Is material prosperity the key to moral improvement? For Marxists, the answer is yes (as explained in my last post). In fact, according to Marx’s narrative, the moral and social ills of society are directly attributable to their material poverty. The only way to improve moral life, then, is to first improve economic conditions. But history tells a different story. In his book “Economics as Religion,” economist Robert Nelson tells the story of Zambia in the late twentieth century. As one of Africa’s poorest nations, Zambia was, for many years, the number one recipient of foreign aid. Hoping to improve the economic life of the Zambian people, nations around the world poured millions into Zambia in an attempt to spur investment and economic growth. But after three decades of aid, Zambia’s economy actually worsened—its GNP was smaller than when the aid first began. Needless to say, economic factors alone are not enough to improve the moral life of poor people. In fact, causation is precisely the other way around. The Zambian story shows clearly that without strong moral foundations—especially with regard to theft and property rights—economic growth is almost impossible. Wealthier nations could pour all the capital they wanted into the Zambian economy, but as long as officials failed to respect the rights and lives of their countrymen, it would never make a difference. In the early twentieth century, famed economist Frank Knight argued a similar thesis in response to progressives and socialists who sought to use government economic programs as a means to eradicate societal ills. He wrote in 1939:
The idea that the social problem is essentially or primarily economic, in the sense that social action may be concentrated on the economic aspect and other aspects left to take care of themselves, is a fallacy, and to outgrow this fallacy is one of the conditions of progress toward a real solution of the social problem as a whole, including the economic aspect itself.According to Knight, then, social progress occurs not when public officials realize that all social problems have economic causes, but rather, when they understand that this idea is a fallacy. Instead of reforming economic policy, then, to try and improve social conditions, human beings everywhere ought to remember that the source of social ills is not necessarily economic, and that even economic problems may not have economic causes. For example, consider poverty. Of course, many people around the world are born in to poverty and never escape it. Others are the unfortunate victims of fraud, disease or natural disasters that have taken a permanent toll on their economic life. But it’s no secret that many economic problems have their cause in moral or familial breakdown. The children of married parents, for example, have more economic resources, more parenting from their fathers, and face less risk of psychologically traumatizing parental break-up. According to the US Census Bureau, children of divorce are more likely to be in poverty, diminishing their prospects of paying for a college education. Additionally, even the poor themselves are extremely likely to name drug abuse as the number one cause of poverty. Material prosperity is important for societal health. It facilitates saving and investment that drive the engine of economic progress. But material deprivation alone is not the cause of societal breakdown. Helping the poor, then, is often more a matter of moral support than an issue of economic policy.