Population growth and economic growth

The Earth’s biggest and most influential economies use an economic system that must continually grow to function. Ultimately, the only way to have that economic growth is to have population growth, so our economic system commits us to endless population growth.


An economy is all about consumption; the size of an economy is determined by the amount of consumption of the goods and services that it produces.


If an economy is to grow, the consumption of its goods and services must grow. The total consumption is a combination of how much the individual people in an economy consume, and the number of people in that economy.  Assuming that everyone consumes a similar amount you could state this as an equation:


Individual consumption x population = the size of the economy


For consumption to grow either the people who take part in that economy must consume more, or there must be more people in that economy doing the consuming.  The combination of population and individual consumption must increase; that’s what economic growth is.


In most developed economies most people have reached the limit of their consumption because they can't, or won't, borrow any more money: their credit cards are likely to be fully drawn, and they are likely to have borrowed as much for their home as they can afford to repay.  Therefore, the only way to increase consumption in developed economies is to increase the population. 

In most undeveloped economies people are poor and consume little, therefore consumption may be increased by reducing poverty.  A nation must have the right sort of structural organisation to allow its people to participate in the economy.  In recent decades nations such as India and China have developed the right sort of structural organisation to allow an increasing proportion of their population to participate in the formal economy and to consume more, causing their economies to grow. 

If a developing economy continues to develop the right structural organisation its people will eventually reach the same limitation in their ability to increase their consumption as the people of developed economies; that is, they won’t be able to borrow any more money because they won’t be able to afford to repay it.  Once an economy reaches this stage (the stage that developed economies are at) the only way for it to continue to increase consumption is by increasing its population. 

For developed economies to grow they must increase their population; developing nations can initially increase consumption by reducing poverty, but eventually as their economic systems develops they will also need population growth to have economic growth. Ultimately, population growth is the only way to have economic growth.

Nearly all business people in developed nations know that they rely on increasing population to provide the economic growth that makes it easy for their businesses to profit; this is why commercial news services always have a policy of promoting population growth.  The Business Council of Australia, which represents Australia's 100 largest companies, have said that population growth is inextricable from continued economic growth and their president, Graham Bradley, has promised to fight any plan to cut population growth in Australia by cutting immigration numbers.


This page is linked from:

Why our population grows


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