Re: Does capitalism really need growth to survive?

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

I will tell you where this discussion can really be heading.  The reason GDP, which
emphasizes quantitative expansion rather than qualitative development is because GDP is
given dominant importance because of international trade and finance.  Soverign credit
ratings and interest rate premiums and exchange rates are driven by GDP growth rates.  Since
the development of cross border finance under financial globalization, these measurements
become the whole game of competing for capital.  Nations declared GDP objectives and would
do everything to achieve it, including high eunemployment, to secure better terms in cross
border finance and better advantages in trade through foreign currency valuations.  Thus the
whole world pushes on quantative growth, not as matter of philosophy but hardball finance.
There is a way to make global capital become more attracted to locations of high development
rather than high quantitative expansion.  At present, capital tends to go economies of high
ginni coefficience (income disparity), for example.

Henry C.K. Liu

Sven R Larson wrote:

> Forgive me for asking, but where is this discussion really heading? This stuff is what I
> discuss with my introductory macro students.
> /srl
>
> "Forstater, Mathew" wrote:
> >
> > I agree Henry.  Put slightly differently, "growth" is not the same thing
> > as "development."  Development usually includes growth, but it is more
> > than that.  It should be said in this regard, that proponents of the
> > stationary state, from John Stuart Mill (whose short but prescient ch.
> > "Of the Stationary State" included in the first edition of his
> > Principles (1848) was the first case of a classical author urging that
> > society choose to have a stationary economy before it is compelled to)
> > to the Meadows (authors of the Club of Rome report) and Herman Daly,
> > have all argued that the economy and society would not be stagnant in
> > other respects--there would be cultural development, moral development,
> > political development, individual development, etc.  In fact, they argue
> > that a no-growth or no-expansion economy could be more dynamic in these
> > other respects.  Also, J.S. Mill confined his proposal to the
> > industrialized countries--as many proponents do today--arguing that only
> > when standards of living have reached a certain level can the emphasis
> > be taken away from production and put on distribution.
> >
> > -----Original Message-----
> > From: Henry C.K. Liu [mailto:hliu@xxxxxxxxxxxxxx]
> > Sent: Tuesday, April 30, 2002 1:58 PM
> > To: pkt@xxxxxxxxxxxxxxxx
> > Subject: Re: Does capitalism really need growth to survive?
> >
> > Economists need to learn the difference between growth and expansion.
> > GDP
> > denominated growth is often merely guantitative expansion.  Growth has
> > to do
> > with improved quality of life which was of economic concern breifly in
> > the
> > 60s, with notions of "limits of growth" being circulated.
> >
> > Henry C.K. Liu
> >
> > "Forstater, Mathew" wrote:
> >
> > > A lot of Marxist economics emphasizes the impossibility of a no growth
> > > capitalism.  "Accumulate, accumulate, that is Moses and the prophets!"
> > > "Accumulate or die!"
> > >
> > > If you are interested in the intersection of this Marxist notion and
> > > environmental sustainability, there is a decent edited book collection
> > > called "Is Capitalism Sustainable?" and an article a few years back in
> > > Rethinking Marxism called "Grow or Die."
> > >
> > > Georgescu-Roegen, who was one of the key economists to argue that
> > > economies operate in the physical world and therefore must obey the
> > laws
> > > of thermodynamics, actually did not agree with his student, Herman
> > Daly,
> > > who popularized the "steady-state economics" (here meaning what the
> > old
> > > classical economists called the "stationary state" and not what modern
> > > growth theory means by a steady-state.).  Georgescu-Roegen argued, I
> > > believe that a no growth system is impossible, not because the economy
> > > must grow, but because he believed the 2nd (entropy) law means that
> > the
> > > only possible system is a shrinking one!
>
> --
> Sven R Larson
> Ph.D.; Assistant professor of economics
> Department of Social Sciences, 22.2
> Roskilde University
> PB 260
> DK-4000 Roskilde, Denmark
> http://www.ruc.dk/english/