Battle 2017 Lecture: how do we create an economic renaissance?
Productivity growth is widely regarded as key to economic growth and rising living standards. For too long, economists and politicians across the Western economies have been puzzling over why productivity growth has been so lacklustre. Nowhere more so than in Britain, where productivity has flatlined since before the financial crash. In response, a familiar wish list of more research, easier funding for startups, a modernised infrastructure, and more relevant skills training is easy to state. However, efforts in these directions have so far appeared to have had little effect. As a result, some draw the conclusion that we have entered an era of low growth, or ‘secular stagnation’, and that we need to get used to it.
In his new book, Creative Destruction: How to start an economic renaissance, Phil Mullan argues that there is a way to ensure a better economic future: by creating one. What is needed is comprehensive economic restructuring brought about through political and cultural change. For too long, state intervention has been about ‘stabilising’ the economy, creating a corporate dependency that has entrenched economic stagnation.
Recasting economic and industrial strategy to enable creative destruction to operate again will not be painless. In the short term, businesses would close and jobs would be lost. A return to higher levels of business dynamism will need to go hand in hand with comprehensive measures to assist people during their transition into the better jobs in new sectors and new industries.
So how do we create an economic renaissance? Do we need a bout of creative destruction, or does that risk generating more hardship? How could a state which has reinforced the zombie economy change to lead in laying the foundations for the next industrial revolution?