RIP GDP – Why we need a new metric of progress in a warming world

By Harry Smith
October 2020

GDP: A Global Economic Metric is Born

Since it’s enshrinement at the Bretton Woods Conference of 1944, GDP, ‘Gross Domestic Product’, has been lifted up as the leading metric of the global economy. The term refers to the total value of goods and services produced in a country. 

GDP has become the central proxy for the health and welfare of society, and the dominant criteria of sound policy. Yet to environmentalists, GDP has long represented a ticking time bomb[1]. As GDP increases, so must the economy’s material throughput, degrading more of nature in circuits of capital, pumping more gases into an already heated atmosphere[2].

Tell your co-worker that the whole engine of economic growth and GDP needs binning, and they won’t hesitate to tell you that you’re mad. We’ve become so accustomed, particularly during the COVID-19 pandemic, to hearing about our ailing GDP, that we’ve not yet stopped to question it.

GDP and the Climate Crisis

In the past 20 years, the name of the game hasn’t changed. Progress, or the lack of it, however, means the stakes have never been higher. The global economy has largely ‘re-materialised’ since 2008, becoming even more ‘coupled’ with aggregate resource use. Even if we were to step on the accelerator of clean growth today, absolute decoupling cannot happen at the rate necessary to stave of the worst of the climate crisis[3]. After all, at current rates of growth, we’d have to decarbonise an economy double the size of the present day by 2050, topping 4 times above the ‘safe limits for humanity’ for resource use[4].

GDP insists on accounting for everything - ignoring the extraction of natural resources or any social system that explains it. The logic of GDP means everything is rosy, as long as the trend is ever upward: grow the pie and die. It says nothing about inequality, poverty, nor the fast-declining state of ecology.

Turning the Tide on GDP

Of course, changing how we measure our society isn’t a panacea to our problems of heat, degradation and consumption, it marks only the start of a root and branch transformation of the world economy. Resigning GDP to the history books is to chart a new course, but we must also transform the vessel that is the economy into one that takes only what is required for our prosperity.

Capitalism, meanwhile, is a deep-sea trawler. As one of the only economic systems dependent upon growth, the climate crisis is really a crisis of capitalism[5]. This fact won’t change even if it goes unacknowledged. As GDP is the central axiom of late capitalism, this is where to start if we are to get serious on climate. Any talk about emissions or ecological degradation, that misses this context, is to mistake the symptoms for the disease.

New Alternatives

Turning the tide on GDP therefore requires us to seek out real alternatives, economic models that meet the needs of society within planetary limits. Fortunately, we’re not starting from scratch: a long neglected field of economics, ecological economics, has long held that a ‘steady-state’ economy or even ‘degrowth’ as pragmatic policy goals, placing a focus on sustainability and well-being as the purpose of society, as opposed to growth at all costs[5].

Maryland’s ‘Genuine Progress Indicator’ realises this by correcting for for environmental degradation, inequality and other social ills[6]. Similarly, Amsterdam’s ‘City Doughnut’ goes someway to address growthism, by providing a framework where planetary and social well-being are targeted in tandem[7]. Even China, despite internal resistance, has gone someway to address the environmental side of the equation by its ‘Green GDP’, shelved in 2006 but revived in 2016[8]. It is the combination of the two, however, a new metric for a new economy, that meets the eye of today’s crises.

RIP GDP

It has long been an ideological project of neo-liberal economists to paint the economy as something removed from our thinking, subject to its own mathematical laws. It’s why it’s often decried as a ‘dismal science’, a pretence to a more noble discipline. 

Yet the history of GDP, wedded to the idea of economic growth, makes this fallacy abundantly clear. As does the COVID-19 pandemic, as the virus pulsed through networks of global capital, states capriciously designated essential and non-essential labels to every conceivable economic activity in an effort to stem the spread. GDP is similarly just as arbitrary and within an era of climate anxiety and social discontent, can be retooled to guide us away from our economic system as we know it.

Our ‘new normal’ awaits.
RIP GDP.

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You may also be interested in: A Circular State of Mind

References:
[1] Timothée Parrique, (2018), Memories of Life After Growth, available at: https://www.youtube.com/watch?v=qfOo_KC_0NQ
[2] Andreas Malm, (2020) Corona Climate Chronic Emergency.
[3] Hickel & Kallis, (2019), Is Green Growth Possible?, available at: https://www.tandfonline.com/doi/full/10.1080/13563467.2019.1598964
[4] Jason Hickel, (2020), Less is more: how degrowth will save the world.
[5] Vadén et al (2020), Decoupling for ecological sustainability: A categorisation and review of research literature, available at: https://www.sciencedirect.com/science/article/pii/S1462901120304342?dgcid=coauthor#bib0060
[6] Maryland State, (2017), Genuine Progress Indicator, available at: https://dnr.maryland.gov/mdgpi/Pages/default.aspx. The GPI was originally coined by ecological economist Herman Daly in 1995.
[7] Doughnut Economics Action Lab et al (2020), available at: https://www.kateraworth.com/wp/wp-content/uploads/2020/04/20200406-AMS-portrait-EN-Single-page-web-420x210mm.pdf
[8] Wang (2016), Revive China's green GDP programme, available at: https://www.nature.com/articles/534037b

© 2020 Climate Just Collective