How should we measure the wealth of a nation?

22 : 01 : 2018 Culture : Finance : Cities
Phillip K Smith for Desert X. Photography by Lance Gerber Phillip K Smith for Desert X. Photography by Lance Gerber

Despite this growth, we have built a world of jobless growth, climate change, mass migration and rising inequalities.

Victoria Buchanan, strategic researcher, The Future Laboratory

In the 1980s, world GDP was £19.6 trillion ($28 trillion, €22.4 trillion) – in 2016 this had tripled to £52.9 trillion ($75.4 trillion, €60.5 trillion) (sources: World Bank, Statista). The global economy is now three times bigger than it was a generation ago.

And yet despite this growth, we have built a world of jobless growth, climate change, mass migration and rising inequalities thanks to our techno-utopian obsession.

The Growth Delusion, a new book by David Pilling, demonstrates how our focus on economic growth is distorting our view of what really matters, and is leading to policies that are increasingly at odds with people’s lived experience. ‘Economic growth has become… an altar on which we are prepared to sacrifice all,’ he writes in the opening chapter.

Take the 9,500 premature deaths caused each year by air pollution in London, for example. Some of them would have been avoided had more people worked from home or shared cars to the office. That would have meant fewer cars on the roads and less money spent at petrol stations. It would be good for the nation’s health but would reduce gross domestic product. As calculated at present, it would be bad for growth.

GDP was developed as a concept in the 1930s to facilitate fiscal policy – not to summarise national wellbeing or to benchmark industrial sophistication. The way we measure it today is failing us.

As we fully embrace the digital economy we will need to let go of outdated business models and contradictory definitions of growth and prosperity.

GDP can grow even if we throw more out than we buy and we become poorer. It can even increase as the consequence of a major environmental disaster, because of the economic activity created by the clean-up and repair. When forests are destroyed by economic activity, GDP can increase, making it good news for the economy.

We know there is a pressing need to create a more sustainable form of consumerism, but the fact is if we collectively choose to consume less, our society would break down because that is the way the economy and our corporations are designed.

Take Adidas and its new Speedfactory initiative, which will offer a more sustainable means of production, but surely once they can accelerate the manufacturing process, they’ll have to set targets to sell us even more trainers?

It already feels like there is a moral imperative to spend our way out of austerity, and it is our natural resources that bear the consequences. As we approach the third decade of the 21st century, society will need to solve increasingly grand problems and as we fully embrace the digital economy we will need to let go of outdated business models and contradictory definitions of growth and prosperity.

Just look at the alternatives that are already emerging in cities such as Jacksonville in Florida and Santa Monica in California, where they are implementing sustainable metrics around wellbeing, equality, happiness, natural capital and cultural assets.

‘Growth was a great invention,’ says Pilling. ‘Now get over it.’

For more on the new metrics we need to adopt if we are to build a better future, look out for our forthcoming Post-growth Society macrotrend.