[Paleopsych] Commentary: Dan Seligman: Good and Plenty
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Fri Dec 30 19:31:13 UTC 2005
Good and Plenty
The Moral Consequences
of Economic Growth
by Benjamin M. Friedman
Knopf. 592 pp. $35.00
Booms are better than busts. When the good times roll, people have
more money, more options in life, more fun, higher living
standards. The material case for prosperity seems incontestable.
And now, it appears, there is also a moral case. Max Weber told us
that good character promotes economic growth. Benjamin M. Friedman,
who has taught economics at Harvard for 33 years, turns this
around. He argues that growth not only relies upon morality, but
also has "positive moral consequences."
What might these be? In Friedman's words: "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." Conversely, Friedman warns, periods
of economic stagnation threaten a country's "moral character"--as,
in his view, moral character is threatened right now in the United
The rising intolerance and incivility and the eroding generosity
and openness that have marked important aspects of American society
in the recent past have been, in significant part, a consequence of
the stagnation of American middle-class standards during much of
the last quarter of the 20th century.
In tackling the money-morality nexus, Friedman is venturing into a
crowded field, and in one sense going against the grain. Many
thinkers have emphasized the corrupting effects of wealth, and the
tensions between our material interests and our moral
sensibilities. Edward Everett, another Harvard sage (but in the
early 19th century), argued that "palmy prosperity" was actually a
threat to "public virtue." Egalitarians, who regard income
inequalities as inherently immoral, worry that high growth rates in
some developed countries, like the United States, appear to be
associated with less equality. They tend to prefer the
French-German-Scandinavian model, currently featuring far less
growth but greater equality.
By calling for high levels of growth as a means to a greater
"commitment to fairness," Friedman is implicitly rejecting these
familiar perspectives. In an opening chapter, he offers a kind of
armchair summary of his reasons. His main point here is that
citizens who feel confident about their own situation will be more
generous in supporting those who are less well off. But Friedman's
case does not really depend on this proposition, which seems
intuitively plausible if not exactly airtight. Ultimately, it rests
on a massive exercise in inductive reasoning--specifically, on nine
historical chapters that comprise three-quarters of his book and
that present numerous examples of moral progress that appears to
have been associated with economic growth.
This tour is prefaced by a chapter on the 18th-century
Enlightenment thinkers who first began to conceive of morality in
secular terms. Next, Friedman takes us through the moral
consequences (mostly favorable) of the industrial revolution; then
he offers four chapters that in effect make up an economic history
of the United States; and then he serves up parallel chapters on
Britain, France, Germany, and the developing world. With some
exceptions, he finds both freedom and tolerance rising with the
economy, and repression and bigotry on the march in times of
stagnation. The book's final section, less directly relevant to the
main thesis, has chapters on the problem of inequality, on the
environment, and--finally and inevitably--on what needs to be done
in the United States today.
Friedman has, without question, an impressive command of worldwide
economic/technological history, and this book is a treasure trove
of arresting details. One is reminded, for example, that L. Frank
Baum's The Wizard of Oz, published in 1909, was widely understood
at the time as an allegory supporting the populist free-silver
program. (Dorothy's magical shoes are silver in the book, even if
not in the movie.) One learns that the invention in 1856 of the
Bessemer process for steelmaking suddenly made possible steamships
that were far lighter, and therefore able to travel much farther.
Also that steel gave men razors to shave with at home. Also that,
since 1869, successive generations of Americans have exceeded their
parents' living standards by an average of 50 percent.
Such historical vignettes make for compelling reading. Yet how well
does Friedman's basic proposition about the link between economic
growth and morality hold up? The answer hinges in part on his, and
our, definition of morality.
In his guided tour of morality as it has been conceived by great
thinkers in the past, Friedman leans hard on the ethos of
self-improvement propagated by the Puritans. He cites Lincoln's
contention that in America, the only reason for a worker's failure
to rise above wage labor would be his "dependent nature." He
includes an intriguing commentary on Adam Smith's The Wealth of
Nations. This work, Friedman reminds us, had a powerful moral
subtext. In the past, national wealth had been created by war,
plunder, slavery, and other forms of exploitation. Now the world
had a model for creating wealth via transactions entered into
voluntarily, and expected to produce advantages for both sides. For
the first time in human history, national wealth creation might be
an exercise in virtue.
