This paper examines an alternative strategy for sustainability and economic development
based on de-growth assumptions. This concept is proposed by ecological economists, who
consider there to be a natural limitation on economic growth, imposed by necessary
environmental regulation. Moreover they oppose the neoclassical ideas, which are considered
as pro growth theories, arguing that economic growth itself does not contribute to the social
and economic development, therefore it should not be sustained. Accepting this proposition
the author makes an attempt to verify the feasibility of a de-growth strategy for
macroeconomic stability, applying a post-Keynesian methodology for analysis. The Kaleckian
model is used as the basic approach to derive the model restrictions for the de-growth strategy
that maintains macroeconomic stability. The findings of this paper will provide policy
recommendations to sustain macroeconomic stability, while taking full account of the degrowth
assumptions.
Table of Contents
1. Introduction
2. From growth critics to de-growth
2.1. Historical overview of the economic growth theories and environmental limits
2.2. Formation of the de-growth concept from the environmental perspective
3. Economics of the concepts for sustainability
3.1. Neoclassical environmental approach to sustainability
3.2. Ecological approach to sustainability
3.2.1. The Steady-State economy
3.2.2. The LowGrow model
3.3. Post-Keynesian approach to sustainability
4. De-growth modelling in the Post-Keynesian economic framework
4.1. Kaleckian model and its extensions
4.1.1. Dutt–Amadeo model and Bhaduri-Marglin extension
4.1.2. The impact of financialisation
4.2. The de-growth assumptions in the Kaleckian model
4.2.1. Zero growth assumption in the Dutt–Amadeo, Bhaduri-Marglin, and market financialisation framework
4.2.2. Governmental intervention in the economy
4.2.3. Evaluation of the functioning model with the given notion of de-growth
5. Policy recommendations
6. Conclusion
Objectives and Research Themes
This master thesis investigates the feasibility of a de-growth strategy as an alternative economic path to achieve sustainability. The core research question addresses whether a zero-growth economic strategy can maintain macroeconomic stability, using a post-Keynesian framework and Kaleckian models to evaluate potential economic conditions and necessary government interventions.
- Theoretical evaluation of de-growth as a sustainable development strategy.
- Comparative analysis of neoclassical, ecological, and post-Keynesian economic approaches.
- Modelling macroeconomic stability under zero-growth conditions using Kaleckian extensions.
- Assessment of government policy instruments, such as taxation and redistribution, to support a non-growing economy.
Auszug aus dem Buch
3.1. Neoclassical environmental approach to sustainability
Environmental economics is the orthodox approach to apply economic methods to environmental problems. As the main methodological framework, it implies the neoclassical theory both at macro and micro levels. The macroeconomic perspective is derived from the circular flow of income, representing the interdependences of the households, firms, governments and markets, where the environment is treated as a subsection of the economic processes. Starting already from this angle of economic thought, the environmentalists’ vision inclines to adopt the neoclassical concept: that supply creates its own demand (SERI, 2010, pp. 21-23).
Accepting the neoclassical framework, environmental economics incorporates the neoclassical theory of economic growth, developed by Solow and Swan and its various models, based on the circular flow of income, to understanding sustainable development (ibid.). The classic macroeconomic growth approach consists of the simplest production function Y= F(K,L), where capital and labour are substituted. The main extension of the environmentalists is the addition of natural resources (R) to the production function as the third component, while the increase in the production depends on the technological innovation, improved labour skills or improved organization (Krugman et al., 2008).
Considering the new production factor, the environmentalists claim that the increase in the extraction of the non-renewable resource makes it scarce. It leads to the rise of its price and consequently to a substitution of this resource with another or by capital (technology), and finally, to a substitution away from products that uses this resource intensively. Thus, due to the substitution of the production’s factors the scarcity of resources cannot be considered as an environmental limit for growth. The rise in the resource’s price fosters not only resource substitution, but also recycling. Hence, in order to sustain such economic growth, technological progress and production, the desire for costs’ minimization makes the extraction of lower quality resources more efficient (SERI, 2010, pp. 21-23).
Summary of Chapters
1. Introduction: Presents the research topic, the environmental crisis, and the motivation for examining the de-growth strategy as an alternative to conventional economic growth models.
2. From growth critics to de-growth: Provides a historical overview of growth theories and the emergence of the de-growth concept within ecological and environmental perspectives.
3. Economics of the concepts for sustainability: Analyzes the different theoretical frameworks for sustainability, covering neoclassical, ecological, and post-Keynesian approaches.
4. De-growth modelling in the Post-Keynesian economic framework: Investigates the technical feasibility of modeling a zero-growth scenario using Kaleckian growth models, including the impact of financialisation and government intervention.
5. Policy recommendations: Discusses the political and fiscal mechanisms required to support a sustainable, non-growing economy.
6. Conclusion: Synthesizes the research findings, reflecting on the feasibility of de-growth and suggesting directions for future research.
Keywords
De-growth, Sustainability, Consumption and Production patterns, Ecological economics, Environmental economics, Post-Keynesian economics, Kaleckian Model, Macroeconomic stability, Taxation, Distribution policy, Zero-growth, Capital accumulation, Financialisation, Economic policy, Resource limitation.
Frequently Asked Questions
What is the primary focus of this thesis?
The thesis explores the macroeconomic feasibility of a de-growth strategy—a concept that advocates for moving beyond economic growth to address environmental degradation—while maintaining macroeconomic stability.
Which economic schools of thought are analyzed?
The author analyzes and integrates perspectives from ecological economics and post-Keynesian economics, while contrasting them with the orthodox neoclassical approach.
What is the core objective of the research?
The goal is to determine if a zero-growth strategy can be sustained within a modern economic system and to identify the specific economic conditions or policy interventions required for such stability.
What scientific methodology is utilized?
The research employs a qualitative and descriptive analysis, applying post-Keynesian methodologies and the Kaleckian growth model to simulate a zero-growth economic environment.
What does the main body of the work cover?
The main part examines historical growth theories, compares environmental economic frameworks, and models the impact of financialisation and government fiscal interventions on the viability of a zero-growth capital accumulation rate.
Which keywords best characterize this work?
Key terms include De-growth, Sustainability, Kaleckian Model, Post-Keynesian economics, macroeconomic stability, and environmental regulation.
What role does the Kaleckian model play in this study?
The Kaleckian model serves as the technical backbone for the analysis, helping the author to model the relationship between aggregate demand, investment, and income distribution under the constraint of zero growth.
How does the author view government intervention in a de-growth economy?
Government intervention is deemed essential; the author proposes tools such as specific taxation on savings and resources to "demotivate" excessive capital investment while maintaining social welfare.
Is the de-growth strategy considered feasible in practice according to the author?
The author concludes that while the framework is theoretically intriguing and offers a potential path for transformation, it remains politically and practically difficult to implement, requiring complex adjustments that may not fit well within the current capitalistic system.
- Citation du texte
- Dina Padalkina (Auteur), 2012, The Macroeconomics of de-growth - Can a de-growth strategy be stable?, Munich, GRIN Verlag, https://www.grin.com/document/191185
