I am a subscriber to McKinsey’s
free Weekend Read newsletter, and recently they featured a podcast summary and
transcript by members who are the authors of a new book: ‘A Century of Plenty:
A Story of Progress for Generations to Come.’ The authors are Sven Smit, Chris
Bradley, Nick Leung, and Marc Canal, and each spoke in the podcast. I will
summarize and review below.
They note that the past century’s
sixfold increase in global prosperity is a reason for optimism regarding the
future. AI, energy, productivity, and innovation are deemed to be the enablers
of future prosperity. They say that growth and inclusion should go hand in
hand.
Smit starts the podcast by
inviting listeners to imagine the past and then imagine the future. He suggests
imagining a prosperous future where GDP per capita is $80,000 in all the
countries of the world. Geology and energy expert Scott Tinker and EQT CEO Toby
Rice envision $50K per capita as a minimum standard of living sufficient to
uplift the poor. Smit then asks if a highly prosperous, 80K per capita future
is possible, if so, and how?
Next, the subject is beliefs about
growth. Bradley notes that, according to surveys, most people are not
optimistic about a more prosperous future, despite the fact that we have
steadily gotten more prosperous over the past century. He notes:
“One belief is that growth isn’t good, that it’s
destroying the planet, creating inequality, and causing all these problems.
Another is that growth isn’t possible, that we’ve reached our limits, that
there isn’t enough to keep growing. But maybe the most personal belief is that
growth isn’t for me—that I’m not included in growth.”
I might add that all the news
isn’t good. Here in the U.S., it used to take a lower percentage of our income
to buy a house or a car. Another fact is that there are capable, intelligent,
and creative people even in wealthy countries who are poor and struggling. It
seems reasonable to assume that those people have some reason to be
pessimistic. Leftists, often in memes, portray these realities to kind of
reinforce pessimism about growth and capitalism.
Canal notes that the numbers are
different in China, where surveys find 70% of people optimistic about the
future. Leung suggests that this is the case because China’s growth rate has
been higher as a developing economy, and that people have seen what growth can
do in terms of modernities and better conditions for people in general. I
wonder how much of it had to do with fear of saying something against the
Chinese Communist Party, thinking about their social scores and surveillance
policies. Maybe none at all, I just wonder.
Smit notes that memories often
accentuate the positive, and what people see as the good old days were not so
good. We develop a biased view of history akin to nostalgia. Canal simply notes
that over the past century, GDP per capita has increased sixfold.
The next section explores
‘Measures of Progress.’ Canal, who is an economist, notes that while people may
not trust GDP as an accurate indicator, that many of the things we care about
improved along with it, including higher life expectancy and a huge drop in
extreme poverty. Inequality, however, increased. He says inequality is more
complicated and will be discussed later. I would say that those other, more
important issues to the poor and vulnerable should be prioritized over
addressing inequality, although I think we could easily address it with
reasonably higher tax rates on the wealthy and super-wealthy. Smit notes that
the growth over the past century was not limited and involved periods of
contraction, such as the Great Depression, WWII, the oil crisis in the 70s, the
dot-com crash, and the 2008 global financial crisis. Bradley notes the work of
Hans Rosling, which is covered in the book. Rosling talked about getting to the
fourth level of human development as a good life, roughly $32 a day.
The next section explores what’s
directly ahead and how things may be changing. Smit says that in the past, we
benefited from globalization, favorable demographics, cheap money, abundant
resources, and a growing economy, but things seem to be changing now.
“Today, globalization is changing. Technology is no
longer just digital. It’s about AI. AI could be incredibly beneficial, but it
also introduces new risks. Demographics are no longer providing the same
tailwind. We have questions about whether we’ll have enough energy to power AI
and whether we can do it cleanly. Where is the cheap money now?”
Bradley cites economist Noah
Smith, who suggested people during those massive growth periods of the past
century also didn’t see themselves as part of that massive growth and
betterment. He notes:
“One of our central arguments is that we’ve made
enormous progress, but according to the measures we use at MGI, we’re only
about halfway toward empowering the world. Our message is: Don’t get off the
train halfway through the tunnel. Can we finish the journey?”
Smit notes:
“Progress came from a system with many interconnected
parts. You could think of it as a machine with eight cylinders. We had more
workers. Female labor force participation increased, allowing society to
accomplish more. Workers had better tools—what economists call capital. We
became smarter as a knowledge economy, developing new manufacturing techniques
and new ideas. People increasingly lived in cities, which foster collaboration
and productivity.”
They note that there was a glut of
working-age people, but that is changing now as people retire and live longer.
