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The Macroeconomics of Degrowth: Can Planned Economic Contraction Be Stable?

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Abstract

The growth paradigm of capitalism has energetic foundations, exemplified by the close correlation between GDP growth and energy use globally. Furthermore, the magnitude of debt suggests that, for economic stability, growth must continue in order for that debt to be repaid. But various ecological pressures imply that the energetic foundations of ongoing growth may not be available if societies decarbonise deeply and swiftly. Substantial contraction of human energy and resource use may be forced upon us, especially in the most developed regions of the world. It is both too late and also not feasible to achieve this by carbon taxes or pricing alone. A dual-price mechanism where every transaction requires both money and tradeable Universal Carbon Credits could ensure that the burden of income reduction fell on the rich rather than the poor. At the same time, we need to avoid past private sector financial commitments crippling the post-carbon economy, via a Modern Debt Jubilee. Financing both proposals can be achieved using the insights of Modern Monetary Theory.

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Keen, S. (2022). The Macroeconomics of Degrowth: Can Planned Economic Contraction Be Stable?. In: Alexander, S., Chandrashekeran, S., Gleeson, B. (eds) Post-Capitalist Futures. Alternatives and Futures: Cultures, Practices, Activism and Utopias. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-16-6530-1_9

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  • DOI: https://doi.org/10.1007/978-981-16-6530-1_9

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  • Publisher Name: Palgrave Macmillan, Singapore

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