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Degrowth, Deep adaptation and MMT – Part 3

This is the third part in a on-going series that I am writing about Deep Adaptation, Degrowth and related concepts, all of which are designed to provide some sort of pathway beyond the current mess that the world is in with respect to climate, inequality, poverty, excessive consumption, and excessive population growth. Today, I consider how Modern Monetary Theory (MMT) fits into the transition agenda and discuss the labour market dislocation that will accompany the transition to degrowth.

Series to date

1. Deep adaptation – Part 1 (August 22, 2022).

2. Deep adaptation, degrowth and MMT – Part 2 (September 8, 2022).

3. Deep adaptation, degrowth and MMT – Part 3 (October 3, 2022).

Background

Some years ago, my research group – (Centre of Full Employment and Equity (CofFEE) – did some early work on estimating the employment consequences of moving away from coal-fired power stations in the state of New South Wales (Australia).

I discussed that research in this blog post – Australia’s response to climate change gets worse … (November 15, 2009).

We found that shifting from coal-fired power generation to a clean, renewable energy economy would result in a net gain of 5,760 and 10,650 jobs depending on assumptions made about market reach and manufacturing input.

The net job creation would result in well-paid jobs in the research, design, manufacture, installation, maintenance and export of energy efficiency and renewable energy technologies.

We also outlined a Just Transition framework that would be required to accompany such a shift in employment.

It was an experimental piece of work commissioned by Greenpeace, which sought to provide ballpark estimates of the shifts in the labour market towards renewables for power generation.

We followed that up with a more complex analysis, which extended the scope of the analysis and found positive results.

The final report is not publicly available but you can download the technical conference paper we published – Job Impacts of a Decarbonised Australian Economy (November, 24, 2011).

That research found that there will be significant gains in employment in the electricity industry under either decarbonising scenarios we modelled.

Technological advances have been vast since we did that work in 2008, which only serve to reinforce the positive outcomes we found for workers in abanding carbon-intensive power generation.

The earlier research we did was not ambitious enough, where ambition is a shifting target really, given the uncertainty of the climate challenge.

In other words, we now appear to have less time to make the necessary shifts than was considered to be the case 15 or so years ago.

The point though is that jobs remains an important part of the degrowth debate and warrants further consideration.

Degrowth and MMT

In Jason Hickel’s book – Less is More: How Degrowth Will Save the World – Chapter Five focuses on ‘Pathways to a Post-Capitalist World’ where we read that:

… degrowth is not about reducing GDP. It is about reducing the material and energy throughput of the economy to bring it back into balance with the living world, while distributing income and resources more fairly, liberating people from needless work, and investing in the public goods that people need to thrive. It is the first step toward a more ecological civilisation.

To accomplish this shift several steps are outlined including “End planned obsolescence … Cut advertising … Shift from ownership to usership … End food waste … Scale down ecologically destructive industries … ”

All of the steps are sound.

Just the other day, the pump that connects our home water tanks to our house failed.

Upon inspection the failure was a plastic grommet that was not designed to handle the daily stress of pumping water.

I then sought a replacement and found that to remedy the problem I had to purchase the entire new sensor unit and connectors (around $A950) whereas the plastic grommet was easily dissambled and would cost a few dollars to produce.

The waste involved in having to discard the whole unit to replace a small disposable piece was staggering.

We encounter frequent examples of this disposable society.

But that is not what I am writing about today.

Jason Hickel is as aware as anyone involved in this debate that it is one thing to propose sweeping changes in isolation but the reality of the consequences for employment must be addressed.

To some extent, the ‘green’ lobby has been held back by its reluctance to address the jobs issue front and centre.

It is one thing to go into a community and lecture it on how its forestry industry, for example, has to close down, but another to provide that commnunity with the confidence that such a shift will not leave them materially impoverished.

Green politicians and activists have been strong on the first part and almost non-existent on the jobs front.

That is why Brian Kohler, who was a leader with the Communications, Energy and Paperworkers Union of Canada, said on December 6, 1996:

The real choice is not jobs or environment. It is both or neither … if you attack us in our workplaces, if you fail to understand the jobs issue, you will create a confrontation that you cannot win. You will force us into an alliance with our employers and you, we, society and the environment will all be the losers.

