1. The Power of the Single Number: A Political History of GDP Public Lecture Department of International Development, LSE April 28, 2015 Philipp Lepenies, Freie Universität Berlin #LSEGDPHistory

2. GDP as Phenomenon Most powerful statistical indicator in history part of our political culture recently: attempts to „dethrone“ GDP sits firmly in the saddle absence of historical dimension Why and how did GDP become the world‘s most powerful number?

3. What is GDP? GDP is Political Arithmetic

4. History of GDP – what to explain? National Income versus National Product (Gross National or Gross Domestic Product) focus on production from account to single number growth more than economic statistics

5. The History of GDP Is a tale of… – two countries: Britain and USA – three men: William Petty, Colin Clark and Simon Kuznets – tragedy: none of them succeeded – triumph: of J. M. Keynes – transnational historiography (Germany) – the role of Growth

6. Structure 1.Britain 2.USA 3.Germany 4.Growth

7. Great Britain (England)

8. William Petty (1623 – 1687) Political Arithmetick „the method is not very usual, for instead of using words, I express myself in terms of number, weight, or measure and consider only such causes that have visible foundations in nature“ science explains „the perplexed and intricate ways of the world“ “The glory of the prince, and the happiness and greatness of the people” - goal of government: peace and plenty

9. The First National Account Men, Women, and Children, in England and Wales, about six Millions, whose Expence for Food, Housing, Cloaths, and all other necessaries, amount to 40 Millions, per Annum. If the Annual proceed of the Stock, or Wealth of the Nation, yields but 15 millions, and the expence be 40. Then the labour of the People must furnish the other 25.

10. Legacy interest in „National Income“ – only academically discovery of „labour“ as economic value political arithmetic becomes „Statistik“ problematic: combination and interpretation

11. Colin Clark (1905 – 1989) chemist „inventor“ of GNP and National Income member of Papal Commission on Birth Control

12. The National Income 1932 Three ways of calculation: consumption, production and distribution Per capita income measure of progress Estimates macroeconomic aggregates numbers before theory National income as historical category

13. Conditions of Economic Progress 1940 international comparison sectoral development: 1. Agriculture 2. Industry 3. Services development economics new picture of the world

15. After Clark

16. The Keynesian System System of National Accounts following requirements and logic of the Keynesian Theory Focus on Income (tax base) – not production No single number Positive and important role of the state taken up by the govt – but very late No planning No longer only historical number (quarterly)

17. The U.S.A.

18. Simon Kuznets (1901-1985) „exemplar empiricist of the century“ empirical study before theory

19. Definition of National Income 1932 start by end of all economic activity provision of goods and services moment individuals receive their income closely linked to distribution people-centred, welfarist approach extremely cautious

21. Birth of GNP Victory Program 1942

22. Keynes visit to US 1941

23. Result focus on single-number: Gross National Product (GNP) production-focus - politics of productivity based on adapted System of National Accounts Political Arithmetic – Dept. Of Commerce Taken up by political rhetoric

24. Production

25. Kuznets 1945 income more important than production means to an end goal of economic activity? market-based economy role of state – harmony of accounts critical

26. Germany

28. United States Strategic Bombing Survey

29. Marshallplan and Modernization production-focus Hoffmann: „You can become like us, this was the message of the Marshallplan“ idea of „catching-up“

30. Growth

31. Traditional View Stagnation or Maturity

32. a cognitive change 1945/1946

33. 1946 and beyond Employment Act Council of Economic Advisors Truman Doctrine: economic progress 1949 Point Four – geopolitical policy Race of Systems - CIA calculation of Soviet GNP Unique improvement of material living conditions

34. Growth: Sign of New Times Erhard 1957 / Galbraith 1958

35. Lessons learnt GDP only one way to explain „the intricate ways of the world“ defenders of GDP: conscious of the historic context in which GNP/GDP emerged advocates of alternative measures: conscious of what it took GDP to triumph – and what it might take to establish an alternative political arithmetic

36. Thank you! philipp.lepenies@fu-berlin.de