In this article, Z Staff member Bridget Meehan talks to Caroline Whyte, an ecological economist whose interests include financial system reform and climate justice. Caroline conducts research and advocacy for Feasta, the Foundation for the Economics of Sustainability. The discussion focuses on alternatives to GDP (Gross Domestic Product) as a measure of economic health and why alternatives are necessary.

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Bridget: Could you tell me a little about Feasta, how it got started, its purpose is and its main projects?

Caroline: Feasta was founded in 1998 and basically it’s a kind of an ecological economics think-tank. It does a few important things, to my mind. One is that it has always very consciously tried to be non-hierarchical. So it’s not like a standard research institute where you get this clear hierarchy and chain of command, and so on. We’re influenced by Sociocracy and try to make our decision-making reasonably efficient but also inclusive as much as possible. We try to get that balance. We don’t always get it right but we try our best. And it’s important to us that there isn’t a CEO, for example, there isn’t a big boss in charge of everything. We’re a charity and we have a Board of Trustees because you have to have that in a charity. They keep an eye on our operations and make sure we’re more or less following the mission and so on but that’s about it in terms of hierarchy.

Bridget: That makes sense to me because in Z we have a flat structure too. If you want a democratic organisation, the last thing you want is a hierarchy.

Caroline: It’s trying to live the way you want the future to be. Sometimes it’s a challenge and sometimes it’s actually brilliant. I think on balance it’s really great.

But, what we do [in Feasta] is to look at the economy in a way that’s really different from the standard, the mainstream. We’re assuming that there are hard limits to resource extraction and that you can’t just keep expanding and expanding and expanding production, which we’ll be talking about later when we talk about GDP. So, we need to find ways we can fit within the [natural] limits and make sure everybody has a decent dignified life and have what they need, both in terms of social needs as well as physical needs. It’s finding that way of living, or that balance, that’s really important for us at Feasta.

We have a two-track way of doing things. We encourage discussion among everybody, where we hold open events about how the economy should be, what’s the vision for the economy, and so on. Right from the start, we’ve had lots of events and workshops, conferences. And we also published a lot as well; there were a few books at the beginning but we don’t do as many books now because we have the impression that people don’t read that kind of book so much anymore, they tend to get their information from the Internet. So we do a lot online, videos of events and podcasts which are really interesting I find. We also have a kind of a consensus about a few things – over the years there’s a few things we think are super important but they can change, they evolve. But for a lot of the details, we don’t have a consensus; we just say this is what so-and-so thinks and there’s no fixed Feasta line.

Feasta was started by four people; unfortunately two have passed away and of the other two, one of them isn’t involved anymore and the other is not so active. So, it’s mostly other people from the founders and the baton’s been passed on in a way. We have a group of hardcore people in Ireland but we also have people in other countries, which I find really helpful. The work I’m doing is about 50% focused on Ireland and the other 50% focused more broadly. I find that super interesting, looking at the relationships between Ireland and the wider world.

Bridget: Just getting that diversity of people as well is good. Living on an island can be very isolating and you can become socio-centric when you don’t get an infiltration of new ideas and people so as it’s good to have that diversity and be more international.

Caroline: One thing we’ve done in the last few years is that we’ve been able to support some people from the Global South, some youth from Brazil, Pakistan and India, to go to the COP climate summits and have a platform there. They get shut out of these big international summits, which are very corporate. The corporations get in no problem, the conferences are dominated by these powerful people with big voices and then the people who are actually affected by the policies are shut out. We weren’t telling them [our funded delegates] what to say; they have their own things to say. We had help with some of the funding from the Irish Environmental Network, which we really appreciated, and it was great to have that opportunity. And it was educational for us because we could learn from the experiences of the people who went. I’m hoping we can keep working together and deepen the relationship we have with them.

GDP Alternatives: The National Well-being Index and the Dashboard

Bridget: I wanted to ask you about Feasta’s research into alternative ways to measure progress, to measure economic health other than using GDP. I know you have the National Well-being Index (NWI) and I wanted to find out what the rationale was for devising this and why you think it’s important to target GDP specifically?

