This year across the world countries have been plunged into recessions with percentage declines in gross domestic product (GDP) for many countries way higher than we have seen in a generation. Now that the peak from the first wave of the Covid-19 virus is behind us we are seeing economies across the world staging a recovery in their GDP, but many are expecting a second wave of the virus to impact many economies over the winter.
I’ve questioned previously the fixation we have with GDP and never-ending GDP growth. This is the cornerstone of a capitalist system and today many economists, business leaders and politicians are questioning this key measure of success. As we all know our home, earth, has a finite amount of everything it has to offer humankind in our never-ending quest to produce more and consume more.
I’d like to share with you the thoughts of the economist Ernst Schumacher. He would probably be surprised that his book, Small Is Beautiful, published back in 1973, would become recognised as one of the most influential books since World War Two. His point was that conservation makes perfect economic sense.
Schumacher pointed out the folly of limitless growth in our finite world. The dilemma he foresaw back in the ’60s is far more evident today, for example, from the astonishing impacts of human-caused global warming, to the rapid erosion of soil, to the pollution of air and water.
Schumacher promoted “permanence,” what we generally refer to now as “sustainability.” This is simply the ability of the land to sustain us in perpetuity. It isn’t just about aesthetics, but rather long-term survival that depends on environmental health, which, in turn depends more and more on conservation and restoration.
Whether you’re looking at mining, logging, fisheries or agriculture, according to Schumacher: “One of the most fateful errors of our age is the belief that the problem of production has been solved. The illusion is mainly due to our inability to recognise that the modern industrial system, with all its intellectual sophistication, consumes the very basis on which it has been erected. To use the language of the economist, it lives on irreplaceable capital which it cheerfully treats as income.”
He insists: “The truth is that a large part of the costs of private enterprise has been borne by the public authorities because they pay for the infrastructure and that the profits of private enterprise therefore greatly overstate its achievement. In the excitement over the unfolding of his scientific and technical powers, modern man has built a system of production that ravishes nature and a type of society that mutilates man. Scientific and technological ‘solutions’ which poison the environment or degrade the social structure and man himself are of no benefit, no matter how brilliantly conceived or how great their superficial attraction.”
He suggested a whole new approach: “The economics of giantism and automation is a leftover of 19th-century conditions and 19th-century thinking and it is totally incapable of solving any of the real problems of today. An entirely new system of thought is needed, a system based on attention to people, and not primarily attention to goods. It could be summed up in the phrase, “production by the masses, rather than mass production.”
He was one of the first economists to question the appropriateness of using GDP to measure human well-being, he asserted: “The aim ought to be to obtain the maximum amount of wellbeing with the minimum amount of consumption.”
Finally, Schumacher emphasises the need for the “philosophy of materialism” to take second place to ideals such as justice, harmony, beauty and health.
Gordon is the former president and chief executive of BMMI. He can be reached at email@example.com