Post by Admin on Aug 4, 2021 10:58:59 GMT
Beyond Growth
The dominant patterns of growth in OECD countries over recent decades have generated significant harms.
First, GDP growth is now widely associated with rising inequalities. In almost all OECD countries, the last forty years have seen a declining share of national income going to wages and salaries (labour), with a rising share going to the owners of capital. With capital ownership increasingly concentrated among those on the highest incomes, the result has been a growth of both income and wealth inequality, particularly between the top 1% and 10% and the rest of the population. In some countries aggregate GDP growth over the last two decades has been particularly skewed towards those on higher incomes, leaving average earnings only slowly rising, and in some cases more or less stagnant. In such circumstances GDP growth no longer translates into rising living standards for those on median and lower incomes. In some countries high rates of poverty remain a persistent blight.
Second, GDP growth is no longer correlated with improvements in wellbeing. The study of wellbeing has advanced greatly in recent decades. Income is important, particularly for those whose incomes are low. But we now understand that people’ sense of a fulfilled and flourishing life comes also from a wide variety of other factors: from the security and satisfaction they experience in work; their physical and mental health, social networks and personal and family relationships; and from social goods such as the levels of crime and trust in society, and the quality of public services such as health and education.37 None of these are automatically improved simply by higher GDP, and can often be harmed by the ways it is generated – particularly for those on lower incomes and in more precarious work, and where private consumption is prioritised over public goods. For most people today, rising GDP is no longer a sufficient measure either of their own wellbeing or their sense of society’s economic progress.
Third, severe environmental degradation has forced a recognition that today’s patterns of economic growth are undermining our capacity to maintain current standards of living. An economic system based on fossil fuels, present forms of intensive and meat-based agriculture and the unlimited exploitation of global natural resources is not sustainable over the long term. Climate change, air and marine pollution and ecological breakdown are already damaging the lives and livelihoods of millions of people around the world; they risk catastrophic damage to our economies and societies within the next few decades unless currently dominant forms of production and consumption are radically changed.
These developments do not mean that economic growth should be abandoned as a goal of economic policy. Rather, they force attention to the form of economic growth which a country experiences and aims to achieve. It is not enough for GDP to be rising, if the underlying patterns of growth are generating significant harms at the same time. It is the type of economic activity which matters. This is why we believe politicians and policymakers need to go ‘beyond growth’. They need to ensure that, alongside rising GDP – and as a result of it – economic policy is achieving a wider set of objectives and measures of economic and social progress. We can no longer rely on economic growth on its own to make our societies better off.
OECD Draft report; 2019.
The dominant patterns of growth in OECD countries over recent decades have generated significant harms.
First, GDP growth is now widely associated with rising inequalities. In almost all OECD countries, the last forty years have seen a declining share of national income going to wages and salaries (labour), with a rising share going to the owners of capital. With capital ownership increasingly concentrated among those on the highest incomes, the result has been a growth of both income and wealth inequality, particularly between the top 1% and 10% and the rest of the population. In some countries aggregate GDP growth over the last two decades has been particularly skewed towards those on higher incomes, leaving average earnings only slowly rising, and in some cases more or less stagnant. In such circumstances GDP growth no longer translates into rising living standards for those on median and lower incomes. In some countries high rates of poverty remain a persistent blight.
Second, GDP growth is no longer correlated with improvements in wellbeing. The study of wellbeing has advanced greatly in recent decades. Income is important, particularly for those whose incomes are low. But we now understand that people’ sense of a fulfilled and flourishing life comes also from a wide variety of other factors: from the security and satisfaction they experience in work; their physical and mental health, social networks and personal and family relationships; and from social goods such as the levels of crime and trust in society, and the quality of public services such as health and education.37 None of these are automatically improved simply by higher GDP, and can often be harmed by the ways it is generated – particularly for those on lower incomes and in more precarious work, and where private consumption is prioritised over public goods. For most people today, rising GDP is no longer a sufficient measure either of their own wellbeing or their sense of society’s economic progress.
Third, severe environmental degradation has forced a recognition that today’s patterns of economic growth are undermining our capacity to maintain current standards of living. An economic system based on fossil fuels, present forms of intensive and meat-based agriculture and the unlimited exploitation of global natural resources is not sustainable over the long term. Climate change, air and marine pollution and ecological breakdown are already damaging the lives and livelihoods of millions of people around the world; they risk catastrophic damage to our economies and societies within the next few decades unless currently dominant forms of production and consumption are radically changed.
These developments do not mean that economic growth should be abandoned as a goal of economic policy. Rather, they force attention to the form of economic growth which a country experiences and aims to achieve. It is not enough for GDP to be rising, if the underlying patterns of growth are generating significant harms at the same time. It is the type of economic activity which matters. This is why we believe politicians and policymakers need to go ‘beyond growth’. They need to ensure that, alongside rising GDP – and as a result of it – economic policy is achieving a wider set of objectives and measures of economic and social progress. We can no longer rely on economic growth on its own to make our societies better off.
OECD Draft report; 2019.
