Britain’s Central Statistical Office (now the Office for National Statistics) was founded in 1940 following a direct order from Winston Churchill.  With Nazi troops at channel ports, the issue to be answered was obvious.  What was the capacity of the British economy to build tanks, guns and planes?  And how successful was wartime direction of production in diverting resources to these uses?

Both the relevant questions, and the nature of the economy, are today very different.  But the methods by which national economic statistics are collected have changed less, as last week’s report from Sir Charles Bean shows.

We no longer strain to discover how much stuff we can hurl at the enemy.  We are not even really concerned with how ‘the economy’ is performing – it amuses me how many people talk of the needs of ‘the economy’, as if it were a demanding relative whose demands we are obliged to satisfy.  We want to know how well our market system meets our expectations of a better life.

And increased quantities of physical goods are less and less important to these expectations.  An affluent society mostly wants better, rather than more. And increasingly wants services rather than manufactured goods. These goods and services today are heterogeneous and of different, and mostly improving, quality. How can I even interpret a measure of output of goods, when the phone in my pocket has more processing power than the massive university computer on which I did research in the 1970s?

       Most of these goods and services are not valuable in themselves, but only as means to some end.  Of course, this was always true:  Churchill did not really want Spitfires and Hurricanes, but things that would repel attacking Germans, Today, I don’t really want a phone in my pocket – to remember and carry it is a nuisance – but I do want to be able to talk to friends and colleagues, read books, know my way from A to B, and share photographic memories, and the genius of the iphone is that it does all these things.

What we need to know today in order to understand the effectiveness of a modern economy in fulfilling the aspirations of modern consumers is fundamentally different from what we needed to know to direct wartime production effectively.  Yet the picture Bean describes is one in which, to a considerable extent, official statisticians are just turning the same handle that Churchill ordered them to turn seventy-five years ago.  The report contrasts the extraordinary granularity of the categorisation of manufactured output with the broad brush classification of categories of services. We are slow to acknowledge new methods of production and consumption; Bean notes that the omission of Airbnb alone might reduce reported GDP by as much as 0.7%. Depreciation of capital is secondary when there is a war to be fought, but central to the quality of modern life.  Besides these fundamental questions, the matter of whether revisions to provisional data estimates in Britain are larger or smaller than those made by statistical offices in other countries seems inconsequential.

And in 1940, the only way to assess the productive capacity of the British economy was to survey plants and ask their managers what they could do.   But now the information technology revolution generates extraordinary quantities of information every day.   Computers and cameras are recording every sale, every movement of goods, every transaction of significant value. Everyone is talking about ‘big data’. Doesn’t it seem odd that the principal means of compiling official statistics is still specially commissioned surveys?