Peace or prosperity

Malthus is dead, but prosperity for all guarantees neither peace nor happiness. This is the key message emanating from Daniel Cohen’s acclaimed new book, La prospérité du vice: Une introduction (inquiète) à l’économie. This professor of the École Normale Superieure and deputy director of the Paris School of Economics looks back over four centuries and draws on the thinking of the great economists, historians and sociologists in order to bring us to this insight: prosperity alone guarantees neither peace nor happiness. Despite Cohen’s prevailingly pessimistic tone, his pedagogical talent makes this book an exciting and educational read.

The core argument is simple: Malthus is dead, mankind has escaped the population trap and the famine that, through the twin pincers of sinking agricultural yields and rising birth rates, have always whittled mass prosperity away. Globalisation and entertainment are westernising all humanity, as China and India add a sizeable portion of mankind into the market-oriented economy. However, according to Cohen, this development means neither a worldwide shift to market democracy–Francis Fukuyama’s “end of history”–nor the unleashing of Samuel Huntington’s “clash of civilizations”. A much greater risk is that surging countries will go down the path that Europe took during the last 500 years, with the same sorry sequences of war and collapse.

Cohen is by no means an enemy of globalisation, as his previous books show. The chief route out of mass poverty in the world leads through international merchandise trade (financial globalisation, by contrast, has at times proven to be a dead-end alley). The mass exodus from the countryside to the cities, now occurring in China and India, boosts productivity and incomes. Knowledge-based production is increasingly shaping the global economy. Conception and design become the source of value added; even Renault prizes itself now as a “créateur d’automobiles”, and no longer as a mere “producer” of cars. Structural change, competition, new products, new production processes, and new marketing methods all bring advantages.

But Cohen wonders, like Pangloss in Voltaire’s satirical novel Candide, if all really is for the best in the best of all possible worlds. Why is Cohen worried?

The reason is the Easterlin paradox, the finding, first published in 1974, that although people with higher incomes are more likely to report being happy, rising incomes do not lead to increases in subjective wellbeing. Consumption acts like a drug, providing only ephemeral pleasure. Happiness depends more on growth rates than on GDP levels: people will only be satisfied if they have more than they had yesterday–and more than their neighbour. China and India are bound to find that their growth will slow as soon as they reach the level of the rich industrial countries, if not before. Then social tensions will grow as they did in Europe in the 1970s.

Also, the battle over natural resources has intensified now that China and India have emerged. Cohen cites the example of the German Empire at the beginning of the 20th century to show that convergence by no means pacifies countries. Thus, for Cohen, the potential for military conflict has not declined with the rise of the emerging countries. As observed in Africa’s conflicts, the fight for natural resources often burdens prosperity in the absence of strong, legitimate public governance.

Cohen is not preaching historical determinism, but urges diversity in approaches to economic policy. Asia does not have to repeat Europe’s mistakes. Even ecological risks can be managed, especially with the help of the new cyber world. In contrast to material globalisation, the virtual world is not subject to the same laws of scarce resources, since the more people that participate in the Internet, the more it will flourish. So Cohen is pinning his hopes on the cyber world. If it does not live up to its promise, then we are left with the dark vision of the future described in the book’s opening quote from singer Leonard Cohen: “Give me back the Berlin Wall. Give me Stalin and Saint Paul. I’ve seen the future, brother–it is murder.”

Daniel Cohen, La prospérité du vice: Une introduction (inquiète) àl’économie, Editions Albin Michel, Paris, September 2009.

©OECD Observer No 276-277 December 2009-January 2010

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