It’s not “companies”, it’spublicly traded companies.

And the answer is quite simple really: the moment you become publicly traded your stock becomes your product, and everything else becomes a means to deliver better stock prices to your investors.

Not all companies are publicly traded, I patronise privately held companies wherever possible because as a client I’m still at the core of their business strategy, and I’m wary of the alternative.

At the end of the day, bad strategies result in bad products and services. Vote with your wallet, it’s very possible.

I didn’t see a single top level comment be the devil’s advocate so I will give it a try.

Humanity moves forward. Standards are always shifting. New technologies and needs are created everyday and people want to raise their standard of living to accommodate for new things. Also, global population has been growing since we stabilized food production in the 1800’s.

If companies don’t grow at least with population, that means tomorrow we will have less than today. If companies don’t also grow with raising standards of living, that means someone stays poor. If companies don’t also grow to match the complexities of producing new technology, that means we stopped in time technologically.

In a competitive system such as capitalism, you don’t wait for more competitors to show up and fill this new ever-growing demand; you take that demand for yourself. So everyone seeks growth.

When a society does not grow (i.e. japan) for too long, capitalism doesn’t break down immediately, but you clearly see it stagnates. Japan’s population is not stable and their economy is facing major problems.

Whether growth is organic or fabricated is a related, but different, topic

Valuation of companies is partially dependent on growth. A company that is projected to grow is worth more than a similarly sized company because it is expected that future growth will make the company earn more in the future, which makes the company worth more now.

They don’t.

See local businesses that remain a single location for generations.

It is a want not a need.

Idiots began to demand perpetual growth and other idiots began trying to make it happen. And then it became institutionalized. And then the idiots forgot they were idiots.

Only workers are expected to be happy with good enough. The elite will never say the balance of thier bank account is good enough. And thus companies always need to grow bigger.

There are many answers to this.

First, this is not a general capitalism thing. It is more the specific flavor we have. Second, it is not an absolute rule, there are companies that don’t focus on growth, but it is rare amongst massive companies.

The original idea of capital investment is that when you need investment for your company (e.g. to buy better machines, expand production, etc.) you let people invest (by buying shares) and then give them a portion of the profits gained from that investment (in the form of dividends).

However, most companies have figured out that if they don’t pay dividends but re-invest the money, shareholders are still happy because their shares get more valuable as the company grows and they get to grow the company, which is good for CEO paychecks and lot of other things.

There are things like economies of scale (if you produce million units of something per year, it is almost always cheaper per unit than if you produce ten per year). So if you don’t grow, your competitor that does grow could sell cheaper than you and put you out of business.

And a lot more.

Shareholder primacy. Thank you Dodge v Ford. Thank you Friedman Doctrine.

This mostly only happens to companies with outside investors, and it’s in order to make the investors happy.

Companies owned privately by one or a handful of people who all just want the company to keep going, make a decent profit, and be sustainable, don’t always exhibit the “need for growth” behavior.

It’s usually because the investors don’t really give a shit about the company or its mission, they just want money. Often this kind of “need for growth” bullshit is just short term growth, since that’s what most investors care about. It stifles the company’s ability to plan for long term growth and make the right decisions to achieve it.

The reason cited even in privately held companies is pretty much because everyone else is doing it.

Their COGS (Cost of Goods Sold) rises every year. The markup on licenses, the physical hardware, the shrinkflation from the manufacturer, and COLA (Cost of Living Adjustments) for staff all cut into the operating budget (or the profit) of the company.

Under capitalism there are hardly any checks to this, so even companies that are not seeking to grow must raise rates else they will take a loss every year.

Idiots began to demand perpetual growth and other idiots began trying to make it happen. And then it became institutionalized. And then the idiots forgot they were idiots.

Charles Eisenstin’s book “Sacred Economics” (which you can read here and that I recommend reading in full) has a nice, simple parable in chapter 6 about that.

Once upon a time, in a small village in the Outback, people used barter for all their transactions. On every market day, people walked around with chickens, eggs, hams, and breads, and engaged in prolonged negotiations among themselves to exchange what they needed. At key periods of the year, like harvests or whenever someone’s barn needed big repairs after a storm, people recalled the tradition of helping each other out that they had brought from the old country. They knew that if they had a problem someday, others would aid them in return. One market day, a stranger with shiny black shoes and an elegant white hat came by and observed the whole process with a sardonic smile. When he saw one farmer running around to corral the six chickens he wanted to exchange for a big ham, he could not refrain from laughing. “Poor people,” he said, “so primitive.” The farmer’s wife overheard him and challenged the stranger, “Do you think you can do a better job handling chickens?” “Chickens, no,” responded the stranger, “But there is a much better way to eliminate all that hassle.” “Oh yes, how so?” asked the woman. “See that tree there?” the stranger replied. “Well, I will go wait there for one of you to bring me one large cowhide. Then have every family visit me. I’ll explain the better way.” And so it happened. He took the cowhide, and cut perfect leather rounds in it, and put an elaborate and graceful little stamp on each round. Then he gave to each family 10 rounds, and explained that each represented the value of one chicken. “Now you can trade and bargain with the rounds instead of the unwieldy chickens,” he explained. It made sense. Everybody was impressed with the man with the shiny shoes and inspiring hat. “Oh, by the way,” he added after every family had received their 10 rounds, “in a year’s time, I will come back and sit under that same tree. I want you to each bring me back 11 rounds. That 11th round is a token of appreciation for the technological improvement I just made possible in your lives.” “But where will the 11th round come from?” asked the farmer with the six chickens. “You’ll see,” said the man with a reassuring smile. Assuming that the population and its annual production remain exactly the same during that next year, what do you think had to happen? Remember, that 11th round was never created. Therefore, bottom line, one of each 11 families will have to lose all its rounds, even if everybody managed their affairs well, in order to provide the 11th round to 10 others. So when a storm threatened the crop of one of the families, people became less generous with their time to help bring it in before disaster struck. While it was much more convenient to exchange the rounds instead of the chickens on market days, the new game also had the unintended side effect of actively discouraging the spontaneous cooperation that was traditional in the village. Instead, the new money game was generating a systemic undertow of competition among all the participants.

The development of currency results in loans. The practice of loaning starts the practice of charging interest. Interest requires constant growth.

Individual companies have to grow to keep up with the necessary constant growth of the economy as a whole. Any company that doesn’t keep up dies.

It’s all based around fractional reserve lending and interest. Banks take in deposits and lend several times the deposit amount at interest against that reserve. To pay back the bank the business sector has to grow in order to pay interest on the principal. Make sense?

if you look closer you’ll note that it’s very much related to whether a company is publicly trader or not, as soon as people are trading stocks you end up with a bunch of people who don’t actually care about the company and those involved in it, they only care about making money.

a company that isn’t having stocks traded around is able to focus on things other than growth, such as making sustainable revenue or being a public good (or a personal good, like a small café that barely makes any profit and just exists because the owners want to run a café).

Yeah that’s the entire problem.

“Always bigger” is delusional or cancerous.