Are we ready to plot a new course for society or will we continue using the GDP as our compass and sink like the ill-fated Titanic?

OPINION: To change our economy, first change the compass

The economy is booming, according to most policymakers at least. But if the number of working poor, inequality, resource exhaustion, species extinction, debt and deaths from air pollution are all on the rise then who gains from a ‘booming economy’ – and who looses?

Belgium’s federal planning agency calculated that well-being generally declines when GDP rises. The only sudden increase in well-being was in a year with GDP decline. The key factor in Belgium’s decline in well-being is a health crisis. Burnouts doubled in the last five years and sick leave days started to rise exponentially.

Fortunately, indicators that measure progress better than GDP exist. Why are they not used as the key yardstick for policy-making? That question has gone in and out of fashion ever since Sicco Mansholt suddenly advocated for a negative growth economy, while being president of the European Commission in 1972. Now there’s reason to believe that the topic is creeping back on the European agenda. This time it’s not because of, but despite the European Commission president.

An all-party coalition of Members of the European Parliament is busy preparing a major post-growth conference in the European Parliament in September. Antonio Tajani, the President of the European Parliament and Margrethe Vestager, Commissioner for Competition, are already confirmed speakers. Two months later both the Austrian Presidency of the Council and the environmental department of the European Commission will be engaging in discussions on how to move beyond GDP.

Sicco Mansholt used his last year at the top to read and act upon a milestone report of the Club of Rome: The Limits to Growth. Jean-Claude Juncker was given just such an opportunity with the latest Club of Rome report, which said: “Measuring our success on GDP growth has proven inadequate to the task and it also masks a growth in inequality between rich and poor. New indicators such as a Genuine Progress Indicator could more accurately measure economic welfare.

The Genuine Progress Indicator or GPI takes fuller account of the well-being of a nation. It decreases when poverty or pollution increase. Experiments with applying it have taken place in Canada, the US and the EU – but it never reached the central status of GDP. What is lacking is not the technical expertise, but the courage to leap. Policymakers need to not only use it to measure well-being but also to act on the signals it gives to make sure it rises – even if that involves taking decisions that might harm GDP growth.

There’s no point in simply adding an indicator and the associated army of statisticians and bureaucrats to a ship that still goes full steam ahead towards a major iceberg. The whole point of moving beyond GDP is about building a new and better compass for the ship we’re all in together. A compass that is able to steer us through multiple and growing storms of the 21st century. If policymakers gave people a choice between growth in traffic accidents, oil spills and private prisons or better air, work-life balance and healthcare, wouldn’t a vast majority vote for the latter? To borrow from the title of the Club of Rome’s latest report: Come on!