Anchoring Economic Growth and Development in the Pursuit of Human Flourishing
In the fifteen or so years since the Great Financial Crisis, a global consensus has emerged that economic governance requires fundamental change. Countless international agreements have committed governments to:
- Render economic growth more inclusive, sustainable and resilient;
- Accelerate progress toward the SDGs and Paris climate agreement targets;
- Internalize social and environmental externalities in business and economics; and
- Renew social contracts in order to reduce inequalities and narrow social justice deficits.
While the new US administration’s disavowal of the SDGs and other aspects of this agenda represents a significant setback for it, there remains broad agreement elsewhere in the world on the overall direction of required change. Yet even within this domain of agreement, a large gap persists between aspiration and action — between rhetoric and results. There has been a welcome intensification of technical diagnosis, political aspiration, goal-setting and measurement of progress in recent years. But these largely procedural steps, along with the considerable amount of worthwhile but disconnected individual actions by various stakeholders, are simply not producing the systemic change political leaders committed to in adopting the 2030 Agenda/Sustainable Development Goals, Paris climate agreement, Kunming-Montreal Biodiversity Framework and ILO Centenary Declaration. Humanity is well off track with respect to the objectives set by each.
In short, international economic cooperation and the G20 in particular currently confront two fateful challenges: (1) to formulate a sound response to the new wave of “me first” approaches to public policy initiated by the new US administration as part of a larger effort to maintain the growth and stability of a world economy, which is already facing a number of other important headwinds; and (2) to promote actionable progress of requisite magnitude toward the objectives of the existing major agreements on global problem-solving.
Regarding the first challenge, the United States’ recent disengagement from key international agreements and organizations could have profound implications for international cooperation unless the G20 formulates a coherent, credible and feasible response. Fortunately, such a response is available on several fronts. First, it is possible to restate many multilateral goals in national terms. Multilateral collaboration in the provision of global public goods yields greater national benefits than the sum of uncoordinated policies, provided that the costs and benefits are divided appropriately. The G20 should focus special efforts on facilitating such an appropriate division.
Moreover, in recognition that most G20 member states remain committed to solving global problems in the spirit of our shared humanity, the G20 should also frame its proposals in the global public interest, drawing on the spirit of Ubuntu, “I am because we are.”
Furthermore, there are precedents for alternatives to G20 consensus-based decision-making processes, such as coalitions of the willing and flexible commitment frameworks, such as the 19+1 approach to climate action under Germany’s G20 Presidency in 2017.
Regarding the second challenge – accelerating implementation of existing international agreements – it has become clear that scaling progress in line with political commitments and societal expectations on inequality, multidimensional poverty, environmental degradation and other challenges will require a fundamental change in the way economic growth and development have been conceived, practiced and measured for the past half century.
For change to materialize at the promised scale and speed, capitalism’s very source code and operating system—economic theory and the corresponding frameworks applied by domestic and international economic policy institutions—will need to be reformulated to better serve a world in which distributional, environmental and “just transition” considerations have become at least as important to many societies as the overall size of their economies as measured by GDP, and often act as a drag on growth itself. Economists will need to address more frontally the question of how the pedagogy and practice of macroeconomics can be transformed to improve both the quantity as well as the social and environmental quality of growth, and indeed to achieve the former through the latter whenever possible.
“Vision without execution is hallucination.” -Thomas Edison.
“Imagination is more important than knowledge.” -Albert Einstein.
The economics community—both academic and policymaking—is manifestly struggling to adapt the discipline to these 21st century circumstances and challenges. It appears to be stuck in a doctrinal cul-de-sac analogous to that which it struggled to exit in the 1930s. Characterized by what Einstein might have called a failure of imagination rather than knowledge, it has been unable to adapt its mental model of growth and development to the performance requirements humanity’s political leadership has set and repeatedly reaffirmed. For all of the talk of moving beyond neoliberalism and the Washington Consensus, the standard model continues to dominate. It treats the larger objective of human flourishing—including the notions of social inclusion, environmental sustainability and human and systemic resilience—essentially as a residual consideration, a trickle-down byproduct of higher GDP per capita.
To be certain, fundamental rethinking is occurring within the profession, and a growing number of governments are beginning to measure progress using frameworks that go beyond GDP. However, this activity remains largely experimental; it has a long way to go before becoming widespread let alone systemic. A more concerted and collaborative effort is required to accelerate the pace of fundamental reflection, reformulation and implementation of a new anchoring paradigm or mental model of growth and development, one that transcends the so-called neoclassical synthesis and its late-20th century derivative, neoliberalism. This intensified and better connected effort (in both an international and interdisciplinary sense) should seek to bring about:
- a new conceptual framework for economic analysis, linking economic activity more closely to its social and environmental foundations;
- a corresponding policy framework to guide practitioners at the national and subnational levels and frame the analysis and support provided by international economic organizations; and
- a corresponding empirical framework by which progress on the key parameters of this more sufficient model of growth and development can be monitored by policymakers and citizens on the basis of evidence gathered by scholars and other researchers.
