The ethical economist

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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.


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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