Podcast: Is GDP fit for purpose?

Should economies always aim to keep growing on a finite planet, or can a prosperous and sustainable economy and planet be defined differently?

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In this podcast we delve into the pressing question: is our focus on GDP growth truly beneficial, or is it exacerbating our most critical challenges?

As climate and ecological crises deepen and economic inequality widens, the limitations of GDP as a measure of progress become starkly evident. Join Professor Bob Costanza from UCL's Institute for Global Prosperity as he explores these issues with Professor Kate Pickett from the University of York's Department of Health Sciences, and Sandrine Dixson-Declève, co-president of the Club of Rome.

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Photo by Alex Tai on Unsplash

Photo by Alex Tai on Unsplash


Bob Costanza: Hi. In this episode of the Bartlett Review podcast, we're going to be asking whether our current emphasis on GDP growth as a primary policy goal is helping us or holding us back. As the world faces deepening climate and ecological crises along with widening gaps between the rich and the poor, it's clear that GDP growth is not really providing the solutions we need to these urgent and very complex problems. In fact, the side effects of our current approach to growth are depleting natural and social capital and deepening the crises. So should economies always aim to keep growing on a finite planet, or can a prosperous and sustainable economy and planet be defined differently? What could that look like? I'm Professor Bob Costanza. I'm a professor of ecological economics here at The Institute for Global Prosperity, and I'm pleased to be joined today by Professor Kate Pickett from the Department of Health Sciences at the University of York. Hi Kate.

Kate Pickett: Hi Bob

Bob Costanza: And Sandrine Dixson-Declève, who is the co-president of the Club of Rome. Hi Sandrine.

Sandrine Dixson-Declève: Hi there.

Bob Costanza: How are you doing?

Sandrine Dixson-Declève: Doing well.

Bob Costanza: And I should say that all three of us actually are members of the Club of Rome, which is an organisation that's been around since the seventies and was one of the first organisations really to highlight the finiteness of our planet and the fact that there are limits to economic growth on this finite planet. I know from my readings and understanding that GDP really only came into wide acceptance and use in the post World War II period when we were trying to rebuild from World War II, and some have argued that it was a major contributor to the ability to win that war, but times have changed. So Sandrine, maybe you could take us through a little bit more of that discussion about what's changed and why GDP is no longer the right goal for society to be pursuing.

Sandrine Dixson-Declève: Thanks, Bob. I mean, I think as you said, the first basic concept of GDP was pretty much invented at the end of the 18th century, and we were going through the industrial revolution and productivity was the number one signal of how an economy could grow and potentially because there are many theories out there could have a real positive effect on the livelihoods of people who were employed within that economy.

And I think that we often talk about GDP growth based on the kind of modern concept of Simon Kitz and the way in which we adopted the main measure for all economies to measure how economic development was occurring. And you're right, this was linked to rebuilding after the second World War. But what we're seeing and what we actually already saw when we started with the Club of Rome started by Alio Pache, who was an industrialist himself and a lot of thought leadership in the sixties. And this was even questioned by Bob Kennedy in 68 at one of his most famous speeches, actually very famous, exactly where he says GDP measures everything except that which truly is valuable. We don't measure love, we don't measure relationships, we don't measure education. We don't measure parts of our society that truly have an impact on our lives.

Bob Costanza: Those problems, were known from the very beginning. Kennedy argued against using GDP for the things that we're using it for as a major societal indicator. So it's no big surprise that GDP is not a good indicator of societal wellbeing, but somehow it got to be used. It's gotten to be used for that inappropriately.

Sandrine Dixson-Declève: I think that's why Kate needs to come in because I think that all of her work is so relevant to this. But maybe one thought before you do start, Kate, is it was a simple measure and people were addicted. As you have written in your book, addicted to Growth. People were also addicted to simplicity and they thought that GDP could be the ultimate measure for everything. And absolutely as you say, it's not. And it never actually was.

