“…increasingly we live in a world filled with the equivalents of deadly garage-door openers, unnecessary items that offer us mild and insipid comfort at the price of a dangerous and uncomfortable planet, and at the price of any real relationship to the physical world. if you live in a suburban home and commute to a parking garage somewhere, that ten seconds of opening the garage door(manually) might be nearly the only rain you ever feel.”
Bill McKibben, The Age of Missing Information
At the end of last month, the New Zealand Labour Party Prime Minister Jacinda Ardern announced a radical plan to change the way we think about what real wealth is. Her government is proposing to move away from the traditional measurement of economic health, which is GDP or Gross Domestic Product, towards a more multi-faceted approach which focuses on measuring living standards and quality of life as well. This step offers an opportunity to start a much-needed global conversation in political and public circles about how we grapple with the pressing and urgent issues of our times; the causes and effects of climate change and increasing poverty and inequity both of which are rooted in an economic narrative that has shifted wealth into fewer hands and taken little account of the human and environmental costs.
For decades the success of economies has been measured by looking at their national income captured as GDP. Growth has been represented as a cure-all for society’s social and economic ills. If GDP is rising it is a good news story. If it is not, then we are told this is a problem which will impact on a country’s ability to pay for public goods. We are continuously and erroneously told by politicians with an ideological agenda that government’s ability to provide public, welfare and social infrastructure is dependent upon a healthy, growing economy. As we shall see, there could not be a more fraudulent narrative.
Growth, growth, growth. Politicians, Institutions and Unions have for decades talked about it as if it were an endless, upward trajectory and now in this age of ecological crisis they talk instead of sustainable growth as if that is the solution. The message we are being given is that we can continue to consume, but we have to do it sustainably. As Philip Lawn, a senior lecturer in environmental and ecological economics at Flinders University in South Australia, explained in a lecture at Adelaide University last year ‘Sustainable growth is an oxymoron. It is impossible’* (For a more in-depth discussion of this statement you can listen to the lecture here). We must stop kidding ourselves that growth as an objective (even sustainable growth) is advisable or indeed possible. The message has to be that if finite resource use exceeds the biocapacity of the planet, then that spells trouble.
So, to go back to the beginning. Where did the term GDP come from? During the Great Depression an economist, Simon Kuznets, developed a model for measuring National Income which became known as Gross National Product. This allowed the US government to measure and compare annual output which at that time was an important measure determining whether the government’s New Deal was making a difference following the financial collapse. By the 1950s it had become the standard measurement of economic success for industrialised countries.
For decades we have been mesmerised by a measurement which puts growth as the ultimate attainment for economic success, regardless of the real costs whether they are environmental or socio-economic. The problem with GDP, as is increasingly being noted in many different forums, is that it looks at all human activity purely in numerical terms rather than societal. These days GDP as a measurement trumps ecological health and well-being, but it is inadequate because it cannot show how income and wealth is being distributed. The GDP measurement measures the income deriving from production and lumps it all together regardless of its source. It does not measure inequity, environmental destruction, or the loss or squandering of wealth and resources.
To put that into a UK context, over the last few years, and indeed this week, torrential rain due to the human impact of our carbon-based economies on our weather patterns has caused huge flooding and infrastructure damage. Repairs to that infrastructure have been and will be accounted for in the GDP figures as benefits regardless of the long-term impact on people’s lives, the communities they live in and their local economies which will suffer the painful consequences for months and maybe years to come.
In some countries, even drug money and prostitution are counted in the GDP figures without any consideration of the cost to those whose lives are blighted or destroyed by them.
The question is should GDP ever be considered a suitable indicator of success or happiness?
Interestingly, and as an aside, as Kate Raworth notes in her book Doughnut Economics, Kuznets himself became one of its most outspoken critics saying that ‘the welfare of a nation can scarcely be inferred from a measure of national income.’ Now we can add ecological concerns to that lack of measurement.
To keep that growth train moving forward and in the service of an ideological market driven agenda, it became an accepted narrative to sacrifice environmental and other standards by watering them down and cutting spending on public services and welfare which were all seen as costs constraining growth. The consequence of this ideologically driven narrative has been increasing harm to the well-being of citizens.
However, as the subject of climate change increasingly gets top billing in people’s minds, politicians have begun talking warmly about their commitment to addressing it. Never mind that their commitment doesn’t match their actions and successive globally negotiated agreements and national legislative efforts have not delivered as promised.
At the end of last month, the head of Scotland’s nature conservation agency expressed her anxieties saying that the world had less than 10 years to shift to a low carbon economy before the effects of climate change became irreversible and catastrophic. Radical action she said was needed by 2030.
Of course, last week Theresa May did enshrine in law a pledge to reach net zero carbon emissions by 2050 saying “This country led the world in innovation during the Industrial Revolution, and now we must lead the world to a cleaner, greener form of growth.’ That all sounds very positive. But there we have it again – a ‘greener form of growth’ -the panacea for addressing climate change – just put eco in front of it and Bob’s your uncle; the capitalist merry-go-round can continue.
