social, human and environmental wealth and this methodology is mirrored in other
indices like the National Welfare Index (NWI) in Germany. While adhering to a
monetary valuation of progress, these indicators make an effort to identify the ‘use
value’ created or depleted in the course of a particular path of development. Starting
with the exchange value numbers of GDP, these are adjusted by using 24 different
components that express gains or losses in social, natural and human capital. These
include, for example, pollution and ozone levels, CO 2 emissions, loss of farmland
and primary forests and, in line with many well-being findings, income distribution,
crime rates, loss of leisure time and also the time people spend in unpleasant
activities like commuting. The benefits of non-marketized work at home, or as
volunteers, are added as increases in wealth by counting the amount that it would
cost to employ someone to do the babysitting and cleaning etc. (Genuine Progress
2014).
The overall goal is not to create an alternative cumulative indicator of sustainable development, as the information loss through monetarization and high
aggregation levels prevails. The GPI was and is intended to deliver a warning as to
where increased GDP contrasts with negative individual and social experiences, i.e.,
when uneconomic growth is reached and the marginal benefits of more GDP
growth are lower than its marginal costs.
A growing group of researchers and some governments have calculated GPI per
capita and compared results with GDP per capita. Similarly to Easterlin’s findings,
they observed a parting of the two curves at a certain point of development. In a
2013 journal article, many of the leading scholars in ecological economics like
Robert Costanza, Tim Jackson and John Talberth brought together the insights of
GPI calculations in 17 countries from five continents, representing 53 % of the
world’s population. Next to an assessment of where the costs of GDP growth start
to outweigh its benefits they also compared GPI per capita findings with other
indicators like ecological footprint, the UN Development Programme or UNDP’s
Human Development Index or HDI and life satisfaction surveys in those countries
(Kubiszewski et al. 2013).
By using Purchasing Power Parity to convert all GPI and GDP findings into
2005 US dollars, they added up all the country data into Global GDP and GPI per
capita figures to compare their developments. While the authors do not claim their
figures were absolutely accurate, as both GPI and GDP are hard to determine, the
trends are clear (Fig. 3.5).
The authors identified the start of uneconomic growth on a global scale in the
late 1970s: “Global GPI/capita peaked in 1978, about the same time that global
Ecological Footprint exceeded global Biocapacity. Life Satisfaction in almost all
countries has also not improved significantly since 1975. Globally, GPI/capita does
not increase beyond a GDP/capita of around $7000/capita” (Kubiszewski et al.
2013: 57). The primary policy recommendation taken from these findings comes
very close to the Brundtland Report’s redistribution goal but without declaring that
we first need to grow more: “If we distributed income more equitably around the
planet, the current world GDP ($67 trillion/year) could support 9.6 billion people at
$7000/capita” (Kubiszewski et al. 2013). In 2012 we had already reached a global
102
3 Why the Mainstream Economic Paradigm Cannot Inform …
indices like the National Welfare Index (NWI) in Germany. While adhering to a
monetary valuation of progress, these indicators make an effort to identify the ‘use
value’ created or depleted in the course of a particular path of development. Starting
with the exchange value numbers of GDP, these are adjusted by using 24 different
components that express gains or losses in social, natural and human capital. These
include, for example, pollution and ozone levels, CO 2 emissions, loss of farmland
and primary forests and, in line with many well-being findings, income distribution,
crime rates, loss of leisure time and also the time people spend in unpleasant
activities like commuting. The benefits of non-marketized work at home, or as
volunteers, are added as increases in wealth by counting the amount that it would
cost to employ someone to do the babysitting and cleaning etc. (Genuine Progress
2014).
The overall goal is not to create an alternative cumulative indicator of sustainable development, as the information loss through monetarization and high
aggregation levels prevails. The GPI was and is intended to deliver a warning as to
where increased GDP contrasts with negative individual and social experiences, i.e.,
when uneconomic growth is reached and the marginal benefits of more GDP
growth are lower than its marginal costs.
A growing group of researchers and some governments have calculated GPI per
capita and compared results with GDP per capita. Similarly to Easterlin’s findings,
they observed a parting of the two curves at a certain point of development. In a
2013 journal article, many of the leading scholars in ecological economics like
Robert Costanza, Tim Jackson and John Talberth brought together the insights of
GPI calculations in 17 countries from five continents, representing 53 % of the
world’s population. Next to an assessment of where the costs of GDP growth start
to outweigh its benefits they also compared GPI per capita findings with other
indicators like ecological footprint, the UN Development Programme or UNDP’s
Human Development Index or HDI and life satisfaction surveys in those countries
(Kubiszewski et al. 2013).
By using Purchasing Power Parity to convert all GPI and GDP findings into
2005 US dollars, they added up all the country data into Global GDP and GPI per
capita figures to compare their developments. While the authors do not claim their
figures were absolutely accurate, as both GPI and GDP are hard to determine, the
trends are clear (Fig. 3.5).
The authors identified the start of uneconomic growth on a global scale in the
late 1970s: “Global GPI/capita peaked in 1978, about the same time that global
Ecological Footprint exceeded global Biocapacity. Life Satisfaction in almost all
countries has also not improved significantly since 1975. Globally, GPI/capita does
not increase beyond a GDP/capita of around $7000/capita” (Kubiszewski et al.
2013: 57). The primary policy recommendation taken from these findings comes
very close to the Brundtland Report’s redistribution goal but without declaring that
we first need to grow more: “If we distributed income more equitably around the
planet, the current world GDP ($67 trillion/year) could support 9.6 billion people at
$7000/capita” (Kubiszewski et al. 2013). In 2012 we had already reached a global
102
3 Why the Mainstream Economic Paradigm Cannot Inform …