{
  "title": "We Must Change the Nature of Growth",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2024/09/we-must-change-the-nature-of-growth-daniel-susskind",
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  "summary": "The pursuit of economic growth is one of our most treasured ideas, but it’s also one of the most dangerous",
  "sections": [
    {
      "heading": "New obsession: history and origins of growth as a dominant aim",
      "content": "- The pursuit of economic growth is a very recent preoccupation in human history; for most of humanity’s 300,000-year history life was stagnant.\n- Classical economists (Adam Smith, David Ricardo, John Stuart Mill) assumed an impending “stationary state” rather than an active pursuit of growth.\n- Reliable measures of the size of the economy emerged only in the 1940s; GDP as a statistic was developed during World War II (John Maynard Keynes and Simon Kuznets).\n- The Cold War elevated GDP growth as a central metric: outgrowing an adversary signaled superiority in military capacity and the battle of ideas, inaugurating an era of “growthmanship.”"
    },
    {
      "heading": "Growth dilemma: benefits and costs",
      "content": "- Benefits associated with growth:\n  - Extreme poverty fell from 8 in 10 people in 1820 to just 1 in 10 today.\n  - Illiteracy shifted from 9 in 10 in 1820 to 9 in 10 literate today.\n  - Growth lengthened and improved lives, changing major problems (e.g., obesity replacing famine in rich countries).\n- Costs and contemporary problems tied to growth:\n  - Environmental degradation and climate change: “the past eight years have been the hottest eight years in human history,” and climate change is described as a “climate emergency.”\n  - Inequality: growth-promoting technologies have also been “inequality-creating.”\n  - Labor-market and political disruption from technologies like AI.\n  - Community disruption: some industries and sources of shared meaning have been decimated.\n- The central dilemma: growth has been associated with many human triumphs but also many of our greatest problems; “It’s as if we cannot go on—and yet we must.”"
    },
    {
      "heading": "Degrowth critique",
      "content": "- Degrowth argument: less growth or no growth as a response to growth’s harms.\n- Author’s counterpoints:\n  - The slogan “infinite growth is not possible on a finite planet” is labelled wrong; growth derives from intangible ideas, not merely material inputs.\n  - Degrowth would be catastrophic in distributional terms: “Freezing GDP per capita at current levels would… require either abandoning 800 million people to extreme poverty or slashing the income of the other 7.1 billion.”\n  - The intangible realm of ideas is “as good as infinite,” so planetary finiteness is not the binding constraint on growth."
    },
    {
      "heading": "How to generate more and better growth (four priorities)",
      "content": "- Reforms to intellectual property (IP):\n  - Current IP regimes often “protect the status quo,” rewarding past discoverers at the expense of reuse and future innovation.\n  - Example: the Berne Convention “hasn’t changed for over half a century.”\n  - IP protections currently provide “too much protection for the material these systems are trained on—and without which they cannot function—and too little for the extraordinary material they create.”\n- Much larger investment in R&D:\n  - R&D expenditure trends are described as “discouraging.”\n  - Examples: R&D as a share of GDP “has collapsed” in France, The Netherlands, and the UK since the mid-20th century; in the US the measure “has stagnated at late-1960s levels for decades.”\n  - Israel invests 5.4 percent of GDP in R&D each year.\n  - Leading companies (Alphabet, Huawei, Meta) spend “more than 15 percent of their revenue on R&D.”\n- Reduce inequality and broaden participation in idea-generation:\n  - Claim: “The US could, for instance, quadruple innovation if racial minorities, women, and children from low-income families invented at the same rate as white men from high-income families.”\n  - Reducing inequality is framed as both a moral imperative and an economic efficiency imperative.\n- Use new technologies to accelerate idea-discovery:\n  - Example: DeepMind’s AlphaFold solved the “protein folding” problem in 2020 and “can now calculate the 3D shape of millions of proteins in minutes,” dramatically accelerating research that previously would take a human an entire PhD for a single protein."
    },
    {
      "heading": "Changing the nature of growth: policy levers and evidence",
      "content": "- Redirect technological progress toward broader social ends by reshaping incentives (taxes, subsidies, rules, regulations, social norms).\n- Case study: climate and cost of emissions reduction\n  - 2008: Nicholas Stern concluded it would cost 2 percent of GDP to reduce carbon emissions by 80 percent.\n  - By 2020: the UK’s Climate Change Committee estimated the cost of eliminating emissions had fallen to just 0.5 percent of GDP.\n  - The “trade-off had collapsed” because two decades of interventions induced a technological revolution (example: a “200-fold fall in the price of solar technology”).\n- Conclusion: growth can be “greener than ever” when incentives drive development of cleaner technologies; policy can shape both the quantity and the character of technological progress."
