Is there a monetary growth imperative?

Abstract

We do not know; but simplistic answers to the title's question should be mistrusted. In this paper, we first provide a literature overview, laying out the vast diversity of theories on the role of monetary aspects for economic growth both within mainstream growth theory and within heterodox perspectives. In fact, completely contradicting results have been derived from a variety of reasonable theories. Based on this literature survey, we explore the narrative background of the most prominent theories as each of them is related to and justified by a distinct narrative. For instance, mainstream growth textbooks are based on the assumption that "money is a neutral medium of exchange" while other approaches hold that "zero interest rates are a precondition for a stationary economy". We show how these narratives - though they may well contain some truth - lend themselves to serve as myths, which rather inhibit than facilitate our understanding of the complex relationship between monetary variables and economic growth. Finally, we discuss consequences for the degrowth debate in terms of practical proposals for overcoming assumed growth imperatives as well as theoretical consequences.