Something I hear a lot in the criticism of capitalism is that it builds on the idea of continuous growth, which inherently is non-sustainable. But I’ve never been able to grasp exactly why constant growth is needed in capitalism? Also, is growth on a large scale always tied the increase of something physical like resources or population? or can it be something completely abstract and isolated from the physical world?
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Basically because of Stocks and Shares. Shareholders want to see constant growth in their investments. If they don’t, they’re more likely to sell their shares. More people selling = shares are cheaper = value of company goes down.
Most people who criticize capitalism understand it very little.
Fundamentally, economies are about the value and utility created by that economy. If today you made an apple pie and could sell it for $10, then you contributed $10 to the economy. If you became better at baking and baked pies that could sell for $12, then you contributed $12 to the economy. This “growth” is a function of people wanting better things. Although in an economy a lot of growth is associated with “more stuff”, a lot of growth is also associated with “better stuff”.
If you’re a good singer and got paid $100 to sing a night, then that is $100 you added to the economy. If you become a huge singer and got paid $100,000 to sing at a concert, then that is $100,000 added to the economy. It is still a night’s worth of work for you but the economy values it differently because the people who wanted to hear you sing valued it differently.
Well, it’s kinda complex to explain why capitalism needs growth. It’s not so much that it intentionally has someone seeking it, it’s more like a positive feedback loop.
For example: when a mother tries to feed her baby breastmilk, the baby “biting” the nipple creates a positive feedback on the breast. It gets stimulated, which causes more milk to be produced. What stops this system from trying to go infinite is that at some point the baby won’t be hungry anymore. Positive feedback needs something else to stop it.
We came from a feudal economy, which was very… Manual. But after french revolution the “middle point” between producer and buyer started gaining advantage negotiating, which made them compete with one another. Most of them lose and their companies go bankrupt or bought, but the ones that win create a positive feedback: they get more money, which will be forced to get invested into their brand (by “competition”) – often by corrupt means, which makes them win again. You see, this “positive feedback” feeds itself indefinitely. Any side effect it causes will grow with it, also indefinitely. This is how we get monstrosities like Nestle hoarding up natural water sources and Johnson&Johnsons being pretty much the only cleaning products company everywhere.
Tbh we don’t really need more money in any way, if we as a society had the intent to solve problems, we would solve them. We’re just not organised with the intent of doing it
Economic growth is when the total value of everything produced in the economy is greater rhan it previously was; this is generally achieved through either producing more stuff, or producing higher quality stuff.
Economic growth is absolutely essential to capitalism because capitalism results in the continual centralization of wealth. If you think of the economy on the whole as a pie, capitalism results on a small group of people steadily owning more and more of the pie, so the only way for the rest of the people to survive is for the pie to keep getting bigger, so their shrinking percentage doesn’t shrink too much in real terms.