Originally Posted by Christel

I've wondered and was reminded by Michael Viney's column today:

Securing a steady state is the basis of eco-economics - The Irish Times - Sat, Mar 28, 2009

Is economic growth an axion in economic theory? If so, why?
If not, why does economic growth seem to be a dogma, and does economics have alternatives? Which ones?

Originally Posted by Christel

Can someone tell more about the idea of "steady-state economy"?

Originally Posted by Christel

And: Circles at least seem to be accepted, deflation-inflation, recession - boom.
Why then is a recession such a shock? Why do governments, actors not prepare for it during boom time, when recession will inevitably happen at some stage? Would it not be wise to expect recession to happen, like we expect winter every year, happening in nature?

Originally Posted by Christel

Is economic growth an axion in economic theory? If so, why?

Originally Posted by 20000miles

In other words: scientists and economists will be the new philosopher-Kings, and they with the government will dictate what to produce and in what quantity. It's a power-grab.

Originally Posted by Oppenheimer

Why the need for this, i.e., can't scientists and economists BE the Govt?

Originally Posted by 20000miles

Here is the basic problem of economics: Resources are scarce, while our desires are virtually boundless. What mechanisms should be used in distributing these resources?

The answers can be a voluntary economy where people trade goods and services. Or you can elect someone to allocate resources to everyone. Or anything inbetween.

As to economic growth, it is percieved by many as an end in itself. I disagree with this. It is merely a means to an end. The end being satisfaction of your values.




Well the article makes it pretty clear:

WHAT WOULD A steady-state economy be like? New Scientist offered a future scenario under Daly’s mentoring: “We have two guiding principles: we don’t use natural resources faster than they can be replenished by the planet, and we don’t deposit wastes faster than they can be absorbed. In our [ideal] society, scientists set the rules. They [should] work out what levels of consumption and emission are sustainable . . . Then it’s up to the economists to work out how to achieve those limits and how to encourage innovation so we extract as much as possible from every scrap of natural resource we use.”

In other words: scientists and economists will be the new philosopher-Kings, and they with the government will dictate what to produce and in what quantity. It's a power-grab.



During a boom phase, central bank money expansion leads to a misallocation of capital and labour. Once the monetary expansion ends, it is revealed that a terrible misallocation has taken place. These investments must be liquidated, and people must start saving to get real investment going again.

This recession didn't surprise me, as I'm an Austrian Schooler and a beleiver in the Austrian Business Cycle Theory. Some economists still beleive recessions come down to "animal spirits" or "irrational exuberance".

The reason everyone is so surprised at recessions is because they appear after periods of great prosperity and "growth". Prices are stable, unemployment is low. It's like a goldilocks economy. The Austrians saw this recession coming, just like Mises saw the 1929 Crash coming.

Oh yeah, and the boom is the problem. The recession is the response to the boom.

Originally Posted by Christel

Thank you all so far.

Now, inflation seems to be associated with "growth", which seems something positive. Deflation seems to be associated with recession, negative.

Why does inflation seem to have to happen, if "things go well"?

I looked for web definitions of "inflation", and this list I find rather funny:

"S: (n) inflation, rising prices (a general and progressive increase in prices) "in inflation everything gets more valuable except money"

Is it thinkable for economists that all prizes would be fixed, so that no inflation could occur in an economy?