Can capitalism survive without constant growth?

[frish]

It's not clear what you're talking about.

Well - You say:
a process can continue by solely utilizing energy derived from Earth's daily solar input combined with geothermal emissions. We can call this the daily energy budget for Earth.

That seems to be to strict limit on 'sustainable' . If mankind can live from an energy source for
few hundred years - without problems -- then I would call that sustainable life.

The gen IV nuclear reactors ww.gen-4.org/Technology/evolution.htm do offer such a source,
so - once we learn how to build them, we have additional sources of energy.

BTW, I did listen to dr West TED lecture. Very interesting. Thanks for the tip.

Peter

 

[H2Bro]

so what exactly are the limits of growth (in the developed world) over the next 100 years?

That's a really tough question to just answer from the hip. My guess would be, obtaining enough liquid fuels cheaply enough to maintain current modes of economic activity. Right now our entire supply and transport infrastructure is based on gasoline / diesel engines. Fuel prices that keep growing will make a lot of activity unfeasible, i.e. importing oranges from florida if you live in New York. It can be done, but the price of oranges will go up, people will stop buying, or look for alternatives.

This goes across the board, especially with manufacturing. But there are flip sides to this - manufacturing could return to North America on a big scale, food production could be local, people might eat (god forbid) seasonal foods instead of assuming mangos and kiwis in winter are the norm. It's tough to say what the limit on TOTAL growth is, because as some industries decline, others grow up (You can read up on Creative Destruction, also from Schumpeter), what affects total growth is, I suppose, the market capitalization of various firms in decline or ascension - but even market cap is not based on real asset value, but estimated value.

Another possible roadblock to growth is economic inequality. If the majority of people can't afford the majority of goods because they can hardly get by, it's tough to grow new high tech businesses. You can get around this with a massive extension of household debt, but look where that got us in 2008. One very very Rich person simply doesn't buy enough bread-and-butter consumer goods to boost aggregate demand more than a dozen middle class folks.

other mineral resources are either abundant (i.e. iron) or substitutable(rare Earth's) or eventually can be gotten from space

Are rare Earth's substitutable? My understanding was that, because they are not, China has a strategic monopoly on them. There are economic theories saying that as the costs of extraction of certain resources increase, industries move to utilize different ones. Problem is there is not an unlimited variety of materials to make things like trusses out of.

Getting things from space is also problematic unless the price of metals gets really, really high, and the price of liquid fuels somehow goes down as well. Right now, if there was a 1kg nugget of Gold floating conveniently in a low Earth orbit, it would cost more money to send something up to bring it down than the gold is worth. It goes without saying that iron or REM's are even less feasible.

the avenues for growing per capita wealth:

- Manufacturing will progress to the point where the only costs for "stuff" are energy and materials

I guess you mean the only difference is that humans will not need to be recompensated for their efforts, because as it is the only costs of manufacturing are energy, materials, and labor. This is unlikely because ultimately people build and maintain those robots. The factory can get by with less people, but it puts more people out of work as well, so demand for those products can drop unless they are re-skilled. Also note that automation is the primary reason for worker productivity increases over the last few decades, so its less a matter of everyone producing more than it is where a similar amount of goods being produced by less people.

Here's where marxism comes in. The wages you pay to workers need only recompensate them for the education investments they undertake to get those jobs, therefore the rises in wages are not commensurate with rises in productivity. That's great for manufacturing owners, terrible for the majority of workers, and as you may have noticed income inequality is a huge barrier for growth.

-advances in health care enabling people to live longer healthier lives

Then we damned well better increase the retirement age!

 

[H2Bro]

That seems to be to strict limit on 'sustainable' . If mankind can live from an energy source for
few hundred years - without problems -- then I would call that sustainable life.

It is a very strict definition indeed. I'd call that 'hard sustainability' as opposed to something that can just last beyond the next 10 generations or so.

BTW, I did listen to dr West TED lecture. Very interesting. Thanks for the tip.

Peter

Dr. West is probably my favorite physicist that doesn't really do physics.

 

[Pythagorean]

The responses to this thread seem to fall into one of two categories. One is that Capitalism is the best system there is and the end is inevitable so just hang on for the horrifying decline. The other response wants to get into the semantics of the meaning of growth, sustainable, and Capitalism turning this into a question of linguistics.

Ryan was the only one who attempted to answer my questions.

The questions were is capitalism sustainable?

If so, how and why?

If not, what are some sustainable steady state alternatives?

I don't believe my answer fell into either of those two categories. My answer was that the core aspects of capitalism are sustainable, but the implementation of capitalism would have to evolve. I mostly talked about the how and why, though. And didn't explicitly answer your questions piecewise.

