What if your invention changes the world, but not in the way you intended it? That is what happened to Simon Kuznets, a Russian-born US economist, who helped develop the concept of gross domestic product, or GDP, almost a century ago.
For Kuznets, who tried to make sense of the Great Depression and its impact on the economy, GDP was a useful measure. It helped account how much goods the US economy produced, and how quickly it rebounded after the crisis. But the economist also warned it was a poor tool for policymaking – to no avail.
For many markets and policymakers, GDP growth has become an all-consuming metric, even though it is counterproductive to solve some of the world’s biggest problems: inequality and environmental degradation, which are getting worse over time.
The crises we are facing may be the ultimate “I told you so” of an oft misunderstood economist, and could be summarized as “Kuznets’ Curse”. But before we get deeper into this “curse”, let’s...
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