Growth doesn't just mean using more resources. It also means using less

If you can do something for one ten-thousandth the cost it used to be, you'll feel pretty rich.

The Atlantic's Noah Smith has written on whether capitalism actually does require growth to continue. He argues:

Looking at history, we see that the biggest challenges to capitalism actually came during times of rapid growth. The early 20th Century was the heyday of communism, anarchism, and socialism. But this was a time of immense growth, technological progress, and increased material standards of living. It seems possible that those alternatives to capitalism gained popularity precisely because rapid growth disrupted the stable social systems that had been in place before the Industrial Revolution.

Clearly there's something problematic in that analysis; the "stable social systems" in place before the Industrial Revolution had very little in common with capitalism as we know it today. It may well be the case that the age the joint-stock company didn't require growth in the same way that modern financial capitalism does.

Smith does, however, argue that finance doesn't require growth either, because interest comes not just from an expectation of growth but also the value of consumption smoothing. That is, people will put up with having less money in the future in order to have income now, and interest is a reflection of that.

But the whole argument is rather a moot point, either way, because it's so frequently brought up in the context of a second claim: that growth requires exploitation of resources, and that if we desire an economy which doesn't carry on tearing up the planet, we need to accept that that economy will be "steady state".

There is clearly a grain of truth here. Famously, the history of America can be described, in economic terms, as a country continually dealing with financial issues by physically growing; first expanding south, then west, and then eventually overseas in the form of the pseudo-protectorates the US now runs. And an end to resource extraction would definitely hit growth rates enormously, if for no other reason than that it would require the world's economy to be completely retooled around renewable energy and recycling usable material from waste, which wouldn't happen painlessly.

But it's simply not true to say that growth can only come from increased abuse of the environment. My favourite illustration of the falsehood comes from a two-year-old piece by Alexis Madrigal:

Imagine you've got a shiny computer that is identical to a Macbook Air, except that it has the energy efficiency of a machine from 20 years ago. That computer would use so much power that you'd get a mere 2.5 seconds of battery life out of the Air's 50 watt-hour battery instead of the seven hours that the Air actually gets. That is to say, you'd need 10,000 Air batteries to run our hypothetical machine for seven hours. There's no way you'd fit a beast like that into a slim mailing envelope.

That, right there, is growth. For the energy cost of running one laptop twenty years ago, you can now run 10,000. That's an annual growth rate of just under 60 per cent.

Clearly, energy efficiency in portable computers over the last 20 years is one of the most rapid measurable increases in technology ever, but nonetheless, it puts paid to the idea that all growth can be is increasingly extractive.

We should be planning for an economy which takes only memories and leaves only footprints — but that's not the same as planning for an economy with no growth. Though George Osborne might wish to convince you otherwise, that would be an unnecessary disaster for all concerned.

Some MacBook Airs, engaged in naughtiness. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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Donald Trump's inauguration signals the start of a new and more unstable era

A century in which the world's hegemonic power was a rational actor is about to give way to a more terrifying reality. 

For close to a century, the United States of America has been the world’s paramount superpower, one motivated by, for good and for bad, a rational and predictable series of motivations around its interests and a commitment to a rules-based global order, albeit one caveated by an awareness of the limits of enforcing that against other world powers.

We are now entering a period in which the world’s paramount superpower is neither led by a rational or predictable actor, has no commitment to a rules-based order, and to an extent it has any guiding principle, they are those set forward in Donald Trump’s inaugural: “we will follow two simple rules: hire American and buy American”, “from this day forth, it’s going to be America first, only America first”.

That means that the jousting between Trump and China will only intensify now that he is in office.  The possibility not only of a trade war, but of a hot war, between the two should not be ruled out.

We also have another signal – if it were needed – that he intends to turn a blind eye to the actions of autocrats around the world.

What does that mean for Brexit? It confirms that those who greeted the news that an US-UK trade deal is a “priority” for the incoming administration, including Theresa May, who described Britain as “front of the queue” for a deal with Trump’s America, should prepare themselves for disappointment.

For Europe in general, it confirms what should already been apparent: the nations of Europe are going to have be much, much more self-reliant in terms of their own security. That increases Britain’s leverage as far as the Brexit talks are concerned, in that Britain’s outsized defence spending will allow it acquire goodwill and trade favours in exchange for its role protecting the European Union’s Eastern border.

That might allow May a better deal out of Brexit than she might have got under Hillary Clinton. But there’s a reason why Trump has increased Britain’s heft as far as security and defence are concerned: it’s because his presidency ushers in an era in which we are all much, much less secure. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.