Kate Pickett: And it's a funny old measure, isn't it? I mean, we all know that when bad things happen, GDP tends to go up. So you have a war GDP increases, you have a natural disaster, and everybody responds. GDP increases. And so it's a clumsy measure of a particular thing, and yet it has become fixed in our national systems of accounting. It's been fixed in the sort of, I would say, the political and policymaking and public mind as a positive thing. You want growth. I mean, I still very rarely hear a mainstream politician who doesn't say we want growth and if we get into government, we will pursue growth. Now, there are parts of the world that still do need to see an increase in their national income per capita to benefit in terms of health and wellbeing, but that is not true at all in the rich world. And there are better measures of all of these things anyway. So it counts all the bad stuff as a positive, but also it doesn't tell you who is getting.

Sandrine Dixson-Declève: It's growth, growth, growth but for who?

Bob Costanza: I was just going to say that.

Kate Pickett: If it's all going to the top 1% and none of it to the bottom 99% or if it's evenly distributed, GDP doesn't tell you that.

Bob Costanza: And one of the main things that's changed since then since it was invented is that we're in the Anthropocene Epic now, where the limiting factor, the limiting factors to improving wellbeing are these relationships, are the social interactions, the social capital and also our natural capital, our climate, our ecological and ecosystem services, et cetera.

Sandrine Dixson-Declève: I think building on that, Bob, you're absolutely right. We already knew that GDP was not the right measure, but now it's absolutely the wrong measure because it's going contrary to what we need to do, which is to live within our planetary boundaries. We've already passed six out of the nine planetary boundaries. We actually know from the earth for all modelling that we've just done and the system dynamic analysis that basically we'll never come within our planetary boundaries if we continue to not take into consideration wellbeing and allow for inequality and poverty to grow.

Bob Costanza: Indeed. And also to make it clear that we can make the world better. And we know from the studies in positive psychology and other areas that humans' wellbeing is a much more complex thing than simply how much we produce and consume. So once we get beyond that and recognise that we have a broader goal, we have to have to consider wellbeing.

Kate Pickett: Think that's a major development really, Bob of the past 40, 50 years that we understand better what produces human health and wellbeing. And in the past it was things to do with needing more food, better shelter material, things were important for our health. But what we've learned over the past few decades is how important the social and the psychological are. And we often put those together and call them the psychosocial so that we know how important social cohesion is for our health and wellbeing, how important friendship is, how important social status is. And when you start to understand those things, it reorients you to what is it you need to do to produce those things more. And so you're faced with a complex understanding of planetary people, production systems, but actually one that requires fairly simple changes, I would argue, to actually make a large amount of progress. And one of those simple changes would be giving up GDP as your societal goal.

Bob Costanza: And that's what ecological economics has been about from the beginning. How do we look at the whole system, the natural, the social capital, and also the built capital and the human capital, and how does the whole system function? And we have to take a systems approach. And certainly that's been one of the hallmarks of the Club of Rome from the beginning and the kind of systems modelling that has gone on to try to understand how these systems can behave and where the thresholds are, where the tipping points are, where the boundary, the planetary boundaries are. So I think we've learned a lot more, but certain aspects of our policy community haven't picked up on that quite yet. But I think things are changing and you can look to things that are going on in the European Union, for example, and maybe Sandrine, you could say what's happening there because I think there is a real shift.

Sandrine Dixson-Declève: Yeah, no, absolutely, Bob. I think there are several triggers right now and shifts that we can really anchor ourselves on. One is that there are countries that have realised that actually shifting towards wellbeing economics makes a lot more sense for them. And those are the wellbeing economy, governments, Scotland, Finland, New Zealand, Iceland and Wales. And I was just with the government of Wales last week and also a month before that with the Scottish government. And what's interesting there is that they clearly have understood that they need to shift out of a GDP model. Now, they haven't scrapped GDP entirely. They've created other indicators alongside GDP that will really guide them in terms of a better holistic, more balanced approach of understanding what is wellbeing for our society and our citizens and the broader number of citizens rather than that 1%, what does that look like? And then where do we start to really measure those different indicators that we've chosen?

