by HighlightsDegrowth and Modern Monetary Theory form a strategic symbiosis for addressing social and ecological crises Public spending on social and ecological objectives is not constrained by tax revenues or GDP MMT needs to incorporate ecological limits to production and productive capacityTargeted fiscal and monetary policies can ensure macroeconomic and price stability during a degrowth transition Policy priorities include a job guarantee, credit regulation, price controls, tax reforms, and universal public servicesAn MMT-informed degrowth transition requires more democratic control over monetary policy and financial system governanceAbstractDegrowth lacks a theory of how the state can finance ambitious social-ecological policies and public provisioning systems while maintaining
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Highlights
- Degrowth and Modern Monetary Theory form a strategic symbiosis for addressing social and ecological crises
- Public spending on social and ecological objectives is not constrained by tax revenues or GDP
- MMT needs to incorporate ecological limits to production and productive capacity
- Targeted fiscal and monetary policies can ensure macroeconomic and price stability during a degrowth transition
- Policy priorities include a job guarantee, credit regulation, price controls, tax reforms, and universal public services
- An MMT-informed degrowth transition requires more democratic control over monetary policy and financial system governance
Abstract
Degrowth lacks a theory of how the state can finance ambitious social-ecological policies and public provisioning systems while maintaining macroeconomic stability during a reduction of economic activity. Addressing this question, we present a synthesis of degrowth scholarship and Modern Monetary Theory (MMT) rooted in their shared understanding of money as a public good and their common opposition to artificial scarcity. We present two arguments. First, we draw on MMT to argue that states with sufficient monetary sovereignty face no obstacle to funding the policies necessary for a just and sustainable degrowth transition. Increased public spending neither requires nor implies GDP growth. Second, we draw on degrowth research to bring MMT in line with ecological reality. MMT posits that fiscal spending is limited only by inflation, and thus the productive capacity of the economy. We argue that efforts to deal with this constraint must also pay attention to social and ecological limits. Based on this synthesis we propose a set of monetary and fiscal policies suitable for a stable degrowth transition, including a stronger regulation of private finance, tax reforms, price controls, public provisioning systems and an emancipatory job guarantee. This approach can support broad democratic mobilization for a degrowth transition.
How to pay for saving the world: Modern Monetary Theory for a degrowth transition
Christopher Olk, Colleen Schneider, Jason Hickel