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Towards post-Keynesian ecological macroeconomics

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  • Fontana, Giuseppe
  • Sawyer, Malcolm

Abstract

The paper starts with a brief criticism of macroeconomic analyses of different schools of thought for their focus on economic growth and maximisation of output. This applies to the traditional Keynesian approach, which has focused on the achievement of sufficient aggregate demand to underpin full employment and full capacity utilisation, down-playing aggregate supply constraints. This also applies to the neoclassical approach, including the current New Consensus Macroeconomics approach, which asserts the dominant role of aggregate supply in the long run, and where growth is set by the so-called ‘natural rate of growth’, with no concerns over environmental and ecological issues. The paper then proposes a different approach to macroeconomic analysis. It explicitly acknowledges that economic growth is a double-edged sword. Growth can help to alleviate persistent levels of high unemployment, but it can also lead to potentially catastrophic environmental problems. Building on the Monetary Circuit theory and the Demand-led growth theory, the paper offers an analysis of the interconnections and interdependence of the economic, biophysical and social worlds and by doing it hopes to provide the building blocks for the establishment of post-Keynesian ecological macroeconomics.

Suggested Citation

  • Fontana, Giuseppe & Sawyer, Malcolm, 2016. "Towards post-Keynesian ecological macroeconomics," Ecological Economics, Elsevier, vol. 121(C), pages 186-195.
    • Handle: RePEc:eee:ecolec:v:121:y:2016:i:c:p:186-195
    DOI: 10.1016/j.ecolecon.2015.03.017
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    More about this item

    Keywords

    Ecological economics; Sustainability; Post-Keynesian; Monetary Circuit; Kaleckian; Demand-led growth;
    All these keywords.

    JEL classification:

    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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