And they've looked at a series of economic indicators, environmental indicators, and social indicators, and those are kind of the three pillars of the wellbeing economy. And you can see that all of those different governments have done something quite similar. But what I want to really pinpoint right now, because I think this is fundamental, is beyond the thinking of new indicators, what we need to do is get better at describing the deficiencies in our existing systems and that this is the moment in time to adopt a 21st century system that really works for people because as we've seen through our wellbeing, index wellbeing is dramatically going down across the globe except for a few countries social tension because wellbeing is going down and equality is going up, is dramatically going up. And therefore with the poly crisis, with current compound effects of risks and impacts that we're having on people, we can see that this could lead to more conflict, to insecurity to war, et cetera. So this is the moment all of us, scientists, economists, decision makers to come together and realise that this system which is only profiting a certain few, which is an over financialized system, purely extractive functioning around productivity, does not reflect the needs of people in planet, but is also going to enhance greater insecurity and will be a real threat to democracy as we move forward.

Bob Costanza: No, absolutely. I think that it's driving a lot of the political polarisation that the right wing movements that are out there because people recognise that, oh, GDP is going up, but my life's not getting better. The middle class is not benefiting from this growth and I think the key also is to create a vision of a world where life does get better.

Sandrine Dixson-Declève: Maybe I could bring in Bob just some figures that I got today actually, which are really fascinating around the fact that a 4 degree world, its impact on GDP and I had not understood these figures until today, but wow, are they powerful. So pretty much a 4 degree world, if unchecked, we'll have a 30% reduction in GDP. Anyway, that's the new analysis and a 1.5 degree world. And we have to remember that we're at 1.3, so we're very close. We'll have a 10% decrease in GDP anyway, so it's a no brainer. Why are we even contemplating whether we should bring in new indicators? Because GDP is already not going to be functioning as a real evaluator of economic development, Kate.

Kate Pickett: I still feel that at the level of national governments, quite often we are seeing a reluctance to engage with either the poly crisis that is happening or these alternative ways of thinking about the future, a reluctance to think about what is really needed to tackle poverty and inequality and vulnerability, and a real lack of willingness to tackle big business and finance and the big beasts that also have a vested interest in keeping the system as it is because their time horizons are so short, their focus, their bandwidth is so narrow. So that's a real concern and we need to find ways to break through at that level.

Bob Costanza: And they're locked in, they are addicted to that system and all of the special interests that are benefiting from the way things are. How do we engage that broader public in the discussion and in building that shared vision? I think the sustainable development goals, for example, are one step in that direction, but they've been limited to the policy community. They're not really something that the general public is even very aware of yet. But we could change that. I think we could begin to get people to understand that there is a better world possibly.

Sandrine Dixson-Declève: Yeah. The problem with the sustainable development goals, Bob, is the fact that the stock take has demonstrated just when we went through the last summit with the UN Secretary General, the stock take has been dismal, but also what are the tricks up our sleeve to really what are the short term levers to enable us to start to really create this shift and to hack the system. And there are a variety of different ones. One is eco side, the legal element of basically launching big legal trials against some of the big oil companies and really putting in place new ecocide laws and other types of laws that would start to make them liable for their immoral behaviour. There's also now the big push on wealth taxation, which is very interesting and really starting to get implemented and series of countries, I don't know if everyone knows this, but basically the windfall profits from oil and gas companies are 2.8 billion per day, per day untaxed.

Bob Costanza: And we're still subsidising the fossil fuels sector, which is ridiculous. So yeah, I think overcoming those special interests is going to be a big part of the problem. There's also the public trust doctrine, which is another legal principle that requires sovereign governments to protect common assets like the atmosphere. And there've been several court cases pursuing that line as well. So I don't think it's going to be a silver bullet, but I think all of these things that are happening taken together, I think we'll begin to put the pressure on the system to make this difficult transformation. So Kate, you said that Scotland was one of the wellbeing economy governments, but what about the rest of the UK and there are elections coming up in the UK soon. What do you think that's going to mean for this movement or transition to more of a wellbeing based economy and system?

