By
general definition Gross Domestic Product (GDP) is the total monetary value of
final goods and services produced within a country or region over a specified period
of time divided by the number of citizens whose work effort is responsible for
such production. The complexity of this
indicator is strongly affected in its subjective nature by the exclusion from
the calculation of (1) children and most retired people (2) unrecorded daily
toils such as housework and assistance given to charities or not-for-profit institutions
(3) secret government surveillance activity and the development of weapons of
war (4) the black economy which is increasingly promoted by the dark web and
conducted through crypto-currency.
Most
nations of the West rely upon the Organisation for Economic Co-operation and
Development (OECD) to collate and interpret their economic statistics while
those of the East , Africa and South America rely upon national ministries or
international agencies which may be subjective to the political stance of their
governments . Such sensitive
manipulation may also compounded by whether or not the calculation of GDP is
made at purchasing power parity (PPP) and
if it include taxes.
In a
statement just released, the OECD´s chief
economist, Àlvaro Pereira, says that the
global economy needs to grow by 4% if it is to keep pace only with rising
population in territories where poverty and low standards of living are the
norm ; but he also goes on to say that superior economies need to tackle the enormous debts which have
been created by rampant capitalism in
the related property and commercial banking sectors . The determination of central banks to reduce
inflation by the further raising of interest rates by as much as 200 points can only be achieved if
supported by a nation´s monetary and
fiscal authorities . “We also need to reduce demand, there is no doubt about
that” he concluded.
And
there lies the nub. If the struggles of
humankind to reduce and stabilise the ravages of climate change (which are now
accumulating so rapidly) are to succeed, there must be introduced unilaterally
measures of “degrowth” which may conflict with the apparently desirable growth
in the pale green alternative economy which is now developing. For example, the construction of the giant windmills which
provide an increasing proportion of our energy requirements consumes large
quantities of both energy and material
resources and their decommissioning after a life of perhaps seven years
similarly needs consumption in their disposal. To
meet the OECD´s wishes for a reduction in demand will require a disciplined abandonment by the fortunate few
of the beneficial hedonism which enables the logistical movement of luxury
goods and elitist people around the world !
But the removal of worldly pleasures from those accustomed to wealth is
most unlikely in a world where money is power so the alternative to maintaining
the somewhat dubious value of the various GDPs is to stabilise and the reduce
the global population and thus achieve a reduction in the pillaging of the
planet´s finite resources.
As
almost an admission of failings in our
present use of GDP as a calculator of economic decline, the OECD introduced in
2011 a “Better Life Index” which is designed “to capture the multiple
dimensions of economic and social progress” by identifying and valuing areas
such as personal wellbeing, the quality of the environment and the performance of public services. A similar Stiglitz inspired framework is
that evolved by Oxford economist Kate Raworth in her 2012 OXFAM paper “A Safe
and Just Space for Humanity”. Both
concepts are potentially more informative than GDP values if they are given full and
transparent access to unadulterated statistics.
by email, Roberto
Cavaleiro,Tomar