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Info Service on UN Sustainable Development (Jun24/02) Penang, 29 May (Kanaga Raja) — An increase in gross domestic product (GDP) is not a precondition for the realization of human rights or for combating poverty and inequalities, according to a United Nations human rights expert. In his report (A/HRC/56/61) to the upcoming 56th regular session of the UN Human Rights Council next month, the Special Rapporteur on extreme poverty and human rights, Olivier De Schutter, argued that the current focus on increasing the gross domestic product is misguided. He said that the dominant approach to the fight against poverty relies on increasing the aggregate output of the economy (measured as the gross domestic product), combined with post-market redistribution through taxes and transfers. However, the UN expert said the ideology of “growthism” should not become a distraction from the urgent need both to provide more of the goods and services that enhance well-being and to reduce the production of what is unnecessary or even toxic. As long as the economy is driven mainly by profit maximization, it will respond to the demand expressed by the richest groups of society, leading to extractive forms of production that worsen social exclusion in the name of creating more wealth, and it will fail to fulfil the rights of those in poverty, said De Schutter. Moving from an economy driven by the search for maximizing profits to a human rights economy is possible and, to remain within planetary boundaries, necessary, he emphasized. In his report, the Special Rapporteur said defined as the increase in gross domestic product (GDP), economic growth has long been seen as desirable for its own sake. Economists have debated how it can be achieved and politicians how its benefits could be shared. He said human rights bodies have seen growth as an indispensable condition for the realization of economic and social rights, based on the assumption that without growth, there would be no resources to mobilize for the progressive realization of such rights – for investments to be made in the provision of health care, social housing or education, or for the creation of jobs. According to De Schutter, governments still act as if infinite growth were possible. “Ignoring the warnings of scientists, they seem to believe that economic activity can expand endlessly, as if the Earth will forever provide limitless resources and absorb the waste resulting from our apparently endless quest for more.” However, in his report, the Special Rapporteur questioned these assumptions. First, he argued that growth is a distraction from what truly matters, namely: poverty eradication and well-being for all. Second, the economies of rich countries have grown far beyond what is necessary to allow people to flourish; they have become obese. In those countries, growth is failing to reduce poverty and inequalities and to create jobs. It is leading to the transgression of a number of planetary boundaries. Third, it has been fuelled by a plundering of the resources of the global South, in a post-colonial pattern of domination maintained by the stranglehold of foreign debt. In poor countries, where significant investments are still required – for the building of schools and hospitals, or for transport or electricity infrastructure – growth can still serve a useful role. The Special Rapporteur said in practice, however, it has often been extractive, relying on the exploitation of a cheap workforce and the unsustainable mining of natural resources. If it is to contribute to the realization of human rights, therefore, its direction must change, he added. “It should be re-oriented towards satisfying needs and shared more widely, rather than simply making the rich richer and furthering the dominance of major economic actors.” De Schutter said that despite its limitations, growth has become hegemonic. GDP remains the main indicator by which the performance of governments is measured. “Its increase is seen both as a substitute for large-scale re-distribution and as a pre-condition for meeting certain challenges societies face.” The UN expert said that unsurprisingly, it is in the name of growth that trade liberalization has been pursued: the Agreement establishing the World Trade Organization refers to the need to ensure “a large and steadily growing volume of real income and effective demand, and [to expand] the production of and trade in goods and services” (first preambular paragraph). Perhaps more troubling, economic growth is also referred to in the 1992 Rio Declaration on Environment and Development, which includes a pledge to support an “open international economic system that would lead to economic growth and sustainable development in all countries, to better address the problems of environmental degradation.” More recent multilateral environmental agreements replicate that language, he added. The dominant approach to poverty eradication has largely remained within this hegemony of “growthism”: it has relied on fuelling economic growth first, followed by redistributing wealth through taxes and transfers. The report said instead of seeking to make the economy more inclusive, ensuring real equality of opportunities, governments have focused on stimulating growth, which they have seen as a pre-condition for job creation and for the financing of public services and social policies. De Schutter said that policy choices such as trade liberalization, the flexibilization of work or the creation of a “business-friendly investment climate” (code words for lowering taxes and regulatory burdens on the largest corporations) have been made in the name of increasing GDP, despite such measures causing social exclusion and testing the resilience of communities. He said because it has acquired the status of a State imperative, the endless quest for growth restricts political imagination: more promising avenues for development, which could contribute better to human well-being and the realization of human rights, are insufficiently explored. “That must and can be reversed. Within the Sustainable Development Goals themselves, while Goal 8 refers to “sustained, inclusive and sustainable economic growth” and includes a target of 7 per cent annual growth for least developed countries (target 8.1), target 17.19 calls for measurements of progress “that complement” GDP.” World leaders gathered at the Sustainable Development Goals Summit in September 2023 agreed on the need to “go