Capital Commentary is the weekly current-affairs publication of CPJ, written to encourage the pursuit of public justice.


Economic Growth: Always Good?


George N. Monsma, Jr.

06-07-2013


June 7, 2013

By George N. Monsma, Jr.

Economic Growth: Unleashing the Potential of Human Flourishing by Edd S. Noell, Stephen L. S. Smith, and Bruce G. Webb (AEI Press; April 2013)

The authors of this short book, all professors of economics at Christian colleges, state that “the core proposition of this book is that growth is a moral issue because of its impact on the flourishing—or shriveling—of human society.” With an interest “in how growth relates to Christian moral norms in particular,” they state that sustained growth is good because “At its best, sustained growth raises the poor out of poverty, improves the lives of the rich, and helps nations avoid intergenerational conflict and the deprivations of fiscal crises.  Even more basically, growth provides nations with the means and interest to protect the environment and to cultivate a vibrant and humane civilization.” They also provide an economic analysis of the sources of growth, policies that promote it, and its effects. 

They define growth as increases in per capita Gross Domestic Product (GDP), pointing out that such growth comes from investments in physical capital (e.g., machines and buildings) and human capital (e.g., education and healthcare), as well as technological changes that raise the output from this human and physical capital.  They also explain how sustainable growth depends on personal and societal norms and values, such as honesty, trust, and compassion; the rule of law, which protects private property rights; an important role for markets; and a sound financial system. 

Although some passages in the book give an almost unqualified endorsement of sustainable growth in all societies, the authors appear to believe that growth is not a moral end in itself, but is rather a means to attain moral ends.  They justify growth on the basis that it contributes to human flourishing and “at its best” reduces poverty and protects the environment, among other things.  But since growth can do both harm and good, as they acknowledge with relation to the environment and some aspects of culture, and because growth in different situations will have different effects, such as growth in poor or rich countries or growth used for different purposes, an unqualified endorsement of growth is not appropriate. There are other ways of achieving the moral ends of reduction in poverty, increase in life expectancy, and reduction of pollution. This is demonstrated by the facts that these are different in countries with similar levels of GDP per capita, and are more fully achieved in some countries with lower levels of GDP per capita than in others with higher levels.

A strong Christian moral defense of growth as an instrument for good needs to clearly identify the aspects of flourishing from a Christian perspective and their relative importance.  The authors mention a range of things related to growth, including reductions in poverty, freedom for creativity and productivity, care for the environment, compassion and generosity, and increases in wealth and consumption for all, including the already rich.  I believe all but the latter would be included in the biblical concept of shalom, a state of flourishing. 

They dismiss concerns about inequality in wealth and income as long as the poor are gaining in absolute terms.  But the opportunity for people to fulfill their God-given callings in their societies is dependent on their relative wealth and income, as well as their absolute income. We see this demonstrated in the importance of positional goods, such as education where the relative amount one has is important in gaining employment, and by the importance of money in politics, where the relative amount one can spend on political activity is significant in the opportunity to influence policies.

Climate change induced by human activity illustrates the importance of a careful understanding of the relative importance of aspects of flourishing and the differential costs and benefits of growth in various situations. The authors correctly note that it is hard to know the timing and magnitude of the environmental consequences of climate change and it is difficult to negotiate a global solution.  They caution against taking immediate and sweeping actions in response to possible but uncertain consequences, and say that a broad-based global carbon tax would be the best and most efficient response, should action be taken.  But if there may be a tipping point in climate change beyond which the consequences would be drastic and the effects would be especially harsh on some of the poorest countries, as many climate scientists believe, would it not be prudent for the richest countries to take action now? Would it not be just for them to bear a greater proportionate burden than the poorer nations, even if this comes at the expense of some of their growth?

Overall, although the book has much useful information and analysis, it lacks some things necessary for an evaluation of growth in various situations from a Christian perspective.  

- George N. Monsma, Jr. is Professor of Economics, Emeritus at Calvin College.



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