Brian Kohler first introduced the concept of the Just Transition as a result of his insight into the importance of jobs in the environmental debates.

He knew that it was about jobs, jobs, and jobs.

Jason Hickel knows that too and he followed the outline of his steps towards ‘Post Capitalism’ with a section entitled – “But what about jobs?”.

Indeed.

He knows that “the policies … suggested … are likely to reduce industrial production”, which will cause jobs to “disappear across the supply chains”.

He writes:

In other words, as our economy becomes more rational and efficient, it will require less labour.

He also understands that “from the perspective of the individual workers who will be laid off from these jobs, it is a disaster.”

The rise in unemployment implied by this shift would present major political problems for governments around the world.

Jason Hickel, though, thinks he has a solution to this imbrolgio.

He writes that:

As we shed unnecessary jobs we can shorten the working week, going from forty-seven hours (the average in the United States) down to thirty or perhaps even twenty hours, distributing necessary labour more evenly among the working population and maintaining full employment. We can facilitate this process by introducing a job guarantee …

In an Op-Ed piece he wrote in 2020 – Degrowth and MMT: A thought experiment (September 23, 2020) – he amplifies this message and ties it in with Modern Monetary Theory (MMT).

He thinks that ‘degrowth’ and MMT:

… belong together.

What links them in his view?

I can quibble with his rendition of MMT, but that would take me away from the point of this post.

For example, he wrote “the purpose of taxation is not to fund government spending … but rather to reduce excess demand”.

Well, strictly speaking that is not entirely accurate from an MMT perspective.

The major purpose of imposing a tax liability is to create a demand for the otherwise worthless currency.

And the extent of the taxation levied is to designed to create the real resource space in which government can spend into without having to compete for resources at market prices.

The difference between that characterisation and Jason Hickel’s is subtle but important.

But, as I wrote, I don’t want to quibble about that.

The link between degrowth and MMT in Jason Hickel’s view is defined in three ways:

1. Government capacity as the currency-issuer to “Develop generous, high-quality universal public services” – which go beyond health care and education into “public transportation, affordable housing, etc”.

2. Fast track the substitution of “fossil fuels” for “renewable energy infrastructure” funded by the currency-issuing capacity of the government.

3. “Introduce a job guarantee, so that anyone who wants to work can get a job” – and these workers would be “working in public services, building renewable energy infrastructure, and regenerating ecosystems”.

On reflection, when I am asked what is the relevance of MMT to transitions from carbon-usage, I reply ‘not much’ – MMT has very little to say about the transition.

But what it has to say is very important and Jason Hickel clearly has seen that.

MMT allows us to understand that there is really no financial constraint facing society, which has the urgent need to make expenditures designed to fast track decarbonisation and expand activities that benefit people and reduce energy usage.

Where I have issues is in the characterisiation of the Job Guarantee, which is a central pillar of MMT.

A degrowth agenda will create massive disruptions in our lives – it has to to be successful.

And the structure of the labour market will have to shift more quickly than historical structural changes in the composition of employment.

Millions of workers will have to move from existing jobs into other jobs and do that fairly quickly.

The sort of transition that will be required will not be easy and unless there is hope at the end of the tunnel, it will be resisted and undermined.

The Job Guarantee is not the key here – it is a buffer stock.

In fact, a national Job Guarantee, might only be a small part of a Just Transition framework to deal with climate change.

Obviously, having an employment safety net in place means that the most disadvantaged workers can always find some degree of income security that would be otherwise absent.

But the Job Guarantee is a coercive system – it provides a socially inclusive minimum wage job as an alternative to unemployment.

We should always aim to minimise the size of the Job Guarantee pool exactly because we don’t want to only provide minimum wage jobs as the solution to social dislocation arising from structural change.

The role of the Job Guarantee in MMT is to provide a macroeconomic stabilisation capacity when spending is outstripping the supply capacity and fiscal contraction is required.

That is its provenance.

It should not be thought of as a stand-alone job creation option when jobs are being shed.

