Intra-pandemic, the call for governments and businesses to focus on ‘rebuilding a better future’ has been a loud one. In May 2020, 61 per cent of people polled by You Gov said that the UK Government should prioritise improved social and environmental outcomes even after the pandemic is over. As the months pass by, the appetite for positive change shows no sign of waning. But will that extend to the way in which we fundamentally understand and measure our progress as nations? Written by Nicole Junkermann (pictured )
I’d like to think it will. The current global measurement, Gross Domestic Product (GDP), offers a very limited set of criteria for determining a ‘successful society’. Largely created by the economist Keynes and driven at the time by wartime procurement, it is increasingly being challenged as a suitable way to understand peacetime social systems that are far more complex.
It’s a recalibration that is long-overdue. Modern economies have lost sight of the fact that GDP merely measures the size of a nation’s economy but doesn’t reflect a nation’s welfare. GDP is an aggregate measurement and as such it flattens all sorts of vital feedback and knowledge in a society. For example, it fails to capture the distribution of income and inequality levels as well as ignoring the negative effects of economic growth on society, such
as climate change. Undue focus on GDP means governments can laud economic performance and growth while ignoring the reality of the situation ‘on the ground’ and what actually matters to people’s everyday lives. One only has to think back to George Osborne’s assertion that austerity had been a ‘national achievement’ to see the disconnection present in governments’ thinking.
To really ‘build back better’ governments need to reorient their economics to focus not on GDP, but on the wellbeing of that nation and its citizens. We need alternative metrics, including equality, mental health and natural capital, to complement GDP in order to get a fuller view of development and ensure informed policy making that doesn’t exclusively prioritise economic growth. With the pandemic challenging the way we think about so many accepted norms, there is a unique opportunity now to be bold about moving into a more equitable future.
Pushback on the primacy of GDP as the only true measurement of success already showed promising shoots pre-pandemic. Two examples spring to mind: Bhutan’s decision to measure Gross National Happiness, which considers factors like socio-economic development and good governance, and Wales’ legal requirement on public bodies to think about the long-term social, cultural, environmental and economic wellbeing impact of their decisions. In 2019, New Zealand also looked to eschew GDP in favour of wellbeing, as understood through ideas of human, social and natural and financial capital when setting budgets and policy — a bold and determined mindset shift by Jacinda Arden.
Ultimately, if we change the barometer of development and success, there can and will be an inevitable change in how governments — and businesses too— frame policies to combine economic prosperity and societal well-being. If the end game is to have a more equitable society that is also thriving economically and offering citizens a meaningful quality of life, then it is surely the only real way forward.
Nicole Junkermann is an international entrepreneur and investor, and the founder of , an international investment company with interests in venture capital, private equity, and real estate. Through NJF’s venture capital arm (), Nicole oversees a portfolio similar in size to a small venture fund across Europe and the US, including in healthcare, fintech, and deep tech.