The capital accumulation process is pervaded by several tensions and contradictions that manifest as continuous features of, or ruptures in, the development of capitalism (Harvey 2014). Due to its contradictory nature, capitalism depends on the existence of societal institutions beyond the market to temporarily stabilise it (Jessop 2002: 19). Various strands of scholarship deal with this phenomenon.¹ In this chapter, we build upon regulation theory, which was designed to consider the specific social, cultural and institutional forms and frameworks within which capitalist growth in actual social formations proceeds. According to this theory, accumulation regimes need to be stabilised by modes of regulation conceptualised in terms of various institutional forms: the wage–labour nexus, the enterprise form, the monetary regime, the state and insertion into international regimes (Boyer and Saillard 2002; Koch 2012; Lipietz 1992). In addition to this, regulationist scholarship has dealt with the relation to nature of specific accumulation regimes.

Consideration of institutional forms has so far predominantly entered analyses of capitalist social formations. Degrowth scholarship has not, for the most part, adopted the concept, or for that matter regulation theory terminology more generally (but see Koch and Buch-Hansen 2021). It is thus safe to say that comprehensive answers as to what the various institutional forms could involve in relation to degrowth (that is, whether they could come to stabilise a degrowth economy) have not been provided. Nevertheless, to varying extents, ideas or visions related to each form have been developed, both by degrowth scholars and scholars working on, for instance, eco-feminism and diverse economies. In this chapter we relate to some of these ideas to contemplate what transformations towards degrowth could entail. Moreover, we bring up the issue of what capitalist diversity means for such transformations. First, however, we consider institutional forms under capitalism.

Institutional forms

The concept of institutional forms refers to the various institutional arrangements that, in a given spatio-temporal setting, lend stability to a specific regime of accumulation (Piletic 2019: 1310). By implication, institutional forms vary in place and time. The examples of Fordist and neoliberal capitalism can be used to exemplify this point. The Fordist era in the decades after the Second World War is often referred to as the Golden Age of Capitalism (e.g., Glyn et al. 1990). It entailed ‘a virtuous circle of growth based on mass production, rising productivity based on economics of scale, rising incomes linked to productivity, increased mass demand due to rising wages, increased profits based on full utilization of capacity and increased investment in improved mass production equipment and techniques’ (Jessop 2002: 56). Overall, institutional forms in this era delivered stable accumulation and social progress in the advanced capitalist countries for approximately three decades (Neilson 2020).

The content of the institutional forms in the Fordist mode of regulation was characterised by the following features. Its wage–labour nexus involved industrial relations systems with minimum wage levels and generalised collective agreements that coupled wages and productivity increases. Its enterprise form involved large corporations oriented towards economies of scale production and an oligopolistic form of competition. Its monetary regime entailed credit money and credit policies oriented towards maintaining aggregate demand in national markets. In terms of state form, a Keynesian welfare state provided social security for citizens, ensuring that they remained consumers even in the absence of employment. And, finally, the international system was oriented towards the expansion of trade and investment in the Atlantic zone (Jessop 2002: 57; Boyer and Saillard 2002; Lipietz 1992). Of these institutional forms, the wage–labour nexus prevailed in the Fordist mode of regulation: ‘The necessity of a parallel evolution of mass consumption and mass production for the coherence of Fordism put the institutional arrangements of the wage–labour nexus at the centre of the whole institutional architecture’ (Amable 2000: 665). As this indicates, not only does the content of the various institutional forms vary, so does their internal hierarchy, which is to say that one or more institutional forms matter more than the rest in a given mode of regulation.

After the 1970s, Fordist-Keynesian capitalism gave way to a postfordist-neoliberal form of capitalism (henceforth denoted neoliberal capitalism). In Chapter 3 we consider some of the mechanisms causing this shift. In the present context we can note that the new form of capitalism entailed deep changes in all the institutional forms making up the previously existing modes of regulation. Neoliberal capitalism involves a finance-dominated accumulation regime, and a key feature of its mode of regulation is financial deregulation (Skyrman 2022; see also Koch 2012: 87). Entailing deregulation of domestic financial systems combined with the liberalisation of international capital flows, financial deregulation fundamentally changed the financial landscape and enhanced the power of the financial sector (Stockhammer 2011: 239). The growing weight of finance in the economy is often referred to as financialisation (Krippner 2005). As observed by Frieden (2007: 385), ‘By the late 1990s international financial activities were so intertwined with domestic financial markets that for all intents and purposes there was one global financial system that included all the developed countries and many developing and formerly Communist countries.’ In terms of the hierarchy of institutional forms, regulation theorists have suggested that this monetary regime is at the top under neoliberal capitalism (e.g., Boyer and Saillard 2002; Piletic 2019).

