How not to be gross. The trouble with the GDP obsession

Gross Domestic Product, or GDP, even sounds slightly repellent. All the outputs a country spews out into the world, minus none of the defilements to human welfare and the natural world. Gross is a good description. Unearth all the fossil fuels in the ground, burn them and watch the GDP meter spike, while civilisation drowns. Fight a war and see GDP spiral as you repair the damage you’ve inflicted. Sit back in grim satisfaction as your products cause an obesity epidemic and the economy spreads depression like a virus. But as long the volume of goods and services shows a steady rise, you are outpacing the abyss.

But more than just being blind to suffering, the obsession with GDP actively seems to thrive on human misery. According to psychologist Oliver James, who gives it the moniker, ‘selfish capitalism’, “it is absolutely critical for everybody to go around feeling miserable, filling the emptiness with commodities, dealing with misery by trying to give themselves short-term boosts with hamburgers or drink.”

Divorce and separation, seemingly unbridled negatives for human happiness, are a positive boon for GDP statistics, James points out. They result in more homes rented out, more fridges and furniture bought, extra DVD players needed etc. A world comprising solely of single person households would be terrible on many fronts – it would be an environmental disaster and would spread the blight of our time, loneliness. But as far as GDP is concerned, this outcome would be an unadulterated blessing.

Small wonder there is mounting pressure for other measurements of the state of the economy and society to knock GDP off the statistical throne it has occupied since the Second World War. According the author Dirk Philipsen, there are more than a hundred alternatives, ranging from the ‘Happy Planet Index’, to the Genuine Progress Indicator to the ‘Beyond GDP’ initiative.

These indexes both measure things that GDP ignores, such as childcare and housework, and take account of huge negative impacts that are grist to the mill of GDP. They are thus a far more realistic or complete picture of the health of the societies we inhabit. The book, The Spirit Level, painstakingly demonstrated that rising GDP, a blunt measure of rising societal wealth, can harbour great damage to well-being, incubating trends such as rising mental illness and obesity or declining social mobility.

But before we rush to ditch GDP as an economic measure, it is necessary to recognise that it does record something meaningful in our current society.

As economist Michael Roberts points out, ‘GDP is not designed to measure benefits to people but productive gains for the capitalist mode of production.’ And in a ‘capitalist mode of production’, there is an undeniable, if regrettable, link between the productive gains of the economy’s major institutions and the welfare of most people. If the system doesn’t make its productive gains, the disappointment is swiftly transferred downwards.

The 2007-9 recession and its aftermath made this plain to see. Global output slumped by eight percentage points and GDP in the OECD area (34 wealthy countries around the world) contracted by six percentage points. Those are the bare figures. But these statistical falls were accompanied by real-world spikes in unemployment and homelessness and serious depletions of income and wealth. With GDP per person still lumbering below its 2007 level, exploitative work contracts and self-employment have mushroomed. GDP may be blind but there is a connection between it and human welfare.

But, because this connection undoubtedly exists, it is used by governments and international agencies to justify all kinds of policies to resuscitate GDP which harm people. Neutral-sounding ‘structural reforms’, such as raising the pension age, restricting collective bargaining agreements or clamping down on ‘generous’ welfare benefits, are hawked as ways to return the world economy to a path of growth.

Sure, there is anger about these policies. Left Keynesians and others protest there are other ways to revitalise GDP growth. But there is unanimity that sustainable GDP growth is a worthy aim. And at the back of our minds there exists a seedy toleration of the anti-social consequences of rising GDP because, without it, the abyss seems to beckon. This is why, despite a wish to be humane on the part of many people, there is a deep ethical rot at the heart of our economies.

But, far from accepting this miserable bargain, we need to face it down. The god of GDP growth, as one economist puts it, needs to be dethroned. We don’t need alternative measures that co-exist with GDP, we need economic alternatives to GDP. Public policy should no longer aim at maximising GDP. It should aim at maximising human welfare and if that depresses GDP, so be it.

This change can take many forms. People growing their own fruit and vegetables rather than relying on the sugar-addled products of the food industry would improve well-being but be bad for GDP. A health policy that aimed at curing, where possible, physical and mental illness rather than merely treating their symptoms with drugs would benefit human welfare but dampen GDP. And policies to keep fossil fuels in the ground forsake future economic growth in the hope of ameliorating the impact of climate change.

It is estimated that the global economy needs to grow by at least 3% a year in order to make sufficient profits for large corporations. This means compound growth; growth on top of the growth already attained. It is doubtful whether this rate is possible but unquestionably it is not desirable. “Imagined physically,” says the geographer, David Harvey, “the enormous expansion in physical infrastructures, in urbanisation, in workforces, in consumption and in production capacities that have occurred since the 1970s until now will have be dwarfed into insignificance over the coming generation if the compound rate of capital accumulation is to be maintained”.

But should we collectively decide not to pursue the aim of maintaining the rate of capital accumulation, we need to be fully aware of what this implies. Not only do large corporations directly and indirectly (through supply chains) employ large swathes of the population, they also act as the destination for pension fund investments. The current and future wealth of millions of people depends on their success. Recognising this is not to justify the economic system but state a bare fact of social reality.

