While addressing a political rally on the potential adverse economic implications of Brexit, the then UK Chancellor of the Exchequer, George Osborne, made reference to the impact it could have on the gross domestic product (GDP). His speech was curtailed by a perturbed audience member who asked about the effect on his own GDP.
This instance indicates the significance of economic development not just for governmental and financial institutions but also in the political discourse. It served as a reminder that citizens gauge economic growth on personal terms. They’re concerned about what it means for their standard of living and how optimistic or pessimistic they feel about their prospects for the future.
It has often been noted the disconnect between stories of national economic growth and the personal struggles of the citizens, a problem that is very much recognised in Ireland.
If we think that all politics is rooted in local issues, perhaps all economic development should also be seen from a personal perspective? The following works investigate growth from both macro and micro angles, focusing on the reasons and outcomes of economic development and its implications for the future.
Daniel Susskind’s work ‘Growth: A Reckoning’ commences with a recognition that economic leaps have been a modern occurrence. For the majority of human history, we have been engulfed in the ‘Long Stagnation’, a period marked by negligible changes, pitiable living standards and a life reduced to mere survival.
With the advent of Growth, this changed. Both living standards and longevity increased and politics was transformed. The struggle to allocate limited funds amongst ever-increasing demands is inherent in political decision making.
Growth eases this predicament. In Susskind’s words, the focus should not just be on distributing the existing resources, but also on augmenting them in the future so that everyone benefits.
Though he lists the negative repercussions of economic advancement, such as environmental impact, social inequality and the threat to democratic decision-making posed by potent technologies, he still concludes that economic growth has led to several notable achievements. This embodies the paradox of growth: the conflict between the costs and the rewards of economic progress.
The original text presents the discussion of different strategies to address what it refers to as a growth dilemma. One proposition, rather grandiosely termed “GDP minimalism”, advocates for a wider outlook that includes additional factors beyond national income. This method takes social indices into account, with civic engagement metrics among them.
There is an increasing call for more government control that surprisingly, is being voiced by conservative political entities. The text recognises the “degrowth” concept as useful and pertinent, particularly in casting light on sustainability issues in present-day economies.
However, the author, Susskind, critiques proponents of degrowth for avoiding the complication of how less growth might exacerbate poverty and lower living standards. In his view, it would be a catastrophic misstep to divert our collective focus from the only intervention that could improve the living conditions of mankind universally – growth.
Susskind suggests a new direction that promotes growth. His plan includes revising intellectual property laws, making large investments in research and innovation, opening immigration policies, and giving more prominence to technological advancements.
The insightful piece, “Growth: A Reckoning”, concludes with an acknowledgement of the primary status of politics. Economic growth will always require compromise. The best way to anticipate and navigate these compromises is through democratic decision-making, thereby underlining the critical role of politics “to grapple with the disorder, to confront the challenging moral dilemmas”.
The author underplays the extent to which the quest for economic growth has fallen out of political favour and even authenticity. His analysis fails to explore the correlation between economic growth and the security and prestige of nations. It seems unlikely that the “growth at any expense” or “no growth at all, ignoring the expenses” camps will be appeased. Yet, perhaps that in itself is an indication of its strength.
In “We Can Do Better”, a piece by Maja Göpel, expertly translated by David Shaw, another growth predicament is identified. She suggests modern societies need external energy to increase their activities continuously, leading to either environmental or societal unrest. These societies try to mitigate this by becoming larger, quicker, and more intricate.
The author believes the optimal way to manage this predicament is via a more comprehensive review of how economies and societies perform. She supports a “systems” approach, playing into the belief that society and economy are intrinsically linked via structures and patterns, entrenched so profoundly that their force could potentially be overlooked.
This ideological approach calls for a wider view of economic aspects and advocates for taking into consideration a broader array of signals and designs. It offers a practical blueprint, as it recognises the intertwined nature of our financial, ecological, and social aspects, a key characteristic of our present-day lives.
The central portion of the book deals with an examination of “system traps”. Göpel suggests “innovative learning” to steer clear of the trap of societies guided by inappropriate goals. This stresses the need for increased readiness for transformational transition and for modifying the decision-making authorities.
Where China is concerned, the nation has set an aspiring objective of a 5% increase for the year.
An in-depth elucidation of what this shift involves could greatly reinforce the argument. For instance, what implications will this novel learning style have on our educational institutions?
The text scrutinises responses to the prevailing situation of “permacrisis”. The “control loop” illustrates our efforts to gain command over situations. This perceives “the world as an assembly of entities that we swiftly aim to standardise and classify”. Attempts to attain such a degree of control generally fall through.
