Growth and Economic Folk Morality

I recently wrote a review of Friedman's Moral Consequences of Economic Growth for the forthcoming edition of the Cato Journal, and I wrote a lot of notes that I didn't use. And what good are blogs if not for publishing your discarded book review notes!

A main weakness of the Friedman book is that he becomes increasingly fuzzy about what he takes to be the specifically moral consequences of growth. Toward the end, you strongly suspect “moral” in Friedman's mouth means something like “egalitarian welfare liberal.” As much as this undermines the credibility or interest of his overall case, this move has been, I think, a rhetorical success for Friedman. His resolute sloppiness about the normative side of the equation gives him a lot of room to move. And he gets credit (though not so much from me) for avoiding the standard economist moral argument for growth. And here's what I have to say about that.

Which consequences of growth count as moral consequences? This is no small question. The answer naturally turns on one’s moral theory. According to the utilitarian philosophy (sometimes just called “consequentialism”) morality is entirely a matter of consequences, and the consequences that matter are those that increase the net quantity of pleasure or happiness. If economic growth increases the net sum of happiness, then that’s all we need to know in order to endorse it morally.

In fact, a kind of simple utilitarianism is the house philosophy of the economics profession. In the orthodox neoclassical theory, utility just is a measure of the satisfaction of an agent’s preferences, and it is a logical consequence of the definition of terms that an increase in income leads to the choice of a more preferred combination of goods, thereby increasing utility. It should be emphasized that the formal notion of utility as preference satisfaction, is, well, formal, and is not a substantive psychological notion at all. Formal utility implies nothing whatsoever about subjective experience and is not synonymous with pleasure or happiness, just as “preference” in the formal theory implies nothing about liking or wanting. Preference is nothing more than that which is revealed by what an agent has done, and utility is the notation for representing it.

Nonetheless, economists are generally all-too-happy to shuffle back and forth between the two notions of utility according to convenience. The slide from formal to substantive utility, combined with utilitarian moral theory, leads to what I call “economic folk morality.” According to economic folk morality, the moral desirability of economic growth is close at hand. Broad-based growth makes almost everyone wealthier; wealthier people can satisfy more of their preferences; satisfying preferences just is happiness; and happiness just is the moral summum bonum. So growth is morally good. QED.

But economic folk morality is false for at least three reasons. First, preference satisfaction does not entail happiness. It is possible to want and get things that will make us miserable. Second, the pleasure or happiness a life contains does not exhaust its value. The value and quality of our lives depends not only on how we feel, but also on how much of our human potential has come to fruition, the content of our characters, and the objective nature of our behavior. Third, morality is not primarily a matter of adding up a quantity of anything. A person who achieves her ends, honors her obligations, and contributes to her community has lived a moral life, regardless of the quantity of happiness she added to it.

Part of the interest of Friedman’s book is that he does not lean on the economic folk proof for the morality of growth. Insofar as the folk proof is unsound, that has to be to Friedman’s credit. However, the folk proof is tantalizingly close to a profound truth about the morality of economic growth. My complaint is that Friedman’s list of the moral consequences of growth are in fact moral consequences only because they are instrumental to some further state of affairs that is good.

Democracy, tolerance, openness are not good for their own sakes, but for what they enable. But what they enable—an increase in the scope of opportunity and the realization of meaningful human ends—is what economic growth enables, too. Friedman's moral favorites are not things of independent value with which to justify growth. Rather these liberal desirables are part a package of political-economic goods that already includes growth. These elements are part of the same package in virtue of the fact that they each make life more secure, more satisfying, and more worth living. Growth has better consequences when it occurs within a liberal system. But liberalism is worth having in very large part because it enables economic growth and its consequences. Friedman's moral desirables are in fact desirable because they enable and magnify the life-enhancing powers of wealth. If it is true that growth in turn enables the conditions that enable it, then we will have a virtuous circle. But we have to get out of the circle to morally vindicate growth. And the folk proof shows the way: growth makes life better.

7 thoughts on “Growth and Economic Folk Morality”

  1. People need autonomy, but they need community, too. It seems that the Danish way is about the best: a common culture (and presumably some sort of local communities–I’m not Danish so I’m actually talking out of my ass) that everyone can belong too, yet people have enough freedom to do the different things they actually want to. But if their preferences were more diverse, things would be harder.
    The US still does very well in the happiness ‘rankings’, though. Maybe there are enough local communities. Maybe the red-blue sorting is helping us out. One law and set of communities for San Francisco, another for Dallas.

    1. Denmark is an extreme outlier with a very small population. I’m sure there are lessons to be learned from a few of their policies, but it’s not very useful as a model.

  2. Well, after reading the post and the comments I can see that you’re right Will. You need a translation to understand his point. I’ll attempt a translation into secular language. First the translation then some comments.
    I enjoyed Prof. Deneen’s post about free-riding and I agree that devout Christians are in a precarious position. I think it is also the strongest position available because we try to be conscious of our debts and to meet our obligations. I submit that the main lines of argument against this position are weak because they point to the issue of the debts.
    We inherited our situation, as everyone does, and we aren’t satisfied with it. Why is the situation the way it is? It got this way because our ancestors attempted to live independently from God. We can either pursue that attempt or admit that are lives are dependent on God. It is true we wouldn’t be in this situation if our ancestors hadn’t made the attempt. We should be grateful for what we have inherited, but we shouldn’t make the same mistakes as our ancestors.
    Respect for what we inherited is important and should be maintained. It is out of loyalty to what our parents left us that we should reject things that destroy the institutions and country to which we owe a great deal.
    The first point that I feel ought to be made is that were I translated “our” as “devout Christians” the translation is fairly weak. Unfortunately I’m not at all clear about which group of devout Christians Larison belongs to. My brother would probably know, but since he joined a monastery he’s kind of hard to reach.
    In Larison’s title “Patrimony and Autonomy” Patrimony, as I think everyone knows, refers to what people receive from their parents/ancestors, while Autonomy in this case refers to the relation between individuals and God.
    As for the “false beliefs” the only one I know of that he could be referencing is the “belief” generally attributed to atheists and unnamed ancestors is that humans don’t need God to thrive. The argument for it being a false belief stems from the metaphysics/theology position that God created and sustains everything.
    The point about being dependent on God is related to some of the other things that Christians have done. Particularly when they sell what they have and give everything away to the needy, open free clinics or hospitals, or become teachers to people too poor to pay much beyond subsistence wages. Honestly, Larison seems to be one of the Christians that is mostly concerned with the arguments going on internally to Christian groups and the charity efforts.

Comments are closed.