Ethics and Economic Progress

I make no resolutions upon the turn of a calendar year partly because time change is a very arbitrary factor but I resolve every now and again to read some more of a type of literature or improve on a set of skills that I consider important. Among the resolutions that I made is to read at least one book per month written by a scholar who won the Nobel Prize in Economic Sciences. 

In the last week, I started and read an extremely perceptive book that provides the title for this blog post. Its author is James Buchanan, to whom the Nobel prize in Economic Sciences was deservedly awarded in 1986, "..for his development of the contractual and constitutional bases for the theory of economic and political decision-making."

Needless to state, the book is very well written and reads well notwithstanding the fact that its author avoided complicated notations in the text. Without spoiling it for readers of this blog, he provides a justification based on Adam Smith's thinking for the reason to encourage saving and work. He correlates these easily by starting with the observed truth that division of labour and exchange are significant factors for raising productivity. Growth in division of labour in turn affects the extent of the markets with the result that more labour and saving affect this increase.  Taking these two together, it is clear that the value to society is increased by the choice of an individual to work some more or save some more. On the other hand, idleness exerts a cost on the rest of society because it constrains its growth. 

Essays in the second portion of the book connect these three thoughts by addressing the effects of these ethical considerations on tax responses, idleness and "unproductive" labour. In all, the essays clarify many issues and are written in a very lucid and engaging manner. This is indeed a five start book written by a colossus of the discipline and leader in the Public Choice School of economics.