To Save The Economy, We Have To Break Its One Sacred Rule

April 10, 2016

Profile photo of Jason

Author

This article was originally posted on FastCompany on 15 March 2016.

Scholars are still trying to figure out why the society on Easter Island collapsed, ending the people famed for their construction of towering stone heads. One interesting theory holds that it had to do with the heads themselves. Somehow, the islanders decided that the giant heads represented power and success, so different groups competed to build as many heads as possible. But because there was only one quarry, to move the stones around the island required felling trees to use as rollers. To feed their lust for heads, they felled the trees so eagerly that, over just a few generations, what was once a tropical forest was reduced to barren scrubland.

The islanders must have realized that their obsession with heads would quickly spell their doom. As the project wore on, they no longer had sufficient wood to build fishing boats or houses, nor trees from which to gather fruits and nuts. They must have seen this disaster unfolding—slowly starving to death and forced to live in caves for shelter—right up until they felled the last palm. It was all because of a myth, but a myth so powerful that, despite knowing its madness, they could not resist it.

Humans are strange creatures. We create our own myths and then we live by them almost as though we didn’t create them at all, as if they were handed down to us by the gods. And this is not just a characteristic of small societies. Our global civilization has its fair share of powerful myths, one of which is remarkably similar to that which destroyed Easter Island. Just as multiplying heads became the sacred rule of Easter Island economics, so there is one sacred rule that underpins our global economic system: namely, that GDP must grow, and must grow at all costs. Why must GDP grow? Because GDP growth is equivalent to human progress.

We tend to take the GDP measure for granted as though it has always existed. Most people don’t know that it was invented only recently. It has a history. During the 1930s, the economists Simon Kuznets and John Maynard Keynes set out to design an economic aggregate that would help policymakers figure out how to escape the Great Depression. Kuznets argued for a measure that would help us maximize human well-being and track the progress of human welfare. But when World War II struck, Keynes argued that we should count all money-based activities—even negative ones—so we would know what was available for the war effort.

In the end Keynes won, and his version of GDP came into use. GDP was intended to be a war-time measure, which is why it’s so single-minded—almost violent. It counts money-based activity, but it doesn’t care whether that activity is useful or destructive. If you cut down a forest and sell the timber, GDP goes up; GDP does not count the cost of losing the forest as a habitat, or as a future resource, or as a sinkhole for carbon. What is more, GDP doesn’t count useful activities that are not monetized. If you grow your own food, clean your own house, or take care of your aging parents, GDP says nothing. But if you buy food from Tesco, hire a cleaner, and send your parents to a nursing home, GDP goes up.

Of course, there’s nothing inherently wrong with measuring some things and not others. GDP itself doesn’t have any impact in the real world. GDPgrowth, however, does. As soon as we start focusing on GDP growth, we’re not only promoting the things that GDP measures, we’re promoting the indefinite increase of those things. And that’s exactly what we started to do in the 1960s. GDP was adopted during the Cold War for the sake of adjudicating the grand pissing match between the West and the USSR. Suddenly, politicians on both sides became feverish about promoting GDP growth. GDP growth became a sacred rule. And we remain in thrall to it today.

The imperative for growth is incredibly powerful; probably the most powerful force in our world. When the entire global political establishment puts its force behind this goal, human and natural systems come under enormous, overwhelming pressure.

What does this pressure look like in the real world? In India, it looks like corporate land grabs, which leave peasant farmers dispossessed. In the U.K., it looks like privatization of public services—with corporations eager to exploit untapped markets. In Brazil it looks like deforestation, which is eating the Amazon at a rapid clip. In the U.S. it looks like fracking, backed by a government desperate for cheap energy. Around the world it looks like trade agreements that strip away regulations that protect workers and the environment. And for all of us it looks like longer working hours, expensive housing, depleted soils, polluted cities, wasted oceans, and—above all—climate change.

We normally think of these as separate crises. But they are not: they are all connected. They all proceed from the same deep logic of GDP growth, the collective madness at the heart of our economic system. To fight them as separate issues is to mistake the symptoms for the disease.

