Beyond GDP: Reclaiming the Economy as a Tool, Not a Goal

This is an opinion piece written by Jack Fleming, a member of the Radical Association’ It was first published on 13th November 2025.

It is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail 

– Maslow’s Hammer.

When a measure becomes a target, it ceases to be a good measure

– Goodhart’s Law

The Good Life

What is your idea of a good life?

As Liberals, I imagine we all have different answers to that question (though many common elements will be shared). For me, the answer probably involves spending time with the people I love, listening to, and performing music, climbing mountains, animals, good food and good books. Your answer might involve an avid devotion to your favourite sport, or baking, or gardening or any number of other things that, for you, offer purpose and fulfilment. For Tom and Barabara Good, it meant quitting the rat race, in favour of self-sufficiency in Surbiton.

Now comes the moment where I state the blindingly obvious. My answer, and most likely yours too, has very little to do with the total value of everything produced in the UK economy.

Picture the scene. Your favourite café. You are there with your best friend, enjoying an overdue catch up. It’s a Saturday afternoon, and the clientele are the sort of people you’d find anywhere in the UK – young mums, retirees, families taking a break from a weekly shop, teenagers hanging out. This café is a microcosm of the economy.

Then who should walk in but Jeff Bezos, the richest person in the world. Suddenly, the wealth of the café has grown by many orders of magnitude. But you are not suddenly enjoying speaking to your friend any more than before.

This is the fundamental problem with GDP. To most of us, it is at best an irrelevance, as long as we have enough to live the life we want to lead.

As Bobby Kennedy put it, half a century ago, GDP “does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.”

Yet, if you were to read most political manifestos from recent years, economic growth would be one of the most obvious through lines. No other measure is so ubiquitously used as a sign of national success.

So how did we get to a point where politics is so divorced from daily life? And what are the implications of this disconnect?

It’s the economy, stupid

I’m not, of course, claiming that the economy doesn’t matter. Clearly, broad based taxation is essential to deliver the services we all rely on, from healthcare to education. Without a functioning economy, the restaurants, book shops and music venues I love would go out of business. We all need money in our pockets to live the lives we want.

But ultimately, it is just an enabler. What matters is how well those priorities are enabled, and GDP is a very bad way to measure that.

We don’t use GDP as a measure of hospital performance or education outcomes, for very obvious reasons. And it’s an equally poor measure to assess how well a local indie bookshop is faring, or whether families are scraping by from paycheque to paycheque.

Treasury orthodoxy

Of course, the problem is not just that GDP is an ineffective measure.

Among the policymakers and journalists who shape national decision making, GDP is the primary measure of national success. A government that fails to deliver GDP growth will be pilloried for failing on the economy.

And that means that governments, and especially the Treasury Ministers and Officials who hold the purse strings, will sacrifice almost any other policy on the altar of GDP growth.

So, if a big tech company wants to build a datacentre in the UK, it will be welcomed with open arms, regardless of that company's impact on the social fabric. If a UK arms manufacturer has a contract with a state which is widely agreed to be committing genocide, well, that’s just the cost of doing business. Airport expansion? Sure, who cares about the environmental damage.

It was this same mentality which underpinned disastrous privatisations of natural monopolies, from water to postal services. The Government was more interested in short term economic gain than the long-term value of the commons.

And perversely, this asset-stripping of the state made it hard to deliver the genuine improvements that our communities need.

Sharing the pie

One solution to this problem is to combine a focus on GDP growth with an emphasis on addressing inequalities, whether of wealth, income or power.

Think back to Jeff Bezos in the café (if you can bear it). One way you might benefit from his presence is if he offers to pay for another coffee for everyone there. That means you can stay and keep chatting to your friend.

Or perhaps, rather than relying on philanthropy, we could consider taxing his wealth. If Jeff wants to buy up a cake for himself, he must buy something for everyone else at the same time; but they each get to choose what.

There’s a clear argument that GDP, coupled with meaningful inequality measures, could give a better understanding of how most people experience the world.

That’s not a point to gloss over. Many of our communities have seen little more than stagnation over recent decades. Addressing concentrations of wealth is crucial to giving those communities back their stake in our society, and their chance at a good life.

We also have a ready-made way to monitor inequality, using the Gini Coefficient. It might seem trite, but the fact that this is a well-established economic measure, which can also be easily explained to lay audiences, might mean that Treasury economists aren’t sent running for the hills by the mere prospect of adding it to our arsenal of economic indicators. This is the change option for a government afraid of change.

It’s not about the Money, Money, Money

The trouble with turning to the Gini Coefficient, is that it remains rooted in the financial value of stuff.

Certainly, a basic level of economic security is essential to enjoy a good life. But money only gets you so far. Not everything of value can be quantified in pounds and pence.

But any attempt to assign financial value to the sun setting over the sea, the smell of rain on warm rock, or the smile of my best friends’ baby, will swiftly collapse into meaningless abstraction.

On top of that, research suggests that, beyond a certain point, more wealth doesn't lead to greater wellbeing. A future of more stuff for everyone is not necessarily one which brings more joy for everyone (nor, for that matter, does it leave us with a liveable planet).

The good news is there are alternatives. We don’t have to commoditize everything, and discard anything that doesn’t lead to maximal financial gain.

From a line to a picture

If you are anything like me, you picture GDP as a line graph, which remained nearly flat for centuries, before spiking since the industrial revolution (perhaps flattening off over the last two decades).

What if, instead of drawing a line, we could paint a picture?

I'm partial to Kate Raworth’s doughnut economics model, which seeks to meet the various needs of individuals without exceeding the capacity of the planet. But there are other options out there.

Their human rights record notwithstanding, perhaps we could borrow from Bhutan’s Gross National Happiness approach, with its four pillars of sustainable and equitable socio-economic development, environmental conservation, preservation and promotion of culture and good governance.

Or maybe we turn to the Well-Being-Adjusted Life-Years (WELLBYS), favoured by the World Happiness Report, which gives respondents space to assess their own wellbeing, and correlates that with factors such as social support, perceptions of corruption, and freedom to make life choices.

We could even look closer to home. Following the passage of the Wellbeing of Future Generations Act in 2017, Wales identified a set of Wellbeing Indicators, aligned to seven key goals: from health and resilience to community cohesion and cultural vibrancy.

All these measures try to paint a holistic picture of our societies. None of them are perfect. But a government that genuinely prioritised any of them (and didn’t just try to game the results), would find themselves pursuing a radically different policy agenda to one driven by the siren song of GDP.

That seems like a worthwhile endeavour to me.