The Impossibility of Growth

[Aeson]

Who is stupid enough to lend money if the economy stagnates?

The Fed. And it's not stupid. (Though it could be. It could also be smart.)

[AAAAAAAAH!]

Who is stupid enough to lend money if the economy stagnates?

Who was stupid enough to lend money during the last several thousand years? Do you think credit was invented in the 1800s or something?

[Fake Boris]

It is happening. The nominal value of immaterial goods and services is increasing faster than the nominal value of material goods.

This doesn't matter - as long as the absolute number of raw resources extracted augment, which is the observed tendency.

You do understand why the value of intangible wealth increases faster, right? Because it takes less inputs of work to extract the same amount of resources, which tends to augment extraction.

This is caused by the fact that as the value of assets - tangible or not - increase, credit increases. People have to find a way to pay for that credit, and whatever they do, they end up using a little bit more resources.

As long as it is possible to gain a competitive edge by burning up more resources, market agents will necessarily do it.

[Aeson]

The general argument you hear about renewable practices is that they're too expensive.

We should wait until they are cost competitive with less ecological practices, or else the economy would crash.

So why won't the economy crash then?

There are solutions to this - but they all require a non-capitalist approach.

I'm not saying the economy will crash. You're the one playing chicken little.

I'm saying changes to more sustainable economic activities will happen when the price ratios make it in people's best interests to modify their behavior to be more sustainable. I'm also saying that technology has offered and surely will continue to offer great tools to decrease the costs and possibility of sustainable behavior.

It doesn't have to be capitalist, but some form of free market is certainly going to be a solution for the issues you are worried about.

We can somewhat force it to happen if/when we (as a nation) want to, through pigovian taxes. All that's required is political will. Which goes back to market choices really.

[Fake Boris]

Who was stupid enough to lend money during the last several thousand years? Do you think credit was invented in the 1800s or something?

Credit (in the form of currency) was incredibly scarce for most of world's history.

There isn't any reason to extend credit if there won't be growth.

Credit though still exists in absence of growth, under different forms: slavery, serfdom, corvee.

[Aeson]

This doesn't matter - as long as the absolute number of raw resources extracted augment, which is the observed tendency.

You do understand why the value of intangible wealth increases faster, right? Because it takes less inputs of work to extract the same amount of resources, which tends to augment extraction.

This is caused by the fact that as the value of assets - tangible or not - increase, credit increases. People have to find a way to pay for that credit, and whatever they do, they end up using a little bit more resources.

As long as it is possible to gain a competitive edge by burning up more resources, market agents will necessarily do it.

The observed tendency is that you're worried about a hockey stick that has largely leveled off.

As for the bolded part, as material resources become scarcer and harder to aquire, their price increases, and the competitive edge by "burning" them as you say decreases. It's a self-rectifying "problem".

[Fake Boris]

It doesn't have to be capitalist, but some form of free market is certainly going to be a solution for the issues you are worried about.

We can somewhat force it to happen if/when we (as a nation) want to, through pigovian taxes. All that's required is political will. Which goes back to market choices really.

[Fake Boris]

The observed tendency is that you're worried about a hockey stick that has largely leveled off.

This is only true for the developed world. Most countries are undergoing an industrial revolution right now.

As for the bolded part, as material resources become scarcer and harder to aquire, their price increases, and the competitive edge by "burning" them as you say decreases. It's a self-rectifying "problem".[/QUOTE]

If only it were true.

If the price of resources goes up too rapidly, then the economy stagnates or worst, crashes. However, our political and economic systems haven't been designed to handle that kind of situation, because they emphasize maximal production at the expense of optimal distribution.

Remember: the title of this thread is not "Growth is wrong", but rather "Growth is not possible". If growth were possible, then I guess it would be OK.

[Fake Boris]

My proposal earlier in this thread was to improve distribution so that 0.1 % growth works for most.

Under the current system, unsustainable rates (2% and more) are required.

Think of it like a CPU. We need more ARM and less P4.

[Aeson]

This is only true for the developed world. Most countries are undergoing an industrial revolution right now.

If only it were true.

If the price of resources goes up too rapidly, then the economy stagnates or worst, crashes. However, our political and economic systems haven't been designed to handle that kind of situation, because they emphasize maximal production at the expense of optimal distribution.

Remember: the title of this thread is not "Growth is wrong", but rather "Growth is not possible". If growth were possible, then I guess it would be OK.

We are growing and have been, and will likely continue at least for a good long while. As you said, much of the rest of the world is just starting to grow. It's not impossible. It's not important that growth go on forever. We survived a recession the last fewyears, We can survive a stagnation if it happens. It's really not a bad thing. Technological progress will continue to better quality of life even in stagnating economy. Today I have an iPhone 5, Net has a Samsung S4 ... 20 years ago even Bill Gates couldn't have such a device.

You're worried that at some point in the future people might have to get by with using the same cell phone for more than 2 years before throwing it away. I'll be happy when we get there, because at least by then modern technology will have improved billions of lives. You're worried this will lead to catastrophe, but it's more likely to look like Japan has the last couple decades if it does happen.

[AAAAAAAAH!]

Credit (in the form of currency) was incredibly scarce for most of world's history.

There isn't any reason to extend credit if there won't be growth.

Credit though still exists in absence of growth, under different forms: slavery, serfdom, corvee.

Slavery, serfdom and corvee are not actually "credit". In the absence of growth, people would still borrow money to buy things they haven't saved up enough money for, like a home, or a car, or a college education, or to start a business.

[Fake Boris]

The problem remains that under the current distribution and monetary scheme, stagnation leads to impoverishment of the masses.

People have to understand that production in the context of a primitive agrarian society was the solution. In the context of an advanced postindustrial society, the solution is distribution.

Of course the capitalist oligarchs won't give up so easily. They are the ruling class that benefits the most from credit.

[Fake Boris]

Slavery, serfdom and corvee are not actually "credit". In the absence of growth, people would still borrow money to buy things they haven't saved up enough money for, like a home, or a car, or a college education, or to start a business.

1) For most of history, the bulk of people didn't even have currency.

2) Think again about credit. If there won't be any growth, the monetary supply will run out as people pay interest. (Unless of course minted coins are given directly to people). Which is a system that has never existed AFAIK.

[Geronimo]

As the prices of resources go up, we'll just compensate by writing more books and issuing more patents.

and research more effective recycling technologies while we are at it.

[AAAAAAAAH!]

1) For most of history, the bulk of people didn't even have currency.

2) Think again about credit. If there won't be any growth, the monetary supply will run out as people pay interest. (Unless of course minted coins are given directly to people). Which is a system that has never existed AFAIK.

1. Subsistence farmers don't need currency.
2. Someone else is receiving the interest. I still don't see why you think money is just going to disappear into some black void and we'll run out of money.