"F. George McDuffee" wrote in message
...
On Tue, 4 Nov 2008 12:41:26 -0500, "Ed Huntress"
wrote:
snip
Without capital growth there isn't enough reason to assume risk, George.
The
thought on this is that the system runs down like an unwound watch when
the
only return on capital is dividends.
snip
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Don't confuse capital growth with "growth," don't confuse raw
capital growth with inflation adjusted/tax effect growth, and
above all don't confuse an increase in "spondulicks" with an
increase in capital. {see my earlier post on this}

Even in a relatively static economy [from a population and
standard of living/conspicious consumption standpoint] there
should still be plenty of opportunity for profitable investment,
for example upgrading/replacement of existing plants/equipment,
production of consumables such as food and clothing, and
[legitimate] replacement products.

That's a static economy, like a machine into which you put fixed amounts of
inputs and get fixed amounts of outputs. If you know of a capitalist system
that has worked with static growth, I'd love to hear about it.


What would be missing is the "leverage" [steroids/meth] and
outsized returns, which never seems to "trickle down" to the
savers that provided the capital in the first place.

You're talking about the kind of out-of-control finance that we've been
going through lately. That's not the basic growth model of capitalism.


For the "investors" :-( that are looking for "action" there are
plenty of casinos, both in the US and abroad, that are more than
willing to accommodate them. This also has the benefit that "the
players" are further removed from the real economy, and less
likely to cause damage.

The kind of imaginary growth we've had lately is not the operating principle
of capitalism. All experience-based models show that capitalism works when
you have opportunities for growth. Without it, you kill the incentive for
capital to take risks.

With no growth, productivity increases and other innovations are zero-sum;
growth in one area means loss in another. THAT's the gambling game, in which
there is no net growth, and any advantage one party gains comes at the
expense of another.

If you say that it isn't necessary for that to happen, then you're talking
about a growth model again. Slow growth, fast growth -- any growth will
motivate the system. But in a global economy, no one country or group of
countries (like the West, for example) can simply choose slow growth. If you
try, you get killed by the other countries that successfully operate on a
fast-growth model.

This can get complicated. If you know of a way to run capitalism with no
growth, you should patent it. You'll grow like crazy. d8-)

--
Ed Huntress