Long-run Growth, Social Institutions and Living Standards
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Long-run Growth, Social Institutions and Living Standards

Edited by Neri Salvadori and Arrigo Opocher

This engaging book contains a set of original contributions to the much-debated issues of long-run economic growth in relation to institutional and social progress.
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Chapter 4: Economic Progress and the Standard of Life: Notes on a Dynamic Approach to Needs and Consumption

Davide Gualerzi

Extract

4. Economic progress and the standard of life: notes on a dynamic approach to needs and consumption Davide Gualerzi 4.1. INTRODUCTION Economic growth is considered a goal in itself by most economists; a growth rate theory thus often exhausts the question of economic progress. Part of the same framework is the firmly established growth–consumption trade-off. Growth depends on saving and saving struggles with consumption, like two opposites. The ‘golden rule of accumulation’ is then spelt out as a growth equilibrium condition that maximizes consumption per capita. This approach, however, increasingly conflicts with the criticism of the established measures of economic performance. In particular, development studies have pointed out that GDP measures only market transactions and is therefore a limited indicator. This concern lies behind the effort, pioneered by A. Sen, to establish indicators of human development and welfare that go beyond standard economic measures. More recently, the dissatisfaction with the traditional approach to economic progress has opened the way to rethink its goals completely, towards questions traditionally outside the domain of economic analysis, such as that of happiness (Bruni and Porta, 2005). This has an interesting counterpart in the history of economic thought. An examination of the writings of fundamental figures such as J.S. Mill, Marshall and Keynes (Opocher, in this volume) suggests that they considered the goals of economic progress a very complex question, one that led them to consider an objective standard of comfort, often associated with the notion of a nobler life. Its improvement is fundamental...

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