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What do we mean when we speak of economic development or, by extension, of economic growth? Do we have a clear idea, or are they just buzzwords we tend to parrot now and then since they’ve become a part of everyday economic jargon?

The Concept of Economic Development: A Preamble

money economyThe concept of economic development and a related notion, that of economic growth, have both assumed pivotal roles in any meaningful discussion of the state of the economy and its attendant social effects. Both have become indispensable tools of today’s economic analysis.  One needs only to witness the great energy and excitement spurred by Thomas Piketty’s recent magnum opus, Capital in the 21st Century, to have become convinced of the fact.

Piketty’s underlying thesis, whereby the relationship r>g [where “r,” the rate of return on capital, exceeds “g,” the rate of (economic) growth], signifies economic conditions conducive to generating greater and greater income inequality is a case in point. In no small measure because of the recent Occupy Wall Street movement, the thesis has become the starting point of any poignant critique of capitalist society, for allowing the growing disparities in income and wealth to become permanent features of everyday life ­– so much so, in fact, that almost overnight Piketty had become the darling of the liberal economists the world over, his thesis lauded as the greatest invention since sliced bread.

Needless to say, the concern is well placed even though the bulk of the proposed solutions, which range from progressive taxation on income to lowering the limit on tax-exempt inherited wealth, aim at ameliorating the symptoms rather than eradicating the cause.

What do we mean, however, when we speak of economic development or, by extension, of economic growth? Do we have a clear idea of the underlying concepts, or are they just buzzwords we tend to parrot now and then since they’ve become a part of everyday economic jargon?

On one level of discourse, the concepts are fairly straightforward, especially if we take them to be more or less synonymous.  Growth, for instance, measures an increase in size, in body weight, IQ, GNP, GDP, etc. It’s a relative measure, besides, relative, that is, to some prior value. Ever since the advent of statistics and scrupulous record-keeping, economics has become a science, not exactly hard science but a science nonetheless – just like (the history of) baseball can be said to have been put on a quasi-scientific basis by virtue of records scrupulously kept. Consequently, the economy’s growth and/or decline are calculable in terms of prior values, registering as an up- or a downtick.  That’s the business of econometrics. And yet…

The purely quantitative approach to concepts such as economic development or growth, unless we know exactly what it is that we’re measuring, can be grossly misleading. It doesn’t answer the fundamental question about the underlying conceptual content – the meaning of the terms so readily employed, which is by far the most interesting question of all! What exactly does economic development or economic growth come to? What’s their overall significance? What exactly is it that we are measuring? The scalar concept clearly obscures the metaphysical content of what it is that is being measured. Yet, it is commonly assumed that we all know what it is. But do we, really?

Offhand, I can think of at least two problems which arise from such a simplistic employment of what are purported to be key economic terms.

The first concerns the very notions of growth and/or development: they’re hopelessly ill-defined. If we are to take the physical model or analogy of growth seriously, as in body weight, for instance – and I don’t see why we shouldn’t! – then we clearly run into all kinds of difficulties, for surely, not all kinds of growth are identical: while some may be beneficial to your health, others may be detrimental.

An obese man, for one, obviously shouldn’t carry his great bulk as a badge of honor; he’d do much better to shed a pound or two if his health is a matter of concern. A cancerous growth, though an extreme example, is in the same category: harmful to body and soul, there being no benefit to it.

Likewise with the concept of development, for development can be normal as well as abnormal. It would thus seem that these economic concepts make little or no provision for these anomalies, which shows that their respective definitions leave a great deal to be desired.

The second problem is considerably more nuanced though no less perturbing. To wit, it had become a longstanding mantra among the critics of the capitalist system – an unexamined assumption, as it were – that capitalism is more prone to generating excessive or wrong kinds of growth than any other economic system. Charles Taylor, for one, makes a strong case to that effect (see, for instance, his “Growth, Legitimacy and The Modern Identity” in Praxis International, 1:2 July 1981, or the expanded version of the Praxis article, “Legitimation Crisis?” in Philosophy and The Human Sciences: Philosophical Papers 2), although the bulk of his argument in either version centers on moral repercussions likely to follow from what he dubs in so many words as “excessive growth.”

