EconomicsPoliticsTransition

The ‘GDP fetish’

The FT’s Janan Ganesh recently ‘dismissed the Green Party as hippy eccentrics for, among other things, contemplating zero per cent gross domestic product growth’.

cropper five seasons kindle unlimited coverCardiff author Don Cropper counters: “In this respect, the Greens are only as eccentric as the boy who pointed out the problem with the Emperor’s new clothes”.

He explains: “GDP growth broadly equates to a growing throughput of energy and material resources in the economy. How much sense, then, does it make to advocate exponentially increasing GDP, for ever and ever, within the limits of a finite biosphere? The laws of physics are not trumped by free trade, or innovation or whatever else is supposed to make infinite economic growth come true.

“Yet this is exactly what our entire corporate and political establishment professes to believe.

“Moreover, the evidence indicates that biodiversity collapse, catastrophic depletion of soil and freshwater resources, and dramatic alteration in the dynamics of the oceans and atmosphere, are today unfolding at a rate unprecedented in the known record of life on Earth. The biosphere on which we depend is being lethally reconfigured by our ever-expanding appetite for nature’s resources. In short, by economic growth.

devinder 6 ndtvIndian analyst Devinder Sharma also raised the issue of ‘the GDP fetish’ this morning: “The fact is that the more you destroy the environment (and the planet) the higher is the economic growth. You can bomb a city, and then rebuild it. The GDP soars. Similarly, if you allow the biotechnology companies to contaminate your food and environment, the health costs go up and so does the GDP. The more the application of all kinds of deadly pesticides and chemical fertilizers the higher is GDP growth.

The Chinese precedent

Sharma points out that more than seventy of China’s smaller cities and counties have dropped GDP as a ‘performance metric’ for government officials, in an effort to shift the focus to environmental protection and reducing poverty. The move, detailed in two articles in the Financial Times, follows a directive by leaders last year – one of the first concrete signs of China switching the pursuit of economic growth at all costs towards measures that encourage better quality of life.

As Fortune magazine reported last March, local governments in China were pursuing growth at any cost and food safety was being compromised. Pollution is still widespread.

Shanghai has now become the first major city to abandon GDP targets

This is a bid to focus on quality rather than quantity when it comes to economic expansion. Zhou Hanmin, vice chairman of the top Communist Party committee in Shanghai, told the BBC in London that the goal is a more balanced economy.

Cropper summarises: “Time has run out for the doctrine of infinite GDP growth. The Greens, though not perfect, are at least willing to discuss what no one else in the political and economic mainstream seems to have the courage to confront”.