Banking system demands and creates economic growth

I am having a discussion on monetary policy with a Green Party economist who is sceptical of monetary reform on this post.

These debates usually get into a tangle, so I am trying to take a constructionist approach, building on what we agree on.

So far we agree on this:

1 Money is being created.
2 Banks create money by lending at interest.
3 Although banks also borrow from depositors at interest, the interest rates are always lower for savers than for borrowers, and the amounts retained on deposits are in the order of one percent of the amounts lent out.
4 To pay back the interest means that the borrower has to make a profit on the market.

Next, I wish to insert this line:

5 This system is an important driver of economic growth.

To back this point, a thought experiment is needed:

Imagine 2 companies, A and B, which are in competition. They are in stable equilibrium, each having 50% of the market, and both are sound.
Now company A goes to the bank, borrows capital, and invests it in new machinery. His firm's productivity goes up, so he is able to lay off workers, who go on to social security. His share of the market goes up, so he now has 75% of the market.
His competitor, company B, has no choice but to borrow, invest in new machinery, and lay off workers.
B is successful in this, so they are now back in equilibrium, with a 50-50 share of the market.
However, they are both now burdened with debt interest which reduces their profits, so they must increase output by invading other markets, or by producing goods with shorter working lives, or both.

So the system has "progressed" from equilibrium to equilibrium, but in the process hands have been laid off, the banks have secured a source of income, and A and B are marketing more goods more aggressively.

This is the essence of a book by Willem Hoogendijk, "The Economic Revolution", Green Print/Jan van Arkel, London/Utrecht 1991

So, Alison: do we agree line 5
5 This system is an important driver of economic growth.

?