Hi, guys.
This is a newbie question, so perhaps the moderators can move the thread if it's more appropriate in another forum.
Leftists often claim that capitalist economies are ultimately unsustainable because the compound growth upon which they depend means that they will inevitably run out of finite resources. Is it true that capitalist economies must grow and, if so, what are the implications of this?
Thanks.
The whole point of capitalism is to show how people are able to adapt to scarcity... For example, people fear that we will run out of oil, but so what? I am sure that well before we run out of oil, there would already be an alternative energy source that would take its place... What I am trying to say is that, there is always an alternative for something, and the market is best suited to explain what the alternatives are. (on a side note, the fear of running out of oil has been going around for decades now.... so it is nothing more than a tatic to scare people)
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Define "growth". Most things you see "growing" (GDP, SP500 index, etc.) are doing so because the values of the units by which they are measured (fiat currencies) are shrinking. The real growth -- for example the fact that I can get a glass of water from a faucet as opposed to trecking two miles to the river with a bucket -- is rarely amenable to quantification into aggregates like that.
As Mises said, economic growth only occurs when per-capita productivity rises - that is, when productivity rises at a faster rate than the population does. So "economic growth" is really growth in productivity. That doesn't necessarily mean more stuff. It can also mean doing more with what we already have.
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By growth I mean GDP growth. Leftists frequently claim that compound GDP growth is a necessity in order for capitalist economies to survive. They then point out that the world is finite, and argue that capitalism is unsustainable as a result. Is it true that capitalist economies must grow?
What capitalist country are you referring to?
Ask them what a capatalist economy is?
ansiktburk, did you read any of the replies? Also, wouldn't it be easier for the source of the claim (the leftist) to substantiate it?
isn't growth a consequence?
Leftists generally consider pretty much every country to be a capitalist country in that the capitalist mode of production is the dominant one. David Harvey in his Crisis of Capitalism lecture (http://www.youtube.com/watch?v=qOP2V_np2c0) makes the point that compound growth is a necessity for capitalist countries. I've heard countless other leftists make the same claim though.
I have read the replies, thanks!
ansiktsburk: By growth I mean GDP growth. Their first error right there. GDP measures but one thing, inflation, as this article explains. And capitalism does not need inflation to survive. Quite the contrary. Leftists frequently claim that compound GDP growth is a necessity in order for capitalist economies to survive. And their evidence for this absurd claim? None, right? It's supposed to be obvious, I imagine. Or maybe The Messiah, Marx, told them this in revealed prophecy. But let us try to make some sense out of this mishmash. It might be the Malthusian Doctrine. More population means more mouths to feed, means more productivity needed. Besides the usual disproofs of this line of thinking, how are the Marxists going to solve this problem? They then point out that the world is finite, and argue that capitalism is unsustainable as a result. Is it true that capitalist economies must grow? No, of course not. Why do they need to? What is true is that they tend to grow [without "needing" to], as a free market makes it possible to make more than the bare neccesities of life, allowing underconsumption of resources which can be put aside to make tools and such, which increases productivity. Contrast this with a Marxist world, 1] no motivation exists for underconsumption. 2] the calcualtion problem will mean constantly diminishing resources.
By growth I mean GDP growth.
Their first error right there. GDP measures but one thing, inflation, as this article explains. And capitalism does not need inflation to survive. Quite the contrary.
Leftists frequently claim that compound GDP growth is a necessity in order for capitalist economies to survive.
And their evidence for this absurd claim? None, right? It's supposed to be obvious, I imagine. Or maybe The Messiah, Marx, told them this in revealed prophecy.
But let us try to make some sense out of this mishmash. It might be the Malthusian Doctrine. More population means more mouths to feed, means more productivity needed. Besides the usual disproofs of this line of thinking, how are the Marxists going to solve this problem?
They then point out that the world is finite, and argue that capitalism is unsustainable as a result. Is it true that capitalist economies must grow?
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This is not specific to capitalism. No matter how you try to handle property and ownership one thing remains true: The more stuff we have per capita the better off we are. If population increases and production doesn't, we're worse off (assuming static values).
The comments about compound growth makes no sense. Compound growth in an industry just means that demand is so underserved that reinvestment for expansion continues to make sense. Eventually demand will be sated and production will level off, or grow with population. Sounds to me like someone is saying "boo hoo, capitalism is managing to provide a bunch more stuff that people want every year".
ansiktsburk:Hi, guys. This is a newbie question, so perhaps the moderators can move the thread if it's more appropriate in another forum. Leftists often claim that capitalist economies are ultimately unsustainable because the compound growth upon which they depend means that they will inevitably run out of finite resources. Is it true that capitalist economies must grow and, if so, what are the implications of this? Thanks.
What they probably mean (and confuse with free market capitalism in general) is that a fractional reserve banking system has to keep creating new money, and the economy has to keep up with that monetary growth or the system collapses. (The Crash Course preaches some of that stuff, I forget which chapter.) This is not a problem with "capitalism" itself but with our particular ponzi-scheme of government-monopoly fiat money. As Autolykos said, economic growth is simply growth in productivity, it does not follow that resources are 'used up' at a greater pace. I fact, resources are not finite at all. Higher productivity is another way of saying that we created more resources. The problem is in fact the opposite of what environmental socialists (read as in 'national socialist') want us to believe. We have to keep renewing resources through economic growth to run a sustainable economy. Their retreat into "renewability" and economic stagnation ("stability") is truly unsustainable. This finite-earther stuff is dangerous religious nonsense. What these ascetics have a problem with is wealth creation, exploiting the earth to make humans better off. They are simply rich kids who are perfectly willing to give up (other peoples) material well-being for the sake of a spiritual notion. And this whole movement is kept together by communist and anti-liberal propaganda.
ansi,
In that video, it's The Messiah who tells him. No arguments made to prove it.
And he also assumes there is a conflict between financiers and manufacturing, as if one can only get rich at the expense of the other. No proof offered, because it is false.
He confuses "anti financier", which should mean removal of laws that give them privileges others do not have, with anti free markets.
He throws around "greed" as something businessmen have, but then exposes his own when he thinks hedge fund managers make "obscene" profits. Translation: gimme some o' dat.
I'm always impressed by the ability of AE to explain and to prove its claims in a few words, when everyone else doesn't even bother. Or else present something so full of holes one wonders how they tie their laces successfully in the morning.
Good points in that video:
1. He confesses that he doesn't know the answer.
2. He confesses that he has to change his mode of thinking. [Unless he means we have to change our way to his way].
3. He mentioned 5 reasons we are in a mess, says all of them are partly right, and adds in The Messiah's explanation. This is good, because it proves he has no clue. No mention of AE's explanation [except some inane dismissal of what he thinks Hayek said].
Hankster:isn't growth a consequence?