The Moral Consequences of Economic Growth

by Benjamin M. Friedman

From the author of Day of Reckoning , the acclaimed critique of Ronald Reagan’s economic policy (“Every citizen should read it,” said The New York Times ): a persuasive, wide-ranging argument that economic growth provides far more than material benefits.

In clear-cut prose, Benjamin M. Friedman examines the political and social histories of the large Western democracies–particularly of the United States since the Civil War–to demonstrate the fact that incomes on the rise lead to more open and democratic societies. He explains that growth, rather than simply a high standard of living, is key to effecting political and social liberalization in the third world, and shows that even the wealthiest of nations puts its democratic values at risk when income levels stand still. Merely being rich is no protection against a turn toward rigidity and intolerance when a country’s citizens lose the sense that they are getting ahead.

With concrete policy suggestions for pursuing growth at home and promoting worldwide economic expansion, this volume is a major contribution to the ongoing debate about the effects of economic growth and globalization.

Genres: Economics, Nonfiction, History, Philosophy, Politics, Business, World History

592 pages, Paperback

First published October 18, 2005

About the author

Benjamin Morton Friedman (born 1944) is a leading American political economist. Friedman is the William Joseph Maier Professor of Political Economy at Harvard University. He is a member of the Council on Foreign Relations, the Brookings Institute's Panel on Economic Activity, and the editorial board of the Encyclopædia Britannica.

Friedman received his A.B., A.M., and Ph.D. degrees, all in economics, from Harvard University. He also received an M.Sc. in economics and politics from King's College, Cambridge where he was a Marshall Scholar. He has been on the Harvard faculty since 1972. Currently Friedman is a member of the Committee on Capital Markets Regulation.

Reviews

[Paige McLoughlin · Rating 5 out of 5]

This book I read in 2006 and it pricked up my ears to the consequences of economic growth on politics in the aughts when this came out. The argument that periods of economic crisis and declining fortunes of the mass of the population lead to extremist politics (sometimes of the left) mostly of the right. The crisis of WWI and the collapse of the world economy was a spur for Fascism to grow in Europe. Britain and America were fortunate oddballs to this phenomenon (the fascists were around for sure and active) but fortune smiled on the US and British system and things stayed liberal or moved further left to a form of social democracy. We got lucky that time. That luck and British and Americans being victors over fascism in world war II the postwar boom happened which allowed for the prosperity and expectations for the Civil Rights movement and rights revolution of the sixties and early seventies. Of course, the good economic times broke down in the mid-seventies. With the end of the good times came the right-wing chill and the slide to right and Reagan and growing inequality, the destruction of labor and downward drift of the middle class and the rightward pull getting reinforced both feedings off each other till now it reached its apotheosis in Trumpism, Bad times and Right-wing politics are now an existential threat to democracy. I paid attention to this around the time of 9/11 and the author's thesis seems to have been proven right since that time. Sad but true.

[Laurent Franckx · Rating 3 out of 5]

This book dates from 2005, but it's amazing how relevant it is for today.
Friedman argues that economic growth does not just generate direct benefits in terms of more goods and services, but also makes societies more tolerant and progressive. Moreover, argues Friedman, what counts is less the absolute income levels as the process of growth itself.
This is a very bold thesis, but Friedman does a pretty good job in illustrating his thesis in detail with examples from the US, France, Germany and the UK. So, even if you are not convinced by the the main argument, you will learn a lot about the economic and political history of those countries.
What makes this book rather exceptional, is that Friedman does not cherry pick his evidence, and repeatedly points to exceptions to his thesis, and admits he doesn't really have a good explanation for them.
The only issue I have with the book is that some chapters don't really belong there. The chapters on developing countries, inequality and the environment are certainly very interesting, but each of them would deserve a book length treatment in their own right. As Friedman tries to give a very balanced view, the result is chapters that are much too dense in contents for a general readership. Also, the concluding chapter on the US is not really relevant for a general audience, at least not in the detail of this book.
But, overall, it's an interesting work that remains amazingly relevant today.

