What economic theory is involved in promoting constant growth rather than allowing an organization to just reach a point of stability?
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The theory is competition. All of the things that businesses do to grow (offer new and better products, market their products better, etc.) are necessary to grow but also necessary to stay at their current point of stability. Ford could say “we sell enough cars, we don’t need to continue to develop new and better cars to constantly grow,” but very quickly they’d be out classed by their competitors and they would sell no cars instead of a stable number of cars. Even in simpler industries, a company that doesn’t attempt to get better, more efficient, etc. will eventually be beaten by competitors.
Modern economics does not operate within the confines of physical reality.
What does that mean?
Modern economics wants constant growth. It’s baked into the theory.
Problem is that growth ignores that we live and work in a world with limited resources. To be clear, I don’t mean scarcity or anything like that; I mean that there’s only so much stuff in the Earth, and of that there’s a limited amount of stuff we can even access.
At some point, that physical limit would creep up against growth.
The theory is competition. All of the things that businesses do to grow (offer new and better products, market their products better, etc.) are necessary to grow but also necessary to stay at their current point of stability. Ford could say “we sell enough cars, we don’t need to continue to develop new and better cars to constantly grow,” but very quickly they’d be out classed by their competitors and they would sell no cars instead of a stable number of cars. Even in simpler industries, a company that doesn’t attempt to get better, more efficient, etc. will eventually be beaten by competitors.
Modern economics does not operate within the confines of physical reality.
What does that mean?
Modern economics wants constant growth. It’s baked into the theory.
Problem is that growth ignores that we live and work in a world with limited resources. To be clear, I don’t mean scarcity or anything like that; I mean that there’s only so much stuff in the Earth, and of that there’s a limited amount of stuff we can even access.
At some point, that physical limit would creep up against growth.
I would not say it is economic, it is rather in the nature of business.
Look at what brand product people were buying in the 1950s. Chances are you are not going to recognize much of them. People slowly stopped buying them until it made no sense for the business to keep on making the product and/or the company died.
For your company, it means that If your sales on a product are going down, it is dying, and you would better have something ready to replace it, else your company iself may be in danger.
TL,DR： In business, you are either growing or you are dying, hence why everybody always tries to grow.
The theory is that the demand for growth is the main driving factor that makes goods and services optimally good and cheap.
Think about it like this, I give you money to go start a restaurant. You have to pay me back, so that means you will need to make a place that serves good food with good service and at a price where people will want to come. You do well and pay me back. But then you now have an incentive, if you wanted to get even richer, you can try to grow the restaurant. How? Anything like:
1. Open more locations
2. Expand what’s on the menu to attract more guests. Maybe get some better decor, or a nice wine menu.
3. Streamline your kitchen and waitstaff so that people can get served faster and flip tables faster
You get the idea. In theory, it’s win-win. The townspeople get a damn good restaurant, and you get the opportunity to make a ton of money. You don’t have to, it’s just that there’s a reward if you try and succeed, and inevitably some amount of people will try. It’s also what makes new companies keep entering, keeps prices in check, and makes services progressively better. Curb-side pickup? That was implemented by companies seeking to grow. Compare tvs for example: In 2004, a 24 inch TV with was many pounds and had no HD or Smart features cost like $800 in today’s dollars, now a thin, light, 50 inch tv with HD and smart features is like $400. That happened as a direct result of companies innovating in an attempt to deliver growth the shareholders.
Also, there’s this kind of mythos that “the Earth can’t sustain perpetual growth.” Growth in the economic sense does not mean growth in resource consumption, it means growth of GDP, or growth in the size of the business. As resources get constrained they get expensive, and then the growth can come about as ways to use them more efficiently. Planes like the 787, 737MAX or A321neo are way more fuel efficient than planes of a few decades ago. Washing machines and dryers use less water and electricity. I’m not saying economic growth always results in less resource consumption, my point is that one doesn’t by definition lead to the other.
I would not say it is economic, it is rather in the nature of business.
Look at what brand product people were buying in the 1950s. Chances are you are not going to recognize much of them. People slowly stopped buying them until it made no sense for the business to keep on making the product and/or the company died.
For your company, it means that If your sales on a product are going down, it is dying, and you would better have something ready to replace it, else your company iself may be in danger.
TL,DR： In business, you are either growing or you are dying, hence why everybody always tries to grow.
The theory is that the demand for growth is the main driving factor that makes goods and services optimally good and cheap.
Think about it like this, I give you money to go start a restaurant. You have to pay me back, so that means you will need to make a place that serves good food with good service and at a price where people will want to come. You do well and pay me back. But then you now have an incentive, if you wanted to get even richer, you can try to grow the restaurant. How? Anything like:
1. Open more locations
2. Expand what’s on the menu to attract more guests. Maybe get some better decor, or a nice wine menu.
3. Streamline your kitchen and waitstaff so that people can get served faster and flip tables faster
You get the idea. In theory, it’s win-win. The townspeople get a damn good restaurant, and you get the opportunity to make a ton of money. You don’t have to, it’s just that there’s a reward if you try and succeed, and inevitably some amount of people will try. It’s also what makes new companies keep entering, keeps prices in check, and makes services progressively better. Curb-side pickup? That was implemented by companies seeking to grow. Compare tvs for example: In 2004, a 24 inch TV with was many pounds and had no HD or Smart features cost like $800 in today’s dollars, now a thin, light, 50 inch tv with HD and smart features is like $400. That happened as a direct result of companies innovating in an attempt to deliver growth the shareholders.
Also, there’s this kind of mythos that “the Earth can’t sustain perpetual growth.” Growth in the economic sense does not mean growth in resource consumption, it means growth of GDP, or growth in the size of the business. As resources get constrained they get expensive, and then the growth can come about as ways to use them more efficiently. Planes like the 787, 737MAX or A321neo are way more fuel efficient than planes of a few decades ago. Washing machines and dryers use less water and electricity. I’m not saying economic growth always results in less resource consumption, my point is that one doesn’t by definition lead to the other.
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