Indeed ... compound interest does not require growth ... it requires that an activity yields gross profit income that can be used to pay interest after the costs have been recouped and the principle repaid ... and that is something that is quite possible in a steady state.
but without economic growth one person's "gross profit income" is someone else's loss... "Imagine all the people/ Sharing all the world" -- John Lennon
(I may be completely wrong or irrelevent here as my total theoretical economic knowledge could be written on the back of a postage stamp) Any idiot can face a crisis - it's day to day living that wears you out.
The neoclassical fantasy was that there was something intrinsic about that allocation of the earned income between wage income and profit income, when it is, after all, a social system rather than a physical one. Many traditional marginalist economists still cling to that fantasy.
But as long as the fresh injections into the spending-income-spending loop are stable and the proportions leaking out of the same loop are stable, then any arbitrary allocation of profit and wages that allows those working in the ongoing enterprise to survive (whether they gain their allocation as a wage share, profit share, or mix of both), then that system is reproducible.
The sustainable steady state benchmark is a far more useful benchmark than the traditional economic fantasy of general equilibrium markets all around. A sustainable steady state is not sufficient for sustainability ... the system also has to be able to respond to shocks upsetting a sustainable steady state and settle back into a sustainable steady state ... but it sure as heck is necessary. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
If there is pure technological progress leading to pure productivity gains (and not simply gross labor productivity, which has often over the last four centuries been accompanied by greater resource intensity per labor hour), then a pure steady state is not required, but since pure technological progress tends to ebb and flow in waves, it is important for strong sustainability to have an economic system that is capable of sustaining a steady state, and as well as of accomodating productivity gains as they occur without loss of the ability to sustain a steady state. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
