Just as past global disasters gave rise to new ways of organizing society and the economy, so must the COVID-19 pandemic. A system built on "optimization" and accumulation for its own sake can no longer be defended in a world of mounting financial debts and rising temperatures.
PARIS – The key to a green recovery after the pandemic is to reform the entire economic and financial system. It is no accident that our current approach to calculating economic activity emerged in the aftermath of the Great Depression. That crisis impelled the adoption of national accounting based on John Maynard Keynes’s insights about aggregate demand, the concept of GDP as a metric for economic progress, and the generally accepted accounting principles that underpin private accounting systems to this day.
How we measure wealth creation matters. Having suffered through the 2008 global financial crisis and now the COVID-19 pandemic – episodes that laid bare the fragility of the current system – we have had ample opportunity to adopt a new approach more in keeping with the Sustainable Development Goals (SDGs).
We have also had the means to do so. Back in 2008, then-French President Nicolas Sarkozy asked economists Jean-Paul Fitoussi, Joseph E. Stiglitz, and Amartya Sen to prepare a report on the “Measurement of Economic Performance and Social Progress.” Sadly, very little concrete action followed that great work. But there is no better time than now to launch an overhaul of the prevailing national and private accounting frameworks. Sustainability can no longer be viewed as a nice add-on; it must become an embedded feature across all economic standards and metrics.