Capital Institute owes much to the thought leaders who have helped frame our perspective on “the purpose of capital,” and Hazel Henderson is among those to whom we are most indebted. Hazel never ceases to amaze me. Susan Witt, Executive Director of the E. F. Schumacher Society, once described Hazel as a “national treasure.” It’s true. Never formally trained in economics, Hazel’s grasp of the subject, particularly its shortcomings, is remarkable. Hazel is a systems thinker, with a unique grasp of the multiple disciplines necessary to be able to see, holistically, the systemic challenges we face. Yet it’s Hazel’s intellect, energy, passion, generosity, and drive, often against the grain where it can be lonely, year after year, “self inflicted” I might add, that is so special. I owe a great personal debt to my teacher, advisory board member, and inspirational friend, Hazel Henderson. —John Fullerton, Founder, Capital Institute

Hazel Henderson has been knocking on the doors of the establishment for years with remarkable success to deliver her “beyond macroeconomic” message.

intellectual boutique for redesigning cultural DNA… a global acupuncturist applying fine policy needles at optimal intervention points with the goal of reconfiguring dysfunctional systems. Those are apt descriptions of Hazel Henderson, a brilliant, self-taught, systems thinker, “anti-economist,” and determined outsider who has been knocking hard for years with a remarkable degree of success on the doors of the establishment to deliver her iconoclastic “beyond macroeconomic” message. The sustainability movement is only now beginning to catch up with this visionary thinker.

Rewriting economic scorecards has been perhaps Henderson’s most enduring passion. “It has just always been so obvious to me that if you change the scorecard you change the game,” says Henderson. “And I have always been very interested in changing the unsustainable economic game.” Her core belief is that GDP is “a malfunctioning strand of cultural DNA replicating unsustainability” that needs to be redesigned.

Henderson traces her obsession with exposing the flaws in this key indicator to a defining childhood memory. Her parents had just returned to their home in the English countryside from a trip to London and described to her a black “fog” so dense that they could hardly see across their hotel room. This was the historic “Great Smog” of December 1954, induced by the discharges of coal-fired furnaces, and which was to be responsible for 4000 premature deaths in one week in the city.

A year later, in March 1968, three months before his assassination, Kennedy proved that he was a quick study of Hendersonian thinking. Campaigning for the Democratic presidential nomination, he delivered a speech to the student body at the University of Kansas in which he spoke of how “Gross National Product…counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage…special locks for our doors and the jails for the people who break them…and…the destruction of the redwood and the loss of our natural wonder in chaotic sprawl… yet does not allow for the health of our children, the quality of their education … the beauty of our poetry … the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.”

That memory came back to Henderson with full force when she moved to New York in the early 1960s and witnessed first-hand the horrific impact on air quality of the city’s millions of garbage incinerators. A born activist, Henderson lost no time as a new American citizen in co-founding Citizens for Clean Air in 1964, three years before the first federal anti-pollution enforcement legislation was enacted. When then Mayor Robert Wagner failed to take the organization seriously, she convinced Senator Robert F. Kennedy to join her Clean Air colleagues on a helicopter ride over Manhattan in 1967 to view the sources of pollution. Henderson expounded on what was in her view so fundamentally wrong with GDP as a measure of prosperity–how absurd it was to add to it, rather than subtract from it, negative economic activities like cleaning up air pollution. The New York Medical Society agreed and gave Henderson its Citizen of the Year Award in 1967.

Since her days as an anti-air-pollution campaigner, joining with Ralph Nader in the Campaign to Make General Motors Responsible, Henderson has been a vocal critic of neo-classical economists, the narrowness of their vision, their tendency to manipulate indicators, indexes and models, and their excessive influence in Washington (in Harvard Business Review, 1968, 1971, 1973). “What amazed me is the need to change all the economic scorecards and accounting protocols has been so obvious yet nothing has been done about it,” she maintains. “It was my political education to figure out where the resistance was coming from and who were all of these interest groups keeping the status quo in place.”

