Firstly, I don't know how much of an application this has in the real world where there are many economic actors. I saw it on another forum at thought it was an interesting problem.
Imagine a simple two person economy. I produce apples and you produce oranges. Only i can consumer oranges and only you can consume apples (so they can't be substituted for eachother). Say also that we produce 3 each per week (enough to keep us alive) and trade off at a 1 to 1 basis. Obviously it would be nice if i have more oranges and you have more apples. Where is the incentive for me to improve productivity and produce a fourth apple if i don't receive an increased reward for it (i.e. i still only receive 3 oranges as a reward). The mini-economy would be stuck in an unnecessary zero-growth situation.
I thought this problem could have an application when an economy is in recession, when entrepeneurs have the ability to increase productivity and invest but don't. Thanks for your answers.
The Bomb19:Imagine a simple two person economy. I produce apples and you produce oranges. Only i can consumer oranges and only you can consume apples (so they can't be substituted for eachother). Say also that we produce 3 each per week (enough to keep us alive) and trade off at a 1 to 1 basis.
If one guy can only consume apples and the other can only consume oranges, why are they trading?
Same scenario, but with names to make it less confusing (so we don't get the I's and You's confused, that is):
Imagine a simple two person economy. Adam produces apples and Bob produces oranges. Only Adam can consume oranges and only Bob can consume apples (so they can't be substituted for eachother). Say also that we produce 3 each per week (enough to keep us alive) and trade off at a 1 to 1 basis. Obviously it would be nice if Adam has more oranges and Bob has more apples. Where is the incentive for Adam to improve productivity and produce a fourth apple if he doesn''t receive an increased reward for it (i.e. Adam still only receives 3 oranges as a reward). The mini-economy would be stuck in an unnecessary zero-growth situation.
So Adam produces apples but wants oranges (and he needs 3 per week to survive).
And Bob produces oranges but wants apples (and he needs 3 per week to survive).
Therefore, they begin to produce and then exchange 3 apples for 3 oranges and they each get the bare minimum for survival.
But, if it would be desirable for both to have more of want they want (because it makes them feels better or to save for the future), they could make a deal that they would both each produce 5 units (or whatever would maximize their wants, with respect to how much they wanted to work for it). This is demonstrated by marginal utility graphs. Of course they could also use their increased purchasing power to get other things they want. Maybe Adam wants a back rub from Bob or Bob wants Adam to sing for him. A back rub or a singing performance are also legitimate forms of payment, but they don't show up as much in measurements such as gross national or gross domestic product. But once the economy did get to the point where it would not be worth it for either to produce more, this is not a bad thing. Neither are willing to work for a little more pleasure, so growing the economy would be a drag on their personal lives.
"I know that it is a hopeless undertaking to debate about fundamental value judgments."-Albert Einstein
Why shouldn't there be an incentive for you to produce a fourth apple if you know there is demand for it and you can exchange it for your fourth orange? After all you produce three apples and get three oranges in return. If you know the consumption patterns of your trade partner, there is no reason why you shouldn't be incentivized to produce more.
Providing that you are satisfied with the current production, then growth would be unnecessary. If growth is unnecessary then there's nothing undesirable about zero-growth. After all, production is done on the account of current and future consumption. If consumption is satisfied at the current production levels and you know that consumption won't change, then who needs growth?
Your case is highly unrealistic because no human could survive only on apples, so given that you can't utilize other natural resources or expand your production possibilities you will starve. Even if you could satisfy your human needs with additional goods, this case would again be unrealistic because in the real, complex economy, consumer preferences constantly change. In such a scenario, therefore, continuous growth would be necessary.
HUMAN ACTION