Beyond the GDP: rereading Keynes’s social liberalism to commemorate Jean-Paul Fitoussi
Here are some random thoughts, to remember Jean-Paul Fitoussi, one of the best economists of our troubled and difficult times. Thoughts on economy values, on the GDP as an inadequate tool to measure economic development (showing only the quantity, and not the quality, of economic growth), on the needs for what is called “sad science” to give consideration to people, not just making money.
Thoughts inspired by a comment by Tony Judt, one of the most clear-headed historians of the second half of the 20th century: “We know what things cost but have no idea what they are worth. We no longer ask of a judicial ruling or a legislative act: is it good? Is it fair? Is it just? Is it right? Will it help bring about a better society or a better world? Those used to be the political questions, even if they invited no easy answers. We must learn once again to pose them.” This quote is from Ill fares the land, written in 2010, just before his demise, and published in Italian by Laterza as Guasto è il mondo. In those pages – a kind of political and moral testament – Judt reiterates the responsible role politics and intellectual work should play, and collects reflections on the unresolved issues of the century that’s just ended, as well as on our current imbalance (ample evidence of it can be found in Novecento. Il secolo degli intellettuali e della politica (Thinking the 20th century. Intellectuals and politics in the 20th century), a long and fascinating conversation with Timothy Snyder, also published by Laterza in 2012).
Judt’s work embodies a full awareness of the major analytical and strategic shortcomings evident in the turn of the century’s mainstream cultural thought – characterised by laissez-faire, market fundamentalism, the unregulated free market and unrestrained individualism – and fostered by politicians à la Margaret Thatcher (“There is no such thing as society”) and Ronald Reagan, as well as those monetarist economists of the ‘Chicago school’ led by Milton Friedman (1976 Nobel Memorial Prize in Economics). It also emphasises the importance of rethinking political reforms and economic strategies in favour of a public and private intervention on the economy, which would encourage a move towards sustainability and better social balance.
These are themes that will bring back to the fore John Maynard Keynes‘s theory on a form of liberalism with pronounced social leanings, which will change our economic thinking – less emphasis on shareholder value ideology (whereby companies are ruled by profit and the stock market) and much more focus on stakeholders values (prioritising attention on the communities on which businesses rely, such as employees, suppliers, consumers, people).
Friedman’s supremacy is on the decline, Keynes is coming back (cleansed from those welfarist interpretations given by the most superficial Italian readers, which have very little to do with Keynesian theory), to give economists such as Joseph Stiglitz (2001 Nobel Prize in Economics) and, in fact, Jean-Paul Fitoussi, their well-deserved space within public debate. Stiglitz and Fitoussi, together with Amartya Sen (1998 Nobel Prize in Economic Sciences) led the Commission on the measurement of economic performance and social progress, created in 2008 by then French president Nicholas Sarkozy, thus contributing to bring on a radical shift in economic thought, a move towards a “just”, “circular” and “civil” economy, as well as environmental and social sustainability. An approach that encompasses the philosophy of Pope Francis, wide debates in the best economics publications and, after the Great Recession of 2008, a commitment by powerful financial institutions, such as the largest investment company in the world, BlackRock, headed by Larry Fink, to support environmental and social sustainability.
Fitoussi’s work is key to all this, as evidenced by observations such as, “For some time now, according to prevalent thought, public authorities have legitimised their actions by turning the spotlight on price stability as the goal of economic policy – which should also allow to maximise GDP growth – as well as on competitive market theory.” Critically, “GDP growth was accompanied by deep social misery and market deregulation merely foreshadowed the worst market performance since the Great Depression of the 1930s. The wrong spotlights were turned on and we tried to act in accordance with a theoretical representation of the world that had little to do with the real world, with poorly measured targets (such as GDP ones) that were not really significant to society.” Basically, “The GDP would be a useful economic measure if it could at least give an idea of how wealth is distributed within a nation. Yet, GDP can appear positive even when 80% of wealth belongs to just 1% of the population.” In short, “Economy expands only when the increase in prosperity is distributed among most of the population.”
