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‘The tide is rising, don’t rock the boat!’ Economic growth and the legitimation of inequality

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‘The tide is rising, don’t rock the boat!’ Economic growth and the legitimation of inequality Handbook on Development and Social Change, edited by Honor Fagan and Ronaldo Munck. (Edward Elgar, 2018)
Handbook on International Development and Social Change 

A rising tide lifts us all; dont rock the
boat!
Economic growth and the legitimation of
inequality

A widely held view on the relationship between poverty and inequality is that there
isn’t one.1 Welfare, in this optic, is determined by economic growth, not distribution. How
the poor fare has nothing to do with how well-heeled are the rich. What matters is not the
pie’s ingredients or how it is carved up, but the fact that tomorrow’s delivery is bigger than
today’s. As the size of the average serving grows, all will reap the benefits.
To switch metaphor, the aphorism that encapsulates the case is ‘a rising tide lifts all
boats.’ The ‘rising tide’ metaphor carries a distinctively modern charge. In this chapter I
examine its qualities, as they relate in particular to the growth paradigm. By growth
paradigm I refer to the idea that ‘the economy’ exists as an identifiable social sphere, that it
possesses an inherent propensity to grow, that its growth is imperative, continuous (even
limitless), and that growth is an acknowledged social goal and considered to be a
fundamental social good—even, indeed, the principal remedy for a catalogue of social ills.
I shall discuss four aspects of the ‘rising tide’ image. Three are attributes of the
metaphor itself: it envisages ‘the economy’ as, like the sea, a law-governed natural
phenomenon; it moves (or rises) as a whole, and in a manner that is perceptible and
measurable; and all human livelihoods rest on a single socio-economic basis, much as
vessels on the ocean. The fourth pertains to the conjuncture in which the aphorism first
gained popularity: in a speech by John F. Kennedy in which he laid out his Smithian-
Keynesian version of the growth paradigm.
1. ‘The economy’ as a law-governed entity
If the study of various aspects of economic behaviour—including policies, ethics, and
the dynamics of certain processes of production and trade—is ancient, it was not until the
middle of the last millennium that ‘the economy’ as a discrete, law-governed realm came to
be studied in a systematic way. The breakthrough was striking in Western Europe. In the
medieval era, economic behaviour was considered an indissoluble aspect of the social
totality, with economic interests deemed to be subordinate to the real business of life,
Handbook on International Development and Social Change 

which was salvation. God administered worldly affairs, and no sense existed of an
economic realm independent of the service of the clerics and the nobles, having its
autonomy and its own laws as a part of nature. The prevailing ideas held natural laws to be
part of a comprehensively graded order consisting of hierarchies nested within hierarchies,
punctuated by contingencies and divine intervention. It was a tiered conception of the
universe: thoroughly hierarchical, with God, angels, kings, priests, etc., each in their place.
And it was static. There was little sense in searching for laws of motion2.
From around the sixteenth century that began to change. The new era was
fascinated by motion and circulation. Copernicus had theorised the circular motion of
heavenly bodies. Physiology was reinvented as the study of fluid hydraulics and forces,
with the body conceived as a hydraulic machine of circulating fluids, and sickness and
health understood as a matter of the equilibrium among the body’s ‘humours’ (fluids).3
These developments rubbed off on social discourse. Relations of economic value began to
be discussed under a similar rubric to the laws of motion, and with similar metaphors. The
circulation of commodities and money came to be explicated using the vocabulary of
astronomy and mathematics, anatomy and pathology, and accounting: the quantity theory
of money, the balance of trade (from the weighing apparatus, via accounting), and so on.4
The mercantilist economist Edward Misselden was far from alone in resorting to geometric
and hydrological metaphor to depict the balance of trade. Whereas international trade
marks “the Periphery or Circumference of the Circle of Commerce,” the balance of trade
constitutes “the very Center of this Circle, and if conceived thus, all the mysteries of
exchange will resolve themselves. For, just “as a paire of Scales or Ballance, is an
Invention to shew us the waight of things,” so the balance of trade is an excellent and
politique Invention, to shew us the difference of waight in the Commerce of one Kingdome
with another.” All the “rivers of Trade,” he concludes, “spring out of this source, and empt
themselves againe into this Ocean. All the waight of Trade falle’s to this Center, & come’s
within the circuit of this Circle.5
The seventeenth-century mercantilists were interested in questions of growth,
production, and distribution, but their focus, much more than that of their successors, was
on the “circular flow of economic life,” the maintenance of which was deemed essential to
the preservation of a stable commonwealth, and which helped writers to conceptualise the
interdependence among diverse phenomena such as price levels, specie flows, and the
quantity of money.6 Out of this project, the ‘circulatory model’ of economic behaviour was
!
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
to evolve.
The metaphor of ‘circulation’ originated in husbandry (agricultural production), and
in this it is of a piece with Thomas Mun’s conceptualisation of the investment of bullion in
foreign trade ventures as a kind of “advance,” like the planting of seed, which would yield
a profitable “harvest.”7 Metaphors from biology and anatomy were also attracting
attention, such as theories of the circulation of celestial bodies, and Claude Perrault’s study
of the circulation of sap in plants. Another was William Harvey’s studies of the circulation
of blood, which appeared in 1616. The understanding that prevailed before Harvey posited
the key anatomical relations as those between each individual bodily part and the whole—
for example, the Hippocratic notion of harmonic equilibrium among bodily humours. With
Harvey, a new mechanical understanding emerged, of organs affecting one another through
the flow of blood.8 Harvey cited the mechanism of a water pump as an analogy for blood
circulation,9 but Ernest Gilman’s thesis is also suggestive: that the context was provided by
the privateering ventures of Francis Drake and his ilk. Harvey, he writes:
…specifies the idea of bodily circulation by opening a ‘passage’ between the arterial
and venous systems for the flow of blood (moving in vessels, coincidentally) to
unite the most distant points in the body with the heart. In the ‘lesser world’ of
man, Harvey remapped the global voyages of the great circumnavigators.10
There was a close fit between the scientific revolution and the invention of the economy as
a law-governed system; the ascent of mechanical philosophy coincided with that of the
market mechanism, and the concomitant sundering of ‘economy’ from ‘society.’ From the
conception of the universe as a machine it was a short step to envisaging society and
economy likewise—as determined by lawful regularities that are akin to those that govern
the natural world.
From the mid-seventeenth century onward, the idea prevailed that commerce “is a
field of social regularities” that should receive extensive support from, but not the detailed
intrusion of, human law. By the late 1660s, Child already possessed “a clear idea of the
explanatory value of the simple fact that commodities tend to seek the most advantageous
market,”11 being drawn by expectations of profit, and the related idea that trade is by
nature free. He believed that the laws of money, with their “foundation in nature, will
ensure a downward trend to interest rates and a correlative upward trend to economic
growth—in which respect he quotes William Petty: “nature must and will have its
"
Handbook on International Development and Social Change 

