How can a country’s economy apparently grow year on year without limit, and why is this thought to be desirable?
Richard Saunders, Dagenham
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Readers reply
If one takes the definition of an economy as the one based on gross domestic product (GDP), it probably can’t and it certainly shouldn’t; the pursuit of perpetual growth is destroying our planet. Such a model takes no account of parenting, care for others, voluntary activities and general wellbeing. We need a different model which is broader and more human. Kate Raworth’s Doughnut Economics is a good starting point. BigBear2
It isn’t and it can’t. More and more people consuming more and more resources and generating more and more rubbish will soon be coming up against very hard limits. Shame; it’s probably the drivers of this who will be the last standing. basil29
It can’t, but it’s the capitalist model – good luck drumming up support for the/any alternative. It’s thought to be desirable because the process of “growth” results in an increase in “wealth”, although sadly most of this goes to entirely the wrong people (Bezos, Musk, Rees-Mogg et al) and almost none of it to those who need it. Rotwatcher
Nor does it go to those who earn it or deserve it. Nickynin
Economic growth is the only way to remove absolute poverty around the world. It has been phenomenally successful. PatPending
The “economy” isn’t a monolithic thing. The simplest way to describe it is to break it down to three components: productivity, credit and money. If you looked at each component, you probably wouldn’t find them growing year on year.
Is it desirable? In a credit/debt-driven economy, the cycles happens because people overspend when there’s too much credit, then they have to cut spending when the cycle turns the other way and people lose jobs and the standard of living decreases. The consequence of the growth in money supply is, over time, your money is worth less (this is inflation). So, no, it isn’t desirable for debt or the money supply to grow year on year, but perfectly healthy for productivity to grow year on year. DrPepperIsNotARealDr
Another big part of it is inflation. The target for most developed economies is 2%. It’s upward cycle. Profits up, pay up, prices up. Productivity is the real growth. Inflation is the perceived growth. Classyrc
I know this question provides an opportunity for a critique of the capitalist system, but the answer that stays away from value judgments about the merits or otherwise of capitalism is technological progress. Technological progress provides the ability to achieve greater outputs from a given level of input. Because new technology builds incrementally on previous technology, progress is theoretically limitless.
The distribution of income and wealth that has been created by this progress is clearly a mess and whether technology can continue to develop without creating ecological catastrophe is…
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