Money, interest rates and accumulation on a finite planet: revisiting the ‘monetary growth imperative’ through institutionalist approaches

Ecological economists have often argued that the very nature of modern money, created by banks through interest-bearing debt, forces our socio-economic system to seek perpetual growth if we are to avoid a systemic collapse. The foundations of this so-called ‘monetary growth imperative’ suffer from theoretical weaknesses, as shown by several scholars who have used post-Keynesian theory and models to support their claims. However, this critique relies on an incomplete assessment of money, missing its institutional dimensions. The way money is created, circulated and destroyed is the result of social constructs, and historical accounts indicate that the progressive generalization of interest-bearing debt money since the thirteenth century marks a distinct development in the institutionalization of capitalism and its multiple growth imperatives. As such, “monetary contestations†aimed at diminishing the importance of interest rates remain critical to achieving a post-growth socio-economic system.