In Defense of Economic Inefficiency
Essays Politics Toward a Just Political Economy

In Defense of Economic Inefficiency

Benjamin V. Miller

This essay is a contribution from our symposium Toward a Just Political Economy. To receive a print copy and read the other essays, order here.

“There are few in the world who can resist the urge to help their seedlings grow.” —Mencius1

The development of free market capitalism produced an unprecedented boom in material prosperity. Goods and technology once the subject of science fiction novels became staples of everyday life. Poverty plummeted and standards of living skyrocketed. Material well-being reached a state Adam Smith never could have dreamed of.

Yet, despite grand material prosperity, our society now copes with an empty pit in the stomach. Our market economy seems to provide access to any good imaginable. Nevertheless, we cannot shrug the feeling that we are missing some elusive good. Something that will bring us the satisfaction and fulfillment we long for.

As G.K. Chesterton wrote,

[Capitalism is] that commercial system in which supply immediately answers to demand, and in which everybody seems to be thoroughly dissatisfied and unable to get anything he wants.2

Lack of fulfillment is readily evident in modern society. Rates of depression and anxiety continue to dramatically rise year after year. Suicide is now the second leading cause of death for those under the age of 35.3 Despite the unprecedented material prosperity, our society is suffering from a loss of purpose and satisfaction.

There is no lack of fingers to point in addressing the crisis of lost meaning. Copious amounts of ink have been spilled criticizing the decline of religion, the rise of moral relativism, and the destruction of the nuclear family, among others. Undoubtedly, the cause of the current crisis is multifaceted. Yet, while much attention has been paid to socio-moral issues, the thesis that free market capitalism may be the culprit has generally flown under the radar. Don’t get me wrong, plenty of people vocally criticize capitalism for woes in present-day society. However, their critique is generally focused on one major issue: inequality. Modern critics of capitalism, following the dialectic framework of Karl Marx, see social injustice as a derivative of socio-economic inequality. Although I can see merit in criticizing capitalism on the basis of inequality, my critique follows a unique line of reasoning.

I suggest our crisis of lost meaning is partially a by-product of the capitalist mentality which views economic growth and maximal efficiency as the ultimate goal of political economy. This mindset, while providing society with unimaginable material wealth, has bankrupted our sense of fulfillment. As such, we must reframe the way in which we view political economy and construct a new hermeneutic of economic success around the concept of “enlightened underdevelopment.”

In the writing that follows, I begin by outlining the current capitalist mindset. Next, I theorize why capitalism inevitably ends in lack of fulfillment. Third, I suggest the antidote to this toxic capitalist mindset lies within the ancient wisdom of Daoism and Neo-Confucianism. Finally, I attempt to provide a “positive upshot” for policy makers and analysts when assessing new economic solutions.

The Capitalist Mindset

“Capitalist production, therefore, develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth—the soil and the labourer.”

—Karl Marx4

If I had to summarize the capitalist mindset in one term, it would be: economic growth. According to the mindset, economic growth is the ultimate goal of political economy. Through higher growth, an economy is able to reduce poverty and increase standards of living. Eli Dourado for Cato Unbound writes,

Maximizing sustainable economic growth, properly understood, should be an essential element of any system of ethics. . . Growth is so fundamental to human well-being, both directly and through correlation with other plural values, that this claim hardly strikes me as controversial.5

The question is whether economic growth is ever truly sustainable. I don’t mean with respect to issues such as environmental concerns, though those certainly must be considered. The bigger problem with economic growth is the toll it takes on the human spirit.

Economic growth in the United States is largely a product of increased spending and efficiency. Consumer spending drives profits. Profits allow for investments into new technology, which in turn increases efficiency. Greater efficiency results in a higher productive output, which enables increased sales. It is a grand virtuous (or dare I suggest vicious) cycle. Is this model sustainable?

