Continued from previous post on Subjectivity Concealed in Index Numbers. Because modern epistemology rejects values as being just opinions, and only accepts facts as knowledge, values have be to disguised in the shape of facts. What better way to do this than by embodying them in cold hard and indisputable numbers? This post discussed how the GDP embodies the values of a market society.
From the sixteenth to the eighteenth century, the values of European societies were radically transformed by a complex combination of forces. Traditional social values, originating from Christianity, can be roughly summarized as follows:
- Community: All members are part of a common body, striving together for common goals.
- Social Responsibility: All members must take care of each other.
- Duties: Duty to society takes precedence over individual rights.
The transition to a market society led to a new creed, described by Tawney (1926) as: “The Industrial Revolution was merely the beginning of a revolution as extreme and radical as ever inflamed the minds of sectarians, but the new creed was utterly materialistic and believed that all human problems could be resolved given an unlimited amount of material commodities.” As Polanyi (1944) has explained, a central characteristic of market society is the creation of three artificial commodities: money, labor, and land. Labor is the stuff of human lives, and it is widely accepted that our lives cannot be bought or sold for money. But market societies require labor markets, where human lives are bought and sold. Similarly, land is our habitat, and the natural relationship is to protect, preserve, enhance, enrich our environment, known metaphorically as “Mother Earth”. However, market societies convert land and natural resources into saleable commodities. Finally, money is a third commodity which gets value from our social consensus as a means of artificially storing market values across time. The creation of these commodities leads to a set of values which are anti-thetical to traditional values. Operation of a labor market, where lives are for sale, requires reducing or removing social responsibility, so that the threat of hunger forces people to work. When human live are bought and sold, community ties automatically weaken. Market societies create individualism and hedonism, where pleasure is derived from possession and consumption of material goods, instead of social relationships. For a brief summary of Polanyi’s arguments, see Summary of the Great Transformation by Polanyi.
GDP as a measure of wealth captures the values of a market society. Conceptually at least, the GDP aims to measure the total market value of the final products which are purchased by consumers. Intermediate goods, purchased by firms as inputs towards production of final consumer goods, are not counted. This expresses perfectly that values embedded in a market society. Only goods and services which are traded on the marketplace are given value. Services done out of love, or social responsibility, do not have any value. This excludes the vast majority of what matters in traditional societies – the most valuable things are the ones which are not available for sale. Furthermore, environmental resources, forest, lakes, plants and animals – these are no value, until they are traded on the market. The Amazon forest, millions of the year in the making, and irreproducible at any price, is evaluated in the GDP by the price of the furniture made by cutting down the trees for timber. For more extensive discussion, see “Consumer Theory“.
Statistics are the eyes of the state. Things are measured when they matter, and what is measured comes to matter. Throughout the world, policy and political decisions are guided by the numbers produced by the statistics department. The GDP is value laden in term of the choices it makes as the factors which are included, the factors which are excluded, and the weights assigned to the factors. The factors which are included differ in radical ways from those valued by traditional societies:
- Wasteful, ostentatious, and luxurious products are included, and valued at their sale prices. These products, such as Alligator skin briefcases for $20,000, would be regarded as being of negative value to society in a traditional society.
- Basic needs – food, housing, health, education – for the poor, are valued very low, because the poor cannot afford to pay much for these services. All traditional societies would value provision of these needs very highly, instead of at market value.
- Intangibles, such as community, social services and support provided by family and friends, are not sold in the market, and hence excluded from the GDP. Also, skills, experiences, knowledge, and capabilities of human beings, not for sale in the market, are evaluated at zero.
- Environment, natural resources, plant and animal species, and all the wonders of the planet that make our lives worth living, are assigned zero weights in the GDP measure.
The damage done by the use of GDP as a measure of wealth is deadly because it is hidden. Modern rhetoric is especially effective because it uses numbers to persuade, without any mention of the the values that went into the manufacture of these numbers. The devastating effects of market values promoted by GDP are only now becoming apparent. We list some of these harmful consequences below:
- Loss of Meaning in Lives: When the value of lives is measured in money, making money becomes the goal of life. This is an inherently meaningless activity, as money is only useful as a means to pursuit of higher goals. The Quran teaches us that human lives are infinitely precious, and cannot be evaluated in monetary terms.This message is aligned with the capabilities approach to development, which aims to enable human beings to develop their unique capabilities, and lead rich and fulfilling lives.
- Destruction of community and societies: The fabric of human lives is woven from our social relationships. However, a market society values human lives only for what they can produce and sell on the marketplace. This leads to destruction of communities, and loss of happiness, due to the illusion that happiness can be created by material possessions.
- Environmental Collapse: When natural resources are sold, the GDP records an increase, because the cost of depletion and destruction of environment is not taken into account. As many authors have noted, if we take these costs into account, the enormous growth recorded in the last century would be converted into an enormous loss. This is because the value of what has been produced is very small compared to the value of what has been destroyed in order to produce these goods. The strong drive for making short-term monetary gains by destroying planetary resources have led to the looming climate catastrophe.
If the market values embodied in the GDP were open, and available for discussion, most human being would disagree with the idea that these represent useful goals to strive for. But because they are concealed behind the rhetoric of objectivity, nearly all nations in the world emphasize the goal of increasing GDP growth, and governments rise and fall according to their ability to achieve growth targets. One of the reasons for this blind obsession with the wrong numbers, which embody anti-social values, is the specialization and fragmentation of knowledge that characterizes our times. Specialization leads to the separation of theory and practice. Statisticians specialize in manipulating the numbers, without knowledge of the real world origins of these numbers. It is the field specialist who understands the meaning of these numbers and uses the results from the statistical analysis. The statistician is supposed to do an objective analysis based purely on the numbers. Massively wrong analysis and policies result when everyone is doing his small piece of work, and no one has a global perspective.