All remarks taken from a book that’s really worth reading: Misurare ciò che conta. Al di là del Pil (Beyond GDP: Measuring what counts for economic and social performance), written by Stiglitz, Fitoussi and Martine Durand and published by Einaudi in 2021. Indeed, going beyond the GDP, ISTAT devised an Italian index measure, the BES (Benessere equo e sostenibile – Equitable and sustainable well-being, which has already become a primary reference when drafting Italian financial policies). And, further, disregarding the quantity of the economic growth (which is nonetheless useful data, especially to defuse so-called “happy degrowth” delusions), we should above all look at the quality of our development, paying greater attention to topics such as health, education, social inclusion, occupational safety and the participation of young people and women in productive and social processes. This is rereading Keynes à la Fitoussi, unquestionably, where choices can be found outside the spurious antinomy between State and market (both, with their different yet convergent roles, are necessary to attain harmonious reforms focused on development and employment), and where special attention is paid to EU policies, of which Fitoussi was a strong supporter, in order to overcome ordoliberalist beliefs and all their parameters and insist, instead, on public investment as a way to foster development (the EU Next Generation Recovery Plan, set up in response to the crisis caused by the COVID-19 pandemic, it’s solid evidence of this).
Italian economic thought shows a trend in this direction, something that Fitoussi well knew and appreciated, such as the theories by Franco Modigliani (1985 Nobel Memorial Prize in Economics), Claudio Napoleoni and Federico Caffè (intellectual mentor of Prime Minister Mario Draghi, suddenly and mysteriously disappeared in the spring of 1987, just when a more intense form of liberalism – what he strongly opposed – was taking over the economic world. Amongst others, Ermanno Rea in L’ultima lezione (The last lesson), published by Einaudi; his favourite pupil Bruno Amoroso; and, more recently, Guido Maria Brera, Dimmi cosa vedi tu da lì (Tell me what you see from there), published by Solferino, speculated about the reasons for his disappearance.
One further thought to bear in mind, while we’re rediscovering Keynes and Fitoussi, well expressed by Zygmunt Bauman in Vite che non possiamo permetterci (Living on borrowed time), published by Laterza: “Society can soar and become a community only if it is able to effectively protect its members from the twin horrors of misery and humiliation, from the terror of being excluded and condemned to ‘social redundancy’ or, in any case, to be marked as ‘human waste’.” A good lesson for our times.
(Photo by Sophie Bassouls/Sygma/Sygma via Getty Images)
Here are some random thoughts, to remember Jean-Paul Fitoussi, one of the best economists of our troubled and difficult times. Thoughts on economy values, on the GDP as an inadequate tool to measure economic development (showing only the quantity, and not the quality, of economic growth), on the needs for what is called “sad science” to give consideration to people, not just making money.
Thoughts inspired by a comment by Tony Judt, one of the most clear-headed historians of the second half of the 20th century: “We know what things cost but have no idea what they are worth. We no longer ask of a judicial ruling or a legislative act: is it good? Is it fair? Is it just? Is it right? Will it help bring about a better society or a better world? Those used to be the political questions, even if they invited no easy answers. We must learn once again to pose them.” This quote is from Ill fares the land, written in 2010, just before his demise, and published in Italian by Laterza as Guasto è il mondo. In those pages – a kind of political and moral testament – Judt reiterates the responsible role politics and intellectual work should play, and collects reflections on the unresolved issues of the century that’s just ended, as well as on our current imbalance (ample evidence of it can be found in Novecento. Il secolo degli intellettuali e della politica (Thinking the 20th century. Intellectuals and politics in the 20th century), a long and fascinating conversation with Timothy Snyder, also published by Laterza in 2012).
Judt’s work embodies a full awareness of the major analytical and strategic shortcomings evident in the turn of the century’s mainstream cultural thought – characterised by laissez-faire, market fundamentalism, the unregulated free market and unrestrained individualism – and fostered by politicians à la Margaret Thatcher (“There is no such thing as society”) and Ronald Reagan, as well as those monetarist economists of the ‘Chicago school’ led by Milton Friedman (1976 Nobel Memorial Prize in Economics). It also emphasises the importance of rethinking political reforms and economic strategies in favour of a public and private intervention on the economy, which would encourage a move towards sustainability and better social balance.
These are themes that will bring back to the fore John Maynard Keynes‘s theory on a form of liberalism with pronounced social leanings, which will change our economic thinking – less emphasis on shareholder value ideology (whereby companies are ruled by profit and the stock market) and much more focus on stakeholders values (prioritising attention on the communities on which businesses rely, such as employees, suppliers, consumers, people).
