Suppose the growth of the U.S. economy slows to a trickle. I don’t mean in the next quarter or next year or even over the next decade. I mean from this time forth.
Gordon writes that three industrial revolutions have taken place over the past 250 years: the first centered on the steam engine and railroads; the second based on electric power, the internal combustion engine and indoor plumbing; and the third rooted in computers and the Internet. By substituting mechanical power for human power in the production process and by greatly speeding up transportation and communication, Gordon asserts, the second revolution raised productivity and wealth far more than did the other two.
Indeed, U.S. productivity gains and the concomitant increase in wealth have slowed in recent decades from the levels the United States historically enjoyed. The Internet, Gordon writes, is increasing our ability to consume more than our ability to produce, while the gains of the second revolution — jet travel, urbanization, indoor temperature control — aren’t subject to much improvement. Accordingly, he argues, slow growth will be the norm for the rest of this still-new century. And because economic inequality will slow our progress still further, all but the wealthiest 1 percent will see the growth in their consumption slowed to an annual rate of just 0.2 percent — a level far lower than what we think of as the American norm, and incompatible with what we think of as the American dream.
If Gordon is right — and he makes a plausible, if arguable, case — then the very essence of American exceptionalism will be undone. The United States is the world’s only nation whose lifespan is coterminous with the Industrial Revolution: We were born when growth was born and have long considered it our birthright. More than any other country, we have depended on growth to ease our economic conflicts. America without growth will perforce be a different nation, in which class conflict will be more open, enduring — and necessary.
Gordon may be too pessimistic about the future of innovation, but his projections of the constraints that inequality, globalization and other encumbrances will place on growth seem completely plausible. If he’s onto something, decades of stagnation lie ahead. What will that mean for our nation and our politics?
Hard times can create mean times. Americans may find scapegoats for stagnation, as many already have in immigrants or public-sector unions. But permanent stagnation could also lead to the creation of class politics, which by the standards of other nations have been largely absent from the American experience — save among the rich. Since growth slowed in the ’70s, the wealthy have sought and won changes to tax codes, financial regulations, campaign spending laws and the bargaining power of workers that have enabled them to claim an unprecedented share of the country’s output.
Long-term stagnation, however, might just transform this one-sided class war into a two-sided contest. If growth vanishes — or if the wealthy continue to claim so vast a share of our wealth that growth vanishes for everyone but them — then the only path that the 99 percent could take to better their lot would be explicitly redistributive.
America’s middle and working classes have historically waged many partially and indirectly redistributive battles, of course: when the Progressive Movement created the income tax, when the New Deal created Social Security and gave workers the right to organize, when the Great Society created Medicare and the current administration created Obamacare. Each of these victories was preceded by years of on-the-ground agitation by unions, civil rights groups and the occasional professional association. But their mobilizations have been sometime things. Their victories have been incomplete at best and rolled back (in the cases of worker rights and tax progressivity) at worst. Their struggles were never as explicitly redistributive as they would have been if America had stopped growing.
Turning the distribution of wealth and power into a zero-sum game would require such groups to focus more radically on a small number of big campaigns — scaling back finance, increasing tax progressivity, publicly funding elections, increasing social provision of such basic goods as education and health care, and leveling the playing field for workers seeking to organize. Given all the racial and cultural rifts that divide Americans, the emergence of a majoritarian redistributionist movement would be extraordinary. But given the slow growth and stagnating incomes of recent decades, even as the rich have claimed more and more of our wealth, the emergence of such a movement is long overdue.
(This column first appeared in the Washington Post.)