beyond” GDP. Momentum is growing. The search for post-growth forms of development has begun, in part because advanced economies have entered an era of secular stagnation. The negotiations of the next development goals, starting with the Summit of the Future in September 2024, provide a unique opportunity to accelerate that endeavour, he said. LIMITS TO GROWTH The emphasis placed on economic growth is often justified by the need to increase State revenue, allowing it to provide public services and social protection, said the Special Rapporteur. “It is also seen as a way to create jobs, thus compensating for job losses that result from technological change, including artificial intelligence.” De Schutter said that on that latter front, it has disappointed: while economists have long relied on Okun’s law, positing that economic growth is needed to absorb the excess workforce made redundant by productivity gains, the correlation between GDP growth and the employment rate has been highly uneven in recent years, amounting to a meagre 0.34 since 2012 for Organisation for Economic Co-operation and Development (OECD) countries. Once the exception, jobless growth is becoming the norm. In rich countries at least, growth has passed its sell-by date, said the UN expert. It has modernized poverty without eradicating it. And it has become uneconomical, undermining the foundations of the productive economy itself, he added. Poverty is often defined as lacking the income required for an adequate standard of living, resulting from the lack of access to decent work or gaps in social protection, the Special Rapporteur noted. It is that definition that is used to monitor progress towards the eradication of poverty, which is target 1.1 of the Sustainable Development Goals. Today, 670 million people (8.4 per cent of the world’s population) live below the international poverty line of $2.15 a day at 2017 purchasing power parity, and it is estimated that this figure will fall to 575 million by 2030, which is far short of the target. The UN expert said that the money-centric approach to poverty, adopted to monitor progress under target 1.1 of the Sustainable Development Goals, is hardly useful to capture the experience of persons in poverty. De Schutter said that multi-dimensional approaches to poverty, such as the one adopted in the Multidimensional Poverty Index developed by the United Nations Development Programme (UNDP) and Oxford University, seek to capture deprivations not only in the areas of consumption or income, but also of educational attainment, educational enrolment, drinking water, sanitation and electricity. “Such approaches reflect much better the impacts of multiple deprivations on individuals’ ability to lead decent lives. They too, however, remain insufficient.” They fail to capture the reality of social exclusion, which may result from the inability of certain households to meet social expectations, such as the need to organize decent funerals for their parents or decent weddings for their children, to pay for extracurricular activities for a child or to own a smartphone. The UN expert said that such social expectations change as overall affluence increases. “As such, economic growth (defined by an increase in GDP), if accompanied by rising income inequality, may ultimately prove counterproductive: by raising the bar within a particular society, it may in fact worsen social exclusion – the sense of shame and worthlessness that people in poverty will experience.” In addition, if the rise in overall affluence leads to the increased commodification of certain services in areas such as health, education or transport, under the pretext that most people will now be able to afford paying for such services, the impacts of income poverty will be worsened, said the UN expert. In that sense, economic growth can go hand in hand with the modernization of poverty: even while extreme material deprivation is reduced, the number of socially excluded persons may increase, he added. “The so-called productive economy, the activity of which is registered by the GDP indicator, depends on the ecosystems that provide the resources and absorb the waste and pollution on which economic activity relies.” The UN expert said the productive economy also depends on the so-called reproductive economy, which takes place within households and communities, without remuneration, and to which women are the main contributors. It depends, finally, on the “commons”, on which many people in poverty still rely for the satisfaction of their basic needs, he added. “A process of economic growth that erodes those foundations instead of recognizing that triple embeddedness is bound to fail in alleviating poverty.” The UN expert also said that economic growth demands escalating energy and material resource consumption to levels that can no longer be afforded. Unsustainable forms of consumption by certain groups of the population, primarily in rich countries, have pushed the Earth well outside a safe operating space. Six out of the nine planetary boundaries defining Earth stability and life support conducive to human welfare and societal development have already been transgressed, he noted. “The United Nations Environment Programme (UNEP) recently warned that the extraction of resources had tripled since the mid-1970s, and it expected material extraction to rise by a further 60 per cent by 2060.” The Special Rapporteur said in its 2019 global assessment report on biodiversity and ecosystem services, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services estimated that, as a result of human activity, 75 per cent of the Earth’s land surface had been significantly altered, 66 per cent of the ocean area was experiencing increasing cumulative impacts, more than 85 per cent of wetlands had been lost, and approximately 1 million species would be facing extinction within decades, unless action was taken to reduce the intensity of drivers of biodiversity loss. De Schutter said that economic growth is a major driver of those trends: “Economic incentives generally have favoured expanding economic activity, and often environmental harm, over conservation or restoration.” SOCIALLY USEFUL WORK UNDERVALUED The focus on increasing GDP obscures the importance of domestic and care work and the need to value it better, the report further said. Approximately 16.4 billion hours are spent each day on direct personal care of young children or older relatives and indirect care activities, such as cooking, cleaning or collecting