Post-growth transition, working time reduction, and the question of profits

Abstract

The ecological macroeconomics literature has developed models, which outline the transition from today's growth-dependent economies to post-growth systems where output can be stabilized to limit resource consumption while good living conditions and high employment are ensured. Working time reduction plays a pivotal role in those transitional strategies to relax the trade-off between economic growth and unemployment. This analysis contributes to the research by developing a macroeconomic model where, in contrast to the existing models, a sufficient profit rate is the precondition of any private-sector economic activity. It is shown that under such assumptions working time reduction is not enough to stabilize output but is a threat to macroeconomic stability. To make the post-growth transition successful, working time reduction must go along with supporting economic policies and macroeconomic governance including public investment, which controls the private-sector profit rate to avoid instability and unemployment.