Beyond GDP

Author(s): György Széll

Source: Indian Journal of Industrial Relations , April 2011, Vol. 46, No. 4, Beyond GDP
(April 2011), pp. 545-552
Published by: Shri Ram Centre for Industrial Relations and Human Resources

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By Invitation

Beyond GDP

György Szell

At least since the recent world wide Introduction

financial crisis questions were

raised if the rush for economic I am glad that the Indian Journal
growth measured by the GDP is an of Industrial Relations is dedicating
appropriate tool. Fundamental is this issue to a topic, which has been
sues like the quality of life and work marginalized during the last world
ing life, social inequality, health, life wide financial and economic crisis,
expectancy, sustainability are ne although it is of highest relevance for
glected since then. In the 1960s a more just and peaceful world. It is
these questions were raised e.g. a privilege for myself to be the guest
Brundtland Commission "Our Com editor of this issue, and we are proud
mon Future" leading to the United to have been able to assemble excel
Nations Conference on Environment lent authors from different disciplines
and Development in Rio de Janeiro. and different parts of the world to
The Agenda 21 in 1987 was an im contribute.
portant milestone in reconsidering
the dominant economic policies and Background
assessments. However, already in
the 19th century the whole debate When Francis Fukuyama pro
about the alternatives to the devel claimed the "End of History" after
oping modern capitalism were dis the break down of the Soviet Empire
cussed and practiced - the social in 1992, it seemed that there did not
ist, communist, anarchist, cooperaexist any alternative anymore to the
tive movement. "Another World is real existing capitalism, dominated by
possible!" is the slogan of the World
US-American capital and its military
Social Forum since 2001, and may industrial complex (Baran & Sweezy
1967). This world is since 500 years
give the perspective for a world "Be
yond GDP". characterized by its violence, increas
ing inequalities, exploitation, and
alienation on the one hand, and on the
György Szell is Professor Emeritus, Departmentother
of hand through technical and fi
Social Sciences, University of Osnabrueck D-49069
nancial innovations (Braudel 1992,
Osnabrueck/Germany. Email: gszell@uos.de

The Indian Journal of Industrial Relations, Vol. 46, No. 4, April 2011 545

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 György Szell

Polai^yi 1944, Wallerstein 1974). The real assets, cf. the bad banks. And the
double book-keeping in Venice in the 13th dominance of the financial capital is guid
century was the maj or breakthrough for ing by its short-term orientation the whole
modern capitalism, as it was from then economy into a wrong, unsustainable di
on possible to calculate losses and prof rection.
its on every investment. I he GDP is just
its emanation on the level of the national In 1972 the first report to the Club
economy. It is the very core of capitalof Rome indicated 'The Limits to
ism to put everything into figures andGrowth' of an economy, based only
numbers, and to count success on the GDP growth (Meadows et al. 1972).
background of permanent growth. But theAndre Gorz (1964) alarmed that the
other reality of capitalism is its permaGDP growth included increasingly de
nent crisis, as already pointed out by Karlstructive elements, and that in the fore
Marx and others. More recently the Ger seeable future more use values, espe
man sociologist Burkhard Lutz (1984) cially in the environment were de
spoke about the 'Short dream of ever stroyed than created, e.g. a car acci
lasting prosperity'. And the Hungariandent, which destroys goods, lives and/
American speculator George Soros or handicaps people, is contributing to
(1998) announced the 'The crisis of glo
the growth of GDP. The German econo
bal capitalism'. mist Christian Leipert demonstrated in
his book 'Die heimlichen Kosten des
Fortschritts. Wie Umwelt Zerstörung
But the other reality of capitalism das Wirtschaftswa chstum fördert'
is its permanent crisis, as already
(The secret costs of progress. How the
pointed out by Karl Marx and oth
ers.
destruction of the environment pro
motes economic growth 1989) that al
ready then 40% of GDP growth was
Since more than 100 years it is the
destructive.
financial capital, which is dominating the
economy (Hilferding 1904, An Luxemburg
answer to these analyses was the
1913). It does not create any
creation byvalues
use the U.N. of the Brundtland
but only the exchange values - in terms
Commission, which submitted its report
'Our Common
of the classical political economy. On Future'
the in 1987. There the
contrary it is just air bubbles old notion-ofas the
sustainability, derived from
Internet bubble in 2000 demonstrated
forestry, was applied to the world
and inflating the GDP. Instead of enor
economy, and led to the United Nations
mous profits - 40% and more - and ac
Conference on Environment and Devel
cording bonusses, it is not improving opment
the in Rio de Janeiro and the Agenda
quality of life of the majority of people,
21, which was an important milestone in
but only for a few. It is a transfer of
reconsidering the dominant economic
assets from the real to a virtual economy.
policies and assessments.
The circulation sector even destroying