[David]

Picture two men. One is named Mike and the other John. Mike's net worth is $20,000 and John's net worth is $1 million.

One year later, after a series of unfortunate business outcomes, John's net worth falls to $100,000. But Mike's net worth stays the same.
John's fall in fortune affects his health and his marriage and his relationship with his children, but Mike is still happy the way he was.

So far so good.

Now imagine a social scientist comes. After observing Mike's relative financial misfortune and his consequent social problems he concludes that economic progress is necessary for morality and social stability. The evidence he gives is that Mike was in sound health and was in good relationship with his wife and children before he lost 90% of his wealth. Would that be conclusive?

That, I believe, is the mistake the author makes.

He tries to argue that financial expansion is necessary for social stability by pointing out episodes of intolerance and crime that occurred during financial contractions. But all that demonstrates is that financial contraction in places where financial expansion is assumed to be the norm has a social and moral impact.

[Fiatluxury]

Again, this is about seeing if anyone has a compelling argument for why MORE is better. In this guy's case, the argument is that there is a correlation between growth - not just wealth, but productivity, innovation, blah blah - and liberalization of policies that we western 21st century types have moralized (human rights, individualism, ecology, that sort of thing.) I'm not sure how much cheerleading for growth I can tolerate, but it looks interesting. By the by, this is not the same (Thomas) Friedman who wrote the odious and dull "World is Flat." This guy Benjamin has a few more chops than simply being famous for being rich and thinking consumption is bad, so I'm giving him the benefit of the doubt...for now.

[Mateusz Borowiecki · Rating 3 out of 5]

"All men [...] have in them the physical power to raise themselves up to the highest ideas [...] the differences in intellect which we observe among them depend on the different circumstances in which they find themselves placed, and the different education which they receive" -- Claude Adrien Helvetius, cited in Friedman (Chapter 3)

TL;DR: Absolutely read the first half, and definitely ditch the rest.

Moral Consequences was published just as the quantification revolution was hitting the social sciences. All at once, every popular work of social and economic and political history began to include regressions, complex economic models, and quantitative measures of historical phenomena ranging from growth in technology and incomes to religiosity or "morality". Friedman rightly bucks the trend here, relying on a vaguer qualitative methodology, judging only very broad correlations between periods of economic growth on one hand, and moves towards greater progress in social inclusion and democracy on the other. Charting this pattern across the 19th and 20th centuries across the US, UK, France, and Germany, Friedman aims to demonstrate that economic stagnation is consistently tied to rising authoritarianism and exclusionary politics, while economic growth leads to greater social openness, tolerance, and more democratic governance.

The first parts of the book (dealing with the history of the political philosophy of liberal openness, followed by a close historical study of these four countries) is excellent. Too many books from this period use hard quantitative methods to establish mathematical correlations on topics that we simply don't have enough information about: we simply have no reliable estimates on income growth, the severity of depressions, and so on for most of the Western world until the early 1900s. By falling back on a softer methodology, looking only at broad trends in boom, depression, and associated social movements, Friedman constructs a much more robust case for his core argument. I loved the close analysis of the various booms and busts of the late 19th and early 20th century, a period which is too often lumped into one steady era of industrial progress in the popular imagination. The road to modernity was incredibly rocky. This section ends with a dire warning: for the last forty years, most Americans and Europeans have seen few fruits of nominal economic growth, and if history is any guide, this portends a new era of reactionary politics and authoritarianism on the Western horizon. Ten years after this book's publication in 2005, this prediction has sadly proven correct.

Friedman is also ahead of his time in recognizing the status and dignity conveyed by material goods, rather than mere physical consumption of the goods themselves, as the key motivating factor of individuals' politics (similarly, he correctly notes that the base of support for most reactionary movements is not the poor of society, but the precarious middle classes that feel they are falling behind in relative, if not absolute, terms). We've had nothing short of a deluge of opinion pieces about those "left behind" or suffering from "status anxiety" since Trump's first election. Friedman beats these out by over a decade, and in the process configures these observations into a coherent theory of status politics (something that cannot be said of the next NYT piece interviewing voters in a flyover-country diner).

