The latest issue of Resurgence carries two responses to the current economic recession, one from Nick Robins, co-editor of Sustainable investing: The art of long term performance, and the other from Tony Juniper, formerly Director of Friends of the Earth and currently a Green Party candidate. Robins believes that this is “a period of great excitement” that could lead to “the prize of a sustainable economy”, although Juniper worries that “governments around the world seem fixated on keeping the failed system on life support rather than on giving birth to a system more fit for the times we live in”. Both writers urge us to identify new economic priorities, and point to the limitations of the main government indicators such as GDP. Gross Domestic Product is the total income generated by economic activity within a country within one year. It is widely used as an indicator of economic welfare, but this assumes that all expenditure is good and, conversely, that not spending is a reflection of poor welfare. These assumptions are false. For example, I can improve my work-life balance by working fewer hours and taking more time for activities that contribute to my well-being. Such activities might include spending more time with my friends and family, going for long walks in the countryside, singing in a choir, and many other activities that cost very little. If many of us did this, our welfare would improve considerably but we would be contributing less to GDP, which would fall as a result. Similarly, shopping locally in small privately run shops rather than large and more distant supermarkets enhances our welfare but contributes less to GDP. Conversely, if the country experienced a disastrous event such as a hurricane or an earthquake, our welfare would suffer but GDP would increase as a result of the cost of repairing the damage.

GDP also ignores trading activity using Local Exchange Trading Systems (LETS). These are grass roots schemes that use a local currency that is issued by the scheme organisers, not by the banks. George Monbiot explains that in a recession “everything grinds to a halt for want of money”, but that money doesn’t have to be sterling or dollars. In A better way to make money he describes a number of schemes using local currencies that have successfully kick-started economies, saved local businesses and even whole towns, solved major social problems and generated employment. Almost all of these schemes “were closed down as the central banks panicked about losing their monopoly over the control of money”. Monbiot believes that it is time that we gave serious consideration to such alternatives.