Can humanity raise global living standards without burning fossil fuels?
IN T HE W EALTH OF N ATIONS (1776), Adam Smith identified three economic states: progressive, stationary and declining. He associated each state with a different national mood:
It is in the progressive state, while the society is advancing to the further acquisition, rather than when it has acquired its full complement of riches, that the condition of the labouring poor, of the great body of the people, seems to be the happiest and the most comfortable. It is hard in the stationary, and miserable in the declining state. The progressive state is in reality the cheerful and the hearty state to all the different orders of society. The stationary state is dull; the declining, melancholy.
In Smith’s day Britain’s economy was at the start of a long and happy progress. Since the 2008–09 global financial crisis, however, its economy has entered a dullish stationary state. When Rishi Sunak took over as Conservative prime minister, one of his five promises was to grow the economy. Yet last year the UK’s gross domestic product expanded by a measly 0.1 per cent, according to the Office for National Statistics. The shadow chancellor, Rachel Reeves, promises to do better when, as seems certain, the Labour Party takes the reins of government later this year. Expanding the size of the economy, she says, is the only way to increase funding for public services. She might have added that without further growth the British state’s vast debts and pension commitments will become unsustainable. “Unless you get growth ... you’re always going to have to make almost impossible trade-offs”, Reeves told the BBC.
But when it comes to economic growth there is more than one trade-off to consider, as Daniel Susskind makes clear in Growth: A reckoning. Its harmful environmental consequences must also be taken into account. “Growth”, writes Susskind, “has an irresistible promise and an unacceptable price; it is miraculous and devastating; we need a lot more and vastly less.” His book is an ambitious, if not wholly successful, attempt to resolve the growth dilemma.
Susskind focuses his story of growth not on the Industrial Revolution, but on the publication in 1934 of the first national income statistics by the American economist Simon Kuznets. Susskind assumes that it was only once policymakers had statistics that economic growth could be successfully pursued. It’s not clear, however, that the invention of GDP as a measure has actually improved economic policymaking. The US economy, for instance, experienced its most rapid growth in the 1920s, before Kuznets’s work appeared. The Hong Kong administrator Sir John Cowperthw