Caroline: Those questions tie into the whole issue of what is progress, what do we actually want from the economy and we measure if a society’s doing well. I’m sure you know that since the end of the Second World War more or less there’s been more and more of an obsession with GDP. It of course is a measure, a statistic, an aggregate of data about different kinds of production and different sectors of the economy and they’re all brought together and given a monetary value which is GDP. There’s a convention, an international UN convention, about how it’s calculated. Ever since the beginning, I mean you couldn’t make this up, even the economist who came up with it always said to be really careful, that this is not a measure of welfare, this is not a measure of quality of life and that you always have to ask what’s growing and is this a good thing and should it be growing? But GDP has become this catch-all idea of what’s progress and modernity. It does measure something, it measures a certain kind of economic activity but part of the problem is that it doesn’t even measure all the important economic activity and it leaves out a lot of important things. It leaves out housework, it leaves out a lot of care work, things that aren’t paid; the things that just ‘happen’. There’s that tradition of thinking where certain things that are invisible are left out and you don’t notice them or factor them in.

And then meanwhile, things are left out which are negatives like environmental damage, and that’s a really huge. Even things like road accidents, they can show up as positive in GDP because they stimulate the economy – you have to replace the car; you have to give people health care which costs money but that makes GDP go up.

Bridget: It’s the perversity of our economic system, really.

Caroline: It’s just crazy. There’s basically two ways, I think, you can approach this – they’re both useful in trying to counterbalance this. One of them is the approach of what we in Feasta call the National Well-being Index and it’s a derivation of something called the Index for Sustainable Economic Welfare, ISEW. The nuanced detail of it [National Well-being Index] actually came from Germany originally where some of our colleagues in the university in Heidelberg have been working on a German version of the Index which they call the National Welfare Index. A small group of people in Feasta took it [the German Index] and adapted it to an Irish context.

It’s a little bit frustrating for them, partly because some of the Irish data isn’t there. The Central Statistics Office in the South [of Ireland] has difficulty at the moment with recording some things so the Index isn’t as comprehensive as the German Index and it has things missing.

But basically the idea is that you make an attempt to price various things and this is where it gets a little controversial because, of course, there are certain things you can’t put an accurate price on; you can fudge it and you can do your best but it’s not perfect. And there are there are philosophical questions too about whether it’s a good idea to try and price everything.

Bridget: Like whether you should have a monetary value on caring for your children or caring for a parent or sick relative.

Caroline: Exactly, and this is why I said there’s two ways that complement each other for dealing with the GDP problem. One way is this way where you’re literally producing an alternate Index that gives everything a price and is trying to show more accurately what’s really going on in terms of the value of what’s happening in the economy. I think that’s actually really helpful in a lot of ways. That’s actually helpful for people who’ve been trained, like conventional economists and so on, to only think in terms of price and they just can’t see outside that frame. And it’s a stark way to show the limitations of GDP because you can put the two graphs [GDP and the alternate Index] on top of each other to see the difference. We have some good material like that and the German folk have great material. So, from that point of view it’s a really useful communications tool. It does also have limits because you are on the shaky ground of putting a price on childcare [for example] and also the environmental damage which we have to be very careful with because then it can turn into this thing of, oh well, if we can afford to pay for it then who cares if we damage the environment. So, it’s a balancing act but it’s still worth doing.

National Welfare Index (NWI) versus real GPD per capita (normalized, 2000 = 100); graph taken from “The National Welfare Index Ireland – A Feasibility Study”, https://www.feasta.org/wp-content/uploads/2017/10/NWI_IRL_Feasibility_study.pdf

But then the other approach I was talking about is what they call the dashboard approach, where we’re not trying to price everything but we’re saying these twenty-or-so things are super important and we’re going to measure them to see how they’re doing. For example, having things like climate change, we can measure the PPM, the emissions. For things like income we can measure the proportion of people in a situation where they’re really precarious economically. I think that is a much better measure than just saying what the average wealth of a household is because that doesn’t tell you anything about equality or who’s getting what.

Nowadays there’s more interest in dashboards and the nice thing with dashboards is that you’re not trapped into trying to price everything. They can be used for budgeting by governments because they can see visually that [for example] there’s a very high level of mental health problems in this area compared to other places. Dashboards map it out. It’s a communications tool again, but maybe a little more nuanced in the sense that you’re not trying to monetise everything; you’re just using it as a way to inflect.

Bridget: Is it like giving you snapshot of certain situations at that time, a visual snapshot, where according to the reading on the dashboard, there’s a particular problem? You don’t need to get any more scientific about it; it’s enough to know that maybe there’s something you need. It also counters that very formula-focused approach that classical economics uses.

