Why We are Getting More for Less

Joakim Book, November 19, 2019, American Institute for Economic Research

With strong enough libertarian priors, it doesn’t matter what the question is – more capitalism is always the solution. Such an extreme position is surprisingly hard to argue with: capitalism generates wealth for all and creates the very resources that spend-hungry politicians can later tax and redistribute; core tenets of capitalism such as more secure property rights and well-functioning financial systems support economic growth; the freer the economy, the higher GDP/capita; not to mention that moving towards capitalism in the last decades has lifted billions of people out of poverty. On the basis on these observations, the more capitalism our world experiences, the richer and better off we get.

Few people accept this. Even among those who spend their careers studying markets, this seems like wishy-washy utopianism. One of the first things a capitalist sceptic would raise is capitalism’s impact on the environment, as for example seen by the large majority of young people that endlessly worry about climate change.

In our minds, capitalism is synonymous with chopping down trees and exploiting the earth. Business, especially Big Business, is routinely “caricatured as rapacious predators of Earth’s bounty.” “We cannot have infinite growth on a finite planet,” reads a common objection and activist slogan. St Greta’s speech to the UN in September famously objected to world leaders and their “fairytales of eternal economic growth.” If capitalist growth is truly wrecking the planet, perhaps we should slow down the capitalism a little?

Thankfully, capitalism is not wrecking the planet. At least that’s the message in a brand-new book with the stunning title More From Less by Andrew McAfee, a researcher at the MIT Sloan School of Management and co-director of the MIT Initiative on the Digital Economy. His previous book, co-authored with Erik Brynjolfsson – The Second Machine Age – dealt comprehensively and optimistically with technological change, a topic that McAfee continues to investigate as it relates to environmental problems.