That argument is not new. It was over 200 years ago, with the world’s population at a fraction of today’s level, that the Reverend Thomas Malthus made his infamous prediction that rising populations would lead to global disaster. Malthus’ argument was simple: he argued that while population grows geometrically (1, 2, 4, 8 . . .), food production increases arithmetically (1, 2, 3, 4 . . .). His prophecy was grim: mass starvation. This type of argument has been re-formulated again and again at various points over recent history.
But Malthus’ bleak predictions have not (as yet) been borne out. Far from leading to catastrophe, the boom in global population has coincided with an unprecedented economic boom that has seen living standards rise in most parts of the world. Economics may be known as the “dismal science”, but it has so far confounded the bleak Malthusian prediction. That is because Malthus failed to take into account one crucial factor that is dear to all economists’ hearts: innovation. The human race has so far demonstrated an extraordinary capacity for finding ingenious solutions to its most serious challenges, from the agricultural revolution onwards. If we are to overcome the latest challenges posed by a growing population, this capacity will have to be used to full effect once again.
Major challenges can be a big driver of innovation, just as the everyday demands of consumers can be. History is littered with tales of innovative solutions that have arisen from deadly problems. John Harrison’s revolutionary maritime clock was developed to prevent sailors getting lost at sea (with the added incentive of an enormous cash prize from Parliament), just as London’s sewer system was designed to prevent people dying from cholera. By the same token, there is a significant body of academic evidence suggesting that strong customer demand for particular products can drive innovation and productivity growth in those industries. This relationship between demand and innovation is something that the Big Innovation Centre is going to look at over the coming months.
The growing world population presents two enormous opportunities for the UK economy. In The Next Wave of Innovation, we identified healthcare and the low-resource economy as two of the best prospects for growth in the British economy over the next few decades. The reason for our thinking is simple – both areas offer solutions to immense challenges, and will offer huge rewards to successful innovators. Many of the technologies needed to make rapid advances in these areas already exist; they just need to be developed and turned into commercially viable projects in order to unlock a vast amount of untapped demand.
The challenges involving healthcare are already well-documented. The UK, in common with many countries around the world, has an ageing population that needs to be cared for and supported effectively. The proportion of our national income that we spend on healthcare is already set to rise. The challenge is to make our healthcare sector more productive, so that we can do more with fewer workers, and drive wages up. This means developing and applying new technologies in life sciences, as well as developing new, more efficient service models. If the UK gets this right, there is also a major opportunity to export these innovations around the world.
Even more relevant to population growth is the concept of a low-resource economy. In the past, we have highlighted the economic opportunities created by the need to combat climate change. But we can take this a step further. As the world’s population grows, and emerging economies like China continue to industrialise, the world’s raw materials are likely to come under ever greater strains. Some raw materials, most notably oil, may be in danger of running out at some point in the future. At any rate, natural resources seem likely to get more expensive in the long-term.
The innovative response to this would be to begin substituting raw materials for human knowledge (which we have an ever-growing supply of). In practice, this means developing new technologies that reduce the need for natural resources, finding new types of material, and making everything we do more efficient. In the short term, this is most likely to apply to resource-intensive areas such as energy and transport, but in time it could apply to basic consumer products. This low-resource economy has a very broad scope, but any cost-effective solutions that Britain can develop to reduce the need for raw materials could bring huge economic benefits.