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Growth: The Existential Stakes and the Fatal Chokepoint
Patrik Schumacher
Published in: Austin Williams (Ed.), Five Critical Essays on Growth, TRG Publishing, 2026
Note: This short essay was published as Afterword to a small book published in the book series “Five Critical Essays” edited by Austin Willimas. The book contains – among others – three articles my paper refers to:
Phil Mullan, Economic Growth is Essential
Shiv Malik, Growth? What’s that?
Nico MacDonald, Growth needs Entrepreneurs
My three fellow contributors converge, from different angles, on a diagnosis I share. Phil Mullan exposes the fatalism that has naturalised growth into a mysterious “lever” no one knows how to pull, and rightly identifies degrowth not as a rebellious fringe but as the culturally mainstream alibi of an exhausted governing class. Shiv Malik traces the political mechanics of stagnation to the rise of a pensioner bloc whose revealed preferences are set against the future, while a successor generation, priced out and dispossessed, has stopped asking for one. Nico Macdonald reminds us that growth has an agent—the entrepreneur—and that Britain has spent two decades burying that agent under red tape while propping up the zombies that entrepreneurship should have swept away.
I align with each. With Phil, I want to win the ideological battle for growth against the self-loathing of degrowth. With Shiv, I want to break the political grip of the pensioner class—but I extend his point: the deeper problem is the grip of politics over the economy and society as such, of which the pensioner settlement is only the most electorally visible expression. And it is with Nico that I am most closely aligned, in his insistence on entrepreneurship and the removal of the regulatory thicket that suffocates it. I would add one qualification to his cautious openness to state innovation funding. I have little trust in government grants: bureaucracies cannot pick winners, and the money reliably flows to the well-connected and the safely unadventurous rather than to the disruptive. If such grants are to exist at all, I would tolerate them only as a way of redirecting tax revenue from welfare to investment, and only on one strict condition: that every public pound be matched by private capital, so that a disinterested market judgement—someone’s own money at risk—vets each venture before the taxpayer’s money follows. Absent that discipline, “innovation funding” becomes merely another channel of welfare.
The existential stakes of small numbers
Let me begin where the debate rarely does: with the sheer, underestimated, existential importance of growth. The reason growth commands so little urgency is that its arithmetic is counter-intuitive. Year on year, the difference between a stagnant economy and a growing one is almost imperceptible—a percentage point here, two there, easily lost in the noise of daily life. Nobody feels a 2 per cent gain in a given year. And so the political class, feeling nothing, does nothing, and the public, feeling nothing, does not punish them for it.
But compound growth is the most powerful force in economic life, and the small, unnoticeable annual differences accumulate, over the span of a working life, into differences that are nothing short of life-transforming. An economy growing at 2 per cent a year doubles in living standards in about thirty-five years—within a single career. An economy growing at 3 per cent doubles in a mere twenty-three. The gap between 1 per cent and 3 per cent, trivial in any single year, is the gap between a society that roughly stagnates across a generation and one that becomes two-and-a-half times richer over the same span. Over twenty years, the divergence is already the difference between a child who inherits a world of expanding possibility and one who inherits a shrinking one.
This is not an abstraction. It is the concrete texture of Shiv’s “existential reckoning”: the first time in 150 years that the next generation will be poorer than the last. Those forgone percentage points are forgone cures for disease, forgone housing, forgone careers, forgone leisure, forgone escape from drudgery for millions. Every year of stagnation is not a neutral pause but a permanent theft from the compounding future—a subtraction that, once it has slipped away, can never be recovered. We only live once. To be indifferent to growth is therefore not a modest, prudent conservatism. It is a slow-motion catastrophe conducted at a pace too gradual to trigger alarm. The degrowther who volunteers for less is not choosing simplicity; he is choosing, on behalf of everyone else and especially the poor, a cumulative impoverishment whose full weight will fall on those not yet born.
Phil is therefore right to see degrowth as the negation of the Enlightenment itself, and right, too, that its danger lies less in its overt advocates than in the quiet defeatism it licenses among elites who no longer believe in their own system. But I would press the point one step further. The degrowth premise—that we have breached fixed natural limits—inverts the actual historical record. It is precisely growth that has, again and again, dissolved the limits that were confidently declared final: the Malthusian ceiling on food, the peak-resource panics, the recurring predictions of exhaustion, each overturned not by restraint but by the productivity and substitution that growth alone makes possible. Wealthier societies do not despoil more; past a threshold they clean up, as the falling pollution curves of the newly rich attest. The choice is not between growth and a preserved planet but between a growing society that can afford to solve its problems and a stagnant one that cannot. Restraint does not protect the future; it forecloses it.
The key current choke-point: liberating urban development
If we ask where the single greatest self-inflicted brake on British growth is to be found, the answer is unambiguous: the built environment. Here, uniquely, there is hardly a market at all. Since the Town and Country Planning Act of 1947, development rights have been effectively nationalised. The presumption of freedom—the right to build unless expressly prohibited—was inverted into its opposite: prohibition unless a political authority grants permission. Every act of construction became illegal by default. What should be a domain of entrepreneurial initiative and voluntary exchange became an administrative rationing system, politically paralysed and politically directed from end to end.
The consequences reach far beyond housing, and this is the point most often missed. Construction is a component of nearly every entrepreneurial venture and nearly every substantial investment. The factory, the laboratory, the data centre, the shop, the studio, the clinic, the office—each must be built, extended, or converted, and each therefore must pass through the discretionary planning bottleneck. When that bottleneck is opaque, slow, uncertain in timing and outcome, and subject to reversal on a change of local political control, it functions as a fatal choke-point on the entire investment process. Nico’s entrepreneur, full of animal spirits, collides with a system in which the decisive competitive advantage is not the quality of one’s product but one’s capacity to navigate councillors and planners—rent-seeking, as public choice economics rightly names it, substituted for wealth creation. The so-called “land banking” that critics denounce is not the hoarding vice of greedy capitalists; in a functioning market, idle land is a pure cost, tying up capital and generating no return. It is land held hostage to the resolution of political and regulatory risk. Land banking is a pathology not of the market but of governance—not too much market freedom, but far too little.