Kate Pickett: The most likely scenario seems to be a labour government, possibly a coalition, but certainly a change. It's very hard to say at the moment what that will mean. I think already we are seeing the Labour party indicating, for example, that it's not going to do something around a wealth tax, which might be one of the things that we all three of us would agree would be a good thing to do to tackle inequality and to give them the resources to be able to do some of the positive innovations that we might want to see them tackle. They're certainly talking to business and finance more, I think, than they are talking to people like us. So where will they find the space to do this consideration as they're thinking about their manifesto ahead of the election and as they're thinking about what they do when they're first in office? I'm not sure.

And I think some of the onus is on us as academics to make sure that we are speaking in the language that politicians understand, making sure that we engage with them in a way in which they feel enabled to hear what we are presenting them with. And sometimes I think when I say we, I am certainly not referring to the three of us here, but I think we collectively as academics don't always do that as well as we could. So I think the signs at the moment are likely business pretty much as usual in terms of GDP alternative economic strategies. And so I think there's still a major job of work to be done around the British political parties. I feel a bit more hopeful in Europe as perhaps does Sandrine. I think at EU level there is a much more serious engagement with what we're talking about.

Bob Costanza: Sandrine, you want to pick up on that?

Sandrine Dixson-Declève: Yeah, I would agree with Kate that there's been a lot more consideration of different models and also at the European Commission and the European parliament level. But I don't think any of us planned for the real shift towards the radical right that we're seeing and the real pushback actually to the ethos of that kind of alternative future that you were talking about, Bob, which is the European green deal, that European green deal when it was brought forward by a card carrying conservative, the president of the European Commission, president Vander Land, it was really seen as both a social and environmental deal, quite amazing to have someone representing the European People's Party, which is more to the right of centre to actually be proposing this new deal. But it was really taken on board. And so Kate is absolutely right that over the last four years of the president's tenure, we've seen a real move towards a European green. But because of Covid, because of the Ukrainian invasion, now because of Gaza and because of the radicalization of the right and this alignment against any type of democratic process and citizen engagement and a real push against several of the real key areas that we hold dear, which is ecological survival as well as human survival, we've been pinned against each other. So it's very much the green against the social. So it's really interesting how we're in the midst now of a European election that unfortunately will probably go to the right because they've been so good at pinning, they kind of green versus social against each other and we didn't see it coming.

Kate Pickett: If they are better at that narrative capture than we are, then we need to get smarter and learn from that. I mean, we all know the story of it being a very small group of economists and political thinkers at Mont Pein who dreamt up the whole neoliberal agenda and then managed to sell it to the kind of think tanks and the right wing politicians. And that's the world we live in now. And I saw a phrase on something that I can't remember where I came across it that said, it is now easier to imagine the end of the world than it is to imagine the end of capitalism. And we have got to a point where I think it is very, very difficult to convince the public that anything else, it's just too big. It's just immovable. This is an object that can't change. This is the way human nature works. This is the way the system has to be.

Bob Costanza: So is this a failure of our governance systems and also our education systems? I think that's part of it. How do we get beyond that to an actual democracy where the will of the people is first of all educated and second of all employed? Can we create real democracy? Well, deliberative democracy,

Sandrine Dixson-Declève: In the United States the congress members of Congress spend 40 hours a week.

Bob Costanza: Oh, it's ridiculous. Yeah,

Sandrine Dixson-Declève: 40 hours a week talking to lobbyists, 40 hours a week.

Bob Costanza: How can you call that a democracy? And then they don't do anything that's not,

Kate Pickett: There's two things. I mean, tackling inequality to me is central to this because when you have great inequality, then there is a whole s swathe of your population that doesn't feel that decision making is something that they have any agency over. They don't feel they have power, they don't feel they have voice. And so tackling inequality is a sort of precondition, I think for then the kinds of deliberative democracy that we might want to encourage more of. I mean, I'm always impressed how intelligent and thoughtful citizens juries are when they consider big, weighty difficult problem like abortion in Ireland for example. They're perfectly capable, the great public of listening to argumentation and expert differences of opinion and weighing those things up and coming to sensible conclusions. So it can be done, but there's some groundwork that has to happen first. And to me, tackling that inequality and tackling that disenfranchisement, that feeling that I'm left behind, this is not for me.