That education continued in the mid-1970s when Henderson successfully organized a grassroots letter-writing campaign on her own behalf to be appointed a member of the Technology Assessment Advisory Council to the newly created Congressional Office of Technology Assessment. Among Henderson‘s fellow OTA members were Nobel Prize winners, the head of the GAO, the presidents of CalTech and MIT, and the CEOs of Dow Chemical and Texas Instruments. “It was pretty daunting, very fast track for me,” she admits. “I had to crack the books and work hard. I considered it my unofficial PhD.” Since then, she has been awarded several honorary doctorates, including from the University of San Francisco and Soka University in Tokyo.

The OTA was a real innovation in multidisciplinary policymaking, a group that members of Congress could consult when they were considering legislation related to science and technology. The group took what was then an unorthodox approach to policy analysis. “We recognized that you could use economic analysts for policy decision-making but it was not legitimate without physics, ecology, engineering and all the others who needed to weigh in,” Henderson reports. “At OTA we hired economists and gave them very specific orders. We said: ‘Don’t bring us your models. We want you to study this set of technology choices and we don’t want cost benefit analyses. We want to see the income distribution and the second-order impacts. Who precisely are the winners and losers?’ Because of course those cost benefit analyses just average everything out.”

Henderson’s six-year stint commuting back and forth from her home in New Jersey to Washington on the prestigious Advisory Council of the OTA put her in “body contact” with “experts” on the big issues of the day. “This is where I honed my consciousness of how the economics profession had colonized the public policy process,” she says. “They got everyone to believe in this idea that everything had to have an economic impact statement, that you couldn’t do anything until an economist signed off on it. I was amazed, I kept asking, ‘how can you manage such a complex society with a single discipline?’ The economists had ridden into town with the Keynesians and when they put together the Full Employment Act of 1948 they promised they could manage the economy and keep inflation low and unemployment low and keep the GDP growing and they were everywhere. But I used to go round saying, ‘of course you want the economists on tap, but never on top.’“ She participated in the first international Conference on Chaos Theory and Complexity in 1982 with Ilya Prigogine, Edgar Morin, Kenneth Boulding and Ashok Khosla, after presenting her paper “Risk, Uncertainty and Economic Futures” at the North American Society for Risk Assessment (Bests Review, May 1978).

As Chair of Citizens for Clean Air Hazel Henderson took advantage of a helicopter ride over Manhattan with then Senator Robert F. Kennedy, Jr., in 1967 to express her views on what was so fundamentally wrong with GDP as a measure of prosperity. In a speech he gave at the University of Kansas the following year, Kennedy proved he was a quick study of Hendersonian thinking, arguing that “GNP measures everything…except that which makes life worthwhile.”

The OTA was disbanded in 1996 after the Republican takeover of Congress promoting their “Contract with America,” Henderson reports. “They took the neoclassical economic view that you don’t need to assess technology, it is driven by consumers. I always knew that was nonsense. I knew that technology is often pushed by corporations and imposed on the market by advertising campaigns and corporate lobbying. That was how we got nuclear power and supersonic transport planes and why we didn’t get solar energy. Jim Fletcher who was on the OTA Advisory Council with me, and later became Head of NASA, always maintained that if we in the United States had subsidized solar, wind, renewables, and energy efficiency to the same extent as coal and nuclear and oil the entire USA would have been driven by renewables and energy efficiency by 1975.”Henderson took advantage of every opportunity to lobby for initiatives that would expose policymakers to a wider spectrum of viewpoints. For example, she testified before Congress in 1973 for the establishment of a Congressional Budget Office. “Back in those days there was just the Office of Management and the Budget,” she recalls. “They would send huge reports and dump the budget documents on Congress. At the time Congress had nothing like a CBO and so there was never any capability to critique whatever the president was pushing.” Congress passed enabling legislation creating the CBO in 1974.

