Recovering from COVID-19? Let’s do it without GDP growth

COVID-19 has infected both our bodies and economies. On March 12, Mark Rutte compared the Dutch economy to ‘a patient’ requiring treatment. The next day, his government was ready with a rescue plan for major firms, such as Air France-KLM and Schiphol. Just as our bodies need oxygen, the economy needs money – so the theory goes. Other European governments are also preparing to inject credit, and a lot of it, to ensure their economies’ survival.  Yet, this cure is limited. It presupposes that our economies need growth in order to flourish. If we do not steer away from this limited paradigm, then the cure we apply now will become a liability by giving rise to potential crises in the future.

This sure happened the last time, in the wake of the 2008 financial crisis. Governments bailed out too-big-to-fail financial institutions while imposing fierce austerity measures on public services and the population. Eventually, economic growth resumed. However, the cure created the conditions for the health emergency we are facing today. Our economic ‘recovery’ from the 2008 recession happened at the expense of global ecosystems and in favor of the conditions under which zoonotic diseases, such as COVID-19, emerge more frequently. In 2016, the UN Environment Programme clearly warned that human ‘encroachment on natural ecosystems through resource exploitation, agricultural activity, and human settlements provides opportunities for pathogens to spillover from wild animals to people’. COVID-19 is the latest in a series of zoonotic epidemics – from Ebola to Zika – which have cost the world more than USD 100 billion in the last two decades.

What is more, the austerity measures imposed after 2008 significantly weakened the public health sector. Since 2012, the Dutch government repeatedly cut on health care budgets, increased insurance costs, abandoned vaccine research, targeted efficiency instead of quality, and replaced institutional care with home care. Sadly, these measures have worsened the conditions in which healthcare and medical personnel must now make efforts to combat the pandemic.

A radical shift: From restoration to prevention

So far, government responses to COVID-19 tend to repeat the 2008 script of economic restoration. In a context of rapidly degenerating ecosystems and growing inequality, however, this strategy will inevitably lead us to the next emergency, for which we will be even less prepared. It is therefore time for a different cure. To decrease our vulnerability to global health and environmental threats, the political treatment of COVID-19 needs to shift from reactionary restoration to precautionary prevention. Instead of reviving the old economy, we need to bring into life a new economy. Instead recovering GDP growth, we need to create an economy that pursues the following vital goals: collective wellbeing, social justice, and ecological regeneration.

COVID-19 teaches us to give priority to what economist Tim Jackson calls the economy of care, craft and culture. Such an economy fosters sectors and activities that share four characteristics. First, they directly improve our wellbeing, including health, creativity, knowledge and social relations. Second, they are labor-intensive and cannot be replaced by automation. Third, they have a relatively low carbon footprint. They run on human labor rather than fossil energy. Fourth, these sectors operate through short value chains. They don’t require global trading but local distribution and proximity. COVID-19 has hit hard the predominant just-in-time and cost-cutting global value chains. The antidote is an economy that is more autonomous and self-sufficient. To increase wellbeing, provide jobs and foster ecological regeneration, our governments need to invest in such a different economy. So far, vital sectors have been operating on an understaffed, underpaid and precarious workforce – already long before COVID-19. 

To achieve a better economy, we need to change our economic goal. Contemporary capitalist societies tend to equate wellbeing with GDP growth. This is odd, as GDP is indifferent to the quality of goods and services we produce, to fairness of distribution, and to impacts on health and environment. At the same time, GDP does not register all the values we produce outside of the market, such as housework or care within families and communities.

Redistribution toward solidarity: Universal Basic Income

COVID-19 gives us a chance to change this logic for the better. As governments apply the emergency brakes on economic activity, two essential yet undervalued social instruments are triggered: solidarity and redistribution.  

The Cura Italia, for example, gives income allowances of up to 600 Euros to the self-employed. So does the Tozo (Tijdelijke overbruggingsregeling zelfstandig ondernemers, in English: temporary benefit for self-employed professionals) in The Netherlands. We could learn from these temporary solutions as stepping-stones towards innovative forms of social security and solidary, such work-sharing, a Universal Basic Income or more labor-intensive local food systems. To finance these measures, we need a progressive system of taxation that takes from capital, rent and harmful industries and gives back to workers, local production and care. This system has to be both national and cross-national, building on a solid European culture of solidarity, because – as COVID-19 has shown – our own survival depends on that of our neighbors. 

Solidary redistribution measures will not just give millions of people a modest yet reliable income in times of economic contraction, but they also help us prevent the next crisis by mitigating global warming and biodiversity loss. This is not just a hypothesis. Environmental authorities, such as the European Environmental Bureau, agree that there is ‘no empirical evidence’ that our current sustainability strategy, green growth, will succeed in avoiding environmental breakdown. The only reliable pathway, they argue, is to ‘steer away from the current limited paradigm of economic growth’.  

These alternatives to the standard government response in this time of crisis may sound scary. Many of us are hoping for economic life to get back to ‘normal’ as soon as possible. However, ‘normal’ was unhealthy for people and for the planet. There is hope perhaps in seeing that the alternatives are very much in line with much of what humanity is already doing to deal with COVID-19: scaling down unnecessary forms of labor, competition and consumption, while scaling up what is vital to our wellbeing and that of the planet. Our current experience of self-isolation gives us clues about the kind of recovery that we want.