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Readers' Blog: What if growth was no longer needed?

There is much talk of markets in recent economic discussion. World; single; free. 

Sadly very few free markets still exist; the majority are enslaved by gross overproduction and unless something is done about it, the capitalist system which has created the most successful and potentially beneficial time ever experienced by the human race is in deep trouble.

Communistic revolution is no longer needed to “do away” with capitalism; it is doing a great job of bringing about its own demise. Economic freedoms are being destroyed by the phenomenal success of capitalism itself. The theory of capitalism is based on encouragement and reward of producing more, better, cheaper, and faster. Economics operated sluggishly throughout most of history but experienced extraordinary and phenomenal growth of ability and wealth over two centuries of inspired invention and innovation which created the bedrock on which capitalism was founded. The wonderful success was facilitated by increasing demand from rapidly expanding and affluent populations which guaranteed substantial shortfall between what could be produced and what was needed for consumption. In other words there was a market for everything that capitalism could produce.

When the Rubicon of supply consistently exceeding demand was crossed, however, and indeed reversed, as happened in recent decades, capitalism is confronted by an enormous challenge; something never experienced before. There is simply too much of everything being produced. If markets are oversupplied, potential for growth is stymied and a driving force of capitalism wilts. Enormous completion arises to control what remains, leaving many who until recently were essential participants in the capitalistic dream detached, dependent, and disillusioned.

Capitalism and governments who espouse such principles are handling the present economic situation very badly. By refusing to adapt to entirely changed output, growth, and employment conditions, they risk an imbalance of wealth, security, and wellbeing that could cause enormous social and commercial upheaval. One of capitalism’s great strengths was the number of people involved in administration, production, transportation, and marketing. Technological advance facilitates enormous increase of output with reducing dependence on nearly as many being involved in delivery of the final product. The result is numerous business failures and serious reduction of secure employment. Such “recessions” in the past were temporary and through injection of capital, eventually returned to growth and renewed prosperity and paid back the capital injected. But what if growth was no longer needed or possible?

The 21st century experience is different. It a first taste of sufficiency; the reality of technological economics of the future. Enormous injections of money which despite fancy names of quantitative easing and bond purchase is just debt, try to tide us over until growth economics are restored but this cannot be in a situation of immense ability to overproduce. Furthermore technology facilitates enormous elimination of work which cannot be allowed translate into similar elimination of employment.

It is ironic that modern technology, which is the greatest success and achievement of the human race and provides the best time ever in human existence, is liable to cause some of the greatest problems ever encountered. Unless benefits are politically shared with all, control of technology allows concentration of vast wealth and power within a shrinking minority of very powerful conglomerates and individuals while increasing numbers who until recently were essential participants in capitalism are cut adrift. Such a development is a recipe for social disorder on a grand scale and poses serious threats to democracy and peace. If nothing is done to adapt to technology by restraining output so that balanced markets can restore commerce and unless there is a move towards generation of substantially more secure jobs from less work, capitalism could find itself in an even bloodier dustbin than communism did.

Padraic Neary




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