Madsen Pirie

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Wealth has endured several decades of abuse and has been charged with everything from destroying individual cultures to despoiling the planet. Assorted demonstrations against international capitalism and the World Trade Organisation have all had themes in common: they were anti-progress, and specifically anti-growth. Yet economic growth is a legitimate target for humanity to pursue. It is good in and of itself, and a solution to many of mankind’s abiding problems.

We were told, notably by the Club of Rome Report in 1972, that economic growth would lead us to use up scarce metals and minerals, depleting limited resources which “belong to future generations”. In fact nearly all of these resources are more plentiful now (measured by price) than they were then. It has also become apparent that wealthier countries are better able to protect the environment. It turned out to be the poorer countries of the socialist block that polluted most. The richer, capitalist, countries were able to afford the introduction of emission controls and water purity standards, and to enact measures to control the disposal of toxic waste. It is the poorer countries of the developing world that can least afford the often expensive techniques which accompany cleaner and safer production. Those that become rich should be able to produce their energy and their manufactured goods in less damaging ways.

The cities of the rich countries are, on the whole, be far less polluted in the early years of the 21st century than they were in early years of the 20th. The shift away from coal has brought huge improvements in air quality. Rivers and water are cleaner. If cities are noisier today, they smell less. As economic growth lifts countries out of poverty, they, too, are able to afford the luxury of cleaner air and water. As for the destruction of “individual cultures”, the poorer countries have made it clear that they prefer not to remain as theme parks of picturesque poverty for rich tourists to enjoy from their luxury hotels. Given the choice, they prefer to be wealthy, even if it means becoming like other wealthy countries. Put at its most politically incorrect: the whole world wants to be like California.

The most persistent charge against growth is that it is widening the gap between countries and even within countries. The claim is that in both cases the rich are growing richer and the poor are falling further behind. This uses relative poverty as the measure, rather than the absolute command of resources that matters for people at subsistence level. But even on this measure, the charge no longer sticks.

The poor set the pace

The Gini coefficients, which measure the degree of inequality in income distribution, show a sharp fall in world inequality in the past half-century. Economic growth in Asia has spectacularly closed the world wealth gap. Paul Ormerod, an economist, points out, “The economic success of East Asia has liberated millions of people from lives of unremitting drudgery and toil, and has sharply reduced world income inequality.”

The upward path of economic growth has spread to China, and now India. This will destroy the argument of those who have valued India for its chaotic, overpopulated poverty, where spiritual values prevailed over profits. India will be one of the world’s fastest-growing economies in 2001, which will do more for the street poor of Calcutta than a generation of aid. Most South American countries are following that same road. The prospect is for further reductions in the inequalities of world income between countries. Much of Africa is still mired in poverty, but it is becoming an exceptional, rather than a typical, case.

The idea that growth exacerbates inequalities in income distribution within countries is also wrong. The equality of the poorer countries is an equality of deprivation. Even the much-touted inequalities in the United States and United Kingdom over the past two decades are exaggerated. Wealth distribution in Britain is almost exactly the same as in France. And the inequality in America today is not different to the level France had in the mid-1970s.

There is a moral argument against growth but it, too, is proving specious. It is that growth directs us excessively towards material things such as consumer goods, at the expense of self-fulfillment and high moral or cultural goals. The counter-attack now gaining ground is that it is subsistence which causes material preoccupation. If you are not getting enough to eat, it has to preoccupy your thoughts and activities. It is wealth, generated by growth, which brings choice and culture. It enables people to choose leisure time, if they wish, to devote to charitable or voluntary work, or to self-education. It is wealth which enables people to be generous. In other words, growth and wealth bring the necessary space and opportunity for moral advancement. Growth has been sneered at for 30 years, mostly by those who enjoy its benefits. Many problems have been laid at its door during that time. In the early years of this century it will be seen, however, as the prime tool for advancing the lot of mankind.