It is not so much the transnationalisation of finance, however, as the transnationalisation (globalisation) of the production process that qualitatively sets the neoliberal era apart from previous eras (Robinson 2004). This development was closely related to gigantic, transnational corporations (TNCs) becoming the dominant enterprise form. The number of such corporations increased from approximately 7,000 in 1970 to over 38,000 in 1995 and to more than 100,000 in 2010 (Jaworek and Kuzel 2015; Robinson 2004: 55–56). Paralleling this development was a massive increase in foreign direct investment (FDI) – that is, investments that are made to acquire interests in companies operating outside the economy of the investor. In the neoliberal era, deindustrialisation, technological change and the growing transnationalisation of ownership structures and production circuits marked a gradual and partial transition towards a more flexible type of capitalism (Jessop 2002). The transnationalisation of economic structures intensified competitive pressures and forced many companies to become more flexible.

This development translated, for instance, into a push for more flexible labour markets, resulting in a move away from the existing wage–labour nexus. ‘The developed economies needed to adjust to a new and emerging division of labour, where huge differences in unit labour costs stimulated the relocation of production especially in manufacturing’ (Dannreuther and Petit 2006: 106). As a result, wages and social protection came under pressure in the advanced capitalist countries. This development was to no small extent driven by changes in the state form. Keynesian welfare states were gradually transformed into competition states. These expose citizens to the forces of competition and promote social solidarity only insofar as it constitutes an asset in global competition (Cerny 1997; Hirvilammi and Koch 2020; Streeck 2000). In parallel, state regulation of the economy in a broad range of areas was ‘neoliberalised’, the areas of competition policy, industrial policy and monetary policy being cases in point (e.g., Buch-Hansen and Wigger 2011; Bulfone 2022). This development was to no small extent due to the emergence in the international system of loose networks made up of trans- and supranational organisations such as the OECD, IMF, WTO, World Bank and EU, together with national states. These networks, which can also be thought of as transnational state apparatuses (Robinson 2004), serve to organise the conditions of transnational accumulation. In this transnational architecture, states compete with one another to attract mobile capital.

A sixth institutional form? The social relation to nature

Different accumulation regimes correspond to specific forms of appropriation of nature by society. For example, accumulation regimes may be linked to specific forms of energy consumption such as biotic, fossil and renewable energy sources. This is reflected in regulation theory, where some scholars speak of ‘energy regimes’ or more broadly ‘the social relation to the environment’. There is some disagreement among regulation theorists as to whether the social relation to the environment constitutes an institutional form in its own right. Some argue that the relation to the environment is governed by all the fundamental social relations of capitalism, as a result of which it does not constitute an institutional form in its own right (Douai and Montalban 2012). Others argue that it is meaningful to consider the relation to the environment as a sixth institutional form inasmuch as the specific manner in which energy/matter is utilised is subject to regulation (Becker and Raza 2000). This institutional form, then, regulates ‘access to, and utilization of, the material world both for productive and reproductive activities. Hence, it also regulates the spatial and temporal distribution of the ecological costs and benefits of these (re-)productive activities’ (2000: 10). Synthesising these perspectives, Cahen-Fourot (2020) proposes that while each of the five traditional institutional forms is likely to influence society–nature relations, the combination of all their effects is what produces a particular relation between the mode of regulation and the environment.

Here we proceed on the assumption that the social relation to the environment can meaningfully be considered a distinct institutional form, yet consistent with the terminology used in Chapter 1, we refer to it as the social relation to nature. Considering this institutional form first in relation to Fordist capitalism, we can note that this type of capitalism delivered some decades of economic growth and social progress in the advanced capitalist countries. It did so, in processes mediated by global value chains, on the basis of highly violent social relations to nature (Brand and Wissen 2012). That is, the aforementioned Golden Age of Capitalism in the Global North was premised on massive consumption of fossil energy and only possible due to the overexploitation of natural resources. Had all people led lifestyles corresponding to what many Westerners came to think of as adequate material welfare levels after the Second World War, the planet would have ended in an acute climate emergency significantly earlier (Koch and Mont 2016; Fritz and Koch 2016). Fordist progress, then, was accompanied by massive growth in CO₂ emissions. Indeed, the origins and development of the global climate crisis relate directly to ‘the upswing and generalisation of the Fordist production and consumption norm in the Western world and of the simultaneous establishment of an international division of labour in industrialised and extraction societies’ (Koch 2012: 83; see also Lessenich 2019). For this and other reasons (Laruffa 2022: 124), Fordism and the Keynesian welfare state should not be glamorised.

As for neoliberal capitalism, it certainly inflicts no less violence on nature than did its predecessor. Aside from remaining overwhelmingly reliant on fossil fuels, an inbuilt problem of neoliberal capitalism is that with the weakening of labour, wages and thus aggregate demand levels in the advanced capitalist countries came under pressure (e.g., Kotz 2010). This inbuilt problem was dealt with partly by maintaining and even increasing levels of private consumption by facilitating the increased indebtedness of households, partly by exporting the Western consumption norm to other parts of the world. The result is that ‘at no other point in time have so many people in the world participated in consumption patterns that used to be the privilege of elites’ (Koch 2012: 120). Under neoliberal capitalism, then, despite greener technologies, more natural resources are being used than ever before – with the distribution of this use and extraction being massively unequal (e.g., Soper 2020: 39; see also Neilson 2020). The violent extraction of natural resources continues, mainly in the Global South. Yet it is also important to recognise that it occurs within countries in the Global North. For example, peripheral regions of Finland have ‘been one of the key targets of the recent global boom in the quest for untapped mineral resources’ (Lassila 2018: 1).