Her book Creating Alternative Futures, published in 1978, became an “underground best-seller,” selling 40,000 copies. In 1981 she published The Politics of the Solar Age in which she advanced the thesis that the country could not make the shift to renewables without overhauling its economic model, confronting the fossil fuel industry lobbies and pulling their subsidies. In reviewing the book for the New York Times, Langdon Winner wrote: “Miss Henderson writes in a lively, well-informed, deliberately outrageous style about matters important to us all. In her best moments she seems a capable successor to the late E.F. Schumacher, a man she recognizes as her mentor. Those weary of threadbare liberal economics and repelled by present-day conservative nostrums will find here a great deal to ponder.”

Henderson did not relax her alertness to the often-problematic economic impacts and hidden costs of technological innovation after she left the OTA. She had remained active in labor advocacy organizations since the 1960s, including labor leader Theodor Kheel’s Automation House, a New York City-based nonprofit that was working to raise public awareness of the connection between automation and job destruction. At the time, visionary labor leaders were taking the view that if machines were eliminating jobs then labor needed to own a piece of the machine. Henderson allied herself with Louis and Patricia Kelso’s Employee Stock Ownership Plan initiative and founded the National Citizens for a Guaranteed Income with futurist Robert Theobald. She continued to write articles about the need for the economics profession to own up to the fact that the flip side of the gains in productivity from technology was job destruction and unemployment, and that more often than not automation was translating into decreased middle-class purchasing power. “Everyone wanted to introduce more technology, which meant you could work fewer employees harder,” reports Henderson. “ Those fired (whose ‘productivity’ fell below zero), would become the taxpayer’s responsibility.”

Although the book was critically acclaimed, the recent election of Ronald Reagan had created a climate in the United States that was not particularly receptive to its message. Henderson therefore began traveling around the world, delivering it instead to audiences in Europe, Japan, China, and in the many countries where her books had been translated. Since 1986, China’s State Council has invited Henderson to lecture at many of their institutes and universities.

Henderson realized early on that the media was the message. In 1966, with her characteristic skill at applying pressure at just the right power points, she singlehandedly convinced all the major television and radio networks to begin broadcasting the air pollution index when they reported the weather. “That was a big lesson to me in how to deal in a democracy,” says Henderson. “I just sat down in front of my typewriter and typed out letters to the network chiefs at ABC, NBC and CBS, and the then Head of the Federal Communications Commission Newton Minow. I got a lovely letter back from Minow and he said he would be interested in learning from me how the networks reacted to my proposal. So I sent a copy of Minow’s letter to the networks and after about a month I got a phone call from a fellow who said, ‘are you the lady that wants to put the air pollution index on TV?’ and I said, ‘yes,’ and he said, ‘I am vice president for news at ABC TV and we think it is a great idea.’”In 1982 the Calvert Group of socially responsible investment funds asked her to join their advisory council. “That was like crossing the Rubicon for me,” says Henderson, “deciding to be part of capitalism.” The association with Calvert proved to be highly productive. Along with

her fellow Advisory Council members she pioneered some of the earliest ESG screening methodologies. And in 2000, in partnership with the Calvert Group, she launched the Calvert-Henderson Quality of Life Indicators. Although the book was critically acclaimed, the recent election of Ronald Reagan had created a climate in the United States that was not particularly receptive to its message. Henderson therefore began traveling around the world, delivering it instead to audiences in Europe, Japan, China, and in the many countries where her books had been translated. Since 1986, China’s State Council has invited Henderson to lecture at many of their institutes and universities.

Henderson served with Norman Cousins and Fred Friendly on the National Committee for Public Broadcasting, an initiative that led to the creation of the Corporation for Public Broadcasting in 1967. In the early 1970s Henderson also actively participated in the successful effort to block the National Association of Broadcaster’s attempt to gain ownership control of all their TV licenses in the country.

