In my post Steve Keen in Solvent Land (2), I mentioned that I thought Steve Keen’s analysis may be incomplete in that it ignores
increasing our capital goods (such as housing)
Let me be clear that I am not criticising his analysis, since he has created a model aimed at understanding the importance of debt in our economy whereas I am looking at eliminating debt.
And because I am looking at an economy with no debt, I need to look at whether this means an economy with no growth.
So let me go back to the dark ages when money was only used by the wealthiest in society and consisted of lumps of metal. Back then, the money supply was fixed (broadly speaking) since the only way if could be increased was by digging gold mines.
But there was, nevertheless, some form of economic growth. We had houses, villages, towns and cities which could be made larger and farms which might be extended.
So even without bankers and borrowing, economic growth is possible and can be measured by the increase in capital goods. I would suggest that even today, any real growth is very similar – western economies have better housing and sanitation than third world countries.
Whether growth is faster in a debt-laden economic system is arguable. It certainly seems so, but the 1930s and previous depressions have shown that this comes at a significant human cost which is no longer possible (ie we have built up substantial social security in western countries which mean that few people are left to starve).