water or fuel-wood, representing two billion people working eight hours a day without remuneration. If that contribution were to be remunerated on the basis of the minimum hourly wage, it would represent 9 per cent of global GDP. More than three quarters of that work (76.4 per cent) is provided by women, who dedicate 3.2 times more time than men to unpaid care work, said the UN expert. De Schutter said that care work is vital to the economy: productive work would be impossible without it. Yet, because care work is not valued in monetary terms, it has generally neither been accounted for nor supported through social investment, he noted. “That is gradually changing. Since 2013, labour force surveys more systematically include unpaid domestic and care work in statistics, under the heading “own-use provision of services”; the Sustainable Development Goals include a target (5.4 under Goal 5 on gender equality) to recognize and value unpaid care and domestic work.” The Special Rapporteur said recognizing unpaid domestic and care work is a first step, ensuring that it is factored into economic analysis and taken into account in public policies; that the upbringing and education of children or caring for a dependent relative is considered valuable work experience by prospective employers; that the paid parental and other carers’ leaves are granted; and that “care credits” are included in pension calculations, as is required under the International Covenant on Economic, Social and Cultural Rights. In addition, he said governments should reduce the scope and weight of domestic and care work, which means ensuring the provision of universal access to safe water, sanitation and domestic energy systems, of affordable and high-quality care services, as well as policies that support mothers and fathers in their parenting roles and other caregivers. Beyond domestic and care work, “growthism” leads to undervaluing work that makes positive contributions to society, while work that “adds value” is overvalued: as emphasized, for instance, by scholars of the “foundational economy”, it is the most profitable jobs, but not the most useful, that are better rewarded through higher wages and better working conditions, including job security, said the Special Rapporteur. “Steering economies towards post-growth scenarios does not mean imposing austerity; nor should it be confused with recession, although recessions are characterized by negative growth rates.” Rather, De Schutter said directing the economy towards a post-growth future means democratically planning a transition towards an economy that will reduce its addiction to growth, in a way that contributes to the realization of economic, social and cultural rights and to the reduction of inequalities. “Attempts to steer societies away from the search for growth will be met with resistance as long as people equate economic growth with progress and improved well-being.” The Special Rapporteur said the strengthening of democracy is therefore necessary if a post-growth approach to development is to succeed: participatory forms of democracy in particular can allow the questioning of certain widespread assumptions about the correlation between growth and well-being, or happiness. Significant progress has been achieved in recent years in designing, and using, indicators of social progress as an alternative to GDP, he noted. While a number of countries have introduced well-being indexes under various forms, some have gone further, using such indicators to guide policy. For instance, the Special Rapporteur said in 2008, Bhutan introduced the gross national happiness index, which seeks to measure progress through nine domains and 33 indicators that encompass psychological, health, cultural and environmental well-being; the Constitution of Bhutan requires the government to consider gross national happiness in its policymaking. FIGHTING INEQUALITIES The report said the fight against income and wealth inequalities – “vertical inequalities”, as opposed to the “horizontal inequalities” between groups that human rights law has traditionally been more concerned with – should be at the heart of the search for post-growth approaches to poverty eradication. First, inequalities (both within countries and among countries) allow the most affluent to command resources that, as a result, are not available to meet the basic needs of persons in poverty. “The more the production system is guided by demand, and the more income differentials are allowed to persist, the more resources will be diverted to satisfying the desires of the rich, rather than the needs of the poor.” The report said the economy is thus less efficient in meeting those needs if it tolerates high levels of inequality. Second, the accumulation of wealth within a narrow elite has significant impacts, in particular on greenhouse gas emissions, due to the investment choices of the wealthiest groups. The most wealthy 1 per cent of the world’s population has been responsible for 23 per cent of the total increase in emissions since 1990 (while the poorest 50 per cent has been responsible for only 16 per cent of all emissions growth); the bulk of the emissions from the richest result from their investments rather than from their consumption. “Third, reducing inequalities would put a brake on the most unsustainable lifestyles, which only the richest segments of the population, located mostly in rich countries, can afford.” The UN expert said globally, the wealthiest 10 per cent of the world’s population (two thirds of whom live in high-income regions) contribute about 36-45 per cent of global greenhouse gas emissions, while the lifestyle consumption emissions of the middle-income and poorest citizens in emerging economies are between 5 and 50 times below their counterparts in high-income countries. “It is not just the wealth of the elite that is the problem, due to the kind of consumption patterns its allows, but inequality itself, since inequality encourages status competition through material consumption.” Fourth, income and wealth inequalities have political consequences. Economic dominance is easily converted into political influence, allowing the richest groups of the population and the most powerful economic actors to veto any change that might challenge the status quo they benefit from, said De Schutter, adding that inequalities thus lead to a vicious cycle. They lead to a financialization of the economy that is a major source of increased greenhouse gas emissions and they stimulate