course.”12 Davenant, in 1696, argued similarly:
Trade is in its Nature Free, finds its own Channel, and best directeth its own Course:
and all Laws to give it Rules, and Directions, and to Limit, and Circumscribe it, may
serve the Particular Ends of Private Men, but are seldom Advantagious to the
Publick. Governments in Relation to it, are to take a Providential Care of the Whole,
but generally to let Second Causes work their own way.13
In Locke, the idea of the natural laws of trade finds a still more sophisticated form,
with an explicit proposal that the laws of trade are different in character from, and thus
independent of, laws of governments; that the exchange process possesses an independent
causal character, with all prices determined by the universal forces of supply and demand,
and the exchange mechanism of a free market “generating an operation of its own, one
which is independent of most of the characteristics of the participants.”14
Another key figure in developing the case that natural laws of economic
phenomena exist which defy political control was North. He was the first, according to
Letwin, to construct an analysis founded on a few general axioms, which enabled him “to
provide a mechanistic explanation of an economic process, and to reach policy conclusions
that are deducible strictly from the premises.”15 This is most apparent with respect to his
theorisation of the supply and demand for money. “This ebbing and flowing of Money,” he
wrote, “supplies and accommodates itself, without any aid of Politicians. For when Money
grows scarce, and begins to be hoarded, then forthwith the Mint works, till the occasion be
filled up again.”16 Might the tidal allusion have been inspired by Isaac Newton’s discovery,
a few years earlier, that the tides are influenced by the Moon, as set out in his ‘Equilibrium
Theory of Tides’? Be that as it may, North’s perspective is that the laws of trade form
elements of a self-equilibrating system. The law he describes works through individuals—
they take coins to the Mint for melting down, and so on—but in so acting not one of them
is aiming to maintain the money supply in equilibrium. From this economic ‘law,’ North
deduces the laissez-faire conclusion that prices should not be set by government. There
exists a self- adjusting mechanism which maintains the money supply within the required
limits, a homeostatic process with which political regulation would interfere.17 North
thereby propounded an “equilibrium vision”—a supply and demand theory of price
formation. As mentioned above, he also identified the pursuit of profit as the driving force
of economic activity, the notion that free market exchange is conducive to general
economic welfare, and the idea that a self-regulating order emerges from the process of
#
Handbook on International Development and Social Change 

exchange between profit-driven individuals.18 His arguments for laissez-faire policies,
including towards the labour market—entailing abolition of the Elizabethan Poor Law—
invoked self-regulating mechanisms.19
The market, according to post-mercantilist economists such as North (and, later,
Richard Cantillon and Adam Smith) operates as a self-equilibrating system with, at its
heart, the self-adjusting price mechanism functioning to maintain the supply of
commodities (including money) in balance with demand. The economic ‘machine,’ they
postulated, works in an orderly and predictable manner to produce results that could be
defined as subject to laws—in the novel, seventeenth-century sense of ‘regularities’—and
which therefore constituted a proper field of enquiry for the social scientist.20 The laws of
the market are different in character from those of government, and intervention by
government would interfere with the self-adjusting mechanism.
2. The economy as subject to growth and measurement
To become constituted as an object or process, the movement of which can be clearly
apprehended (like a tide), economic affairs had to be subjected to rigorous measurement.
Here too, the sixteenth and seventeenth centuries marked a watershed. In previous
civilisations, arithmetical calculation was a normal and necessary part of economic life,
particularly where money was involved. It was in some societies regarded as indispensable
to justice and civic peace. Amon weighed the deeds of the ancient Egyptians in his scales,
as did Archangel Michael for the Christians.21 “The discovery of calculation (logismos)
ended civil conflict and increased concord,” proposed Archytas of Tarentum in the fourth
century BC. “For when there is calculation there is no unfair advantage, and there is
equality, for it is by calculation that we come to agreement in our transactions.”22 But on
the whole, and certainly in pre-modern Europe, the standardisation of weights and
measures remained relatively haphazard, and land was viewed through the prism of its
purpose rather than against the slide rule of abstraction. “The łan of barren soil in Poland
was larger than the łan of fertile soil,” the historian Witold Kula informs us, while the
bushel for measuring oats was larger than that used for selling wheat. In France, similarly,
the arpent was the area one farmer with two oxen or horses could plough in a day. One
department had nine sizes of arpent, the largest was five times the size of the smallest. The
unit of measure in both cases varied tremendously according to the value of the measured
$
Handbook on International Development and Social Change 