I find two major flaws. First, economic growth theory relies on undying consumerism. To enable investment, businesses require consumers to endlessly purchase new goods. For certain products, this is non-problematic. Food products and clothing naturally have a shelf life. Even the most frugal consumer will one day find a hole in their T-shirt. However, goods with long shelf lives, particularly electronic goods, require prompting the consumer into believing they need to upgrade. These upgrades often result in minor conveniences rather than life-changing enhancements. The first problem of capitalism can be summarized as so: Capitalism requires the conversion of mere “wants” into “needs.” This concept entraps consumers in a downward spiral of consumeristic spending through which they are never satisfied.

Second, economic growth theory requires the endless adoption of new technologies. This opens the door for increased efficiency, which in turn grows the economy. On the micro-level, laborers are wrung out for every last drop of productivity via new electronic devices, software, SOP manuals, and even experimental office environment designs. The hyper-focus on productivity reduces laborers to mere input-output automata and eliminates the space once held by creative problem-solving. On the macro-level, new technologies result in hyper-specialization and automation. It has become increasingly rare for a single factory to manufacture an entire product. Often, multiple factories produce a single component each to be assembled at another location. Hyper-specialization creates a gap between the laborer and the finished product. Typically, an employee will never see the full fruits of their labor. Additionally, automation pushes production further into the realm of mass-produced garbage. Production is no longer an art but a mere process. I predict sometime in the future the word “artisan” may be completely lost from common vocabulary. The second problem of capitalism can be summarized as so: Capitalism separates the laborer (artisan) from the fruits of their labor (art).

The focus on economic growth has unquestionably led to great material prosperity. Countless people have been freed from worries regarding basic food, clothing, and shelter. However, once we obtain a full notion of human fulfillment, the two problems outlined above call into question our unwavering loyalty to economic growth theory.

The Need for Craftsmanship

“The development We speak of here cannot be restricted to economic growth alone. To be authentic, it must be well rounded; it must foster the development of each man and of the whole man.”

—Pope Saint Paul VI6

The capitalist mindset is humanist in nature, seeking to better the human condition via material prosperity. However, Jacques Maritain reminds us of the need to embrace an “integral humanism,” a humanism which recognizes man as both body and spirit. While the capitalist mindset succeeds at satisfying the body, it utterly fails to bolster the spirit.

The turn of the 2010s saw a renaissance in anti-consumerist thinking. In the ruin of the 2011 Great East Japan Earthquake, many Japanese citizens began to question the emphasis their country placed on economic growth for the previous several decades. The earthquake showed the fleetingness of material reality. Structures which the they labored for years to construct were destroyed in mere seconds. Simultaneously, Japanese citizens came to realize that their country’s world-leading technologies did not make them any happier. In fact, the new digital realm and correspondent consumerism left them feeling empty. Thus, the contemporary minimalist movement was born.

Writers such as Fumio Sasaki and Marie Kondo became international best-sellers as they argued for the virtue of intentionally living with less “stuff.” In its essence, minimalism is not about rejecting material goods wholesale. Rather, it is about surrounding oneself with only those goods which invoke a sense of fulfillment. As Marie Kondo prescribes, “take each item in one’s hand and ask: ‘Does this spark joy?’ If it does, keep it. If not, dispose of it.”7

It is poetically fitting that such a movement would arise out of Japan, one of the most technologically advanced and economically prosperous nations in the world. Minimalism embraces a simple idea: material goods are not what ultimately makes us happy. This is a profound economic lesson to come from a nation whose modern history is centered around the goal of rapid economic growth.The minimalist framework has been further developed to encompass the technological sphere through the work of Cal Newport. Newport notes several studies which show technology and social media having a destructive effect on mental well-being.8 He draws upon the work of Dr. Jean Twenge’s iGen and her observation of lower mental well-being among those who grew up in the smartphone generation. He suggests humans of the 21st century have lost two critical elements of their personal fulfillment: craftsmanship and strenuous activity.

As unities of body and spirit, there is an innate need for human craftsmanship as an “outlet for self-worth established through unambiguous demonstrations of skill.”9 Through craftsmanship, we use our body to unite the form of the object in our intellect with the material in front of us. As such, craftsmanship unites both body and spirit to produce an actual object in the real world. This melding of body, spirit, and reality is crucial to the self-actualization of our human nature. Additionally, strenuous activity requires us to challenge ourselves and grow in virtue, as opposed to passive consumption of entertainment.

