You're conflating Wall Street and public companies with capitalism. Thousands of small businesses provide excellent livelihoods for their owners with predictable stable income as you suggest. Until the media started harping about VC and the "tech boom" in 2001, most businesses were started with the specific goal you mention.

Stable profits in boring domains isn't sexy though, which is why you don't hear that narrative very often.

> Until the media started harping about VC and the "tech boom" in 2001, most businesses were started with the specific goal you mention.

Approximately 98%-99% of all businesses started in the US every year, still fall under that banner. Half a million new businesses are started each year, 1%-2% of those are traditional venture capital backed (averaging the per year figures since ~2006).

Interesting point of view. I've never thought about it this way, that you would count the normal middle class companies as a legit element of capitalism as well and not just people who try to survive in a ridiculous system.

Also great account name I have to say. That shows class and style.

"Capitalism" is such a general term I find it hard to know what exactly you mean. A liberal or free markets based economy doesn't need growth at all. The problem is that a lot of companies and a lot of state-run institutions (pension funds, etc.) have had the default assumption that the economy will always be growing (mostly due to population increase). But that trend is now reversing in a lot of countries, where populations have started to shrink and societies as a whole (not just the economy) will need some time to adjust to this.

Capital + ism - the idea that capital should govern the flow of all resources.

Is Calvinism the idea that Calvins should govern the flow of all resources?

No, capitalism emphasizes individual sovereignty over property, voluntary transactions, crowd-sourcing in determining the value of goods and services, and some related implications. All functioning societies have these things to some degree whether they like it or not.

Capitalism allows for many involuntary transactions.

And there are many ways to crowd source value determination without capitalism.

But you are correct “individual sovereignty over property” and “capitalism” are more or less the same idea.

What do you think the difference is between "capital" and "resources"?

"Capital" is generally defined as something like "productive output reserved for future productive capacity". See for example most of Schumpeter.

"Resources" would be any factors of production. Traditionally these are land, labour, capital, and ... well, things vary, but "entrepreneurship" is what the page I'm looking at argues for:

http://smallbusiness.chron.com/economic-definition-four-fact...

Answering your question: "capital" is a subset of "resources". "Resources" are a superset of "capital".

The question of what ought to be considered as factors of production is ... an interesting one. The list largely comes from cost accounting, and economists picked the items which dominated the cost-accounting sheets, which was pretty much "labour". Capital and other elements were added later. Much of the foundations of this seems to come from Alexander Hamilton Church[1]

Among the interesting alternative discussions I've run across of factors of production comes from Count Leo Tolstoy, in What Shall We Do Then:

https://archive.org/stream/whatshallwedothe00tolsrich#page/1...

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Notes:

1. And yes, there appears a possible connection to the other A.H.: https://en.wikipedia.org/wiki/Alexander_Hamilton_Church#cite...

Is there any definition of "capital" which (a) is justified by some principle other than pure historical usage; and (b) doesn't include land?

I can sort of see where labor would be different, but to me it looks like land is squarely in the middle of the "capital" concept.

What's the goal of your question? Are you asking for the common and accepted definition of capital, or for any possible definition.

Language itself is a common set of symbols and pointers providing for a shared set of mental models amongst various actors. Generally the most common definition should be the guiding one, much as the most preferred medium of payment becomes a de facto currency (and for many of the same reasons).

If you want a standard definition of capital I'd suggest looking at those provided by a source such as Investopedia or leading economics texts, probably Paul Krugman or Gregory Mankiw's, though there are many, with one fair list at Reddit's /r/Economics: https://www.reddit.com/r/Economics/wiki/reading. Otherwise, you might hit up DDG for econ 1 or econ 101 syllabi and recommended readings.

If you're looking for the broadest possible set of definitions, well, there are many, with varying levels of acceptance, but the answers probably aren't particularly useful.

