Photograph by Nathaniel St. Clair
In the middle of the eighteenth century, the physician-turned-economist François Quesnay devised a quantitative model of the economy, among the first of its kind and a precursor to present-day GDP. Quesnay is famous today as among the leading lights of an economic theory known as Physiocracy. Like other Physiocrats, Quesnay placed land and agricultural output at the center of the economic system. He wrote at a time of incredible advances in calculus and probability theory, and he applied mathematical rigor to his economic theories, becoming among the first economists to produce such a quantitative model of the economy. In his efforts to categorize and quantify economic output in this way, Quesnay anticipates the fundamental idea behind GDP (and GNP, etc.), that to understand the economy, we must measure and sort our productive output.
Quesnay’s Tableau Économique was not the first such attempt. Almost a century earlier, William Petty had presaged a sea change in economics (though formal economics as we know it did not yet exist) by applying mathematical and statistical methods to the quantification of economic life.[1] By the twentieth century, the approach had been formalized and brought close to its contemporary state by the work of economist Simon Kuznets, who in 1971, won the Nobel Prize “for his earlier work with growth and the economy’s size. He developed methods for calculating the size of a nation’s income and changes in it and standardized the concept of gross national product (GNP).” Kuznets was a brilliant person, and he recognized the limits of the idea and perhaps foresaw its misapplications. “The welfare of a nation,” he wrote, “can scarcely be inferred from a measure of national income.”
It is worthwhile to briefly review the history of this idea, revolutionary in terms of the depth of change it brought forth, of economic life as a thing apart from social and political life, a distinct thing that can be quantified and, more still, made to grow forever. It may be that crude attempts to size the parts of life we call economic are as old as humanity. In the modern era, though, this idea of measuring the economy as a newly independent object of study was distilled and clarified, taking on the character, eventually, of a sociological mania. We adopted a notion of economic progress and limitless growth so extreme and precarious that it now threatens safety and stability within several social and ecological contexts. The anarchist Colin Ward summarizes the criticism with characteristic style:
The notion of progress is one of the most pernicious delusions of our time. It is a notion which has been foisted on us by the machine age, a notion which has been implanted in us by the servants of the capitalist system who lead us to believe that the speed with which things are produced and the amount of things produced are synonymous with human well-being.
The relationship between GDP growth and progress is itself a subject of some debate. Progress has no fixed meaning and no platonic form; its many meanings are subjective, human-determined, and mutable. The version of progress we know today is part of a broader meta-ideological suite associated with modernity. We are governed by this modern ideology, a meta-ideology standing a level above smaller periods’ popular political ideologies—even standing beyond major ideological categories like humanism, liberalism, capitalism and nation-statism. The modern ideology is their bedrock, defined by ideas of human perfectability, unlimited progress (scientific, technological, economic, and in every other sense), never-ending growth, the importance of institutional hierarchy and power, and the obsession with sorting and quantifying everything under the supervision of experts. Now everything was to be the domain of the specialist, whose position allowed him (and it was a him) to dictate, to tell you what to do and what is true. We may consider that the notion of progress itself requires that objects of inquiry must be, in Ivan Illich’s words, “homogeneous and quantifiable” (he contrasts the “unique and incommensurable” products of nature). So the notion of progress, like GDP, reduces vernacular ways of life, losing the ability to see their complexity—and, with it, the binding social forces occupying the spaces between more readily quantifiable things.
The claim that GDP is not an accurate or useful proxy for the real economy is an interesting area of overlap between the socialist left and radical libertarians. Both groups apply theories of class-conflict to understand the outsized influence of the finance sector on the decisions of policymakers and regulators (whether regulators are themselves the real policymakers today is a question for another day). As a measure of overall economic health and performance, GDP is both overinclusive and underinclusive; in the way it calculates the value of goods and services in the U.S., it doesn’t draw a distinction between economic activity dedicated to war and needless death, for example, and economic activity that serves human well-being and flourishing. Worse still, it often does not measure the latter at all, as so much of socially beneficial economic activity takes place outside of the formal market, in the form of mutual aid and other spontaneous community support. Informal mutual aid exists in countless forms across the country and the world, and virtually none of this all-important social and economic activity is captured by GDP. Solidarity networks and community groups provide themselves with food and shelter, clothing, childcare, and other crucial support, all situated “beyond the idea that we should compete for resources and depend on structures of power to provide for us.”
