Economic growth – measured as the continuous increase in GDP – represents an omnipresent policy goal within contemporary discourse. The meaningfulness and feasibility of economic growth are rarely challenged, since economic growth has broadly facilitated high material living standards within Europe. However, economic growth is also associated with negative social as well as environmental consequences.

What if these negative consequences were to outweigh the positive implications of further economic growth? Ecological economist Herman Daly argues that such economic growth is actually uneconomic, because “increases in production come at an expense of resources and well-being that is worth more than the items made”.³

This notion of uneconomic growth can be adequately analysed using the GPI (genuine progress indicator), because the GPI – in contrast to GDP – does take into account social as well as environmental considerations. As depicted in the Figure on the left, GDP/capita has been continuously rising in several countries [1], whereas GPI/capita has been slowly decreasing since the late 1980s. This development indicates that, even though economic activity has grown in terms of GDP/capita, the beneficial aspects of this economic growth have been outweighed by negative social and environmental impacts.⁴ Therefore, it is imperative to ensure an economic system that is not contingent on continuous economic growth that is inherently connected to negative social and ecological impacts.

[1] Underlying countries include Austria, Belgium, Germany, Italy, Netherlands, Poland, Sweden, the United Kingdom, the United States, Chile, Australia, New Zealand, China, India, Japan, Thailand and Vietnam.

Why to rethink economic growth