Sizes and Proportional Structures of Total Output and Income

The rise in the labour force from about 50 million to over 120 million between 1929 and 1989 is certainly one indicator of the increase in the United States economy. The aggregate size of the economy is perhaps better measured by what the labour force — or perhaps we should say the whole population — has actually produced, consumed, accumulated or received as income. There are four standard aggregates in the national income statistics, and their history is shown in Figure 3.1. The most familiar of the aggregates is GNP. This is a concept which has been subject to some severe criticism.1 It does not include household production, and since 1929 there has been a considerable shift from household production to market production, reflected for instance in the increase in the proportion of women in the labour force, and in some other changes, which would suggest that the GNP of earlier years may have been underestimated relative to the GNP of later years, so that some of the growth is illusory. The concept of GNP also identifies household purchases with household consumption. Many household purchases are durable goods which may be consumed over a long period of time, or may even appreciate like antique furniture or paintings. Household capital is almost completely neglected in the national accounts.