The Growth Delusion: The Wealth and Well-Being of Nations

by David Pilling (Bloomsbury, £9.99)

Now it’s not just the mavericks, but mainstream economists who agree that our central measure of economic growth—gross domestic product (GDP)—is an awful way of charting social progress. David Pilling explains how cynicism about the value of GDP is widely accepted—though as yet none of the competing alternatives has won out. What matters most: happiness, health and education, inequality, sustainable development?

Pilling, a journalist at the FT, shows how in the past certain economists and politicians made—and won—the argument that higher GDP would mean all other boats were raised. But it didn’t happen and now the consensus has cracked.

The Growth Delusion is mostly about the US and UK, and a little more concentration on other countries would have made it a better book. France and Finland spend much more per person on public goods as do the US or UK. And, not coincidentally, in France and Finland people live longer, are healthier, happier and better educated. In Japan, where Pilling has spent some time, low GDP has not harmed exceptionally high living standards, which are still rising.

Pilling interviews Gavyn Davies—a former partner at Goldman Sachs, chairman of the BBC and Labour donor—who confides that as a banker he told himself: “What we’re doing is actually the most important function of all. We’re allocating capital in the right way.” Until the 2008 crash, when Davies realised he’d been getting things very wrong for decades.

Pilling concludes that “the economy is not real. It is merely one way of imagining our world.” Surely that is a matter of perspective. For most people “economy” means the same it has always meant: the need to be economical, to not waste. Where Pilling hits the nail on the head is just how wasteful our economic thinking has been in recent decades.