I listened to an HBR Ideacast this AM that had an encouraging perspective from an unlikely source. An economist was advocating that there is more to life than a growing GDP. Here’s a few notes I jotted down.
- If I asked you what a good life consists of, your answer would be about more than money & stuff. It would be about a life rich in relationships (social capital), accomplishment (organizational capital), meaning, fulfillment and passion (emotional capital)—all of those things add up to a meaningful life.
- Economics as we know it and live it doesn’t really capture this conception of a good life. The idea of a good life as we practice it in economic terms is all about about GDP: the amount of industrial output an economy can conjure up. But, the money and stuff that GDP consists of doesn’t necessarily add up to the definition of a good life. The field of economics needs to shift…we have an “outcomes” gap.
- I ask you…what is the whole point of an economy? Why do we do all this stuff? Why do the gears of exchange spin? We need a more nuanced and sophisticated answer to that question.
- We’ve made this shift before. For example, if you look at the field of psychology made a shift from what you might call negative psychology (mostly about curing dysfunction and erasing the negative) to positive psychology (really about optimal function). In a positive paradigm, healthy isn’t defined as state that’s merely free of dysfunction it’s a state where you achieve higher and higher peaks of functionality. That’s really the question we need to ask ourselves about today’s economy. Surely the sum total of prosperity cannot mean billions of person hours spent mopping brows over slightly smellier of deodorants and new car models. We are capable of more than that.
- Presumably the point of economy is to provide us with goods. That’s the fundamental definition of prosperity. Go back to the writings of Aristotle…“goods” is more than stuff that lines the shelf. “Goods” include relationships, meaning, fulfillment, passion, ethics, etc. These are the things that prosperity are made of. The Greeks called it eudaimonia: a meaningful good life. Eudaimonia is more sophisticated than the conception of the good life we have today. For the Greeks, a good life was not full if it just consisted of the stuff of opulence. It also required the human stuff…the stuff of relationships.
- The focal access our economy spins around more, bigger, faster, cheaper—the GDP. That’s the number analysts endlessly obsess over. That’s the reason our economy exists. And I don’t think that’s a sufficient tool for us to achieve eudaimonia prosperity.
- Look at it this way. The GDP is like a rev counter. It tells us how fast the economy’s pistons are moving, but it doesn’t really tell us if our journey to prosperity is going anywhere. Case in point: GDP has grown in the U.S. over the past 20-30 years has grown but median incomes have not. We’re pressing the accelerator, the engine is roaring, the rev counter is spinning but we don’t have a speedometer. And, without a speedometer how can we tell if we’re actually making forward motion? [Sound familiar? Activity or accomplishment…]
- That’s the challenge for us now. We need a new model that measures more than the GDP. It’s important for us to understand a bigger picture when we measure prosperity. Business (busy-ness) is software for human exchange that might be on its last leg. Maybe it’s time for us to take a paradigm shift beyond business…to betterness.
- Kindle book: Betterness: Economics for Humans, by Umair Haque
- HBR Ideacast: Economics for Humans. Originally posted Thursday, December 22, 2011.