The Riches of the Ocean for Humankind: Rethinking Value in Economics and Development

We acknowledge the inadequacy of the ancient model to develop the wealth of nations and the recognition that both economics and ecology are the best possible ways to manage world and human resources to achieve a better wealth of nations. The rebuilding of economics and of a credible strategy for increasing the wealth and well-being of nations is today at the center of the problem of providing a sound basis for the legitimacy and credibility of public institutions and governments. If the dichotomy between traditional economic goals and new ecological and environmental requirements for sustainable development will not credibly combine, the political consensus and the legitimacy of governments at the local, national, and international levels will have a tendency to produce on the new liberalizing world disaggregation effects that could be as extensive as those witnessed in former Marxist countries.

The oceans are a fundamental part of this patrimony and Elisabeth Mann* should be remembered for her very important dedication on this issue.

1. Introduction
I had the privilege of knowing Elisabeth Mann Borgese for over 20 years. I first met her on the occasion of the conferences of the Club of Rome. She was clearly one of those persons who provides you with an example of how human beings, from time to time and thanks to exceptional individuals, are capable of creating a better standard for the civilized part of our human history.

I am still so grateful to her for having been interested in my efforts to better understand “in the present world” the search for the wealth of nations that is really going on. Over 50 years of experience in the chemical industry, industrial and technological research, the financial sector studying the management of risks and uncertainties, teaching my subject (service economics) at university, and having even some political experience within the European Federalist Movement, have served as references to build up some hypotheses and ideas. I have also drawn on the views expressed in relevant economic and social literature. But it is clear that my views have grown somewhat diverted from those of the economic establishment.

Elisabeth was in fact looking for a better answer to the question “What is the value of the oceans?” Value in conventional economics – as it was borne of a consequence of the development of the Industrial Revolution – is linked to the basic notion of scarcity of resources and to their pricing in the market system. Resources that are not scarce and are not exchanged have in principle no theoretical value. But what about those resources that are not scarce in the beginning, but which become scarce when over-exploited or polluted?

Adam Smith wrote the fundamental starting text of economics over two centuries ago – The Wealth of Nations. What about the economic price-value of goods and services that have become scarce after having been available at no cost?

Furthermore, at the macroeconomic level, the average educated person is not conscious that a measure of the gross national product is a measure of the flow, whereas talking, for instance, of the value of the oceans and of any other resource on earth is a matter of evaluat­ing a stock. That is, a stock that can become scarcer and therefore more and more costly and “valuable” and where sometimes technology and advancement in research are capable of creating a situation of such abundance that the products of services become almost free, as could be the case in the telecommunications sector. All this is linked to what I have tried to describe in a few books as the passage from the industrial economy, which is the basis for modern economics, to a service-based economy where the notion of stock, performance, and uncertainty in time replaces day-by-day equilibrium-based traditional economic theory.

I am a sea and ocean lover, but I am not an ocean expert. Nevertheless, the question of identifying the economic and social value of the oceans has inevitably to do with the identification and measurement of a stock (i.e., in terms of price and indicators), whatever its nature.

I was always very thankful to Elisabeth for having grasped the essence of my attempts to enter and develop this debate. As a consequence, she made reference to my writings in many of her books and articles.1 In one of her last writings,2 she even went on to the issues of risk and uncertainty that are inevitably linked to the new service economy and to the identification and discussion of any policy that has to do with the performance and sustainability of any stock – and even more so the oceans – in the future. In the following paragraphs, I insist on two key issues: the economics of common heritage and the notion and strategy of sustainable development.

2. The Economics of Common Heritage

2.1. The Concepts of Common Heritage of Mankind and Dowry and Patrimony: In Quest of an Adequate Notion of Economic Value
The concept of Common Heritage of Mankind as developed by its principal author, Arvid Pardo, Ambassador of Malta to the United Nations in the 1960s, is characterized by the following:

  • the non-appropriability of the common heritage;
  • a system of management in which all users share;
  • an active sharing of the profit and benefits derived from shared management and transfer of technologies;
  • the reservation of ocean space for peaceful purposes; and
  • its reservation for future generations.

As Elisabeth Mann Borgese stated in her report to the Club of Rome, The Future of the Oceans,3 there are some startling similarities between the concepts of Common Heritage and Dowry and Patrimony (D&P) developed in the report to the Club of Rome.4

In fact, a lot of work has been done in the last few decades by private research centers, as well as by international organizations, to define the value of so-called non-economic goods. Although I respect and take into account all these efforts, I feel the necessity to become more provocative and to say that conventional economic wisdom does not fundamentally provide instrumental measures that are adequate to evaluate the real economic value of oceans as common heritage.

This article therefore will be very risky for its author. Firstly it will try to prove that conventional economics does not provide the necessary tools for what is needed. Secondly, it has to explain why the fundamentals of conventional economics have been developed in quite another context and with other objectives for measurement that are now out of context. Thirdly, this short article has to open some avenues to find other plausible and useful references.

The reader will admit that such tasks are almost equivalent to intellectual suicide. I have a little excuse in the fact that these ideas are based on more than 40 years of research and practical testing in economic activities, both in industry and services. Perhaps the most demanding element of this article is to try to explain how and why a conventional economic theory functions as it does today, and why it is theoretically inadequate.

Orio Giarini: Director, The Risk Institute; Member, Board of Trustees, World Academy of Art and Science
* Elisabeth Mann Borgese was an internationally recognized expert on maritime law and policy and the protection of the environment.
1. E. Mann Borgese, “Integrating Development and Environment Concerns: New Economic Theories,” in Ocean Governance and the United Nations (Halifax: Centre for Foreign Policy Studies, Dalhousie University, 1995), 246; E. Mann Borgese, “The Economics of Common Heritage,” Ocean and Coastal Management 43 (2000): 763-779.
2. Borgese, “Economics of Common Heritage,” 2000.
3. E. Mann Borgese, The Future of the Oceans: A Report to the Club of Rome (Montreal: Harvest House, 1986), 144.
4. O. Giarini, Dialogue on Wealth and Welfare – An Alternative View of World Capital Formation (Oxford: Pergamon Press, 1980).
† Many of the research centers and international organizations are listed in Annex 14 of the paper “The Contribution of Oceans and Ocean Development to Wealth and Welfare,” by O. Giarini and M. Börlin (presented to the International Centre for Ocean Development [ICOD] in Halifax, Nova Scotia, Canada, 2nd December 1988).

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