The Normative Stakes of Economic Growth; Or, Why Adam Smith Does Not Rely on “Trickle Down”

Abstract

This article analyzes Adam Smith’s endorsement of economic growth and asks what it might mean for a scenario of low or zero growth in the Western economies. It distinguishes two models of economic growth in Smith’s writing. The first, a “trickle down” scenario, plays a marginal role; Smith’s main focus is on a model in which the growth of productive capital and of jobs reinforce one another. There are three desiderata that this second model of growth achieves: a distribution that benefits the worst-off and leads to more equality in the long run, the harmonization of individual interests and societal interests, and the strengthening of the independence of citizens from employers, and of the political sphere from economic influences. To achieve these desiderata in a low or zero growth scenario, institutional reforms are needed, but such a scenario need not be as bleak as Smith imagined, as arguments by John Stuart Mill show.