So, super, the Labour Party has pledged to do even more to beat climate change. Huzzah! etc. And then we get a British professor – yes, one employed upon your and my tax pounds – musing that perhaps we really need to go further than this and to overturn that entire idea of economic growth. At least, that’s what he thinks he’s saying which is the degradation:
And there are even greater challenges for the Labour Party. Can it go beyond a paradigm in which, whatever the question, state-led growth is the answer? Could the embrace of the need for green transformations extend to questioning an unflinching commitment to economic growth at all costs? This would mean engaging with ideas which place well-being and prosperity – not GDP or growth – as the goals to be achieved. This might open the way to seeing radical reductions in the production and consumption of energy as possible and desirable, as well as necessary, to prolong life on a finite planet.
What actually is GDP other than a measure of prosperity?
Sure, it’s not the only one, perhaps not even the most important one – the consumer surplus matters more to peoples’ lives. But it is a measure of prosperity. It’s the value of all production in an economy. Note that value – it’s not a measure of tonnage, or time or labour consumed, but of the value created. By construction it is also equal to all incomes in that economy or and to all consumption in that economy. All value that is produced is consumed, all value produced or consumed is an income to someone.
Prosperity is the ability to consume. Sure, they’re not exact correlates, prosperity and GDP. The former will include non-monetarised items, the latter again by construction not. But the reason for that is that economists – specifically Simon Kuznets – thought that including only those things which can be monetarised would be a good idea as that gave us an objective basis upon which to do sums. Including the value of a baby’s smile is too subjective – what if it looks like that of the bloke next door?
So now we’ve got some bloke paid for with our money, taxes extracted from our hides. trying to tell us that we should stop concentrating upon prosperity in order to concentrate upon prosperity? That expansion of the universities was a mistake, wasn’t it?