It bears repeating that the imperative of economic growth, even before formalized GDP as we know it today, is intimately bound as a historical matter to imperialism and the process of accumulation by dispossession. The attempt to measure growth and progress using such a distorted yardstick made the resort to land and resource theft practically inevitable, just as the permanent growth ideology demands theft and fraud. Indeed, a large and growing body of research examines the staggering connection between appropriation through unequal exchange and the global North’s toxic obsession with permanent GDP growth. If it is taken for granted that “the economy”—defined worse than arbitrarily—must always grow, come what may, then growth must come by hook or crook. Capitalists have fewer and fewer prospects in the world they have created, one in which the exploited cannot afford to buy the products and services that real-life capitalism gives us. In the twenty-first century, capital’s primary recourses have been two in number, and they are of course intimately connected in practice: (1) create the illusion of growth by dramatically increasing the volume of risky economic speculation and the costs of the services associated therewith; when the crisis latent in the system manifests, preserve as much of this financial speculation economy as is possible through massive fiscal and monetary stimulus, and (2) continue to recreate colonialism using new strategies and ideologies of resource extraction that proceed from the existing logic and practices; for example, the land and natural resources have already been siphoned from the Global South, but the United States’ imperial intellectual property regime is allowing the reenactment of colonial extraction by subordinating the rest of the world to Western corporate interests.
Reflecting the character of the capitalist system it represents, GDP growth demands some questionable accounting. Both capitalist profits and GDP growth depend on the social and economic costs being distributed according to one’s social position in overlapping hierarchies. Today’s hyper-fixation on GDP growth hints at its own class character: the benefits of GDP growth are extraordinarily concentrated within a very small group. According to an Oxfam report released earlier this year, “The world’s top 1 percent grabbed nearly two-thirds of the $42 trillion in new wealth created since 2020.” This is the United States, so the working classes and the poor just hear about the growth while they live between economic crises. These accounting tricks pop up everywhere, hiding major costs that would be a focal point of any truly accurate measure of social and economic health. Sociologist Juliet B. Schor observes that “the most widely reported stories” associated with our culture’s myopic fixation on GDP growth are overwork and the accompanying “stress, impaired family life, undermined community, and reduced political as well as civic engagement.” These enormous costs go unaccounted for. Whether the omission is intentional or not, it represents a system of values just as a matter of course.
If the economic import of GDP is easy to see, its social and emotional role is perhaps less obvious. Beyond reducing our value as human beings to an economic output defined and overseen by someone else, GDP also features in the narratives of control presented by politicians and their spokespeople in the legacy media. They insist that this or that fiscal or monetary policy is best for stable and long-term GDP growth; they seldom talk about how much the crisis will cost regular people monetarily, psychologically, and physically. Even less seldom is an honest accounting of how much of your money is being made available to global corporations in the name of growth and progress, even as they devastate communities and habitats around the country and world. The opacity of GDP to the common man makes it a useful tool of emotional and psychological manipulation, for few of us bother to take apart GDP growth models. Now that we’ve begun, we see that GDP reckons costs in a way that seems to defy our common sense. Further defying reason, we find that there are many ways of growing GDP that are actually destructive—to human life, to the natural world, even to our long-term viability as a species.
