The future of growth

Abstract

Economists, when hard pressed to summarize economic history, boil it down to two events: i) the agricultural revolution, 2) the industrial revolution. Each has its own paradox. Agriculture aimed at feeding people properly, but usually led to famines. This is Malthus' law. As soon as the economic situation improves, demography explodes. The number of people, not the income per head, rises. In retrospect, it is extraordinary to think that such a simple law may have been ignored by agrarian societies. With the industrial revolution, income per head has been on the rise. Yet another Malthusian law keeps operating, that we may fail to understand: Easterlin's paradox. Well-being stagnates, in the same way income had stagnated before. And it is as simple as Malthus’ law to understand. You are never satisfied with what you have, you want more. Growth, not wealth, is the goal of modern society. What is then the future of growth? A religious war tears down the economic profession, dividing it between the believers and the heretics. The optimists, the believers, follow the line of thinking of an author such as Ray Kurzweil, leader of transhumanism and author of The Singularity is Near. Moore’s law, he argues, will transform our lives in ways we cannot imagine. Flash disk could contain by 2050 all the information of a human brain. And before the end of the century, all of the world’s information could be downloaded onto the same disk… Pessimists like Robert Gordon stand at the exact opposite. Growth has been continuously declining. Growth in Europe or in Japan has been falling. In the US, the bottom 90% experienced zero growth of their income over the last 30 years. 55% of growth was captured by the top 1%. The digital revolution is not as exciting as the previous one. The smartphone is the only noteworthy product but it does not compare with electricity, cars, indoor plumbing…. Whom should we trust? And is it a matter of faith? This is the topic of the lecture that will revisit the question of understanding why growth has become a source of disappointment, both numerically and in terms in well-being.