Valuing and accounting for natural and social capital to be given at least equal weight to Gross Domestic Product (GDP) in government decision-making with the use of alternative indicators.
For over half a century governments have allowed a single indicator, Gross Domestic Product (GDP) to assume total dominance as the key measure of a nation’s progress. Yet, GDP was not designed to be such a comprehensive measure of economic prosperity, let alone a measure of societal progress. GDP is the sum of national spending with no distinctions between transactions that add to well-being, or those that diminish it. In effect, GDP assumes that all monetary transactions, when combined as ‘growth,’ equate to a positive stimulus in our socio-economic progression.
As far back as 1934 GDP’s chief architect the economist Simon Kuznets warned that “The welfare of a nation can scarcely be inferred from a measurement of national income“. Ultimately, GDP irrefutably fails to measure sustainability, justice, social cohesion, healthy environments and happiness. So how has GDP become the predominant metric by which socio-economic progress is almost universally measured against?
Using a broader range of indicators will ensure the integration of a wider set of policy objectives in the pursuit of a fairer, more sustainable and dignified future. ‘Alternative indicators’ have already been developed to enable a far more holistic measurement and understanding of our progression.
Whether these alternative indicators take the form of subjective well-being indicators or a composite measure of the use of natural resources, when they are used alongside economic data they can bring the issues of equality, sustainability and genuine well-being to the forefront of policy-making. Using such metrics can serve as a framework for decision-making in policy that takes into account future generations.
Implementing sustainable solutions by adopting alternative indicators contributes to the progression of our interconnected global movements.
The World Future Council invites you to join us as a voice for future generations. The ‘Global Pact’ aims to build an effective ‘Coalition of the Working’ based on our common values in an effort to move from competition to collaboration, individualism to holism, all in the aim of securing our shared future through mutual successes.
The Caring Economy Campaign, a coalition of over 100 organisations led by WFC Councillor Dr. Riane Eisler, has launched a new set of economic measures that goes beyond GDP: “Social Wealth Economic Indicators” (SWEIs). These indicators demonstrate the importance of care work still primarily performed by women and are designed to persuade policy-makers to support this work through paid parental leave, caregiver tax credits, high quality early childhood education, and other woman and family-friendly policies, as well as to adopt SWEIs to guide and evaluate funding allocations. SWEI's show the enormous financial value of (and return on investment in) the most essential human work – the work of caring for people from childhood to old age.
For example, SWEIs include data from studies showing that if the unpaid care work primarily performed by women were included it would constitute 20 to 50 percent of reported GDP. SWEIs make the case that supporting this work is not only key to cutting through cycles of poverty worldwide, but also an essential investment in human capacity development, which is largely a function of the care and education children receive early on.
For further information, you can find the latest SWEI report here.
The World Future Council is part of the Post Growth Alliance of like-minded organisations using our collective reach to explore inspiring paths to global prosperity that don’t rely on economic growth. The Alliance believes that all people can live one-planet lifestyles in ways that bring increased peace, well-being and prosperity but that if we are to survive and thrive into the future, we must together consume within natural boundaries and produce less waste than nature can absorb.