While certain aspects of Taylor’s analysis may be to the point, and while we may further agree that his singling out the capitalist system, of all economic systems, as being the most conducive to generating “excessive growth” is not exactly counterintuitive, it remains to show what it is exactly about capitalism proper that would make it so.

In particular, what is it about capitalism that makes it generate a kind of “excessive growth” that would be detrimental to our moral fiber, whereas any other kind of growth, simply because it would issue from some other economic system (say, one based on slavery or feudal relationships), would be likely to get a free pass? Why is “excessive growth” which is due to capitalism alone so cancerous insofar as our moral well-being is concerned, whereas any other kind of “excessive growth” doesn’t carry such a connotation?

If “excessive growth” is the main culprit insofar as its effects on our moral fiber are concerned, then why should it matter which particular economic system is responsible for generating it? In particular, why should capitalism be “punished” more severely than any other economic system for doing precisely the very same thing the others do? Simply because it does it better, in that it generates a greater abundance of goods and services than any of its predecessors?

If that were the sole basis of Taylor’s critique, I’d be inclined to dismiss it. But perhaps there’s another idea lurking in the background as well, namely, that perhaps certain kinds of “excessive growth” are proprietary, which is to say, characteristic of the capitalist system alone, proprietary to it and no other. But if that is the case, it remains to be shown.

In any event, in future installments we shall re-examine this and similar assumptions in light of Jane Jacobs’s seminal work, The Nature of Economies. Ms. Jacobs’ central thesis is that any kind of development, including economic development, is but a species of natural development. According to Jacobs, growth and development, whether economic or any other kind, are the way of nature.

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About Roger Nowosielski

I'm a free lance writer. Areas of expertise: philosophy, sociology, liberal arts, and literature. An academic at a fringe, you might say, and I like it that way.

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14 comments

  1. Dr Joseph S Maresca

    A targeted excess consumption tax will extract payments from the underground economy and people who avoid paying taxes historically. In addition, raising the minimum wage ( as is being done in New York) will place more money into the hands of the poor and lower income people.

    Affordable housing is another component.Micro-apartments provide the means for downsizing the living space and rent paid in proportion. In the 19th century, the government opened up federal lands for settlement. Today, we can encourage that again because new technologies like solar energy make western settlements more doable. Desalination is another technology which can deal with droughts assuming that the government partners with the private sector to build the water pipeline infrastructure.

    In “The Formation and Distribution of Wealth” by Anne Robert Turgot, the author states the following in support of thrift :

    “Thrift increases capital, increases the number of lenders, and reduces the number of borrowers. Extravagance has precisely the opposite effect. It is thus possible to judge by what has been about already the use of capital, in agricultural, industrial and commercial enterprises, whether extravagance enriches or impoverishes a nation.”

    Finally, the Israeli Kibbutz form of work organization provides a centralized workplace, living quarters, recreation and common cafeterias. This form of organization has the potential to reduce poverty by centralizing the resources into a single place so that people are more easily employed. It’s easy enough to channel government and private sector contracts to each individual kibbutz or groups of kibbutzim.

  2. A friend had alerted me to the fact that the subject matter of this article is not exactly passe.. In support, they cited a similar discussion on the pages of Aeon, “It’s time to move beyond growth for growth’s sake,” as per https://aeon.co/opinions/it-s-time-to-move-beyond-growth-for-growth-s-sake

  3. Since Jane Jacobs and some of her works are going to be posited here as a possible antidote to the all-pervasive dogma that all kinds of growth and/or development, especially if it’s being generated by the hateful capitalism system are evil, here are some of the examples which attest to the fact that Ms. Jacobs is not just another crock-pot.