Applying these concepts to the economic sphere, the widening abyss between laborer and the fruits of labor is cause for concern. G.K. Chesterton tragically proclaims:

Our society is so abnormal that the normal man never dreams of having the normal occupation of looking after his own property. When he chooses a trade, he chooses one of the ten thousand trades that involve looking after other people’s property.10

While purchasing the ability to consume a plethora of new material goods, citizens sold any meaningful claim of ownership over their labor. The concept of craftsmanship was thrown out the window in favor of mass-produced garbage. As cultural geographer David Nemeth states, the new technology indiscriminately accepted during the 20th century has “not so much reduced human labor as it has reduced human self-sufficiency and dignity.”11

Chesterton understood the value in economic self-sufficiency. He writes, “Making the landlord and the tenant the same person has certain advantages, as that the tenant pays no rent, while the landlord does a little work.”12 There is virtue to be found in ownership and “doing a little work.” Craftsmanship gives humans an unparalleled sense of self-worth. Thus, we should orient our economy in a way that promotes ownership, self-sufficiency, and craftsmanship.

I do not mean to suggest everyone must become a subsistence farmer. Such a suggestion is ludicrous. Rather, as I will discuss below, humans should prudentially avoid labor-saving technology and embrace inefficiency for the sake of growing in virtue. New technology can and should be adopted over time but only insofar as it assists craftsmanship rather than replaces it, lest we lose a crucial element of human fulfillment.

Enlightened Underdevelopment

“It’s not that I don’t know about your machine—I would be ashamed to use it!”


As discussed above, prioritizing economic growth and efficiency has torn us from fulfilling self-production. If not economic growth theory, what should be our framework for economic life? To find the answer, I believe we should look to the wisdom of ancient Daoism and Neo-Confucianism.

The classical Chinese critique of growth theory is best illustrated by Mencius. He gives us the following parable:

There was a man from Sung who pulled at his seedlings because he was worried about their failure to grow. Having done so, he went on his way home, not realizing what he had done.

“I am worn out today,” said he to his family. “I have been helping the seedlings to grow.”

His son rushed out to take a look and there the seedlings were, all shriveled up. There are few in the world who can resist the urge to help their seedlings grow.14

Like the man from Sung, growth theorists are so impatient to produce a bountiful harvest that they leave a trail of destruction in their wake. There are few in the world who can resist the urge to help their economy grow. The thirst for endless innovation and increasing efficiency drives needless consumerism, destruction of self-sufficiency, and the loss of worth-inducing craftsmanship.How are we to reclaim a sense of self-sufficiency and craftsmanship? In what ways may we increase the virtue gained through work? The following story comes from the Daoist classic Zhuangzi:

Zigong traveled south to Chu, and on his way back through Jin, as he passed along the south bank of the Han, he saw an old man preparing his fields for planting. He had hollowed out an opening by which he entered the well and from which he emerged, lugging a pitcher, which he carried out to water the fields. Grunting and puffing, he used up a great deal of energy and produced very little result.

“There is a machine for this sort of thing,’”said Zigong. “In one day it can water a hundred fields, demanding very little effort and producing excellent results. Wouldn’t you like one?”

The gardener raised his head and looked at Zigong. “How does it work?”

“It’s a contraption made by shaping a piece of wood. The back end is heavy and the front end light and it raises the water as though it were pouring it out, so fast that it seems to boil right over! It’s called a well sweep.”

The gardener flushed with anger and then said with a laugh, “I’ve heard my teacher say, where there are machines, there are bound to be machine worries; where there are machine worries, there are bound to be machine hearts. With a machine heart in your breast, you’ve spoiled what was pure and simple, and without the pure and simple, the life of the spirit knows no rest. Where the life of the spirit knows no rest, the Way will cease to buoy you up. It’s not that I don’t know about your machine—I would be ashamed to use it!”15

This story is an example of what David Nemeth refers to as “enlightened underdevelopment.” Nemeth writes, “Enlightened underdevelopment thinking involves accepting the principle and practice of deliberately rejecting labor-saving devices as a demonstration of one’s virtue.”16 Eastern thought was centered around the idea of virtue and moderation, as exemplified by the Confucian classics such as Doctrine of the Mean.

