sokol at sokol at
Fri Feb 19 11:39:15 PST 1999

At 01:22 PM 2/19/99 -0500, rakesh cited:
>"What is happening is that the gross private investment figures in GNP is
>not really a gross number after all. It is actually a net measure and
>purposely excludes 'intermediate goods' that are purchased to be used as
>inputs in producing other goods and services. It is a strictly value added
>"In short, the GNP data exclude the critical intermediate stages of
>production. Advocates of this traditional approach do so because, they say,
>they wish to studiously avoid double counting...

This sounds to me like bullshit criticism. If you have a circular flow, the only way to know the total volume in the system is to measure value added. The value added approach does not pose any problem for the economy as a whole - it starts posing such problems only when you start breaking it up by activity or institutional sector. The value addedd approach shifts intermediate consumption to the final consumer on the assumption that intermediate consupmtion cost is included in the market price of the final product. The commodity production and distribution process thus appears as a "value conveyor belt" rather than creation of value - which has a Marxian aftertaste to which those trolls most likely object. This is why the value addedd approach pictures US computer hardware industry as a minuscule contributor to the GDP which by definition includes only production within national borders (a point I raised re. Doug's post).

I think that the bone of contention is the question formulated by Marx: who creates or adds value? Unlike Marx, the national accounts count value added by capital (but perhaps not as much as bourgeois trolls would like to see) but exclude value added by non-market activities, such as gray economy or voluntary work. I am not sure, however, how national accountants break up the GDP by fields of activity or institutional sector.

The bottom line is that the objections you cite appear to be more political than technical.



PS.Sorry for posting over limits.

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