Capitalism,Economy, Growth, and limits to all...

Discussion in 'Economics' started by jsv416, Nov 21, 2008.

  1. jsv416


    I have been thinking about this for the past couple of weeks and I need someone smarter than me in the realm of Economics to clarify some things for me.

    My assumptions of a capitalistic economy (society)
    1) A "healthy" capitalistic economy requires sustained year over year growth at healthy levels ( not to fast not to slow).
    2)An economy has to grow in order for new people coming into the work force to be able to work. Otherwise unemployment would steadily increase year over year if an economy is stagnant and no new jobs are available.
    3) There are more people coming into the work force than exiting the work force at all times. I assume this simply because the population of the United States and the world for that matter has a growing population.
    4) For an economy to continue growing over a long period of time (100's of years), and acknowledging that there will be booms and busts along the way, doesnt there need to be an infinite supply of raw materials and ENERGY to sustain reasonable growth year over year? Isn't there a point at which population starts to grow faster than an economy can grow to sustain that very population and give it a decent standard of living, due to scarcity of ENERGY and raw materials? Doesn't it at some point get to where the limits of growth are reached under all currently available sources of energy and an economy must "reset" in order to find a new source of energy to sustain growth into the future?

    I am talking theory here, I am not saying that this is happening now, I am just asking if my assumptions are true? I acknowledge that the above is overly simplistic, but I just want to see if my basic premise is correct.....
  2. 1) Yes.
    2) Unemployment will remain static if the population ages and retires at the same rate that children become working adults.
    3) Due to immigration, legal and illegal.
    4) Raw materials are indeed immaterial if there is no demand for what the workers can produce. In a manufacturing economy with a nationalistic enterprise priority, there is no point at which growth cannot be sustained.

    What is happening now is due in large part to the Federal Reserve and global free trade, which has exported our living-wage jobs abroad to take advantage of cheap labor, but while eliminating the good domestic jobs that once provided the high income to buy those middle-class goods. There is no shortage of workers. There is only a shortage of living-wage jobs in the manufacturing base, which makes things on a value-added basis, which means suppliers that makes things for other suppliers, that supply other suppliers, that supply other suppliers, until all the pieces reach the final assembly point. Service economies cannot do that, and are not sustainable. That is where we are now.

    You cannot do business with people who don't have any money.
  3. jsv416


    Thanks for the response,

    In regards to 4)

    I don't see how it is possible for any economy to grow year over year indefinitely without there being supply constraints on raw materials and energy at some point in the future.

    If populations and economies have a consistent growth rate year over year, and the amount of energy we have by conventional methods is finite, there has to be some point where growth is unsustainable.

    That being said, if an economy has a "sustainable" source of energy, that can constantly renew itself, isnt that the only way for "sustainable" growth for the long term?


  4. Some of your questions in #4 illustrate why your assumption in #1 can't hold. Boom/bust is written into the very fabric of natural process, trying to prevent those cycles in economics just leads to the kinds of dislocations we're seeing today.
  5. achilles28


    Well said.

    Energy is the lynch-pin.

    Replace that with Free Energy, economic limits on growth become boundless.

    Space Exploration, Colonization etc.

    Huge swaths of the population could live completely off-grid, in rural communities. Once the land, tractor and house is paid-off, everything is free.

    Free food, free transport, free shelter, save the sweat off your brow.

    Government can't have that!
  6. Using "off grid" in the metaphorical sense, this used to happen, regularly. History of western civ is of mass migration to one off-grid continent after another (yes I'm ignoring local populations that provided little more than speed bumps for the spread of western "civ").

    Now, there's nowhere left to run to, and I'm fairly confident that's not healthy. So now what?

    I worry - and I know this an incredibly non-PC and rather un-humanist thing to say - that if we're not taking, we're being taken.