The politics of social accounting: public goals and the evolution of the national accounts in Germany, the United Kingdom and the United States

Abstract

National social statistics have become one of the pervasive institutions of modern economics and politics. However, less is known about the origins of national accounting and the disagreements over its fundamental purpose and design. Modern national accounts emerged in attempts by German statistical entrepreneurs to understand the industrial economy and harness production in the service of national goals. In the American context national accounts emerged as a means for measuring social welfare, but evolved in the direction of the German and then British efforts at maximizing war production during the Second World War. The origins and evolution of social accounting in the German, British and American contexts illustrate the competing public goals served by our institutional choices. Different normative purposes, driven by new national goals, may require institutional change.

Notes

¹As evidence of Wagemann's international reputation we note that, in the early 1930s, a long essay describing his work appeared in a 12-volume set of economic publications that had been organized by a group of Italians not aligned with Mussolini's Fascist regime. The essay, translated from German into Italian under the title ‘Introduzione alla Teoria della Congiuntura Economica’, was published in Vol. VI of the Nuova Collana di Economisti under the direction of G. Bottai and C. Arena (see Wagemann, 1932). We thank Luigi Pasinetti of Università Cattolica in Milan for bringing this work to our attention.

²After the war, Rathenau became foreign minister of the Weimar Republic and in that capacity negotiated the production schedule underpinning Germany's reparations payments, a program that resulted in Germany having a more modern industrial output factory system than the French or British. For his troubles, Rathenau was assassinated by a Nazi anti-Semite.

³The barometer comprised three series: series A represented speculative bond and share prices, series B was an index of business activity and series C reflected short-term money market interest rates. The Harvard Committee created the forerunner of the current Review of Economics and Statistics, prior to 1947 called The Review of Economic Statistics.

⁴In his biography of John Maynard Keynes, Harrod (1969) described the origins of national accounting in terms of E. A. G. Robinson's efforts to implement Keynes's How to Pay for the Wars (1940).

⁵Meade and Stone's efforts resulted in Stone's 1984 Nobel Prize. Meade, awarded the Nobel Prize in 1977, confided to Perlman at their last meeting that he would have preferred to have been paired with Stone for their work on national accounts rather than being paired with Bertil Ohlin for their work on international trade.

⁶What is presented here is not a comprehensive history of the construction of the national accounts, as several excellent histories are already available. Among the best is Duncan & Shelton's (1978) Revolution in United States Government Statistics, 1926–1976. What that volume does not do is discuss the choices made by the designers of our national accounts. In 1980 the US Department of Commerce published Reflections of America: Commemorating the Statistical Abstract Centennial. Within it are several short chapters dealing with various aspects of the emergence of national statistics: in particular see John Kenneth Galbraith, ‘The National Accounts: Arrival and Impact’. See also Kendrick (1970), Carson (1975) and Ruggles (1983).

⁷The size distribution of income can be understood as a measure of the proportion of aggregate income received by different sectors of the population, often reported as the percentage of national income received by each quintile or by the top 5%.

⁸After the publication of The General Theory of Employment, Interest and Money Kuznets had an exchange of correspondence with him over what Kuznets regarded as the mishandling of the data on capital formation (Keynes, 1973–79, Vol. XXIX, pp. 188–206).

⁹This was not the first time Kuznets had clashed in print with Gilbert; see the exchange over the valuation of GNP increases during the war in Gilbert et al. (1944).

¹⁰For a particularly interesting perspective on the information economy and its class manifestation – the idea worker – see Florida's The Rise of the Creative Class (2002).

¹¹See Prewitt (1986, p. 113): ‘public statistics are not politically neutral. Decisions about what to count are influenced by the dominant political ideologies, and numbers enter the political fray on behalf of social interests’.