The book falters in its second half. Having established that economic stagnation leads to authoritarian (or worse) politics, Friedman throws himself into the problem of boosting economic growth. But he is no specialist in this topic, and what follows is a torrent of neoliberal pablum: the deficit must be reduced, Americans must be made to save more of their earnings, and school choice is the silver bullet to improving educational outcomes.

The latter argument I found particularly infuriating. Friedman notes that in the last several decades, American education outcomes have fallen behind those in peer countries. But rather than investigating what is happening in those peers, he goes on for pages about how the competition generated by school choice, voucher programs, and charter schools is a hard but necessary choice. Yet none of the nations doing better than us uses this sort of competition! What accounts for this incuriousity? Laziness? Pre-exisisting ideological bias? Simple arrogance? I'm not sure, but it does mean that the latter chapters are not only unhelpful but provide nothing that we didn't hear from a hundred other policy books in the 2000s. A wiser author would have admitted that solving the growth problem is beyond his expertise and merely left us with some recommended reading from experts. Sadly, Friedman can't help himself. The latter part of the book is hence a mix of drag and cringe from those of us now living 20 years after its publication--20 years across which Friedman's prophecy of a stagnant and hence authoritarian future is about to come to pass.

[Jonathan Vincent · Rating 3 out of 5]

It's good for what it is, I just personally didn't find it persuasive.

Here's the essential argument: people judge the betterment of their own lives in two ways: against their recent past selves and against other people. When there's no economic growth, people do not see themselves as being better off than in the past and they see any improvement in the lives of others as the result of hoarding/cheating (as life is, in this scenario, a zero sum game). When there's economic growth, by contrast, people can positively compare their lives to their past selves, giving them a positive feeling, even if their lives are improving at a slower rate than others. This leads to morally good outcomes- more trust, a stronger social fabric, more altruism. In particular, what people feel is falling in social status/wealth. In a system without economic growth, for any one person to rise, another must fall, but when there's growth that's not the case. This eliminates a strong source of social discord from society.

That's an interesting thesis, but I don't think the author proves it well. He takes a 10,000 foot view of the histories of four countries (The US, Germany, the UK, and France) and writes a narrative showing that during times of economic growth people were more likely to be tolerant, generous to the poor, and generally, morally righteous. That's all well and good, but I find the evidence for the causal link lacking. The periods he designates as growth/stagnation can seem arbitrary (I don't think he established a rule for designating them) as well as the results on the toleration/exclusion axis. This seems like the sort of thing that requires some solid data to prove, and he doesn't provide that.

I'm not going to discount the thesis, and he definitely provides some evidence for his claims, but it's not strong enough to completely convince me. But good book, some interesting history!

[Eric P]

Benjamin Friedman’s “The Moral Consequences of Economic Growth” is an attempt to give as strong an argument as possible in favor of increased economic output. What naturally results is an over-emphasis on the importance of economic growth, confusion between well-being and money (for a particularly revealing example, he uses “Standard of Living” as a synonym for “GDP per capita”), and hence an under-emphasis on everything that is not more money.


While Benjamin Friedman very often says things that are true in isolation, the whole book struggles to penetrate past surface-level analysis. Rarely does Friedman seem concerned about what it might mean that the system we worship has so many “drawbacks”, and when he acknowledges these drawbacks, he is unconcerned, minimizes them, and if he admits it, he gives the uncaring response: “if it’s a big deal, just let the government fix it”.

In the world of economists, Benjamin Friedman is a vulgar one who doesn’t give a damn about the truth and just wants to be “that guy” among those who are also vulgar and don’t give a damn. Like a true capitalist, he sees the truth not as something we must discover and adapt ourselves to and live within, but as something to be twisted and distorted so it can perform as an instrument for capital’s self-reproduction.