People who spend their lives pushing against these destructive trends will tell you how futile it feels. It is futile because our governments don’t care. They don’t care because according to their most important measure of progress, destruction counts as good. Indeed, under the tyranny of GDP growth, the destruction must continue at all costs. The problem here is not that humans are inherently destructive. The problem is that we have created a myth that encourages us to behave in destructive ways, and have given that myth the power of a sacred rule. As Joseph Stiglitz has put it, “What we measure informs what we do. And if we’re measuring the wrong thing, we’re going to do the wrong thing.”
GDP growth might make sense on a planet with endless room and endless resources. But we don’t live on such a planet. In fact, we’re already overshooting our planet’s biocapacity by more than 50% each year. There are no longer any frontiers where accumulation doesn’t directly harm someone else, by, say, degrading the soils, polluting the water, poisoning the air, and exploiting human beings. At this point in our history, GDP growth is creating more misery than it eliminates. And the problem is not just that the growth is inequitably shared, although that it is a major issue; the problem, rather, is aggregate growth itself. In our era of climate change, even sober scientists are pointing out that growth is leading us down a path that that has widespread famine and mass displacement just around the corner.Why does GDP growth retain such a hold on our imagination? Because we assume that when GDP goes up, it makes our lives better: it raises our incomes, it creates more jobs, it means better schools and hospitals and so on. This may have been true in the past. But unfortunately it no longer holds. In the United States GDP has risen steadily over the past half century, yet median incomes have stagnated, the poverty rate has increased, and inequality has grown. The same is true on a global scale: since 1980, global GDP has grown by 380%, but the number of people living in poverty has, according to World Bank numbers of people living on $5 a day, increased by more than 1.1 billion. Why is this? Because past a certain point, GDP growth begins to produce more negative outcomes than positive ones—more “illth” than wealth, as the economist Herman Daly has put it (if “ill” is the opposite of “well,” “illth” is the opposite of “wealth”).

Yes, some try to reassure us that our economy is gradually “decoupling” from material throughput, and that soon we will have growth without destruction. Butstudy after study has proven that it’s not true. In fact, global consumption of materials has nearly doubled over the past 30 years, and accelerated since 2000.

The rule of GDP growth may seem sacred, but it is not. As quickly as we created it, we can pull it apart. And pull it apart we must—it’s time for the giant stone heads to roll. There are already movements in this direction. A number of states and countries have adopted much more sensible alternatives, like the Genuine Progress Indicator, which seek to promote human and environmental well-being. There are many others we might consider, and it doesn’t much matter which we choose—indeed, each city or country could pick a different measure, or no measure at all. The important thing is that we shake off the tyranny of GDP growth and open up a creative, democratic conversation about what kind of world we want to live in.

Be the first to add your opinion

Leave a Reply

Your email address will not be published. Required fields are marked *

 

Login / Create account


Trump: Join us in connecting the dots

The election of Donald Trump has left millions, maybe even billions of us in shock. Although we may be looking with bewilderment at the US today, we should remember that he is not an isolated phenomenon. He is a symptom of a sickness that is raging all around the world. People are hurting, disillusioned with mainstream politics and increasingly angry at a neoliberal economic system that is destroying lives and the planet with increasing ferocity. And in their desperation they are willing to consider extreme measures to make themselves heard.

Demagogues thrive amid fear and insecurity, which is why they paint the world in such dark terms. It’s a strategy that has put right-wing populist leaders in power in an Axis of Egos: from Brazil to Turkey, the Philippines to Russia, authoritarian strongmen like Trump are on the rise. Meanwhile, many centrist liberals, like the Democratic Party in the US, have been so intent on rejecting left-wing populist solutions, and so sure of their ability to beat anyone running on a white supremacy platform with its misogyny and homophobia, that they opened the door for Mr. Trump to walk straight through. Their preference is always to maintain the status quo that has served them so well.

As dangerous as the election of Trump is for the world, we can also see in this moment the truth that we simply cannot rely on the electoral political system to save us, because it is designed to prevent the fundamental change we need. Its own survival is at stake and it will marshal all its champions and resources to defend itself and stop the emergence of a new system. But when we work, or continue working for change from the ground up; when we build or keep on building new ways of living and being with each other where we live; when we construct or keep constructing the future we know is possible with our own hands, rather than hoping distant leaders will build it for us, we find our true power. Finally, when we combine that with the unbending hope that has powered change through the ages, we know our power has meaning.

A 400-year-old economic system is dying and another is struggling to be born. Change on this scale is not going to be smooth or easy. We should not be surprised, then, that moments like this — where the establishment is dealt a body blow — become more and more common. We can despair when that blow comes in the form of right-wing extremists, or we can step-up. We are the ones we are looking for, who can and must grasp the opportunities in these crises that are undoubtedly there.

So it’s time to come together, taking time to remember the earth. Remember all the successful struggles for justice that came before us, and imagine all those to come. Remember that social movements are growing all over the world and realising the common struggle. Remember life. Then, organise. Find each other and help midwife the inevitable transition that brings forth from the ashes of neoliberal capitalism a system that works for the good of all life on Mother Earth. This is not just activism; this is our responsibility as human beings alive as this all unfolds.

This is why we are here.