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Being asked to review a book by an economist that is 500 pages long and has over 1,000 endnotes is an unusual event in today's publishing world. Academic economists mostly write articles; few write books; even fewer write books the scope of Benjamin F. Friedman's The Moral Consequences of Economic Growth. Friedman is Maier Professor of Political Economy at Harvard University, and he merits the old-fashioned title, "Professor of Political Economy." Like Adam Smith and Alfred Marshall before him, Friedman takes readers far beyond the neoclassical paradigm and econometrics of contemporary economics and instead weaves a remarkable tapestry of economics, history, and politics, with theology and psychology also sewn in. So the question is: what does the resulting fabric look like?
The Moral Consequences of Economic Growth
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The backdrop of the tapestry is the proposition that economic growth is a good thing. This proposition probably bears repeating because the majority of books written today (certainly outside the field of economics) contend that economic growth is a bad thing. But stitched into Friedman's contrarian backdrop are two different analytical threads that are rarely sewn together. The first is that growth is good because it means more goods and services. The second is that growth is good because it generates morality.
The first thread in Friedman's analysis is the conventional wisdom in economics. This idea goes back to Adam Smith: the wealth of a nation consists of its goods and services, not its gold. Today, an economics teacher might simply state what seems obvious (at least to economists): expanding a consumer's choice set necessarily makes the consumer better off (or at least no worse off, since the consumer can always choose the original choice set).
Today the conventional wisdom is often criticized. At one time, those opposed to what Adam Smith called the "obvious and simple system of natural liberty" faulted the market system for producing too little. That was the old-fashioned case against capitalism. Today, anti-growth environmentalists and small-is-beautiful advocates fault the market system for producing too many goods and services. Once scarcity was bad. Now abundance is. Once the market system provided too few choices; now it produces too many.1
The second thread in Friedman's analysis is that people generally behave in a more civilized and ethical fashion when economic times are good. As Friedman puts it, "Economic growth—meaning a rising standard of living for the clear majority of citizens—more often than not fosters greater opportunity, tolerance of diversity, social mobility, commitment to fairness, and dedication to democracy." In short, economic growth "not only relies upon moral impetus, it has positive moral consequences."
Just as opponents of economic growth often couch their objections in moral terms, so Friedman makes the case for economic growth in moral terms, arguing (from history and contemporary data) that the moral positives of growth outweigh the moral negatives. Economic textbooks focus on the GDP data and personal income figures of a nation. Friedman calls attention to unpriced benefits that accompany economic growth, such as greater tolerance and the extension of democracy.
The Moral Consequences of Economic Growth is no libertarian tract. Stitched into the tapestry that Friedman weaves is a generous role for government through taxation, environmental protection, and welfare provisions. Benjamin Friedman is not to be confused with Milton Friedman. But both Friedmans can restrain their enthusiasm for the anti-growth protesters whose policies would deprive others of higher incomes, more education, more employment opportunities, as well as the prospect of a more humane and democratic society that is derivative of economic growth.
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