We must ensure, in the words of the Canadian Labour Congress in 2000, that workers are not “simply thrown on the scrap heap as a sustainable economy” (Source):

The idea that a Job Guarantee will provide a ‘just’ and ‘equitable’ employment solution to the massive dislocation that will accompany a degrowth agenda is selling ourselves short and is unlikely to engender the hope that will be required to facilitate such a transition.

A ‘Just Transition’ requires the “costs of environmental change will be shared fairly” such that “workers in targeted industries and their communities” will not endure the costs that benefit us all (Source).

It is clear that the need to provide “Re-employment or alternative employment” goes well beyond what we think of as the Job Guarantee, which is a buffer stock job to deal with spending fluctuations.

Among other things, government support will be required in:

1. Skill development – new training courses in renewable energy, with linkages into schools and potential employers. A significant boost in funding is needed to support quality teaching, to attract students and engage employers.

2. Special targeted support for older, disabled and less educated workers will be required.

3. Relocation support – funding to help ease housing and transport issues should a worker nominate to relocate.

4. Job creation in renewables – new public sector jobs to be created in renewables in all aspects of the sector – primary industry, design, manufacturing, sales, administration, maintenance and support, etc – this is the way communities can retain pay levels, benefits and seniority.

5. Job Creation elsewhere – a raft of jobs will need to be created in low-energy using activities which also provide adequate material outcomes for the workers and prospects for individual expression and creativity.

An understanding of MMT tells us that our governments can fund these elements.

Paying for them is not the issue, although critics use the ‘how are we going to pay for it’ ruse to prevent such adaptation.

The challenges for all of us is to ensure no-one gets left behind.

Relying on Job Guarantee to address the labour market fall out will not meet that challenge.

In ‘Less is More’, Jason Hickel writes in relation to the jobs challenge that there will be a need to:

… roll out retraining programmes so that people laid off from shrinking industries can transition easily to others (renewable energy, public services, maintenance, etc.).

This is the key.

Provide pathways for people into jobs that offer less hours, creative opportunities, social status, individual advancement, and material security in a low energy world – that is the key.

Conclusion

I am currently working in Japan and there is much less attention to these issues at present.

Part of my efforts here will be to elevate the degrowth agenda up the ladder of importance.

That is enough for today!

(c) Copyright 2022 William Mitchell. All Rights Reserved.

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    This Post Has 7 Comments
    1. Degrowth is another name for “The Big Reset” (in the sense of Willem Middelkoop’s book).
      The global pile of debt is so big that it has no solution.
      We can’t “eat” this debt through growth and we need degrowth anyway.
      The western world is trying to eat debt through inflation, which is the orwellian way to deal with it.
      The ones that are in charge of the “big reset” are the same bunch that brought us here, and so we have this huge pile of morbid syntoms: wars, fascism, fake news, dementia, slapstick politics and so on.
      If they stay in charge, in the end we’ll have a world far worst than that we have today.
      We’re already seeing the results of the first actions of the “reset team”, and it’s a ugly sight.
      I just hope that Gramsci was right and the new world will topple down the old world.
      Maybe a world with no more empires will rise out of the ashes of this one that we live in.

    2. The framing of ‘degrowth’ suggests (& is believed by many followers) that human society can both begin immediately to use less real resources & at the same time transform the technology & infrastructure we use at present, plus increase the living standards of the ~80% ‘developing’ world.

      This is dangerously wrong. It’s going to take huge investment in real resources over the next decades to achieve any serious degree of sustainability. This reality is constantly ignored by ‘economists’ lacking the knowledge of what must be engineered.

      It would be useful if lifestyles of the developed world could be changed to reduce present consumption of ‘non-essential’ resources.

      But this will require considerable co-operation & understanding among the mass of population. An understanding that the present monopoly over mass media by the wealthy elites is totally unfit to engender.

      Ignoring the importance of mass media transformation is another gross error being committed by just about all who are advocating for ‘degrowth’ or any other ‘green’ or ‘socialist’ transition.

      A new public commons media sector, comprising only public funding (via citizen vouchers) to common ownership media providers, to challenge the status quo, would be easy to create for any fiat currency issuing Govs.

