How can a country’s economy apparently grow year on year without limit, and why is this thought to be desirable?
Richard Saunders, Dagenham
Send new questions to firstname.lastname@example.org.
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 probably the most pressing question facing human society, but these are, to my mind, different issues. Related, but different. thinksthatimacabbage
As David Attenborough once said: “Anyone who thinks that you can have infinite growth in a finite environment is either a madman or an economist.”
A more specific and uglier answer is that it is seen as desirable because for years the World Bank and the IMF have made increase in GDP and economic growth the measures of a country’s health (and ability to get loans, not have loans called in etc). Which is laughable when you consider that this standard made, for example, Sierra Leone and Liberia among the “healthiest” countries, due to economic growth related to diamonds, while they also came in at the bottom of all the countries in the world in medical health or public health infrastructure. But it’s still desirable because otherwise they call in the loans. Thomas1178
With the greatest respect to David Attenborough, the environment is not finite. Increasing knowledge and increasing culture is economic growth with negligible use of natural resources. The release of Blue Planet does not prevent us enjoying Life on Earth. The knowledge of crop-rotation creates economic growth without using more natural resources than monoculture. UpVoteThis
A modern economy is mainly services. The UK economy is about 80% services. We can continually improve the services that we provide to each other. Some growth areas are health, social…