It may sound like a paradox but it is possible to grow the economy without increasing GDP, if we widen the definition of the economy to include human wellbeing and nature, says Christian Felber, the founder of the Economy for the Common Good, in a new guest article.
A fierce battle is raging around the role of growth in the economy. While critics, such as British economist Tim Jackson, are demanding degrowth or post-growth, neoclassical economists and political leaders seem to be addicted to growing the economy. Without growth, they fear that the capitalist engine would grind to a halt and the economy die. Nevertheless, four female prime ministers – of Iceland, Scotland, Finland and New Zealand – are officially seeking a more suitable successor to gross domestic product (GDP) for measuring wellbeing.
One reason why the debate is so entrenched is due to the ambiguity of the core concepts involved. Economics does not offer a clear and universally accepted definition of “welfare”, let alone what it means when it refers to the “economy”. As a consequence, it remains unclear what exactly is meant when we talk about “economic growth”, beyond the equating of GDP growth with economic growth.
Money doesn’t grow on trees
But what grows when GDP grows is not necessarily grain, vegetables, food security, affordable housing, meaningful work, healthy ecosystems, or even love and peace. GDP growth is little more than an aggregation of market transactions measured in monetary terms, such as the production and sale of chocolate, airplanes, facility cleaning, business consultation or weapons production, regardless of whether or not they contribute to human wellbeing and the health of the planet.
Read the full article on META, the news channel by the European Environmental Bureau (EEB).