Why is perpetual economic growth necessary in a modern market economy?

The essence of the question is "modern" not "market". Modern economies are founded on credit; most of the money in the world is bank money - created by borrowing; etc.

http://wfhummel.cnchost.com/moneybasics.html

No one would lend if they didn't expect to get their money back; no one would borrow if they didn't expect to make a profit after paying back the loan. If the economy isn't growing in real terms, then most loans just can't make a real profit and the economy collapses.

http://cij.inspiriting.com/?p=698#

When people talk about the modern economy being a Ponzi scheme, this is what many mean.

http://writ.news.findlaw.com/buchanan/20101202.htm...

The alternative would be a much poorer society, where most people couldn't afford to buy houses because they'd have to save up the cost of a house while still paying rent, where farmers couldn't buy the machinery that made them more productive until they had accumulated the full cost of that machinery while being less productive, etc.

So the answer is C.

It is also the case, that people do want their standard of living to rise and are willing to take action against politicians that don't deliver the economic growth that makes that possible:

http://www.foreignaffairs.com/articles/64862/minxi...

http://www.asianews.it/news-en/Inflation-in-China-...

And it is also the case that rising populations require rising aggregate growth just to keep standards of living constant.

http://worthwhile.typepad.com/worthwhile_canadian_...

So, politically, though not economically, A and B are also legitimate answers.

In any case:

1. It is imposible for there to be perpetual significant economic growth in any finite universe, which means that the modern economic system is simply not sustainable - it will stop.

http://dieoff.org/page110.htm

2. The Marxists would argue that there is a further self-destructive element: the nature of capital accumulation, where the rich have more chances to become richer yet, resulting in a concentration of assets and a tendency for the rate of profit to fall.

http://en.wikipedia.org/wiki/Tendency_of_the_rate_...

A countervailing force would be continually improving technology, but it is hard to assume that technology will continue at the same rate from now to eternity.

http://www.economist.com/node/346598?story_id=3465...

State path can focus financial potential in a small form of palms, stagnating circulate of materials and maximum advantageous to financial deterioration. interior the Classical sense, "loose industry" economies circumvent this, because of the fact potential is balanced between nicely-reported shoppers, considered one of those sellers, and each now and then some governmental obstacles. needless to say, interior the US case in point, the place the fortune often hire unlawful immigrants (overcoming government's obstacles), mastercard businesses remember on advantageous print (keeping shoppers out of the loop), and food sellers use intentionally deceptive labels (doing the two on the comparable time), we are actually no longer talking related to the "loose industry" Adam Smith meant for us to think of of, yet somewhat of a directed financial equipment, merely no longer a state-directed financial equipment. as a result, what a lot of human beings consult with as loose markets fail to fulfill the definitely definition, and are as a result, subject to the comparable inabilities as economies with an overabundance of state-making plans.

b/c of perpetually growing population, and perpetually growing demands of each person.