As noted above, the social relation to nature in a given social formation will be influenced by other institutional forms. The state form is a case in point. Some scholars speak of the emergence of a green or environmental state in the last third of the twentieth century (Eckersley 2004; Hausknost 2020; Koch 2020b). Just as the welfare state emerged together with the institutionalisation of the wage–labour nexus to mediate capital–labour relations and to limit the social damages caused by capitalist production, so the environmental state serves to limit, to a certain extent, the environmental damages caused by capitalist accumulation (Gough 2016). Similarly, the structures of the international system have a major impact on social relations to nature in every country. For example, patterns of resource extraction are shaped by free trade legislation enforced by international organisations.

In the context of degrowth social formations, the social relation to nature would be altogether different from how such relations are and have been in different capitalist social formations. Transactions with nature would be characterised less by violence and more by gentleness and care (Buch-Hansen and Nesterova 2023). In capitalist social formations, nature is regarded as a pile of resources that can be extracted, monetised, exchanged and consumed. Nature, then, is valuable because it is a source of raw materials and energy that humans can use. Degrowth, conversely, views nature, including non-humans, as inherently valuable irrespective of their usefulness for humans. In economic and social practice, gentleness and care towards nature would involve both reduction and growth in different domains. An overall far smaller throughput of matter and energy necessitates growth in nature- and place-based economic activities as well as more sufficiency-based modes of being. A major reduction of fossil fuel use requires growth in renewable and localised energy production. Importantly, there are limits as to how localised such production can meaningfully become, especially in the short run. Equipment such as wind turbines, solar panels and the like typically requires long supply chains, which are themselves associated with high energy consumption. Existing localised production of renewable energy, for example using wood as biofuel, is not necessarily more sustainable than production requiring long supply chains. Considered as a distinct institutional form, gentle social relations to nature would be placed high in the hierarchy of such forms in degrowth social formations. In other words, it would have a deep impact on the functioning of the other institutional forms.

This consideration brings us to the more general matter of what degrowth could entail in relation to the remaining institutional forms. Being an anti- and post-capitalist project, it is clear that institutional forms under degrowth would not serve to stabilise capital accumulation. Instead, they would be oriented towards facilitating gentle social relations to nature as well as social equity to ensure satisfaction of the basic needs of humanity now and in the future. It is an open question whether the same institutional forms – the wage–labour nexus, the enterprise form, the monetary regime, the state form and insertion into international regimes – would also be the key forms in the post-capitalist context of degrowth. In the following, we will assume that they would (in versions profoundly different from their current manifestations) and bring together ideas and visions from degrowth scholarship and related literatures that more or less closely connect to each form. The purpose of this exercise is not to present a blueprint of institutional forms under degrowth. Providing such a blueprint would be meaningless, both because the future is not predetermined and because institutional forms under degrowth would neither be uniform across space nor be fixed once and for all. Rather, the purpose is to think, at a general level, about what degrowth could entail in various interrelated dimensions and in this context indicate the depth of the transformations it would require. While touching upon all the institutional forms in the following sections, we devote most attention to the wage–labour nexus and money, as later chapters deal in greater depth with the remaining forms.

The wage–labour nexus

Several growth-critical scholars have observed how, under capitalism, work is intimately entangled with the growth imperative. Jackson and Victor (2011) speak of a productivity trap, which involves companies, in order to increase profits and market shares, seeking to grow labour productivity. As a result, fewer employees are needed to produce the same quantity of goods and services, meaning that unemployment increases in the absence of economic growth. For those affected, unemployment entails a loss of meaning, identity, social status and the ability to consume. The trap, then, contributes to creating widespread support for economic growth. While not necessarily involving the abandonment of wage labour, degrowth would involve breaking with productivity growth and entail various transformations of work. Barca (2019), for example, advocates a liberation from and of work. The liberation from work involves a reduction in work time and the simultaneous creation of time and spaces beyond work-life for regenerative activities, community building and activism. The introduction of a universal basic income is a policy that could contribute towards this end. The liberation of work involves changing the predominant nature of work, for instance in terms of how it is controlled, organised and distributed. This could entail that work is increasingly controlled by those carrying it out, that work is organised more democratically and less hierarchically, and that both stimulating work and less pleasant but necessary work is distributed more equally (see also Chertkovskaya and Paulsson 2021).

Wage labour is the predominant form taken by work under capitalism, yet zooming in on existing societies it can be seen that labour, including wage labour, takes multiple forms. Diverse economies scholarship brings into focus this diversity (e.g., Gibson-Graham and Dombroski 2020). It notes that some labour is unpaid, including labour undertaken by non-human species, housework, family care, emotional labour, neighbourhood work, volunteering and slave labour. As for waged work, it also takes a variety of forms, ranging from salaried and unionised work to increasingly common precarious forms of work, such as part-time, non-unionised, temporary, freelance and seasonal work. Finally, several forms of work that are remunerated in ways other than with wages exist, including, for example, self-employed, self-provisioning, cooperative, indentured, feudal, reciprocal and bartered labour (Gibson-Graham and Dombroski 2020: 13).

