Growth vs Prosperity

["Geoff Edwards" <g.edwards@xxxxxxxxxxxxxxx>]

John

I am troubled by your claim that growth in living standards is 'the
indisputable goal of all economic endeavour'. This is a large claim. Growth
(meaning an increase in per capita consumption of goods and services)
appeared as an objective of public policy only after 1950 and then as a
stake in the Cold War rivalry between the USA and USSR. I would have thought
that there are several legitimate alternative goals of economical activity:
such as prosperity for all, eradication of poverty, easing of pain and
suffering, construction of civic amenities, establishment of the conditions
for future economic activity or even simply employment.

Also, the claim that an increased rate of economic activity is the goal of
economic activity has a somewhat tautological flavour to it and overlooks
the alternative conception that economic activity is a tool to allow mankind
to achieve the goals that it sets for itself. This alternative conception
steers economics itself as a discipline away from being a study of an
autonomous market powering growth for the sake of it, into a study of how
society can organise economic activity to achieve its goals.

Another problem if one equates growth with the goal of economic endeavour is
that this can be sustained only until a limit of the capacity of the earth's
resources to fuel growth is reached. There is good scientific evidence that
we have already passed that point - and China and India have yet to claim
their full share as they industrialise. For example, there is good evidence
that the peak of oil production is only 10 years away.

My view is that another chapter needs to be added to Keynes' GT to
accommodate the new insights we have today about the magnitude of human's
footprint on the earth's resources, for demand / consumption cannot be fed
indefinitely and an economy that relies on continually increasing
consumption is unstable and unsustainable.

Regards


Geoff Edwards
PhD Student
Griffith University
Brisbane, Australia



 -----Original Message-----
From: 	pkt-owner@xxxxxxxxxxxxxxxx [mailto:pkt-owner@xxxxxxxxxxxxxxxx]  On
Behalf Of John Vertegaal
Sent:	Friday, May 16, 2003 10:23 AM
To:	Gunnar Tomasson
Cc:	POST KEYNESIAN THOUGHT
Subject:	Keynes' Legacy


Gunnar Tomasson wrote:

>I don't equate Keynes with either his "legacy" or "followers".

>In the post-Bretton Woods era, his "legacy" has been transformed by
>self-proclaimed "followers" into the notion that the U.S. performs a
>useful function as World Engine of Growth through the spill-over of
>Excess Domestic Credit Creation into a Deficit on External Goods and
>Services account now running at about $500 billion on an annual basis.

Interesting comment Gunnar, that at least may have put me back on your
wavelength.  In a circuitist paradigm: capital creation = credit creation
= potential growth, that is realized through the subsequent resolution
of capital/credit (which can only happen on the retail level).
  This circuit reflects a dynamic equilibrium potential.  Bringing in
foreign trade doesn't really matter, as this is not going to change the
above principle.

So a growth in living standard, the indisputable goal of all economic
endeavour, requires the _resolution_ of capital/credit.  Furthermore,
this resolution has to proceed within the time frame set by creditors;
thus whether this is happening via the round-about way of foreign trade
is critical.  And if it isn't, a paradigm that identifies capital/credit
as an engine of growth doesn't recognize that it's robbing Peter to pay
Paul.  *Capital is nothing but resolvable debt*

Without going into a lot of extraneous details, but just relating the
principle to your comment; it should be obvious enough that if capital/
credit creation is no direct engine to growth domestically, neither can
it be so abroad.

John V