[GrandpaBooks · Rating 4 out of 5]

The author argues that "broadly distributed economic growth provides benefits far beyond the material, creating and strengthening democratic institutions, establishing political stability, fostering tolerance, and enhancing opportunity." Conversely, the author also argues that economic stagnation results in societies moving away from openness, tolerance, mobility, fairness, and democracy. Although published in 2005, I think that the author's arguments hold up extremely well despite having missed the major upheavals occurring since 2008. A long, at times dense, at times a tad tedious, read at 436 pages I found it to be worth the effort to finish especially as someone without a strong background in economics. The book helped me understand that the current era of stagnation and threats to our democratic institutions is not first that our country has endured, but it is now becoming the longest and most dangerous one.

[Richard Marney · Rating 5 out of 5]

The book investigates the question of how economic performance affects the moral character of a society.

How do rising incomes influence the development of institutions and social / political attitudes? How does inequality affect the outcome? Why are Switzerland, America, Singapore, China and Kenya different? What policies are necessary to maintain (avoid) the virtuous (vicious) circle of economic and moral wellbeing (deprivation)?

A thoughtful book.

[Terry Cox · Rating 4 out of 5]

I've been reading a lot about our moving to a no-growth economy and this book provided a lot of historical reference to the ramifications of how economic growth affects the morality of a nation. Considering that this is all wrapped up in human nature, I didn't exactly find the book encouraging. I think we need a prospective change as a race.

[Sam · Rating 5 out of 5]

ambitious, since to answer its thesis one must take into account moral philosophy, economics, and history. and since it’s a broad claim about human society, the scope is about as broad as it can get.

this book still does an excellent job of arguing its points. I don’t think it definitively proves itself, but the arguments are strong enough to warrant further reading.

[Lance Cahill · Rating 3 out of 5]

The beginning and end of the book were much better than the middle where the author tries to connect his theory (more openness, tolerance, etc,. From economic growth) to specific recent histories for the UK, France, Germany, and the US. Overall, I think this book serves as a valuable repository of the literature on economic growth and various other topics, but did not find it very compelling.

[Alessandro Agazzi · Rating 2 out of 5]

Interessante dal punto di vista storico, totalmente incentrato sulla realt� americana, con qualche raro passaggio dedicato alla vecchia Europa.
Quasi totale assenza di spunti per il futuro, in particolare in ottica di crescita sostenibile ed esaurimento delle risorse.

Insomma, un libro interessante ma che guarda al passato.

[Linjun · Rating 4 out of 5]

Great read and a very important contributing factor to my decision to study economics. The book explores various historical periods in various countries to study the seldom-considered impacts of broadly-based economic growth and it was very enlightening.

[Taylor Barkley · Rating 3 out of 5]

Felt like it under delivered, but maybe I was expecting the wrong thing. Lots of great info nonetheless. Not sure how novel the arguments are, but that might be because it’s nearly 20 years old and perhaps the points have filtered into the mainstream.

[Elizabeth]

As heard on The New Bazaar:
https://shows.acast.com/the-new-bazaa...

[Charity · Rating 5 out of 5]

formative

[Xane · Rating 3 out of 5]

Friedman admirably and effectively supports his thesis (A. economic growth is good for a society's openness, tolerance, fairness, and commitment to democracy; and B. government policies can achieve a higher growth rate than the market would if left to its own devices) without overreaching for evidence. He is quick to point out exceptions to his theory, and notes how they may or may not actually counter it. Despite being written nearly 15 years ago, many of Friedman's insights are still relevant (and looking back at his outlined policy prescriptions highlights a common sense course of action that we can still learn from in 2020 and beyond). Despite this, Friedman tends to get bogged down in historical minutiae, and while many of his conclusions are compelling, the length of his analysis could have easily been trimmed down. Additionally, it should be noted that Friedman spends two of the book's later chapters arguing for the validity of the Kuznets curve (both its environmental and inequality versions), a problematic idea at best (for further and more current reading, see Kate Raworth's excellent discussion of the Kuznets curve in her book Doughnut Economics).

