Abstract
ABSTRACT Growth dynamics are often explained by insatiable wants or anthropological constants, modelled as preferences and behavioural axioms. By contrast, structural perspectives postulate a growth imperative due to macroeconomic or monetary system-inherent properties. Reconciling both perspectives, we develop a relational structure–agency framework to evaluate growth imperative hypotheses. We analytically separate the credit structure (including balance-sheet mechanics and nominal uncertainty) from institutional structure, and describe decision norms for households, entrepreneurs, commercial banks, central bank, and the state. Our framework suggests that the interplay of credit principles, income-dependent saving and portfolio saving rationales prevent the interest rate from adjusting downwards and thereby cause mature credit economies to stagnate. Underemployment results in growth policies becoming the dominant norm – seeking, under budget constraints, to overcome declining growth rates. Our method helps identifying agency to resolve this imperative. Preventing real asset inflation to relieve monetary policy at the effective lower bound appears essential.
Highlights
KEYWORDS Stagnation; institutional macroeconomics; social ontology; monetary theory; land value tax Mature economies are revealing a pattern of declining growth that is likely to continue (Gordon 2016)
We have developed a structure–agency framework to investigate growth imperative hypotheses in mature credit economies
Such hypotheses have received increasing attention, given the widely acknowledged lack of ecological, social and economic sustainability of mature economies, which are typically coping with stagnation, unemployment, and inequality
Summary
Mature economies are revealing a pattern of declining growth that is likely to continue (Gordon 2016). Whereas methodologically individualist approaches neglect the structural determinants of agency (Colander 1993), structural approaches downplay the capacity of agency to transform structure (Bhaskar 1998, Emirbayer and Mische 1998) Seeking to reconcile these two poles, we present a novel and more nuanced heuristic framework and ‘practical social theory’ We develop an analytical framework combining structural principles, institutions and actors’ decision norms motivated by actors within given structural settings. Based on this analytical framework, we theoretically derive a growth imperative resulting from stagnation – a state here defined as insufficient economic growth to create full employment.
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