Here’s a book title that wears its heart on its cover. Lorenzo Fioramonti’s
[amazon_image id=”1780322739″ link=”true” target=”_blank” size=”medium” ]Gross Domestic Problem: The Politics Behind the World’s Most Powerful Number (Economic Controversies)[/amazon_image]
Start with growth and the environmental costs. It is surely obvious to all but a small minority that measuring better the impact of economic activity on the environment is vital. My preference is to monitor the depletion of natural assets of all kinds, a balance sheet approach automatically injecting the longer-term perspective necessary for sustainability – there is much on this in
On the book’s political arguments, it’s obvious post-crisis that conventional, mainstream economics has been wrong to ignore the politics of finance and the lobbying power of the banking industry. Brett Christophers’ new book,
One particular confusion that many commentators on GDP make is muddling up this measure of economic activity with the measurement of economic welfare. Economics has always been clear about the distinction. Simon Kuznets, one of the creators of GDP and the national accounts, advocated a measure of welfare instead but lost the argument – this book presents his work as criticism of the definition of GDP, but the quotes here date from a 1937 book in which he was pitching for a welfare approach instead. The production demands of the war – when the military-industrial complex was indeed powerful – swung it in favour of GDP instead.
I do think these seemingly dry questions of measurement are important, and that measurement choices affect the way people behave. However, Gross Domestic Problem is an unsubtle and confused take on the question of GDP. GDP is one measure of economic growth – there could be others, and economic growth is highly desirable, in my view, subject to the huge challenge of moving towards sustainability. Measuring the economy’s size differs from measuring society’s welfare, but they are linked. It’s high time political economy was revived, but understanding how elites acquire economic power deserves some serious social science research rather than conventional assertions.
I did not read the book yet, but the topic is so controversial that is why I have just ordered the book and I am looking forward to read it!