The Prosperity of Vice: A Worried View of Economics

Like many men of my age, I have reasons to be grateful to Leonard Cohen. His atmospheric songs were an essential ingredient of the student's romantic evening c.1970. Hours drinking cheap red wine followed by a risky scramble over the college garden wall, then a 40-watt bulb and Suzanne on the turntable to change the mood. Bliss, until the hangover kicked in.

It has been reassuring, too, to find that the mysterious appeal of his gloomy lyrics has crossed the generations: a 2010 tour was a sell-out, and this year he is out on the road again.

I did not, however, see him as a political philosopher or economic analyst. There was airy talk of "tea and oranges that come all the way from China", but I did not see this as a commentary on the dangers of mercantilism. (Maybe I wasn't listening too closely by then.)

Daniel Cohen (no relation, I assume) takes his namesake more seriously. The Prosperity of Vice begins with a quote from The Future, a 1992 song too late to be of use to me. And the lines Daniel quotes are not "lie beside me, baby, that's an order", but rather "Give me back the Berlin Wall/Give me Stalin and St Paul/I've seen the future, brother: it is murder".

This is not just a bid for popular credibility: in interviews, Daniel Cohen has used the song to summarise the core argument in his book. He believes that the comforting idea that globalisation will lead the world to a more peaceful future is misconceived. He notes that for many centuries the Malthusian principle kept prosperous societies in check, but we now believe, or act as if we believe, that we may all become more prosperous indefinitely.

This may turn out to be wrong for two principal reasons. First, there is the Easterlin paradox. Human happiness tends to depend more on growth rates than on levels of income, and on relative rather than absolute prosperity. At present, China, India and others are engaged in a process of catch-up, but gradually the pace will slow as they begin to approach Western levels of wealth. That will create tensions in those societies, which may lead them to a more confrontational approach. China's "peaceful rise" may have a built-in time limit.

Second, now that everyone wants to get rich in the same way, the world looks very small. Resource depletion and climate change will require us to develop alternatives to energy-rich growth, but progress towards equitable policies on emissions has proved very difficult. It is not clear how these tensions will resolve themselves. They may come to generate armed conflict.

Cohen dismisses the notion that an interconnected world is necessarily one in which conflict is less likely. There is little evidence that the intensity of global trade is correlated with peaceful coexistence. The First World War followed a period of intensifying globalisation: "to the extent that trade may enable one nation in a state of latent war with another one to diversify its supply sources, it may contribute to making new wars possible".

This is depressing stuff: he has certainly learned that from his singer-songwriter namesake. Is there a solution? Here, after 180 intellectually exhilarating pages, things become a little less clear. The solution may, if I understand him correctly, lie in cyberspace. The new age of global communication may give us the means to manage the anticipated ecological crisis and "to transform the norms of Western consumption in such a way as to make them compatible with their becoming generalised to the rest of the world".

I suppose that may be so, although the initial impact has surely been to sharpen the desire for emulation. But let me not carp. This is a fascinating book that deserves a wide readership. I was sorry when it ended - which is a rare state of mind at the end of an economic tract.