Genuine economic welfare has been declining since 1978

An important principle of liology is that we humans can live sustainably on the earth only when we begin to harmonize with the natural world rather than seeing it as a resource to be utilized.  But, of course, that’s not what our global economic system measures.  Instead, countries measure their success by their increase in gross domestic product (GDP).

But GDP was never meant as a measurement of economic success.  Instead, GDP measures only the marketed economic activity of a country and ignores everything else.  This means that an oil spill that costs billions of dollars to clean up adds to a country’s GDP, whereas if millions of people are growing their own vegetables in their backyard, not a single cent’s worth of those vegetables get measured in a country’s GDP.

Oil spills add to our GDP…

… while homegrown vegetables aren’t counted

The problem is, there is a natural dynamic to human society that You Get What You Measure (or YGWYM for short.)  If a corporation starts measuring revenues as its standard of success, you can be sure those revenues will rise, even if its profits fall.  And presidents around the world get voted in and out of office based on what’s happening to their country’s GDP.

People are becoming increasingly aware of this mismatch, and have been developing different measurements to give a more accurate idea of a country’s welfare.  One of these is called the Genuine Progress Indicator (GPI) which factors in negative aspects such as income inequality, environmental pollution and crime, as well as positive aspects such as volunteer work and household work.

In a fascinating new study, called “Beyond GDP: Measuring and achieving global genuine progress” some researchers have looked at how different countries in the world have done in their GPI all the way back to 1950.  What did they find?  In contrast to GDP, which has been soaring for the past 70 years, they found that GPI peaked worldwide in 1978 and has been falling ever since.  This seems to confirm what many of us have been feeling instinctively for some time – that while our politicians and promoters of the global capitalist economy tell us that we’ve “never had it so good,” the real welfare of people worldwide has been in a state of decline.


Click on the graph to see a larger version

This is important news.  As more people around the world recognize that measures like GPI, rather than GDP, offer a more accurate assessment of their welfare, it makes it more feasible that the world can begin to move towards a more sustainable way of life, before it gets too late.