Statistics Canada recently released its quarterly gross domestic product result. Mainstream economists, investors, bankers, business people and politicians rejoiced, seeing the result as a demonstration of Canada’s strong economic health.
I initially felt a surge of pride at the news that Canada appears to be doing well compared to many countries. But then I asked myself: What does GDP mean for me? Am I better off today than yesterday? Has the well-being of all Canadians been enhanced? Does it give any information about the things that matter most in life?
Ask an average Canadian what the purpose of the Canadian economy is and the answer might resemble that of a corporate director describing company goals: growth, job creation.
Ask that same Canadian what they aspire to and you get a much more human and nuanced answer: prosperity, fulfilment, increased well-being, a healthy future for generations to come — answers aligned with Chilean economist Manfred Max Neef’s model of fundamental human needs.
Here lies the paradox
The fundamental objectives of our contemporary economics do not align with our collective aspirations.
Numbers like GDP are not designed to say if our individual or collective well-being is increasing. Policy-makers do have access to alternative metrics that attempt to track something akin to progress. The Human Development Index, for instance, tracks life expectancy, education and per capita income to determine a country’s level of development. But none are on par with GDP, the prime number that overrules all others.
GDP gained prominence as a tool of war in the 1940s. Its omnipotence was enshrined in 1944 when about 700 men (and, yes, they were all men!) gathered in Bretton Woods, New Hampshire, to boot up the modern economic world order. GDP co-inventor Simon Kuznets was clear in expressing its limitations, arguing earlier, “The welfare of a nation can scarcely be inferred from a measure of national income [domestic product].”
Unfortunately, his warning fell on deaf ears.
Our economy might produce 10,000 jobs in a quarter, but are they good jobs? Are they jobs people would want if they had a choice? And why don’t people have a choice?
It might also produce a billion dollars’ worth of stuff in a quarter, but is that stuff useful or helpful? Does it help meet real needs that increase happiness?
If not, what can we do about it?
Transforming our economics
Transforming our economics is by no means easy. But it’s not a lack of knowledge of other ways of doing things that prevents change. We’ve known about approaches based on progress and well-being for more than a century. Recently, innovative thought leaders like Herman Daly and “renegade” economist Kate Raworth have brought us nature-based economics and even “doughnut economics.” All are based on the real world rather than flawed assumptions about people and an idea that inifite growth on a finite planet is possible (cue the laws of physics).
Why is changing this man-made construct so challenging?
Contemporary economics exhibits similar qualities to those of a religion. We are taught that growth will be our salvation. Economic gospels reinforce these teachings: Consumption leads to happiness. Wealth trickles down to the masses. (Why can’t it flow?) Unfettered private enterprise will always deliver public good. There are promises of rewards for the devout while those who dare challenge the faith are branded heretics. This has led Canada and the broader global community to adopt without question a growth-at-all-costs dogma, stifling even the mere whisper of innovation.
In this belief system, a life-affecting challenge like climate change is painted as a technical failing that makes emitting CO2 necessary; in fact, it is caused by an economics failing that values aspirations for happiness, the right to a healthy environment and a stable climate less than the financial reward generated by polluting activities.
This outdated thinking can change
The “growth-first” obsession is a law of (literally) man, not a law of nature.
As we struggle to understand, acknowledge and address global challenges in the 21st century, we can take comfort in knowing that many pioneering economists have worked to integrate well-being and the natural world’s limits into mainstream economic thought (for example, E. F. Schumacher, Peter Victor and Ann Pettifor).
People in Canada have been gifted a creative opportunity, born out of a failing economic theory disconnected from our deepest aspirations. Whereas today, the majority of Canadians serve a system that has no real purpose, we now have the necessary ingredients to design a system that unleashes our full potential — a system that serves our diversity and delivers what we really want out of life. Moving beyond our “growth” obsession opens up vast new horizons.
As with all belief systems, change requires awareness. As we understand the limitations and history of old economics, we can become empowered to imagine and enable new ways.
A longer version of this op-ed was originally published in the National Observer.