Oxford professor Daniel Susskind lectured his latest book “Growth: A Reckoning” at Stanford University on 28th May 2024 and hosted by Professor Eric Brynjolfsson. In Susskind’s lecture, he presents a compelling argument for the necessity of economic growth despite its associated challenges. He begins by highlighting how economic growth has historically been linked to improvements in human well-being. Economic growth has facilitated remarkable achievements, such as extended life expectancy, advanced scientific discoveries, and unprecedented levels of material prosperity. These achievements have liberated billions from subsistence living and contributed to a better quality of life globally.
However, Susskind acknowledges that economic growth also carries significant costs, including environmental degradation, cultural erosion, and increasing inequality. He refers to this as the "growth dilemma," where growth has been both a source of triumph and a cause of major global issues.
The Role of Ideas and Technology in Driving Growth:
Central to Susskind's argument is the influence of ideas and technological innovation on economic growth, an insight heavily influenced by Nobel laureate Paul Romer's research. Romer’s work emphasizes that growth is driven not merely by accumulating resources but by discovering new and more efficient ways to use existing resources. This shift from a tangible to an intangible understanding of economic drivers underscores the potential for "effectively infinite growth on a finite planet."
Susskind illustrates this with Romer’s analogy of a kitchen larder: while the number of physical ingredients is finite, the number of potential recipes is virtually limitless. Similarly, in economics, the tangible resources may be limited, but the ideas for utilizing them can be boundless.
Addressing the Growth Dilemma:
To address the challenges posed by economic growth, Susskind argues against the de-growth movement, which advocates for reducing or halting growth to mitigate its negative impacts. He considers this approach impractical and potentially harmful, citing economist Branko Milanovic's warning that halting growth would either perpetuate extreme poverty or necessitate significant reductions in the incomes of billions of people.
Instead, Susskind advocates for fostering a different type of growth—one that is more inclusive and less destructive. He proposes several strategies:
1 Overhauling Intellectual Property Regimes: To ensure that ideas are more widely accessible and can stimulate further innovation.
2 Increasing Investment in Research and Development (R&D): Highlighting how leading companies invest significant portions of their revenue in R&D, he suggests that nations should similarly prioritize substantial investments in innovation.
3 Enhancing Human Capital: By enabling more people to participate in innovation-driven sectors of the economy.
4 Leveraging Technology for Idea Generation: Using advanced technologies like AI to accelerate the discovery and application of new ideas.
Practical Examples and Policy Implications:
Susskind points to tangible examples such as AI-enabled drug discovery and renewable energy advancements. These examples demonstrate how directed technological progress can alleviate some of the growth-related challenges, such as environmental impact. The dramatic reduction in the cost of solar energy, driven by technological advancements and policy incentives, exemplifies how growth can become greener.
Furthermore, Susskind emphasizes the importance of creating incentives that promote the development of technologies that augment human capabilities rather than replace them. This involves rethinking tax policies and other economic incentives to favor technologies that create more inclusive growth.
Conclusion:
Susskind concludes on an optimistic note, suggesting that society has the opportunity for moral and technological renewal. By harnessing the power of ideas and technology, we can continue to drive economic growth and address the pressing challenges it brings. He calls for political innovation to ensure that these technological and economic advances are aligned with broader societal values and goals. This approach requires active citizen engagement and the establishment of institutions that facilitate public discourse on the trade-offs and priorities in economic growth.
