Why does capitalism need 3% growth?

[elbows]

Debt-based financing will go wrong without growth wont it?

 

[littlebabyjesus]

Debt-based financing will go wrong without growth wont it?

Does it, or does it just need inflation?

Nobody's answered my question yet. It's a genuine one.

 

[butchersapron]

Because everything inflates. You can get individual capitals or people moving money around but that's it. The system itself cannot run on that. Where does the humongous surplus needed to be produced even to just stand still then come from?

 

[littlebabyjesus]

Ok, so inflation keeps money moving around because it loses value if it stands still, but inflation without growth will result in a larger and larger proportion of the wealth ending up with the capitalist class, which eventually is unsustainable?

 

[butchersapron]

No growth is the unsustainable part of that not inflation. And inflation only will move around pockets of money, it wont do chnage global production. That requires growth because the whole system is and can only be premised on competition (or read that technological development if you're an apolitical type)

 

[ymu]

Ok, so inflation keeps money moving around because it loses value if it stands still, but inflation without growth will result in a larger and larger proportion of the wealth ending up with the capitalist class, which eventually is unsustainable?

I don't know enough about macro-economics to answer your question (watching this thread with interest), but that is exactly what is happening, isn't it? Wages as a proportion of GDP have fallen from around 60% 30 years ago to just over 50% now.

As to whether it's sustainable ... that depends. India and China have been relying on exports to get rich, which has meant keeping wages low and the internal market virtually non-existent. A handful of billionaires living alongside hundreds of millions of the poorest people in the world. That was "sustainable" until all their customers went broke. Now they are developing their own internal markets in order to survive. Wages in China are rising rapidly, and India is about to conduct a huge biometric 'Domesday' exercise in part to make welfare more efficient (a welfare state being the defining characteristic of a rich economy with a well-developed internal market).

Wages getting lower and lower relative to GDP is entirely sustainable as long as there are customers elsewhere who can afford to buy whatever it is we're selling. ASEAN and South America are developing a large, wealthy middle-class who will no doubt make the ConDems attacks on our benefits and the erosion of wages entirely sustainable, from the point of view of those who own the capital.

 

[weltweit]

If a market is growing, it is much easier for companies to expand their sales. A growing market means relatively easy sales growth for at least some of the players.

If a market is stagnant or declining it is much harder for any firms to grow their sales because the extra sales have to come at the direct expense of a competitor. They have to take customers from a competitor which is much harder to do.

When people talk about a market reaching saturation, that is the sort of situation, every player who could become a customer is already someone's customer.

 

[the B]

If we were being all academic about it, and we simplify things and go back to something like a two person economy and see if growth is strictly necessary for 'capitalism' (free market economy). You get growth without capitalism. You can have capitalism without the growth (but you can suppose they won't bother sticking with capitalism for long in that situation).

Or are we sticking with capitalism where there are strictly 'capital owners' and 'labour sellers' or what?

 

[butchersapron]

That's not being academic, that's being crude and laughable. What free market exists with two people you tool. Slavery? You then say this capitalism isn't even capitalism. Sort it out.

 

[the B]

Yeah, ok butchy, just decide that all things involving 'models' to illustrate your point are damn bad.

And markets can exist with two people. You can name the goods things if you like, as in, one dude has food and the water. And oh look, now that they have a reliable supply of the other they can suddenly get better at producing more of each etc.

You're quite douchy butchy.

 

[butchersapron]

one dude has food and the water.

bye

 

[the B]

Still douchy. Don't like models etc.

 

[butchersapron]

What the fuck do you think douchy even means? No i don't like models abstracted from any historical reality or imposed on the future. I'm not a utopiast or a liar.

 

[ymu]

Yeah, ok butchy, just decide that all things involving 'models' to illustrate your point are damn bad.

And markets can exist with two people. You can name the goods things if you like, as in, one dude has food and the water. And oh look, now that they have a reliable supply of the other they can suddenly get better at producing more of each etc.

You're quite douchy butchy.

How can it possibly be a free market if one person has all the food and water?

 

[the B]

It doesn't really mean anything. I'm just a bit drunk and always laugh at how easy you are to stir up

But really, models have plenty of value.

 

[butchersapron]

You've shown once more that you're an idiot. You do believe this crap. I know you do. You know you do. The running off bit doesn't help.

 

[the B]

How can it possibly be a free market if one person has all the food and water?

I typo'd. One has all the food and the other has the all the water. When not in the most sober of states, I do tend to miss out words while typing.

 

[the B]

You've shown once more you're an idiot. You do believe this crap. I kmow you do.

???

Baffling.

But you're still damn entertaining

 

[butchersapron]

I typo'd. One has all the food and the other has the all the water. When not in the most sober of states, I do tend to miss out words while typing.

That changes nothing at all - you established resource chains as well in your model. From where? Your farm? Your dams? Your idiocy?

 

[ymu]

I typo'd. One has all the food and the other has the all the water. When not in the most sober of states, I do tend to miss out words while typing.

You're still postulating a monopoly situation to illustrate the workings of a 'free' market. How does that work?

 

[the B]

Theory of Comparative Advantage. Takers?

Lots of shots at capitalism go for one, the associated political structure and two, the free market economics end of it.

It's an interesting mix.

 

[butchersapron]

I give you - another economics graduate.

 

[butchersapron]

Theory of Comparative Advantage. Takers?

Lots of shots at capitalism go for one, the associated political structure and two, the free market economics end of it.

It's an interesting mix.

You don't even understand what you write yourself.

 

[the B]

I give you butchy the douchy. Models?! NO!!!!!!!!!!!!!!!!!!!

Application of anything in the scientific method? NO!!!!!!!!!!!!!!!

 

[butchersapron]

The science involved in this

Theory of Comparative Advantage. Takers?

Lots of shots at capitalism go for one, the associated political structure and two, the free market economics end of it.

It's an interesting mix.

I'm sure we can all do without. Without mentioning the dangerous idiocy of mixing hard and social sciences.

 

[butchersapron]

I give you butchy the douchy. Models?! NO!!!!!!!!!!!!!!!!!!!

Application of anything in the scientific method? NO!!!!!!!!!!!!!!!

Tell you what, semi-sober up and come back or you'll get laughed at. In your £900 coat.

 

[the B]

£800 butchy. And which one?

And ToCA has value. Or you reckon it's worthless?

There's very little chance of me coming on here to chat to you when sober. Your mind isn't for changing. Ever! Which is what makes you so douchy and funny

 

[butchersapron]

ToCA - what's that - a George knock-off?

 

[the B]

Theory of Comparative A-Douchy-ness.

 

[butchersapron]

You mean where the big ones get to tell the small ones what they better produce.