From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Sat Mar 03 2007 - 14:14:16 EST
Hi Jerry, Yes you are correct, measures of economic growth and development are not easy. BTW I don't regard GDP as total nonsense, it does measure something. And I admire national accountants, because having worked in the area I know what an analytical challenge it is to produce this data. But I often look on the statistics as a statistician might - and statisticians are often a bit skeptical or cynical about the uses to which their data are put, and the claims made about them. People are reluctant to overhaul the categorical system used to collect data, for fear of discontinuities in time series data, but as property income and foreign trade become more and more important, this is going to be necessary. I think it will happen, insofar as policy-makers will be driven to the position of saying "this data does not enable us to make wise policies and evaluate their effects correctly". In a capitalist economy, I think what is critical for economic growth is especially the rate of reinvestment of realised profit income (distributed and undistributed) in productive activities. Given a particular profit income, it can be reinvested or not. And if it is reinvested, it can be reinvested in productive business, or all kinds of other placements. That is not so difficult to develop indicators for, although, because macro-economic profit measures are typically defined to fit a concept of value-added, they deviate from "true" profit volumes such as you find in company reports etc. Multinationals can also be very adept at making profits appear here and disappear there, to get around tax and accounting regimes or make the most of permissible deductions and exemptions, and so often there is more profit in the system than official data would lead you to believe. In classical Marxist theory, the central "development indicator", or the indicator of growth and progress was the overall productivity of labour, or more broadly, the development of the productive powers of human labour. And that is certainly very important. But in view of the modern history of Russia and China etc. I think it is unacceptable to regard this as the ONLY or synthetic indicator. If you do that you can end up with a mindless "productivism" where as long as output of any kind keeps growing, you've got progress. This cannot really be sustained. There are also lots of other indicators which are just important - mortality rates, health of the population, crime incidence, skill levels, environmental despoilation, efficient infrastructure and so on. UN statisticians are very aware of this, and thus they compute for example a "human development index". In 2006, Norway is at the top, Australia is number 3, the US at 8, the Netherlands at 10, the UK at 18 and New Zealand at 20. At the bottom you get countries like Sierra Leone and Niger where people die in their 20s and 30s. Why I have emphasised production of physical products is that, whereas we might talk about the "knowledge economy" and so forth, the reality is that hundreds of millions of people don't have clean drinking water on tap at home, they don't have decent housing, they don't have proper sanitation etc. in which case the knowledge economy may be a fat lot of use to them. Even a few billion dollars (equal to the amount that got "lost" in Iraq) could make an enormous difference, if wisely invested. And because I think that central to the economic growth process is the transformation of the physical world to better satisfy human needs. This is not to say that other kinds of growth aren't important as well, they are, but if we create a "planet of slums" as Mike Davis puts it, then we are dealing with a growth pattern that we ought to reject. It's the kind of growth you have, that's the real issue, i.e. both the quantitative and qualitative dimensions. I think you have to oppose relativistic, nihilistic, pomo and cultural-pessimistic ideas according to which economic growth is humanly not important. It is, if we don't have it, people literally starve, or live in conditions hardly fit for a human being. But the real issue is what kind of growth. Economics as ideology will separate production from distribution, but in reality most people know that you cannot do that, it doesn't make any sense. And there Marx's theory is obviously a theoretical gain, insofar as he genuinely theorises the intertwining of production and distribution. I was talking previously about an analogy of how the human body grows not only up, but also sideways, internally etc. and this is not a joke either because there are roughly as many people in the world who are overweight as those who are undernourished or malnourished. I haven't checked the exact stats on this lately, but this estimate will not be far off. And that makes you wonder about what we are really dealing with here! Cheers Jurriaan
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