    Here, for instance, is her interview about her work, “The Nature of the Economies.”:

    https://search.yahoo.com/search;_ylt=AnbxEC4hbnOlM.1nhsFtdESbvZx4?fr=yfp-t-470-s&toggle=1&fp=1&cop=mss&ei=UTF-8&p=the%20nature%20of%20economies%20jane%20jacobs

  4. Here’s another entry, a NYT book review as well as the first chapter of the work:

    https://www.nytimes.com/books/00/03/12/reviews/000312.12kuttnert.html

  5. Lastly, to her previous work: “The Death and Life of Great American Cities,” a full pdf text (I hope) — file:///C:/Users/aarons%20sales/Desktop/124201744-Jane-Jacobs-The-Death-and-Life-of-Great-American-Cities-1961.pdf — as well as a commentary by Peter Dreier, “Jane Jacobs Radical Legacy.”

    http://www.nhi.org/online/issues/146/janejacobslegacy.html

  6. The following should rectify the previously nonoperational link to Jane Jacobs;s :The Death and Life of …”

    https://files.acrobat.com/a/preview/e3c45dfb-5b8e-4b16-a2ed-3a745d4c6632

  7. Dr Joseph S Maresca

    The population in the USA has grown from 180 million in 1960 to 320 million today.That’s nearly a doubling.Even providing basic services implies considerable development like new schools,roadways, rails, highways and the electronic infrastructure.The question is how will the infrastructure be created and funded?

    The Eisenhower Administration had much higher taxes on the upper income levels to pay for WW2 and the necessary increments in the American infrastructure both existing at the time and foreseeable for the future. From today’s perspective, the population in the USA could approach 1/2 billion by mid-century. We need to have the infrastructure in place to provide even basic services let alone luxury development.

    The Kibbutz form of organization provides the organizational structure to facilitate housing, workplace facilities, centralized cafeterias, recreation etc. very efficiently. We should be looking into this existing form of organization which has worked well in the past and is growing in Israel today.

    Overdevelopment is a problem in spots. For instance, China is building 12+ cities a year and creating GHOST CITIES where no-one lives except for basic security roaming these sites. The emphasis has to be on necessary infrastructure and not creating too much underutilized development or development that doesn’t serve the society at large.

    https://www.youtube.com/watch?v=CBoHIiSAZ1Y

  8. Thanks to the author for this article which affords an interesting starting point for an investigation into the motion and moments of complex systems.

  9. Thank you for reading this article in the way it was intended. It is my conviction that the key economic concepts under discussion have become hopelessly ideological, especially at the hands of the capitalist system critics. This is an effort to demystify these concepts, to bring them down to earth, as it were. And Jane Jacobs work on the subject, which should be a required read, is as good a text as any to help us make some kind of progress.

  10. Is it reasonable to suppose that our perception of dynamic equilibria, emergence and sublation in material natural systems governed in some fashion by the dialectical interpenetration of chance and necessity will lead to a moral foundation for political action beyond Hegel’s radical conservatism?

  11. I’m no Hegelian scholar by any means, but your comment prompted me to dig deeper. See, for instance, “Hegel’s Conservatism” and “Hegel as a Political Theorist,” both in JStore: http://www.jstor.org/stable/3228340?seq=1&loginSuccess=true#page_scan_tab_contents and http://www.jstor.org/stable/2128351?seq=1#page_scan_tab_contents

    both available as read-only articles once you register.

    First off, my concern in this article is only with capitalism. Could you then rephrase your question insofar as the economic system is concerned.

    As regards my concept of the State, scroll down my list of articles. In a number of them, I voice my ideas concerning the institution of statehood. How do you picture my account of statehood in terms of Hegelian schematics?

  12. Here is something of a bibliography for the concept of economies as organisms:

    http://evonomics.com/the-new-story-the-economy-is-an-organism/

    Mr. Nowosielski, do you intend to follow up on this article?

  13. Yes, I will.