Reproduction (economics) - Economic Reproduction in Capitalism

Economic Reproduction in Capitalism

According to Marx, in a capitalist society economic reproduction is conditional on capital accumulation. If workers fail to produce more capital, economic reproduction begins to break down. Therefore, economic reproduction in capitalist society is necessarily expanded reproduction and requires market growth. Capital must grow, otherwise the whole process breaks down. Thus, economic growth is not simply desirable, but also absolutely necessary in capitalism, not just because of population growth but for commercial reasons.

In this light, the ecological vision of a "zero-growth society" appears rather utopian; or, at the very least, its achievement would require the abolition of capitalism. Some would argue that population growth makes economic growth absolutely necessary. Others argue that population growth must be restricted with birth control methods because otherwise there will be too many people for the available resources. The real argument though is not about "growth or no growth", but about the kind of growth that is best for the (enlarged) reproduction of the human species as such. Ecologists may validly argue that some types of growth undermine important conditions for human survival in the longer term, without this invalidating other kinds of growth which are beneficial. However, there is much dispute about which kinds of economic growth are actually beneficial or harmful.

Capital accumulation (the amassment of wealth in the form of capital assets) can occur in two basic ways:

• either by means of producing a net addition to the stock of capital assets,
• or by transferring wealth from one owner to another.

In the former case, the total stock of capital grows. In the latter case, the accumulation of one owner is at the expense of the other, there is no net growth. These two ways are usually combined, meaning that all or most owners can make gains, but in unequal amounts. In considering the economic reproduction process as a whole, one therefore has to consider both the production of new resources and the transfer (distribution) of resources. As a corollary, supposing that there is no net growth of output and capital, capital accumulation can continue only if some people and organizations get richer while other people and organizations get poorer. Typically, if output growth slows down, socio-economic inequality (measured e.g. by the Gini coefficient) increases.