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Capitalism is predicated on the idea of perpetual and infinite growth. Those assumptions are reflected in many ways and we're going to need to rethink our econo

Capitalism is predicated on the idea of perpetual and infinite growth. Those assumptions are reflected in many ways and we're going to need to rethink our economy and political systems with entirely different assumptions soon enough because we're already running into their limits.

gruez 5y ago
>Capitalism is predicated on the idea of perpetual and infinite growth First sentence from wikipedia: >Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. How does this predicate "on the idea of perpetual and infinite growth"? I mean, it'll be nice if the economy grew infinitely, but I'd still want to invest my money into production even if that didn't exist.
- nicoffeine 5y ago
  Modern capitalism depends on fiat currency and investment from those with capital. Currency loses value over time to inflation, so investors are always trying to get better returns against a baseline. Even at 3% per year, consumption has to double every 16 years if investors only want to break even. So, it's not "nice" if the economy grows, it's an absolute requirement to keep investors interested.
  - nicoffeine 5y ago
    For the downvoters: "The single most important question in investing this year is whether the rampant inflation of the moment is temporary, as the Federal Reserve believes, or marks a historic shift. I argued last week that we are on the cusp of a major change and long-run inflation is now more likely." https://www.wsj.com/articles/if-inflation-is-coming-here-is-what-to-do-about-it-11620694235 https://www.wsj.com/articles/if-inflation-is-coming-here-is-...
    - betwixthewires 5y ago
      Why have I been seeing so much attention given to voting in threads on HN these days? Is there an influx from Reddit or something by a bunch of people who didn't take the time to learn the etiquette here? We speak only when there's something to be said, vote only based on the quality of the comment and move on. You don't need to address downvoters. If you had something to address them with it should've been in your original comment, then maybe they wouldn't have downvoted.
      - nicoffeine 5y ago
        > Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.
        betwixthewires 5y ago
        What in particular is this in response to?
        nicoffeine 5y ago
        If you’re going to arbitrate etiquette, lead by example. Following part of it when it suits you defeats the point of bringing it up.
        betwixthewires 5y ago
        OK, but what in particular did I say that you felt the need to quote rules?
  - imtringued 5y ago
    It isn't. People keep credit (aka bank money) in their bank accounts even at negative nominal interest rates. The problem is the insistence on positive interest because of moral attachments to the idea of frugality. Central banks target positive inflation because of the inability to cut interest rates below zero.
  - gruez 5y ago
    >Currency loses value over time to inflation, so investors are always trying to get better returns against a baseline. Even at 3% per year, consumption has to double every 16 years if investors only want to break even. The math does not check out. 1.03^16 = 1.6, not 2 like you'd expect if it was "double". Moreover, inflation only necessitates that the money supply grow infinitely, not economic activity and/or resources. If we doubled the bank balance of everyone overnight, and the price of everything doubled, that's not really "growth" in any meaningful sense.
- jfengel 5y ago
  Would you be able to invest? I'm trying to work through the thought experiment. Suppose we've reached a point where the population has stabilized and all natural resources were being used at the sustainable rate. What production would you be able to buy? Would the current owners sell it to you? Would you be able to accumulate enough capital to induce them to sell? Obviously the definition of capitalism doesn't include "perpetual growth", but it does seem like a reasonable extrapolation about the world. At the time capitalism was defined, indefinite growth was realistic, and easy to assume axiomatically. I'm not sure what capitalism looks like if that assumption fails. I'm also not sure what it looks like for that assumption to fail, since "production" also includes creativity which isn't limited by natural resources. You can always invest in new books, video games, etc which are effectively unlimited.
