GDP Illusion

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Description

John Smith:

"The “GDP Illusion” is a fault in perception caused by defects in the construction and interpretation of standard economic data. Its main symptom is a systematic underestimation of the real contribution of low-wage workers in the global South to global wealth, and a corresponding exaggerated measure of the domestic product of the United States and other imperialist countries. These defects and distorted perceptions spring from the neoclassical concepts of price, value, and value added which inform how GDP, trade, and productivity statistics are devised and comprehended. The result is that supposedly objective and untarnished raw data on GDP, productivity, and trade are anything but; and standard interpretations conceal at least as much as they reveal about the sources of value and profit in the global economy.

Three archetypical examples of the “global commodity”—the iPhone, the T-shirt, and the cup of coffee—validate and illustrate this argument; their diversity serves to highlight what is universal to them and to all other products of globalized production processes. All data and experience, except for economic data, points to a significant contribution to the profits of Apple Inc. and other western firms by the workers who work long, hard, and for low wages to produce their commodities. Yet economic data show no sign of any such contribution; instead, the bulk of the value realized in the sale of these commodities, and all of the profits reaped by Apple and Starbucks from them, appear to originate in the country where they are consumed. These three global commodities are in turn representative of broader transformations in capitalist production.

Economic statistics and their standard interpretation also obscure the relation of exploitation in the relations between northern firms and southern producers. This relation of exploitation does not disappear entirely but remains partially visible in the paradoxes and anomalies which infest standard accounts of global political economy. These paradoxes and anomalies are like blemishes in a distorting lens that alert observers to its existence, making it necessary to identify and characterize this distortion so that the world can be seen as it is. This distortion is the misrepresentation of value captured as value added." (http://monthlyreview.org/2012/07/01/the-gdp-illusion)