It is in non-profit-oriented work contexts that niches relevant for degrowth transformations are most likely to be developed and expanded (Hinton 2020). Feminist scholars have long noted that work of essential importance to the functioning of society either does not take the form of wage labour or is underpaid and under-recognised. Most notably, reproductive care work – taking care of children and elderly and various household work – is mainly undertaken by women and is not regarded as proper work. In the Global North, where many women work in the wage-labour market, much care work has been commodified, for example by being outsourced to privatised care providers employing underpaid, mainly female, caregivers from the Global South (Dengler and Seebacher 2019). Feminist degrowth scholars envision gender-just care beyond monetary valuation (Dengler and Lang 2022). They note that the reorganisation of care needs to take into consideration the diversity of currently existing care arrangements existing around the globe and that ‘many of today’s examples for caring commons are found in the Global South, where communitarian caring commons … and more generally, communal modes of living have survived colonial intrusion at the margins of capitalism’ (2022: 17). It is important to add to this that in many places communal modes of living come with family obligations, arranged marriages, traditional gender roles and restricted freedoms, especially for women. As such, these communities should not be romanticised in general. Also, for the sake of nuance, it is important to recognise that not only women perform underpaid, under-recognised and undesirable work: for example, many dirty industries with dangerous work employ mainly male workers. For degrowth, then, the point is not just to emancipate women but to emancipate humanity (see also Bhaskar 2012a).

As noted in the Introduction, degrowth as we understand it involves massive growth in some sectors such as organic agriculture and renewable energy, combined with the shrinkage or abolition of other sectors. These other sectors include polluting sectors such as oil and coal, sectors promoting unsustainable consumption such as advertising, sectors manufacturing products that inflict harm on people and nature such as the military industry, and sectors creating little use value, finance being a case in point. By implication, the distribution of jobs across sectors – and thus the prevalent nature of work – would be very different in the context of degrowth. Under degrowth, the bulk of employment would have to be shifted from jobs that are environmentally harmful to jobs that entail gentler relations to nature. An aspect of such gentleness relates to the types of outputs resulting from work. Desirable outputs are goods and services that directly benefit nature (for example, composting food waste) or constitute ecologically generalisable need satisfiers (for example, organic horticulture providing people with food). Conversely, undesirable outputs are ones entailing unnecessary violence done to nature. Cases in point are work outputs designed to satisfy luxury wants for, say, holidays in distant locations, SUVs and villas (Bohnenberger 2022). Another sustainability-related aspect of work concerns lifestyles. A sustainable work-lifestyle exists when a job does not prevent the employee and his or her household from leading a sustainable lifestyle. A job can do so in various ways. It can, for instance, provide income that is too low for the employee to be able to make sustainable choices, such as buying organic food. Conversely, a job can provide income that is so large that it enables the employee to lead a grossly unsustainable lifestyle (Bohnenberger 2022).²

In the previous chapter we noted how, in capitalism, most jobs alienate workers. Moreover, many jobs result in employees suffering from burnout and stress. Degrowth advocates envision a post-capitalist society in which the pace is slower, including in the area of work. Soper (2020) imagines a society in which state-of-the-art technologies in the energy and medical areas blend with the reinstatement of previous ways of producing and providing. Specifically, she has in mind the expansion of craft ways of working with ‘their emphasis on skill, attention to detail, and personal involvement and control’ (Soper 2020: 100). The use of skill, the exercise of mental concentration and the satisfaction it can give rise to means that such work has relevance in post-capitalist contexts. Soper underscores the importance of not reproducing the exploitative nature of labour processes associated with artisan work in premodern times, of cutting the link between economic growth and progress without dismissing ‘the advances in democracy and social and sexual emancipation that have accompanied the development of market society and mass production’ (2020: 104).

The monetary regime

As noted above, a monetary regime characterised by deregulated financial systems and liberalised international capital flows is at the top of the hierarchy of institutional forms in neoliberal capitalism. More generally, the nature of money and the financial system is at the core of what makes possible the commodification of nature and social life under capitalism, leading to a variety of ills. The current international financial system, for example, facilitates the drain of natural resources from the Global South to the Global North due to debt relations and financial dependency (Dziwok and Jäger 2021). Money is unlikely to disappear in a degrowth society, yet in the literature on degrowth, various proposals are discussed that involve money coming to play a different and overall far less prominent role. In other words, the monetary regime would be placed much lower in the hierarchy of institutional forms than is the case under neoliberal capitalism.

A demonetisation of pursuits such as food and energy production is a key way in which money could become less important in degrowth social formations. That is, to the extent people can use or share energy and food they themselves have contributed to producing, these activities come to exist outside the capitalist accumulation process and thus no longer translate into economic growth (Heikkurinen et al. 2019). Demonetising these and other pursuits could not only result in all basic human needs being satisfied outside the framework of capitalism, it could also free time and energy for other activities, such as activism and education. This would mark a shift in relation to (neoliberal) capitalism where, as previously noted, much such time and energy is tied to wage labour. The use of time banks, where time is the unit of currency, is a means through which demonetisation can unfold. Other practices of demonetisation could be barter (Trainer 2012) and the introduction of local currencies (Dittmer 2013). Demonetisation, then, is a process that would result in the shrinking of the space in which monetised relations and the accumulate-or-perish logic of capitalism prevail.

