The Soviet Union used to judge itself on how much iron and how many tractors it produced. Britain used to measure itself by the size and reach of its navy, while Germany had its army. Today, Western societies measure the growth of GDP, because such material advance is what we believe counts.
But Western societies have been changing again as their peoples move beyond valuing themselves in terms of cars, fridges and TVs.
We want to be the authors of our own lives. People choose a life they have reason to value, as the economist Amartya Sen once put it. And over my lifetime, more people — though not enough — have been doing just that.
We want our work to be meaningful and satisfying. If key relationships do not work, we divorce. We try to be the best parents we can, not just “good enough.” We spend more than half our disposable income on services — adventure holidays, pedicures and garden design, to name a few. We no longer affiliate ourselves with mainstream parties because one ideology no longer expresses the complexities of our choices. We are worried about the environment, climate change, traffic congestion and the security and beauty of where we live.
But as nations, we carry on measuring the growth of goods and services that are sold in the marketplace — the gross domestic product — as if it were the only thing that matters. It is not.
David Cameron, leader of the British Conservative party, expressed this when he tried to launch a debate on promoting greater national well-being, but he was decried by the UK’s redneck media and timid politicians as a tree-hugging quiche eater who should get back to what politicians do — finding lines of division, promoting business, limiting workers’ rights and slashing back the state. But Cameron was right — and it is a pity he has retreated to being a typical politician.
However, the truth will out. French President Nicolas Sarkozy has been seized by the same conviction, and last year he commissioned the world’s best economists — a star-studded list of original thinkers — led by Nobel Prize-winner Joseph Stiglitz and Amartya Sen, to report on how best economic performance and social progress could be measured. Last week, they reported with a well-reasoned, technical but devastatingly radical document that could change all of our lives.
They damn GDP as hopelessly inadequate, even in its own terms. A car produced this year is very different from one in 1979, so why compare them? GDP does not reflect the world because it cannot reflect inequality. It does not reflect the sustainability of growth, not just in environmental but in economic terms. For example, if the growth of indebtedness had been offset against traditional GDP growth between 2004 and 2007, the numbers would have looked a lot less rosy and the impending crisis would have seemed a lot more obvious. It might have been mitigated or prevented.
And, of course, GDP gives no guide as to whether the environment has got better or worse over the measured period, nor whether we are depleting natural resources so much as to menace our children’s futures. In fact, it is pretty useless. To measure and worry about all of this would transform the public policy debate.
But the extraordinary group of thinkers Sarkozy commissioned does not stop there. Having been asked to measure social progress, they have had to identify what it is. Their answer is uncompromising. It is about promoting our well-being — and that is necessarily multi-dimensional. Obviously material wealth counts, but it must take account of the defects listed above.
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