Why the wellbeing economy could be key to Scotland's independence

This will become an increasingly contentious issue because it doesn’t appeal to those with socialist or capitalist tunnel vision. They have a vested interest in spreading misinformation. Their key claim is that wellbeing economics is all well and good but because we can’t measure it, it cannot be used as a policy benchmark.

It might come as a shock to some political commentators but we can in fact measure national wellbeing and its impact on society and on the economy. Those who say you can’t are simply admitting they do not know how.

If there is a problem with measuring wellbeing in economics, it’s not the difficulty of the task at hand but rather that when you do, you realise that all past measures of the economy, the conclusions drawn and approaches implemented have been completely wrong.

The concept that economic growth as measured by GDP is the bellwether that all economic policy should follow has become a semi-religious mantra. GDP remains popular as it serves as a measure to justify a solely neo-capitalist economic approach but that approach has failed completely.

That fact is generally understood by the public but it is not accepted by political parties or the mainstream media.

Almost all attempts so far to create measures for wellbeing seek only to add wellbeing tick-boxes to current wrong-headed economic measures, rather than to ask the question – what is the best way to measure the socioeconomic wellbeing of the nation?

The problem is that poor wellbeing outcomes are built into the foundations of our economic system. GDP measures wealth, not wealth distribution, and that simple fact renders it almost useless as a guide for economic policy unless inequality, poverty, boom and bust cycles, poor environmental outcomes, unhappiness and indeed slower growth are your goals.

We need a broad-based indicator of socioeconomic progress, not a single net-wealth indicator such as GDP.

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If you are not yet convinced of the inadequacy of GDP as a measure of economic health, consider that the internationally sanctioned Russian economy is predicted to grow more quickly than the UK’s next year.

Although the UK having applied self-sanctions in the form of Brexit explains its low growth, it doesn’t explain why Russia’s economy is growing. To put it simply, war increases GDP. Every bullet fired and missile launched adds to GDP but that doesn’t mean the Russian economy is performing well.

The US will have to rebuild after a disastrous tornado season. The local economies of those devastated towns will boom through reconstruction. Would a less environmentally destructive wellbeing economic approach have made climate-related disasters less frequent? The science certainly suggests it would.

Neo-capitalism ignores the fact that GDP measures societal negatives which ironically are often the root causes of future poor GDP performance. Let’s be clear – our current economic system has negative outcomes for society and the planet hard-wired into the system.

The wellbeing economic approach as defined by the wellbeing economics think tank Scotianomics is about the overall socioeconomic health of the nation. In a nutshell, it’s a plan that recognises that quality of life, equality, fairness, sustainability, happiness, and health are all outcomes that should be given equal weight to GDP in economic planning.

It creates a virtuous cycle – you can’t have a thriving economy without a thriving society and you can’t have a thriving society without a thriving economy.

We must cast last century’s outdated ideas of left and right and class struggle into the bin of history and accept we can’t solve the new and deadly serious problems of this century with the failed ideas of the last.

What if the only way to maintain positive growth (that adds to national wellbeing without harming the environment) and positive societal outcomes is to maintain a socioeconomic equilibrium that requires the simultaneous implementation of ideas for improving society and business that have previously been considered mutually exclusive?

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There is clearly a hunger for a new economic approach but all we are offered is rebranded versions of last century’s ideas of socialism and capitalism. We can’t just keep the old system and paper over the cracks with some wellbeing tick-boxes because the system doesn’t have cracks, it has unbridgeable chasms.

Scotianomics (the economics think tank from Business for Scotland) has championed the wellbeing economic approach for many years, first researching the core socioeconomic values of the Scottish people and then suggesting policies and approaches that match those values.

Now we must ask the question: How do we measure the impact of the wellbeing economic approach?

Many nations, especially Scandinavian countries, are already making moves towards wellbeing-led policies, so nothing we are suggesting is radical, new or even untested. However, we are suggesting bringing the best of those ideas together in a new approach and system for measuring their impact providing a framework for policy development.

It’s simply a question of seeking new and improved outcomes from the economy. To achieve this, we require a different set of measures.

Next week, Scotianomics will publish our paper Defining and Quantifying the Wellbeing Economic Approach – an international analysis of wellbeing economics with a focus on measuring and quantifying success.

This will speed up the journey towards a holistic system for designing and quantifying the desired outcomes of the wellbeing economic approach and provide international wellbeing economy comparisons called the Scotianomics Wellbeing Economy Index. We hope this will act as a yardstick against which the wellbeing impact of socioeconomic policy can be measured and tested.

Gordon MacIntyre-Kemp is the managing director of Scotianomics and the founder of both the Business for Scotland and Believe in Scotland independence campaigns.