In this little video George says something very strange indeed.
That the economy is limited by the real value of assets in the physical world.
Which is a very strange indeed thing to say about any possible world after capitalism. For it\’s actually the definition of the world before this strange capitalist/free market mix that we have.
It pretty much was true of the Malthusian world, that wealth only increased as physical resources grew. The huge change that the capitalist/market mix brought, that industrial revolution if you like, is that wealth escaped from that limitation.
The communist economies were still bound by it. That lovely example that Paul Krugman uses. That the Soviet economies had, by some estimates, absolutely no increase in total factor productivity. All growth came from using more resources (including more and better educated labour). And as Bob Solow has pointed out 80% of the market economies\’ growth over that same 20th century came from tfp growth, only 20% from greater resource use.
That is, that the very system he wants us to get beyond, capitalism/markets, is the very system that has freed us from his constraint, that wealth depends purely upon real world physical assets.
And changes in tfp are exactly the measure by which wealth creation is disconnected from those real world physical resources. Which leads us to, if you\’re concerned about the availability of such real world resources, why on Earth would you want to abandon the only economic system we\’ve ever had which divorces wealth from their availability?