In the new episode of Re-Imagine Talks, Daniel Susskind, economist, author and research Professor in economics at King’s College London, offers a balanced perspective on the complexities of growth and its implications for society. His analysis has shown that economic growth is a very modern concept, noting that “almost no politicians, policymakers, economists, or anyone was talking about the idea of economic growth as a policy priority” not long ago.
But why is growth so important? According to Professor Susskind, growth is linked to many of the greatest challenges we face today, “whether it’s the impact that growth has had on the climate, whether it’s the growing inequalities in society (…) It’s associated with almost every measure of human flourishing.” Despite the far-reaching impact of growth in all areas, it comes with a significant cost. Leaning on the Stern Review, the first report into the economics of climate change, Daniel Susskind argued that “in 2007, if we wanted to reduce emissions by 80%, it was going to cost us 2% of GDP a year. Fast forward to the year 2020, (…) they concluded that the cost of eliminating emissions had fallen to 0,5% of GDP.” In other words, “the trade-off between growth and the climate had collapsed.”
When asked about GDP as a measure of growth, Professor Susskind encourages a minimalist approach and criticises economists or policymakers who advocate for replacing the current GDP calculation. Instead, he suggests focusing on repairing the technical problems with GDP, such as accurately valuing free goods like email servers and recognising quality improvements in products, which current GDP measures based on prices fail to do. Furthermore, Susskind supports the establishment of innovative political institutions that could foster citizen deliberation and discussion about moral questions, since these “should be addressed in politics, not in treasuries and statistical departments.”
The author of the new book “Growth: A History and a Reckoning” warns that much of our thinking has not adapted to the new world, leading to 80% of misunderstandings and polarisations, and believes part of the responsibility lies in not paying careful attention to the economic and political consequences of technologies like artificial intelligence, as these are in different ways “affecting what information we receive, how we deliberate with one another, whose voices get elevated and whose don’t, a whole variety of different political dimensions.” European politics are oversimplifying growth by wrongly focusing on limited resources as the main problem. Instead, the real constraint lies in our diminishing capacity to generate innovative ideas: “This idea that infinite growth is not possible on a finite planet it’s just wrong (…) Growth doesn’t come from using ever more finite resources, but it comes from discovering ever more productive ways of using those resources.”
Growth essentially comes from generating more ideas in society and allow us to control its speed, quantity, direction, and nature. To foster this growth, Professor Susskind presents a four-step guide that should be incorporated into any policy program. First, he advocates for reforming the intellectual property regime, as these rules and regulations “stifle the discovery of new ideas in order to protect the interests of those who have already discovered ideas.” The second step is increasing investment in research and development both inside and outside Europe, since “we cannot expect serious discoveries about the world if we don’t invest in them.” The Professor in Economics at the King’s College London also recommends putting the focus on the capacity for generating new ideas, followed by the recruitment of more individuals into sectors that drive innovation and rely on technologies for the creative process. Finally, it is urgent to embrace a more optimistic and enthusiastic perspective on the possibilities for the future.
ReImagine TALKS is a series of video podcasts launched by Re-Imagine Europa together with leading media partners and featuring some of the most innovative, influential, and original thinkers of our time, challenging conventional thinking and reimagining the concept with an unexpected and contemporary lens. The series is hosted by Erika Stäel von Holstein and Luca de Biase, RIE’s Chief Executive and Research Director, respectively. The previous episodes addressed topics like Capitalism, Power, Ethics, Narratives, Taxation or Migration. You can find the previous episodes here.
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