Monetary and Fiscal Policies for a Finite Planet

Abstract

Current macroeconomic policy promotes continuous economic growth. Unemployment, poverty and debt are associated with insufficient growth. Economic activity depends upon the transformation of natural materials, ultimately returning to the environment as waste. Current levels of economic throughput exceed the planet's carrying capacity. As a result of poorly constructed economic institutions, society faces the unacceptable choice between ecological catastrophe and human misery. A transition to a steady-state economy is required, characterized by a rate of throughput compatible with planetary boundaries. This paper contributes to the development of a steady-state economy by addressing US monetary and fiscal policies. A steady-state monetary policy would support counter-cyclical, debt-free vertical money creation through the public sector, in ways that contribute to sustainable well-being. The implication for a steady-state fiscal policy is that any lending or spending requires a careful balance of recovery of money, not as a means of revenue, but as an economic imperative to meet monetary policy goals. A steady-state fiscal policy would prioritize targeted public goods investments, taxation of ecological -bads‖ and economic rent and implementation of progressive tax structures. Institutional innovations are considered, including common asset trusts, to regulate throughput, and a public monetary trust, to strictly regulate money supply. OPEN ACCESSSustainability 2013, 5 2803

Consistency and stability analysis of models of a monetary growth imperative

“…A (weaker) 'constant incentive for growth' caused by decisions of economic agents is called 'growth impetus' (H. C. Binswanger, 2013, p. 116) or 'driver' (Jackson and Victor, 2015, p. 39). Beltrani (1999), H. C. , M. Binswanger (2009), Douthwaite (2000), Farley et al (2013), and Lietaer et al (2012) locate a growth imperative within the monetary system, while Berg et al (2015), Cahen-Fourot and Lavoie (2016), Jackson and Victor (2015), Strunz et al (2015), and Wenzlaff et al (2014) dispute this claim. The political relevance of this controversy is emphasized by some members of the Study Commission on 'Growth, Wellbeing and Quality of Life' by the German parliament: They suggest to study the different positions on the relation of growth, money, and credit to improve the basis for decision-making (Deutscher Bundestag, 2013, p. 794).…”

Welfare with or without Growth? Potential Lessons from the German Healthcare System

“…In order to provide a trenchant presentation of its points, this article can be especially seen as a response to the literature on degrowth and post-growth [2][3][4][5][6][7][8]. The article questioned the possibility of exchanging growth by these concepts without risking unforeseeable consequences, as they currently seem to lack explanations of what this would mean for basic values like individual freedom or granted property rights as well as the growth-based financing of the social state.…”

“…Consequentially, the possibility of growth as a principle for the benefit of human welfare was denied fundamentally by some of the literature: As an alternative, the concept of "sustainable degrowth" with its core attributes of scaling down production and enhancing ecological conditions in order to increase human welfare was developed [2][3][4][5]. By changed consumption patterns, replacing GDP from its dominant position in political discussions, and decoupling material and energy use from growth, a transition from "more" (i.e., quantitative) to "better" (i.e., qualitative) progress in terms of technological improvements and knowledge increase is hoped to be achieved [6].…”

Investigating the Degrowth Paradigm through prospective Modeling

“…Besides, many of these proposals arise from systemic considerations, and are designed and intended to be combined and to work as a system. For instance, an unconditional autonomy allowance is seen as paired with an income ceiling, and complemented with worksharing (Liegey et al 2013), while the transformation of the money creation system is considered as an indispensable measure to accompany the expected contraction of the economy (Farley et al 2013). Hence, exploring Degrowth scenarios and strategies requires simultaneously implementing combinations or sets of these proposals of different nature and scale.…”