Caroline: Exactly, and there’s more and more interest in that [dashboard approach]. The government in the South in Ireland has a framework it uses. It’s got some problems, it’s not perfect, but in Feasta, as part of the Environmental Pillar, we’ve been talking to the people who are working on it in the Department of the Taoiseach [Prime Minister].

Bridget: Do they listen? Do they take on board what you say or some of what you say?

Caroline: Yes, it’s interesting actually. For one thing, I think they’re understaffed. There are three of them and they’ve got this huge job and I think they’re hearing different things and they’re trying to juggle it and make sense of it all. And they’re civil servants so they can’t come out with anything political, they can’t come out, for example, and say we totally agree with you on that. But we want to keep the discussion going and we feel like it’s worth trying.

The thing is, we [Feasta] are not alone. For example, Social Justice Ireland are working a lot on this [GDP alternatives] and also in other countries, there are loads of people working on this issue of GDP. Governments and the civil servants are very influenced by each other in different countries. So, when they have contact with each other, there’s a lot of peer pressure that goes on.

Bridget: That must make a difference because they can’t just write you off if there are others saying the same thing and you’re not a lone voice. It shows that there’s an international movement around this issue.

Caroline: Exactly, but like I say, in Ireland we have this dashboard. The most famous one is probably in New Zealand. They started working on theirs about ten to fifteen years ago and it’s improving but it’s still not perfect. When the Labour government took over there about five years ago, they started using it to influence their budgeting decisions. At the beginning it was only a tiny amount, like 2% of the budget, but now it’s growing. What ended up happening was that more money went into child welfare and those sorts of things. So it’s really quite progressive and I think it has a potential, but you have to be careful because it could be sidelined.

In Ireland, hardly anyone knows about it. I think people need to know about it and they need to be asking questions about it and critiquing it. A lot of the politicians either haven’t heard of it or they think of it as this very marginal thing and don’t realise the potential it could have. Obviously some of them don’t want to change things anyway but for the ones that do – and I think this could move us onto discussion about the Left – I think sometimes it’s misunderstood. And usually they’re called Well-being Frameworks, at the moment the buzzword is well-being. We’ve taken that on in Feasta. We talk about well-being; we talk about Donut economics as well. But there might not be a single perfect word to describe what we’re after. Well-being might work, it might be okay. But the trouble is some people think it means self-care, which is important, don’t get me wrong, but they think it’s yoga or whatever.

Key components of the National Well-being Index

Bridget: There can be confusion or different ideas about what is meant by well-being in this context, for sure. So, I’d like to drill down a bit more into the National Well-being Index you mentioned earlier, and the key areas it focuses on as compared to what GDP focuses on.

Caroline: There are twenty indicators altogether. I could just pull them up and list them off but I’ll talk about the most interesting ones. Like I said before, there’s housework which they’ve attempted to give a value to. There’s private consumption but it’s a bit different from the way GDP measures consumption because it’s weighted according to income so it’s to convey how unequal society is. So, that’s really important. Then voluntary work is another one because that’s a big positive in a lot of ways and that doesn’t get factored in at all; it’s just taken for granted. And a huge one is environmental damage, and getting a handle on it in financial terms. That effort is always going to be flawed but it’s at least something and can be used as a communications tool. I think those four are the really important ones. The others, we could go through the whole list but…

Bridget: No, it’s okay. You’re talking about the things that are basically ignored right now under the GDP system but that are so crucial to how we function as a society and how we protect the world around us. Caring, volunteerism…

Caroline: Yeah, and the environment as well because again, it’s all around us and we’re so reliant on it, we need it and yet it’s literally invisible when it comes to measuring it.

Bridget: Our economic system doesn’t even factor it in.

Caroline: And that brings us to this whole subtopic of why is it considered so important and how can it be taken off its throne. I think a lot of it has to do with the way money works and the financial system, banking, all of that. And it’s a funny thing because a lot of politicians and civil servants understand intellectually that there’s a real problem with GDP. I mean, it’s hard to not realise that. If you even look at it a bit you can see there are problems. And loads of them [politicians] have gone on record saying that they know GDP isn’t – they wouldn’t say we mustn’t pay any attention to GDP – but they very often they say we need to have other things, we need to include other measures that should complement GDP. That’s one way it’s often put.

