- As we recover from the coronavirus crisis, most evaluations of the economic damage and recovery focus on one thing: GDP.
- But GDP fails to capture important aspects of how the economy is performing.
- It's time we rely on alternative measures of the economy to truly understand what is going on.
- Jay Drydyk is a professor of philosophy at Carleton University (Ottawa); Sophie Mitra is a professor of economics at Fordham University (New York); Jack Simpson is from Leeds University (Leeds); and Elaine Unterhalter is a professor of education and international development at University College London.
- This is an opinion column. The thoughts expressed are those of the author.
- Visit Business Insider's homepage for more stories.
As the COVID-19 crisis has mounted, it has become clear that this tragedy is also an opportunity to re-envision our society and our understanding of recovery or progress.
But most portrayals of the economic recovery from the pandemic focus almost exclusively on growth in GDP, with little consideration for the kinds of goods and services that are produced, the kinds of jobs people do, the lives people are able to lead, and the environmental effects on our world.
The neoliberal agenda — enthusiastically promoted over the last 40 years — is dissociated from ethics, and ignores or undermines relations that are not market-based such as care for people or our planet. This has led to enormous inequalities between people and countries, the neglect of public services and immense harm to the environment. We need a better pathway.
We cannot ignore approaches to the economy that focus on more than growth. We should measure this recovery in ways that are holistic, human-centered, equitable, and sustainable. We need to accept planetary boundaries and take seriously the gross inequalities and injustices of our world.
GDP is not the right way to measure the recovery
Six months into the pandemic as some economies reopen, the sense of urgency for reimagining our global economy appears to be waning. GDP has returned as the lodestar.
This was the main focus of press concern when the IMF World Economic Outlook Update was presented on June 25 with its lowered global GDP forecast for 2020 of -4.9%. How long it might take GDP to recover to pre-pandemic levels was the chief theme reported in the evidence of the Chief Economist of the IMF to the UK parliamentary committee on July 1. GDP growth is thus presented as the central element of a recovery.
If we go back to business as usual with a focus on recovering GDP, we are no longer able to see what is wrong with current economic and social arrangements and risk the next crisis being as or even more devastating than the current one.
The capability approach, initially developed by Nobel prize-winning economist and philosopher Amartya Sen in the 1980s, suggests changes to the metric to evaluate progress for economies so that this is not based on GDP or growth in incomes, but is instead centered on expanding valuable opportunities. These may be for sociability, care, and sensitivity to our ecological footprint. From this perspective, GDP, income, productivity, and jobs are no longer ends, but means to achieve what people value.
For the past three decades, the capability approach has framed national and global efforts in setting goals for human development and sustainability and revising metrics to go beyond GDP. The United Nations Development Program has used measures that portray multiple dimensions of wellbeing and deprivations such as the Human Development Index, the Gender Inequality Index and the Global Multidimensional Poverty Index.
Many research teams have built on this work and enlarged the metrics for assessing and evaluating progress, which in turn contributed to the Sustainable Development Goals (SDGs). This framework, developed after widespread global consultation, has been endorsed by all the governments of the world. It serves as a framework to guide action to end poverty, protect the planet and improve lives. It posits a vision of development that goes way beyond GDP.
The capability approach also has much to offer in thinking about the recovery process from the health, economic, environmental and political crises that confront us. One key feature is its stress on the role of agency.
People, and especially the most disadvantaged, have key relationships with local communities, including schools, workplaces, and neighborhoods. They have much to contribute in reflecting on what constitutes progress and the values this should express, and much to suggest for the policies and the institutional processes that are needed.
Diversity needs to be taken into account in assessments of policy, and data needs to be disaggregated for various groups (e.g. gender, race/ethnicity, age, disability). Policies and practices, even if well intentioned, will not lead to opportunities for all if diversity is ignored.
GDP does not respond to diversity. It is heedless of ecological damage and does not engage with questions of justice or agency. What we value in life is broader than this. Our recovery from this crisis demands we use a wider vision of a human-centered and sustainable recovery. The work already done using the capability approach speaks more than ever to the current moment.
Jay Drydyk is a professor of philosophy at Carleton University (Ottawa); Sophie Mitra is a professor of economics at Fordham University (New York); Jack Simpson is from Leeds University (Leeds); and Elaine Unterhalter is a professor of education and international development at University College London.
This is an opinion column. The thoughts expressed are those of the author(s).
Do you have a personal experience with the coronavirus you’d like to share? Or a tip on how your town or community is handling the pandemic? Please email [email protected] and tell us your story.
Get the latest coronavirus business & economic impact analysis from Business Insider Intelligence on how COVID-19 is affecting industries.
Source: Read Full Article