyst with the freedom to decide what weights would be most appropriate for the exercise in which he or she might be engaged. It is on this major shift of the informational focus that the rationale of the human development approach has rested.

As was argued in Section 2.3, the recent reassertion of the classic humanist approach (in the Human Development Reports and related documents) has involved engagement on two fronts. The first is a defense of the ultimate objective of the enhancement of the opportunity to lead a worthwhile life (and not, for example, the pursuit of opulence as a goal in itself). The second is a clarification of the by-now well-established fact that economic growth is only one instrument among many in promoting life opportunities, and the effectiveness of that instrument is itself contingent on a number of factors which the approach of human development has tended to highlight.

These disputations have occurred at different levels, including professional economic argumentation, in which many economists, philosophers and others have engaged over the last few decades.23 The arguments have also had implications for the presentation of systematic information by international organizations, which draw attention to different aspects of achievements and failures in the modern world. There has begun to be more convergence in each of these fronts, but perhaps more so in the latter. Organizations other than the UNDP, which has been producing the Human Development Reports, have also increasingly focused on conditions of human life across the world, enriching financial and narrowly economic statistics by information on life and death, health and morbidity, education and illiteracy, and the tell-tale signs of inequality between women and men in many countries in the world.24 The statistics presented by these organizations as well as by the UNDP have, perforce, been of varying quality, and the need for improving data collection and processing is certainly very strong. And yet a major battle has been won in establishing the central relevance of information about human lives in judging the progress and backwardness of nations, communities, regions and peoples.

It is important, in this context, to emphasize that the value of reporting on human development goes well beyond the usefulness of the narrowly based "human development index". The efficacy of that index lies in providing an alternative general focus of attention--alternative to the ubiquitous GNP per capita. This is an exercise in presenting an alternative immediate view of the overall situation in a country or a region--a situation that may be very badly reflected by GNP statistics. On the other hand, to go beyond that into a fuller analysis of the situation of human development in that country or region, it is quite essential to step over the human development index on to the more detailed information provided in the Human Development Reports.

This systematic informational enhancement is more significant than it might first appear. In welfare economics as well as moral philosophy it has been increasingly recognized that a great deal of the debates on valuations and ethical norms turn on the use of some information and the non-use of others.25 Ethical judgments can, to a great extent, be axiomatized by the information that is kept "out" of ultimate accounting, in addition to the information it includes "in". For example, the utilitarian approach is characterized not only by the note that is taken of utility values, but also by the complete neglect of all information other than utilities, and even a neglect of the inequalities in utilities (concentrating, as utilitarianism does, on the sum-total only).

Similarly, the approach of wealth maximization not only takes "in"--and makes use of--wealth data, but also keeps "out" other information, including the characteristics of human lives. As was discussed earlier, it thus manages to concentrate entirely on information related to the means and not the ends, and in particular, on one class of means only--ignoring others. One of the objectives of the Human Development Reports has been to focus attention on the variables that relate most directly to the lives of people, distinguishing them from other variables that are valued for instrumental reasons only--as good means to other ends. Some of these means can, of course, be extremely important and would certainly deserve a great deal of attention. But it is still important to separate out those characteristics that are valued for their own sake, as things that are intrinsically valuable (such as the quality of life we can lead), from other things (such as income and wealth) that are desired--as Aristotle put it--"for the sake of something else". For the analysis of political ethics and practical reason, ready access to information on the characteristics of human development can indeed be truly central.
 

4.4. Human Capital and Human Development

We end this critical account of sustainable human development with some remarks on the relationship between ends and means. The basic rationale of the human development approach, as we have discussed, lies in the fact that the constitutive elements of human development are closer to the shared human ends than are some of the more commonly used criteria of progress, such as the growth of GNP per person. In contrast, the importance of GNP growth and related achievements in expanding the means of life lies in their instrumental relevance. This thesis--based on the significance of human development as an end--should not, however, be construed as a denial of the importance of human development as a means as well. Human development, in the form of people being better educated, more healthy, less debilitated, and so on, is not only constitutive of a better quality of life, but it also contributes to a person's productivity and her ability to make a larger contribution to the progress of material prosperity.

Indeed, recent works on economic growth have demonstrated the far-reaching role of education, health, and other human qualities in generating economic growth. For example, in interpreting the causal antecedents of the so-called "East Asian miracle", it has increasingly become clear that a foundational and immensely far-reaching role has been played by the enhancement of the quality and skill of labor.26  This is, in fact, "the human capital aspect" of human development. The economic roles of better and more widespread schooling, good health and nourishment, learning by doing, and technical progress all point to the importance of human agency as a prime mover of material progress. There are many lessons to be learned from these experiences, and the powerful instrumental role of human development--in addition to its intrinsic importance--is certainly quite central to our understanding of the economic and social world.

The human development approach must take full note of the robust role of human capital, while at the same time retaining clarity about what the ends and means respectively are. What has to be avoided is to see human beings as merely the means of production and material prosperity, taking the latter to be the end of the causal analysis--a strange inversion of objects and instruments. That is the danger to which an approach that sees women and men only as "human capital" is open. Rejecting such exclusive concentration on people as "human capital" is central to the human development approach. But that disputation does not, in any way, deny the commanding role of human capital in enhancing production and material prosperity as well.