  - bluGill 5y ago
    I'd invest in something more efficient. If I can find a better way to turn the natural resources into something else can make a profit. Or I'd invest in games/movies/art. People are always interested in something new even if the plot 3000 years old.
    - jfengel 5y ago
      In your first paragraph, that's the point that the OP was making: you're assuming that we won't reach a point of diminishing returns. That's not guaranteed. We might be able to guarantee infinite creativity... but will you be able to invest in it? If you're not the one writing the game/movie/novel, why would the artist permit you to invest and reap the benefit of their creativity? Until recently, you could gain that power by owning key industries: the cinemas, the advertising agencies, etc. But those middle men are increasingly squeezed out; what would you offer that they can't get elsewhere? They'd cut your marginal return to the bone by playing you off against other people who have money to invest but nothing of their own to invest in. In the best case, the resources would be distributed well enough that you could write your own novel, or whatever creative project, and not care about who will pay for it. In the worst case, you could find that all of the money ends up in the hands of a very few, who would out-compete you for any investment opportunity that arose.
acchow 5y ago
> Capitalism is predicated on the idea of perpetual and infinite growth See Japan? They're doing fine without growth.
notanzaiiswear 5y ago
Growth means that things get better. If you build better houses and cars, that is growth. Likewise if you cure more cancers. Economic growth does not imply consuming more resources. Developing a more fuel efficient car is also growth, for example.
- nicoffeine 5y ago
  Growth only means that there is more economic activity. If you reduce the quality of houses and cars but increase the price and your profit, that's also growth. If you cure cancers, that's bad for growth if you made more profit on treatments than the cure. > Developing a more fuel efficient car is also growth, for example. One of the major economic concerns about electric vehicles is that they have fewer moving parts and maintenance requirements, and might cut auto worker jobs in half.[1] I don't think the article got into numbers of job loss in gas stations, oil production and distribution, etc. So the most fuel efficient car possible may prove to be bad for growth in general. > Economic growth does not imply consuming more resources. Technically true, but in practice, if your product is not 100% recycled and 100% carbon negative to produce, you'll need to extract more of the earth to sell it. I will say that with some industries like meat production potentially moving to vats and away from farmed animals, there is a possibility. But you also have to consider the economic damage of eliminating cattle farmers, farm vets, slaughterhouses, meat packing, etc. [1] https://www.nbcnews.com/business/autos/electric-vehicles-pose-real-risk-autoworkers-halving-number-people-required-n1060426 https://www.nbcnews.com/business/autos/electric-vehicles-pos...
  - notanzaiiswear 5y ago
    "If you cure cancers, that's bad for growth if you made more profit on treatments than the cure." That is simply wrong. If you cure cancers, you save human lives, which is worth a lot of money. You are basically falling for the broken window fallacy - breaking a window is like somebody getting cancer. You think the economy benefits because lots of doctors, nurse, undertakers and whatnot get business out of it. But you are wrong. "Technically true, but in practice, if your product is not 100% recycled and 100% carbon negative to produce, you'll need to extract more of the earth to sell it." Another fallacy to think the economy only consists of producing things. Also you have to think longterm - sometimes it can be worth it to replace old things with more efficient things, sometimes not.
betwixthewires 5y ago
You do not understand what a capitalist means by "infinite growth." We do not need to completely re-think our economy because people are about to feel the consequences of their bad financial decisions.

