Social Europe

politics, economy and employment & labour

  • Themes
    • Global cities
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter
  • Membership

Growth Is Back! So What?

Éloi Laurent 25th January 2018

Éloi Laurent

Éloi Laurent

Reports of the death of growth have been greatly exaggerated. As the IMF noted last month, the world enjoyed in 2017 the “broadest cyclical upswing since the start of the decade”. In other words, after ten years of real downturns, false starts and speculations on “secular stagnation”, a genuine global recovery has finally materialized. The European Commission, in its autumn forecast, similarly rejoiced that “the euro area economy” was “on track to grow at its fastest pace in a decade this year”.

But does it matter? It all depends on what you know about what Gross Domestic product (GDP) measures… and leaves aside. GDP actually captures only a tiny fraction of what goes on and matters in our complex societies: it tracks some but not all of economic well-being (saying nothing about fundamental issues such as income inequality); it does not account for most dimensions of well-being (think about the importance of health, education or happiness for your own quality of life); and it says exactly nothing about “sustainability”, which basically means well-being not just today but also tomorrow (imagine your quality of life on a planet where the temperature would be four degrees higher or where there would be scant drinkable water or breathable air).

Sure enough, growth, measured by GDP, is back, but it will not result in prosperity for people or sustainability for societies in Europe and beyond because it was not designed to achieve either goal. To put it simply, growth cannot help us understand let alone solve either of the major crises that mark the beginning of the early 21st century: the crisis of inequality (the growing gap between the haves and the have-nots) and the crisis of the Biosphere (the alarming degradation of climate, ecosystems, and biodiversity that threatens human well-being). In our time, regardless of its current or future level and the enthusiasm that greet them, growth is indeed dead as a collective horizon and it is a broken compass for policy.

Mis-measuring the economy

Consider the US, which is supposed to be growing faster than Europe: stock markets, profits and growth are up, sometimes at historic highs. But stock markets, profits and growth are the holy trilogy of mis-measuring the economy. Consider another US trilogy: inequality, health and trust and the picture changes radically. Recent data show that income inequality is higher today than it was during the Gilded Age, relentlessly fracturing the American society; that Americans in large numbers have been “dying of despair” since the late 1990s while the economy was growing (not to mention corporate profits) and that the level of trust in Congress has been divided by three and half since the mid-1970s with political polarization at an all-time high all the while Growth domestic product per capita roughly doubled. There is every reason to believe that the Republican tax bill voted last year and about to be enacted, will degrade the country on all three counts while increasing further corporate profits, stock market indices and GDP growth. The simple but hard truth is that governing societies with metrics that veil social reality instead of highlighting it is perilous. Measuring is governing: indicators determine policies and actions.

There is a real European paradox in this respect since the great recession. On the one hand, the European Union has tried to capitalize on the discontent with standard economics and capture the “beyond GDP” momentum. But on the other, it has become even more rigid in applying its ill-designed public finance targets that are all based on GDP. The EU is today largely governed by bad numbers and democracy ends up at risk when too much confidence is put by policy makers on too-narrow indicators.


Become part of our Community of Thought Leaders


Get fresh perspectives delivered straight to your inbox. Sign up for our newsletter to receive thought-provoking opinion articles and expert analysis on the most pressing political, economic and social issues of our time. Join our community of engaged readers and be a part of the conversation.

Sign up here

So what should we actually be concerned about? Instead of growth, well-being (human flourishing), resilience (resisting shocks) and sustainability (caring about the future) should become the collective horizons of social cooperation, of which economics is only a facet. Because these three horizons have been overlooked by mainstream economic thinking in the last three decades, our social world has been mismanaged and our prosperity is now threatened by inequality and ecological crises. At its best, economics measures what counts and provides societies with the means to make it count, among the most powerful of which are robust and relevant social and ecological indicators. Building, disseminating, and using them is thus a practical way to reclaim essential values and advance important issues and policies. Done properly, measuring produces positive collective meaning. Understanding how what matters to humans can be properly accounted for is the first step to valuing and taking care of what really counts.

