It was a blast. Since the Industrial Revolution, we enjoyed unprecedented economic growth, propelled by a seemingly unstoppable wave of technological innovation. For 100 years from around 1870, life in the West was transformed by inventions such as electricity, the car and domestic appliances, which led to soaring growth, better lives and booming wealth for all. The poor became less poor, and the number of middle income earners exploded. In the second half of the 20th century the rest of the world began to catch up, with China lifting hundreds of millions out of extreme poverty and the rise of the BRICs.
But then it stopped. Since around 1970, middle incomes in the US have stagnated, while the top 1% have pulled away in terms of earnings and wealth. Productivity growth fell. The great recession of 2008 was expected to be a blip but we are still in the doldrums. China’s miracle growth has shuddered to a slowdown and is set to drop even further. Just last week, the European Central Bank announced fresh rounds of quantitative easing to try and pump life into the eurozone’s flagging economy.
Many economists are now predicting that stagnation is here to stay. We may hear a lot of excited talk from the techno-optimists about the Second Machine Age and the Fourth Industrial Revolution and the rewards they are set to bring us, but some say that most of the fruits of the IT revolution have already been harvested. For example, driverless cars may be the future, but they will change the world far less than the invention of cars in the first place – and put millions of professional drivers out of a job.
If the age of endless growth is over, how should we assess the implications? Does the developed world face decades of misery-inducing recession, or – given that the planet’s resources are finite – can we look forward to a more sustainable future where ever-increasing consumption does not count as the main good? Or are the economic doom-mongers wrong? Will capitalism, that engine of human ingenuity, continue to be the route to rising prosperity for all? If so, what are the mechanisms that will kick-start the global economy again?
On 16th May 2016, we were joined by a star panel for this major discussion on the future of the global economy. On stage were Stephanie Flanders, JP Morgan’s chief market strategist for Europe; Deirdre McCloskey, acclaimed US economic historian; and Tim Jackson, Professor of Sustainable Development at the University of Surrey and author of 'Prosperity Without Growth: Economics for a Finite Planet'. The event was chaired by Economics Editor of BBC News Kamal Ahmed.