The leaders of developed countries and emerging market economies often consult the growth rate of the GDP, on both the domestic and global levels, in order to predict the trends of the economic crisis and the paths that the recession might scale. Despite the fact that some feeble indicators spread some reassurances concerning the possibility that the recession has bottomed, many experts, officials and international economic institutions are warning against excessive optimism as the growth achieved so far remains fragile. Also, some experts have established that an end to the crisis is strongly linked to the extent at which new jobs are created and unemployment rates are reduced. Others have gone even further and focused their analysis on the issue of the GDP's growth. The Nobel Prize laureate for Economics Joseph Stiglitz, for instance, considers that the calculation of growth rates is based on a fundamental error, and that what is thus erroneous will most certainly lead to inaccurate conclusions. Equally, the sociologist and philosopher Dominique Méda - chairperson of the French Centre of Labour Studies - associates social progress to the growth of the GDP. As such, society progresses inasmuch as it produces and imbues the market with goods and services, which are in turn acquired or consumed by economic agents. She adds that an old philosophical tradition has always associated economic growth to progress. What matters now, then, is to care for this legacy. This view by Méda is corroborated by the report issued by the Norwegian group Gro Harlem Brundtland entitled “Our Common Future” focused on sustainable development in 1987, and which was adopted by the Earth Summit in Rio in 1992. (This report is mainly concerned with economic development, social justice and ecological burdens) These implications then come to light when the issues of the established GDP are re-examined by the economic commission set up by the French President, which is presided by Stiglitz. In its report issued in mid September, the commission proposed the restoration of the term “established GDP”, after assessing that almost 35 percent of the French domestic output is not being taken into consideration when calculating the GDP as per its current components. Stiglitz thus estimates that the growth indicator is not taking all the outputs and inputs into account, and is not calculating for instance, the depreciation of natural resources in the same manner that companies calculate the depreciation of their assets. In fact, this issue dates back to the 1970s when the fragility of natural balances and the depletion of resources became evident. According to several observations, the GDP then came under scrutiny as an inaccurate measure of human wealth. Furthermore, the drafters of the GDP index between 1930 and 1940 focused on the “the fact that the priority of the general authorities lies in its ability to mobilize production capacities to aid the war effort, and after that the efforts of reconstruction”. In such an environment, the growth index emphasizes the convention of choosing what can be quantified, and the method by which it can be quantified. In other words, the index selects the production accompanied with paid labour over a certain period of time. However, this is a convention that is flawed, even if it takes into account the fundamental importance of labour and currency in the society, and even if it often translates into a sense of satisfaction. As such, the value of production is computed at market prices, and expresses the extent of the satisfaction of individuals when paying for the goods and services. On the other hand, the GDP also reflects the trends of collective choice within a given society, by introducing the expenditures of public administration on the basis of the value of production. In this context, the GDP provides a service in showing the sum total of added values throughout all production unites within a specific area, and a good measure of how financial wealth is managed and distributed. The GDP, and in a broader context the “National Accounts”, are all essential tools to understand the functioning of the economy, which ultimately determines the economic policies. Nevertheless, as mentioned above, the inputs that go into calculating the GDP can be deceptive. This is because the prices in the market are often unrealistic, while the value of the currency does not lie in the extent of its use, because any amount of money no matter how small when compared to the fortunes of the rich, can be very large for the poor. Therefore, the GDP per capita in any country does not measure the justice in the distribution of wealth. Quite the contrary, all available reports show that there is a centrality of wealth controlled by a small number of citizens. Also, the determination of prices is often linked to rarity and profit, or to supply and demand. The scarcity in the supply for instance, would motivate the prices to soar beyond their natural levels. The most important issue however, emerged in the seventies when the term “GDP” was criticized for not taking into account the production that is not accompanied by paid labour. For instance, there is an imbalance between women who work at home or in the field in return for a wage, and the women who work at home or in the field or in any unpaid services, while noting that their production output are in fact equal. The GDP also ignores environmental damages and the depletion of natural resources. For instance, it measures crude production without taking into account the natural depreciation. Also, while it calculates the necessary expenditure that should compensate for the damages caused by production, it neglects the cost of the pollution that cars, for instance, cause: the greater the GDP, in fact, the greater the resulting environmental damage is. Meanwhile, the structural transformation of economies also negatively affects everything related to the GDP as the sole measure of production. The most important examples of such a transformation would be the changing economic role of the government, the acceleration of product life-cycles due to technological improvements and welfare investments (health, education, social services, etc.) and which are not taken into consideration in the national accounts. This in turn increases the flaws inherent in the GDP. To compensate for these flaws, economists are suggesting that complementary indicators be added as components to the GDP, such as indices of self-sufficiency, happiness, well being and other indices... Stiglitz says: “in our quest to increase the gross domestic product, we may end up worsening the conditions of most people within a society”. The GDP as such remains a good measure of the economy, but not of the welfare or the well-being of society.