Éloi Laurent
Éloi Laurent

Éloi Laurent is a senior research fellow at OFCE, the Centre for Economic Research at Sciences Po in Paris, professor at its School of Management and Innovation and visiting professor at Stanford. He is author inter alia of The New Environmental Economics: Sustainability and Justice (Polity Press).

You are here: Home / Economy / Growth Is Back! So What?

Most Popular Posts

Ukraine,fatigue Ukraine’s cause: momentum is diminishingStefan Wolff and Tetyana Malyarenko
Russia,information war Russia is winning the information warAiste Merfeldaite
Nanterre,police Nanterre and the suburbs: the lid comes offJoseph Downing
Russia,nuclear Russia’s dangerous nuclear consensusAna Palacio
Belarus,Lithuania A tale of two countries: Belarus and LithuaniaThorvaldur Gylfason and Eduard Hochreiter

Most Recent Posts

G7,BRICS,China,Russia G7 versus the BRICS: taking stock in 12 figuresThorvaldur Gylfason
solar energy,photovoltaic,Europe,EU,PV Powering up: the EU and solar energyFrancesco Crespi, Dario Guarascio, Serenella Caravella and Giacomo Cucignatto
Nagorno-Karabakh Nagorno-Karabakh: it’s not over yetSvante Lundgren
Sweden,climate,green Sweden’s climate policy—off the railsLisa Pelling
Biden,Detroit,UAW,strike Detroit, Joe Biden and a union renaissancePaul Knott

Other Social Europe Publications

strategic autonomy Strategic autonomy
Bildschirmfoto 2023 05 08 um 21.36.25 scaled 1 RE No. 13: Failed Market Approaches to Long-Term Care
front cover Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship

Hans Böckler Stiftung Advertisement

WSI European Collective Bargaining Report 2022 / 2023

With real wages falling by 4 per cent in 2022, workers in the European Union suffered an unprecedented loss in purchasing power. The reason for this was the rapid increase in consumer prices, behind which nominal wage growth fell significantly. Meanwhile, inflation is no longer driven by energy import prices, but by domestic factors. The increased profit margins of companies are a major reason for persistent inflation. In this difficult environment, trade unions are faced with the challenge of securing real wages—and companies have the responsibility of making their contribution to returning to the path of political stability by reducing excess profits.


DOWNLOAD HERE

ETUI advertisement

The future of remote work

The 12 chapters collected in this volume provide a multidisciplinary perspective on the impact and the future trajectories of remote work, from the nexus between the location from where work is performed and how it is performed to how remote locations may affect the way work is managed and organised, as well as the applicability of existing legislation. Additional questions concern remote work’s environmental and social impact and the rapidly changing nature of the relationship between work and life.


AVAILABLE HERE

Eurofound advertisement

Eurofound Talks: does Europe have the skills it needs for a changing economy?

In this episode of the Eurofound Talks podcast, Mary McCaughey speaks with Eurofound’s research manager, Tina Weber, its senior research manager, Gijs van Houten, and Giovanni Russo, senior expert at CEDEFOP (The European Centre for the Development of Vocational Training), about Europe’s skills challenges and what can be done to help workers and businesses adapt to future skills demands.

Listen where you get your podcasts, or for free, by clicking on the link below


LISTEN HERE

Foundation for European Progressive Studies Advertisement

The summer issue of the Progressive Post magazine by FEPS is out!

The Special Coverage of this new edition is dedicated to the importance of biodiversity, not only as a good in itself but also for the very existence of humankind. We need a paradigm change in the mostly utilitarian relation humans have with nature.

In this issue, we also look at the hazards of unregulated artificial intelligence, explore the shortcomings of the EU's approach to migration and asylum management, and analyse the social downside of the EU's current ethnically-focused Roma policy.


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube