Can capitalism survive without constant growth?

[ImaLooser]

Something seems to elude most posts : the very existence of capitalism is related to the scarcity of natural resources. That's why "capitals" are not equally distributed in society for the classical theory of economics.

I suppose that is true. If there were unlimited, easily available natural resources then there would be no need to produce anything. There would be no means of production at all. So there would be no issue as to the ownership to the non-existent means of production.

 

[nazarbaz]

There's no such thing as a natural limit or foundation to capitalism. It's not a natural fact but a technology : its limitations are social and political.

 

[H2Bro]

There's no such thing as a natural limit or foundation to capitalism. It's not a natural fact but a technology : its limitations are social and political.

I like this way of looking at it, Capitalism as technology or just a cultural innovation.

The question becomes how we can sustain a high level of symbolic economy using as little physical substrate as possible, i.e., the most number of value added services or innovative software which doesn't actually use much resources beyond electricity per unit of product, with as little coal, steel, lumber, etc, as possible.

The problem of how to increase efficiency gains in infrastructure and manufacturing or vehicles, things that use raw physical inputs and are actually scarce, is one that will be addressed as inputs rise in price automatically. Thats the nature of the capitalist allocation algorithm. It is, in a sense, a dynamically robust system.

 

[enosis_]

I heard a report that says that the Earth may have passed its carrying capacity. Which means the life systems of this planet are now in decline and can no longer sustain themselves. I read that 30% of the great barrier reef has disappeared over the last thirty years.

My question is can capitalism work as a zero to minimal growth, sustainable system, or is growth required for the capitalist system to work? The assumption that a country like the United States or any country can have 3% GDP growth till the end of time is foolish since we are living in a world in which resources are more and more scarce and areas for the expansion of markets are becoming more and more rare.

What are some sustainable economic models?

Hasn't US GDP remained less than 2% for the past few years?

 

[Jim Kata]

Capitalism maybe extremely capable at adaption, but it seems terrible at planning ahead. I just look at this global warming debacle. The fossil fuel industry will not respond until it is probably too late and the modern world we know is destroyed. The short term profit motive which drives corporate capitalism around the world is completely unsustainable, as far as its wasteful use of non renewable resources, and it seems that it will only change if absolutely forced to. As long as the profit motive is the driving force behind it, I don't see the system changing. If the system does not become more sustainable in its use of resources and stewardship of the environment, I think the human species maybe in trouble.

The pessimistic side of me says this is the way it is and just don't have children and hope you die before things get too bad.

The optimistic side hopes the system can be changed into a more sustainable one.

 

[enosis_]

Capitalism maybe extremely capable at adaption, but it seems terrible at planning ahead. I just look at this global warming debacle. The fossil fuel industry will not respond until it is probably too late and the modern world we know is destroyed. The short term profit motive which drives corporate capitalism around the world is completely unsustainable, as far as its wasteful use of non renewable resources, and it seems that it will only change if absolutely forced to. As long as the profit motive is the driving force behind it, I don't see the system changing. If the system does not become more sustainable in its use of resources and stewardship of the environment, I think the human species maybe in trouble.

The pessimistic side of me says this is the way it is and just don't have children and hope you die before things get too bad.

The optimistic side hopes the system can be changed into a more sustainable one.

Aren't you confusing progress with Capitalism?

 

[Jim Kata]

Aren't you confusing progress with Capitalism?

I'm not sure what you mean by progress? If the extinction of the human race is progress, then I guess so.

 

[enosis_]

I'm not sure what you mean by progress? If the extinction of the human race is progress, then I guess so.

The industrial revolution, indoor plumbing and heat, mechanized farming, and motorized transportation all seem to be progress - the cost is not necessarily "the extinction of the human race" - is it?

 

[Jim Kata]

The industrial revolution, indoor plumbing and heat, mechanized farming, and motorized transportation all seem to be progress - the cost is not necessarily "the extinction of the human race" - is it?

What is ignored by this analysis is that the exponential progress the human race has made since the industrial revolution has been due to an exponential depletion of natural resources. When the resources that have made this progress possible are expended the progress will halt. I do not know the affects global warming or massive habitat destruction will ultimately have, but I don't imagine they will be good. The current global economic system doesn't seem to be planning for these effects and it may prove impossible to reverse these effects. I do not see unfettered capitalism as a system well built for dealing with issues such as proper stewardship of the environment.