Another proposal discussed in the literature on degrowth is to put the creation of money under public control, so as to democratise the monetary regime and increase the probability that money is provided for societally desirable purposes (Cahen-Fourot et al. 2022: 344). Investments would, for instance, be channelled to sustainable, non-growing businesses, community energy initiatives, and improvements of public infrastructure and transport, as well as worker-led organisations (Chertkovskaya and Paulsson 2021: 417). This would require legislation at the national and international levels, legislation requiring public banks to serve the common good by providing money for activities satisfying human needs (as opposed to wants) and gentler relations to nature.

In recent years there has been much talk of green finance in degrowth circles and beyond. Originating in financial-sector strategies, green finance initiatives for the most part serve mainly to turn the climate and biodiversity crises into profit opportunities for the sector. Such initiatives, then, are reformist in nature and do not point beyond capitalism. Yet other visions of green finance are more progressive. Distinguishing between different varieties of green finance and monetary policy, Dziwok and Jäger (2021) identify a variety which they consider broadly compatible with degrowth. They call, for instance, for the expansion and transformation of so-called debt-for-nature swaps. Such swaps involve forgiving foreign debt obligations, allowing debtor nations to use the money for environmental purposes. They also suggest that monetary policy can provide a global institutional setting within which resources for the attainment of global sustainable welfare can be provided (Dziwok and Jäger 2021). For green finance to become compatible with degrowth, the financial sector would need to give up its one-sided fixation on growth and focus instead on the common good and relocate vast sums of finance to other areas (Dörry and Schulz 2022). That is, in contemporary capitalism, money is channelled to where returns on investment are high or acceptable. In degrowth social formations, the point would be to channel money to where ecological and social returns are high, that is, where it is needed, irrespective of the potential return. For instance, this may include financing small-scale businesses which do not plan to grow and pursue sufficiency in the size or scale of the business.

Currently a lot of so-called green finance is channelled to activities aiming to lower carbon emissions, such as renewable energy. The main struggle small, non-growth-oriented sustainable companies are currently facing is a lack of access to finance. Under degrowth, financing would not depend on businesses wanting to grow (Nesterova 2021a). Seen from the perspective of degrowth, this focus is inadequate as it risks forgoing support towards other transformative forms of business. Cases in point could be local craft and artisanal businesses, small-scale organic farmers, repair cafés, libraries, renting services, lower and appropriate technologies, businesses that produce durable products, and alternative, affordable dwellings. If so-called green finance is to make a difference in degrowth transformations, the meaning of ‘green’ needs to be redefined and expanded, to concern not just low carbon but to also include other degrowth-compatible businesses and initiatives.

Under normal (capitalist) circumstances, little investment which does not promise return would be happening. To avoid such an outcome in degrowth social formations, the state would in all likelihood need to oversee financing and change the terms on which it takes place. One aspect could be to prevent investment in undesirable industries while facilitating resources being channelled towards genuinely green industries. Another aspect could be to provide financing without interest repayment. Such financing would reduce pressures on businesses – including pressures to grow because of borrowing necessitating repayment with interest. In contemporary capitalism, innovative businesses experimenting with local materials and new business models particularly struggle to obtain funding as they are often perceived as risky. Green finance (as understood here) without interest could help such businesses and encourage more people to perhaps seek and try such employment rather than employment in ‘bullshit jobs’ in inhumane multinational corporations. A third aspect of the role the state could play in facilitating (genuine) green finance concerns the principles of financing. Many people feel powerless in relation to the current financial system. They are confronted with certain rules of the game which they are required to accept as something given. For example, if they want to start a business, they have to promise growth to the financing institution, borrow, repay with interest or even adjust their business plan (which may go against their original idea) in order to be granted a loan. Changing these rules of the game, the state could pave the way for different principles of financing, making it more accessible to a wider range of people and purposes.

In thinking about money, it is important to recognise that it is not a homogeneous artefact. Hornborg (2019) distinguishes the currently prevailing form of general-purpose money from special-purpose money. General-purpose money is underpinned by the notion that anything can be converted into anything else. Child labour can be bought for money deriving from the sale of wine gums or guns. ‘In making all values interchangeable’, Hornborg (2019: 6–7) writes, ‘general purpose money dissolves the kinds of distinctions on which all living systems depend: between the short term and the long term, the small scale and the large scale, the trivial and the essential’. The problem with this form of money is that there are no constraints on what can be bought for it. Consumers, then, are incentivised to search for the best deal and use the money to purchase the least expensive products available. That these products are cheap is often a function of how they were produced in the first place, that is, with little regard for the wellbeing of employees and nature. Hornborg envisions a reform of the currency system which leads to the introduction of a digital, special-purpose currency that exists next to general-purpose money. This complementary currency, which is to be introduced in each country and be distributed to all its citizens as a basic income, can be used only for local use. That is, the currency can only be used for purchasing goods and services produced within a certain geographical radius of the location of the purchase. Key purposes of such a currency are to limit the damage done by transnational financial speculation and reduce long-distance transportation of goods and the associated harm done to nature, while increasing local cooperation and integration (Hornborg 2019: 233–242).