With respect to the first two elements, a good starting point would be to place the multidimensional or comprehensive living standards of households (multiple material aspects of their everyday lived experience) at the center of each. Economics was originally conceived by Adam Smith and the most influential 19th century theorists and codifiers of the field, John Stuart Mill and Alfred Marshall, as the intellectual discipline concerned with the promotion of the material aspect of the human condition and social welfare—which is to say, the general standard of living. Each was a moral philosopher before he was an economist, literally and figuratively, and each warned that markets, capital accumulation and growth in economic activity, or what we now call GDP, were crucial but incomplete means to this larger end. They wrote at length that the proper exercise of political economy, as the field was then known, required more than these.
However, modern mainstream economics has come to treat broad societal progress in comprehensive living standards as essentially as an assumed byproduct of growth in productive output. It has never engaged directly with this phenomenon on a theoretical level, despite the fact that improving the lived experience of people is clearly the ultimate purpose of the field and indeed what political leaders are accountable for delivering to their constituents—not growth per se. And while there is a positive empirical relationship between GDP and some aspects of material living standards, it is far from lockstep, tends to weaken as countries attain upper-middle-income and high-income status and can be quite weak to outright negative in the case of certain social and environmental measures.
Thus, any new mental model of growth and development that aims to internalize the wider social and environmental requirements of human flourishing rather than treat them as afterthoughts—as an inexorable result of more production as measured by GDP—needs a conceptual model of multidimensional living standards at its core and as its anchor. That model then needs to be coupled with policy and measurement frameworks that aid in translating this conceptual anchor into the practical implementation strategies of policymakers. In other words, reformulating the very conception of economics so that it focuses more directly on the bottom-line societal objective of broad and sustainable gains in the material lived experience of people, as ambitious as that is, won’t be enough. It will also be necessary to instrumentalize and measure the application of this notion in a systematic fashion.
The key to doing so is to more fully appreciate the critical role in multiple domains of institutions—laws and regulations, policy incentives and public institutional capacity—in diffusing gains in living standards at the household level. A simple such multidimensional model of household living standards was published last year framing the five main channels by which improvements in living standards manifest at the household level and mapping the corresponding wide spectrum of policy and institutional features on both the supply and demand sides of an economy that have the potential to activate these channels more fully (Samans 2024). The essential principle this work posits is that the living standards of median households deserve at least as much direct policy attention and cultivation by economists and policymakers as the overall wealth, or productive output, of nations. Broad progress in the lived experience of people, rather than GDP growth per se, depends on the strength of both markets of exchange and institutions in such areas as labour and social protection, financial and corporate governance, competition and rents, taxation, infrastructure and basic necessities, environmental protection, anti-corruption, and education and skilling.
Extensive comparative data are presented demonstrating that nearly every country has considerable policy space to narrow its social “welfare gap”—its underperformance on key dimensions of household living standards relative to the frontier of leading outcomes and enabling policy practices of peer countries—and that doing so can often also help to reduce its output gap, or underperformance on growth. Herein lies an immediate policy opportunity for many countries—to identify the most important areas in which improvement in its institutional setup—its social contract—is likely to yield a two-for-one outcome for both economic growth and median household living standards. The data show that virtually every country has underexploited synergies of this nature, i.e., where the quantity as well as social and environmental quality of its growth are being held back by policy and institutional weaknesses in one or more of its labour market rules, financial, tax or educational systems, corporate governance rules, treatment of competition and rents, or support for basic necessities orand environmental protection, etc. The road to a more inclusive and sustainable model of development begins with the proactive and systematic identification of such missed win-win policy opportunities and prioritization of plans to address them on an ongoing, iterative basis at the core of the country’s economic strategy.
All of this said, it is important to recognize that well-being is a broader concept than living standards in that it also includes important non-material dimensions of progress. These merit priority attention by policymakers as well. The theme of South Africa’s G20 Presidency is “Solidarity, Equality, Sustainability.” Solidarity is essential for social wellbeing, since it provides the bedrock of trust and shared purpose on which all collective action rests. Equality of opportunity is essential for generating individual and social agency, underlying the inclusive participation on which successful economic, social and environmental policies rest. Sustainability, in the environmental and other domains, is essential for safeguarding our legacy for future generations.
