A political economy run according to progressive policies does not have to be able to grow indefinitely, but a political economy run according to neoliberal principles does.
If the monetary system you use in your progressive economy is based on interest-bearing credit created by credit intermediaries then your money supply is going to grow indefinitely.
Jerome's view is, I think, that smart investment and development will allow such money supply growth and the related debt to be serviced and accommodated indefinitely. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
Not if those credit intermediaries have expenses (including taxes and dividend payouts) that equal the total interest.
There are three political variables to fiddle with here to maintain the money supply (above and beyond those employed by conventional monetary policy): Taxes, general wage levels and dividends. One of those can be directly dictated by the central government, and another of them can be heavily influenced by industrial policy in general.
But even if you're right, so what? What is the problem with an infinitely growing money supply? It's just bookkeeping - there is no problem with printing money that cannot be solved by even the crudest of direct distributional policies.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
