In Europe and elsewhere, the sacrosanct gross domestic product (GDP) continues to be the main yardstick for measuring economic performance. Yet the concept of “the well-being of its peoples” has in fact been a feature of the European Treaty since the very foundation of the European Economic Community. How can the well-being paradigm replace the growth paradigm? At an ETUI Monthly Forum on 23 February, the Austrian economist Georg Feigl presented a tool that could refocus European and national economic policies.
Georg Feigl, an economist at the Vienna Chamber of Labour, pointed out that the well-being paradigm was a far from recent concept. Feigl singled out two periods in which it came to the fore: 1970s Europe, with social movements challenging the productivist model, and, at a much more institutional level, the initiatives that followed the European Parliament’s “Beyond GDP” conference in 2007.
The conference was to give rise to the creation of the “Commission on the Measurement of Economic Performance and Social Progress”, championed by the then French President, Nicolas Sarkozy. The aim of the Commission, chaired by the American winner of the Nobel Prize in Economics, Joseph Stiglitz, was to produce new indicators of social progress as an alternative to GDP alone.
Georg Feigl believes that two elements must be combined to change the growth paradigm: on the one hand, political support provided by what he calls “policy entrepreneurs”, and on the other, the opening of “windows of opportunity” during economic, social or environmental crises.
While these two elements coincided at the time of the 2007-2008 turning point, the expected paradigm shift clearly did not come about. Political discourse continued to be very largely dominated by classical neoliberal rhetoric. The Austrian economist believes that the disconcerting pressure exerted by the success of populist parties could open a new “window of opportunity” favouring a change in paradigm.
To support this transition and to convince public decision-makers that they have to bring their thinking up to date, new tools must be developed to refocus the economic policies introduced and measure their social performance. Georg Feigl developed the “magic polygon” concept, so called in reference to the “magic square”, a highly influential economic theory in Germany in the 1960s and 1970s. The “magic square” was based on four main economic policy goals: steady economic growth, high employment, price stability and balanced external economic relations.
Rather than a square, Feigl proposed an eight-sided polygon corresponding to well-being oriented economic policy objectives: full employment and decent jobs, ecological sustainability, stable public sector activity, balanced external economic relations, price stability, financial stability, quality of life and fairly distributed material well-being.
Feigl suggests that existing indicators should be used to measure the efficiency of his “economic compass” (citing the 31 indicators developed by the Austrian Statistics Office), or that Eurostat initiatives should be strengthened (“Quality of Life Indicators”).
When asked to comment on the Austrian economist’s proposals, Claire Dhéret (European Policy Centre – EPC) said that the limits of certain indicators should be raised. While Mr Feigl believes that the most appropriate forum for initiating the paradigm shift is the European Semester, Ms Dhéret drew attention to “the loss of credibility of the Semester at national level”. “Shouldn’t we find another way in?” she asked.
During discussions with the audience, several speakers pointed out the difficulties of making this kind of work accessible to civil society and uninformed citizens.
Georg Feigl (AK Wien)
Martin Myant and Laura Brandhuber (ETUI)
Bart Vanhercke, David Natali and Denis Bouget