Friedman’s supremacy is on the decline, Keynes is coming back (cleansed from those welfarist interpretations given by the most superficial Italian readers, which have very little to do with Keynesian theory), to give economists such as Joseph Stiglitz (2001 Nobel Prize in Economics) and, in fact, Jean-Paul Fitoussi, their well-deserved space within public debate. Stiglitz and Fitoussi, together with Amartya Sen (1998 Nobel Prize in Economic Sciences) led the Commission on the measurement of economic performance and social progress, created in 2008 by then French president Nicholas Sarkozy, thus contributing to bring on a radical shift in economic thought, a move towards a “just”, “circular” and “civil” economy, as well as environmental and social sustainability. An approach that encompasses the philosophy of Pope Francis, wide debates in the best economics publications and, after the Great Recession of 2008, a commitment by powerful financial institutions, such as the largest investment company in the world, BlackRock, headed by Larry Fink, to support environmental and social sustainability.
Fitoussi’s work is key to all this, as evidenced by observations such as, “For some time now, according to prevalent thought, public authorities have legitimised their actions by turning the spotlight on price stability as the goal of economic policy – which should also allow to maximise GDP growth – as well as on competitive market theory.” Critically, “GDP growth was accompanied by deep social misery and market deregulation merely foreshadowed the worst market performance since the Great Depression of the 1930s. The wrong spotlights were turned on and we tried to act in accordance with a theoretical representation of the world that had little to do with the real world, with poorly measured targets (such as GDP ones) that were not really significant to society.” Basically, “The GDP would be a useful economic measure if it could at least give an idea of how wealth is distributed within a nation. Yet, GDP can appear positive even when 80% of wealth belongs to just 1% of the population.” In short, “Economy expands only when the increase in prosperity is distributed among most of the population.”
All remarks taken from a book that’s really worth reading: Misurare ciò che conta. Al di là del Pil (Beyond GDP: Measuring what counts for economic and social performance), written by Stiglitz, Fitoussi and Martine Durand and published by Einaudi in 2021. Indeed, going beyond the GDP, ISTAT devised an Italian index measure, the BES (Benessere equo e sostenibile – Equitable and sustainable well-being, which has already become a primary reference when drafting Italian financial policies). And, further, disregarding the quantity of the economic growth (which is nonetheless useful data, especially to defuse so-called “happy degrowth” delusions), we should above all look at the quality of our development, paying greater attention to topics such as health, education, social inclusion, occupational safety and the participation of young people and women in productive and social processes. This is rereading Keynes à la Fitoussi, unquestionably, where choices can be found outside the spurious antinomy between State and market (both, with their different yet convergent roles, are necessary to attain harmonious reforms focused on development and employment), and where special attention is paid to EU policies, of which Fitoussi was a strong supporter, in order to overcome ordoliberalist beliefs and all their parameters and insist, instead, on public investment as a way to foster development (the EU Next Generation Recovery Plan, set up in response to the crisis caused by the COVID-19 pandemic, it’s solid evidence of this).
Italian economic thought shows a trend in this direction, something that Fitoussi well knew and appreciated, such as the theories by Franco Modigliani (1985 Nobel Memorial Prize in Economics), Claudio Napoleoni and Federico Caffè (intellectual mentor of Prime Minister Mario Draghi, suddenly and mysteriously disappeared in the spring of 1987, just when a more intense form of liberalism – what he strongly opposed – was taking over the economic world. Amongst others, Ermanno Rea in L’ultima lezione (The last lesson), published by Einaudi; his favourite pupil Bruno Amoroso; and, more recently, Guido Maria Brera, Dimmi cosa vedi tu da lì (Tell me what you see from there), published by Solferino, speculated about the reasons for his disappearance.
One further thought to bear in mind, while we’re rediscovering Keynes and Fitoussi, well expressed by Zygmunt Bauman in Vite che non possiamo permetterci (Living on borrowed time), published by Laterza: “Society can soar and become a community only if it is able to effectively protect its members from the twin horrors of misery and humiliation, from the terror of being excluded and condemned to ‘social redundancy’ or, in any case, to be marked as ‘human waste’.” A good lesson for our times.
(Photo by Sophie Bassouls/Sygma/Sygma via Getty Images)