Locker Room Economics
Is bigger always better?
Unfortunately, economics has often been a men’s game, through the same patriarchal structures that still plague many fields of study (and the world let’s face it) today. Is it then any surprise that some evolutionary remnant of our male mind makes us need our bar chart to be bigger than the next guy’s? Do we whip our graphs out at the next G20 or WEF meeting to establish our dominance over the global locker room to show that our Gross Domestic Product (GDP) is the biggest?
While I am sure there are elements of the male ‘whose obelisk is bigger’ thinking that may be true, this obsession with growth as progress is ingrained into our human psyche. As Kate Raworth says in her book ‘Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist’ about the deep embedding of this concept “…the mastery of this movement — forwards and upwards — charts an individual child’s development, but also echoes the story of progress we tell ourselves as a species.”
Of course for a while GDP did what it was designed to do which was measure the ‘size’ of the economy, particularly in the early 20th century when the world was reeling from war and then the ideological race between the superpowers. It shouldn’t be ignored that constant economic growth has also resulted in great advancements in factors such as nutrition and poverty reduction, especially within the twentieth century. However, as the years moved on and those lower hierarchical problems started being taken care of, we became more and more concerned with other concepts like ‘sustainability,’ ‘environmental capacity’ and ‘well-being’ — yet GDP remains king.
Even after economists pointed out that GDP doesn’t even do as comprehensive a job of measuring the true size of the economy (unpaid work and the shadow economy for example), GDP still reigns supreme. It occupies every single economic forecast concerning the COVID-19 pandemic. Negative growth makes headlines.
Understandably, the immediate reaction in the midst and aftermath of the pandemic is to ensure a level of stability and security for the millions of people affected. However, this obsession with GDP is not going to save us. Truthfully, it will make us even more vulnerable to system shocks like COVID-19.
From a natural systems perspective, the COVID-19 pandemic shows us what happens when our rapid expansion into the natural environment meets social systems that are driven and weakened by the unfettered capitalist system — the capitalist model that depends on the exploitation of the earth’s finite resources. There’s no way around it. GDP and its growth depends on countries’ production and consumption: production depends on natural resources and our consumption and waste impacts on the world around us.
It is also clear and well understood that the rise of global infectious diseases like COVID-19, SARS and MERS are directly linked to biodiversity/habitat encroachment and destruction. Building on this, UN Environment in 2016, highlighted emergent zoonoses (diseases spread from non-human animals to humans) as issues of environmental concern, along with microplastics and pesticides. It should be troubling to us all, as we socially distance in our homes, that an international 2020 synthesis of science and policy around biodiversity by Otero et al summarises that “economic growth contributes to biodiversity loss via greater resource consumption and higher emissions.’
As I’ve written before in my article about the need to bend all the curves, the COVID-19 pandemic shows us how vulnerable our systems are to shocks of this magnitude. These human systems of healthcare, housing and agriculture are being tested before our eyes. We see the seams of GDP ripping, showcasing the life and death impact of inequality, exacerbated by the capitalist model we’ve all learnt to live with. The resilience of our human systems is being weakened by this obsession with growth. As Kate Raworth so describes, we need to live within the ecological and social boundaries of our systems.
However, the biggest shocks are still coming over the next few decades. The ecological boundaries are being surpassed, with 4 of the 9 planetary boundaries assessed in 2015 (climate change, biosphere integrity, biogeochemical flows, and land-system change) having surpassed the boundaries of being at high risk for destabilisation, with global impacts. Unfortunately for us, 2 of the boundaries surpassed are the core critical boundaries for the earth’s systems — climate change and biosphere integrity.
To drive the point home, O’Neill et al in Nature (2018), make it quite clear that “…if all people are to lead a good life within planetary boundaries, then…provisioning systems must be fundamentally restructured to enable basic needs to be met at a much lower level of resource use…findings suggest that the pursuit of universal human development, which is the ambition of the SDGs, has the potential to undermine the Earth-system processes upon which development ultimately depends. But this does not need to be the case. A more hopeful scenario would see the SDGs shift the agenda away from growth towards an economic model where the goal is sustainable and equitable human well-being.”
How do we, especially writing from a Small Island perspective, retool our thinking and systems to move away from growth as the be-all and end-all of progress?
We want environmentally-friendly (green) development yes, so we can subsidise eco-conscious cars and appliances but run the risk of Jevons’ paradox where efficiency gains cause individuals to consume more and continue putting pressure on the natural systems. We want to keep the free-market approach but go headfirst into green technology but run the risk of expanded social inequality due to job loss and wide unemployment. Or maybe we jump into a de-growth strategy — reducing consumption, which reduces our impact on the natural systems and build adaptability to climate change, but this leads to increases in the debt-GDP ratio especially for developing countries without a parallel change in global financial frameworks.
As D’Alessandro et al write in Nature (2020), there is no win-win scenario where we all get what we want. What we do know is that the current economic models are setting us up for a future that we do not want. There are conflicting opinions on whether growth and higher income levels bring happiness or contribute to increasing subjective happiness or life satisfaction over time. The data does show that in developing countries, increases in income bring parallel increases in subjective happiness or life satisfaction over time but that correlation reduces over time, as highlighted by the Easterlin Paradox. However, it is important to note that subjective happiness or life satisfaction is just that, subjective, and influenced greatly by the predominant socio-cultural landscape that we live in: we’re usually happier when we have the means to buy more, consume more as a mark of our status. As Raworth puts it, it’s an innate part of the human condition to ‘move upwards’ and in this case have more.
I hope that while we are recovering from the COVID-19 pandemic, we make it a priority to start discussions at community, national, regional and global scales about what it is we want from the economy. Let us reshape it in our image and guide the policymakers to a future we want — emphasising to them that a bigger economy does not necessarily indicate prosperity and sustainability.
So when you take the lead in kicking these conversations off, just remind them: it’s not the size of the boat, it’s the motion in the ocean.