Henderson is now a media mogul in her own right as Founder and President of Ethical Markets Media (USA and Brazil), which reports on news of initiatives that promote a more sustainable, green, and more ethical global economy. Ethical Markets Media’s syndicated PBS Special, “The Money Fix,” has been broadcast on PBS stations throughout the country.

Advocating for An Alternative to GDP
One of Hazel Henderson’s first thought pieces on alternative measures to GDP was published in The Futurist in 1975. In Paradigms in Progress (1991), she developed Country Futures Indicators©, a scorecard that expanded GDP measures to include key nonfinancial indicators of well-being. She worked with the UN Development Program to launch what is now an often-cited alternative to GDP, the Human Development Index. Henderson also participated in the UN Earth Summit in Rio de Janeiro in 1992 when 170 countries signed on to an agreement to revise GDP to reflect the costs of social and environmental impacts of economic activity. In 2000, in partnership with the Calvert Group, she launched the Calvert-Henderson Quality of Life Indicators.In 2003 she helped organize the International Conference on Implementing Indicators of Sustainability and Quality of Life (ICONS), in Curitiba, Brazil, which was attended by over 700 economic global policymakers and statisticians. She was instrumental in inviting the government of Bhutan to present its research on Gross National Happiness (GNH) at this conference.

Most recently Henderson was a co-organizer, representing the Club of Rome, together with the EU Commission, World Wildlife Fund, OECD and EuroSTAT leaders, of the November 2007 European Parliament conference on Beyond GDP. Ethical Markets Media funded their survey with Globescan of publics in 10 countries, the results of which indicated significant support worldwide for a broader set of measures of well-being as an alternative to GNP. An update will be distributed by the BBC in September 2010.

The Friends of Hazel Henderson
Nicholas Parker, Executive Chairman & Co-Founder, The Cleantech Group: “I got to know Hazel when I was living in London in the early 1990s. It was around the time of the Rio Summit some colleagues and I were building what turned out to be Europe’s first environmental finance strategy advisory group. She and I met over coffee in Covent Garden and I remember thinking at the time, “she is way ahead of all of us in her thinking and hopefully we will all catch up.” We have had a conspiracy of ideas between us ever since…sharing and road testing our thoughts before putting them out into the public.

Matthew Kiernan, founder of Innovest Strategic Value Advisors, and author of Investing in a Sustainable World: Hazel is a force of nature. She consciously elected to stay out of the mainstream and instead to be a constructive critic, buzzing around it and zipping in to do helicopter strikes! She is a not only a “big picture,” original thinker, I would describe her as courageous as well. She has been totally consistent over several decades and there has been no challenge too daunting for her to throw herself at.

Amy Domini, Founder and CEO, Domini Social Investments LLC, and author of Socially Responsible Investing: Making a Difference and Making Money: Hazel has been a key thinker in framing the issues that have allowed people like me to construct an intellectual underpinning in the field of socially responsible investing. For example, the Calvert-Henderson Quality of Life Indicators was an early, disciplined approach to analyzing were we better off or not. Hazel was also an urging voice for us in the Social Investment Forum and the Social Venture Network. She was very much a force in setting the groups’ tones and directions. She has also been a prolific writer, and that has been extremely important in getting people to understand the underlying theory she has expounded.

Alice Tepper Marlin, President and CEO of Social Accountability International:  Hazel was been a wonderful advisor and mentor. She served as a board member of the Council of Economic Priorities, which I founded in 1969, and was a great inspiration to all of us. She not only inspired us but informed us with new ideas, and was very effective at promoting the organization as a public speaker, a networker, and in her writings. Although many of her ideas have gained acceptance they were far ahead of their times when first introduced.

More About Hazel Henderson
www.hazelhenderson.com
www.ethicalmarkets.com

—Susan Arterian Chang is Director of Capital Institute’s Field Guide to Investing in a Regenerative Economyproject.