Economic growth has become a secular religion

According to an article authored by Professor Robert H. Nelson who also wrote 'Economics as Religion,' "The reason Americans have had such a long-standing separation of church and state is that they have had powerful common values, apart from official church doctrine, that have helped to hold them together.

There have been shifts in the vision of America over time, but through its history, American secular religion has been based on a belief in democracy, capitalism, free enterprise, and economic progress."

Through out the world the American dream is hailed as the best model of economic development based on the free market theory of capitalism.

So it is with great religious fervour that developing countries who are in need of financial aid from America and other developed countries follow the economic growth of the much heralded US model.

This American economic religion has helped greatly to resolve what Robert Nelson calls 'the market paradox.' The market paradox arises from the fact that an economic system has to be based on a considerable degree of honesty and altruistic behavior, but it must also encourage individuals to pursue their own advantage in the market.

Economist Milton Friedman once speculated that free markets and American-style religious pluralism have gone hand in hand, stimulating both economic growth and religion.

We are at a time in history when increasing affluence generated through the free market initiative has enabled us to live longer and healthier lives more than ever before.

It has generally allowed a shortening of working hours and therefore more time for individuals to spend on leisure. Economic growth is also closely related to the development of science and culture.

For all the benefits that we have received from economic growth, we still find that we have to grapple with poverty, malnutrition and disease that has not been eradicated.

While direct attacks on economic growth are rare, increasingly we hear of the damages caused to environment, the inequality of wealth distribution, and the unhappiness caused by the constant pressure to compete.


United States itself exposes this glaring contradiction.

What an irony it is that the city of the stars, the city of the rich and glamorous is also the homeless capital of the United States. Los Angeles has about 4 million people while nearly 10 million live in Los Angeles County, which embraces a sprawl of 88 cities. Los Angeles County is the second biggest urban concentration in North America after the big apple, New York.

A report released by the Los Angeles Homeless Services Authority estimated that 82,291 people were homeless in Los Angeles County on any given night in 2005, with about 48,103 of the county's homeless living within Los Angeles' city limits.

The United States has powerfully demonstrated that economic growth alone does not solve society's problems such as poverty.

As explained in 'The Moral Consequences of Economic Growth,' by Benjamin Friedman- a professor of economics at Harvard University, the market economy does not automatically guarantee growth, social justice, or even economic efficiency; achieving those ends requires that government play an important role.

In other words, there is a role of government in promoting growth and making sure that it is the right kind of growth.

The problem is that this goes against many American economists who tend to have a strong aversion to advocating government intervention.

Their basic presumption is often that markets generally work by themselves and that there are just a few limited instances in which government action is needed to correct market failure; government economic policy, the thinking goes, should include only minimal intervention to ensure economic efficiency.

But as we have seen in the US homeless example, the results on the ground do not bear that out.

Thus, there is a convincing argument that governments do have a role to play to bring out a more sustainable and an even handed development that will benefit everyone from the rich elites to the poor across all sections of society.

Therefore, governments need to provide adequate intervention to ensure economic growth gives a better life to everyone, without leaving growth entirely to the Adam Smith's 'invisible hand' of the free market to decide how growth and development should take place.

Countries that need to deal with poverty and other aspects of social inequalities will have to call upon their governmnets to influence measures that will redress the imbalances rather than entirely depending on the free market to do the job for them.