development politics wealth

Genuine Progress vs GDP

A few years ago the New Scientist dedicated a whole issue to the idea of possibility of life without economic growth. I wouldn’t want to hail them as champions of the postgrowth perspective, but the magazine is asking the right questions, and drawing links between the environment and the economy.

This summer they ran a story on one of the alternatives to Gross Domestic Product, the more holistic Genuine Progress Indicator. Where GDP just measures raw economic activity, the GPI takes account of non-monetary profit and loss. It debits negative things like habitat loss, unemployment, or the cost of crime from the accounts, so that bad things aren’t counted alongside the good stuff.

When charted alongside GDP, it emerges that ‘genuine progress’ has plateaued. In the US, it peaked in 1978. Britain’s chart tells a rather different story, a decline and then a recovery.


Here’s the New Scientist on what changed in the late 70s: “It is surely not a coincidence that 1979 marked the end of the post-war economic consensus and the rise of neoliberalism, with its rallying cry “greed is good”. Globalisation, deregulation and unfettered movement of capital have made a lot of people rich, but have come at a terrible cost: environmental destruction and widening inequality.”

The politics of such a statement is unavoidable of course. The environmental side is less controversial, but the social elements are more subjective. If you think inequality is acceptable, you won’t see the problem and you won’t like the Genuine Progress Indicator. It’s also hard to parse the good aspects of globalisation and deregulation from the bad. We don’t have a second earth that didn’t adopt neoliberalism to do a comparison.

Personally, I’m not entirely convinced by the GPI. I think it’s an ambitious idea, and I do actually agree with the majority of what they’re measuring, equality included. But I think it’s far too complex. Ultimately, I don’t think it’s possible to cram the vast scope of human development into a single figure, and then track that figure over time. It doesn’t work with GDP, and while the GPI may be vastly more sophisticated than GDP, it’s still too limiting.

We need to get beyond GDP as our top level measure of progress, but that doesn’t mean replacing it with a single alternative. It means opening up to a wider set of metrics. The Office of National Statistics is now measuring wellbeing across a host of different indicators rather than trying to crowbar them into a single figure. Perhaps they could revisit their economic data with a similar view.

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