capitalism and eternal growth

[ag]

In the sentence "capitalism needs growth in order to survive" I do not understand the words "capitalism", "needs", and "survive". We are, also, probably, not on the same page as far as the word "growth" is concerned. Care to elablorate?

[ag]

In the sentence "capitalism needs growth in order to survive" I do not understand the words "capitalism", "needs", and "survive". We are, also, probably, not on the same page as far as the word "growth" is concerned. Care to elablorate?

something ideologically sensitive and the econ. professor suddenly loses half of his vocabulary.  fascinating tactic but I'm not about to get drawn into a pedantic dissection on your territory this early on.  go with your intuition and impression.

The problem is: you original claim makes absolutely no sense to me. So, define your terms.

[ag]

Nothing is infinite on this planet. Not even this planet will exist forever, for that matter. But economics does not deal with geological time horizons

[ag]

It's not just about energy per se, but value, or "utility", let's say measured at a constant market price in an arbitrary currency. Why don't you agree with this view?

Value or utility? And how do you measure utility at a market price?

[ag]

It's not just about energy per se, but value, or "utility", let's say measured at a constant market price in an arbitrary currency. Why don't you agree with this view?

Value or utility? And how do you measure utility at a market price?

There are lots of ways economists do it. Look at people's behavior in choosing between options that have a currency value (observed or estimated), and then make inferences.

The point is that non-economists tend to think in terms of discrete, tangible things such as "the Earth" and "methane hydrate extraction", whereas economists tend to think in terms of numbers and equations. The economist's viewpoint is that he or she is thinking at a higher level because he or she is at once being more general and precise than someone talking about peak oil or the need to recycle.

I am an economist, and I have no clue of what you've just said.

[ag]

Why not? Can you imagine a capitalist system without growth? (if we are talking about a permanent condition).

What's the relationship between growth and "capitalism" (whatever the latter means)? Markets, surely, do not need growth to operate. Not having growth isn't fun, but, conditional on having no growth, I would still much prefer to live in a market economy, as compared with any alternative I am aware of.

[ag]

I applaud your inattention to ag, Tweed.  I have a solution for you - growth can be slightly mitigated by tremendous cataclysmic wars and to a lesser extend by plagues and other forms of 'die off'.  I admit we have not seen nearly enough of this solution yet, but perhaps more is coming.  I for one do hold out some hope for the 'zombie solution', but I suppose that's a bit of a fantasy given the source (B-movies).

Well, well... Your own humanitarian view of that part of the world that you personally not screwing at the moment has been well-known around here Though, of course, you assume that you won't be among the victims. And you got annoyed at me addressing you "Your Lordship" )

[ag]

Two problems in a shrinking economy:

- deflation - basically messing up the whole system and leading to a negative growth spiral.

- lack of jobs giving fewer and fewer people access to the market leading to increased pressure for either government allocation of resources or a new distribution of the means of production.
 

Now, as a homework assignment: try figuring out what is the relationship between growth, deflation, and jobs.

[ag]

Capitalism is more than a market economy. Its a form of market economy in which a class of capital owners control the means of production - or at least most of them.

I have no freaking clue what "capitalism" means. The term is entirely meaningless to me and has no descriptive value.

[ag]

Then you shouldn't be an economist.

Why? Do you honestly believe that being an economist requires using meaningless words?

[ag]

No, I just see your transparent attempt to be ignorant of the meaning of some basic words or the framing of Tweed's argument to be ridiculous.

You really want me to go into detail on why I consider the whole "argument" to be ridiculous? I don't like being nasty.

[ag]

Ok.

1. I do hate the idiotic lables: "capitalism", "socialism" or whatever. These are not terms that have any meaning in modern economics. They do have a very dusty library smell, believe me. You want to be describing actual historic/contemporary institutions - be my guest. But then describe them - and don't post ridiculous lables.

2. Private property and markets are things I can, sort of, understand. The former means people have the right to use and/or dispose of their assets and the latter that they can actually exchange those assets if they so like. Now, in a modern world all those things come w/ zillions of limitations (technological, legal, political, etc., etc) - some of these justifiable, others not, but that's a completely separate issue. Anyway, at least these are the things I can understand.

3. Growth. Growth of what? If you mean growth of consumption of certain goods, population, etc. - well, ok, I get it. If you mean growth of GDP - that notion in itself is completely dependent on the existence of markets, because unless we have prices, we don't even know what to add up. Estimates of GDP (and its growth) for places like the old USSR or the modern North Korea have a lot of magic in them

4. Why on earth would private property and markets require growth of anything, beats me. Naturally, it is very nice when consumption is growing - societies tend to be happy-looking places in such moments. It is also not very nice, when consumption starts falling - there are a lot of unhappy people around in those cases, of course. Even a market economy cannot make people believe they are living better today than tomorrow if they have less. But, hell, it is a lot more efficient in providing for human welfare than whatever the alternatives known to humanity - except in extraordinary short-term circumstances, such as famine, war, pestilence, etc. Yes, even Churchill and Roosevelt got their ration books during WWII, in order to buy the price-controlled eggs. But, in the end, if you try to impose such emergency measures permanently, societies adapt: there emerge black markets, underground workshops, traders. You can try to kill them off (they shot an ancestor of mine for selling shirts and needles), but, in the end, you yield. In the late 1980s/early 1990s markets in Russia emerged at the time of economic collapse. Today what makes life bearable in North Korea are the illegal and semi-legal markets. It's not as if NK were growing - but the markets did. Shoot them, murder them, declare them scum: if there is scarcity, there will be traders and markets and (illegal, but nevertheless quite real) private property. That's as much of an empirical law as social science can get you.

