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Culture War Roundup for the week of September 26, 2022

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And after it expands globally to take over 100% of the entire market for left-handed grape peelers in every nation of the earth, what then? How can it continue to grow?

As GP said:

Economic growth just means "continuous improvement". Sometimes that's by making the pie bigger, other times it's from increasing efficiency.

Company F figures out how to manufacture left-handed grape peelers more cheaply, or makes them last longer, or makes them work better, or invents a machine that peels grapes that both left- and right-handed people can use. Or someone else invents a better grape, so the value of grape peelers to people goes up, and more people buy them on the margin. Markets aren't static.

Markets aren't static.

No, I understand that, but neither are they infinite. You can only sell 100% of grape peelers, even if you develop AI that builds robots so you fire all your human staff and your factories run on a cost of fresh air churning out the world's cheapest and most technologically advanced grape peelers. You can't grow from 100% to 110% next year. Well, ignoring that if the global population was 9 billion this year and will be 12 billion next year so you sell 3 billion more grape peelers, but suppose we are all now uploaded into cyberspace and no more new babies are going to be born ever again. You are selling all the grape peelers you can possibly sell, there is no market to sell more. Every single entity on planet Earth has a drawer full of your grape peelers.

I do see that there is room for company F to improve its market share while there is competition from companies G, H, I and J in the cut-throat world of grape peelers, but there surely can't be infinite room for growth forever?

I do see that there is room for company F to improve its market share while there is competition from companies G, H, I and J in the cut-throat world of grape peelers, but there surely can't be infinite room for growth forever?

Growth isn't gross production for a reason.

If the market can't support companies F, G, H, I, and J all in the cut-throat world of grape peelers, but only four of them, then company F might expand the market by executing the sub-market of grape-peeler production, and support it's growth instead via the grape-peeler advertisement market to increase the market efficiency of one of the remainers, or the grape-peeler delivery market to expand the size of the consumer market who can be sold to, or offer grape-peeler-throat-cutting-protection services to protect corporate secrets (and throats) against cut-throat competition.

In many cases, growth isn't about gross production increasing at all, but efficiency increasing or upkeep reduction. Say you do have a maximally-saturated equilibrium where everyone who could possibly want a grape peeler has one, and no more should be made. At this point, market growth can come from cutting costs- whether the application of a material science for cheaper handles, or international trade deal market access for cheaper peeling-blades, or removing the now-excess grape-peeler production-expansion parts of your business, so that the freed up capital can go into the next great thing, pear-peelers.

At which point, the market continues to grow again, as having maximized profit in the current equilibrium in one area, capital can be invested to grow in another. But as we do that, things may (will) change in the old equilibrium. Maybe the market capacity for grape peelers grows again, because we uplifted our fellow primates and now monkeys are consumers. Maybe the market capacity shrunk more, and now we need to dismantle existing market infrastructure to re-allocate capital.

Well, that deconstruction is going to require capital, which markets will compete over to offer, and re-allocate the dismantled capital, which market actors will seek to repurpose, and that will feed other markets and submarkets as the entire ecosystem of managing this transition supports expertise and industrial specialists who can do the task more efficiently than the competition, who will be consuming tools and systems developed for that purpose, which-

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Like /u/FarNearEverywhere says, the expectation of Wall Street is that growth is perpetual, outside of actual innovations that genuinely increase productivity — like a better kind of grape, or a better machine to process them.

And why shouldn't it be? Investors are the ultimate reality-based community, and economies have in reality grown basically forever. Where and in what form this growth happens changes, though. It can change a lot, which is why companies that fail to grow get capital removed and companies that do grow get capital applied.

This is not a moral judgment, though. Investors are not morally shunning companies that fail to grow. It's just that by all appearances, those resources would be more useful elsewhere. It's like selling a guitar you rarely play any more to finance a bicycle that you would ride often. This is not a judgment on the quality of the guitar, or its inherent moral worth, or driven by an unreasonable expectation that the guitar be more useful to you. It's purely an optimization.