GDP, Growth & Historical Origins of Development

GDP: Definition & Core Components

• GDP (Gross Domestic Product) is the aggregate market value of all final goods and services produced within a country during a given period.
  • Accounting identity: GDP = C + I + G + (X - M)
  • C = private/household consumption
  • I = business investment (capital formation)
  • G = government expenditure on goods & services
  • (X - M) = net exports = exports X minus imports M
• "Real GDP" = inflation‐adjusted GDP (base-year prices).
• GDP per capita (often called "income per head"): GDP_{pc} = \frac{\text{Real GDP}}{\text{Population}}
  • Adjusts for country size by population to give an average output (or income) per person.

Limitations & Blind Spots of GDP

• GDP ≠ development; it measures expenditure/production, not well-being.
• It treats any monetised activity as a positive contribution:
  • More prisons, wars, pollution, deforestation, health-care payments for sickness—all boost GDP ("everything counts as growth").
• Major omissions:
  • Unpaid care work (predominantly but not exclusively women’s labour).
  • Informal/grey economy.
  • Leisure, community ties, voluntary work, environmental quality, mental & physical health.
• Illustrative metaphor: “Don’t marry your baby-sitter”—paying a sitter boosts GDP; marrying them makes the same care unpaid and GDP falls.
• Distributional blindness:
  • GDP rise can coincide with widening inequality; aggregate growth says nothing about who benefits.
• Key critics & sources:
  • Joseph Stiglitz, Amartya Sen & Jean-Paul Fitoussi, Mismeasuring Our Lives: Why GDP Doesn’t Add Up—argue GDP ignores inequality and well-being.
  • World Economic Forum video (cited in class) summarises shortcomings.

Growth vs. Development & Planetary Limits

• Growth (continuous rise in GDP) is routinely conflated with human development, but:
  • Quality-of-life indicators (health, education, equality, ecological integrity) may stagnate or worsen despite GDP rises.
• UNCTAD paper (David Woodward, 2015) “Incrementum ad absurdum”:
  • To eradicate poverty via "trickle-down" growth alone would require ecologically impossible GDP expansion.
  • Unlimited growth clashes with finite planetary resources; would trigger catastrophic climate outcomes.
• Bottom line: We cannot “grow forever”; need alternative metrics and models (to be addressed later in course).

Unit-1 Synthesis (Lecture Review)

• Single, internal (“country-specific”) explanations of under-development are inadequate.
• Development problems are historically relational:
  • Poverty, hunger, GDP levels are products of past and present relationships between places, not isolated national traits.
• Technical fixes alone do not solve fundamentally political problems.
• Always read statistics (poverty lines, hunger counts, GDP) critically—each number has a history and set of assumptions.

Transition to Unit-2: Historical Roots of Poverty & Wage Labour

• New guiding questions:
  • How did poverty originate historically?
  • How did wage labour become normal?
• Temporal scope: c. 1500-1900 (Age of European expansion, colonialism & industrialisation).
• Key concepts previewed: accumulation by dispossession, original accumulation, enclosure, wage labour.

Analytical Frameworks: Internal vs. Relational Explanations

• Common narrative: Industrial Revolution = purely European ingenuity → “Great Divergence”.
• Alternative (relational) approach: Europe’s rise is inseparable from colonial land theft, resource extraction, forced labour and global trade networks.
• Modern political rhetoric still defaults to internal-traits explanations (e.g., Donald Trump praising Norway’s “well-run” internal factors), overlooking relational histories.

Colonial Encounters & Precious-Metal Drain

• 1492: Columbus reaches the Caribbean; diary proposes subjugation of Indigenous peoples (“with 50 men they can all be subdued”).
• 1508 (Bartolomé de las Casas): Reports ~3,000,000 Indigenous deaths on Hispaniola in just 14 years via war, slavery, mines.
• Indigenous perspective (Eduardo Galeano): Europeans appear “like hungry swine” for gold.
• By early 1800s: 100,000,000\text{ kg} of gold & silver extracted from Latin America → shipped to Europe → traded with China & India for manufactured goods.

