Why is constant growth an imperative under capitalism?

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Scallywag
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Sep 4 2015 22:46
Why is constant growth an imperative under capitalism?

So I've read a few things about this (most of JBF's Ecological rift, as well as 'what every environmentalist needs to know about capitalism' both the book and the article on monthly review, the environmental sections of the anarchist FAQ, Naomi Klein's this changes everything and the introductory guides on libcom), there all really good at helping me understand the consequences of growth, but I am still having a really hard time trying to understand why its necessary under capitalism.

I know that competition and 'survival of the fittest' means that companies have to expand in order to avoid being outcompeted, and I know the system is also driven by self interest and the desire for capitalists to accumulate private profits.

I am not sure why the economy as a whole has to continuously expand however, and I am not sure either why money has to keep becoming more and more money in order to stay profitable or wealthy?

Anyone able to offer any help with this?

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Steven.
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Sep 4 2015 23:05
Scallywag wrote:

I know that competition and 'survival of the fittest' means that companies have to expand in order to avoid being outcompeted, and I know the system is also driven by self interest and the desire for capitalists to accumulate private profits.

The first bit of this is definitely the case. On the second bit, it's not just "desire", it is written into law that companies must maximise profits for shareholders. But it's worth pointing out that this doesn't just mean "profit", but more just means growth and accumulation. So many even huge companies like Amazon or Uber may not even make profit, but will reinvest earnings to grow.

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I am not sure why the economy as a whole has to continuously expand however, and I am not sure either why money has to keep becoming more and more money in order to stay profitable or wealthy? Anyone able to offer any help with this?

well basically the latter is a result of the former. If all enterprises and firms need to grow to survive (or if they do not they are superseded by other firms which have grown), then the economy will grow as well. And where there is growth and profits, more investment will flow to it, to make more money. So countries compete to grow their economies more to attract more investment, to grow their economies more…

This is not to say of course that economies do always grow: periodic crises where economies contract are just part of business as usual.

Does this answer your question, or are you getting something else?

Scallywag
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Sep 4 2015 23:13
Steven. wrote:
Scallywag wrote:

I know that competition and 'survival of the fittest' means that companies have to expand in order to avoid being outcompeted, and I know the system is also driven by self interest and the desire for capitalists to accumulate private profits.

The first bit of this is definitely the case. On the second bit, it's not just "desire", it is written into law that companies must maximise profits for shareholders. But it's worth pointing out that this doesn't just mean "profit", but more just means growth and accumulation. So many even huge companies like Amazon or Uber may not even make profit, but will reinvest earnings to grow.

Quote:

I am not sure why the economy as a whole has to continuously expand however, and I am not sure either why money has to keep becoming more and more money in order to stay profitable or wealthy? Anyone able to offer any help with this?

well basically the latter is a result of the former. If all enterprises and firms need to grow to survive (or if they do not they are superseded by other firms which have grown), then the economy will grow as well. And where there is growth and profits, more investment will flow to it, to make more money. So countries compete to grow their economies more to attract more investment, to grow their economies more…

This is not to say of course that economies do always grow: periodic crises where economies contract are just part of business as usual.

Does this answer your question, or are you getting something else?

Yes cheers, economics really isn't my thing at all though so I have trouble trying to understand the logic of all this, just sounds like madness to me really lol.

One last thing though I meant to ask, why periods of slow or no growth means that the system is in crisis

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Steven.
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Sep 4 2015 23:18
Scallywag wrote:
Yes cheers, economics really isn't my thing at all though so I have trouble trying to understand the logic of all this, just sounds like madness to me really lol.

of course it is mad, however the general view is that "there is no alternative"!

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One last thing though I meant to ask, why periods of slow or no growth means that the system is in crisis

I'm going to bed so not got time to properly respond now. But just to say I wouldn't say that "the system is in crisis", as periodic crises are essentially part of the capitalist system. Hopefully someone else can step in and say more on this point…

Edited to add, this article is quite good demystifying common economic and crisis jargon from a working class perspective: https://libcom.org/library/proles-guide-recession-economics-truth-wildca...

