Why is Economic Growth so important?

[Karalysia]

Then there's still economic growth in post-capitalist economy. You don't mean that socialists do not produce?

Socialists produce. They do not however have the same problem of massive overproduction as capitalists do. Production is tailored to people's needs.

 

[Danielos]

Socialists produce. They do not however have the same problem of massive overproduction as capitalists do. Production is tailored to people's needs.

Like you mean the massive amount of weapons and nukes the Warszawa pact countries produced during the cold war?

 

[amadeus]

Socialists produce. They do not however have the same problem of massive overproduction as capitalists do.

You can say that again! *zing*

Production is tailored to people's needs.

But seriously... what does this mean? How can you avoid a problem of over/under-producing something? Let's say I decide I'm going to make beef tacos tomorrow... well, how is the central planning bureau supposed to know that I'm going to need beef, tortillas, lettuce, tomatoes, salsa, whipped sour cream, and shredded cheese?

 

[Hehehe]

http://www.youtube.com/watch?v=vVkFb26u9g8

 

[Gustave5436]

This is why capitalism is not compatible with a green, environmental society. In its very nature, it encourages obsessive materialism, overconsumption and waste of resources. Can any economist please explain how endless economic growth is possible on a planet with limited resources??

In the medium term, it is because human civilization uses only a tiny fraction of the total energy available on Earth. Economic growth is not just a component of capitalism; everything other than primitivism is either neutral or, in some cases (e.g. technocracy) in favor of continued, rapid development, and this includes environmentalists.

But seriously... what does this mean? How can you avoid a problem of over/under-producing something? Let's say I decide I'm going to make beef tacos tomorrow... well, how is the central planning bureau supposed to know that I'm going to need beef, tortillas, lettuce, tomatoes, salsa, whipped sour cream, and shredded cheese?

You filled out a requisition order six months ago, of course.

Stale joking about the inefficiency of authoritarian means of administration aside (which is incidentally rather ironic for capitalists, those living in glass houses should not throw stones and all that), food perishables, though, are only a tiny fraction of all production. Using statistical analysis to predict consumption, then producing a couple standard deviations more than that, is much more empirical and therefore orderly/practical than the indirect and extremely ineffective supply and demand "theory" of value. Much more significant components of production are non-perishable and/or much easier to scale closely to need or overproduce without waste, such as housing construction or electricity production (assuming nuclear power and, perhaps with future developments in chemical manufacturing, solar as well).

 

[Elta]

You can say that again! *zing*


But seriously... what does this mean? How can you avoid a problem of over/under-producing something? Let's say I decide I'm going to make beef tacos tomorrow... well, how is the central planning bureau supposed to know that I'm going to need beef, tortillas, lettuce, tomatoes, salsa, whipped sour cream, and shredded cheese?

Perhaps central planing should first make sure everyone has health care, housing and food.


You are aware that there are different levels of central planing right?


Why would ask such a bumbaclot of a question?

 

[amadeus]

Perhaps central planing should first make sure everyone has health care, housing and food.

Now name a centrally-planned economy that is able to provide those in sufficient quantities with comparable quality to that of the Western world.

 

[Elta]

Now name a centrally-planned economy that is able to provide those in sufficient quantities with comparable quality to that of the Western world.

*shrug*

Every nation has central planing, only to different levels. Norway does a better job at these things than the U.S. for example.


I suppose I'll need your definition of central planning first.

 

[BasketCase]

Why do Governments/People all over the world put so much stock in continuously growing the Economy?

Answer me this: which computer do you prefer, that AMD/Intel you're currently using to browse this and many other web pages....or the good old Atari 2600?

That should pretty much sum it up.

It must consume a lot of resources and will inevitably shrink/crash again so what's the point? Wouldn't keeping it on a stable level be better?

Depends how you do it. Advancing technology allows us to produce more and better stuff with less resources and less work.

As to the inevitable shrinking and crashing--you're absolutely right. To which I answer, so what. You know you're gonna die someday. It's inevitable. So, no point in living, right....? Rather than spend our entire lives in absolute poverty, most of us would prefer to spend at least a part of said life in relative luxury.

 

[Danielos]

Answer me this: which computer do you prefer, that AMD/Intel you're currently using to browse this and many other web pages....or the good old Atari 2600?

That should pretty much sum it up.

That doesn´t excuse the wasteful behavior of companies and people to upgrade their perfectly fine and functional computers every other year or so...

 

[amadeus]

That doesn´t excuse the wasteful behavior of companies and people to upgrade their perfectly fine and functional computers every other year or so...

Why is it wasteful? What do you think happens to those year-old computers?

 

[BasketCase]

That doesn´t excuse the wasteful behavior of companies and people to upgrade their perfectly fine and functional computers every other year or so...

You didn't answer the question. But then, seeing as how you're here, surfing the Web, I gather you don't use an Atari 2600. Question answered.

