Growth summary

Our current obsession with economic growth is something that began in the twentieth century. A lot of it has to do with World War II. As the war was getting underway for the US, economists like John Maynard Keynes and Simon Kuznets were asking a critical question: How much of the economic pie could be devoted to war without leaving civilians starving?

At this point, military spending wasn’t even accounted for in the overall national economic figures. This puzzle led to one of the most transformative innovations in economic history – the Gross Domestic Product, or GDP, which includes a broader amount of government expenditures and is now used worldwide to track economic growth.

So, what has been the true cost of economic progress? Today, it’s not limited to any one area. We face the threats of environmental collapse, social inequality, technological upheaval, and cultural erosion. None of these are isolated problems, either – they’re symptoms of the same relentless pursuit of growth.

Take climate change. CO2 levels have skyrocketed since 1950, reaching unprecedented highs of over 400 parts per million – and causing temperatures to rise at twice the rate seen in previous decades. These shifts echo past climate disruptions that devastated societies – but now they’re amplified by “dirty” technologies fueling our prosperity. Since 2000, carbon emissions have risen nearly tenfold faster than any sustained increase in the past 800,000 years. In short, the environmental price of growth has become glaringly evident.

When it comes to dealing with the “growth paradox,” there have been two common responses. One is to start redefining GDP. The other is known as the degrowth movement. Both approaches have their pluses and minuses. While they helpfully illuminate critical flaws in how we think about growth, neither fully resolves the underlying tensions.

First, let’s focus on GDP. It’s true that the current concept of GDP is deeply flawed. For instance, it captures market activity but doesn’t take unpaid labor, environmental degradation, or societal well-being into consideration. By turning GDP into a moral compass, society has prioritized what the market values over what people cherish – often to harmful effect. 

So, how can we revive and reshape economic growth moving forward? Well, to start, we need to envision a future where ideas – not physical resources – take center stage.

Unlike physical resources, ideas are infinite and don’t wear out. They also build upon each other, creating endless opportunities for innovation and growth. If we were to embark on a “Second Industrial Enlightenment,” as the author proposes, it would hinge on four strategies that support ideas: reforming intellectual property laws, investing in research and development, expanding economic participation, and utilizing technology.

One thing the degrowth movement is absolutely correct about is tradeoffs. We need to rethink the costs and benefits of growth that we often take for granted. Growth isn’t just about deciding whether to tolerate more inequality for greater prosperity – it involves weighing environmental impact, community well-being, political stability, and job quality against the drive for more output. At the same time, through incentives and applying the right kind of pressure, we can also promote the kind of growth we want.

The good news is, we’ve already seen how innovation can weaken tradeoffs. Renewable energy was once seen as an obstacle to economic growth. But clean energy technologies like solar power are now proving that environmental progress can coexist with economic expansion. By shifting incentives and investing in sustainable solutions, society has begun to navigate the once-impossible tradeoff between economic growth and reducing carbon emissions.