The Moral Consequences
of Economic Growth
by Benjamin M. Friedman
Knopf, 592 pp., $35
Benjamin Friedman is an eminent economist--arguably the world's second-most eminent economist named Friedman. A liberal Democrat, he is best known to general readers as the author of Day of Reckoning, a prize-winning 1988 critique of Reaganomics. In this new, highly ambitious book, Friedman attempts to make an original argument on behalf of economic expansion.
Belief in the desirability of increased wealth leads Friedman, like almost all economists, to favor economic growth. The novelty of his argument, though, is that he principally advocates it for moral reasons: "The familiar balancing of material positives against moral negatives when we discuss economic growth is . . . a false choice. . . . Economic growth bears moral benefits."
At the very beginning, Friedman makes it clear that he is not defending economic growth because it promotes the good behavior of individuals. Instead he explores how "economic growth--or stagnation--affects the moral character of a society." Economic growth yields a morally improved society, in that it "more often than not fosters greater opportunity, tolerance of diversity, social mobility, commitment to fairness, and dedication to democracy."
Economic growth has this effect because we act more generously when we are gaining economically than when we are falling behind: "People in a growing economy will be willing to accept enhanced mobility," he writes, "and they are willing to accept measures like anti-discrimination laws, or special education programs for children from low-income families, designed to make social mobility greater." Conversely, "when an economy stag nates, . . . the resulting frustration gen erates intolerance, un generosity, and resistance to greater openness to individual opportunity."
Roughly half of the book consists of extended explorations in the economic history of America, Britain, France, and Germany, in which Friedman tests this hypothesis against the empirical evidence. Does economic growth promote openness, and economic stagnation intolerance? For the most part, yes, he maintains. To Friedman's credit, he is honest enough to acknowledge the evident counterexamples. To pick only the most obvious, the depression of the early 1930s in Weimar Germany, ushering in Hitler's rule, is consistent with Friedman's thesis: The depression of the 1930s in the United States, which ushered in Franklin Roosevelt's presidency, is not.
The book concludes with a chapter discussing ways in which public policy can spur American economic growth, thereby promoting the openness of American society. Friedman advocates measures designed to encourage saving and to reduce government borrowing. Developing themes from his earlier critique of Reaganomics, he focuses principally on seeking to reduce the deficit by "undoing much of the tax reduction that Congress has enacted since 2001." Such a change would not only make "a large contribution to addressing America's saving-investment problems," it would also do so in a way "that does not further skew the distribution of benefits toward the already advantaged."
Friedman's attempt to show how economic growth generates society's moral improvement is ultimately unsatisfactory, because his exclusive focus on social morality, as he defines it--and abstraction from considering the behavior of individuals--is untenable.
The limits to his approach become apparent when you consider his treatment of that much-discussed decade, the 1960s. Friedman portrays the '60s as a time of moral advance, facilitated by a prospering economy. He hails the decade's "movements toward openness, tolerance, mobility, fairness, democracy." In particular, he commends the '60s for the "active effort" that was made "to share the perceived prosperity with those who were being left behind"--i.e., for launching and conducting the War on Poverty.
To be sure, Friedman is not wholly wrong to praise the '60s, an era in which "blacks had rights, . . . individual citizens' freedoms were stronger, . . . women composed a large and growing share of the labor force, . . . immigrants were welcome, not just from northern and western Europe, and domestic prejudice against Americans other than white Protestants was in retreat."
Nevertheless, it is odd to present the '60s unequivocally as a time of moral advance. If, unlike Friedman, you look at the era from the standpoint of individual behavior, the '60s ushered in a host of worrisome trends. To mention only a few relevant statistics, the crime rate was more than twice as high in 1970 as it had been in 1960; the percentage of out-of-wedlock births was more than twice as high in 1970 as it had been in 1960; and the percentage of Americans receiving welfare was more than twice as high in 1970 as it had been in 1960.
In criticizing Friedman for ignoring developments like these, I am not blaming him for writing this book as opposed to the one that I think he should have written. He writes as an advocate of economic and social mobility. But the mobility that he rightly desires was and is, in large measure, precluded by the calamitous behavior (attested to by the statistics I have just cited) that he fails to consider.
Whether or not these baleful social indicators were caused by the War on Poverty, they clearly ensured that the War on Poverty would fail. Poor people who commit crimes, produce illegitimate children, and accept doles will continue to be mired in poverty rather than advancing out of it. Friedman's lengthy book does not speak to this concern, apart from a somewhat odd statement alluding to a "Romantic reaction [that] focused on America, addressing mounting concerns over the deterioration of the family as an institution and of individual values more generally." (An endnote cites Gertrude Himmelfarb's De-Moralization of Society. I will confess to never before having thought of Himmelfarb as a romantic--let alone a Romantic!)
Friedman writes as an advocate of tolerance, but he does not think enough about which things should, and should not, be tolerated. Why did the '60s witness a rise in crime, births out of wedlock, and welfare dependency? At least to some extent, because many influential Americans not only tolerated but also actively welcomed behavior that should still have been opposed. In Lawrence Mead's formulation, "Those on the left sought . . . to challenge conventional beliefs about personal and social discipline. They wanted a society that was more inclusive but also more individualist, and less insistent on the work ethic, law abidingness, and the conventional family." The ensuing society, which did not demand that its citizens work, obey the law, and procreate only within marriage, predictably failed to ameliorate poverty.
The problem of illegitimacy in particular--unlike the problems of crime and welfare dependency--has continued to worsen, in both good and bad economic times, during the past four decades. It is hard to imagine that much can be done to increase the social mobility of impoverished Americans so long as so many of them continue to produce children out of wedlock. But this is a problem about which Friedman has next to nothing to say, apart from noting the educational problems of children who live "in situations in which only one parent (or maybe neither) is present at home."
Friedman correctly links his aspirations for societies that are prosperous, tolerant, and democratic to the views of Enlightenment thinkers. But it is also arguable that the collapse of marriage, which does so much to worsen the plight of the poor, is itself at least indirectly a result of the Enlightenment. James Q. Wilson has made this case effectively, noting that "the greatest familial problems . . . exist in countries where the culture has most fully embraced the Enlightenment ideal."
Elaborating on this point, Wilson has explained that:
The Enlightenment made us preoccupied with individual rights and more restless with collective obligations; . . . more ready to search for self-expression than to accept joint endeavors. It only slowly and gradually affected marriage, but once the genie of individual rights was out of the bottle there was no way it could either be put back in or kept from influencing sex and marriage.
The Enlightenment is arguably of a piece, and it may not be possible to take its beneficial consequences (which Friedman celebrates) while rejecting its problematic ones (which he overlooks). Friedman is half-right to assert that economic growth has desirable moral consequences. But it is necessary to realize that individualistic societies devoted to economic growth also have moral problems because such societies have weaker marriages and families. It is by no means clear that these problems are soluble, but they certainly cannot be solved if they are not acknowledged.
We cannot plausibly assess a society's morality so long as, like Friedman, we are oblivious to what is problematic about the behavior of the individual men and women who inhabit that society.
Joel Schwartz, an adjunct senior fellow at the Hudson Institute, is the author of Fighting Poverty With Virtue: Moral Reform and America's Urban Poor, 1825-2000.