object—and often deliberately so, for in the feudal order price was regarded as an inherent
attribute of a commodity, its alteration as sinful. Hence, different measures were necessary:
merchants would apply one when buying and another when selling—the profit lay in the
difference.23
The picture changed dramatically with the rise of capitalism—and its associated
culture of ‘agricultural improvement’—and European colonialism. Colonial expansion and
capitalist agriculture generated a demand for a type of science that could present reality as
objective, precise, quantifiable. This was especially striking in seventeenth-century
England. There, writes historian Sarah Irving, the discourse in which the natural
environment was understood:
…became more quantitative and meticulous. It needed to, in order to render colonial
knowledge useful. Natural philosophy became more theorized, experimental and
regulated as a result of the exigencies of effective planting. Political arithmetic
produced the kind of knowledge which colonization demanded: quantifiable, and
encased in a claim of epistemological reliability.24
The system of “political arithmetic” devised by Petty to statistically assess the economic
potential of England and its Irish colony was important here. It tabulated assets in
quantified form, enabling the process of assessment to appear “objective and
disinterested.”25
With this, Petty made a seminal contribution both to the political arts of economic
administration (statistics) and to the conceptualisation of ‘the economy’ as a distinct field
subject to scientific study and accurate measurement. The latter assured him recognition by
The Economist as “the man who invented economics.”26 Marx acknowledged him as the
originator of English political economy—although, Hugh Goodacre points out, the more
accurate moniker would be “the political economist par excellence of the period of
primitive accumulation.”27 He planted quantification at the heart of scientific economics,
crafted to the purposes of English empire and deployed in ideological form, making the
most of the sheen of objectivity with which economic statistics—or ‘political arithmetic’ as
he termed it—comes coated.Moreover, he played a significant part in priming the growth
paradigm. In England before Petty, it could hardly have existed, for the simple reason that,
as Paul Slack points out (2015, 2), no one knew the nation’s territory, population or
income. But by the time of his death these all had been calculatedwithin acceptable
%
Handbook on International Development and Social Change 
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77/(-4(
(.)**(
*.(&( *&**
++&
2++/&.+*3(+'
28*(5*+&(.
()*+*6
  +  *(    (  /&    *      2&  +)
*)**++
*(*
/    8              (  0    
+).&*+(*
9 (& landlords and the state: surplus labour.29 The scientific authority that numbers
conveyed, moreover, was less in their precision than in the procedure through which they
are produced. Arguments based on ‘number, weight and measure,’ in Petty’s view (here
paraphrased by Mary Poovey) “would compel assent as surely as mathematics did—
especially if the King was willing to back the knowledge that the supposedly disinterested
numbers expert produced.”30 The aspiration to ‘disinterest’ was central to the emergent
discipline of economics. As Till Düppe has argued, economics ever since Petty has gained
scientificity (and thus, in a scientific age, epistemic authority) less through ‘objectivism’—
e.g. the meticulous accounting of individuals’ productive acts and consumer needs—than
through ‘formalism,’ and the belief that ‘the economy’ has an independent existence “was
:
Handbook on International Development and Social Change 

not made by means of the objectification of economic life, but by means of the
formalization of an a-subjective structure.”31
Petty’s claim to originality is usually thought of in connection with his adumbration
of a ‘national accounting’ model of the economy. His presentation of estimates of income,
expenditure, stock of land, and other physical assets in an integrated set of accounts for the
whole economy of England and Wales make him, according to a hagiography in The
Economist, the man who “came up with the idea of how to measure GDP.”32 But in
establishing aggregated data as the raw material of economics, he also helped to steer the
attention of scientific economics toward the aim of “maximizing quantities like the total
wealth of a nation,” an approving stance toward economic growth in the abstract, with the
occlusion of “issues of distributive justice.”33 As has been widely noted, in Petty’s work
5*0*
&*(++
+)+*6"#with the nation conceived
“as a productive engine,”35 an economic collectivity that serves the interests of English
power projection.36 His assessments of national income were dedicated not to the blue skies
of social science but to improving the state’s wartime tax collecting capability by supplying
it with a “quantitative framework for effective implementation of fiscal policy and
mobilization of resources.”37 In these ways Petty helped to found economics as a positivist
‘science of wealth,’ one that gave methodological expression to commodity fetishism—for
example the idea that the economy is a system that functions with similar law-governed
regularities as are found in the natural world. The new discipline was infused with the spirit
of scientific optimism, and the assumption that epistemological and material progress
march arm in arm. It promised to seal the “open link,” as Düppe has put it, “between
science and economic growth.”38
3. “The rising tide lifts us all, so don’t rock the boat!”
In Petty’s day, sustained economic growth did not exist as a reality, and the growth
paradigm did not exist as a discernible ideology or mental construct. In the following
century, the eighteenth, its contours began to become apparent, and this was, in part, in the
form of the legitimation of inequality.
The context (at least in Britain, the focus of this chapter) was formed by political
;
Handbook on International Development and Social Change 