On the contrary, the “participation loop” recognises that unpredictability and surprises are integral to our perception of the world. The critical virtues here are humility and a willingness to try out different things.
‘We Can Do Better’ concludes somewhat abruptly with brief contemplations on collaboration and courage. While the book offers insights into the dilemmas we are up against, a practical understanding of how we could perform better remains unclear. However, it serves as an articulate reminder that growth is, of importance, a ramification of political decisions. When such decisions seem missing, or when the trend of economies appears unavoidable, it is often due to the influence of decisions previously taken by political figures.
Fareed Zakaria, a renowned American journalist and commentator, discusses the political impact on economic growth in his book ‘The Age of Revolutions’.
It begins with the acknowledgment that we inhabit revolutionary times. The global structure is rapidly evolving, with a burgeoning China and Russia’s aggression towards Ukraine having significant consequences. Economically, there is a rapidly declining consensus around the role of free trade, and the emergence and influence of states within economies.
Another transformation is in progress, the sentimental longing to “revert to the starting point”, to hasten towards a past that was “simple, orderly and unadulterated”.
Zakaria queries: what characteristics distinguish a revolutionary epoch? How do these periods of upheaval initiate and how could they potentially conclude?
The underlying architecture is identifiable, with structural modifications taking place. These include technological integration, economic development acceleration and economic interconnection, which subsequently instigate a shift in societal self-perception.
Historic periods of drastic changes dominate the initial part of the book. As they refresh the reader’s memory on the true drivers of economies – political decisions, social unity, and the establishment of institutions and laws –, these historical passages ought to be studied by every economic scholar.
The tale opens with the “first liberal revolution”, the Dutch Republic’s establishment in 1588. By the 17th century, this petite nation had ascended to the pinnacle as the wealthiest country in Europe. This position was reached by fostering an environment conducive to trade and entrepreneurship. This transformation was propelled by its notoriously inclusive and urbanised society.
An overarching notion is that economic innovation and growth stimulate the evolution of political identity. The abolishment of the Corn Law in Britain in 1846 lessened the influence of land and inheritance, and fidelity to the empire and faith was substituted.
Economic growth pursuit has forfeited its political significance and even validity. Zakaria contends that we are presently amidst a modern political revolution. There is a new wave of populism overhauling the conventional left-right alliances and altering our perception of politics. The calls for intensified government involvement are now emanating from conservative political circles.
The drivers behind this shift are detailed in the second part of the book. It succinctly discusses the substantial changes occurring in our contemporary times, such as the significance of technology and the transformation of trade.
This is a widely recognised analysis – the momentum established in the initial chapters dwindles. Nonetheless, the final chapter is exquisitely crafted. It has the potential to succeed as a standalone pamphlet. It addresses the “corrosives of modernity” and presents a persuasive and hopeful case for liberalism’s merits. It concludes by advocating that our brightest days are yet to come, and indeed, they are.
These publications recognise the significance of growth to our economy and society’s wellbeing. They also appreciate the intricate mixture required to make it a reality.
Susskind and Zakaria may not fully grasp the implications of climate change on existing and forthcoming economic development modes, yet wisely acknowledge the effect economic expansion has on society shifts. Göpel spotlights the intrinsic crisis in our present growth model, however, fails to grasp the intricacies of political decision-making in transitioning this model.
These three texts hold substantial weight and will assuredly enlighten any reader in comprehending the choices that will steer the future trajectory of our civilisation.
Robert J Gordon’s book, ‘The Rise and Fall of American Growth’ (Princeton University Press, 2017), is a magnificent combination of research and narrative that decodes the roots of growth in the United States from 1870 to 1970. It expresses scepticism about the influence of modern innovation and casts doubt on the future of the US economy.
In ‘Slouching Towards Utopia: An Economic History of the Twentieth Century’ (Basic Books, 2022), J Bradford DeLong poses intriguing questions. How has the journey towards progress begun to drag its feet? Why hasn’t this progress delivered a utopia? This slightly infuriating yet astoundingly brilliant book provides a history of the global economy throughout the previous century.
‘The Entrepreneurial State’ by Mariana Mazzucato (Penguin, 2013) paints an enthusiastic picture of the relevance of the contemporary state in backing innovation and research. The book importantly recalls the state’s crucial role in spurring economic development and reminds us that free markets depend on policy decisions.
Paschal Donohoe presently holds positions as the Minister for Public Expenditure and the President of the Eurogroup.