The Transatlantic Slave Trade & Triangle Trade

• Trigger: Dwindling Indigenous labour + finite gold supply → demand for new labour source.
• Route (Triangle):
  1. European manufactured goods (textiles, guns, metal ware) to West African coast.
  2. Enslaved Africans (≈ 12{-}15 million transported; ≈2 million die en route) shipped to Caribbean & the Americas.
  3. Plantation commodities (sugar, cotton, tobacco, coffee, rice, indigo) shipped to Europe → fuel Industrial Revolution → surplus goods re-exported globally (including colonies).
• Economic optimisation: Ship diagrams show “regulated” packing to maximise human cargo; early example of efficiency calculus.
• Unpaid labour tally: 225 million hours ≈ \$97\text{ trillion} in today’s minimum-wage terms.
• Compensation irony: 1830s British emancipation paid £20 million (≈ \$300 billion today) to slave-owners, not the enslaved.
• “Ghost acres”: ≈ 30 million acres of expropriated colonial land boosted Europe’s ecological carrying capacity.

Industrial Revolution: External & Internal Drivers

External (global) inputs

• Free land (Americas), free/under-paid labour (Africa & enslaved diaspora), raw materials for factories (cotton, sugar), colonial markets for finished goods.
  Internal (British) transformation
• Technological innovations (steam engine, spinning jenny, power loom).
• Domestic social restructuring through the Enclosure Movement.

Enclosure Movement & Birth of Wage Labour in Britain

• Pre-enclosure commons: Villagers accessed shared land for subsistence farming & grazing.
• Late feudal transition: Landlords (backed by state) fence (“enclose”) commons → convert to private property with legal title.
• Consequences:
  • Peasants lose direct means of subsistence; forced off land (“original accumulation”).
  • Survival now requires \text{money} ⇒ need wages ⇒ move to towns/factories.
  • Factory owners gain ready labour supply; peasants become first mass consumer-workers (buying food, shelter, clothing they once self-produced).
• Parallel timelines: Forced wage labour at home mirrors forced enslaved labour abroad—both underpin capitalist industrial take-off.

Accumulation by Dispossession & Original Accumulation

• Coined by Marx; elaborated by David Harvey/Jason Hickel.
• Definition: Initial concentration of wealth through violent seizure of land, resources, and labour, creating capitalist property relations.
• Outcomes:
  • Generational wealth and power for colonisers & domestic elites.
  • Generational poverty and structural disadvantage for dispossessed populations (Indigenous, African diaspora, rural poor).

Selected Historical Illustrations

• Belgian Congo (King Leopold II, late 19th c.)
  • ~10 million Congolese (≈½ population) perish via forced rubber & ivory extraction, famine & disease.
  • Loot funds grand architecture of Brussels—visible “markers of development.”
• Karl Marx (mid-1800s) on global plunder: Gold/silver extraction, East-Indies looting, African slave hunts = “rosy dawn” of capitalist production.

Key Terms & Concepts Recap

• GDP / Real GDP / GDP per capita
• Net exports (X-M)
• Growth vs. development
• Externalities & non-market activity (unpaid care, leisure, environment)
• Accumulation by dispossession / original accumulation
• Enclosure
• Wage labour
• Triangle trade / Transatlantic slave trade
• Relational vs. internal explanations of development

Course Logistics & Upcoming Tasks

• Reading for next class:

  • Eric Williams, Capitalism and Slavery: Preface; pp. 1{-}7 & 51{-}57 (triangle trade analysis).
  • Sven Beckert, Empire of Cotton: Introduction (global cotton networks).

• Reading response schedule:

  • Current response (relational analysis between two places) due tomorrow night.
  • Response on Williams & Beckert moved to Saturday (allows in-class discussion first).

• Next lecture themes: Sugar & cotton as world-tying commodities; deeper dive into triangle trade stimuli for British economy; continuities into modern supply chains.

Reflective Prompt

• How do historical processes of land/labour dispossession continue to shape present-day GDP figures and global inequality?