Skip to main content

What alternative to GDP growth?

Now that so many countries are officially in “recession”, the main effort of policymakers the world over is to re-establish economies on a path of “growth”. The measure of success here is Gross National Product (GNP),  the value of all goods and services produced by the people of a nation. But how much more growth is possible? Or desirable?

Wealth production must be supported by the entire ecological system in order to happen. But economic activity almost invariably makes demands on the ecological system, either through the consumption of non-renewable resources or through the creation of by-products or waste materials which damage the ability of the ecological system to function as a life support system. It is also the case that economic activity also results in the production of that which people do not desire. The construction of an airport, for instance, gives rise to ongoing disbenefits such as noise, pollution, traffic congestion, which are not reflected in GDP figures since these are solely additive. A good example would be water pollution, which would add to notional GDP since work would have to be done to clean up the mess.

The question raised about GDP is this: since it lumps together both “goods” and “bads” and bears only a tangential relationship to the sum total of human well-being, what is the point of collecting this data? The trouble is compounded because GDP growth has become an aim of government policy. What possible alternative might there be? The aggregate rental value of land is one, since this is a market value and not an arbitrary assessment of goods and bads. External costs and benefits are directly measured since they reflect the actual value that people put on them. As a government objective, ARV would mean that governments promoted that which made for the kind of environment that people put most value on. The benefits and disbenefits of, for instance, an airport, would appear in the statistics and it would be easier to make a rational decision about which projects should and should not happen. ________________
You Can’t Eat GNP: Economics as Though Ecology Mattered by Eric A. Davidson