The Political Economy of Gross Domestic Product Accounting and the Philippine Case

The Human Development Index, introduced by the UNDP in 1990, uses three indicators of social-well being, educational access, life expectancy at birth and the so-called transformed per capita GDP(based on the world median per capita for a particular year) and assigns a maximum and minimum value to each indicator.(See table below):

The UN HDI does not show other important aspects in the social-well being of people like their access to cultural activities, political participation and good health. Regarding its indicator of life expectancy, one may live up to 85 years but in bad health and this would really be a rather uncomfortable long life. To complement life expectancy, it could have adopted an indicator of rate of illness per 1000 of the population to convey the state of health of a people. Moreover, its arbitrary assignment of the minimum value of 25 years for life expectancy is also questionable since choosing 35 years as the minimum length of a healthy and fulfilling life would be considered a better indicator of social-well being by anyone. And why use the dollar as a measure for its transformed per capita GDP, since a country that offers its goods cheaply to the global trade market because of a productive, regulated and self-sufficient economy may have a lower value of its currency than the HDI minimum in the international exchange market. This may be because this country gives priorities to the need of its people instead of relying on trade with other countries, and, consequently, its people may be more economically and socially fulfilled than a country whose per capita is the HDI maximum value. Such questions the UN HDI fails to take into account because it simply assumes the present structure of the global capitalist economy as given, where the dollar is the leading currency. In the present crisis propelled by speculative investments (2007) of US capitalism where the dollar is fast losing its value, the UN HDI may have to use other international currency as its third indicator to compare levels of development of countries. There have been other criticisms of the UN HDI among which are it does not indicate the disparities between the rich and the poor, between urban and rural areas and between the welfares of men and women. These observations may similarly be applied to the Physical Quality of Life Index as well as the International Human Suffering Index, as we have discussed them above.

Summary and Conclusion

It has been presented in this study how the method of GDP/GNP accounting is beset with the ideological leanings of those thinkers, the neo-classical economists, who have formulated it to be the measure of the economic development of a nation. These Western thinkers, who subsist on the patronage of the academe or other institutions nurtured by capitalism, have succeeded in disseminating their theory of GDP growth to the developing nations like the Philippines. Their GDP accounting method has remained the dominant indicator of economic development being adopted as the official assessment of the health of an economy by the World Bank and other capitalist organizations. But as we have seen, this GDP/GNP method hides the interest of the bourgeoisie because it is market-driven and therefore profit-driven. Its defenders have been hopelessly enmeshed in various conceptual difficulties, even contradictions, in their attempt to have under the purview of GDP all aspects of the productive activities of people. GDP/GNP forgets that there are other fulfillments rather than the accumulation of profit and higher incomes. Because by its very nature, the bourgeois GDP thrives on market prices, it cannot capture other higher satisfactions of peoples like the enjoyment of a healthy and meaningful life. Why a great part of humanity can be influenced to adopt such a primary measure of national development only speaks of the moral and cultural bankruptcy of our age under the dominance of monopoly capitalism.

There have been attempts from different quarters to challenge the use of GDP accounting as the leading criteria to account for national progress. We have discussed some of the more-well known alternatives to illustrate the state of social-well being of a people, which, however, have not been adopted by the majority of countries today as their primary gage for national development. This only manifests the intellectual hegemony as perpetuated by its apologists, especially the neo-classical economists, of the capitalist class with regards to how the destiny of a nation should be evaluated.

The Philippine government, besides obediently adopting the GDP method of the bourgeoisie, has mangled its application through a very sloppy gathering of price data to explain the productive activities of the Filipino people. The subtleties in which capitalist countries use the GDP method to make it appear that if there is growth in GDP, the state of the whole economy is healthy, has not been inherited by the Philippine government. The use of GDP by the Philippine government is more ideologically or politically blatant to hoodwink its people. The base year has been changed 4 times, violating even the basic standards set by the bourgeois economists of when the base year should be revised. The abuse of the GDP method to deodorize a political regime is specially patent during the present Arroyo regime, when the statistical discrepancies between GDP by economic activity and GDP by expenditures have become very high, amounting on the average to P310 billion from 2001 to 2006. The Arroyo regime has also changed the base year for CPI from 1985 to 1994 to show a lower inflation rate in the prices of consumer goods. It could be said that the motivating principle of the Arroyo regime seems to be to create more illusions for a people that tolerate deception.

Unless responsible leaders and organizations of the world come together to intellectually combat the various theories of human progress promoted by the dominant capitalist class, more miseries and cultural bankruptcies will prevail upon the world. Never in the history of humankind has economic want and hunger become extensive as they are at present with almost one billion people suffering from starvation.This amidst a time of plenty, when warehouses and stockrooms of the owners of production are awash with their abundant goods, which, however, cannot be sold because of the meager incomes of 1/3 of the world population. Thus, crises of overproduction spawned by the greed of capitalism continue to recur in the world, further impoverishing the working class who become the first victims of economic disorder.

If the global economy remains in the hands of those who seek primacy in the marketplace, GDP accounting will only be a myth of development. Unless, the private ownership of the means of production is changed in favor of the collective good of the people, GDP growth as a measure of the productive activities of societies will only reflect the economic prosperity of the few over the labor of the many and the exploitation committed against the true producers of the wealth of humankind. Contributed to (Bulatlat.com)

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