Just over a mile away from here
in Edinburgh's old town
is Panmure House.
Panmure House
was the home of the world-renowned Scottish economist Adam Smith.
In his important work "The Wealth of Nations,"
Adam Smith argued, amongst many other things,
that the measurement of a country's wealth
was not just its gold and silver reserves.
It was the totality of the country's production and commerce.
I guess it was one of the earliest descriptions of what we now know today
as Gross Domestic Product, GDP.
Now, in the years since, of course,
that measurement of production and commerce,
GDP, has become ever more important,
to the point that today,
and I don't believe that this is what Adam Smith would have intended,
that it is often seen as the most important measurement
of a country's overall success.
And my argument today
is that it is time for that to change.
You know, what we choose to measure as a country matters.
It really matters, because it drives political focus,
it drives at public activity,
and against that context,
I think the limitations of GDP as a measurement of a country's success
is all too obvious.
You know, GDP measures the output of all of our work,
but it says nothing about the nature of that work,
about whether that work is worthwhile or fulfilling.
It puts a value, for example,
on illegal drug consumption,
but not on unpaid care.
It values activity in the short term that boosts the economy
even if that activity is hugely damaging
to the sustainability of our planet
in the longer term.
And when we reflect on the past decade of political and economic upheaval,
of growing inequalities,
and when we look ahead to the challenges of the climate emergency,
increasing automation,
an aging population,
then I think the argument for the case for a much broader definition
of what it means to be successful as a country, as a society,
is compelling, and increasingly so.
And that is why Scotland in 2018
took the lead, took the initiative in establishing a new network
called the Wellbeing Economy Governments group,
bringing together as founding members
the countries of Scotland, Iceland, and New Zealand for obvious reasons.
We're sometimes called the SIN countries,
although our focus is very much on the common good.
And the purpose of this group is to challenge that focus
on the narrow measurement of GDP,
to say that, yes, economic growth matters.
It is important.
But it is not all that is important.
And growth in GDP should not be pursued
at any or all cost.
In fact, the argument of that group
is that the goal, the objective of economic policy
should be collective wellbeing:
how happy and healthy a population is,
not just how wealthy a population is.
And I will touch on the policy implications of that in a moment,
but I think particularly in the world we live in today
it has a deeper resonance.
You know, when we focus on wellbeing,
we start a conversation
that provokes profound and fundamental questions.
What really matters to us in our lives?
What do we value in the communities we live in?
What kind of country, what kind of society,
do we really want to be?
And when we engage people in those questions,
in finding the answers to those questions,
then I believe that we have a much better chance
of addressing the alienation and disaffection from politics
that is so prevalent in so many countries
across the developed world today.
In policy terms, this journey for Scotland started back in 2007
when we published what we call our National Performance Framework,
looking at the range of indicators that we measure ourselves against.
And those indicators are as varied as income inequality,
the happiness of children, access to green spaces,
access to housing.
None of these are captured in GDP statistics,
but they are all fundamental to a healthy and a happy society.
(Applause)
And that broader approach is at the heart of our economic strategy,
where we give equal importance to tackling inequality
as we do to economic competitiveness.
It drives our commitment to fair work, making sure that work is fulfilling
and well-paid.
It's behind our decision to establish a just transition commission
to guide our path to a carbon zero economy.
We know from economic transformations of the past
that if we're not careful, there are more losers than winners.
And as we face up to the challenges of climate change and automation,
we must not make those mistakes again.
The work we're doing here in Scotland is, I think, significant,
but we have much, much to learn from other countries.
I mentioned a moment ago our partners at nations
in the wellbeing network,
Iceland and New Zealand.
So I'm noting, and I will leave it to you to decide whether this is relevant or not
that all three of these countries are currently led by women.
(Applause)