Readers will recall the article by Jason Hickel which recently appeared in ERA Review (v12, n6, p10) Degrowth and MMT: a thought experiment, in which it is argued that Modern Monetary Theory provides an opportunity to construct a post-growth post-capitalist economy.

Our attention was recently drawn to the work of Mastini, Kallista and Hickel, a paper entitled A Green New Deal With- out growth? which appeared in Ecological Economics Journal [1], and also an

article by the same authors entitled For the Green New Deal to work, it has to reject “growth” which appeared on the website In These Times on 14 December 2020 [2].

From the abstract of [1] we have the statement:

“ The IPCC warns that in order to keep global warming under 1.5°, global emissions must be cut to zero by 2050. Policymakers and scholars debate how best to decarbonise the energy syst- em, and the socio-economic changes that might be necessary. Here we will review the strengths, weaknesses and synergies of the two most prominent climate change mitigation narratives, known as the Green New Deal and Degrowth:

“ Green New Deal advocates propose a plan to coordinate and finance a large-scale overhaul of the energy system. Some see economic growth as crucial to financing this transition, and claim that the Green New Deal will further stimulate growth.

“ By contrast, proponents of Degrowth maintain that growth makes it difficult to accomplish emissions reductions, and argue for reducing the scale of energy use to enable a rapid energy transition.

“ The two narratives converge on the importance of public investments for financing the energy transition, industrial policies to lead the decarbonisation of the economy, socializing the energy sector to allow longer investment horizons, and expanding the welfare state to increase social protection. “

The authors conclude that:

“ … despite important tensions, there is room for synthesizing Green New Deal and Degrowth-minded approaches into a ‘Green New Deal without growth’. “

What type of growth should be rejected by a Green New Deal?

The following contains a summary of points made by the authors in article [2]:

1. Pursuing GDP growth makes the task of decarbonising the economy much harder than it needs to be.
2. Statistical evidence demonstrates that the growth of GDP requires growth in the use of energy. The authors have concluded that by actively reducing total energy use we can reduce the growth of GDP. [In our view this is not a sufficient argument because GDP growth can be maintained if energy use is reduced but more efficient, coupled with policies to keep the cost of use the same – Ed]
3. It was also argued that it is easier to supply the system with renewables energy in the short time we have left if total energy use is reduced. However this argument assumes that renewable sources of energy cannot or will not substantially replace energy derived from burning fossil-fuels within the time available for system transition. [That assumption has been challenged by recent reports that various countries, and regions within countries, have been able to achieve close to 100% of their energy requirements from renewables energy alone – Ed].
4. We should also think about which sectors we actually want to grow. That type of growth could be described as good growth (e.g. renewable energy, public healthcare, public education, public transportation). Growth in the sectors that are less necessary and could actively be scaled down may be described as bad growth (e.g. SUVs, industrial beef, advertising and so on).
5. The usual assumption, typically made within the USA, that GDP growth is necessary in order to improve the quality of human lives, is repudiated by evidence available from a range of other large countries. This evidence indicates that in all the important social indices USA – which enjoys high GDP growth – is outperformed by many other countries despite their having far lower GDP growth.
6. Some others have argued that we need GDP growth in order to reduce inequality, but the available statistical evidence indicates that this growth does exactly the opposite.
7. Another argument is that we need GDP growth in order to deliver theinnovations necessary for a green transition. But if the objective is to achieve specific kinds of innovations (e.g. better solar panels, better railways and other transport systems), it makes more sense to invest in those directly rather than by growing the whole economy willy nilly.
8. Many believe that GDP growth will make it easier to pay for the Green New Deal. However there are now serious concerns about whether growth rates of 2-3% per annum can be sustained in the long run, given signs that high-income countries are entering a period of secular stagnation (i.e. a permanent, non-cyclic- al fall in economic growth). And that’s okay, because we have other options, including federal deficit spending.

In summary, we think the authors have made a compelling case for uniting the GND approach to decarbonising the economy and the Degrowth approach (which we think is really talking about rejecting GDP growth). It is also our view that the public investments required for financing the necessary energy transition are entirely compatible with economic principles espoused by MMT economists

Sources:

1. Riccardo Mastini, Giorgos Kallisa and Jason Hickel, A Green New Deal without growth? https://www.sciencedirect.com/science/article/abs/pii/S0921800919319615

2. Riccardo Mastini, Giorgos Kallisa and Jason Hickel, For the Green New Deal to work, it has to reject “growth”. https://inthesetimes.com/article/green-new-deal-decarbonization-economic-growth-climate-activists-climate-change

Riccardo Mastini is a researcher at the Autonomous University of Barcelona, Spain

Prof Giorgos Kallis is an ecological economist attached to ICREA, Barcelona, Spain

Dr Jason Hickel is a senior lecturer attached to Goldsmiths College, Univ of London, UK