Ecological monetary economics: A post-Keynesian critique

- Some ecological economists believe in a growth imperative arising from debt-money and interest rates.
- As post-Keynesians, we critically review this thesis.
- Endogenous money theory indicates that the causality goes from output growth to money creation.
- We show that debt-money and interest rates are compatible with a full stationary state.

The monetary analysis of some ecological economists currently appears to be mostly articulated around the following core: a stationary economy (and a fortiori a degrowth economy) is incompatible with a system in which money is created as interest-bearing debt. To question the relevance of the debt-money/positive interest rate/output growth nexus, this paper adopts a critical stance towards the currently emerging ecological monetary economics from the standpoint of another strand of heterodox economics - the post-Keynesian approach. In its current state, ecological monetary economics is at odds with post-Keynesian economics in its analysis of the money-growth relationship. This will be shown using the theory of endogenous money and a simple Cambridgian-Kaleckian model where debt-money and a positive interest rate are compatible with a full stationary economy.