MMT Applies to Both Growth and Degrowth

Modern Monetary Theory (MMT) can be applied to growing economies. Equally, as Jason Hickel rightly observes, MMT is also an appropriate macroeconomic framework for proponents of degrowth. The theory makes clear that a currency-issuing government always has the capacity to maintain full employment through implementation of a job guarantee, irrespective of the overall level of aggregate demand or rate of economic growth. As currency issuer, the government faces no financial barrier, nor has any need of profit. Whereas employment in an economy left to the whims of for-profit firms slumps whenever demand slumps – not least because private firms as currency users are financially constrained and subject to the profit criterion – currency-issuing governments have the capacity to maintain full employment at all times.

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