Why does economy need growth?
It's a well known "fact": economy needs growth. But what's the thought behind this? It can't grow and grow and grow! If ever more products are made, services are lent, how will the world look like in the future? Like a global New York or Abudabi? Or whatever big city? I looked once, in a museum of history, to the expansion of the city I lived in. It grew slowly, in tandem with the number of inhabitants, to explode exponentially later in history. What's the big deal with growth. To be honest, every time I hear economy stagnates or decreases, I rub my hands an make a little dance.
PS: I got banned from an economy forum for asking this question (there was even a tag "philosophy of economy). They asked me every time, firstly, to ammend my question (to re-open it). So the question grew longer and longer, backing it up with references, which were considered unscientific every time. I went a bit agitated at a point...
PS: I got banned from an economy forum for asking this question (there was even a tag "philosophy of economy). They asked me every time, firstly, to ammend my question (to re-open it). So the question grew longer and longer, backing it up with references, which were considered unscientific every time. I went a bit agitated at a point...
Comments (27)
Yet the population is still growing. And it's good for the society that these new people will have jobs, can sustain themselves and live happy lives as we have done. Too many unemployed and an economy not working will likely lead to violence and war. History has shown this many times.
Economic Growth is a rough measure of the avilability of goods and services avilable to everyone.
Generally speaking where there is economic growth there is more availability for everyone. Problems arise with inequal distribution, but more problem arise with simple lack.
Don't forget that ECONOMICS is at its heart about distribution of resources
I agree. It brought us WW2. After which economy bloomed. "Das Wirtschaftswunder". It even boomed. Globally. The depression of the thirties (banknotes of 500 billion German Marks were worth even less than their paper value!) subsided globally after the warbut was the war cause of this? Did an optimism spark this? During the economic depression though there was a pessimistic feeling. Did this increase the depression even more? What brings about depressions in general and in economy in particular?
Quoting I like sushi
Is this the litteral meaning?Quoting I like sushi
Growth is measurement of their increase.
Simple answer: There are only a few economies that are at the top and a large number at the bottom. Those at the top need to stay ahead of the pack and those at the lower rungs have to play catch up - growth, it seems, is inevitable. This pattern is ubiquitous; take gang and drug wars - the traffickers buy powerful weapons, the police must do all it can to keep up - a vicious cycle of...er..."growth."
As for war, money is part of the so-called soft power package - buying influence and support in politics and even...in war.
Which red-blooded person doesn't want more money than fae already has? None! Economic growth where the sky's the limit is simply that sentiment manifested at a global scale.
I think you mean the ones blue blood. Or was it purple? All vicious circles can be broken. No matter how vicious they are.
There’s some ‘degrowth’ movements cropping up, mostly in Europe, I believe.
Senor Ponzi entrepeneured well. Got even wicked scemes named after him. Ponzi-fraud.
Yes. The term 'goods and services' is a very broad one that covers ALL resources material (Iron ore or clothes) or otherwise (labour, knowledge or arts).
The layman usually see it as about money and nothing else. money is merely the generic device of measuring value within a group of goods and services distributed.
Quoting Thunderballs
Per person. Increased goods and services (as in Economic Growth) is based on growth per person.
The nasty recessions usually happen after a speculative boom that has been created by lax funding by the financial sector. Housing market booms and busts create the most serious ones as houses cannot be manufactured by robots in China, but actually employ a lot of people. And once a banking crisis happens, the banks won't lend and even otherwise healthy companies are in trouble. Then when unemployment grows, things look bad, people save.
Economists have brazenly announced for years that THEY can do away with the boom and bust cycle, but I'm not so sure. They usually create just a far bigger problem later.
Nut what determines the value of money? The goods produced and services delivered? Trust? Quality?
What is it we are talking about when we speak of the needs of an economy, and how should we define growth?
Ostensibly, an economy is a proxy for individuals. So what do i docudals need in an economic sense? The need what goods and services provide value to them, including basics like food, clothing, shelter and medical care. Of course, people need other items of value , only some of which can be monetized or directly measured in terms of the standard measures of economic activity. Others, like satisfying relationships , may not be directly measured i. economic terms but nevertheless may be inseparable from economic phenomena.
But let’s say that indices of economic growth are a rise a s i axcueqte way of measuring what we’re really after, which is growth in personal satisfaction.
Many would argue that there is no correlation between
personal happiness and economic growth, and certainly none between the historical evolution of technology and happiness. Romantics would claim that those living simpler economies from the past ( tribal, agricultural) may in fact have led happier lives.
Let me offer a restricted definition of personal growth here and the. relate it to economic growth. This notion of personal growth is about the development of sense-making. According to this way of thinking, all forms of human creativity ( scientific, philosophical , political, arts and music ) undergo historical development in tandem , as aspects of larger worldviews that replace older ones and are overthrown by newer ones.
Even though this is no linear progress , I will call it personal growth. I’m fact , I suggest that it is the most important variable over longer periods of time on which personal growth depends. The question now is what is the connection between economic growth and the evolution of worldviews. I think it’s tru that there can be no evolution of worldviews without technological innovation, but but technological growth doesn’t operate in a vacuum, it implies , and has no priority over , growth in all other aspects of culture.
