No Stupid Questions

Yeah that's the entire problem.

"Always bigger" is delusional or cancerous.

In the strictest definition, they don't.

Capitalism is minimally fulfilled when a business sells something for a profit and reinvests the profit (now capital) in the business. Hence the term. It doesn't have to grow the business, make new products, or do anything beyond maintenance of its processes, be that fixing or updating machinery or training employees. A single person selling tomatoes in a market in Madagascar that fixes of their tomato table with profits is perfectly capitalist.

Expecting constant growth is not a requirement of anything.

Probably same reason cancer always needs to grow. It's a fundamentally broken part of the system.

I hate it. It even bleeds over into performance reviews. Like you'll never get a perfect score no matter how hard you work because you always have to be improving on something. It's supposed to be the sure fire sign of "success" but all it does is create impossible goals and bring everyone down.

if you look closer you'll note that it's very much related to whether a company is publicly trader or not, as soon as people are trading stocks you end up with a bunch of people who don't actually care about the company and those involved in it, they only care about making money.

a company that isn't having stocks traded around is able to focus on things other than growth, such as making sustainable revenue or being a public good (or a personal good, like a small café that barely makes any profit and just exists because the owners want to run a café).

They don't. It is a fallacy.

This mostly only happens to companies with outside investors, and it’s in order to make the investors happy.

Companies owned privately by one or a handful of people who all just want the company to keep going, make a decent profit, and be sustainable, don’t always exhibit the “need for growth” behavior.

It’s usually because the investors don’t really give a shit about the company or its mission, they just want money. Often this kind of “need for growth” bullshit is just short term growth, since that’s what most investors care about. It stifles the company’s ability to plan for long term growth and make the right decisions to achieve it.

Shareholders want their shares to increase in value, because that's how you earn wealth, your retirement fund grows, etc. That means the company needs to earn more profit (more precisely, profit per share). To do that you typically grow, but you can also do it by buying back stock (that increases profit per share), or by "increasing efficiency" which is usually a dead end.

Fiduciary responsibility. If you own a company that has shareholders they can sue you for refusing money or 'leaving money on the table', iirc this was a major reason why they sold twitter to musk

More money more better…

Inflation, but also scale of manufacturing and tooling.

I was a Buyer for a chain of bike shops. You will not buy the same stuff forever. Continuous manufacturing is also generally much more expensive. Most cheap modern goods are made through contract manufacturing. That creates the cycle of seasonal products. Even something like cars involves a tooling cycle where the same stuff cannot be made indefinitely; the tools wear out with time. The market saturates with any given design. All people do not want to drive a Toyota Corolla from 1992 in beige.

There are plenty of small companies that don't grow. Think mom and pop shops and self employed tradesmen.

I've you get a bit bigger and you've already got the hassle of employing lots of people in multiple places you can't really balance it to be neutral, you will grow or shrink and it's a lot more pleasant to grow than shrink.

Year over year is what EVERY company looks at.

Making the same amount of money as you did last year is considered a failure in business.

Shareholders are always going to demand more profits. There is no mechanism in a capitalist economy that reinforces the concept of having "enough."

Disclaimer that I'm not an economist

I believe I have heard a discussion about this before... that the "always grow bigger" model is not only not a necessity under capitalism, it wasn't even the predominant economic model in the US for a while. Post war, FDR's New Deal followed the Keynesian model, which from my understanding indirectly led to the type of regulated capitalism with a much heavier emphasis on shareholder/employee satisfaction... and also when the extremely high progressive income tax brackets happened. The always need to grow bigger idea may or may not have come from Milton Friedman of the UChicago school in the 1970s: one of the core assumptions of the Neoclassical model is that companies maximize profits.

Also this is definitely not just a US megacorp thing. Other countries have megacorps too. Case in point South Korea...

If the owners primarily want to make money by taking out a portion of revinue as dividends or distributions, like a family business typically does, then stable revenue is more important in some ways than reinvesting in growth.

