Eli Cook — The Pricing of Progress and the Origins of GDP

The key element that distinguishes capitalist societies from previous forms of social organization is not the existence of markets or money but rather capital investment, the act through which basic elements of society and life—including natural resources, technological discoveries, cultural productions, urban spaces, educational institutions, human beings, and the nation-state—are transformed (or “capitalized”) into income-generating assets valued and allocated in accordance with their capacity to make money and yield profitable returns.

In my book, I argue that economic indicators and the pricing of progress emerged out of such acts of capital investment as capitalist forms of quantification and valuation used to manage or invest in railroad corporations, textile factories, real estate holdings, or slave plantations slowly but surely escaped the narrow confines of the business world and seeped into nearly every nook and cranny of American society. As a burgeoning “investmentality” led American businessmen and policy makers to quantify not only their portfolio but their nation as a for-profit investment, the progress of its inhabitants, free or enslaved, came to be valued according to their moneymaking abilities. 

Follow the capital, therefore, and you will find the origins of GDP and our current obsession with monetized metrics...

To conclude, by the time GDP was finally invented during the Great Depression, Americans already had much experience with the notion that one could measure social success by calculating the income-bearing capacities of the nation. The rise of GDP, therefore, is not the opening scene in the rise of modern economic indicators, but rather the final act of a global story that began not in twentieth century economic departments, government bureaucracies or think tanks but rather with the enclosure of English lands, the enslavement of African bodies and the capitalization of American life in the seventeenth, eighteenth and nineteenth centuries.

Capitalism is not about markets. It is about economies based on capital investment. Capital investment did not become a major factor until the development of technology made industry possible.

Previously capital investment was in land and labor under feudal conditions, and ships involved in international trade under mercantilist conditions.

The development of machinery and the subsequent development of finance ushered in industrial capital as the dominant economic force.

Economic growth came to be viewed chiefly in terms of capital formation and accumulation rather than agricultural production, resource extraction, and trade.

Economic Sociology and Political Economy
The Pricing of Progress and the Origins of GDP

Eli Cook | Assistant Professor of History at the University of Haifa