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Cultural capital includes immaterial stocks such as music and local traditions; these
can be shared but commercialised sharing may lead to loss of quality through
dilution.
Human capital is intrinsically linked with intangible acquired capital; i.e. skills
and capabilities. Human capital is the only resource whose quality can be improved
through education and training. Developing and maintaining human capital as a
renewable resource is one of the issues explored in this chapter.
The focus in this chapter is on manufactured capital: i.e. material goods and
fixed assets. This includes infrastructure (for energy distribution, communications,
transport, and water and other services), buildings (industrial, commercial, institutional and domestic), equipment (both “productive” and appliances used by “consumers”) and durable consumer goods (including, for example, furniture and
garments). Focussing on the stock brings out the importance of something which is
often overlooked: durability or service life of manufactured capital. This is explored
later in this chapter.
The Role of Incentives in Flow Versus Stock Management – The Case of
Reforestation
If the wealth of societies is based on the quantity and quality (Q&Q) of capital
or stocks, a delicate balance is necessary to maintain stock quantity without
compromising stock quality. Growth can be defined as increase in Q&Q of
stock rather than flow. To achieve this, policy measures need to shift from a
flow to a stock approach: witness reforestation programmes in countries like
Nepal, which are directed and financed by Western organisations.
Local people are paid to grow seedlings, plant them on barren slopes, water
them regularly and protect them by fences - a typical production-driven flow
approach. Local people respond in a flow-focused way by minimising their
work load, which means reforesting slopes near villages rather than the slopes
presenting the biggest hazards (the stock approach). As villagers have conflicting priorities, such as feeding their goats and cattle and working as tourist
guides, they will often neglect the maintenance of the fences, and goats will
eat the young trees. A new reforestation programme will follow, financed by
well-meaning sponsors.
In a stock management approach, the villagers are instead paid a modest
fee for each tree on the village property. The driver for reforestation is then
villagers looking for a higher donor income by increasing their stock of trees,
which includes protecting young trees from being eaten by animals as much
as planting new trees. The barrier is that donors, including the World Bank,
generally do not pay for stock management but only for flow. The same
applies to preventive measures versus post-disaster repairs.
7 Stocks and Flows in the Performance Economy
Cultural capital includes immaterial stocks such as music and local traditions; these
can be shared but commercialised sharing may lead to loss of quality through
dilution.
Human capital is intrinsically linked with intangible acquired capital; i.e. skills
and capabilities. Human capital is the only resource whose quality can be improved
through education and training. Developing and maintaining human capital as a
renewable resource is one of the issues explored in this chapter.
The focus in this chapter is on manufactured capital: i.e. material goods and
fixed assets. This includes infrastructure (for energy distribution, communications,
transport, and water and other services), buildings (industrial, commercial, institutional and domestic), equipment (both “productive” and appliances used by “consumers”) and durable consumer goods (including, for example, furniture and
garments). Focussing on the stock brings out the importance of something which is
often overlooked: durability or service life of manufactured capital. This is explored
later in this chapter.
The Role of Incentives in Flow Versus Stock Management – The Case of
Reforestation
If the wealth of societies is based on the quantity and quality (Q&Q) of capital
or stocks, a delicate balance is necessary to maintain stock quantity without
compromising stock quality. Growth can be defined as increase in Q&Q of
stock rather than flow. To achieve this, policy measures need to shift from a
flow to a stock approach: witness reforestation programmes in countries like
Nepal, which are directed and financed by Western organisations.
Local people are paid to grow seedlings, plant them on barren slopes, water
them regularly and protect them by fences - a typical production-driven flow
approach. Local people respond in a flow-focused way by minimising their
work load, which means reforesting slopes near villages rather than the slopes
presenting the biggest hazards (the stock approach). As villagers have conflicting priorities, such as feeding their goats and cattle and working as tourist
guides, they will often neglect the maintenance of the fences, and goats will
eat the young trees. A new reforestation programme will follow, financed by
well-meaning sponsors.
In a stock management approach, the villagers are instead paid a modest
fee for each tree on the village property. The driver for reforestation is then
villagers looking for a higher donor income by increasing their stock of trees,
which includes protecting young trees from being eaten by animals as much
as planting new trees. The barrier is that donors, including the World Bank,
generally do not pay for stock management but only for flow. The same
applies to preventive measures versus post-disaster repairs.
7 Stocks and Flows in the Performance Economy