Degrowth and Full Employment

A Modern Monetary Theory Perspective

Abstract

This paper advocates for the use of techniques of optimal planning that were developed by Soviet mathematicians. It argues that these techniques, based as they are on the labour theory of value, are compatible with: (a) the efforts of Modern Monetary Theorists to achieve full employment through a return to active fiscal policy (with the GDP gap serving as an estimate of the level of additional aggregate demand required to this end); (b) national income accounting procedures taken up by the United Nations; (c) the work of industrial ecologists who use input-output techniques to support and inform their analysis of waste, pollution, and the unsustainable use of renewable and non-renewable resources. It argues that, with slight modification, the techniques originally developed by Kantorovich and Novozhilov could be applied to the construction of metrics that account for the ‘short-changing’ of nature. For example, they could incorporate estimates of the labour time required to prevent unsustainable exploitation of renewable resources (including through higher levels of recycling and restocking), the use of non-renewable resources at rates exceeding the time required to produce substitutes, and the time required for adequate remediation and restoration of polluted resources (including investment in new transport and power generation systems).