I'm not asking what scaling solution is best. I'm asking the question: if the market wants to be at Q* but the production quota forces it to be at Qmax, who exactly will enforce the quota (especially over the long term as forking pressure builds)?
Normally, the answer is "the government" (or some powerful organization). But something like Bitcoin is governed by the market itself, is it not? How can the market enforce a quota that the market itself does not want? Well, I don't think it can.
There's a subtlety here: is the "thing" that will enforce the quota necessarily the same "thing" that wants to break the quota? The answer is not completely clear to me...
The code Peter, the code! Bitcoin is not governed by the market!...
Good; I sort of agree. Bitcoin is indeed governed by the code that people run. But is it not these same people who
choose which code to run? And are not these the same people who, in aggregate, become "the market"?
I would argue then, that in the final analysis, it is the will of the market that controls the code and thus it is the will of the market that governs Bitcoin.
The Bitcoin market is a curious one full of very different actors whose incentives are not all particularly aligned. Assuming I play along with your characterization, then I shall specify that the demand you speak of does not currently comes from "the market" but mainly from consumers & merchants
To be quite honest, I'm not exactly sure what "the market" even means in this context. I said earlier, "how can the market enforce a quota that the market itself does not want?" But what's not clear to me is if the "market" that wants the increase is the same "market" that needs to enforce the quota.
Anyways, I suspect by this time next year we shall have our answer. My hunch is that, yes, there is only one market and if that market wants an increase (i.e., Qmax is to the left of Q*) then it shall find a way to fork the protocol.
By the way, I am still taking 1 BTC bets (subject to deposit in a 2-of-3 escrowed wallet) that the longest proof-of-work chain will contain a block larger than 1 MB by this time next year.