Should we ALWAYS pursue economic growth?

De-growthers say that we have an unhealthy obsession with economic growth. They often focus on how richer countries do not really need to get richer, and some countries could in fact even decrease their economic standing in order to improve environmental outcomes. There is some disagreement between de-growthers on if poorer countries should pursue economic growth; on the one hand, poorer countries that grow can reduce poverty and improve access to basic needs. On the other hand, poorer countries typically do not emit as much since there is very little production, so growing involves a larger environmental footprint (see the Kuznets Curve).

However, Brian Kogelmann, a political philosopher now at Purdue University, asks a crucial question: should we always pursue economic growth? He says, plainly, yes.

What I find interesting about this paper is that he approaches it in a different way than I would have thought to. Instead of focusing mainly on the benefits of economic growth (even for richer countries), he flips the premise. Stopping economic growth, according to Kogelmann, requires morally objectionable actions.

Underlying Conditions Lead to Growth; Do Not Stop Those Conditions

Brian uses a great metaphor in this paper:

If conditions are right, growth tends to occur naturally. No one commands it. This does not mean growth is inevitable. For most of human history, growth was rare. […] But if a country is rich, we can assume that conditions are right, which means growth will likely continue absent anyone’s explicit command. Given this, how does a rich country stop growing? It can alter the underlying conditions that tend to foster economic growth. If the soil is right the economy will likely grow like a weed. If you want to stop the weed from growing without completely uprooting it, you alter the soil to slow or halt its progress.

This makes a simple, but important point. For most of human history, poverty was the norm and growth/wealth was the exception. But now we live in a world where growth is quite common. Even developing countries have living standards that middle-income countries 100 years ago would have been envious of.

Obviously, something has changed that has led to this substantial rise in global wealth. Kogelmann makes the point that these conditions are morally good regardless of if they are good for growth or not. (Since they happen to be good for growth, that’s just the cherry on top!)

There’s a litany of reasons for what those conditions actually are. Kogelmann points out a few: high-quality institutions (economic and political), stock of knowledge and technological advancements, and change in ethics.

Let’s start with institutionalists. Acemoglu and Johnson in their book “Why Nations Fail” point out the differences between inclusive and extractive institutions. The former provides property rights, unbiased legal systems, public provisions that level the playing field from a legal perspective, and ease of doing business; the latter takes resources from one group of society and redistributes it to another, often more politically connected, group.

If you take this viewpoint broadly seriously, this can help explain the large gap of living standards between countries. Conditions that are inclusive institutions will naturally lead to growth. Therefore, if the goal is to stop growth in those countries, you need to remove these institutions. As Kogelmann puts it:

Extractive political institutions allocate political power narrowly, in the hands of the few; inclusive political institutions allocate power broadly, in the hands of the many. To insist on extractive political institutions is to insist on a non- democratic form of government. But it is relatively uncontroversial that any normatively defensible society will be democratic.

This goes back to last week’s post, which shows that economic freedom is necessary for political freedom. Doing what the vast majority of us view as “morally right” will naturally lead to prosperity. Even de-growthers agree, and often emphasize, that democracy is necessary for their worldview. However, if Acemoglu and Johnson are correct, then de-growthers will have to want such institutions to change. But this makes the world that is already experiencing declines in human freedom and democracy (or a “Democratic Recession”) even more so.

Joel Mokyr is at the forefront of the “knowledge/innovation” side of explaining economic growth. Increases in human capital and knowledge will increase, according to Mokyr, as long as people are free to obtain such knowledge.

Do we want to live in a world where the thirst for knowledge is not quelched? According to Kogelmann (and I agree), this would be morally apprehensible, since this would involve large-scale levels of censorship. Achieving such means for the sake of slowing growth would involve a suppression of speech and inquiry. Again, de-growthers would have swallow an uncomfortable pill that this is an absolute necessity to slow down economic progress. In short, they would need to subscribe to a worldview that leaves the world both less democratic and free.

Dierdre McCloskey is the most well-known in favor of the third explanation of “the hockey stick” of economic growth: a change in ethics. Merchants were often viewed with contempt, but during the Enlightenment Era, this all changed. They were now seen as respectable members of society who added value to the world by providing people access to goods that were originally absent.  

Once again, if we take this viewpoint seriously, then going back to a world pre-growth would involve one that denigrates tradespeople and providers of valuable services. Kogelmann says:

So, we now afford dignity to everyone because we believe everyone is of the same rank. To revoke dignity from the bourgeoisie would be to treat them as members of an inferior rank. This is obviously unacceptable.

To summarize this wonderful paper, if we truly want to stop growth for whatever reason, this would almost certainly involve making the world less free and one where we look down on our fellow citizens. Kogelmann states that this is morally reprehensible, and I completely agree. He concludes his paper, and I will conclude here with one final point:

Since we have independent moral reasons to insist on inclusive institutions, open inquiry, and bourgeois dignity, we are committed to continued economic growth.