In an important new paper (pdf) Robert Gordon suggests that US economic growth could be very slow over coming decades, even ignoring the consequences of the financial crisis. I'll leave the critique of this to others. I want to ask: if his pessimism also applies to the UK, what would be the political implications?
It's bad news for the Tory right. If there are few new innovations - or if the funding for them is unavailable - then deregulation and tax cuts just won't unleash the wave of entrepreneurship and growth they hope it will.
But it also requires Labour to think again. Rob Marchant says:
A simple fact seems to lie unaddressed by politicians: people still want to get on in life, just as they always have done. And they want politicians who understand that. It’s called aspiration, and in Labour we used to understand it.
But in a stagnating economy, aspirations are dangerous.When there's no aggregate growth, one person can "get on" only at the expense of another. Aspiration thus becomes a (near) zero-sum game, which is a recipe for conflict and social tension.
Which brings me to other worries. Traditionally, growth has helped resolve two conflicts. One is resistance to taxation versus the demand for public services; economic growth funds increases in the latter without excessively onerous taxation. The other is between rich and poor; people might tolerate the rich getting better off if they too are getting better off, if only at a slower rate. But what if the rich get richer as the poor get absolutely poorer? On both counts, stagnation would increase political conflict, perhaps undermining the perceived legimitacy of democratic government. Remember, the (mild) stagnation of the 70s triggered serious talk (pdf) of a crisis of democracy.
This could be exacerbated by a tendency identified by Ben Friedman. Slower growth, he said, makes people meaner and less tolerant; its no accident that the slowdowns in the 1930s and 1970s led to increased class conflict, racism and worse.
Post-growth politics thus presents some nasty challenges for all politicians.
In this context, perhaps (only perhaps) there's something to be said for David Cameron. You can interpret his big society and broken Britain thinking as an intuitive recognition of all this - as a belief that social capital must be shored up against the threat of its degradation by economic stagnation.
Whether he can succeed in this is, of course, another question. But my point is that Rob's likening him to Harold Macmillan might be more correct than he realizes. Macmillan thought his role was to manage Britain's relative decline. And this might be exactly the job of Cameron and his successors.