An economics for people and planet

29 Mar 2019

Economics is supposedly a hard-nosed academic profession, focused on understanding the mechanisms by which material wealth is created and enlarged to meet ever-growing demand. For a long time, the belief has been that maximization of individual consumption is equivalent to the maximization of social well-being.

This “pure” economist’s perspective did not go unchallenged for long. Nearly a century ago, amid the gloom of the Great Depression, John Maynard Keynes emphasized the importance of the social imperative that should underpin the “dismal science,” describing economics as “essentially a moral science.” The emphasis placed by the pure economist’s utilitarian approach on the greatest happiness for the greatest number overlooked the non-egalitarian nature of this principle. As Amartya Sen later pointed out, “maximizing the sum of individual utilities is supremely unconcerned with the interpersonal distribution of that sum.”

The dramatic economic and social gains of the past century are, undoubtedly, a result of rapid economic growth. A century ago, three-fourths of the world’s population lived in extreme poverty with an average life span of just 31 years. Today, poverty has been reduced to just one-fourth of the global population and average life expectancy has gone up to 67 years. Asia and the Pacific now has 1.1 billion fewer poor people than in 1990 and average life expectancy has increased sharply over the past half-century.

Yet, all this progress has also been accompanied by a considerable decline in broader human well-being. The immense increases in wealth have left the majority of people behind, who still do not have the same opportunities to improve their lot. Material prosperity has also damaged the planet with massive resource depletion and pollution. In fact, rapid economic growth is pushing humankind and the planet closer to the brink of a social and environmental catastrophe.

The good news is that the world is becoming aware of the price we are paying for a single-minded preoccupation with economic growth. This was evident in the universal affirmation of the vision of “the future we want” with the adoption of the 2030 Agenda for Sustainable Development.

The worrying news is that the Asia-Pacific region in not on track to achieve the Sustainable Development Goals by 2030, according to the latest ESCAP assessment.

The 17 Sustainable Development Goals of the 2030 Agenda, supported by various dimensions including people, planet and prosperity, underline that material well-being depends on social progress and planetary health, which have been severely undermined.

Implementing the Goals requires a change in mindset and policy direction. We need to move away from the preoccupation with economic growth to promote the well-being of humanity and the health of our world.

Moving proactively, ESCAP economists have stepped up their efforts to estimate the price tag for achieving the Goals in the Asia-Pacific region. The forthcoming Economic and Social Survey of Asia and the Pacific 2019 has estimated the additional investment needed in the region by 2030.

The results show that the costs are within reach for the region and it is a win-win situation. Investing in people and planet will also drive economic growth in the long term. The roadmap to inclusive and sustainable prosperity for Asia and the Pacific is straightforward and the ticket is affordable.

We only need to find the will to take that first step.