In search of what the “Wealth of Nations” means today, when the Industrial Revolution has given way to the Service Economy, these European Papers propose to consider the lengthening of the life cycle a key, decisive social and economic issue. Let’s review here some basic points:
• the lengthening of the life cycle is a unique revolutionary phenomenon, having a profound impact on contemporary and future societies. It concerns the social, political and economic institutions in a far deeper sense than is still commonly perceived;
• people in older age, over 60, 70 and 80, have always existed in history. But they were special cases representing a minute minority. Now the lengthening of the life cycle concerns the majority of the population;
• the lengthening of the life cycle is a world wide phenomenon. From the ‘older’ industrialized countries it is extending to the large majority of communities, everywhere;
• the lengthening of the life cycle is often presented (mistakenly) as the problem of ‘population ageing’, and as such as an indication of the decay of the industrialized world: in fact, the ‘older’ countries have the great advantage of both offering a longer (and better) life to their citizens and of advancing in the delicate social, economic and political adaptations required by the new demographic reality;
• what is really ageing is the notion of older age itself. Taking into consideration the ability of each individual to be autonomous (in physical and/or mental terms), many studies and surveys indicate that on average a 60 or even an 80 year old person of today, corresponds to a person about 15/20 years younger living a century and more ago. Statistics based not on age but on capacity to perform, indicate in fact that in many countries, the population is not ‘ageing’ but ‘rejuvenating’. In fact we live in a ‘Counter-ageing society’;
• the lengthening of the life cycle is clearly the result of economic and social advances strictly linked to scientific and technological advances: biology, medicine, health control, nano technologies, nuclear applications, communication, instrumentations etc. are all now producing, almost every year significant advances for the human body and main maintenance;
• the lengthening of the life cycle implies of course redefining the period of ACTIVE life, which should be considered in two different categories: remunerated work on one side and unpaid or benevolent activities on the other. In fact the two are complementary, and this increasingly so in the post-industrial Service Economy;
• this also implies the open possibility (and in many instances the necessity) for postponing the retirement age. At the time of the first provisions for retirement, these were fixed at the average age of death. Today, at the age of retirement, in many countries, life expectancy tends to reach 15 to 20 years;
• satisfactory employment, based on adequate formation and education systems (including preparing for changing types of jobs according to age conditions), is in a majority of cases the condition for having a healthier life;
• at the basis of this: enhanced HUMAN CAPITAL at all ages;
• it is very important to consider and promote part-time employment as a basic element for a well balanced social security system: it is, among others, an important issue for all those working over 60 and 65. As happens in some northern European countries, part time pensions will be increasingly coupled with partial work. Also important are gradual retirement plans and the perspective of the ‘four pillars system’ (on this see www.genevaassociation.org), based on the three pillars of the Swiss system plus the fourth pillar relating to partial employment;
• health improvements are necessarily based on a great increase in costs: one could die almost for free in a not so distant past, and now one has to pay for the possibility of control, eliminating or reducing the effects of all sorts of illnesses or accidents. We already spend a lot of money on buying and using an automobile which allows us to move (sometimes) faster: we will probably one day spend even more individually for our health maintenance, which allows us to live better and move. Spending on health is therefore producing added value for our lives: it increases the ‘Wealth of Nations’;
• from an economic point of view, retirement and health costs imply the building of financial capabilities, in the form of redistribution (de facto fiscal systems) and in the form of savings (or reserves). We have here to do with nothing less than a new definition of the notion of Capital (its building and utilisation) in the post-industrial Service economy;
• another very important issue on which to invest research capabilities in the next one or two decades, is the reconsideration of the measurements relating to the ‘Wealth of Nations’ and from which derive the most appropriate references for better welfare policies. In the Service Economy, not all the ‘value added’ measures indicate an increase in the level of wealth (for instance the costs of coping with pollution), whereas many developments in service functions and performances (for instance in the case of many communication systems) add to real wealth much more than usual value added references indicate. In particular the notion of productivity, in a Service Economy, is much more relevant with reference to performance in time (hence in a probabilistic system) than to the production factors costs (in an equilibrium based system). All this, however, is linked to progress in economics as a discipline, and to its integration with environmental issues (which also pretend to solve the problems of the ‘Wealth of Nations’, on the basis of their ‘sustainability’);
• all these issues also imply very fundamental and innovative questions such as: how and how far to integrate health and pensions costs and performances; how and how far they will integrate with the fiscal systems; how to stimulate and improve the complementarity of the private and public sectors, the best solutions being determined by the proper synergies of the two.
And then two final considerations at the general political and socio-economic level:
• the first is (as always in human history) a question of vision: the lengthening of the life cycle does not create disasters (social and financial): it is a fantastic, positive perspective, to be exploited by adequate imagination, understanding and good will. A lot of work for those who dare.
• the second, concerns the policies on which adequate and approriate institutions, for instance the European Union, will inevitably have to decide;
• in particular, the European Union needs to find new impulses towards its integration movement. The social policies are clearly a major key to showing concern about the daily problems of European citizens. There is considerable room for consensus to be reached and built on in relation to the issue of a new European Welfare. A more courageus initiative in this field is clearly necessary;
• the building of European Welfare implies a productive comparison among the present differences of the national systems in order to promote the best solutions for all;
• in this context the European countries, and in particular the new countries from Eastern Europe, where in many cases the situation is more ‘open’ than in the older member states, could represent an important promotional group of reference. There are great opportunities here for research and proposals, which could well be exploited. After all this is a ‘must’.
This issue of the European Papers contributes again with a number of important studies to paving the way for the complex, but challenging exploration of the New Welfare in the Counter-Ageing Society. We wish they could inspire politicians, students, professionals and finally every citizens, all of us, whose life is directly concerned.
Tags: European Welfare, Service Economy