Another possible angle would be to ask what I personally think about factors of production, and what they are. My thoughts are in flux. And, as a Space Alien Cat, they frequently have little or no real world significance or impact.

Steve Keen, though, is doing some very interesting work, in and since Debunking Economics, and I'd strongly urge following him. Among other elements, he's looking at the role of energy in economic production (he's one of numerous people to have done so, over the past century or more, though the idea's never really caught on, far the worse reflection on the economic orthodoxy than the notion itself).

I've been looking at the question of what technology itself is, or more specifically, what its mechanisms, of which I've identified roughly nine: fuel and fuel-based systems, energy transmission and transformation, materials, technical knowledge, scientific knowledge, information, networks, systems, and hygiene factors. (Concept still under development, some discussion at https://dredmorbius.reddit.com) It's recently occurred to me that virtually all of these are factors of production, though they're not all the factors of production.

There's the question of what labour itself is, and what its components and mechanisms are, and how they've changed. It's useful to keep in mind that until roughly 1800, a tremendous percentage of actual motive force was supplied by human or animal muscle. And our sense of what these contribute has changed markedly. The present formulation of labour does have many elements of capital to it, and that's reflected in extant terminology (e.g., "human capital" and "intellectual capital"), so your observations have some validity and currency.

As noted above, much of the mainstream factors-of-production has far more to do with tracking payments than functional mechanisms. I see considerable room for refinement.

Perhaps a better term is that it's the ideology where 'capital' and 'resources' should flow through supply and demand with some additional rules such as private property and being able to organize into corporations.

Property law turns a resource into a resource with an owner, i.e. capital.

The idea of property is the legal implementation of capitalism.

This is exactly why the de-facto monetary policy of 2% inflation needs to be rethought.

I don't know all the economic reasons for a 2% inflation rate. But one of them is to disincentivize the hoarding of currencies and making investments in assets like bonds, treasuries or equities more appealing. So you probably want some amount of inflation to always remain.

I'm not sure that the 2% inflation is related at all to population changes. It's a change in the value of money, not in the total supply of money.

But at the same time value is the intersection of supply and demand. All else equal, an increase in the supply of money does decrease the value of money. Granted, all else is rarely equal.

People believe you need growth, but you don't and there are major problems with it.

I just read and recommend The Growth Delusion https://www.amazon.com/Growth-Delusion-Poverty-Well-Being-Na..., which talked about problems with growth and alternatives to its most common measure, GDP.

since it's paid content. Does the book also talk about why people believe in it? Because that it's an illusion is not something I would need to be convinced about. I have more problems following the imperative that there always needs to be an unsustainable amount of growth and why people happily sacrifice stable huge profits just to fake a little more growth.

Capitalism does not require fractional reserve banking. Fractional reserve banking is what causes the need for exponential growth, in general.

How does the fact that banks hold a fraction of their assets in a central bank put pressure on companies to grow exponentially? I'm curious, I don't understand the connection.

> How does the fact that banks hold a fraction of their assets in a central bank put pressure on companies to grow exponentially?

That is not what I would understand by the term "fractional reserve banking". Rather, fractional reserve banking refers to a system where banks do not hold enough liquid assets to cover their obligations. Central banks are completely irrelevant to the concept. The location of a bank's assets are also completely irrelevant to the concept.

Yes.

But unfortunately? Without safety measures like the Fed enabling such, economies have a history of imploding every fifteen years or so on the basis of insufficient currency circulation. Oh wait, that's where we are today... Carry on!

Commodity-backed currencies also have a problem - they implement their own fractional reserves as economies do grow. When they shrink? End-users learn to trade in the notes for the commodities, shrinking the pool of currency in circulation.

Fractional reserve banking is one part of it, but the really horrible things occurred when we left the gold standard so almost unlimited debt can be created. People started investing in stocks instead of bonds, which is probably part of why Glass-Steagall was repealed.

Could you expand on this for someone with very limited economic intuition? (me)

Don't bother. It's a canard.

