Why the global obsession with economic development is harming our progress

An op-ed written by Paramjeet Singh Berwal via Qrius on 10/19/2018

Being a lawyer and a lecturer of the law, I am very well versed and comfortable with the idea of articulating a line of argument in a manner that mellows out its intensity, so it can appeal to a wider audience. John F. Kenedy once said, “Conformity is a jailer of freedom and the enemy of growth.” If you ever observe public discourse on mainstream media being advanced by politicians, policymakers, a phrase that we come across the most is ‘economic development and progress’. The contemporary use of the phrases is, however, accompanied by words such as sustainable, climate change, socio-economic inclusiveness amongst others.

Economic development is considered to be the most important measure of how well we, the human race, is doing and should do. The numbers are all that humanity has been reduced to. This situation has taken us away from the reality and confined us to an extremely limited vision of all the possibilities that we, as humans, are capable of.

The blinkers of parochial approach towards life and its ultimate goal do not allow us to see beyond the glittery wrapper of economic development that hides underneath it a decaying society. Not only this, even observers from organisations like OECD have said, “If ever there was a controversial icon from the statistics world, GDP is it. It measures income, but not equality, it measures growth, but not destruction, and it ignores values like social cohesion and the environment. Yet, governments, businesses and probably most people swear by it.”

There are many scholars and policymakers that seek to put forth a more comprehensive and sustainable approach in measuring the progress, however, such measures still focus on development from an economic perspective as they include issues that have more humanist or social appeal. For instance, the World Economic Forum published an article titled “A new way to measure economic growth and progress”. which was very limiting because the important issues and challenges that affect human beings are still being considered under the umbrella goal of ‘economic growth and progress’.

What are the alternatives

There have been certain studies that are able to move beyond this parochialism. The Frederick S. Pardee Center for the Study of the Long-Range Future at Boston University published a paper in January 2009 titled “Beyond GDP: The Need for New Measures of Progress” highlighting the need for an alternative measurement that does not focus exclusively on economic growth and takes into account social and environmental factors.

In 1934, Simon Kuznets, a Nobel Laureate responsible for designing the United States national accounting system, was, in fact, the first person to develop the modern concept of GDP and his 1934 report for US Congress warned against using GDP for measuring economic or social well-being. In the report, under the section titled ‘Uses and Abuses of Nation Income Measurements’, it reads:

“The valuable capacity of the human mind to simplify a complex situation in a compact characterization becomes dangerous when not controlled in terms of definitely stated criteria. With quantitative measurements especially, the definiteness of the result suggests, often misleadingly, a precision and simplicity in the outlines of the object measured. Measurements of national income are subject to this type of illusion and resulting abuse, especially since they deal with matters that are the center of conflict of opposing social groups where the effectiveness of an argument is often contingent upon oversimplification. […]

All these qualifications upon estimates of national income as an index of productivity are just as important when income measurements are interpreted from the point of view of economic welfare. But in the latter case additional difficulties will be suggested to anyone who wants to penetrate below the surface of total figures and market values. Economic welfare cannot be adequately measured unless the personal distribution of income is known. And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income. The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.”

Simon Smith Kuznets was an American economist and statistician who received the 1971 Nobel Memorial Prize in Economic Sciences. Credit: Wikimedia Commons.

Furthermore, in 1962, Kuznets, in his “How to Judge Quality”, wrote, Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what.”

What does this mean?

It is important to note that we are not discounting the achievements made by following a totally economically lopsided system. However, we need to take into account that the achievements can neither be the reason for nor justify the incredible loss we have subjected ourselves to by following the path of what they call economic development without even thinking whether it has been worth it or not.

While it is not that intellectuals including world-renowned economists, philosophers do not question the notion of over-fetishizing economic growth and development, but when one observes the mainstream public discourse, it bears no signs about the underlying principle that governs almost all dynamics of the contemporary society.

The phrase “No reality please, we’re economists” has been used several times to the critique of contemporary and mainstream economics. Public intellectuals like Noam Chomsky have tried to make this point several times but have been discarded on the basis of their ideology without even venturing into the merits of their opinions. Even economist Robert Solow, who won the 1987 Nobel Prize in Economics for his work on economic growth, was quoted by S. Stoll saying in 2008 that the United States and Europe might soon find that “either continued growth will be too destructive to the environment and they are too dependent on scarce natural resources, or that they would rather use increasing productivity in the form of leisure”.

Robert Solow is an American economist. Credit: Wikimedia Commons.

Peter Victor writing for Nature, has argued that limitations of earth and not the “rising GDP” should guide the operation of the global economy if we want to promote “stability, resilience and wellbeing”. Arguments like exploitation of the resources in the outer space could be advanced by many but that still does not deal with the basic foundational question of why do we need economic development, in the first place.

The way the goal of civilization has been articulated in terms of economic growth and progress is sickening. In general, it is said that with progress comes the comfort of life, people have resources and they are able to enjoy life. If that is the case, why does the World Health Organization’s factsheet mention that 300 million people of all ages, globally, suffering from depression? Not only this, the report indicates that depression is on the rise and it is the leading cause of disability and various diseases. Reports from other organizations like UNCTAD, IMF, Oxfam International mention that economic inequality is increasing at a very rapid rate.

Now, the question arises – why do we need economic development? Nobody knows the answer to that except that it is good for the progress of our societies. People, they feel happy, they feel sad, they laugh, they cry, they share ideas, emotions, stories, they fall in love, they experience life and are not machines. When we live in a world that treats humans as mere economic ingredients, it becomes difficult not only to practice human values but also to talk about them in a totally non-commercial context. Therefore, it becomes necessary for all of us to challenge the notion of economic development and progress in its entirety and advance towards building a system that affords humans an opportunity to be humans with all the development that could make our lives even better.

Matthew Wisner