capitalism and eternal growth

[© tweed]

perhaps the capitalists here can answer this question, I've never seen it properly answered, or answered at all, for that matter.  capitalism needs growth in order to survive.  this shouldn't be controversial.  from recall about 2% growth is needed to stave off deflation, job loss, and the other nasty stuff. 

yet the Earth is finite, and here we run into a problem, a 'contradiction'.  unless the esteemed capitalist innovation can overcome the first law of thermodynamics, or locate other Earth-like planets to transport people to and extract resources from, we eventually hit a wall of sorts.  the use of nature as an infinite source of raw material and dumping ground for externalized costs is necessarily finite.

when exactly this needs to be addressed could constitute a different conversation, which we can leave off for the time being.

[TheDeadFlagBlues]

It's all about the mysterious technology variable that all neo-classical macroeconomic models include:

http://en.wikipedia.org/wiki/Solow_model

http://en.wikipedia.org/wiki/Solow_residual

Theoretically, the increasing returns that technology allows from each particle of biomass means that economic value of the planet is essentially infinite. Worried about using up fossil fuels? No matter, we'll increase the feasibility of methane hydrate extraction or the methods used to refine shale oil. Increase the ECOREI of energy once thought unprofitable and we'll be fine.

I don't agree with this view but I have no explanation outside of this. I'll leave it to the big boys who aren't newbie students to answer this question.

[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?

[© tweed]

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.

[Beet]

It's all about the mysterious technology variable that all neo-classical macroeconomic models include:

http://en.wikipedia.org/wiki/Solow_model

http://en.wikipedia.org/wiki/Solow_residual

Theoretically, the increasing returns that technology allows from each particle of biomass means that economic value of the planet is essentially infinite. Worried about using up fossil fuels? No matter, we'll increase the feasibility of methane hydrate extraction or the methods used to refine shale oil. Increase the ECOREI of energy once thought unprofitable and we'll be fine.

I don't agree with this view but I have no explanation outside of this. I'll leave it to the big boys who aren't newbie students to answer this question.

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?

[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?

[Beet]

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.

[TheDeadFlagBlues]

It's all about the mysterious technology variable that all neo-classical macroeconomic models include:

http://en.wikipedia.org/wiki/Solow_model

http://en.wikipedia.org/wiki/Solow_residual

Theoretically, the increasing returns that technology allows from each particle of biomass means that economic value of the planet is essentially infinite. Worried about using up fossil fuels? No matter, we'll increase the feasibility of methane hydrate extraction or the methods used to refine shale oil. Increase the ECOREI of energy once thought unprofitable and we'll be fine.

I don't agree with this view but I have no explanation outside of this. I'll leave it to the big boys who aren't newbie students to answer this question.

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?

I was using energy as an example of increased utility resulting from technology.

I remain skeptical that neo-classical models are able to capture mankind's inability to overcome the collective action problem that prevents us from taking action on environmental issues. We're destroying the fabric of the planet that provides the basis of civilization and once it is destroyed, it cannot be restarted. Technology does not provide a solution in this instance: Jevon's paradox demonstrates otherwise and I think the past few decades are illustrative of this. This isn't only an issue related to climate change but to all extractive industries and especially agriculture. Pricing externalities, which in itself is a struggle that few nations have been able to implement, is not a solution considering we're already in a positive feedback loop.
Basically, I don't think there are sufficient incentives for developing technologies that don't degrade the most important public good: the biosphere. Technology may increase the utility of natural resources but in the long run, much of our technological may be harmful in so far as natural resources are limited and only exist due to dynamic environmental systems. The value of economic systems may actually be limited due to technological increases.

I agree with the consensus provided by neo-classical economics but find the school's approach to environmental issues to be misguided and deserving of criticism.

This is a weird train of thought I've been on for a few months and it was influenced by an acid trip + reading sci-fi so I'm not sure how relevant of a viewpoint this is. I plan on dabbling in environmental economics + environmental history + economic history this summer to have more concrete answers. I should probably take Macro theory + Micro theory courses before saying more oops.

[t_host1]

perhaps the capitalists here can answer this question, I've never seen it properly answered, or answered at all, for that matter.  capitalism needs growth in order to survive.  this shouldn't be controversial.  from recall about 2% growth is needed to stave off deflation, job loss, and the other nasty stuff.  

yet the Earth is finite, and here we run into a problem, a 'contradiction'.  unless the esteemed capitalist innovation can overcome the first law of thermodynamics, or locate other Earth-like planets to transport people to and extract resources from, we eventually hit a wall of sorts.  the use of nature as an infinite source of raw material and dumping ground for externalized costs is necessarily finite.

when exactly this needs to be addressed could constitute a different conversation, which we can leave off for the time being.

...in order to survive, capitalism will grow; this is instinctively natural. Is this what your looking to define, redefine or ignore?

[politicus]

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.

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

[opebo]

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).

[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" )

[opebo]

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" )

It was humor.  Keep trying.

[politicus]

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.

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.

A market economy with businesses controlled by worker cooperatives would for instance not be capitalist. Nor if businesses were owned by local communities.

In a shrinking economy the lack of jobs gives fewer and fewer people access to purchase the necessary goods on the market leading to increased pressure for either government allocation of resources (planned economy) or a new distribution of the means of production (non-capitalist market economy).
 

[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.

[Ban my account ffs!]

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.

Then you shouldn't be an economist.

[ag]

Then you shouldn't be an economist.

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

[Ban my account ffs!]

Then you shouldn't be an economist.

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

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.

[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.

[Beet]

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.

Sure, I'd be curious.