Redefining the Economy — Ph.D. thesis
November 8, 2011 Leave a comment
This is my Ph.D. thesis as submitted to the City University Library and the digital repository at the British Library, so can be considered a final version for citations. Should you be so inclined, the suggested citation would be:
Mitra-Kahn, Benjamin H. 2011. Redefining the Economy: How the ‘economy’ was invented in 1620, and has been redefined ever since. Ph.D. thesis in economics, City University London
Feel free to cite, quote or distribute, but please include a reference and a link to this page if you are linking through. Hope you enjoy reading it and I am always open for comments, questions and thoughts as I continue to develop the manuscript.
Gross domestic product has long been criticised as a poor indicator of economic growth. In this thesis I argue that any proposed alternative for GDP cannot effect change, because GDP is not an indicator. Instead GDP is our definition of the economy, which I argue by presenting the history of how we have measured the economy through national accounts. GDP, it turns out, is simply the most recent consensus definition of what the economy is. So this is the history of how we have defined, measured and redefined the economy since its invention in the 1620s.
Using primary sources I argue that the supposedly mercantilist definition of the economy was never policy relevant in the 17th century. The 18th century saw an active empirical debate and the economy was defined by Davenant’s civil service, Walpole’s Treasury accounts, and eventually scholars, who displaced secular policy advisors in the 1770s. Adam Smith defined an economy that dominated Britain for a century, but he adopted Physiocratic ideas which were rejected by the French government‟s own economists.
British government offices continued to do empirical work in the 19th century and produced the “official” statistics used for policy making. Marshall and then Keynes would use these offices to redefine the economy. Keynes convinced Meade, Stone and HM Treasury to redefine the economy and his idea displaced the official American definition, despite loud protestations from Kuznets. So this is a history which tries to challenge our view of the economy, by showing how we have redefined it in the past and indicates how we could do it again.