“The bug with GDP is that it does not take into account inequalities or the destruction of natural capital.”
Faced with the bug of past communism and the bug of ongoing and upcoming neoliberalism, would there be a third possible way? To answer this complex question, Bug Me Tender met with economist Philippe Frémeaux. A columnist for the magazine “Alternatives Économiques” (Economic Alternatives), for which he was a long time the managing editor, Frémeaux is also president of the Veblen Institute, an economic think tank promoting the ecological transition as a social project, and a member of the supervisory board of the Political Ecology Foundation advocating for a profound transformation of our business model.
Whilst the economy is not concrete science, its laws and rules are often seen as unbreakable, like the famous TINA ("There Is No Alternative"), and even more in the context of the current globalisation. How to explain this bug of economics?
Oh no, they are breakable. For a long time, I ran a newspaper called Economic Alternatives (Alternatives économiques), a magazine about economic and social issues. When Denis Clerc created this newspaper in 1980, it was because he thought precisely that on every subject there existed possible alternatives: in practice, economic questions concern the way we live individually and collectively. There is never a single solution. They must therefore be at the heart of the political debate.
Today, we are witnessing an ecological crisis that is deeply questioning the notion of growth.But growth, with its key indicator as GDP, remains the global engine of the current economic machine. How to address this bug?
The concepts of GDP and growth are relatively recent. Appeared after the war, they correspond to a historical period when there was a need for quantitative growth: it was necessary to build more houses, roads, to manufacture washing machines… Since the middle of the ’70s, in the most developed countries, GDP growth has been disconnected from the growth of well-being indicators. The fact that we always produce more no longer improves our living conditions. In addition, we are destroying the planet’s resources in order to produce more. To continue in this way would lead humanity to its end and before that to wars for the control of resources. All of this is inscribed in the current dynamics of the economy.
It is therefore necessary to radically question the objectives given to the economy by starting to change the indicators. The problem of GDP today is that it does not take into account inequalities or the destruction of natural capital. The disappearance of birds and bees and a growing GDP can both happen at the same time. It is therefore not a good indicator of a sustainable economy, of an economy capable of sustainably producing well-being for us and our children.
Behind the GDP, you also have a question of income distribution because growth is synonymous with employment and many citizens are victims or fear to be victims of mass unemployment or precariousness. Growth is synonymous with more income and purchasing power and that’s why people are very attached to it. It is therefore not enough to change the indicators. The challenge of the GDP argument is also to radically change the social contract: to the extent that a certain number of people will be victims of the change of the economic model that we have to operate today, it is a matter of exploring employment and social protection policies to ensure employment or income for everyone.
In this sense, is the concept of "green growth" not a bug in itself as these two antithetical terms?
The idea that one could continue to grow indefinitely in a finite world to regain the usual banality is obviously a completely stupid idea. Those who use this concept to say that we can continue to produce and consume as much while not diminishing our natural capital, in short, that we can reconcile economic growth as we know it and protection of the environment, are practicing greenwashing. After that, everything depends on what we put behind the word “growth” as I explained at the beginning of the interview: there are growths that may be desirable and growth that is not. If tomorrow we produce more early childhood services and care for the elderly, that will obviously be a good thing. One can also grow one’s well-being by practicing meditation for one hour a day, which consumes no resources.
We must imagine a world where the priority would be to ensure a model of sustainable activity but also to producewell-being, to live well for all the inhabitants of the planet. The current system, on the other hand, leads us not only to the cliff ecologically, but also socially and democratically, and those are the issues that need to be addressed.
In the current context marked both by the ecological urgency and the structural, economic, social and democratic crisis, can we compare the current economic system to a bug?
Honestly, what is unique about our economic system is that it is fraught with multiple tensions. Thus, for 40 years, it appears that the rules of neo-liberalism have largely prevailed with the liberal globalisation, a Europe that always gives more room to the market, etc… At the same time, a socialist of the early 20th century who wakes up today would find that we live in a society where we can hope to live another fifteen or twenty years when we retire, a company that offers five weeks of paid vacation and where education and health care are free. This man would say “This is socialism!” And we would reply that “No, it is capitalism, socialism has disappeared from the face of the earth except in a few dictatorships”.
