What are the limitations of using GDP as a measure, and what alternatives could we use instead? Ridhi Kalaria shares her experience during the Women’s Budget Group’s Beyond GDP workshop in June and why we must look beyond GDP.
(Photo credit: Women’s Budget Group)
I’ve always understood Gross Domestic Product (GDP) in the vaguest sense: the country with the largest one wins, right? However, last month, I attended a Beyond GDP workshop with the Women’s Budget Group. I had a basic understanding that GDP didn’t count everything that a feminist economist would want it to. We had a good look into its limitations and flaws and how it is not a feminist or environmentally conscious measure. We also delved into some alternatives and what they might look like.
The workshop started as all good workshops should, with biscuits and tea and eventually getting onto what GDP is, what it measures and shows, why it is used, and by whom.
I learnt that GDP is one single figure made up of household income, spending and investments, government spending and net exports (which is exports minus imports). It represents the whole country. However, there’s a lot it doesn’t include. The information and data that is used to calculate GDP is quite narrow; it doesn’t consider, for example, societal impacts such as cost of war, environmental impacts such as carbon emissions, or some aspects of informal, unpaid work such as care work, without which society wouldn’t function.
GDP’s many flaws become apparent. GDP only counts what’s money, or rather what has monetary value; this means that it counts the monetary value of final goods and services, income, and what everyone in the country has spent. It doesn’t consider unpaid care and some informal work, an area of work disproportionately done by women.
Also, within the element of government spending, it doesn’t matter what you spend the money on, it’s just the amount of money spent. So, money could be spent on contracts for unsuitable PPE, or arms and ammunition or building new schools in another country entirely.
What struck me from the workshop was that most arguments for continuing to use GDP were “we use it because we always have” – type arguments, such as;
- It’s a coherent single measure that goes up or down
- It’s published frequently
- It’s explainable
- It can be broken into parts
- It allows international comparisons
But this can all be true of other measures that are more inclusive.
Looking specifically at the last point on international comparison, GDP’s many flaws become apparent. GDP only counts what’s money, or rather what has monetary value; this means that it counts the monetary value of final goods and services, income, and what everyone in the country has spent. It doesn’t consider unpaid care and some informal work, an area of work disproportionately done by women. The nature of this work is so enormously different worldwide that comparing GDP across countries isn’t comparing like for like.
The workshop was full of folk from different spaces, and the conversation went in many directions. We discussed several feminist critiques of GDP, such as that it doesn’t deal with the distribution of wealth across the country, which then doesn’t paint an accurate picture of what the figure of GDP going up or down is doing in particular parts of the country and who it is benefitting or harming. It also means that even if GDP rises, it can mask growing inequality where the rich get richer, and the poor get poorer.
One of the more in-depth conversations was around the use of the term ‘productive economy’, or ‘economically active’; and who gets to decide productivity over need. For example, more affordable and available childcare provisions would allow more women to access paid work. We also talked about unpaid care of family other than children, and again, with sufficient support, more people who are a carers could also access paid work.
A feminist wellbeing economy is one that prioritises people and the planet, rather than economic growth. It is human rights based, which means it looks at the minimum required for human beings to live a decent, dignified life, whilst addressing injustices based on, for instance, gender, race, class and migrant status.
A significant factor in the perpetuation of the use of GDP is that it’s entrenched in many institutions, both nationally and globally, such as the UN, World Bank, International Monetary Fund and many more. Although some of these institutions have commented on the inadequate nature of what GDP does and doesn’t measure, there hasn’t been significant progress on alternative measures: They often don’t give one figure, they have lots of different figures that measure lots of different things, and not the one ‘definitive’ number of GDP.
We looked at some of the other measurement systems, specifically ones that consider factors beyond money, such as wellbeing. A feminist wellbeing economy is one that prioritises people and the planet, rather than economic growth. It is human rights based, which means it looks at the minimum required for human beings to live a decent, dignified life, whilst addressing injustices based on, for instance, gender, race, class and migrant status. A wellbeing economy also reduces inequality, because it thinks about people first, including things missed by GDP like who is doing the work, including unpaid care work. It’s more environmentally sustainable, as it attempts to understand what is given and taken from the planet.
There are many ways to think about and depict a wellbeing economy, including doughnut economics, the ONS’s wellbeing dashboard and the framework used by the Scottish Government. They aren’t perfect, but they start from the premise that people and planet are finite and need to be prioritised over economic growth; they place importance in capturing inequality, informal and unpaid work and wellbeing, both here and in other countries affected by our policies.
The workshop was brilliant. It made me think about how we measure success, the goals that people in power are working towards, and how they are far from the goals that the community, and especially the women and carers organisations at the workshop, are working towards.
Read the Radical Pathways Beyond GDP: Why and how we need to pursue feminist and decolonial alternatives urgently paper
This blog was originally published on the Women’s Budget Group website
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