A very popular one, but a canard all the same.

With higher fractions of reserve the bank is also a more stable institution. So it may be just a symptom, not the source.

Growth doesn't seem to be a prerequisite for capitalism. Rather, it's a shortcut, a cheat, that hides or forestalls your sins and indiscretions.

Picture a MLM or Ponzi scheme- as long as growth is maintained, the problems can be swept under the rug, and you don't have to go to the trouble of running a sound business.

(I'm not calling capitalism a Ponzi scheme, it's just a good illustration)

John Kenneth Galbraith introduces the idea of the "bezzle" in The Great Crash: 1929. That's the apparent increase in monetary wealth created by ... "creative accounting" and/or other means.

There has been some work in this area: https://www.motherjones.com/politics/2010/07/peter-victor-de...

“We’ve had 125,000 generations of humans, but it’s only been the last eight that have had growth,” Victor told me. “So what’s considered normal? I think we live in very abnormal times. And the signs are showing up everywhere that the burden we’re placing on the natural environment can’t be borne.”

See also, the physical limits to growth: https://dothemath.ucsd.edu/2012/04/economist-meets-physicist...

The Do the Math blog is interesting because his core assumption is that growth in energy consumption must keep up with economic growth, and therefore economic growth will run into the physical limits of energy consumption. As the Vox article shows, this is an erroneous assumption (you even see a bit of leveling off in the graph he posts).

I don't know what it is, but there seems to be a whole genre of physicists jumping into a field their unfamiliar with and trying to crunch numbers to prove the experts wrong without ever bothering to learn the fundamentals of the new field.

You also "need" to have growth because the population grows. Simply, if GDP or energy use is flat, that implies lower GDP or energy consumption per capita. The latter may be explained by efficiency, but the former would imply reduced standard of living.

There are plenty of companies that don't grow and just pay dividends. Companies go out of business all the time too. Looks like capitalism isn't just about growth is it.

Capitalism - An economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.

Doesn't say anything about growth. You're just conflating the two.

Yes, way back in the 1600s, Mr. Capital wrote as much.

Less sarcastically and more substantively: there's no such thing as orthodox capitalism requiring growth or any such thing.

Capitalism is what you get when a) you have private property, b) freedom to trade property, goods, and services (labor). Everything you associate with capitalism is either a consequence of this or of not-capitalism market distortions (which we often fail to recognize as such, and then we associate them with capitalism).

Growth will stop when people stop needing, wanting, or being able to afford growth. Clearly, we're very far away from that: clearly people worldwide want the standard of living we have in the U.S., but the world is far from being there. So we have some growth left. Clearly, too, there is a limit to demand for growth, and we see this reflected in fertility rates the world over.

If you're aching to put an end to growth then I counsel patience: we're on our way.

Back to what is capitalism... I talked with an economist friend once who told me that "we need to develop an alternative to capitalism". My answer was: "well, given that capitalism is what you get when you let people be free to own and trade, what freedoms do you propose to deny people?!". Oddly my friend did not challenge the premise of my question (see below)... Instead he admitted that he hadn't thought of it that way. Sadly we never discussed it again.

Many here at HN (and elsewhere) don't see capitalism this way. They deny the premise that capitalism is just freedom. But... where is the force being applied (by whom and to whom) to make capitalism what it is, if capitalism isn't freedom?? (I'm not referring to regulations here, or laws against crime for that matter. Socialist countries, for example, apply lots of force or threats of force to get people to do what is expected of them -- this is what I'm referring to.)

> Capitalism is what you get when a) you have private property, b) freedom to trade property, goods, and services (labor)

I disagree. We (sort-of) have your a) and b) and capitalism now but the implication part "what you get" is not obvious.

Do you have sources that show a consensus on this implication ?

