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Environmental Sustainability and Economic Growth
...we can also engender growth that will be sufficient to ensure that all those who want work can find a job at decent pay and conditions and still satisfy the requirements of environmental sustainability.
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Clearly, this suggests that it will be necessary to change the composition of final output toward environmentally sustainable activities. It is not increased aggregate demand per se that will be necessary to sustain full employment, but increased aggregate demand in certain areas of activity.
MMT is not conservative thought
Fiscal austerity, typically worsens inequality and denies opportunities to the most disadvantaged. As the labour market polarises in terms of skills – with the private sector no longer desiring low skill workers, there will be a great need for very large-scale public employment schemes, which can utilise the labour shed by the profit-motive.
The beauty of public employment schemes is that they can be evaluated on totally different criteria than the decision by a private employer to take on an extra worker.
There will be a massive number of jobs in areas of environmental and personal care services over the next 50 years as the climate and land-use damage from capitalism takes its toll and the population ages. There is significant scope to offer well-paid and secure employment to those being rejected by the private sector as robots take over assembly line and other work.
The OECD conception of growth is one driven by profit. My conception of growth is unrelated to that. If the population increases, then economies need to grow to provide income earning opportunities for all. But growth via public service oriented employment leaves a totally different footprint than that driven by private market incentives.
That is what I tell green-followers who demand no growth. There has be growth, the challenge for progressives is to channel it into green-consistent activities. The government sector has to lead the way in that regard and use its currency-issuing monopoly to mobilise productive resources that the private sector chooses to leave behind (lower skilled labour etc).
There is massive scope to redefine what we mean by productive work – artists, musicians etc – can become public servants on secure pay, which would transform the green-quotient of the real GDP growth rate.
Jazz and reggae concerts and art displays and circuses (without animals) are less environmentally damaging than smokestacks! But the dollars spent on them woud deliver the same growth rates as a dollar of coal exported.
Inequality can also be reversed if governments use their fiscal capacities to advantage and ensure that all workers have opportunities to earn decent incomes. Banning most of the financial speculation will also help.
This also ties in with infrastructure. The trend to privatisation and public-private partnerships has undermined the quality and scope of major infrastructure in the advanced world. Governments should take back control of that development and use major infrastructure projects as vehicles for employment, wages growth, and altering the nature of urban centres. More public transport, better energy systems, better communication systems, etc can be spawned through public sector leadership.
Modern Monetary Theory and environmental sustainability
Thus, a forward-looking, progressive macroeconomics – such as Modern Monetary Theory (MMT) – requires economic activity to be in balance with the natural environment. There are two aspects of this concept of ‘sustainability’ that are relevant to macroeconomic policy design: (a) the level of production (and consumption) must be consistent with the demands of the physical environment; and (b) locally- or community-based production should be encouraged.
The Mathematical Economics of Compound Rates
...modern economists tend to overlook the fact that interest-bearing debt grows according to its own exponential laws of increase. The economy rarely can keep up.
A point arrives at which bankers and investors recognize that no society’s productive powers can long support the growth of interest-bearing debt at compound rates. Seeing that the pretense must end, they call in their loans and foreclose on the property of debtors, forcing the sale of property under crisis conditions as the financial system collapses in a convulsion of bankruptcy.
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Brandon Unti’s Full Employment & Degrowth: The Social and Ecological Sustainability of The Job Guarantee is a paper on degrowth and the JG from an MMT point of view.
There’s also Blake Alcott’s Should degrowth embrace the Job Guarantee? and Philip Lawn’s Facilitating the transition to a steady-state economy: Some macroeconomic fundamentals paywalled & A Qualitatively Improving Steady-State Economy as an Alternative to Continued Growth.
Monetary and Fiscal Policies for a Finite Planet is worth a look too.
Bill Mitchell, “Modern Monetary Theory and Environmental Sustainability” (2012)
Mathew Forstater, “The Case for an Environmental Sustainable Jobs Program” (2005)
Yanis Varoufakis, “Think Big, Think Bold: A Green New Deal” (2014)
Michael Hoexter, “Democratizing Government Spending in an Era of Climate Change–Part 1″ (2014)
Michael Hoexter, “Democratizing Government Spending in an Era of Climate Change–Part 2″ (2014)