Unlimited, assumed, long term growth a thing of the past

It is assumed by economists the world over that growth is cyclical, and the slowdown in the world economy should in theory begin to pick up soon. However, according to a recent study, the era of innovation that has fuelled the growth of the last two centuries is coming to an end.

Robert Gordon, of Northwestern University in Chicago, says in a study published last month that the assumption that economic growth is indefinite is incorrect. He points out that historically there have been periods of no economic growth, especially between 1300 and 1750, and that this could occur again due to recent innovations not seriously affecting the standard of living as found in the industrial revolutions or the discovery of electricity.

He says in his study ‘Is US Economic Growth Over? Faltering Innovation Confronts the Six Headwinds’: “The computer and Internet revolution…began around 1960 and reached its climax in the dot-com era of the late 1990s…Invention since 2000 has centered on entertainment and communication devices that are smaller, smarter and more capable, but do not fundamentally change labour productivity or the standard of living in the way that electric light, motor cars or indoor plumbing changed it.”

Whether he is right is debateable. With much discussion about recent breakthroughs in 3D printing, it is thought that manufacturing and as such the labour markets could change significantly.