Economic growth does not always result in general prosperity

“What elements are excluded from GDP?” This was the question with which József Veress, Assistant Professor in the Corvinus Department of Information Systems, opened his presentation at Researchers’ Night, encouraging his engaged and inquisitive audience to participate in meaningful discourse, ask questions, and share their perspectives. For example, domestic labor and elder care are excluded from GDP calculations, while sexual services and, in some cases, the narcotics trade are included. Veress argues that society and the economy require more thoughtful consideration, citing the Sioux Indians, who often plan seven generations into the future. 

What more effective method exists to characterize a society than by presenting the current GDP value? The speaker referenced that Sárközy, the then French president, established a commission to address this issue in relation to the 2008 crisis. In Bhutan, the concept of gross national happiness is implemented. This includes, in addition to money, mental well-being, citizens’ satisfaction with local and national governance, healthcare, education, and the handling of community-relevant issues. Our prior interview on this subject is available on our website: https://www.uni-corvinus.hu/post/hir/bhutan-es-a-brutto-nemzeti-boldogsag/ Numerous economists contest the comparison of nations based just on their GDP. Simon Kuznets, the Russian American Nobel Prize-winning economist who elaborated the concept, cautioned against this. 

Mony does not always lead to happiness. 

Veress asserts that economic growth does not inherently result in increased happiness, and that perpetual economic expansion is unfeasible on a planet with limited resources. Even though professionals and the general public are frequently happy with growing GDP, he contends that a redefining of well-being is required rather than the self-serving growth that has been primarily realized in the financial sector. The excessive pollution and wasteful resource utilization must be diminished, and, most importantly, a more equitable distribution of products is essential. The speaker asserted that an entirely distinct socio-economic model from the existing one is required. Companies do not assume adequate accountability from either a social or economic perspective. Data indicates that under 1 percent of the global population possesses the predominant and expanding majority of wealth. Veress posited that a novel, predominantly financial “aristocracy” is emerging to dominate the planet. 

Can one have an improved quality of life in the absence of economic growth? Beyond a certain threshold, happiness and life satisfaction do not escalate in direct correlation with income obtained. Research in the USA indicates that individual happiness correlates positively with wealth, peaking at approximately 75,000 USD annually. Nevertheless, exceeding this monetary threshold does not inherently guarantee happiness; in fact, the individual may possibly experience a decline in well-being. For over five decades, Harvard graduates have been consistently surveyed regarding their priorities in the context of happiness. Respondents’ answers indicate that while achievements in a career have clear significance, quality time with family and friends is essential for experiencing happiness. 

The fundamental concern is the distribution. 

The speaker asserts that an entirely distinct socio-economic model is required. In contemporary existence, humanity operates as though we possess not one, but 1.6 Earths. Regrettably, we fail to adhere to numerous aspects of the 2016 Paris climate agreement. As he stated, nowadays we experience global boiling, rather than global warming. He also raised whether wellbeing was “trickling-down” to everybody due to economic growth. Veress emphasized that the findings show that not everyone benefits equally from economic progress, which increases inequality both within and between societies. As Arthur put it by examining the impacts of digitalization, “At present, the problem lies not in the generation of wealth but in its distribution.” In the best-case scenario, we have until 2030 to put important policies in place to address the ecological disaster and social injustice, according to the 2018 IPCC report, which was written by a group of UN-affiliated researchers. 

Is the labor performed in the workplace genuinely generating the highest and most precious value? Veress enquired. Numerous experiments indicate that the economy operates more efficiently with a four-day workweek. Significant arguments regarding basic income are occurring globally. Numerous individuals, according to the premise that “those who do not labor should not eat either,” contest the notion of somebody being paid “without working.”  

The importance of reintroducing ethics into economics and economic processes was emphasized, since it is sadly left out of the mainstream economic paradigm. Veress talked about civil economics, which was founded before political economics emerged and was given a chair in Naples. Moral issues must be considered in the functioning of the free market, akin to the advancement and implementation of technology. This approach contradicts the perspectives usually associated with Adam Smith, which highlight the primacy of self-interest and utilitarianism. Veress asserts that the civil economy, encompassing cooperatives and community enterprises, prioritizes the well-being and sustainability of all stakeholders. Although numerous successful initiatives are reported, they are frequently criticized for their inability to offer a viable alternative at the systemic level. 

In the discussion, the most significant question posed was regarding what actions individuals may take to mitigate the current challenges. The speaker emphasized the necessity of consciously shaping our daily lives. Purchasing local products and opting to fix household objects rather than quickly replacing them due to a single malfunctioning component. Let us be mindful of our consumption and engage actively in communities that seek to address global issues through local solutions. 

Katalin Török