The new Index of Sustainable Economic Growth shows there is a shift to strike a healthier balance between support for the economy, and care for essential social and environmental systems. But can it ever replace GDP as a measure of progress?
The new Index of Sustainable Economic Growth shows there is a shift to strike a healthier balance between support for the economy, and care for essential social and environmental systems. But can it ever replace GDP as a measure of progress?
"It's time to go beyond GDP" claimed Manuel Baroso, President of the European Commission in 2007, but for over 60 years GDP has remained the obsession, and some have said fetish, of most Governments and most commentators.
GDP is a measure of inflation-adjusted value that is added in an economy and, although it was first devised in the 17th century, it was only after the Second World War that it became widely and routinely used. Despite this long history, the Economist magazine recently published a pretty scathing attack on the ability of GDP to tell us all that much about anything at all.
It's becoming increasingly difficult to calculate, and indeed increasingly irrelevant in modern, service-based, economies which feed off the immense growth of the internet, social media, and new business models like Airbnb and Uber. It's a measure that also tells us nothing about inequalities, innovation or expanding consumer choice; it's a rather old-fashioned measure of production, not welfare. It has no means, for example, of including housework or caring for a relative. It does, however, capture major pollution events and their clean-up, such as Deepwater Horizon in the Gulf of Mexico, as positive additions to economic activity. Yes - it's certainly time to go beyond GDP.
Read more at The Ecologist
Image Credits: The Ecologist
