Book review: Reinventing Prosperity

reinventing-prosperityA few weeks ago I was at an event where Graeme Maxton and Jorgen Randers presented some of their thinking from their new book. They gave an overview of thirteen ideas to save the world, which included a number of things I’ve covered on the blog, but presented in a perspective I hadn’t heard before. On the way out I bought a copy of Reinventing Prosperity: Managing economic growth to reduce unemployment, inequality and climate change.

The book has a clear goal: identify solutions to the developed world’s problems that actually have a chance of being implemented. They have to tackle climate change, inequality and stagnation. They also have to be politically feasible in a democratic government, which means they have to benefit the majority of people. That’s a tall order, and clearly the authors have spent a great deal of time ruling things out.

They’ve also spent a lot of time working out how to present their ideas. There are very few books of this scope that are written in such clear and accessible language. Sentences are short, jargon is kept to a minimum. It really does deserve some kind of clear English award.

The Western world faces a series of challenges in the coming century, the authors argue. Climate change is one. An economic system that drives inequality is another. The third big issue is persistent unemployment, mainly as a result of technological change. The traditional answer to these problems has been economic growth, so that we can create jobs, raise incomes and afford cleaner technologies. But this approach isn’t working any more.

Economic growth is still delivering the goods in developing countries. In the rich world, it isn’t leading to higher incomes for most people any more. That stopped some time ago, but most of us haven’t noticed because borrowing is cheap and the price of goods has come down. In reality, the rewards of growth have been going to the richest, instead of being shared out through higher wages. In 2014, the book points out, half of American workers were earning less in real terms than in 1979. That will get worse as computers and robots make more jobs obsolete. The benefits of growth will go to the owners of the machines, while demand for workers – and therefore wages – will fall. “Economic growth in the rich world has not improved living standards for the majority” say Maxton and Randers. “It has not created jobs, at least it has not created enough of them. And it has not reduced inequality.”

In short, the conventional strategy of prioritising economic growth isn’t working any more. It is more likely to make things worse, driving further inequality and environmental destruction. Of course, politicians are hesitant to talk about this. Growth has considerable mythical power, and any fresh ideas have to be more compelling than the status quo. Hence the authors’ quest for “unconventional solutions that will be attractive to the majority of people”.

We know some of the radical things we could do to definitively stop climate change and rein in inequality. But we won’t do them, because “most of the changes that need to be made are not profitable from the perspective of the current economic system.” With political feasibility in mind, the book makes a number of compromises. Ideas can be a “deviation” from free-market capitalism, but “without undermining the whole system”. Policies have to be applicable to modern democracies, which unfortunately rules out useful ideas that don’t deliver immediate benefits – short electoral cycles make that kind of long term planning difficult. Everything here ought to be possible, which makes the book refreshingly practical.

Among the thirteen proposals here are some that will be familiar: redistributive taxation to reduce inequality, including inheritance taxes. In an age of robotization, corporation taxes may be the best opportunity to share out the benefits of new technology. Similarly, if technology is going to undermine the value of human labour, then worker rights and collective action are going to be more important.

The role of work is going to be changing in the years to come. There is going to be less to go round, so the work week should be slowly reduced – the easy way to do this is just to add more days to statutory leave. In the US in particular, this legal minimum for days off every year is still very low. Unemployment benefits will need to be sufficient to allow people to retrain and adapt, and to make it easier for businesses to lay off staff as technology changes.

A guaranteed liveable income, and allowances for care work that is currently unpaid will reduce turbulence as employment opportunities are reduced and the population ages. On that theme, raising the retirement age is also vital. The book points out that when retirement at 65 was first proposed in Europe in 1900, average life expectancy stood at 44. Most people never got to retirement, and decades of leisure at the state’s expense was not the original plan. At current life expectancy that is fundamentally unsustainable, and we will need different patterns of work that reflect age and experience.

There are some details I hadn’t come across before (a nuanced take on the citizen’s income, for example) but in the main these are not new ideas. What makes the book worthwhile is the clarity of presentation, and setting the policy ideas in a wider context of global change. It’s also important to note the authors’ backgrounds. Randers is one of the world’s most experienced environmentalists and a co-author of the Limits to Growth report, but also a former president of the Norwegian Business School. Maxton started out in banking, worked for the Economist Intelligence Unit, and previous books of his have been shortlisted for business book awards by the FT and Goldman Sachs.

That background makes the book an unusual one, and it perhaps represents something of a second wave of postgrowth literature. It’s not anti growth or coming from an environmental extreme. It’s more agnostic on the subject of growth – have it if you want, but don’t prioritise it at the expense of other things. The authors acknowledge that “the developed world does not need more wealth or more goods.” Today’s challenge is different from the one our forebears faced. It’s about better management of what we have, rather than the accumulation of more. (Naming and articulating that new challenge is the subject of the book I’m writing with Katherine Trebeck, which you’ll be hearing more about this year.)

As with all books that focus on the politically possible, it is open to accusations that it doesn’t go far enough. But the authors are well aware of the choice they’re making, and it is well explained. It’s possible to write a scientifically robust strategy that would mastermind a sustainable and equitable society, but if it has no chance of being applied, then it isn’t worth much. Better to give us some starting points, policies to turn us in the right direction, and make some difference rather than none. As we make progress, that opens up new political ground.

To give Maxton and Randers the final word, “society can either let the current economic system impose its relatively predictable and unpleasant long-term consequences, or it can choose an alternative path. The decision will be the epic social, environmental, and political battle of the 21st century, and the stakes are as high as they can ever be: modern civilisation’s continued existence in anything like its current form.”


Buy Reinventing Prosperity from Hive, Amazon UK or Amazon US

2 Comments on “Book review: Reinventing Prosperity”

  1. Laura January 5, 2017 at 10:36 pm #

    In relation to a point that is touched on here – I was listening to this http://www.bbc.co.uk/programmes/b086t0mb this morning and was thinking about all the childcare that supposedly retired people provide, and how it should be recognised that they are continuing to work. A citizen’s income – I would be fascinated to read more.

    • Jeremy Williams January 6, 2017 at 9:07 am #

      Yes, I certainly know plenty of people who are spending their retirement on childcare so that their children can go back to work. It’s a large and invisible contribution to the economy that ought to be recognised one way or another.

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