If the ownership wants to make money by eventually selling their stake (shares or equity) in the company then growth is fundamental to the strategy.

Charles Eisenstin's book "Sacred Economics" (which you can read here and that I recommend reading in full) has a nice, simple parable in chapter 6 about that.

Once upon a time, in a small village in the Outback, people used barter for all their transactions. On every market day, people walked around with chickens, eggs, hams, and breads, and engaged in prolonged negotiations among themselves to exchange what they needed. At key periods of the year, like harvests or whenever someone's barn needed big repairs after a storm, people recalled the tradition of helping each other out that they had brought from the old country. They knew that if they had a problem someday, others would aid them in return. One market day, a stranger with shiny black shoes and an elegant white hat came by and observed the whole process with a sardonic smile. When he saw one farmer running around to corral the six chickens he wanted to exchange for a big ham, he could not refrain from laughing. "Poor people," he said, "so primitive." The farmer's wife overheard him and challenged the stranger, "Do you think you can do a better job handling chickens?" "Chickens, no," responded the stranger, "But there is a much better way to eliminate all that hassle." "Oh yes, how so?" asked the woman. "See that tree there?" the stranger replied. "Well, I will go wait there for one of you to bring me one large cowhide. Then have every family visit me. I'll explain the better way." And so it happened. He took the cowhide, and cut perfect leather rounds in it, and put an elaborate and graceful little stamp on each round. Then he gave to each family 10 rounds, and explained that each represented the value of one chicken. "Now you can trade and bargain with the rounds instead of the unwieldy chickens," he explained. It made sense. Everybody was impressed with the man with the shiny shoes and inspiring hat. "Oh, by the way," he added after every family had received their 10 rounds, "in a year's time, I will come back and sit under that same tree. I want you to each bring me back 11 rounds. That 11th round is a token of appreciation for the technological improvement I just made possible in your lives." "But where will the 11th round come from?" asked the farmer with the six chickens. "You'll see," said the man with a reassuring smile. Assuming that the population and its annual production remain exactly the same during that next year, what do you think had to happen? Remember, that 11th round was never created. Therefore, bottom line, one of each 11 families will have to lose all its rounds, even if everybody managed their affairs well, in order to provide the 11th round to 10 others. So when a storm threatened the crop of one of the families, people became less generous with their time to help bring it in before disaster struck. While it was much more convenient to exchange the rounds instead of the chickens on market days, the new game also had the unintended side effect of actively discouraging the spontaneous cooperation that was traditional in the village. Instead, the new money game was generating a systemic undertow of competition among all the participants.

The development of currency results in loans. The practice of loaning starts the practice of charging interest. Interest requires constant growth.

Individual companies have to grow to keep up with the necessary constant growth of the economy as a whole. Any company that doesn't keep up dies.

Companies grow and shrink from a combination of market and internal forces. Companies sometimes need to shrink or grow. The economy and culture are constantly changing. That is why it is very hard to predict where things will go.

Your example of having a company with a set amount of employees that produce a set product happens pretty frequently. A lot of employee owned or family businesses are this way.

I think most of your post can be summed up with why do investors want more and more money. The answer is because they can. If your company owes money to investors then they will beholden to them in one form or another.

There is another worthy discussion here and it is about boards. Boards that do not contain equal representation for the employees and the public can be very destructive.

Most of the corporate abuses we have suffered come from having perverse leadership non-representative of these two most important influences.

Because they took the money. If you take the money, the path is inevitable

When you take on investors, you just invited in someone who looks at your company like a farmer does to their crops. They want you to grow as much as possible, but they don't actually care if you live or die - you're one of many using up resources

If your growth slows, they're going to demand more. They might demand you make cuts, they might push you to take loans and expand, they might try to sell to someone else. If your value isn't increasing faster than other possible investments, they lose imaginary money to opportunity cost

And by virtue of being an investor, they have plenty of money and want to gamble with it. A total loss probably wouldn't impact their lifestyle, they want invest in Apple at the ground floor and become a billionaire

You can start a company through loans, risk your house and build up slowly, and walk away clear. And people do.

