Rethinking Growth: How Intergenerational Justice Should Replace GDP as the Economic Goal

Two recent publications have reignited the debate on whether nations should continue to prioritize economic growth. In May, the United Nations High-Level Expert Group on Beyond GDP released recommendations for countries to manage their economies using a dashboard of sustainable well-being indicators rather than relying solely on gross domestic product (GDP). This followed the June release of the Global Justice Report by the World Inequality Lab, which called for rebalancing wealth and for wealthy nations to accept lower growth rates to address environmental degradation and climate change.

However, this singular focus on growth metrics may be addressing the wrong question. The core issue is not merely how fast economies should expand or how best to quantify general well-being, but whether governments are preserving or depleting the wealth entrusted to them by past generations. Sustainability is fundamentally a matter of intergenerational justice—what one era owes to the next.

While the Global Justice Report frames justice spatially, focusing on disparities between countries and classes, approaches grounded in planetary boundaries focus on justice across time, ensuring that present consumption does not breach the limits of global natural systems.

The Impartial Spectator

To understand this dynamic, it is useful to revisit Adam Smith’s original definition of national wealth. In his seminal 1776 work, The Wealth of Nations, Smith defined wealth not as money, but as capital—comprising machines, buildings, land, and the acquired abilities of society’s inhabitants. While modern economists still follow this capital-based approach, his earlier 1759 book, The Theory of Moral Sentiments, offers a crucial ethical framework.

Smith argued that an individual’s actions should be judged by an “impartial spectator,” an imagined observer who assesses whether one’s pursuit of happiness unjustly disturbs the well-being of others. This concept can be extended to future generations acting as the ultimate impartial spectators, judging whether their predecessors acted as responsible custodians of inherited wealth.

Smith viewed it as morally wrong for the current generation to benefit while burdening those who follow. He specifically criticized governments for borrowing to relieve present exigencies and leaving the burden of debt repayment to posterity. Instead, he argued that nations grow wealthy by preserving and enlarging their capital stocks—such as infrastructure—rather than consuming their inheritance.

The Economics of Just Savings

Since the 1970s, economists have expanded on Smith’s ideas through the lens of intergenerational justice, drawing on political philosopher John Rawls’s concept of “just savings.” Rawls posited that each generation must preserve cultural gains, maintain just institutions, and accumulate a suitable amount of real capital for the future.

Nobel laureates Kenneth Arrow and Robert Solow further developed these theories. Arrow applied them to conventional capital like machinery and infrastructure, while Solow included exhaustible resources such as oil and minerals. Economist John Hartwick concluded that depleting natural resources could be considered just savings only if the revenues were fully reinvested into other forms of capital. Solow later critiqued the UK’s handling of its North Sea oil revenues in the 1980s, noting that unlike Norway, the UK had squandered its resource windfall rather than reinvesting it.

Later work by economists Partha Dasgupta and Amartya Sen defined sustainability as maintaining the economy’s productive base and preserving human capabilities without compromising the opportunities available to future generations.

Measuring True Wealth

The critical challenge for modern economics is measuring “just savings,” a metric that GDP fails to capture because it only measures production flow. According to research outlined in the forthcoming book The Inclusive Wealth of Nations, just savings must be tracked through “inclusive wealth,” which accounts for three distinct forms of capital: produced (manufactured assets), human (skills and knowledge), and natural (environmental resources).

Inclusive wealth reveals whether current growth is built upon a strengthening foundation or achieved by depleting the natural, human, and produced capital that underpins future prosperity. If a nation runs down its natural capital or allows its physical infrastructure to decay, it effectively robs future generations of the capabilities they need to thrive. Therefore, policy must shift from chasing GDP growth toward maintaining and expanding the total stock of inclusive wealth.