Mandeville’s Fable of the Bees was, after all, just a fable. Private vice rarely leads to public virtue and institutionalized vice is even more damaging. Humanity is now learning this lesson the hard way. Governments and businesses prioritizing economic growth and profit over human and planetary well-being are driving us to the brink of collapse, fueled by environmental degradation, social fragmentation and governance failures. The Agenda 2030 and its Sustainable Development Goals (SDGs), while ambitious, arguably pay mere lip service to basic human and planetary needs — and even those goals now seem destined to fall short.
Economics embraced Mandeville’s fable with Panglossian assumptions about market efficiency. In theory, under conditions of perfect competition, with no externalities or information asymmetries, firms maximizing profit could lead to an efficient allocation of resources. In practice, however, markets reward firms that externalize costs, exploit workers and consumers, and use disinformation to obscure the harms they generate. This creates not efficiency but inequity and dysfunction. Yet, for years, the toxic consequences of cut-throat competition have been overlooked by experts despite being evident to common sense.
Where do we go from here? In this era of interconnected crises — or “polycrisis” — there is an understandable temptation to call for a radical overhaul of economic concepts, metrics, and policies. If human and planetary well-being are to become the paramount goals, shouldn’t economic measures like GDP and profit be replaced with metrics based on happiness, trust, and similar notions?
While subjective surveys are valuable, I argue that the long tradition of welfare economics, dating back to Bergson and Samuelson, offers critical insights into how we might replace GDP and profit with metrics better aligned with well-being.
Welfare economics is grounded in individual well-being as the foundation for evaluating social outcomes. Unlike composite indicators and dashboards, which often rely on arbitrarily weighted measures of disparate issues, this approach uses individuals’ own assessments of what matters most in their lives. It also captures correlations between life domains, recognizing that hardships in one area often exacerbate difficulties in others, disproportionately affecting the worst-off. Once individual well-being has been measured, constructing a synthetic indicator is then a matter of deciding, on ethical grounds, how much priority should be given to the worst off in the aggregate measure of societal well-being. This approach blends equity and efficiency in a transparent manner, enabling a comprehensive evaluation of societal progress.
Transitioning from GDP to a social welfare framework in this way allows for the inclusion of non-market aspects of life, such as leisure and social connections, while addressing inequalities. It also corrects GDP’s inherent productivist bias, which overlooks the human cost of labor.
Interestingly, at the level of individual businesses, profit accounts for labor as a cost, making it a more sensible measure of performance than value added, which forms the basis of GDP. However, profit reflects only the value created for shareholders.
To align with broader well-being goals, profit must be replaced by a more comprehensive measure of stakeholder value.
This measure would combine profits with the surplus generated for customers, employees and other input providers, while adjusting for the externalities imposed on society. The stakeholder value approach promotes intuitively sound management practices which can be characterized as “responsible” profit-seeking.
Social welfare at the macro level and stakeholder value at the corporate level are well-aligned. Both extend the narrow focus of GDP and benefit by incorporating supplementary components, all expressed in monetary terms for clarity. This ensures transparency by highlighting where the exclusive focus on income and shareholder returns fails to capture the broader aspects of well-being.
Environmental well-being, which encompasses non-human dimensions, can also be integrated into these frameworks through the inclusion of externalities. While carbon emissions are now widely recognized and quantified, many other environmental impacts remain inadequately measured. Expanding these measures is essential for a holistic evaluation of well-being and sustainability.
In sum, moving beyond traditional economic metrics like GDP and profit is not only desirable but necessary in addressing the intertwined challenges humanity faces. By grounding social and corporate evaluations in the principles of welfare economics and stakeholder value, we can create frameworks that better reflect the complexities of human and planetary well-being, offering a clearer path toward a sustainable future.
Marc Fleurbaey is a professor at the Paris School of Economics, a CNRS researcher, and an associate professor at the Ecole normale supérieure-Paris Sciences et Lettres. He has published widely on normative economics, social choice, and public economics, including Beyond GDP (with Didier Blanchet; Oxford University Press, 2013), A Theory of Fairness and Social Welfare (with François Maniquet; Cambridge University Press, 2011), and Fairness, Responsibility and Welfare (Oxford University Press, 2008).