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The Macroeconomics of Development without Throughput Growth

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  • Jonathan M. Harris

Abstract

Serious discussion has begun of policies to promote the goal of increasing well-being without material growth. Moving towards this goal requires a profound reorientation of macroeconomic theory. Importantly, the call by ecological economists to move away from traditional growth-oriented models comes at a moment when standard macroeconomics is in considerable turmoil. The financial crisis of 2008/2009 seriously undermined the basis for mainstream macroeconomics and brought renewed attention to various forms of Keynesian analysis and policy previously regarded as outdated. There is a close complementarity between new Keynesian and ecological perspectives. While older Keynesian analysis was oriented towards promoting growth, a true Keynesian analysis of the relationship between investment and consumption does not depend on a growth orientation. What this analysis has in common with an ecological perspective is the rejection of market optimality assumed in classical models. Moving away from the neoclassical goal of inter-temporal utility maximization allows for different, pluralistic economic goals: full employment, provision of basic needs, social and infrastructure investment, and income equity. These goals are compatible with environmental preservation and resource sustainability, whereas indefinite growth is not. But they require a revitalization of the sphere of social investment, seriously neglected (indeed often omitted completely) in standard models. Reintroducing this perspective allows the development of an economic theory suitable for the transition to a stable-population, low-carbon, resource-conserving global economy. The barriers to this transition are primarily political and institutional, not economic. Specifically, an eco-Keynesian perspective emphasizes new macroeconomic categories including: * human-capital-intensive services * investment in energy-conserving capital * investment in natural and human capital The expansion of these categories provides a basis for growth in wellbeing without growth in throughput, while preserving full employment and economic stability. This paper explores some of the implications of this altered macroeconomic perspective for development in both the global "North" and "South". It is suggested that the problems following the global financial crisis cannot be resolved by a return to traditional growth patterns, and will require large-scale practical policies based on eco-Keynesianism.

Suggested Citation

  • Jonathan M. Harris, "undated". "The Macroeconomics of Development without Throughput Growth," GDAE Working Papers 10-05, GDAE, Tufts University.
  • Handle: RePEc:dae:daepap:10-05
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    References listed on IDEAS

    as
    1. Jonathan M. Harris & Neva R. Goodwin (ed.), 2003. "New Thinking in Macroeconomics," Books, Edward Elgar Publishing, number 3113, December.
    2. Jonathan Harris, "undated". "Ecological Macroeconomics: Consumption, Investment, and Climate Change," GDAE Working Papers 08-02, GDAE, Tufts University.
    3. Jonathan M. Harris & Neva R. Goodwin (ed.), 2009. "Twenty-First Century Macroeconomics," Books, Edward Elgar Publishing, number 13112, December.
    4. Jonathan M. Harris & Neva R. Goodwin, "undated". "Reconciling Growth and Environment," GDAE Working Papers 03-03, GDAE, Tufts University.
    5. Jonathan M. Harris, "undated". "Macroeconomic Policy and Sustainability," GDAE Working Papers 01-09, GDAE, Tufts University.
    6. David Dapice, "undated". "Current Economic Conditions in Myanmar and Options for Sustainable Growth," GDAE Working Papers 03-04, GDAE, Tufts University.
    7. Neva R. Goodwin, "undated". "Five Kinds of Capital: Useful Concepts for Sustainable Development," GDAE Working Papers 03-07, GDAE, Tufts University.
    8. Robert E. Lucas Jr., 2003. "Macroeconomic Priorities," American Economic Review, American Economic Association, vol. 93(1), pages 1-14, March.
    9. Solow, Robert M., 2000. "Growth Theory: An Exposition," OUP Catalogue, Oxford University Press, edition 2, number 9780195109030, Decembrie.
    10. Frank Ackerman & Timothy A. Wise & Kevin P. Gallagher & Luke Ney & Regina Flores, "undated". "Free Trade, Corn, and the Environment: Environmental Impacts of US – Mexico Corn Trade Under NAFTA," GDAE Working Papers 03-06, GDAE, Tufts University.
    11. Gallagher, Kevin P. & Aguayo, Francisco, 2003. "Economic Reform, Energy, and Development: The Case of Mexican Manufacturing," Working Papers 15575, Tufts University, Global Development and Environment Institute.
    12. Aguayo, Francisco & Gallagher, Kevin P., 2005. "Economic reform, energy, and development: the case of Mexican manufacturing," Energy Policy, Elsevier, vol. 33(7), pages 829-837, May.
    13. Olivier Blanchard, 2009. "The State of Macro," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 209-228, May.
    14. Dapice, David, 2003. "Current Economic Conditions in Myanmar and Options for Sustainable Growth," Working Papers 15582, Tufts University, Global Development and Environment Institute.
    15. Goodwin, Neva R., 2003. "Macroeconomics for the 21st Century," Working Papers 15581, Tufts University, Global Development and Environment Institute.
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    Cited by:

