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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, November 17, 2005

GDP Again

At the Globalization Institute blog, Anthony Batty makes a point quite similar to mine in my earlier critique of GDP:

If we were to compare the USA and Pakistan for example, looking at GDP per Capita figures we would see workers in the USA earn around 16.5 times as much - $33,293 compared to $2,008. However this picture is not entirely accurate. In Pakistan the informal sector of the economy is much larger. If we were to compare like with like we could look at GDP per worker, this gives us figures of $64,537 compared to $7,023. Workers in the USA are still far more productive (over nine times) but the difference is greatly reduced.

It seems to me that this criticism of comparisons between Pakistan and the U.S. also applies to comparisons between Pakistan before and Pakistan after. If the informal sector has been to some extent monetized and incorporated into the formal money economy under the influence of globalization, then earlier measures of GDP understate the informal economy; and later measures confuse the monetization of activities previously in the household and barter economies with an increase in economic activity as such. So the exploding GDP figures that neoliberals like to point to as evidence of the prosperity that comes from globalization may be misleading. Some or most of that increase in nominal GDP may reflect, not an increase in absolute levels of economic activity, but a shifting of some preexisting economic activity from forms directly under the control of the laboring classes and their communities, to forms controlled by large corporations.



Blogger Kevin Carson said...

That's my impression, too. Certainly a lot of what was provided by the "social factory" in this country 100 years ago is now commodified, and requires wage labor to pay for.

November 17, 2005 9:54 AM  

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