Decentralized extractiveness and the Limits of Growth

Decentralized extractiveness and the Limits of Growth | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Decentralized extractiveness and the Limits of Growth Demetrio Miloslavo Bova, Gökçe Manavgat This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9579386/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Traditional growth models explain long-run development through capital accumulation, human capital, technological change, and institutional quality. This paper argues that these drivers are not sufficient for growth when agents in decentralized exchanges are extractive: growth requires a relational feasibility condition that constrains how value is appropriated in decentralized interactions. We define this condition as pre-growth constraint: before standard growth drivers can operate, appropriation must lie within compatible bounds. To formalize this argument, we develop a relational model with two heterogeneous agents who repeatedly produce and exchange. Each agent is characterized by productivity and appropriation, the latter capturing the degree to which value is captured through pricing and remuneration behavior. From production and budget constraints alone, the model derives a set of necessary conditions for growth. The model yields three results. First, productivity improvements -including those due to capital accumulation and innovation- are not sufficient for growth when appropriation is extractive; their effect depends on the relational structure of exchange. Second, the range of appropriation compatible with growth expands with aggregate productivity, so more developed economies can sustain a larger appropriation. As a consequence, growth-compatible remuneration is bounded: remuneration that rises too strongly with productivity can become over-merit and block growth by undermining the counterpart’s purchasing capacity. Consequently, unequal income distribution limits growth independently of the underlying productivity differential. Therefore, the model suggests that extractive appropriation — even when justified by prevailing notions of merit — can prevent growth. JEL codes : D63, D31, P16, O43. Pre-growth constraint Growth Productivity Appropriation Inequality Extractiveness Merit Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9579386","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":633384093,"identity":"b23e6bee-1408-4078-a764-e6bfc88c5f6a","order_by":0,"name":"Demetrio Miloslavo Bova","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAr0lEQVRIiWNgGAWjYDCCAzwg0gbMlgBiGWK1pMG18BCr5TAJWvgO8B58zFNzPnHDAeaDt3kY7hDWInmAL9mY59htoBa2ZGsehmeEtRgc4DGTnMF2O3EbkCHNw3CYWC3/zgG18H8jXovEx7YDIFvYiNMieZgv2eBjX7Lx/sNsxpZzDIjwC9/x3oMPEr7Zyc5sb354403FHTmCWhiYURgGBwjrQAdkaBkFo2AUjIJhDwBRMDo5QdREfQAAAABJRU5ErkJggg==","orcid":"","institution":"University of Warsaw","correspondingAuthor":true,"prefix":"","firstName":"Demetrio","middleName":"Miloslavo","lastName":"Bova","suffix":""},{"id":633384096,"identity":"2577afd5-3d96-4d45-927b-0443724b98f6","order_by":1,"name":"Gökçe Manavgat","email":"","orcid":"","institution":"Toros University","correspondingAuthor":false,"prefix":"","firstName":"Gökçe","middleName":"","lastName":"Manavgat","suffix":""}],"badges":[],"createdAt":"2026-04-30 16:08:21","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-9579386/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-9579386/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":108806653,"identity":"2da39849-ad75-4dfd-a078-82a5863f62bc","added_by":"auto","created_at":"2026-05-08 15:29:11","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":563832,"visible":true,"origin":"","legend":"","description":"","filename":"DecentralisedextractivenessandtheLimitsofGrowthblinded.pdf","url":"https://assets-eu.researchsquare.com/files/rs-9579386/v1_covered_0f4bdd21-d914-4eda-b1a6-61d88c43606f.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Decentralized extractiveness and the Limits of Growth","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Pre-growth constraint, Growth, Productivity, Appropriation, Inequality, Extractiveness, Merit","lastPublishedDoi":"10.21203/rs.3.rs-9579386/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-9579386/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eTraditional growth models explain long-run development through capital accumulation, human capital, technological change, and institutional quality. 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