A Successful Economy is One that Meets Basic Human Needs

Abstract

AbstractThe multiple problems the world now faces require a new policy approach. The priorities are to achieve better environmental outcomes, and better outcomes for people—especially those facing deprivation and/or precariousness. This book focuses on the human component, and specifically on the contribution that the economy can make. It proposes a criterion of success for the economy, and a monitoring system that corresponds to it. This would act as an objective, an incentive and a criterion of success for policymakers in government at all levels and in wider society. It would also provide specific information to inform public debate and to guide policy decisions.The proposed criterion of success is that the economy should, as far as possible, meet the basic needs of all residents. There is wide agreement on what items qualify as basic needs. Meeting them would minimise distress and promote aspiration and social participation. This aim is widely supported across the political spectrum. It underlies the UN Sustainable Development Goals and other international agreements, and its wide support is backed by survey evidence. This value system is grounded in respect for the dignity of all, which in turn promotes inclusion and social justice, and facilitates agency and aspiration.The monitoring system would comprise the outcomes of the economy that are relevant to people’s basic needs. It would aim to steer the economy towards satisfying them, thereby promoting good health and positive psychological/social functioning. This would represent a shift to pursuing ends, the meeting of human needs, rather than means, the quantity of economic output (GDP). Monitoring these economic outcomes is straightforward, most measures are already available in some form, and they are acceptable and affordable.This book proposes that a list should be agreed of the most important economic outcomes that meet people’s basic needs, and a corresponding monitoring system should be introduced. This would be presented as a dashboard in a standardised format, providing informative material for public debate and a practical agenda for remedial action. In addition, the items would be aggregated to create an Index of Economic Outcomes (the IEO), as an overall score. This would replace GDP as a measure of economic success; GDP would be retained for the purpose of informing economic policy, for which it is well suited. The aggregation principle would be based on the quantitative contribution of each item to health and subjective wellbeing.The overall monitoring system would promote environmental as well as human wellbeing. It would enable the environmental cost of meeting human needs to be calculated—the sustainability ratio, a measure of sustainable development. More generally, I propose a clear structure for monitoring the economic system as a whole, comprising assets of various kinds, output (GDP), outcomes, and impact (health and subjective wellbeing).