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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Location: Northwest Arkansas, United States

Thursday, September 01, 2005

Lindy Davies on "Economic Growth"

Lindy Davies, at The Progress Report, presents an excellent challenge to the kind of vulgar libertarian who points to rising GDPs or average incomes as proof that "globalization" (falsely identified with free trade) reduces poverty. As I've said before, a lot of the increase in nominal GDP may only reflect the monetization of activity previously carried out through informal subsistence, barter or gift economies--with a reduction in real standard of living.

Economic freedom for the world's poorest people is unquestionably all about the land. Let's say a peasant family has a goat and a garden, and, working carefully, can grow enough to feed itself. Occasionally a good harvest will yield some surplus which can be sold -- there isn't much of that, but let's say it brings in an average of two dollars a day. With thrift, enough for school clothes, maybe even books.

Now, let's imagine that the family loses their land -- perhaps an injury or some other disaster makes it impossible to keep farming it -- and they have to go to the city, where they manage to find a combination of odd jobs, yielding an income of $10 per day. Now, they must somehow buy their food and every other necessity out of that $10, and they have to live in a miserable shack, with open sewage running in unpaved streets.

Yet, in terms of development numbers, their income has increased by $500%.

As I said before, the Kenyan GDP no doubt exploded upward when the native population was evicted from the most fertile fifth of the land by British settlers and turned into hired laborers, and many other subsistence farmers were forced into the wage labor market by a poll tax.


Anonymous Anonymous said...

Is there evidence that the GDP and development numbers are actually calculated this way?

- Josh

September 01, 2005 10:40 AM  
Blogger Kevin Carson said...

I can't imagine it not being done that way. I've certainly never heard of a GDP being extensively based on imputed monetary values of non-money transactions.

September 01, 2005 7:28 PM  
Anonymous Anonymous said...

I find it especially interesting that people who aren't blinded by preconceptions are coming to these insights independently, from their own observations and reasoning and not simply by taking yet another person's views on board. KC, I think you ought to revisit that page of John Quiggin's I led you to, and maybe comment on recent postings more clearly than I can manage myself. There's a lot of misunderstanding there right now, about how statistics showing that "fewer people living in extreme poverty" must automatically be good news.

September 01, 2005 8:13 PM  
Blogger b-psycho said...

Speaking of this, notice how cost-of-living is virtually ignored in most economic analysis that people actually get these days? It's as if it were some type of taboo to weigh structural complexity (what is commonly referred to as "progress") against cost.

Don't get me wrong, I'm not anti-modern conveniences, but there simply comes a time when you have to question the worth of what you're being sold. Consumption for its own sake is ridiculous.

September 02, 2005 4:29 PM  
Blogger Kevin Carson said...


Thanks for reminding me of it. I surfed over there and left a comment.


Very true. As I've commented in previous posts, a lot of the built-in complexity and planned obsolescence in consumer goods reflects cartelization. The same production model is shared by the dominant firms in an oligopoly market. For example, patents make it a lot harder for an outsider to specialize in cut-rate spare parts for somebody else's goods, and undermine the planned obsolescence strategy.

September 04, 2005 9:45 AM  

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