Phyllis Deane and the limits of national accounting

 

Shortly after its creation, eighty years ago, the National Institute took on a major research initiative. A young NIESR researcher who worked on the project went on to secure a place in British economic history

 

How do we know if the economy is doing well?  For many decades, the short answer to that question has been to review a single number: Gross Domestic Product (GDP). If the GDP grows, spirits are high. If the GDP declines or its growth rate slows, concerns abound.

In recent years, scholars, activists, and policymakers have questioned this thinking. It’s now widely recognized the GDP has many flaws. For instance, the metric doesn’t account for important aspects of well-being such as environmental decline, social dislocation, and unpaid labor (among many other thing). A number of recent books attest to the limits of GDP and call for alternative metrics to help govern our lives.

Such concerns about the flaws of GDP and other forms of measuring national economic activity (such as Gross National Product, or Gross National Income), however, are not new. Nearly eighty years ago the NIESR funded a major research initiative to construct the first national income and product accounts for the British colonies and create a comparable framework for all economies. The project’s lead investigator, economist Austin Robinson, hoped to show how the new accounting techniques, which had just taken hold in the United States and the United Kingdom, could be applied anywhere. Yet the project became far more significant for the many flaws of such statistics and the many difficulties inherent in calculating them.

The task of collecting the necessary data to make national income and product estimates fell to an economist named Phyllis Deane. Only 23 years old when she embarked on the research project, Deane’s initial research focused on the British colonies of Northern Rhodesia, Nyasaland, and Jamaica. She began her research in Northern Rhodesia in 1941, where, almost as soon as she landed, she began to encounter a wide range of challenges.

The first challenge was conceptual. She noted two distinct forms of economic activity in Northern Rhodesia: a modern industry based on copper extraction and widespread subsistence production. The latter rarely included either money or clear prices. In the United States and United Kingdom, items that did not get to market were simply excluded (including unpaid labor, such as women’s housework). Deane characterised producing for subsistence as important yet problematic for the statistician. Using racial language describing subsistence farming as “backward” and lacking sophistication, she struggled to identify occupational categories since many people, especially women, performed multiple work-related roles in the household. Deane had to make informed guesses for the total size of subsistence production. She estimated prices for beer production and small-scale manufacturing (like weaving rugs), but left out crucial women’s work such as firewood collecting (that took varied amounts of labor and time).

The subsistence quandary related to a second problem: there was no data, historical or present, on much of the population’s production, consumption, and investment habits. The only reliable data came from information on import and export statistics and the income tax department’s returns (which she noted was a “small European population”). The 1931 census of the territory did not include the “native population” in rural areas, and there were no vital statistics involved on them. She used surveys, talked with anthropologists and other experts on the ground for advice, and relied her own observations.

The very nature of colonialism itself prompted a small but significant methodological shift, as well. Official national income estimates in the United States and United Kingdom included the income of residents but excluded the income arising from foreign capital employed in producing the output of the territory. In Northern Rhodesia, as in most colonies, “foreign capital” (in this case, British capital) was hard to define. As the colony became independent, almost all capital would be foreign in origin. Thus it became apparent unlike in the United Kingdom or the United States, colonial accounts should include income of foreign companies in the growing copper industry. Northern Rhodesia’s overall national income thus increased by including income to foreigners who owned mines and factories but did not live there.

In the end, Deane ended up scoffing at the goal Robinson had originally laid out: a clear comparable framework for accounting in colonial territories. Rather than synoptic plans laid down from London, Deane instead suggested the colonial national incomes required local input and management. She called for economists to work closely with other experts. She still estimated what she could, using information she collected through surveys and observation. For instance, to calculate the monetary value of the work done by women milling the grain for a family at home, Deane sought out a few millers elsewhere in the colony who worked for wages, used their prices and average working time, and extrapolated based on those figures was estimated, but she could find millers in other parts of the territory. This allowed her to make women’s work legible in her accounts, but she recognized these were at best provisional.

Over the ensuing decades, scholars built upon Deane’s insights to argue about flaws in accounts. Feminist economists, such as Marilyn Waring, highlighted the invisibility of women’s domestic labor. Reform-minded economists and anthropologists sought ways to calculate the “informal” sector of economic activity that did not come across on official tax documents. Measuring wealth that moves between or beyond national borders – especially income parked in offshore accounts – also became an important topic of interest. In many ways, Deane’s work for the NIESR presaged all these valuable critiques.

After all, Deane recognized the power of such numbers and the importance of making them both inclusive and extensive. Even after the UN – led by one of Deane’s NIESR advisers, Richard Stone – decided not to include unwaged labor in official national accounts, Deane continued to research ways to quantify women’s work, including even the elusive firewood collection and crop transport in a 1953 book published by the NIESR, Colonial Social Accounting. Deane did so with an eye towards social reform, as she believed in order to address distributional concerns, the economic contributions of all producers and consumers, including subsistence producers and women, should be counted. As we once again debate the limits of the numbers we use to depict our collective economic life and struggle to imagine alternatives, we would do well to remember Deane’s initial struggles and her efforts to overcome them.

 

Stephen Macekura, is Assistant Professor at the Department of International Studies at Indiana University and the author of a forthcoming biography of Phyllis Deane. You can read more about her life and work here

 

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