#221. Strategies for a post-growth economy
PART ONE: BUSINESS IN A NEW ERA
Under current conditions, it’s increasingly hard to understand why the inevitability of economic contraction remains so very much a minority point of view.
Many of us have long understood why past growth in material prosperity has gone into reverse.
Here, with the SEEDS economic model, we can go still further, quantifying past trends, and charting a future in which economies get poorer, living standards are squeezed by rises in the real cost of energy-intensive essentials, and the financial system buckles under the weight of its own contradictions.
None of this has to be a disaster, but the management of involuntary economic ‘de-growth’ requires innovative strategies, most obviously in business and government.
The aim here is to concentrate on the PNFC (private non-financial corporate) sector, evaluating strategies that could mitigate the worst effects of economic contraction.
Other sectors – government, households and the financial system – may be the subject of future instalments, whilst the role of technology might merit separate discussion.
Don’t over-simplify
Readers are reminded that this site does not provide investment advice, and must not be used for this purpose.
In any case, it would be an over-simplification to assume that the decline in prosperity must crush discretionary sectors whilst leaving suppliers of essentials largely unscathed.
In fact, suppliers of intermediate (and intermediary) services are at even greater risk than businesses which supply products and services that the consumer might want, but doesn’t need.
Rather, future trends will be more nuanced than a simple decline in all forms of discretionary consumption.
What emerges from this analysis is that businesses will need – and will be pressured by market forces – to front-run the process of de-complexification that will parallel contraction in the size of the material economy.
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