CANBERRA – Last September, at the European Forum on New Ideas, former Soviet President Mikhail Gorbachev, former Polish President Lech Walesa, and former West German Foreign Minister Hans-Dietrich Genscher participated in a panel discussion (of which I was a part) on Europe’s response to climate change and global development prospects more broadly. By ending the Cold War, democratizing Poland, and reunifying Germany, respectively, these leaders have helped to improve the lives of people worldwide.
In rebuilding Europe physically, politically, and socially after World War II, they demonstrated the value of transformative political leadership. To overcome the challenges that they faced, they had to recognize the failings of the paradigms that guided their peers, and adopt updated models based on a new worldview.
In the next half-century, creating a sustainable and desirable future for Europe and the world will require equally significant transformations. But the challenges to be faced will be radically different in nature.
In the second half of the twentieth century, fossil fuels were abundant and cheap. People had barely begun to consider that, over time, unbridled economic growth could damage natural capital assets. Economic growth was the unquestioned goal – and for good reason. Improving human well-being required adequate infrastructure, widespread access to goods and services, and enhanced political and economic participation.
But soaring oil prices, together with indications of natural limits, such as climate disruption, biodiversity loss, and water scarcity, demonstrate the need for a new approach. Not only is it becoming increasingly obvious that GDP-directed development is ecologically unsustainable; survey research shows that it is no longer improving well-being and happiness in developed countries.
Transforming development efforts requires applying some of the principles that worked in the last half-century to a radically different context. This includes reframing obstacles to development and envisioning positive outcomes.
There is growing recognition that GDP – which was not intended to measure economic welfare – conflates social costs and benefits, neglects many non-market costs and benefits, and ignores the distribution of income. While GDP growth might correlate with improved welfare in developing economies, its continued use as a policy goal in “overdeveloped” economies is counterproductive – and even dangerous.
Given that GDP does not account for natural and social capital, which often constrain improvement in human well-being, better measures of progress are needed. For example, the Genuine Progress Indicator, which adjusts for income distribution and environmental losses, shows that the United States and several other developed economies have not improved their people’s well-being since the late 1970’s.
Institutions must be developed to facilitate progress toward a higher quality of life for a larger proportion of the world’s population, while ensuring that environmental limits are respected – even if it diminishes some countries’ GDP. Indeed, achieving sustainable, equitable economic progress must supplant GDP growth as world leaders’ main objective.
Such a radical shift in policy goals will be difficult. But historical precedents provide reason for hope. After all, who in 1985 would have predicted the Soviet Union’s collapse, Poland’s democratization, or Germany’s reunification? As in the second half of the twentieth century, visionary leaders must direct the transformation – and civil-society movements must support them.