The World After GDP

Politics, Business and Society in the Post Growth Era

Lorenzo Fioramonti

• Publisher: Polity
• Year: 2017
• ISBN:
  9781509529247
• Edition: 1
• Topic: Economics
• Subtopic: Economic Policy
• Index: Economics

GDP is much more than a simple statistic. It has become the overarching benchmark of success and a powerful ordering principle at the heart of the global economy. But the convergence of major economic, social and environmental crises has exposed the flaws of our economic system which values GDP above all else as a measure of prosperity and growth.

In this provocative and inspiring new book, political economist Lorenzo Fioramonti sets out his vision of a world after GDP. Focusing on pioneering research on alternative metrics of progress, governance innovation and institutional change, he makes a compelling case for the profound and positive transformations that could be achieved through a post-GDP system of development. From a new role for small business, households and civil society to a radical evolution of democracy and international relations, Fioramonti sets out a combination of top-down reforms and bottom-up pressures whose impact, he argues, would be unprecedented, making it possible to build a more equitable, sustainable and happy society.

1
The Making of a Post-GDP World

GDP influences our governance systems more than we realize. Politicians are rated on their GDP achievements, which can make or break elections. Countries that boast high rates of GDP growth get invited to join exclusive global clubs, from the G20 to the Organization for Economic Cooperation and Development (OECD), which includes the world’s ‘wealthiest’ countries. Business leaders are expected to increase output because this is captured in GDP and counts towards national economic success. Investment choices are predicated on GDP’s present and future projections, as the power of international credit ratings has demonstrated: countries, companies and other organizations can be irremediably broken by a negative rating motivated by low GDP growth.

As remarked by economist Robert Repetto and his colleagues in 1989, ‘the national income accounts are undoubtedly one of the most significant social inventions of the twentieth century’:

Their political and economic impact can scarcely be overestimated. However inappropriately, they serve to divide the world into ‘developed’ and ‘less developed’ countries. In the ‘developed countries’, whenever the quarterly gross national product (GNP) figures emerge, policy-makers stir. Should they be lower, even marginally, than those of the preceding three months, a recession is declared, the strategies and competence of the administration is impugned, and public political debate ensues. In the ‘developing’ countries, the rate of growth of GNP is the principal measure of economic progress and transformation.¹

Since the Bretton Woods Conference of 1944, which redesigned the world economic system, GDP has become much more than a statistic: it has been the overarching parameter of success and a fundamental ordering principle at the global and national level, establishing the economic and political ‘rules of the game’. This has been true for all varieties of socialism and capitalism in the twentieth century, as the consensus on GDP growth was eminently cross-ideological and, therefore, more pervasive than any other political ideology.²

Yet the convergence of economic, social and environmental crises has reinvigorated a debate on the usefulness of this instrument for the twenty-first century. Since 2009, when the first ‘post-GDP’ commission led by Nobel laureates Joseph Stiglitz and Amartya Sen was established in France, the critique of GDP in mainstream political and economic debates has grown from strength to strength.³ The same year, both the OECD and the European Union promoted a new initiative by the name of ‘Beyond GDP’.⁴ In 2012, several African countries joined forces to pledge a shift away from GDP maximization, arguing that the protection of natural resources against depletion and overuse should become a leading parameter for economic development.⁵ A few months later, the Rio+20 Earth Summit provided a global platform for most of these institutional reforms to be discussed. Various alternative indicators were presented, discussed and formally launched, and a long series of commitments to redefine a system of governance in harmony with social and ecological well-being were made. The World Economic Forum has been featuring ‘beyond GDP’ high-level panels over the past few years, with the chief economist Jennifer Blanke publicly admitting that ‘something is clearly missing and we need to move beyond GDP to get there’.⁶ Even the Economist, a liberal free-market magazine, has been publicly advocating a move beyond GDP, after having published several reports and a full issue dedicated to the topic of ‘remeasuring prosperity’ in 2016. Against the backdrop of a growing popular discontent with the type of governance decisions shaped by this mainstream approach to societal success, the UN Secretary-General Ban Ki-Moon has called for a post-GDP framework for the world: ‘Gross Domestic Product (GDP) has long been the yardstick by which economies and politicians have been measured. Yet it fails to take into account the social and environmental costs of so-called progress. [. . .] We need a new economic paradigm that recognizes the parity between the three pillars of sustainable development. Social, economic and environmental well-being are indivisible.’⁷