and ideological responses to a social transition. An older social arrangement, in which all
forms of inequality is sanctioned by God and custom, in which the ruling classes were
rigidly and culturally separated from the producing classes, and in which the latter were
highly dispersed and fragmented (geographically and culturally), was giving way to a new
order. The principle of legal equality was gaining ground and was associated with a
levelling of the status order and a pervasive societal democratisation. Mentalities of
subjecthood and deference were beginning to yield to those of citizenship and equality.
Government was beginning to bargain with the legislature for the authorisation to tax, and
with citizens over the delivery of taxes. Together with a revolution in transport,
communications, media and literacy, all this contributed to a mobilisation of the citizenry.
The producing classes were increasingly educated and socially mobilised—massing in
workplaces and urban conurbations, and beginning to push their demands through
organised public displays on the national scale. The two great revolutions of the period
under consideration, in 1640s England and in 1789 in France, raised the spectre of popular
sovereignty.
These transformations raised the question, in a new way, of how to legitimate
economic inequality. Of course the old ideologies—religious, patrimonialist, and so on—
could be adapted to the task, but traditional conceptions of a fixed hierarchy of social rank
were harder to maintain in the new order, pulsing as it was to ideas of individual self-
interest, social change (progress, economic growth, and revolution) and popular
sovereignty (democracy and nationalism). However, might there be a way in which the
new ideas, of individualism, nationalism and progress/growth, could be knitted together in
a way that supports hierarchy and class division? The thinker who answered this question
with particular originality and influence was Smith.
In The Wealth of Nations, Smith’s starting point is self-interested commercial
activity, as the engine of that natural social process of self-sustaining growth, the advance
of ‘opulence.’39 In his words,
The uniform, constant, and uninterrupted effort of every man to better his condition,
the principle from which publick and national, as well as private opulence is
originally derived, is frequently powerful enough to maintain the natural progress of
things toward improvement.40
Material progress redounds to the good of the community as a whole, in terms of higher
<
Handbook on International Development and Social Change 

living standards (a greater quantity of goods sold at lower prices), such that class inequality
tends to diminish. As axioms, Smith postulates a direct and automatic relationship between
the welfare of the nation and the quantity of goods and services produced (relative to
population), and that the increase of capital is synonymous with the increase of national
wealth.41 “Every individual,” he writes in a famous passage, endeavours “to employ his
capital in the support of domestic industry, and so to direct that industry that its produce
may be of the greatest value.” Hence, “every individual necessarily labours to render the
annual revenue of the society as great as he can.” In acting thus, “he intends only his own
gain, and he is in this … led by an invisible hand to promote an end which was no part of
his intention.”42 Note in this passage the elision of capitalists and the population at large
(“every individual” invests “his capital”) and the notion that each capitalist-individual is an
active, if unwitting, agent of the growth imperative.
At times, Smith portrays the rich as the key source of demand. (He even imagines
that they serve the poor in a familial, ‘hand-me down’ manner. “The houses, the furniture,
the clothing of the rich, in a little time, become useful to the inferior and middling ranks of
people. They are able to purchase them when their superiors grow weary of them; and the
general accommodation of the whole people is thus gradually improved.”43) Elsewhere,
and equally memorably, he identifies “butchers, brewers, and bakers,” and indeed
labourers, as a prodigious source of demand, and even defines wealth in terms of the level
of consumption of the majority of society, the labouring poor.44 One of his justifications of
economic growth, moreover, is linked to his assumption that it leads to rising real wages,
and he is adamant that the most thriving and felicitous state—especially for its working
masses—is not the wealthiest but the one that is growing most rapidly, as measured by
output and the average wage. (These go hand in hand: higher wages are the “necessary
effect” of “increasing national wealth”).45 “An augmentation of fortune,” he argues, “is the
means by which the greater part of men propose and wish to better their condition…; and
the most likely way of augmenting their fortune is to save and accumulate some part of
what they acquire.”46
In having provided grounds for both the rich and the poor to hitch their wagon to
economic growth—the rich, as the principal creators of demand and the enlightened
stewards of the civilisation process; the poor, as beneficiaries of growth, through rising
living standards—Smith’s ideas were amenable to interpretation by two quite different
traditions of political economy. A conservative-liberal route proceeded via Burke and
=
Handbook on International Development and Social Change 