But then they want to retire... And there's this neat trick you can do if you want to own a small business... You can make it buy itself. You can take out a loan to pay out the previous owner, say 5 years of profit, and make the business take on the loan. But now, just to break even, you've got to beat what you paid for it plus interest over the term. And both business and individuals can do this

So in short? The reason is debt. A small business can make you upper middle class, a large one could make your entire family insanely wealthy for centuries.

But once you take the money, the business has to grow, or it'll be harvested

Under capitalism, companies do what their owners want them to do. The owners can choose to try to grow, to shrink, to sell, or to close.

Publicly owned companies have shareholders, and the shareholders usually want the company to grow so their investment grows. Shareholders can have other values, but anyone can become a shareholder.

Under non-capitalist systems, the government might own some or all companies. Then the companies do whatever the party in power wants. The party in power probably doesn't have time to run all the companies, so they give some level of independence. They can reign that back whenever they like.

The most common motivation in non-capitalist systems is probably greed and growing personal wealth of party leaders via corruption under that system. Luckily, the people can vote in a different party and/or protest against party corruption except in all real-world cases, where that is banned or suppressed.

Profits about all. The size of the company itself, eh. But, profits must grow infinitely apparently.

They can. But that would make you 'lose' capitalism.

Why settle for one yatch, when you could have several mega yatchs?

Note that even if by all practical terms a business isn't growing, then it's still growing.

Part of the whole deal is that there's an intent for the money supply to change for a roughly 2% inflation. In an oversimplified sense, the idea being that everything gets 2% more expensive, everyone gets 2% raises, and investments at least generate 2% returns.

We've basically decided that we need to trick ourselves into feeling progress by making "standing still" look like growth. So if someone had flat income year over year, they actually lost in real terms.

The reason cited even in privately held companies is pretty much because everyone else is doing it.

Their COGS (Cost of Goods Sold) rises every year. The markup on licenses, the physical hardware, the shrinkflation from the manufacturer, and COLA (Cost of Living Adjustments) for staff all cut into the operating expenses (or profit) of the company.

Under capitalism there are hardly any checks to this, so even companies that are not seeking to grow must raise rates else they will take a loss every year.

Assume you're saving X amount of money each month for your retirement.

Your options for storing that money is either:

1. In cash which will "lessen" in value as time goes by due to inflation
2. In a savings account with middling interest rate
3. Or you could invest in the stock market which will typically offer better return.

Assuming you go for option 3, would you choose to invest in a company with zero growth meaning your retirement fund won't grow, or would you choose a company that is constantly growing?

Nobody would choose to invest in a company with zero growth or which doesn't return money back in the form of dividends.

You're objectively better off investing in companies that grow since those are the companies that will grow your investment.

• Start business. Business very small, want business big. Big business happier than small business.
• Need money to big business, small business not enough money.
• Ask another big business for help small business
• Big business tells small business: We give you money, you get big, you owe us money back.
• small business always trying to be big business

Ape brain often goes "big = good" and therefore "bigger = better". And since a bunch of other peoples ape brains have thought this before you, then now if you have a tiny business, it's very likely that your only options are to either get trampled by giants or try and become one of them, even if your ape brain doesn't think that way.

As a co-owner to a business, we grow because sometimes the funds from what we're already selling slow so we branch out in other directions to cover it. An answer for small businesses at least.

Depends, but to meet demand seems reasonable?
Imagine you invent something splendid and life-changing. You have your company with a 100 employees but you can't satisfy the market so you expand.
Like with the safety match.

I'd highly recommend watching this video, it goes through the history of capitalism and why it is the way it is now

https://youtu.be/gqtrNXdlraM