Institutional Challenges of the Ecological Transition

Abstract

The ecological transition is often presented primarily in terms of financial costs. Mainstream economists support green finance, selective ecological regulations, and carbon pricing, claiming these tools are sufficient to address environmental issues. In contrast, heterodox economists argue that the neoclassical paradigm is fundamentally incompatible with ecological transition. They stress the need for deep structural reforms in finance and monetary policy, or a broader economic shift guided by degrowth principles. This article contends that achieving the ecological transition necessitates moving beyond the neoclassical economic framework. However, it also demonstrates that existing heterodox approaches fail to provide adequate institutional alternatives. The core challenge lies not in financing or degrowth per se but in reallocating physical resources and labor toward producing essential goods and services that may not deliver immediate consumer satisfaction. From this perspective, the ecological transition is fundamentally a democratic issue.

JEL Classification: B52, P16, Q54, Q56