In macroeconomics theories, Gross Domestic Product (GDP) is used to understand and measure the relative prosperity of a country by the institutions over the world. However, some important factors connected to the welfare of human being is not included in the concept of GDP. It is desirable to include these aspects in the definition of GDP while it may lead to the misconception as well. GDP has three economic definitions from the scientific perspective: the value of the final goods and services provided, the sum of value added and the sum of incomes in the economy during a given period. However, it is noticed that GDP does not take into account the progress of well-being of people and the country, such as education, health, pollution in the environment, crime rate, income distribution and so on. In other words, the GDP concept from the scientific perspective free itself from any sense of moral (Ghoshal). As a result, whether the concept of GDP is able to adequately capture the prosperity of countries is being highly doubted. There are mainly two reasons behind this phenomenon: Firstly, from the scientific perspective, the economy is identified as a science that only pays attention to the knowledge of generalizable rules, social patterns and psychological laws which refer to the “pretense of knowledge”.
Consequently, any ethical or moral discussions will be taken away when decision is being made (Ghoshal). Besides, according to the ideology-based gloomy vision. There is a pessimistic view in the human nature, which will have an effect on the roles of companies in society. Ghoshal believes this pessimistic has led directly to destructive management behavior. As a result, the concept of GDP is influenced and adapted in this way as well. In order to deal with this problems, the concept should be adjusted. “scientific” emphasizes people like to make decisions based on scientifically-proven facts such as rules and laws. However, the concept of GDP should also be based on facts. To be specific, Business should not only be treated as a science, we should use more common sense that combines “how things are” with the imagination of “how things should be” to develop the concept of what corporate governance and decision-making represents. In our example, A prosperous country should not only has considerable value added, it should also be capable of contributing to the development of human welfare. There will be shortcoming and benefits generated after the adjustments. When it comes to the bad side, theoretical concepts such as GDP will be discussed in a descriptive way. Unlike prescriptive or normative perspective, basically everyone can have a personal opinion and individual taste on “how GDP should be and how welfare should be”. However, there should be only one version of GDP, this adjustment makes the definition of the GDP concept harder.
On the other side, the adjustment might also be beneficial. Scientists have been looking for the objects not only in the scientific way but also focus their actual meaning. It is possible to define GDP in a normative way about how people’s welfare is being affecting, just as it also possible to have prescriptive debate on a scientific definition of GDP. The key is how GDP should be ideally representing not only in the economic perspective but also fit in ethical way. To conclude, the adjustment of the GDP concept is desirable if it takes moral factors into account. However, it may still lead to misconception because descriptive method allows everyone has their own opinion.
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