We typically talk about growth in terms of GDP, though it has been much criticized recently as a measure of progress. There have been a variety of attempts to make GDP account for things such as environmental damage, unpaid work, the progress of technology, or the development of human capital. In our view, the biggest problem with GDP is that it doesn’t necessarily reflect how growth changes the real, lived experience of most people. […] Is life actually better or worse for most people? How are the gains of growth shared? GDP cannot answer these questions.
If the concept of growth is to have significance, it should represent improvements in lived experience. If the real measure of a society’s prosperity is the availability of solutions to human problems, growth cannot simply be measured by changes in GDP. Rather, it must be a measure of the rate at which new solutions to human problems become available. […] Growth is best thought of as an increase in the quality and availability of solutions to human problems. Problems differ in importance, and a new view of growth must take this into account.
Authors: Eric Beinhocker, Nick Hanauer
Source: McKinsey Quarterly
Subjects: Capitalism, Economics
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