The alt worsens inequality while making it harder to address.
Terzi, 22—Economist at the European Commission’s Directorate-General for Economic and Financial Affairs, Adjunct Professor at Sciences Po and at HEC Paris (Alessio, “Growth and the Mechanics of Capitalism,” Growth for Good: Reshaping Capitalism to Save Humanity from Climate Catastrophe, Chapter 2, pp. 36-37, dml)
Going through these arguments, we get a sense of a paradoxical situation. Large parts of the degrowth critique come from a progressive or “Millennial socialist” angle, and are accompanied by calls for tougher stands against inequalities, more support for the poor, and a stronger role for the welfare state more broadly. We have just seen, however, that an economy without growth would leave governments with less financial firepower to fight such challenges, even as it expanded their scale—leaving the much-hated alternatives of austerity or iniquitous inflation to pay for them. It comes as no surprise, then, that degrowth advocates have gravitated to the pipe dream of Modern Monetary Theory as an escape route from this policy conundrum. This theory purports to bust the “deficit myth” (to invoke the title of Stephanie Kelton’s book) by promoting money-printing as a sustainable and unlimited way of financing government, magically without creating inflation.21
Recall that the welfare system was first created back in the nineteenth century precisely to shore up capitalism against some of its most perverse wealth-concentration dynamics, and therefore to contain the insurgence of social unrest. Wouldn’t diminishing the welfare state’s firepower at a time of pressing need do the opposite? We can credibly suppose that it would further destabilize the whole economic system and that, as Heather Boushey argues, the increase in inequality would also stifle competition and innovation.22