 

[enosis_]

What is ignored by this analysis is that the exponential progress the human race has made since the industrial revolution has been due to an exponential depletion of natural resources. When the resources that have made this progress possible are expended the progress will halt. I do not know the affects global warming or massive habitat destruction will ultimately have, but I don't imagine they will be good. The current global economic system doesn't seem to be planning for these effects and it may prove impossible to reverse these effects. I do not see unfettered capitalism as a system well built for dealing with issues such as proper stewardship of the environment.

I find your use of the words "unfettered capitalism" interesting. I don't think this system exists anywhere except in textbooks - the real world has regulations. The exception to this statement could be in a communist system - where environmental regulations might be considered counter-productive?

 

[nitsuj]

... due to an exponential depletion of natural resources. When the resources that have made this progress possible are expended the progress will halt.

I am curious what natural resources are being depleted. All I can think of is stuff we burn, so oil, gas & coal.

That stuff has been around for a long time and has little to do with progress and everything to do with producing "work".

How can you view the depletion of those natural resources as a bad thing?

Kinda rhetorical question considering your comment "The fossil fuel industry will not respond until it is probably too late and the modern world we know is destroyed."

 

[Jim Kata]

I am curious what natural resources are being depleted. All I can think of is stuff we burn, so oil, gas & coal.

That stuff has been around for a long time and has little to do with progress and everything to do with producing "work".

How can you view the depletion of those natural resources as a bad thing?

Kinda rhetorical question considering your comment "The fossil fuel industry will not respond until it is probably too late and the modern world we know is destroyed."

Well, there are many resources such as helium and rare Earth metals used and high tech manufacturing processes, but more worrying is the collapse of fisheries, forestries, disappearing fresh water supplies, and the vanishing of arable land for food production, to name a few. You think fossil fuels have nothing to do with progress? Do you need power to run a manufacturing plant? Do you need fuel to ship these manufactured goods to market? Where does the majority of this power come from? Can an economy function without access to a cheap abundant energy source? If you're not sure, look at Iran and the oil sanctions they are under.

I may have speculated too much on the effects a 4 degree centigrade raise in the average Earth's temperature will have, but I don't think I'm the only one who is uncomfortable with the thought of living through the hottest period the Earth has been during human existence.

 

[enosis_]

Well, there are many resources such as helium and rare Earth metals used and high tech manufacturing processes, but more worrying is the collapse of fisheries, forestries, disappearing fresh water supplies, and the vanishing of arable land for food production, to name a few. You think fossil fuels have nothing to do with progress? Do you need power to run a manufacturing plant? Do you need fuel to ship these manufactured goods to market? Where does the majority of this power come from? Can an economy function without access to a cheap abundant energy source? If you're not sure, look at Iran and the oil sanctions they are under.

I may have speculated too much on the effects a 4 degree centigrade raise in the average Earth's temperature will have, but I don't think I'm the only one who is uncomfortable with the thought of living through the hottest period the Earth has been during human existence.

Can you please explain how ending capitalism would change anything you've described - please be specific?

 

[Jim Kata]

Can you please explain how ending capitalism would change anything you've described - please be specific?

I won't be presumptuous enough to claim to have the answer, but I will say that the short term profit motive exasperates many of these problems. To your previous question about regulation, I will say that the short term profit motive incentivises companies to try and skirt, through outsourcing to less regulated countries, or lobby against many of the regulations that maybe required to try and mitigate environmental destruction, such as the Kyoto protocol, because it affects their profits. The good news is there are people thinking about these problems such as environmental economist, steady staters, and so on. I created this post as question not a proselytization, but too many people here believe the evangel of the current economic system to propose alternatives.

 

[Jim Kata]

Since you wanted policy suggestions, I will give you one, put caps on greenhouse emissions for all major industrial countries including the United States and China.

 

[enosis_]

I heard a report that says that the Earth may have passed its carrying capacity. Which means the life systems of this planet are now in decline and can no longer sustain themselves. I read that 30% of the great barrier reef has disappeared over the last thirty years.

My question is can capitalism work as a zero to minimal growth, sustainable system, or is growth required for the capitalist system to work? The assumption that a country like the United States or any country can have 3% GDP growth till the end of time is foolish since we are living in a world in which resources are more and more scarce and areas for the expansion of markets are becoming more and more rare.

What are some sustainable economic models?

This was your original post and topic of the thread.

 

[enosis_]

Why don't we refocus?

http://www.merriam-webster.com/dictionary/capitalism

"Definition of CAPITALISM

: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market"

 

[enosis_]

To go back to the OP - why can't Capitalism survive with less than 3% GDP growth?

