I often see statements in the news from economists saying things like “only 0.2% growth reported, which might have bad effects on the economy”. In my eyes infinite growth is simply impossible when we have finite resources, or is that a misconception from my part?
Edit: thank you for all the detailed an in-depth answers! Learned a lot of new things 🙂
In: 96
Imagine an “economy” of two people. One really likes to take care of their appearance and does not care much for sports. The other person doesn’t care about cosmetics or their appearance much, but loves to play sports–American football in particular.
Now suppose the person who doesn’t care about sports owns a football, and the person who loves football owns a makeup kit. If you were to survey the state of this two-person economy by asking each how much value on a scale of 1-10 each person has, you might get results like this:
Makeup kit: 1
Football: 3
Total market value: 4
Value per person: 2
Okay, now what if these two trade their items? Now each has something that they value more. Another quick survey might look like:
Makeup kit: 7
Football: 9
Total market value: 16
Value per person: 8
Just from some simple trade, this entire economy QUADRUPLED in value! Now this is obviously a small and singular example, but hopefully you can extrapolate this same idea to bigger and more complex economies. The take away: trade builds value. A healthy economy is a growing one.
One counter point you might have to this is “what is the likelihood that the sports fan would get makeup and the other person a football and not the other way to begin with?” The truth is, this is actually more often the way it works. A baker, for example, might have tons of bread products all the time. The relative value of some bread rolls to a baker is probably pretty low. But what about a custom-tailored suit? Maybe that would be more valuable.
Now look at a tailor by trade: likely has a few suits they have customized and really like and they don’t need any more. But are they fed? How much is a roll worth to a tailor?
We use money here as an intermediary. So a single custom-tailored suit equals several bread rolls in value, but the basic ideas and concepts are the same. People often have an abundance of one good or service and a lack of others. Trade grows value in the economy 🙂
Okay, now to the last part of your question: our resources aren’t finite. Or at least how you’re probably thinking. In a small example again, imagine a single person. This person can farm some land and raise livestock. Sure, the crops need to be rotated to keep the land fertile, but it is not hard to imagine a single person farming enough fruits, vegetables, eggs, meats, dairy products, etc. to sustain themself over a lifetime. Water recycles itself through the water cycle. A single person could easily have “infinite” resources here on Earth or, more correctly, infinitely renewable resources. Even the farmed plants could sequester and convert more CO2 than the person exhales in their lifetime! It is also not hard to imagine that a single person could farm enough for more than just themself. This is the case with our economy and the surplus is traded (more value, yay!). There are practices, however, that trend a single resource down towards zero. It is often easier to do this, which is why sustainable practices weren’t our first goal, but now we are moving, as a society, towards sustainable and renewable practices.
Now, there is some finality to resources. I’d argue we only have a few billion years left for Earth in particular and several trillion more (I think) until the heat death of the whole universe, but it’s not something that will ever really “run out” over the course of projected human existence.
I typed this all up on my phone, so I apologize for any errors. I’m happy to discuss this more; I love the concept of an infinitely growing economy! Not everyone understands how it’s possible, but I truly believe it is ☺️
I hope this helped answer your question 🙏
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