Canal notes that we are moving from a demographic dividend toward demographic
drag. Smit emphasizes the importance of energy:
“I like the second law of thermodynamics, which says
that order cannot exist without energy. In a sense, our economy is a form of
order. Good food is organized matter. Good cars are organized molecules
assembled into something useful. All of this progress came from having more
energy while also becoming much more energy efficient.”
Next, they consider whether growth
can be good for the climate. Canal mentions the decoupling that has occurred,
which shows that it is possible to improve living standards while also
decreasing emissions. Smit notes that it costs money to reduce emissions, which
suggests that growth empowers emissions reduction. He notes:
“Interestingly, the additional carbon emissions
generated by growth are smaller than the additional financial resources that
growth provides to solve the problem.”
He cites success in reversing
pollution locally and regionally. In those cases, prosperity enabled
environmental protection. It can enable carbon emissions reductions as well.
Bradley cites plastic pollution and how much of it is coming from developing
countries with inadequate waste collection systems. He notes:
“Many environmental problems—litter, deforestation,
pollution—actually improve with development rather than worsen. In that sense,
more growth, not less, can help solve those problems.”
Next, they return to inequality,
seeing as how economic growth is distributed. Canal notes:
“If we look at the world in aggregate as though it were
a single country, what’s interesting is that inequality has declined since the
1980s. We first had the Great Divergence, when some countries pulled ahead
while others lagged. But over the past 50 to 60 years, inequality has generally
been falling. If you treat every human being equally, regardless of national
borders, global inequality has been decreasing, and I think that’s good news to
begin with.”
Below, he explains why and how
growth is simply better for reducing inequality than non-growth:
“There’s a simple piece of arithmetic here. If
inequality is to decrease in a stagnant or shrinking economy, someone has to
get less for someone else to get more. That’s a much more conflict-ridden
world. If you try to reduce inequality without growth, it’s really hard. But
when the economy is growing and the pie is getting bigger, it’s possible to
reduce inequality while everyone becomes better off. I think that’s simply a
much better world to live in.”
The next section explores
affordability and economic empowerment. Smit notes that the affordability of
essentials such as energy, education, and housing has become more challenging.
He says greater productivity will solve those affordability challenges. At the
same time, those “products: need to be produced at a lower cost to buyers. He
says there are market failures that need to be acknowledged and addressed, and
they can be. Leung explains that purchasing power parity, a measure based on a
unit of goods combined with their empowerment calculation, shows that
essentials have a disproportionate impact on the poor. They calculated an
empowerment line, which is like a poverty line but different, for many
countries in dollars per day required for economic empowerment.
“Smit: Our
definition of empowerment is different. It means having basic food, shelter,
education, healthcare, and a small amount of discretionary income.”
They note that approximately 4.8
billion people are below that empowerment line and the biggest issue in
addressing that is affordability. Bradley points out that it doesn’t really
make sense to count on a global poverty number since poverty levels vary
considerably by country. That is why an empowerment level is a better
indicator. He says it is growth that will bring everyone up to the empowerment
line.
The next section is about trade.
Leung notes that the expansion of global trade has been a major part of
economic growth. He explains one way they analyzed trade:
“As you’d expect, one end of the spectrum includes the
United States, the Five Eyes countries [Australia, Canada, New Zealand, the
United Kingdom, and the United States], and much of Europe. At the other end
are countries such as Russia, China, and Iran, which vote very differently.
What we’ve observed over the last several years is that countries are
increasingly trading with partners that are geopolitically closer to them.
That’s a proxy for what people describe as the fragmentation of the world.
There’s been a lot of discussion, particularly in the United States, about
decoupling. Our view is that throughout the last century, new forms of
collaboration have continually emerged, especially after the Second World War.
We haven’t yet figured out the right model of collaboration for today’s
geopolitical environment, but we’re confident it can be done. Even if you look
at the sheer scale of trade today, intra-Asia trade alone is worth more than
total global trade was 25 years ago. The opportunities for productive
collaboration remain enormous.”
Bradley notes that trade can
remain robust, even in a multipolar world. Trade is often beneficial in uniting
countries, and even countries that have disagreements may still have robust
trade. He cautions that strategic technologies such as semiconductors and AI
may be subjected to restricted trade, but that is generally not true of basic
goods.
Next, they explore the
possibilities of a 2100 economy. They first look at numbers. Population
estimates for 2100 vary from a loss down to 8 billion to a rise to as much as
12 billion. According to their calculations, to get all 12 billion people to
the level of Switzerland’s GDP per capita would require a growth rate similar
to the six-fold growth rate we experienced in the past 100 years. However, the
economy would need to grow by 8.5 times. That is much higher than the 2100 estimates
by the IMF, the World Bank, and others, which suggest the economy will grow by
3 times.
