The start of a new order of economic development?
There is a new economic kid on the block. Some of us have been following the ‘post-GDP’ agenda for a while or more recently the Rio+ 20 debate which is looking at new models for development and most famously, a Commission of the great and good (Professor Joseph Stiglitz, Professor Amartya Sen Professor Jean-Paul Fitoussi et al) set up by former French President Sarkozy in response to concerns that we are not measuring our economic success in a way that is meaningful in reality. Last week, the Organisation for Economic Cooperation and Development (OECD) and the Ford Foundation raised the bar with their workshop on inclusive growth. The workshop marked the start of a new project to develop a strategic policy agenda for sustainable, inclusive growth and I wanted to put down some of the ideas there because as a quiet and rather under-reported event, it marks a watershed in economic thinking and leadership that (hopefully) will lead to, frankly, better lives for all of us.
Why is this of interest to people working in public health, or non-economic fields?
Ultimately this is about moving away from standard gross domestic product (GDP) as a single measure of socio-economic success. This is important as GDP is not a very sensitive tool, and in fact in health policies is actually unhelpful. For example, preventing fatal traffic accidents is essential public health policy, however fatal traffic accidents generate a lot of economic activity (expensive health services, funeral services, catering, flowers even the clothing sector) and therefore increase GDP. In many cases, promoting public health means reducing GDP – prevention of smoking, reducing alcohol harm, junk food consumption etc., all take economic activity (therefore the ‘bit’ we measure) away. Therefore we have a paradox where our current economic policies value economic activities that many in the public health field wish to prevent, and dismiss positive public health improvements as less value than the harmful behaviours which drive GDP. This concept is traditionally not well addressed by health actors, but more so by those working in the environment sector and even the European Parliament adopted a non-binding resolution in 2011 as well as an agreement on environmental ‘measures’ additional to GDP.
So what is inclusive growth?
In part, this is the point of the new OECD project in which this workshop was part: to define, measure and identify how to implement inclusive growth: a term for the next model of economic development. Ultimately the question is not only how to continue with economic – and therefore material – development, given that many of our global population live in poverty, but also how to do so in a way that would allow a more even, and fair, distribution of the wealth and benefits.[i] Our current model for growth is neither fair, nor sustainable and the rise of inequality is now considered to be at the centre of the current global economic crisis, with conditions unseen since before the second world war and in particular an explosion of wealth amongst the so-called ‘1%’
So how to move forward?
There are many questions that remain – mostly in how to define, measure and implement inclusive growth – however there were three additional outstanding points which were only touched upon in the meeting organised by the OECD. Others are perhaps better placed than I to answer questions on definition, indicators/measures and implementation tools, and as these issues move on I will comment on them. However what struck me from the discussions at the meeting – despite an awareness of the fact – was the hegemony of economics in steering the direction of our societies. Discussants were still largely in agreement that it is Finance Ministers (and above in the political leadership) who are the most important actors in the implementation of a new model. In most economies this is a truism, however it is somewhat thinking ‘in the box’ if we do not question this economic hegemony in terms of our societal governance. Discussants frequently reminded us that economics and monetary policy were ‘tools’ to a better ‘end’, and yet until we put the ‘end’ at the top of our governance processes, then the ‘tools’ are bound to become ends in themselves. Do we need to address parallel questions of governance (and therefore power) in order to answer questions regarding implementation of change?
Secondly, how do we manage change? The current model has those who benefit substantially from the system as is. In any process of change, we enter a period of instability which needs careful management (and leadership), and within this we must recognise and address that there will be resistance and that this resistance will come from pockets of the most powerful and wealthy (by very definition of the problem) parts of our system. Someone will have something to lose. Again, this moves us into governance and the rule of law – and ultimately we must admit that this process will not be smooth, in all places, at all times. How to address countries where the rule of law is weak, corruption is high and transparency or accountability difficult to achieve? To what extent is intervention (through the support of bottom-up, civil society, or democratic movements for example) possible or politically palatable?
Finally, how to undertake effective outreach or communication on what this is really about? What was stressed was the need for ‘inclusivity’ in the discussions and framing of the model, in order for the outcome of inclusive growth to be achieved. This inclusivity is absolutely essential and yet in order to create buy-in, understanding and support from those who will benefit, as well as those who need to shuffle aside to make room, we have a complex concept to communicate. Here is where concrete policy measures can help; whether this is Youth Guarantee schemes as called for by Peter Matjašič, President of the European Youth Forum, which have kept youth unemployment down in those countries that have them, or policies that support, empower and include women, or indeed policies that strengthen public institutions and governance, implement fair taxation and bring social returns, these are concepts that can be communicated. The media will have an incredibly important role to ensure that these are communicated effectively, and civil society also in order to help build the political and social support necessary for change. We should not underestimate the need for good communication and leadership – these will be paramount to successful take-up and implementation, and go some way to mitigate the disruptive nature of change towards what is in effect a new economic and social doctrine.
[i] Inclusive growth is described as a solution to the current unequal and unsustainable growth of our global economy. Inclusive growth in theory therefore would combine both prosperity and equity – an emerging model for growth (currently attempted by the Europe 2020 Strategy as well as other policy strategies such as India’s 12th Five Year Plan. The European Public Health Alliance published a critique of the Europe 2020 Strategy in relation to post-GDP in 2011.