Will we reach the end of economic growth?

Keith Hudson

Certainly we will — in the consumer goods value terms in which we presently measure it.  How?  Over-population?  Shortage of resources?  Pollution?  Global over-heating?  Societal  breakdown?  Nuclear/cyber warfare?  Virus epidemic? None of these, probably. The answer is much more prosaic.

These days, your average urban man, wife and family in the advanced countries now has all those possessions and services which, until 1780 — when the indiustrial revolution took off with a whoosh! — only the rich aristocratic land-owners possessed which, in this country comprised only about 200 families who owned half of the productive land (the Church owning most of the rest), about a dozen families in Poland, and in France and Germany it was probably somewhere in between.

We are talking of plenty of clothes, warm housing, a swift mode of conveyance, medical care, advanced education for their children, plenty of other services, a regular variety of entertainment, opportunity to travel — all items which were totally unknown to the mass of the population, when the way of life of the aristocrats was unimaginatively different from your average town artisan, countryside peasant or tenant farmer.

The very rich these days may have better quality versions of all of the above items, and they will pay a great deal more for them.  And they’ll pay even more again — one might say absurdly more — for certain sorts of very high status goods such as diamonds, paintings, sculptures, sleek cars, ocean-going yachts, large countryside mansions or sandy private beaches — all crazily-priced and seldom used or publicly exhibited — owned not so much to show how much more superior they are to the hoi polloi but in order to play status games between themselves.

And, if we’re talking of consumer (status) goods there aren’t any more new ones!  There are no more in the R&D departments of the multinationals.  There’ll be a plethora of innovations but these will be in production goods or scientific equipment, not consumer goods. This applies whether we are very rich or even (often in the advanced countries) quite poor.  And, for those who have jobs and are raising families — whether rich or poor — there is scarcely any spare time or energy (or hitherto unused perceptual organs in our bodies) for any more to be enjoyed in the daily schedule or in annual peregrinations even if they existed.  All the ‘new’ goods that we have had in the last 40 years or so, such as smart phones, are improvements to the stock items that existed before (and they — once again — were only the modern equivalents of what royalty and aristocracy used to enjoy for thousands of years).

So that’s where about a dozen countries in the world are at at present.  Except for the very small number of the very rich in the other 180 other countries there’s no opportunity for their populations to share our desirable way of life unless they manage to develop leading-edge scientific research centres and devise brand new consumer goods or services that are hitherto unknown to the Lucky Dozen.  Until they do they’ll be unable to enter the small ring of countries which exchange most of the high value goods in world trade.

The inhabitants of the dozen countries  — rich or average — are largely content with what they have by way of consumer goods (although the very rich are always searching for more exotic sorts of status goods to impress their competitors!).  What both the rich and the poor in the advanced countries want now — both of them — are vastly superior health and educational technologies, but those will depend on very highly educated individuals in a future economic system that will operate by means of fee gradations, not levels of profit as now empowers our present capitalist system.

But that’s going to be an entirely different story . . .

3 thoughts on “Will we reach the end of economic growth?

  1. While it’s good avoiding the basic mistakes of sloppy growth economists who just assume the future growth of the next few hundred years will resemble the past growth of the last 200, your argument has to come with some caution too, because the things we consume (goods and services) are not fixed – there are going to be plenty of innovations that change the way we can be supplied in a global market.

    It’s a bit like the fallacy that forewarns of robots bringing an end to half of today’s jobs by 2025. It’s certainly true that augmentations in technology will mean an end to many roles currently undertaken by humans (one need only think of all the jobs we used to do that are now being done by machines). But that doesn’t necessarily mean what the doomsayers believe it will mean – because as history shows quite clearly, humans have the capacity, imagination and skill to do other things.

    Imagine if you were having this conversation with a journalist at the beginning of the Industrial Revolution, and he told you how fearful he was that these new farming, printing and transportation machines would bring a gradual end to humans’ ability to work. You’d simply have to tell him that a lot changed after the Industrial Revolution, and that those changes saw more people on the planet than ever before, and more jobs than ever before. The key reason why there probably is nothing to worry about is that what constitutes ‘work’ (where work means earning a living) changes with growing societies and increasing technological advancements.

    In the early 19th century you wouldn’t have been able to imagine how people could earn a living, say, making films or television programs, doing stand up comedy, providing complex domestic litigation, designing cars, driving taxis, flying planes, building speedboats, producing Kindles, playing football, working at a bowling alley, advertising on websites, fixing telephone lines or analysing DNA or quantum mechanics.

    The same is true of this generation – the future ‘work’ that lies ahead is currently bound by technological limitations and unawareness of the activities that are currently not jobs but will be one day. As technology increases and those robots do things we used to do, we go on to do things we never used to do. In other words, we lose jobs thanks to technology (and make our lives a little easier in the process) and we create jobs thanks to ingenuity.

    The same probably will apply to the global market, as (hopefully) developing countries will get wealthier by having more involvement in the global market, and come up with ways to attract buyers’ attention, just as has happened in the above analogous cases.

    All that said, your point about the dozen or so dominant countries, and the extent to which they dominate the lion’s share of innovation at the expense of less developed nations, is an interesting, and probably correct, forecast of the immediate future in terms of economic growth. It is genuinely fascinating to wonder for how long and what rate the market of supply and demand can keep facilitating our economic growth before a natural stasis occurs. Yes, very interesting.

  2. The US patent office should also be closed. Pretty much everything has been invented.

    Also, physics research has clearly come to an end, now that we have discovered the proton, neutron and electron. These are the absolutely fundamental particles and thus signal the end of research in physics.

    History departments will also get closed down. Everything that needed to be done, everything that can be done, has been done. No new history can be or will be created.

    (Just by the way, check out Tracing the Quote: Everything that can be Invented has been Invented.)

  3. Be careful Atanu, it’s pretty short-sighted and unimaginative to think that pretty much everything has been invented. The same thing was said in the 1st century….

    “Inventions have long-since reached their limit–and I see no hope for further developments.” Julius Frontinus (Rome, 10 AD)”

    Not only is this statement by Julius Frontinus a great candidate for being as wrong as you can be, it is evidence of one of the most astoundingly erroneous predictions and poor forecasting I’ve ever seen. Bear in mind too that the person who said this was actually an engineer.

    When Einstein said “Imagination is the preview of life’s coming attractions” it seems this is the kind of failure of imagination he had in mind.

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