Psychology Dictionary of ArgumentsHome
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| Economic growth: Economic growth is the increase in the production of goods and services in an economy over a period of time. It is typically measured as a percentage change in real gross domestic product (GDP), which is the total value of all goods and services produced in a country in a given year, adjusted for inflation. See also Economy, Economic development._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Economic Growth - Dictionary of Arguments
Rothbard III 962 Economic Growth/Rothbard: The discussion is replete with comparisons of the higher rate of country X which "we" must hurriedly counter, etc. Amidst all the interest in growth, there are many grave problems (…) First and foremost is the simple query: "What is so good about growth?" Problem: The economists, discoursing scientifically about growth, have illegitimately smuggled an ethical judgment into their science - an ethical judgment that remains unanalyzed, as if it were self-evident. Ethics/justification/values: But why should growth be the highest value for which we can strive? What is the ethical justification? There is no doubt about the fact that growth, taken over as another dubious metaphor from biology, "sounds" good to most people, but this hardly constitutes an adequate ethical analysis. Free market/Rothbard: Many things are considered as good, but on the free market every man must choose between different quantities of them and the price for those forgone. Similarly, growth, (…) must be balanced and weighed against competing values. Given due consideration, growth would be considered by few people as the only absolute value. If it were, why stop at 5 percent or 8 percent growth per year? Why not 50 percent? Economics: It is completely illegitimate for the economist qua economist simply to endorse growth. What he can do is to contrast what growth means in various social conditions. In a free market, for example, every person chooses how much future growth he wants as compared to present consumption. Living standard: "Growth," i.e., a rise in future living standards, can be achieved (…) only in a few definable ways. Growth/Rothbard: Either more and better resources can be found, or more and better people can be born, or technology improved, or the capital goods structure must be lengthened and capital multiplied. Rothbard III 963 Saving/investment: In practice, since resources need capital to find and develop them, since technological improvement can be applied to production only via capital investment, since entrepreneurial skills act only through investments, and since an increased labor supply is relatively independent of short-run economic considerations and can backfire in Malthusian fashion by Iowering per capita output, the only viable way to growth is through increased saving and investment. Free market/decisions: On the free market, each individual decides how much he wants to save - to increase his future living standards - as against how much he wants to consume in the present. The net resultant of all these voluntary individual decisions is the nation's or world's rate of capital investment. The total is a reflection of the voluntary, free decisions of every consumer, of every person. Economics: The economist, therefore, has no business endorsing "growth" as an end; if he does so, he is injecting an unscientific, arbitrary value judgment, especially if he does not present an ethical theory in justification. Rothbard III 964 Coercion/saving: (…) in cases of coerced saving the saver reaps none of the benefit of his sacrifice, which is instead reaped by government offcials or other beneficiaries. Free market: This contrasts to the free market, where people save and invest precisely because they will reap some tangible and desired rewards. Free rider/coercion: In a regime of coerced growth, then, "society" cannot grow, and conditions are totally different from those of the free market. Indeed, what we have is a form of the "free rider" argument against the free market and for government; here the various "free riders" band together to force other People to be thrifty so that the former can benefit. >Free rider. Def Economic growth/Rothbard: Any proper definition must surely encompass an increase of economic means available for the satisfaction of people's ends - in short, increased satisfactions of people's wants, or as P.T. Bauer has put it, "an increase in the range of effective alternatives open to people." On such a definition, it is Clear that compulsory saving, with its imposed losses and restrictions on people's effective choices, cannot spur economic growth; and also that government "investment," With its neglect of voluntary private consumption as its goal, can hardly be said to add to people's alternatives. Quite the contrary.(1) Rothbard: Finally, the very term "growth" is an illegitimate import of a metaphor from biology into human action.(2) "Growth" and "rate of growth" connote some sort of automatic necessity or inevitability and have for many People a value-loaded connotation of something self-evidently desirable.(3) 1. P.T. Bauer, Economic Analysis and Policy in Underdeveloped Countries (Durham, N.C.: Duke University Press, 1957), pp. 113 ff. On Soviet economic growth Bauer and Yamey make this salutary comment: „The meaning of national income, industrial output and capital formation is also debatable in an economy when so large a part of output is not governed by consumers' choices in the market; the diffculties of interpretation are particularly obvious in connection With the huge capital expenditure undertaken by government without reference to the valuation of output by consumers.“ (Bauer and Yamey, Economics of Under-Developed Countries, p. 162). Also see Friedman, "Foreign Economic Aid," p. 510. 2. For a critique of various metaphors illegitimately and misleadingly imported from the natural sciences into economics, see Rothbard, "The Mantle of Science." 3. The presumably excessive growth of cancerous cells, for example, is generally overlooked._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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> Counter arguments against Rothbard
> Counter arguments in relation to Economic Growth