Do you have a source for a definition of capitalism? It's definitely not like Marxism -- one man's idea. Capitalism really is an evolution ("what you get when ...") of Dutch and British economics of the 17th century or thenabouts through today. The key characteristic is: private property and freedom to trade (goods, property, services).

Yes there is not "one" definition of capitalism, but yours (private property + freedom to trade) misses some characteristics (for instance: capital accumulation).

> Capitalism really is an evolution ("what you get when ...")

"is an evolution" is not the same as "what you get when", I agree that the current system is an evolution of the 17th century, but "what you get when" would mean this is the most likely evolution, which is not obvious.

> Capitalism is what you get when a) you have private property, b) freedom to trade property, goods, and services (labor). Everything you associate with capitalism is either a consequence of this or of not-capitalism market distortions (which we often fail to recognize as such, and then we associate them with capitalism).

If you give people property and trade they will trade in the hopes of growing their property. So it might be part of the official definition or not, it's what will happen every time you start a system with these rules.

> we're very far away from [needing, wanting, or being able to afford growth]

Far away from wanting? agreed. Far away from being able to afford faking it? I think you are not watching politics, but the risk level of reaching that end are increasing yearly.

> They deny the premise that capitalism is just freedom. But... where is the force being applied (by whom and to whom) to make capitalism

You just mentioned two rules. private property and freedom to trade. These must be enforced by law, police and military if necessary.

If you don't enforce property rights people will grab whatever they can carry. You wouldn't like that friends visiting your home for a football match and one leaving with the tv and another leaving with the couch (and another leaving with your girlfriend).

Being born in a socialist country I can tell you that the average person in such a country doesn't feel a force applied to them either. The same way you feel that capitalism is "just the way things are" such person would feel socialism is "just the way things are". The problem is that both sides have a distorted view about the other side.

For instance when I hear the word capitalism I don't think "freedom to do what I would naturally do", I think "strongre people making weaker people's life harder, monopolies, exploiting and lying to each other". When I hear the word "socialism" I think "helping each other, giving up a few unhealthy personal desires to give everybody an equal chance". The same way you feel police stopping people from stealing being a naturally good thing I feel police stopping people from their greed and selfishness being a good and natural thing. Someone who hurts the community by putting himself first needs to be punished. That's very natural thinking to me and nobody needs to force me to think that way.

It occurs to me that growth has one unmitigated good- attaining critical "threshold" economies of scale.

Semiconductor technology would still be exotic, expensive, and immature if not for massive economies of scale. It is only through wide application & corresponding broad demand that modern semiconductors are possible.

> Is it just me or is the obvious biggest problem in capitalism that you always need to have growth?

Need and want are different things.

> I don't need investments that constantly grow in profits.

Until your rent increases or inflation makes your money less valuable or you have a child or you incur some unexpected expense.

Most people don't like living paycheck to paycheck because its stressful. Large businesses are no different. But just because they don't like something doesn't mean a capitalist economy is going to bend over and hand them something. Unlike a planned economy where two year plans forced wasteful industries to continue wastefulness.

You need general economic growth, in general. You don't need growth in _all_ things; periodically, industries decline or become entirely obsolete. Capitalism survived, say, the decline in the demand for horses.

It's not "capitalism".. it's publicly traded companies. That's the root of the issue. Stockholders demand their stock increase in value, otherwise there was no point in buying stock.

Dividends also exist as a point to buying stock.

> Is it just me or is the obvious biggest problem in capitalism that you always need to have growth?

I'm not sure what you're talking about.

In capitalism investors want profits.

In this specific industry, for ultra-specific reasons, profits need growth. This isn't the case 99% of the time.

But even if investors go away, the companies will run fine without them. They'll just have low stock prices.

There's no need for growth anywhere in this equation.

Does capitalism require growth? Moreover, is growth bad? Don't forget that GDP growth is not the same as growth in resource consumption. Eg. Amazon's kindle allowed far more books to be published while using far fewer natural resources.

How do you like zero sum games?

