"rapidly increase real-product output but then see most of the dollar-gains erased by competition." What you mean to say is 'can we measure consumer surpluses'

"rapidly increase real-product output but then see most of the dollar-gains erased by competition." What you mean to say is 'can we measure consumer surpluses' instead of 'producer surpluses' - i.e. profits. Indirectly - yes - this may be the root of the problem. When products improve in quantity and quality, but profits go down - we generally say the 'economy is shrinking'. But the value to consumer has gone up. We don't measure 'consumer surplus' i.e. the value captured by a consumer when they buy something. Essentially - you pay $1 for a pen. How much would that pen cost so that you felt 'it was not worth it'. Well, you might pay $100 for a pen, if you need to write sometime in your life. You'd probably treat it very well, but you'd still need to buy it. Maybe $500 is the real value of a pen. In this case - there is $499 'consumer surplus' every time a pen is bought for $1. (Again, not quite fair as you might buy several $1 pens whereas you'd only buy one for $500 - but you get the picture). The GDP is just the cost of everything sold in the economy + government spending. Which is a really bad measure if you think about it :)