New Measures of Economic Success
Key issue
Economic inequalities have been increasing within countries as the top ten per cent decile gets richer, and the bottom 50 per cent becomes poorer. Both income and wealth inequalities represent a key problem when addressing the problems our societies face, as these issues increase the economic divide among citizens, and can result in social upheavals. Furthermore, as wealth inequality grows at a faster pace than income inequality, a handful of billionaires accumulate excessive amounts of money at the same time that hundreds of millions are barely able to survive under the extreme poverty line.
These staggering economic inequalities are caused by many societal issues, rooted in the structure of our economy. The lack of functioning education systems, structural racism and discrimination, large generational inequalities, among other issues are an impediment for minorities and less privileged groups to fully develop their economic freedoms.
A society with large inequalities and lack of equal economic opportunities tends to be more divided, and hence, the support for democracy becomes less straight-forward. The trust in democratic institutions tends to decrease when people do not feel considered in its policy outputs. Therefore, as inequalities arise, and as the social and economic conditions of the citizens worsen, the legitimacy of the democratic state may decrease.
In this way, supporting economic policies that aim at bringing back the ‘left-behind’ can have a potentially positive consequence in the support for democracy, and the development of inclusive and sustainable societies. The left behind may include a wide range of social groups. Therefore, our approach to tackling the lack of equal economic opportunities is through an intersectional and green perspective that takes into account the relevance of human diversity and the current environmental crisis.
Response
Within nearly all countries across the world, economic success is measured by Gross Domestic Product (GDP) and its continual annual growth. We consider this measure of success to be inadequate. Increasing economic growth is a distraction for decision-makers, as it covers up a more detailed picture of what is actually happening within society. Simultaneously, the continual desire for economic growth leads to increasing pressures on our environmental and planetary systems, as it demands never-ending higher levels of resource use.
Taking inspiration from economist Kate Raworth’s “Doughnut Economics”, we propose an alternative model. Within this model, the economy is framed within the context of and as a dependent of the environment. Continual environmental degradation in the name of economic growth is destined to lead to wide-spread economic and political instability in the future. Moreover, the performance of the ‘economy’ shall be measured by an array of indicators that determine overall human ‘wellbeing’. These indicators shall include access to education, healthcare, employment opportunities, good quality housing, food, clean water, electricity, as well as income inequality and social equity. The definition of a ‘good economy’ and subsequent policy decisions should use these measures of wellbeing to understand economic success.