Joseph Stiglitz has a lengthy review of Benjamin Friedman’s ‘The Moral Consequences of Economic Growth’ in the most recent issue of Foreign Affairs – which is equal parts book review and Stigltiz op-ed. While admitting that many of the arguments are compelling, Stiglitz points out that the type of growth matters as much as the amount.
Benjamin Friedman takes on [growth] critics, positing that growth has not only obvious economic benefits, but moral benefits as well. He argues that it has the potential to improve the environment, reduce poverty, promote democracy, and make for a more open and tolerant society... His message is nuanced (though not, in some respects, as nuanced as I would have liked), and he realizes that growth has not always brought the promised benefits. The market economy does not automatically guarantee growth, social justice, or even economic efficiency; achieving those ends requires that government play an important role.
Accordingly:
The debate should not be centered on whether one is in favor of growth or against it. The question should be, are there policies that can promote what might be called moral growth -- growth that is sustainable, that increases living standards not just today but for future generations as well, and that leads to a more tolerant, open society?
And while he points out several fundamental flaws in Friedman’s analysis, Stiglitz concludes:
Friedman's book is thus an important antidote to the populist antigrowth movement and also to those who say that the free market is all we need.
In the author’s own words:
My book focuses on how economic growth, or its absence, shapes the moral character of a society…The point of my book is that economic growth matters in part because it brings positive changes in a society’s social attitudes and political institutions, and ultimately its moral character. But let’s not forget that rising incomes–and that’s what economic growth means–bring material benefits as well, and that the poorer a country is, the more important those material improvements are.
The last part of the book is dedicated to a critique of current US domestic policies and how these could be changed to pursue Friedman’s “moral growth.” (A point which Stiglitz of course discusses at length.)
Has anyone read this? Care to share?
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I have not read the book, but would say that this debate is all a matter of perspective. This discussion is very different if you are a domestic government formulating policy or if you are an international donor.... actually, take that back, no i dont. Growth is good. All growth. The more the better.
I very much liked this: "Consider the following thought experiment: If you could choose which country to live in but would be assigned an income randomly from within that country's income distribution, would you choose the country with the highest GDP per capita? No. More relevant to that decision is median income (the income level that 50 percent of the population is below and 50 percent is above).... As the income distribution becomes increasingly skewed, with an increasing share of the wealth and income in the hands of those at the top, the median falls further and further below the mean. That is why, even as per capita GDP has been increasing in the United States, U.S. median household income has actually been falling."
Read more Read lessDiego, In the US the median household size is shrinking, so you would expect the median household income to go down. US per capita income is still increasing.
Hey Pablo, I just came across this post and thought that I would share something similar I had writen. I quote Stiglitz's review quite heavily. http://www.nextbillion.net/blogs/2006/06/26/moral-growth