Before 1930, economists theorized and measured markets, trade, inequality, and more, but did not bundle these objects together into a unified whole named "the economy." This dissertation investigates why the economy emerged in the 1930s and why it took the particular shape it did. Using archival research and computational techniques for analyzing text, it argues that the production of official, routine, timely macroeconomic statistics transformed the fuzzy conceptual space of economic life into a concrete, bounded object, "the economy" in the 1930s and 1940s. The standardization and diffusion of national income statistics in the 1950s and 1960s globalized "the economy," such that by 1970 every country was understood to have an economy. Since these economies were all measured the same way, their size could then be easily compared to make claims about development and growth. National income statistics focused attention on economic growth, and away from income and wealth inequality, which contributed to academics and policymakers overlooking increasing inequality even as interest in poverty grew.
Intellectual Merit
Scholars have long argued that scientific practices construct objects, but most work in this tradition focuses on the natural sciences and medicine. Unlike the natural sciences, social sciences often build their objects with administrative data, and thus the information available is already interpreted and categorized. This investigation of how economists constructed "the economy" should provide broader insight into the process of how social sciences shape the world.
Broader Impacts
Why should every dollar count the same, whether it is spent on treating illness, cleaning up pollution or building bombs? This dissertation explores how the US settled on one particular answer to that question, and why scholars and others are still arguing about it. Behind debates over the proper measurement of Gross Domestic Product are ethical questions about what is to be valued and fundamental questions about the nature of the economy itself.
This project examines the history of national incomes statistics (GNP, GDP, etc.) to understand transformations in economic policymaking and economic theory that occurred in the 1930s-1940s. In this period, the United States, Canada, the United Kingdom, and other Western countries began to produce official national income statistics. These statistics produced a measure of the size of the entire economic system, and facilitated comparisons of the economic might of nations. Because these statistics were produced in a timely fashion, they also transformed how governments saw and acted on the economic system. Before the 1930s, the idea of countercyclical economic policymaking designed to smooth the rough edges of the business cycle was implausible. Small swings in the cycle were simply not visible in real time. By the end of the 1940s, economic debates look very modern, with discussions of the proper role of fiscal vs. monetary policy, and the role of automatic stabilizers like unemployment insurance and income taxes. In order to produce national income statistics, economists had to solve numerous practical and theoretical problems. Some of these problems, such as the valuation of government’s output (roads, education, courts, etc.) were determined to be intractable, but economists persisted and produced theoretically unsatisfactory, but practically useful, ad hoc guesses. For example, government output was valued at the cost government paid for it (thus assuming that government neither wasted money nor added any additional value). These ad hoc solutions were enshrined in national andinternational standards which in turn diffused around the world in the United Nations System of National Accounts. By the 1950s, most countries in the world measured their economies in (roughly) the same way. International organizations like the World Bank and United Nations relied on national income statistics to determine which countries merited development aid, and to determine how much countries should be asked to contribute to global efforts. Every country had an economy, and every country’s economy was (and was supposed to be) measured the same way.
