In reply to my “Resuming progress — but with more intelligence” (14 December), James Knight writes: “I personally think there is reason to be optimistic that economic growth will continue broadly despite increased inequality, quite simply because the economy is not a fixed pie, and because there are countless future goods and services that are currently not goods and services.”
If by “fixed” you meant in composition, I fully agree with you. Three hundred years ago 90% of the economy was agricultural, today it’s barely 10%. If by “fixed” you meant in size I agree with you, but only partially. The world economy is still growing at present mainly to industrialise sufficiently to bring the remaining Chinese rural poor — about 300 million — into the newly built cities.
Otherwise the world economy is definitely a fixed-size pie. It can only be as large as the energy that can be injected into it. To raise the present population of the world to the same standard of living as the middle-classes of the advanced countries would require several times more additional energy. This is plainly not achievable.
Finally, yes, there will certainly be “countless future goods and services that are currently not goods and services.” But the bulk of consumers’ money that drives economic growth is spent on status goods and services — and there are no more of these. What with houses, car, furnishings, fashion clothes, expensive personal ornaments we — and on which we frequently spent up to the hilt — have emptied the pot that royalty and the aristocracy used to enjoy exclusively.