Hornborg’s proposal is appealing but not without challenges. While local production may sound, and is often presented as, desirable, it is important to be aware that such production (if at all possible) may itself conceal long supply chains. That is, as also touched upon above, a locally made product may still require equipment and ingredients made elsewhere, equipment and ingredients that may themselves be products requiring long supply chains. Even locally grown food requires the use of equipment and machines (if not the chemicals, packaging or energy) made outside the location where it is grown. If, then, consumers are to be able to make informed decisions with respect to the purchase of products which are eligible for being bought with special-purpose currencies, full disclosure of what went into the production of these products would be necessary. Another noteworthy consideration is the digital nature of special-purpose currency. While in the minds of the public the currency may be geographically restricted, enabling its use is far less geographically limited. For instance, data centres which make data storage possible may be located elsewhere. Digital currencies also require digital/electronic devices which likewise necessitate long supply chains. This is not to discount the potential value of special-purpose currencies, but rather to highlight that reduction in, for example, long-distance transportation in one domain does not necessarily eliminate the issue of long-distance transportation altogether.

The state, the international system and business

The state in capitalist social formations is, unsurprisingly, a capitalist state. That is, it is a state that in various ways serves to facilitate the capital accumulation process. It does this in a variety of ways, which differ from one formation to another. In neoliberal capitalism, which primarily serves the interests of transnational capital, a key function of the state and international organisations is to serve as promoters of competition both in the corporate sphere and in society at large. Owing to a deep suspicion of democracy, key state institutions, such as central banks, are insulated from democratic pressures (Buch-Hansen and Wigger 2011; Harvey 2005). Moreover, even when it assumes the guise of an ‘environmental state’ that reduces the damage caused to nature by the working of capitalism, the social relation to nature remains a grossly violent one.

For degrowth social formations to work, a very different type of state would be needed. For one thing, the orientation of the ‘degrowth state’ would be profoundly different from that of the neoliberal capitalist state. In degrowth social formations, state interventions at all scales (local, national, transnational) would promote gentle social relations to nature and human needs satisfaction for all. This would be reflected in how tax revenues are used, namely on sustainable welfare (see Chapter 5), universal basic income and universal basic services rather than on, say, the military complex and subsidies for dirty industries. The degrowth state would heavily tax polluters and income and/or wealth above a certain level and use these and other tax revenues for subsidising a wide range of degrowth-compatible businesses and initiatives (see also Latouche 2009). As noted above, many such businesses and initiatives currently have few possibilities for gaining funding and encounter regulatory obstacles. As such, they would benefit from state involvement in the form of policies that in various ways support small-scale, local production, not-for-profit organisations and other alternative forms.

More controversially, to accomplish degrowth on a societal scale, the state may well have to nationalise dirty sectors, such as conventional monoculture, industries engaged in natural resource extraction and fossil fuels and companies producing chemicals, metals, mineral products and paper products.³ The state would do so with a view to taking charge of either transforming (‘greening’) these sectors or dismantling them altogether (see Chapter 5). Such steps would have negative consequences relating to employment, and risk affecting the mental health of individuals employed in the sectors in question. Many of these individuals would be concerned about future occupation, pensions, meaning and identity. To alleviate these consequences, the state would need to proactively facilitate the reskilling of such employees and ensuring that genuinely green jobs are available.

Aside from reskilling for individuals leaving dirty industries, the degrowth state would provide free education for all and make available diverse options of education including higher education and vocational training. Moreover, the very nature of education would need to be transformed. Currently, the system of education is geared towards the reproduction of capitalist structures, whereas degrowth would require creating spaces for new imaginaries, reflection and critical approaches to capitalism and its structures, as well as emphasising genuine sustainability (Kaufmann et al. 2019). Educational pursuits of individuals can be facilitated by the state not only by making education accessible (free) and useful for a more sustainable future, but also by introducing supporting mechanisms which make education affordable and possible for everyone. Such mechanisms could include universal basic income, affordable housing and the provision of free services such as transportation, healthcare and childcare.

In terms of steering, the literature generally envisions degrowth transitions and societies to be profoundly democratic (Schmelzer et al. 2022). For instance, this may, in addition to representative democracy, involve more direct participatory decision-making, allowing citizens to be involved in taking decisions affecting their lives. This is relevant, for instance, in relation to green finance where, as we touched upon above, the state could play a key role. Its activities in this area could be guided or supported by various democratic forums. Relatedly, some scholars envision citizens’ councils which facilitate public control over banking and financial regulation (e.g., Cahen-Fourot et al. 2022). Similar forums could be involved in deciding on tax-funded (low or no interest) green investments. Such a democratisation of green investments could be paralleled by steps taken by the state to reduce the space for investments by angel investors and venture capitalists. These forms of investment are widespread in capitalism (S. C. Parker 2018). They commonly entail the investors being entitled to a share in a business and its profit. Apart from putting immense pressure on the businesspersons to grow their businesses to repay debts, these forms of financing may alienate businesspersons from their business as a project and an idea since the investors acquire an opportunity to have a say in its matters. For more people to come to have a say on decisions in democratic forums, a redistribution (decentralisation) of power from the state to the local scale would be necessary (cf. Chapters 5 and 6).