    },
    {
      "heading": "Existential opportunity and moral renewal",
      "content": "- Thesis: we face an “existential opportunity” to redirect technological progress and “change the nature of growth” to make the world fairer, greener, less dependent on disruptive technologies, and more respectful of place.\n- The author’s prescription combines promoting more idea-driven growth with active reshaping of incentives and institutions so growth advances multiple ends rather than only material prosperity.\n\n- Key statistics and figures cited in the article:\n  - 300,000-year (human history)\n  - mid-1990s (Japan and Germany sputtered)\n  - mid-2000s (United States and United Kingdom sputtered)\n  - mid-2010s (China sputtered)\n  - 1940s (reliable measures of the size of the economy emerged)\n  - 8 in 10 → 1 in 10 (extreme poverty, 1820 to today)\n  - 9 in 10 illiterate in 1820 → 9 in 10 literate today\n  - “the past eight years have been the hottest eight years in human history”\n  - Berne Convention “hasn’t changed for over half a century”\n  - Israel: 5.4 percent of GDP in R&D each year\n  - Alphabet, Huawei, Meta: “more than 15 percent of their revenue on R&D”\n  - Quadruple innovation scenario in the US if underrepresented groups invented at same rate as white men from high-income families\n  - AlphaFold (2020) can calculate the 3D shape of millions of proteins in minutes\n  - 2008 Stern: cost 2 percent of GDP to reduce carbon emissions by 80 percent\n  - 2020 UK Climate Change Committee: cost of eliminating emissions had fallen to 0.5 percent of GDP\n  - 200-fold fall in the price of solar technology\n\nArticle by Daniel Susskind, F&D Magazine, September 2024; opinions expressed are those of the author and do not necessarily reflect IMF policy.\n\n---\n\n Content in this bundle\n\n- We Must Change the Nature of Growth\n  - We Must Change the Nature of Growth (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - We Must Change the Nature of Growth (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2024/09/we-must-change-the-nature-of-growth-daniel-susskind"
    }
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    "Authors: DANIEL SUSSKIND",
    "Published: September 3, 2024",
    "The pursuit of economic growth is a very recent preoccupation in human history; for most of humanity’s 300,000-year history life was stagnant.",
    "Classical economists (Adam Smith, David Ricardo, John Stuart Mill) assumed an impending “stationary state” rather than an active pursuit of growth.",
    "Reliable measures of the size of the economy emerged only in the 1940s; GDP as a statistic was developed during World War II (John Maynard Keynes and Simon Kuznets).",
    "The Cold War elevated GDP growth as a central metric: outgrowing an adversary signaled superiority in military capacity and the battle of ideas, inaugurating an era of “growthmanship.”",
    "Benefits associated with growth:",
    "Costs and contemporary problems tied to growth:",
    "The central dilemma: growth has been associated with many human triumphs but also many of our greatest problems; “It’s as if we cannot go on—and yet we must.”",
    "Degrowth argument: less growth or no growth as a response to growth’s harms.",
    "Author’s counterpoints:",
    "Reforms to intellectual property (IP):",
    "Much larger investment in R&D:",
    "Reduce inequality and broaden participation in idea-generation:",
    "Use new technologies to accelerate idea-discovery:",
    "Redirect technological progress toward broader social ends by reshaping incentives (taxes, subsidies, rules, regulations, social norms).",
    "Case study: climate and cost of emissions reduction",
    "Conclusion: growth can be “greener than ever” when incentives drive development of cleaner technologies; policy can shape both the quantity and the character of technological progress.",
    "Thesis: we face an “existential opportunity” to redirect technological progress and “change the nature of growth” to make the world fairer, greener, less dependent on disruptive technologies, and more respectful of place.",
    "The author’s prescription combines promoting more idea-driven growth with active reshaping of incentives and institutions so growth advances multiple ends rather than only material prosperity.",
    "Key statistics and figures cited in the article:",
    "**We Must Change the Nature of Growth**"
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