Economic Progress and Adam Smith’s Dilemma

Main Points

• After a quarter millennium of modern economic growth, the ability of capitalism to deliver social progress is being increasingly widely questioned. The climate crisis, embedded inequality, the cost of living squeeze and disruptive technological developments are leading many people to ask whether it is time to go ‘Beyond GDP’ in thinking about the measurement of growth.
• Process innovations are often overlooked in discussions of productivity; attention is more readily captured by the excitement of scientific discovery and new devices. However, time and again since the late 18th century there have been significant advances in processes of production.
• Without a change in direction that shifts corporate purpose from shareholder value to a broader societal purpose, a growing share of the economy will produce goods and services in a way that does not serve the public interest or deliver shared prosperity, that ‘universal opulence’ of a truly wealthy nation.