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The Tyranny of Growth examines the sacrosanct concept o...

DM168

BOOK REVIEW

The Tyranny of Growth examines the sacrosanct concept of GDP as a growth measure in Africa

Malcolm Ray’s recent book The Tyranny of Growth: Why Capitalism has Triumphed in the West and Failed in Africa is a crisply written account of the origins of the concept of gross domestic product (GDP) and its discontents. Brimming with a colourful cast of characters, it brings into vivid focus some of the 20th-century’s key intellectual economic debates in a highly readable fashion.

Although Ray’s arguments are not always convincing or original, this book brings fresh insight to growing debates about economic growth. It is a good primer for someone interested in this hotly contested arena.

Much of Ray’s thinking has been influenced by the South African economist Lorenzo Fioramonti, a leading critic of GDP as an accurate measurement of economic or social wellbeing. Indeed, Ray comes across as something of a “Fioramontist”.

He also draws heavily on the writings of the leftist journalist John Pilger. It’s just worth noting these two influences, which dilute somewhat the originality of Ray’s reporting even as he connects dots between the issues they raise in interesting ways.

For the record, GDP is the single standard measure of economic growth – or contraction – with universal usage. All government statistics departments use it to quantify economic performance.

According to Investopedia: “GDP is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health.”

Every three months, economics and financial journalists, myself included, will cover the GDP data that stats departments calculate. It can come across as sacrosanct – and sets the policy agenda for many governments regardless of their ideology – so there is nothing wrong with raising questions about its utility. Ray’s work is part of a growing body of literature which is doing just that.

Following a well-trodden path blazed by others, including Fioramonti, Ray traces the origins of GDP to the looming Second World War and the American government’s obsession with getting a grip on measuring the economy’s capacity for wartime production.

The narrative thread that Ray spins around this saga is compelling and this reviewer certainly learned a few things, though the broad strokes of this story are already fairly well known.

Ray examines how the concept would be woven into a “growth-at-all-costs economic agenda in Africa and other developing regions”, driven in part by the very visible hand of the International Monetary Fund (IMF) and World Bank in the economic policies of what would eventually be dubbed “emerging markets”.

“Developing countries … facing balance-of-payments problems could borrow from the IMF to finance their deficits,” Ray writes. “But to get IMF money they would have to pay the price of allowing the IMF to shape their economic policy to meet the policy objectives of the fund. Central to a resolution on those policy objectives was shifting productive resources from industries that served domestic markets to those oriented toward export… The techniques for accomplishing these objectives included a battery of austerity measures…”

This would morph into a supply-side driven, structural adjustment approach under Ronald Reagan’s US administration, with economic direction controlled ultimately by Washington. This included the privatisation drive of the 1980s.

There is nothing earth-shattering in such a critique of the IMF, which draws heavily on the work of Pilger and other past critics of the Fund and its activities.

In the African context, Ray has a withering critique of Nepad or the New Partnership for Africa’s Development, which was a pet project of former president Thabo Mbeki, who embraced market economics.

Ray counts among Nepad’s legacies the oligarchic capitalism that defined the Kabila kleptocracy in the Democratic Republic of the Congo (DRC). But the DRC has been the scene of plunder on a vast scale since King Leopold’s reign, and Ray is probably giving the vain Mbeki too much credit on this score. Nepad is a buzz term thrown out in long-winded African Union speeches as a cure for insomnia. It has been years since this correspondent came across anything that took it remotely seriously.

Returning to Fioramonti, Ray makes reference to his research that claims to show that deducting the negative economic consequences of global GDP – treating such trends as losses rather than gains by producers – highlights “statistical biases and cover ups… Since the 1980s, there has been no real growth around the world.”

This remains contested terrain, to say the least, but Fioramonti and others have brought important insights to the party.

For those who hold economic growth as a magic wand to prosperity, there is, for example, the phenomenon of “jobless growth”.

But that is also a concept that was recognised decades ago by development economists.

GDP will almost certainly not withstand the test of time – the dismal science of economics is never set in stone – though its replacement remains unclear.

There are plenty of transactions it does not capture, notably in an African context. How does one measure the unpaid household work undertaken mostly by women, for example? Or the economic contribution of subsistence crops, which by definition tend to be consumed as calories at the point of production, rather than transformed through exchange into capital?

A decade ago, the oil and African analyst Duncan Clarke noted in his book Africa’s Future: Darkness to Destiny: “GDP and incomes may rise but the numbers, and even the share, of very poor people remains at best stubbornly large” in many African countries. From different perspectives, Clarke and Ray have taken issue with notions of GDP and economic growth in Africa.

The debate goes on, and that is refreshing and certainly necessary, given the scale of the environmental and social challenges that Africa confronts. But sometimes such debates can seem a bit stale as well.

“This book is the story of why and how GDP came to define economic growth, and its devastating social and ecological impact,” Ray writes. Like GDP itself, this often absorbing book does not quite measure up to that billing. DM168

Ed Stoddard is a Business Maverick contributor.

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.

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