## WE MUST CHANGE THE NATURE OF GROWTH

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**Canonical URL:** [WE MUST CHANGE THE NATURE OF GROWTH](https://www.imf.org/-/media/files/publications/fandd/article/2024/09/susskind.pdf)

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### Historical origins and rise of growth as a priority
- Growth as a central political and economic objective is a recent phenomenon, becoming prominent in the mid-20th century.
- Timelines noted in the text:
  - Japan and Germany: mid-1990s
  - United States and United Kingdom: mid-2000s
  - China: mid-2010s
- Key drivers of growth’s elevation:
  - Development of reliable measures of economic output (GDP) in the 1940s by economists including John Maynard Keynes and Simon Kuznets.
  - The Cold War’s rivalry reframed growth as a proxy for national strength and the superiority of economic systems.
- Broader historical context:
  - Humanity’s roughly 300,000-year history characterized largely by economic stagnation until the industrial and modern eras.

### The growth dilemma: benefits and costs
- Enumerated societal benefits associated with growth:
  - Extreme poverty declined from 8 in 10 people in 1820 to just 1 in 10 today.
  - Literacy shifted from 9 in 10 illiterate in 1820 to 9 in 10 literate today.
  - Growth extended life expectancy and shifted main problems in rich countries from famine to obesity.
- Major costs and risks linked to unmodified pursuit of growth:
  - Environmental degradation and climate change, with the past eight years described as the hottest eight years in human history and climate change labeled a climate emergency.
  - Technologies that promote growth have also increased inequality, threatened work, undermined politics, and disrupted communities.
- The central dilemma: growth is necessary for many human ambitions (e.g., eradicating poverty, universal health care) yet pursuing growth without changing its nature exacerbates existential risks.

### Critique of degrowth
- Degrowth proponents are correct that current growth paths are unsustainable environmentally, but the movement errs on key points:
  - The slogan “infinite growth is not possible on a finite planet” is challenged: growth is driven by ideas (intangible), not merely by using more finite material resources.
  - Freezing GDP per capita at current levels would, according to the text, require either abandoning 800 million people to extreme poverty or slashing the income of the other 7.1 billion people.
- Conclusion: abandoning growth entirely would be catastrophic for human development.

### How to generate more growth: focus on idea discovery
- Core premise: growth is driven by technological progress and the discovery of new ideas. Policy must therefore increase idea generation.
- Four priorities identified:
  1. Reform intellectual property regimes
     - Current frameworks (example: the Berne Convention) are described as antiquated and overly protective of materials used to train generative AI while under-protecting outputs these systems create.
  2. Invest far more in R&D
     - Worrying trends: R&D expenditure as a share of GDP has collapsed since the mid-20th century in France, The Netherlands, and the UK; the US has stagnated at late-1960s levels for decades.
     - Comparative figures and observations:
       - Israel invests 5.4 percent of GDP in R&D each year.
       - Leading companies (Alphabet, Huawei, Meta) spend more than 15 percent of their revenue on R&D.
  3. Reduce inequality to broaden idea generation
     - Potential impact example: The US could, the text argues, quadruple innovation if racial minorities, women, and children from low-income families invented at the same rate as white men from high-income families.
  4. Use new technologies to accelerate idea discovery
     - Example: DeepMind’s AlphaFold in 2020 solved the “protein folding” problem and can now calculate the 3D shape of millions of proteins in minutes; a comparable human effort would take an entire PhD to do just one protein.

### Changing the nature of growth: policy leverage and evidence
- Principle: reshape economic incentives so technological progress delivers fairer, greener, and less disruptive outcomes.
- Empirical illustration: climate and decarbonization
  - In 2008, Nicholas Stern estimated it would cost 2 percent of GDP to reduce carbon emissions by 80 percent.
  - By 2020 the UK’s Climate Change Committee found that the cost of eliminating emissions had fallen to just 0.5 percent of GDP.
  - A 200-fold fall in the price of solar technology is cited as a striking outcome of incentive-driven technological change.
- Implication: targeted policies (taxes, subsidies, rules, norms) can collapse trade-offs between growth and other societal goals, making “growth greener than ever.”

### Final assessment: existential opportunity and moral renewal
- The author frames the present as an "existential opportunity":
  - We can redirect technological progress to produce growth that also advances fairness, environmental sustainability, stability in labor markets, and respect for place.
  - Achieving this requires policy reforms, investment priorities, inequality reduction, and harnessing technologies for idea discovery.
- Closing normative claim: directing growth toward broader societal ends offers the power to make life better in ways currently unimaginable and is presented as the central task of our time.

*Source: Daniel Susskind, F&D, September 2024.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2024/09/susskind.pdf_