This concept was found not only in East Asian philosophy but also in practice. Until the 1800s, East Asia experienced economic success and stability that rivaled or surpassed the rest of the world. David Nemeth credits enlightened underdevelopment as playing a crucial role in this success as it produced both stability and virtue.

Enlightened underdevelopment does not seek to shun new technology. Rather, it seeks to adopt technology in timely moderation. This was exemplified by ancient China’s technological advancement paired with political stability. By gradually assessing and accepting new technologies, society can avoid the rapid swings that cause displacement and instability.

This should be of particular concern as we enter the world of advanced automation. Many economists suggest technological displacement is offset by workers finding newly created jobs. For example, farmers shifted to manufacturing during the Industrial Revolution. However, this fails to consider differences in necessary human capital as well as the deep pains displacement causes. Farming and manufacturing are both forms of manual labor. In today’s society, manufacturing jobs are being replaced by positions that require higher levels of technical knowledge. The result will be a massive displacement of blue-collar workers who lack the necessary skills to secure any newly created jobs. If we consciously slow down the rate by which we adopt new technology, it buys us the necessary time for widespread investment in developing human capital.

A fair criticism to address is whether history has already proven enlightened underdevelopment to be a poor ideology. From the Industrial Revolution forward, Europe rapidly outpaced the East economically. Without a doubt, adoption of new technology and economic growth led to great leaps in standards of living. Meanwhile, China and the East failed to adopt new capitalist practices. Developmentally, this left China in the dust for many decades. Does this not prove enlightened underdevelopment failed?

Sociologist and economist Max Weber propagated the myth that Confucianism and Daoism were to blame for China’s inability to embrace capitalism. This same myth laid the groundwork for Mao Zedong’s Cultural Revolution which persecuted Confucian ideology for allegedly stifling China’s possibilities for development. Though, I believe this is all the claim ever amounts to: a myth.The reason for China’s inability to industrialize first was multifaceted and still debated by scholars today. To a certain extent, religion seems to have played a role. However, the reason for China’s slow development has nothing to do with enlightened underdevelopment. As Nemeth states, “The enlightened underdevelopment concept carries with it the principle of rejection but is not anti-technology. Change is inevitable which is why the Book of Changes (I Ching) is the principal classic of the Neo-Confucian canon.”17 If enlightened underdevelopment is not opposed to change, why was China slow to the industrial race?

Historian Karel Davids performed an in-depth study on the various theories surrounding religion and China’s lack of technological development. Upon assessing the historical evidence, he found the Weberian thesis to be deeply lacking. Davids discovered that religion did indeed play a role in the faster development of Europe, but he writes,

The chief point of impact, however, did not lie in the sphere of ideas, attitudes and values, but at the level of institutions, patterns of communications and movements of people connected with religious traditions.18

Neo-Confucian and Daoist values were not the cause of China’s failure to develop. A proper enlightened underdevelopment does not shirk all technological advancement, proven by China’s long history of innovation prior to the 1800s. Rather, Neo-Confucian China was merely outpaced by the large religious institutions of Europe, namely the Catholic Church. Davids states, “The Catholic Church still lent massive support to the arts and the building industry, especially in papal Rome, which provided a favourable atmosphere for innovations.”19 Additionally, Catholic educational structures oversaw a massive investment in human capital that was unparalleled in China. These institutions planted the seeds for a massive spike in European technological progress that China simply couldn’t complete with.

The moral of the story is that enlightened underdevelopment was not the culprit in China’s late capitalist development. Rather, large institutions present in Europe, but lacking in China, provided a backbone of infrastructure and investment China could never compete with. History has not proven enlightened underdevelopment to be a failed ideology.

On the flip side, I suggest the Industrial Revolution’s extremes could have been remedied by an enlightened underdevelopment. While the Industrial Revolution produced great improvements in economic well-being, much suffering was also a product of unbridled increases in production. For example, child labor was utilized to satisfy the increased demand for factory workers. Small farmers became economically displaced as the industry shifted toward large mass-producers. This in addition to the horrendous environmental impact.

