Economic growth is based on an action principle which is defined by the technological driver and an energy conservation principle based on the avoidance of scarcity.
Considering the active principle, that sustains the maximal strategy, technology is the purpose that must be achieved in order to make an economy grow.
This purpose is put into action by a consumer’s monetary circulation and sustained by value competitiveness.
The active principle of economic growth requires:
- Technology: technology implies an improvement of the generation of added value with less energy consumption and less energy losses. Thus the economy grows in terms of increasing the available added value that can be traded in the community.
- Consumer’s monetary circulation: is the necessary credit available to access goods for the mass population.
- Value competitiveness: is the capacity to compete providing superior value and not based on cost advantages.
The energy conservation principle requires the integration of a need to avoid scarcity, productive monetary circulation to finance the production of goods and services and price competitiveness in order to win markets based on price advantages.
There are different levels of growth attitudes:
Reactive growth is the growth driven by scarcity and sustained by productive monetary circulation. It is the first level of a crisis recovery. It is very unstable because the conditions of monetary circulation for consumers are not given.
This is the growth fostered by state or government driven economies. This growth is basically based on price advantages and implies the second level of a crisis recovery. Structural crisis recovery implies necessarily the participation of governments. If the participation happens before the first stage has been achieved, it works as a palliative of the crisis without producing its solution.
Supply driven Growth (Stage 3)
It is the growth produced by the creativity of industry finding new ways to improve the added value delivered. This produces a change of the attitude of the market if the creative solutions fit into the unfulfilled needs of the population. It requires the existence of consumer monetary circulation or substitutes (counter-trade). The fulfillment of stage 2 is necessary.
Demand driven Growth (Stage 4)
This is the final stage when the demand responds developing a growing attitude in order to improve wellbeing. This implies the existence of a fluid financial system to provide the necessary monetary circulation to foster individuals’ consumption. The participation of the state is unnecessary. In order to prevent a new crisis the state needs to administrate the ethic of the market (justice).
Growth will happen when technology provides the necessary shift to productivity and the market accesses new added value with lower costs.
The substitution of technologies has basically no added value to market growth. This requires the existence of a perception of scarcity in order to sustain the minimum strategy for growth.