Transformation of capitalism to enforce ecologically sustainable GDP growth: lessons from Keynes and Schumpeter

Hansjörg Herr
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Hansjörg Herr: N/A

European Journal of Economics and Economic Policies: Intervention, 2022, vol. 19, issue 1, 159-173

Abstract: An economy with a low stable medium-term growth rate given by ecological needs is only possible after a radical reform of the type of capitalism we have today. In an ecologically sustainable economic system, aggregate demand has to be controlled on a macroeconomic level. Of focal importance is the steering of investment. Here a national credit plan that fixes the national credit volume and to a certain extent the allocation of credit is in the centre. For consumption demand in a low-growth economy it is important that saving is low or in a zero-growth economy even zero, whereas at the same time accumulation of deficits of economic sectors or sub-sectors such as poorer households are not sustainable. Here policies to achieve a more equal distribution of income and wealth are suitable. Although comprehensive government interventions and rules are needed in an ecologically low-growth economy, the recommended system is not comparable with a planned system of the former Soviet type. Whether such an alternative system is understood as a version of highly regulated capitalism or as a new system is a question of taste.

Date: 2022
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