The purpose for my tirade into the history of Industrial-era economic growth is two-fold. First, the preconceived bias against Daoist and Confucian philosophy on the grounds of being economically backwards and non-developmental is false. Second, the notion of unrestricted technological advancement as always economically beneficial is equally false. I propose an economic middle way which prudentially adopts new technology for the sake of growth while avoiding unrestricted innovation for the sake of stability.

A Positive Upshot

I wish to end on a “positive upshot” for policy makers, analysts, and interested thinkers. What types of rules should we adopt for the sake of promoting enlightened underdevelopment? Below, I put forward a few rules one may consider when analyzing new policies.

Rule #1: Political economy should always be subservient to human self-sufficiency and dignity rather than merely material prosperity.

For those who are Christians, we know it is easier for a camel to pass through the eye of a needle than for a rich man to enter Heaven. For too long, the economic measure of success has been material prosperity. The 21st century is starting to teach us that material well-being can only lead you so far. At some point, the depression of no self-worth will destroy a person.

Self-sufficiency and dignity go hand-in-hand. To repeat, human craftsmanship is an “outlet for self-worth established through unambiguous demonstrations of skill.”20 While material prosperity removes the fear of want, it cannot satisfy non-material needs. Economics needs a revitalization of investment in human capital, regardless of the consequence to the “bottom line.”

Rule #2: When constructing economic policy, ask yourself “Does this spark human fulfillment?” particularly in contrast to pure economic growth.

Rule #2 is similar to Rule #1 but put into practical application. An economic system exists for the sake of the people. As highlighted above, the human person is not merely body but also spirit. Thus, an economic system must equally value fulfillment alongside material prosperity. We must rid ourselves of the mindset that growth is all that matters. Drawing inspiration from Marie Kondo, economic policies should be judged based on the question, “Does this spark human fulfillment?”, particularly with regard to craftsmanship and self-sufficiency as outlined above.

Rule #3: When promoting new technologies, consider whether its absence significantly detracts from human well-being.

In his book Digital Minimalism, Cal Newport gives the following advice regarding the use of technology:

My general heuristic is the following: consider the technology optional unless its temporary removal would harm or significantly disrupt the daily operation of your professional or personal life.21

In our personal lives, new technology often distracts rather than make our lives easier. Again, Newport dives deep into the research connecting smartphones, social media, and depression. The goal of his heuristic is to remove unnecessary technologies from one’s life. I believe we can reframe this principle to work for the adoption of new technologies.

New technology is necessary to reach higher standards of living. However, rapid adoption or adoption of technologies that negatively affect self-sufficiency can be detrimental. When seeking to adopt new technologies, we must consider whether its absence significantly detracts from human well-being. We must discriminate in our adoption of technology, both on the micro and macro levels, lest we destroy our outlets of craftsmanship.Let me outline a brief example. The invention of the printing press largely eliminated the art of manuscript writing. However, the new access to knowledge clearly outweighs this loss of craftsmanship. A crystal ball was not necessary to see the positive future impact of the printing press. Compare this to another writing invention, the electronic word processor. Thanks to autocorrect and copy and paste, I believe a generation lost the art of crafting a sentence. I, like most of my peers, cannot deny procrastinating and playing computer games rather than writing essays in school. Also, children today fail to write in cursive and their penmanship looks like a doctor’s handwriting. Adopting word processors for business is essential. But could we not do without them in schools, at least in certain cases?

New technologies are beneficial. However, we must measure this benefit, its consequence, and whether there are certain scenarios in which its absence would not greatly hinder well-being.


“But when we really delve into the reasons for why we can’t let something go, there are only two: an attachment to the past or a fear for the future.”

—Marie Kondo22

Since the birth of modern capitalism, society has been trapped by economic growth theory. Consumerism and rapid innovation are the norm. Though, alternatives do exist. We must simply be willing to try them. I believe enlightened underdevelopment can serve as a new framework for political economy. Society must reframe its measure of economic success to focus on human self-fulfillment. Material prosperity is great, but it cannot satisfy the soul.

