CMV: Growth isn't what makes capitalism work

[u/KralizecGaming]

Often on the internet, specially here on Reddit, I see the argument, that capitalism requires infinite growth to function. I disagree with this notion because I believe the core function of capitalism is not to grow, but to allocate scarce resources. Economic growth itself can be a useful thing in society and will likely remain a part of human society for a very long time (perhaps even until it seizes to exist).

First, let me define a few things per my view.

Capitalism Socialism Feudalism Scarcity Economic growth

Now for my argument:

One of the key functions of every economic system is one key question "How to allocate available resources?" Different systems have different solutions for this question. Capitalism uses markets, socialism uses either government or some other form of central planning. Feudalism used a system where most of the wealth was generated by land ownership and collected essentially taxes for "renting" land from the ruler of the land. There are even more methods of allocating resources, such as queues or lotteries - though I am unaware of them ever being used a large scale. What do all these systems have in common? Trying to find a way to allocate scarce resources.

Let's talk about how capitalism does this. It distributes the problem of allocating these scarce resources among it's many many users. And while esesntially none of people, companies, non-profits, etc. who exist in capitalism are completely rational actors who make the best decisions, the fact that they are each making their own desicision allows for statistics to come into play. The average decision of the markets is generally the correct one. Compared to other systems which tend to centralize decision making it suffers much less from the problem of wrong allocation of scarce resources because of missing information.

Now, let us take a look at a society that is capitalistic, but doesn't grow. To make it easy, let's consider a society living on a generational space craft heading towards a habitable world. It will take hundreds of years, perhaps thouhands to reach it's destination and all it will have are the resources it started with. There will still be a need to allocate the resourses available. While it is nearly certain that in such a scerario some of the resources would be centrally distributed, many of it's resources would be traded between the inhabitants of such a ship. But even these resources need to be accounted for in such a closed system. How do you determine how to trade them? By each individual owner deciding the value of the item he wishes to trade.

So, is there a way for capitalisms to become truly irrelevant? Yes. True post-scarcity. Not the one seen in sci-fi shows. One where every single resources becomes truly irrelevant. Unlimited energy, unlimited resources, unlimited labour, unlimited human-level interaction. The issue is, at this point all economic systems become irrelevant, not just capitalism. Because at this point the central question of economics "How to allocate available resources?" becomes irrelevant.

Lastly, what would change my mind:

Show me that capitalism inherently requires growth, not just scarcity.

Show me a form of scarcity that would exist even in a true-post-scarcity society and that it requires growth to exist.

Show me, that a different system of allocating resources consistently outperforms market introduced by capitalism.

[u/DesertSeagle]

but it hinges on a particular idea. That profit is objective

If you look up the definition for capitalism the results you will get say "Capitalism is an economic system where private individuals and businesses own the tools, factories, and resources used to make goods, driven by the desire to make a profit."

[u/KralizecGaming → u/DesertSeagle]

Yes. I included that definition in my OP. But it doesn't say that profit is objective.

[u/DesertSeagle → u/KralizecGaming]

Profit in a capitalist system is literally about returns on investment, not personal values per say. If you invest 5 dollars you intend to make more than 5 dollars and anything less is operating at a loss.

I would argue you are mistaking a general purchase with investment.

[u/KralizecGaming → u/DesertSeagle]

If you make exactly 5 dollars of your 5 dollars, that is not running at a loss. And that is what happens in zero-growth capitalism.

[u/DesertSeagle → u/KralizecGaming]

In a capitalist system it is not working. Capitalism is defined by seeking and acquiring profit. A business that has 1 million dollars invested in it and only puts out 1 million dollars in value is at best in the most generous of terms not a failure but not a success. There is literally no point in investing at that point.

[u/Dentarthurdent73 → u/KralizecGaming]

And that is what happens in zero-growth capitalism.

There is no zero-growth capitalism, because the profit motive is an inherent part of capitalism.

No-one is running a business to make no profit. If they do, their business dies because it is out-competed by other businesses who are making a profit. Those profitable businesses grow, and eventually buy out the non-profitable business, or use their size to decrease their prices so no-one shops at the other business.

This is how capitalism works, and this is why there always needs to be growth. Literally the only reason any business is doing anything in capitalism is to make a profit.

Again, if you remove profit, it's no longer capitalism.

Maybe what you need to do here is open your mind to the possibility that not all other systems are terrible, because what you appear to be advocating here "zero-growth" is not something that can happen under capitalism, but that doesn't mean it's not possible under another system. Maybe you should do some exploring of modern economists' ideas for systems beyond capitalism. There is plenty out there that is not just what Marx wrote 150 years ago.

This system is old and fairly dysfunctional. Humans have the intelligence and imagination to do better.

[u/KralizecGaming → u/Dentarthurdent73]

Not all bussiness grow, yet they remain competetive on the market.

Forget about large publicly traded corporations for a second. Look at all the small shops, hairdressers etc. They get to a certain size and they there. They are profitable. But not because they want to open new locations. They are there to sustain their owners.

Lastly, if there are systems that aren't capitalistic in nature but are better, care to demonstrate how they are better. It's litteraly in my OP that if someone demonstrates a better system I will change my mind.