1.1 Why Looking Back to the Founders?
Why is it necessary to employ the founders’ support for a better, fairer and simpler understanding of sustainable development? Various reasons are discussed in the following paragraphs.
First of all, their framework for analysis is clear, logical and well-articulated. The division of labour and human cooperation gives substance to this framework, and through them, almost everything is explained: exchange, money, equilibrium and social harmony. The reality of the classical founders’ world is a contradictory one, socially and economically. Their economic and social harmony is dynamic, with rich and poor changing places, efficiently or otherwise, depending on how they use their minds and hands. Good practices (Smithian institutions) respected by economic actors, the government in particular, provide support for understanding the seeds of economic resilience. This resilience is sustained by a small but powerful government, with a job description in accordance with the conception of Smith and Bastiat, summed up under two main headings: freedom and security. The role of domestic education as a natural institution regarded by Smith as a creative activity and the role of profit and productive work in sustaining economic dynamics, all with support in private ownership, reject any contemporary approach that would pursue sustainability beyond the free market economy. Classical economists tell us that profit moves the world, but wealth is gained through work and within the boundaries of such a framework. Work concerns all those who have the capacity to engage in it. This is how growth is achieved, and its rationale, through development, is to make people happy—not equally nor through statistical manipulation. With reference to such a background, it is possible to understand why degrowth is not suitable for everybody, through both message and reasoning; and how distributive justice and impersonal efficiency are as attractive as they are non-engaging.
Following a natural process with impeccable logic: production–distribution–exchange–consumption, the classicists help us understand why their GDP has consistency. Unlike the contemporary one, the concept is not full of holes, filled with nominal bubbles due to the fact that the causal relationship between the main components of reproduction has been reversed. In such a context, it is possible to prove that proclaiming the primacy of distribution and redistributive justice in relation to production is a naive, if not an absurd conclusion. For the same reasons, one can find proof of the lack of logical support within reports such as the Stiglitz-Sen-Fitoussi one (Stiglitz et al. 2009). We will rely on the founders’ analyses to reveal how the nominal economy may be illusory, if both the lesson of Smith’s alleged dogma (Marx 1990) and the lesson of Ricardo’s (2001) and Marx’s (1990) one about money are omitted.
Development for the benefit of all and with respect to nature can be targeted and implemented through a socialist or liberal policy, or a mixed one. Regardless of which research methodology is used, including a counterfactual one, a brief but objective analysis of the history of economic and social dynamics, as it has emerged from the classicists, tells us one certain thing: welfare and civility, including respect for the environment, are found in the countries that have followed Smith. At the same time, the social and environmental elements call for the consistent presence of the state, effecting concrete policies. Not, however, a Leviathan state in communist clothes, but a responsible state, the main actor in an institutional arrangement that makes possible human coexistence and cooperation. When asked how much state and how much market, how much liberalism and how much protectionism, how the logic of profit gets along with social welfare or how much macro-management must be given to the state, classical texts remain the source for qualified answers. If their recipe is sometimes seen as the ideal, at least, it shows us the direction to follow. For example, the role of free competition within the framework of well-considered laws, in satisfying both personal and general interests, remains the one that Adam Smith (1977) and Frédéric Bastiat (2007) supported. The XVIIIth passage of Bastiat’s Economic Sophisms alone, “There are No Absolute Principles”, is sufficient to understand how the mechanism whereby private initiative and freedom of exchange, guided by the invisible hand and personal interest, are infinitely more effective in satisfying everybody than any arbitrary government intervention. Similarly, it becomes embarrassing to seek protectionist arguments after reading the famous writing “Petition of the Manufacturers of Candles, Waxlights, Lamps, Candlelights, Street Lamps, Snuffers, Extinguishers, and the Producers of Oil, Tallow, Resin, Alcohol, and, Generally, of Everything Connected with Lighting”—by the same classical author. A simple reading of Marx’s “Fragment on Machines” and of Ricardo’s chapter “On Machinery” might have calmed the atmosphere at the Davos meeting in 2016. It might have clarified for the participants that the fourth industrial revolution is not necessarily destined to fill the world with high-skilled unemployed. But do we still have time for them? How many scholars still waste their time reading Ricardo to the end to understand that “machinery cannot be worked without the assistance of men, it cannot be made but with the contribution of their labour” (Ricardo 2001, p. 290) and that the law of competitive advantage could be theoretically invalidated but, in practice, it sustains the positive-sum game of free international trade.