On the other hand, Chancellor Philip Hammond deplored the prospect of such a target which he claimed would require further austerity and cuts to public spending. So, lots of nice warm words from one side and on the other caution being advised because the Chancellor’s ‘sound finance’ approach might go belly up. They can’t even agree amongst themselves and spending promises cannot, as we know, be relied upon once governments or leaders are elected. In fact, it is notable that in the recent Tory leadership debates that despite pledges on the NHS and social care, there were no promises made to abandon austerity. One candidate even went as far as to say that public services like the NHS depended on creating a healthy economy, presumably based on the false idea that taxes fund spending. And as for the environment, that scarcely got a look in when candidates were making their pitch for the leadership.
At the other end of the scale, the Trump administration is currently seeking to increase fossil fuel use and scrap environmental regulations because it says they impede business. Only this week, new rules were announced to roll back previous environmental legislation on coal fired energy plants (which critically never actually came into force due to opposition) which the administration claimed would create thousands of jobs. But at what cost? Even Unite the Union is missing the point this week with its support for a third runway at Heathrow. It justifies its backing on the basis of the proposals for an ultra-low emission zone and improved air quality in and around the airport, attracted no doubt by the prospect of the 77,000 jobs it will create. Jobs are important, of course, but they should not be at any cost. This position fails to take into account the damaging impact of flying overall on the global environment, not to mention the local impact of noise pollution caused by planes taking off every few seconds and the increased car traffic in and out of the airport.
There doesn’t seem to be any collective will or common approach on the part of global politicians to really address the joint issues of climate change and socio-economic inequality. The market-led growth or sustainable growth paradigms still rule on the left and right of the political spectrum but at whose expense?
As many people are increasingly noting in relation to their own lives, the GDP measurement doesn’t match up to their own real-life experiences in terms of their standards of living, health and well-being not to mention the impact of climate change on citizens across the world and increasingly, our own nation.
So, what is the solution? In a world of finite resources and increasing inequity in wealth distribution, there is an urgent need to move beyond the GDP metric to measure what really matters and consider how can we make the necessary transition towards what has been termed ‘a steady state economy’. Many ecology experts and economists are increasingly giving their support to the concept of a Genuine Progress Indicator (GPI). This reflects in many respects the Gross National Happiness Index created by the Buddhist state of Bhutan in 1971, which advocated a radical approach to development by measuring prosperity through the spiritual, physical, social and environmental health of the country and its people. It fostered a belief that well-being should take preference over material growth.
The GPI is based on the idea that a country’s growth has both benefits and costs and the latter can have a damaging impact on citizens’ welfare and ecological health. In Philip Lawn’s model, the harmful costs of economic activity range from resource depletion, increased crime and family breakdown to air, water and noise pollution and loss of farmlands and wetlands.
Should humans fail to consider the impacts of the market-led, consumer growth model on people’s well-being and the environment, then at some point we will face the consequences imposed by nature itself. We must, therefore, start to make preparations to move towards a steady state economy defined by the recognition that the earth’s natural resources are finite, that the planet has a limited biocapacity and that if we continue to grow beyond the earth’s ecological limits through overproduction and overconsumption there is only one outcome. Environmental degradation and collapse. Spaceship Earth no longer capable of supporting its passengers.
Of course, the next question here is how can we make this transition? The Chancellor and others have already claimed that the scale of the investment needed is too costly and unaffordable. Aside from the increasing evidence of the effects of global warming, austerity has already cost countless lives both in real terms and in terms of increased poverty and inequality. It is also responsible for the demolition of the public and social infrastructure on which society depends for its health and well-being. Alongside those realities, on the right -wing, fiscal discipline takes precedence over the future of generations to come while those on the progressive left are still embracing the economic narrative of household budgets which will equally constrain government action. We balanced the books and stuck to our fiscal credibility rules but look what we did to the planet!
During the global financial crisis, George Osborne and David Cameron talked about the nation being ‘all in it together’ but clearly taking into consideration the growing inequity in the distribution of wealth and resources, that was never true. However, in terms of the ecological crisis we face then it is absolutely true. We are all in it together. There is no escape. Putting it frankly, unless collectively we take responsibility no-one’s getting out alive, least of all those who will inherit our mess.
The only thing we can’t afford is not to act. That action needs to take place within the context of an understanding of how a modern money system works. And far from it being a question of monetary affordability, governments need to focus on the more pressing questions around finite resources and how we manage them to bring about a steady state economy which values humans and the environment in which they live. A government with the power to issue currency has the tools within its reach to achieve that goal, if it espouses a truly progressive agenda and is willing to rethink economic goals that are usually based on growth and build in instead, a plan for ecological transition along with a more equable distribution of the planet’s resources. The Green New Deal and the Job Guarantee are already gaining traction as first steps in achieving a steady state economy, and Jacinda Ardern’s government sets an important example of the road we need to travel. The first seeds are being planted, and now we have to ensure that we create a receptive and informed audience willing to play its part to deliver it.
Great info ,thank you .