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Britain’s ‘economy’ is doing terribly

October 2, 2014

Another reminder as to why Chris Dillow’s Stumbling and Mumbling is one of best blogs around. Some simple facts about the British economy:

Let’s just remind ourselves of the facts. Back in June 2010 the OBR forecast (pdf) that real GDP would grow by a cumulative 8.2% in between 2010 and 2013. In fact, it grew by only 3.1%. Partly because of this, the deficit is much larger now than expected. In 2010, the OBR forecast that PSNB in 2014-15 would be £37bn, or 2.1% of GDP. It now expects it to be £83.9bn, or 5.5% of GDP.

The economy has grown much more slowly than expected and the deficit is therefore much worse.

But then Dillow questions the very idea of ‘the economy’ as an actually-existing thing. A newer post on Baudrillard’s idea of hyperreality asks whether what we think of as ‘the economy’ might not really be what we think it is. Politicians and the media are “creating a symbol or set of signifiers which actually represent something that does not actually exist”.

All that matters is that policymakers keep the creators and sustainers of that hyperreality happy by seeming to alter those symbols and signifiers in a useful way. Where ‘the economy’ ends and the media begins might be a blur. Looking good in the media isn’t just a means to an end; it might be the end itself.

I’ve long doubted that ‘the economy’ is an object just like a table or an elephant. The concept is probably conditioned by the way in which it is discussed. Even the study of economics has all sorts of definitions, each of which affects the notion of what the economy is. Economists aren’t natural scientists studying fixed objects in an effort to find out the truth. They’re engaged in a process of narrative. And economics is personal, whether we like it or not. The idea of hyperreality might be a good way of thinking about these problems.

As Dillow suggests, it may be irrelevant whether or not the ‘objective’ realities of unemployment and poverty due to economic underperformance cause people physical unhappiness. These people aren’t the creators and purveyors of hyperreality.

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