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Who really creates value?
Along with a growing number of academics and socioeconomic commentators, Colin Talbot, Professor of Government at Manchester University, believes there is a big problem with GDP.
Experts like Diane Coyle have long been pointing out that GDP numbers – developed for the industrialized economies of the late 20th century – are ‘problematic’ in the more intangible, service dominated, economies of the early 21st century.
Non-monetised value is all but ignored in GDP calculations, but as he points out, unpaid household services alone have been estimated (by the ONS in 2018) at £1.24 trillion or 63 per cent of the size of official GDP. And failing to recognise the real impact of our use of technology also has its disadvantages:
When someone at home spends hours researching and booking a holiday on the web they are replacing the job of someone in a travel agents, for example. This has real impacts – as Thomas Cook recently discovered. This is work being transferred from the private to the civic sector.
He cites Coyle’s book GDP – a brief but affectionate history, in which she identifies three key issues for 21st century GDP:
- the increasing complexity of modern economies making them harder to measure representatively;
- their increasingly immaterial nature;
- the problem of sustainability or what economists would call “externalities”.
Any radical policy agenda for transforming 21st century society needs to start addressing these issues.