1. The post growth challenge
In this latest CUSP working paper, Tim Jackons explores the dynamics of this emerging ‘post-growth challenge’. He believes it demands both a deeper understanding of how we got here and a wider palette of colours from which to paint the possibilities for our common future. The paper examines the underlying dynamics of secular stagnation, on both the demand and the supply side, and discusses its relationship to labour productivity growth, rising debt and resource bottlenecks.
The toughest element in this challenge, not yet fully addressed on either the political left or the right, is the relationship between declining growth and social equity. The coordinates of inequality are now plain to see in the stagnant wage rate and declining living conditions of ordinary people. ‘Thousands upon thousands’ of people flocked to this year’s TUC march in London, making it abundantly clear that persistent inequality is threatening political stability. According to TUC general secretary Frances O’Grady ‘there is a new mood in the country; people have been very patient, but now they are demanding a new deal.’
CUSP have addressed the mathematics of this relationship in depth elsewhere. What we found was unexpected. The rising inequality that has haunted advanced economies in recent years wasn’t inevitable at all. Nor is it inevitable in the future. The problem lies, as I argue more specifically in this paper, not in secular stagnation itself but in our responses to it. Specifically, I suggest that rising inequality is the result of our persistent attempts to breathe new life into capitalism, in the face of underlying fundamentals that point in the opposite direction. Our growth fetish has hindered ecological innovation, reinforced inequality and exacerbated financial instability. Prosperity itself is being undone by this allegiance to growth at all costs.
What’s clear now is that it’s time for policy-makers to take the ‘post-growth challenge’ seriously. Judging by the enthusiastic reception from the 900 or so people who attended the première of System Error in Berlin, such a strategy might have a surprising popular support.
Read more at the source: https://medium.com/the-nature-of-prosperity/secular-stagnation-meets-the-gdp-fetish-blog-by-tim-jackson-6c0a95c2c23a
2. From the paper
2.1 About services and growth
Late modern economies are characterised by a shift from primary and secondary manufacturing of material products towards the provision of services. This shift occurs both in the supply structure of the economy (for a variety of reasons) and the demand structure. On the supply side, there is a tendency for advanced economies to export basic extraction and processing activities to countries with lower labour costs and lower environmental regulations.
On the demand side, it is possible that, once basic material needs are satisfied, people turn more to service-based activities as the destination for disposable income, rather than to even more material products. Servicebased activities are generally understood to be less amenable to growth in labour productivity – partly because the core-value proposition in such activities relates to the time spent by human beings in delivering the service
There remains a disturbing possibility that the huge productivity increases that characterised the early and middle twentieth Century were a one-off, something we can’t just repeat at will, despite the wonders of digital technology.
Low (and declining) rates of economic growth may well be the ‘new normal’.
2.2 About technology
The technological revolution of the 19th and early 20th Century tended to increase the potential for workers to improve their productivity of their labour. This led to higher wages and greater spending power in the economy.
The expansion of consumer demand provided a further stimulus to growth and productivity improvement. Putting technology in the hands of workers created new jobs in the economy and allowed for a general improvement in the quality of life of citizens.
There is a real danger that new digital and robot technologies will remove the need for whole sections of the working population, leaving those who don’t actually own the technologies without income and without bargaining power. Meanwhile the owners of these technologies are likely to acquire unprecedented market power, and the conditions for ordinary workers will deteriorate even further.
Read full paper here