As the current default indicator for economic and social ‘progress’, GDP is the most broadly established measure of a country’s economic performance relative to that of other countries. Conceived as a tool to measure economic quantity, GDP is widely used to assess economic quality, although it ignores a range of vital economic activities, most notably care work. On top of that, the race for GDP growth has dire consequences for the social fabric of societies and increases pressure on the earth’s ecosystems. Is it adequate then to argue that GDP-centeredness perpetuates interdependent systems of disadvantages and injustices?
Before exploring this question, we have to get one thing clear: to criticize GDP as an indicator does not necessarily equal criticizing economic growth. One might be simply advocating for better frameworks to measure growth. However, to separate the two is a futile undertaking since politicians do not measure GDP just for the sake of it. Rather, they measure it to prove their success in keeping the economy on track towards continued economic growth. Thus, when looking at GDP, it is central to reflect on what it means to worship a framework that is biased towards limitless growth. Above and beyond, we need to scrutinize what growth-centeredness means to the vulnerable and how it shapes the lived and reproduced social practices that disadvantage the former.
One of the first major critics of the GDP was former New Zealand politician and feminist Marilyn Waring, who in 1988 cast light on the GDP’s structural blindness to the labor contributions by women. Today, given its continued use, we are still confronted with the question of if and how GDP perpetuates existing environmental and social injustices. This can only be achieved if we adopt an intersectional perspective. But before, let us examine GDP a little more.
To begin with, GDP does not differentiate between social-ecological costs and benefits of growth-boosting economic activities. According to the framework, ecosystems do not carry any value in themselves; only once they are exploited do they enter the calculation. The same is true for any negative external effects relating to extractions from nature. There is no debit side to GDP: Every expenditure is interpreted as positively contributing to welfare, be it health expenditures due to air pollution, cleanups after environmental disasters, or war. In contrast, if rivers, oceans and the air are polluted, the resulting damages do not enter GDP as costs. It’s all too easy to imagine that if something doesn’t count, there is also no incentive to preserve it .
Unfortunately, it doesn’t stop here. Continued GDP growth is strongly linked to the degradation of our ecosystems, global rise in temperatures over the past centuries, massive resource exploitation and the large-scale emission of greenhouse gases. Knowledge about these problems has been available for many years and limits to decoupling economic growth from ecological depletion have been pointed out by countless studies. Despite this growing body of evidence, the logic of growth remains largely unchallenged since most mainstream economists do not predict a conflict between growth, the environment, and social justice.
All the more important it is that we carefully examine the consequences of continued GDP growth with respect to the many intersecting dimensions of injustice: indigenous communities, people of color, ethnic minorities and low-income communities are disproportionately exposed to environmental harm fueled by continuous growth. Simply being born a woman heightens the risk for vulnerability to environmental disasters. This can be explained through women’s gendered positions in society, which on average make them more likely to live in poverty, be less mobile and poorer than men. Of course we cannot turn GDP into the sole scapegoat for structural injustice. Nonetheless, the naturalized notion of GDP growth equaling social progress is at the core of many of the flawed political decisions that lie at the heart of social and environmental injustice.
Jointly with the exploitation of nature, we find evidence of the systematic exploitation of women through the structural invisibility of their labour contributions in the GDP account. Comprised of both a paid economy, where output is captured by the GDP, and an unpaid economy, which reproduces workers through care and domestic work, economies are highly gendered structures. Categorized as ‘non-producers’, homemakers and mothers are considered ‘unoccupied’ as far as the GDP is concerned. In short, transactions that cannot be expressed in monetary terms and take place in the informal sector are not considered as contributing to economic well-being (with a few negligible exceptions). Think of housework, child care or voluntary work as examples of such ‘invisible’ activities. This infuses GDP with a clear taste of patriarchy.
Invisibility and disregard of certain types of labor in the GDP are not merely analytically problematic but have real macroeconomic consequences. Being invisible as a producer in the economy automatically entails being overlooked when it comes to the distribution of benefits. Let’s imagine, for example, that growth suddenly falters and GDP rates decrease: there will be an immediate public policy response. What we have seen in the past is a clear correlation between lower GDP growth and cuts in public expenditures, including a limitation of access to crucial public services. Due to their more vulnerable economic positions, those measures have a detrimental impact on low-income women in particular. It would be foolish to think that GDP growth is a neutral process, and neither are policy responses to it. Quite on the contrary, GDP growth implicitly depends on the reproduction of gender inequalities. Especially labor-intensive, export-driven industries usually rely to a large extent on the low-wage work of women, in particular in developing economies.
All over the world, there is a growing well-being gap not only between men and women but also between women, whose socio-economic status has improved, and women who remain continuously disadvantaged due to their class or ethnicity. Many white middle-and upper-middle-class women have found their way into the formal sector only by transferring their former full-time, unpaid care work to other women, oftentimes poor or immigrant women and women of color. As long as the informal sector remains invisible, the fruits of its labor cannot be equally distributed.
The same holds true for inequality between countries. GDP is limited to national borders and therefore makes it possible to grow ‘well-being’ in a country by exporting negative side effects of growth to other – mostly developing – countries. This shift occurs at the expense of the communities and ecosystems in the countries the negative externalities are exported to.
In many ways, GDP traps us in a systematic misjudgment of our well-being. Financial markets, central banks, private companies and politicians all base their decisions on predictions of GDP growth. Because of its misleading nature, economic agents take – from a social welfare perspective – flawed directions through the GDP’s influence on their investment and innovation decisions. As a result, ecological processes and caring activities are jointly overlooked and devalued, with dire impacts, especially for poor, indigenous, non-white and female* persons.
We cannot derive sound policies on a social and environmental level if the criteria considered in their design are only the ones falling inside of the monetary production boundary. In order to overcome social and environmental injustices, we have no choice but to abandon the naturalized and structuralized notions that equate GDP growth with social progress and sincerely aim to conceive of alternatives.
Teaser photo image: https://www.freeimages.com/photo/world-economic-growth-1238527