Listener: 1 April, 1989

Keywords: Statistics;

The basic message in Marilyn Waring’s book Counting for Nothing: What Men Value and What Women are Worth is correct, as those of us who worked on related problems in the early 1970s are well aware.

The economist’s account of the world is a limited one, ignoring very important phenomena. Waring focuses upon its treatment of women and of the environment, particularly in the national accounts, that complex set of tables which are used to measure the total and the components of economic activity. Most readers will be aware of the acronym GDP, which stands for gross domestic product and is meant to be measure the market output of an economy.

Confining the measure to ‘market’ behaviour, Waring argues, leaves out most economic activity, including the unpaid household work usually done by women. But the impression given by the official accounts that women provide substantially less than half of the country’s economic output may merely reflect the decisions made by statisticians about what they measure.

On the other hand, some items included in the national accounts are less easily understood. The statisticians thought long before they included military expenditure in GDP. Waring thinks they got that wrong too, and contrasts the inclusion of the salaries of those who control the nuclear missiles, with the exclusion of the work of a young Zimbabwean girl who each day walks 22 kilometres to fetch water for her family.

There are other puzzles. How should the activity of reproduction (including raising children) be excluded? And what about environmental depletion (and enhancement)? There are no easy answers.

Knowing all this, it was with a lot of goodwill that I began the book. And that made my disappointment with it all the greater. I had hoped for a study one could have given economics students to read, knowing that it would expand their understanding and get them to challenge what they take for granted. For many it will not. There are far too many economic errors, and most students will turn away superciliously, saying Waring does not know what she is writing about.

For instance the book uses a definition of economics (Robbins’s definition) as if it were universally accepted; it is hotly disputed. The book characterises Gary Becker as ‘patron of the Chicago School’; Milton Friedman would be surprised. The book treats at face value a quotation from Paul Samuelson which is dripping with sarcasm, parodying the views of some economic extremists. [For his views see chapter 9.]

Another problem is that the book hardly refers to the greatest use of the system of national accounting, despite the fact that it is mentioned by one of the economists Waring consulted. Economists use GDP when assessing employment, inflation and the balance of payments. Since all these are market phenomena, the use of market-based measures of economic activity is justified. Whether we should want to distinguish between those in the labour force and those outside is a more difficult question.

There is a larger issue. Waring states that ‘most economists would hail the development of national accounting as one of the greatest achievements of modem economics’. I doubt that is true; of the 40 or so Nobel prizes in economics only one has been awarded for national accounting. Far more have been awarded for what economists call ‘value theory’, the attempt to explain what determines prices in an economy and how these relate to values.

The issue is far from trivial. Why, for instance, do economists use market prices when they are constructing the national accounts? The answer is that, starting from the premises of value theory, it can be shown, as in a classic but little known paper by Samuelson, that market prices are the ‘correct’ weights to reflect social value.

And this turns the spotlight onto value theory, something which Waring fails to do. But she would not be surprised that at the centre of value theory is a concept called ‘rational economic man’. The gender is perfectly specified, for value theory has little to do with women, except when they conform to the male stereotype. The reason why the Zimbabwean girl is left out of the accounts is because she does not conform to the assumption of rational man – she should get a job. The missile minder , on the other hand, does conform, does he not?

It is here that I break with Waring, and indeed with the Ministry of Women’s Affairs who are promoting the extension of our National Accounts to cover more of the activity of women. All they are advocating is forcing our account of woman into the mould of rational economic man, missing the point that the real need is for a radical revision of the fundamentals of value theory. Anything less than this will make women second-rate men, and leave us with an economic theory which is insensitive to half our population, to the environment and to all the nonmarket activities which, as women, children and men we value.