As regards scale, degrowth scholarship has mainly focused on the local and the national levels (albeit see Fritz and Koch 2016; Koch 2015; Hasselbalch et al. 2023; Babic and Sharma 2023). Treatment of the international dimension has predominantly revolved around the Global North–Global South distinction, with many scholars arguing that degrowth mainly or exclusively concerns the Global North. While this is in some respects a fair argument, in others it is problematic: deep transformations across all four planes of social being are as relevant in the South as they are in the North, although the very different contexts are of course essential to take into consideration. Degrowth scholarship has yet to focus in any depth on the insertion of local and national scales into a global architecture. This is unfortunate, as it is difficult to imagine degrowth (national-scale) social formations functioning – or coming into being in the first place – in the absence of international coordination (see also Neilson 2020: 104).⁴ Indeed, it is hard to envision one country succeeding in pursuing degrowth while all others remain integrated in the architecture of global capitalism. The state seems best positioned to ensure such coordination. That is, it makes more sense to coordinate international degrowth on the state level than the micro or grassroots level of individuals, businesses and movements. States can direct transformations in the international spaces and organisations they form part of (the EU, the OECD, the United Nations etc.).

The prevailing type of organisation of production and service provision in the growth-based economy is a large and growing business motivated by profit and owned by shareholders (Johanisova et al. 2013; Roman-Alcalá 2017). Such organisations are always in pursuit of minimising costs and maximising profit. They do so by externalising their costs to workers, the environment and future generations and exploiting nature, humans and non-humans. The competitive setting in which such organisations operate further facilitates this externalisation of costs and exploitation. The whole world is viewed by such organisations as a resource pool and a market, while humans and nature are reduced to mere factors of production. Human desires for belonging, respect, comfort and so on are utilised by corporations as a platform for creation of wants. Many have pointed to multiple problems associated with such an inhuman scale of production and the inhumanity and alienation which derive from this scale, and called for human-scale production and production carried out in a humanistic way, with people and nature in mind (Schumacher 1993; Max-Neef 1991, 1992). For instance, for Max-Neef (1992), smallness or human scale indicates transparency, lack of bureaucracy and a relative ease of solving problems as they become manageable.

For Schumacher (1993), smallness meant lower ecological as well as social impact. Schumacher suggested that small-scale operations are less likely to be harmful to the environment than large-scale ones because their force is smaller in relation to the forces of nature. According to him, people organised in small units would take better care of natural resources than ‘anonymous companies’ which perceive the universe to be their quarry (Schumacher 1993: 23). The principles of production and business for a degrowth society have been known at least since the 1970s. Localisation, increased self-sufficiency, smallness and production to satisfy genuine human needs are some of those principles. However, more recently attempts have been made to more holistically outline what a business should look like in a degrowth society. While we discuss this in more detail in Chapter 6, here we briefly summarise the key aspects of degrowth business. First and foremost, business needs to be transformative of itself as well as the socio-economic structures of production. Transformations need to unfold in the domains of the business’s material transactions with nature, people and non-humans and profit. In a degrowth society, production would be localised and place-sensitive, and, above all, humane.

It is important to recognise the nuance associated with business and degrowth transformations. For instance, not all businesses currently operating in the capitalist setting are large and profit-maximising, faceless and inhumane corporations. There are multiple examples of diverse forms of organising production (Gibson-Graham 2006). Not all businesses are striving to maximise their profits, exploit humans and nature and grow indefinitely. Cases in point are non-growing firms, lifestyle businesses and small-scale craft and artisanal production. Moreover, it is unrealistic to assume that degrowth transformation would, at least initially, entail conversion of all large-scale production into small-scale initiatives. Indeed, large-scale production is likely to remain in a degrowth society, while the principles – the reasons, ends, means and ownership patterns – under which such production is carried out would need to change substantially (see Chapter 6).

From capitalist diversity to degrowth diversity

A diversity of economies already exists alongside capitalism (Gibson-Graham 2006). Yet when moving from considering capitalism at an abstract level to considering its actual forms in specific spatio-temporal settings, it also becomes clear that capitalism itself continues to take a variety of forms – despite the pressures for convergence associated with economic globalisation and neoliberal policies. Aside from changing over time, institutional forms differ geographically. The field of comparative political economy is devoted to studying this diversity. Starting with the seminal work of Shonfield (1965), which identified a liberal model of capitalism typical of Britain, a statist model typical of France and a corporatist model typical of Germany, a range of typologies have been developed to aid the study of capitalist diversity. The most well-known examples are Esping-Andersen’s three welfare regime ideal-types (Esping-Andersen 1990) and the ‘varieties of capitalism’ approach which distinguishes between coordinated and liberal market economies (Hall and Soskice 2001). Comparative political economy scholarship brings into focus how advanced capitalist countries differ with respect to their industrial relations systems, corporate governance arrangements, competition policy, the generosity of social transfers, and taxation and education systems, to give but a few examples.

