The latest Business podcast featured Professor David Harvey, in the company of Julian Glover, Aditya Chakraborrty and Larry Elliott of the Guardian. Quick observations:
- is there a quicker, more insightful or more thoughtful commentator than Julian Glover anywhere? I’m not sure there is. Listen to this podcast just for his interventions about financial reform, what the public is asking for, anything
- Pretty much all of the other speakers seemed to have a more nuanced and realistic understanding of how capitalism works to the Professor. In my humble opinion. To expand:
Professor DH seems to think that the developed economies should not or cannot grow, and at the end asks, straightforwardly ‘well, where do you think 3% growth will come from?’ He seems to have a stereotypically Marxist view of how growth happens: more of the same stuff, basically. Larry Elliott points out that technological improvements deliver growth (as they have for 200 years). It is not ALL about capital deepening. Finding ways of doing the same things better is a form of growth – replacing a clunky inefficient spewing car with a neat, efficient computer-enabled Prius, say.
When Professors and miserabilist commentators sit back and say ‘I can’t see where growth can come from’, the following observations are in order:
- People have felt we saturated all opportunities for many decades. It reflects poverty of imagination. 1960s levels of living standards might have seemed ‘good enough’ back then, but don’t now because of the inventions and improvements since. We have higher standards – in health, in our living spaces, in where we can holiday, in how we can communicate and play and interact. Fulfilling those standards is growth
- Failing to see ‘how’ is why we need entrepreneurs, because it is not about one big mind saying ‘What we need is X% more roads and y% more hospitals and Z% more diesel-buses’ but endless tweaking responses to intuited demands, constantly updating modifying and adapting the existing models. Look, for example, at the frugal innovation that Unilever, P&G and others are learning about in India.
For the second time I find myself linking to a Tim Worstall comment on a Cif Thread (hattiping my own excellent post about the problem with nef-ish Green thinking on growth). GDP growth is about adding value – and adding value does not mean adding endless new stuff.
Growth also happens in ways that subtract from GDP; I can Skype my folks in France for nothing ; I can replace time consuming visits to the library with Google; I can calculate thousands of seat-swings without employing hundreds of humans with bits of paper; all of these improvements fail to show up in GDP. This is why I get annoyed when I see people calling for ‘new models of growth’. What we perhaps need is a recognition that improvements in life are not all captured in GDP indices.
There are plenty of ways to grow in the future. Ignore the Marxist miserabilists and their defunct model.