Modern capitalism can’t seem to get enough of economic growth. Capitalists, workers and the unemployed all say that they need it. Politicians pledge their commitment to it. And the experts… claim they know how to achieve it. Yet over the past fifty years, global economic growth has slowed down dramatically, including in the US and in the OECD countries. If the trend persists, by 2030, growth will have fallen a mere 1%, compared to 5% in the 1960s. So… the question is… With so much goodwill and expertise apparently available, why won’t the economy cooperate? Mainstream economists argue that a perfectly competitive market would have grown rapidly, but that external interventions keep distorting the competitive balance and slowing the economy down. But – that’s not what the data suggests. As we’ll see, economic slowdown fuels upward income redistribution and a greater share of power for leading capitalists. Far from being a distortion of contemporary capitalism, slowing growth may be part of its very logic. Let’s begin by taking a closer look at the data on growth. Liberal and heterodox economists both maintain that “growth is the key measure of economic health”. In other words, that the faster the growth of the economy, the better off the society. And, if that is indeed the case, the numbers don’t bode well for the U.S. This figure shows the growth of the American economy, measured in so-called “real” terms. Each annual observation represents the percentage by which the economy’s gross domestic product, or GDP, grew relative to the previous year. For example, in 1942, when the United States entered the Second World War, its economy grew by 19% compared to 1941. By contrast, in 2009, when the U.S. entered a Great Recession, the economy contracted by 3%. Since annual growth rates are very volatile, we can use a “trailing average” to track long-term movements. In this chart, we plot a five-year trailing average, which means that every observation shows the average of the previous five years. The trailing average clearly shows that US growth has trended downwards for almost a century. If well-being depends on growth, you’d expect both workers and capitalists to have suffered from this slump. So, let’s take a closer look at this claim, beginning with American capitalists. Capitalist income is made up of profit and interest, and its growth rate, measured in so-called “real” terms, displays a close correspondence with the overall growth of the economy. When the economy accelerates, profit and interest rise even faster, and when it decelerates, they fall more rapidly. As with growth, we see a long-term deterioration. Capitalist income growth is far weaker today than it was during the first half of the previous century. Now let’s turn to workers. Just like capitalists, they’ve experienced a significant income drop closely synchronized with the American slowdown. But not only have their earnings shrunk, workers have also suffered through rising unemployment. Since the 1940s, U.S. growth has oscillated inversely to unemployment – lower growth has yielded higher unemployment, and vice versa. And the same relationship has applied to the general trends. For the postwar period, then, the overall picture in America does indeed appear to be one of progressive decline, marked by decelerating real GDP growth, falling real income growth for both capitalists and workers, and rising unemployment. Based on this picture, it would be easy to conclude that everyone should be interested in faster growth. This reasoning assumes, as does liberal economic theory, that society is made up of isolated individuals, or “agents”. The agents’ ultimate goal is to maximize their individual pleasure, or “utility”, which they do by consuming more and more goods and services. Now, since consumption depends on earnings, all agents must want their income to rise – and since all agents obey the same hedonic drive, they must probably all suffer when the economy slows down or contracts. But let’s cut the data along different lines, and have a look at the following graph. We’ve already seen that the growth rate of “real” capitalist income has trended downwards with the slowdown. Yet, the relative share of capitalist income out of overall income has actually trended upwards. In other words, capitalists and workers have not borne the damage from the slowdown equally. Indeed, capitalists have redistributed income in their favour, therefore doing better for themselves despite the slowdown. And this, doesn’t square with the utilitarian assumptions of liberal economic theory, and so deeply challenges the theory’s explanatory power. Instead, there’s a completely different way to explain this economic phenomenon, based on the capital-as-power approach, or CasP for short. CasP shifts the emphasis away from individuals and utility to analyze capitalism not as a mode of production and consumption, but as a mode of power. Instead of a uniform society made of identical “agents”, we can distinguish between two social groups: First, the underlying population – which includes workers, the unemployed and those not in the labour force. This group definitely wants to improve its material wellbeing and minimize the threat of unemployment. In a capitalist system, these goals do require overall growth. But the underlying population doesn’t control capitalism, capitalists do. And according to CasP, their key motivation is not hedonic pleasure, but power. The very structure of capitalism forces them to seek more power. Those who don’t are quickly overpowered and cast aside by capitalists who do. Unlike wellbeing and utility, power is not about how much a group earns in “real”, or absolute terms; it’s about how much the group earns relative to others. The key point here is that power is not absolute, but differential. Capitalists don’t seek a higher level of consumption, but a larger share in the overall income of society. Their goal is not “purchasing power” but “differential power”. And this distinction is crucial, because in capitalism, the two measures often move in opposite directions, as we saw in the previous graph. The growth rate of capitalist purchasing power may have declined over the past century, but their differential power has actually increased. Even more tellingly, these opposite processes are intimately connected. We’ve already observed the close association between weakening economic growth and rising unemployment. But as this figure shows, rising unemployment also correlates with a higher capitalist income share, and therefore, with rising capitalist power. The two series not only trend upwards, they’re also cyclically correlated. If instead of plotting the current rate of unemployment, we plot the rate of unemployment three years earlier, we can see that unemployment is an accurate leading indicator of the capitalist share of income. In other words, if we know the rate of unemployment at any given time we can predict the extent of capitalist differential power three years later! It appears that weakening economic growth, resulting in rising unemployment, is actually a boon for capitalists. This makes a lot of sense: rising unemployment reduces the bargaining power of workers, the unemployed and those that are out of the labour force. And as this bargaining power weakens, capitalist power increases along with the capitalist share of income. So, is there truly a social consensus in favour of economic growth? For those who believe that everyone in society, including capitalists, is after utility, the answer would be a definite yes. But this view fails to explain why growth has remained so systematically elusive. Moreover, it’s directly contradicted by the actions of capitalists. Over the past century, they’ve strategically restricted greenfield investment, stalled pro-growth policies and objected to downward income redistribution. By contrast, this historical record is fully consistent with CasP. CasP argues that capitalists are driven by differential power rather than by maximum utility, and that their power doesn’t hinge on rapid growth but on relative stagnation, which decreases the employment rate and redistributes income in their favour. In other words, decelerating growth is not a historical anomaly. It’s an integral component of the capitalist mode of power. And that means that vigorous growth is not in the forecast. As long as they remain in control, capitalists will continue to oppose it, because it would undermine their differential power by cutting their income share. Simply put, continuous economic growth is something that capitalists can hardly afford.