gruez 5y ago

>Capitalism is predicated on the idea of perpetual and infinite growth First sentence from wikipedia: >Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. How does this predicate "on the idea of perpetual and infinite growth"? I mean, it'll be nice if the economy grew infinitely, but I'd still want to invest my money into production even if that didn't exist.

nicoffeine 5y ago
Modern capitalism depends on fiat currency and investment from those with capital. Currency loses value over time to inflation, so investors are always trying to get better returns against a baseline. Even at 3% per year, consumption has to double every 16 years if investors only want to break even. So, it's not "nice" if the economy grows, it's an absolute requirement to keep investors interested.
- nicoffeine 5y ago
  For the downvoters: "The single most important question in investing this year is whether the rampant inflation of the moment is temporary, as the Federal Reserve believes, or marks a historic shift. I argued last week that we are on the cusp of a major change and long-run inflation is now more likely." https://www.wsj.com/articles/if-inflation-is-coming-here-is-what-to-do-about-it-11620694235 https://www.wsj.com/articles/if-inflation-is-coming-here-is-...
  - betwixthewires 5y ago
    Why have I been seeing so much attention given to voting in threads on HN these days? Is there an influx from Reddit or something by a bunch of people who didn't take the time to learn the etiquette here? We speak only when there's something to be said, vote only based on the quality of the comment and move on. You don't need to address downvoters. If you had something to address them with it should've been in your original comment, then maybe they wouldn't have downvoted.
    - nicoffeine 5y ago
      > Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.
      - betwixthewires 5y ago
        What in particular is this in response to?
        nicoffeine 5y ago
        If you’re going to arbitrate etiquette, lead by example. Following part of it when it suits you defeats the point of bringing it up.
        betwixthewires 5y ago
        OK, but what in particular did I say that you felt the need to quote rules?
- imtringued 5y ago
  It isn't. People keep credit (aka bank money) in their bank accounts even at negative nominal interest rates. The problem is the insistence on positive interest because of moral attachments to the idea of frugality. Central banks target positive inflation because of the inability to cut interest rates below zero.
- gruez 5y ago
  >Currency loses value over time to inflation, so investors are always trying to get better returns against a baseline. Even at 3% per year, consumption has to double every 16 years if investors only want to break even. The math does not check out. 1.03^16 = 1.6, not 2 like you'd expect if it was "double". Moreover, inflation only necessitates that the money supply grow infinitely, not economic activity and/or resources. If we doubled the bank balance of everyone overnight, and the price of everything doubled, that's not really "growth" in any meaningful sense.
jfengel 5y ago
Would you be able to invest? I'm trying to work through the thought experiment. Suppose we've reached a point where the population has stabilized and all natural resources were being used at the sustainable rate. What production would you be able to buy? Would the current owners sell it to you? Would you be able to accumulate enough capital to induce them to sell? Obviously the definition of capitalism doesn't include "perpetual growth", but it does seem like a reasonable extrapolation about the world. At the time capitalism was defined, indefinite growth was realistic, and easy to assume axiomatically. I'm not sure what capitalism looks like if that assumption fails. I'm also not sure what it looks like for that assumption to fail, since "production" also includes creativity which isn't limited by natural resources. You can always invest in new books, video games, etc which are effectively unlimited.
- bluGill 5y ago
  I'd invest in something more efficient. If I can find a better way to turn the natural resources into something else can make a profit. Or I'd invest in games/movies/art. People are always interested in something new even if the plot 3000 years old.
  - jfengel 5y ago
    In your first paragraph, that's the point that the OP was making: you're assuming that we won't reach a point of diminishing returns. That's not guaranteed. We might be able to guarantee infinite creativity... but will you be able to invest in it? If you're not the one writing the game/movie/novel, why would the artist permit you to invest and reap the benefit of their creativity? Until recently, you could gain that power by owning key industries: the cinemas, the advertising agencies, etc. But those middle men are increasingly squeezed out; what would you offer that they can't get elsewhere? They'd cut your marginal return to the bone by playing you off against other people who have money to invest but nothing of their own to invest in. In the best case, the resources would be distributed well enough that you could write your own novel, or whatever creative project, and not care about who will pay for it. In the worst case, you could find that all of the money ends up in the hands of a very few, who would out-compete you for any investment opportunity that arose.

acchow 5y ago

> Capitalism is predicated on the idea of perpetual and infinite growth See Japan? They're doing fine without growth.

notanzaiiswear 5y ago

Growth means that things get better. If you build better houses and cars, that is growth. Likewise if you cure more cancers. Economic growth does not imply consuming more resources. Developing a more fuel efficient car is also growth, for example.

nicoffeine 5y ago
Growth only means that there is more economic activity. If you reduce the quality of houses and cars but increase the price and your profit, that's also growth. If you cure cancers, that's bad for growth if you made more profit on treatments than the cure. > Developing a more fuel efficient car is also growth, for example. One of the major economic concerns about electric vehicles is that they have fewer moving parts and maintenance requirements, and might cut auto worker jobs in half.[1] I don't think the article got into numbers of job loss in gas stations, oil production and distribution, etc. So the most fuel efficient car possible may prove to be bad for growth in general. > Economic growth does not imply consuming more resources. Technically true, but in practice, if your product is not 100% recycled and 100% carbon negative to produce, you'll need to extract more of the earth to sell it. I will say that with some industries like meat production potentially moving to vats and away from farmed animals, there is a possibility. But you also have to consider the economic damage of eliminating cattle farmers, farm vets, slaughterhouses, meat packing, etc. [1] https://www.nbcnews.com/business/autos/electric-vehicles-pose-real-risk-autoworkers-halving-number-people-required-n1060426 https://www.nbcnews.com/business/autos/electric-vehicles-pos...
- notanzaiiswear 5y ago
  "If you cure cancers, that's bad for growth if you made more profit on treatments than the cure." That is simply wrong. If you cure cancers, you save human lives, which is worth a lot of money. You are basically falling for the broken window fallacy - breaking a window is like somebody getting cancer. You think the economy benefits because lots of doctors, nurse, undertakers and whatnot get business out of it. But you are wrong. "Technically true, but in practice, if your product is not 100% recycled and 100% carbon negative to produce, you'll need to extract more of the earth to sell it." Another fallacy to think the economy only consists of producing things. Also you have to think longterm - sometimes it can be worth it to replace old things with more efficient things, sometimes not.

betwixthewires 5y ago

You do not understand what a capitalist means by "infinite growth." We do not need to completely re-think our economy because people are about to feel the consequences of their bad financial decisions.