546 The Indian Journal of Industrial Relations, Vol. 46, No. 4, April 2011

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 Beyond GDP

Unfortunately the countries of real pecially India - the informal sector is

existing socialism, i.e. state capitalism, still the dominant one, although the de
with their planned economies were even pendency from the formal sector and
worse in regard to sustainability than the the money circulation is apparent, even
countries, where private capitalism domi if it is not counted within the GDP. But
nates. Instead of GDP-growth the 'ton there is still another large sector of the
ideology' was practiced, i.e. the measure economy, at least about 50%, which is
ment of economic growth not in monetary not included within the GDP: It is the
terms but in volume and weight. Some unpaid work, largely for reproduction
of these countries with their planned - house chores etc., also
economies still survive e.g. Cuba, North neighbourhood help, barter exchan
Korea, and Myanmar. The late French historian Andre Gorz
(1980, 1983) described this part of the
BRIC Economies economy as the autonomous sector in
contrast to the dominant heteronomous
sector. In the autonomous sector alien
The so-called BRIC-countries, i.e.
ation from work is overcome. As Karl
Brazil, Russia, India, and China,
Marx (1964) rightly described, the
with their enormous GDP-growth
worker is only by himself when he is
rates follow the bad examples of
the Western countries.
out of his workplace.

Another World Possible

On the other hand the emerging
economies - led by the so-called BRIC At least the worldwide financial and
countries, i.e. Brazil, Russia, India, and crisis since 2008 taught us for
economic
China - with their enormous GDPtunately another lesson than the End of
growth rates follow the bad examples of"Another World is possible!"is
History:
the Western countries. China, formally
the slogan of the World Social Forum
still a socialist country, is evensince leading
2001. But there have always been
the pack, and has become last year the to the dominant capital sys
alternatives
second biggest world economy tem andsince
bigits very inception: Diverse Uto
gest polluter. Actually China ispias a mixed
(socialism, communism, anarchism)
economy, like all countries in the were conceived and practiced (Rosner
world
are mixed economies, as some part, 1975); the cooperative movement; the
mainly the military, is always controlled social and solidary economy; self-man
by the state on its different levels - even agement (cf. Szell 1988). Initiatives like
in the U.S.A. or Japan, where the state 'Gifts in Kind Natural', which distrib
quota is the lowest. ute the overproduction to people who
need without any payment, create fields
However, until today in large parts out of GDP, but save use values, instead
of the world a subsistence economy of destroying them (Kahn 20-10)
continues. And in many countries - es

The Indian Journal of Industrial Relations, Vol. 46, No. 4, April 2011 547

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 György Szell

Measurement Problems 2. Gini and Theile coefficients

3. The Human Poverty Index

In reaction to the problems enumer
ated above a number of initiatives have 4. Sustainable Scale
been developed to formulate alternatives
5. The Economist Quality of Life-Index
for the 'Beyond GDP'. Probably the best
known is the introduction in the Kingdom
6. Transparency International Ranking
of Bhutan in the Himalayas:
7. The 2006 Quality of Life Index, and
The term Gross National Happiness
8. Quality of Living Report.
was first expressed by the King of Bhutan
His Majesty Jigme Singye Wangchuck. It The British magazine The Economist
is rooted in the Buddhist notion that the has developed the following nine indica
ultimate purpose of life is inner happiness. tors for the measurement of the quality
Bhutan being a Buddhist country, Bhutan'soflife:
King felt the responsibility to define de
velopment in terms of happiness of its 1. Material wellbeing: GDP per
people, rather than in terms of an abstract person, at purchasing power per
economic measurement such as GNP."
person in US$. Source:
Economist Intelligence Unit
Some critiques have emerged in re
gard to the concrete living conditions in 2. Health: Life expectancy at birth,
this remote country: e.g. there is no de Source: U.S. Census

