Thank you for focusing an important and interesting area. It is my sense that we must make a very careful analytical distinction here between:
Does economic growth reduce poverty?
Is economic growth the only goal?
I emphatically agree that economic growth is not the only solution; Rule of law is critical, Conscious Capitalism is critical, entrepreneurial training and development for diverse indigenous peoples is critical (Steve Kaplitt made some excellent suggestions here), protection for the environment is critical, and more.
At the same time:
No country has ever created a mass middle class without sustained economic growth.
Every nation that has experienced sustained economic growth has seen dramatic improvements in its Human Development Index.
Thus while one can, and should, advocate for many improvements beyond economic growth, for any nation with a GDP below $14,000 or so, it is difficult to make a case that anyone who cares about either poverty or peace should be against economic growth. Adam Przeworski has made a very robust case that the stability of democracies is tightly correlated with GDP per capita; see
In essence, poor nations are far more likely to experience violent coups and civil wars than are wealthier nations. This is a very robust result.
With respect to the Human Development Index (HDI) itself, the economist Miles Cahill has shown that GDP per capita and HDI are so closely correlated that they are statistically indistinguishable,
Miles Cahill, “Is the Human Development Index Redundant?,” Eastern Economic Journal, Vol. 31, No. 1, Winter 2005
This is not inconsistent with the fact that countless individuals remain poor and/or experience a worsening of their condition in nations that are growing economically. In a world of six, going on seven, billion human beings, even as tens or hundreds of millions of people are being lifted out of poverty through economic growth, there may still be tens of millions whose lives may be made worse off, at least temporarily. Thus one will always be able to identify any number of people whose lives are not made better through economic growth, and we should work to minimize that number.
But the fact that some are not made better by economic growth, and that some may be made worse off when a country grows, is very, very different from the claim that economic growth does not alleviate poverty or reduce conflict.
I would go so far as to claim that sustained economic growth in the developing world is the sine qua non for the reduction of global poverty AND the creation of stable, democratic societies that do not collapse into civil wars. One can always say “Yes, AND we also need rule of law, etc.” Of course you are right that other elements are necessary.
But I don’t know of any evidence that indicates that large populations can become middle class without economic growth, nor of any evidence that indicates that democracies are stable in very poor nations.
So while I absolutely support and encourage all forms of Conscious Capitalism and various other forms of doing good, it is difficult to see how we can create a better world for the world’s poor, or reduce violent conflict, without economic growth.
Although there are exceptions, entrepreneurs create value by transforming the way that people go about their daily activities, from a pattern of activity that creates less value, to a pattern of activity that creates more value. As people’s daily activities create more value than they did before, most of the time they are happier than when they were unemployed or underemployed and they earn more money and experience a higher standard of living than they did before. The process through which this pattern of changing the daily activities of millions, or billions, of human beings from less valued activity to more valued activity, results in economic growth. We can work to manage this process to minimize the creative destruction that results, but without a continuation of some form of this process, we will never eliminate poverty and war.
Do any of you see a realistic alternative to some form of this process (however tamed and civilized) of massive poverty alleviation through entrepreneurship and economic growth?
And what are the key elements of taming the process of entrepreneurially-led creative destruction, to minimize the extent to which the process itself may ignite conflicts even as it is moving towards a long-term net benefit?