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