To anchor these three goals – Solidarity, Equality, Sustainability – into the decision-making processes of the G20, the goals must be measured as consistently as GDP. A simple framework for doing so is the SAGE dashboard, covering Solidarity (S), Agency (A), material Gain (G) and Environmental sustainability (E). These drivers of human flourishing have been measured consistently across over 100 countries for the past 15 years (Lima de Miranda and Snower, 2020, 2022a,b; Ortega and Snower, 2024) and is the subject of growing interest and research (e.g., Mayer and Snower, 2023; Coyle, Mayer and Snower, 2024; Snower, 2024; Snower, 2025). These measures provide a basis for consistent measurement of government policy effectiveness and business performance. They also provide an integrative basis covering other wellbeing measurement frameworks, such as the OECD Better Life Index (2024).
In March of this year, the UN Statistical Commission took an important step in this overall direction by extending guidance on national income accounting to material aspects of well-being that are not covered in standard national accounts, including unpaid household service work, health care activity, education and training activity and aspects of ecosystem services and natural capital. It stopped short of providing similar guidance on non-material dimensions for the time being, deeming those “out of scope of the discussion of material well-being within the context of the integrated framework of national accounts” but acknowledging that “a definitive measurement boundary on material well-being [versus non-material aspects of well-being] has not been established” (see Section F, Chapters 34 and 35, United Nations Statistical Commission (2025).
Thus, there is considerable practical experimentation and progress around the world in measuring economic performance in a manner that extends well beyond GDP even if corresponding reform of the theory and policy practice of growth and development remains at an earlier stage.
The G20 could take an initial important step in this direction by collectively agreeing to monitor their economies’ respective progress on this more holistic basis and to do so in a consistent and comparable manner.
It should also endeavour to frame its collaborative initiatives on various challenges more explicitly in terms of the concrete benefits on offer for each participating nation. Rationalizing multilateralism in terms of nationalism is always possible in the provision of global public goods.
All governments would do well to anchor their economic policymaking in the broader and thus firmer intellectual foundation of human flourishing.
The Global Solutions Summit 2025 has been designed to inspire and assist in this regard. A series of Summit sessions is devoted to this topic, and the Global Solutions Initiative aims to serve as a platform for ongoing cooperative work among interested parties across public and private sectors and academia and other parts of civil society.
Richard Samans is Senior Fellow at the Geneva Graduate Institute of International and Development Studies, Non-resident Senior Fellow of The Brookings Institution and Special Advisor to the UN Economist Network. He was previously Director of the Research Department and G20/G7 Sherpa of the ILO, a Managing Director of the World Economic Forum and Special Assistant to the President and National Security Council Senior Director for International Economics in the second Clinton-Gore Administration.
Dennis J. Snower is President of the Global Solutions Initiative, Professorial Fellow at the Institute for New Economic Thinking, Oxford University and Non-resident Senior Fellow of The Brookings Institution. He was previously Program Chair at The New Institute, President of the Kiel Institute for the World Economy and Professor of Economics at the Christian-Albrechts-University of Kiel.
Featured image: Photo by Sam Mgrdichian on Unsplash
Bibliography and Further Reading
Coyle, D., Mayer, C., and Snower, D.J. (2024), Measuring Prosperity Inclusively and Sustainably, T20 Policy Brief, Brazil G20 Presidency, https://www.t20brasil.org/media/documentos/arquivos/TF06_ST_04__Measuring_Prosperi67002ffb29c9a.pdf
Mayer, C., and Snower, D.J. (2023), An Ethical Framework for Measuring Prosperity, T20 Policy Brief, Indian G20 Presidency, https://t20ind.org/research/an-ethical-framework-for-measuring-prosperity/
OECD Better Life Index (2024), https://www.oecdbetterlifeindex.org/#/11111111111
Ortega, F., and Snower, D.J. (2024), The Dark Side of Escaping the Middle-Income Trap: A SAGE Study of Asian High-Income Countries, Working Paper 2024-09, INET, University of Oxford.
Samans, R. (2024), Human-Centred Economics: The Living Standards of Nations, Palgrave Macmillan in association with the International Labour Organization. Available at: https://richardsamans.net/book-human-centred-economics/
Snower, D.J. (2024), Principles for Collective Progress, Global Solutions Journal, Issue 10, p. 256-263.
Snower, D.J. (2025), Recoupling: The Drive of Human Success, in The Nature and Dynamics of Collaboration, ed. By P.F.M. Verschure et al., Cambridge, MA: MIT Press.
United Nations Statistical Commission (2025), Intersecretariat Working Group on National Accounts, “System of National Accounts 2025,” March 7, pp. 950 – 1004. Available at: https://unstats.un.org/UNSDWebsite/statcom/session_56/documents/BG-3a-ISWGNA-BG-2025-SNA-Combined-E.pdf