Ricardo to Hayek and Samuelson; a radical route wended via Paine and Sismondi to the
Smithian socialism of William Thompson and Karl Polanyi. Relatedly, Smith’s argument
that economic growth raises wages was seized upon by radicals and liberals alike. For
radicals, it justified demands for wage rises, and, much later, served to endorse social
democracy’s embrace of the capitalist system. For conservatives and liberals it was rolled
out whenever the poor needed to be put in their place.
A critical period was the 1790s, a decade of social turbulence, as the lower orders
found inspiration in the French Revolution. For philosophers and political economists, it
appeared imperative to remind readers of the need to keep the hoi polloi in their place.
Burke’s view, as laid out in Thoughts and Details on Scarcity, was that the deity and
science, in alliance, ensured that the poor shall and must remain poor. The laws of
commerce, after all, “are the laws of nature, and consequently the laws of God.”47 The
mutual benefit that arises from the pursuit of individual selfish interest, he argued, depends
upon the universal acceptance of the natural chain of subordination: of beast and plough to
labourer, of labourer to farmer, and so on.48 A similar argument was put by Archdeacon
Paley—a utilitarian philosopher, admirer of Smith, and one of the two dominant
theological figures of the age—in a two-pence anti-revolutionary pamphlet of 1792. How
lucky they are, he reminded the poor, given that God had created frugality as “a
pleasure.”49 Workers should “learn the art of contentment,” and should accept their role as
one of God-given duty—for “the labour of the world is carried on by service, that is, by
one man working under another man’s direction.”50 The crass inequality of wealth that
obtained across Europe, he argued, was dispiriting but was the by-product of a system that,
by fostering industry and the arts, was, considered in the round, beneficial to all. In his
ideal society, “a laborious frugal people [ministered] to the demands of an opulent,
luxurious nation.”51 He warned the lower classes who were enchanted by events in Paris
that:
The change, and the only change, to be desired, is that gradual and progressive
improvement of our circumstance which is the natural fruit of successful industry;
when each year is something better than the last; when we are enabled to add to our
little household one article after another of new comfort or conveniency, as our profits
increase, or our burden becomes less.
This, he cautioned, “may be looked forward to, and is practicable, by great numbers in a
Handbook on International Development and Social Change 

state of public order and quiet; it is absolutely impossible in any other.”52
In ways such as these, traditional norms of deference (to rulers, to God, to the
social hierarchy) were reinvented for the new times. They slotted neatly into the nationalist
framework, affirming that, although in a sense equals before the law, the political
community could, like a family, act together as an ordered unit, with individual differences
seen as either functional or irrelevant. They could be alloyed to the idea of material and
social Progress: if each accepts their place in the nation’s hierarchy, all will benefit from
the “gradual and progressive improvement” that ensues. This may not have constituted
‘grand’ ideology, in the sense of a population swept up in fervent support for a set of
beliefs. It was perfectly compatible with a grumbling pragmatic apathy towards the social
order and its rules. Nonetheless, it was vitally ideological. It said, in effect: the rising tide
will lift us all, so don’t rock the boat!
4. The rising tide and the growth take-off
The heyday of the growth paradigm arrived in the twentieth century. In its early decades,
a shift occurred, from a vague sense—long prevalent—that government should preside
over economic ‘improvement’ and ‘material progress’ to a conviction that promoting
growth is a matter of national priority. Factors behind the shift included intensified
geopolitical rivalry, and the increasing ‘muscularity’ of states, with expanded bureaucratic
apparatuses, surveillance systems and welfare provision. In some countries the expansion of
the suffrage was an additional factor: rights were extended and an infrastructure and
ideology of ‘national belonging’ was constructed with the aim of incorporating the lower
orders as citizens into the body politic. National accounting techniques were systematized.
In 1932, the US Congress commissioned the economist Simon Kuznets to devise a means
by which to measure the nation’s output. Gross Domestic Product (GDP) was the result.
Another 1930s milestone was the publication of Keynes’ General Theory.
Keynesian ideas, developed in parallel, and/or in dialogue with Michał Kalecki,
Joan Robinson and Keynes’ former student Roy Harrod, among others, responded to, and
fed into, the mid-century transformation of the world economy towards corporatism and
state capitalism. For social democratic parties in particular, Keynesian theory offered a
strategic ideology that provided justification for their aspiration to, or assumption of, a role
as a party of government within a capitalist environment. Following success in winning
!
Handbook on International Development and Social Change 