Rather, we have to see human development as having both direct and indirect importance. Since education, health and quality of life have intrinsic value, human development has direct--and immediate--importance. In addition, since the quality of human agency is enhanced by better education, health, etc., it is also the case that human development has great indirect importance. The material prosperity that is advanced by human development can, in its turn, contribute to further increases in the quality of human life. The importance of this indirect connection adds to the relevance of human development, but does not detract from its direct importance. The human development approach includes the significance of human capital without making that perspective supplant the view of human beings as the end of the exercise, rather than as means of production and of economic activity.

Immanuel Kant's injunction "to treat humanity" ultimately "as an end withal, never as means only"--an injunction with which the first chapter of the first Human Development Report had been launched in 1990--remains just as powerful, even when the great importance of human capital in economic growth is appropriately acknowledged. Needless to say, this applies to our obligations to the future generations as well. The importance human capital indicates that the pivotal role of education, health, training, etc., in work and production must be kept firmly in view in considering alternative scenarios of sustainable development; human skill and agency would be important not just in raising productivity, but also in devising ways and means of dealing with environmental and other challenges. However, while taking full note of this instrumental importance of human quality in maintaining and expanding the material basis of human life, we must not lose sight of the central importance of the quality of human life as an end in itself. What is to be sustained is the nature of the lives that people can lead, and the fact that in that sustaining, human agency would be pivotal, does not reduce in any way the significance of human life as an end.

The discipline of universalism requires us to extend the same concern for all human beings--irrespective of race, class, gender, nationality, or generation. The underlying ethics of it sees different human beings as important in the same way. This importance relates to the personhood of people: human beings seen as persons--not as means of production. As a matter of fact, human beings are also superb means of production. But that is not the most momentous fact about us. The overarching relevance of human development lies in that basic recognition.

7: For example, it is strongly endorsed by the World Bank's World Development Report 1992; Development and the Environment (Box 2, p. 8).

8: As Solow (1991: 4) states, "If you don't eat one species of fish, you can eat another species of fish... That is extremely important because it suggests that we do not owe to the future any particular thing. There is no specific object that the goal of sustainability, the obligation of sustainability, requires us to leave untouched."

9: The Spectator, Vol. VIII, No. 583, 20 August 1714.

10:  As Henry Sidgwick (1907: 414) had argued, this is incompatible with universalism within the context of utilitarianism: "It seems...clear that the time at which a man exists cannot affect the value of his happiness from a universal point of view; and that the interests of posterity must concern a Utilitarian as much as those of his contemporaries, except in so far as the effect of his actions on posterity -- and even the existence of human beings to be affected -- must necessarily be more uncertain."

11:  Appendix A.1 discusses extensions of this result to situations involving technical progress, population growth, and a concern for well-being equality between generations.

12:  See, however, Pearce, Barbier and Markandya (1988: 6).

13:  See Anand and Nalebuff (1987) for further discussion of Hotelling's rule.

14:  See also Hammond (1993), Hartwick (1978), Solow (1986), Ahmad et al. (1989), El Serafy (1991), Lutz (1993), Bartelmus (1993), among others.

15:  What is maintained constant in Hartwick's Rule is a chain (or Divisia) index of the combined value of resource and capital stocks.

16:  There are few models of intertemporal allocation which incorporate a concern for distribution among contemporaries. Anand and Joshi (1979) present one, and derive the optimum solution for extreme values of the "aversion" to well-being inequality--both inter- and intra-generational. With no pure time discount, as this inequality aversion parameter tends to infinity, the entire surplus from production is redistributed to the poor of today, and there is no capital accumulation. This is like the Rawlsian solution derived by Solow (1974b).

17:  This view of the poverty-environment nexus is also prominent in Mink (1993) and Pearce and Warford (1993).

18:  Some of the underlying issues have been discussed in Dr�ze and Sen (1989), in the specific context of public action for eradicating hunger and famines.

19:  On this and related matters, see Charles Taylor's important investigation of "what is human agency?" (Taylor 1985: Chapter 1).

20:  This dominance ranking, which can be shown to have standard regularity properties such as transitivity, can indeed take us some distance--often quite a distance--in the evaluative exercise.

21:  On this see Sen (1970, 1977).

22:  See, for example, Srinivasan (1994).

23:  See, for example, the collection of papers in Nussbaum and Sen (1993).

24:  One of the pioneering sources of information on this has been the annual publication of UNICEF's The State of the World's Children. The World Bank's World Development Report, which has always been a good source of general background data, has in very recent years started putting in noticeably more effort to present information on specific aspects of human development.

25:  On "the informational basis of alternative welfare approaches", see Sen (1974, 1977).

26:  See particularly the World Bank study, The East Asian Miracle: Economic Growth and Public Policy (1993), and the extensive literature cited in that report. See also Nancy Birdsall's (1993) forceful exposition of the accumulated evidence in favor of the view that "social development is economic development". For a classic contribution to the importance of education as a prime mover of progress, see Schultz (1980).