Getting Serious About the Limits to Growth: ELR and Economic Restructuring Under Decroissance

This chapter argues that Post Keynesians are, despite their recent tepid concern for the environment, actually well-positioned to deal with limits to growth because they are open to active macroeconomic policies that actually change the structure of our economy. Traditional monetary approaches and quantitative easing merely inject more reserves into the financial sector, but this does not adjust the economy to slow or zero gross domestic product (GDP) growth because the financial sector seeks high returns within the market sector of the economy, is prone to cronyism, and will favor financialization over real investment in alternative structures if growth stops. Active fiscal policies advocated by Post Keynesians, on the other hand, not only deal more effectively with unemployment, they are also much more effective for restructuring the economy for eliminating the growth of high-throughput output and directing human activity towards more environmentally friendly activities. For example, fiscal policy can directly shift expenditures from high- to low-throughput productive activities, and an employer of last resort (ELR) program can be especially effective in directly shifting employment towards low-throughput activities. In general, fiscal policy is needed because many collective public activities must be expanded in order to restructure human society and diminish the human environmental footprint.