Last year New Zealand’s Prime Minister Jacinda Ardern made international headlines after she put out a national budget where spending was dictated by what best encourages the well-being of citizens rather than focussing on traditional bottom-line measures like productivity and economic growth.
The progressive government, which has been credited for its response to the coronavirus crisis, announced that instead of putting an emphasis on Gross Domestic Product (GDP) it would target goals such as community and equity in well-being across generations in what was described as a “game changing event” by LSE professor Richard Layard.
As the Covid-19 pandemic takes hold and people’s priorities begin to alter, it seems like the rest of the world is starting to take note.
Post-growth economy
In Amsterdam, where the city’s economy has been ravished by global travel restrictions, leaders are putting together an unorthodox post-pandemic recovery plan where its main goals aren’t about growing the economy or increasing GDP but about making the city better for people and the planet.
Milan has already moved to introduce one of Europe’s most ambitious schemes reallocating street space from cars to cycling and walking in response to the crisis and in France a citizen’s assembly has called for a different social and economic model that is more human and more resilient in the face of future downturns.
Winds of change
In the UK, too, winds of change seem to have been exacerbated by the pandemic.
A report commissioned by The Treasury recently concluded that we need to recognise new measures of success that go beyond GDP. The Dasgupta Review noted that the “human economy is embedded within, rather than external to nature”, and that a limited paradigm that prizes economic growth at any cost could lead to future crises.
A recent poll of 2,000 Brits found eight out of 10 people would prefer the government to prioritise health and wellbeing over economic growth during the coronavirus crisis, and six in 10 would still want the government to pursue health and wellbeing ahead of growth after the pandemic has subsided.
The findings show that “growth at all costs” is not something that people will support any longer, with a clear appetite to move away from GDP as the only indicator.
The tragedy of growth
As such a new report has been published by Positive Money calling on the Treasury, the Bank of England and the Office for National Statistics (ONS) to change tack in how they define growth following the Covid-19 pandemic.
Pulling research from across the world it argues that GDP growth fails to deliver enhanced life satisfaction, poverty alleviation and remains environmentally disruptive. It also sets out steps that we should consider in moving towards a ‘post-growth’ or ‘doughnut economy’, where other indicators are taken into account and actively improved upon.
As report author, David Barnes notes: “We are stuck in a tragic relationship with GDP growth, now is the time to escape this relationship and build a new system where the economy is built around people and planet.”
New way
As Caroline Lucas pointed out, the old system is getting stress tested like never before.
“The idea that we can somehow pursue infinite growth on a finite planet without disastrous social and ecological consequences is at the core of how most governments run their economies”, she said.
That cannot be the way for much longer.
As Lord Deben concluded, “what throwing a nation on its internal resources does is to make people think much more clearly about what they think is important.
“It has given people the chance to think differently about their lives.”
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At last! Humanity is the real economy. It has no intrinsic value. The first casualty must be trading in money itself.