Anyone who thinks you can have infinite growth on a finite planet is either a madman or an economist – David Attenborough.
The problem with using GDP as a measure of the human condition is that it will ultimately fail. The prospect of keeping growth going to satisfy an ever demanding public is nonsensical when the earth’s resources are limited. Arguments that we have managed so far won’t wash. Once the agar jelly in the petri dish is depleted there is no replacement.
Also, GDP does not measure the human condition. A higher GDP does not make for happier people as it only counts monetary transactions rather than the other myriad of things that keep us alive and in comfort.
There is that old saying that ‘he knows the cost of everything and the value of nothing’ and this rings true for the use of GDP. It is a monetary measure of things that add to society as well as detract from society yet it does not measure any of the unpaid value, including voluntary work and much of the world’s caring duties.
What then is to be done to wean us off our GDP addiction? First of all we need to recognise that continual growth is impossible. Even standing still may not be possible without a radical rethink as we are using up the world’s resources faster than they can be replaced.
Secondly, we need to split GDP into those things that are positive for society and actually add value, such as manufacturing and retailing, and those things that are bad for society or do not add value, such as policing or financial transactions.
You may wonder why the differential. Surely policing is not bad for society, we can all agree that we need the police to maintain a peaceful and fairer society but it does not add value. At the moment, if crime goes up, the cost of policing adds to GDP. If you need to insure your property more because of a crime wave then GDP goes up. A lawless and warmongering society would increase GDP.
Next, we should measure the ratio between the two GDP figures and set policy to increase the ratio between the positive and the negative – a positive GDP index perhaps. We should then set out to maximise this ratio.
As a country we have a high GDP, the fifth or sixth biggest in the world yet in truth we are a rich country filled with many poor people. Our obsession with GDP does nothing to resolve this problem and it is high time we measured something else.