What Comes After The “Economic Growth” Paradigm? The “Personal Growth” Paradigm

Why we need new metrics for measuring success and how to do it.

by Naomi Ryland, tbd*, May 13, 2020
Person standing in the woods

“Growth for growth’s sake is boring, unimaginative and driven by ego. It is also destroying the planet and dividing societies”, Starting a Revolution

There are many things that we do not know about Covid-19 aka Corona, but there is one thing we know for sure. In the short term at least, it is affecting our GDP. And that, we are told, is something to be alarmed about. The idea that countries should be growing their GDP year on year is so deeply embedded into our conscious that we hardly ever really questioned it. I still look with mild panic at headlines designed to terrify us, “UK economy shrinks for first time in seven years”, “German economy slips into negative growth”, not fully understanding what they mean, but nevertheless pondering what horrors they hold in store. I assume that this is also the sort of thing that former civilisations concerned themselves with, going right back to the Greeks and Romans. Indeed, probably even Jesus felt some blessed relief on reading that the economy in Jerusalem had grown by 0.6% in the final quarter, right?

So it was with some surprise that I recently found out that the idea of national economic growth as a primary goal and measure of success is an entirely modern concept, something that emerged only in the middle of the 20th Century in fact. It was only during the 1950s that “economic growth” became a key notion within economics, politics and the general public. Economic Historian, Matthias Schmelzer writes, “Scholars from a variety of fields, including renowned historians, have described growth as a “fetish”(John R. McNeill) or “obsession” (Barry Eichengreen, Hermann van der Wee), an “ideology”(Charles Maier, Alan Milward), “social imaginary”(Cornelius Castoriadis, Serge Latouche), or an “axiomatic necessity”(Nicholas Georgescu-Roegen).” It has led to “the general acceptance of growth as an incontestable dictum” whereby GDP is its measure. It stands synonymous with progress and stability and bears no limits.

To a certain extent that did make sense. Economic growth was, for a time, synonymous with an increase in living standards for most of the global population even, as Schmelzer points out, extremely unevenly. But this has come at a cost and, certainly for the Global North, it simply no longer holds true. Our collective fetish around growth at all costs has cost us dearly environmentally and in terms of social equality, both of which in turn destabilise that which was intended to be stabilised. And we are not getting any happier. Economic growth can no longer be accepted as a suitable measurement for human progress, and certainly not in the Global North.

And so it is that the metric we use to assess economic performance and social progress, i.e. wellbeing of a society, is no longer fit for purpose. Joseph Stiglitz, a Nobel Prize winner, wrote an article in the Guardian just a few weeks ago to reinforce this position: “The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy […] yet the accepted ways by which we measure economic performance give absolutely no hint that we might be facing a problem. Each of these crises has reinforced the fact that we need better tools to assess economic performance and social progress.” He argues that a new set of metrics is required that takes into account environmental degradation, resource depletion, inequality and wellbeing.

Imagine what that would look like now, if we didn’t have to feel like it were a choice between “saving the economy” and “saving lives”, because we had a different way of measuring the wellbeing of the nation that took into account both. Making it not an “either / or” but an “and”.

It is a relief to see that three world leaders have picked up on this and taken first steps to at least complement the GDP, if not entirely replace it. Icelandic Prime Minister Katrin Jakobsdottir is the latest country to introduce social or “wellbeing” indicators into the budget alongside GDP. In doing so she has teamed up with Scottish First Minister Nicola Sturgeon and New Zealand's PM Jacinda Ardern to promote a "wellbeing" agenda globally. Whilst they don’t advocate for shrinking economies, they are concerned that growth should be in service to the society, and should not be the primary metric for a country’s wellbeing. It may be a coincidence that this is a coalition of three of the few female global leaders, but it may not. As Katrin Jakobsdottir gently put it, "it's very important to have all genders at the table - it affects the way you think, and then different decisions are made.”

If GDP is dead. Can we kill “the bottom line”, too?

