It’s all about GDP

Who would have thought economic statistics would become such a hot topic? Certainly not me when I decided a couple of years ago to write a book about GDP for non-specialist readers. It isn’t as if GDP has lacked for critics. Over the decades there have been both environmentalist and feminist critiques, not to mention the blossoming interest in the direct measurement or targetting of happiness or subjective well-being. Still, there is a new wave, more focused on the political economy and historical context of the policy focus on GDP growth and rankings. There are (at least) two conferences on statistics over the next few months, following a joint RES/RSS/IFS conference earlier this month. Surely the scholarly debate, like the policy interest reflected in the Bean Review, is a precursor of change?

The latest book I’ve read is Matthias Schmelzer’s . The book begins with what has become familiar territory, the development of the forerunner of GDP and the system of national accounts in world war II, building on pioneering work by Colin Clark and Simon Kuznets. What became GNP (and GDP) differed crucially from these pioneers’ ideas, however, by moving away from a clear relationship with economic welfare, and embedding Keynesian macroeconomics. As Schmelzer writes: “The emergence of macroeconomic policies based on such theoretical constructs as consumption, demand, savings, investment, expenditure and their relationships made the rigorous measurement of these aggregates a public necessity, reaching far beyond the mere interest in the comparative wealth of a country and the different production factors.”

[amazon_image id=”1107130603″ link=”true” target=”_blank” size=”medium” ]The Hegemony of Growth: The OECD and the Making of the Economic Growth Paradigm[/amazon_image]

The book provides a distinctive focus by exploring in detail the role of the OECD in the spread and normalisation of the new accounting standards and, by the late 1950s or early 1960s, the adoption of GDP growth as a policy target. The organisation’s forerunner, the OEEC, had been the distributor and overseer of Marshall Aid throughout Europe. The American administration had, as it still does, great influence over its approach. The heating up of the Cold War led the Kennedy Administration to insist on the centrality of growth, making GDP as much a weapon of the Cold War as it had been of the Second World War. Schmelzer says: “The public acceptance of economic expansion as a political goal, as well as the active support of influential societal groups such as capital, labour or the press, had to be actively produced.”

He goes on to describe how orienting the OECD around the goal of growth took it steadily into areas of policy previously not linked to the economy at all, such as science policy and education. In addition, through the aid donors’ club at the OECD, the Development Assistance Committee, the idea became firmly embedded that economic growth and development were essentially the same. Through both geographical reach and policy expansionism, the book portrays the OECD as a key organisation in shaping the ‘growth paradigm’ – even though it also, paradoxically, also gave birth to the earliest, and influential, critique of ‘growthmanship’ in the shape of the Club of Rome report.

The book ends by speculating that the famous ‘hockey stick’ of exponential growth might be about to become an equally familiar S-curve because of ‘secular stagnation’, not least because of environmental limits. Schmelzer argues that GDP growth is part of the paradigm of ‘high modernism’ so brilliantly described in Seeing Like A State. The ‘hegemony of growth’ may be ending; it is certainly changing as the context has changed so dramatically. My money is on the idea of growth being transformed in order to measure better sustainability and economic welfare, but this is exactly what all the new wave of scholarship is investigating. The outcome will be just as contingent and negotiated through political and historical processes as the emphasis on GDP growth was in the first place.

This book provides an interesting perspective on the GDP debate; I hadn’t previously registered the importance of the OECD’s role in particular. The author has clearly dug deep into the archives and provides a lot of fascinating material, shedding new light on what is steadily becoming increasingly well explored territory. There are other new books for the non-specialist out on this subject. I have reviews on two out soonish, Ehsan Masood’s (in Nature) and Philipp Lepenies’ (in the Journal of the History of Economic Thought).

[amazon_image id=”B01FKTBW3O” link=”true” target=”_blank” size=”medium” ]The Power of a Single Number: A Political History of GDP by Philipp Lepenies (2016-04-26)[/amazon_image] [amazon_image id=”B019G14YKK” link=”true” target=”_blank” size=”medium” ]The Great Invention: The Story of GDP and the Making and Unmaking of the Modern World[/amazon_image]

These titles join an older batch of general titles; not only my own but also Zachary Karabell’s , Dirk Philipsen’s , Lorenzo Fiaramonti’s , Sen, Stiglitz and Fitoussi’s .

[amazon_image id=”0691169853″ link=”true” target=”_blank” size=”medium” ]GDP: A Brief but Affectionate History[/amazon_image] [amazon_image id=”1451651228″ link=”true” target=”_blank” size=”medium” ]The Leading Indicators: A Short History of the Numbers That Rule Our World[/amazon_image] [amazon_image id=”0691166528″ link=”true” target=”_blank” size=”medium” ]The Little Big Number: How GDP Came to Rule the World and What to Do about It[/amazon_image] [amazon_image id=”1780322720″ link=”true” target=”_blank” size=”medium” ]Gross Domestic Problem: The Politics Behind the World’s Most Powerful Number (Economic Controversies)[/amazon_image] [amazon_image id=”1595585192″ link=”true” target=”_blank” size=”medium” ]Mis-Measuring Our Lives[/amazon_image]

And there are more. Morten Jerven looks at African economic statistics in . Brett Christophers addresses the measurement of finance in . Expect more to come!

[amazon_image id=”B00FKYOLGU” link=”true” target=”_blank” size=”medium” ]Poor Numbers: How We are Misled by African Development Statistics and What to Do About it (Cornell Studies in Political Economy (Paperback)) (Paperback) – Common[/amazon_image] [amazon_image id=”1444338285″ link=”true” target=”_blank” size=”medium” ]Banking Across Boundaries (Antipode Book Series)[/amazon_image]

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