In the future, economists will have a different vision of the economy and will measure success differently.
Few ideas unite left-wing and right-wing politicians like that of economic growth. We can debate all we want about how to generate growth and what to do with the money created, but the undisputed fact remains that we must pursue annual growth rates of at least 3% for there to be new money and for the economy to function minimally well. Or so tells us the overwhelming majority of politicians, economists and media outlets.
Three percent doesn’t sound like all that much, does it? Because in our minds, we imagine an angle that looks more or less like this:
In truth, however, this 3% is better represented as an upward curve than as a straight line, since the growth rate is calculated each year based on the total of the previous year, not the initial year.
If we model the world GDP with an annual growth rate of 3%, the global economy actually doubles in size every 23 years.
As the economy grows, so does our energy consumption, garbage, pollution, fishing, population, extinctions and deforestation.
In other words, even though we are hitting planetary limits and we must stop now so as not to ruin the future of generations to come, we are still being told that we need to produce more and more, forever.
We live in a suicidal economic system whose engine is economic growth. If we are to survive, we must change it.
Abandoning Infinite Growth
To get out of infinite growth, we can start by targeting its almighty indicator, the one used to rank the world’s economies: the Gross Domestic Product, or GDP.
The GDP is supposed to measure the success of an economy, because more growth should mean more work and money for everyone.
However, that’s not the whole story: the GDP measures whether there was more or less activity, but it does nothing to monitor the distribution of wealth. It also fails to measure the impact of our activities on our health and that of the environment.
How does GDP relate to happiness?
It is true that, in some countries, growth can improve the lives of many people. They are usually the countries that have polluted the least and are least responsible for climate change, those that need more development to cover very basic needs.
But for those countries most responsible for the grim state of our planet, GDP growth basically equals more destruction.
Sounds like taking on the system? Maybe, but as Robert Kennedy warned us long ago:
There are better indicators for the success of our economy, though they are rarely represented in mainstream media.
The Happy Planet Index, for example, was created by the New Economics Foundation in an attempt to measure success in a different way, weighing our personal well-being against our ecological footprint and society’s inequalities.
The formula is the following:
Happiness/well-being of citizens (on a scale of 1 to 10 based on surveys)
Life expectancy (in each country)
Income inequality (calculated as a %)
Calculating this index for each country, we get a very different global picture and ranking of countries than what we are accustomed to:
What the Happy Planet Index shows is that once certain basic needs are met, exploiting more natural resources does not necessarily translate into more happiness.
The United States, which has a good level of happiness but also an enormous ecological footprint, ranks 108 out of 143 on the Happy Planet Index.
And number 1 is… Costa Rica.
Costa Rica has no military expenses, it has a huge number of national parks, and according to the HPI it is the country that achieves the most happiness with the fewest resources.
This index is just one example of how we can better measure the success of our economies and societies.
After all, what we are talking about is changing the end goal of the entire system we fashioned. Holding the production of more goods and services as an end in itself is to confuse the means with the end—not to mention it is a fatal means.
We can aspire to a better vision, and perhaps etymology can inspire us in doing this. The word economy derives from the Greek oiko-nomos, which means home management. In short, we could say all of this is about how we manage our home. Home? That big blue ship we’re all riding, travelling through space, teeming with life: Planet Earth.