This is an excerpt from Gordon MacIntyre-Kemp's Reinventing Scotland newsletter, all about the wellbeing economy. To receive it for free every Tuesday, click here.

Thomas Bertram Lance, adviser to Jimmy Carter in the 1970s, coined a famous phrase: “If it ain't broke, don't fix it”.

That was pretty much the response I got when suggesting the world economy could collapse due to unsustainable personal debt in the early noughties.  

In a 2006 meeting with a member of the Bank of England’s Monetary Policy Committee, I was told “Scotland’s economy had never seen it so good” and asked whether I had seen that the recent retail sales figures were booming.

Yes, I said, but economic growth paid for by credit card (or worse still, store cards) was a Ponzi scheme fit to collapse. He explained: “Banks don't lend more than people can afford to pay back. That’s why personal debt isn’t a threat to the economy”.

READ MORE: Why Scotland urgently needs a wellbeing economy

I still blame Gordon Brown

That might have been true about debt once but as the world changes, so do the rules of economics.  Idiotic deregulation – much of which I blame Gordon Brown for – meant that the UK banks could lend more and more money to people who couldn’t afford it. They called it a boom. 

The National: Former Prime Minister Gordon Brown during a 'Making Britain Work For Scotland' rally, organised by Our Scottish Future at Central Hall in Edinburgh. Picture date: Thursday June 1, 2023..

New lenders appeared with TV adverts saying: “Got a bad credit record? Turned down for multiple loans? Don’t worry, we’ll say yes”. You’ll remember how that turned out.

Since the banking crisis in 2007/8, we’ve had record low growth in wages, increases in poverty (notably, in-work poverty), slow growth both caused by and leading to austerity and a lack of trust in the centrist political elites, leading to a move to the right in western politics. Everyone is doubling down on the right-wing economic mistakes that caused to problems in the first place. 

The second part of Bertram Lance’s rant is now apt: “That’s the trouble with government: Fixing things that aren't broken and not fixing things that are broken”. The world economy is broken. Twentieth century ideas of socialism and capitalism are outdated and unable to address the emerging economic, social and environmental threats of today.  

Sacrificing the sacred cow – GDP

Believing that economic growth is the answer to all socioeconomic problems has become a semi-religious mantra with policymakers. I am not saying that increasing Gross Domestic Product (GDP) is the be-all-and-end-all of government decision making – but it sometimes feels that way.

In the sci-fi programme Star Trek, there is a species called the Ferengi – a race whose civilisation is based around greed and capitalism. Accumulating wealth is their sole task in life and all respect in their society is based around how rich you are. It’s a comic exaggeration for sure but it’s also the direction of travel of neo-capitalism. If we don’t change direction, it will be the end of us. 

The idea that GDP growth is a poor measurement of a nation’s success is not new. Whilst standing for US President Robert F Kennedy said: “Gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile."

Why wasn’t that the end of it right there? GDP serves as a measure to justify a solely neo-capitalist economic approach but that has failed. 

An economy based on poor outcomes delivers poor outcomes

The problem is that poor wellbeing outcomes are built into the foundations of our economic system. GDP measures wealth, not wealth distribution and that renders it almost useless as a guide for economic policy unless inequality, poverty, boom and bust cycles, poor environmental outcomes, unhappiness and indeed, slower growth, are your goals. 

Currently wealth acquisition is the source of power. The more wealth a person or corporation has, the more power they have. Wealth begets power which begets wealth in our corrupt society – inequality and societal negatives are hardwired into the system.

We need to reinvent economics with a system that makes mass accumulation of wealth unacceptable and equally rewards generosity. Where no one is left behind and the needs of the planet, society and the poor sit on at least an equal footing with wealth creation. Throughout history, all societies collapse into chaos and war when the poor lose hope. We are almost ready to cross that economic Rubicon. 

Let’s measure positive outcomes

Switching to a wellbeing economic approach isn’t a tick box exercise, nor a slow evolutionary process. We need an altruistic revolution and we need it now. In a nutshell, the wellbeing economic approach is about making the protection of a nation’s socioeconomic health the key purpose of government. It recognises that quality of life, equality, fairness, sustainability, happiness, and health are all outcomes that should be given equal weight to GDP in economic planning.

So, we’ve defined the wellbeing economic approach and the problems of neo-capitalism. Next week, we will get into the nitty-gritty of how we create a system that measures socioeconomic wellbeing and puts GDP in its place in a post-capitalism society.

Gordon MacIntyre-Kemp is the CEO of Business for Scotland, the chief economist at the wellbeing economics think tank Scotianomics, the founder of the Believe in Scotland campaign and the author of Scotland the Brief.

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