The authors of “Recoupling Economic and Social Prosperity,” a new article from University of California Press’s journal Global Perspectives, discuss the need to recouple economic and technological progress with social, societal and environmental progress for a more honest assessment of human well-being in an era of social fragmentation, globalization and technological advance.
By Dennis Snower & Katharina Lima de Miranda
To stop fragmentation among societies and to ensure economic activities are carried out sustainably, the use of gross domestic product (GDP) as an indicator of prosperity is no longer enough. Measures of prosperity in the 21st century must consider social wellbeing and environmental sustainability. Only then can governments and businesses take the necessary actions to ensure the continued thriving of our societies.
The world has experienced impressive economic growth for some 40 years now. GDP, currently the most used measure of prosperity, has continued in an upward trend with almost no lapse. In the last ten years alone, GDP per capita has risen 13 per cent, thanks to globalization and technological advances. Yet, despite this growth, many people are increasingly afraid of the future and feel socially alienated. They see their ability to shape their own lives dwindling and their trust in institutions is declining. Globally, there is a worrying rise of populism and a withdrawal from international cooperation, all while climate change and other global challenges require deep, ongoing cooperation. Economic and technological progress is decoupled from social, societal and environmental progress.
This decoupling is happening worldwide: The United States is experiencing a remarkable increase in its economic output but at the same time is more socially torn apart than ever before. France’s planned eco-tax on fuel and recent reforms of its pension system led to massive protests. A WhatsApp tax in Lebanon ended in a domestic political crisis.
Under such circumstances, populism becomes an attractive offer: Populist leaders promise a return to the ‘good old days’ and fast remedies based on my-country-first policies. Yet, this promise fades quickly: Nationalism and the use of various scapegoats do not provide answers. Even a counter-strategy that focuses on redistribution of wealth is not enough as it only addresses the economic part of the problem and overlooks the equally important needs of humans as social beings: acknowledgment, solidarity and a healthy living environment.
Redefining prosperity
Humanity needs a new understanding of prosperity based on a comprehensive definition of human needs, one that incorporates the following four dimensions: agency, social solidarity, environmental sustainability and economic prosperity. These dimensions are at the core of the new “Recoupling Dashboard,” which can help recouple economic prosperity with social prosperity.
“Man shall not live on bread alone,” Moses once said, meaning that securing basic material needs is not enough in itself, although a fairer distribution of wealth is clearly necessary given the growing social imbalance. Human wellbeing also involves the integration of oneself into a social community, an intact, healthy ecosystem, the opportunity to develop as an individual and the ability to influence one’s life through one’s own efforts. To achieve such goals, a complete, comprehensive recoupling is necessary, i.e. the linking and realignment of economic and technological progress with social and ecological progress. This is the basis of a new, more inclusive understanding of prosperity – in politics, business and society.
Today’s economic and business models are primarily focused on growth as are indices of wellbeing. This is hardly a suitable model to carry into the future, especially in light of global challenges being shaped by social division and populism. Economic-based measures, such as GDP and shareholder value, are no longer enough. Not only are they inadequate as analytical instruments, but they are also now increasingly part of the problem and not the solution.
The Recoupling Dashboard provides a new way to measure prosperity and wellbeing. In the same way that the cockpit of an airplane requires several indicators (altitude, speed, fuel) to ensure a safe flight, leaders in politics, business and society need to consider several dimensions so as to properly analyze and assess the state of social progress.
The Recoupling Dashboard is about more than growth. It includes four measures to ensure a holistic understanding of prosperity: solidarity, agency and ecological sustainability. Agency and solidarity, as well as economic prosperity and environmental sustainability are basic human needs that exist in all countries and all cultures. Only when a person’s fundamental material needs are met, when they feel secure and meaningfully anchored in society, when they have the power to influence their life based on their own goals, and when they live in a healthy environment, do they have a truly complete sense of wellbeing.
Failure to meet any of these needs results in suffering: An inability to meet basic material needs means poverty; lack of empowerment means there is an absence of freedom and self-determination; living without social solidarity means loneliness and alienation; and unsustainable economic activity leads to the destruction of healthy and fulfilling livelihoods.
The four dimensions – agency, solidarity, economic prosperity and environmental sustainability – are not simply interchangeable. To make progress toward ensuring thriving people live in thriving societies, all needs must all be fulfilled. Agency and empowerment are worthless if you are starving and material gain is baseless if you are in solitary confinement. Only when a country makes progress in all four dimensions are the needs of its citizens successfully being met.
Holistic, not silo thinking
A rethink is already taking hold as demonstrated by several social alliances, the Fridays for Future movement, the emergence of economic initiatives and the inclusion of ecology matters in current political debates. The Business Roundtable, one of the largest US business associations, is demanding that environmental protection and the dignity and respect of people be placed at the forefront of entrepreneurial activity, for example. The Value Balancing Alliance is looking at new models of corporate accounting, where sustainability criteria play a much greater role.
However, these initiatives will only be effective if this rethink occurs globally. That is why GDP, a purely economic measure of wellbeing based on the consumption of goods and services, should be replaced with a comprehensive measure of wellbeing, such as the Recoupling Dashboard. Only then will politicians, business leaders and governments have the appropriate tools to implement policy centered around human needs and to provide an effective response to combatting populism.
DENNIS J. SNOWER is President of the Global Solutions Initiative and Professor at the Hertie School of Governance.
KATHARINA LIMA DE MIRANDA is a researcher at the Kiel Institute for the World Economy and visiting professor at the University of Hamburg. The RECOUPLING DASHBOARD is an annual new measure of prosperity based on economic, social and environmental factors. The results can be viewed at www.recoupling-dashboard.org.
About Global Perspectives
Global Perspectives is a peer-reviewed, transdisciplinary journal seeking to advance social science research and debates in a globalizing world, specifically in terms of concepts, theories, methodologies, and evidence bases. The journal is devoted to the study of global patterns and developments across a wide range of topics and fields, among them trade and markets, security and sustainability, communication and media, justice and law, governance and regulation, culture and value systems, identities, environmental interfaces, technology-society interfaces, shifting geographies and migration.
online.ucpress.edu/gp
