The Moral Consequences of Economic Growth

Brad DeLong has authored a wonderful and intelligent review of Ben Friedman's recent book, "The Moral Consequences of Economic Growth." Snip from DeLong's article:

Friedman is—as I am—a card-carrying neoliberal. We economists do not understand very much about how knowledge of modern technologies and effective organizations and institutions diffuses from region to region around the globe. We do know that it diffuses appallingly slowly: there are still three billion people throughout the world whose lives are largely preindustrial (even if theyare far above the Malthusian poverty in which most of our preindustrial ancestors lived). We suspect that maximizing contact—economic, social, and cultural—is a powerful way to transfer ideas and practices. Hence the neoliberal imperative: do whatever you can to maximize economic growth in the developing world, and hope that rapid growth generates in its train the strong local pressures for social, environmental, cultural, and political advance that are needed if non-economic forms of progress are to be stable and durable.

There is a criticism of the neoliberal view that holds that higher material incomes cannot be the cure to poverty, for poverty is also a lack of voice in society, a lack of security in one’s position, and a lack of respect. With all this Friedman agrees. But he adds that faster material progress is the best way to generate pressures to produce voice, security, and respect.

Hence the neoliberal imperative: lower barriers to trade and contact; lower barriers of all kinds; lower barriers in the expectation that faster economic growth will itself generate countervailing pressures that will undo and cure the bad social and distributional side-effects of faster growth. Friedman’s reading of the moral consequences of economic growth provides a powerful piece of support to this neoliberal imperative.

Do read the whole thing. Link