Edited by Lucia A. Reisch and Inge Røpke
Chapter 12: Macroeconomic stability: Sustainable development and full employment
Jesper Jespersen 12.1 INTRODUCTION – QUESTIONS TO BE DISCUSSED Today, the paradoxical situation is that goods are produced not because they are needed – agriculture and the car industry are the outstanding examples – but to prevent unemployment from going up any further. The Western societies seem to have given up the ambition of creating a sustainable development in an attempt to rescue the labour market from rising unemployment. Anyhow, this vicious cycle could be broken if governments started to implement the zero growth strategy as presented below. Then people would get more leisure time organized according to individual preferences. They would be able to keep their present standard of living. This would make it possible to employ the productivity gains in such a way that the Western societies could embark on a production path leading to sustainable development. What are the macroeconomic consequences of such a rigorous implementation of sustainable development with special regard to the negative impact on employment/unemployment? What can economic theory tell us, in general, about the interrelationship between the traditional macroeconomic variables and increased environmental considerations? Does an economic system based on capitalist principles require an everincreasing output to keep itself ‘on track’? Is the market system like a bicycle – does it have to keep on going at a certain speed not to be wrecked? Or does the economic system start to ‘spin’ when the growth process is slowed down – like the bicycle that starts to wobble when the speed is lowered? Is it likely that the market...
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