Corporations thus play a dual role in the economic system. Economic viability apparently depends on them but they are taking us in fundamentally anti-social, anti-ecological directions. This state can be characterised as one of economic bondage.

It might be argued that public investment should substitute for falling GDP. After all, the definition of GDP includes – in addition to consumer spending, business spending and investment and net exports – spending by the government. But, in order for growth to be maintained in this way the level of government involvement in the economy would have to rise more than anyone is advocating (Jeremy Corbyn included). This kind of economy would be akin to the Second World War economies of Britain and America. And of course without the huge stimulus of manufacturing weapons.

Twenty years ago there was unbridled optimism that the information economy was the future of capitalism. The number of new products was only limited by the boundaries of the human imagination. Steve Jobs could “anticipate technological desires you didn’t even know you had”. But digital capitalism has not turned out to be the saviour of corporate profitability and economic growth. “Info-tech,” says the author Paul Mason, “drives labour out of the production process, reduces the market price of commodities, destroys some profit models and produces a generation of consumers psychologically attuned to free stuff.”

We are currently living in a stagnant capitalist economy. Growth has levelled out at rate well below the average prior to the 2008 crash. Another slump is very likely, which will turn growth negative again, causing a depression. That’s the scenario, and all its human consequences, we have to imagine if we explicitly decide not to make the profits of multi-national corporations a priority.

Therefore, logically, not following the GDP compulsion anymore means constructing a post-capitalist economy. And in the short-term that entails safeguarding the incomes of millions of people. This implies the free (or at negligible cost) provision of many utilities and the use of a basic income as the primary source of people’s income, not as is commonly imagined, a fall back that gives people the confidence to make money elsewhere.

The most pressing task therefore is not just to illustrate how an alternative economic system is desirable, but to show how it would work. How it would provide and distribute income and wealth, substituting for the institutions that currently perform this function.

On not being governed by 'the best'

A single person will not serve as the sole representative of the Partido da Terra, the libertarian municipalist political party elected to Lousame municipality in North-West Spain in May. Instead, under a system of rotation, every four months a different person will occupy the position; 11 in total over the four year term.

In Iceland, the grassroots group Alda (‘The Association for Sustainability and Democracy’) advocates that a third of Icelandic Parliament be reserved for randomly selected citizens. Part of Alda’s board is also randomly selected. “Random selection is simply a very incorruptible process, unlike elections which are usually won with money,” argues board member Hjalti Hrafn Hafthorsson.

Faced with the twin realities of economic and ecological failure, many opposition movements press for the widening use of elections to bring undemocratic institutions into line with the popular will. Under the banner of ‘economic democracy’ there is an insistence that company boards and pension fund managers, for example, should be elected, not appointed. More conventionally, there is a fervent desire – witness Jeremy Corbyn, Bernie Sanders, Syriza etc - for elected austerity-imposing governments to be replaced by elected anti-austerity governments.

But alongside this fixation on more elections – choosing people to occupy empowering positions for which the only available recourse is that they lose subsequent elections - there exists a growing recognition that they cannot overcome the burgeoning set of problems we face. Both in terms of what kind of person puts themselves forward as a candidate for election and the forces exerted on that person once in a position of power, many are concluding that elections are not the answer. Random selection (or sortition to give it another name) – the selection of people who don’t visibly desire power to govern for short and non-renewable periods – can be however.

Not only are elections not the answer to the unmistakable issues of mammoth inequality and elite power, but they are also not democratic. For a long time elections have been regarded as synonymous with democracy, but random selection has a far better claim to be the democratic way.

Ancient Athens and sortition

Aristotle famously said that choosing officials by lot was democratic but selecting them by election was a sign of oligarchy. A cursory look around the world reveals its oligarchical character – the widespread use of elections, coupled with the barely hidden assumption that elections cannot actually threaten the interests of the 1 per cent and 0.1 per cent. Ancient Athens was the originator of the practice of government by sortition – apart from expert posts such as architects or admirals, all public officials, magistrates and so on, were chosen randomly, using an allotment machine for that purpose, the kleroterion.

But sortition didn’t die out with the end of democracy in Athens. According to the anthropologist David Graeber, for much of European history elections were assumed to be an aristocratic way of selecting public officials. “’Aristocracy’”, he writes, “after all literally means, ‘rule by the best,’ and elections were seen as meaning that the only role of ordinary citizens was to decide which, among the ‘best’ citizens, was to be considered best of all.” The democratic way to select officials, he asserts, was taken to be by random lottery (and this was actually the case in early modern times in the Italian cities of Lucca and Vincenza).

