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The strongest argument is buried towards the end of the article and even then its not touched on directly. Due to compound interest, our financial system requi

The strongest argument is buried towards the end of the article and even then its not touched on directly. Due to compound interest, our financial system requires exponential growth. Exponential growth isnt possible in a finite world. Thats the fundamental contradiction woven into the fabric of our society. Perfectly effective capitalists may be able to stave off government intervention till they own everything but at that point growth will basically cease.

ajmurmann 3y ago
How finite is the world? Where will we stop making efficiency gains? Is colonizing the solar system impossible? Great breakthrough sound impossible till we make them. Yet, we have antibiotics, eradicated polio, invented the phone, the airplane and the internet and maybe soon the superconductor.
sublinear 3y ago
> Exponential growth isnt possible in a finite world. That the world and its resources are finite is irrelevant. You probably mean "finite economy". Resources and work done upon them may be the basis of cost, but the economy is not so tightly coupled to resources because cost is not equal to price. Price is whatever the market accepts. If we have a finite economy you're not wrong about this, but you're omitting a few corollaries. 1) A finite economy implies a zero-sum game. 2) "Exponential growth" is only exponential for a window of time. Nothing lasts forever. 3) Bankruptcy exists. It's the safety valve that releases the pressure of compound interest. So, for there to be exponential winners there must also be one or more losers. This allows for the growth you're skeptical of. You see this all the time on the stock market. "Growth" is most often money being moved around. Assume the trivial case where there's one "loser" and one "winner". If the loser is worth a lot more, a tiny drop in its value can be a massive win for the winner. If it keeps accelerating for a while it will look like "exponential growth" for the winner. As for bankruptcy, that loss is someone's gain. The value can be recovered and growth at any rate can still occur. Just because the loser couldn't keep up with their debt doesn't mean their assets aren't enough to pay it back plus interest with different people driving. Anyway, the total value of the world economy is not really finite. It doesn't go up just because of inflation, but also from new value being added. New value can be due to efficiency gains on work, not just the discovery of new resources. The rate at which new value is created is unpredictable though. Whew ok final nail here: before modern capitalism, economic systems of the past definitely had these same properties and successfully operated in scarce environments before the industrial revolution. Shuffling money around to keep things afloat is not a new idea. It might be the oldest idea we've got and all modern economic systems have this in common. What you quoted from the article is not a strong argument against capitalism. It's an argument for anarchy.
paulpauper 3y ago
Due to compound interest, our financial system requires exponential growth. what if the exponent of exponential growth gradually approaches zero. technically it is still exponential. that possibility is often ignored. Japan for example has been able to sustain itself by gradually transitioning from red-hot growth in the 70s-80s to near zero growth.
pdonis 3y ago
> Exponential growth isnt possible in a finite world Exponential growth in use of material resources isn't. But exponential growth in wealth is, because a given quantity of wealth does not require a fixed amount of material resources to achieve. Efficiency improvements can continue to drive that quantity down. The real strongest argument is one that the article does not even make (because it considers productivity gains to be a problem instead of a benefit): the huge productivity gains associated with technology improvment, drastically reducing the number of humans required to produce a given quantity of goods or services, should result in huge decreases in the price of the goods and services where the gains are made. For example, food production in the US today takes about 1 in 20 people; a century ago it was more like 19 in 20. That huge gain in efficiency should have resulted in a huge decrease in the price of food. Why did this not happen? Because of governments manipulating the money supply. The effect of this is to transfer wealth to the financial system (banks and other financial institutions) from everyone else. A key way this shows up is that prices stay the same or even increase, even though productivity improves greatly. That is the fundamental problem woven into the fabric of our society: so many aspects of our economy are now dependent on government manipulation of the money supply that there is no easy way to stop doing it. But we have to stop doing it if we want ordinary people to gain the benefits of increased productivity.

ajmurmann 3y ago

How finite is the world? Where will we stop making efficiency gains? Is colonizing the solar system impossible? Great breakthrough sound impossible till we make them. Yet, we have antibiotics, eradicated polio, invented the phone, the airplane and the internet and maybe soon the superconductor.

sublinear 3y ago

> Exponential growth isnt possible in a finite world. That the world and its resources are finite is irrelevant. You probably mean "finite economy". Resources and work done upon them may be the basis of cost, but the economy is not so tightly coupled to resources because cost is not equal to price. Price is whatever the market accepts. If we have a finite economy you're not wrong about this, but you're omitting a few corollaries. 1) A finite economy implies a zero-sum game. 2) "Exponential growth" is only exponential for a window of time. Nothing lasts forever. 3) Bankruptcy exists. It's the safety valve that releases the pressure of compound interest. So, for there to be exponential winners there must also be one or more losers. This allows for the growth you're skeptical of. You see this all the time on the stock market. "Growth" is most often money being moved around. Assume the trivial case where there's one "loser" and one "winner". If the loser is worth a lot more, a tiny drop in its value can be a massive win for the winner. If it keeps accelerating for a while it will look like "exponential growth" for the winner. As for bankruptcy, that loss is someone's gain. The value can be recovered and growth at any rate can still occur. Just because the loser couldn't keep up with their debt doesn't mean their assets aren't enough to pay it back plus interest with different people driving. Anyway, the total value of the world economy is not really finite. It doesn't go up just because of inflation, but also from new value being added. New value can be due to efficiency gains on work, not just the discovery of new resources. The rate at which new value is created is unpredictable though. Whew ok final nail here: before modern capitalism, economic systems of the past definitely had these same properties and successfully operated in scarce environments before the industrial revolution. Shuffling money around to keep things afloat is not a new idea. It might be the oldest idea we've got and all modern economic systems have this in common. What you quoted from the article is not a strong argument against capitalism. It's an argument for anarchy.

paulpauper 3y ago

Due to compound interest, our financial system requires exponential growth. what if the exponent of exponential growth gradually approaches zero. technically it is still exponential. that possibility is often ignored. Japan for example has been able to sustain itself by gradually transitioning from red-hot growth in the 70s-80s to near zero growth.

pdonis 3y ago

> Exponential growth isnt possible in a finite world Exponential growth in use of material resources isn't. But exponential growth in wealth is, because a given quantity of wealth does not require a fixed amount of material resources to achieve. Efficiency improvements can continue to drive that quantity down. The real strongest argument is one that the article does not even make (because it considers productivity gains to be a problem instead of a benefit): the huge productivity gains associated with technology improvment, drastically reducing the number of humans required to produce a given quantity of goods or services, should result in huge decreases in the price of the goods and services where the gains are made. For example, food production in the US today takes about 1 in 20 people; a century ago it was more like 19 in 20. That huge gain in efficiency should have resulted in a huge decrease in the price of food. Why did this not happen? Because of governments manipulating the money supply. The effect of this is to transfer wealth to the financial system (banks and other financial institutions) from everyone else. A key way this shows up is that prices stay the same or even increase, even though productivity improves greatly. That is the fundamental problem woven into the fabric of our society: so many aspects of our economy are now dependent on government manipulation of the money supply that there is no easy way to stop doing it. But we have to stop doing it if we want ordinary people to gain the benefits of increased productivity.