The gross domestic product says nothing about our well-being and that of the planet. Time for an alternative

Imagine: you go to the doctor for an annual check-up. You make a little small talk and then he measures your blood pressure. Everything's fine. You will be out like a flash. Does the doctor now have a good picture of your overall health? I'm afraid not. Because what about your lungs, your heart, your eyes and ears, your blood values and mental health? No idea.

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Yet this is the way we in the modern world, and I am talking about almost every country on this globe, measure the overall (financial) health of a society. We call it the gross domestic product (GDP). A global economic measurement system of which the economist who once invented it in the 1930s, Simon Kuznets, warned that it is a potentially dangerous oversimplification that can easily be misused. For example, GDP counts bombs and the construction of prisons as progress, for the simple reason that it generates money. It does not include ecological damage at all.

However, that was no reason for the elite of that time not to embrace it as an accounting system for the global economy. After the Second World War, GDP soon formally became part of national and international economic policy. Currently it has been given some sort of holy status. It's like we are presented with only one single figure each year. For example: "GDP grows by 0.7 percent in the second quarter of 2018." And on that basis governments and companies base their policies. Growing, stay the same or contracting, those are the options.

We get what we measure. The indicators that we choose determine which things we pursue collectively. In the case of GDP, this often leads to absurd logic. Because everything that causes economic activity, whether good or bad, contributes to GDP. So if, for example, there is a large oil spill at sea, then GDP will go up because of all the economic activity that the 'cleaning' engenders. The bigger the leak, the better for GDP. In other words, GDP measures the speed at which a society transforms nature and human activity into a monetary economy, without considering what this does with the quality of life in general.

And that's not all. Activities that put more pressure on our natural environment often contribute more to GDP. So for the country's gross national product it's better that I grab my car and top up the tank (and thus spend money) than that I always go to work by bike. Or: if I get something from my own vegetable garden and eat it, it will not affect GDP, but a visit to the supermarket will.

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Now the power of GDP is of course its simplicity; an international measurement method that organizes all transactions and balance sheet items of an economy in a structured way and then spits out one digit per country. The big question is therefore how another fairly simple measurement system can replace this method - one that is accepted worldwide (more than two hundred countries are currently using GDP as a 'measure of prosperity').

It is not that there are no alternatives. Alternative measurement systems have been discussed for several decades, such as the genuine progress indicator (GPI) or gross national well-being (GNW). There are also (especially smaller) countries that pioneer with GDP alternatives. In Bhutan, for example, there is gross national happiness, and New Zealand recently announced that it will use new approaches to draw up their budget like better quality of life and general well-being for the population.

Without a coherent and focused strategy, however, a global transition to a healthier welfare measurement system cannot be made. In the world of GDP alternatives, there is no clear agreement between frequently used terms, such as "well-being", "sustainable development" and "quality of life." If it wants to provide a globally usable alternative, it will therefore have to develop a clear common language with the aim of understanding, measuring and managing the present well-being and the well-being of the future.

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It is clear that the time is right for a next step. Continuing on the current road will ensure that the economic reality is increasingly moving away from our social and ecological reality. To most people it is clear by now that the good annual growth rates of the economy say little about their monthly wage slip or our social welfare, and certainly nothing about the state of the living environment.

So: if we want a different economy, one that doesn't massively plunder our earth, we'll have to start installing a new measurement system. It requires an overall and integral approach to our economy in conjunction with people, animals and natural welfare. The alternative is Control-Alt-Delete.

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Note: all pictures come from Unsplash.