To your last question, there is no steady state. Steady-state is death. There are stable dynamics, but transitions must occur with an evolving society. But I don't see capitalism going anywhere without some major (and unlikely) behavioral revisions in human nature. The thing about capitalism is that it can encompass the transitions; it makes the most of them by being an adaptive (and competitive system).

 

[Jim Kata]

Thank you H2Bro for your analysis on sustainability. Your assessment that the current system which relies almost entirely on non renewable resources is unsustainable is right. You also hint at the core of the problem which is really the harder question to answer. People may say greed and avarice is just human nature, and I'm not claiming humans are altruistic, but it misses the primary driving force of human nature and that is incentives. IMO if humans are incentivised to do good they will do good, and if they are incentivised to do bad they will do bad. Why were there so many sub prime mortgages? The system incetivised this kind of lending. Why does Wall Street engage in so much dangerous speculation? The incentives of the system. So for long term sustainability the system needs to be changed from one which incentivises short term profit at the expense of sustainability.

H2Bro also hit on some of the solutions I've been thinking about. A kind of localization of the economy where communities become much more self sustaining, i.e. buy local. Another thing I was thinking about was maybe redefining the definition of corporation. Corporations want personage. They want to be vested with the right's and privileges of citizenship. Well then, they should also have to fulfill the obligations of citizenship. Such as, maybe tying their corporate charters if not to environmental neutrality at least to mitigated environmental impact through a carbon trade or something.

In order to protect against capital flight, you would probably have to resort to some extreme measures.

What are some suggestions to changing the incentives of the current economic system which promotes profits at the expense of all else?

Yes, I agree you can wait for the market to fix the problems on its own, but I don't think you would like to live through the the market's fixing of them. I mean when we run out of fossil fuels we can just return to the dark ages, but I would prefer if people had planned ahead instead of just waiting for the market to sort it out.

 

[BWV]

But these discussions presuppsose two very dubious propositions, A) that some group of people has the ability to successfully allocate resources in a more efficient manner than free markets in liberal societies and B) political processes will recognize this, discerning the "right" answer from competing plans and give this group the power to implement their plans (usually disregarding formalities like due process and other constitiutional liberties)

 

[Jim Kata]

But these discussions presuppsose two very dubious propositions, A) that some group of people has the ability to successfully allocate resources in a more efficient manner than free markets in liberal societies and B) political processes will recognize this, discerning the "right" answer from competing plans and give this group the power to implement their plans (usually disregarding formalities like due process and other constitiutional liberties)

Do we actually have free markets? It seems to me that many of the vital resources such as fossil fuels and commodities are controlled by a small group of companies and firms. In fact I am always a bit dubious of people and companies that preach the evangel of the free market since a lot of times it is these very same people who come begging for the government dole in the form of subsidies and bailouts when it is their turn to face market discipline. If you believe in free markets fine, but be willing to live by them and die by them. I know this is not possible because of systemic risk, but then what is the free market's response to systemic risk?

 

[frish]

Jim Kata: You say

Do we actually have free markets?
If you believe in free markets fine.

What are some suggestions to changing the incentives of the current
economic system which promotes profits at the expense of all else?


And by that you are leading us into same semantic trap, which you prepared with 'capitalism'.
========================================================
Indeed::

1) Free market. If USA would finally catch up, and following EU, starts charging tax on CO2 emissions,
leaving it to companies how they accomplish that - is it still a ' free market'? Some (including me) would say yes - since they just pay for what they took from the 'commons'. Other would say it is a subsidy for non-polluting producers.
Koch brothers would spend billions to prove that it is wrong to subsidize renewables.

So - If you believe in free markets you are hopeless victim of right wing sloganeering.

2) Which promotes profits ... . Every company goes after profits and that is OK.
Example: if society would introduce carbon tax then companies would minimize CO2 pollution IN ORDER TO increase their (final) profit (profit after taxes).

So--- in conclusion -- this 'debate is so fuzzy -- that I am seeing little sense to continue,

BUT - and I hope you will appreciate it, I will offer my final conclusion.
+++++++++++++++++++
Capitalism may be sustained for few more decades - but in the long run only socialism is sustainable.
Why ? Becouse goal is not 'most efficient' or optimal distribution of resources - but (as socialism says) it is to make people happy.
As resources are getting scarce, those who own land, mineral resources, water ..
tend to get rich and those who live through the work of their hands (proletariat) are getting unemployed,
as described e.g. here:>

Andrew McAfee: Are droids taking our jobs?
> http://www.ted.com/talks/andrew_mcafee_are_droids_taking_our_jobs.html
> and in book
Vonegut: Player piano.

This is not Ludism. There will be some new jobs in health, services and research, but most of useful work will be done by robots.
Since people are not that stupid any more, they will insist that products will get shared. They will not start dying of hunget in order to maintain 'optimal distribution' of goods.