I am aware of the holes left to be filled in the enlightened underdevelopment framework. How are we to properly determine which technologies are necessary? Will this mentality falter economic development to the point of ruin? Should we focus on the micro or macro level? Aren’t minor incremental upgrades necessary for major technological advancement? These are all excellent questions which remain to be sufficiently answered. However, I do not believe these unknowns detract from the rational appeal of enlightened underdevelopment. As shown above, enlightened underdevelopment fills a gap in current capitalist thinking with respect to human fulfillment.

Enlightened underdevelopment deserves greater attention among political thinkers. Daoist and Neo-Confucian wisdom is often overlooked in the West. Enlightened underdevelopment thinking historically led to great stability, much needed in the West today. I am certain about the worthwhile nature of its consideration and the need for a continued discussion regarding the ways capitalism ruined craftsmanship and fulfillment. I leave the reader with the following quote from Pope Pius XI’s encyclical Quadragesimo anno:

Even though economics and moral science employs each its own principles in its own sphere, it is, nevertheless, an error to say that the economic and moral orders are so distinct from and alien to each other that the former depends in no way on the latter.23

Perhaps what is best for the economy, economic growth, is not what is morally best for the economic people.


1. Mengzi and D.C Lau, Mencius. (Penguin Books: Harmondsworth, 2004).

2. Economic Theory and Distributism (Society of Gilbert Keith Chesterton), accessed October 10, 2020,

3.“Suicide,” National Institute of Mental Health (U.S. Department of Health and Human Services), accessed October 10, 2020,

4. Karl Marx and Friedrich Engels, The Marx-Engels Reader, trans. Robert C. Tucker (Norton: New York, NY, 1978).

5. Eli Dourado, “Economic Growth Isn't Just Ethical. It's Sublime.,” Cato Unbound, January 16, 2019,

6. Paul VI, Populorum Progressio, §14.

7. Kondō Marie, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing, trans. Cathy Hirano. (Ten Speed Press: Berkeley, CA, 2014), Ch. 2.

8. Cal Newport, Digital Minimalism: Choosing a Focused Life in a Noisy World. (Portfolio/Penguin: New York, NY, 2019), Ch. 4.

9. Ibid, Ch. 6.

10. “Economic Theory and Distributism” (Society of Gilbert Keith Chesterton), accessed October 10, 2020,

11. David J. Nemeth, “Enlightened Underdevelopment,” National Geographical Journal of India 40 (pts 1-4) (1994): 87-100.

12  Economic Theory and Distributism (Society of Gilbert Keith Chesterton), accessed October 10, 2020, Zhuangzi and Burton Watson, The Complete Works of Zhuangzi. (New York, NY: Columbia University Press, 2013).

14. Mengzi and D.C Lau, Mencius. (Harmondsworth: Penguin Books, 2004).15. Zhuangzi and Burton Watson, The Complete Works of Zhuangzi. (Columbia University Press: New York, NY, 2013).

16. David J. Nemeth, “Blame Walt Rostow: The Sacrifice of South Korea's Natural Villages,” in Sitings: Critical Approaches to Korean Geography. (University of Hawai'i Press: Honolulu, HI, 2008), 83-100.

17. Ibid.

18. Karel Davids, Religion, Technology and the Great and Little Divergences. China and Europe Compared, c. 700-1800. (Brill: Leiden, 2013), 30.

19. Ibid, 220.

20. Cal Newport, Digital Minimalism: Choosing a Focused Life in a Noisy World. (Portfolio/Penguin: New York, NY, 2019), Ch. 6.

21. Ibid, Ch. 3.

22. Kondō Marie, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing, trans. Cathy Hirano. (Ten Speed Press: Berkeley, CA, 2014), Ch. 5.

23. Pius XI, Quadragesimo anno, §42.

Featured image: View of the Canton Factories painting (c. 1805-1806) by William Daniell via Wikimedia Commons.

Benjamin V. Miller is a graduate student of Eastern Philosophy at Yonsei University in Seoul, South Korea. He is an alumnus of the University of Wisconsin—Madison.