They don’t need to be consumer goods. $1000 spent on clothes is the same as $1000 spent on GPUs as far as GDP is concerned. Headless businesses swapping dollars around creates plenty of GDP with few to no people involved.
A common fallacy is thinking that transactions exist without a human at either end of it (usually due to many layers of complexity in between).
You can talk all you want about companies selling to companies, etc., but at the end of the day everything on earth is owned by a human eventually.
Even high-frequency trades between two hedge funds are done with capital that was supplied by Limited Partners who probably are acting on behalf of pensioners.
The scenario you're describing is one of extreme wealth inequality, which is a real problem, but one that's supposed to be solvable through democratic means. Stopping technological progress isn't going to solve it.
Sure, everything is owned by a human. But does it have to be 8 billion humans? Why not 8 million or even 8 thousand? If humans provide literally zero economic value and their costs are significant, what can our economic systems say about whether they should even exist? It’s Macroeconomic Changes Have Made it Impossible for Me to Want to Pay You [1] but on a global level.
Yes, but at our current scale? At first glance it really seems that our simple economical metrics are a good way to have billions of humans living largely peacefully together – while ruining their environment of course.
The scenario you're describing is one of extreme wealth inequality, which is a real problem, but one that's supposed to be solvable through democratic means. Stopping technological progress isn't going to solve it.
The broken window fallacy is a controversial axiom that implies demand generation isn't a meaningful way to increase GDP (it comes from the camp that believes output capacity is the only true measure of GDP).
This concept became particularly controversial during the Cambridge Capital Controversy [0].
If you believe that GDP is an exogenous measure of what society can produce, you run into oddities like global GDP changing trajectory in 2008 [1] (i.e. we never 'caught up' but did the US housing crisis really cause the human race to lose our ability to create more goods and services?).
On the other hand, if you believe demand drives GDP, then why don't we just demand ourselves into more wealth? Shouldn't natural constraints like resource scarcity then drive GDP (i.e. the original underpinning of the broken window fallacy)?
In either case, the broken window fallacy is far from an agreed-upon axiom.
If I understand your point, the broken window fallacy is to say that a child who breaks a window has actually done something good for the economy by keeping glass makers and installers employed. Obviously this isn’t true because those people could be building new things instead of fixing the old.
Well, a huge portion of our economy is in fixing the old. Why waste so much money on healthcare for humans when we could use it to build bigger and better things. We have whole portions of the economy like food production whose entire purpose is to keep people alive. What a waste. The far more efficient option is to eliminate those people and let machines do the work. Even if GDP goes down, ultimate productivity goes up.
The same can be said for entertainment, hospitality, most education (we spend 20+ years educating people before they can meaningfully contribute) and marketing. A broken window theory might say these industries contribute to the economy and give people jobs, but actually they accomplish little.