legal status in Western Europe and elsewhere, it sought to marshal its followers behind
goals—economic growth, welfare spending and war—that can be pursued within a
capitalist framework. The paradigmatic case was Sweden’s Social Democratic Party,
which, in the inter-war period abandoned the quest for “equal rewards” and economic
democracy in favour of aspirations to economic growth & “democratised opportunities,”
neatly wrapped in a Keynesian compact with the corporate sector. Keynesianism offered
something precious to social democracy. As Adam Przeworski explains, it:
…granted a universalistic status to the interests of workers. Earlier, all demands for
increased consumption were viewed as inimical to the national interest: higher
wages meant lower profits and hence a reduced opportunity for investment and
future development. But in the logic of Keynes’ theory, higher wages meant
an increase of aggregate demand, which implied increased expectations of profit,
increased investment, and hence economic stimulation. The significance of
increasing wages changed from being viewed as an impediment to national
economic development to being its stimulus. Corporatist defence of the interests of
workers, a policy social democrats had pursued during the ‘twenties now found
ideological justification in a technical economic theory.53
In short, Keynesianism furnished social democracy with new tools with which to
claim that the corporatist defence of workers’ material interests was synonymous with the
interests of the nation as a whole. Economic growth would enable rich and poor to flourish
together. This helped to ensure the marginalization of some of the left’s traditional agenda,
notably workers’ control, economic planning and radical redistribution. In the US, for
example, the left and the union movement in the 1940s dropped such demands in favour of
support for a government led programme of economic growth. In her history of the period,
Elizabeth Fones-Wolf describes the emergence of a capital-labour accord:
with unions abandoning their quest for industrial control in return for periodic
wage and benefit increases. In politics, labor shelved its earlier commitment to
economic planning and social solidarity for a program emphasizing ‘sustained
growth and productivity gain-sharing’ with a small expansion of the welfare state. 54
This went hand in hand with the expulsion of communists from the unions, undermining
militancy, and limiting labour’s ability to act as an independent political force. Writing of
the same period, Steve Fraser has described how US unions bargained away control over
"
Handbook on International Development and Social Change 

the shop floor in exchange for employment security and wage growth. A comparatively
affluent age ensued, but the spirit of solidarity declined, with organised labour taking its
place within the prevailing culture of acquisitiveness and individualism.55
By the mid-point of the century, growth had firmly established itself in industrial
societies, whether capitalist or communist, as a “secular religion,” in Daniel Bell’s phrase,
supplying “the source of individual motivation, the basis of political solidarity” and the
justification for mobilizing society behind a common purpose.56 Growth was increasingly
understood as a goal (as much as a means), with the economy conceived as an entity
essentially divorced from a natural resource base defined by its momentum of growth.57 It
became an integral part of social life throughout the world, and played a decisive part in
binding ‘civil society’ into capitalist hegemonic structures. It came to be seen as a proxy
for the profitability of national economies and as a magic wand to achieve all sorts of
goals: to abolish the danger of returning to Depression, to soothe class tensions, to reduce
the gap between ‘developed’ and ‘developing’ countries, to carve a path to international
recognition, and so on. The greater the rate of growth, it was universally supposed, the
lesser the economic, social and political challenges, and the more secure the regime. There
was a military angle too. The Cold War rivals identified growth as the elixir of geopolitical
success. “If we lack a first-rate growing economy,” as John F. Kennedy declaimed on the
campaign trail, “we cannot maintain a first-rate defence.”58
Arguably, the US in the 1950s saw the growth paradigm achieve its acme. In 1952
William Paley’s report ‘Resources for Freedom: Foundations for Growth and Security’
declared that it shares “the belief of the American people in the principle of growth,” for
growth seems preferable to its every conceivable antithesis, all of which imply “stagnation
and decay.”59 In 1958, the Republican plutocrats Nelson and Laurence Rockefeller
recruited Henry Kissinger to prepare a report on “The Challenge of the Future.” Heading a
panel comprised of economists associated with large corporations and major universities,
Kissinger produced a book, The Key Importance of Growth to Achieve National Goals,
which identified growth as the solution to the continuous pressure of competing claims on
national income (the arms race, public infrastructure, education, etc.). Growth, it argued,
not only brings “dignity, freedom, and purpose” but promises to expand “the opportunities
for individual fulfilment, multiply the incentives for enterprise, enable us to improve our
educational system, permit us to increase our protection against economic hardship, make
possible rising standards of national health and open new vistas of cultural achievement.”60
#
Handbook on International Development and Social Change 

In this context, the notion of the economy as a tide that raises all boats appeared
common-sensical. The idiom itself entered popular discourse thanks to Kennedy. He first
used it in 1960, on the campaign trail in Ohio. His campaign was oriented around questions
of the arms race, social justice, and above all growth—one of his campaign promises was
to hike the GDP growth rate to an annual rate of five per cent. In his Ohio speech Kennedy
asks rhetorically: how can we “move this country ahead,” how can we “provide full
employment, [and] develop the natural resources”? The answer he gives: “We must attempt
to stimulate the growth of the United States,” and “we must develop our natural
resources.”61 He related these points specifically to the building of the St. Lawrence
Seaway. This was a project for which he was proud to have voted in the Senate, for, even
though his base was Massachusetts, which did not stand to benefit, the scheme would be “a
national asset, and a rising tide lifts all boats.”62 This was, in essence, a Smithian-
Keynesian formulation of the growth paradigm: Smithian in its assumption that the
extension of commerce is of universal benefit, and in its denigration of protectionism and
pork-barrel politics; Keynesian in its emphasis on full employment as goal and public
infrastructure investment as means.
It was little wonder, then, that Kennedy was impressed by the work of Walt Rostow—a
leading purveyor of growth economics, along neoclassical/Keynesian lines. Rostow’s
theory was based on neoclassical assumptions, and focused on the ‘supply side’ conditions
for growth (population, savings, innovation, capital accumulation). However, he paid close
attention to social and institutional factors, and, although never a card-carrying Keynesian,
did think that Keynes had essentially solved the problem of economic volatility.63 “There is
every reason to believe,” Rostow enthused,
…that the sluggish and timid policies of the 1920s and 1930s with respect to the
level of unemployment will no longer be tolerated in Western societies. And now the
technical tricks of the trade—due to the Keynesian revolution—are widely
understood. It should not be forgotten that Keynes set himself the task of defeating
Marx’s prognosis about the course of unemployment under capitalism; and he
largely succeeded.64
Rostow’s own neoclassical/Keynesian box of tricks proved influential within the new
politics of ‘development’ that arose in the post-1948 conjuncture, in which Cold War
rivalry extended to the newly independent nations of the South. US administrations, from
$
Handbook on International Development and Social Change 