As mentioned above, the GDP calculation includes economic output associated with arms manufacture and the military-industrial complex generally. As Robert F. Kennedy put it in a 1968 speech at the University of Kansas, GDP (Kennedy referred to GNP, but the point is unchanged[2]) “counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities.” The United States is the world leader in military spending, as well as in the share of GDP represented by such spending. The United States government pours hundreds of billions of dollars into “defense” spending every year, with the White House requesting almost $850 billion for fiscal year 2024. Granted, defense outlays of even these amounts make up a very small portion of United States GDP in a given year. And still, it is not at all clear that the sale of the machinery of death ought to be treated as a net positive for the economy at all, at least not if the economy’s reason for being is serving human needs. Are technologies designed specifically to effect efficient mass murder something designed to meet human needs? That they make the economy grow tells us something important about our definition of the economy. If it isn’t serving human well-being, then the sale of weapons and military technologies has no place in GDP, which purports to exclude gains from criminal enterprises. And if such weapons are thought to serve legitimate human needs for the purposes of GDP, then we should consider the possibility that GDP is not a neutral, scientific measure, but a value-laden social artifact. It is a social construct that reorients us against our shared humanity by erasing social relationships that confound the high-modern mind, because they are not reducible to a mere cash value; they are neither only social or only economic.
Contrary to the carefully attended story of GDP, often people are simply in community with one another, to hear each other’s stories, to share a meal, to help a neighbor in need. If you think those things count, GDP says you’re wrong. So I’m addition to being wrong about how to accurately measure this constellation of billions of things we mistake for “the economy,” GDP is also socially alienating and isolating, suggesting if not demanding that one should pour all of her time and energy into doing things that allow her to grow the economy by buying things in the formal capitalist market. This example, GDP’s neglect of caring for one’s family and community as a real source of economic value also betrays the sexism embedded in the values underlying GDP. Ultimately, people need to be able to thrive, not just survive, without dedicating virtually every waking moment of their lives to efforts to growing GDP. Ivan Illich argued that GDP as a measure threatens and seeks to undermine “autonomous activity,” regarded as an alternative to formal growth and thus as a threat. The ideological framework of growth and development demand that productive activity enter the state-market sphere, where it can be controlled, measured, and comprehended by the relevant experts. Production undertaken for personal or family consumption is specifically excluded from the value of GDP, both warping our picture of the social and economic system and consolidating activity in transactions that take place in the formal market. Illich observed that even the fulfillment of certain basic social needs must be subordinated to the fetish of measurability and GDP growth:
What is . . . propagated as self-help is the opposite of autonomous or vernacular life. The self-help the new economists preach divides the subject of social policy (be it a person or an entity) into two halves: one that stands in a professionally defined need, and the other who is professionally licenced to provide it.[3]
We find again the modern exaltation of the specialist, the professional, the expert—a new clergy. In countless ways, GDP seems to be deeply misaligned with human values. The cult of endless growth has built for us a culture of constant work, which is inescapable if one is to consume all that she must to keep up with the demands of all that growth. We all always have to buy more or it doesn’t work. The false idol of GDP has created a mental health disaster by making plugged-in, burned-out automatons of flesh-and-blood human beings. Economist Joseph Stiglitz, who has won both the Nobel Prize and the John Bates Clark Medal, has been a prominent critic of GDP as a measure, noting its failure to account for the well-being, economic and otherwise, of the average person in the country. He also points to the example of America’s mass incarceration crisis as a policy that is extremely destructive socially, but contributes to GDP.
Given the complexity of today’s economies, we are likely very far from having the ability to measure one with any accuracy, with apologies to today’s experts. The fact that we’re fixated on GDP shows that we are in our infancy in terms of genuine understanding. Indeed, it suggests that we’re still asking the wrong questions when defining a strong and well-performing social and economic system for human beings. We know neither what we’re looking for nor whether we have the ability to measure it accurately once we know. Supposing we do have the ability to undertake such a project, we first need to appeal to values that precede and inform any quantitative analyses. We need to know, for instance, why we want to measure the economy in the first place, and we should also know what we mean when we say “the economy.” What do we measure to get to a reasonably representative picture of this thing called the economy? When we begin to pose these questions, it becomes clear that far from being a neutral, scientific measure that comes to us through a value-free process of discovery, GDP is deeply informed by a set of background assumptions embedded in the prevailing system. Our surgeon general says we have a “crisis of connection,” an “epidemic of loneliness and isolation.” A socio-economic measure superior to GDP would ask us to attempt a quantification of this loss in human happiness and connectedness, but GDP sees only the spectrum visible to it: activities legible to the state. Human beings will optimize their efforts around the metrics used to judge their behavior. “Anything you measure will impel a person to optimize his score on that metric,” so generally you’ll get more of what you measure. GDP is in no way a neutral tool or objective measure; it is a social and cultural artifact, carrying a heavy load of normative content, and much of this content is almost invisible to us given our incubation in authoritarian statism and monopoly capitalism.