In terms of energy, “it’s
about expanding total energy availability” as we have been doing.
Renewable energy has been growing, but so has fossil energy and all energy.
Renewables are just now getting close to matching energy growth. Thus, they are
getting close to a point where they actually can replace some fossil fuels. Up
to this point, they have not really replaced any fossil fuel energy in total
numbers.
“Smit: So
imagine an economy that’s 8.5 times larger by 2100, with GDP per capita six
times higher and everyone enjoying at least the living standards of today’s
Switzerland.”
“Bradley: Eventually humanity will reach some limit to
growth. My view is simply that we should aim to reach that limit only after
everyone enjoys a Swiss standard of living and has the opportunity to live a
fully empowered life.”
Leung says that primary energy
would have to increase by 2 to 3 times, but electrified energy would need to
increase by 7 to 13 times as more processes are electrified. Low-carbon energy
would need to increase by 20 to 30 times. He also says these growth rates are
achievable, and that China’s electrification and renewables growth rates are an
example. Bradley quips that China’s current growth rate is two to three times
what would be needed globally. Nuclear scale-up is also achievable and
comparable to France’s 1970s expansion of nuclear growth.
“Canal: To put it in context, the scenario we developed
assumes that roughly 40 percent of global energy comes from solar and wind,
another 40 percent from nuclear, and the remainder from other sources combined
with technologies like carbon capture. That scenario certainly won’t be exactly
right, but we wanted concrete numbers so we could estimate the required
build-out.”
That would require a huge nuclear
buildout, which makes me a bit skeptical. They suggest that 300 new nuclear
reactors per year would be required. Smit notes that technologies could have
breakthroughs that change the energy scenarios. Perhaps solar and batteries
will have a bigger share. Bradley also notes that much more material and
minerals would be required; for instance, five times the current amount of
copper used in the world today would be required. He also notes that it is
doable since proven reserves, not total resources, exceed that amount today.
“Bradley: When we examined every major commodity, we
didn’t find a single one where projected demand by 2100 came anywhere close to
exhausting available resources, even if future reserve growth were only a
fraction of what we’ve seen historically.”
“Compounding really matters. When we looked across all
the materials, we found that available resources, combined with continued
improvements in reserves, comfortably supported the levels of growth we’re
discussing.”
The last subject they discussed is
AI and automation. These are already replacing humans in the work environment.
“Smit: This is where the 8.5-times-larger economy
becomes important. Imagine we automate 80 percent of today’s work while the
economy only triples. The remaining 20 percent of work becomes 60 percent of
today’s total, leaving perhaps 40 percent of people without enough work—or
everyone working substantially fewer hours.”
“Now imagine an economy that’s 8.5 times larger. Instead
of having too many workers, we might actually need more people, or more robots,
to keep up. That’s a very different world.”
“The key point is that automation doesn’t follow growth.
Automation makes things cheaper, and that affordability creates growth. People
are beginning to talk about abundance—not universal basic income, but universal
abundance. That may sound overly optimistic. But if there’s ever been a time
when an 8.5-times-larger economy seems plausible, it’s during the emergence of
advanced AI.”
Finally, Smit gives a summary and
the following Five Shifts to Get to Plenty:
“First, people have to believe that this future is
possible—not guaranteed, but possible. Instead of focusing only on limits, we
need to recognize the possibility of abundance.”
“Second, we need to believe that growth is fundamentally
a good thing, that it helps create prosperity while also giving us the
resources to solve the problems we care about.”
“Third, we have to believe there’s enough. Enough food.
Enough materials. Enough resources for 12 billion people to enjoy at least the
living standards of Switzerland today.”
“We also need to change our mindset from “it’s
complicated to build” to “it’s great to build.” That includes permitting
systems and everything else that currently slows progress. The future only
arrives if we build it.”
“Finally, we need a new narrative. We call it the
“narrative of progress.” It’s built around the possibility of a century of
plenty—a story worth telling to future generations.”
“If all we’ve achieved is encouraging people to raise
their ambitions a little and imagine a future of plenty, then I think we’ve
done something worthwhile.”
This was a great discussion of
economic possibilities, and I believe what the data is telling us is
encouraging, that it can be done. That should be seen as good news. Thus, we
should continue to believe in the power of capitalism and economic growth to
provide the goods and services we need and to empower all people in the world
to decent living standards.
References:
How do
we reach universal prosperity by 2100? McKinsey Global Institute. August 5, 2026.
Global
prosperity by 2100: pathways to inclusive growth | McKinsey