On the trail of classical thinking, we can set out certain assumptions and suggestions that may be less comfortable but are not non-scientific or unnecessary truths. With truths established, a priori, one remains within orthodox analysis. This is not our intention. Rather, we think that the natural division of labour and inequality, not only at the starting point but also during the process, can be realistic working hypotheses. Both economic geography and economic history will be exploited to consider what responsibility may look like for future generations, in an increasingly globalized world. What does it mean, and how and for whom can redistributive justice act in order to materialize the messages of Piketty, Hayek, Mill, Tinbergen, Sachs, etc. Significant migration makes the relationship between generations transient, as it is observed in the Brundtland Report, because of the substantial number of children and grandchildren living in a country other than the one of their grandparents. If we allow distributive justice to become a sensitive topic, how will it be perceived by the world, and how will it fit, if at all, with Smith’s comments on “the unfortunate law of slavery” (Smith 1977, p. 775) or “very little honour to the policy of Europe” (Smith 1977, p. 778)? How can these topics be tackled when it comes to the lack of development in a good part of the world to which today’s developed nations have a “moral obligation”, to use Brundtland’s phrase (World Commission on Environment and Development 1987, p. 52). Will we rediscover the poor of the world to squeeze out their surplus savings or allow them to find their way unhindered? At the same time, how do we deal with the chorus of camouflaged futurists who advise them to industrialize more slowly and focus on more traditional activities (Martin 2007)? Instead of advising the underdeveloped to look at the rich countries in a demoralizing mirror (Marx 1990), we should suggest that systematic and tenacious work is the way to achieve sustainable development. Max Weber (2005) would prove to be a good teacher in this endeavour.
We will also refer to the founding tenets of economics to show that the dynamics of accumulation through reinvestment of profits ensures employment and economic equilibrium as well as social peace. Also, through the founders, we find that the concept of decrease is essentially pre-modern, inspired by the obsolete idea of the uselessness of reinvesting the surplus and the illusion, as a consequence, of ostentatious consumption. In other words, we can understand through the founders that accumulating profits and reinvesting them are the main determinants of growth. This is the way to be wealthy and happy. Mill’s “Socrates dissatisfied” (Mill 2015, p. 124) is a transitory episode only to the extent that waste and consumerist ostentation tend to define ranks, rather than following rational precepts. It remains to be seen whether we need to revisit the Brundtland Report to learn about the relationship between the rich and the poor, when we already know from Adam Smith that things will always be like this. Although differences will always exist, absolute poverty is ugly and inhumane, and all energies must be gathered against it. Furthermore, a fact that cannot be ignored is that many poor of the rich world are today richer than the rich of the poor world, and relative poverty is the measure we should consider when we try to validate economic principles.
It is important to look back also because from the classical economists we understand not only that the object of economic science is economic growth, but also that a civilized society is sustained through the presence of and respect for rules. Any deviation from these principles runs counter to the theory of development and to reality itself. This topic is one of the most generous places to be exploited. This is because instead of focusing on meaningful themes, especially the theory of growth, there is a process of dilution and digression to areas that do not belong to economics. This is done by disregarding ideas from economics and by considering areas only loosely linked to it. It should be noted that an extraordinary number of books and articles dealing with growth make no reference to classical economics. And it is highly damaging when renowned, opinion-forming minds fall into this trap. If not even well-known economists build on solid foundations, it is not difficult to understand how the theory of sustainable development has been filled with an extravaganza of words and why it entertains the possibility of living better without working more, or why proclaiming propagandistically “Down with growth!” paves the way to scientific glory. On this line of thought, is it not significant that the Stiglitz-Sen-Fitoussi Commission was created in 2008, precisely the year when the world economy began to crack? To crack not in relation to distribution or the environment but rather in regard to its hard core: the link between the natural rate of interest and the bank rate; and in regard to an inflated monetary dimension fuelled by breaking some elementary classical rules regarding the role and functions of money. Yet, it is precisely the two aforementioned dimensions, of environment and distribution, on which the Commission has focused.
In Romanian philosophy, there is a belief that, in each country, the sky is different. Paraphrasing, we could say that each country experiences the joy of possessing a part of the world’s sky in a unique way, a joy that you build yourself, a distinct part of the joy of the world. The World Bank can make calculations of the globalized world GDP, but they are not relevant to individual well-being in Somalia or Switzerland. Individual well-being is a result of how each person uses, efficiently or not, his/her mind and hands in an environment of competition restricted only by law. To wait for a share of the welfare of an increasingly globalized world to also flow towards you only because you are part of it is akin to Campanella’s Sun City or More’s Utopia. Individualism, and not holism, as a principle of judgement, remains the distinctive feature of constructing and acceding to welfare. Here, again, the founders tell us which is the best alternative. If Adam Smith and his disciple on this topic, Hayek, reviewed the state of the ...