Ambition and other disorders

And now, in a world convinced that elections are the only democratic way to choose who governs us, we are growing increasingly tired of being ‘ruled by the best’. Epidemiologist Richard Wilkinson, co-author of The Spirit Level has astutely identified one of the faults of our political system as selecting “people with ambition as their primary quality”. The English psychologist, Oliver James, claims that, while 13 per cent of the general population have a personality disorder, so do a majority of high achievers in spheres such as politics, business and the arts.” And invariably the high achievers will be the ones pushing themselves forward as candidates and being elected to positions of power.

The evidence that psychopathy amongst corporate chief executives and senior managers is four times higher than amongst the rest of the population has by now become something of a trope in popular culture. But psychopathy is just an extreme example of personality disorder. Personality disorder more commonly takes the form of narcissism (marked by the desire for dominance, insensitivity to others and a preoccupation with personal success) or the borderline (capriciousness and impulsivity). I believe any close-up observation of the exercise of power by successful people will reveal these behaviours to be very common.

As James emphasises, the traits that accompany personality disorder are an advantage in the quest of reach positions of power. “Being a chameleon, with the self-monitoring, game playing distance that often accompanies dissociation, has been shown to enhance career success in organisations,” he says. “Ruthlessness is easier if you lack empathy for the emotions of others, as borderline people often do, and being ruthless is usually necessary if you are to reach the very top.”

According to James, personality disordered behaviour thrives in organisations “where an individual is very concerned to gain power, resources or status.” Institutions that hold out the lure of gaining “power, resources or status” are clearly not limited to profit maximising capitalist corporations. Public sector organisations, elected governments or pan-governmental bodies like the EU are just as susceptible to this kind of misrule. There is now a well-trodden career path in politics – intern, researcher, special adviser, MP, minister – while a common alternative is to demonstrate your talent in the corporate sector before switching to politics. It is more accurate to say that personality disordered behaviour thrives in oligarchic institutions.

Mimicking the elite

Our collective sense of impotence is compounded by the fact that, while ruling elites are generally more disordered than the populations they rule over, the mass of people are catching up. The American researcher Jean Twenge, has identified a 30 per cent increase in narcissism, among college students, since the late 1970s. She says that in the 1950s only 12 per cent of teenagers agreed with the statement, ‘I am an important person’ but, by the late 1980s, this had risen to 80 per cent. The English academic Peter Fleming, says students now approach their education like “fecund bank managers who only see rational and singular futures.”

Culturally, ‘being the best’, the aristocratic mode of rule, has become firmly entrenched, as evident in public life, marked by perennial elections, as it is in its traditional bastion of the autocratic private, corporate sector. For the rest of the population, the only feasible choice is to try and mimic the successful, prodded by the neoliberal insistence that everyone think of themselves as an individual enterprise. Witness the rise in self-employment and the accompanying conviction that success or failure is a personal responsibility. But, as much we seem besotted with the lives of the rich and famous and want to emulate them, there is a germinating awareness that there is something wrong with ‘the best’ and the kind of rule they embody. Paradoxically, we need rule by people who don’t want to rule over us. Immediately we allow the desire for power to be let off the leash, multiple problems ensue. “If righteous people don’t want to govern,” says French economics lecturer, Étienne Chouard, “and if we give power, as in representative government, to those who want it, the worst will govern.”

Conventional political thought, even if it recognises the problem, cannot provide an answer. Oliver James, who politically is a left-wing social democrat, candidly admits he can’t ultimately see a way out. “To run a large business or government department requires extremely hard work, and it may even be that the disordered are the best equipped to make what to others would be a sacrifice of their personal lives.” The social psychologist Stanley Milgram, whose 1960s experiments showed the power of obedience, could only suggest “constant vigilance” as a remedy.

However, sortition does offer a solution, if not an instantaneous one. The choosing of people to hold positions of power, not as part of a well-thought out career ladder, but randomly and for short and non-renewable periods, can neutralise the pernicious effects of electing individuals to niches of power. And as has been demonstrated, it can more accurately reflect the make-up of society, increasing the presence of women and marginalised groups. Random selection can therefore loosen the stranglehold of the upper middle classes on political power.  A reliance on elections, by contrast, will merely reproduce the same political inequalities.

A realist vision

But less noticed is the fact that random selection can turn traditional notions of Left and Right on their head. The linguist Steven Pinker differentiates between a left-wing utopian vision of human nature and a right-wing tragic vision, associated with, among others, Friedrich Hayek and Milton Friedman. The tragic vision assumes that people are inherently selfish and flawed and that any changes will likely have unintended consequences worse than the problems they are intended to fix. The utopian vision assumes people are altruistic, and, in principle, perfectible. In short, conservatives are realists, leftists are idealists.

But random selection rests on a realist view of human nature and the conviction that institutions have a decisive effect on how people behave. You don’t count on virtuous behaviour; you assume people are not inherently good, you assume dishonesty. That’s why mandates, under random selection, are short and non-renewable. Representative government, however, when it is not simply disingenuous, is founded on a naïve idealism: that democracy will somehow emerge unscathed, while the elected inhabitants of power pursue their own self-interest and, in between elections, accede to the demands of the economy’s dominant financial and corporate institutions. It is time to see through the election myth and recognise how the world works