Theory of Knowledge - Course Companion for Students Marija Uzunova Dang Arvin Singh Uzunov Dang

III. Methods and tools
told Mahbub, ‘Look, you are a sophisticated enough
I
to know that to capture complex reality in one
guy
is just vulgar, like [gross domestic product]
number
… And he called me back later and said,
GDP’
you’re quite right. The Human Development
‘Amartya,
will be vulgar. I want you to help me to do an
Index
which is just as vulgar as GDP, except it will
index
for better things’.
stand
single most widely used economic policy
The
of the last century, the GDP growth rate
metric
embedded in a paradigm that considers longterm
is
growth in output and consumption as
for human betterment, despite the
necessary
resources of the planet. GDP as a measure of
finite
output was conceived between the Great
national
and the Second World War to estimate
Depression
March 1968, Robert Kennedy took aim at what he
in
as idolatrous respect for GDP, which measures
saw
and jails but does not capture ‘the beauty
advertising
our poetry or the strength of our marriages’.
of
(conomist brieng 2016)
aside, GDP (and its most widely
Marriages
form, GDP per capita) fails to measure
used
of income, the quality of output
distribution
or the environmental impact of
produced
it, or any of the important indicators
producing
living standards such as healthcare,
of
gender equality and political
education,
According to Steve Landefeld,
freedom.
of the Bureau of Economic Analysis,
Director
United States experimented with “green”
the
measurements in the early 1990s, using
GDP
charges to account for natural
depletion
depletion, but abandoned the initiative
resource
political reasons after pressure from
for
first Green GDP report in China, in 2004,
the
substantial losses caused by pollution
showed
reported in an article in the China Daily
(as
19 April 2007) and efforts at green
newspaper,
one of the pioneers of GDP measurement
Indeed,
the 1930s, Simon Kuznets, specifically warned
in
“the welfare of a nation can scarcely be
that
from a measure of national income”
inferred
in Coyle 2014). Kuznets wanted to
(quoted
expenses relating to war and financial
subtract
and other things that “do not
speculation
represent net services to the individuals
really
the nation but are, from their
comprising
an evil necessary in order to be
viewpoint,
to make a living” (Coyle 2014). With the
able
of the Second World War, Kuznets lost the
start
it was more important to measure
argument:
not wellbeing.
output,
its limitations, GDP has grown to
Despite
political and economic discourse,
dominate
in newspapers and used by state
featured
to define their strategy and objectives.
leaders
course, economists have worried about
Of
for almost a century, and the HDI was
this
by Haq and Sen in response to the
developed
of GDP. As recently as 2009 a report
“vulgarity”
by the French government
commissioned
written by Stiglitz and Sen, two Nobel
and
winning economists, called for an end to
prize
in favour of better measures
“GDPfetishism”
welfare. Yet GDP continues to
ofhuman
policy, and its ease of measurement
dominate
are a number of concerns that arise when
There
knowledge we use to act in the world, or
the
guide policy objectives, is defined by what
to
can measure. It is important to examine the
we
of measures that carry over to become
limitations
of the knowledge based on them.
limitations
measure fails to capture something, and
Each
which is omitted risks becoming ignored or
that
A measure can miscalculate, overvalue
neglected.
undervalue some factors. GDP has failed to
or
for the environment and depleted future
account
stocks of natural capital, and very
generations'
8
GDP were subsequently dropped.
(Sen 2010)
the manufacturing capacity of war-time goods.
measure created when survival was at stake
A
little notice of things such as depreciation of
took
or pollution of the environment, let alone
assets,
human accomplishments. In a famous speech
ner
surely has something to do with that.
mining companies (Wagner 2004). Similarly,
possibly their quality of life.
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