Truman to Kennedy and Johnson, were keen to associate themselves with the
‘modernisation’ of their Third World allies, and development economists were recruited to
advise on the project. Academics would “swarm into Washington,” with much talk of
nation-building and “self-sustaining growth,” recalls George Ball, undersecretary of state
from 1961 to 1966, in his memoirs.65 In 1958, Kennedy met Rostow, and the modernisation
theorist entered his inner circle of advisors.
The alliance of Rostow’s Stages and Kennedy-Johnson foreign policy ushered in
the heyday of modernisation theory, during an era in which development became
synonymous with rapid GDP growth, to the service of which an industry was called into
being to advise the US and other major powers on how to develop the Third World (much
as ‘developers’ develop real estate).66 Rostovian theory—with its postulate that, once
liberated from their traditional customs and institutions, poor countries will enjoy rapid
capitalist growth —was transparently aligned with a longstanding but newly revitalised US
mission to remake the Third World in its interests, establishing thriving zones of Western
capitalism, secured against the threats of leftist nationalism or Communist insurgency. But
Rostow’s influence extends beyond ‘development,’ to the theory of growth, and to the
propagation of the growth paradigm. In his magisterial treatise on the age of ecology,
Joachim Radkau goes so far as to refer to Rostow as the principal source of “the growth
obsession of the economic sciences.”67
Conclusion
The growth paradigm serves to naturalise and justify the prevailing social order,
applying ideological gloss to the true goal of capitalist production: the self-expansion of
capital. Capitalists and the social layers that support them would prefer their interests not to
be seen in these terms. In other words, as a system of competition, capitalism depends on
the growth of capital, but as a class system it depends on obscuring the sources of that
growth. In this, the ideology of growth is pivotal. It enables accumulation to be understood
as something of general interest—growth—rather than as a process of exploitation that
depends upon structural inequality. In this sense, growth is central to the justification of
capitalism. As the economist Joseph Schumpeter argued in the 1940s, capitalist economic
growth produces “avalanches of consumer goods” which “progressively raise the standard
of life of the masses”—and if sustained, moreover, will surely abolish poverty.68 The
%
Handbook on International Development and Social Change 

system, as Joan Robinson paraphrased Schumpeter’s case, is “cruel, unjust, turbulent, but it
does deliver the goods, and, damn it all, it’s the goods that you want.”69
The growth paradigm enjoyed its heyday during the trentes glorieuses. Since then,
storm clouds have gathered, from several directions. One concerns the growth paradigm in
its own terms. Per capita growth rates, at the global level and especially in the richer
countries, have declined, decade by decade. This poses a problem for systemic legitimacy,
for ‘performance legitimacy’, based on popular approval of a regime’s success in bringing
about economic growth and satisfying popular demand for goods and services, has over the
decades become the norm. In a context of lower growth, the notion of a ‘social contract’
between the state and the citizenry suffers attrition. States rely more heavily on techniques
of repression and of divide and rule. The symptoms are manifest in the form of alienation,
electoral volatility, anti-politics, and so forth. Increasing numbers feel excluded. As a
modern proverb of uncertain origin puts it, “A rising tide that lifts all boats drowns those
who have no vessel.”70
Secondly, various forms of growth scepticism are on the march. Some emphasise
the disconnect between economic growth and social wellbeing. As numerous scholars have
argued—perhaps most notably Richard Wilkinson’s and Kate Pickett’s The Spirit Level
the relationship between per capita GDP and wellbeing is limited, and such correlation
between them as does exist tends to decline after a certain point (for the sake of argument,
when the former hits $15,000). As national income increases beyond a certain level it
ceases to translate into improvements in health or general well-being. Instead, the critical
variable is the degree of equality.
Another source of growth scepticism concerns the impact of growth on supplies of
non-renewable resources and on the natural environment. Recognition of the hazardous
effects of climate change in particular have transformed the debate on growth. For the most
powerful pro-growth argument is an argument from freedom. It has been put with
particular eloquence by Arthur Lewis. The advantage of economic growth, he proposed,
…is not that wealth increases happiness, but that it increases the range of human
choice. What distinguishes men from pigs is that men have greater control over
their environment; not that they are more happy. And on this test, economic growth
is greatly to be desired. The case for economic growth is that it gives man greater
control over his environment, and thereby increases his freedom.71
:
Handbook on International Development and Social Change 