At the close of the twentieth century, around the putative end of history, GDP was hailed as among the greatest inventions of the century, with the Department of Commerce releasing a self-congratulatory press release after it “embarked on a review of its achievements.” But we have reasons to reposition ourselves relative to the concept of GDP growth. Self-described “renegade economist” Kate Raworth “makes the case for creating economies that are agnostic about growth.” For Raworth, centering growth as the most important metric, making it the be-all and end-all of our social and economic calculus, is much too one-dimensional to be useful. Her “Doughnut Economics” model aims for a more comprehensive understanding of economic success that recognizes a middle way for human flourishing. That middle way is faced at its upper limits with the “ecological ceiling,” beyond which a host of environmental catastrophes are triggered. Of course, there are the social catastrophes with which to contend, too. The paradox to which Raworth points—concentrated wealth, intensive resource use, and overshoot existing alongside tragic shortfalls in areas of genuine social importance—is a consequence of the self-contradictory nature of monopoly capitalism, its extreme accumulations and disparities of wealth. As a historical system, at least, capitalism has been characterized not by economic freedom, but by the theft of land and natural wealth and the suppression and control of people. Following in the tradition of great decentralists such as Leopold Kohr, George Woodcock, and E.F. Schumacher, she points to the social and economic breakdowns that emergence from exceeding ceilings; we see how these indices—the ecological, the social, the economic, the political—-are interconnected. Raworth urges us to “reimagine the shape of progress,” to move from “economies that need to grow whether or not they make us thrive” to “economies that make us thrive whether or not they grow.”
Conventional economics has failed to explain the fundamental nature of the problem. Its models have grown in size and complexity, yet we continue to push further into growth-for-growth’s sake insanity. The importance of GDP growth as the gold standard, the ostensibly neutral measure of progress, reflects the interests of a ruling class. They take it as an article of faith, just as they do a definition of growth that centers the mere creation of things and use of productive capacity—whether useful or not, whether wealth-producing or not—above human happiness and well-being. GDP imposes an impossible standard. No system can grow forever, without limit or counterpoise, yet our institutions are enthralled to an ideology that demands exactly this. Challenging GDP should be a part of a broader project of psychological deprogramming and social deconstruction. Discussing the ideas of Ivan Illich, Canadian documentarian and writer David Cayley says,
It’s the school that stands in our way, if we can’t deschool our minds; it’s the medical system that stands in our way if we unable to find in ourselves the ability to suffer our own reality, the ability to die our own death; it’s the media system that stands in our way if we are unable to speak in our own voices with words that have personal meaning for us . . . .
We cannot settle for a world that is fixed around a uniform standard, not even a standard as mighty in the mind as GDP. If it is not, at this juncture, an appropriate time to challenge the doctrine of unending growth and the worship of GPD, then it never will be. It is possible to reimagine and redefine concepts like growth and progress. Indeed, if they are to remain dynamic and living ideas, we must continue to test our assumptions.
Notes.
[1] Jacob Assa, The Financialization of GDP: Implications for economic theory and policy (Routledge 2017).
[2] Regarding the difference, the Department of Commerce’s Bureau of Economic Analysis defines GDP simply as “the value of the goods and services produced in the United States.” GNP represents the “value of goods and services produced by labor and property supplied by U.S. residents, regardless of where they are located.”
[3] David Cayley, Ivan Illich: An Intellectual Journey (The Pennsylvania State University Press 2021), page 193.
