The Great Invention: The Story of GDP and the Making and Unmaking of the Modern World

by Ehsan Masood

Overview

The fascinating story of one of the twentieth-century's most influential and dangerously addictive ideas, told through the lives of those who invented it.

The world’s principal measure of the health of economies is gross domestic product, or GDP: the sum of what all of us spend every day, from the contents of our weekly shopping to large capital spending by businesses. GDP also includes the myriad things that our governments pay for, from libraries and road-line painting to naval dockyards and nuclear weapons.

The Great Invention reveals how in just a few decades GDP became the world’s most powerful formula: how six algebraic symbols forged in the fires of the 1930's economic crisis helped Europe and America prosper, how the remedy now risks killing the patient it once saved, and how this fundamentally flawed metric is creating the illusion of global prosperity—and why many world leaders want to be able to ignore it but so far remain powerless to do so.

Drawing on interviews, firsthand accounts, and previously neglected source materials, The Great Invention takes readers on a journey from Capitol Hill to Whitehall—on the trail of theories made in Cambridge, tested in Karachi, and designed for global application—into the minds of unworldly geniuses seduced by the allure of power and the demands of politics.

Product Details

ISBN-13:	9781681771373
Publisher:	Pegasus Books
Publication date:	06/07/2016
Pages:	352
Product dimensions:	5.70(w) x 8.30(h) x 1.10(d)

About the Author

Ehsan Masood is a science writer, journalist, and broadcaster. Formerly on the editorial staff of Nature and New Scientist, he is currently the editor of Research Fortnight and Research Europe and teaches international science policy at Imperial College London. As well as writing for Prospect magazine, The Times (London), The Guardian, and Le Monde, he is a frequent presenter for BBC Radio. He lives in London.

Table of Contents

Preface xi

Prologue: Lost History xiii

Introduction: The Great Invention xvii

1 GDP and Its Discontents 1

2 The Fight for the Formula 11

3 Made in Cambridge 31

4 The Karachi Economic Miracle 39

5 The Talented Mr. Strong 55

6 "As Vulgar as GDP" 85

7 Exporting Shangri-La 107

8 $33 Trillion Man 127

9 Stern Lessons 145

10 "Nothing Is More Destructive of Democracy" 155

Epilogue: Unfinished Revolution 161

A Note on Symbols 173

Acknowledgments 179

Notes 183

Bibliography 215

Index 227

Editorial Reviews

03/28/2016
Masood’s book might have been more accurately titled “The Not-So-Great Invention,” as he is clearly frustrated with the reliance on gross domestic product (GDP) as a measure of national prosperity. In lively prose, Masood argues that GDP is flawed because it ignores volunteering, housework, environmental degradation, job satisfaction, and income inequality. Relying on primary source materials and interviews, Masood names the economists who helped develop GDP. These include Simon Kuznets, who used a version of it in a report submitted to the U.S. Congress in 1933; John Maynard Keynes, who set down a formula for calculations in 1940; and Richard Stone, Keynes’s former assistant, who applied the formula to help the U.S. allocate Marshall Plan funds. Masood also explores the introduction, in 1990, of a rival measure, the human development index, though he concludes it “had zero effect on GDP itself.” Masood’s critique is interesting but not entirely convincing, particularly because it includes just one example—in 1960s Pakistan—of GDP gone awry. In the end, as Masood acknowledges, the change he seeks won’t come easily, because challenges to GDP may threaten to downgrade the perceived relative prosperity of the world’s most powerful nations. Agent: Peter Tallack, Science Factory (U.K.). (June)

Publishers Weekly

"After reading it you'll never be able to treat GDP seriously again."

Sydney Morning Herald

"Masood covers decades of challenges to GDP conventions that make for a fascinating institutional and human story."

Nature

"If you ever thought that economic policy could never make for gripping drama, try reading this book."

Dawn

"[A] sprightly and informative new history."

In These Times

"An interesting book. Masood doesn’t merely criticize the overreliance on GDP: he also explores ongoing efforts to develop a satisfactory substitute or supplement that would yield a more accurate picture of economic activity and its effects"

Foreign Affairs

"Highly readable. Masood poses troubling questions and lays the foundations for improvements to GDP."

Journal of Markets and Morality

"An important and interesting book that shows how trapped we have become by the idea of Gross Domestic Product—and reveals how important it is to develop alternatives that will help us reduce inequality and respond to climate change."

Kate E. Pickett

"Masood contends that GDP is a bill of goods the developed world foisted on emerging nations. It is flawed, he argues, because the monetary value of all goods and services produced in a country makes no reference to social well-being or inequality. Masood is also troubled by GDP’s failure to consider the environmental damage that is, at times, a byproduct of growth. Many of Masood’s criticisms have merit. He presents some interesting alternatives. He favors revolutionary change."

Wall Street Journal

"Masood’s highly readable book is a useful reminder of what GDP is and what it isn’t."

Science

"Fascinating. Whether happiness should be embedded into decisions on the economy is an important one, and whether GDP should be abandoned in favor of something better is too. Masood’s book helps raise those questions and others in a thought provoking manner. That’s much needed in every endeavor these days, and needed in few places more than in the economics profession"

Forbes

"Masood covers decades of challenges to GDP conventions that make for a fascinating institutional and human story."

Nature Lib

"Masood’s highly readable book is a useful reminder of what GDP is and what it isn’t."

Science

Masood covers decades of challenges to GDP conventions that make for a fascinating institutional and human story.

Natue

"Masood contends that GDP is a bill of goods the developed world foisted on emerging nations. It is flawed, he argues, because the monetary value of all goods and services produced in a country makes no reference to social well-being or inequality. Masood is also troubled by GDP’s failure to consider the environmental damage that is, at times, a byproduct of growth. Many of Masood’s criticisms have merit. He presents some interesting alternatives. He favors revolutionary change."

Wall Street Journal

2016-05-02
We all know that statistics can lie. But what about one of the greatest statistical measures of all, Gross Domestic Product?British science writer and BBC presenter Masood (International Science Policy/Imperial Coll. London; Science and Islam: A History, 2008, etc.) offers a provocation from start to finish, one that, though accessible to lay readers, will be most meaningful to those concerned with economic policy and development. GDP, he argues, is by the nature of its definition tilted to advanced economies, and it layers in hedges such as "effective demand" to condition tried-and-true formulas of the past. In the postwar era, he writes, the predecessor of the Organization for Economic Co-operation and Development pushed the use of the Depression-era GDP measure "as a system of accounting to assure richer nations that the assistance they were providing under the Marshall Plan wasn't being misspent and was contributing to the growth of economies." The problem, as development economists such as Mahbub ul Haq have argued, is that GDP doesn't account for aspects of the unofficial economy that are so important in developing countries, such as barter and job sharing. Neither does it account for externalities such as the value of available clean water, bringing the concept of GDP under criticism from environmental activists as well as economists. Masood examines the history and evolution of GDP, which seems to have the overall effect of making rich nations seem richer and poor nations poorer than they actually are and which therefore makes rich nations resistant to modifying or dropping it as a standard. The author further considers alternate methods of gauging economic activity, such as ul Haq's Human Development Index and the so-called Gross National Happiness standard, which are useful in quantifying "job satisfaction, volunteering, friendships, or other kinds of life satisfaction that do not involve money." A welcome cross-examination of a concept that seems as natural as sunlight but that, like every other human construct, is shot through with both politics and flaws.

Kirkus Reviews