the adoption of consumption patterns by the rich – larger houses, more powerful cars, exotic trips – which compete against marginalized communities and low-income households for the use of scarce resources. De Schutter said those communities and households are priced out from that auctioning process, and they may ultimately be unable to satisfy their needs, even in situations in which resources would otherwise be sufficient to ensure decent standards of living for all. The UN expert said that “the lifestyles of the rich, driven by status competition and conspicuous consumption, fuel the consumption-driven model of our current global economic system, which relies on the ever-increasing production and purchase of consumer goods to sustain economic growth.” Such lifestyles are entirely incompatible with the need to reduce environmental pressures. Yet, their control of assets allows powerful economic actors, who thrive on the status quo, to veto any significant reform that might threaten their dominant position, he added. MOVING FROM PROFIT-DRIVEN ECONOMY Reforms of the economy that reduce its dependency on the market can allow societies to move away from the treadmill in which overproduction, dictated by the need to increase profits, can only be sustained by stimulating over-consumption, thus locking people into an employment-consumption cycle that is an obstacle to flourishing lives, said the Special Rapporteur. At the consumption end, access to goods and services necessary for the full enjoyment of human rights should be made less conditional on the ability to pay and thus on access to remunerative jobs, he added. “At the production end, the productive machinery should focus more on responding to basic needs, and less on satisfying wants manufactured by the marketing strategies of companies and stimulated by status anxiety.” In this context, De Schutter highlighted five priorities that have emerged: (1) stimulating the social and solidarity economy; (2) democratizing work; (3) sharing employment (he said shortening working hours holds significant potential for reducing the pressure of economic activity on ecosystems); (4) combating consumerism; and (5) providing universal basic services. He said that significant obstacles remain to steer the economy towards the fulfilment of human rights rather than towards increasing outputs valued in monetary terms. The cultural barriers are real: many people still believe that economic growth can be equated with human progress. Political economy issues too should not be underestimated: the players who gain from the status quo will seek to oppose change, he noted. Beyond creating the necessary support, the Special Rapporteur said that policymakers face two key challenges. Firstly, he said it is commonly believed that GDP growth is required to finance the services the State provides to the population, as well as to make the investments required for the green transition – in renewable energy or in public transport infrastructure, for example. Indeed, the welfare states that emerged in advanced economies in the early twentieth century were mainly funded by the contributions of workers and employers and by income taxes, De Schutter noted. He said the challenge today is to finance these State policies without having to further increase the total flow of economic activity (as measured by the GDP indicator). While States that are monetarily sovereign (issuing their own currency, which suppliers of goods and services accept as payment) can afford high levels of public debt, significant constraints nevertheless exist, he added. The Special Rapporteur highlighted global interdependencies as being the second key challenge. The current growth model is the source of a deeply unequal exchange, in which growth in the global North relies on exploiting resources in the global South, and in which wealth creation in the global South largely depends on producing for the high-value markets of rich countries, in large part to pay back a foreign debt labelled in hard currencies, he said. “Thus, while the North imposes social and ecological costs on the South, countries in the global South depend on transfers and on imports from the North. No “beyond growth” strategy can ignore such dependencies inherited from colonial patterns of domination.” Overcoming those dependencies requires a fair allocation of efforts. While the economies of rich countries have become obese, economies in low-income countries are still too lean: they should be supported in their efforts to expand further, said the UN expert. According to the Special Rapporteur, the support of the international community in that direction should be guided by the principle of common but differentiated responsibilities and respective capabilities, to take into account both the past contributions of countries to environmental pressures and their ability to contribute to reversing this trend as measured by financial resources and technologies. He said structural dependencies between North and South may require de-growing North-South trade patterns and instead developing South-South trade and local and regional markets; increasing the capacity of developing countries, particularly low-income countries, to produce to satisfy their own needs, including by technology transfers and infant industry protection; and favouring debt restructuring and forgiveness to ensure that heavily indebted poor countries are not forced to produce for global markets, and can instead prioritize the needs of local communities. In conclusion, the Special Rapporteur said that the transition to a post-growth development trajectory, focused on the realization of human rights rather than on an increase in the aggregate levels of production and consumption, should be explicitly mentioned in “A Pact for the Future”, which is expected to be adopted at the Summit of the Future in September 2024. However, he said that cannot be achieved at once; nor can it be achieved locally or at country level alone. Escaping growth dependencies will require multi-year strategies and it will require an effort at different levels of governance. The overall objective should be to reshape the economy in order to produce more socially useful and ecologically sustainable goods and services, and to significantly reduce unnecessary and wasteful production, he said. Appropriate sequencing and coordination of the transition at multiple levels of governance is key, the UN expert concluded. +
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