Growth with Investment & Small Consumption

It is possible to grow the economy with just investment and nominal amounts of consumption. In fact, this is how a modern urban society is created.

It is not necessary to focus too much on current consumption in order that the economy must grow. The focus on current consumption is necessarily only when the economy is structured to concentrate on the production of consumer goods. This was the Japanese economic model and, in the last decade or so, the Chinese economic model.

But in order that the economy is able to sustain its growth for a longer time, there is a need to focus on investment. Investment is that part of the current resource that you have which you have decided not to simply consume away (because you have simple needs) and instead used to improve future production (because you feel you will be unable to produce for yourself in the future or because you will have more dependents to take care of).

You could develop your current resources to the gathering of know-how, exploring the environment or just experimenting to find new ways - to produce things for which you think there will be a demand in future, things that people will need.

By focusing on saving current resources from current consumption and investing those savings on projects that will bear fruit in future, we create a society where people are hard at work on their little projects with great curiosity of how to come up with new ideas and putting those ideas into practice. There will be excitement about developing a better world for our children.

If instead we are focusing our current resources on current consumption - which may be necessary in cases where there is constant starvation because of high population growth or poor production technology - then society will be caught in a poverty trap. (Poverty in the modern sense of the word, as in this sense, probably all of history is caught in poverty.)

But we have become enlightened with new possibilities because of our ability to think out of the religious box and into the scientific box. Now, we may have to jump out of the scientific box into new boxes which are now becoming favourites such as the environmentally-friendly box. Whatever it may be, there is a lot of investing for all of us to do and it is better we spend time dreaming and doing rather than eating and grow fat and sick.