But actually, I don’t know if you’re aware, there are more radical elements creeping in, even into more mainstream politics. For example, the Secretary General of the UN, Antonio Guterres, just recently he came out with some interesting comments about GDP. In the last year or so he’s been saying things that are basically what we’re saying, that using GDP as our main measure is destroying the environment, we’re in huge trouble, this is really dangerous, we’ve got to change the way we’re measuring progress. And in fact, the UN is actually in the process of changing the definition of GDP. It’s like this long process they started a couple of years ago and it’ll go on until 2025 and they’re bringing together people in different countries.

The process is rather opaque; but there’ll be periods apparently where people can feed into it and give opinions. So Feasta’s hoping to be able to jump in and say a few things. But they’re actually revising their definition of GDP. Now, I’ve no idea what will happen with that, whether it will go in a good way or not. From what Antonio Guterres said, I think he himself recognises intellectually that there’s a real problem.

But there’s the intellectual and then there’s the emotional, and I think for a lot of people it’s very hard. Say, if you’re a central banker and you’re really in the system and you don’t want to scare investors away from your country; you’re scared that if you say something in public like, well, infinite growth is physically impossible, then all the big companies will say, oh jeepers, and go and put their money somewhere else. So you keep kicking the can down the road.

Bridget: In political circles as well as economic circles, they latch onto GDP because it’s understood and makes their job easier. It doesn’t need explained. Whereas, when you’re trying to introduce something new, that’s hard and it takes a lot of courage and tenacity.

Caroline: Well, you’ve got Bhutan which has the Gross National Happiness Index and it has done some good. People laughed at first but now they’re not laughing as much because it is doing some good. But that’s just one little teeny country and I don’t think it’s all that dependent, from what I understand, on foreign investment and it’s got a fairly sound economy. But then you get a country like Ireland which has this vast amount of foreign direct investment, and plus there’s the whole taxation [issue].

Bridget: Being a tax haven, Ireland doesn’t want to move away from GDP and scare off all the tax evaders. But it leads me onto talking about the uptake from those on the Left, politically, although we did talk a bit about this earlier. Sometimes you expect to have allies among other like-minded groups or political parties but then you realise that for some reason or other, whatever their agenda is, they’re not your ally at all. I’m wondering what kind of the support you get from political parties and others on the Left.

Caroline: I don’t have a quick easy answer to that question but I’ll tell you a few thoughts. I think sometimes from where we’re at, where we’re talking about things like limits and boundaries and planetary boundaries, it can sound almost dictatorial or almost like we want to deprive people in some way. There is such a thing as eco-fascism; it really does exist, as I’m sure you know, so there is that strand. Even the Nazis, Hitler was big into nature. So, sometimes the way this [subject] is talked about can sound really bad. And some of the people who are into limiting consumption come across as really misanthropic; it’s like they just hate the human race.

Bridget: It’s as though some of them don’t mind that maybe two billion people will have to die in the process; they’re like, yeah, that’s okay. They obviously don’t see themselves as one of those two billion. And discussion on this subject can exclude a lot of people too who are just trying to get on with their lives and pay the bills. The language might not be very relatable to their lives. More widely, this can be the case when you’re trying to create something for change, for a post-capitalist society, you can be in your own bubble and not even reaching people who you want to win over.

Caroline: Which is why having real discussions is so important. That’s a big part of why we [Feasta] try to do that; participatory discussions are so important. I’ve noticed that there can be a little bit of a lack of reflectiveness on the Left about things like income and standard of living. With the whole idea of standard of living, there’s a feeling that the average person needs more, and that’s really understandable and justifiable especially when there’s a lot of pressures, so I can see where that comes from. But it’s almost like there’s no real plan; it’s just saying we need more and more and more. I think sometimes it can be a reaction to what’s happened to people that they just want to compensate for that with more stuff. You see it even in the ILO, for example, they want to increase worker standards of living and there’s no limit, it’s like they should just increase and increase. That’s fine but what happens if your grandchildren aren’t going to have enough resources because they’ve been used up.

So, sometimes there seems to be a lack of reflectiveness in the way that’s thought about and  just talking about it in-depth really helps, discussing what’s the actual goal, what do we really want from all this stuff and busyness and so on. I think there’s again a justifiable sense of, and a need, for justice and fairness and balance; if you see wealthy people living in this very extravagant way, it’s absurd to then say everybody else should live very simply and humbly. There needs to be a system where people can’t get away with private jets and all this awful excess.

