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4 - The Firm and Economies of Growth

Published online by Cambridge University Press:  24 August 2023

Stephen Gruneberg
Affiliation:
University College London
Noble Francis
Affiliation:
University College London
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Summary

This chapter explains how economies (or savings) of growth are the drivers of expansion, as growth enables firms to remain competitive. This relentless pressure to expand has existed since the rise of capitalist production replaced feudal methods.

In the eighteenth century, before the Industrial Revolution, construction markets in Britain were regulated by guilds of master craftsmen. The guilds controlled each trade, prices and quality. They also controlled the number of journeymen and apprentices who could be employed by each master craftsman. This limited the ability of any one master to gain power over his competitors. However, from approximately the 1750s to the 1820s, the Industrial Revolution and the Napoleonic Wars did much to undermine the power of the guilds, and gradually they were replaced by a market system.

Since then markets have remained competitive, favouring the most efficient firms and often the most ruthless. Ever since the arrival of the market in construction there has been pressure on firms to increase sales, increase profits and raise the productivity of staff on site and in contractors’ offices to improve competitiveness. The ever-present pressure to increase sales implies the need to increase the size of the firm, as measured by the size of turnover, number of people employed, value of assets or some other yardstick. Under market conditions it has never been possible for firms to rest on their laurels, take it easy and relax.

How firms meet this challenge of continuous expansion is explained in this chapter. It is a challenge that has a price, as society today becomes increasingly aware of the limits to growth caused by environmental degradation, the non-sustainability of declining resources and pollution. Increasingly sustainability has become an issue in construction, and writers such as Kate Raworth (2017) point out that the economy is simply not able to expand its consumption of resources at its current rate and dump the resulting waste in the environment. Such writers describe an attitude towards the economy as a whole that questions the need to continue on a growth path indefinitely.

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Publisher: Agenda Publishing
Print publication year: 2018

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