DeLong on the reasons for economic growth - They may be trending lower

 

In 1870 the last pieces of the institutional complex that supported what Simon Kuznets labelled “Modern Economic Growth”—average real income and productivity levels doubling every generation, growing at an average rate of 2%/year or more—fell into place. The addition to the institutions that were there before pushed humanity across a watershed boundary with the coming of

• the industrial research lab,

• the modern corporation, and

• the globalized market economy

These revolutionized the discovery, development, deployment, and diffusion of human technologies useful for manipulating nature and cooperatively organizing ourselves. 

- Lecture notes from Brad DeLong Grasping Reality

We are in a different era, beyond the neoliberal period, which will be different in terms of growth and globalization. To understand where we are headed, we need to think about long-term economic growth and why the last 150 years have been so different than prior economic history. Brad DeLong is grappling with this question through his research and presented in his book, Slouching Towards Utopia: The Economic History of the 20th Century. This book is a singular achievement given its breath, deep analysis, and unique views from a truly gifted researcher. Many will not agree with his work, but that does not change the fact that you will learn a lot about economic growth.

Are we in a better era of discovery? it is not clear. Has the value of the modern corporation exceeded its limits? Again, not clear, but it seems to be tilted lower. We do know that the age globalization is changing and may have ended. 

Along with the three key factors of DeLong, the institutional environment is moving away from growth. The celebration of the bourgeoisie and businesses seems to be over as the culture and government has changed, and the desire to have corporations focus on profit is also declining. The economic environment is more fragmented and the goals for economic improvement and growth are less clear. Overall, the environment matters and the current cycle for growth may be ending.