Although the environment has generally been neglected by scholarship on capitalist diversity (Koch and Buch-Hansen 2021), such scholarship still provides important insight into the nature of capitalism, insights constituting a crucial supplement to the considerations of how institutional forms differed in Fordist versus neoliberal capitalism.⁵ For example, Keynesian welfare states took a variety of forms, with the social democratic Scandinavian countries having welfare arrangements exhibiting a higher degree of decommodification than the conservative regime in Germany or the liberal one in the US (Esping-Andersen 1990). Fordism itself also varied among the advanced capitalist countries. For example, whereas Germany extensively introduced Fordist production techniques, in Denmark it was mainly the demand side of the Fordist growth model, that is, mass consumption of standardised goods, that manifested itself. In all its forms, however, Fordism relied on overexploitation of natural resources, not least in developing countries, where Fordism did not materialise. In a similar vein, a variety of competition states can be identified (Genschel and Seelkopf 2015).

When accounting for why different types of capitalism have emerged in different countries, one of the key factors pointed to by scholars of capitalist diversity are historical legacies of various kinds. For example, welfare regime scholarship has pointed to the importance of religious roots, noting that liberal welfare regimes mainly emerged in Protestant countries, whereas conservative welfare regimes typically appeared in countries dominated by Catholicism. Such scholarship also notes that the degree to which workers were organised in unions contributed to determining the nature of the welfare regime that emerged. In a similar vein, scholarship concerning the post-socialist countries in Central and Eastern Europe points out that institutional and cultural legacies mattered greatly in the transition from ‘communism’ to capitalism (Bohle and Greskovits 2007). Feldmann (2006), for example, identifies diverging legacies as a major reason why Estonia and Slovenia witnessed the emergence of fundamentally different varieties of capitalism.

The implications for degrowth transformations are vast. Aside from entailing systemic changes (Buch-Hansen and Carstensen 2021), such transformations would also entail incremental changes (Barlow et al. 2022) starting out from current social formations. That is, just as all capitalist societies took shape on the basis of what came before them, whether that was specific manifestations of feudalism or communism, so degrowth transformations, if they were in fact initiated on a wide scale, would to no small extent be shaped by the diverse structures, including institutional forms, of contemporary capitalism. Certainly, ‘institutions can vary in their degree of path dependency, such that we can envisage institutions in the Anthropocene that are able to adapt to a rapidly changing (and potentially catastrophic) social-ecological context’ (Dryzek 2016: 942). Still, path dependencies and ideational legacies would mean that instead of simply disappearing, existing forms would be recalibrated via a combination of existing practices and principles with new ones originating in various strands of thinking, including contemporary degrowth thinking. Within countries transformations would thus exhibit at least some continuity with the past, guaranteeing that a degrowth transformation in, say, Iceland would look very different from a degrowth transition in, say, Poland, Australia or Argentina (Buch-Hansen 2014; Buch-Hansen et al. 2016).

In conclusion

In this chapter the regulation theory concept of institutional forms was considered, first in relation to Fordist and neoliberal capitalism, then in relation to degrowth. Whereas institutional forms in capitalist social formations overall serve to facilitate capital accumulation (albeit not always successfully), we envision that under degrowth they would instead be oriented towards facilitating gentle social relations to nature and the satisfaction of basic human needs for all. Here we considered visions on the social relation to nature, the wage–labour nexus, the enterprise form, the nature of money, the state, and insertion into international regimes in relation to degrowth. Given that degrowth has yet to materialise on a societal level, and given that it would vary from one setting to the next, no attempt was made to outline more than the contours of how the institutional forms could look in degrowth social formations. Nor was an attempt made to specify their hierarchy, although it was suggested that, in comparison to under neoliberal capitalism, (gentle) social relations to nature would be placed high in the hierarchy, whereas the monetary regime would take a less prominent position.

The idea would be for the various institutional forms to entangle and produce synergies. For example, the state and international organisations may oversee green finance, channelling economic resources to degrowth-compatible businesses, creating meaningful green employment. Participation in/working for degrowth-compatible businesses, which opens spaces for deviation from profit maximisation and shorter working hours, would allow individuals to dedicate more time towards taking part in direct democracy, thus having an impact on how the state makes decisions and shapes society’s relations to nature. A similar effect of increased participation in direct democracy can be achieved, for instance, by the state providing universal basic income. Demonetisation of spaces, such as producing one’s own food and energy, may require more time spent in and with nature and working with the land and nature more closely, thus deeply transforming and reshaping social (and individual) relations to nature. In turn, a transformed relation to nature may encourage people to participate differently in other spaces such as business and democracy and seek meaningful employment and education for genuine sustainability.