Bridget: Any kind of post-capitalist economy would have to address that and make sure that could never happen, no matter what contribution you make to society that the mechanisms should not allow you to amass that kind of wealth. But you’re hitting one of those really tricky areas and it’s again going into the nuance.

Caroline: There’s been really interesting research where a couple of groups in different universities have came up with similar figures, and they estimated that by 2050 if the whole world population – which would be a bigger population than now – if everybody had enough to live a basic but dignified, decent life, that this could be done with roughly 40% of the energy we use now. 40% and that’s with a greater population than we have now in the world; with much less energy everybody’s needs could be met. I find that fascinating.

Moving beyond GDP and capitalism

Bridget: That research is really powerful because it gives people hope that it [moving away from capitalism] can be done without everybody having to go live in a cardboard box and starve to death. I’m conscious of time, so I wanted to get your thoughts on moving beyond capitalism. Personally, I don’t believe we can tweak it to make it better, and I don’t believe we can dismantle it in time to deal with the climate crisis. At the same time, I don’t trust capitalism to deal with the climate crisis in a just and fair way. So, while we’re making that transition beyond growth and the climate crisis, we also need to be making that transition from capitalism. I wanted to get your thoughts on that, whether you think an alternative to GDP is only the starting point, or whether you think we can achieve the goal of a sustainable world where everybody lives a decent quality of live without all that damage to the environment, and we can do that within a capitalist system.

Caroline: Well, if we’re defining capitalism as a system that requires expansion where these big entities own and have capital; and you’ve got corporations with shareholders and they have the goal where they need to maximise their profits causing a dynamic of expansionism where they have to keep producing more and more; and there’s an ideology where rich people are glamorised and we’re bombarded with ads that make it look like spending lots of money on junk is going to make us wonderfully happy and serene; and of course, a total disregard and downgrading of inequality as a problem or even where saying if you think it’s a problem means you’re jealous; I think all of those things, they’re not compatible. We have to get rid of all of that.

The vision or the goal of maximising profits is a huge problem and something needs to be done. It’s not enough to expect them [capitalists] to voluntarily change because even with the best will in the world – say if there’s some CEO who genuinely wants to change their company’s mission – it’s so easy to be sidelined or to be undermined. There’s so much greenwashing, so much manipulation and gaming of things, so there needs to be the same rules for everyone. And that all ties it with, for example, in Feasta where we’re very into the idea of phasing out the supply of fossil fuel gradually in a way that’s as fair as possible. If you do that and there’s an actual hard limit on the supply of fossil fuel and it’s gradually phased out, then you can’t have things like private jets; that would be impossible. Having the same rules for everyone is really, really important. We can’t have a system where some are allowed to have unlimited wealth. It’s just not compatible with what needs to happen.

Bridget: I view Participatory Economics as an economic model with the ability to make happen the economic changes you talked about. But is there any particular model or ideology that you think would be better than what we have now in terms of the profit-seeking motive and the excess of wealth and inequality?

Caroline: I guess I like as an overall framework, I do like the Well-being idea because it’s looking at lots of different things as being important and necessary and worthwhile to pursue. And then also Donut economics because that’s got a balance, a dynamic balance, I like that idea; it’s an economy where things are moving and changing; it’s not just sitting still and there can be interesting things happening but you’re not damaging the environment and you’re not compromising people’s needs. I like that sort of model. It’s very basic but I like the idea of balance and harmony. I think it’s something we tend to enjoy as humans; we like games of balance. Feasta is part of a project, for example, where we’re talking to some artists and hoping that they’ll help us to think about ways to visualise how the future could look and what the economy could be like. It’s exciting and we’re looking forward to seeing what they come up. But I don’t have a model in the sense of a worked-out costed model where everything is numbered.

Bridget: Well, you’ve outlined the principles you’d like to see in an economy, the values and outcomes, and what you don’t want, and that’s a good start. Capitalism is such a big thing to try and tackle because it’s so embedded and we really have been sold the propaganda message that there’s no better alternative. The idea of breaking it down and replacing with something credible is enormous.

Caroline: Yeah, exactly.

Bridget: Well, we can probably end it there. I’ve really enjoyed the conversation and I want to thank you for taking the time to talk.

Caroline: Thank you; I’ve enjoyed it too.

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