Scallywag
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Sep 5 2015 00:27

Another thing I have some difficulty understanding is how a states economy and economic growth ties in with the private economy since corporations aren't state owned and are international.

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Auld-bod
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Sep 5 2015 06:56

Scallywag #5

‘Another thin I have some difficulty understanding is how a states economy and economic growth ties in with the private economy since corporations aren't state owned and are international.’

My understanding of capitalism is fairly rudimentary though I’ll have a bash at answering this question.

In this instance, ‘the state’ is best looked at as a stabiliser and arbiter of internal disputes (between competing sections of the ruling class and between capital and labour) in a modern capitalist economy.
With the growth of international capitalism nation states compete for the capital investment these companies bring. The UK has a number of these firms and hopes to sustain or increase its share by providing the best opportunities for the return on the ‘foreign’ investments. (In reality capital has no ‘home country’, just as the working class has no country, as both their interests lie in the material improvement of their conditions.)

Historically the state has nationalised private industries only because they were failing to provide the infrastructure needed to maintain the system. The UK is a good example where clapped out enterprises were taken over, pensioned off or rejuvenated and given back to private capital. Presently the NHS is being cherry picked.

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Steven.
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Sep 5 2015 11:02
Scallywag wrote:
Another thing I have some difficulty understanding is how a states economy and economic growth ties in with the private economy since corporations aren't state owned and are international.

It's not states which have economies as such, it is nation states, i.e. countries. And while many corporations are international they are still based in one country (or offshore tax haven) where they need to pay their tax (well, in theory!). Although what you will normally get with multinational corporations is that they will have arms existing in every country they operate in, but many of those will have to essentially pay "fees" to their parent company, which may be based in a tax haven. Hence how companies like Starbucks have paid zero tax in the UK, because Starbucks UK technically makes no profit, but they do pay tens of millions of dollars a year to Starbucks global.

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Tyrion
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Sep 5 2015 17:21

Scallywag, consider the impact that capital accumulation has on the government that controls the territory that the businesses in question are based in. The state expropriates a certain portion of a company's profits in the form of taxation, and so how those companies are faring financially can have a dramatic impact on the government's own wealth and whence its strength and ability to function. This relationship between accumulation and tax revenue extends beyond taxes that come directly from businesses and to taxation in general; after all, if profits are low and companies cut investment in variable capital (i.e. lay people off), then how much tax revenue is the state going to get out of people who doesn't have any income themselves? And this touches on another of the serious consequences of capital abandoning a country for somewhere with a more "business-friendly" environment, which is the disastrous impact that this has on the working class of the former country in a world in which everything is mediated by price and so the social upheaval that the state may be more likely to face. So in light of that, it's no surprise that making whatever area a "good place to do business in" is treated as such a universal neutral principle by politicians.

RC
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Sep 5 2015 17:57

Why does capitalism have to grow? Simple answer: capital is growing value. It’s strange if you put it as: why does growing value have to grow? If you know what capital is all about, the idea of capitalism without growth doesn't make sense. The reason growth is necessary is because that’s the point: every sum of money made, every profit earned, is merely money waiting to be invested again. In Marx's words: “The final result of each separate cycle, in which a purpose and consequent sale are completed, forms the starting point for a new cycle.”

The expansion of capital has no limit. The purpose of capital is never fulfilled and never finished. Capital is a process, the growth of the power to command all means of production, to get the possibility of accessing wealth in all its forms, but accessing it only in order to increase this power.

The purpose of this economy is not to produce useful goods. The sole aim of production is to generate the power to get hold of everything needed to increase this power. Capital is this growth of money for its own sake. That's the absurdity of this economic system.

All other economic roles and interests are mere functions in this movement of capital. The production of goods, the income of workers, the wealth of nations ... everything is either a means for increasing capital or nothing at all.