 

[ImaLooser]

To go back to the OP - why can't Capitalism survive with less than 3% GDP growth?

The 3% GDP growth is so embedded in the USA that its like an eleventh commandment. If somehow the US turned socialist or anarchist or communist or whateverist tomorrow I don't see why the 3% thing would change. It would remain a basic assumption.

It seems to me that socialist governments are just as interested in growth as capitalist ones.

If someday in the future it was decided that 1% or 0% or -3% growth was better, then that would be the new goal. The means of production could remain in private hands. I don't see what capitalism has to do with it.

 

[enosis_]

I agree ImaLooser - Capitalism and private property rights can exist with less than 3% growth. My point was the US hasn't had 3% growth for several years - achieved in only 2 Quarters since 2008.

http://www.tradingeconomics.com/united-states/gdp-growth

 

[Gliese123]

If think Capitalism can and can not continue. What I mean by the terms that it might can is that environmental friendly industries such as renewable and sustainable technologies and power sources that can be profitable. Although the profit for dirty industry, food, cars and other certain traditional industries can't just grow and grow. It's like you said. We can't gain more profit and it's on a decline. But what also might keep the profits grow among big businesses around the planet is the replacement from older devices and products to newer, cleaner and better ones. Thus the population grows, I don't know if that compensates it to a present state anyway..
But I hope to see a big profit for environmental friendly companies in the future. And engagement from both governments of Earth and its population in the ways of environmental friendly terms.

 

[enosis_]

If think Capitalism can and can not continue. What I mean by the terms that it might can is that environmental friendly industries such as renewable and sustainable technologies and power sources that can be profitable. Although the profit for dirty industry, food, cars and other certain traditional industries can't just grow and grow. It's like you said. We can't gain more profit and it's on a decline. But what also might keep the profits grow among big businesses around the planet is the replacement from older devices and products to newer, cleaner and better ones. Thus the population grows, I don't know if that compensates it to a present state anyway..
But I hope to see a big profit for environmental friendly companies in the future. And engagement from both governments of Earth and its population in the ways of environmental friendly terms.

Companies that thrived making buggy whips were replaced by manufacturers of carburators - out with the old and in with the new. Capitalism allows for this evolution.

 

[Drakkith]

Companies that thrived making buggy whips were replaced by manufacturers of carburators - out with the old and in with the new. Capitalism allows for this evolution.

Agreed. I don't see what Gliese is getting at really, but it doesn't sound like capitalism to me.

 

[Gliese123]

Agreed. I don't see what Gliese is getting at really, but it doesn't sound like capitalism to me.

Sorry to make it sounds confusing. ^^/

 

[John Creighto]

Marx's explanation as I heard David Harvey explain, which I vaguely understand goes something like this. In das Kapital volume ii Marx does a gedanken experiment in a society with just two classes workers and capitalist. He argues that demand comes from capitalist paying workers who then spend their money on goods and demand comes from capitalist buying means of production so total demand comes from means of production and the wage bill. The total supply that a capitalist creates in surplus is profit. Marx argues the demand for the surplus is generated by the capitalist. That is the capitalist create the surplus and create the demand for the surplus. In order for this to work it has be an expansive system by which you pay off yesterday's debts with today's expansion, a credit system. So the accumulation of capital is also the accumulation of debt.

Whether you believe this or not I still find it hard to believe that a steady state economic system would resort to speculative economics in such a large way.

I think the life cycle of capitalism is like the fusion cycle of a star. At first it has access to lots of available resources to spur growth like a young star has lots of easy fuel. Then it uses up this easy fuel and starts burning more exotic fuel more fictional speculative forms of capital like synthetic credit default swaps then it runs out of fuel and dies.

Consider the case where scarcity leads to the value of some good “A” being very valuable so that people hoard a lot of “A” thereby driving up its price. Consider some other good “B” which requires “A” to make and people who own “A” require a certain amount of “B”. People who own “A” may try to minimize their consumption of “B” but because they have a need for “B” they will pay a certain amount of “A” to obtain “B”. If the supply of “A” is limited (say by the sun) than the supply of “B” will be limited by the minim of people’s needs for “B” which own “A” and the physical limits on the supply of “A”.

Now say “A” is non-renewable. Then the use of “A” will continue to decline limiting the production of “B” until either “A” is entirely used up or a cheaper alternative to “A” is found for producing “B”.

In conclusion scarcity will slow an economy but isn’t a sufficient condition to stop economic activity.