THE CONFUSION OF ECONOMICS WITH POLITICS:

The general lack of attention in mainstream economics to issues of moral philosophy limits economists' recognition of the central role that a powerful progressive value system plays in their own field, not only in making policy recommendations but in underpinning the core methods of economic analysis. With very few exceptions -- such as Harvard's Benjamin M. Friedman, author of the 2005 book The Moral Consequences of Economic Growth -- economists seldom compare the benefits of economic growth with the costs, usually assuming automatically that the former outweigh the latter.

But growth radically transforms society -- and not always for the better. Economic gains often come hand in hand with personal, social, cultural, and environmental losses that economists too easily ignore; it is simpler to make judgments about what is economically beneficial based on quantifiable factors and impersonal market mechanisms. Consider trade with China. It has no doubt helped to increase total available goods and services in the United States and has produced large material benefits in China too. But it has thrown many American workers out of their jobs and undermined the vitality of many U.S. communities. How can we say that the social gains of U.S. trade with China are greater than the social costs? Many economists find it easy to answer this question, assuming that economic progress, given its necessarily transcendent importance over any social costs incurred, must always be worth it.

This, however, is not a scientific conclusion but rather one based on a secular-religious faith in the absolute value of economic growth and efficiency. Few if any economists have sought to do a truly comprehensive cost-benefit analysis of trade with China -- one in which the costs have included the psychic demoralization of workers who have lost their jobs and of owners whose businesses have failed, and the transitional costs (not just economic but again, psychic) associated with the disruption of workers having to move their families from one community to another. These hidden costs are not easy to measure, but that does not mean they are unimportant, and it is only a blinding devotion to growth that obscures them from economic analysis.

Moreover, economic estimates and projections of growth frequently leave out short-term costs, the stresses and strains that arise in the process of creative destruction, while focusing entirely on the long term. The range of short-run costs that economic analyses normally ignore includes not just the financial and psychic losses when a worker loses a job, but also the loss of community when the market renders a negative verdict on the mainstays of a local economy; the loss of homes, streets, farms, and other historic treasures; the transformation of plant and animal habitats into resources for exploitation; the weakening of communal bonds; the feelings of personal powerlessness when private organizations are the efficiency winners in the market, leaving many people to work as small parts in large and often impersonal bureaucratic enterprises; and the diminishment of personal freedom associated with the kind of government regulation and taxation put in place to sustain and promote economic activity. There is also the sense that some assets or activities are devalued by the very fact of entering them into the price system as goods and services -- the commodification of human reproduction, for instance. (In a few cases, such as prostitution, government intervenes to limit the devaluing consequences of commodification, but these are the exceptions that prove the rule.)

Admittedly, it would be impossible to assign monetary values to many of these costs. But the more fundamental issue is that economic analyses systematically and deliberately leave them out of consideration, focusing instead on achieving the path of the maximum growth of the economy, the path to heaven on earth. If one were able to account for the costs in every dimension associated with gains in economic progress and efficiency, we might find that the gains are not always worth the costs.

In parts of the world that are less developed than the United States -- in countries like Cambodia or Haiti, for example -- it is not difficult to make a strong argument for both the material and moral benefits of economic growth. But what about in the United States today? Perhaps a century ago the countless beneficial social transformations that recent economic development had produced might have offered strong grounds for holding to the faith that growth is a paramount good. But in the twenty-first century, the case for unlimited growth in already economically developed countries may have become less obvious. Why, then, does it remain such a central goal in American politics? To some extent it may be a matter of inertia: we have all agreed about the need for growth for so long, even in the midst of our disagreements about capitalism versus socialism -- which can be seen as disagreements about how best to achieve growth -- that we cannot easily refocus our politics on some other fundamental good. Also, the growth agenda has played a unifying role in American culture. A nation as large as the United States needs a "civil religion" to hold it together, as the late Robert Bellah argued. Although its hold has been weakening, the American civil religion still assigns a central role to the importance of economic growth. Absent a good substitute, it might be dangerous to give up on so central a part of the American faith.

Of course, a moral argument can still easily be made for progress in such areas as human health. But an argument for advancing medicine and improving health care is not an argument for general economic progress, but rather for devoting more of our society's resources to the health sector. And more practically, growth seems the only way we have at present of dealing with the problem of unemployment. Theoretically, in times of insufficient total aggregate demand, there could be a cooperative agreement in society that each working person should reduce his or her workforce participation by a sufficient amount to allow every person to be employed. But this would entail, to put it mildly, immense political and practical difficulties. So growth may be all we currently have as a unifying solution that can deal with unemployment.

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