      How many more decades of ignoring/lip service to the climate change emergency, propaganda campaigns to defeat decent politicians, and promotion of US Neocon’s unnecessary wars of aggression are we going to have before otherwise capable advocates for human survival realise that the public mass information space is key to everything?

    3. The liberals that dominate mainstream macro have let their masks slip.

      People looking at moves in financial market moves, and taking them as Verdicts on the merits of a given policy. Many left/liberal pundits adopting an odd form of market fundamentalism.

      That the OBR was only set up in 2010 by Cameron’s government. Funny to see so many left/liberals this week express dismay that Truss has sidelined it.

      How much is the UK government “saving” by scrapping its plan to lower the 45% top tax rate lol ? I’m sure the OBR and IFS will tell us all lol.

      “Gilts sold off, ergo the underlying policy must be terrible”. And yet gilts and the pound have stabilised without any change to the rest. All the focus is on a relatively small signaling component.

      Next they’ll be screaming for unelected, technocratic, undemocratic, fiscal councils again. As if Euro type fiscal rules attached the £ wasn’t bad enough. They’ll create any plumbing and any rule to strangle any fiscal freedom and serve the financial sector with religious relish.

      Which shows how bad the next Labour government is going to be. It’s a control mechanism to by pass the democratic process. To nullify the vote.

    4. Bendell (2018, 2020) uses the term “deep adaptation” to encompass the ways we personally, professionally, sociologically, and psychologically adapt to climate-influenced collapse of societies, which he sees as “either likely, inevitable or already unfolding.” His view is that it is too late to prevent the collapse of societies. His form of “deep adaptation” is certainly not about reformation that avoids societal collapse, but instead about exploring the implications of collapse.

      But, Bill, it seems that you are using the term “deep adaptation” in a different way than Bendell and that, unlike him, you do not see societal collapse as inevitable or already underway. (Am I reading you correctly?)

      If you dispute Bendell with respect to the inevitability of collapse, perhaps it would be better to use some terminology for your ideas that is different than his – some terminology other than “deep adaptation,” since that terminology, as Bendell uses it, implies the inevitability of societal collapse.

    5. Bill – My perspective on a Job Guarantee is more inline with Hinkel’s than your narower perspective. At a minimum I believe skill development, ongoing lifetime education for all, could and should be an integral part of it. Also health care for all, especially mental / addiction health and housing. There also needs to be job support from the perspective of basic/minimal transportation and dependent (child/senior) care. This may seem overly burdensome, but it is critical to achieving and maintaining a better society than just leaving it to every individual to do on their own.

      While I understand the macroeconomic stabilization roll of the Job Guarantee in MMT, I question the need for, let alone the suitability of, fiscal contraction to manage inflation, which unlike MF, I believe is always and everywhere a supply-side problem. And as such, JG programs that proactively address current and future needs for knowledgeable and skilled labor will be of greatest value in mitigating inflation and other supply-side problems. This is what makes JG far superior to UBI.

    6. Reply to Ralph McNall :
      The needs for public transport, healthcare and training are proper skilled jobs, so they should be compensated in full public sector wages, which is far above minimum wage. The JG worker can by choice go into a training program only if the program is staffed and resources, but the purpose of the JG is NOT to provision society with skilled services, that would be highly regressive and stupid.

      Every bit of work society deems necessary and is not being provided by the private sector already is a skilled job, not a JG position, and can always be government funded if the skilled labour exists willing to be hired.

    7. Replying to John B :
      Bendall’s Analysis on deep adaptation assumes capitalism proceeds to crisis. There is no need on earth to assume we are powerless to thwart capitalism before it wrecks the planet.

      One thing you gain from study of systems analysis is that complex systems are impossible to forecast. Anyone claiming societal collapse is a given is as bad as an astrologer. What is also possible is collapse of certain systems within political economy, and entire government’s need not be included in such collapse. What can instead collapse are the oligarch funded politician old boy/girl networks. A lot can collapse benignly before all of society collapses.

      What can also “collapse” is the entire neoclassical/New Keynesian paradigm in academia and the civil services. That collapse would be an amazingly beautiful event, and the opposite of societal collapse, and indeed helping to avoid societal collapse.

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