Off Dependence on the Highway to Hell and on to the Stairway to Heaven

Eric N. Glock

Journal of Economic Issues, 2022, vol. 56, issue 2, 387-399

Abstract: As global climate change becomes an increasing problem, so will supply shocks, whether in terms of suppression, mitigation, or adaptation. Economics is largely unprepared to entreat these. Supply shocks are often misunderstood as hyperinflations brought on by increased money creation instead of as a fundamental shortfall in habituated consumption. Entreating supply shocks will be more akin to returning Apollo 13 to Earth than it will be to burying bank notes. Modern Monetary Theory's roots provide a solution. MMT is fundamentally a theory that supposes that capacity is the only constraint upon the abilities of economies. MMT, outside of this, has argued that inflation effectively indicates that capacity is being strained. This paper suggests that current prices are being used as a proxy for capacity by both a congressional budget and an MMT approach. It hopes to develop MMT in terms of its institutionalist roots. This article will point out some of the issues that arise with the use of prices as a proxy for capacity—and inflation as a measure of its limits. The paper's primary concern is to determine how society might fit into a lettuce wrap: a consumption space bounded by universal subsistence and zero-non-renewable resource use.

Date: 2022
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DOI: 10.1080/00213624.2022.2056360

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