Common ground

Lessons in etymology: The economist's edition

I've focused in my last two posts on our neoclassical obsession with growth, and how that translates into development. Today I'd like to focus more specifically on the relationship between economic growth and development as defined in the neoclassical framework. It is first necessary to distinguish development from growth, and economists do agree that development is more than growth: it's about fundamental increases in people's quality of life - freedom, self-esteem, levels of living and the like.

I've discussed why growth won't translate into all of this, and contribute towards decreasing poverty and inequality (that, by the way, was just the tip of the iceberg - there is so much more wrong with our way of valuing economic activity). Why then, do economists still say that growth is "necessary" for economic development? (The fundamental philosophical problems underlying this statement are dodged by adding that growth is simultaneously necessary, "but not sufficient.")

Let's have a look at the meaning of the word, necessary, shall we? It's derived from the Latin necessarius, originally "necesse". It means something that is unavoidable and indispensible. Literally, something from which there is no "backing away" - ne (meaning not), and cedere (meaning to withdraw, go away, or yield.)

Why do we state that something is NECESSARY, or indispensable for contributing to human freedom, self-esteem and quality of life, if it clearly in so many cases is the thing that PREVENTS human freedom, self-esteem and quality of life? Once this basic fallacy is grasped, the "but not sufficient" clause at the end becomes moot. If we organise our way of doing more smartly, then growth isn't even necessary*.

The problem, of course, stems from Economics' inability to admit that it is a social science, and behave accordingly. We keep targeting numbers and stats (such as GDP), completely throwing the human side of the equation out the window. As Lynn Parramore reports: "The field of economics is known for attracting Asperger's-spectrum wonks better at formulating financial models than the flow of human interaction."  It's brutal, but true.

Take W.A. Lewis' (Nobel laureate in Economics) defence of the GDP growth=necessary for development paradigm:

"The advantage of economic growth is not that wealth increases happiness, but that it increases the range of human choice...The case for economic growth is that it gives man greater control over his environment, and thereby increases his freedom."

Sen neatly demolishes this view by explaining that freedom is much more complicated than just: I have more money, so I have more choice. There are various factors that could make it difficult, if not impossible, to convert higher levels of income into the capability to live life at a certain level: If you have more money, but you're physically or mentally disabled, how much more free are you really? If you have more money, but you live in a climate so prone to disasters that almost every spare cent you have needs to be spent on shelter, or food because another crop has failed - how much freer are you? If you have more money, but you're a gay man in Uganda - how much freer are you? And isn't man's "greater control over his environment" the very problem which has gotten us into the predicament of futureless growth?

This is why I say we need to re-examine the growth-development nexus. Economists make the mistake of thinking that human life can be so easily quantified: Oh, you have more income so naturally you have more freedom, or choice. We need to take the blinders off and rediscover politics, philosophy, sociology and other social sciences - because it's our entire system that needs changing.

*For those of you choking on your cappuccinos after reading this titillating morsel of economic blasphemy: Yes, really. It's called a Steady State. Look it up: www.steadystate.org