The absurdity becomes vivid in the individual case. When Shiv canvasses a village against a development, the retiree’s honest objection—”I’ve retired, and this is where I walk my dog; I love my view”—is, within the present system, decisive. A private aesthetic preference, backed by votes and leisure time, is empowered to veto the homes, jobs and infrastructure that a whole region needs. This is not a market weighing costs and benefits; it is a political auction in which the settled incumbent always outbids the absent newcomer and the unborn. London itself, strikingly under-dense by the standards of Paris, has ample room to grow; what it lacks is not land but the freedom to use it. Schemes for thousands of homes on derelict, empty sites with no immediate neighbours are refused on the ground that the resulting flats would be “beyond the reach of the people that need them”—as though blocking the creation of value could conjure affordability. Standing still, in a globalised world, means falling behind.
The housing affordability crisis is the most acute symptom, and it is a political artefact through and through. In London the house-price-to-earnings ratio has climbed from roughly four-to-one two decades ago to about ten-to-one today; rent-to-income from a fifth to a third. This is not natural scarcity. Construction costs are broadly stable in real terms; what has exploded is the price of land carrying planning permission, which now accounts for seventy to eighty per cent of a new dwelling’s price in inner London. Homes are dear because politically rationed permissions are dear, not because bricks are costly. And the burden of this artificial scarcity cuts into the prosperity of every member of society. It is what turns stagnant nominal wages into falling real standards of living: when a rising share of income is captured by housing costs manufactured by planning restriction, the worker is impoverished even as his pay-slip holds steady. The population is split into insiders—existing owners drawing perpetual windfalls from engineered scarcity—and outsiders, the young above all, who are priced out of ownership and squeezed in a starved rental market. This is precisely the intergenerational wound Shiv anatomises, and its deepest cause is a planning regime that privileges the incumbent.
The remedy cannot be the one instinctively reached for: more social housing. That “cure” is a further dose of the disease. Mandated affordable housing, imposed through Section 106 obligations, is an opaque, negotiable, in-kind tax on the act of building. Every subsidised unit must be cross-subsidised by dearer market-rate units beside it, so each turn of the interventionist ratchet tightens the affordability crisis for everyone who fails to qualify for rationed provision. The Mayor’s ambition to push affordable quotas toward half of all new housing states the perverse arithmetic plainly: the higher the mandated subsidy, the more unaffordable the remainder. Worse, the minimum space standards that forbid, say, compact studios below thirty-eight square metres exist partly to protect the political legitimacy of subsidised provision—for if the free market were allowed to supply a viable, genuinely affordable low-cost segment, the rationale for state housing at generous specifications would collapse. The affordability regime thus stands squarely in the way of the market-driven affordability it professes to seek, while generating fresh injustices: it rations by political allocation and insider access what a market would supply by price and choice.
The libertarian answer is straightforward, if politically demanding. Restore by-right development within transparent, rule-based codes. Replace discretionary permission with automatic approval for projects meeting objective parameters. Abolish prescriptive unit mixes and space standards. End on-site affordable mandates and, where support is genuinely warranted, make it portable and means-tested rather than embedded in the fabric of every scheme. Liberalise the rental market by restoring freedom of contract. None of this means the absence of rules—only the replacement of discretionary, opaque, politicised rules with general, predictable, neutral ones that specify what may not be done rather than requiring permission for everything that may. Unlock this choke-point and one does not merely ease the housing crisis; one releases the construction component latent in every other venture, and with it a large share of the growth the whole country has forgone.
Welfare: the poisoned chalice
The same interventionist logic that produces zombie firms produces zombie communities. Corporate welfare—subsidies, guarantees, “too big to fail” rescues, the endless drip-feed that props up the unviable—binds capital, labour and resources unproductively, obstructing the creative destruction through which Schumpeter’s gale renews an economy. Nico is right that this is a central pathology. But welfare directed at persons, however humane in intention, can work the same tragic incapacitation. It too often traps its supposed beneficiaries in dependency, dissolving the incentives and the self-respect on which independent flourishing depends. It generates crying injustices under the banner of social justice—penalising the striving and the saving, rewarding the passive, and transferring wealth from the young and productive to the settled and secured, which is precisely the pensioner-class settlement Shiv indicts. And it perpetuates parallel societies and economic dead zones: communities detached from the labour market, sustained but not lifted, held in a stagnation as durable as that of any zombie firm on state life-support. A poisoned chalice is the apt image—the draught is offered as sustenance and works as a slow toxin. The humane path is not the extension of dependency but the restoration of opportunity: growth, work, and the dignity of self-support
Loosening the grip
Behind all three symptoms—the fatalism Phil describes, the sclerotic intergenerational bargain Shiv exposes, the suffocation of enterprise Nico laments—lies a single cause: the ever-tightening grip of politics over the economy and society. Growth is not a lever hidden somewhere in Whitehall waiting to be found. It is what a free people does when the fetters are struck off: when entrepreneurs may build without begging permission, when capital may seek its most productive use without political capture, when individuals bear the risks and reap the rewards of their own initiative. The compounding arithmetic of even modest liberalisation is, over twenty years, transformative. The task is not to pull a lever but to let go—to loosen the grip, one restriction at a time, and let the great prosperity engine run.
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