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How to pay for saving the world: Modern Monetary Theory for a degrowth transition

Olk, Christopher, Schneider, Colleen and Hickel, Jason (2023) How to pay for saving the world: Modern Monetary Theory for a degrowth transition. Ecological Economics, 214. ISSN 0921-8009

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Identification Number: 10.1016/j.ecolecon.2023.107968

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.

Item Type: Article
Additional Information: © 2023 The Author(s)
Divisions: Anthropology
International Inequalities Institute
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
H Social Sciences > HB Economic Theory
JEL classification: E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E12 - Keynes; Keynesian; Post-Keynesian
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General
Date Deposited: 02 Oct 2023 15:36
Last Modified: 23 Feb 2024 08:51
URI: http://eprints.lse.ac.uk/id/eprint/120343

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