So - final sustainable state will be 'to each according to his needs' -- but if anyone would dare
call it communism s/he will be persecuted or prosecuted or both.

 

[BWV]

Do we actually have free markets?

no country has ever been perfectly free markets, but what we have has worked just fine to make the Western world and several Asian countries rich

It seems to me that many of the vital resources such as fossil fuels and commodities are controlled by a small group of companies and firms.

Some places yes, some no. The markets for energy in the US and Canada are pretty open, with hundreds of companies producing energy. Eight years ago the expert consensus was that North America was running out of natural gas and now, thanks to technology no one anticipated, we have 100+ year supply.

In fact I am always a bit dubious of people and companies that preach the evangel of the free market since a lot of times it is these very same people who come begging for the government dole in the form of subsidies and bailouts when it is their turn to face market discipline.

Sure companies look for handouts and special protections from government, but that does not justify a blanket ad hominem argument

If you believe in free markets fine, but be willing to live by them and die by them. I know this is not possible because of systemic risk, but then what is the free market's response to systemic risk?

now you are jumping off topic. systemic risk refers to the interrelation between banking systems and money. Given that the financial sector is unique in its ability to affect money supply, some regulation is required.

 

[BWV]

To be clear, socialism generally refers to state ownership of the means of production - a definition that hardly anyone who calls themselves a socialist these days really believes in, the idea being thoroughly debunked in economic circles and in practice by everyone who has ever tried it. The key problem is that no entity can either obtain or process the information required to run a centrally planned economy because the information is dispersed among its individual members. Furthermore this entity would require near-dictatorial powers as it would have to regulate and control nearly every aspect of a citizen's life. (this was Hayek's criticism, i.e. the Road to Serfdom or The Use of Knowledge in Society)

Capitalism is not inherently incompatible with a generous social welfare system - and basically every socialist political party in existence today believes in a regulated free market with generous welfare policies

 

[ImaLooser]

As a society we are burning through fossil fuels pretty darn quick. This isn't really taking a loan out, rather, our genetic grandparents left us a hefty inheritance and, like some 22 year old, are buying ferraris and hookers left and right. The inheritance simply won't last forever.

So, is capitalism sustainable? No, it isn't. Capitalist development is predicated on returns. We can't get returns on the daily energy budget of Earth because of conservation laws.

It is possible to get return on investment without excessive consumption of resources. Hollywood movies, computer games, etc.

 

[256bits]

It is possible to get return on investment without excessive consumption of resources. Hollywood movies, computer games, etc.

Possibly.
Just take the internet though for example. It is an energy hog and not as 'green' as would be expected.

http://www.nytimes.com/2012/09/23/t...ts-of-energy-belying-industry-image.html?_r=0

Worldwide, the digital warehouses use about 30 billion watts of electricity, roughly equivalent to the output of 30 nuclear power plants, according to estimates industry experts compiled for The Times. Data centers in the United States account for one-quarter to one-third of that load, the estimates show.

Just thought I would throw that into counter any belief that being green does not have an impact upon resource usage.

 

[nitsuj]

Sure, but you aren't saying the Earth could support 7 billion capitalists or 12 billion socialists, are you?

lol, I'll take that.

Of course it can, if I presume socialists are fine with eating less and not messing with the chemical balance of Earth much.

joking aside it's a weak connection; that capitalism is cannibalistic. In fact I think the opposite. capitalism is a going concern, no different than an individual business that must be able to "adapt" to changes in the "environment" (pun).

This is nothing new to capitalism, we maybe so lucky that capitalism will continue to provide...for a profit of course .

The "Pandora's Box" in capitalism is "for profit". Of course states govern this as best they can, balancing the ideals of capitalism / socialism.

That said isn't the OP asking from a consumer product perspective, and for that I'd say we may not always have "more" but we will always have "better", and that's thanks to capitalism & that is economic growth.

 

[mheslep]

But in the process of growth you use up resources that don't come back when you contract.

Yes, some resources like fossil fuels don't come back.

In the process of growth improvements come about, like telephones, computers, LED lighting, vaccines, efficient farming, better batteries, the air plane, plural societies. Improvements, being ideas, can't be used up and don't go away with contraction.

 

[nazarbaz]

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. Capitalism is essentially an engine that creates more "wealth" from less resources. The capacity to adapt is its biggest strength : it uses any means available to generate riches.
The capitalism we know is only a case of a much larger domain : economical systems. Its ideologies and oppositions (like that of government and individual) are superficial. To quote Gilles Deleuze, it's an "axiomatic of decoded streams" that uses whatever it finds to grow and multiply. To some extent, the system is not built on the sustainibility of resources but on the ability to create new ones : money is the most important example. So now we create money from money in a world of symbolic machines that rely less on physical inputs than on imagination : and that is the real and imminent problem.

 

[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