We need to set the economy back on the track of growth. Economic growth is necessary for increased employment. Jobs jobs jobs. That’s what the main political mantra has been in the recent past. As a business graduate it is easy to buy into the story of growing the pie to have more to share for everyone. Still, it is disheartening seeing the political conversation reduced to a debate about numbers and that which can be quantified. Can growth really be all there is?
“The economy is a subsystem of society, and society a subsystem of nature.”
November 25th, 2015 saw over 600 people gather at the Aalto University School of Business to a seminar on “Alternatives to economic growth” hosted by the Finnish Association for Nature Conservation, Helsinki Metropolitan Area Reuse Centre Ltd, Aalto University School of Business and the Finnish degrowth network. (Check out a blog post in Finnish on the event here.)
Growth economics has failed to bring about growth and stability. The necessity of growth is a human construct – therefore a new construct can also be put in its place. Growth and lack thereof is a socio-cultural problem, not an economic one. Degrowth is about questioning the necessity of growth – building a society where well-being is not dependent on growth. Its cornerstones are the carrying capacity of Mother Earth, social justice and democracy. Research activist Marko Ulvila summed it up at the seminar: “The economy is a subsystem of society, and society a subsystem of nature.”
“…money you don’t have, to spend on things you don’t need, to create impressions that won’t last, on people you don’t care about.”
In the current system, degrowth would lead to recession and unemployment. Individuals downshifting is not enough, but structural changes in society are also needed. These changes could include aspects of the sharing economy combined with basic income pose possibilities. Also more even distribution of work has been proposed (New Economic Foundation proposes a 21-hour work week), which would save both people and the planet by helping “to address a range of urgent, interlinked problems: overwork, unemployment, over-consumption, high carbon emissions, low well-being, entrenched inequalities, and the lack of time to live sustainably, to care for each other, and simply to enjoy life.” An idea that would be worth a blog post or two on its own.
Surrey University Professor Tim Jackson sums the current situation aptly as people working for “…money you don’t have, to spend on things you don’t need, to create impressions that won’t last, on people you don’t care about.” At the Alternatives to economic growth seminar, Ulvila put degrowth within reach: Degrowth is possible when a critical mass of people decide to do the type of work for a living that creates sustainable well-being. All in all the message at the seminar seemed to be that it is not a case of less, but different, qualitatively better. Redefining what constitutes a good life. More meaningful. More diverse. Moving beyond what is easy to measure, like jobs, or gross domestic product (GDP). Money and the economy should not be treated as an end in itself, but as tools to achieve well-being, which is not as easily measured.
Decisions are driven and actions incentivized by what is measured, which is why the discussion around indicators for well-being is important. According to Anni Huhtala of the VATT Institute of Economic Research, economists are the first to criticize the use of GDP as a measure of well-being. GDP as a measure is problematic, because it does not discriminate between transactions that are productive and those that are harmful: it includes negative aspects like arms trade and having to combat environmental problems, but not for example voluntary work and the sharing economy. GDP is a measure of economic activity, not economic well-being (see for example Costanza, Hart, Posner & Tallberth (2009)). Humanity is confronted by complex problems, so it is impossible for a single indicator to be sufficient in measuring progress on confronting those problems. Especially when that single metric, the GDP, was developed for a post-World War II economy – surely not the world of today.
The Genuine Progress Indicator (GPI) is an alternative to GDP, adjusting for income distribution, household and volunteer work, crime and pollution. Another example is the Happy Planet Index (HPI). The HPI is a happiness-adjusted life expectancy indicator that takes into account the ecological footprint and therefore does not show Western countries in a particularly favorable light (Costa Rica has topped the list for the past years).
Everyone has personal experience of the qualitative, non-measureable attributes that bring well-being into their lives: being able to enjoy friends, family, hobbies, nature, contribution to that which is important to you. Also, hopefully everyone has experiences on what raises efficiency at work – well-being and being able to do something meaningful through your work, not increased management and controls. That which is truly important, is not quantifiable.
Thinking “this is interesting, but it will never happen”? Many examples exist of social norms changing quite quickly, like women gaining the vote and slave trade being abolished. Public opinion counts. How then, can we guide our daily lives to consider the effects of our actions on not only us ourselves, but for other people and the planet? Jacqueline Novogratz of Acumen, speaking at Slush Nov. 11th, 2015, summed it up in a precept that is as good as any: “Have a single metric: how much you give to the world, not how much you take.”
How simple of a formula to happiness is that? What would living by this metric look like in your life? Some food for thought at the beginning of a new year.
Thank you to all who made 2015 such a memorable year of learnings. May your 2016 be full of quality, not quantity.
Wishing you a happy new year,
- About time: 21 hours. New Economics Foundation, 2012. https://www.youtube.com/watch?time_continue=22&v=580VyI6hFmo
- Coote, Franklin & Simms (2010) 21 Hours: Why a shorter working week can help us all flourish in the 21st century. New Economics Foundation. http://b.3cdn.net/nefoundation/f49406d81b9ed9c977_p1m6ibgje.pdf
- Costanza, Hart, Posner & Tallberth (2009) Beyond GDP: The need for new measures of progress. The Pardee Papers, No 4. Boston University, Boston. http://www.bu.edu/pardee/files/documents/PP-004-GDP.pdf
- Degrowth.fi project. http://www.degrowth.fi/p/briefly-in-english.html
- Genuine Progress Indicator. Redefining Progress. http://rprogress.org/sustainability_indicators/genuine_progress_indicator.htm
- Happy Planet Index. http://www.happyplanetindex.org/
- Latva-Pukkila, Anna (2015) Kohtuutalouden ratkaisut: Kasvunvara on käytetty. Suomen luonnonsuojeluliitto ry.