I always see people say it but Idk the origin
To get to the other side.
But really it's because Capitalists are cannibals, they compete with each other. Mind you capitalists will always unite against the working class, but they have no qualms eating each other's capital. Capitalists always need to increase profit from the last year to please investors and to compete for market share. If a CEO decided one year "actually, this profit is enough. Let's just keep it working as is since we're already profitng" they would eventually get consumed. Either a competing capitalist would undercut them and push them out of the market share or their investors would pull out and invest somewhere else. Either way, stagnating profits is the death of a company.
So capitalists must always be looking for new markets or to sell harder in their existent markets. When they can't do that, they make cuts (either by cutting wages or getting cheaper manufacturing). In the race to grow infinitely, they race to the bottom.
Our interest rates are so low and inflation is so high that a lot of loans are negative yielding. If you were able to borrow a ton of money now and put it into an asset that maintains its value with inflation then you'll make money by the time you pay back the loan (like housing).
Investor puts money in to buy shares
They hope the value of those shares will increase
This only occurs if future investors thinks the value will increase after they've put their money in. Rinse and repeat
Because of this, maintaining a steady profit is not enough to appease investors. The quarterly profit has to increase over time so that investors will believe the company is a good investment for them
This is one of the driving forces of capitalism which is ironic given the Tendency for the Rate of Profit to Fall
The rate of profit falling and the quest for increased profit amount is the reason for infinite growth.
Increases in productivity (mechanization, better procedures, development of productive forces, etc.) Come with a fixed cost of constant capital (means of production, managerial burdens/non-productive work, anything that isn't wages for workers basically). This drives down the prices of commodity and reduces the amount of surplus value a capitalist can extract from an individual worker and maintain that worker's social reproduction.
The only solution besides abolition of the profit motive to this contradiction of economies of scale is exponential growth. Maintenance of profits as the rate of profit falls requires massive booms in labor power which is why we've had exponential population growth, and on top of more workers, you also need to reduce the share of social product those workers receive (exploitation and war in the global south, and austerity at home).
Capitalists can also maintain profit amounts by cannibalizing/proletarianizing their own class. Reduction in the amount of capitalists competing for the surplus product of society means increasing profits for the "survivors". This is the inevitability of capitalist collapse and the necessity of socialism and eventually communism. The new social order arises when the old social order fails to reproduce itself, or when the revolutionary class created in the contradictions of the old world overthrows it (functionally the same thing).
The capitalist mode of production is not a mode of production really, it's a mode of control over social production, the natural state of which we would describe as socialism/communism.
without growth, profits stop. without profits, there's no capitalism.
"Growth" just means "profit," nobody is incentivized to do anything in capitalism without profit so if "growth stops" then everything stops
Sure. So, there's actually two ways to go around it. Though we have to understand why there is no growth.
So obviously, capitalists will never agree to stop growing, because if your competitor is growing and you're not, you're dead.
So firstly, if growth ever does end, it means that you can't expect investments to ever be profitable. Since theres no growth, every market is taken, and you can only ever try to take someone else's place, which is a zero sum game. So you can't expect investments to continue, which means that you lost your only real mechanism to allocate capital, and your entire system can't work anymore.
The other thing is that without growth, there isn't really the possibility of competition. And without that, you will have an incredibly unstable system with even less redundancy.
So the competition of excess investments is capitalism’s solution to the allocation problem and without growth, none of your investments are excess?
So firstly, if growth ever does end, it means that you can’t expect investments to ever be profitable.
This exact thing was beginning to happen in the 70’s and the resulting Capital strike is basically what ushered in neoliberalism. However, we have seen over the past decades that people will buy bonds issued by the American government even when interest rates are low simply because they have so much faith that the American government will not lose the ability to print money. So even if the market crashes, those rates are better than nothing and it’s still a hedge against uncertainty. I hope I’m remembering that analysis properly. I lifted it off of Mark Blythe
If people started doing nothing but buying bonds, capitalism would crumble still, as there wouldn't be anyway to allocate capital.
Bonds have value because they have zero risk, but capital investments will always have a risk, and if there is a no growth, the the average investment will actually lose money. In that case we can never get into a situation where it's similar to the bond market.
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Growth means more profits. Without it, profits fall (even faster) and the system starts to break down. Capital halts investment because it can't get sufficient profits and gets used on even dumber things. Nerds would identify it as a liquidity crisis.
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Marx was right that profits have a tendency to fall over time in a "functioning" capitalist system, as competition + automation drives down profit margins. You can also think of growth as an attempt to outrun this tendency. Monopolization and imperialism are as well, like an escape hatch from decreasing profits.
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This isn't a thing in formal capitalist economics. We don't know the ceiling for human development but we're feeling the price of externalities to the environment so we may be there. We've manage to technology our way out of most problems up until now but we're clearly having trouble solving this one. To address other comments that say companies require growth to survive, capitalist economics assumes 0 'profit'. Economics is a bit dicy when it comes to the word profit, they mean that all stakeholders are being paid the surplus and treating it as personal income. The general problem of companies requiring growth is the greed of capital holders always wanting more money and will happily dissolve a company that doesn't make enough money.
- The owning class lives off of owning things rather than laboring to create/sustain them
- If someone makes an investment, they don’t want that investment to lose value because the less reserve capital they have to live on, the closer they are to relying on their own labor
- Even in the individual cases where some loss acceptable (startups, diversified pools, personal attachment, etc), competition means that investment on average will always be pulled towards firms with a better reputation of higher returns.
- So the firms that don’t grow fail and the market overall has to grow for similar reasons.
Edit: oh, also the return on squeezing labor diminishes over time, so you can’t just grow perpetually by optimizing labor costs
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Companies keep producing extracted surplus value and giving them to investors as dividends.
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Investors spend those dividends on more shares in companies, which increases their future dividends, in exponential growth. (Not all investors do this, but the rest don't have exponentially increasing portfolio sizes, so they become unimportant in the long run.)
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This requires that there's actually more value worth of shares in companies out there for investors to purchase. But the amount of money to invest grows exponentially, so there must be exponential growth of things to invest in.
(Number 2 is like 20 years out of date though. Now the biggest companies skip the dividends and reinvest money in themselves for even more growth, trying to grow faster than a person buying more shares with dividends would be able to.)
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this subthread answers it check it out: https://hexbear.net/post/83354/comment/903070
keep reading until you get to the really big comment that goes into depth
The short answer is that
stockasset prices have growth built into them so if companies stop growing line go downBecause its origin is in idealist metaphysical thought which directly contradicts the universe of many limits and physical laws we find ourselves in.
