welfare of a nation can scarcely be inferred from a measure of national income". GDP nevertheless offered to begin with a broadly successful means of helping to create relatively orderly ways of expanding wealth and helping people gain access to more goods and services. One other outcome was that, as people got richer, so the flow of taxes to governments got bigger. As time has gone by, though, it has become increasingly worrying that the limitations of GDP growth are not being reflected in how economic development is pursued in many countries, although at least now the limitations are becoming much clearer.
One problem with GDP growth as a central measure of progress is that it only measures certain things. Others are left out of the equation. For example, much of the welfare enjoyed by societies derives from the quality of people’s relationships andthe pleasantness and security of their neighbourhoods. GDP does not measure change in these. Neither can it accommodate the financially unmeasured but very real benefits that derive from good parenting, or the care received by an elderly or infirm person from their families. It does not measure how happy we are, nor whether our lives are fulfilling.
Neither does GDP reflect the huge costs that come with clearing ancient forests, depleting fisheries, or loading carbon dioxide into the Earth’s atmosphere. Worse still, all these are the result of activities that at the moment increase economic growth. The clear-up of a major pollution incident contributes to growth; so does the sale of the complex drugs needed to treat our twenty–first–century health problems like cancer, heart disease and widespread allergies. While all of these things count positively towards GDP growth, they are at the same time either signs of diminished natural capacity or reduced human welfare. This is why I think there is now a very strong case to conclude that we are measuring the wrong things. The picture is incomplete.
We have inadvertently created economic signals and measures that regard many natural forms of capital as valueless, not least the stability of the climate. This seems to me to be a fundamental and pretty remarkable oversight, considering how the connections between the continuing degradation of Nature and its economic impact now stare us in the face. For example, some 75 per cent of the electricity produced in Brazil comes from large hydro-power dams. They are clearly totally reliant upon rain which, in the main, is produced by the rainforests of the Amazon basin. Yet as the forests have been cleared in pursuit of economic growth, and the ‘benefits’ of deforestation increasingly judged from this perspective, the cost of clearance, for example, has not been factored into the future price of producing electricity. In other words, the shortterm value of deforestation is not set against the slightly longer-term rises in the price of power that it will cause, never mind the myriad other benefits that are being lost.
Unfortunately, the blunt truth of the situation at the moment is that in order for people to contribute most to national success – that is, success measured by the growth in GDP – they might drive everywhere in a huge, energy-wasting car and then buy a new one every year. They might also buy vast quantities of unnecessary consumer goods, waste much of their food rather than eat it, and, after retirement, die a lingering death preceded by years of dependence on expensive, life-extending drugs; all of which would contribute positively to GDP growth. It may sound a pretty miserable approach, but these are the kinds of things that maximize our principal measure of economic success. With this as the dominant mindset it is perhaps little wonder that such grave imbalances occur.
The largest power station on Earth — Itaipu hydroelectric facility, on the River Parana between Brazil and Paraguay. Each one of the massive pipes seen in this picture is 30 feet wide. Much of the rain that flows in the river which powers this huge dam is generated by the Amazonian rainforest
More recent studies confirm that this economic contradiction not only continues but deepens. For example, the 2006 UN Millennium Ecosystem Assessment demonstrated how it will be impossible to meet our long-term aim of reducing poverty if we continue to deplete and destroy the Earth’s natural ecosystem services. Later that year the Stern Review on climate change was published. It set out how, if we do not act very soon, the ongoing pollution of the atmosphere can be expected to cause damage to the economy in the coming few decades that would be equivalent to the cost of both world wars and the Great Depression combined. To compound the urgency of the situation, since the publication of his report in 2006 the author has suggested that his original projections were based on an underestimate of the speed and severity of climate change and its likely costs.
When GDP was first adopted as the main measure of economic success the assumption was that growth would make us happier because it would provide the resources needed to make us more comfortable and that would offer us more options and greater freedom. Up to a point this has been the case. But even this logic is now under attack. It seems that beyond a certain stage the relationship between increased growth and happiness starts to break down – and that point now appears to have been reached in many parts of the world, especially the richer ones. Academic research has found that consumerism with its emphasis on the acquisition of more and more material goods does not for many people lead to increased happiness. It seems it does not nurture increased well-being once a certain level of comfort and security has been attained. As we shall see in the last chapter, this is all part of the design of consumerism, which again is a more structured ideology than you might imagine. Built into it is both a means of stimulating a desire for happiness by having, and an assurance that this desire will never be completely satisfied.
Professor Tim Jackson of the University of Surrey has called the challenge we face the ‘dilemma of growth’ and recently put his name to an open letter to Her Majesty the Queen that described the underlying cause of the recent economic meltdown as ‘a multi-generational debt–binge, inextricably linked to a concomitant multi-generational energy–binge’. He is not the only one to point out that bingeing does not lead to happiness. The Nuffield Centre in the UK has been conducting ground-breaking research on adolescence with a meticulous ‘time-trend’ study that began in 1974 and now spans three decades. It reports that the country’s young people now have ‘significantly higher levels of emotional and behavioural problems than 16-year-olds who lived through the 1970s and ‘80s’. Clearly, as we continue to liquidate the world’s natural assets in pursuit of what we call ‘progress’, the many social challenges that we hoped economic growth would solve – poverty, stress and ill health – for example seem reluctant to respond to the cure of yet more consumption.
Mahatma Gandhi made a crucial observation when he said that humanity has a natural tendency to consume. The crucial element that he felt was missing from much of the Western approach to life was that of limit. If there are no limits on that tendency, he explained, we can become obsessed with satisfying our desires, consuming ever more as we chase what little satisfaction we achieve. Gandhi was also very clear about the danger of this tendency if it is legitimized by a view of the world that puts humanity at the centre of things, operating under the assumption of an absolute right over Nature. He predicted that such a combination would prove explosive. It would be, he declared, a very destructive world view indeed.
I think the evidence suggests that Gandhi was right, and not just from an ecological point of view. Many developed countries have reported long-term increases in mental health problems. The combination of the stress of trying to keep pace with rampant consumerism and the impact of people living more isolated lives has led to many millions becoming victims rather than the beneficiaries of how we have chosen to achieve and measure progress. Our physical health has also suffered. Many millions of people are now classified as clinically obese because of their much more sedentary lifestyles and their fatridden diets. It is a depressing portrait of our age that we recently reached the point where the number of obese people in the world surpassed the 800 million who are estimated to be malnourished. This is but one awful example of how we are now living in a world of widening extremes. Carrying on as we are, ignoring the need for balance and a more integrative form of economics, is only going to force that gap to grow wider.
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