But in later chapters, where Friedman is searching out examples of
economic growth encouraging moral behavior, he tosses all this
overboard. Here he makes the concept of morality largely synonymous
with government intervention on behalf of the underdog--whether or
not the intervention has generated a positive result. In writing
about recent German history, for example, Friedman speaks
enthusiastically of the German chancellor Willy Brandt's economic
reforms in the early 1970's, even while conceding that many of them
proved counterproductive. It does not matter, says Friedman. The
issue is not whether these measures "ultimately represented optimal
policy"; what is important is that "they reflected [a] political
desire to achieve both a fairer and a more democratic society."
In the American context, Friedman takes morality to mean something
even more narrowly defined: support for affirmative action,
immigration, concern about endangered species, a belief in strong
unions and in corporate social responsibility (as opposed to profit
maximization). He identifies the federal welfare reforms of the
mid-1990's as reverse morality, triggered by the bitterness and
bigotry flowing naturally from years of stagnating wages.
Friedman's unstated but obvious bottom line: morality is the
liberal political agenda.
It is worth noting in this connection that Friedman has never made
a secret of his politics. A Democratic partisan, he has often
advised the party's presidential candidates. His last big book, Day
of Reckoning (1988), was a full-bore attack on Reaganomics that got
a rave review from the New York Times ("Every citizen ought to read
it") and a blast from the Wall Street Journal.
Needless to say, political partisanship need not prevent a scholar
from writing a convincing book with a controversial thesis. But in
this instance, partisanship has clearly skewed the conclusions.
Thus, the case can easily be made that egalitarian policies, by
undermining the very values like thrift and independence that
economic growth hinges upon, often end up injuring their intended
beneficiaries and are therefore immoral.
When trying to prove a generality by citing examples, it would seem
essential that the examples be selected according to some unbiased
principle. No such principle appears in the book. Nowhere does
Friedman state how much living standards must rise in order to
alter the moral climate, nor is it made clear how long a rise must
be sustained. Friedman's formulations sometimes assume that decades
of prosperity are required, yet he also cites changes brought about
in the span of a few short years. Sometimes he uses gross domestic
product as his measure of growth. At other times he uses per-capita
income. At yet other times, he uses the earnings of the "average
worker in American business." So, in making his basic case, he
creates a lot of wiggle room.
Yet even with all this flexibility, Friedman is obliged to note the
existence of numerous exceptions to his rule. By far the most
important--he devotes a whole chapter to it--is the Great
Depression of the 1930's, when the economy was in tatters but New
Deal labor laws, job programs, and welfare initiatives were judged
to be scaling new heights of progressive morality. Friedman offers
several possible explanations of this antithetical phenomenon, of
which the likeliest reason, in his view, was the stark awfulness of
the Depression experience. This, affecting people from all walks of
life, and representing an unparalleled threat to the entire social
structure, ultimately forced Americans to "pull together." But the
Depression was equally awful, if not worse, in Germany, and the
Germans did not choose progressive policies. They chose Hitler.
Another major exception cited by Friedman is from late-19th-century
Germany: Bismarck's introduction, after years of economic decline,
of social benefits like pensions for the elderly and infirm. Still
another is Britain's repeal of the infamous Corn Laws in the
1840's; this step did wonders for ordinary working families, yet it
came about as a "response to stagnation." And then there were the
British electoral reforms of the mid-1880's, which broadly extended
male suffrage--another example of moral deportment that followed
fifteen years without significant growth.
Our current political landscape would appear to present special
difficulties for Friedman. As I noted above, he regards the present
period as politically regressive, and relates our supposed moral
setbacks to stagnating living standards in the years from 1975 to
2000. In fact, median household income rose by 26 percent in that
quarter-century, signifying rising living standards for a clear
majority--and presumably passing Friedman's acid test.
Nevertheless, and highlighting the wobbly nature of his criteria,
he deems this increase insufficient, and attributes our present
moral shortcomings to those 25 years of "stagnation."
But this brings us back to Friedman's politically self-serving
definition of morality. Given his blindness to the possibility that
"progressive" polices (like affirmative action) might themselves be
unfair, or (like unreformed welfare) positively harmful to the
underdog, is it to be wondered that so many of his historical
examples fail to uphold the argument laid out, engrossingly if
tendentiously, over the 570 pages of this book?
Dan Seligman is a contributing editor of Forbes.
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