The ratification of the SDGs in September 2015 is arguably the culmination of more than a decade of evolving discourse at the global level. Interestingly, this policy process is currently being met with an increasing dynamism throughout society. Social movements advocating a post-growth society have proliferated in the past few years. International conferences dedicated to the concept of ‘de-growth’ have become a regular appointment for scholars and activists worldwide. A 2014 event in Germany saw the participation of more than 4,000 scholars, local government officials, activists and small businesses.⁸ So-called ‘transition initiatives’, which help communities adopt ‘energy descending’ low-consumption political and economic strategies, have spread across the world since they were launched in the mid-2000s.⁹ Civil society campaigns opposed to international trade agreements, austerity policies, financial speculation and investment in fossil-fuel energy infrastructure, which are largely justified by governments and businesses as strategies to enhance GDP, are mushrooming not only in the so-called global North (or West) but also among the nations of the global South.¹⁰ Many companies have committed to reforming their practices by integrating alternative indicators of success focusing not only on profit but also on ecological footprints and social parameters.¹¹ Natural capital protocols, which require companies to account (and pay) for the depletion of natural resources, have become increasingly popular. If the SDGs are to have any impact on society, then we should expect a serious international commitment to reaching a comprehensive agreement on climate change in the wake of the Paris conference of December 2015, which will require (or, at the very least, nudge) nations to implement alternative development policies and reform governance processes. This will open further space for additional bottom-up pressures towards radical transformation.

This is of course no foregone conclusion. There are entrenched interests, both in the political and economic realm, which may resist change. The fact that there is limited knowledge of a potential post-GDP system is likely to weaken the push for radical shifts, especially if conservative forces make strategic use of this lack of evidence to convince society, as has been in the past, that ‘there is no alternative’ to the status quo. Against this backdrop, it is paramount to investigate how a post-GDP economic and political order may look and how it may be brought about. The goal of this book is to show the implications that a post-GDP system of governance would have on our economies, our political systems and the international order.

A new narrative for the twenty-first century

Needless to say, this is not the first book projecting how current trends may affect the social, economic and political order in the future. Scholars of social sciences have traditionally offered alternative scenarios, some of which have been characterized by optimistic projections while others have largely embraced pessimism.¹² The end of the Cold War, for instance, triggered a series of ‘visionary’ accounts of a postbipolar international order. One dominant account – associated with political scientist Francis Fukuyama – depicted the triumph of western capitalism over the socialist experience in the East as ushering humanity into ‘the end of history’, that is, a phase of stability, homogeneity and rampant growth.¹³ Such thesis viewed the dominance of markets and the push towards economic globalization as evidence of a postideological global melting pot dominated by limitless consumption streams. A second account, much to the contrary, maintained that the end of the bipolar order would open up the possibility for fragmentation and the resurgence of cultural and religious conflicts. In his bestselling Clash of Civilizations, Samuel Huntington anticipated much of the inward-looking demands put forward by social groups inspired by cultural cleavages as well as the resurgence of terrorism and religious fundamentalism underpinning such political claims. The attacks on the World Trade Center on 11 September 2001 powerfully exemplified these two opposite visions, with the symbol of global market globalization directly targeted by forces inspired by religious fundamentalism, thus questioning the apparent uniformity of the new global order.

Broadly speaking, trying to predict social transformations (and analysing what may cause them) has always been the ultimate ambition of social scientists. Not only political breakthroughs, but also development trajectories have inspired a considerable number of writings outlining risks and opportunities for the future. Famously, in An Essay on the Principle of Population, the British political economist Thomas Malthus predicted that demographic growth would make consumption habits unsustainable, resulting in social instability and hampering poor people’s hopes to achieve higher living standards. By predicting famine, war and extermination if population growth was not kept in check, he went down in history as the prototypical advocate of restrictive economic policies. The biologist Paul Ehrlich resumed the demographic theme almost two centuries later, in the 1960s, with the bestselling book The Population Bomb, which predicted large-scale global starvation and a series of ecological crises if consumption levels and demographic trends were not brought to lower, more sustainable and equitable levels. The Limits to Growth report to the Club of Rome published in 1972 applied a similar perspective to a variety of economic sectors, concluding that resource depletion, environmental degradation and ec...

Table of contents

• Cover
• Dedication
• Title Page
• Copyright
• Acknowledgements
• Introduction
• 1 The Making of a Post-GDP World
• 2 The Rise and Fall of GDP Ideology
• 3 Post-GDP Economics
• 4 Post-GDP Politics
• 5 Post-GDP World
• Conclusion: Data of the People, for the People and by the People
• References
• Index
• End User License Agreement