One of the debates that seems to be threatening to ignite right now is the one about economic growth and how it fits with sustainability.
Is it possible to have an economy that grows, and be sustainable at the same time? Some say yes, some say no, some say maybe.
The issue to me seems to be partly one of definition. Wikipedia defines GDP as “the total market value of all final goods and services produced”. The article also suggests that GDP represents a measure of “the sum of value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time”.
There’s a well-known saying in business: “Turnover is vanity, profit is sanity”.
What I take this to mean is that any fool (more or less) can increase turnover, by for example, selling more products and services. The path to sanity is to focus not on turnover but on profit – because profit is a better measure of the value that an individual or an organisation adds to other people. It’s a measure of what we give, and, crucially, how well we do it.
If we accurately meet really important needs, and we do it really efficiently, the more profit we’ll earn.
I am not an economist, and so am probably making a idiot of myself here. But from my reading, GDP seems to be measuring something analogous to a country’s turnover, not profit.
Plants and animals (and people) grow – so I can’t see anything inherently wrong with growth. Small businesses seem to understand that growth and development isn’t just about size and scale. Profit seems to me to be an excellent way of measuring what we give to other people, and measuring our progress at getting better at that.
By the way, Wikipedia also lists 14 or 15 separate criticisms of GDP. It lists five alternatives to GDP and I heard about another one the other day: Gross Peaceful Product.
Perhaps as the sustainability/economic growth debate develops, we’ll agree some more useful measures of growth?