In his book, “The moral consequences of economic growth”, Benjamin Friedman argues that economic growth has favourable moral consequences because it causes societies to move toward more tolerance, openness, mobility, fairness and democracy. In my view he makes a strong case, based on historical analysis, that periods of high economic growth have, in fact, been accompanied by greater tolerance etc in the United States and several other countries.
The question I want to consider here is whether it is appropriate to view the desirable social consequences of rising incomes as “moral consequences” and whether it is matters if the distinction between social consequences and moral consequences is blurred.
Friedman argues that during periods of economic growth people see that they are doing well compared with the benchmark of their own prior experience and thus place less importance on how well they are doing compared to other people. By contrast, during periods of economic stagnation people attach greater importance to living at least as well as others, and thus tend to be less tolerant and less generous in their attitudes and behaviours.
It is certainly desirable that we should be tolerant towards others, but it seems to me that this hardly qualifies as moral behaviour if we are only tolerant when we feel that our own living standards are rising. We do not view fair weather friendship as having moral virtue – even though fair weather friends can make fair weather more enjoyable - so why should we view the tolerance that others extend when their incomes are rising as moral behavior?
I think it is worth making a distinction between moral consequences and social consequences because some experiences can have lasting consequences for the values that people hold. For example, it is reasonable to suppose that participation in market transactions - mutually beneficial exchanges - tends to promote greater social interactions among people in different communities and hence to promote greater tolerance. It seems to me that the tolerance that develops from these favourable interactions could be viewed as both a social and moral consequence of markets. The relationships that develop through market interactions between relative strangers can enable the people involved to build the interpersonal trust that is integral to the more complex forms of cooperation (e.g. financing of investment and innovation) necessary for economic growth to be sustained.
In my view Benjamin Friedman should be applauded for his efforts in drawing attention to the desirable social consequences of economic growth. It seems to me, however, that the view that the morality of social cooperation depends on continually rising living standards involves too pessimistic a view of human nature. How could economic growth have ever got started if continually rising living standards were needed to generate the trust in others that was necessary for growth to begin to occur?