This argument from freedom is getting less convincing with each passing season. Certainly,
growth gives human beings the potential for greater control over our environment, and
greater actual control over certain aspects of it. But partial control can create blowback,
and enhanced control of some part of the system can undermine our ability to shape the
whole.
Think for example of our ability to “tame rivers.” This, as Fred Pearce shows in
When the Rivers Run Dry, often involves the exercise of short-term, localised and merely
instrumental control that doesn’t consider the long term, or for the entire course of the river
let alone other affected ecosystems. The successful ‘taming’ of a river may generate all
manner of problems downstream—geographically or temporally72. Specific cases such as
this may erode but do not destroy Lewis’ argument. Climate change, however, is on an
altogether different scale. A momentous example of humanity learning the laws of nature
but failing to apply them judiciously, it attests to economic growth actually decreasing
humanity’s ability to control the natural environment, as the planet careers towards
feedback-fuelled runaway warming.
And at that point, the rising tide will no longer be a metaphor.
REFERENCES
>/?( :<">@*/&>>8*
+(*A&
>A <<;88B27C+
C/3D>*.(&*E
>!= "/&*+).2*! *(
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8A :$ H %%;E %<=I>2(>
8/ <<#*+)&B2+G
*&NO&./+-*
*2B288*(L)&/
P++2!= 2*&B>/*&*
C?,
>!===*&7B>&
)G&*2L)&/
*?F!= "*/(*B2/7@.
/-*(Q7
G@F( <<#C+B27>?(
?(* <#$G%=L)&/
C)!= $2>>0B2?>*
KF@/?7
!= "2@*/&+(*@&
*.8*(A*>)>+(&<
A!==#C*B**
C+DL)&/&)/
R&!= #88B/2/
)!==$A&2B8*+-G
/+))L)&/
)C!==;-7*+/S
8
R&A <%=*G/+.K(" 
3(&EEG>EARGC+E/+G
/>T <%= =" GGG+,
R&A <%=*+>*8K.C+*(
!:3(&EEG>EARGC+E8G
KT <%==<!:+,
R@ <;%/L)&/
?!= "2B2+&*&
&)*./L)&
C,
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Handbook on International Development and Social Change 

?!= #B*
 <:$(.73*C+?2/
8(
?@* <%"2KC1*B*2
%%=G ::%
?@>22&*!==:2&
+K,
?++*@!==$H <":I2C&2
+87 <;=7K,L)&/
>!==:8@*& G!="=>B&*G
*&K,L)&/
8*2!==<@*/&>*(/>*K,
L)&/
-&) <;;/*&8+*B>+
L)&8/
F)!==;2872*BC*
2&G8&&)/
 <<$H %!"I288**72.
?*J* /&&/
K <<"2* %#!G :<!2&
/(
/&@* ;#<H :<"I8*(
+7+(.2@@*/&@*CK8
/!==%@)&B@G18
2&G8&7/7
/F>* <;=C*&/*.-?
) !!
/&C+!= =*)*

A*!= UVB@87
7!= #>C2(BCG&J7
? :"%G ;$<7
@ <<=2**)*/
K,L)&/
C*+A+ <$#8+*C**&L
C*+A+ <$$&*>&>SL
C!==#&&B*/+&2&
8*(L)&/
!=
Handbook on International Development and Social Change 

C*>* <<"H ::%I>0&-8@
-K,L)&/
C/!==<H <$;I*7-?2
2(7!= !28+0(*9*2B>
)
J!= !-*(.8?&-@))
B2++C
!
Notes

 ! "#$%&''()'#*
+'',-./01
212.#3#4 5#12
16&78'9#:*#
) 5
!8#; <= > <!"?.(
7
'#/<#!@=/
"#6 <<".+##*('
AB#,68#/# !"
#$%&#'(#':*6#/5/
#),''#
C#49"."$
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7
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!;8*2!==<@*/&>*(/>*K,
L)&/+ :;
!<'# <DD.+376(
#,.,",L/#E/!#/!"@M8#
<.,--)N:*6/
"=BL#C .+E#,3E78##!
$#.J'#/ "
"
FO# .#",$-,"#
3N'#/"D/
"! !.+61*#,#"# F/
"")#J <<!.#+7<=0+9>=#
6#/@5/
"#8#..,/$-,0,
"#:*'6#/5"/
"$8#..,/$-,
0,"#:*'6#/ "!#
5"/
"%#3; !.$#/1
( #P8#/ /
":#'=.'",+0=8?8-$",0
,#)N:*6#/5/
";FO# .#",$-,"#
3N'#/  /
"<2# <<!> ==@?.-!:, '
#)N:*6#8111# /
#=2# <<!> ==@?.-!:, '
#)N:*6#/5/
# 2# <<!> ==@?.-!:, '
#)N:*6#/@D/
#!2# <<!> ==@?.-!:, '
#)N:*6#/"==/
#"2# <<!> ==@?.1GE7
E#)N:*6#/ "!/
##E#F* <DD.",&'$-#
:*6#/ </
#$2# <<!> ==@?.-!:, '
#)N:*6#/=!#D M'# !.+
&F*#,4/#66'
'2#/##5@.-#)N:*6#/="/
#%2# <<!> ==@?.-!:, '
#)N:*6#/!/
#:8#G2#6<> <5D?."/ 3(
#/5D/
#;#// <D./#)N:*6#/5</
#<6#7 D"<> =<!?+J#'
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&( /
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