The economics of almost everything | Daniel Markovits, Martin Wolf, Madeleine Pennington
Feb 13, 2024
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Daniel Markovits, Martin Wolf, and Madeleine Pennington discuss the meaning of productivity in the 21st century, the correlation between productivity and well-being, the role of governments in increasing output, the impact of technology on productivity, the alternative to productivity, the importance of democracy, and the urgency of preserving democracy while creating a stronger and more inclusive society.
Future innovations may not be transformative enough to generate significant productivity growth.
Productivity should be redefined to capture a more holistic view of human welfare.
Social organization, incentives for innovation, and political frameworks play a crucial role in driving productivity growth.
Deep dives
Productivity as the Key Driver of Economics
The panel discusses the central role of productivity in economic growth and its impact on living standards. While technology has been a major driver of productivity gains in the past, the panelists agree that the easy advancements have been exhausted, and future innovations may not be transformative enough to generate significant growth. They also recognize that the current social structure, which rewards private gains over social benefit, hampers productivity. While there is uncertainty about whether productivity will recover, it is clear that the focus on productivity as a measure of success needs to be reevaluated.
The Need to Redefine Productivity
The panel acknowledges the value of productivity as a measure of economic output but highlights the importance of redefining productivity in a broader context. They propose considering other dimensions of human flourishing, such as social connections, individual well-being, and environmental sustainability. While there is agreement that productivity should not be abandoned, the panelists encourage a shift towards measuring productivity in ways that capture a more holistic view of human welfare.
The Importance of Social Context
The panel emphasizes that the social context in which innovation and productivity occur plays a crucial role. They argue that technological advancements alone do not drive productivity, but are influenced by factors such as social organization, incentives for innovation, and political frameworks. The panelists call for a focus on fostering social, democratic, and inclusive structures that align private gains with social benefits to achieve sustainable and meaningful productivity growth.
Challenges and Uncertainty Ahead
The panel agrees that achieving sustained productivity growth faces significant challenges. Overcoming the limitations of current technology and the social structures that hinder productivity requires collective effort and political will. While specific proposals are not fully discussed, the panelists suggest democratizing workplaces, reevaluating societal values, and creating policies that strengthen coalitions and strive for social welfare. They also caution against an overly pessimistic view of the future, emphasizing the need for ongoing dialogue, innovation, and democratic engagement to shape a path forward.
Preserving Democracy and Challenging Authoritarianism
The panel raises concerns about the rise of authoritarian oligarchy and its threat to democracy. They highlight the importance of preserving a democratic social order that allows for vibrant political debate, consensus-building, and inclusivity. The need for a renewed focus on creating a political environment that supports progressive policies, fosters wider participation, and addresses income inequality is emphasized. The success of any alternative to productivity lies in building broad coalitions and winning elections to create a better future for all.
"Productivity isn't everything, but in the long run, it is almost everything" claimed Paul Krugman. Throughout the twentieth century productivity, the average level of output for each hour worked, improved dramatically across the developed world. A greater increase than in the previous 2000 years. Driven by life changing technologies, such as electricity, combustion engines, and phones, living standards increased sevenfold. But since the 2008 financial crisis, despite computerisation and the internet, productivity growth in many countries has been low, static or even, in the case of Japan, falling.
Might the 20th century's extraordinary growth prove to be a unique event? Is tech itself the problem, seemingly creating solutions but in fact encouraging pointless activity? Or is the mistake to focus on productivity in the first place, and should we instead change how we value our activities and our time?
