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Is There a Case for Virtue and Economic Growth?

Is There a Case for Virtue and Economic Growth?

Last updated on: August 26, 2015 at 12:08 am by Acton Institute

Is There a Case for Virtue and Economic Growth? 2015-08-26T00:08:13-04:00 Acton Institute

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By James V. Schall

Bernard de Mandeville (1670–1733) famously (or infamously) suggested that the cause of wealth is vice. If everyone were perfect, Mandeville thought, no one would demand anything. Everyone would be content with little. With no aggregate demand, no production would arise to meet that demand. If no one drinks beer, no brewing industry would exist. No brewing industry would mean no growing of hops and barley, thus no farmers, no market for bottles or cans, no Clydesdales, nor anything refreshing to drink at baseball games.

Plato, by contrast, had indicated that a society driven by unlimited demands would be a “city of pigs.” It would be a people with no interest higher than producing ever more sophisticated items for consumption. Such a people, without military guardians, would be unable to defend themselves from their own passions or from the desires of other armed cities coveting what they had produced for their luxury.

In some sense, then, economics has been saddled with a dubious heritage. Growth will be caused by vice and distribution by greed. Virtue will produce stagnation. We see, moreover, certain governments, because their own people lack internal virtue, desperately buying out the opium poppy supply of other countries that sell them for heroin in order not to ruin the “legitimate” business of the enterprising farmers in their own poor countries who grow the plant’s narcotic for profit. We also have seen that giving or selling surplus farm products at a low price on a foreign market for humanitarian purposes often ruins the higher-priced production of local farmers. Doing good, in other words, seems to foster further wrong.

Clearly, the connection between vice and growth needs to be addressed. Is there a case for virtue and growth?

One major interpretation of the Industrial Revolution and its ongoing consequences suggests that the market mechanism that enabled such widespread wealth in the first place ended up impoverishing the masses. This is the stuff of classic socialist rhetoric.

The fact is, however, that Marx’s taunt that over the years the rich are getting richer and the poor poorer is not true. Rather, what has happened is that everyone becomes richer, provided they enter the market with knowledge of how it works and a will to work within it. Exploitation is not the main explanation of poverty. The theory of exploitation itself impedes growth as it misunderstands its requirements.

A promotion of long-term economic growth need not deny that wars and rumors of war will happen, though it will doubt that economics is their main cause. Nor does it doubt that many individuals, by accident or by their own choices, will fall by the wayside and need help. The need for something beyond justice always remains. The fact is, however, that the world has seen sustained growth of wealth and population for four centuries. This growth suggests that the problems of historic poverty can be and are being solved gradually as we apply the proper means to them.

As the world has become richer at differing rates and in differing circumstances, the possibility of using this wealth wrongly has likewise increased. Freedom means that no automatic way exists to guarantee that wealth will be used properly unless those who produce and use it themselves act virtuously. The moral drama does not lie in the wealth itself but in the souls of those who produce, distribute, and use it—in the habits of those who need it and make it work.

Provided it is itself well-ordered—by no means a certainty—government can to some extent contribute to the proper development and use of wealth, but the records of few governments on this score have been encouraging. Government will not be the primary means for correcting any imbalances in the human condition. Indeed, the abuse of governmental power is the cause of the greatest and bloodiest slaughters of the twentieth century. This slaughter, like widespread poverty itself, has been caused by faulty economic ideas chosen by ideological governments, most often in the name of human benefit and helping the poor.

Religious, political, and cultural leaders who know the facts and faces of real poverty are often so upset by seeing it that they want to stop all else to attend to what seems to be the most pressing issue at the time. This is a praiseworthy sentiment, except that it does not clearly distinguish charity from justice. Some human problems can never be resolved by justice alone. More often than not, attention to dire poverty encourages and leads to political and economic policies that, in fact, are detrimental to any real prospect of helping the actual poor. They end up creating something worse, most often by empowering the state to pursue programs that do not work or that merely increase dependency and state power. The issue is not whether the poor ought to be helped or attended to as part of the common good. Rather, the question is: How does one best accomplish the end of bringing the poor into a situation where they can help themselves?

The primary cause of the vast improvement in the condition of the world’s poor in recent decades is not so much our giving to the poor what they wanted or needed. It is the development of the means of production and distribution that made it possible for the poor to enter into a more productive relationship with those who had already figured out how not to be poor.

A vibrant economy, characterized by free enterprise, a responsible political system, rule of law and fair courts, and the control of corruption—government and private—is the only real mechanism for the elimination of poverty. In recent times, poverty on a wide scale is largely a result of having chosen the wrong political, economic, and moral systems. No ideological alternatives have worked.

This was originally published at Acton Commentary, and is an excerpt from On Christians and Prosperity by James V. Schall.

The Reverend James V. Schall, SJ, Professor Emeritus of Politics at Georgetown University, now resides in California. Among his many books are Political Philosophy and Revelation, At the Limits of Political Philosophy, Reasonable Pleasures, and The Order of Things. He writes regularly for online journals such asThe Catholic Thing and Catholic World Report.

Photo credit: Ken Teegardin

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