So, if the world’s leading economists are challenging the paradigm of endless growth on a macro level, and looking for a new metric for economic progress, does it not follow that the same must happen on the micro level? Should we not challenge the concept of turbo-growth within companies that is so cherished by the world of Venture Capitalists, startups and the politicians who seek to woo them? Fortunately, this is exactly what the founders of Zebras Unite have been doing for the last three years and they have quickly gathered a global movement behind them. There are, in fact, hundreds and thousands of founders who have been challenging the concept of turbo-growth for some time, and who have chosen to build ‘zebras’ rather than the ‘unicorns’, around which the entire startup ecosystem has been designed. “Unlike ‘unicorns’, high-growth startups valued at more than a billion dollars, Zebra companies prioritise mutualism, shared prosperity, and social good over Silicon Valley’s “winner take all” mentality”. These companies might be cooperatives or ‘Purpose-Companies’ allowing the employees a fair share of the wealth and the decision making. They are unlikely to be founded on the principles of competition but rather cooperation, they favour a culture of appreciation rather than pressure and work primarily to serve their communities. As Jennifer Brandel, one of the Zebras Unite founders writes, “many of these companies were founded at the margins, by women and people of colour”. Here, again, we see the importance of diverse leadership when it comes to building businesses for the future.

“Are you the next Unicorn?”. I hope not. Despite everything that we know about the relationship between turbo-capitalism and increased global inequality and climate change, the startup world still supports and even fetishizes the same old ways of working and the same old goals.

This too means that we need new metrics for businesses. We can no longer just rely on “profit” or even revenues. Because if profit and revenues come at the cost of employee exploitation; exploitation of natural resources, of growing inequality and decreased mental health, then they cannot be said to be a marker of “success”. There are big and growing movements, which have been arguing along these lines for some time. Most notably the ‘Economy for the Common Good’, ‘B Corps’, and ‘Purpose Companies’. All of these introduce new metrics or other limitations on the paradigm of economic growth as the marker of success. But none of them have been integrated on a national level and are yet to enter the public discourse. And they are certainly not standardized as indicators for a company’s wellbeing.

The Benefit Corporation has been incorporated in 35 US states as an alternative to the traditional C Corporation. In theory this is a legislative implementation of the idea that companies should consider social and environmental concerns alongside shareholder value. But the emphasis here is on should rather than must. Benefit Corporations are not held to account by any legal framework and, as such, the effect has not been substantive. This would be a clear and easy next step – for Governments to make companies legally accountable for their social and environmental footprints and punishing them for not adhering. Whilst some countries have made progress here, others are lagging behind. My co-author of “Starting a revolution”, Lisa Jaspers, has gathered over 150.000 signatures in support of a law to hold companies legally accountable to ensuring that the people working in their supply chains are not exploited. A similar law was recently passed in France. But the German Government, and most others, are dragging their feet.

Clearly there is something missing in the shift away from the economic growth paradigm. There isn’t a clear “what’s next”? This is because if you don’t have growth as your main go-to when it comes to measuring your success, you, as a founder, politician, or manager of any kind, have to decide what is important. This is something we are not used to. We have been so consistently and effectively socialized according to the economic growth paradigm, that it is – for businesses, states and individuals – clearly difficult to come up with alternatives. More so, you have to deeply and unequivocally believe that these alternatives are truly better. For you, for your employees, and for society as a whole. In Starting a Revolution, we argue that the next paradigm needs to be one of personal growth. If we put a priority on understanding ourselves better, learning what makes us truly happy, what makes us feel well, fulfilled and balanced, we will be able to develop new metrics along which we can measure the success of our business.

It may seem counterintuitive but getting to know ourselves requires deep work. We need to unlearn so much conditioning and socialisation in order to understand our triggers, our habits and our biases. It probably requires a coach and maybe even a therapist. And it will not happen overnight. It will probably be a little different for each founder and each company, and it might change every few years, especially when it comes to setting priorities. So here are some ideas: mental health index; learning index; system change index; diversity index; collaboration index; ethical standards in the supply chain; environmental standards in the supply chain; profit distribution; ownership distribution; social impact; environmental impact. And whatever metrics you choose to measure the success of your company, they need to be as deeply embedded into the annual reporting as revenues, profit and costs and as clearly communicated. Is it easy? No. It’s a lot harder than it looks. It’s much easier to stick with what you know and that which is likely to get you in the media, a startup award, and a polished ego. But eventually, over time, we will start to see different people and companies being celebrated and a paradigm shift will have occurred. And then we will start to see real progress, when we finally prioritise personal growth, and the wellbeing that automatically comes with it, over economic growth.

Are you currently feeling lost or stuck in your career? Whether you’ve recently lost your job, are having trouble starting your own business or are stuck in a job that you no longer enjoy, it can easily feel overwhelming. Especially in these times of crisis. 

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