[ErnstG · Rating 4 out of 5]

This is a book of economic history, exploring the proposition that a country becomes a more open society when living standards are rising. Of course the relationship isn't exact as many other factors play a role. There are also counter-examples such as the US New Deal and the Asquith Reforms but on the whole there is such a tendency, as the US shows now against the backdrop of the last 20 years' economic shocks and stagnation. That analysis is argued very well and convincingly.

The analysis is based on the US (4 chapters of which I only read the post-WW2 chapter) and then one each for the UK, France and Germany -- those are v interesting as they provide a new perspective on well-known history. The chapter on the ''Developing Countries'' is all over the show and IMHO says nothing useful as the countries are too different to allow meaning generalisations.

After the empirical analyses IMHO the book says nothing albeit at great length. To be fair, if I was more interested in US economic history I would have read more of it.

https://www.ft.com/content/1009e6bf-0...

[Andrew · Rating 4 out of 5]

The best measure of economic growth, Friedman argues, is how a person's economic status compares with that of their parents. If that status, overall, is growing, that is economic growth.

When such periods of wide-spread economic growth occur, we become, at least collectively if not individually, a more moral people.

It is during such periods of economic growth that Brown v. The Board of Education of Topeka, KS, was issued. The Virginia law forbidding interracial marriage (Loving v. Virginia) was struck down as unconstitutional during such a time.

There are, of course, exceptions. The Great Depression, which Friedman calls "The Great Exception," was a period in which the economy was contracting, and yet, under Roosevelt's leadership, there was tremendous cooperation.

"The Moral Consequences" does not, by any means, bow at the alter of the free market/capitalism, but it does make a strong case, based on historical eras, for why free markets and expanding economies are not only good economically, but morally and socially.

[Benjamin]

Attempts to demonstrate that economic growth leads to morally-favourable outcomes for society. Does so in part by defining 'moral consequences' in a way that makes them increasingly synonymous with 'economic growth' - making his argument somewhat tautological. returnreturnThe rest of Friedman's claims hinge on correlation not causation, and the book is appended with a chapter entitled 'Great Depression, Great Exception' - which acknowledges that the largest period of economic regression in modern history does not follow his model. returnreturnNevertheless - well-written, detailed and thorough, if a little uninspiring at times.

[Christopher]

Purchased at Half Price on 7/28 for 18$.

[Bluedisc · Rating 4 out of 5]

As a history, and to prove a major part of his thesis, this book does well. What I pick a bone with is the assumptions the author takes that aren't spoken explicitly. These are some of the same assumptions that economists have believed but are up for more of a debate. These come out most in the last chapter. But overall its not unbearable as a read because of this bone I pick.

One of the main things I would say is that the author could easily have predicted the recent unrest by frustrated citizens felt left behind economically.

[Michael Dowling · Rating 4 out of 5]

I very much enjoyed the book. I had read a rather detailed review of it on Amazon that countered some of the economics discussed, but I still found much of the history covered, especially of the US, very apt for the current political environment. I don't know that I subscribe to all of the authors ideas as to how to ensure future growth, but the examination of past growth and how it related to the politics of the time was worth the read for me.

[Chris · Rating 3 out of 5]

A very interesting analysis of the importance of economic growth to a democratic society. The conclusion that growth leads to greater freedom, equality, etc. seems obvious, but Friedman uses many specific historical examples to prove this point. The conclusion is an important statement of what needs to happen in order for the U.S. to get back on its feet.

[Jin · Rating 3 out of 5]

An epitome of neoliberalism: growth produces positive externalities, and over-emphasis on inequality in the society leads to unproductive discussions and ultimately a zero-sum society. It is worth reading, but it requires a critical attitude of mind.

[Alison Prendergast]

I've tried to read this twice so far. so dense! the book I mean, not me. hm.

[Mariana · Rating 3 out of 5]

Interesting, but a bit long. Haven't finished it, I had to return it to the library. I only got to page #335 (out of 436).

[Alex Cone · Rating 5 out of 5]

This would be a good book for world policy makers to read right now.

[Joseph · Rating 3 out of 5]

a rigorous academic read.