    1. Julie A. Nelson, 2012. "Poisoning the Well, or How Economic Theory Damages Moral Imagination," GDAE Working Papers 12-07, GDAE, Tufts University.
    2. Jonathan M. Harris, 2016. "Population, resources and energy in the global economy: a vindication of Herman Daly’s vision," Chapters, in: Joshua Farley & Deepak Malghan (ed.), Beyond Uneconomic Growth, chapter 4, pages 65-82, Edward Elgar Publishing.
    3. Julie A. Nelson, 2012. "Are Women Really More Risk-Averse than Men?," GDAE Working Papers 12-05, GDAE, Tufts University.
    4. Capaldo, Jeronim, 2014. "Trade Hallucination: Risks of Trade Facilitation and Suggestions for Implementation," Working Papers 179115, Tufts University, Global Development and Environment Institute.
    5. Harris, Jonathan M., 2013. "Green Keynesianism: Beyond Standard Growth Paradigms," Working Papers 179111, Tufts University, Global Development and Environment Institute.
    6. Neva Goodwin, 2014. "Prices and Work in The New Economy," GDAE Working Papers 14-01, GDAE, Tufts University.
    7. Frank Ackerman & Elizabeth A. Stanton, 2013. "Climate Impacts on Agriculture: A Challenge to Complacency?," GDAE Working Papers 13-01, GDAE, Tufts University.
    8. Urhammer, Emil & Røpke, Inge, 2013. "Macroeconomic narratives in a world of crises: An analysis of stories about solving the system crisis," Ecological Economics, Elsevier, vol. 96(C), pages 62-70.
    9. Julie A. Nelson, 2011. "Would Women Leaders Have Prevented the Global Financial Crisis? Implications for Teaching about Gender, Behavior, and Economics," GDAE Working Papers 11-03, GDAE, Tufts University.
    10. Røpke, Inge, 2016. "Complementary system perspectives in ecological macroeconomics — The example of transition investments during the crisis," Ecological Economics, Elsevier, vol. 121(C), pages 237-245.
    11. Nelson, Julie A., 2012. "Poisoning the Well, or How Economic Theory Damages Moral Imagination," Working Papers 179107, Tufts University, Global Development and Environment Institute.
    12. Fernández, Antonio Turrent & Wise, Timothy A. & Garvey, Elise, 2012. "Achieving Mexico’s Maize Potential," Working Papers 179101, Tufts University, Global Development and Environment Institute.
    13. Jeronim Capaldo, 2014. "Trade Hallucination: Risks of Trade Facilitation and Suggestions for Implementation," GDAE Working Papers 14-02, GDAE, Tufts University.
    14. Antonio Turrent Fernández & Timothy A. Wise & Elise Garvey, 2012. "Achieving Mexico’s Maize Potential," GDAE Working Papers 12-03, GDAE, Tufts University.
    15. Hardt, Lukas & O'Neill, Daniel W., 2017. "Ecological Macroeconomic Models: Assessing Current Developments," Ecological Economics, Elsevier, vol. 134(C), pages 198-211.

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