How do you like negative-sum games?

https://en.wikipedia.org/wiki/Second_law_of_thermodynamics

(And yes, the system you're in, writ large, is sufficiently closed for this to hold true.)

I would say growth is going to happen no matter what system you pick, it's in our nature. Capitalism only helps us to determine value

Growth for the sake of growth is cancer

good point, utilities essentially get gov't approval to spend money and receive a return on that investment of 5-10% (depending on performance)...its a consistently profitable yet low-growth model and perhaps nothing wrong with it if not for them being investor-owned.

Don't you need to beat inflation?

You can do that by raising your prices with inflation.

Which is growth no?

Lots of folks invest in dividends, it’s a viable model.

Most of those people are still relying on the stock market to sustain exponential growth.

If my investment strategy is based purely on dividends, then it's true I do not require share prices to grow. But if I am going to grow my portfolio be reinvesting my dividends, then I need more shares that I don't already own to be created so that I can buy them, which means the total market cap of companies will have to have increased.

And, after I've grown my portfolio, I'll be looking to reinvest a correspondingly larger quantity of dividends, so that market cap will need to have grow by a correspondingly greater amount.

If you want compounding returns, whatever form those returns take, you need sustained exponential growth in the economy.

Even less growthy than that... lots of people buy bonds, right?

The "growth imperative" is ... complicated. I wouldn't put the cause / blame / credit / fault entirely with capitalism, and I'd specifically exclude fractional-reserve lending[1]. At the same time, there is a clear tendency for a growth-at-all-costs mantra. Seems to me there are several dynamics at play.

1. Given growth, redistribution is not as urgent.

2. Redistribution is politically exceedingly unpopular ...

3. Most especially with those who have the most wealth to redistibute. As Adam Smith wrote in one of his briefest sentences ever ...

4. "Wealth, as Mr Hobbes says, is power."

5. There's a great deal else that becomes more convenient in a growing economic domain, a topic also discussed at length by Smith (Wealth of Nations, book 1, chapter 8, on wages, particularly as concerns England, the Colonies, and China).

6. Though that argument largely boils down to the fallacy of consequences: "The alternative to growth is too horrible to consider, so we won't consider it." This bodes poorly.

There have been a few fairly long-term stable or negative-growth regimes. The Indus River Valley civilisation(s) seem to have been particularly equitable (archaeological evidence shows little diversity of housing stock or personal chattel property), and the Byzantine Empire effectively went through an extensive period of de-growth successfully, if not entirely happily.

Growth as a present economic mantra seems all but ubiquitous. You'll find it held as sacrosanct by voices as diverse as Milton Friedman, Paul Krugman, Thomas Piketty, Lawrence Summers, and Christine Lagarde. It's the fundamental axiom of both hard-left and hard-right economic theologists (what they preach is not a science). See Mauricio Schoijet's "Limits to Growth and the Rise of Catastrophism" particularly for reflections on this: https://www.jstor.org/stable/3985399

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Notes:

1. Brief counterargument: Fractional reserve + fiat currency + at your option any of a) a strong bankruptcy law / process, b) a gradual devaluation of all debt, including perhaps c) a gradual devaluation of all paper currency[2], and/or d) a periodic debt jubilee (see Steve Keen) would allow for a FR banking system without the spectre of debts-in-perpetuity.

2. China instituted this, historically, by requiring regular stamping of paper money. The stamps cost money, and this effectively became a tax on cash holdings. Other mechanisms might be instituted. Remember that money is not wealth, but rather is tokens of wealth. See generally Richard von Glahn, Fountain of Fortune: Money and Monetary Policy in China 1000-1700 (1996).

Life either grows or dies. There is no static state.

"in capitalism that you always need to have growth"

More like: "people want growth" so "there is growth" so "capitalism is the only economic system not at odds with reality."

There's a difference between what people want and the whole of "reality"; in a real universe, growth will never be limitless, no matter how much people want it to be.