5. Anyway, the world's economy isn't going to be growing forever. And the reason is obvious: every single estimate of the world's population dynamics is pointing to the population starting to drop within the next century. This is going to create a lot of problems we are all quite cognizant of: hard to sustain pensions and medical care for the elderly, when you do not have a supply of the younger folk entering the workforce. Mercifully, globally it won't happen in our lifetime, and locally it can be resolved through immigration. Then, of course, there are places like Japan that are already there. Japan hasn't much grown in a generation, and the population is already falling. When I was passing through recently, I didn't notice any price controls or socialized factories. Where should I have been looking?

6. I can go on and on. But the fact remains: the original statement was ridiculous, and not even remotely understood by its author, who himself had only a vague notion of what those words meant.

[ag]

Ah, just so that nobody has to recall. Inflation is growth in prices, as expressed, normally, in money. Deflation is negative inflation. If there are fewer goods out there and the money supply is unchanged, then, in general, you get INFLATION, not DEFLATION: you know, if the number of dollars hasn't changed, and the number of cows decreased, cheese will become more expensive, not less. Should I continue on the rest as well?

[ag]

Ah, just so that nobody has to recall. Inflation is growth in prices, as expressed, normally, in money. Deflation is negative inflation. If there are fewer goods out there and the money supply is unchanged, then, in general, you get INFLATION, not DEFLATION: you know, if the number of dollars hasn't changed, and the number of cows decreased, cheese will become more expensive, not less. Should I continue on the rest as well?

The same logic can be applied to the climate change debate.  Using surface temperature as a measure for climate change, while a rough representation, does not take everything into account.

In the end, the best measure is to measure total energy input and total energy output of the climate system.

Using surface temperature measurements would be like measuring the air temperature in a small kitchen to test whether the pot of water on the flame is heating up or cooling down.

Would you mind clarifying, what is this about. To me (and, apparently, to some others) it appears to be a complete non sequitur.

[ag]

Ah, just so that nobody has to recall. Inflation is growth in prices, as expressed, normally, in money. Deflation is negative inflation. If there are fewer goods out there and the money supply is unchanged, then, in general, you get INFLATION, not DEFLATION: you know, if the number of dollars hasn't changed, and the number of cows decreased, cheese will become more expensive, not less. Should I continue on the rest as well?

The same logic can be applied to the climate change debate.  Using surface temperature as a measure for climate change, while a rough representation, does not take everything into account.

In the end, the best measure is to measure total energy input and total energy output of the climate system.

Using surface temperature measurements would be like measuring the air temperature in a small kitchen to test whether the pot of water on the flame is heating up or cooling down.

Would you mind clarifying, what is this about. To me (and, apparently, to some others) it appears to be a complete non sequitur.

Ah, just so that nobody has to recall. Inflation is growth in prices, as expressed, normally, in money. Deflation is negative inflation. If there are fewer goods out there and the money supply is unchanged, then, in general, you get INFLATION, not DEFLATION: you know, if the number of dollars hasn't changed, and the number of cows decreased, cheese will become more expensive, not less. Should I continue on the rest as well?

The same logic can be applied to the climate change debate.  Using surface temperature as a measure for climate change, while a rough representation, does not take everything into account.

In the end, the best measure is to measure total energy input and total energy output of the climate system.

Using surface temperature measurements would be like measuring the air temperature in a small kitchen to test whether the pot of water on the flame is heating up or cooling down.

Would you mind clarifying, what is this about. To me (and, apparently, to some others) it appears to be a complete non sequitur.

Merely me talking to myself... trying to understand your convoluted posts by framing it in a context I better understand.

Well, it's all very simple. When wombats fly, crocodiles sing. I think that's clear enough.

[ag]

The interesting aspect of all this is whether the current economic model can survive in a non-growth context, or rather which parts of it will have to be reformed/changed.

This is far more interesting than the capitalism stuff IMO.

Current economic model, shmurrent economic model. The economy is changing all the time. Today's institutions are quite distinct from those 100 years ago, and will, of course, change in the future, growth or no growth.  Any society that has an economy that isn't growing at an accustomed rate will have a lot of unhappy people: irrespective of what its institutions are. Both questions are about as interesting, as figuring out whether sun will come up tomorrow or not: and about as innovative. I still have no freaking clue what makes anybody find any of this anything worth talking about. Class, actual producers, what's not. Gosh.

[ag]

The interesting aspect of all this is whether the current economic model can survive in a non-growth context, or rather which parts of it will have to be reformed/changed.

This is far more interesting than the capitalism stuff IMO.

Current economic model, shmurrent economic model. The economy is changing all the time. Today's institutions are quite distinct from those 100 years ago, and will, of course, change in the future, growth or no growth.  Any society that has an economy that isn't growing at an accustomed rate will have a lot of unhappy people: irrespective of what its institutions are. Both questions are about as interesting, as figuring out whether sun will come up tomorrow or not: and about as innovative. I still have no freaking clue what makes anybody find any of this anything worth talking about. Class, actual producers, what's not. Gosh.

One last question: If you find the entire topic so extremely uninteresting and pointless why do you feel the need to comment in this thread

Because, as an actual economist (and the moderator of this board), I find it personally painful to watch. Illiteracy hurts.