mocracy; inequalities are quite marked

etc. Nevertheless it gave a drive for fur
3. Political stability and security:
ther initiatives. So the so-called Happy
Political stability and security
Planet Index, and the Gross International
ratings. Source: Economist
Happiness Index emerged. Since 1992
Intelligence Unit
the World Bank introduced the HDI (Hu
man Development Index), which includes 4. Family life: Divorce rate (per
besides the GDP life expectancy and lit 1,000 population), converted into
eracy rates, but it is largely biased by the index of 1 (lowest divorce rates)
GDP. Some studies replace the GDP per to 5 (highest). Sources: UN;
capita by the PPP (Purchasing Power per Euromonitor.
Person), which is, however, still based on
5. Community life: Dummy variable
monetary terms. In the follow-up other
taking value 1 if country has
dimensions were explored with a high
either high rate of church
impact on sustainability:
attendance or trade-union
membership; zero otherwise.
1. Gender-related Development Index
Sources: ILO; World Values
(GDI) and Gender Empowerment
Survey
Measure (GEM)

548 The Indian Journal of Industrial Relations, Vol. 46, No. 4, April 2011

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 Beyond GDP

b. Climate and geography: 13. Working time per year/life

Latitude, to distinguish between
warmer and colder climates.
14. Transparency International Corrup
tion Index
Source: CIA World Factbook
15. Low number of lawyers
7. Job security: Unemployment
rate, %. Source: Economist 16. Low number of psychiatrists
Intelligence Unit; ILO. 17. Crime rate (homicides p.c.)
8. Political freedom: Average of 18. Illegal drug use
indices of political and civil
liberties. Scale of 1 (completely 19. Percentage of military spending on
GDP
free) to 7 (unfree). Source:
Freedom House
20. Involvement in military conflicts

Gender equality: Ratio of The problem of the measurement of

average male and female happiness and its correlatives is that these
earnings, latest available data.
are very subjective, depending on the
Source: UNDP Human respective aspirations, education, the level
Development Report.of development of a society etc. These
differences were already represented by
However, a closer look delivers at
Abraham H. Maslow (1943) by the five
least another twenty missing criteria (cf.
levels in his famous pyramid.
Szell 2009: 24):

1. rree and lair elections

Recently, however, a number of
OECD countries started to develop al
2. Participation rate at elections ternatives to the GDP. France was the

3. Pollution first in submitting the report of the Stiglitz

Commission, chaired by the winner of the
4. Quality and availability of drinking
Nobel Prize in Economics and former
water
World Bank Chief Economist Joseph
5. Public transport Stiglitz, in 2009 to measure global wealth
more accurately and sustainably. The
b. Public health
task was to overcome the "religion of
7. Retirement protection numbers", as the French President,
Nicolas Sarkozy, phrased it, when he
5. Cultural lite
commanded the report. However, it has
9. Quality oi iood/cooking not been yet implemented due to the po
litical lethargy after the 2008 crisis, al
10. Losts ot education
though this crisis should be the main ar
[ 1. Vocational training gument to favour such an implementa
tion (Fitoussi 2011). In November 2010
[2. Respect oi labour standards
the new British Prime Minister, David

I he Indian Journal of Industrial Relations, Vol. 46, No. 4, April 2011 >49

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 György Szell

Cameron, asked the National Statistical

which does a great job since 1977. Not
Office to establish a mode of measureto forget the International Labour
ment of 'general well-being'. A monthOrganisation with its 'Decent work cam
later the Italian government followed,paign', and the United Nations with its
demanding a measure for the well-being'Millennium Goals'.
of the country. As the President of the
National Statistical Institute, Enrico Other elements for a world Beyond
Giovannini, put it: "The progress of a soGDP are:
ciety cannot be measured only by a mon
etary crirterion." Finally Germany estab• Solidarity, the very base of trade
lished on 17 January 2011 a commission unions
to rethink the limits of today's measure
• Corporate Social Responsibility (Szell
ment of economic growth (Le Monde
2011). 2006)

• Social Innovation (Harrisson et al.

Outlook
2009)

So, what are prospects for imple• A social and solidary economy
(Landriot2011).
menting on a large scale an alternative
to the GDP?
Finally, for succeeding the teaching
in universities and schools has to take

The starting point for sure is to
convene that the economy is not
an end by itself, but should serve
society.
account of these choices. May be India
can take the lead, being the largest de
mocracy on earth, and still linked to some
fundamental values - although torn by
snormous social inequalities.

The starting point for sure is to con References

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 Beyond GDP

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552 The Indian Journal of Industrial Relations, Vol. 46, No. 4, April 2011

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