Blog 02.06.20

GDP: Going Down the Pan?

Growth is good, right? It’s what learn from birth. Grow up. Aspire. Make more stuff. Make more money. And since the 1940s, a country’s gross domestic product (GDP) has become the universal indicator of growth – a measurement of economic wellbeing that enables nations to compare and compete in the league table of global productivity.

If we’re making more, we’re doing well. So where’s the problem?

Why, then, has China recently abandoned its GDP target for the first time since it began setting targets in the ‘90s?

According to Chinese premier Li Keqiang, economic uncertainty brought about by the COVID-19 crisis has made it impossible to set a specific target this year. Making more is no longer inevitable. Indeed, the wider downturn triggered by the pandemic has been rapid and global – exposing the fragility of unconstrained growth and setting boundaries to economic productivity.

On a planet equipped with finite resources, it makes sense that there are boundaries. Yet we’ve sold ourselves the myth that we can run up the slope of exponential growth indefinitely, without investing sufficiently in its foundations. It’s a myth those with wealth find easy to maintain – a pyramid scheme that leaves millions without the basic resources they need, and enables a few to push the planet to its limits in pursuit of ever increasing returns. And there’s no way off the slope because, well, then what? Collapse?

But perhaps there is another way. One that recognises boundaries are inevitable, and that decay is as essential as growth to the sustained survival of any system. Economist Kate Raworth suggests that we need to understand the amount of resource needed to meet everyone’s needs, but also recognise the ecological limits of the planet – several of which we’ve already overshot. The sweet spot in between those two boundaries – the doughnut – is where Raworth says we need to be to have a hope of a sustainable future.

The shift towards doughnut economics requires us to embrace circular, regenerative and collaborative systems that make the most of every resource. And it means thinking differently about how we measure success, by paying attention to indicators such as wellbeing, equity, and innovation. It’s about how we use stuff, not how much of it we can make.

There are signs of this message starting to resonate in the wake of the current global shock. The C40’s Global Mayors Covid-19 Recovery Task Force commits city leaders to putting public health, equality and climate action at the heart of recovery plans – with 42 mayors formally endorsing these principles to date. Amsterdam is going a step further by placing doughnut economics at the centre of its new Circular Strategy. And recent research from the likes of Accenture, McKinsey, and YouGov (UK) suggests public appetite for more sustainable choices, and a desire to prioritise wellbeing over economic growth.

So, is this all just a craving for something sweeter brought about by lockdown madness? Or could the doughnut really be the answer to a more sustainable, more equal future? As Roy Scranton suggests in his book Learning to Die in the Anthropocene, perhaps we just need to learn to accept death, in order to live. And perhaps this includes accepting that growth has reached its limits.

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Author:
Helen Fisher

Associate

Clients:
HPE, Medtronic, H&M Group, A Leading Global Food Company




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