We are in a society that is both horribly neoliberal but where 32% of GDP is spent on social protection. I remind you that the total public expenditure in 1900 was less than 10% of GDP, whereas today it amounts to 55%. Therefore, neo-liberalism is a reality, but the resistance of our societies remains strong.
In the end, whatever the economic model, is it not a time to bug it and make it obsolete?
Since the economy as I conceive, above all, a social and historical science, the question you ask questions not the economy but first the philosophy of history. At the beginning of the 20th century, many believed that communism would bring about the end of history, the disappearance of the state in a universal abundance. We have seen the tragedy this one caused. Then, after the fall of The Wall and until today, we have been able to sell this idea of the end of history in a universalisation of market democracy on a global scale, and we can see that that does not work either. This is the story of men: no one will whistle the end of the game, which does not prevent him from choosing his side.
Between the planned collapse of ultra-liberalism and the collapse of communism, is a third way more necessary than ever?
The challenge is not necessarily to leave capitalism, because this concept seems to me too poor to describe our society. Can Chinese society be compared to French or Danish society? Now, in all three cases, we are dealing with capitalism. So, for me, the challenge is rather to extend the field of democracy in the economy from the bottom up. The enterprise must become more democratic, but it is also necessary to regain control of big capitalism at the central level and to impose planning in order to decide democratically what it is desirable to produce or not. On these bases, we can promote the development of common, productive cooperative organisations without preventing the development of private initiatives in a commercial context. In my opinion, freedom of enterprise is not only an economic freedom, it is a fundamental political freedom.
It is therefore not a question of breaking with capitalism in favour of a collectivist system even reinvented, but of radically transforming it by putting democracy back into command posts. Regain control against globalised capitalism is the big issue today. But the question is not to go back to protectionism or trade warfare like Trump’s policies. Rather, it is to regulate international trade differently, in particular by placing health, social and environmental issues at the top of the regulatory agenda.
For you, radicality is not a break?
In the face of the threats ahead, there are radical choices to transform our business model that are necessary. It’s not a question of going there softly. When we talk about reducing CO2 emissions, it means making relatively drastic choices in terms of energy saving, insulation of housing, changes in our mobility patterns.
The bet I make is that it does not impose totalitarianism. We can do it democratically. It is in this sense that I speak of radical reformism. My point is the extension of democracy and the rapid and strong transformation of the business model to address the challenges of sustainability. When I speak of radicalism, I point to the urgency of today: the threat is not for tomorrow or in 30 years, it is here now. Nevertheless, it is not about building a new society out of nothing.
Capitalism is recognised by the fact that it digests everything, including its contradictions and failings. In the United States, more and more Democrats are calling for a "Green New Deal". At home, Carrefour will be the largest French distributor of organic products. What do you think?
I would be tempted to say that the adaptability of capitalism also simply translates the transformation of our society under the pressure of the social movement. When a SCOP (Corporative Corporation) specialising in fair trade like Etiquable is able to sell its products in most hypermarket chains and thus enables farming communities to be better paid, this is progress. It proves that we won.
Philippe, let's end with the two questions that always conclude the interviews of Bug Me Tender: what is your personal definition of a bug?
A bug is an error in a computer program that causes oversights in the designed conditions.
And in your field what is the biggest bug?
In my discipline, the problem is in much more complex terms. In fact, it all depends on whether you talk about the economy as a reality or economics, as a representation of that reality. The bug of today’s dominant economics lies in the fact that it describes an ideal world that corresponds to its vision of the optimal functioning of the economy. In practice, the actual functioning of the economy is a perpetual bug with regard to the idealistic view of economic theory, because the institutions that make up society, the implicit conventions that connect its members and builds the concrete economy cannot function in accordance with the vision of the prevailing economic theory.
It has come to agree and the study of “imperfections of the markets” has become an essential element of contemporary economics. In fact, economics is not an exact science, in the sense of the concrete sciences, but a social science since it is a human matter and the characteristic of human history is that we can try to explain the past, but in practice we cannot predict the future.