Side note: recycling one's computer every year is redundant, because people like you and me don't produce anything useful with our computers to begin with. Is yours analyzing star charts or quantum physics equations? Or doing financial estimates for AIG so they don't crash again? Probably not. More likely you're playing Modern Warfare 2?

 

[plarq]

Socialist production and economy will still grow, based on demand of the society. Anti-capitalism is not anti-development, and green is not socialism.

 

[Zelig]

That doesn´t excuse the wasteful behavior of companies and people to upgrade their perfectly fine and functional computers every other year or so...

I suspect they generally have some sort of cost analysis, and don't just upgrade for the heck of it.

Side note: recycling one's computer every year is redundant, because people like you and me don't produce anything useful with our computers to begin with. Is yours analyzing star charts or quantum physics equations? Or doing financial estimates for AIG so they don't crash again? Probably not. More likely you're playing Modern Warfare 2?

Well, it depends what you calsify as "useful". I use my computer for a lot of work-related activities, and tend to upgrade when the cost of upgrading will reasonably pay itself back via increased productivity.

(FWIW, as a result, I'm using a 5-year old computer, with several 24" monitors, and a 30" soon to be added to the mix. Compiling/rendering/processing speed is starting to be a problem though, will probably need a new CPU within the next couple years, if nothing breaks down by then.)

 

[Bill3000]

Well, ideally at least, it increases the wealth of at least some parts of the population without leaving anyone worse off.

 

[Cheezy the Wiz]

No reason to ask that of an economist, unless you want to embarrass them. They avoid answering "non-technical" (meaning: embarrassing) questions.

I don't know if it is, or not, a cultural trait, but most people, individually, have expectations of seeing their lives improve. And promising them that is a most convenient political strategy, which only reinforces such expectations. In order to track the results of those promises an proclaim success (or complain about the failure of political opponents) metrics must be found, and that's where economists come in: inventing and tracking those metrics (increasingly virtual constructs, it seems to me).

Historically many societies had gone for the "stable" political goal - I dare say that it was the norm before the modern age. Emperors wanted stability because they essentially wanted to retain the power which they already had! State-sponsored religions and "ethics" promoted the idea of stability. But war, natural disasters, and population growth all worked against that goal.

As the world transited to the modern age, after the industrial and political revolutions started in the 18th century, material wealth increased dramatically but so did population, initially, and individually most people remained poor well into the 20th century, so "growth" was naturally a goal. the political revolutions, which increased the influence of the population over government policy, naturally reinforced that.

But, do we not live (in some parts of the world) on a "post-modern" world? Population finally ceased its explosive growth. Materially, some societies have had the resources to be very well-off since the 1950s. It may be therefore surprising that the idea of "growth" remains so strong. My hypothesis is as follows: the promise of growth remains a very useful, powerful distraction, when now when failure to deliver is plain for all to see. Without it people would have to consider what to do with existing resources, which inevitably would lead to questions about distribution. And just as rulers promoted the idea of "stability" in the pre-modern world because that was convenient for those who were on top, they now promote "growth" because it is convenient to maintain the present hierarchy ("social peace") where they are on top.

CFC is most fortunate to have your critical eye among its members. I've been more or less drawing the same conclusions myself that you did.

I also detect a bit of Alexander to Actium in this post. Excellent book.

 

[JerichoHill]

If you would rather have a world where folks are progressively worse off, go to Somalia.

 

[Neonanocyborgasm]

Why do Governments/People all over the world put so much stock in continuously growing the Economy? It must consume a lot of resources and will inevitably shrink/crash again so what's the point? Wouldn't keeping it on a stable level be better?

Serious question, as I know there are some 'Economist' type people on here.

There are so many reasons to have economic growth, I couldn't possibly mention them all.

Some reasons:

* The more capital you have, the more prosperous your society can be, and the better lives your nation's people can live.
* The more capital you have, the more strength your nation has to project power internationally. If you have hostile neighbors or competitors, this keeps them at bay.
* If your population is growing, you need to keep pace by expanding the economy, or else you will have a lower per capita income, which will translate to poorer and more miserable lives for your people.
* Economic growth allows you to invest in things that will lead to a better life, such as new technologies, which may in turn lead to more economic growth.

 

[bender19]

The boom bust capitalist cycle aside long term economic growth is due to technological progress. You might as well ask why is improved technology important.

 

[El Koeno]

If you would rather have a world where folks are progressively worse off, go to Somalia.

While I agree that economic growth has brought many good things, and I think there is an excess of mindless bashing of capitalism in this thread, I'll have to say that your answer doen't do. No one is actually saying we need to get progressively worse off.

Also, the OP doesn't ask why economic growth is desirable; it asks why it's so important. As an example, take a well-developed Western economy. What if there is a measure that cause 1% less growth, but at the same time it gives us more leisure time, and a more equal distribution of wealth. This is not a bad proposition, but people will always shout: "it's bad for the economy!". Why is limiting growth always bad for "the economy"? The economic system is there to provide us with the things we need. If a more equal distribution of income is what we need, an intervention that limits growth might also be good for the economy. Right?