Bob Costanza: And I think that's driven a lot of the movement to the right that we've seen indeed. And also getting back to our discussion about GDP that the economists are saying everything's fine, GDP is growing, but the population is seeing disenfranchisement. They're seeing their lives getting worse. They're not keeping up with the 1% or the 0.1%. And so their alternatives are to, well, the system's not working for me. How do I disrupt it in some way? And so I think that's driven a lot of that kind of movement.

Sandrine Dixson-Declève: And that's where the alternative futures come in, Bob, where we have to actually show citizens where they can actually really be part of the system, a system that is much more inclusive, whether it includes a better democratic governance, which is including, for example, citizen assemblies. And that is growing. And you're right, Kate, very important to see more and more citizen assemblies that are actually being held. And we know also that actually the current system is not producing that American dream that so many people actually think it is. When you start to talk to them about a new system, they tell you, well, you must be naïve. Of course it's going to be worse. Let's also remember that we're some of our worst enemies in terms of sacrificing. One of the big narratives that we see obviously coming out of the climate movement was that this was all about sacrifice instead of showing the opportunities of decarbonization, the opportunity of transitioning the way in which we can actually make people's lives and livelihoods better.

I think the other key, we were talking about universities and what is the role of the university in its engagement with students to teach them about that complexity? And that's the first and it's fundamental. The other is research and innovation. Research and innovation. And we know that, for example, the feedback loops between research and innovation and policy are often far too long that actually it takes much, too much time to get the data, the evidence, and a real knowledge transaction between policymakers and universities. And we need to enhance some of those short-term feedback loops so that policymakers actually do get the data that they need and the evidence that they need in order to move forward. And maybe the third point is the way in which universities can actually be triangles of change, working with policymakers and industry and the way in which they can truly be at the centre of innovation and creating some kind of holistic engagement between business interests, academic interests and policy.

Bob Costanza: I think there's also an opportunity for universities to get more directly engaged in solving the problems that we're talking about and involving the students, not just in listening to lectures, but in actually participating in the sort of problem solving exercises along with faculty from different disciplines and make the whole educational experience one of it's learning by doing. You have to learn to solve these problems.

Kate Pickett: But in a way, our system, our system of universities, of academia, of learning has also been captured by all the trends that we're talking about and is now enthral really to neoliberal capitalism and to pursuit of that agenda and the ways we train students, the disciplines that we emphasise, the model we have for financing, research and teaching is all problematic. And so there's a lot of reinvention that is going to need to happen if we are going to see universities I think take their place. Once again, as a partner of governments and as a partner of positive social change, I think we have rode back from that or we have allowed that to happen and perhaps not always questioned as we should to get back to that space that Sandrine described where students come to the academy and learn to question and clarify their position vis-à-vis the complexities of the world. That's not somewhere we are at right now. That's not what I really recognise as happening within our universities as much as it should and perhaps not as much as it used to.

Bob Costanza: Indeed and UCL's motto of disruptive thinking I think is something we need to do a bit more of. Well, I think we're going to have to wrap it up there. There's lots more to say and hopefully this will engage and interest people enough to engage with all of us and with their universities and their politicians and their communities to think about what a wellbeing economy could look like and how we might get there. So my thanks to Professor Kate Pickett and Sandrine Dixon Dele. And for more information about the UCL Institute for Global Prosperity, which is part of The Bartlett UCL's Faculty of the Built Environment, you can visit our website, ucl.ac.uk/bartlett and follow us on Twitter or X, to give its new name, at The Bartlett UCL.

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Photo by NASA on Unsplash

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Prosperity, People and Planet MSc

The Prosperity, People and Planet MSc takes an ecological economics and whole systems perspective, and is for anyone interested in the world, how it works, and how we can make it a better place for everyone to live in.