In recent decades, the acronym “GDP”—short for “gross domestic product”—has entered popular and political discourse as a measurement of economic activity; GDP per capita, meanwhile, has emerged as a rough measure of overall well-being. In his informative book, Lepenies describes the tortuous path by which GDP became so crucial, beginning with the conceptual work on economic measurement carried out by the English economist William Petty in the mid-seventeenth century, to the consolidation of GDP’s role in assessing and managing the British and U.S. economies during World War II, to Washington’s postwar insistence that European recipients of Marshall Plan aid adopt GDP as a metric and collect the data needed to calculate it.
The subsequent Western embrace of GDP ultimately led countries around the world to adopt it as a benchmark measurement. In recent decades, Masood argues in his interesting book, that process has gone too far. Masood decries the increasing use of GDP for purposes it was never intended for, such as estimating overall economic performance and strength. Such concerns are not new, as Masood shows by recounting the vigorous debates among economists in the 1930s who disagreed over GDP’s utility. In the view of Masood and others, GDP’s main flaw is its exclusion of most nonmarket activities and its inability to factor in some negative consequences of growth, such as air pollution and climate change. But Masood doesn’t merely criticize the overreliance on GDP: he also explores ongoing efforts to develop a satisfactory substitute or supplement that would yield a more accurate picture of economic activity and its effects.