William (Bill) Allan

Governance at every level should aim to improve the well-being of all citizens within its span of concern. But present GDP measures, based primarily on commercial financial transactions rather than social well-being, significantly limit the power of economic theory to explain or justify broad social policy. The chapter reviews major international reform programs including adoption of accrual basis accounts by many governments, and recent work on Integrated Reporting (hereafter, ) by the International Integrated Reporting Council (IIRC) that significantly broadens the concepts of capital and value creation or diminution for both corporations and government entities. The chapter proposes systematic introduction of an integrated standards-based program to establish government balance sheet approaches and to introduce standards, combined with a revised and coordinated international program on government and enterprise accountability and risk management.

The way that we measure society’s wellbeing profoundly influences how our private and public enterprises meet entity, national, and global goals. The inadequacies of GDP as an indicator of social wellbeing are now widely recognized, and neoliberal dismissal of the worth of government activity is losing credibility.  Michel Foucault for a time considered neoliberal economic theory as providing an ideal set of principles for social decisions, but ultimately saw economics as an essential but partial remedy. The body of his work argues strongly for evidence-based deliberation of all dimensions of social policy. Modern social science and public administration theory point toward a comparably holistic approach. Principles established in recent years by the International Integrated Reporting Council (IIRC) open new possibilities and challenges. They redefine private and public entity responsibilities for managing the entire range of social and commercial capital: as well as the three standard forms of commercial capital, three ‘public-interest’ capitals—human, natural, and social—must be managed and accounted for by all entities.  Implementation of integrated accounting (<IR>) practice at entity level would establish a clear and socially attuned assignment of private and public management responsibilities and performance. It should lead to the eventual replacement or modification of GDP to create a more accurate and fair measures of social wellbeing to guide national and global policies. Global climate change action provides the clearest example of the need for coordination of public and private actors on natural capital management. Other forms of capital, particularly private and public management of social capital, including social data on the internet, however, pose major new challenges. At a dangerous time for vulnerable communities and for global security, it is vital that international cooperation be increased, that new rules be established to maintain world order, and that the US engage cooperatively in that order.
Key words—GDP, empires, integrated reporting, accountability, public financial management (PFM), fiscal risk management, neoliberalism, populism, social capital, climate change, multilateralism, global security.

This book is a forthright and novel examination of efforts to improve national and global governance over the last forty years. Much has changed since Michel Foucault considered, and rejected, economics and neoliberalism as a potential mechanism for individuals to govern themselves and their nations. Nonetheless, his approach, which focused on the evolution of social development through interaction of many disciplines and biopolitical forces, remains highly relevant. Neoliberalism became a dominant political force from the 1980s to the present. It has failed however to address issues of inequality, to ensure economic stability, or to tackle the problems of people and nations that have been marginalized by industrial progress and international conflict. Market forces alone cannot meet the needs of global society. Now, however, developments in behavioural theory, institutional theory and analysis, accounting theory and accountability practice are providing tools that are developing comprehensive and evidence-based measures of well-being that promise to broaden and strengthen the field of socio-economic policy-making. Resolute, albeit long-term, steps to establish widely accepted standards of accountability, the book argues, are essential to guide policies and address the formidable governance issues of global security, information technology, social inequality, and economic and financial crises that the world faces at the beginning of the 21st century.