growth

What comes after the stages of economic growth?

According to the traditional theory, countries go through a series of ‘stages of growth‘. They were first codified by Walt Rostow in 1960 as he observed American capitalism in full swing. Nations start out as traditional societies, he suggested, with limited technology and a subsistence economy. From there come the ‘pre-conditions’ for growth, as commercial agriculture emerges, and external demand for resources encourages extraction for export. Infrastructure and institutions are built to support these developments.

Next comes the ‘take off’, says Rostow. Growth begins to accelerate as the economy moves into early industrialization – traditionally textiles were one of the first. People begin to move into the cities to serve the factories, leading to rapid urbanization.

Stage four is a ‘drive to maturity’ as industry diversifies. People have higher incomes and domestic consumption begins to rise. That leads into the final stage and the holy grail: the age of mass consumption.

That’s where Rostow’s story ends. The consumer society is the the end goal of growth, the pinnacle of development – and presumably, goes on forever.

In her book Doughnut Economics, Kate Raworth explores these stage of growth and raises the awkward question that Rostow doesn’t: what comes after stage 5? The theory talks about ‘take off’, but this flight “differs from every other plane flight in one crucial respect: the plane never actually lands, but cruises instead at a constant growth rate into the sunset of consumerism.”

It’s easy to understand how Rostow’s imagination failed him. He was hardly the only person to see American consumer capitalism as the end of history. The world had never seen anything like it before, and as other countries followed a similar development path, it wasn’t completely unreasonable to think that some kind of economic law had been discovered. Follow these steps, and great wealth will come to all nations in due course.

Today, that looks like a naive view. Demographic change, debt, resource depletion, automation, and a variety of other factors suggest that growth in developed countries isn’t inevitable after all. It’s possible that there’s another stage beyond number 5, a post-growth economy. It may turn out that economic growth is a stage that a country goes through, not a permanent state.

Long term, growth isn’t an endlessly extending hockey stick. Perhaps it’s an S-curve.

Unfortunately, that’s still a forbidden thought. Economic growth is sacred, and few mainstream economists or politicians are willing to think beyond it. But we need to, because a post-growth future may well be impressing itself on us unbidden.

It’s good to see Kate Raworth raising these issues, because I’m working on a book about these questions with Katherine Trebeck at the moment. It’s about the idea of ‘arrival’ – asking if development has a destination, and what our priorities as a society might be as we approach such a place. I’ve been reading through the latest draft this week, and there are all sorts of ideas I want to pluck out of the book and blog about. It’s a bit early for that, but I might start testing some the language we’re using and seeing if it resonates.

5 comments

  1. If you are talking about “Arrival” aren’t you as guilty as you say Rostow was of thinking there is an end point?

    You talk of stage 5, so what about stage 6+?

    1. Rostow leaves his metaphor hanging – growth ‘takes off’, and having taken off, just carries on taking off forever. The end, as far as Rostow is concerned, is endless growth forever.

      I’m wondering if it takes off, and then actually gets somewhere – a point of sufficiency, when the work of growth is done.

  2. Yes, this is really crystal ball time – or peering over the edge into a whole new and forbidden economic future. Given the planet’s finite resources, our challenge is to manage the transition to “post-growth” rather than the world stumble into the reality of it as population increases and resources become scarcer…Can’t wait for the book – when might we expect it?

  3. Nature is cyclic. There is a growth period which accelerates and then declines, followed by decay, when the next cycle begins. Human life exists on a planet subject to its own natural cycles, as well as cosmic cycles.

    On the human time scale, our system of capitalist production has been around for less than three centuries, which is trivial from a historical perspective. It is fundamentally defective, since it is based on flawed structures, including the taking of interest and the private appropriation of the rent of land – both of which, incidentally, are forbidden in Leviticus 25, the former explicitly, the latter implicitly.

    The two together impose a dynamic of perpetual growth which is not sustainable. In addition, societies have become completely dependent on systems which are inherently vulnerable to small disruptions, as the recent NHS computer problem illustrated. There are much worse possibilities, such as a Carrington event or a large volcanic eruption such as that which occurred in Iceland in 1783. The former would knock out electrical systems and everything that depends on a reliable supply. The latter was a major contributor to the social disruption which precipitated the French Revolution and 25 years of war.

    Thus, a collapse is the most likely outcome within the next century. Sorry to sound gloomy but we ought to be prepared for the possibility. Such things have happened before.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s