IF you ever thought that economic policy could never make for gripping drama, try reading this book. The subject is simple, yet powerful. A single indicator, Gross Domestic Product or GDP, has become so powerful and so ubiquitous as a measure of a country’s economic health, that its hegemony in economic discourse is virtually unchallenged. All debate in the profession revolves around the best way to raise this number. Very few have ever asked why an ever-rising GDP ought to be a goal for economic policy at all.

They may be few, but they have indeed been there. In his book, Ehsan Masood has finally presented their story in an engaging and accessible way. You don’t have to be an economist to enjoy this book. Its strength is that it casts a light on a discourse that stretches back at least to the early 1960s, acquiring more and more detail and compelling evidence along the way, but it keeps the people and their personalities firmly in its sights throughout.

And it would take some strong personalities to question the one number around which an entire global profession, and virtually every economic policy, is made. Masood tells us about Dudley Seers, for example, who could fill up a room with his personality, and whose students at the University of Sussex have carried on his work down to the present. There was Rachel Carson, who finished her most influential work while suffering from advanced stages of cancer and suffered further at the hands of her male colleagues who felt deeply threatened by her simple finding that the regulated use of pesticides was harmful to the environment. This might sound like a common sense proposition, but in 1962 it was so revolutionary that it inspired the most vitriolic responses. She was a communist, said some. “We can live without birds and animals, but as the current market slump goes, we cannot live without business,” said one reviewer, going on to add “isn’t it just like a woman to be scared to death of a few little bugs!”

Is it possible to measure the economic health of a country simply on the basis of one number?

The most interesting part of the book for Pakistanis is when the narrative lands, briefly, in Karachi. Masood looks at the making of the first five-year plans, and the role of that other iconic economist, Mahbub ul Haq. The first plans were drawn up under his guidance, and they all emphasised growth before anything else. Concerns relating to equity, or the sharing of the spoils of growth, were left to an unspecified future, when they would trickle down automatically. Ecology and environment were never a big factor in those days.

Haq’s change of heart from this approach, beginning with this dramatic ‘20 families’ speech, gives Masood a narrative device of sorts. All of us have heard about this speech, some may even have read the full context. But how many of us know where exactly it was delivered, and before which audience? Masood tells us it was delivered in Karachi, before an “audience of policymakers and members of the newly created West Pakistan Management Association” and was not delivered from a prepared text. It took the audience by surprise.

It began with a straightforward listing of the achievements of the first two five-year plans, “[b]ut then the narrative changed”. Speaking extempore, Haq told his audience that his wife had been looking at data from the Karachi Stock Exchange, “and had discovered that just 20 families owned 66 per cent of industrial companies, 79 per cent of insurance funds, and 80 per cent of banks listed on the exchange”. Those families, Haq noted in his speech, “had a responsibility to invest their largesse on behalf of a growing nation”.

Then Masood quotes from the speech itself, and the words are worth reproducing in full. Haq said that if these families failed to heed the call of duty, then “society has every right, in fact, it has the duty, to resist the emergence of a privileged class of entrepreneurs which is pampered by fiscal concessions, which is sheltered by prohibitive tariffs, which is nurtured by artificial incentives, and which makes its living on the basis of imperfect and inefficient competition”.

The drama is muted by the language, but Masood drives the point home. “Here was the government’s own chief economist drilling holes in a whole decade’s worth of his own policies” by telling them that they were no longer just living off the fat of the land, but had indeed become the fat of the land.

Pivotal moments of this sort, with a key player having a cathartic change of heart before an audience of admirers, make for a tempting storytelling device. But in treating these moments as critical turning points, something is concealed about the more human and less edifying motivations that lurk beneath the surface. In Masood’s telling, Haq became an ardent opponent of using GDP as a measure of a country’s economic health, even telling economist Amartya Sen at one point that the idea of boiling all economics down to one indicator was “barbaric”. Haq went off to work with the World Bank, where in later years he would develop the alternative Human Development Index as a barometer to measure economic performance, and author The Poverty Curtain, which became a forceful critique of growth-led models of development.

Parallel to the emergence of this critique of economic growth, there was another movement spawned by Carson, which took as its focus the ecological and environmental damage caused by growth, and argued that there was a limit beyond which this process could not go without destroying the basis of all life on earth. These two critiques would have an uneasy relationship with each other in days to come. Today, though, we can see that both have burst onto the world stage as primary concerns, as climate change and the spectacular scale of the inequalities that are warping society and politics in such profound ways.

Masood reminds us that there were milestones along this road. Powerful voices — too many to include in this brief review that has focused on that part of the story which touches Pakistan — told us that more than just our priorities were wrong. The very lens with which we were perceiving the world was warped.

The reviewer is a Dawn member of staff.

The Great Invention: The Story of GDP and the Making and Unmaking of the Modern World
(ECONOMICS)
By Ehsan Masood
Pegasus, US
ISBN: 978-1681771373
352pp.

Published in Dawn, Books & Authors, January 22nd, 2017