What actually matters for human well-being is
provisioning – in other words, people’s access to the resources they need to live long, healthy, flourishing lives. The reason GDP is an unsuitable metric here is because it only counts a very narrow slice of economic activity; specifically, that which has to do with commodity exchange-value. It does not count all forms of provisioning; in fact, much of the provisioning we rely on is totally ignored by, and irrelevant to, GDP. Milanovic
knows this.
So it’s quite possible that GDP could go up while provisioning declines; for instance, if the UK National Health Service were privatized, GDP would go up but people’s access to healthcare would be curtailed (the same is true for virtually all forms of privatization or enclosure). Similarly, GDP could go down while provisioning improves; for instance, if the UK government imposed rent controls, or restored public housing, GDP might take a hit but people would have easier access to housing.
This trade-off is known as the Lauderdale Paradox.
Now, when we think about the question in terms of resource provisioning, the picture changes quite a bit. It becomes clear that there’s no scarcity at all.
Recent research has found that we could end global poverty and ensure flourishing lives for everyone on the planet (for 10 billion people by the middle of the century), including universal healthcare and education, with 60% less energy than we presently use (150 EJ, well within what is considered compatible with 1.5C). As for resource use, we know that high-income nations could meet their citizens’ material needs at a high standard, with up to
80% less resource use, bringing them back within the sustainable threshold.
From this angle, it becomes clear that capitalism is highly inefficient when it comes to meeting human needs; it produces so much, and yet leaves 60% of the human population
without access to even the most basic goods. Why? Because a huge portion of commodity production (and all the energy and materials it requires) is irrelevant to human well-being. Consider this thought experiment: Portugal has significantly better social outcomes than the United States, with 65% less GDP per capita. This means that $38,000 of US per capita income is effectively ‘wasted’. That adds up to $13 trillion per year for the US economy as a whole; $13 trillion worth of extraction and production and consumption each year, and $13 trillion worth of ecological pressure, that adds nothing, in and of itself, to human well-being. It is damage without gain.
This should not come as a surprise, because the point of capitalism is surplus extraction, elite accumulation, and reinvestment for expansion – not meeting human needs. To the extent that the system
does meet human needs, this is
generally the result of political interventions (i.e., unions, labour rights, public provisioning, etc.).