The article critiques the over-reliance on GDP as a measure of economic success, highlighting its limitations and how it has been used to justify policies that may not reflect true economic health. It discusses the historical context of GDP, its evolution from a tool for quantifying economic output to a symbol used to legitimize various economic ideologies. While GDP has traditionally been used to track the overall economic health of a nation, the piece argues that it often fails to accurately reflect the true state of an economy. This is because GDP measures the total value of goods and services produced, but does not account for factors like income inequality, environmental degradation, or the depletion of natural resources. The author points out how this metric has been used to justify everything from neoliberal economic policies to financial speculation, which can have long-term negative effects on an economy.
The article traces the historical evolution of GDP, beginning in the 1930s when it was first developed as a tool to measure economic output. It became a benchmark for economic policy after World War II, particularly within the Keynesian model. However, as the 1970s and 1980s progressed, GDP’s role expanded beyond its original purpose. It became a symbol for neoliberal economic policies, which emphasized deregulation and free-market capitalism. The piece notes that this shift led to distorted growth metrics, as the focus moved from sustainable economic growth to financial speculation and credit expansion. This has resulted in a situation where reported growth often reflects increased debt and asset inflation rather than actual physical output.
The article also explores alternative measures of economic health, such as Tim Morgan’s C-GDP, which aims to strip out the distorting effects of debt and credit expansion to assess underlying economic activity. Morgan’s research highlights the significant discrepancy between conventional GDP metrics and a more accurate assessment of real economic growth. This alternative method reveals how much of the reported growth in recent decades has been driven by credit expansion, asset inflation, and consumer spending rather than the creation of physical goods and services. The implications of this finding suggest that the traditional reliance on GDP may be an incomplete or even misleading representation of a country’s true economic performance.
Additionally, the article examines how the reliance on GDP reflects broader civilizational assumptions and priorities. It suggests that the current economic systems are shaped by a short-term outlook, where immediate gains are prioritized over long-term sustainability. The author reflects on how the continued use of GDP as a primary economic indicator may be a result of a deeper, almost metaphysical belief in the power of economic metrics to guide policy and decision-making. This belief, akin to Constantine’s faith in the cross, is seen as a form of economic mysticism where GDP is treated as a definitive measure of success. Ultimately, the piece calls for a reevaluation of the economic paradigm, urging a shift from short-term metrics to more sustainable and equitable measures of economic health.