Speaker
Description
This chapter examines how economies can be provisioned sustainably in the face of ecological constraints while maintaining full employment and price stability. It argues that the prevailing macroeconomic frameworks misdiagnose both the nature of inflation and the constraints facing currency-issuing governments, leading to policy responses that rely on unemployment, suppressed demand, and underinvestment in social and environmental priorities. Drawing on insights from Modern Monetary Theory (MMT), the chapter reframes sustainability as a problem of real resource allocation and institutional design rather than financial affordability. Against this backdrop, it advances the Job Guarantee as a principal component of an alternative macroeconomic policy framework, one that replaces unemployment with a buffer stock of employed labour, anchors nominal values more effectively, and supports ecological transition without sacrificing social inclusion.
The chapter considers the implications for how inflation is understood and managed. In an ecologically constrained economy, inflation is unlikely to arise primarily from excess aggregate demand. Instead, it is more likely to emerge from disruptions to energy supply, food systems, housing availability, or other resource-intensive sectors. Recent inflationary episodes associated with energy price shocks, climate-related disruptions, and housing shortages illustrate this dynamic. In such contexts, inflation reflects underlying real resource constraints rather than an economy-wide excess of spending.
A Job Guarantee constitutes a central pillar of an alternative counter-inflation framework to the current approach which relies on monetary policy, a blunt tool which is inappropriate for the task for which it has been employed. By offering a fixed-wage job to all who are willing and able to work, the state establishes a nominal benchmark for labour in its own unit of account. The stabilising properties of this approach derive from its buffer stock dynamics. During downturns, workers transition into Job Guarantee employment rather than unemployment, protecting both incomes and skills, and limiting output losses. As private demand recovers, employers can recruit from the Job Guarantee pool by offering higher wages or better conditions. The size of the buffer stock therefore expands and contracts automatically over the business cycle, without the need for discretionary intervention.
We argue that environmental sustainability and full employment need not be treated as competing objectives. Addressing ecological limits requires a more granular approach to macroeconomic management than is currently the case, one capable of distinguishing between activities that must contract and those that must expand. A Job Guarantee contributes to this task by providing a standing mechanism for employment, stabilisation, and reallocation during this structural transition.
