Political Revolution | Tipping Point North South

Thought provoking.

Slow economic growth is not just an after-effect of the Great Recession but part of a deeper malaise that predates, and indeed may have helped cause, the financial crisis. A number of narratives have emerged in recent years to try to explain this global dearth of growth, such as the ‘debt overhang’ narrative, which states that growth is primarily hampered by an excessive indebtedness of economic agents, or various versions of the ‘secular stagnation’ narrative, which sees the cause of slow growth in a chronic shortfall of demand resulting from population ageing and the rise of income and wealth inequality, and/or in the diminishing returns of technological innovation. These various narratives probably all have some degree of validity. However, they tend to focus on developments that, even if they act as mutually reinforcing drags on growth, are in fact symptoms of the world’s economic predicament rather its deeper root causes.

Even more than from what most economists usually look at, i.e. constraints on capital and labour and on the productivity of their use, the slowdown of global economic growth since before the financial crisis might be resulting from factors that they typically ignore, i.e. constraints on the supply of energy and other biophysical resources that feed into the economic process and impact its functioning. In fact, the world’s capacity to create additional wealth is getting increasingly eroded by biophysical boundaries that over time tend to raise the acquisition costs, constrain the quantity and degrade the quality of the flows of energy and natural resources that can be delivered to the economic process, as well as by the constantly increasing costs of some of the economic process’ side effects (i.e. ‘negative externalities’ including environmental degradation and climate change), and the growing need to ‘internalise’ them into the price system. These biophysical constraints, as they increase, tend to weigh more and more on the economy’s productive capacity, thus eroding the potential for productivity and output growth.
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Great piece.

For six years now, often with my colleague John Domokos, I have been travelling around the UK for our video series Anywhere But Westminster, ostensibly covering politics, but really trying to divine the national mood, if such a thing exists. I look back, and find all sorts of auguries of what has just happened. As an early warning, there was the temporary arrival of the British National party in electoral politics from 2006 onwards, playing on mounting popular anger about immigration from the EU “accession states”, in the midst of Gordon Brown’s “flexible” job market, and a mounting housing crisis.

A few years later, we met builders in South Shields who told us that their hourly rate had come down by £3 thanks to new arrivals from eastern Europe; the mother in Stourbridge who wanted a new school for “our kids”; the former docker in Liverpool who looked at rows of empty warehouses and exclaimed, “Where’s the work?”
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