geograph-042587-by-Christine-MatthewsPolitics and money go together. Money buys political influence and electoral advantage. This gives governments a double incentive to favour the already-wealthy. First, the wealthy are best placed to create more wealth on the GDP measure, which makes governments seem successful; second, the money that is made in this way helps to keep them in power.

Clearest evidence of this can be seen in the political response to the economic crisis that began in 2007 and continues today. The approach taken, of refinancing the banks and providing access to loan capital through the policy of quantitative easing, has attempted to restore the “business as usual” that served the interests of capital investors for so long. The approach has had some success in stimulating GDP, but that stimulus has come in the form of asset inflation, with rising house and land prices creating cost pressures for everybody else and ensuring a return to boom and bust conditions.

If GDP measured only productive, useful, economic activity, the political response to the crisis would have been suite different – seeking to put the new money into productive investment such as infrastructure, public services, affordable housing and environmental protection. Politics is capable of producing such imaginative, productive solutions, but only when the targets against which its success is measured reflect the real wants, needs and wellbeing of people, rather than the interests of banks and big business.


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