How does the economy “grow”? Where does the new money comes from?
In: 398
It comes from time and energy spent toward refinement.
If you smelt ore into metal, a process taking time and energy, you have refined it into something more valuable. You have created wealth. (It’s also worth noting that in order to know how to even perform the smelting task, you first had to learn a whole bunch of stuff — a process that also takes time and energy.)
That metal can be tempered and worked, refining it into successively more valuable forms until it has become a tool, that can be reused many times to achieve even greater degrees of refinement elsewhere — agriculture maybe. Or whatever.
Some of the inputs are externalities — the ore for example exists in the form it does because of stellar processes billions of years ago. That refinement was already “done” a long time ago. But it too represented a process taking time and energy. So we call it a natural resource.
Similarly, the wood for the smelting fire and the food you ate to keep going come from stellar processes but much more recently, happening right now in our sun, reaching us as sunlight. The growth of plants and cultivation of crops and livestock are also processes that take time and energy. So they are sources of ever-increasing wealth.
As long as we refine more stuff than we destroy or break down, then we keep creating more and more total wealth. But of course that premise isn’t always a given.. if we pollute too much or consume too many natural resources too fast or destroy too much in wars or whatever, then the loss of people and things can really become overwhelming and wealth starts to decline.
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