Capitalism forever?

Discussion in 'Debates' started by Jemert, Oct 6, 2013.

  1. tehuber1337

    tehuber1337 Well-Known Member

    Did you mean me? Did you mean Adam Smith? Adam West is the guy who played Batman.

    Scarcity of resources is what fundamentally drives of all of economics. As you say, the market exists to allocate resources across competing uses by using price mechanisms. To claim that capitalism and the invisible hand cannot exist when there are finite resources is self-contradictory.

    In any case, it's true that there is an ultimate limit to how much society can grow given the natural resources we have available. This is unavoidable. However, natural resources are not the only factor of growth. Human resources such as quantity of labour and quality of education; capital infrastructure such as roads and power; and technological innovation such as developments in science, engineering, or even management or entrepreneurship all help to increase productivity and overcome economic stagnation. Read up on Robert Solow's neoclassical growth model.

    Now, it may very well be the case that increases in productivity are not keeping pace with increases in consumption. If so, then yes, our growth is unsustainable. Steady state economics provides an interesting alternative, but I'll have to look more into it. My initial impression is that I'd rather have unsustainable growth than inequitable stagnation.

    This is a tricky issue. As a laissez-faire guy I'm wary of government intervention. The government does have a role to play in the economy, and that does include strict regulation of monopolies and oligopolies, but taking care not to do more harm than good is a fine line to walk.

    In regards to banking, fractional reserve banking is normal and plays a very important role in modern economies, despite its inherent instability. As with capitalism, I'm inclined to support it until there's a better alternative.