Some believe that reversals of economic growth automatically imply stagnation or reversal of cultural development , but since the development of worldviews is knowledge-based, can there ever be a reversal in knowledge? Have any large cultures in recent history forgotten the knowledge they were based on, or failed to undergo further cultural development? Certainly some
cultures seem to transform themselves
more rapidly that others, but isn’t there continuous transmission and transformation going on in even the most seemingly stagnant cultures?
This is a particularly significant question because in the era of climate change , there is widespread anticipation
of slowdown in worldwide economic growth.
My claim is that transom is ok and transformation of cultural knowledge does not require economic growth as measured in standard ways. As long as the means remains to transmit extant knowledge , there will be growth of knowledge, because the first presupposes the second. This implies that even in the most stressed economic conditions personal growth will continue as a consequence of the continued change in worldviews.
Quoting Joshs
Not only romantics, though it can't be denied I'm one myself.
Quoting Joshs
That's pretty obvious.
Quoting Joshs
I'm not sure the prisonors in the concentration camps in nazi Germany agreed. The showers they had to take wasn't a real stimulation of personal growth or changing worldview.
Quoting Joshs
How can you make that ostensible? What is the ostensibility? What proxy?
Quoting Joshs
Dunno. Is there truly a widespread anticipation? Aren't people more in anticipation of the disasters to come?
Quoting Joshs
What are docudals?
Quoting Joshs
Nicely said. Too much emphasis on knowledge though. I had the strange feeling of a deja vu when reading your words here.
Quoting Joshs
This suggests they can be indirectly measured. But can they?
Quoting Joshs
I have grown substantially personally. In creative, scientific, love, understanding, etc. I'm trying to live with minimum material goods. They are generally totaly superfluent to me. I make little sense to many people though...
Victor Frankl might have agreed. Some of the central
insights of his existential therapy were gleaned during his concentration camp experience. The notes
for Wittgenstein’s tractatus were written while he was a soldier on the front lines in W War I.
Any and all experiences, no matter how horrendous , are opportunities for personal growth and wisdom. That’s because time does t reverse itself.
I don't how you worded your question in that forum. But, the thinking in terms of economic is linear progression. Which means, for example, productivity translates to an increase of something. A population can't be called productive and be stagnant at the same time, or worse, be shrinking. The more activities, the higher productivity, the bigger the market gets.
Isn't linear progression growth?
Yes. What's your point?
Economic growth is not linear. It's exponential.
Capital needs investment. The existing value is staked against a future result. Return on Investment is the basis of every Bank that records these wagers. The results of the gamble determines who has dough and who does not.
Did I leave something out?
That's basically the same statement as "economy needs growth". Why does capital need investment? To increase it?
New projects are proposed and carried out on the assumption that the investors will get more out of the result than whatever is payed out to have it happen. Economy, in that sense, is how different people respond to how the desire to earn profit might collide with other interests.
Sounds like Krugman's definition:
Economics is the social science that studies how people interact with value; in particular, the production, distribution, and consumption of goods and services.
Krugman, Paul; Wells, Robin (2012). Economics (3rd ed.). Worth Publishers. p. 2. ISBN 978-1-4641-2873-8. wiki
'Stuff'.
The value of gold is determined by the demand (people like gold, it's a useful metal) and the supply (it's not easy to extract). The same goes for pork chops, alfalfa, Fords, and everything else. Stuff that nobody wants isn't worth much.
The value of money is somewhat artificial. A $50 bill, in itself, isn't worth any more than a $1 bill -- both are just ink on paper. Money depends on faith. I believe that I can pay for what is currently $50 worth of groceries with a $50 bill. The merchant who takes my $50 bill believes he can pay the wholesaler with the $50. The wholesaler believes he can pay the canning company for $50 worth of canned tomatoes, and so on,
As long as we all believe in money, it works just fine. What happens when people stop believing in money? We are totally screwed.
As for why economies need to grow, some answers have been given. Growing population, for instance, needs more goods, services, and jobs. Supplying expanded demand expands the economy.
A growing economy also allows wealth to be accumulated. It isn't impossible to accumulate wealth of some sort in a stagnant subsistence economy, but the wealth will be very small potatoes (maybe literally). The more economic activity, the more wealth there is to accumulate.
This bears very directly on global warming: IF 2 billion people in the developed world all decided to cut their consumption of goods (food, clothing, autos, shelter, dildos, etc.) by 25% to reduce CO2 output, the economy would go directly into a tailspin. A collapsing world economy is not something anyone wants to experience.
We might avoid an environmental catastrophe, but at the cost of a severe economic catastrophe.
The Greeks thought interest was immoral, but under Roman law the head of the household, the "Patris Familias" alone had "potestas", or standing in law. And debt entailed becoming dependent upon that patriarchy. Effectively enslaving the debtor. Rome prohibited usury as much to protect that power over debtors as anything else. It was a status eerily akin to "The Godfather" or Mafia Don.