A Growth-No Growth Economy

Keith Hudson

I see no reason why we should not have an economy that is both growth and no growth. In fact, this is precisely what has been happening in the past 30 years. Even while national GDP figures have been rising in the advanced countries (mainly calculated on cost-of-living indices concocted by governments), per capita use of resources (energy particularly), incomes (in real, not inflated, money terms) and family size (now less than replenishment) has been going down.

What’s been happening — almost imperceptibly — in Japan, Northern Europe and, most recently, in America is that the consumer goods proportion of economic growth has been declining and that the proportions due to production goods and government has been rising. Most recently, however, the last item is also reaching its limits. This applies whether governments (such as Germany, the UK, the Nordic countries) are intent on austerity in order to reduce their national debts or whether they are still spendthrift (such as Greece, France, America) in the hope of stimulating consumer growth with consequential taxation increases.

It’s not dramatic, but that’s the trend. If there are no more uniquely new consumer goods in the pipeline that can re-set the sort of economic growth of the last 300 years, what else would be required in order to produce the profit margins that are absolutely necessary for investment purposes? Obviously, it’s in the production of those items which even-state consumers will want to retain — the family car (or some equivalent), a basic house or apartment, a basic set of comfortable furniture, a microwave (the trend to ready-made meals seems unstoppable), a tele-amalgam (my word for a personal phone+TV+PC) and portable goods (ornaments and clothes) which precisely reflect one’s social status (even though the possessor may not always be fully aware of the real reason).

And what do we discover in that category? Smaller number of larger and larger national and transnational production units with ever-fiercer competition between them and ever-declining profit margins. Even with only the tiniest marginal improvements between one marque of a consumer product and another, massive corporations can arise (and disappear) in a trice. But what happens when, for example, the three or four major manufacturers of cars or mobile phones in the world attain products that are well-nigh perfect (such as the garden spade or the frying pan)?

They will only be able to compete (obtain profits and future investment) by making improvements in energy efficiency. Production units will do this by becoming steadily more automated and by deriving their necessary component goods and services more efficiently. And this, in turn, depends on location (the costs of trans-oceanic delivery of goods being relatively trivial). And this, in turn, depends on dense city locations as prescient thinkers such as Fred Hirsch, Neil Peirce, Kenichi Ohmae and Edward Glaeser have been pointing us to in the last 40 years. And here, of course, there is vast scope. There are huge energy savings to be made here.

There are already strong indications that the economy of the world is becoming increasingly concentrated in about 15 to 20 major metropolises. Each of them tends to specialize in one industrial or service sector or another and each of them subsidize the costs of the nation-state in which they are situated. A country without one or two such super-cities will not be able to grow its GDP. It’s already the case in the last 30 or 40 years that the standard of living in almost all countries not in the advanced country fold (and excluding no more than a dozen such as China which might make the grade) has declined. Maybe we’ll have 30 or 40 major cities in due course, but bearing in mind what our present stock are already doing between them the world doesn’t seem to require many more.

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