On the limits of economic activity: bridging degrowth and modern monetary theory for socio-ecological sustainability and justice

Abstract

This paper advances recent work exploring synergies and tensions between two schools of political-economic thought—degrowth and modern monetary theory (MMT)—and posits that this synergy warrants closer attention from International Political Economy and Environment (IPEE) scholars. Thus far, degrowth policies have largely been proposed upon the assumption that governments are limited in budgetary terms. MMT theorists have offered an alternative perspective on fiscal policy space but generally provide insufficient ecological considerations. This paper asks how each school’s underlying assumptions about the limits of economic activity might inform the other’s framework of action. We find that while there are tensions between the two schools’ economic philosophies, there are possibilities for cross-fertilization, which ought to interest IPEE scholars. MMT could engage degrowth’s perspective of ecological limits and global socio-ecological justice in its discussions about what economies can ‘afford’, whereas degrowth could use MMT insights to shift from a ‘pay for’ to a ‘resource’ frame, while centering abundance before limits. Meanwhile, IPEE can provide insights to an MMT-informed degrowth transition by grounding this debate in material analyses of class and power. Our findings suggest that degrowth and MMT could provide a normative direction for IPEE research centered around meeting material needs within planetary boundaries.